Supporting Statement Rel. 33-10825.Final.Final

Supporting Statement Rel. 33-10825.Final.Final.pdf

Form S-1 Registration Statement

OMB: 3235-0065

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SUPPORTING STATEMENT FOR FINAL RULES
UNDER THE SECURITIES ACT OF 1933 AND
THE SECURITIES EXCHANGE ACT OF 1934
This submission, pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C.
§3501, et seq., consists of this supporting statement and the following attachments:
A. Statutory Authority
B. Final Release
A.

JUSTIFICATION

1.

CIRCUMSTANCES MAKING THE COLLECTION OF INFORMATION
NECESSARY

On August 26, 2020, the Securities and Exchange Commission (the
“Commission”) adopted amendments to modernize the description of business (Item
101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K under the Securities Act of 1933 (the
“Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”), and
conforming amendments to Schedule 14A and Form S-4. A copy of Commission Release
No. 33-10825 (“Adopting Release”), which contains the final amendments, is attached at
Tab A.
The following collections of information (“affected forms”) will be affected by
the final amendments:








2.

Form S-1 (OMB Control No.
3235-0065);
Form S-3 (OMB Control No.
3235-0073;
Form S-4 (OMB Control No.
3235-0324);
Form S-11 (OMB Control No.
3235-0067);
Form F-1 (OMB Control No.
3235-0258);
Form F-3 (OMB Control No.
3235-0256);
Form F-4 (OMB Control No.
3235-0325);









Form SF-1 (OMB Control No.
3235-0707);
Form SF-3 (OMB Control No.
3235-0690);
Form 10 (OMB Control No.
3235-0064);
Form 10-K (OMB Control No.
3235-0063);
Form 10-Q (OMB Control No.
3235-0070);
Schedule 14A (OMB Control
No. 3235-0059); and
Schedule 14C (OMB Control No.
3235-0057)

PURPOSE OF THE INFORMATION COLLECTION

The purpose of the final amendments rules is to modernize and simplify the
disclosure requirements of Item 101(a) (description of the general development of the

business), 101(c) (narrative description of the business), Item 103 (legal proceedings),
and Item 105 (risk factors). These disclosure items have not undergone significant
revisions in over 30 years. The amendments update these items to reflect changes in the
domestic and global economy. The modernization of Items 101, 103, and 105 should
elicit more improved disclosures for investors, tailored to reflect a registrant’s particular
and simplify compliance for registrants.
3.

CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY

The collection of information requirements of the final rules are set forth in
amended rules and forms. All of the affected forms are filed electronically with the
Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval
(“EDGAR”) system.
4.

DUPLICATION OF INFORMATION
The final amendments do not duplicate, overlap, or conflict with other federal

rules.
5.

REDUCING THE BURDEN ON SMALL ENTITIES

Pursuant to Section 605(b) of the Regulatory Flexibility Act (“RFA”), the
Commission certified in the proposing release that the amendments would not, if adopted,
have a significant economic impact on a substantial number of small entities. The
Commission solicited comments on this certification and received no comments. The
Commission expects the final amendments will reduce the compliance and paperwork
burden for all registrants, including small entities. Although, the Commission anticipates
that the economic impact of the reduction in the burdens will be modest, the reduction in
the burdens will be beneficial to all registrants, including small entities. Accordingly, the
Commission has certified, pursuant to 5 U.S.C. 605(b), that the final amendments will not
have a significant economic impact on a substantial number of small entities for purposes
of the RFA. See Section VI of the Adopting Release.
6.

CONSEQUENCES OF NOT CONDUCTING COLLECTION

The final amendments set forth disclosure requirements for registration
statements, periodic and current reports, distribution reports, and proxy and information
statements filed by registrants to help investors make informed investment and voting
decisions. Less frequent collection would deprive investors of access to material
information that is important to their voting and investment decisions.
7.

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

2

8.

CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY

The Commission issued a proposing release soliciting comment on the new
“collection of information” requirements and the associated paperwork burdens.1
Comments on Commission releases are generally received from registrants, investors,
and other market participants. The Commission did not receive any comments that directly
addressed the Paperwork Reduction Act (“PRA”) analysis of the proposed amendments. 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/s719-18/s71918.htm. The Commission considered 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 has been provided to any respondents.

10.

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

11.

SENSITIVE QUESTIONS

No information of a sensitive nature will be required under the affected forms.
These information collections collect basic Personally Identifiable Information (PII) that
may include a name and job title. However, the agency has determined that these
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 Impact
Assessment (PIA) of the EDGAR system, in connection with this collection of
information. The EDGAR PIA, published on February 5, 2020, 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

The amendments modernize and simplify the disclosure requirements in Items
101, 103, and 105 of Regulation S-K. The Commission anticipates that the final
amendments will make these disclosures easier to understand, and reduce the compliance
burdens to registrants.

1

See Modernization of Regulation S-K Items 101, 103, and 105, Release No. 33-10668 (Aug. 8,
2019) [84 FR 44358 (Aug. 23, 2019)] (“Proposing Release”).

3

The tables below show the total annual compliance burden, in hours and in costs,
of the collection of information resulting from the final amendments.2 The burden
estimates were calculated by multiplying the estimated number of responses by the
estimated average amount of time it would take an issuer to prepare and review the
exhibit hyperlinks. The portion of the burden carried by outside professionals is reflected
as a cost, while the portion of the burden carried by the issuer internally is reflected in
hours.
For purposes of the PRA, the burden is allocated between internal burden hours
and outside professional costs. The table 1 below sets forth the percentage estimates the
Commission typically uses for the burden allocation for each affected form. We also
estimate that the average cost of retaining an outside professional is $400 per hour.3
Table 1: Standard Estimated Burden Allocation for Specified Forms and
Schedules.
Form / Schedule Type

Internal

Outside Professionals

Forms 10-K and 10-Q, and
Schedules 14A and 14C

75%

25%

Forms S-1, S-3, S-4, S-11, F-1,
F-3, F-4, SF-1, SF-3, and 10

25%

75%

Table 2 below illustrates the estimated net incremental change to the total annual
compliance burdens for the affected forms, in hours and in costs, as a result of the final
amendments.

2

For convenience, the estimated hour and cost burdens in the table have been rounded to the nearest
whole number.

3

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 entities that regularly assist registrants in preparing and filing documents with
the Commission.

4

Table 2: Calculation of the Net Incremental Change in Burden Estimates of
Affected Responses Resulting from the Final Amendments
Form

S-1
S-3
S-4
S-11
F-1
F-3
F-4
SF-1
SF-3
10
10-K
10-Q
Sch.
14A
Sch.
14C
Total

14.

Number of
Estimated
Affected
Responses
(A)4

Estimated
Burden
Hour
Reduction
/Affected
Response
(B)

Total
Incremental
Reduction in
Burden Hours
(C)

898

5

4,490

1,123

Estimated
Reduction in
Outside
Professional
Hours
(E)
= (C) x
(Allocation %)
3,367

1,651
588
67
66
113
39
6
71
216
8,292
22,925
6,369

3
5
3
3
3
3
3
3
4
4
3
2.9

4,953
2,940
201
198
339
117
18
213
864
33,168
68,775
18,470

1,238
735
50
50
85
29
5
53
216
24,876
51,581
13,853

3,715
2,205
151
148
254
88
14
160
648
8,292
17,194
4,617

$1,486,000
$882,000
$60,400
$59,200
$101,600
$35,200
$5,600
$64,000
$259,200
$3,316,800
$6,877,600
$1,846,800

569

2.9

1,650

1,238

412

$164,800

136,396

95,132

41,265

$16,506,200

41,870

= (A) x (B)5

Estimated
Reduction in
Internal
Burden Hours
(D)
= (C) x
(Allocation %)

Total
Reduction in
Outside
Professional
Costs
(F)
= (E) x $400
$1,347,000

COST TO FEDERAL GOVERNMENT

The estimated annual cost of reviewing and processing disclosure documents,
including registration statements, post-effective amendments, proxy statements, annual
report and other filings of operating companies amounted to $119,447,840 in fiscal year
2020, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead.

4

The number of estimated affected responses is based on the number of responses in the
Commission’s current OMB PRA filing inventory. The OMB PRA filing inventory represents a
three-year average.

5

The numbers in Columns (C), (D) and (E) have been rounded to the nearest whole number.

5

15.

REASON FOR CHANGES IN BURDEN

Table 3 below illustrates the changes in cost and hour burdens from the burden
estimates currently approved by OMB. Columns (A) and (B) represent the most recent
burden estimates submitted to OMB. Columns (C) and (D) represent the new burden
estimates under the final rules. Columns (E) and (F) represent the program change,
which encompasses the change in the burden estimates attributable to the final rules.
Table 3:6
Current Burden
Current
Current Cost
Burden
Burden
Hours
(C)
(B)

Form

Current
Annual
Responses
(A)

S-1
S-3
S-4
S-11
F-1
F-3
F-4
SF-1
SF-3
10
10-K
10-Q
Sch.
14A
Sch.
14C

898
1,651
588
67
66
113
39
6
71
216
8,292
22,925
6,369

146,062
192,530
562,362
12,229
26,707
4,459
14,049
2,076
24,552
11,855
14,047,638
3,182,333
778,802

$178,916,043
$234,859,580
$677,255,579
$14,943,768
$32,293,375
$5,724,600
$17,073,825
$2,491,200
$29,463,225
$14,091,488
$1,843,438,119
$421,490,754
$103,805,312

Number
of
Affected
Responses
(D)
898
1,651
588
67
66
113
39
6
71
216
8,292
22,925
6,369

569

56,356

$7,514,944

569

16.

Program Change
Reduction Reduction in
in
Professional
Company
Costs
Hours
(F)
(E)
1,123
$1,347,000
1,238
$1,486,000
735
$882,000
50
$60,400
50
$59,200
85
$101,600
29
$35,200
5
$5,600
53
$64,000
216
$259,200
24,876
$3,316,800
51,581
$6,877,600
13,853
$1,846,800
1,238

Requested Change in Burden
Annual
Burden
Cost Burden
Responses
Hours
(I) = (C) + (F)
(G) = (A)
(H) = (B)
+ (E)

$164,800

898
1,651
588
67
66
113
39
6
71
216
8,292
22,925
6,369

144,939
191,292
561,627
12,179
26,657
4,374
14,020
2,071
24,499
11,639
14,022,762
3,130,752
764,949

$177,569,043
$233,373,580
$676,373,579
$14,883,368
$32,234,175
$5,623,000
$17,038,625
$2,485,600
$29,399,225
$13,832,288
$1,840,121,319
$414,613,154
$101,958,512

569

55,118

$7,350,144

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
the 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.
6

Figures in Table 3 have been rounded to the nearest whole number.

6

18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION
ACT SUBMISSIONS
There are no exceptions to certification for Paperwork Reduction Act
submissions.

B.

STATISTICAL METHODS
The information collections do not employ statistical methods.

7

Short Statement Rel. No. 33-10825
Form S-1
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 1,123 burden hours and a net decrease of
$1,347,000 in the cost burden for Form S-1.
Form S-3
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 1,238 burden hours and a net decrease of
$1,486,000 in the cost burden for Form S-3.
Form S-4
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 735 burden hours and a net decrease of
$882,000 in the cost burden for Form S-4.
8

Form S-11
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 50 burden hours and a net decrease of
$60,400 in the cost burden for Form S-11.
Form F-1
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 50 burden hours and a net decrease of
$59,200 in the cost burden for Form F-1.
Form F-3
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 85 burden hours and a net increase of
$101,600 in the cost burden for Form F-3.

9

Form F-4
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 29 burden hours and a net decrease of
$35,200 in the cost burden for Form F-4.
Form SF-1
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of five burden hours and a net decrease of
$5,600 in the cost burden for Form SF-1.
Form SF-3
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 53 burden hours and a net decrease of
$64,000 in the cost burden for Form SF-3.

10

Form 10
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 216 burden hours and a net decrease of
$259,200 in the cost burden for Form 10.
Form 10-K
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 24,876 burden hours and a net decrease of
$3,316,800 in the cost burden for Form 10-K.
Form 10-Q
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 51,581 burden hours and a net decrease of
$6,877,600 in the cost burden for Form 10-Q.

11

Sch. 14A
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 13,853 burden hours and a net decrease of
$1,846,800 in the cost burden for Schedule 14A.
Sch. 14C
The amendments modernize and simplify disclosure requirements under Items 101(a),
101(c), 103, and 105 of Regulation S-K. The modernization of Items 101, 103, and 105
are intended to elicit improved disclosures, tailored to reflect registrants’ particular
circumstances, which should improve disclosures for investors and simplify compliance
for registrants. Particularly, the amendments increase the flexibility of registrants to tailor
their disclosures; eliminates or reduces disclosure about matters that are not material to
an understanding of the business or to a registrant’s legal proceedings; and encourages
risk factor disclosure that is shorter and concerns only material risks. The Commission
expects the final amendments will reduce the paperwork burden for all registrants. For
purposes of the Paperwork Reduction Act, the Commission estimates that the final
amendments will result in a net decrease of 1,238 burden hours and a net decrease of
$164,800 in the cost burden for Schedule 14C.

12


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