[Federal Register: January 28, 2005 (Volume 70, Number 18)]
[Notices]
[Page 4162-4163]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ja05-127]
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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 Filings and Information Services, Washington, DC
20549.
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 (``Commission'') has submitted to the Office of Management
and Budget requests for extension of the previously approved
collections 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. 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 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-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
[[Page 4163]]
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 information
collection requirements are reflected in the information collection
requirements applicable to those provisions for all registered funds.
The Commission believes that one 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, the foreign
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 respondent would make 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 respondent's investment adviser would make one
response each year under the rule to maintain records in the United
States. Commission staff estimates that each recordkeeping response
would require 6.25 hours each of secretarial and compliance clerk time
at a cost of $21.10 and $21.50 per hour, respectively, and the response
to update the list of affiliated persons would require 0.25 hours of
secretarial time, for a total annual burden of 25.25 hours at a cost of
$537.78. The estimated number of 25.25 burden hours is identical to the
current allocation.
If a foreign 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 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.
The Commission believes that the active registrant and its
associated persons may spend (excluding the cost of burden hours)
approximately $540 per 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.
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 investment company 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.
General comments regarding the above information should be directed
to the following persons: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503 or e-mail to:
David_Rostker@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief
Information Officer, Office of Information Technology, Securities and
Exchange Commission, 450 5th Street, NW., Washington, DC 20549.
Comments must be submitted to OMB within 30 days of this notice.
Dated: January 21, 2005.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-322 Filed 1-27-05; 8:45 am]
BILLING CODE 8010-01-P