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IAS 32 — Clarification of the puttable instruments criteria for income trust units

Date recorded:

The IFRS Interpretations Committee considered a request for clarification on guidance relating to the classification of puttable financial instruments (puts) that include contractual obligations to provide pro rata distributions. The request observed such obligations were often included within the terms of income trust units that are redeemable on demand by the holder. The obligation is frequently to distribute cash or additional trust units with a value equivalent to taxable income.

After a short debate the Committee agreed that this issue fell within the IASB's project on financial instruments with characteristics of equity, the exposure draft of which was due in May or early June 2010, with an expected implementation date of the final IFRS being 1 January 2012.

The Committee agreed with the staff recommendation that this not be added to the 2009-2011 cycle of Annual Improvements, subject to the agreement of the IASB.

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