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T Motors Ltd. has issued two classes of puttable ordinary shares: ordinary shares (one vote per share) and "A" ordinary shares (no voting rights). BOTH classes share EQUALLY in residual net assets on liquidation. Under Ind AS 32, equity classification of these shares is:
ANot available for either class — the differing voting rights mean they fail the "identical features" requirement of the most subordinate class
BAvailable only for the ordinary (voting) class — the "A" non-voting class fails identical features
CAvailable for both classes — voting rights do not affect liability vs equity classification
DAvailable only for the "A" non-voting class — it has the fewer rights and is therefore more equity-like
Answer & Solution
Correct answer: A. Not available for either class — the differing voting rights mean they fail the "identical features" requirement of the most subordinate class
Condition (3) under para 16A requires that ALL instruments in the most subordinate class have IDENTICAL features. Differential voting rights make the two classes non-identical — neither can qualify. The issuer cannot designate one class as "more subordinate" because both share equally in residual net assets — they are in the same subordinate class.
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