Form N-54C Supporting Statement 2017

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
FORM N-54C
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Certain investment companies can elect to be regulated as business development
companies, as defined in section 2(a)(48) of the Investment Company Act of 1940
(“Investment Company Act”), under sections 55 through 65 of the Investment Company
Act. Under section 54(a) of the Investment Company Act, 1 any company defined in
section 2(a)(48)(A) and (B) of the Investment Company Act may, if it meets certain
enumerated eligibility requirements, elect to be subject to the provisions of Sections 55
through 65 of the Investment Company Act by filing with the Commission a notification
of election. Under section 54(c) of the Investment Company Act, 2 any business
development company may voluntarily withdraw its election under section 54(a) of the
Investment Company Act by filing a notice of withdrawal of election with the
Commission. The Commission has adopted Form N-54C as the form for the notification
of withdrawal of election to be subject to Sections 55 through 65 of the Investment
Company Act.

1

15 U.S.C. 80a-53(a).

2

15 U.S.C. 80a-53(c).

2.

Purpose and Use of the Information Collection

The purpose of Form N-54C is to notify the Commission that the business
development company withdraws its election to be subject to Sections 55 through 65 of
the Investment Company Act.
3.

Consideration Given to Information Technology

Form N-54C is electronically filed with the Commission. The Commission’s
electronic filing system (Electronic Data Gathering, Analysis and Retrieval or
“EDGAR”) automates the filing, processing and dissemination of full disclosure filings.
The system permits publicly held companies to transmit their filings to the Commission
electronically. This automation has increased the speed, accuracy and availability of
information, generating benefits to investors and financial markets.
4.

Duplication

The Commission periodically evaluates reporting and recordkeeping requirements
for duplication and reevaluates them whenever it proposes a rule or form or a change in a
rule or form. The information required by Form N-54C is not generally duplicated
elsewhere.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 3 to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The current disclosure requirements for Form
N-54C do not distinguish between small entities and other business development
companies. Although the burden on small business development companies may be

3

5 U.S.C. 601 et seq.

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greater than on larger ones, the Commission believes the burden imposed on any business
development company is small due to the extent and type of information required by the
form.
6.

Consequences of Not Conducting Collection

A business development company that withdraws its election to be subject to
Sections 55 through 65 of the Investment Company Act is required to file the notification
of withdrawal on Form N-54C only once, and therefore the filing of Form N-54C is not a
recurring event requiring periodic collection.
7.

Inconsistencies with Guidelines in 5 C.F.R. § 1320.5(d)(2)

Not applicable.
8.

Consultations Outside the Agency

The Commission and the Division of Investment Management staff 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 the staff with a means of ascertaining and acting upon paperwork
burdens that may confront the industry. The Commission requested public comment on
the collection of information requirements in Form N-54C 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

Not applicable.
10.

Confidentiality

Not applicable.

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11.

Sensitive Questions

No information of a sensitive nature will be required under this collection of
information. The information collection collects basic Personally Identifiable
Information (PII) that may include the name and title of the signatory. However, the
agency has determined that the information collection does not constitute a system of
record for purposes of the Privacy Act. Information is not retrieved by a personal
identifier. In accordance with Section 208 of the E-Government 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.

Burden of Information Collection

The Commission estimates that on average approximately four business
development companies file notifications on Form N-54C each year. Each of those
business development companies need only make a single filing of Form N-54C. The
Commission further estimates that this information collection imposes a burden of one
hour, resulting in a total annual burden of four hours. Based on the estimated wage rate,
the total cost to the business development company industry of the hour burden for
complying with Form N-54C would be approximately $1,380. 4

4

The industry burden is calculated by multiplying the total annual hour burden to prepare
Form N-54C (four) by the estimated hourly wage rate of $345 for a compliance attorney
or other business development company employee with similar duties and
responsibilities. The estimated wage figure is based on published rates for compliance
attorneys from the Securities Industry and Financial Markets Association’s Report on
Management & Professional Earnings in the Securities Industry 2013, modified by
Commission staff to account for an 1800-hour work-year and inflation, and multiplied by

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The estimates of average burden hours and costs are made solely for purposes of
the Paperwork Reduction Act of 1995 (“PRA”) 5 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-54C is mandatory for companies electing to no
longer be subject to Sections 55 through 65 of the Investment Company Act. Responses
to the disclosure requirements will not be kept confidential.
13.

Cost to Respondents

Cost burden is the cost of services purchased to prepare and file the Form N-54C,
such as for the services of outside counsel. The Commission estimates that four business
development companies each year withdraw their election to be subject to Sections 55
through 65 of the Investment Company Act and must file Form N-54C. The Commission
estimates that there is no cost burden associated with Form N-54C.
14.

Cost to the Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, and shareholder
reports of investment companies amounted to approximately $18.6 million in fiscal year
2013, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead.
15.

Change in Burden

The increase in estimated burden hours for Form N-54C is attributable to an
increase in the estimated number of respondents from three to four, resulting in an
5.35 to account for bonuses, firm size, employee benefits and overhead, yielding an
effective hourly rate of $1,380.
5

44 U.S.C. 3501 et seq.

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increase of one hour. There is no change in the estimated cost burden for outside
professionals associated with the collection of data relating to Form N-54C because the
Commission continues to estimate that there is no cost burden associated with this
requirement.
16.

Information Collection 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, although the OMB control number will be displayed. Including the expiration
date on the electronic version of this 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.

18.

Exceptions to Certification Statement for Paperwork Reduction Act

Not applicable.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
Not applicable.

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