Ordinary-looking sales, purchases, loans and leases can move value between a listed company and connected parties.
Quick View
Decide whether the transaction serves the listed company on fair terms and whether governance controls are credible.
Read annual-report RPT notes.
Annual-report RPT note.
Focusing only on transaction value.
Why It Matters
Related parties can include promoters, subsidiaries, associates, key management and connected entities under applicable frameworks. Definitions can differ across law and accounting.
Investors should examine transaction value, recurring nature, pricing basis, credit period, guarantees and year-end balances. A small profit impact can hide a large cash or balance-sheet exposure.
Audit-committee, board and shareholder approvals may apply depending on materiality and current regulations. Approval alone does not prove commercial fairness.
Decision Framework
| Area | What to assess | Investor rule |
|---|---|---|
| Counterparty | Relationship and ultimate ownership are identified. | Map the group. |
| Purpose | Business need and alternatives are understood. | Reject vague explanations. |
| Terms | Price, credit and security are benchmarked. | Compare independent deals. |
| Governance | Approvals, abstention and disclosures are reviewed. | Track repeated exceptions. |
Action Checklist
- Read annual-report RPT notes.
- Compare cash and outstanding balances.
- Review loans and guarantees.
- Check approval disclosures.
- Track transactions over several years.
- Assess counterparty financial strength.
Practical Example
Evidence to Keep
- Annual-report RPT note.
- Exchange disclosures.
- Audit-committee and shareholder notices.
- Receivable and payable trends.
- Guarantee and loan notes.
- Group structure.
Warning Signs
- Focusing only on transaction value.
- Ignoring outstanding balances.
- Accepting ‘arm’s length’ without basis.
- Missing guarantees.
- Analysing one year in isolation.
How to Analyse
Follow the cash. A related-party transaction can appear profitable while delaying collection, shifting risk or supporting another group entity.
Compare disclosure language and amounts across annual reports, investor presentations and exchange filings for inconsistencies.
The investor should record the product, entity, amount, expected return source, maximum credible loss, liquidity, cost, holding period and exit route before transferring money. A decision that cannot be explained without a price target or influencer claim is not yet an investment thesis.
Regulations, product terms, charges, taxes and complaint procedures can change. Use the latest official document and the investor’s actual statement rather than an old screenshot or generic online table.
Investor Safety Test
First verify the legal entity and regulated role. A familiar brand, app-store listing, social-media badge or celebrity does not prove that the person receiving money is the registered intermediary.
Second verify the money and asset trail. Payment should move through the appropriate regulated account, and the investment should appear in an independent contract note, depository statement, folio record or lawful product report.
Third compare return with the risk that produces it. High yield, rapid profit, leverage, illiquidity, concentration and complex valuation are not separate from return; they are often the reason the expected return looks attractive.
Fourth preserve evidence. Statements, product documents, risk disclosures, communications, ticket numbers and complaint acknowledgements should be stored outside the app or platform being disputed.
Finally, separate a disappointing market outcome from fraud, mis-selling, unauthorised activity or service failure. The correct complaint route and available relief depend on that distinction.
Deeper Review
The review should use the same transaction or holding population across all evidence. For this topic, the main areas are counterparty, purpose, terms, governance. If the app, contract note, depository statement, factsheet and tax record describe different positions, the investor should resolve the difference before taking another action.
Suitability has two layers: product risk and household capacity. A product can be lawful and accurately disclosed yet still be unsuitable for money needed for education, emergencies, near-term housing or debt repayment.
The investor should separate price volatility from permanent loss. Temporary market movement, issuer default, fraud, forced sale, liquidity failure and excessive cost require different controls and complaint routes.
Every review should end with a written action: hold with a stated reason, reduce concentration, seek clarification, stop further transfers, preserve evidence or escalate through the regulated entity and official platform.
Follow cash and control, not only accounting profit. Receivables, guarantees, related parties, debt and pledges can transfer risk without immediately reducing reported earnings.
Compare disclosures across several periods and official filings. A changing explanation, missing reconciliation or repeated exception can be more informative than one isolated ratio.
Common Questions
Are all related-party transactions harmful?
No. They can be commercially valid when fairly priced, approved and disclosed.
Does shareholder approval guarantee fairness?
No. It is a governance step, not an investment-quality assurance.
Why review balances?
Loans, receivables and advances reveal continuing exposure beyond annual transaction value.
What is a major warning?
Large recurring value transfer without clear business purpose or independent pricing evidence.
Official Sources
Official links provide the regulatory or investor-protection framework. Product suitability and outcomes still depend on the investor’s circumstances and the current document.