Memorandum to our Investment Management Clients and Friends 

The Quinquennial Report of Foreign-Resident Holdings of U.S. Securities (“TIC Form SHL”) is a benchmark report used by the U.S. Department of the Treasury to survey non-U.S. ownership of U.S. securities every five years.  The data collected through TIC Form SHL filings will be used by the U.S. government to track the U.S. balance of payments and the formulation of international economic and financial policies.  For this reason, data to be reported includes details about U.S. securities owned by non-U.S. residents.  

TIC Form SHL is required to reflect information as of the last business day of June (i.e., June 28, 2024), and must be submitted to the Federal Reserve Bank of New York (the “FRBNY”) on or before the last business day of August (i.e., August 30, 2024).

Who is Required to File TIC Form SHL?

TIC Form SHL is a mandatory report required to be filed by:

1. a U.S.-resident entity (including private funds and registered investment companies) if the total fair value of its securities  issued to non-U.S. residents and not held by a U.S.-resident custodian is greater than or equal to $200 million as of the last business day of June (i.e., June 28, 2024);
2. a U.S.-resident custodian (e.g., broker-dealers) if the total fair value of the U.S. securities¹ held in custody by it for the account of non-U.S. residents (aggregated over all accounts and for all U.S. branches and affiliates of the firm) is greater than or equal to $200 million as of the last business day of June (i.e., June 28, 2024); and
3. a U.S.-resident entity that received a letter from the FRBNY requesting that it file on TIC Form SHL.²

Such U.S.-resident entities required to file on TIC Form SHL are collectively referred to herein as “SHL Reporters”. While all SHL Reporters are required to complete and file Schedule 1 of TIC Form SHL, only those SHL Reporters that meet or exceed the $200 million reporting threshold (the “Reporting Threshold”) are required to complete and file one or more Schedule 2s.  For purposes of calculating the Reporting Threshold and reporting on TIC Form SHL, U.S.-resident entities should use settlement date accounting and report the fair value of the securities, as defined in ASC 820 (formerly FAS 157).

Pursuant to the TIC Form SHL’s consolidation rules, a U.S.-resident investment manager must aggregate the amount of securities issued to non-U.S. residents by all of the U.S. funds sponsored by it on a combined basis when calculating whether it met or exceeded the Reporting Threshold as of the last business day of June (i.e., June 28, 2024). If the U.S.-resident investment manager met or exceeded the Reporting Threshold as of the last business day of June (i.e., June 28, 2024), it is required to file TIC Form SHL on behalf of all U.S. funds sponsored by it. In contrast, a non-U.S. manager cannot be a reporting person on TIC Form SHL and therefore the Reporting Threshold is calculated separately on a U.S. fund-by-U.S. fund basis to determine whether a particular U.S.-domiciled fund managed by it has a TIC Form SHL filing obligation.

Common Filing Scenarios for Investment Managers in respect of their Sponsored Private Funds

1. The fair value of LP and LLC interests owned by non-U.S. limited partners and members in U.S.-domiciled stand-alone funds and U.S.-domiciled feeder funds is greater than or equal to the Reporting Threshold since such securities are not held by a U.S.-resident custodian.
2. The fair value of LP and LLC interests in U.S.-domiciled master funds owned by non-U.S. persons, including any non-U.S. feeder funds that invest therein, is greater than or equal to the Reporting Threshold since such securities are not held by a U.S.-resident custodian.
3. The investment manager has been contacted by the FRBNY. 

Completing the Form

The TIC Form SHL consists of Schedule 1 and Schedule 2.

Schedule 1

Schedule 1 must be completed by all SHL Reporters. Schedule 1 requires certain identifying information of the SHL Reporter that includes, among other details:

• the Reporter Identification Number;
• the name and address of the SHL Reporter;
• the reporting status (i.e., whether the SHL Reporter meets or exceeds the Reporting Threshold for filing a Schedule 2 or is exempt);
• a description of valuation techniques; and
• a summary of any information reported on Schedule 2s (if any).

Schedule 2

Schedule 2 must be completed by all SHL Reporters that meet or exceed the Reporting Threshold and requires details of the U.S. securities owned by non-U.S. residents. A separate Schedule 2 will be required for each reporting entity, for each type of non-U.S. holder and for each country of residence of non-U.S. holders³. Information collected on Schedule 2 includes, among other details:

• details of the U.S.-resident issuer;
• the type of security issued;
• the fair value of the security held;
• the type of non-U.S. holder; and
• the country of residence of the non-U.S. holder.

Filing Procedures

TIC Form SHL may be submitted either electronically, using the FRBNY’s Reporting Central System, by mail or facsimile to the FRBNY.⁴ In order to file the TIC Form SHL, the SHL Reporter must acquire a Reporter Identification Number. SHL Reporters that were contacted by the FRBNY can find this number on the mailing label of their report booklet; otherwise, a Reporting Identification Number can be requested by contacting the FRBNY at (212) 720-6300. If an SHL Reporter already has a Reporter Identification Number because it has made one or more historic TIC filings but it’s unable to locate such number, it can be found via the following link: https://www.ffiec.gov/NPW

Information collected from each SHL Reporter is confidential and will only be released to the public on an aggregated, anonymous level. SHL Reporters that do not report accurate or timely data may face civil penalties of up to $25,000, and a willful failure to submit data may result in a fine of up to $10,000 and up to a year in prison for individuals.

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If you have any questions regarding the foregoing, please contact one of the attorneys listed below or your Seward & Kissel contact attorney.