CERTYNEX IFRS ACADEMY

The Opale fund issues two classes of units: class A, redeemable at the holder's option, and class B, with no redemption option. On liquidation, class A ranks last, at the same rank as class B, and no other class is more subordinated (case facts). A colleague argues that class A's redemption option makes it less subordinated than class B and therefore rules out the exception. Which answer is consistent with the explanation the Committee gave in 2009 (background, not a rule)?

The redemption option places class A ahead of class B in the order of payment on liquidation, so the colleague's argument is well founded.

Subordination is assessed at the date the redemption option is exercised and not on liquidation, so the colleague's argument is well founded.

The Committee removed the exception for units with a redemption option, so the colleague's argument is well founded.

Subordination is measured by rank on liquidation; the existence of a redemption option does not reduce it by itself, so the colleague's argument is not well founded.