Who Is Considered a Related Person on Form D?
Navigate Form D disclosure rules by learning how to properly identify and report the key individuals connected to your exempt securities offering.
When a company raises capital through certain private offerings, it must file a notice with the U.S. Securities and Exchange Commission (SEC) called Form D. This form is required for offerings exempt from standard registration under Regulation D. A part of this filing involves disclosing information about individuals connected to the company, referred to as “Related Persons.” This disclosure provides transparency about the people behind the company’s structure and fundraising.
The Form D must be filed electronically via the SEC’s EDGAR system no later than 15 calendar days after the first sale of securities in the offering. Understanding who qualifies as a Related Person is necessary for any company filing a Form D, as accurate information is required for compliance with federal securities laws.
Who Qualifies as a Related Person
The term “Related Person” on Form D includes individuals with significant roles in the issuing company. This disclosure requirement provides a clear picture of the company’s management and influential figures. The focus is on who is steering the company, not necessarily who has invested, which helps regulators understand who controls the entity raising capital.
A company’s executive officers are one category of Related Person. The SEC defines an executive officer by their function rather than their title. This includes the company’s president, any vice president in charge of a principal business unit, and any other person who performs a policy-making function for the issuer. Common examples are the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Operating Officer (COO).
The company’s directors are another group that must be disclosed. This includes every member of the board of directors or any individual performing a similar function, regardless of their official title. For instance, if a venture capital fund that invested in the company appoints a partner to the board, that individual must be listed as a director.
A promoter is a third category of Related Person. A promoter is defined as any person who takes the initiative in founding and organizing the business. The term also includes any person who, in connection with the company’s formation, receives 10% or more of any class of its securities or 10% or more of the proceeds from their sale. This can include a founder who no longer holds an executive or director title.
Required Disclosure Information
For each Related Person, a company must collect specific information to enter into Item 3 of Form D. Preparing this data in advance streamlines the submission process and helps prevent errors. The required information is uniform for each person listed.
The filer must provide the individual’s full legal name and their complete residential or business street address. The address must include the street name and number, city, state, country, and ZIP code.
Next, the filer must specify the person’s relationship to the company by checking the applicable boxes for “Executive Officer,” “Director,” or “Promoter.” If an individual holds multiple roles, such as being both an officer and a director, all relevant boxes must be checked.
For individuals identified as a promoter, the form provides an optional field for clarification. This text box allows the filer to provide a brief explanation of the person’s role in founding or organizing the business, which can be helpful context for reviewers.
How to Complete Item 3 of Form D
The information described above is entered into Item 3 of the electronic Form D, filed through the SEC’s EDGAR system. After initiating a Form D filing, navigate to the “Related Persons” section.
To add an individual, use the “Add Related Person” function. This action opens a new set of fields where you will input the required name, address, and relationship details for the first person.
After filling in the information for one person, save the entry. The system will then show the added person in a list. You can repeat this process for each additional individual and use the EDGAR interface to edit or delete entries before final submission.