CERTYNEX IFRS ACADEMY

The Brande co-operative issues members' shares that each member may ask to have redeemed. Its statutes prohibit redemption when its liquidity ratio is below 8%; outside that situation, redemptions are due (case facts). How does Brande classify these shares?

As equity, because the statutes contain a prohibition on redeeming, which is enough to rule out any obligation to deliver cash, without any need to examine its conditions.

As financial liabilities in principle, because the prohibition on redeeming depends on a liquidity condition: it is not unconditional.

As equity, because a liquidity constraint of statutory origin is equivalent to an unconditional prohibition written into law or the statutes.

As financial liabilities for the portion of shares for which redemption is requested, and as equity for the rest of the shares.