The International Financial Reporting Interpretations Committee (IFRIC) has issued IFRIC 8, Scope of, which clarifies that , Share-based Payment, applies to arrangements in which an entity makes share-based payments for apparently nil or inadequate consideration.
IFRIC 8 argues that, if the identifiable consideration given appears to be less than the fair value of the equity instruments granted or liability incurred, other consideration typically has been, or will be, received by the issuing entity. Therefore, where for public policy or other reasons, an entity gives its shares or rights to shares to individuals, organisations or groups that have not provided goods or services to the entity, the arrangements fall within the scope of. IFRIC 8 may be obtained from www.iasb.org. It applies to annual periods beginning on or after 1 May 2006. Earlier application is encouraged.