The Committee of European Securities Regulators (CESR) has published a response to EFRAG’s (European Financial Reporting Advisory Group) draft comment letter on the IASB’s (International Accounting Standards Board) Exposure Draft (ED) “Classification of Rights Issues”.

CESR supports the overall approach proposed by the IASB to classify certain rights issues as equity investments. It also notes the concerns of EFRAG that the amendments as drafted could lead to structuring opportunities. In light of this CESR supports the proposals made to limit the range of instruments covered to focus on an area of known practical difficulty and to limit as far as possible unforeseen consequences, ahead of the IASB’s completion of its project on financial instruments with characteristics of equity.