Supporting Statement for N-8A

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

A.

JUSTIFICATION
1.

Necessity for the Information Collection

The Investment Company Act of 1940 (“Investment Company Act”) 1 requires investment
companies to register with the Commission before they conduct any business in interstate
commerce. 2 Section 8(a) of the Investment Company 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. 3 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
Investment Company Act and to enable the Commission to administer the provisions of the
Investment Company 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 Investment Company 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 Investment Company 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. 4
2.

Purpose and Use 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 Investment Company Act. The Commission uses this form to
determine the existence of investment companies prior to the filing of the registration statement
1

15 U.S.C. 80a-1 et seq.

2

15 U.S.C. 80a-7.

3

15 U.S.C. 80a-8(a).

4

See Instruction 4(b) to Form N-8A.

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.

Consideration Given to Information Technology

The Commission’s Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”)
automates the filing, processing, and dissemination of full disclosure filings. This automation has
increased the speed, accuracy, and availability of information, generating benefits to investors
and financial markets. Notifications of registration on Form N-8A are required to be filed with
the Commission electronically on EDGAR. 5 The public may access filings on EDGAR through
the Commission’s website (http://www.sec.gov) or at EDGAR terminals located at the
Commission’s public reference room.
4.

Duplication

The Commission periodically evaluates form-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or form or
changes a rule or form. The information required by Form N-8A is not generally duplicated
elsewhere. 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.
5.

Effect on Small Entities

The Commission reviews all rules and forms periodically, as required by the Regulatory
Flexibility Act, 6 to identify methods to minimize recordkeeping or reporting requirements
affecting small businesses. Section 8(a) applies to all investment companies required to register
under the Investment Company Act, regardless of size. Although the burden on smaller funds to
prepare and file notifications of registration 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 and that imposing different
requirements on smaller funds would not be consistent with investor protection and the purposes
of the notification of registration.

5

See rule 101(a)(1)(iv) of Regulation S-T [17 CFR 232.101(a)(iv)].

6

5 U.S.C. 601 et seq.

2

6.

Consequences of Not Conducting Collection

Investment companies seeking to register under the Investment Company 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)

This collection is not inconsistent with 5 CFR 1320.5(d)(2).
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 through public
conferences, meetings, and informal exchanges. These various forums provide the Commission
and staff with a means of ascertaining and acting upon the 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.
9.

Payment or Gift

No payment or gift to respondents was provided.
10.

Assurance of Confidentiality

No assurance of confidentiality was provided.
11.

Sensitive Questions

No information of a sensitive nature will be required in the information collection. The (these)
information collection (s) collect basic Personally Identifiable Information (PII) that may include
name, business address, and residential address (for sole proprietor only),
telephone/cellular/facsimile numbers, and email address. The information collection is covered
under the following System of Records Notice (SORN)
http://www.sec.gov/about/privacy/sorn/secsorn2.pdf

3

12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for purposes of
the Paperwork Reduction Act of 1995 7 and are not derived from a comprehensive or even
representative survey or study of the cost of Commission rules and forms. Compliance with Form
N-8A is mandatory. Responses to the collection of information will not be kept confidential.
Based on recent filings of notifications of registration on Form N-8A, we estimate that about
92 investment companies file such notifications each year. An investment company must only
file a notification of registration on Form N-8A once. The currently approved average hour
burden per investment company of preparing and filing a notification of registration on Form
N-8A is one hour. Based on the Commission staff’s experience with the requirements of Form
N-8A and with disclosure documents generally—and considering that investment companies that
are filing notifications of registration on Form N-8A simultaneously with the registration
statement under the Investment Company Act are only required by Form N-8A to file a signed
cover page—we continue to believe that this estimate is appropriate. Therefore, we estimate that
the total annual hour burden to prepare and file notifications of registration on Form N-8A is 92
hours. 8 Based on the Commission’s estimate of 92 burden hours and an estimated wage rate of
about $318.50 per hour, 9 the total annual cost to reporting persons of the hour burden to comply
with the requirements of Form N-8A is $29,302. 10
13.

Cost to Respondents

Cost burden is the cost of goods and services purchased to prepare and file notifications of
registration on Form N-8A, such as for the services of outside counsel and printing. The cost
burden does not include the cost of the hour burden discussed in Item 12 above. The currently
7

44 U.S.C. 3501 et seq.

8

92 investment companies per year × 1 hour per investment company = 92 hours per
year.

9

The Commission’s estimate concerning the wage rate is based on salary information for
the securities industry compiled by the Securities Industry and Financial Markets
Association. The estimated wage figure is based on published rates for compliance
attorneys and senior programmers, modified to account for an 1,800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead,
yielding effective hourly rates of $334 and $303, respectively. See Securities Industry and
Financial Markets Association, Report on Management & Professional Earnings in the
Securities Industry 2013. We estimate that compliance attorneys and senior
programmers would divide their time equally, yielding an estimated hourly wage rate of
$318.50. ($334 per hour for compliance attorneys + $303 per hour for senior
programmers) ÷ 2 = $318.50 per hour.

10

92 hours per year × $318.50 per hour = $29,302 per year.

4

approved cost burden of Form N-8A is $443 per filing. We are updating the estimated cost
burden to $449 to account for the effects of inflation. 11 Therefore, we estimate that the total
annual cost burden to associated with preparing and filing notifications of registration on Form
N-8A is about $41,308. 12
14.

Costs to Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post effective amendments, proxy statements, shareholder reports, and
other filings of investment companies amounted to approximately $19.8 million in fiscal year
2012, based on the Commission’s computation of the value of staff time devoted to this activity
and related overhead.
15.

Changes in Burden

The estimated hourly burden associated with Form N-8A has decreased from 130 to 92 (a
decrease of 38 hours). This decrease is due to a decrease in the number of estimated annual
filings. Similarly, the estimated cost burden associated with Form N-8A has decreased from
$57,590 to $41,308 (a decrease of $16,282). This decrease is due to a decrease in the number of
estimated annual filings that is partially offset by the effects of inflation.
16.

Information Collection Planned for Statistical Purposes

The results of any information collected will not be published.
17.

Approval to Omit OMB Expiration Date

“We request authorization to omit the expiration date on the electronic version of the form.
Including the expiration date on the electronic version of the form will result in increased costs,
because the need to make changes to the form may not follow the application’s scheduled version
release dates. The OMB control number will be displayed.
18.

Exceptions to Certification for Paperwork Reduction Act Submission

The Commission is not seeking an exception to the certification statement.

11

This adjustment was computed using the personal consumption expenditures index. See
FRED Economic Data available at http://research.stlouisfed.org/fred2/.

12

92 filings per year × $449 per filing = $41,308 per year.

5

B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information will not employ statistical methods.

6