3235 0456 Supporting Statement

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form 24F-2
A. JUSTIFICATION
1. Necessity for the Information Collection
Section 24(f) of the Investment Company Act of 1940 (“Investment Company
Act” or the “Act”) 1 relates to the registration of securities of open-end investment
companies, unit investment trusts (“UITs”), and face-amount certificate companies
(collectively, “funds”) under the Securities Act of 1933 (“Securities Act”). 2
Specifically, section 24(f) provides that a fund will be deemed to have registered an
indefinite amount of securities upon the effective date of its registration statement
under the Securities Act. 3 The fund thereafter must pay a fee to the Commission
within 90 days after the end of its fiscal year based upon the aggregate sale price of
the fund securities sold during that fiscal year pursuant to a registration of an
indefinite number of securities (including securities issued pursuant to a dividend
reinvestment plan) reduced by (i) the aggregate redemption or repurchase price of the
securities during that year and (ii) the aggregate redemption or repurchase price of
the securities sold during any prior fiscal year (ending on or after October 11, 1995)
that were not used previously by the fund to reduce the registration fees payable
under section 24. In addition, a fund that pays the required fee, or any portion
thereof, more than 90 days after the end of the fiscal year must pay to the
Commission interest on unpaid amounts.
Form 24F-2 provides a standardized format for funds' annual registration fee
filings. Form 24F-2 specifically contains items that address redemptions from a
fund's prior fiscal years that could be used to reduce registration fees in the fiscal year
for which the Form is filed, and also reflects the requirement that a fund pay interest
when the registration fee is paid late.
On March 20, 2019, the Commission issued a release proposing rules that would
modify the registration, communications, and offering processes for business
development companies and other closed-end investment companies under the
Securities Act of 1933. 4 In particular, the Commission proposed to amend rules
23c-3 and 24f-2 to require registered closed-end investment companies that make
1

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

2

15 U.S.C. 77a et seq.

3

15 U.S.C. 80a-24(f).

4

Securities Offering Reform for Closed-End Investment Companies, Investment
Company Act Release No. 33427 (Mar. 20, 2019).

periodic repurchase offers under rule 23c-3 under the Investment Company Act 5 to
pay registration fees on the same annual basis using Form 24F-2 and to require funds
to submit reports on Form 24F-2 in a structured data format.
2. Purpose and Use of the Information Collection
Form 24F-2 is designed to assist funds in making their annual registration fee
filings. The Commission and funds' experience since Form 24F-2 was adopted
suggests that the Form has been beneficial for funds and reduced errors in
registration fee calculations. Use of the Form also has improved the Commission's
ability to process funds' registration fee filings.
3. Consideration Given to Information Technology
The Commission’s Electronic Data Gathering, Analysis, and Retrieval system (or
“EDGAR”) provides for automated 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.
Form 24F-2 is required to be filed with the Commission electronically on EDGAR.
4. Efforts to Identify Duplication
The Commission periodically evaluates rule- and form-based reporting and
recordkeeping requirements for duplication and reevaluates them whenever it
proposed a rule or form, or a change in either. Form 24F-2 does not require
duplicative reporting or recordkeeping.
5. Effect on Small Entities
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. Form 24F-2 is designed to assist funds,
including small entities, in making their annual registration fee filings. The form does
not distinguish between small entities and other funds. The Commission believes,
however, that imposing different requirements on smaller funds would not be
consistent with the purposes of the requirements.
6. Consequences of Not Conducting Collection
Section 24(f) of the Act requires funds to pay their registration fees annually.
Form 24F-2, therefore, is required to be filed annually. In the past, the Commission
considered not having a standardized form to accompany the funds' annual
registration fee filings. Based on the Commission's experience prior to the adoption
of Form 24F-2, and the comments received when Form 24F-2 was proposed,
however, the Commission believes that Form 24F-2 has been beneficial for funds and

5

17 CFR 270.23c-3.

the Commission. Form 24F-2 has made it easier for funds to calculate registration
fees and reduced errors in fee calculations.
7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
This collection is not inconsistent with 5 CFR 1320.5(d)(2).
8. Consultations Outside the Agency
Before adopting the proposed amendments affecting Form 24F-2, the
Commission will receive and evaluate public comments on the proposal and its
collection of information requirements. Moreover, 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 paperwork burdens
confronting the industry.
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, 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, job title, and
work address. 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 following estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act of 1995 6 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission
rules and forms. Compliance with Form 24F-2 is mandatory. Responses to the
disclosure requirements will not be kept confidential.

6

44 U.S.C. 3501 et seq.

TABLE 1: BURDEN ESTIMATES FOR FORM 24F-2
Internal Burden

Wage Rate

Cost of
Internal Burden

Annual
Cost Burden

$134

$0

CURRENTLY APPROVED ESTIMATES
Clerical work to file Form 24F-2

2 hours

×

$67 (compliance clerk)

Number of annual responses

× 7,284

× 7,284

× 7,284

Total annual burden

14,568 hours

$976,056

$0

PROPOSED ESTIMATES
Clerical work to file Form 24F-2

2 hours

×

$67 (compliance clerk)

$134

$0

Submission in a structured data format

2 hours

×

$261 (programmer)

$522

$0

Total annual burden per response

4 hours

$656

$0

Number of annual responses

× 7,341

× 7,341

× 7,341

Total annual burden

29,364 hours

$4,815,696

$0

TABLE 2: CHANGE IN BURDEN ESTIMATES
Annual Number of Responses

Form 24F-2

Annual Time Burden (hours)

Cost Burden (dollars)

Previously
Approved

Proposed
Estimate

Change

Previously
Approved

Proposed
Estimate

Change

Previously
Approved

Proposed
Estimate

Change

7,284

7,341

+ 57

14,568

29,364

+ 14,796

$0

$0

$0

As summarized in Table 1 above, the Commission has previously estimated that
approximately 7,284 funds file reports on Form 24F-2 annually. 7 The current
estimated annual internal hour burden per fund of filing Form 24F-2 is two hours of
clerical time, with an estimated total annual burden for all respondents of 14,568
hours. At an estimated wage rate of $67 per hour, the annual cost per respondent of
this burden is estimated at $134, and the total annual cost for all respondents is
$976,056. We estimate that an additional 57 funds would file reports on Form 24F-2
annually under the proposed amendments. In addition, we estimate that the
requirement to submit filings on Form 24F-2 in a structured data format would
increase the annual internal hour burden by two hours per respondent. At an
estimated wage rate of $261 per programmer hour, we estimate that the annual cost
per respondent of this additional burden is about $522 per year. Accordingly, we
estimate that the annual hour burden to file reports on Form 24F-2 under the
proposed amendments would be about 29,364 hours, at a corresponding internal cost
of about $4.8 million.
13. Cost to Respondent
As summarized in Table 1 above, the Commission does not believe that there are
any burdens associated with Form 24F-2 other than the burdens discussed in Item 12
of this Supporting Statement.
14. Cost to the Federal Government
The annual cost of reviewing and processing disclosure documents, including
new registration statements, post-effective amendments, proxy reports, shareholder
reports, and other filings of investment companies amounted to approximately $22.2
million in fiscal year 2018, based on the Commission’s computation of the value of
staff time devoted to this activity and related overhead. However, with respect to
Form 24F-2 specifically, the costs associated with processing the Form are de
minimis, given that the process is automated.
15. Changes in Burden
As summarized in Table 2 above, the estimated annual burden hours for Form
24F-2 has increased from 14,568 to 29,364 hours (an increase of 14,796 hours). This
is due to an increase in the number of funds that would file reports on Form 24F-2
and the proposed structured data format. We do not estimate a change in cost
burden.

7

This estimate was previously submitted to OMB in connection with the renewal of
approval for the collection of information required by Form 24F-2 in 2018.

16. Information Collection Planned for Statistical Purposes
The results of any information collected will not be published.
17. Approval to Omit Expiration Date
We request authorization to omit the expiration date on the electronic version of
the form for design and IT project scheduling reasons. The OMB control number will
be displayed.
18. Exceptions to Certification Statement for Paperwork Reduction Act
Submission
The Commission is not seeking an exception to the certification statement.
B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information will not employ statistical methods.