At its meeting in July 2007 the IFRIC concluded that the following cash-settled share-based payment arrangements should be within the scope of IFRS 2 Share-based Payment:
- Arrangement 1 – The employees will receive cash payments that are linked to the price of the equity instruments of the entity; and
- Arrangement 2 – The employees will receive cash payments that are linked to the price of the equity instruments of the parent of the entity.
In both cases, the parent (not the entity that receives services from the employees) is obliged to make the required cash payments to the employees.
The IFRIC also concluded that the entity should measure services from its employees in accordance with the requirements in IFRS 2 applicable to cash-settled share-based payment transactions.
At this meeting, the IFRIC decided to amend IFRIC 11 IFRS 2—Group and Treasury Share Transactions to reflect these tentative decisions. In addition, the IFRIC decided to recommend that the Board amend IFRS 2 to clarify its scope, particularly paragraph 3 of IFRS 2.
The IFRIC considered the staff’s proposed amendments to IFRIC 11. The IFRIC agreed with the proposed amendments, subject to some drafting changes. The draft amendments do not change the existing requirements in IFRIC 11. Instead, they add an issue to the Interpretation to specify how the arrangements described above should be accounted for in the financial statements of the entity that receives services from the employees.
As the next steps in this project, the IFRIC asked the staff to ask the Board:
- whether it would object to the draft amendments to IFRIC 11; and
- to approve draft amendments to IFRS 2 to be exposed for comment along with the proposed changes to IFRIC 11 to clarify the scope of IFRS 2 with respect to intragroup arrangements.