Share Subscription attracts RPT provisions of Listed Company?

[falguni shah]

Dear Members,

I have query in regard to RPT provisions of Listed Company.

Scenario

ABC Ltd (Listed Co) subscribe to Equity Shares of PQR Ltd (Unlisted Public Co). Mr A is common Director in both co ABC Ltd and PQR Ltd. Mr. A holds 39% stake in PQR Ltd. Will share subscription attract RPT Provisions for ABC Ltd?

Please suggest on this.

Regards

Falguni

Mobile No. 9766450422

[R V Seckar]

Yes, a share subscription can attract Related Party Transaction (RPT) provisions for a listed company in India, particularly if the subscriber is a "related party" under the Companies Act, 2013 or SEBI Listing Regulations. 

While a preferential allotment to all shareholders in proportion to their holding is exempt, other forms of share subscriptions that benefit a related party are scrutinized for potential conflicts of interest. 

How a share subscription becomes an RPT

A share subscription triggers RPT provisions if the subscriber falls under the broad definition of a "related party" and the transaction does not meet specific exemptions. 

1. Definition of related party

The subscriber of the shares is a related party if they are a: 

• Director or their relative
• Key Managerial Personnel (KMP) or their relative
• An entity in the promoter or promoter group
• Any person or entity holding 10% or more of the company's equity shares (as of April 1, 2023)
• Any person on whose advice, direction, or instructions a director or manager is accustomed to acting 

 

• SEBI LODR Rules for Related Party Transactions - TaxGuru

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• Related Party Transactions - Companies Act 2013 - ClearTax

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• SEBI's New Guidelines for Related Party Transactions - Ricago

  21 Aug 2025 — SEBI's Revised Related Party Transaction Rules: What You Need to Know * Expanded Definition of Related Parties : Previo...

  

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