CERTYNEX IFRS ACADEMY

A colleague writes: "The protective rights of Sigma SA's bank do not give it power; the fact that a breach makes them exercisable therefore calls for no reassessment of control of Sigma." What is wrong with this reasoning?

It is wrong about the nature of protective rights, which actually confer power over the relevant activities of the investee.

It omits that the reassessment leads to loss of control by the former investor in this situation.

It overlooks that a breach making protective rights exercisable is a change in facts that requires control to be reassessed.

It confuses the reassessment with the first assessment of control, which must be made at each annual reporting date.