The Interpretations Committee received a request to clarify how an entity should account for a price difference between the institutional offer price and the retail offer price for shares issued in an initial public offering (IPO).
The submitter states that the final retail offer price could be different from the institutional offer price because of:
- an intentional difference arising from a discount given to retail investors as indicated in the prospectus; or
- an unintentional difference arising from the book-building process.
The submitter asked the Interpretations Committee to clarify whether the difference between the institutional offer price and the retail offer price for shares issued in an IPO should be analysed within the scope of IFRS 2 Share-based Payment.
The Interpretations Committee discussed the views presented by the staff to account for the price difference.
The Interpretations Committee tentatively observed that in the particular fact pattern submitted, the entity is not obtaining goods or services from the retail investor. Consequently, the guidance in IFRS 2 would not apply to account for the price difference between shares issued to retail investors and the shares issued to institutional investors. Instead, it tentatively observed that the price difference would be accounted for in accordance with IAS 32 Financial Instruments: Presentation. In this respect it observed that for the shares issued to retail investors and for the shares issued to institutional investors, the amount recorded in equity should be the proceeds received less any transaction costs of the equity transaction in accordance with paragraph 35 of IAS 32.
The Interpretations Committee tentatively decided that the agenda criteria were not met for this submission because the issue does not appear to be widespread. Consequently, it asked the staff to prepare a tentative agenda decision for discussion at its November 2013 meeting.
Read the September IFRIC Update.