PRA - Form N-8A - Supporting Statement (2012)

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission
“Form N-8A”

A.

JUSTIFICATION
1.

Necessity of Information Collection

The Investment Company Act of 1940, as amended (“1940 Act”) (15 U.S.C. 80a1
et seq.), requires investment companies to register with the Commission before they
conduct any business in interstate commerce. Section 8(a) of the 1940 Act provides that
an investment company shall be deemed to be registered upon receipt by the Commission
of a notification of registration in such form as the Commission prescribes. Form N-8A
is the form for notification of registration that the Commission has adopted under section
8(a).
The purpose of such notification of registration provided on Form N-8A is to
notify the Commission of the existence of investment companies required to be registered
under the 1940 Act and to enable the Commission to administer the provisions of the
1940 Act with respect to those companies. After an investment company has filed its
notification of registration under section 8(a), the company is then subject to the
provisions of the 1940 Act which govern certain aspects of its organization and activities,
such as the composition of its board of directors and the issuance of senior securities.
Form N-8A requires an investment company to provide its name, state of
organization, form of organization, classification, the name and address of each
investment adviser of the investment company, the current value of its total assets and
certain other information readily available to the investment company. If the investment

company is filing a registration statement as required by Section 8(b) of the 1940 Act
concurrently with its notification of registration, Form N-8A requires only that the
registrant file the cover page (giving its name, address and agent for service of process)
and sign the form in order to effect registration.
2.

Purpose of the Information Collection

As noted above, the purpose of Form N-8A is to notify the Commission that an
investment company is registering under the 1940 Act. The Commission uses this form
to determine the existence of investment companies prior to the filing of the registration
statement required by section 8(b). The notification submitted on Form N-8A represents
less information than that required in the registration statement required by section 8(b).
3.

Role of Improved Information Technology

The Commission’s electronic filing system, called EDGAR (for Electronic Data
Gathering, Analysis and Retrieval), is designed to automate the filing, processing and
dissemination of full disclosure filings. The system permits publicly held companies to
transmit their filings to the Commission electronically. As of November 6, 1995, all
registered investment companies were required to use EDGAR for their disclosure filings.
Therefore, the filing requirement for Form N-8A is satisfied using EDGAR.
4.

Duplication

The Commission periodically evaluates form-based reporting requirements for
duplication and reevaluates them whenever it proposes or amends a rule or form. Form
N-8A does not require duplicative reporting. As noted above, an investment company
that simultaneously files its notification of registration and its detailed registration
statement under section 8(b) may file an abbreviated Form N-8A.

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5.

Effect on Small Entities

Section 8(a) applies to all investment companies required to register under the
1940 Act, regardless of size. Although the burden on smaller funds may be greater than
for larger funds, the Commission believes the burden imposed on any investment
company by Form N-8A is small due to the extent and type of information required by the
form.
6.

Consequences of Less Frequent Collection

Investment companies seeking to register under the 1940 Act are required to file
Form N-8A only once, and therefore the filing of Form N-8A is not a recurring event
requiring periodic collection.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not applicable.
8.

Consultation Outside the Agency

The Commission and the staff of the Division of Investment Management
participate in an ongoing dialogue with representatives of the investment company
industry and through public conferences, meetings, and informal exchanges. These
various forums provide the Commission and the staff with a means of ascertaining and
acting upon paperwork burdens confronting the industry. The Commission requested
public comment on the collection of information requirements in Form N-8A before it
submitted this request for extension and approval to the Office of Management and
Budget. The Commission received no comments in response to its request.

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9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.
11.

Sensitive Questions

Not applicable.
12.

Time Burden Estimate

The following estimate of average burden hours is made solely for the purposes of
the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even
a representative survey or study of the costs of Commission rules and forms.
The number of filings of Form N-8A by investment companies is estimated based
on the Commission’s industry statistics. The hour burden of preparing and filing a Form
N-8A is based on the Commission’s experience with the contents of Form N-8A and with
disclosure documents generally. In the case of investment companies that are filing Form
N-8A simultaneously with the registration statement under the 1940 Act, Form N-8A may
consist of only a signed cover page.
The Commission estimates that approximately 130 investment companies file
Form N-8A each year. An investment company has to file Form N-8A only once. The
hour burden per investment company of preparing and filing Form N-8A is approximately
one hour. Therefore, the total annual hour burden to prepare and file Form N-8A for all
investment companies is 130 hours.

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Based on an estimated hourly wage rate of the professionals who fill out the form,
the total estimated aggregate annual cost of the hour burden to comply with Form N-8A is
$41,600 ($320 per hour x 130 hours). 1
13.

Annual Cost Burden

The Commission estimates that the total cost of outside services used in preparing
and filing Form N-8A is approximately $443 per filing annually, for a total annual cost of
approximately $57,590. 2 Such outside services include costs associated with outside
counsel and printing.
14.

Federal Government Cost

The annual cost of reviewing and processing new registration statements, post
effective amendments, proxy statements, and shareholder reports of investment
companies amounted to approximately $20.5 million in fiscal year 2011, based on the
Commission’s computation of the value of staff time devoted to this activity and related
overhead.
15.

Changes in Burden

The change in the estimate of burden hours for Form N-8A from the previous
submission is due to an increase in the number of respondents. The number of

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The cost to the industry is calculated by multiplying the total annual hour burden (130
hours) by the estimated hourly wage rate of $320. The staff estimates that the average
hourly rate for a compliance attorney is $322 and the average hourly rate for a senior
programmer is $318. The estimated wage rate was further based on the estimate that
attorneys and programmers would divide time equally, resulting in a weighted wage rate
of $320 (($322 x .50) + ($318 x .50)). All hourly rates for the occupations in this
statement are from SIFMA's Management & Professional Earnings in the Securities
Industry (2011), modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee benefits and
overhead.

2

This estimate is based on the following calculation: 130 funds x $443 = $57,590.

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respondents has increased from 105 to 130, resulting in an increase of 25 burden hours.
The change in the estimate of the total annual cost burden from the previous submission
is due to the increase in the number of respondents, together with a change in the
estimated per filing cost of outside services used in preparing and filing Form N-8A. The
estimated per filing cost of outside services used in preparing and filing Form N-8A
increased from $417 per filing to $443 per filing. The total annual cost burden increase
from $43,800 to approximately $57,590, which reflects the increase in the number of
respondents as well as the increased estimated cost of outside services used in preparing
and filing Form N-8A.
16.

Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the OMB expiration date.
18.

Exception to Certification

This collection complies with the requirements in 5 CFR 1320.9.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

This collection does not employ statistical methods.

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