entity a has a wholly owned subsidiary gp which is the general partner and fund mana 611690

Illustration of exposure to variability of returns through indirect interests

Entity A has a wholly-owned subsidiary, GP, which is the General Partner and fund manager of a Fund. A has a 50% interest in the shares of Entity B and, as a result of the contractual arrangement with the other investors in B, has joint control of B. GP has a 1% interest in the Fund, with the remaining 99% of the Fund owned by B.

It has been assessed and concluded that GP, in its capacity as the fund manager, has power over the Fund. Therefore, by extension, A has power over the Fund. At the same time, GP also concluded that it is acting on behalf and for the benefit of another party or parties, i.e. as an agent for the investors, and therefore does not control the Fund.

B also evaluated its involvement with the Fund and determined it has no power over the Fund, and therefore does not control it.

A has joint control of B. It does not have control over B and therefore does not control how the returns from the Fund are ultimately distributed to the investors in B.

While A does not control how the returns from the Fund are ultimately distributed, its indirect entitlement to the returns of the Fund are considered with its direct investment through the GP when evaluating whether there is sufficient exposure to variable returns, when combined with power, to conclude that control exists.