Notice2022-18979
Submission for OMB Review; Comment Request; Extension: Rule 7d-1
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
September 2, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 170 (Friday, September 2, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 170 (Friday, September 2, 2022)]
[Notices]
[Pages 54274-54275]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18979]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-176, OMB Control No. 3235-0311]
Submission for OMB Review; Comment Request; Extension: Rule 7d-1
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
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 (``OMB'') a 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 with the Commission 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 with the Commission
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 ensure 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:
[[Page 54275]]
<bullet> For the fund and its investment adviser to maintain
records in the United States:\1\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
0 hours: 0 minutes of compliance clerk time.
<bullet> For the fund to update its list of affiliated persons:
2 hours: 2 hours of support staff time.
<bullet> 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.
<bullet> 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\ 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 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.
---------------------------------------------------------------------------
\2\ This estimate is based on the following calculation: (0 + 2
+ 0.5 + 0.25) = 2.75 hours.
---------------------------------------------------------------------------
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. For purposes of this PRA we are assuming one registrant
has filed a substantive supplemental application within the past three
years. The Commission staff estimates that the rule would impose an
additional information collection burden of 5 hours on a fund to comply
with the Commission's application process. The staff understands that
funds also obtain assistance from outside counsel to comply with the
Commission's application process and the cost burden of using outside
counsel is discussed below.
Therefore, the Commission staff estimates the aggregate annual
burden hours of the collection of information associated with rule 7d-1
is 13.25 hours.\3\ Amortized over three years we estimate an hourly
annual burden of 4.42 hours.\4\ 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.
---------------------------------------------------------------------------
\3\ This estimate is based on the following calculation: 2.75
hours year 1 + 5 hours year 1 + 2.75 hours year 2 + 2.75 hours year
3 = 13.25 hours
\4\ The estimates are based on the following calculations: 4.42
hours = 13.25 cumulative burden hours/3 years.
---------------------------------------------------------------------------
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 $20,000 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, 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 $20,000 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.
As indicated above, 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 filed a substantive application in the past three
years. The staff understands that funds generally use outside counsel
to prepare the application. The staff estimates that outside counsel
spends 10 hours preparing the application, including 8 hours by an
associate and 2 hours by a partner. Outside counsel billing
arrangements vary based on numerous factors, but the staff has
estimated the average cost of outside counsel at $531 per hour, based
on information received from funds, intermediaries and their counsel.
The Commission therefore estimates that the fund would obtain
assistance from outside counsel at a cost of $5,130.\5\
---------------------------------------------------------------------------
\5\ This estimate is based on the following calculation: 10
hours x $531 per hour = $5,130.
---------------------------------------------------------------------------
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.
The public may view background documentation for this information
collection at the following website: <a href="http://www.reginfo.gov">www.reginfo.gov</a>. Find this
particular information collection by selecting ``Currently under 30-day
Review--Open for Public Comments'' or by using the search function.
Written comments and recommendations for the proposed information
collection should be sent within 30 days of publication of this notice
by October 3, 2022 to (i) <a href="/cdn-cgi/l/email-protection#28656a700667656a0667617a69067b6d6b774c4d5b4377474e4e414b4d5a6847454a064d4758064f475e"><span class="__cf_email__" data-cfemail="a9e4ebf187e6e4eb87e6e0fbe887faeceaf6cdccdac2f6c6cfcfc0caccdbe9c6c4cb87ccc6d987cec6df">[email protected]</span></a> and
(ii) David Bottom, Director/Chief Information Officer, Securities and
Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC
20549, or by sending an email to: <a href="/cdn-cgi/l/email-protection#3d6d6f7c62705c54515f52457d4e585e135a524b"><span class="__cf_email__" data-cfemail="a6f6f4e7f9ebc7cfcac4c9dee6d5c3c588c1c9d0">[email protected]</span></a> .
Dated: August 29, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-18979 Filed 9-1-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 2, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.