IFRIC recently issued the following tentative agenda decision (open for comment until May 29, 2026):

• Fact pattern
• An entity was involved in setting the purpose and design of an investee when the investee was established. At that time, the entity concluded—applying IFRS 10—that it controlled the investee. At a later date, the governing document of the investee was amended in a way that could result in a change in the investee’s relevant activities, as well as in the rights of the entity and other parties relating to those relevant activities.
• Question
• The request asks whether—applying paragraph 8 of IFRS 10—the amendments to the investee’s governing document require the entity to reassess whether it retains control the investee.
• Findings
• Evidence gathered by the Committee [to date] indicated no diversity in determining whether, in the fact pattern described in the request, the entity reassesses whether it retains control of the investee. Feedback suggests that, in that fact pattern, the entity reassesses whether it retains control of the investee.

Based on its findings, the Committee concluded that the matter described in the request doesn’t have widespread effect, and tentatively decided not to add a standard-setting project to the work plan. As summarized above, that conclusion probably appears obvious. The submission that led to the discussion is a bit more esoteric though. It focuses on an Entity A, required to undertake specified Corporate Social Responsibility (CSR) initiatives, prescribed by the legislation of the country in which it operates. To comply with the country’s legislation, Entity A established a Trust, holding assets which can only be utilized to pursue CSR initiatives as defined, and which can never be returned to Entity A; those assets are shares of Entity A, which in this fact pattern provides the entity “with specific points that contribute to its overall CSR rating.” The submission goes on:

• At the inception of the Trust, Entity A was found to have control over the Trust, as the relevant activity of the Trust was to hold an investment in Entity A shares. Entity A obtained non-financial benefit in the form of CSR points attributable to the number of shares held by the Trust and had the practical ability to control these non-financial benefits, as the trustees were not permitted to sell its investment in Entity A’s shares without permission from Entity A.
• …(over time) the Trust began to accumulate cash from the dividends received on its investment in Entity A shares. With the surplus cash, the Trust was able to procure other investments, thereby diversifying its portfolio of investments. At this point the Trust Deed was superseded by a new Trust Deed, in terms of which, the purpose of the Trust Deed was amended to indicate that the purpose of the Trust was to hold various investments as endowments, which would be used to produce investment returns that would be utilized by the trustees to make donations to qualifying beneficiaries. The Trust Deed established governing sub-committees, namely the investment committee and the disbursement committee, which would govern the management of the investments held by the Trust, as well as govern the way beneficiaries would be donated to. These sub-committees would be under the control of the independent trustees of the Trust. Furthermore, the Trust Deed was amended to require both the trustees and Entity A to jointly approve the sale of any Entity A shares held by the Trust.

That all may sound too fact-specific to be of much broad interest, but several respondents to the IASB staff’s request for information indicated some familiarity with such situations. The submitter of the request set out a possible alternative analysis, that a new control assessment isn’t required even though the Trust Deed has been superseded: the original designer of the Trust, Entity A, is still a party to the deed, and although it lacks power over the Trust’s investment and distribution decisions, it continues to be able to include any Entity A shares held by the Trust in its CSR score. In broad terms, the thinking seems to be that regardless of the various technical changes, the Trust was initially set up for the benefit of Entity A and continues to provide that benefit; nothing has happened that’s important enough to trigger possible deconsolidation. But almost all the above-mentioned respondents said that IFRS 10.8 – requiring an entity to “reassess whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control” – would indeed be applied in such scenarios, leaving not much else to discuss.

A basic summary: however distinctive you think your situation might be, however intuitively obvious it might seem that consolidation remains appropriate, IFRS 10 provides no short-cuts!

The opinions expressed are solely those of the author.