Form SHL: What You Need to Know

The US Department of the Treasury (the Treasury), with the assistance of the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York, conducts a mandatory benchmark survey every five years. The survey requires certain US resident entities to report US securities owned by foreign residents by filing Treasury International Capital Benchmark Form SHL (herein referred to as Form SHL) by August 30, 2024, using data as of June 28, 2024 (the last business day in June).

Who Must File. US resident custodians (including broker‑dealers), US resident central securities depositories and US resident issuers (including investment advisers on behalf of their private funds) that either meet the reporting threshold for Schedule 2 set out below or receive a notification from the Federal Reserve Bank of New York have an obligation to report non-US resident ownership of US securities.

Reporting Threshold for Schedule 2. The reporting threshold is met if the total fair market value of reportable US securities owned by non-US residents is equal to or exceeds $200 million as of the close of business on June 28, 2024. US resident entities must consolidate all US resident parts of their organization, which for investment advisers includes all US investment funds and joint ventures. Reportable US securities include equity securities (including limited-partner interests), debt securities, and asset-backed securities. Certain securities, such as derivatives, loans, letters of credit, nonnegotiable certificates of deposit, bank deposits, annuities, and direct investments (as further described below), do not need to be reported. The complete list of reportable and nonreportable US securities is specified in the instructions for Form SHL, linked below.

Timing and How to File. Reports for the next SHL benchmark survey must provide data as of June 28, 2024, and must be submitted by August 30, 2024. Form SHL can be submitted electronically using the Federal Reserve Reporting Central System. Filers submitting less than 100 Schedule 2 records also have the option of submitting the form via mail.

Applying for a Reporter Identification Number. US resident entities that must file Form SHL are required to obtain a Reporter Identification Number (referred to in the filing as an RSSD) for the filing entity. An RSSD can be obtained by emailing SHLA.Help@ny.frb.org or calling the SHL staff at (212) 720-6300 or (646) 720-6300, and typically takes one to two business days to receive. If a filer has an RSSD from a previous filing, it can reuse such RSSD.

Requested Information. Form SHL is composed of two schedules:

• Schedule 1 requires US resident entities to report basic identifying information and summaries of data reported on Schedule 2.
• Schedule 2 requires detailed information regarding US securities held by non-US residents, including the name and type of issuer, the type of securities, the currency denomination of the securities, the country and type of the non-US holder, and the fair value of the securities.

Exception for Direct Investments. Form SHL has a reporting exception for any holding that is a “direct investment.” When a foreign entity owns or controls 10% or more of the voting securities of a US resident entity, that holding is generally considered a direct investment and should be excluded from Form SHL. Notably, however, investments in private funds, or between the entities of a private fund, are not considered a “direct investment” and therefore are not excluded from Form SHL unless certain additional conditions are met.

Confidentiality — Use of Reported Data. Form SHL is filed on a confidential basis, and the data contained therein is disclosed to the public only on an aggregate basis. The Treasury uses data from Form SHL to meet international reporting requirements, formulate international and financial policies, and determine the US balance of payments and the US international investment position.

Penalties for Failure to File. Failure to submit a Form SHL can result in a civil penalty of up to $25,000 and injunctive relief, and willful failure to submit a Form SHL can result in a fine of $10,000 and imprisonment for up to one year. Any officer, director, employee, or agent who knowingly participates in willful failure to submit a Form SHL may be punished by a like fine or imprisonment.

For additional information and guidance, a copy of Form SHL and the instructions are available here. If you have any questions about Form SHL or the reporting requirements, please reach out to your Goodwin contact or a lawyer listed below.

This article provides only a high-level overview of Form SHL. Form SHL is part of a series of Treasury International Capital forms (TIC Forms) used by the US Department of the Treasury to gather information on cross-border portfolio investment flows and positions between US and non-US residents. Reporting obligations for US resident entities vary, and private fund advisers may be required to file one or more TIC Forms.

 

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.