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IFRIC 2 — Members' Shares in Co-operative Entities and Similar Instruments


  • IAS 32 Financial Instruments: Presentation


20 September 2003 IFRIC D8 Members' Shares in Co-operative Entities published Comment deadline 13 September 2004
25 November 2004 IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments issued Effective for annual periods beginning on or after 1 January 2005

Summary of IFRIC 2

Members' shares in co-operative entities have some characteristics of equity. They also give the holder the right to request redemption for cash, although that right may be subject to certain limitations.  IFRIC 2 gives guidance on how those redemption terms should be evaluated in determining whether the shares should be classified as financial liabilities or as equity.

Under IFRIC 2, shares for which the member has the right to request redemption are normally liabilities. However, they are equity if:

  • the entity has an unconditional right to refuse redemption, or
  • local law, regulation, or the entity's governing charter imposes prohibitions on redemption. But the mere existence of law, regulation, or charter provisions that would prohibit redemption only if conditions (such as liquidity constraints) are met, or are not met, does not result in members' shares being equity.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.