[Federal Register Volume 75, Number 171 (Friday, September 3, 2010)]
[Notices]
[Pages 54194-54196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22030]
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SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 7d-1; SEC File No. 270-176; OMB Control No. 3235-0311.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995
(44 U.S.C. 3501-3520), the Securities and Exchange Commission (the
``Commission'') has submitted to the Office of Management and Budget a
[[Page 54195]]
request for extension of the previously approved collection of
information discussed below.
Section 7(d) of the Investment Company Act of 1940 (15 U.S.C. 80a-
7(d)) (the ``Act'' or ``Investment Company Act'') requires an
investment company (``fund'') organized outside the United States
(``foreign fund'') to obtain an order from the Commission allowing the
fund to register under the Act before making a public offering of its
securities through the United States mail or any means of interstate
commerce. The Commission may issue an order only if it finds that it is
both legally and practically feasible effectively to enforce the
provisions of the Act against the foreign fund, and that the
registration of the fund is consistent with the public interest and
protection of investors.
Rule 7d-1 (17 CFR 270.7d-1) under the Act, which was adopted in
1954, specifies the conditions under which a Canadian management
investment company (``Canadian fund'') may request an order from the
Commission permitting it to register under the Act. Although rule 7d-1
by its terms applies only to Canadian funds, other foreign funds
generally have agreed to comply with the requirements of rule 7d-1 as a
prerequisite to receiving an order permitting the foreign fund's
registration under the Act.
The rule requires a Canadian fund proposing to register under the
Act to file an application with the Commission that contains various
undertakings and agreements of the fund. The requirement for the
Canadian fund to file an application is a collection of information
under the Paperwork Reduction Act. Certain of the undertakings and
agreements, in turn, impose the following additional information
collection requirements:
(1) The fund must file agreements between the fund and its
directors, officers, and service providers requiring them to comply
with the fund's charter and bylaws, the Act, and certain other
obligations relating to the undertakings and agreements in the
application;
(2) The fund and each of its directors, officers, and investment
advisers that is not a U.S. resident, must file an irrevocable
designation of the fund's custodian in the United States as agent for
service of process;
(3) The fund's charter and bylaws must provide that (a) the fund
will comply with certain provisions of the Act applicable to all funds,
(b) the fund will maintain originals or copies of its books and records
in the United States, and (c) the fund's contracts with its custodian,
investment adviser, and principal underwriter, will contain certain
terms, including a requirement that the adviser maintain originals or
copies of pertinent records in the United States;
(4) The fund's contracts with service providers will require that
the provider perform the contract in accordance with the Act, the
Securities Act of 1933 (15 U.S.C. 77a), and the Securities Exchange Act
of 1934 (15 U.S.C. 78a), as applicable; and
(5) The fund must file, and periodically revise, a list of persons
affiliated with the fund or its adviser or underwriter.
As noted above, under section 7(d) of the Act the Commission may
issue an order permitting a foreign fund's registration only if the
Commission finds that ``by reason of special circumstances or
arrangements, it is both legally and practically feasible effectively
to enforce the provisions of the (Act).'' The information collection
requirements are necessary to assure that the substantive provisions of
the Act may be enforced as a matter of contract right in the United
States or Canada by the fund's shareholders or by the Commission.
Rule 7d-1 also contains certain information collection requirements
that are associated with other provisions of the Act. These
requirements are applicable to all registered funds and are outside the
scope of this request.
The Commission believes that one foreign fund is registered under
rule 7d-1 and currently active. Apart from requirements under the Act
applicable to all registered funds, rule 7d-1 imposes ongoing burdens
to maintain records in the United States, and to update, as necessary,
certain fund agreements, designations of the fund's custodian as
service agent, and the fund's list of affiliated persons. The
Commission staff estimates that each year under the rule, the active
registrant and its directors, officers, and service providers engage in
the following collections of information and associated burden hours:
For the fund and its investment adviser to maintain
records in the United States: \1\ 0 hours: 0 minutes of compliance
clerk time.
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\1\ The rule requires an applicant and its investment adviser to
maintain records in the United States (which, without the
requirement, might be maintained in Canada or another foreign
jurisdiction), which facilitates routine inspections and any special
investigations of the fund by Commission staff. The registrant and
its investment adviser, however, already maintain the registrant's
records in the United States and in no other jurisdiction.
Therefore, maintenance of the registrant's records in the United
States does not impose an additional burden beyond that imposed by
other provisions of the Act. Those provisions are applicable to all
registered funds and the compliance burden of those provisions is
outside the scope of this request.
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For the fund to update its list of affiliated persons: 2
hours: 2 hours of support staff time.
For new officers, directors, and service providers to
enter into and file agreements requiring them to comply with the fund's
charter and bylaws, the Act, and certain other obligations: 0.5 hours:
7.5 minutes of director time; 2.5 minutes of officer time; 20 minutes
of support staff time.
For new officers, directors, and investment advisers who
are not residents of the United States to file irrevocable designation
of the fund's custodian as agent for process of service: 0.25 hours: 5
minutes of director time; 10 minutes of support staff time.
Based on the estimates above, the Commission estimates that the
total annual burden of the rule's paperwork requirements is 2.75
hours.\2\ We estimate that directors perform 0.21 hours of these burden
hours at a total cost of $945,\3\ officers perform 0.04 of these burden
hours at a total cost of $16.72,\4\ and support staff perform 2.5 of
these burden hours at a total cost of $147.50.\5\ Thus, the Commission
estimates the aggregate annual cost of the burden hours associated with
rule 7d-1 is $1109.\6\
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\2\ This estimate is based on the following calculation: (0 + 2
+ 0.5 + 0.25) = 2.75 hours.
\3\ The director estimates are based on the following
calculations: (7.5 minutes + 5 minutes)/60 minutes per hour = 0.21
hours; and 0.21 hours x $4500/hour = $945. The per hour cost
estimate is based on estimated hourly compensation for each board
member of $500 and an average board size of 9 members.
\4\ The officer estimates are based on the following
calculations: 2.5 minutes/60 minutes per hour = 0.04 hours; 0.04
hours x $418/hour = $16.72. The per hour cost estimate is based on
the figure for chief compliance officers found in SIFMA's Management
& Professional Earnings in the Securities Industry 2009, 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 and overhead.
\5\ The support staff estimates are based on the following
calculations: 2 hours + 20 minutes + 10 minutes = 2.5 hours; and 2.5
hours x $59/hour = $147.50. The per hour cost estimate is based on
the figure for compliance clerks found in SIFMA's Management &
Professional Earnings in the Securities Industry 2009, 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 and overhead.
\6\ This estimate is based on the following calculation:
$1109.22 = $945 + $16.72 + 147.50.
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If a fund were to file an application under rule 7d-1 to register
under the Act, the Commission estimates that the rule would impose
initial information collection burdens (for filing an application,
preparing the specified charter, bylaw, and contract provisions,
designations of agents for service of
[[Page 54196]]
process, and an initial list of affiliated persons, and establishing a
means of keeping records in the United States) of approximately 90
hours for the fund and its associated persons. The Commission is not
including these hours in its calculation of the annual burden because
no fund has applied to register under the Act pursuant to rule 7d-1 in
the last three years.
As noted above, after registration, a Canadian fund may file a
supplemental application seeking special relief designed for the fund's
particular circumstances. Rule 7d-1 does not mandate these
applications. The active registrant has not filed a substantive
supplemental application in the past three years. Therefore, the
Commission has not allocated any burden hours for these applications.
These estimates of average burden hours are made solely for the
purposes of the Paperwork Reduction Act. The estimate is not derived
from a comprehensive or even a representative survey or study of
Commission rules.
If a Canadian or other foreign fund in the future applied to
register under the Act under rule 7d-1, the fund initially might have
capital and start-up costs (not including hourly burdens) of an
estimated $17,280 to comply with the rule's initial information
collection requirements. These costs include legal and processing-
related fees for preparing the required documentation (such as the
application, charter, bylaw, and contract provisions), designations for
service of process, and the list of affiliated persons. Other related
costs would include fees for establishing arrangements with a custodian
or other agent for maintaining records in the United States, copying
and transportation costs for records, and the costs of purchasing or
leasing computer equipment, software, or other record storage equipment
for records maintained in electronic or photographic form.
The Commission expects that a foreign fund and its sponsors would
incur these costs immediately, and that the annualized cost of the
expenditures would be $17,280 in the first year. Some expenditures
might involve capital improvements, such as computer equipment, having
expected useful lives for which annualized figures beyond the first
year would be meaningful. These annualized figures are not provided,
however, because, in most cases, the expenses would be incurred
immediately rather than on an annual basis. The Commission is not
including these costs in its calculation of the annualized capital/
start-up costs because no fund has applied under rule 7d-1 to register
under the Act pursuant to rule 7d-1 in the last three years.
These estimates of average costs are made solely for the purposes
of the Paperwork Reduction Act. The estimate is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number.
Please direct general comments regarding the above information to
the following persons: (i) Desk Officer for the Securities and Exchange
Commission, Office of Management and Budget, Room 10102, New Executive
Office Building, Washington, DC 20503 or e-mail to: Shagufta Ahmed at
[email protected]; and (ii) Charles Boucher, Director/CIO,
Securities and Exchange Commission, c/o Remi Pavlik-Simon, 6432 General
Green Way, Alexandria, VA 22312; or send an e-mail to: [email protected]. Comments must be submitted to OMB within 30 days of
this notice.
Dated: August 30, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-22030 Filed 9-2-10; 8:45 am]
BILLING CODE 8011-01-P