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IFRS: Reverse acquisition by a listed company

Louise Kelly Louise Kelly

Private operating companies seeking a ‘fast track’ stock exchange listing sometimes arrange to be acquired by a smaller listed company (sometimes described as a ‘shell’ company). This usually involves the listed company issuing its shares to the private company shareholders in exchange for their shares. How should these transactions be accounted for? 

This document looks at:

  • is the transaction a business combination?;
  • accounting when the transaction is not a business combination;
  • accounting when the transaction is a business combination;
  • identifying the accounting acquirer;
  • is the acquisition a business combination?;
  • developing an accounting policy when the listed shell is not a business;
  • treatment of excess of acquisition cost over net assets acquired;
  • disclosures; and
  • separate financial statements.