Rule 13e-3.SS.2017

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT INFORMATION COLLECTION
SUBMISSION FOR RULE 13e-3 AND SCHEDULE 13E-3
A.

JUSTIFICATION
1.

Circumstances Making the Collection of Information Necessary

The disclosure requirements for persons engaging in corporate control transactions are
designed to make material facts concerning the nature of the transaction and the participants
known so that security holders have the opportunity to make informed investment decisions.
Disclosure of this information is required primarily by the rules adopted under Section 13(e) of
the Securities Exchange Act of 1934
Rule 13e-3 prescribes the filing, disclosure and dissemination requirements in connection
with a going private transaction by an issuer or an affiliate. A “Rule 13e-3 transaction” is a
transaction or series of transactions specified in Rule 13e-3(a)(3)(i) that has either a reasonable
likelihood or a purpose of producing, either directly or indirectly, any of the effects described in
Rule 13e-3 (a)(3)(ii). The effects referred to in Rule 13e-3 (a)(3) include: (a) causing any class
of equity securities of the issuer which is subject to Section 12(g) or Section 15(d) of the
Exchange Act to be eligible for termination of registration, or causing the reporting obligations
with respect to such class to become eligible for termination or suspension; or (b) causing any
class of equity securities of the issuer which is either listed on a national securities exchange or
authorized to be quoted in an inter-dealer quotation system of a registered national securities
association to be neither listed on any national securities exchange nor authorized to be quoted on
a inter-dealer quotation system of any registered national securities association. The Schedule
13E-3 is the transaction statement that must be filed under Section 13(e) of the Exchange Act and
Rule 13e-3.
2.

Purpose and Use of the Information Collection

The information required to be filed with the Commission permits verification of
compliance with securities laws requirements and ensures the public availability and
dissemination of the collected information. Private contractors reproduce much of the filed
information and provide it to private parties. Many other persons obtain information directly
from the Commission’s public files. Security holders, investors, broker-dealers, investment
banking firms, professional securities analysis and others need the information in evaluating
transactions and making investment decisions.
3.

Consideration Given to Information Technology
Schedule 13E-3 is filed electronically using the EDGAR system.

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4.

Duplication of Information

No similar information is made available to investors or the securities markets. Taken
literally, Section 13(g) would require the filing of a report even though a report containing
similar ownership information was also required under other sections of the Exchange Act.
Section 13(g)(5), however, directs the Commission to take such steps as are necessary and
appropriate in the public interest and for the protection of investors to achieve centralized
reporting of the information to avoid unnecessary duplicative reporting and to minimize the
compliance burdens on persons required to report.
5.

Reducing the Burden on Small Entities

The Commission believes that small entities seldom participate in control transactions as
a filing person or a significant equity participant. Accordingly, it is believed that Schedule 13E-3
does not have a substantial economic impact on a significant number of small entities.
6.

Consequences of Not Conducting Collection

The schedules and regulations are designed to elicit disclosure concerning substantial
equity participants in control transactions and identify indirect control that is difficult to prove
factually.
7.

Special Circumstances
Not applicable.

8.

Consultations with Persons Outside the Agency

Rule 13e-3 and Schedule 13E-3 were solicited for public comment. No comments were
received during the 60-day comment period prior to OMB’s review of this extension request.
9.

Payment or Gift to Respondents
Not applicable.

10.

Confidentiality
Schedule 13E-3 is a public document.

11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The information collection collects basic Personally
Identifiable Information (PII) that may include name. However, the agency has determined that
the information collection does not constitute a system of record for purposes of the Privacy Act.

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Information is not retrieved by a personal identifier. In accordance with Section 208 of the EGovernment Act of 2002, the agency has conducted a Privacy Impact Assessment (PIA) of the
EDGAR system, in connection with this collection of information. The EDGAR PIA, published
on January 29, 2016, is provided as a supplemental document and is also available at
https://www.sec.gov/privacy.
12.

Estimate of Respondent Reporting Burden

For purposes of the Paperwork Reduction Act (“PRA”), we estimate that Schedule 13e-3
takes approximately 137.42 hours per response to comply with the collection of information
requirements and is filed by 77 issuers. We derived our burden hour estimates by estimating the
average number of hours it would take an issuer to compile the necessary information and data,
prepare and review disclosure, file documents and retain records. In connection with rule
amendments to the form, we occasionally receive PRA estimates from public commenters about
incremental burdens that are used in our burden estimates. We believe that the actual burdens
will likely vary among individual issuers based on the nature of their operations. We further
estimate that25% of the collection of information burden is carried by the issuer internally and
that 75% of the burden of preparation is carried by outside professionals retained by the
company. Based on our estimates, we calculated the total reporting burden to be 2,646 hours
((0.25 x 137.42) x 77 responses). For administrative convenience, the presentation of the totals
related to the paperwork burden hours have been rounded to the nearest whole number and the
cost totals have been rounded to the nearest dollar. The estimated burden hours are made solely
for the purpose of the Paperwork Reduction Act.
13.

Estimate of Total Annualized Cost Burden

We estimate that 75% of the 137.42 hours per response (103.06 hours) is prepared by the
issuer’s outside counsel. We estimate that the Schedule 13E-3 cost is $400 per hour ($400 x
103.06 hours per response x 77 responses) for a total cost of $3,174,248.00 is prepared by an
outside law firm hired by the company. We estimate an hourly cost of $400 for outside legal and
accounting services used in connection with public company reporting. This estimate is based on
our consultations with registrants and professional firms who regularly assist registrants in
preparing and filing disclosure documents with the Commission. Our estimates reflect average
burdens, and therefore, some companies may experience costs in excess of our estimates and
some companies may experience costs that are lower than our estimates. For administrative
convenience, the presentation of the totals related to the paperwork burden hours have been
rounded to the nearest whole number and the cost totals have been rounded to the nearest dollar.
The cost estimate is made solely for the purpose of the Paperwork Reduction Act.
14.

Costs to Federal Government

The estimated cost to the federal government is approximately $100,000 to review and
process Schedule 13E-3 filings.

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15.

Reason for Change in Burden

The decrease of 790 in burden hours and decrease of $948,152 in cost burden are due to
an adjustment. The decrease burden hours and cost burden is due to change in the number of
Schedule 13E-3 filings filed with the Commission.
16.

Information Collections Planned for Statistical Purposes
Not applicable.

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 Submissions
Not applicable.

B.

STATISTICAL METHODS
Not applicable.