We wanted to remind you of the upcoming deadline for filing the Treasury International Capital Benchmark Form SHL (herein referred to as "Form SHL"). Form SHL is filed every five years with the Federal Reserve Bank of New York (the "NY Fed") and requires U.S. resident entities to report information regarding foreign ownership of U.S. securities. Data is reported as of June 28, 2024 and must be submitted no later than August 30, 2024.
Very generally, Form SHL is required to be completed by, among others, U.S. resident issuers (including pooled investment vehicles such as private investment funds, hedge funds, mutual funds and other similar commingled vehicles), the securities of which are held by foreign residents, to the extent the total fair value of such securities equals or exceeds $200 million.1 Investment advisers and managers typically file a Form SHL on behalf of the U.S. resident issuers they advise.2 As a result, if a U.S. fund has foreign investors with a value of $200 million or more, the fund's investment adviser will need to complete a Form SHL.
Form SHL is a two-part report:
- Schedule 1 to Form SHL requires the U.S. resident report basic identifying information about itself, the securities it issues and summary information about Schedule 2. Schedule 1 is required to be filed if a reporter (a) meets either of the thresholds to report on Schedule 2 or (b) is notified by the NY Fed of an obligation to make a Form SHL filing.
- Schedule 2 to Form SHL requires detailed information regarding U.S. securities, the safekeeping of which is not held with a U.S. resident custodian, to the extent the total fair value of such securities equals or exceeds $200 million.
Notably, Form SHL does not require a reporter to include specific information about the foreign owner of U.S. securities beyond (a) the country of residence of the foreign owner, (b) the country of denomination of the U.S. security, and (c) whether the foreign owner is a "foreign official".
Footnotes
1.For purposes of determining whether the $200 million threshold has been met, a U.S. resident issuer can exclude the value of any securities held with a U.S. resident custodian.
2. For fund structures involving both U.S. and foreign entities (for instance, master-feeder structures), the investment adviser is only required to file with respect to the U.S. entity in the structure. As a result, with respect to a master-feeder structure, an investment adviser would only be required to report with respect to a U.S. master fund (and would report the ownership of the foreign feeder fund, as well as any other foreign direct investors).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.