[Federal Register Volume 64, Number 9 (Thursday, January 14, 1999)]
[Notices]
[Pages 2528-2529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-804]
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SECURITIES AND EXCHANGE COMMISSION
[Extension: Rule 7d-1; SEC File No. 270-176; OMB Control No. 3235-0311]
Existing Collection; Comment Request
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collections
of information summarized below. The Commission plans to submit these
existing collections of information to the Office of Management and
Budget (``OMB'') for extension and approval.
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 both that
is 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, funds in other
jurisdictions generally have agreed to comply with the requirements of
rule 7d-1 as a prerequisite to receiving an order permitting the fund's
registration under the Act.
The rule requires Canadian funds that wish to register to file an
application with the Commission that contains various undertakings and
agreements by the fund. Certain of these 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 funds'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 the 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-77z-3], and the Securities
Exchange Act of 1934 [15 U.S.C. 78a-78mm], as applicable; and
(5) The fund must file, and periodically revise, a list of persons
affiliated with the fund or its adviser or underwriter.
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.
Certain information collection requirements in rule 7d-1 are
associated with complying with the Act's provisions. These requirements
are reflected in the information collection requirements applicable to
those provisions for all registered funds.
The Commission believes that three Canadian funds and one other
foreign fund are registered under rule 7d-1. Only one of the registered
funds, a Canadian entity, currently is 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, the fund's list of affiliated persons. The
Commission staff estimates that the rule requires a total of three
responses each year. The staff estimates that a fund makes two
responses each year under the rule, one response to maintain records in
the United States and one response to update its list of affiliated
persons. The Commission staff further estimates that a fund's
investment adviser makes one response each year under the rule to
maintain records in the United States. Commission staff estimate that
each recordkeeping response requires 12.5 hours of support staff time
at a cost of $15 per hour, and the response to update the list requires
0.25 hours of support staff time, for a total annual burden of 25.25
hours at a cost of $379. The estimated burden hours are a decrease from
the current allocation of 101 burden hours. The decrease of 75.75 hours
reflects the current inactive status of two Canadian registrants and
one other foreign registrant, as well as the staff's administrative
experience with the rule.
If a fund were to file an application under the rule, 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 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 under rule 7d-1 to register
under the Act in the last three years.
After registration, a foreign fund may file a supplemental
application seeking special relief designed for the fund's particular
circumstances. Because rule 7d-1 does not mandate these applications
and the fund determines whether to submit an application, the
Commission has not allocated any burden hours for the applications.
The estimates of burden hours are made solely for the purposes of
the Paperwork Reduction Act. The estimates are not derived from a
comprehensive or even a representative
[[Page 2529]]
survey or study of Commission rules and forms.
The Commission believes that the one active Canadian registrant and
its associated persons may spend (excluding the cost of burden hours)
approximately $500 each year in maintaining records in the United
States. These estimated costs include fees for a custodian or other
agent to retain records, storage costs, and the costs of transmitting
records by computer mail or otherwise.
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 $16,000 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 typically maintained in paper form
(such as minutes of directors' meetings), 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 the fund and its sponsors would incur
these costs immediately, and that the annualized cost of the
expenditures would be $16,000 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.
Written comments are requested on: (a) Whether the collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burdens
of the collection of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 60 days of this
publication.
Upon Written Request, Copies Available From: Securities and
Exchange Commission, Office of Filings and Information Services, 450
5th Street, NW, Washington, DC 20549.
Direct your written comments to Michael E. Bartell, Associate
Executive Director, Office of Information Technology, Securities and
Exchange Commission, Mail Stop 0-4, 450 5th Street, NW, Washington, DC
20549.
Dated: January 7, 1999.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-804 Filed 1-13-99; 8:45 am]
BILLING CODE 8010-01-M
