BDO submits comment letter on IASB's ED - Financial Instruments with Characteristics of Equity

BDO has submitted a comment letter in response to the Exposure Draft issued by the IASB on Financial Instruments with Characteristics of Equity.
While BDO supports the efforts of the IASB to clarify some of the requirements in IAS 32 Financial Instruments: Presentation to reduce diversity in practice and enhance comparability, it has expressed concerns about a number of aspects of the proposals. The main areas of concern relate to the proposals regarding:

The effects of relevant laws or regulations: BDO has expressed a concern that the proposals could give rise to significant unintended consequences.
Settlement in an entity’s own equity instruments: BDO believes that the proposed requirements related to the application of the fixed-for-fixed condition are narrow. It also believes that the proposed requirements related to the passage-of-time adjustments are highly restrictive. It has further expressed concerns on a possible reading of proposed paragraph 22D.
Contingent settlement provisions: BDO disagrees with the proposed measurement approach in paragraph 25A to disregard the probability and estimated timing of occurrence or non-occurrence of contingent events.
Reclassification of financial liabilities and equity instruments: BDO disagrees with the proposal to prohibit reclassification of financial instruments on changes in the substance of the contractual arrangement that occur when contractual terms become, or stop being, effective with the passage of time and strongly recommend that such reclassification be required.

The Exposure Draft and the comment letter may be accessed here.