United States of America: Next Deadline for SHC Form – Foreign Securities Holdings
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The Treasury recently issued the final instructions for the reporting requirements for the Treasury International Capital Measurement Form (hereinafter the “SHC Form”) for calendar year 2021. The SHC form is filed every five years with the Federal Reserve Bank of New York. Data must be submitted as of December 31, 2021, no later than March 4, 2022.
In general, Form SHC requires US residents to report information regarding (i) foreign securities owned by US-resident end investors that are not held with a US-resident trustee and (ii) foreign securities owned by Before ultimate investors residing in the United States and being held with a trustee residing in the United States. US resident end investors include pooled investment vehicles (such as private equity funds, hedge funds, mutual funds and other similar blends), public and private pension funds, foundations and endowments. Generally, the investment advisor and manager files the SHC form on behalf of the end investors residing in the United States who advise them to do so.
Classification as a “foreign security” depends on the country of residence of the issuer of the security. Reportable foreign securities may be traded in the United States or in foreign countries, and can be denominated in any currency, including the US dollar. Neither the country in which the securities are traded, nor the currency in which the securities are denominated, are relevant in determining whether the securities are foreign. Reportable securities generally include:
- Equity securities: Equity securities represent an ownership interest in a foreign resident organization and include the interests of limited partners, interests of limited liability companies, corporate shares and equity interests in funds and equivalent investment vehicles.
- Long-Term Debt Securities: Foreign long-term debt securities include bonds and securities that do not have a fixed maturity date or have an original maturity of more than one year and that usually give the holder an unconditional right to the financial assets.
- Short-Term Debt Securities: Foreign short-term debt securities include bills of exchange, commercial paper and other money market instruments with original maturities of one year or less that give the holder an unconditional right to the financial assets.
- Asset Backed Securities: Assets backed are the shares of securities in a group of assets that give the buyer a claim against the cash flows generated by the underlying assets. Asset-backed securities are reported if the issuer securitizing the assets is a foreign resident. The underlying asset should not be used to determine whether or not the securities are reportable.
Certain holdings specified in the SHC Form Instructions (including letters of credit, derivative contracts, loans, loan-sharing certificates, non-negotiable certificates of deposit, bank deposits and direct investments1) from the SHC form reporting.
The SHC form is a three-part report:
- Schedule 1 of the SHC form requires a US resident to provide basic identifying information about themselves and brief information about the contents of Schedule 2 and Schedule 3.
- Schedule 2 of the SHC form requires detailed information about foreign securities, which are not held by a trustee resident in the United States, to the extent that the total fair value of such securities is Equal to or greater than $200 million.
- Schedule 3 of the SHC form requires summary information on foreign securities held by an unaffiliated U.S. resident trustee, to the extent that the total fair value of such securities is Equal to or greater than $200 million.
For additional information and instructions, a copy of the SHC form and instructions are available here.
1. “Direct investments” are reported and identified in the Bureau of Economic Analysis of Direct Investment Surveys.
The content of this article is intended to provide a general guide to the topic. It is recommended to take the advice of specialists in such circumstances.
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