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Whether Employee purchasing shares of fellow subsidiary company is RPT?

Radhika Sharma (Student CS) (30 Points)

19 September 2022

Hello All,

There are 3 companies. A Ltd, B Ltd, and C Ltd.

B Ltd and C Ltd are subsidiaries of A Ltd.

If an employee of B Ltd buys shares of A Ltd or C Ltd, will this amount to a related party transaction?

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2 Replies

(Guest)

Employee doesn't come under related party definition as per Act. Unless he is employee in capacity of KMP. Further purchase of shares also doesn't come under RPT as given in Sec. 188 of the Act.

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Yasaswi Gomes new (Finance ) (4514 Points)
Replied 19 September 2022

Employees are creditors and not related party

As per AS-18 a relative broadly includes-

Associate Companies
Subsidiaries
Fellow Subsidiary
Intermediary Companies
Controlled Companies
Holding Company
Key Managerial Personnel and there relatives
Individuals owning direct or indirect interest in Enterprise the voting power of the reporting enterprise or having significant influence over the reporting company or relatives of such individuals.