Notice2023-25724
Proposed Collection; Comment Request; Extension: Rule 18f-3
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
November 21, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 223 (Tuesday, November 21, 2023)</title>
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[Federal Register Volume 88, Number 223 (Tuesday, November 21, 2023)]
[Notices]
[Pages 81165-81166]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25724]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-385, OMB Control No. 3235-0441]
Proposed Collection; Comment Request; Extension: Rule 18f-3
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 et seq.) (``Paperwork Reduction Act''), 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 18f-3 (17 CFR 270.18f-3) under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) exempts from sections 18(f)(1) and
18(f)(i), a fund that issues multiple classes of shares representing
interests in the same portfolio of securities (a ``multiple class
fund'') if the fund satisfies the conditions of the rule. In general,
each class must differ in its arrangement for shareholder services or
distribution or both, must pay the related expenses of that different
arrangement, and must satisfy certain voting rights provisions.
The rule includes one requirement for the collection of
information. A multiple class fund must prepare, and fund directors
must approve, a written plan setting forth the separate arrangement and
expense allocation of each class, and any related conversion features
or exchange privileges (``rule 18f-3 plan''). Approval of the plan must
occur before the fund issues any shares of multiple classes and
whenever the fund materially amends the plan. In approving the plan,
the fund board, including a majority of the independent directors, must
determine that the plan is in the best interests of each class and the
fund as a whole.
The requirement that the fund prepare, and directors approve, a
written rule 18f-3 plan is intended to ensure that the fund compiles
information relevant to the fairness of the separate arrangement and
expense allocation for each class, and that directors review and
approve the information. Without a blueprint that highlights material
differences among classes, directors might not perceive potential
conflicts of interests when
[[Page 81166]]
they determine whether the plan is in the best interests of each class
and the fund. In addition, the plan may be useful to Commission staff
in reviewing the fund's compliance with the rule.
The following estimates of average burden hours are made solely for
purposes of the Paperwork Reduction Act of 1995 \1\ and are not derived
from a comprehensive or even representative survey or study of the cost
of Commission rules and forms. Compliance with the information
collection requirements of rule 18f-3 is necessary to obtain the
benefit of the rule's exemption. Responses to the collection of
information requirements will not be kept confidential.
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\1\ 44 U.S.C. 3501 et seq.
Table 1--Rule 18f-3 PRA Estimates
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Internal annual burden Wage rate \1\ Internal time costs
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ESTIMATES FOR RULE 18F-3
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Prepare and approve a written 18f-3 6 hours \3\............
plan \2\.
Average number of responses annually 0.5 responses \3\......
per registrant.
Total number of hours per registrant 3 hours \3\............ $484 (in-house $936,056 (in-house
per year \4\. attorney). attorney).
$4,770 (fund board of $4,612,590 (board of
directors) \6\. directors).\7\
Total number of registrants.......... 967 \4\................
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Total annual hour burden......... 2,901 hours \5\........ ....................... $5,548,646.\8\
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Notes:
1. The Commission's estimates of the relevant wage rates are based on salary information for the securities
industry compiled by the Securities Industry and Financial Markets Association's Office Salaries in the
Securities Industry 2013. The estimated figures are modified by firm size, employee benefits, overhead, and
adjusted to account for the effects of inflation. See Securities Industry and Financial Markets Association,
Report on Management & Professional Earnings in the Securities Industry 2013.
2. The Commission estimates that each registrant prepares and approves a rule 18f-3 plan every two years when
issuing a new fund fund or class or amending a plan (or that 484 of all 967 registrants prepare and approve a
plan each year).
3. This estimate assumes that each response will take 6 hours, requiring 3 hours per registrant per year (0.5
responses per registrant x 6 hours per response = 3 hours per registrant).
4. The Commission estimates that there are approximately 6,733 multiple class funds offered by 967 registrants.
5. 967 registrants x 3 hours = 2,901 hours.
6. The estimate for the cost of board time as a whole is derived from estimates made by the staff regarding
typical board size and compensation that is based on information received from fund representatives and
publicly available sources. The $4,770 per hour estimate for a fund board of directors was last adjusted for
inflation through 2019, and assumes an average of 9 board members per board.
7. This estimate assumes that two-thirds (1,934) of the internal hours are spent by in-house attorneys to
prepare the plan (1,934 hours x $484 estimated hourly rate = $936,056 per year) and that one-third (967) are
spent by the fund's board of directors to approve the plan (967 hours x $4,770 per hour = $4,612,590).
8. $936,056 + $4,612,590 = $5,548,646.
Written comments are invited on: (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have 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 by January 22, 2024.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Acting
Director/Chief Information Officer, Securities and Exchange Commission,
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an
email to: <a href="/cdn-cgi/l/email-protection#cc9c9e8d9381ada5a0aea3b48cbfa9afe2aba3ba"><span class="__cf_email__" data-cfemail="540406150b19353d38363b2c142731377a333b22">[email protected]</span></a>.
Dated: November 16, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25724 Filed 11-20-23; 8:45 am]
BILLING CODE 8011-01-P
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