Cover Paper (Agenda Paper 23)

The IASB published Discussion Paper DP/2020/2 Business Combinations under Common Control (BCUCC) in November 2020, with a comment letter deadline of 1 September 2021. In previous meetings, the IASB discussed the project direction for the project on BCUCC and in September 2023 discussed the feedback from various stakeholders to inform the project direction.

In this meeting, the IASB was asked to make a decision on the project direction.

This paper was not discussed.

Due Process Handbook assessment (Agenda Paper 23A)

In this paper, the staff provided an updated assessment of the Due Process Handbook requirements for a standard-setting project, taking into accounts IASB members’ comments from the September 2023 meeting. This included an updated assessment of whether the IASB should maintain project direction, or change the project direction and choose Option 2 (i.e. develop disclosure-only requirements) or Option 3 (i.e. develop no recognition, measurement or disclosure requirements).

Staff recommendation

The staff recommended that the IASB should change the project direction and discontinue the project (Option 3). The IASB was also asked for any comments on next steps for the staff to take in accordance with the IASB’s decision.

IASB discussion

IASB members generally agreed with the staff recommendations. Though a minority of IASB members would have preferred trying to develop recognition and measurement principles, the majority agreed that the diverse stakeholder views and inconsistent existing practices mean that there is no clear way forward. Some IASB members observed that, at this stage of a project, the overall direction might be apparent whereas for this project there are still some significant issues, such as identifying the acquirer in such transactions, that are yet to be explored.

IASB members provided some feedback regarding what information should be included in a comprehensive project summary, suggesting that all considerations given to the project, what feedback was heard and how the IASB responded should be explained, while also summarising what current requirements would apply to business combinations under common control, even if they are not within the scope of IFRS 3.

IASB decision

The IASB voted 10:3 (one absent) in favour of the staff recommendation to change the direction the project.

The IASB generally expressed that disclosure-only requirements in lieu of recognition and measurement principles would not be appropriate. On this basis, the IASB members present voted unanimously in favour of the staff recommendation to discontinue the project.

What a disclosure-only project could cover (Agenda Paper 23B)

In this paper, the staff set out an overview of what a disclosure-only project could cover to support the IASB in assessing the staff recommendations in Agenda Paper 23A.

This paper did not ask the IASB for any decisions and was not discussed.