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IFRS for SMEs Q&A 1-3 Interpretation of 'traded in a public market'


The IFRS Foundation's SME Implementation Group, which assists the IASB in supporting the implementation of the IFRS for SMEs, published on 14 April 2011 the draft Q&A Interpretation of 'traded in a public market'.

The draft Q&A considers how the term, 'traded in a public market', should be interpreted in the definition of public accountability. More specifically, the question included in the draft Q&A asks how broadly 'traded in a public market' should be interpreted and whether it includes, in Europe, only those markets defined as 'regulated market' for the purpose of EU accounting regulations or whether it also includes other markets such as growth share markets and over-the-counter markets. It also asks what happens if no trading occurs in the market. The answer provided in the draft Q&A is that a 'public market' is not restricted to recognised and/or regulated stock exchanges, but includes all markets that bring together entities and investors. However, publicly advertising shares for sale by the shareholder, on a website or in a newspaper, does not in itself create an over-the-counter public market. For a market to be public, it must be accessible by a broad group of outsiders. Also, if no trading has occurred or is expected to occur for the foreseeable future, instruments cannot be considered to have been 'traded'. However, if trading only occurs a few times a year, this would constitute 'trading'.

On 21 April 2011, EFRAG issued its draft comment letter in response to the draft Q&A, and on 15 June 2011 it submitted its comment letter to the SMEIG.
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