ASIC has decided to extend Class Order [CO 13/1050] which allows issuers of stapled securities (stapled entities) to continue to present consolidated or combined financial statements.

The amended class order extends the relief given to stapled entities for future financial years pending further consideration of reporting requirements by the IFRS Interpretations Committee.

Stapled entities are listed entities whose securities are traded together such that each investor has the same proportionate interest in each entity.

Consolidated or combined financial statements provide useful and meaning information on investors’ interest in the overall stapled arrangement, and may be necessary to give a true and fair view of the individual entity financial reports. Transactions between the entities are eliminated in preparing consolidated or combined financial statements.

Under a new accounting standard on consolidation accounting, it is not clear that stapled entities would be permitted to prepare consolidated financial statements in the absence of the class order.

The amended class order provides certainty that entities can continue their previous consolidated or combined reporting.

A stapled group which has not previously prepared a financial report under Chapter 2M can present consolidated financial statements under the class order.

Class Order [CO 13/1050] has also been amended to require disclosure:

• that the class order has been relied upon and whether consolidated financial statements or combined financial statements have been presented; and

• where consolidated financial statements are presented, of the amounts of the non-controlling interests that are attributable to the stapled security holders.

We have extended the application of class order [CO 13/1050] on the understanding that the presentation of consolidated financial statements by stapled entities may be considered by the IFRS Interpretations Committee in 2014. The class order is intended to provide relief until the matter is resolved by that committee. We may review our position in response to any future developments, particularly if the IFRS Interpretations Committee decides not to address the matter.

Having regard to the possible consideration of the accounting treatment by the IFRS Interpretations Committee, extension of the previous relief was supported by the majority of those responding to ASIC's Consultation Paper 217 Presentation of financial statements by stapled entities (CP 217) which was issued in October 2013.

Class Order [CO 13/1050] also allows stapled entities in a stapled group to present their respective financial statements together in a single financial report.

The class order will be operative when registered on the Federal Register of Legislative Instruments, which we expect to occur in mid January 2014.

Download:

• Class Order [CO 13/1644] (amends [CO 13/1050])

• Class Order [CO 13/1050] (amendments not yet incorporated)