IFRS 12 | Disclosure of Interests in Other Entities

1

Objective

The objective is to require an entity to disclose information that enables users of its financial statements to evaluate: (a) the nature of, and risks associated with, its interests in other entities; and (b) the effects of those interests on its financial position, financial performance and cash flows.

2

Meeting the Objective

To meet the objective, an entity shall disclose: (a) the significant judgements and assumptions it has made in determining the nature of its interest in another entity or arrangement, and in determining the type of joint arrangement in which it has an interest; and (b) information about its interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities.

3

Aggregation

If disclosures required by this IFRS (together with disclosures required by other IFRSs) do not meet the objective, an entity shall disclose whatever additional information is necessary to meet that objective.

4

Level of Detail

An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the requirements. It shall aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have different characteristics.

5

Scope

This IFRS shall be applied by an entity that has an interest in any of the following: (a) subsidiaries; (b) joint arrangements (ie joint operations or joint ventures); (c) associates; or (d) unconsolidated structured entities.

5A

Held for Sale

Except as described in paragraph B17, the requirements in this IFRS apply to an entity's interests listed in paragraph 5 that are classified (or included in a disposal group that is classified) as held for sale or discontinued operations in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

6

Exclusions

This IFRS does not apply to: (a) post-employment benefit plans or other long-term employee benefit plans (IAS 19); (b) separate financial statements (IAS 27), except for specific requirements for investment entities; (c) an interest held by an entity that participates in, but does not have joint control of, a joint arrangement unless that interest results in significant influence or is an interest in a structured entity; and (d) certain interests accounted for in accordance with IFRS 9.

7

Significant Judgements

An entity shall disclose information about significant judgements and assumptions it has made (and changes to those judgements and assumptions) in determining: (a) that it has control of another entity; (b) that it has joint control of an arrangement or significant influence over another entity; and (c) the type of joint arrangement (ie joint operation or joint venture) when the arrangement has been structured through a separate vehicle.

9

Example Judgements

Examples of significant judgements include those made in determining that: (a) it does not control another entity even though it holds more than half of the voting rights; (b) it controls another entity even though it holds less than half of the voting rights; (c) it is an agent or a principal; (d) it does not have significant influence even though it holds 20 per cent or more of the voting rights; and (e) it has significant influence even though it holds less than 20 per cent of the voting rights.

9A

Investment Entity Status

When a parent determines that it is an investment entity in accordance with IFRS 10, the investment entity shall disclose information about significant judgements and assumptions it has made in determining that it is an investment entity.

9B

Change in Status

If the investment entity or any of its subsidiaries does not have one or more of the typical characteristics of an investment entity (see IFRS 10), it shall disclose its reasons for concluding that it is nevertheless an investment entity.

10

Subsidiaries General

An entity shall disclose information that enables users of its consolidated financial statements to understand: (a) the composition of the group; and (b) the interest that non-controlling interests have in the group's activities and cash flows.

12

Material NCI

For each of its subsidiaries that have non-controlling interests that are material to the reporting entity, an entity shall disclose: (a) the name of the subsidiary; (b) the principal place of business (and country of incorporation if different); (c) the proportion of ownership interests held by non-controlling interests; (d) the proportion of voting rights held by non-controlling interests, if different from the proportion of ownership interests held; (e) accumulated non-controlling interests of the subsidiary at the end of the reporting period; and (f) profit or loss allocated to non-controlling interests of the subsidiary during the reporting period.

13

Significant Restrictions

An entity shall disclose: (a) significant restrictions on its ability to access or use the assets and settle the liabilities of the group, such as restricted cash or regulatory requirements; (b) the nature and extent to which protective rights of non-controlling interests can significantly restrict the entity's ability to access or use the assets and settle the liabilities of the group; and (c) the carrying amounts in the consolidated financial statements of the assets and liabilities to which those restrictions apply.

14

Consolidated Structured

An entity shall disclose the terms of any contractual arrangements that could require the parent or its subsidiaries to provide financial support to a consolidated structured entity, including events or circumstances that could expose the reporting entity to a loss.

18

Joint Arrangements/Associates

An entity shall disclose information that enables users of its financial statements to evaluate: (a) the nature, extent and financial effects of its interests in joint arrangements and associates, including the nature and effects of its contractual relationship with the other investors with joint control of, or significant influence over, joint arrangements and associates; and (b) the nature of, and changes in, the risks associated with its interests in joint ventures and associates.

19

Investment Entities

An investment entity that applies the exception to consolidation shall disclose specific information regarding its unconsolidated subsidiaries as required by paragraphs 19A-19G.

20

Material Joint Ventures

For each joint arrangement and associate that is material to the reporting entity, an entity shall disclose: (a) the name of the joint arrangement or associate; (b) the nature of the entity's relationship with the joint arrangement or associate; (c) the principal place of business (and country of incorporation if different); and (d) the proportion of ownership interest or participating share held by the entity and, if different, the proportion of voting rights held.

21

Financial Information

An entity shall disclose: (a) for each joint venture and associate that is material to the reporting entity, summarised financial information as specified in paragraphs B12 and B13; and (b) for each joint venture and associate that is not material to the reporting entity, in aggregate, the carrying amount of its interests in all individually immaterial joint ventures or associates and separately the aggregate amount of its share of those joint ventures' or associates' profit or loss, other comprehensive income and total comprehensive income.

24

Unconsolidated Structured

An entity shall disclose information that enables users of its financial statements: (a) to understand the nature and extent of its interests in unconsolidated structured entities; and (b) to evaluate the nature of, and changes in, the risks associated with its interests in unconsolidated structured entities.

26

Qualitative and Quantitative

An entity shall disclose qualitative and quantitative information about its interests in unconsolidated structured entities, including, but not limited to, the nature, purpose, size and activities of the structured entity and how the structured entity is financed.

29

Risk Disclosures

An entity shall disclose in tabular format, unless another format is more appropriate, a summary of: (a) the carrying amounts of the assets and liabilities recognised in its financial statements relating to its interests in unconsolidated structured entities; (b) the line items in the statement of financial position in which those assets and liabilities are recognised; (c) the amount that best represents the entity's maximum exposure to loss from its interests in unconsolidated structured entities, including how the maximum exposure to loss is determined; and (d) a comparison of the carrying amounts of the assets and liabilities of the entity that relate to its interests in unconsolidated structured entities and the entity's maximum exposure to loss from those entities.

Appendix A

Definitions

The following terms are defined in this Standard:

• income from a structured entity: For the purpose of this IFRS, income from a structured entity includes, but is not limited to, recurring and non-recurring fees, interest, dividends, gains or losses on the remeasurement or derecognition of interests in structured entities and gains or losses from the transfer of assets and liabilities to the structured entity.
• interest in another entity: For the purpose of this IFRS, an interest in another entity refers to contractual and non-contractual involvement that exposes an entity to variability of returns from the performance of the other entity. An interest in another entity can be evidenced by, but is not limited to, the holding of equity or debt instruments as well as other forms of involvement such as the provision of funding, liquidity support, credit enhancement and guarantees. It includes the means by which an entity has control or joint control of, or significant influence over, another entity. An entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship.
• structured entity: An entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.
• The following terms are defined in IAS 27, IAS 28, IFRS 10 and IFRS 11: associate, consolidated financial statements, control of an entity, equity method, group, investment entity, joint arrangement, joint control, joint operation, joint venture, non-controlling interest, parent, protective rights, relevant activities, separate financial statements, separate vehicle, significant influence, subsidiary.