Financial reporting

The meaning of fair value in Articles of Association.

This was a shareholder dispute case embellished by an attempted share dilution and a challenge regarding the use of a loan taken out by Destiny Investments (1993) Limited (“Destiny”).

Through the early 1990s, it was generally accepted that the publicly traded price of a company’s shares represented the value of a minority interest and that, if the goal was to value a control interest, a “premium for control” would be added to the value of equity indicated by that publicly traded price.

Andrew Strickland looks at the cases of Attwood v Maidment and the observations that can be made.

Since the introduction of IFRS 3 ‘Business Combinations’, in 2004, acquiring companies have been required to report the fair values of intangible assets arising from an acquisition separately from the residual allocated to purchased goodwill. In 2009, the UK regulator, the Financial Reporting Council (FRC), performed a survey of the accounting for 20 significant acquisitions to review compliance with IFRS 3.