CPC Scores Win as FASB Indefinitely Delays

SFAS 150 for Private Companies

At a meeting of the Financial Accounting Standards Board (FASB) on November 6 to discuss and review comments on FASB Staff Position 150-c, the Board decided to indefinitely delay portions of SFAS 150 that deal with the mandatorily redeemable shares of non-public companies. FEI's Committee on Private Companies had commented to the FASB that private company shares should be exempted from the scope of SFAS 150. CPC's comment letter is located here.

Through the issuance of FSP 150-3 on November 7, the Board decided to institute a two-year delay in the implementation of SFAS 150 for non-SEC registrants who have shares subject to mandatory redemption upon a fixed date or amount. For such arrangements, SFAS 150 would be in effect for financial periods beginning after December 15, 2004.

FSP 150-3 will also indefinitely delay implementation of SFAS 150 as it applies to the shares of private companies that are mandatorily redeemable upon death or separation from service. The Board has said that it plans to re-examine this issue during phase II of its liabilities and equity project or during phase II of its business combinations project.

Furthermore, FSP 150-3 will indefinitely delay the additional disclosures that SFAS 150 would have required. Finally, it will clarify that FAS 129 already requires certain disclosures for equity instruments, including redemption features, and that SFAS 129 continues to apply in these situations.

Contact Bob Shepler for additional information at 202 626-7806 or bshepler@financialexecutives.org.