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For those entities applying IFRS or FRS 101 with an accounting period beginning on or after 1 January 2018 refer to IFRS 9 for the recognition and measurement of financial instruments at CFM 21800+.

Held to maturity investments

Held to maturity investments (‘HTM�) are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity, other than:

• those that the entity upon initial recognition designates as at fair value through profit or loss (FVTPL);
• those that the entity designates as available-for-sale (AFS); and
• those that meet the definition of loans and receivables (L&R).

Held-to-maturity investments are likely, in practice, to be a restricted class since the decision to classify as HTM indicates the investor is indifferent to future profit opportunities. For example, a company might hold gilts or corporate bonds as a long-term investment, but would be prepared to sell them if it needed cash to finance a future expansion of the business. The company could not classify the assets as HTM - it cannot demonstrate the necessary positive intent and ability to hold them to maturity.

Equity shares in a company do not have a ‘maturity date�, so they cannot be HTM investments.

CFM21570 contains guidance on when classification of investments as HTM is restricted.

HTM assets are stated at amortised cost, using the effective interest method (CFM21170).