Financial Instruments with Characteristics of Equity

The International Accounting Standards Board (IASB) published the Exposure Draft Financial Instruments with Characteristics of Equity. The IASB has proposed amendments to address the existing challenges in companies’ financial reporting on financial instruments with characteristics of equity.
The proposals in the Exposure Draft would amend IAS 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures, and IAS 1 Presentation of Financial Statements.

The proposals include:

• clarification of the underlying classification principles of IAS 32 to help companies distinguish between financial liabilities and equity;
• disclosures to further explain complexities around instruments that have both financial liability and equity characteristics; and
• presentation requirements for amounts—including profit and total comprehensive income—attributable to ordinary shareholders separately from amounts attributable to other holders of equity instruments.

The comment period closed on 29 March 2024. The IASB will discuss feedback at future meetings.