Repurchase obligations can increase the diluted denominator
Ind AS 33 paragraph 63 addresses contracts requiring an entity to repurchase its own shares, including written puts and forward purchases. Where the exercise or settlement price exceeds the period's average market price and the effect is dilutive, assume enough shares are issued at that average price to fund the obligation, then subtract the shares assumed repurchased. This guide was checked on 28 October 2026 against ICAI's current standard text. Ind AS 33: paragraphs 36–44 and 62–63.
Start with the contract rather than the closing share price
Identify the number of shares, settlement price, dates outstanding and the contractual obligation. The paragraph compares the exercise or settlement price with average market price during the period, not merely the last day's quotation. Preserve a supported price series and averaging method. The simple fixed-share, fixed-price examples below assume ordinary shares, no other instruments and no separate numerator adjustment required on the stated facts. Ind AS 33: paragraphs 36–44 and 62–63.
Calculate the assumed funding issue
For Q shares repurchased at price K and average market price M, the illustrative gross funding issue is Q multiplied by K divided by M. Subtract Q to obtain incremental shares when K exceeds M, then apply the relevant outstanding-period weighting and dilution test. This is an EPS assumption, not a report that the entity actually issued funding shares or paid the contract during the period. Ind AS 33: paragraphs 36–44 and 62–63.
Keep the reverse calculation distinct from ordinary employee options
A written repurchase obligation is not the same as an option holder paying an exercise price to the company. Importing the usual option proceeds-subtraction spreadsheet can reverse the conclusion. Paragraph 62 separately excludes purchased put and purchased call contracts because their assumed exercise would be anti-dilutive. Establish the instrument direction before selecting the formula. Ind AS 33: paragraphs 36–44 and 62–63.
Do not use a denominator adjustment to conceal numerator problems
The ordinary-attributable earnings figure must already be correctly established on the relevant reporting basis. Instrument accounting and any applicable numerator adjustments need their own review, especially for more complex settlement choices. Continuing-operations earnings are the dilution control figure under paragraphs 41–44. In a simple loss case, adding shares makes loss per share smaller and is anti-dilutive. Ind AS 33: paragraphs 36–44 and 62–63.
Weight and reconcile each contract
Under the standard's potential-share timing rules, reflect the period outstanding rather than assuming that a late-year contract existed throughout. Test contracts or series in the required sequence alongside other instruments where relevant. Preserve a bridge from basic weighted shares to incremental repurchase-contract shares and the final diluted denominator. Round reported EPS after the underlying calculation, not each intermediate ratio. Ind AS 33: paragraphs 36–44 and 62–63.
Applicable primary references
Ind AS 33: paragraphs 36–44 and 62–63
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Basic reverse calculation
Assume a whole-year written put over 1,00,000 shares at ₹120, average market price ₹100 and no numerator adjustment. Funding issue is 1,20,000 shares; incremental shares are 20,000. With basic shares 10,00,000 and earnings ₹20,40,000, diluted EPS is ₹2.00 rather than basic ₹2.04.
Illustrative example 2: At the average price
For 1,00,000 shares at exercise price ₹100 and average market price ₹100, the arithmetic funding issue is 1,00,000 and incremental amount zero. The stated above-average-price condition is not met; no extra denominator arises from this simple model.
Illustrative example 3: Different average price
A whole-year obligation covers 1,00,000 shares at ₹150 and average market price ₹120. Funding issue is 1,25,000 shares, leaving 25,000 incremental shares. Using a ₹150 closing price instead of the ₹120 average would incorrectly eliminate the increment.
Illustrative example 4: Part-period weighting
Assume a reasonable half-year weighting for a contract covering 2,00,000 shares at ₹150 with relevant average market price ₹100. Gross assumed issue is 3,00,000, increment before weighting 1,00,000 and weighted increment 50,000. Basic shares 10,00,000 and earnings ₹21,00,000 produce diluted EPS ₹2.00, with no other adjustments.
Illustrative example 5: Loss-case exclusion
Take the first illustration's 20,000 potential incremental shares but ordinary-attributable continuing loss ₹20,40,000. Basic loss per share is ₹2.04; including them would reduce its magnitude to ₹2.00. That effect is anti-dilutive, so exclude them in this simple case and retain loss per share ₹2.04.
Illustrative example 6: Do not aggregate a below-market contract as a negative increment
Contract A has 1,00,000 shares at ₹120 and contract B 50,000 at ₹90, with average market price ₹100 for both and both outstanding all year. A contributes 20,000 incremental shares. B does not satisfy paragraph 63's above-average condition; do not subtract a negative 5,000 from A. The stated combined increment is 20,000, subject to the full dilution analysis.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm the EPS framework | Ind AS applicability and reporting basis |
| 2 | Identify contract direction | Written obligation versus purchased right |
| 3 | Read repurchase terms | Share number, price and settlement conditions |
| 4 | Determine period outstanding | Inception, expiry and actual changes |
| 5 | Validate average market price | Supported series and appropriate averaging |
| 6 | Test the price condition | Exercise or settlement price versus average |
| 7 | Calculate gross assumed issue | Funding amount divided by average price |
| 8 | Compute and weight incremental shares | Assumed issue less repurchased shares |
| 9 | Perform dilution and numerator review | Continuing-operations control and other instruments |
| 10 | Reconcile final EPS | Basic-to-diluted bridge and precision checks |
Sixteen practitioner FAQs
1. Which provision addresses written repurchase contracts?
Ind AS 33 paragraph 63.
2. Can a repurchase obligation increase diluted shares?
Yes, under the prescribed assumptions where the effect is dilutive.
3. Which market price is compared?
The average market price during the relevant period, not simply the closing quotation.
4. What price relationship does paragraph 63 describe?
Exercise or settlement price above that average market price.
5. What is the assumed gross issue used for?
It raises proceeds sufficient to satisfy the repurchase contract.
6. What is then subtracted?
The ordinary shares assumed received through satisfying the contract.
7. Are those assumed shares an actual share issuance?
No. They are part of the EPS computation assumption.
8. Is this the same formula as an employee option?
No. Establish the opposite direction of the cash and share obligation.
9. Are purchased puts treated identically?
Paragraph 62 separately excludes purchased put and call contracts on its anti-dilution rationale.
10. Can the price condition replace the dilution test?
No. The resulting effect must still be dilutive.
11. What happens in a simple continuing-loss case?
Additional shares reducing loss per share are anti-dilutive and excluded.
12. Can a negative increment from another contract offset a valid positive increment?
Do not create that offset by applying the above-market formula to an ineligible below-market case.
13. Must a contract issued late in the year be weighted?
Apply the standard's relevant period-outstanding rules.
14. Is a half-year weighting always mandatory?
No. It is an expressly assumed reasonable approximation in the illustration.
15. Can every complex settlement contract use these simplified examples?
No. Review its instrument terms, relevant provisions and numerator effects.
16. When should EPS be rounded?
After completing the supported numerator, weighting and denominator calculation.
Conclusion
Calculate incremental shares for written puts and forward repurchase contracts under Ind AS 33 paragraph 63, with average-price and anti-dilution checks.