FAST_Act_PRA Supporting StatementFinal

FAST_Act_PRA Supporting StatementFinal.pdf

Form S-1 Registration Statement

OMB: 3235-0065

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SUPPORTING STATEMENT FOR THE PAPERWORK REDUCTION ACT
INFORMATION COLLECTION SUBMISSION FOR INTERIM FINAL RULES
UNDER THE SECURITIES ACT OF 1933
This supporting statement is part of a submission under the Paperwork Reduction
Act of 1995, 44 U.S.C. §3501, et seq.
A.

JUSTIFICATION
1.

CIRCUMSTANCES MAKING THE COLLECTION OF
INFORMATION NECESSARY

In Release No. 33-10003 (the “Interim Final Rule Release”), the Commission
adopted interim final rule amendments to Form S-1 and Form F-1 on January 13, 20161
to implement Sections 71003 and 84001 of the Fixing America’s Surface Transportation
(“FAST”) Act, which was enacted on December 4, 2015.2 The FAST Act required the
Commission to adopt these rule and form amendments within specified days after the
enactment of that Act.
The amendments revise Form S-1 and Form F-1 to implement Sections 71003 and
84001 of the FAST Act. Section 71003 of the FAST Act allows an emerging growth
company (“EGC”) that is filing a registration statement (or submitting the registration
statement for confidential review) on Form S-1 or Form F-1 to omit financial information
for historical periods otherwise required by Regulation S-X if it reasonably believes the
omitted information will not be required to be included in the filing at the time of the
contemplated offering, so long as the issuer amends the registration statement prior to
distributing a preliminary prospectus to include all financial information required by
Regulation S-X at the time of the amendment. The amendments revise the general
instructions to Form S-1 and Form F-1 to reflect this self-executing change, as directed
by Section 71003.
Section 84001 of the FAST Act requires the Commission to revise Form S-1 to
permit a smaller reporting company to incorporate by reference into its registration
statement any documents filed by the issuer subsequent to the effective date of the
registration statement. The amendments add a new paragraph to Item 12 of Form S-1 and
make a conforming change to Item 512(a) of Regulation S-K to effect this provision.
The adopted amendments contain “collection of information” requirements within
the meaning of the Paperwork Reduction Act of 1995. The titles of these requirements
are:

1

Simplification of Disclosure Requirements for Emerging Growth Companies and Forward Incorporation
by Reference on Form S-1 for Smaller Reporting Companies, Release No. 33-10003 (Jan. 13, 2016) [81 FR
2743].
2

Pub. L. No. 114-94, 129 Stat. 1312 (Dec. 4, 2015).

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2.

Form S-1 (OMB Control No. 3235-0065);
Form F-1 (OMB Control No. 3235-0258); and
Regulation S-K (OMB Control No. 3235-0071).

PURPOSE AND USE OF THE INFORMATION COLLECTION

Form S-1 (17 CFR 239.11) is the form used by domestic issuers to register the
offer and sale of securities under the Securities Act of 1933 (15 U.S.C. 77a et seq.) when
no other form is authorized or prescribed, and Form F-1 (17 CFR 239.31) is the
corresponding form used by foreign private issuers. Item 512 of Regulation S-K (17
CFR 229.512) describes the undertakings that an issuer must include in a registration
statement.
3.

CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY

Registrants file Form S-1 and Form F-1 electronically with the Commission using
the Commission’s Electronic Data Gathering and Retrieval (EDGAR) system.
4.

DUPLICATION OF INFORMATION

We are not aware of any rules that conflict with or substantially duplicate the
adopted amendments.
5.

REDUCING THE BURDEN ON SMALL ENTITIES

The amendments permit emerging growth companies to omit financial
information for certain historical periods on Forms S-1 and F-1, and permit smaller
reporting companies to use forward incorporation by reference on Form S-1. The
Commission believes these rule and form amendments would decrease the existing
compliance burden for eligible small businesses and other small entities.
6.

CONSEQUENCES OF NOT CONDUCTING COLLECTION

The information collection required by the amendments would help investors
make informed investment decisions. Less frequent collection would frustrate the
statutory intent of Sections 71003 and 84001 of the FAST Act and would mean that
current information may not be available to investors.
7.

SPECIAL CIRCUMSTANCES
None.

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8.

CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY

After the Interim Final Rule Release was published, the Commission issued an
emergency notice3 soliciting comment on the new “collection of information”
requirements and associated paperwork burdens. No comments were received in
response to the emergency notice prior to OMB’s review of this submission. The
emergency notice and Interim Final Rule Release are attached.
9.

PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10.

CONFIDENTIALITY
Not applicable.

11.

SENSITIVE QUESTIONS

No information of a sensitive nature would be required under this collection of
information. The information collection collects basic Personally Identifiable
Information (PII) that may include name, business address, and residential address (for
sole proprietor only), telephone/cellular/facsimile number, email address, and Tax ID
Number (TIN). The information collection is covered under the System of Records
Notices (SORN), which may be found at the following link:
http://www.sec.gov/about/privacy/sorn/secsorn1.pdf). The Privacy Impact Assessment
(PIA) is provided as a supplemental document.
12/13. ESTIMATES OF HOUR AND COST BURDENS
The estimated burden hours and cost burden are made solely for the purposes of
the Paperwork Reduction Act and represent the average burden for all issuers. The cost
burden is not derived from a comprehensive or even a representative survey of the costs
of Commission rules and forms. The paperwork burden estimates associated with the
amendments include the burdens attributable to collecting, preparing, reviewing and
retaining records.
Regulation S-K is assigned one burden hour for administrative convenience. The
burdens are reflected in the forms containing Regulation S-K disclosure.
For both Form S-1 and Form F-1, we estimate that 25% of the burden of
preparation is carried by the issuer internally and is reflected in hours, and that 75% of
the burden is carried by outside professionals retained by the issuer at an average cost of
$400 per hour.
3

81 FR 4072 (Jan. 25, 2016).

3

Current Paperwork Burden for Forms S-1 and F-1
Form S-1 is currently estimated to take approximately 972 hours per response to
prepare 901 responses per year, and Form F-1 is currently estimated to take
approximately 1,807 hours per response to prepare 63 responses per year. Table 1
illustrates the current total annual compliance burden, in hours and costs, of the collection
of information pursuant to Form S-1 and Form F-1, respectively.

Table 1.

Form S-1
Form F-1
Total

Estimated paperwork burden under Forms S-1 and F-1, preamendments relating to the FAST Act
Number
of
responses
(A)
901
63

Burden
hours/form
(B)

Total burden
hours
(C)=(A)*(B)

Internal issuer
time
(D)

972
1807

875,772
113,841
989,613

218,943
28,460
247,403

External
professional
time
(E)
656,829
85,381

Professional
costs
(F)=(E)*$400
$262,731,600
$34,152,400
$296,884,000

We believe that the adopted amendments relating to Forms S-1 and F-1 decrease
the existing paperwork burden of each form by requiring less information in Forms S-1
and F-1 with respect to emerging growth companies and smaller reporting companies.
Form S-1
We estimate that EGCs filed 401 Forms S-1 on average during the period from
2012 to 2014, and we estimate that the number of responses will remain the same
following the amendments. We estimate that the amendments permitting EGCs to omit
certain historical period financial information will reduce the total burden for emerging
growth companies to prepare and file Form S-1 by 62,155 hours (401 x 155). In addition,
we estimate that smaller reporting companies filed 425 Forms S-1 on average during the
period from 2012 to 2014, and we estimate that the number of responses will remain the
same following the amendments. We estimate that the amendments allowing smaller
reporting companies to forward incorporate by reference on Form S-1 will reduce the
total burden for smaller reporting companies to prepare and file Form S-1 by 212,500
hours (425 x 500). Therefore, we estimate that the amendments will reduce the burden
hours per response, across all issuers, to 667 hours ([875,772 - 212,500 - 62,155] ÷ 901).
We estimate that 25% of the 667 hours per response (166.75 hours) is prepared by the
issuer for an issuer burden of 150,242 hours (166.75 hours per response x 901 responses).
We estimate that 75% of the 667 hours per response (500.25 hours) is prepared by
outside professionals retained by the issuer. We estimate that the cost of these outside
professionals to be $400 per hour for a total cost burden of $180,290,100 ($400 per hour
x 500.25 hours x 901 responses). Table 2 illustrates the estimated total compliance
burden, in hours and in costs, of the collection of information pursuant to Form S-1
following these adopted amendments.
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Form F-1
We estimate that EGCs filed 40 Forms F-1 on average during the period from
2012 to 2014, and we estimate that the number of responses will remain the same
following the amendments. We estimate that the amendments permitting EGCs to omit
certain historical period financial information will reduce the total burden for emerging
growth companies to prepare and file Form F-1 by 6,200 hours (40 x 155). We estimate
that the amendments will reduce the burden hours per response, across all issuers, to
1,709 hours ([113,841 - 6,200] ÷ 63). We estimate that 25% of the 1,709 hours per
response (427.25 hours) is prepared by the issuer for an issuer burden of 26,917 hours
(427.25 hours per response x 63 responses). We estimate that 75% of the 1,709 hours per
response (1,281.75 hours) is prepared by outside professionals retained by the issuer. We
estimate that the cost of these outside professionals to be $400 per hour for a total cost
burden of $32,300,100 ($400 per hour x 1,281.75 hours x 63 responses). Table 2
illustrates the estimated total compliance burden, in hours and in costs, of the collection
of information pursuant to Form F-1 following these adopted amendments.
Table 2.

Form S-1
Form F-1
Total

14.

Estimated paperwork burden under Forms S-1 and F-1, postamendments relating to the FAST Act
Number of
responses
(A)

Burden
hours/form
(B)

Total burden
hours
(C)=(A)*(B)

Internal issuer
time
(D)

901
63

667
1,709

600,967
107,667
708,634

150,242
26,917
177,159

External
professional
time
(E)
450,725
80,750

Professional
costs
(F)=(E)*$400
$180,290,000
$32,300,100
$212,590,100

COSTS TO FEDERAL GOVERNMENT

We estimate that the cost of preparing the amendments will be approximately
$50,000.
15.

REASON FOR CHANGE IN BURDEN

As explained in further detail in Items 12 and 13 above, the rule and form
amendments implement the requirements of Sections 71003 and 84001 of the FAST Act.
The change in burden for Form S-1 relates to the reduced disclosure requirements
relating to emerging growth companies and smaller reporting companies. These
disclosure requirements implement Sections 71003 and 84001 of the FAST Act by
permitting emerging growth companies to omit certain historical period financial
information and allowing smaller reporting companies to use forward incorporation by
reference. The change in burden for Form F-1 relates to the reduced disclosure
requirements to emerging growth companies, as required by Section 71003 of the FAST
Act.
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16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL
PURPOSES
Not applicable.

17.

DISPLAY OF OMB EXPIRATION DATE

We request authorization to omit the expiration date on the electronic version of
this 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 SUBMISSIONS
Not applicable.

B.

STATISTICAL METHODS
Not applicable.

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