Commission Regulation (EC) No 53/2009 of 21 January 2009 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Accounting Standard (IAS) 32 and IAS 1 (Text with EEA relevance)
Date: 2009-01-21
Institutions: European Commission
Subjects: accounting, capital market, international standard, standardised accounting system

22.1.2009

EN

Official Journal of the European Union

L 17/23

COMMISSION REGULATION (EC) No 53/2009

of 21 January 2009

amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in
accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council
as regards International Accounting Standard (IAS) 32 and IAS 1

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Regulation (EC) No 1606/2002 of
the
European Parliament and of the Council of 19 July 2002 on
the application of international accounting standards (1), and in
particular Article 3(1) thereof,

(4)

(5)

neutrality of the European Financial Reporting Advisory
Group's (EFRAG’s) opinions (3),
the Standards Advice
Review Group considered EFRAG's opinion on endor­
sement and advised the Commission that
is well
balanced and objective.

it

Regulation (EC) No 1126/2008 should therefore be
amended accordingly.

The measures provided for in this Regulation are in
accordance with the opinion of the Accounting Regu­
latory Committee,

Whereas:

HAS ADOPTED THIS REGULATION:

(1)

(2)

(3)

By Commission Regulation (EC) No 1126/2008 (2)
certain international standards and interpretations that
were extant at 15 October 2008 were adopted.

Article 1

The Annex to Regulation (EC) No 1126/2008 is amended as
follows:

On 14 February 2008,
the International Accounting
Standards Board (IASB) published amendments to Inter­
national Accounting
(IAS) 32 Financial
Standard
Instruments: Presentation and IAS 1 Presentation of
Financial Statements — Puttable Financial
Instruments
and Obligations Arising on Liquidation, hereinafter
‘amendments to IAS 32 and IAS 1’. The amendments
require certain instruments issued by companies that
are currently classified as liabilities despite having charac­
teristics similar to ordinary shares, to be classified as
equity. Additional disclosures are required relating to
those instruments and new rules should apply to their
reclassification.

The consultation with the Technical Expert Group (TEG)
the European Financial Reporting Advisory Group
of
(EFRAG) confirms that the amendments to IAS 32 and
IAS 1 meet the technical criteria for adoption set out in
Article 3(2) of Regulation (EC) No 1606/2002.
In
accordance with Commission Decision 2006/505/EC of
14 July 2006 setting up a Standards Advice Review
Group to advise the Commission on the objectivity and

1. International Accounting

Instruments: Presentation is amended as set out
Annex to this Regulation;

Standard (IAS) 32 Financial
in the

2. IAS 1 Presentation of Financial Statements is amended as set

out in the Annex to this Regulation;

International

3. International Reporting Financial Standard (IFRS) 7, IAS 39
Interpretations
and
Committee's
amended in
accordance with the amendments to IAS 32 and IAS 1 as
set out in the Annex to this Regulation.

Financial
Interpretation 2 are

Reporting

(IFRIC)

Article 2

Each company shall apply the amendments to IAS 32 and to
IAS 1, as set out in the Annex to this Regulation, at the latest,
as from the commencement date of
financial year
starting after 31 December 2008.

its first

(1) OJ L 243, 11.9.2002, p. 1.
(2) OJ L 320, 29.11.2008, p. 1.

(3) OJ L 199, 21.7.2006, p. 33.

L 17/24

EN

Official Journal of the European Union

22.1.2009

This Regulation shall enter into force on the third day following that of its publication in the Official Journal
of the European Union.

Article 3

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 January 2009.

For the Commission

Charlie McCREEVY
Member of the Commission

22.1.2009

EN

Official Journal of the European Union

L 17/25

ANNEX

INTERNATIONAL ACCOUNTING STANDARDS

IAS 32

IAS 1

Amendments to IAS 32 Financial Instruments: Presentation

Amendments IAS 1 Presentation of Financial Statements

Reproduction allowed within the European Economic Area. All existing rights reserved outside the EEA, with
the exception of the right to reproduce for the purposes of personal use or other fair dealing. Further infor­
mation can be obtained from the IASB at www.iasb.org

L 17/26

EN

Official Journal of the European Union

22.1.2009

AMENDMENTS TO IAS 32 FINANCIAL INSTRUMENTS: PRESENTATION AND IAS 1 PRESENTATION OF FINANCIAL
STATEMENTS

PUTTABLE FINANCIAL INSTRUMENTS AND OBLIGATIONS ARISING ON LIQUIDATION

Amendments to IFRSs

This document sets out amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial
Statements (as revised in 2007) and consequential amendments to IFRS 7 Financial
IAS 39
Financial Instruments: Recognition and Measurement and IFRIC 2 Members’ Shares in Co-operative Entities and Similar Instruments.
This document also contains amendments to the Basis for Conclusions on IAS 32 and IAS 1 and the illustrative examples
accompanying IAS 32. The amendments result from proposals that were contained in an exposure draft of proposed
amendments to IAS 32 and IAS 1—Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation
published in June 2006.

Instruments: Disclosures,

Entities shall apply these amendments for annual periods beginning on or after 1 January 2009. Earlier application is
permitted. If entities apply these amendments for an earlier period, they shall disclose that fact.

Amendments to IAS 32

Financial Instruments: Presentation

In paragraph 11 of the Standard, the definitions of a financial asset and a financial liability are amended and the definition of a
puttable instrument is added after the definition of fair value.

DEFINITIONS (SEE ALSO PARAGRAPHS AG3–AG23)

11

The following terms are used in this Standard with the meanings specified:

…

A financial asset is any asset that is:

(a) …

(d) a contract that will or may be settled in the entity’s own equity instruments and is:

(i) …

(ii) a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the entity’s own equity instruments. For this purpose the entity’s
own equity instruments do not include puttable financial instruments classified as equity instruments in
accordance with paragraphs 16A and 16B, 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 and are classified as
equity instruments in accordance with paragraphs 16C and 16D, or instruments that are contracts for
the future receipt or delivery of the entity’s own equity instruments.

A financial liability is any liability that is:

(a) a contractual obligation:

(i) to deliver cash or another financial asset to another entity; or

(ii) to exchange financial assets or financial liabilities with another entity under conditions that are poten­

tially unfavourable to the entity; or

(b) a contract that will or may be settled in the entity’s own equity instruments and is:

(i) a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s

own equity instruments; or

22.1.2009

EN

Official Journal of the European Union

L 17/27

(ii) a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the entity’s own equity instruments. For this purpose the entity’s
own equity instruments do not include puttable financial
instruments that are classified as equity
instruments in accordance with paragraphs 16A and 16B, 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
and are classified as equity instruments in accordance with paragraphs 16C and 16D, or instruments that
are contracts for the future receipt or delivery of the entity’s own equity instruments.

As an exception, an instrument that meets the definition of a financial
liability is classified as an equity
instrument if it has all the features and meets the conditions in paragraphs 16A and 16B or paragraphs 16C
and 16D.

…

A puttable instrument is a financial instrument that gives the holder the right to put the instrument back to the
issuer for cash or another financial asset or is automatically put back to the issuer on the occurrence of an
uncertain future event or the death or retirement of the instrument holder.

The heading before paragraph 15 and paragraph 16 is amended. After paragraph 16, a heading, paragraphs 16A and
16B, another heading, paragraphs 16C and 16D, another heading and paragraphs 16E and 16F are added.

PRESENTATION
Liabilities and equity (see also paragraphs AG13-AG14J and AG25–AG29A)
…

16

When an issuer applies the definitions in paragraph 11 to determine whether a financial instrument is an equity
instrument rather than a financial liability, the instrument is an equity instrument if, and only if, both conditions
(a) and (b) below are met.

(a) …

(b) If the instrument will or may be settled in the issuer’s own equity instruments, it is:

(i) …

(ii) a derivative that will be settled only by the issuer exchanging a fixed amount of cash or another financial
asset for a fixed number of its own equity instruments. For this purpose the issuer’s own equity
instruments do not include instruments that have all the features and meet the conditions described
in paragraphs 16A and 16B or paragraphs 16C and 16D, or instruments that are contracts for the future
receipt or delivery of the issuer’s own equity instruments.

A contractual obligation, including one arising from a derivative financial instrument, that will or may result in
the future receipt or delivery of the issuer’s own equity instruments, but does not meet conditions (a) and (b)
above, is not an equity instrument. As an exception, an instrument that meets the definition of a financial
liability is classified as an equity instrument if it has all the features and meets the conditions in paragraphs 16A
and 16B or paragraphs 16C and 16D.

Puttable instruments

16A

A puttable financial instrument includes a contractual obligation for the issuer to repurchase or redeem that
instrument for cash or another financial asset on exercise of the put. As an exception to the definition of a
financial liability, an instrument that includes such an obligation is classified as an equity instrument if it has all
the following features:

(a)

It entitles the holder to a pro rata share of the entity’s net assets in the event of the entity’s liquidation. The
entity’s net assets are those assets that remain after deducting all other claims on its assets. A pro rata share
is determined by:

(i) dividing the entity’s net assets on liquidation into units of equal amount; and

(ii) multiplying that amount by the number of the units held by the financial instrument holder.

(b) The instrument is in the class of instruments that is subordinate to all other classes of instruments. To be in

such a class the instrument:

(i) has no priority over other claims to the assets of the entity on liquidation, and

L 17/28

EN

Official Journal of the European Union

22.1.2009

(ii) does not need to be converted into another instrument before it is in the class of instruments that is

subordinate to all other classes of instruments.

(c) All financial instruments in the class of instruments that is subordinate to all other classes of instruments
have identical features. For example, they must all be puttable, and the formula or other method used to
calculate the repurchase or redemption price is the same for all instruments in that class.

(d) Apart from the contractual obligation for the issuer to repurchase or redeem the instrument for cash or
another financial asset, the instrument does not include any contractual obligation to deliver cash or another
financial asset to another entity, or to exchange financial assets or financial liabilities with another entity
under conditions that are potentially unfavourable to the entity, and it is not a contract that will or may be
settled in the entity’s own equity instruments as set out in subparagraph (b) of the definition of a financial
liability.

(e) The total expected cash flows attributable to the instrument over the life of the instrument are based
substantially on the profit or loss, the change in the recognised net assets or the change in the fair value
of the recognised and unrecognised net assets of the entity over the life of the instrument (excluding any
effects of the instrument).

16B

For an instrument to be classified as an equity instrument, in addition to the instrument having all the above
features, the issuer must have no other financial instrument or contract that has:

(a)

total cash flows based substantially on the profit or loss, the change in the recognised net assets or the
change in the fair value of the recognised and unrecognised net assets of the entity (excluding any effects of
such instrument or contract) and

(b) the effect of substantially restricting or fixing the residual return to the puttable instrument holders.

For the purposes of applying this condition, the entity shall not consider non-financial contracts with a holder of
an instrument described in paragraph 16A that have contractual terms and conditions that are similar to the
contractual terms and conditions of an equivalent contract that might occur between a non-instrument holder
and the issuing entity. If the entity cannot determine that this condition is met, it shall not classify the puttable
instrument as an equity instrument.

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

16C

Some financial instruments include a contractual obligation for the issuing entity to deliver to another entity a
pro rata share of its net assets only on liquidation. The obligation arises because liquidation either is certain to
occur and outside the control of the entity (for example, a limited life entity) or is uncertain to occur but is at
the option of the instrument holder. As an exception to the definition of a financial liability, an instrument that
includes such an obligation is classified as an equity instrument if it has all the following features:

(a)

It entitles the holder to a pro rata share of the entity’s net assets in the event of the entity’s liquidation. The
entity’s net assets are those assets that remain after deducting all other claims on its assets. A pro rata share
is determined by:

(i) dividing the net assets of the entity on liquidation into units of equal amount; and

(ii) multiplying that amount by the number of the units held by the financial instrument holder.

(b) The instrument is in the class of instruments that is subordinate to all other classes of instruments. To be in

such a class the instrument:

(i) has no priority over other claims to the assets of the entity on liquidation, and

(ii) does not need to be converted into another instrument before it is in the class of instruments that is

subordinate to all other classes of instruments.

22.1.2009

EN

Official Journal of the European Union

L 17/29

(c) All financial instruments in the class of instruments that is subordinate to all other classes of instruments
must have an identical contractual obligation for the issuing entity to deliver a pro rata share of its net assets
on liquidation.

16D

For an instrument to be classified as an equity instrument, in addition to the instrument having all the above
features, the issuer must have no other financial instrument or contract that has:

(a)

total cash flows based substantially on the profit or loss, the change in the recognised net assets or the
change in the fair value of the recognised and unrecognised net assets of the entity (excluding any effects of
such instrument or contract) and

(b) the effect of substantially restricting or fixing the residual return to the instrument holders.

For the purposes of applying this condition, the entity shall not consider non-financial contracts with a holder of
an instrument described in paragraph 16C that have contractual terms and conditions that are similar to the
contractual terms and conditions of an equivalent contract that might occur between a non-instrument holder
and the issuing entity.
it shall not classify the
If the entity cannot determine that this condition is met,
instrument as an equity instrument.

Reclassification of puttable instruments and 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

16E

An entity shall classify a financial instrument as an equity instrument in accordance with paragraphs 16A and
16B or paragraphs 16C and 16D from the date when the instrument has all the features and meets the
conditions set out in those paragraphs. An entity shall reclassify a financial instrument from the date when
the instrument ceases to have all the features or meet all the conditions set out in those paragraphs. For example,
if an entity redeems all its issued non-puttable instruments and any puttable instruments that remain outstanding
have all the features and meet all the conditions in paragraphs 16A and 16B, the entity shall reclassify the
puttable instruments as equity instruments from the date when it redeems the non-puttable instruments.

16F

An entity shall account as follows for the reclassification of an instrument in accordance with paragraph 16E:

(a)

It shall reclassify an equity instrument as a financial liability from the date when the instrument ceases to
have all the features or meet the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D. The
financial liability shall be measured at the instrument’s fair value at the date of reclassification. The entity
shall recognise in equity any difference between the carrying value of the equity instrument and the fair value
of the financial liability at the date of reclassification.

(b) It shall reclassify a financial liability as equity from the date when the instrument has all the features and
meets the conditions set out in paragraphs 16A and 16B or paragraphs 16C and 16D. An equity instrument
shall be measured at the carrying value of the financial liability at the date of reclassification.

Paragraphs 17–19 are amended.

17

18

No contractual obligation to deliver cash or another financial asset (paragraph 16(a))

With the exception of the circumstances described in paragraphs 16A and 16B or paragraphs 16C and 16D, a
critical feature in differentiating a financial liability from an equity instrument is the existence of a contractual
obligation of one party to the financial instrument (the issuer) either to deliver cash or another financial asset to
liabilities with the holder under
the other party (the holder) or to exchange financial assets or financial
conditions that are potentially unfavourable to the issuer. …

instrument, rather than its legal form, governs its classification in the entity’s
The substance of a financial
statement of financial position. Substance and legal form are commonly consistent, but not always. Some
financial
instruments take the legal form of equity but are liabilities in substance and others may combine
features associated with equity instruments and features associated with financial liabilities. For example:

(a) …

L 17/30

EN

Official Journal of the European Union

22.1.2009

is a financial

(a puttable instrument)

(b) a financial instrument that gives the holder the right to put it back to the issuer for cash or another financial
asset
for those instruments classified as equity
liability, except
instruments in accordance with paragraphs 16A and 16B or paragraphs 16C and 16D. The financial
instrument is a financial
liability even when the amount of cash or other financial assets is determined
on the basis of an index or other item that has the potential to increase or decrease. The existence of an
option for the holder to put the instrument back to the issuer for cash or another financial asset means that
the puttable instrument meets the definition of a financial liability, except for those instruments classified as
equity instruments in accordance with paragraphs 16A and 16B or paragraphs 16C and 16D. For example,
open-ended mutual
trusts, partnerships and some co-operative entities may provide their
unitholders or members with a right to redeem their interests in the issuer at any time for cash, which
results in the unitholders’ or members’
liabilities, except for those
instruments classified as equity instruments in accordance with paragraphs 16A and 16B or paragraphs
16C and 16D. However, classification as a financial liability does not preclude the use of descriptors such as
‘net asset value attributable to unitholders’ and ‘change in net asset value attributable to unitholders’ in the
financial statements of an entity that has no contributed equity (such as some mutual funds and unit trusts,
see Illustrative Example 7) or the use of additional disclosure to show that total members’ interests comprise
items such as reserves that meet the definition of equity and puttable instruments that do not (see Illustrative
Example 8).

interests being classified as financial

funds, unit

19

If an entity does not have an unconditional right to avoid delivering cash or another financial asset to settle a
contractual obligation, the obligation meets the definition of a financial liability, except for those instruments
classified as equity instruments in accordance with paragraphs 16A and 16B or paragraphs 16C and 16D. For
example:

…

Paragraphs 22, 23 and 25 are amended. After paragraph 22, paragraph 22A is added.

22

22A

23

25

Settlement in the entity’s own equity instruments (paragraph 16(b))

Except as stated in paragraph 22A, a contract that will be settled by the entity (receiving or) delivering a fixed
number of its own equity instruments in exchange for a fixed amount of cash or another financial asset is an
equity instrument. For example, …

If the entity’s own equity instruments to be received, or delivered, by the entity upon settlement of a contract are
puttable financial instruments with all the features and meeting the conditions described in paragraphs 16A and
16B, or 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 with all of the features and meeting the conditions described in
paragraphs 16C and 16D, the contract is a financial asset or a financial liability. This includes a contract that will
be settled by the entity receiving or delivering a fixed number of such instruments in exchange for a fixed
amount of cash or another financial asset.

With the exception of the circumstances described in paragraphs 16A and 16B or paragraphs 16C and 16D, a
contract that contains an obligation for an entity to purchase its own equity instruments for cash or another
financial asset gives rise to a financial liability for the present value of the redemption amount (for example, for
the present value of the forward repurchase price, option exercise price or other redemption amount). This is the
case even if the contract itself is an equity instrument. One example …

Contingent settlement provisions

A financial instrument may require the entity to deliver cash or another financial asset, or otherwise to settle it in
such a way that it would be a financial liability, in the event of the occurrence or non-occurrence of uncertain
future events (or on the outcome of uncertain circumstances) that are beyond the control of both the issuer and
the holder of the instrument, such as a change in a stock market index, consumer price index, interest rate or
taxation requirements, or the issuer’s future revenues, net income or debt-to-equity ratio. The issuer of such an
instrument does not have the unconditional right to avoid delivering cash or another financial asset (or otherwise
to settle it in such a way that it would be a financial liability). Therefore, it is a financial liability of the issuer
unless:

(a)

the part of the contingent settlement provision that could require settlement in cash or another financial
asset (or otherwise in such a way that it would be a financial liability) is not genuine;

22.1.2009

EN

Official Journal of the European Union

L 17/31

(b) the issuer can be required to settle the obligation in cash or another financial asset (or otherwise to settle it
liability) only in the event of liquidation of the issuer; or

in such a way that it would be a financial

(c)

the instrument has all the features and meets the conditions in paragraphs 16A and 16B.

Before paragraph 96, the heading is amended. After paragraph 96, paragraphs 96A–96C are added. After paragraph 97B,
paragraph 97C is added.

EFFECTIVE DATE AND TRANSITION

96A

Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1), issued in
February 2008, required financial instruments that contain all the features and meet the conditions in paragraphs
16A and 16B or paragraphs 16C and 16D to be classified as an equity instrument, amended paragraphs 11, 16,
17–19, 22, 23, 25, AG13, AG14 and AG27, and inserted paragraphs 16A–16F, 22A, 96B, 96C, 97C,
AG14A–AG14J and AG29A. An entity shall apply those amendments for annual periods beginning on or
after 1 January 2009. Earlier application is permitted. If an entity applies the changes for an earlier period, it
shall disclose that fact and apply the related amendments to IAS 1, IAS 39, IFRS 7 and IFRIC 2 at the same time.

96B

Puttable Financial Instruments and Obligations Arising on Liquidation introduced a limited scope exception; therefore,
an entity shall not apply the exception by analogy.

96C

97C

The classification of
instrument under IAS 1,
instrument under other guidance, for example IFRS 2 Share-based Payment.

instruments under this exception shall be restricted to the accounting for such an
IAS 32, IAS 39 and IFRS 7. The instrument shall not be considered an equity

When applying the amendments described in paragraph 96A, an entity is required to split a compound financial
instrument with an obligation to deliver to another party a pro rata share of the net assets of the entity only on
liquidation into separate liability and equity components. If the liability component is no longer outstanding, a
retrospective application of those amendments to IAS 32 would involve separating two components of equity.
The first component would be in retained earnings and represent the cumulative interest accreted on the liability
component. The other component would represent the original equity component. Therefore, an entity need not
separate these two components if the liability component is no longer outstanding at the date of application of
the amendments.

In the Appendix Application Guidance, paragraphs AG13 and AG14 are amended. After paragraph AG14, a heading, paragraphs
AG14A–AG14D, another heading, paragraph AG14E, another heading, paragraphs AG14F–AG14I, another heading and
paragraph AG14J are added.

Equity instruments

AG13

Examples of equity instruments include non-puttable ordinary shares, some puttable instruments (see paragraphs
16A and 16B), some 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 (see paragraphs 16C and 16D), some types of preference
shares (see paragraphs AG25 and AG26), and warrants or written call options that allow the holder to subscribe
for or purchase a fixed number of non-puttable ordinary shares in the issuing entity in exchange for a fixed
amount of cash or another financial asset. An entity’s obligation to issue or purchase a fixed number of its own
equity instruments in exchange for a fixed amount of cash or another financial asset is an equity instrument of
the entity (except as stated in paragraph 22A). However, if such a contract contains an obligation for the entity
to pay cash or another financial asset (other than a contract classified as equity in accordance with paragraphs
16A and 16B or paragraphs 16C and 16D), it also gives rise to a liability for the present value of the redemption
amount (see paragraph AG27(a)). An issuer of non-puttable ordinary shares assumes a liability when it formally
acts to make a distribution and becomes legally obliged to the shareholders to do so. This may be the case
following the declaration of a dividend or when the entity is being wound up and any assets remaining after the
satisfaction of liabilities become distributable to shareholders.

AG14 A purchased call option or other similar contract acquired by an entity that gives it the right to reacquire a fixed
number of its own equity instruments in exchange for delivering a fixed amount of cash or another financial
asset is not a financial asset of the entity (except as stated in paragraph 22A). Instead, any consideration paid for
such a contract is deducted from equity.

L 17/32

EN

Official Journal of the European Union

22.1.2009

The class of instruments that is subordinate to all other classes (paragraphs 16A(b) and 16C(b))

AG14A One of the features of paragraphs 16A and 16C is that the financial instrument is in the class of instruments

that is subordinate to all other classes.

AG14B When determining whether an instrument is in the subordinate class, an entity evaluates the instrument’s claim
on liquidation as if it were to liquidate on the date when it classifies the instrument. An entity shall reassess the
classification if there is a change in relevant circumstances. For example, if the entity issues or redeems another
financial instrument, this may affect whether the instrument in question is in the class of instruments that is
subordinate to all other classes.

AG14C An instrument that has a preferential right on liquidation of the entity is not an instrument with an entitlement
to a pro rata share of the net assets of the entity. For example, an instrument has a preferential right on
liquidation if it entitles the holder to a fixed dividend on liquidation, in addition to a share of the entity’s net
assets, when other instruments in the subordinate class with a right to a pro rata share of the net assets of the
entity do not have the same right on liquidation.

AG14D If an entity has only one class of financial instruments, that class shall be treated as if it were subordinate to all

other classes.

Total expected cash flows attributable to the instrument over the life of the instrument (paragraph 16A(e))

AG14E The total expected cash flows of the instrument over the life of the instrument must be substantially based on
the profit or loss, change in the recognised net assets or fair value of the recognised and unrecognised net assets
of the entity over the life of the instrument. Profit or loss and the change in the recognised net assets shall be
measured in accordance with relevant IFRSs.

Transactions entered into by an instrument holder other than as owner of the entity (paragraphs 16A and 16C)

AG14F The holder of a puttable financial instrument or an instrument that imposes on the entity an obligation to
deliver to another party a pro rata share of the net assets of the entity only on liquidation may enter into
transactions with the entity in a role other than that of an owner. For example, an instrument holder may also
be an employee of the entity. Only the cash flows and the contractual terms and conditions of the instrument
that relate to the instrument holder as an owner of the entity shall be considered when assessing whether the
instrument should be classified as equity under paragraph 16A or paragraph 16C.

AG14G An example is a limited partnership that has limited and general partners. Some general partners may provide a
guarantee to the entity and may be remunerated for providing that guarantee. In such situations, the guarantee
and the associated cash flows relate to the instrument holders in their role as guarantors and not in their roles as
owners of the entity. Therefore, such a guarantee and the associated cash flows would not result in the general
partners being considered subordinate to the limited partners, and would be disregarded when assessing whether
the contractual terms of the limited partnership instruments and the general partnership instruments are
identical.

AG14H Another example is a profit or loss sharing arrangement that allocates profit or loss to the instrument holders on
the basis of services rendered or business generated during the current and previous years. Such arrangements are
transactions with instrument holders in their role as non-owners and should not be considered when assessing
the features listed in paragraph 16A or paragraph 16C. However, profit or loss sharing arrangements that
allocate profit or loss to instrument holders based on the nominal amount of their instruments relative to
others in the class represent transactions with the instrument holders in their roles as owners and should be
considered when assessing the features listed in paragraph 16A or paragraph 16C.

AG14I The cash flows and contractual terms and conditions of a transaction between the instrument holder (in the role
as a non-owner) and the issuing entity must be similar to an equivalent transaction that might occur between a
non-instrument holder and the issuing entity.

No other financial instrument or contract with total cash flows that substantially fixes or restricts the residual return to the
instrument holder (paragraphs 16B and 16D)

AG14J A condition for classifying as equity a financial instrument that otherwise meets the criteria in paragraph 16A or
paragraph 16C is that the entity has no other financial instrument or contract that has (a) total cash flows based
substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the
recognised and unrecognised net assets of the entity and (b) the effect of substantially restricting or fixing the
residual return. The following instruments, when entered into on normal commercial terms with unrelated
parties, are unlikely to prevent instruments that otherwise meet the criteria in paragraph 16A or paragraph
16C from being classified as equity:

22.1.2009

EN

Official Journal of the European Union

L 17/33

(a)

instruments with total cash flows substantially based on specific assets of the entity.

(b) instruments with total cash flows based on a percentage of revenue.

(c) contracts designed to reward individual employees for services rendered to the entity.

(d) contracts requiring the payment of an insignificant percentage of profit for services rendered or goods

provided.

Paragraph AG27 is amended and after paragraph AG29, paragraph AG29A is added.

AG27

The following examples illustrate how to classify different
instruments:

types of contracts on an entity’s own equity

(a) A contract that will be settled by the entity receiving or delivering a fixed number of its own shares for no
future consideration, or exchanging a fixed number of its own shares for a fixed amount of cash or another
financial asset, is an equity instrument (except as stated in paragraph 22A). Accordingly, any consideration
received or paid for such a contract is added directly to or deducted directly from equity. One example is an
issued share option that gives the counterparty a right to buy a fixed number of the entity’s shares for a fixed
amount of cash. However, if the contract requires the entity to purchase (redeem) its own shares for cash or
another financial asset at a fixed or determinable date or on demand, the entity also recognises a financial
liability for the present value of the redemption amount (with the exception of instruments that have all the
features and meet the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D). One example is
an entity’s obligation under a forward contract to repurchase a fixed number of its own shares for a fixed
amount of cash.

(b) An entity’s obligation to purchase its own shares for cash gives rise to a financial liability for the present
value of the redemption amount even if the number of shares that the entity is obliged to repurchase is not
fixed or if the obligation is conditional on the counterparty exercising a right to redeem (except as stated in
paragraphs 16A and 16B or paragraphs 16C and 16D). One example of a conditional obligation is an issued
option that requires the entity to repurchase its own shares for cash if the counterparty exercises the option.

(c) A contract that will be settled in cash or another financial asset is a financial asset or financial liability even if
the amount of cash or another financial asset that will be received or delivered is based on changes in the
market price of the entity’s own equity (except as stated in paragraphs 16A and 16B or paragraphs 16C and
16D). One example is a net cash-settled share option.

(d) …

AG29A Some types of instruments that impose a contractual obligation on the entity are classified as equity instruments
in accordance with paragraphs 16A and 16B or paragraphs 16C and 16D. Classification in accordance with
those paragraphs is an exception to the principles otherwise applied in this Standard to the classification of an
instrument. This exception is not extended to the classification of non-controlling interests in the consolidated
financial statements. Therefore, instruments classified as equity instruments in accordance with either paragraphs
16A and 16B or paragraphs 16C and 16D in the separate or individual financial statements that are non-
controlling interests are classified as liabilities in the consolidated financial statements of the group.

Amendments to IAS 1

Presentation of Financial Statements (as revised in 2007)

DEFINITIONS

After paragraph 8, paragraph 8A is added.

8A

The following terms are described in IAS 32 Financial Instruments: Presentation and are used in this Standard with
the meaning specified in IAS 32:

(a) puttable financial instrument classified as an equity instrument (described in paragraphs 16A and 16B of

IAS 32)

L 17/34

EN

Official Journal of the European Union

22.1.2009

(b) an instrument that imposes on the entity an obligation to deliver to another party a pro rata share of the net
assets of the entity only on liquidation and is classified as an equity instrument (described in paragraphs 16C
and 16D of IAS 32).

Information to be presented either in the statement of financial position or in the notes

After paragraph 80, paragraph 80A is added.

80A

If an entity has reclassified

(a) a puttable financial instrument classified as an equity instrument, or

(b) an instrument that imposes on the entity an obligation to deliver to another party a pro rata share of the net

assets of the entity only on liquidation and is classified as an equity instrument

between financial liabilities and equity, it shall disclose the amount reclassified into and out of each category
(financial liabilities or equity), and the timing and reason for that reclassification.

After paragraph 136, a heading and paragraph 136A are inserted. Paragraph 138 is amended.

Puttable financial instruments classified as equity

136A For puttable financial instruments classified as equity instruments, an entity shall disclose (to the extent not

disclosed elsewhere):

(a) summary quantitative data about the amount classified as equity;

(b) its objectives, policies and processes for managing its obligation to repurchase or redeem the instruments
when required to do so by the instrument holders, including any changes from the previous period;

(c)

the expected cash outflow on redemption or repurchase of that class of financial instruments; and

(d) information about how the expected cash outflow on redemption or repurchase was determined.

Other disclosures

138

An entity shall disclose the following, if not disclosed elsewhere in information published with the financial
statements:

(a)

the domicile and legal form of the entity, its country of incorporation and the address of its registered office
(or principal place of business, if different from the registered office);

(b) a description of the nature of the entity’s operations and its principal activities;

(c)

the name of the parent and the ultimate parent of the group; and

(d) if it is a limited life entity, information regarding the length of its life.

After paragraph 139A, paragraph 139B is added.

TRANSITION AND EFFECTIVE DATE

139B

Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1), issued in
February 2008, amended paragraph 138 and inserted paragraphs 8A, 80A and 136A. An entity shall apply
those amendments for annual periods beginning on or after 1 January 2009. Earlier application is permitted. If
an entity applies the amendments for an earlier period,
it shall disclose that fact and apply the related
amendments to IAS 32, IAS 39, IFRS 7 and IFRIC 2 Members’ Shares in Co-operative Entities and Similar Instruments
at the same time.

22.1.2009

EN

Official Journal of the European Union

L 17/35

Amendments to IFRS 7, IAS 39 and IFRIC 2

Entities shall apply the following amendments to IFRS 7, IAS 39 and IFRIC 2 when they apply the related amendments to
IAS 32 and IAS 1.

IFRS 7

Financial Instruments: Disclosures

Paragraph 3 is amended.

SCOPE

3

This IFRS shall be applied by all entities to all types of financial instruments, except:

(a) …

(f)

instruments that are required to be classified as equity instruments in accordance with paragraphs 16A and
16B or paragraphs 16C and 16D of IAS 32.

After paragraph 44B, paragraph 44C is added.

EFFECTIVE DATE AND TRANSITION

44C

An entity shall apply the amendment in paragraph 3 for annual periods beginning on or after 1 January 2009. If
an entity applies Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and
IAS 1), issued in February 2008, for an earlier period, the amendment in paragraph 3 shall be applied for that
earlier period.

IAS 39

Financial Instruments: Recognition and Measurement

Paragraph 2(d) is amended.

SCOPE

2

This Standard shall be applied by all entities to all types of financial instruments except:

(d) financial

instruments issued by the entity that meet the definition of an equity instrument in IAS 32
(including options and warrants) or that are required to be classified as an equity instrument in accordance
with paragraphs 16A and 16B or paragraphs 16C and 16D of IAS 32. However, the holder of such equity
instruments shall apply this Standard to those instruments, unless they meet the exception in (a) above.

After paragraph 103E, paragraph 103F is added.

EFFECTIVE DATE AND TRANSITION

103F

An entity shall apply the amendment in paragraph 2 for annual periods beginning on or after 1 January 2009. If
an entity applies Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and
IAS 1), issued in February 2008, for an earlier period, the amendment in paragraph 2 shall be applied for that
earlier period.

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

In the References section, the footnote is amended.

(*)

In August 2005, IAS 32 was amended as IAS 32 Financial Instruments: Presentation. In February 2008 the
IASB amended IAS 32 by requiring instruments to be classified as equity if those instruments have all the
features and meet the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D of IAS 32.

Paragraphs 6 and 9 are amended and paragraph 14A is added.

CONSENSUS

6

Members’ shares that would be classified as equity if the members did not have a right to request redemption are
equity if either of the conditions described in paragraphs 7 and 8 is present or the members’ shares have all the
features and meet the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D of IAS 32. Demand
deposits, including current accounts, deposit accounts and similar contracts that arise when members act as
customers are financial liabilities of the entity.

L 17/36

EN

Official Journal of the European Union

22.1.2009

9

in

be

absolute,

unconditional

prohibition may

pro-
An
in that it prohibits redemption of members’ shares if
hibited. An unconditional prohibition may be partial,
redemption would cause the number of members’ shares or amount of paid-in capital from members’ shares to
fall below a specified level. Members’ shares in excess of the prohibition against redemption are liabilities, unless
the entity has the unconditional right to refuse redemption as described in paragraph 7 or the members’ shares
have all the features and meet the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D of IAS
32. In some cases, the number of shares or the amount of paid-in capital subject to a redemption prohibition
may change from time to time. Such a change in the redemption prohibition leads to a transfer between
financial liabilities and equity.

redemptions

that

are

all

EFFECTIVE DATE

14A

An entity shall apply the amendments in paragraphs 6, 9, A1 and A12 for annual periods beginning on or after
1 January 2009. If an entity applies Puttable Financial Instruments and Obligations Arising on Liquidation
(Amendments to IAS 32 and IAS 1),
issued in February 2008, for an earlier period, the amendments in
paragraphs 6, 9, A1 and A12 shall be applied for that earlier period.

In the Appendix (Examples of application of the consensus), paragraphs A1 and A12 are amended.

EXAMPLES OF APPLICATION OF THE CONSENSUS

A1

This appendix sets out seven examples of the application of the IFRIC consensus. The examples do not constitute
an exhaustive list; other fact patterns are possible. Each example assumes that there are no conditions other than
those set out in the facts of the example that would require the financial instrument to be classified as a financial
liability and that the financial instrument does not have all the features or does not meet the conditions in
paragraphs 16A and 16B or paragraphs 16C and 16D of IAS 32.

Example 4

Classification

A12

In this case, CU750,000 would be classified as equity and CU150,000 would be classified as financial liabilities.
In addition to the paragraphs already cited, paragraph 18(b) of IAS 32 states in part:

… a financial instrument that gives the holder the right to put it back to the issuer for cash or another financial
asset (a puttable instrument) is a financial liability, except for those instruments classified as equity instruments
in accordance with paragraphs 16A and 16B or paragraphs 16C and 16D. The financial instrument is a financial
liability even when the amount of cash or other financial assets is determined on the basis of an index or other
item that has the potential to increase or decrease. The existence of an option for the holder to put the
instrument back to the issuer for cash or another financial asset means that the puttable instrument meets
the definition of a financial liability, except for those instruments classified as equity instruments in accordance
with paragraphs 16A and 16B or paragraphs 16C a