Final Comment Letter - Amendments to the Fair Value Option (IAS 28)
Dr Andreas Barckow Chairman International Accounting Standards Board Columbus Building 7 Westferry Circus Canary Wharf London E14 4HD
23 April 2026
Dear Dr Barckow
Exposure Draft IASB/ED/2026/1 Amendments to the Fair Value Option for Investments in Associates and Joint Ventures
1The UK Endorsement Board (UKEB) welcomes the opportunity to provide comments on the International Accounting Standards Board (IASB)'s Exposure Draft Amendments to the Fair Value Option for Investments in Associates and Joint Ventures (ED). In developing this letter, we have consulted with stakeholders in the UK, including preparers, accounting firms and institutes, and users of accounts.
2UK entities wishing to apply the fair value option to investments in associates and joint ventures have not highlighted any interpretational issues hindering their ability to apply these requirements. However, we note the IASB is working to address diversity in practice arising internationally in this area and to support resolving any concerns ahead of the application of IFRS 18 Presentation and Disclosure in Financial Statements to ensure consistent application of that Standard.
Overarching comments
3We believe it would be better to rationalise the articulation of the scope of the option in paragraph 18 of IAS 28 Investments in Associates and Joint Ventures to make it concise and principles-based as to a defined activity. The proposed wording in the ED is a list of four undefined entity types, three named, i.e. “venture capital organisation, or a mutual fund, [or] unit trust” and one merely 'similar', with the latter including those with an IFRS 18.49(a) main business activity. We consider that a simpler, principles-based way to draft this could be as follows:
'When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that has a main business activity of investing in particular types of assets (see paragraph 49(a) of IFRS 18), is a venture capital organisation, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure that investment at fair value through profit or loss in accordance with IFRS 9.'
4We are concerned by the proposal to include in the Basis for Conclusions accompanying the ED, paragraphs BC17 and BC18, which refer to the ability to revoke the fair value option in IAS 28. Those paragraphs are not related to the scope of the option, which is the purpose of this urgent amendment. If the IASB considers that clarification of this point is necessary, we believe that this should be addressed on a future occasion. Furthermore, we do not think it appropriate to make such clarifications within the Basis for Conclusions and would recommend that any such clarification should be made either in mandatory text or through an IFRS Interpretations Committee referral.
5While we can see that the alternative views may have some merit, this topic requires much more investigation than can be addressed by this urgent project. We encourage the IASB to consider the extent to which stakeholder feedback supports consideration of equity accounting for associates more generally as part of the forthcoming Fourth Agenda Consultation, and, if there is support for this, to incorporate this topic as part of that wider project.
6Responses to the IASB's specific questions about the ED are included in the Appendix to this letter.
If you have any questions about this response, please contact the project team at [email protected].
Yours sincerely
Paul Lee Chair UK Endorsement Board
About the UKEB
The UK Endorsement Board is responsible for endorsement and adoption of IFRS Accounting Standards for use in the UK and therefore is the UK's National Standard Setter for IFRS Accounting Standards. The UKEB also leads the UK's engagement with the IFRS Foundation on the development of new standards, amendments and interpretations.
About IFRS in the UK
There are currently approximately 1,300 entities with equity listed on the London Stock Exchange that prepare their financial statements in accordance with IFRS.[^1] In addition, UK law allows unlisted companies the option to use IFRS and approximately 14,000 such companies currently take up this option.[^2]
About this letter
This letter is intended to contribute to the Foundation's due process. The views expressed by the UKEB in this letter are separate from, and will not necessarily affect the conclusions in, any endorsement and adoption assessment on new or amended international accounting standards undertaken by the UKEB.
Appendix A: Questions on IASB/ED/2026/1 Amendments to the Fair Value Option for Investments in Associates and Joint Ventures
Question 1—Proposed amendments to paragraphs 18–19 of IAS 28
Paragraphs 18–19 of IAS 28 permit an entity to elect to measure an investment in an associate or a joint venture at fair value through profit or loss in accordance with IFRS 9 Financial Instruments if the investment is held by a venture capital organisation, or a mutual fund, unit trust and similar entities including investment-linked insurance funds.
The IASB is proposing to amend paragraphs 18–19 of IAS 28 to clarify that similar entities include those that have a main business activity of investing in particular types of assets (as set out in paragraph 49(a) of IFRS 18).
Paragraphs BC1–BC19 of the Basis for Conclusions explain the IASB's rationale for this proposal. In particular, paragraphs BC9–BC13 explain why the IASB decided not to propose extending the fair value option to all entities.
Do you agree with this proposal? Why or why not? If you disagree, please explain what you would suggest instead and why.
Clarification of the fair value option
A1We believe it would be better to rationalise the articulation of the scope of the option in paragraph 18 of IAS 28 to make it concise and principles-based as to a defined activity. As currently proposed it is a list of four undefined entity types, three named, i.e. “venture capital organisation, or a mutual fund, [or] unit trust” and one merely 'similar', with the latter including those with an IFRS 18.49(a) main business activity. We consider that a simpler, principles-based way to draft this could be as follows[^3]:
'When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that has a main business activity of investing in particular types of assets (see paragraph 49(a) of IFRS 18), is a venture capital organisation, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure that investment at fair value through profit or loss in accordance with IFRS 9.'
Election to use the fair value option
A2We are concerned by the proposal to include in the basis for conclusions accompanying the ED, paragraphs BC17 and BC18, which refer to the ability to revoke the fair value option in IAS 28. Those paragraphs are not related to the scope of the option, which is the purpose of this urgent amendment. If the IASB considers that clarification of this point is necessary, we believe that this should be addressed on a future occasion. Furthermore, we do not think it appropriate to make such clarifications within the Basis for Conclusions and would recommend that any such clarification should be made either in mandatory text or through an IFRS Interpretations Committee referral.
Alternative views
A3While we can see that the alternative views may have some merit, this topic requires much more investigation than can be addressed by this urgent project. We encourage the IASB to consider the extent to which stakeholder feedback supports consideration of equity accounting for associates more generally as part of the forthcoming Fourth Agenda Consultation, and, if there is support for this, to incorporate this topic as part of that wider project.
Question 2— Effective date and transition
The IASB proposes that an entity apply the amendments to paragraphs 18–19 of IAS 28 at the same time and on the same basis as it applies IFRS 18.
Paragraphs BC20–BC21 of the Basis for Conclusions explain the IASB's rationale for this proposal.
Do you agree with this proposal? Why or why not? If you disagree, please explain what you would suggest instead and why.
A4We agree with the proposal in the ED on the effective date and transition. In relation to the requirements in paragraph 45M of the ED for an entity that has already adopted IFRS 18, we suggest that the drafting could be made even clearer with the following additional text:
'If an entity has elected to apply IFRS 18 for an earlier period in accordance with paragraph C1 of IFRS 18, and that earlier period begins before the issuance of these amendments, the entity shall apply the amendments, in accordance with paragraph C7 of IFRS 18, from the beginning of the reporting period starting on or after the issuance of the amendments, as if this were the date of initial application of IFRS 18.'
[^1] UKEB calculation based on London Stock Exchange Group (LSEG) and Eikon data, November 2025. This calculation includes companies listed on the Main market as well as on the Alternative Investment Market (AIM). [^2] UKEB estimate based on FAME, Company Watch and other proprietary data. [^3] With equivalent consequential amendments to paragraph 19 of IAS 28.