Paragraph 16A(d) of IAS 32 describes a condition for a puttable instrument to be classified as equity as an exception. Specifically, the paragraph states that a puttable instrument should not include any contractual obligation to deliver cash or another financial asset to another entity to qualify for an exception.
The request proposes that paragraph 16A(d) of IAS 32 should be clarified to permit a putable instrument to be classified as equity if the put includes a contractual obligation to deliver cash or another financial asset to all existing holders of the instrument on a pro rata basis. The request also identifies that such an obligation is often included within the terms of income trust units that are redeemable on demand by the holder.
In its May 2012 meeting, the Interpretations Committee decided not to propose an amendment to address the issue because (1) the IASB clearly identified unique circumstances that justified the Classification of Rights Issues (Amendment of IAS 32), (2) an amendment could be an additional exception to the definition of a financial liability and this would be outside the scope of Annual Improvements and (3) it would only be effective for annual periods beginning on or after 1 January 2012 and this is expected to be after the IASB have issued a final Financial instruments with Characteristics of Equity standard.