| IAS 1.135 requires disclosure of the nature of any externally imposed capital requirements and how they are incorporated into the management of capital. Confirmation is also required of whether the entity has complied with these requirements and, if not, the consequences of such non-compliance. |
| The disclosures made by the 40 companies were classified as follows: |
|
External capital requirements |
Fairly informative |
2 |
Slightly informative |
5 |
Boilerplate |
12 |
Missing |
6 |
Likely not applicable |
15 |
Total |
40 |
| It was not always possible to identify where externally imposed capital requirements were present. Clearly, financial services businesses are subject to regulatory capital requirements, but other regulated businesses may also be subject to externally imposed capital requirements. |
| Further, there is some lack of clarity over whether in the UK the restrictions on dividends in the absence of distributable profits are caught by these provisions. Certainly, if dividend policy is constrained by an absence of distributable profits it seems logical that this should be addressed as it will be relevant to those investors that base their valuations, at least in part, on forecast dividend flows. |
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