Rule236.SS.9-12-2014

SUPPORTING STATEMENT FOR RULE 236

A.

JUSTIFICATION
1.

Circumstances Making the Collection of Information Necessary

Section 3(b) of the Securities Act of 1933 (the “Securities Act”) gives the
Commission the authority to adopt rules and regulations, including exemptions, from the
registration requirements of the 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 Act, a company is
eligible for the exemption only if it is a reporting company and files a letter with the
Commission, at least ten days prior to the offering of the shares that provides the limited
information specified by the rule. 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 amount of shares to be offered; (3) the aggregate market value of such
shares as of the latest practicable date; and (4) a brief description of the transaction in
connection with which the shares are to be offered.
2.

Purpose and Use of the Information Collection

The principal function of Commission forms and rules under the securities laws
disclosure provisions is to make information available to the securities market. The
Commission uses very little of the collected information itself (except on an occasional
basis in the enforcement of the securities laws). In this respect, the Commission’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 the investment transaction.

2
3.

Consideration Given to Information Technology

The Commission will consider electronic filing of the information required by
Rule 236 on EDGAR.
4.

Duplication of Information
No similar data is made available to investors.

5.

Reducing the Burden 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) of the Securities Act.
6.

Consequences of Not Conducting Collection

The information is needed to establish qualification for reliance on the prescribed
exemption.
7.

Special Circumstances
Not applicable.

8.

Consultations with Persons 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 Respondents
Not applicable.

10.

Confidentiality
Not applicable.

11.

Sensitive Questions

This collection does not contain any personal identifiable Information (PII). The
Privacy Impact Assessment (PIA) is provided as a supplemental document.

3
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.
13.

Estimate of Total Annualized Cost Burden
Not applicable.

14.

Costs to Federal Government
The estimated cost to the federal government is $1,000.

15.

Reason for Change in Burden
Not applicable.

16.

Information Collection Planned for Statistical Purposes
Not applicable.

17.

Approval to Omit OMB Expiration Date
The Commission is not seeking approval to omit the expiration date.

18.

Exceptions to Certification for Paperwork Reduction Act Submissions
Not applicable.

B.

STATISTICAL METHODS
Not applicable.