Notice2022-21201
Submission for OMB Review; Comment Request; Extension: Rule 7d-2
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 30, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 189 (Friday, September 30, 2022)</title>
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[Federal Register Volume 87, Number 189 (Friday, September 30, 2022)]
[Notices]
[Pages 59477-59478]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-21201]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-464, OMB Control No. 3235-0527]
Submission for OMB Review; Comment Request; Extension: Rule 7d-2
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. 350l-3520), the Securities and Exchange
Commission (the ``Commission'') has submitted to the Office of
Management and Budget a request for extension and approval of the
collection of information discussed below.
In Canada, as in the United States, individuals can invest a
portion of their earnings in tax-deferred retirement savings accounts
(``Canadian retirement accounts''). These accounts, which operate in a
manner similar to individual retirement accounts in the United States,
encourage retirement savings by permitting savings on a tax-deferred
basis. Individuals who establish Canadian retirement accounts while
living and working in Canada and who later move to the United States
(``Canadian-U.S. Participants'' or ``participants'') often continue to
hold their retirement assets in their Canadian retirement accounts
rather than prematurely withdrawing (or ``cashing out'') those assets,
which would result in immediate taxation in Canada.
Once in the United States, however, these participants historically
have been unable to manage their Canadian retirement account
investments. Most investment companies (``funds'') that are ``qualified
companies'' for Canadian retirement accounts are not registered under
the U.S. securities laws. Securities of those unregistered funds,
therefore, generally cannot be publicly offered and sold in the United
States without violating the registration requirement of the Investment
Company Act of 1940 (``Investment Company Act'').\1\ As a result of
this registration requirement, Canadian-U.S. Participants previously
were not able to purchase or exchange securities for their Canadian
retirement accounts as needed to meet their changing investment goals
or income needs.
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\1\ 15 U.S.C. 80a. In addition, the offering and selling of
securities that are not registered pursuant to the Securities Act of
1933 (``Securities Act'') is generally prohibited by U.S. securities
laws. 15 U.S.C. 77.
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The Commission issued a rulemaking in 2000 that enabled Canadian-
U.S. Participants to manage the assets in their Canadian retirement
accounts by providing relief from the U.S. registration requirements
for offers of securities of foreign issuers to Canadian-U.S.
Participants and sales to Canadian retirement accounts.\2\ Rule 7d-2
under the Investment Company Act \3\ permits foreign funds to offer
securities to Canadian-U.S. Participants and sell securities to
Canadian retirement accounts without registering as investment
companies under the Investment Company Act.
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\2\ See Offer and Sale of Securities to Canadian Tax-Deferred
Retirement Savings Accounts, Release Nos. 33-7860, 34-42905, IC-
24491 (June 7, 2000) [65 FR 37672 (June 15, 2000)]. This rulemaking
also included new rule 237 under the Securities Act, permitting
securities of foreign issuers to be offered to Canadian-U.S.
Participants and sold to Canadian retirement accounts without being
registered under the Securities Act. 17 CFR 230.237.
\3\ 17 CFR 270.7d-2.
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Rule 7d-2 contains a ``collection of information'' requirement
within the meaning of the Paperwork Reduction Act of 1995.\4\ Rule 7d-2
requires written offering materials for securities offered or sold in
reliance on that rule to disclose prominently that those securities and
the fund issuing those securities are not registered with the
Commission, and that those securities and the fund issuing those
securities are exempt from registration under U.S. securities laws.
Rule 7d-2 does not require any documents to be filed with the
Commission.
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\4\ 44 U.S.C. 3501-3502.
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Rule 7d-2 requires written offering documents for securities
offered or sold in reliance on the rule to disclose prominently that
the securities are not registered with the Commission and may not be
offered or sold in the United States unless registered or exempt from
registration under the U.S. securities laws, and also to disclose
prominently that the fund that issued the securities is not registered
with the Commission. The burden under the rule associated with adding
this disclosure to written offering documents is minimal and is non-
recurring. The foreign issuer, underwriter, or broker-dealer can
redraft an existing prospectus or other written offering material to
add this disclosure statement, or may draft a sticker or supplement
containing this disclosure to be added to existing offering materials.
In either case, based on discussions with representatives of the
Canadian fund industry, the staff estimates that it would take an
average of 10 minutes per document to draft the requisite disclosure
statement.
The staff estimates that there are 4,312 publicly offered Canadian
funds that potentially would rely on the rule to offer securities to
participants and sell securities to their Canadian retirement accounts
without registering under the Investment Company Act.\5\ The staff
estimates that all of these funds have previously relied upon the rule
and have already made the one-time change to their offering documents
required to rely on the rule. The staff estimates that 216 (5 percent)
additional Canadian funds would newly rely on the rule each year to
offer securities to Canadian-U.S. Participants and sell securities to
their Canadian retirement accounts, thus incurring the paperwork burden
required under the rule. The staff estimates that each of those funds,
on average, distributes 3 different written offering documents
concerning those securities, for a total of 648 offering documents. The
staff therefore estimates that 216 respondents would make 648 responses
by adding the new disclosure statement to 648 written offering
documents. The staff therefore estimates that the annual burden
associated with the rule 7d-2 disclosure requirement would be 108 hours
(648 offering documents x 10 minutes per document). The total annual
cost of these burden hours is estimated to be $49,140 (108
[[Page 59478]]
hours x $455 per hour of attorney time).\6\
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\5\ Investment Company Institute, 2021 Investment Company Fact
Book (2021) at 276, tbl. 66, available at <a href="https://www.ici.org/system/files/2021-05/2021_factbook.pdf">https://www.ici.org/system/files/2021-05/2021_factbook.pdf</a>. Since the last renewal, we
understand that the Investment Company Institute has changed its
methodology to enhance the accuracy of how it estimates the number
of Canadian funds. The estimate used for this renewal reflects this
change in methodology and the number of estimated Canadian funds has
increased from the last renewal.
\6\ The Commission's estimate concerning the wage rate for
attorney time is based on salary information for the securities
industry compiled by the Securities Industry and Financial Markets
Association (``SIFMA''). The $455 per hour figure for an Attorney is
based on SIFMA's Management & Professional Earnings in the
Securities Industry 2013, updated for 2022, modified by Commission
staff to account for an 1800-hour work-year and inflation, and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead. As discussed in footnote 5, since the last
renewal, we understand that the Investment Company Institute has
changed its methodology to enhance the accuracy of how it estimates
the number of Canadian funds. The estimate used for this renewal
reflects this change in methodology and the hourly burden has
increased from the last renewal.
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These burden hour estimates are based upon the Commission staff's
experience and discussions with the fund industry. The estimates of
average burden hours are made solely for the purposes of the Paperwork
Reduction Act. These estimates are not derived from a comprehensive or
even a representative survey or study of the costs of Commission rules.
Compliance with the collection of information requirements of the
rule is mandatory and is necessary to comply with the requirements of
the rule in general. Responses 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
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 31, 2022 to (i) <a href="/cdn-cgi/l/email-protection#19545b413756545b3756504b58374a5c5a467d7c6a7246767f7f707a7c6b5976747b377c7669377e766f"><span class="__cf_email__" data-cfemail="84c9c6dcaacbc9c6aacbcdd6c5aad7c1c7dbe0e1f7efdbebe2e2ede7e1f6c4ebe9e6aae1ebf4aae3ebf2">[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#b5e5e7f4eaf8d4dcd9d7dacdf5c6d0d69bd2dac3"><span class="__cf_email__" data-cfemail="d6868497899bb7bfbab4b9ae96a5b3b5f8b1b9a0">[email protected]</span></a>.
Dated: September 26, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-21201 Filed 9-29-22; 8:45 am]
BILLING CODE 8011-01-P
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