# Commission Regulation (EC) No 1864/2005 of 15 November 2005 amending Regulation (EC) No 1725/2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council, as regards International Financial Reporting Standard No 1 and International Accounting Standards Nos. 32 and 39 (Text with EEA relevance), Division 11A

Extent: E+W+S+N.I.

Notwithstanding paragraph 11, if a contract contains one or more embedded derivatives, an entity may designate the entire hybrid (combined) contract as a financial asset or financial liability at fair value through profit or loss unless:
(a) the embedded derivative(s) does not significantly modify the cash flows that otherwise would be required by the contract; or
(b) it is clear with little or no analysis when a similar hybrid (combined) instrument is first considered that separation of the embedded derivative(s) is prohibited, such as a prepayment option embedded in a loan that permits the holder to prepay the loan for approximately its amortised cost.

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Source: https://www.legislation.gov.uk/eur/2005/1864/annex/division/B/division/AMENDMENTS/division/2/division/11A (the official version)
Page: https://openlegislation.uk/eu-regulation-2005-1864/annex/division-B/division-AMENDMENTS/division-2/division-11A
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.