SUPPORTING STATEMENT FOR RULE 236
A. Justification
1. Necessity of Information Collection
Section 3(b) of the Securities Act of 1933 (the “1933 Act”) gives the Commission the authority to adopt rules and regulations including exemptions from the registration provisions of the 1933 Act, if the Commission determines that such registration is not necessary by reason of the small amount involved. Rule 236 exempts from registration shares of stock or similar securities which are publicly offered by companies to provide funds to be distributed to security holders in lieu of fractional shares, scrip certificates, order forms, or other evidences of such fractional interests, in connection with a stock dividend, stock split, reverse stock split, conversion, merger or similar transaction. The aggregate gross proceeds from the sale of the shares may not exceed $300,000.
While Rule 236 alleviates the need for registration under the 1933 Act, a company is eligible for the exemption only if it is a reporting company and files a letter with the Commission setting forth brief information specified by the rules. Although the Commission deemed it appropriate to exempt from registration offers and sales of the subject securities aggregating less than $300,000 because of the small amount involved, the Commission believed that certain basic information is still required for the protection of investors. A company relying on the exemption must disclose the following information: (1) that it proposes to offer shares in reliance upon the exemption; (2) the estimated number of shares to be so offered; (3) the aggregate market value of such shares as the latest practicable date; and (4) a brief description of the transaction in connection with which the shares are to be offered.
2. Purposes of, and Consequences of Not Requiring, the Information Collection
The principal function of SEC forms and rules under the securities laws disclosure provisions is to make information available to the securities market. The SEC uses very little of the collected information itself (except on an occasional basis in the enforcement of the securities laws). In this respect, the SEC’s collections differ significantly from most other federal information collections, which are primarily for the use and benefit of the collecting agency.
The information required to be filed with the Commission permits verification of compliance with securities law requirements and assures the public availability and dissemination of such information. Private contractors reproduce much of the filed information, and provide it to private parties; and many other persons obtain information directly from the Commission’s public files. The letter filed by issuers relying on the exemption provided by Rule 236 is publicly available to purchasers so that they may have information concerning their investment.
3. Role of Improved Information Technology and Obstacles to Reducing Burden
The Commission will consider electronic filing of the information required by Rule 236 on EDGAR.
4. Effort to Identify Duplication
No similar data is made available to investors.
5. Effect on Small Entities
Small issuers, as well as other issuers, benefit from the exemption from registration requirements provided by Rule 236. The Commission determined that certain limited information is required to enable the Commission to fulfill its statutory mandate under Section 3(b).
6. Consequences of Less Frequent Collection
The information is needed to establish qualification for reliance on the prescribed exemption.
7. Inconsistencies with Guidelines in 5 CFR 1320.6
Not applicable.
8. Consultations Outside the Agency
Rule 236 was proposed for public comment. No comments were received on this request during the 60-day comment period prior to OMB’s review of this submission.
9. Payment or Gift to Respondent
Not applicable.
10. Assurance of Confidentiality
Not applicable.
11. Sensitive Questions
Not applicable.
12. Estimate of Respondent Reporting Burden
An estimated 10 respondents file the information required by Rule 236 annually at an estimated 1.5 hours per response for a total annual burden of 15 hours. We estimate that 100% of the total burden hours (15 hours) is prepared by the company. The estimated hours are made solely for the purposes of the Paperwork Reduction Act. They are not derived from a comprehensive or even a representative survey or study of the cost of Commission rules and forms.
13. Estimate of Total Annualized Cost Burden
Not applicable.
14. Estimate of Cost to the Federal Government
The Commission has no records permitting the estimation of cost to the federal government on an annual basis of administering Rule 236.
15. Explanation of Change in Burden
Not applicable.
16. Information Collections Planned for Statistical Purposes
Not applicable.
17. Explanation as to Why Expiration Date Will Not Be Displayed
Not applicable.
18. Exception to Certification
Not applicable.
B. Collection of Information Employing Statistical Methods
Not applicable.
| File Type | application/msword |
| File Title | SUPPORTING STATEMENT FOR RULE 236 |
| Author | U.S. |
| Last Modified By | crawleyp |
| File Modified | 2008-06-16 |
| File Created | 2008-04-17 |