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A Wunderful Member Convention dictates not to start with an apology, but Socrates apologises ab initio if his monthly column is too focused on the Supplier of Choice (SoC), but it does dominate the direction of a large proportion of the diamond industry and De Beers’ London based Diamond Trading Company, the DTC, is still the largest player in the pipeline.The DTC publishes in its profile notes, a diagram of a theoretical sightholder called W undergems which demonstrates the various permutations of inclusion of companies within a sightholder group. In 2005 the DTC had three definitions of a group company:
The latter two, but not the first, required that the parent company must be a member, i.e. shareholder, of the subsidiary. Then in November 2005 the idea of requiring IFRS was floated, which gives a fourth definition not requiring a shareholding. In Q1 2006 after some sightholders spent money to become IFRS compliant, IFRS was dropped, but the requirement of maintaining a shareholding still remained. By the end of July 2006 when the absolutely final Profile Lite notes were published, the shareholding requirement was thankfully dropped. All this, you remember, was retrospective to 2005. Now in 2007, the Profile notes are even more convoluted. The shareholding requirement is back, yet there is one exception; “ the holding company does not have to be a member of the applicant” which would appear to apply only to the holding company of the sightholder company applying for a contract.Given that this was published in May 2007 and is applicable to 2006 gives rise to the conundrum of how, if you followed the 2005 definition without a shareholding, to change your group company structure retroactively to 2006. A proposal to ‘grandfather’ group companies recognised for 2005 to be accepted as group companies for 2006 was not accepted. Fortunately, the separate BPP definition has disappeared and all group companies have to be consolidated, or at least combined, with Appendix One being the authoritative list. It is a pity that the DTC did not adopt the internationally acceptable IFRS definition, see IAS 27, section 13; perhaps next year? But Socrates invites readers to decipher the wunderful line from the 2007 Notes, “The applicant being a member of the applicant..” |
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