21-8-2009 | EFRAG's Draft Comment Letter on Classification of Rights Issues

EFRAG has issued its draft comment letter on the IASB's Exposure Draft 'Classification of Rights Issues (proposed amendment to IAS 32)'. This letter can be downloaded here. Comments are invited by 31 August 2009.
	EFRAG broadly agrees with the proposals in the exposure draft.  We consider that foreign currency rights issues are in substance equity and therefore support the IASB’s decision to amend IAS 32 Financial Instruments: Presentation urgently.  We do however have concerns about some aspects of the proposals, in particular: ·         We do not find the IASB’s arguments in the Basis for Conclusions comprehensive and consider that they could more clearly articulate the reasoning behind the proposals and their relationship to earlier agenda decisions.  ·         We consider that the proposals should be more clearly articulated as an exception to the current equity/liability model in IAS 32. ·         In order to minimise the amendments being susceptible to structuring risk we believe the IASB should provide further guidance on the nature of rights issues.
Document : EFRAG Draft Comment Letter on IASB ED Classification of Rights Issues.pdf
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