Whether Employee purchasing shares of fellow subsidiary company is RPT?

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Student CS
30 Points Posted on 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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On 19 September 2022 at 13:46 Report
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Quick Summary
This discussion explores whether an employee of one subsidiary (B Ltd) purchasing shares in a fellow subsidiary (A Ltd or C Ltd) qualifies as a related party transaction (RPT). The consensus is that if the employee is not a Key Managerial Personnel (KMP) and the transaction isn't specifically listed under Section 188 of the Act, it likely doesn't constitute an RPT, even though accounting standards might consider fellow subsidiaries as related entities.

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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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On 19 September 2022 at 14:20
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Finance
4592 Points Posted on 19 September 2022

Employees are creditors and not related party

As per AS-18 a relative broadly includes-

  1. Associate Companies
  2. Subsidiaries
  3. Fellow Subsidiary
  4. Intermediary Companies
  5. Controlled Companies
  6. Holding Company
  7. Key Managerial Personnel and there relatives
  8. 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.
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On 19 September 2022 at 19:01

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