In light of increasing scrutiny by regulators over National Registration Database (NRD) filings and disclosure (and the potential for late fees!) we want to stress that when creating or updating a registrant’s ownership chart, consider whether to include all Specified Affiliates and Specified Subsidiaries.
Specified Affiliates mean a person or company that is a parent of the firm, a specified subsidiary of the firm, or a specified subsidiary of the firm’s parent.
Specified Subsidiaries mean a person or company of which another person or company has significant control.
These two definitions are important as they speak to entities that the registrant controls or that the registrant’s parent controls. For example, if a registrant operates an investment fund structured as a limited partnership, often the registrant or the registrant’s parent may control the general partner of that partnership. Accordingly, technically there may be a requirement to ensure that the general partner of the partnership is included on the registrant’s ownership chart that is filed or updated on NRD.
We note that while the above may be technically required, it is generally not well understood nor standard industry practice to consider and disclose all entities that would be considered a Specified Affiliate or a Specified Subsidiary of the registrant.