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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.

IASB® Update July 2025

The IASB met on 24 July 2025 to continue redeliberating the Exposure Draft Financial Instruments with Characteristics of Equity. The IASB discussed:

  • feedback on the proposed requirements related to the effects of relevant laws or regulations and an analysis of this feedback (Agenda Paper 5A); and
  • feedback on the proposed requirements related to reclassification of financial liabilities and equity instruments (Agenda Paper 5B).

Detailed feedback and staff analysis—Effects of relevant laws or regulations (Agenda Paper 5A)

The IASB tentatively decided to withdraw the requirements proposed in the Exposure Draft related to the effects of relevant laws or regulations on the classification of financial instruments.

All 13 IASB members agreed with this decision.

Detailed feedback—Reclassification of financial liabilities and equity instruments (Agenda Paper 5B)

The IASB discussed a summary of the feedback on the requirements proposed in the Exposure Draft related to reclassification of financial liabilities and equity instruments.

The IASB was not asked to make any decisions.

Next milestone

Final Amendments