Explanatory Statement

Accounting Standard AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues

October 2009

EXPLANATORY STATEMENT

Standard Amended by AASB 2009-10

This Standard makes amendments to Australian Accounting Standard AASB 132 Financial Instruments: Presentation.

These amendments arise from the issuance of Classification of Rights Issues (Amendment to IAS 32) by the International Accounting Standards Board in October 2009.

Main Features of this Standard

Application Date

This Standard is applicable to annual reporting periods beginning on or after 1 February 2010.  Early adoption is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 February 2010.

Main Requirements

The amendments clarify that rights, options or warrants to acquire a fixed number of an entity's own equity instruments for a fixed amount in any currency are equity instruments if the entity offers the rights, options or warrants pro rata to all existing owners of the same class of its own non-derivative equity instruments.

Consultation Prior to Issuing AASB 2009-10

The AASB issued Exposure Draft ED 186 Classification of Rights Issues (proposed amendment to IAS 32) in August 2009.  ED 186 reproduced the proposals included in the IASB’s Exposure Draft Classification of Rights Issues (Amendment to IAS 32) (August 2009) without amendment. 

The AASB received three submissions from Australian constituents on ED 186.  Submissions received were generally supportive.

A Regulation Impact Statement has not been prepared in connection with the issue of AASB 2009-10 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.