In its draft comment letter, EFRAG welcomes the IASB's efforts and approach to address issues that arise in practice related to IAS 32 by clarifying some of the underlying principles in IAS 32 and adding application guidance to facilitate consistent application of the principles.

However, EFRAG suggests that the IASB should:

• avoid classification changes that do not raise concerns in practice in order to avoid unintended consequences;
• consider whether a liability should be recognised for a mandatory tender offer;
• discuss more comprehensively measurement issues of financial liabilities within the scope of IAS 32;
• reconsider the initial accounting within equity for written put options on non-controlling interest;
• consider that many stakeholders disagree with presenting subsequent changes to the carrying amount of the financial liability in profit or loss;
• explore the alternative model to treat contracts which meet the definition of a derivative as a stand-alone derivative at fair value through profit or loss; and
• allow reclassification of 'passage-of-time changes'.

EFRAG also welcomes the proposed improvements to disclosures in IFRS 7, but expresses some concerns and suggestions.

Comments on EFRAG's draft comment letter are requested by 20 March 2024. For more information, see the press release and the draft comment letter on the EFRAG website.