Download:
pdf |
pdfOMB 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 (“BDCs”) as defined by Section 2(a)(48) of the Investment
Company Act (collectively, “funds”) in certain business combination transactions: (1) a
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.
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.
On April 8, 2020, the Commission adopted rules to modify the registration,
communications, and offering processes for business development companies (“BDCs”)
and other closed-end investment companies (“closed-end funds”) under the Securities Act
of 1933. 8 The Commission adopted amendments to Form N-14 to permit BDCs to
incorporate certain information by reference into that form to the same extent as registered
closed-end funds. More specifically, the Commission amended Instruction G in Form N-14,
which governs incorporation by reference, to specifically include BDCs.
7
17 CFR 230.145(a).
8
Securities Offering Reform for Closed-End Investment Companies, Securities Act Release
No. 10771 (April 8, 2020).
2
2. Purpose and Use of the Information Collection
The principal purpose of Form N-14 is to make available to investors material
information regarding securities to be issued in connection with business combination
transactions. 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.
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. 9 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. 10
9
See 17 CFR 232.101(a)(1)(i).
10
See Use of Electronic Media for Delivery Purposes, Securities Act Release No. 7233 (Oct. 6,
1995) [60 FR 53458 (Oct. 13, 1995)].
3
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, 11 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,
4
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).
8. Consultation Outside the Agency
Before adopting the amendments affecting Form N-14, the Commission solicited and
evaluated public comments on the proposal and its collection of information requirements.
The Commission requested comment on whether it should amend Form N-1. The
Commission received several comments supportive of the amendments to Form N-14 as
adopted, and received no comments in opposition to the amendments. 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. Confidentiality
No assurance of confidentiality was provided.
11
5 U.S.C. 601 et seq.
5
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 199512 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.
The amendments to Form N-14 will decrease the existing disclosure burden of the form
by allowing BDCs to incorporate by reference to the same extent as is currently permitted
for registered CEFs and eliminating the requirement for affected funds to file with the Form
12
44 U.S.C. 3501 et seq.
6
N-14 registration statement the documents that contain the information that is incorporated
by reference into the prospectus or statement of additional information (“SAI”).
7
Table 1: Burden Estimates for Initial Registration Statements Filed on Form N-14
Internal
Burden
Cost of
Internal
Burden
Wage Rate1
Annual
Cost Burden
Annual
Responses
Internal Burden
(Aggregate)
Cost of
Internal Burden
(Aggregate)
Annual
Cost Burden
(Aggregate)
CURREN TLY A PPROVED ESTIMA TES
Preparing and filing
reports on Form N-14
generally
497.31 hours
×
$348 (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 (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
REVISED ESTIMA TES
Preparing and filing
reports on Form N-14
generally
610 hours
$317.3 (blend of attorney,
senior accountant, and
paralegal)
$193,554
$27,500
156
96,160 hours
$29,181,672
$4,290,000
Burden per amendment
290 hours
$319 ((blend of attorney,
senior accountant, and
paralegal)
$92,530
$16,000
97
29,100 hours
$8,674,710
$1,552,000
125,260 hours
$37,856,382
$5,842,000
TOTAL ANNUAL BURDEN
Notes:
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 5.35 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.
1
-8-
Table 2: Change in Burden Estimates
Annual Number of Responses
Form
N-14
Previously
Approved
Revised
Estimate
253
253
Annual Time Burden (hours)
Change
Previously
Approved
Revised
Estimate
0
125,883
125,260
Cost Burden (dollars)
Change
Previously
Approved
Revised
Estimate
Change
(623)
$5,917,900
$5,842,000
($75,900)
As summarized in Table 1 above, the Commission has previously estimated that about
253 funds will make about 253 filings on Form N-14 each year, incurring 125,883 hours of
internal hour burden at a cost of about $43.78 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 Form N-14 to permit BDCs to incorporate certain information by
reference into that form to the same extent as registered closed-end fund are expected to
decrease the burden and costs for BDCs that prepare and file Forms N-14. As summarized
in Table 1 above, we estimate that the total internal burden associated with N-14 will be
125,260 hours, at a cost of approximately $37,856,382.
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.
9
As summarized in Table 1 above, in our most recent Paperwork Reduction Act
submission for Form N-14, Commission staff estimated about $5.92 million in external cost
burden per year. We estimate that the revised external burden will be approximately $5.84
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 $21.2 million in
fiscal year 2019, 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 decreased from 125,883 hours to 125,260 hours (a decrease of 623 hours). In
addition, the cost burden associated with Form N-14 has decreased from $5,917,900 to
$5,842,000 (a decrease of $75,900). The changes in burden hours and external cost burdens
are due to the estimates of the time burden and external costs that will result from our
amendments permitting BDCs to incorporate certain information into the form by
reference.
16. Information Collection Planned for Statistical Purposes
The results of any information collected will not be published.
10
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.
11
| File Type | application/pdf |
| File Title | _SUPPORTING STATEMENT |
| Author | David Schwartz |
| File Modified | 2020-08-18 |
| File Created | 2020-08-18 |