[Federal Register Volume 67, Number 102 (Tuesday, May 28, 2002)]
[Notices]
[Pages 36940-36941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13232]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, 
DC 20549

Extension:
    Rule 7d-2; SEC File No. 270-464; OMB Control No. 3235-0527
    Rule 237; SEC File No. 270-465; OMB Control No. 3235-0528

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (the ``Commission'') has submitted to the Office of 
Management and Budget (``OMB'') a request for extension and approval of 
the collections 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''). In cases where these individuals 
move to the United States, these participants (``Canadian/U.S. 
Participants'' or ``participants'') may not be able to manage their 
Canadian retirement account investments. Most securities and most 
investment companies (``funds'') that are ``qualified investments'' for 
Canadian retirement accounts are not registered under the U.S. 
securities laws. Those securities, therefore, generally cannot be 
publicly offered and sold in the United States without violating the 
registration requirements of the Securities Act of 1933 (``Securities 
Act'') \1\ and, in the case of securities of an unregistered fund, the 
Investment Company Act of 1940 (``Investment Company Act'').\2\ As a 
result of these registration requirements of the U.S. securities laws, 
Canadian/U.S. Participants, in the past, had not been 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. 77.
    \2\ 15 U.S.C. 80a.
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    In 2000, the Commission issued two rules 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 their accounts.\3\ Rule 237 under the Securities Act permits 
securities of foreign issuers, including securities of foreign funds, 
to be offered to Canadian/U.S. Participants and sold to their Canadian 
retirement accounts without being registered under the Securities Act. 
Rule 7d-2 under the Investment Company Act permits foreign funds to 
offer securities to Canadian/U.S. Participants and sell securities to 
their Canadian retirement accounts without registering as investment 
companies under the Investment Company Act.
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    \3\ 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)].
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    The provisions of rules 237 and 7d-2 are substantially identical. 
Rule 237 requires written offering materials for securities that are 
offered and sold in reliance on the rule to disclose prominently that 
those securities are not registered with the Commission and may not be 
offered or sold in the United States unless they are registered or 
exempt from registration under the U.S. securities laws. Rule 7d-2 
requires written offering materials for securities offered or sold in 
reliance on that rule to make the same disclosure concerning those 
securities, and also to disclose prominently that the fund that issued 
the securities is not registered with the Commission. Neither rule 237 
nor rule 7d-2 requires any documents to be filed with the Commission. 
The burden under either rule associated with adding this disclosure to 
written 2 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 the annual burden as a result of the disclosure 
requirements of rules 7d-2 and 237 as follows.

a. Rule 7d-2

    At the time rule 7d-2 was adopted,\4\ the staff estimated that 
there were approximately 1,300 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. During the first year 
rule 7d-2 was in effect, the staff estimates that approximately 910 (70 
percent) of these Canadian funds relied on the rule. The staff further 
estimates that each of those 910 Canadian funds, on average, 
distributed 3 different written offering documents concerning those 
securities, for a total of 2,730 offering documents.\5\
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    \4\ See supra note 3.
    \5\ Because Canadian tax law effectively precludes non-Canadian 
funds from being held in a Canadian retirement account, the 
Commission believes that no funds from countries other than Canada 
rely on rule 7d-2 to sell their shares to the Canadian retirement 
accounts of Canadian/U.S. Participants.
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    The staff therefore estimates that during the first year that rule 
7d-2 was in effect, approximately 910 respondents made 2,730 responses 
by adding the new disclosure statements to approximately 2,730 written 
offering documents. Thus, the staff estimates that the total annual 
burden associated with this disclosure requirement in the first year 
after rule 7d-2 became effective was approximately 455 hours (2,730 
offering documents x 10 minutes per document). In each year following 
the first year that rule 7d-2 became effective, the staff estimates 
that approximately 65 (5 percent) additional Canadian funds may rely on 
the rule to offer securities to Canadian/U.S. Participants and sell 
securities to their Canadian retirement accounts, and that each of 
those funds, on average, distributes 3 different written offering 
documents concerning those securities, for a total of 195 offering 
documents. The staff therefore estimates that in each

[[Page 36941]]

year after the first year that rule 7d-2 became effective, 
approximately 65 respondents would make 195 responses by adding the new 
disclosure statement to approximately 195 written offering documents. 
The staff therefore estimates that after the first year, the annual 
burden associated with the rule 7d-2 disclosure requirement would be 
approximately 32.5 hours (195 offering documents x 10 minutes per 
document).

b. Rule 237

    Canadian issuers other than funds. The Commission understands that 
there are approximately 3,500 Canadian issuers other than funds that 
may rely on rule 237 to make an initial public offering of their 
securities to Canadian/U.S. Participants.\6\ The staff estimates that 
in any given year approximately 35 (or 1 percent) of those issuers are 
likely to rely on rule 237 to make a public offering of their 
securities to participants, and that each of those 35 issuers, on 
average, distributes 3 different written offering documents concerning 
those securities, for a total of 105 offering documents.
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    \6\ Canadian funds can rely on both rule 7d-2 and rule 237 to 
offer securities to participants and sell securities to their 
Canadian retirement accounts without violating the registration 
requirements of the Investment Company Act or the Securities Act. 
Rule 237, however, does not require any disclosure in addition to 
that required by rule 7d-2. Thus, the disclosure requirements of 
rule 237 do not impose any burden on Canadian funds in addition to 
the burden imposed by the disclosure requirements of rule 7d-2. To 
avoid double-counting this burden, the staff has excluded Canadian 
funds from the estimate of the hourly burden associated with rule 
237.
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    The staff therefore estimates that during each year that rule 237 
is in effect, approximately 35 respondents would be required to make 
105 responses by adding the new disclosure statements to approximately 
105 written offering documents. Thus, the staff estimates that the 
total annual burden associated with the rule 237 disclosure requirement 
would be approximately 17.5 hours (105 offering documents x 10 minutes 
per document).
    Other foreign issuers other than funds. In addition, issuers from 
foreign countries other than Canada could rely on rule 237 to offer 
securities to Canadian/U.S. Participants and sell securities to their 
accounts without becoming subject to the registration requirements of 
the Securities Act. Because Canadian law strictly limits the amount of 
foreign investments that may be held in a Canadian retirement account, 
however, the staff believes that the number of issuers from other 
countries that relies on rule 237, and that therefore is required to 
comply with the offering document disclosure requirements, is 
negligible.
    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. 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.
    Please direct general comments regarding the above information to 
the following persons: (i) Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503; and (ii) Michael E. Bartell, Associate Executive Director, 
Office of Information Technology, Securities and Exchange Commission, 
450 5th Street, NW., Washington, DC 20549. Comments must be submitted 
to OMB within 30 days of this notice.

    Dated: May 20, 2002.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-13232 Filed 5-24-02; 8:45 am]
BILLING CODE 8010-01-P