Read our full publication.
What’s the issue?
Private operating companies seeking a ‘fast track’ stock exchange listing sometimes arrange to be acquired by a smaller listed company (often described as a ‘shell’ company). This usually involves the listed shell company issuing its shares to the private company shareholders in exchange for their
shares in the private operating company. A transaction in which a company with substantial operations (‘operating company’) arranges to be acquired by a listed shell company should be analysed to determine how it should be accounted for under IFRS.
The ‘Insights into IFRS 3 – Reverse acquisitions explained’ article introduces situations in which mergers and acquisitions are accounted for as reverse acquisitions and how they should be accounted for – either as a business combination under IFRS 3 ‘Business Combinations’ or as an asset acquisition (if what is being acquired is not a business). This IFRS Viewpoint sets out the accounting issues related to reverse acquisitions that are out of the scope of IFRS 3.