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Version date: 26 February 2020 - onwards

Scope exception (paras. BC15-BC18)

BC15 The Board reconsidered the scope exception of IAS 31 that had also been proposed in ED 9. The Board concluded that the scope exception in ED 9 for interests in joint ventures held by venture capital organisations, or mutual funds, unit trusts and similar entities, including investment-linked insurance funds, that are measured at fair value through profit or loss in accordance with IFRS 9 Financial Instruments, is more appropriately characterised as a measurement exemption, not as a scope exception.

BC16 The Board observed that when venture capital organisations, or mutual funds, unit trusts and similar entities, including investment-linked insurance funds, conclude that they have an interest in a joint arrangement, this is because the arrangement has the characteristics of a joint arrangement as specified in IFRS 11 (ie a contractual arrangement exists that establishes that two or more parties have joint control of the arrangement).

BC17 The Board also observed that the scope exception in ED 9 did not relate to the fact that these arrangements do not have the characteristics of joint arrangements, but to the fact that for investments held by venture capital organisations, or mutual funds, unit trusts and similar entities, including investment-linked insurance funds, fair value measurement provides more useful information for users of the financial statements than would application of the equity method.