Significant restrictions

Learning objectives

• Identify the statutory, contractual or regulatory restrictions to be disclosed in a case.L2

Normative references

• IFRS 12 §13The entity discloses: (a) significant restrictions (statutory, contractual, regulatory) on its ability to access or use the assets and settle the liabilities of the group, for example those that restrict the transfer of cash or other assets between entities within the group, or guarantees that may restrict dividends, loans or advances; (b) the nature and extent to which protective rights of non-controlling interests can significantly restrict that ability; (c) the carrying amounts in the consolidated financial statements of the assets and liabilities to which those restrictions apply.

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

2 questions

• Which items are to be reported as significant restrictions on the group's ability to access assets and settle liabilities? More than one answer is possible.L2
• Nova Group includes the subsidiary Sud SA. (a) A financing agreement forbids Sud from paying dividends while its debt exceeds a set level; (b) the local regulator imposes a minimum level of equity on Sud; (c) Sud's minority shareholders have a veto over the sale of its main assets (case facts). Write a short note identifying the restrictions to report, distinguishing rule, case facts and professional judgement.L2