CERTYNEX IFRS ACADEMY

Iris SA, whose functional currency is the euro, issues a warrant to an investor: if the holder exercises it, Iris will deliver 10,000 of its own shares against a payment of 120,000 euros. The number of shares and the price are fixed in the contract and do not vary; settlement is by physical delivery (case facts). How does Iris classify this warrant?

As a derivative financial liability, because a warrant is a derivative whose value varies with the share price, whatever the settlement method.

As a financial liability, because Iris commits to deliver a number of shares that may be worth more than 120,000 euros on the exercise date.

As an equity instrument, because it will be settled by delivering a fixed number of own shares for a fixed amount of cash.

As equity provided that the 10,000 shares are already held as treasury shares when the warrant is issued.