Form N-6 - Supporting Statement

OMB CONTROL NUMBER: 3235-0503
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
FORM N-6
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Form N-6 is the form used by separate accounts organized as unit investment trusts that
offer variable life insurance contracts to register under the Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.) (the “Investment Company Act”) and/or to register their securities under
the Securities Act of 1933 (15 U.S.C. 77a et seq.) (the “Securities Act”). Section 5 of the
Securities Act (15 U.S.C. 77e) requires the filing of a registration statement prior to the offer of
securities to the public and that the statement be effective before any securities are sold, and
section 8 of the Investment Company Act (15 U.S.C. 80a-8) requires a separate account to
register as an investment company. Section 5(b) of the Securities Act makes it unlawful to carry
or cause to be carried a security for purposes of sale or for delivery after the sale “unless
accompanied or preceded” by a prospectus that meets the requirements of section 10(a) of the
Act (which, in turn, generally requires a prospectus relating to a security to contain the
information contained in the registration statement). For separate accounts that offer variable life
insurance contracts, Form N-6 provides the information required to appear in prospectus meeting
the requirements of section 10(a) of the Securities Act (as well as the information required to
appear in the statement of additional information (“SAI”)).
On March 11, 2019, the Commission adopted rule and form amendments designed to
enhance disclosures for variable annuities and variable life insurance contracts (together,
“variable contracts”). The rules use a layered disclosure approach that would permit a person to
satisfy its prospectus delivery obligations under the Securities Act for a variable contract by

sending or giving a summary prospectus that presents key information about a variable contract’s
terms, benefits, and risks, with access to more detailed information available online and
electronically or in paper format on request. 1
The Commission adopted amendments to Form N-6 to update and enhance the
disclosures to investors in variable life insurance contracts, and to implement the new summary
prospectus regime. The Commission amended certain disclosure requirements that Form N-6
currently requires. In addition, amended Form N-6 requires certain new disclosures regarding,
among other things: the Key Information Table, an overview of the contract, principal risks,
optional benefits, loans, and the Appendix of available portfolio companies. The amendments
also reduced or eliminated certain disclosures currently required by the form, including the
requirements to include condensed financial information for each class of accumulation units of
the registrant.
2.

Purpose and Use of the Information Collection

The purpose of Form N-6 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. This information collection
differs significantly from many other federal information collections, which are primarily for the
use and benefit of the collecting agency. 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 the information.

1

Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable
Life Insurance Contracts, Investment Company Act Release No. 33814 (Mar. 11, 2020), available
at https://www.sec.gov/rules/final/2020/33-10765.pdf (“Adopting Release”).
2

3.

Consideration Given to Information Technology

The Commission’s electronic filing system (Electronic Data Gathering, Analysis and
Retrieval or “EDGAR”) is designed to automate the filing, processing, and dissemination of full
disclosure filings. The system permits publicly held companies to transmit filings to the
Commission electronically. This automation has increased the speed, accuracy, and availability
of information, generating benefits to investors and financial markets. Form N-6 is required to
be filed with the Commission electronically on EDGAR (see 17 CFR 232.101(a)(1)(i) and (iv)).
The public may access filings on EDGAR through the Commission’s internet website
(http://www.sec.gov) or by using an EDGAR terminal located in the Commission’s public
reference rooms. Prospectuses and SAIs may be sent to investors by electronic means so long as
certain requirements are met. 2
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 requirements of Form N-6 are not generally duplicated elsewhere.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.), to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The disclosure requirements for Form N-6 do not
distinguish between small entities and larger entities. The burden on smaller entities may be

2

See Use of Electronic Media for Delivery Purposes, Securities Act Release No. 7233, Exchange
Act Release No. 36345, Investment Company Act Release No. 21399 (Oct. 6, 1995) [60 FR 53458
(Oct. 13, 1995)].
3

greater than for larger entities. This burden includes the cost of producing, printing, and filing,
and disseminating prospectuses and SAIs. 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-6 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)

Not Applicable.
8.

Consultation Outside the Agency

Before adopting the amendments to Form N-6, the Commission solicited and evaluated
public comments on the proposal and its collection of information requirements. Specifically,
the public was given the opportunity to comment on the Commission’s estimates for the burdens
of Form N-6, as proposed and as compared to the existing approved burden inventory in the
proposing and adopting releases for the amendments. While comments were received from filers,
investors and other market participants, and were considered by the Commission as discussed in
the Adopting Release none of these related to the proposed burden estimates for the amendments

4

to Form N-6. 3 In addition, the Commission and 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 that
may confront the industry.
9.

Payment or Gift

Not Applicable.
10.

Confidentiality

Not Applicable.
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, and work addresses. 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 1/29/2016, 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 (44 U.S.C. 3501 et seq.) and are not derived from a
3

See Adopting Release, supra footnote 1.

5

comprehensive or even representative survey or study of the cost of Commission rules and
forms.
Form N-6 generally imposes two types of reporting burdens on investment companies:
(1) the burden of preparing and filing the initial registration statement; and (2) the burden of
preparing and filing post-effective amendments to a previously effective registration statement.
The hour and cost burden estimates for preparing and filing initial registration statements and
post-effective amendments on Form N-6 are based on the Commission’s experience with the
contents of the form. The number of burden hours and cost may vary depending on, among
other things, the complexity of the filing and whether preparation of the form is performed by
internal staff or outside counsel. We currently estimate for Form N-6 a total of 31,987
internal burden hours.
The table below summarizes the estimated adjustments to the Form N-6 collection of
information from the proposed amendments, the estimated adjustments to the Form N-6
collection of information from the final amendments, and the final PRA estimates for internal
and external burdens associated with amended Form N-6:
FORM N–6 PRA ESTIMATES
Internal
Hour
Burden

Wage Rate

Internal
Time Costs

Annual
External
Cost
Burden

FINAL ESTIMATES FOR INITIAL REGISTRATION STATEMENTS

Final form amendments
per filing

1 hour

$269
(blended rate for
compliance attorney
and intermediate
accountant)

×

6

$269

--

Number of initial registration
statements

×7

×7

7 hours

$1,883

Total additional burden
for all initial registration
statements
--

FINAL ESTIMATES FOR POST-EFFECTIVE AMENDMENTS
$269
(blended rate for
compliance attorney
and intermediate
accountant)

Final form amendments per
filing

8 hours

Number of post-effective
amendments

× 378

× 378

3,024 hours

$813,456

--

3,031 hours

$815,339

--

Total additional burden
for all post-effective
amendments
Total additional annual burden
for all initial registration
statements and post-effective
amendments

×

$2,152

--

TOTAL ESTIMATED BURDENS INCLUDING AMENDMENTS
Current burden estimates

31,987
hours

$9,084,308

Revised burden estimates

65,123
hours

$17,518,087 $7,840,000

$3,816,692

The table above summarizes our PRA initial and ongoing annual burden estimates
associated with Form N-6 as amended. In the aggregate, we estimate the total annual hour
7

burden to comply with amended Form N-6 to be 65,123 hours, at an average time cost of
$17,518,087. These estimates reflect the increase in estimated burdens associated with the
amendments, adjustments to certain per filing estimates, and current estimates for the annual
number of filings on Form N-6.

13.

Cost to Respondents

Cost burden is the cost of goods and services purchased to prepare and submit reports on
Form N-6. The cost burden does not include the hour burden discussed in Item 12 above.
Commission staff currently estimates for Form N-6, a total annual external cost burden of
$3,816,692. As outlined in the table above, staff estimates the total external cost burden to
comply with amended Form N-6 to be $7,840,000.
14.

Cost to the Federal Government

The annual cost of reviewing and processing 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. Change in Burden
As summarized in the table above, the estimated hourly burden associated with Form N-6
has increased from 31,987 hours to 65,123 hours (an increase of 33,136 hours). Further, the
estimated cost burden has increased from $3,816,692 to $7,840,000 (an increase of $4,023,308).
These estimates reflect the increase in estimated burdens associated with the amendments,

8

adjustments to certain per filing estimates, and current estimates for the annual number of filings
on Form N-6.
16.

Information Collection Planned for Statistical Purposes

The Commission requests 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.

17.

Approval to Omit OMB Expiration Date

The Commission requests 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.
Submission

Exceptions to Certification Statement for Paperwork Reduction Act

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable.

9