In November 2023, the International Accounting Standards Board (IASB) published the Exposure Draft Financial Instruments with Characteristics of Equity. The IASB proposed amendments to IAS 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures, and IAS 1 Presentation of Financial Statements* to address the existing challenges in companies’ financial reporting of financial instruments with characteristics of equity.
The proposals include:
The comment period closed on 29 March 2024. The IASB is considering stakeholder feedback and redeliberating the proposals.
* In April 2024 the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1. IFRS 18 has an effective date of 1 January 2027.
The IASB met on 25 September 2025 to continue redeliberating the proposed requirements in the Exposure Draft Financial Instruments with Characteristics of Equity. The IASB discussed proposed amendments to IAS 32 Financial Instruments: Presentation related to two classification topics:
The IASB tentatively decided to proceed with the proposed requirements on the reclassification of financial liabilities and equity instruments set out in the Exposure Draft, subject to some targeted refinements:
Nine of 12 IASB members agreed with this decision.
The IASB discussed a summary of the feedback on the proposed requirements on shareholder discretion.
The IASB tentatively decided to proceed with the proposed factors-based approach set out in the Exposure Draft for assessing at initial recognition whether shareholder decisions are treated as entity decisions, subject to minor drafting improvements.
The IASB also tentatively decided to clarify the principles underlying the proposed factors-based approach, namely, that an entity applies judgement when considering:
All 12 IASB members agreed with this decision.
Final Amendments
FASB–IASB education meeting October 2025