FRSC Adopts Amendment on Classification of Rights Issue (05-10)

May 2010


The Financial Reporting Standards Council (FRSC) approved in its meeting in March 2010 the adoption of Amendment to IAS 32: Classification of Rights Issues, issued by the International Accounting Standards Board (IASB), as an Amendment to PAS 32.

This amendment to IAS 32, Financial Instruments: Presentation, addresses the accounting for rights issues (rights, options or warrants) that are denominated in a currency other than the functional currency of the issuer. Previously such rights issues were accounted for as derivative liabilities. However, the amendment issued today requires that, provided certain conditions are met, such rights issues are classified as equity regardless of the currency in which the exercise price is denominated.

The amendment is effective for annual periods beginning on or after February 1, 2010, with earlier application is permitted.

The FRSC has submitted the Amendment to PAS 32 to the Board of Accountancy for approval.