FR 2021-02122

The document is a notice from the Securities and Exchange Commission (SEC) seeking comments on its request to extend a currently approved information collection through Form N-6F. This form is integral for companies that intend to register as business development companies under the Investment Company Act of 1940. The main purpose of the document is to inform, clarify the process involved, and invite public participation in the regulatory review process.

General Summary

Form N-6F is used by companies to notify the SEC of their intent to elect regulation as a business development company, as specified under certain sections of the Investment Company Act of 1940. The SEC reports that approximately four companies file this form annually. The process is relatively straightforward, taking about half an hour per filing. The collected information is mandatory and is openly accessible to the public, emphasizing transparency in regulatory processes.

Significant Issues and Concerns

One notable concern is the complexity of the language used in the document. The technicality of terms such as "business development company" and specific sections of the 1940 Act may not be readily understandable to a layperson. Additionally, the reason why a company might be unprepared to make an election under the Act is explained in a footnote. Moving this explanation into the main text could enhance clarity for readers and reduce potential confusion.

Another issue regards the estimation of industry costs for compliance, identified as $736 annually. Without a detailed breakdown, stakeholders may question the assumptions or calculations that led to this figure.

Public Impact

For the general public, particularly those interested in corporate regulations, this document provides insight into how businesses transition into becoming business development companies. It highlights the procedural aspects of regulatory compliance and the transparency obligations companies must meet. The ability to access related documentation freely promotes public engagement and oversight.

Impact on Specific Stakeholders

For companies interested in becoming business development companies, this notice is relevant as it outlines regulatory requirements and processes. The document highlights an obligation that might influence their strategic planning, especially if they are at the borderline of making a public offering or expanding shareholders.

Regulatory bodies like the SEC might view this document as a necessary step in maintaining transparency and ensuring compliance with federal laws, while ensuring they keep administrative processes up to date.

For industry professionals and legal experts in securities law, the document serves as a reminder of the procedural nuances involved in regulatory compliance, possibly impacting their advisory practices to companies in this field.

Overall, while the notice itself is somewhat administrative and technical in nature, it plays a crucial role in ensuring companies adhere to important regulatory standards, which can, in turn, contribute to a more stable and transparent financial system.

The document from the Securities and Exchange Commission, as referenced in the Federal Register, includes a discussion about the cost implications for industries related to compliance with Form N-6F. This form is used to notify the Commission of a company's intent to elect to be subject to certain sections of the Investment Company Act of 1940.

Summary of Financial Estimations

The document estimates that, on average, about four companies annually are required to file this notification. Each company makes a single filing of Form N-6F, and the estimated burden imposed by this requirement is 0.5 hours per company. Collectively, this results in a total annual burden of 2 hours for all companies involved.

The associated cost of this compliance burden on the industry is approximately $736. This figure provides an estimation of the industry's financial cost in terms of the time required to complete the form.

Considerations and Context

While the document specifies an overall cost to the industry of $736 for compliance, it does not break down how this estimate is calculated. This lack of detail might prompt questions about the basis for the wage rate used in the calculation and what specific elements the cost covers. For instance, clarity about whether this figure includes only direct costs, such as labor, or indirect costs, like administrative overhead, is not provided.

Relation to Identified Issues

The document does not identify issues directly related to wasteful spending or favoritism towards particular organizations or individuals. However, the complexity of the form and the regulatory requirement might lead some to question the necessity of the procedure and the associated costs, albeit relatively minor in the larger regulatory landscape.

Additionally, it is worth noting that a clearer breakdown of how the $736 figure is derived could address some of the ambiguities pointed out in the issues. By providing a detailed explanation, stakeholders might better understand the financial implications and compliance obligations associated with Form N-6F.

Overall, while the document fulfills a regulatory function by notifying interested parties about the requirements of Form N-6F, the financial discussion could benefit from more transparency in explaining the cost estimation process. This would make the information more accessible and understandable to a general audience.