CERTYNEX IFRS ACADEMY

Ambre SA issues 10,000 perpetual securities for 1,000,000. Contract terms (case facts): no redemption date, no right of redemption for the holder; the dividend is paid only if the general meeting of Ambre so decides, and Ambre has no obligation to decide so. How does Ambre classify these securities at issue?

As a financial liability, because perpetual securities are issued against a cash contribution that Ambre will one day have to return.

As a financial liability, because a security that rewards investors creates an obligation to reward them every year.

As a financial liability until the meeting has decided not to distribute, and then as equity.

As equity, because no term obliges Ambre to deliver cash or another financial asset.