FR 2021-01655

The document details a request by the Securities and Exchange Commission (SEC) for the extension of an existing information collection requirement. This requirement involves Form N-54A, used by certain investment companies wishing to be regulated as business development companies under the Investment Company Act of 1940. The document, published in the Federal Register, outlines the purpose of the form, the estimated burden on companies that file it, and invites public feedback on the proposed extension.

General Summary

The Securities and Exchange Commission (SEC) is seeking to continue the use of Form N-54A for investment companies electing to be regulated as business development companies. Business development companies are a type of investment company defined by federal law. The form notifies the SEC of a company's decision, enabling the SEC to enforce specific regulatory provisions. Typically, around seven companies file this form annually, each incurring a compliance cost estimated at $1,288 and a total time burden of approximately 3.5 hours.

Significant Issues or Concerns

Several issues present themselves within the document:

1. Technical Language: The document uses jargon and references legislative acts that may not be easily understood by individuals without a background in finance or law, potentially limiting public comprehension.

2. Lack of Contextual Cost Analysis: While the document states an estimated cost of $1,288 for compliance, it doesn't provide a clear context or comparison to industry standards, making it difficult for stakeholders to evaluate the reasonableness of this burden.

3. Transparency Concerns: Although the information collection is stated to be non-confidential, there is no mention of what protections are in place to secure sensitive data, which could be crucial for companies considering filing.

Potential Impact on the Public

For the general public, particularly those with investments or interests in investment companies, the document highlights the ongoing regulatory oversight that the SEC exercises over business development companies. This oversight aims to ensure that such entities operate under specific rules that protect investors and maintain market stability.

Impact on Specific Stakeholders

For investment companies considering the election to be regulated as business development companies, the document outlines both the administrative process and the associated costs. Since the requirement and the form are mandatory and must be publicly filed, these entities need to weigh the benefits of such a regulatory status against the transparency and compliance costs involved.

Furthermore, the document invites public comments, giving stakeholders—including investment companies, industry experts, and members of the public—the opportunity to express concerns or suggestions regarding the information collection process. This aspect may positively affect those who seek to influence regulatory policies, ensuring that they are appropriately balanced and practical.

In conclusion, while the document is an essential procedural element for specific investment companies, its technical presentation limits broader public engagement. Ensuring clarity and providing meaningful context could enhance understanding and participation from all interested parties.

The document under discussion is a notice from the Securities and Exchange Commission (SEC) regarding a request for an extension of the information collection under Form N-54A.

In terms of financial references, the document estimates that the total cost to the business development company industry for the hour burden of complying with Form N-54A is approximately $1,288. This figure reflects the SEC's projection of the cost related to the information collection burden, which they estimate at 0.5 hours per company, with an average of about 7 such notifications being filed each year. This results in a total annual burden of 3.5 hours.

The $1,288 figure is the only financial reference within the document and is indicative of the administrative costs imposed on business development companies by the requirements of Form N-54A. However, the document does not provide further context or comparison with industry standards to help readers evaluate the reasonableness of this cost. For example, it does not compare this burden with the costs of similar regulatory requirements in other financial sectors or previous years' costs.

Additionally, the document mentions that the costs are associated with mandatory information collection, indicating that business development companies are required to comply if they wish to be regulated under the specified sections of the Investment Company Act. However, it lacks details on how this financial burden compares to potential benefits or savings that might arise from regulatory compliance, such as enhanced credibility or access to capital markets.

Furthermore, while the estimated cost is modest, the lack of discussion on cost variability means that readers are not informed about potential fluctuations in financial burden depending on specific circumstances faced by individual companies.

Overall, the document provides a succinct financial reference, but could enhance understanding by providing comparative analyses or additional context to help assess the financial implications it describes.