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IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments
References
IAS 32 Fi nancial Instruments: Presentati on
History
IFRIC D8 Members' Shares i n Co-operative Enti ti es was issued 30 June 2004
Comment deadline 13 September 2004
Final Interpretation 2 issued 25 November 2004
Effective for annual periods beginning on or after 1 January 2005
Click for Press Release (PDF 23k).
SUMMARY OF IFRIC 2
Members' shares in co-operative entities have some characteristics of equity. They also
give the holder the right to request redemption for cash, although that right may be
subject to certain limitaitons. IFRIC 2 gives guidance on how those redemption terms
should be evaluated in determining whether the shares should be classified as financial
liabilities or as equity. Under IFRIC 2, shares for which the member has the right to
request redemption are normally liabilities. However, they are equity if:
the entity has an unconditional right to refuse redemption, or
local law, regulation, or the entity's governing charter imposes prohibitions on
redemption. But the mere existence of law, regulation, or charter provisions that
would prohibit redemption only if conditions (such as liquidity constraints) are met, or
are not met, does not result in members' shares being equity.
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