PRA Supporting Statement - Rules 3-10 3-16 Proposing Release -Final

SUPPORTING STATEMENT FOR PROPOSED RULES RELATING TO
FINANCIAL DISCLOSURES ABOUT GUARANTORS AND ISSUERS OF
GUARANTEED SECURITIES AND AFFILIATES WHOSE SECURITIES
COLLATERALIZE A REGISTRANT’S SECURITIES
This supporting statement is part of a submission under the Paperwork Reduction
Act of 1995 (“PRA”).1
A.

JUSTIFICATION
1.

CIRCUMSTANCES MAKING THE COLLECTION OF
INFORMATION NECESSARY

On July 24, 2018, the Securities and Exchange Commission (“Commission”)
proposed amendments to the financial disclosure requirements for guarantors and issuers
of guaranteed securities registered or being registered, and issuers’ affiliates whose
securities collateralize securities registered or being registered.2 The Commission
proposed amendments to the disclosure requirements in Rules 3-103 and 3-164 of
Regulation S-X.5 Rule 3-10 requires financial statements to be filed for all issuers and
guarantors of securities that are registered or being registered, but also provides several
exceptions to that requirement. These exceptions are typically available for individual
subsidiaries of a parent company when certain conditions are met, including that the
parent company provides certain disclosures in its consolidated financial statements. If
the conditions are met, separate financial statements of each qualifying subsidiary issuer
and guarantor may be omitted. Rule 3-16 requires a registrant to provide separate
financial statements for each affiliate whose securities constitute a substantial portion of
the collateral, based on a numerical threshold, for any class of registered securities as if
the affiliate were a separate registrant.
The proposal moved part of Rule 3-10 and all of Rule 3-16 to new Rules 13-01
and 13-02 in Regulation S-X, respectively. In addition, the Commission proposed

1

44 U.S.C. §3501, et seq.

2

Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose
Securities Collateralize a Registrant’s Securities, Release No. 33-10526 (July 24, 2018) [83 FR 49630
(Oct. 2, 2018)] (“Proposing Release”).

3

17 CFR 210.3-10.

4

17 CFR 210.3-16.

5

17 CFR 210.1-01 through 210.12-29.

1

conforming amendments to Items 504,6 1100,7 1112,8 1114,9 and 111510 of Regulation SK;11 Forms F-1,12 F-3,13 1-A,14 1-K,15 and 1-SA16 under the Securities Act; and Rule 12h517 and Form 20-F18 under the Exchange Act. A copy of the Proposing Release, which
contains the proposed rule and form amendments, is attached.
The proposed changes are intended to:






focus disclosures on the information that is material given the specific facts and
circumstances;
make the disclosures easier to understand;
reduce the cost of compliance for registrants and encourage potential issuers to offer
guaranteed or collateralized securities on a registered basis, thereby affording
investors protections they may not be provided in offerings conducted on an
unregistered basis; and
facilitate through lower costs and burdens of compliance, issuers’ flexibility to include
guarantees or pledges of affiliate securities as collateral when they structure debt
offerings, which may increase the number of registered offerings that include these
credit enhancements and could result in a lower cost of capital and an increased level
of investor protection.
The amendments contain “collection of information” requirements within the meaning

6

17 CFR 229.504.

7

17 CFR 229.1100.

8

17 CFR 229.1112.

9

17 CFR 229.1114.

10

17 CFR 229.1115.

11

17 CFR 229.10 through 229.1208.

12

17 CFR 239.31.

13

17 CFR 239.33.

14

17 CFR 239.90.

15

17 CFR 239.91.

16

17 CFR 239.92.

17

17 CFR 240.12h-5.

18

17 CFR 249.220f.

2

of the PRA.19 The titles for the collection of information are:20









2.

“Form S-1”21 (OMB Control No. 3235-0065);
“Form S-4”22 (OMB Control No. 3235-0324);
“Form S-11”23 (OBM Control No. 3235-0067);
“Form F-1” (OMB Control No. 3235-0258);
“Form 20-F” (OMB Control No. 3235-0288);
“Form 40-F”24 (OMB Control No. 3235-0381);
“Form 10-K”25 (OMB Control No. 3235-0063);
“Form 10-Q”26 (OMB Control No. 3235-0070); and
“Regulation A (Form 1-A)” (OMB Control No. 3235-0286).27

PURPOSE AND USE OF THE INFORMATION COLLECTION

The proposed amendments are intended to provide investors with material
information, given the specific facts and circumstances; make the disclosures easier to
understand; and reduce the costs and burdens to registrants. In addition, by reducing the
costs and burdens of compliance, issuers may be encouraged to offer guaranteed or
collateralized securities on a registered basis, thereby affording investors the protection
they may not be provided in offerings conducted on an unregistered basis. Further, by
making it less burdensome and less costly for issuers to include guarantees or pledges of
affiliate securities as collateral when they structure debt offerings, the proposed
amendments may increase the number of registered offerings that include these credit
enhancements, which could result in a lower cost of capital and an increased level of
investor protection.
19

The paperwork burdens for Forms S-3, F-3 and 8-K are imposed through the forms from which they
incorporate by reference and are reflected in the analysis of those forms. Our estimates for Form 10-K take
into account the burden that would be incurred by including the proposed disclosures in the annual report
directly or incorporating by reference from a proxy or information statement. To avoid a PRA inventory
reflecting duplicative burdens, we estimate that the proposed disclosure would not impose an incremental
burden for proxy statements on Schedule 14A or information statements on Schedule 14C.
20

The paperwork burdens from Regulation S-K and Regulation S-X are imposed through the forms that are
subject to the requirements in those regulations and are reflected in the analysis of those forms. After the
Proposing Release was issued, OMB discontinued the OMB Control Numbers for these regulations so that
the PRA inventory would not reflect duplicative burdens.
21

17 CFR 239.11.

22

17 CFR 239.25.

23

17 CFR 239.18.

24

17 CFR 249.240f.

25

17 CFR 249.310.

26

17 CFR 249.308a.

27

The amendments to Forms 10, F-4, 1-K, 1-SA, SF-1 and SF-3 are not expected to affect the burdens
associated with those forms.

3

3.

CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY

The forms that would require the proposed disclosures are filed electronically
with the Commission using the Commission’s Electronic Data Gathering, Analysis and
Retrieval (“EDGAR”) system.
4.

DUPLICATION OF INFORMATION

We believe that the proposed amendments would not duplicate, overlap, or
conflict with other federal rules.
5.

REDUCING THE BURDEN ON SMALL ENTITIES

The proposed changes would affect some registrants that are small entities.
However, many of the proposed changes would simplify and streamline existing
disclosure requirements in ways that are expected to reduce compliance burdens for all
registrants, including small entities. Some of the proposed changes could incrementally
increase compliance costs for registrants, although we do not expect these additional
costs to be significant.
6.

CONSEQUENCES OF NOT CONDUCTING COLLECTION

The regulations and forms set forth the disclosure requirements for registration
statements, and periodic and current reports filed by companies to help investors make
informed investment decisions. Not conducting this collection would deprive investors
of access to information that is important to their voting and investment decisions.
7.

SPECIAL CIRCUMSTANCES
There are no special circumstances in connection with these amendments.

8.

CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY

The Proposing Release solicits comment on the new “collection of information”
requirements and the associated paperwork burdens. In response to the solicitation for
comment in the Proposing Release, registrants, investors, and other market participants
provide comments. In addition, the Commission and staff participate in ongoing dialogue
with representatives of various market participants through public conferences,
roundtables, and meetings. All comments received on the proposal are available at
https://www.sec.gov/comments/s7-19-18/s71918.htm. The Commission will consider all
comments received prior to publishing the final rules as required by 5 CFR 1320.11(f).
9.

PAYMENT OR GIFT TO RESPONDENTS
No payment or gift to respondents.

4

10.

CONFIDENTIALITY
All documents submitted to the Commission are available to the public.

11.

SENSITIVE QUESTIONS

No information of a sensitive nature would be required under the following
collections of information in connection with these rulemaking amendments: Form S-1,
Form S-4, Form S-11, Form F-1, Form 20-F, Form 40-F, Form 10-K, Form 10-Q, and
Form 1-A. The information collections collect basic personally identifiable information
that may include a name and job title. However, the agency has determined that the
information collections do 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 act
assessment (“PIA”) of the EDGAR system, in connection with these collections 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. and 13.

ESTIMATES OF HOUR AND COST BURDENS

Under the proposed amendments, Rule 3-10 would continue to permit the
omission of separate financial statements of subsidiary issuers and guarantors when
certain conditions are met and the parent company provides supplemental financial and
non-financial disclosure about the subsidiary issuers and/or guarantors and the
guarantees. Similar to the existing rule, the proposed rule would provide the conditions
that must be met in order to omit separate subsidiary issuer or guarantor financial
statements. Proposed Rule 13-01, contained in new Article 13 of Regulation S-X, would
specify the disclosure requirements for the accompanying proposed disclosures. The
proposed amendments would:






replace the condition that a subsidiary issuer or guarantor be 100% owned by the
parent company with a condition that it be consolidated in the parent company’s
consolidated financial statements;
replace condensed consolidating financial information, as specified in existing Rule 310, with certain proposed financial and non-financial disclosures. The proposed
financial disclosures would consist of summarized financial information, as defined in
Rule 1-02(bb)(1) of Regulation S-X, of the issuers and guarantors, which may be
presented on a combined basis, and reduce the number of periods presented. The
proposed non-financial disclosures, among other matters, would expand the qualitative
disclosures about the guarantees and the issuers and guarantors, as well as require
disclosure of additional information that would be material to holders of the
guaranteed security;
permit the proposed disclosures to be provided outside the footnotes to the parent
company’s audited annual and unaudited interim consolidated financial statements in
the registration statement covering the offer and sale of the subject securities and any
related prospectus, and in certain Exchange Act reports filed shortly thereafter;
5





require that the proposed disclosures be included in the footnotes to the parent
company’s consolidated financial statements for annual and quarterly reports
beginning with the annual report for the fiscal year during which the first bona fide
sale of the subject securities is completed; and
require the proposed financial and non-financial disclosures for as long as the issuers
and guarantors have an Exchange Act reporting obligation with respect to the
guaranteed securities rather than for as long as the guaranteed securities are
outstanding.

The proposed amendments to the disclosure requirements in Rule 3-16 would be
amended and relocated to proposed Rule 13-02. Among other things, the proposed
amendments would replace the existing requirement to provide separate financial
statements for each affiliate whose securities are pledged as collateral with financial and
non-financial disclosures about the affiliate(s) and the collateral arrangement as a
supplement to the consolidated financial statements of the registrant that issues the
collateralized security. The proposed amendments would also permit the proposed
financial and non-financial disclosures to be located in filings in the same manner as
described above for the disclosures related to guarantors and guaranteed securities.
Additionally, the proposed amendments would replace the requirement to provide
disclosure only when the pledged securities meet or exceed a numerical threshold relative
to the securities registered or being registered with a requirement to provide the proposed
financial and non-financial disclosures in all cases, unless they are immaterial to holders
of the collateralized security.
We estimate that the existing Rule 3-10 and Rule 3-16 disclosures each require an
average of 100 burden hours to prepare and process. Considering the various impacts to
the existing collection of information requirements, we estimate that the proposed
amendments to Rules 3-10 would reduce the overall paperwork burden for registrants that
currently provide the disclosures under existing Rule 3-10 in any particular filing by
approximately 30 hours. Further, we estimate that the disclosure requirements in
proposed new Rule 13-02 would also reduce the overall paperwork burden for registrants
that currently provide the disclosures under existing Rule 3-16 in any particular filing by
approximately 30 hours, except for quarterly reports on Form 10-Q. Therefore, we
estimate that each of the disclosures related to the proposed amendment to Rules 3-10
and proposed Rule 13-02 would require 70 hours to prepare and process.
Existing Rule 3-16 requires registrants to include interim period financial
statements that comply with Rule 3-16 when those financial statements are presented in
registration statements, but it does not require similar financial statements that comply
with Rule 3-16 in quarterly reports on Form 10-Q. Proposed new rule 13-02 would
require financial information in quarterly reports on Form 10-Q, which would increase
registrants’ paperwork burden for that form. We estimate that the proposed amendments
related to Rule 3-16 would increase the current paperwork burden by approximately 70
hours for each affected quarterly report on Form 10-Q.
Additionally, although the proposed amendments to Rule 3-10 and proposed rule
6

13-02 could reduce the paperwork burden for each individual affected form, except for
Form 10-Q, they could cause the number of affected forms filed to change over a period
of time. We believe proposed amendments to Rule 3-10 would encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
we believe that proposed Rule 13-02 would encourage potential issuers to conduct
additional registered collateralized debt offerings because the costs of complying with
proposed Rule 13-02 could be less than the costs required to comply with existing Rule
3-16. As the number of these registered offerings increases, the number of affected forms
filed would also increase over a period of time. Therefore, we believe that the number of
registration statements filed on affected forms that would include the disclosures related
to the proposed amendments to Rule 3-10 and proposed Rule 13-02 would necessarily
increase.
An increase in the number of registration statements filed would typically result in
an increase in the number of periodic reports filed as well because some of the new
registration statements would presumably be from new registrants. However, the
proposed amendments to Rule 3-10 would reduce the ongoing reporting requirements of
certain registrants and could result in fewer periodic reports on affected forms with
disclosures under Rule 3-10 being filed over a period of time. Overall, we believe the
decrease in the number of periodic reports filed on affected forms due to the change in
ongoing reporting requirements would be largely mitigated, and perhaps offset, by the
number of periodic reports with disclosures under Rule 3-10 that would increase due to
the filing of new registration statements. Consequently, to avoid overestimating the
paperwork reduction associated with the proposed amendments to Rule 3-10, we are not
adjusting our existing estimate for the number of periodic reports filed with that
information on affected forms.
Although we are not adjusting our existing periodic report estimate based on the
proposed amendments to Rule 3-10, we are adjusting those estimates based on the
disclosures related to proposed Rule 13-02. We do not believe that all registrants that file
additional registration statements with the proposed Rule 13-02 information would be
new registrants, so we believe that, while there would be additional filings on Form 10-K,
the increase would not be as great as the increase in the number of registration
statements. Estimating the number of additional filings on Form 10-Q requires a separate
determination because the proposed amendments would require that the proposed Rule
13-02 information be included in quarterly reports on Form 10-Q. Currently, financial
statements under Rule 3-16 are not required in quarterly reports on Form 10-Q. To
estimate the number of additional filings on Form 10-Q that would include the proposed
Rule 13-02 information, we look to the estimated number of filings on Form 10-K. For
every Form 10-K, a registrant would be required to file three quarterly reports on Form
10-Q.
We estimate below the aggregate change in paperwork burden as a result of the
proposed amendments, both in terms of the change to existing responses as well as the
effect of additional responses. These estimates represent the average burden for all
7

registrants, both large and small. In deriving our estimates, we recognize that the burdens
will likely vary among individual registrants based on a number of factors, including the
nature of their business. The burden estimates were calculated by multiplying the
estimated number of responses by the estimated average amount of time it would take a
registrant to prepare and review disclosure required under the proposed amendments.
The portion of the burden carried by outside professionals is reflected as a cost, while the
portion of the burden carried by the registrant internally is reflected in hours.
For purposes of the PRA, we estimate that 75% of the burden of preparation of
Forms 10-K, 10-Q, and 1-A is carried by the registrant internally and that 25% of the
burden of preparation is carried by outside professionals retained by the company at an
average cost of $400 per hour.28 Additionally, we estimate that 25% of the burden of
preparation for Forms S-1, S-4, S-11, F-1, 20-F, and 40-F and is carried by the registrant
internally and that 75% of the burden of preparation is carried by outside professionals
retained by the company at an average cost of $400 per hour.
Table 1: Calculations of Change in Burden Estimates of Current Responses Due to
Proposed Amendments to Rule 3-10
Number of
Current Affected
Responses
(A)

Burden Hour
Change per
Current
Affected
Response
(B)

Change in
Burden Hours
for Current
Affected
Responses
(C)

Change in
Company
Hours for
Current
Affected
Responses
(D)

Change in
Professional
Hours for
Current
Affected
Responses
(E)

Change in
Professional
Costs for
Current
Affected
Responses
(F)

= (A) x (B)
= (C) x 0.75,
0.25
10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

28

474
1,252
10
14
8
100
5
5
0

(30)
(30)
(30)
(30)
(30)
(30)
(30)
(30)
---

(14,220)
(37,560)
(300)
(420)
(240)
(3,000)
(150)
(150)
---

(10,665)
(28,170)
(75)
(105)
(60)
(750)
(37.5)
(37.5)
---

= (C) x 0.25,
0.75
(3,555)
(9,390)
(225)
(315)
(180)
(2,250)
(112.5)
(112.5)
---

= (E) x $400

($1,422,000)
($3,756,000)
($90,000)
($126,000)
($72,000)
($900,000)
($45,000)
($45,000)
---

We recognize that the costs of retaining outside professionals may vary depending on the nature of the
professional services, but for purposes of this PRA analysis, we estimate that such costs would be an
average of $400 per hour. This estimate is based on consultations with several registrants, law firms
and other persons who regularly assist registrants in preparing and filing reports with the Commission.

8

Table 2: Calculations of Change in Burden Estimates of Additional Responses Due
to Proposed Amendments to Rule 3-10
Number of
Additional
Affected
Responses
(A)

Burden Hour
Change per
Additional
Affected
Response
(B)

Change in
Burden Hours
for Additional
Affected
Responses
(C)

Change in
Company
Hours for
Additional
Affected
Responses
(D)

Change in
Professional
Hours for
Additional
Affected
Responses
(E)

Change in
Professional
Costs for
Additional
Affected
Responses
(F)

= (C) x 0.25

= (C) x 0.75

= (E) x $400

----52.5
35
--577.5
35
35
---

----157.5
105
--1,732.5
105
105
---

----$63,000
$42,000
--$693,000
$42,000
$42,000
---

= (A) x (B)

10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

0
0
3
2
0
33
2
2
0

----70
70
--70
70
70
---

----210
140
--2,310
140
140
---

9

Table 3: Calculations of Change in Burden Estimates of Current Responses Due to
Proposed Amendments to Rule 3-16
Number of Current
Affected
Responses
(A)

Burden Hour
Change per
Current
Affected
Response
(B)

Change in
Burden Hours
for Current
Affected
Responses
(C)

Change in
Company
Hours for
Current
Affected
Responses
(D)

Change in
Professional
Hours for
Current
Affected
Responses
(E)

Change in
Professional
Costs for
Current
Affected
Responses
(F)

= (C) x 0.25,
0.75, or 0.15

= (E) x $400

(52.5)
----(22.5)
-----------

($21,000)
----($9,000)
-----------

= (A) x (B)
= (C) x 0.75,
0.25, 0.85
10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

7
0
0
1
0
0
0
0
0

(30)
----(30)
-----------

(210)
----(30)
-----------

(157.5)
----(7.5)
-----------

Table 4: Calculations of Change in Burden Estimates of Additional Responses Due
to Proposed Amendments to Rule 3-16
Number of
Additional
Affected
Responses
(A)

Burden Hour
Change per
Additional
Affected
Response
(B)

Change in
Burden Hours
for Additional
Affected
Responses
(C)

Change in
Company
Hours for
Additional
Affected
Responses
(D)

Change in
Professional
Hours for
Additional
Affected
Responses
(E)

Change in
Professional
Costs for
Additional
Affected
Responses
(F)

= (A) x (B)
= (C) x 0.75,
0.25
10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

3
18
1
2
0
4
1
1
1

70
70
70
70
--70
70
70
70

210
1,260
70
140
--280
70
70
70

157.5
945
17.5
35
--70
17.5
17.5
52.5

10

= (C) x 0.25,
0.75
52.5
315
52.5
105
--210
52.5
52.5
17.5

= (E) x $400

$21,000
$126,000
$21,000
$42,000
--$84,000
$21,000
$21,000
$7,000

Table 5: Calculations for Incremental Paperwork Burden under the Proposed
Amendments to Rules 3-10 and 3-16 (Current Responses + Additional Responses)

10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

Number
of Total
Affected
Responses
Under
Proposed
Rule 3-10
(A)

Number
of Total
Affected
Responses
Under
Proposed
Rule 3-16
(B)

Change in
Burden
Hours for
Total
Affected
Responses
Under
Proposed
Rule 3-10
(C)

Change in
Burden
Hours for
Total
Affected
Responses
Under
Proposed
Rule 3-16
(D)

Change in
Company
Hours for
Total
Affected
Responses
Under
Proposed
Rule 3-10
(E)

Change in
Company
Hours for
Total
Affected
Responses
Under
Proposed
Rule 3-16
(F)

Change in
Professional
Hours for
Total
Affected
Responses
Under
Proposed
Rule 3-10
(G)

Change in
Professional
Hours for
Total
Affected
Responses
Under
Proposed
Rule 3-16
(H)

Change in
Professional
Costs for
Total
Affected
Responses
Under Rule
3-10
(I)

Change in
Professional
Costs for
Total
Affected
Responses
Under Rule
3-16
(J)

474
1,252
13
16
8
133
7
7
0

10
18
1
3
0
4
1
1
1

(14,220)
(37,560)
(90)
(280)
(240)
(690)
(10)
(10)
---

0
1,260
70
110
--280
70
70
70

(10,665)
(28,170)
(22.5)
(70)
(60)
(172.5)
(2.5)
(2.5)
---

0
945
17.5
27.5
--70
17.5
17.5
52.5

(3,555)
(9,390)
(67.5)
(210)
(180)
(517.5)
(7.5)
(7.5)
---

0
315
52.5
82.5
--210
52.5
52.5
17.5

($1,422,000)
($3,756,000)
($27,000)
($84,000)
($72,000)
($207,000)
($3,000)
($3,000)
---

$0
$126,000
$21,000
$33,000
--$84,000
$21,000
$21,000
$7,000

11

Table 6: Incremental Paperwork Burden under the Proposed Amendments to
Rules 3-10 and 3-16
Change in
Burden
Hours of
Affected
Response
(B)

10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

(14,220)
(36,300)
(20)
(170)
(240)
(410)
60
60
70

Change in
Company
Hours
(C)

Change in
Professional
Hours
(D)

Change in
Professional Costs
(E)

(10,665)
(27,225)
(5)
(42.5)
(60)
(102.5)
15
15
52.5

(3,555)
(9,075)
(15)
(127.5)
(180)
(307.5)
45
45
17.5

($1,422,000)
($3,630,000)
($6,000)
($51,000)
($72,000)
($123,000)
$18,000
$18,000
$7,000

The table below illustrates the changes in cost and hour burdens from the burdens
currently approved by OMB. The total estimated burdens were calculated by adding the
incremental burdens to the existing burdens.
Table 7: Requested Paperwork Burden under the Proposed Amendments to Rules
3-10 and 3-16
Current Burden
Current
Annual
Responses
(A)

10-K
10-Q
S-1
20-F
40-F
S-4
S-11
F-1
1-A

8,137
22,907
901
725
132
551
64
63
179

14.

Current
Burden
Hours
(B)

14,198,780
3,209,558
147,208
479,304
14,237
562,465
12,214
26,692
98,396

Program Change
Current Cost
Burden
(C)

$1,895,224,719
$425,120,754
$180,319,975
$576,875,025
$17,084,560
$677,378,579
$14,925,768
$32,275,375
$13,111,912

Number
of
Affected
Responses
(D)

Change in
Company
Hours
(E)

484
1,270
14
19
8
137
8
8
1

(10,665)
(27,225)
(5)
(43)
(60)
(103)
15
15
53

Change in
Professional
Costs
(F)

($1,422,000)
($3,630,000)
($6,000)
($51,000)
($72,000)
($123,000)
$18,000
$18,000
$7,000

Requested Change in Burden
Annual
Responses
(G)

Burden
Hours
(H)

= (A) + (D)

= (B) + (E)

8,621
24,177
915
744
140
688
72
71
180

14,188,115
3,182,333
147,203
479,261
14,177
562,362
12,229
26,707
98,449

Cost Burden
(I)
= (C) + (F)

$1,893,802,719
$421,490,754
$180,313,975
$576,824,025
$17,012,560
$677,255,579
$14,943,768
$32,293,375
$13,118,912

COSTS TO FEDERAL GOVERNMENT

The annual cost of reviewing and processing disclosure documents, including
registration statements, post-effective amendments, proxy statements, annual reports and
other filings of operating companies amounted to approximately $102 million in fiscal
year 2018, based on the Commission’s computation of the value of staff time devoted to
this activity and related overhead for the Division of Corporation Finance.

12

15.

REASON FOR CHANGE IN BURDEN

The proposed amendments would simplify and streamline the disclosure provided
to investors about registered transactions and improve transparency in the market to the
extent more offerings are registered. The proposed amendments to Rule 3-10 are
expected to reduce the cost of compliance for registrants and encourage potential issuers
to conduct registered debt offerings or private offerings with registration rights. The
proposed amendments to the disclosure requirements in Rule 3-16 are expected to reduce
the burden associated with providing guarantees or pledges of affiliate securities as
collateral. The table below illustrates the changes in cost and hour burdens from the
burdens currently approved by OMB. The total estimated burdens were calculated by
adding the incremental burdens to the existing burdens.
Table 8. Summary of Revised Annual Responses, Burden Hours, and Burden Hour
Cost Estimates for Each Information Collection
IC
Title

Form
10-K
Form
10-Q
Form
S-1
Form
20-F
Form
40-F
Form
S-4
Form
S-11
Form
F-1
Form
1-A
Total

Annual Number
of Responses
Previously
Requested
Approved

Change

Annual Time Burden
(Hours)
Previously
Requested
Change
Approved

Annual Cost Burden
($)
Previously
Requested
Approved

Change

8,137

8,621

484

14,198,780

14,188,115

(10,665)

$1,895,224,719

$1,893,802,719

($1,422,000)

22,907

24,177

1,270

3,209,558

3,182,333

(27,225)

$425,120,754

$421,490,754

($3,630,000)

901

915

14

147,208

147,203

(5)

$180,319,975

$180,313,975

($6,000)

725

744

19

479,304

479,261

(43)

$576,875,025

$576,824,025

($51,000)

132

140

8

14,237

14,177

(60)

$17,084,560

$17,012,560

($72,000)

551

688

137

562,465

562,362

(103)

$677,378,579

$677,255,579

($123,000)

64

72

8

12,214

12,229

15

$14,925,768

$14,943,768

$18,000

63

71

8

26,692

26,707

15

$32,275,375

$32,293,375

$18,000

179

180

1

98,396

98,449

53

$13,111,912

$13,118,912

$7,000

33,659

35,608

1,949

18,748,854

18,710,836

(38,018)

$3,832,316,667

$3,827,055,667

($5,261,000)

16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL
PURPOSES
The information collections do not employ statistical methods.

17.

APPROVAL TO OMIT 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.

13

18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION
ACT SUBMISSIONS

There are no exceptions to certification for the Paperwork Reduction Act
submissions.
B.

STATISTICAL METHODS
The information collections do not employ statistical methods.

14

Form 10-K Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form 10-K, we estimate that the proposed amendments would result in a
reduction of approximately 10,665 internal burden hours and a reduction of
approximately $1,422,000 in outside professional costs.

15

Form 10-Q Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form 10-Q, we estimate that the proposed amendments would result in a
reduction of approximately 27,225 internal burden hours and a reduction of
approximately $3,630,000 in outside professional costs.

16

Form S-1 Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form S-1, we estimate that the proposed amendments would result in a
reduction of approximately five internal burden hours and a reduction of approximately
$6,000 in outside professional costs.

17

Form 20-F Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form 20-F, we estimate that the proposed amendments would result in a
reduction of approximately 43 internal burden hours and a reduction of approximately
$51,000 in outside professional costs.

18

Form 40-F Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form 40-F, we estimate that the proposed amendments would result in a
reduction of approximately 60 internal burden hours and a reduction of approximately
$72,000 in outside professional costs.

19

Form S-4 Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form S-4, we estimate that the proposed amendments would result in a
reduction of approximately 103 internal burden hours and a reduction of approximately
$123,000 in outside professional costs.

20

Form S-11 Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form S-11, we estimate that the proposed amendments would result in an
increase of approximately 15 internal burden hours and an increase of approximately
$18,000 in outside professional costs.

21

Form F-1 Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form F-1, we estimate that the proposed amendments would result in an
increase of approximately 15 internal burden hours and an increase of approximately
$18,000 in outside professional costs.

22

Form 1-A Short Statement
The proposed amendments would revise the disclosure requirements in Rules 310 and 3-16 of Regulation S-X to better align those requirements with the needs of
investors and to simplify and streamline the disclosure obligations of registrants. These
amendments are intended to provide investors with the information that is important
given the specific facts and circumstances, make the disclosures easier to understand, and
reduce the costs and burdens to registrants. The proposal would amend both rules and
relocate part of Rule 3-10 and all of Rule 3-16 to proposed Rules 13-01 and 13-02,
respectively.
Considering the various impacts to the existing collection of information
requirements, we estimate that the proposed amendments to Rules 3-10 and would reduce
the overall paperwork burden for registrants that currently provide the disclosures under
existing Rule 3-10 in any particular filing. Further, we estimate that the proposed
amendments to the disclosure requirements in Rule 3-16 would also reduce the overall
paperwork burden for registrants that currently provide the disclosures under existing
Rule 3-16 in any particular filing, except for Form 10-Q. The proposed amendments
related to Rule 3-16 would require financial information in quarterly reports on Form 10Q that are not required under existing Rule 3-16.
Although the proposed amendments would reduce the paperwork burden for most
of the affected forms, they could cause the number of affected forms filed to increase
over a period of time. The proposed amendments to Rule 3-10 could encourage potential
issuers to conduct registered debt offerings or private offerings with registration rights
instead of conducting those offerings privately or without registration rights. Similarly,
the proposed amendments to the disclosure requirements in Rule 3-16 could encourage
potential issuers to conduct additional registered collateralized debt offerings because the
costs of complying with proposed Rule 13-02 could be less than the costs required to
comply with existing Rule 3-16. As the number of these registered offerings increases,
the number of affected forms filed would also increase over a period of time, which could
mitigate, or offset, any reduction to the paperwork burden for any particular filing.
For Form 1-A, we estimate that the proposed amendments would result in an
increase of approximately 53 internal burden hours and an increase of approximately
$7,000 in outside professional costs.

23