Notice2021-15427
Proposed Collection; Comment Request
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 21, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 137 (Wednesday, July 21, 2021)</title>
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[Federal Register Volume 86, Number 137 (Wednesday, July 21, 2021)]
[Notices]
[Pages 38509-38510]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15427]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0422, SEC File No. 270-373]
Proposed Collection; Comment Request
Extension:
Rule 23c-3 and Form N-23c-3
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (the ``Commission'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget (``OMB'') for extension and approval.
Rule 23c-3 (17 CFR 270.23c-3) under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) permits a registered closed-end
investment company (``closed-end fund'' or ``fund'') that meets certain
requirements to repurchase common stock of which it is the issuer from
shareholders at periodic intervals, pursuant to repurchase offers made
to all holders of the stock. The rule enables these funds to offer
their shareholders a limited ability to resell their shares in a manner
that previously was available only to open-end investment company
shareholders.
There have been recent regulatory developments put forth by the
Commission that will provide shareholders of closed-end funds with
additional benefits. Effective August 1, 2021, rule 23c-3 will be
amended by including a new subparagraph (e) that will permit a fund
that relies on rule 23c-3 to register an indefinite amount of
securities, under Section 24 of the Investment Company Act upon the
effectiveness of a fund's registration statement.\1\ In addition,
concurrent with the implementation of rule 23c-3(e), the Commission
adopted an amendment to rule 24f-2 under the Investment Company Act,
permitting closed-end funds to compute registration fees on an annual
net basis.\2\ The Commission's intent in proposing and adopting rules
23c-3(e) and 24f-2(a) respectively, was to avoid the possibility a
closed-end fund of inadvertently selling more shares than it had
registered.\3\ These revisions to rule 23c-3 do not impose additional
collections of information.
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\1\ 17 CFR 270.23c-3(e).
\2\ 17 CFR 270.24f-2(a).
\3\ Securities Offering Reform for Closed-End Investment
Companies (SEC Rel. No. IC-33427) (Mar. 20, 2019) [84 FR 14448 (Apr.
10, 2019)] at 64.
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Notwithstanding these recent regulatory developments, a closed-end
fund that relies on rule 23c-3 must send shareholders a notification
that contains specified information each time the fund makes a
repurchase offer (on a quarterly, semi-annual, or annual basis, or, for
certain funds, on a discretionary basis not more often than every two
years). The fund also must file copies of the shareholder notification
with the Commission (electronically through the Commission's Electronic
Data Gathering, Analysis, and Retrieval System (``EDGAR'')) on Form N-
23c-3, a filing that provides certain information about the fund and
the type of offer the fund is making.\4\ The fund must describe in its
annual report to shareholders the fund's policy concerning repurchase
offers and the results of any repurchase offers made during the
reporting period. The fund's board of directors must adopt written
procedures designed to ensure that the fund's investment portfolio is
sufficiently liquid to meet its repurchase obligations and other
obligations under the rule. The board periodically must review the
composition of the fund's portfolio and change the liquidity procedures
as necessary. The fund also must file copies of advertisements and
other sales literature with the Commission as if it were an open-end
investment company subject to Section 24 of the Investment Company Act
(15 U.S.C. 80a-24) and the rules that implement Section 24. Rule 24b-3
under the Investment Company Act (17 CFR 270.24b-3), however, exempts
the fund from that requirement if the materials are filed instead with
the
[[Page 38510]]
Financial Industry Regulatory Authority (``FINRA'').
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\4\ Form N-23c-3, entitled ``Notification of Repurchase Offer
Pursuant to Rule 23c-3,'' requires the fund to state its
registration number, its full name and address, the date of the
accompanying shareholder notification, and the type of offer being
made (periodic, discretionary, or both).
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The requirement that the fund send a notification to shareholders
of each offer is intended to ensure that a fund provides material
information to shareholders about the terms of each offer. The
requirement that copies be sent to the Commission is intended to enable
the Commission to monitor the fund's compliance with the notification
requirement. The requirement that the shareholder notification be
attached to Form N-23c-3 is intended to ensure that the fund provides
basic information necessary for the Commission to process the
notification and to monitor the fund's use of repurchase offers. The
requirement that the fund describe its current policy on repurchase
offers and the results of recent offers in the annual shareholder
report is intended to provide shareholders current information about
the fund's repurchase policies and its recent experience. The
requirement that the board approve and review written procedures
designed to maintain portfolio liquidity is intended to ensure that the
fund has enough cash or liquid securities to meet its repurchase
obligations, and that written procedures are available for review by
shareholders and examination by the Commission. The requirement that
the fund file advertisements and sales literature as if it were an
open-end fund is intended to facilitate the review of these materials
by the Commission or FINRA to prevent incomplete, inaccurate, or
misleading disclosure about the special characteristics of a closed-end
fund that makes periodic repurchase offers.
The Commission staff estimates that 60 funds make use of rule 23c-3
annually, including 32 funds that are relying upon rule 23c-3 for the
first time. The Commission staff estimates that on average a fund
spends 89 hours annually in complying with the requirements of the Rule
and Form N-23c-3, with funds relying upon rule 23c-3 for the first time
incurring an additional one-time burden of 28 hours. The Commission
therefore estimates the total annual hour burden of the rule's and
form's paperwork requirements to be 6,236 hours. In addition to the
burden hours, the Commission staff estimates that the average yearly
cost to each fund that relies on rule 23c-3 to print and mail
repurchase offers to shareholders is about $32,744.13. The Commission
estimates total annual cost is therefore about $1,964,647.
Estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act and are not derived from a
comprehensive or even representative survey or study of the costs of
Commission rules and forms. Compliance with the collection of
information requirements of the rule and form is mandatory only for
those funds that rely on the rule in order to repurchase shares of the
fund. The information provided to the Commission on Form N-23c-3 will
not be kept confidential. 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.
Written comments are invited on: (a) Whether the collection of
information is 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 burden 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.
Please direct your written comments to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, C/O Cynthia
Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to:
<a href="/cdn-cgi/l/email-protection#613133203e2c00080d030e19211204024f060e17"><span class="__cf_email__" data-cfemail="3e6e6c7f61735f57525c51467e4d5b5d10595148">[email protected]</span></a>.
All submissions should refer to File Number 270-373. This file
number should be included on the subject line if email is used. The
Commission will post all comments on the Commission's internet website
(<a href="http://www.sec.gov">http://www.sec.gov</a>). All comments received will be posted without
change; we do not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly.
Dated: July 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15427 Filed 7-20-21; 8:45 am]
BILLING CODE 8011-01-P
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