The Lowenstein Sandler Investment Management Group is pleased to provide you with (i) general information on the purpose and applicability of the Form SHC (“Form SHC”); (ii) a summary of its contents; (iii) considerations for pooled investment vehicles such as hedge funds, private equity funds and other alternative investment vehicles with respect to Form SHC; and (iv) information on its filing deadline.


Form SHC: Declaration of U.S. Ownership of Foreign Securities, Including Certain Money Market Instruments is a five-year benchmark survey (recurring every five years) filed with the Federal Reserve Bank of New York. Data collected by the Federal Reserve Bank of New York, acting on behalf of the Treasury Department (Treasury), is used by the U.S. government to determine the U.S. balance of payments accounts, U.S. international position , to help formulate international financial and monetary policies, and to improve statistics on foreign securities holdings of major investing countries compiled and maintained by the International Monetary Fund (IMF).

A U.S. resident custodian of foreign securities or “end investor” (a U.S. resident organization that holds investments in foreign securities on behalf of others or for its own portfolio, such as an investment manager or fund promoter) is required to file this report if it (i) has received a notice from the Federal Reserve Bank of New York requiring it to file, or (ii) holds portfolios of foreign securities above the reporting thresholds (described below).

A U.S. end investor includes, but is not limited to, financial and non-financial organizations (that is to sayIntermediate Holdings Companies), managers of private and public pension funds, managers or promoters of private investment vehicles (for example., money market mutual funds, unit investment funds, exchange-traded funds, hedge funds, limited partnerships, private equity firms and venture capital firms), insurance companies, foundations, university endowments , trusts and estates.

A U.S. resident person or organization required to file Form SHC must provide detailed, security-by-security information about their holdings of foreign securities. The SHC form collects information about U.S. residents’ holdings of (i) foreign portfolio securities (that is to say., foreign stocks); (ii) short-term debt securities (including certain money market instruments); (iii) long-term debt securities; and (iv) asset-backed securities, which must be reported separately from other debt securities. Foreign securities are all securities issued by entities incorporated under the laws of a foreign country (that is to sayany entity legally incorporated in a foreign country) and all securities issued by international or regional organizations.

Certain types of securities are not reportable under Form SHC, including, but not limited to: derivative contracts (for example, futures, futures, swaps, options and warrants), loans and loan participation certificates, letters of credit, non-negotiable certificates of deposit (CDs) and bank deposits (except negotiable CDs) . Holdings known to be “direct investments” (10% or more of the voting equity of a foreign incorporated company or an equivalent interest in a foreign unincorporated company) are excluded from reporting on the SHC form.

Content of the SHC form

The SHC form consists of three schedules, each with a different reporting requirement:

  • Appendix 1. This appendix contains basic identifying information about the reporter and their reporting status, as well as summaries of the data reported on Appendix 2 and Appendix 3. If a custodian or end investor has received a notice from the Federal Reserve Bank of New York that he is required to file, but does not meet the reporting thresholds (described below), such a filer would only need to provide identifying information basis and indicate that its reporting status is “exempt”.
  • Appendix 2. This appendix contains details of foreign securities (i) the custody of which is maintained by the filer for itself and other US residents; (ii) the custody of which the declarant has entrusted directly to foreign resident sub-custodians or to US or foreign resident central securities depositories to manage the safekeeping of such securities; or (iii) of a type for which there is no US custodian to administer their custody. Schedule 2 only needs to be completed if the total fair value (aggregated for all accounts) of these foreign securities is $200 million or more.
  • Appendix 3. This appendix summarizes summary data regarding foreign securities entrusted to an unaffiliated US resident custodian (which is not a US resident central securities depository) by the US parts of the registrant’s organization and its US resident clients that the declarant represents as an end-investor. Detailed security-by-security information regarding such foreign securities will be reported on Schedule 2 of the Form SHC submitted by the unaffiliated US resident custodian. Schedule 3 should be completed for each US custodian only if the total fair value (aggregated across all accounts) of those foreign securities is $200 million or more.

Impact on hedge funds, private equity funds and other alternative investment vehicles

Non-voting interests in resident alien funds must be included as reportable equity securities on Form SHC by a person or organization resident in the United States, if that person or organization holds foreign portfolio securities above the reporting thresholds (described above). Foreign ownership in a fund is determined based on the country in which the fund is legally established, regardless of where the security is issued or traded. Accordingly, investment advisers, managers, or similar types of legal entities and fund sponsors that establish master-feeder fund structures outside and inside the United States must report all investments relationship between the United States and the foreign resident affiliated funds that the investment manager has established. That is, limited partnership interests in a Cayman Master Fund held by a US Feeder Fund involve Form SHC.

When to deposit

Form SHC data as of December 31, 2021 must be filed with the Federal Reserve Bank of New York by March 4, 2022. As a reminder, Form SHC should only be filed by a U.S. custodian or end investor who (i) has received notice from the Federal Reserve Bank of New York that it is required to do so, or (ii ) holds foreign portfolio securities above the reporting thresholds (described above). A copy of the SHC form and related instructions, as published by the Treasury Department, can be found here.