IFRS Foundation considers SPACs

Posted on March 11, 2022 by Editor

Special Purpose Acquisition Companies, or SPACs, have become something of a hot topic. In particular, they were last year the subject of attention from the US Securities and Exchange Commission, which clarified its accounting and reporting expectations to affirm that certain stock warrants should be considered liabilities rather than assets, triggering a wave of restatements.

We are interested to see, therefore, that this very issue is now being considered by the International Financial Reporting Standards (IFRS) Foundation. A staff paper prepared for the most recent IFRS Interpretations Committee meeting lays out two contrasting views on whether, and under what circumstances, SPACs should classify public shares as financial liabilities or as equity. It concludes, however, that this matter is part of a broader practice issue on the effect of shareholder elections on the characteristics of specific instruments. This will be comprehensively analysed in the ongoing ‘Financial Instruments with Characteristics of Equity’ project.

Read more here.

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