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IAS Plus newsletter — Puttable financial instruments and obligations arising on liquidation

Published on: 15 Feb 2008

On 14 February 2008, the International Accounting Standards Board (IASB) published amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements.

The amendments are relevant to entities that have issued financial instruments that are:

  • puttable financial instruments, or
  • instruments, or components of instruments, that impose on the entity an obligation to deliver to another party a pro-rata share of the net assets of the entity only on liquidation.

Under the revised IAS 32, subject to specified criteria being met, these instruments will be classified as equity whereas, prior to these amendments, they would have been classified as financial liabilities. It should be noted that the amendments differ significantly in some respects compared to the Exposure Draft issued in June 2006.

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