Form N-14 Supporting Statement (FAST Act 2-11)

OMB CONTROL NUMBER: 3235-0336
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-14
A. JUSTIFICATION
1. Necessity for the Information Collection
Section 5(c) of the Securities Act of 1933 (“Securities Act”) 1 requires a company to have
filed a registration statement with the Commission before it offers securities to the public by use
of the mails or other channels of interstate commerce. 2 Section 5(b) requires that a prospectus
containing the pertinent information set forth in the registration statement be furnished to the
purchaser of a security prior to or with the confirmation of sale or delivery of the security after
sale, whichever comes first. 3 Investment companies are required to register under Section 8(a) of
the Investment Company Act of 1940 (“Investment Company Act”) 4 and to file a registration
statement under Section 8(b) of the Investment Company Act containing such information as the
Commission has determined to be necessary or appropriate in the public interest or for the
protection of investors. 5
Form N-14 6 is the form for registration under the Securities Act of securities to be issued
by management investment companies registered under the Investment Company Act and
business development companies as defined by Section 2(a)(48) of the Investment Company Act
in: (1) a transaction of the type specified in rule 145(a) under the Securities Act; 7 (2) a merger in
which a vote or consent of the security holders of the company being acquired is not required
pursuant to applicable state law; (3) an exchange offer for securities of the issuer or another
person; (4) a public reoffering or resale of any securities acquired in an offering registered on
Form N-14; or (5) two or more of the transactions listed in (1) through (4) registered on one
registration statement. Rule 145(a) provides that submitting a proposal for certain
reclassification of securities, mergers, consolidations, or transfers of assets for the vote or
consent of security holders, is deemed to involve an “offer,” “offer to sell,” “offer for sale,” or
“sale” of the securities to be issued in the transaction. The effect of the rule is to require
registration of the securities to be issued in connection with such transactions, unless an
exemption from registration is available.

1

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

2

15 U.S.C. 77e(c).

3

See Securities Act Release No. 8591 (July 19, 2005) (70 FR 44722, 44782 (Aug. 3, 2005)).

4

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

5

15 U.S.C. 80a-8.

6

17 CFR 239.23.

7

17 CFR 230.145(a).

On October 11, 2017, the Commission issued a release proposing amendments to certain
of the Commission’s forms that are used by investment companies, including Form N-14. 8 The
Commission proposed amendments to Rule 102 of Regulation S-T to apply hyperlinking and
HyperText Markup Language (“HTML”) format requirements to registrants filing Form N-14 to
facilitate access to the Form’s exhibits for investors and other users of the information. Under
the proposed amendments, affected registrants would be required to include a hyperlink to each
exhibit identified in a filing’s exhibit index, unless the exhibit is filed in paper pursuant to a
temporary or continuing hardship exemption under Rule 201 or Rule 202 of Regulation S-T, or
pursuant to Rule 311 of Regulation S-T. This requirement would apply to registration statements
on Form N-14. Consistent with its rules for operating companies, the Commission did not
propose to require registrants to refile electronically any exhibits filed only in paper. Under the
proposed amendments, an electronic filer would also be required to correct an inaccurate or
nonfunctioning link or hyperlink to an exhibit. 9
In connection with the proposed exhibit hyperlinking requirements, the Commission also
proposed amendments to Rule 105 of Regulation S-T to require investment company registrants to
make Form N-14 filings that include exhibits in HTML format. Currently, investment company
registrants must submit electronic filings to the Commission using the EDGAR system in either
American Standard Code for Information Interchange (“ASCII”) format or HTML format. Because
the ASCII format does not support hyperlink functionality, the exhibit hyperlinking requirement
would be feasible only if registrants are required to file in HTML. Under the proposed requirement,
registrants would be required to file Form N-14 in HTML format. While the affected Form N-14
filings would be required to be filed in HTML pursuant to the proposed amendments to Rule 105,
registrants would continue to be permitted to file in ASCII any schedules or forms that are not
subject to the exhibit filing requirements, such as proxy statements, or other documents included
with a filing, such as an exhibit. The proposed amendments are intended to facilitate access to these
exhibits for investors and other users of the information.
2. Purpose and Use of the Information Collection
The principal purpose of Form N-14 is to make material information regarding securities
to be issued in connection with business combination transactions available to investors. The
information required to be filed with the Commission permits verification of compliance
with securities law requirements and assures the public availability and dissemination of
such information. Without the registration statement requirement, material information may
not necessarily be available to investors.
3. Consideration Given to Information Technology
The Commission’s Electronic Data Gathering, Analysis and Retrieval System
(“EDGAR”) automates the filing, processing, and dissemination of full disclosure filings.
8

Investment Company Act Release No. 32858 (Oct. 11, 2017) (the “Proposing Release”).

9

See Proposing Release at footnotes 315-18.

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This automation has increased the speed, accuracy, and availability of information,
generating benefits to investors and financial markets. Registration statements on
Form N-14 are required to be filed electronically on EDGAR. 10 The public may access
filings on EDGAR through the Commission’s website (http://www.sec.gov) or at EDGAR
terminals located at the Commission’s public reference rooms. Prospectuses may be sent to
investors by electronic means so long as certain requirements are met. 11
4. Duplication
The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or a change
in a rule. The information in Form N-14 is not generally duplicated elsewhere.
5. Effect on Small Entities
The Commission reviews all rules periodically, as required by the Regulatory Flexibility
Act, 12 to identify methods to minimize recordkeeping or reporting requirements affecting
small businesses. The current disclosure requirements for registration statements on
Form N-14 do not distinguish between small entities and other investment companies. The
burden on smaller investment companies of preparing and filing registration statements may
be proportionately greater than for larger investment companies. This burden includes the
cost of producing, printing, filing, and disseminating prospectuses. The Commission
believes, however, that imposing different requirements on smaller investment companies
would not be consistent with investor protection and the purposes of the registration
statements.
6. Consequences of Not Conducting Collection
The purpose of Form N-14 is to meet the filing and disclosure requirements of the
Securities Act and the Investment Company Act and to enable filers to provide investors
with information necessary to evaluate an investment in the security. Less frequent filing
would be inconsistent with the filing and disclosure requirements of the Securities Act and
the Investment Company Act. In addition, if the form were to be filed less frequently,
investors may not be provided with the information necessary to evaluate an investment in
the security.
7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
This collection is not inconsistent with 5 CFR 1320.5(d)(2).
10

See 17 CFR 232.101(a)(1)(i).

11

See Use of Electronic Media for Delivery Purposes, Securities Act Release No. 7233 (Oct. 6,
1995) [60 FR 53458 (Oct. 13, 1995)].

12

5 U.S.C. 601 et seq.

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8. Consultation Outside the Agency
Before adopting the proposed amendments to Form N-14, 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 the 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. 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 names, job titles, work addresses and work
telephone numbers. 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 13 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-14 is mandatory. Responses to the collection of information will not be kept
confidential.

13

44 U.S.C. 3501 et seq.

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Table 1: Burden Estimates for Initial Registration Statements Filed on Form N-141
Burden Per Response
Internal
Burden

Aggregate Burden
Cost of
Internal
Burden

Wage Rate2

Annual
Cost Burden

Annual
Responses

Internal Burden

Cost of
Internal Burden

Annual
Cost Burden

253

125,820 hours

$43,758,162

$5,842,000

125,820 hours

$43,758,162

$5,842,000

CURRENTLY APPROVED ESTIMATES
Preparing and filing
reports on Form N-14
generally

497.31
hours

×

$348 (1:1 blend of
compliance attorney and
senior programmer)

$173,063.88

$23,091

×

Total annual burden

REVISED ESTIMATES
Preparing and filing
reports on Form N-14
generally

497.31
hours

×

$348 (1:1 blend of
compliance attorney and
senior programmer)

$173,063.88

$23,091

×

253

125,820 hours

$43,758,162

$5,842,000

Preparation and review
of exhibit hyperlinks

0.25 hours

×

$348 (1:1 blend of
compliance attorney and
senior programmer)

$87

$300

×

253

63 hours

$22,011

$75,900

125,883 hours

$43,780,173

$5,917,900

Total annual burden

Notes:
1. The Commission used updated estimates based on an extension in 2019 renewing the collection of information
2. The Commission’s estimates concerning the allocation of burden hours and the relevant wage rates are based on consultations with industry representatives and on salary information for the
securities industry compiled by the Securities Industry and Financial Markets Association’s Office Salaries in the Securities Industry 2013. The estimated wage figures are modified by Commission
staff to account for an 1800-hour work-year and multiplied by 2.93 to account for bonuses, firm size, employee benefits, overhead, and adjusted to account for the effects of inflation. See
Securities Industry and Financial Markets Association, Report on Management & Professional Earnings in the Securities Industry 2013.

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Table 2: Change in Burden Estimates1
Annual Number of Responses

Form N-14

Previously
Approved

Revised
Estimate

253

253

Annual Time Burden (hours)

Change

Previously
Approved

Revised
Estimate

0

125,820

125,883

Change

Revised
Estimate

Change

+ 63

$5,842,000

$5,917,900

+ $75,900

Note:
1. The Commission used updated estimates based on an extension in 2019 renewing the collection of information

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Cost Burden (dollars)
Previously
Approved

As summarized in the tables above, the Commission previously estimated that about 253
funds will make about 253 filings on Form N-14 each year, incurring 125,820 hours of
internal hour burden at a cost of about $38.39 million. The hour burden estimates for
preparing and filing reports on Form N-14 are based on the Commission’s experience with
the contents of the form. The number of burden hours may vary depending on, among other
things, the complexity of the filing and whether preparation of the forms is performed by
internal staff or outside counsel.
The amendments to Regulation S-T that will require funds filing reports on Form N-14
to submit these documents in HTML format and to include a hyperlink to each exhibit
identified in the exhibit index of these documents are expected to increase the burdens and
costs for funds that prepare and file these registration statements. For purposes of the
Paperwork Reduction Act, we estimated the average burden for a fund to hyperlink to
exhibits based on the median number of exhibits that are filed with an affected form. As
summarized in Table 1 above, we estimate that the total internal burden associated with
Form N-14 will be 125,883 hours per year, at a cost of about $38.4 million.
13. Cost to Respondents
Cost burden is the cost of goods and services purchased to prepare and amend
registration statements on Form N-14, such as for the services of independent auditors and
outside counsel. The cost burden does not include the hour burden discussed in Item 12
above. Estimates are based on the Commission’s experience with the filing of registration
forms.
As summarized in Table 1 above, in our most recent Paperwork Reduction Act
submission for Form N-14, Commission staff estimated about $5.84 million in external cost
burden per year. We estimate that the revised external burden will be $5.92 million.
14. Cost to the Federal Government
The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, 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.
15. Changes in Burden
As summarized in Table 2 above, the estimated hourly burden associated with
Form N-14 has increased from 125,820 hours to 125,883 hours (an increase of 63 hours). In
addition, the cost burden associated with Form N-14 has increased from $5,842,000 to
$5,917,900 (an increase of $75,900). The changes in burden hours and external cost burdens
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are due to the estimates of the time burden and external costs that will result from our
amendments affecting Form N-14 regarding hyperlinking.
16. Information Collection Planned for Statistical Purposes
The results of any information collected will not be published.
17. Approval to Omit OMB 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.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information will not employ statistical methods.

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