Objective
The objective of this IFRS is to specify the financial reporting by an entity when it undertakes a share-based payment transaction. In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated with transactions in which share options are granted to employees.
Scope
An entity shall apply this IFRS in accounting for all share-based payment transactions, whether or not the entity can identify specifically some or all of the goods or services received, including:
- equity-settled share-based payment transactions,
- cash-settled share-based payment transactions, and
- transactions in which the entity receives or acquires goods or services and the terms of the arrangement provide either the entity or the supplier of those goods or services with a choice of whether the entity settles the transaction in cash (or other assets) or by issuing equity instruments,
Recognition
An entity shall recognise the goods or services received or acquired in a share-based payment transaction when it obtains the goods or as the services are received. The entity shall recognise a corresponding increase in equity if the goods or services were received in an equity-settled share-based payment transaction, or a liability if the goods or services were acquired in a cash-settled share-based payment transaction.
When the goods or services received or acquired in a share-based payment transaction do not qualify for recognition as assets, they shall be recognised as expenses.
Defined terms
cash-settled share-based payment transaction A share-based payment transaction in which the entity acquires goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or services for amounts that are based on the price (or value) of equity instruments (including shares or share options) of the entity or another group entity
employees and others providing similar services Individuals who render personal services to the entity and either (a) the individuals are regarded as employees for legal or tax purposes, (b) the individuals work for the entity under its direction in the same way as individuals who are regarded as employees for legal or tax purposes, or (c) the services rendered are similar to those rendered by employees. For example, the term encompasses all management personnel, ie those persons having authority and responsibility for planning, directing and controlling the activities of the entity, including non-executive directors.
equity instrument A contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
equity instrument granted The right (conditional or unconditional) to an equity instrument of the entity conferred by the entity on another party, under a share-based payment arrangement
equity-settled share-based payment transaction A share-based payment transaction in which the entity
- receives goods or services as consideration for its own equity instruments (including shares or share options), or
- receives goods or services but has no obligation to settle the transaction with the supplier.
fair value The amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be exchanged, between knowledgeable, willing parties in an armβs length transaction.
grant date The date at which the entity and another party (including an employee) agree to a share-based payment arrangement, being when the entity and the counterparty have a shared understanding of the terms and conditions of the arrangement. At grant date the entity confers on the counterparty the right to cash, other assets, or equity instruments of the entity provided the specified vesting conditions, if any, are met. If that agreement is subject to an approval process (for example, by shareholders), grant date is the date when that approval is obtained.
intrinsic value The difference between the fair value of the shares to which the counterparty has the (conditional or unconditional) right to subscribe or which it has the right to receive, and the price (if any) the counterparty is (or will be) required to pay for those shares. For example, a share option with an exercise price of CU15,6 on a share with a fair value of CU20, has an intrinsic value of CU5.
market condition A performance condition upon which the exercise price, vesting or exercisability of an equity instrument depends that is related to the market price (or value) of the entityβs equity instruments (or the equity instruments of another entity in the same group), such as:
- attaining a specified share price or a specified amount of intrinsic value of a share option; or
- achieving a specified target that is based on the market price (or value) of the entityβs equity instruments (or the equity instruments of another entity in the same group) relative to an index of market prices of equity instruments of other entities.
A market condition requires the counterparty to complete a specified period of service (ie a service condition); the service requirement can be explicit or implicit.
measurement date The date at which the fair value of the equity instruments granted is measured for the purposes of this IFRS. For transactions with employees and others providing similar services, the measurement date is grant date. For transactions with parties other than employees (and those providing similar services), the measurement date is the date the entity obtains the goods or the counterparty renders service.
performance condition A vesting condition that requires:
- the counterparty to complete a specified period of service (ie a service condition); the service requirement can be explicit or implicit; and
- specified performance target(s) to be met while the counterparty is rendering the service required in (a)
The period of achieving the performance target(s):
- shall not extend beyond the end of the service period; and
- may start before the service period on the condition that the commencement date of the performance target is not substantially before the commencement of the service period.
A performance target is defined by reference to:
- the entityβs own operations (or activities) or the operations or activities of another entity in the same group (ie a non-market condition); or
- the price (or value) of the entityβs equity instruments or the equity instruments of another entity in the same group (including shares and share options) (ie a market condition).
A performance target might relate either to the performance of the entity as a whole or to some part of the entity (or part of the group), such as a division or an individual employee.
reload feature A feature that provides for an automatic grant of additional share options whenever the option holder exercises previously granted options using the entityβs shares, rather than cash, to satisfy the exercise price.
reload option A new share option granted when a share is used to satisfy the exercise price of a previous share option.
service condition A vesting condition that requires the counterparty to complete a specified period of service during which services are provided to the entity. If the counterparty, regardless of the reason, ceases to provide service during the vesting period, it has failed to satisfy the condition. A service condition does not require a performance target to be met.
share-based payment arrangement An agreement between the entity (or another group7 entity or any shareholder of any group entity) and another party (including an employee) that entitles the other party to receive
- cash or other assets of the entity for amounts that are based on the price (or value) of equity instruments (including shares or share options) of the entity or another group entity, or
- equity instruments (including shares or share options) of the entity or another group entity, provided the specified vesting conditions, if any, are met.
share–based payment transaction A transaction in which the entity
- receives goods or services from the supplier of those goods or services (including an employee) in a share-based payment arrangement, or
- incurs an obligation to settle the transaction with the supplier in a share-based payment arrangement when another group entity receives those goods or services.
share option A contract that gives the holder the right, but not the obligation, to subscribe to the entityβs shares at a fixed or determinable price for a specified period of time.
vest To become an entitlement. Under a share-based payment arrangement, a counterpartyβs right to receive cash, other assets or equity instruments of the entity vests when the counterpartyβs entitlement is no longer conditional on the satisfaction of any vesting conditions.
vesting condition A condition that determines whether the entity receives the services that entitle the counterparty to receive cash, other assets or equity instruments of the entity, under a share-based payment arrangement. A vesting condition is either a service condition or a performance condition.
vesting period The period during which all the specified vesting conditions of a share-based payment arrangement are to be satisfied.
Disclosures
An entity shall disclose information that enables users of the financial statements to understand the nature and extent of share-based payment arrangements that existed during the period.