IFRS Update – June 2025

Disclosures for Eligible Subsidiaries & Timing of Issuing Amendments

(Based on IASB Agenda Papers 5C & 5D)

Issued by: Prabix Accounting & Advisory
Date: November 2025

1. Overview

The International Accounting Standards Board (IASB) continues to refine its work on the Financial Instruments with Characteristics of Equity (FICE) project. Two recent papers from the June 2025 IASB meeting—Agenda Paper 5C and 5D—address:

• Agenda 5C: Disclosures for eligible subsidiaries under the forthcoming IFRS 19 – Subsidiaries without Public Accountability: Disclosures
• Agenda 5D: The timing of issuing the proposed amendments relating to presentation, classification, and disclosures

These updates aim to simplify financial reporting for subsidiaries without public accountability, while maintaining transparency on instruments with both liability and equity features.

2. Key Developments

A. Disclosures for Eligible Subsidiaries (Agenda 5C)

The IASB has proposed retaining the disclosure requirements for eligible subsidiaries under IFRS 19, subject to minor refinements.

Who is eligible?

An eligible subsidiary is one that:

1. Does not have public accountability, and
2. Has a parent entity that prepares publicly available, IFRS-compliant consolidated financial statements.

Disclosure focus areas:

Eligible subsidiaries will disclose simplified, yet decision-useful, information in three key areas:

Area	Summary of Disclosure Requirement
Nature and priority of claims	Disclose how financial instruments rank on liquidation (secured/unsecured, subordinated/unsubordinated).
Terms and conditions	Explain contractual terms that affect classification (liability vs. equity), redemption rights, or conversion features.
Equity attribution	Disclose how profit or loss is attributed among different equity instruments, and reconcile any cumulative undeclared amounts.

Stakeholder feedback:

• Most respondents supported the reduced disclosure approach.
• Some raised concerns that even the simplified set could still be burdensome, especially for wholly owned subsidiaries.
• The IASB decided not to reduce disclosures further, emphasising consistency and usefulness over minimalism.

B. Timing of Issuing Amendments (Agenda 5D)

The IASB also discussed when to issue the forthcoming amendments related to classification, presentation, and disclosure of FICE instruments.

Staff recommendation:

• Do not issue amendments in stages.
  The IASB plans to issue one complete package of amendments rather than separate releases for presentation/disclosures and classification.

Reasons for unified issuance:

• Avoid confusion or overlap between multiple amendment sets.
• Allow entities more time to prepare system and process changes holistically.
• Ensure coherence with the forthcoming IFRS 18 – Presentation and Disclosure in Financial Statements (effective 1 January 2027).

Alternative view:

Some stakeholders suggested earlier issuance or optional early adoption to align with IFRS 18. However, the IASB prioritised implementation clarity and reduced complexity.

3. Implications for Preparers and Groups

1. Group Consistency:
   Ensure alignment between subsidiary disclosures (under IFRS 19) and the parent’s consolidated disclosures (under IFRS 7 and IFRS Presentation amendments).
2. Instrument Mapping:
   Identify all instruments with both liability and equity characteristics (convertible debt, preference shares, etc.) and document terms that affect classification or liquidation priority.
3. Disclosure Readiness:
   Update reporting templates to capture:
   • Ranking of claims
   • Terms and conditions affecting classification
   • Equity attribution and undeclared distributions
4. Transition Planning:
   Although timing remains open, preparers should begin system updates and staff training now to ensure readiness once final amendments are issued.
5. Audit & Regulator Engagement:
   Communicate early with auditors and regulators to confirm interpretation and disclosure expectations.

4. Prabix Advisory Insight

At Prabix, we recommend that clients:

• Start a disclosure gap assessment now against the proposed requirements;
• Build internal documentation for all financial instruments with hybrid characteristics; and
• Plan for phased implementation aligned with IFRS 18 (target effective date – 1 Jan 2027).

Proactive readiness will ensure smoother transition and stronger transparency when the final standards are released.

5. Key Takeaway

The IASB’s June 2025 deliberations show a clear direction:

“Simplified does not mean superficial.”
Even subsidiaries under IFRS 19 will face meaningful disclosure expectations, especially around instruments blending debt and equity features.

For groups, synchronising disclosures and presentation across entities will be essential to maintain clarity and comparability.

Prabix will continue to monitor IASB discussions and issue implementation guidance as the final amendments approach.