Financial instrument with non-financial obligation that must be settled if, and only if, the entity fails to redeem the instrument

The reporting entity borrows €1 million from its bank for five years on terms that, at the end of five years, the entity must deliver its head office building to the bank but may instead repay the loan at €1 million plus rolled-up interest at market rates.


Change of control

X plc is owned by: two wealthy individuals A and B, who own, respectively, 48% and 42% of X"s equity, together with a number of private individuals with small shareholdings totalling 10% of the equity.

In practical terms, if A and B agree that B will sell his shares to A, thus giving A a 90% controlling stake in the entity, it makes very little difference whether this is achieved by a private sale treaty between A and B or a general meeting of the company (at which A and B would be able to cast 90% of available votes in favour of the transaction).

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