Transactions in Financial Assets and Liabilities 239
9.51 From time to time, corporations restructure
their shares and may off er shareholders a new number
of shares for each share previously held. Th ese bonus
shares are not, however, treated as transactions, but
as a form of redenomination. If a public corporation
buys its own shares, the transaction is classifi ed as
being a reduction in the equity liability, rather than
an acquisition of an asset. Because a corporation can-
not have a claim on itself, the liability is deemed to be
extinguished, even if the shares are not canceled.
9.52 Membership dues and subscription fees
payable to international organizations are treated
as the acquisition of equity in cases when there is a
possibility—even if unlikely—of repayment of the full
amount.^15 A capital contribution to an international
organization or nonprofi t institution is a capital trans-
fer if it does not give rise to equity for the provider of
the contribution (see paragraphs 6.94 and 6.124).
Privatization/Nationalization
9.53 Privatization generally is the disposal to pri-
vate owners by a government unit of the controlling
equity of a public corporation or quasi-corporation.
Such a disposal is treated as a transaction in equity.^16 If
a public corporation or quasi-corporation sells some
of its assets and provides part or all of the proceeds to
its parent government unit, then the provision of the
proceeds would also be a disposal of equity of the gov-
ernment unit. Brokers’ commissions and other priva-
tization costs are expense transactions just as all other
costs of ownership transfer related to the acquisition
or disposal of a fi nancial asset.
9.54 Government units also can be privatized.
If the assets disposed of as a single transaction con-
stitute a complete institutional unit, the transaction
should be classifi ed as a sale of equity. Th e govern-
ment is assumed to have converted the unit to a quasi-
corporation immediately prior to disposal by means of
a reclassifi cation of assets, which should be recorded
as an other economic fl ow. If the assets disposed of do
not constitute a complete institutional unit, then the
(^15) In most cases, these membership dues and subscription fees
should be recorded as an expense in use of goods and services (22)
if there is an exchange of a payment for some form of a service or,
if no exchange, as a current transfer not elsewhere classifi ed (2821).
(^16) Th e public corporation is reclassifi ed to a private corporation
through an entry in other changes in the volume of assets and
liabilities, as explained in Chapter 10.
transactions should be classifi ed as a disposal of the
individual nonfi nancial and/or fi nancial assets.
9.55 Nationalization is generally the acquisition
from private owners by a government unit of the
controlling equity of a private corporation or quasi-
corporation. Such an acquisition is treated as a trans-
action in equity. In some exceptions, government
units may acquire ownership of a private corporation
or quasi-corporation by way of confi scation or ap-
propriation. Th ere is no payment to the owners (or
the compensation is not commensurate with the fair
value of the assets). Th is is not the result of a transac-
tion by mutual agreement. Th e diff erence between the
market value of the asset acquired and any compensa-
tion provided (a transaction) should be recorded as
other changes in the volume of assets, in the form of
an uncompensated seizure (see paragraph 10.62).^17
Investment fund shares or units (32052,
32152, 32252, 33052, 33152, 33252)
9.56 Changes to the value of investment funds due
to the issuance or repayment of shares or units are re-
corded as transactions. Th e increase (decrease) in the
value of investment fund shares or units, other than
from holding gains and losses, is recorded as distrib-
uted to the share- or unit holders and reinvested by the
holders in the shares or units (see paragraph 5.121).
Th is treatment is similar to the treatment of retained
earnings of a foreign direct investment enterprise.
Gains and losses arising from the value of an asset
or fund to refl ect its current market value are not re-
corded as transactions, but as holding gains or losses.
Insurance, Pension, and Standardized
Guarantee Schemes [GFS] (3206, 3216,
3226, 3306, 3316, 3326)
9.57 General government units may incur liabili-
ties for these reserves, entitlements, and provisions
as operators of nonlife insurance and standardized
guarantee schemes, nonautonomous pension funds,
and unfunded pension schemes. General government
units may acquire insurance technical reserves as fi -
nancial assets in their capacity as holders of nonlife
insurance policies. Public corporations can engage
(^17) Th e same treatment would apply to the acquisition of land or
any other nonfi nancial asset under a compulsory sale.