Share-based payment transactions with non-employees

These transactions fall within the scope of IFRS 2 when an entity receives goods or services in exchange for its own equity instruments or cash amounts based on the value of those equity instruments.

For non-employee arrangements, entities must measure the transaction at the fair value of the goods or services received, or, where this cannot be reliably estimated, at the fair value of the equity instruments granted.

The timing of measurement is generally based on the date the goods or services are received, which may differ from employee share-based payment arrangements where measurement is typically based on the grant date.

Key considerations in Saudi Arabia

Entities operating in Saudi Arabia, particularly those applying IFRS within group structures or multinational arrangements, should consider:

• Whether goods or services received from non-employees meet the definition under IFRS 2
• The appropriate fair value measurement basi
• The timing of recognition of expenses in profit or loss
• Whether arrangements are equity-settled or cash-settled

These considerations are particularly relevant for entities engaging external consultants, advisors, or service providers through equity-linked incentive arrangements.

IFRS 2 requires entities to disclose the nature and extent of share-based payment arrangements with non-employees, including valuation methods, key assumptions, and the financial impact on the financial statements.

Clear disclosure enhances transparency and supports users of financial statements in understanding the impact of these arrangements.