Form N-14 Supporting Statement (3-05 Proposal)

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.

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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 May 3, 2019, the Commission proposed amendments to the financial statement
requirements for acquired and disposed businesses to improve the financial information
about acquired or disposed businesses, facilitate more timely access to capital, and reduce
the complexity and costs of preparing the disclosure. 8 Among other amendments, the
Commission proposed new Rule 6-11 of Regulation S-X and amendments to Form N-14 to
govern financial reporting for acquisitions involving investment companies. More
specifically, the Commission proposed to amend Form N-14 to make its disclosure
requirements consistent with the disclosures required in proposed Rule 6-11.

7

17 CFR 230.145(a).

8

See Amendments to Financial Disclosures about Acquired and Disposed Businesses,
Securities Act Release No. 10635 (May 3, 2019) [84 FR 24600 (May 28, 2019)].

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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
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.

9

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

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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,
investors may not be provided with the information necessary to evaluate an investment in
the security.

10

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

11

5 U.S.C. 601 et seq.

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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
In September 2015, the Commission issued a Request for Comment on the Effectiveness of
Financial Disclosures About Entities Other Than the Registrant; 12 and on May 3, 2019, the
Commission issued a proposing release soliciting comment on the “collection of
information” requirements and associated paperwork burdens of the proposed
amendments. 13 Comments on the Commission’s releases are generally received from
registrants, investors, and other market participants. In addition, the Commission and staff
participate in an ongoing dialogue with representatives of various market participants
through public conferences, meetings, and informal exchanges. The Commission considers
all comments received.
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

12

See Release No. 33-9929 (Sept. 25, 2015) [80 FR 59083 (Oct. 1, 2015)].

13

See supra note 8.

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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 14 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.
We estimate that the proposed amendments to Form N-14 will result in a reduction of
100 burden hours for each filing that contains acquired fund financial information. To
estimate the overall paperwork burden reduction from the proposed amendments, we first
estimated the number of filings that include acquired fund financial statements. To do so,
we searched the various form types over a three-year period ended October 1, 2018 for
indications of fund acquisition disclosure. 15 Based on this review, we estimate that 70 of the

14

44 U.S.C. 3501 et seq.

15

To conduct this analysis, Commission staff used text-based search terms of filings made
through the EDGAR system to identify filings that may contain acquired fund financial

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152 total average number of Form N-14 filings (or 46%) contained fund acquisition
disclosure. Using the currently-approved number of responses (253), we therefore estimate
that 116 Form N-14 filings (46% of 253) would be affected by the proposed amendments
annually.
As shown in Table 1 below, we estimate that 25% of the burden of preparation for Form
N-14 is carried by the registrant internally and that 75% of the burden of preparation is
carried by outside professionals retained by the company. We estimate that such costs would
be an average of $400 per hour. 16
Table 1: Calculation of the Change in Burden Estimates of Current Responses
Due to Proposed Amendments to Form N-14
Form

Number of
Estimated
Affected
Reponses
(A)

Burden
Hour
Change
per
Current
Affected
Response
(B)

N-14

116

(100)

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)
(11,600)

= (C) x 0.25
(2,900)

= (C) x 0.75
(8,700)

= (E) x $400
($3,480,000)

statements and pro forma financial information from investment company registrants.
However, the use of text-based search terms may understate the actual number of instances.
Because the number of filings varied from year to year, we use an average over a three-year
period.
16

This $400 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.

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Table 2: Requested Paperwork Burden Under the Proposed Amendments to Form N-14
Current Burden
Form

N-14

Program Change

Current
Annual
Responses
(A)

Current
Burden
Hours
(B)

Current Cost
Burden
(C)

253

125,260

$5,842,000

Requested Burden

Number
of
Affected
Responses
(D)

Reduction
in
Company
Hours
(E)

Reduction in
Professional
Costs
(F)

Annual
Responses
(G)

Burden
Hours
(H)

= (A)

116

(2,900)

($3,480,000)

253

= (B) +
(E)
122,360

Cost Burden
(I)
= (C) + (F)
$2,362,000

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 2 above, in our most recent Paperwork Reduction Act
submission for Form N-14, Commission staff estimated $5,842,000 in external cost burden
per year. We estimate that the revised external burden will be approximately $2,362,000.
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.

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15. Changes in Burden
As summarized in Table 2 above, the estimated hourly burden associated with
Form N-14 has decreased from 125,260 hours to 122,360 (a decrease of 2,900 hours). In
addition, the cost burden associated with Form N-14 has decreased from $5,842,000 to
$2,362,000 (a decrease of $3,480,000). 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
the proposed amendments streamlining the financial reporting on Form N-14 relating to
acquisitions involving investment companies.
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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