Document conflicts and related parties

Look beyond ownership

Consider related-party transactions, competing investments, allocation of opportunities, affiliate services, sponsor compensation, other duties, and decisions where one party benefits at investors’ expense. The actual deal determines which conflicts exist.

Describe the process

Explain the relationship, potential harm, and the process for managing the conflict. Identify approval rights, pricing methods, disclosures, and any independent review. A broad sentence saying conflicts may exist is rarely a useful description of a known arrangement.

Keep it consistent

Reconcile conflicts with fees, sponsor roles, governance, and governing documents. Do not invent conflicts to reach a count. Use the help center to understand the section, then ask counsel to review the substance.

Describe the relationship and its practical effect

Write who has the conflict, what relationship or compensation creates it, and how it can affect a decision. Examples to investigate include affiliated service providers, allocation among competing vehicles, sponsor borrowing, related-party acquisitions, and incentives tied to fees or performance.

Only describe controls that actually exist. Do not claim independent approval, competitive bidding, fee offsets, or investor consent unless the governing arrangement requires and supports that process. Cross-check the disclosure with fees, sponsor information, acquisition terms, and governance. Add another disclosure when there is another substantive conflict, not to satisfy a row count.