Form SHL

The Department of the Treasury recently announced that certain U.S. persons must complete a survey of foreign ownership of U.S. securities as of June 30, 2019.  A U.S. person must file Form SHL if the person (1) manages the safekeeping of U.S. securities (e.g., custodians) if the total market value of the U.S. securities whose safekeeping they manage on behalf of foreign persons is $100 million or more as of June 30, 2019, (2) issues securities if the total market value of those securities owned directly by foreign persons is $100 million or more as of June 30, 2019, or (3) received a letter from the Federal Reserve Bank of New York requiring that person to file Form SHL.  Form SHL requires the filer to provide information on foreign resident holdings of U.S. securities, including equity securities, short-term debt securities and long-term debt securities.  Equity securities include limited partnership interests.

U.S. private funds may fall into the second category of mandatory filers, for example, if foreign persons directly own $100 million or more of their interests.  For example, if a Delaware “master fund” has a Cayman “feeder fund,” and the value of that feeder fund’s investment in the master fund on June 30, 2019, was $100 million or more, then that Delaware master fund must file Form SHL to report the feeder fund’s investment in the master fund.  Generally, holdings of affiliated U.S. entities must be aggregated for the purpose of determining if the $100 million threshold is met.  Interests held through a U.S. entity, however, such as a U.S. nominee, are not included.

The report is due by August 30, 2019, and it must be filed with the Federal Reserve Bank of New York.  The form and instructions are available here.

If you have any questions, please contact one of the attorneys in the Investment Funds & Advisers Group at Shartsis Friese LLP: John Broadhurst, Geoffrey Haynes, Carolyn Reiser, Neil Koren, Jim Frolik, Christina Hamilton, David Suozzi, Joan Grant or Lyn Roberts.

Previous letters to our investment advisory clients and friends and discussions of other topics relevant to private fund managers, investment advisers and private investment funds can be found at our insights page: