Project Initiation Plan - Proposed Targeted Amendments to IFRS Foundation Constitution

Purpose

1This paper sets out the plan to influence the IFRS Foundation Trustees' Exposure Draft (ED) Proposed Targeted Amendments to the IFRS Foundation Constitution. The ED was published on 18 August 2026 with a consultation period ending on 16 November 2026.

2The ED aims to operationalise the Trustees' 2025 decision to reduce the size of the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB), from 14 to 10 members each.

Background

3In 2024, the IFRS Foundation carried out a review of its operations, which informed a transformation programme, to streamline aspects of the Foundation's operations and governance structure. The programme aims to ensure the IFRS Foundation's continued service as the global corporate reporting standard-setter.

4Streamlining measures include reducing the size of both standard-setting boards and the IFRS Foundation Constitution is being amended to operationalise the change. The Trustees' proposed amendments intend to provide a suitable governance framework for the smaller boards to ensure they continue to function effectively.

Summary of Proposed Changes

5The proposed amendments align requirements relating to the two boards with the proposed reduction in board members. The matters addressed are set out below.

Board size

6Currently, the IASB and the ISSB shall normally comprised 14 members each. The Trustees propose amending the Constitution to reduce this number so to specify that each Board should normally comprise between eight and 12 members. The Trustees will take account of the respective boards' workload and priorities in determining the number of members appointed to it.

7The proposals anticipate that from 2028, each board will be expected to comprise of 10 members. The upper limit of 12 members is to provide flexibility if, for example, there are a large number of part-time members.

Geographical representation

8Board members are appointed as individuals and not to represent their respective jurisdiction. Nonetheless, the board is appointed to represent the geographical diversity of the standards' application.

9Therefore, the number of members to be drawn from each area of the globe has been reduced, in line with the reduction in the size of the boards. The Trustees state that the proposals "maintain the principle of broad international balance, ensuring that the boards continue to reflect the global nature of the Foundation's work and supporting confidence that the boards remain geographically diverse and credible global standard setters".

10The Trustees also propose formalising the recent practice of appointing the Chair from the 'at-large' category, so that it is not restricted to any specific region.

Voting arrangements

11The Trustees propose to align the voting provisions with the reduced size of the boards:

1. Decisions relating to the publication of Exposure Drafts and Standards will change from super-majority voting to requiring a simple majority plus one vote, with a minimum of five affirmative votes.
2. All other decisions will require a simple majority, with a minimum of four affirmative votes.

Project Plan

12A proportionate approach has been applied in accordance with paragraphs 3.7 and 5.3 of the UKEB's Due Process Handbook. The Secretariat recommends the 'Limited scope' project plan shown below. The factors considered in arriving at this project plan are described in paragraphs A13-A21. A timeline for the key project milestones is presented in paragraph A25.

Table 1:

Proportionality Assessment

Significance and Size

13The UKEB is responding to this consultation because the governance of the IFRS Foundation and the operation of its two boards directly impacts the development of IFRS standards.

14Changes to the Constitution may impact how the UKEB is able to engage with the IFRS Foundation and the members of its boards, particularly the IASB, in carrying out its statutory functions and adhering to its own due process requirements.

Complexity

15The proposals are intended to operationalise the Trustees' decision to reduce the size of the two standard-setting board. As such, we do not believe that the proposals are highly technical or complex. However, some complexity arises from understanding the governance implications of the changes being proposed.

Expected Timeline / Urgency

16The IFRS Foundation Trustees published the Exposure Draft of Proposed Targeted Amendments to the IFRS Foundation Constitution on 18 August 2026 for a 90-day consultation period. The consultation ends on 16 November 2026.

17Due to the timing of the UKEB Board meetings, the September 2026 meeting is the first opportunity for the Board to review a draft comment letter. As the UKEB's November meeting is scheduled for 26 November 2026, after the Trustees' consultation period ends, the Board will review the Final Comment Letter at its meeting in October 2026.

18To facilitate this timeline, a 21-day consultation period is proposed.

Expected Interest / Sensitivity

19Given the impact of the work of the IFRS Foundation on the transparency in the UK capital market, we expect other UK bodies within the company reporting framework to respond to the consultation.

Feedback on the Proposals from Desk-based Research

20We reviewed the IFRS Foundation Constitution, Annual Reports and related documents, feedback to previous consultations, the Corporate Governance Code, and reviewed relevant capital markets data.

Connectivity

21As the Constitution applies to the operation of the IFRS Foundation and both its standard-setting boards, the UKEB has an interest in the proposed changes to the ISSB, as well as the IASB.

Recommended UKEB Project Scope

22Based on the proportionality assessment above we recommend a 'Limited' project scope, and the approach described in this document reflects this.

Resources Allocated

23To undertake the activities described in this project plan, a Project Director – Governance Lead has been assigned for the brief period of the project, with some assistance from other senior resource with knowledge and understanding of the workings of the two boards. The required resources are allowed for in the 2025/26 UKEB plan and budget.

Setting up an Ad-hoc Advisory Body

24The UKEB will not require a separate ad-hoc advisory body for this project. Existing UKEB advisory and working groups have the necessary skills and expertise to support this project and will be consulted, as outlined in the project plan.

Project Timeline

25The proposed high-level project timeline is shown below. This provides a best estimate based on information known at this time.

Table 2:

* To be confirmed