Solution

To determine whether the financial instrument will be classified as equity or not, we need to consider the relevant accounting standards. According to IAS 32 Financial Instruments: Presentation, an equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. A financial instrument will be classified as equity if it meets the following criteria:

1. It includes no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities with another party under conditions that are potentially unfavorable to the entity.
2. Any residual interest in the assets of the entity is divided among the instrument's holders in proportion to the number of instruments held.
3. There is no contractual obligation to pay dividends.

Let's apply these criteria to the convertible preference shares of RT Limited held by HT Limited:

1. The terms of the instrument entitle HT Limited to proportionately more equity shares of RT Limited in case of a stock split or bonus issue. This criterion may create a contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities with another party under conditions that are potentially unfavorable to the entity. Therefore, this criterion is not met.
2. Any residual interest in the assets of the entity is divided among the instrument's holders in proportion to the number of instruments held. This criterion is also not met because the terms of the instrument give HT Limited proportionately more equity shares in case of a stock split or bonus issue.
3. There is no contractual obligation to pay dividends. This criterion is not relevant in this case because the question does not provide information about dividend payments.

Based on the above analysis, the convertible preference shares of RT Limited held by HT Limited do not meet the criteria for classification as equity.