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EFRAG has finalised its due process and submitted to the IASB its comment letter on the Discussion Paper “Financial Instruments with Characteristics of Equity'
EFRAG does not, however, consider the proposals developed in the Paper suitable for substituting existing IFRS requirements in this area and recommends that in the future a careful consideration is given to the purpose of distinguishing between equity and liability.
EFRAG also notes that most of the issues need to be resolved at the conceptual level within the scope of the Framework. The new standard on the classification of financial instruments as financial liabilities and equity could be then almost application guidance of those generally applicable definitions.
Finally, EFRAG considers that it is essential that whichever approach is eventually chosen it works for both separate financial statements and consolidated financial statements without the need for additional, arbitrary rules.