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Financial Instruments with Characteristics of Equity (FICE) - 2015 IASB Research Project


The IASB's research project on Financial Instruments with Characteristics of Equity (FICE) is a new round of a long debate on how to distinguish liabilities from equity instruments.  The IASB has finalised its discussions on this project and issued a Discussion Paper on 28 June 2018. The Discussion Paper is open for comment until 7 January 2019.

​EFRAG has published its draft comment letter in response to the IASB's Discussion Paper 2018/1 Financial Instruments with Characteristics of Equity (the 'DP') on 28 August 2018.  EFRAG considers that the application issues that arise with IAS 32 are pervasive enough to require standard-setting activity and welcomes the IASB’s efforts to respond to challenges in distinguishing financial liabilities from equity instruments.

EFRAG also welcomes the fact that the IASB’s preferred approach considers a number of EFRAG’s past requests. However, EFRAG has reservations over some of the proposals in the DP, including:

  • the balance of costs and benefits of the information provided by attributing comprehensive income to subclasses of equity;

  • separate presentation in the statement of financial position and statement of financial performance for partly independent derivatives;

  • accounting for standalone derivatives to extinguish an equity instrument on a bases consistent with accounting for a compound instrument;

  • the proposed removal of the foreign currency rights issue exemption; and

  • classification changes for financial instruments that, to EFRAG’s knowledge, do not raise concerns in practice today.

More generally, EFRAG notes that the approach in the DP introduces completely new terminology.  In EFRAG’s view a careful weighing of the potential benefits of a better articulation of the principles in IAS 32 against the potential risks of unnecessary disruption and unintended consequences is essential.

Finally, EFRAG considers that the IASB should further analyse the possibility of accounting for all standalone and embedded derivatives as derivative assets and liabilities under the scope of IFRS 9 Financial Instruments.

EFRAG is currently organising a number of outreach activities and surveys (here) to collect the views of European stakeholders.

To help European stakeholders to better understand the IASB discussion on FICE and EFRAG initial views on them, EFRAG has launched a video (here) and an webinar (here).

EFRAG has issued two bulletins (here) to help constituents better understand the IASB’s Discussion Paper Financial Instruments with Characteristics of Equity and participate in the debate on it.

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Project news

  • 22/11/2018 - Reminder: Debt or equity? Impact assessment surveys

    EFRAG has extended the deadline until 30 November 2018 for its user and preparer surveys seeking views on the likely impact of the proposals of the IASB Discussion Paper Financial Instruments with Characteristics of Equity on the distinction between debt and equity.

  • 24/10/2018 - Debt or Equity? - Impact assessment surveys

    ​EFRAG seeks feedback from preparers and users of financial statements to assess the impact of the IASB’s Discussion Paper Financial Instruments with Characteristics of Equity on distinction between debt and equity.
    EFRAG invites you to complete the appropriate survey by 26 November 2018. Your participation will help enrich the quality and representativeness of the overall findings.

  • 26/09/2018 - FICE consultation update

    ​Get up to speed with EFRAG's draft comment letter on FICE in the latest EFRAG video.