Financial Instruments with Characteristics of Equity

The IASB met on 22 September 2026 to continue redeliberating the proposed requirements in the Exposure Draft Financial Instruments with Characteristics of Equity.

The IASB discussed the proposed amendments to IAS 32 Financial Instruments: Presentation and IFRS 18 Presentation and Disclosure in Financial Statements related to the classification and presentation of financial instruments containing obligations to purchase own equity instruments. Specifically, the IASB discussed:

1. the debit entry on initial recognition of the financial liability (Agenda Paper 5A);
2. the recognition of gains or losses on remeasurement of the financial liability (Agenda Paper 5B);
3. the measurement of the financial liability (Agenda Paper 5C); and
4. other matters (Agenda Paper 5D).

Obligations to purchase own equity instruments—Debit entry on initial recognition (Agenda Paper 5A)

The IASB tentatively decided to proceed with the proposed requirements related to the debit entry on initial recognition of the financial liability, subject to some drafting improvements and targeted refinements. These refinements would clarify that:

1. an entity assesses whether an obligation issued over non-controlling interest currently gives the entity access to the returns associated with an ownership interest in accordance with the requirements in IFRS 10 Consolidated Financial Statements; and
2. an entity whose obligation over non-controlling interest does not currently give it access to the returns associated with an ownership interest:
   1. deducts the debit amount from non-controlling interest on initial recognition but does not derecognise non-controlling interest; and
   2. presents the debit amount as a separate line item, deducted from a gross line item for non-controlling interest in the statement of financial position, unless separate presentation is unnecessary for that statement to provide a useful structured summary as described in IFRS 18.

Nine of 12 IASB members agreed with these decisions.

Obligations to purchase own equity instruments—Remeasurement gains or losses (Agenda Paper 5B)

The IASB tentatively decided to proceed, subject to minor drafting improvements, with the proposed clarification that an entity would recognise in profit or loss any gains or losses on remeasurement of the financial liability.

All 12 IASB members agreed with this decision.

Obligations to purchase own equity instruments—Measurement of the financial liability (Agenda Paper 5C)

The IASB discussed:

1. feedback on the proposed requirements related to the measurement of the financial liability;
2. an analysis of this feedback; and
3. potential changes to the proposed requirements in response to the feedback.

The IASB was not asked to make any decisions.

Obligations to purchase own equity instruments—Other matters (Agenda Paper 5D)

The IASB tentatively decided to proceed, subject to drafting improvements, with the proposed requirements related to:

1. the instruments to which paragraph 23 of IAS 32 applies; and
2. gross versus net settlement.

All 12 IASB members agreed with these decisions.

The IASB tentatively decided to proceed with the proposed requirements related to the expiry of written put options, subject to drafting improvements and a targeted refinement. The targeted refinement would clarify that on expiry of the put option on non-controlling interest, an entity recognises in profit or loss the difference between:

1. the carrying amount of the financial liability; and
2. the initial amount by which non-controlling interest was reduced.

Eleven of 12 IASB members agreed with this decision.