In May 2010, the IFRS Interpretations Committee ('the Interpretations Committee') received a request for guidance on how an entity should account for changes in the financial liability for a put option that has been written over shares held by a non-controlling interest ('NCI Put') in the consolidated financial statements of the parent entity.  

In September 2010, the Committee tentatively decided not to add this issue to its agenda. The Interpretations Committee observed that IAS 32 Financial Instruments: Presentations and IAS 39 Financial Instruments: Recognition and Measurement should apply with the effect that changes in NCI Puts should be recognised in profit or loss. The Interpretations Committee also recommended to the IASB that the additional accounting concerns in relation to the NCI put should be addressed as part of the IASB’s Financial Instruments with Characteristics of Equity project.

EFRAG addresses wordings for rejection published by the Interpretations Committee by exception, i.e. when European constituents express concern that they are expected to have a significant and undesirable effect in practice and EFRAG would share that concern after proper assessment of the wording for rejections. Such circumstances have just arisen with the Interpretations Committee issuing its tentative wording for rejection on NCI puts. In summary EFRAG’s comment letter states that in EFRAG’s view it is inappropriate to include interpretations with potentially widespread consequences in the wording for rejection on complex, long-running issues. EFRAG also believes that the wording for rejection does not address in a balanced manner the issue raised (i.e. the perceived conflict between IAS 27 and IAS 32/IAS 39) and hence the Interpretations Committee should redraft its wording for rejection so that it no longer refers to IAS 32/IAS 39.  

Press release