The legal form of the vehicle

Learning objectives

• Analyse whether the legal form of the vehicle gives the parties rights to the net assets or leaves them rights to the assets and obligations for the liabilities.L2

Normative references

• IFRS 11 §B22The legal form of the separate vehicle is relevant when classifying the joint arrangement: it helps in the initial assessment of the parties' rights to the assets and obligations for the liabilities held in the vehicle. A legal form that separates the vehicle from the parties points to a joint venture, but the contractual terms and, when relevant, other facts and circumstances can override that initial assessment (B23); the legal form alone is sufficient to conclude that the arrangement is a joint operation only if it does not confer any separation between the parties and the vehicle (B24).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• A colleague writes: "The joint arrangement is housed in a public limited company, whose assets belong to the company and not to the parties; it is therefore a joint venture, with no need to read the contractual arrangement." What is the error in this reasoning?L2
• Hélios SARL, a separate vehicle held by Alpha SA and Bêta SA, has a legal form that gives its members rights to its net assets and not to its assets taken one by one (case data). Examination of the contractual arrangement and of other facts and circumstances reveals nothing that modifies this situation (case data). What classification results?L2