FR 2021-02687

The document titled "Submission for OMB Review; Comment Request" informs readers about the Securities and Exchange Commission's (SEC) recent request to the Office of Management and Budget (OMB) for an extension to continue using Form N-14 for information collection. This form is crucial for investment companies and business development companies to register securities during specific business transactions, as per the Paperwork Reduction Act. The notice estimates that about 253 filings are made annually, incurring significant time and monetary costs. Importantly, the document also discusses proposed amendments aimed at reducing some of this burden.

General Summary

Form N-14 is used under the Securities Act for registering the securities of investment and business development companies during specific business activities. The intention behind these filings is to ensure that crucial information about these business transactions is available to investors, thus promoting transparency and compliance with securities laws. The notice particularly focuses on the efforts to extend the authority to collect this information and highlights amendments intended to reduce burdens on certain companies.

Issues and Concerns

The notice mentions the significant costs and efforts associated with preparing these forms, estimated to be around $43.78 million annually. However, the document does not provide a detailed breakdown of how these estimates were derived, which could pose transparency issues. The lack of clarity on how these financial and labor estimates are calculated may leave stakeholders in the dark about the actual resource requirements for compliance.

Additionally, the technical language used in the document could be difficult for those without a financial or legal background to understand. This potentially limits the general public's ability to comprehend the implications of Form N-14 and the associated amendments.

Impact on the Public

For the general public, particularly investors, the Form N-14 and its associated registration processes aim to ensure that they have access to material information about securities being offered in business combination transactions. This endeavor to provide transparency protects investors from incomplete information, aligning with the SEC's mandate to safeguard investor interests.

Moreover, the public is encouraged to submit comments, indicating the SEC’s willingness to consider public input. Yet, the technical nature of the document may deter meaningful participation from everyday citizens who might lack detailed understanding but have valid concerns about securities regulation.

Impact on Specific Stakeholders

For investment companies and business development companies, navigating Form N-14 involves considerable compliance burden and cost. The amendments aiming to allow the incorporation of existing information by reference appear to be a step toward reducing these burdens. However, the document stops short of quantifying the exact savings or efficiency gains from these changes, leaving stakeholders with questions about the real impact on their operations and legal compliance costs.

Overall, while the document emphasizes efforts to streamline processes for certain entities, the lack of concrete data and the complexity of language could limit its effectiveness in conveying crucial information to all stakeholders. A more detailed explanation or illustrative cases could enhance understanding and enable stakeholders to better anticipate the practical effects of the proposed amendments.

The Federal Register notice submitted by the Securities and Exchange Commission (SEC) under the Paperwork Reduction Act discusses the financial implications of using Form N-14. This form facilitates the registration of securities under specific business transactions as regulated by the Securities Act and the Investment Company Act. The financial details referenced in the document highlight significant cost estimations and burden hours associated with filling out and processing these forms.

The SEC has estimated an annual internal hour burden of approximately 125,883 hours for about 253 filings on Form N-14 each year. This translates to a substantial cost, amounting to about $43.78 million. These figures indicate the sizeable administrative and financial commitment required by funds interacting with these forms, reflecting the considerable effort involved in ensuring compliance with the required securities regulations.

Further analysis shows that amendments to the Form aim to reduce these costs and related burdens. Specifically, the changes are expected to decrease the internal hour burden to 125,260 hours and associated costs to approximately $37,856,382. This reduction reflects an effort to streamline processes, particularly for Business Development Companies (BDCs), by allowing them to incorporate certain information by reference—similar to existing practices for registered closed-end funds. However, the notice does not provide much detail on how exactly these reductions will be achieved or the specific savings per entity that may result, leaving some ambiguity about the real-world financial impact.

While these financial allocations are crucial, the notice lacks transparency regarding the methodology used to derive the estimated costs of $43.78 million. It does not outline the specific factors contributing to this total or provide a breakdown of how such substantial figures were calculated. This absence of detailed financial analysis might limit stakeholders' understanding of the actual and varying costs associated with these submissions.

The language used in the document is technical and may not be easily digestible for readers without a strong background in legal or financial terms. This complexity could hinder the broader public's comprehension of the financial duties and expectations tied to Form N-14, despite its significance for compliance and investor information transparency.

In conclusion, while the proposed changes seek to alleviate some financial burdens, the notice could benefit from increased clarity and transparency in presenting these financial references, helping all stakeholders better understand the impacts of Form N-14 on their operations and finances.