[Federal Register Volume 68, Number 29 (Wednesday, February 12, 2003)]
[Notices]
[Pages 7152-7153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3491]
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SECURITIES AND EXCHANGE COMMISSION
Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Filings and Information Services, Washington,
DC 20549.
Extension:
Form N-23C-1--SEC File No. 270-230, OMB Control No. 3235-0230;
Rule 19a-1--SEC File No. 270-240, OMB Control No. 3235-0216;
Rule 22d-1--SEC File No. 270-275, OMB Control No. 3235-0310;
Rule 30b2-1--SEC File No. 270-213, OMB Control No. 3235-0220;
Form ADV-E--SEC File No. 270-318, OMB Control No. 3235-0361;
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'') is soliciting comments on the
collections of information summarized below. The Commission plans to
submit these existing collections of information to the Office of
Management and Budget (``OMB'') for extension and approval.
Section 23(c) of the Investment Company Act of 1940 [15 U.S.C. 80a-
23(c)] (``Investment Company Act'' or ``Act'') prohibits a registered
closed-end investment company (``closed-end fund'' or ``fund'') from
purchasing any security it issues except on a securities exchange,
pursuant to tender offers, or under such other circumstances as the
Commission may permit by rules or orders designed to ensure that
purchases are made in a manner that does not unfairly discriminate
against any holders of the securities to be purchased. Rule 23c-1 [17
CFR 270.23c-1] under the Act permits a closed-end fund that meets
certain requirements to repurchase its securities other than on an
exchange or pursuant to a tender.
A registered closed-end fund that relies on Rule 23c-1 may purchase
its securities for cash if, among other conditions set forth in the
rule, certain conditions are met: (i) Payment of the purchase price is
accompanied or preceded by a written confirmation of the purchase; (ii)
the purchase is made at a price not above the market value, if any, or
the asset value of the security, whichever is lower, at the time of the
purchase; and (iii) if the security is stock, the issuer has, within
the preceding six months, informed stockholders of its intention to
purchase stock of the class by letter or report addressed to all the
stockholders of the class.
In addition, the issuer must file with the Commission, on or before
the tenth day of the month following the date in which the purchase
occurs, two copies of Form N-23C-1. The form requires the issuer to
report all purchases it has made during the month, together with a copy
of any written solicitation to purchase securities under Rule 23c-1
sent or given during the month by or on behalf of the issuer to ten or
more persons.
The purpose of Rule 23c-1 is to protect shareholders of closed-end
funds from fraud in connection with the repurchase by funds of their
own securities. The purpose of the rule's requirement that the fund
file Form N-23C-1 with the Commission is to allow the Commission to
monitor funds' repurchase of securities as well as any written
solicitation used by the fund to effect those repurchases, and to make
that information available to the public. Investors may seek this
information when determining whether to invest in certain funds.The
requirement to file Form N-23C-1 applies to a closed-end fund only when
the fund has repurchased its securities. If the information provided in
the form were collected less frequently than a month after repurchases
occur, the Commission and investing public would lack current
information about closed-end funds that repurchase their own
securities.
Commission staff estimates that each year approximately 30 closed-
end funds use the repurchase procedures under Rule 23c-1, and that
these funds file a total of 180 forms each year. The number of forms
filed by each fund ranges from 1 to 12 depending on the number of
months in which the fund repurchases its securities under Rule 23c-1.
Commission staff estimates that each response requires 1 burden hour to
prepare and file Form N-23C-1 with a copy of any written solicitation
to purchase securities under the rule (if necessary).\1\ The total
annual burden of the rule's paperwork requirements is estimated to be
180 hours.
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\1\ The burden hour estimates are based upon consultation with
lawyers and accountants familiar with the practices of fund boards
and the staff of investment advisers.
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Section 19(a) [15 U.S.C. 80a-19(a)] of the Investment Company Act
makes it unlawful for any registered investment company to pay any
dividend or similar distribution from any source other than the
company's net income, unless the payment is accompanied by a written
statement to the company's shareholders which adequately discloses the
sources of the payment. Section 19(a) authorizes the Commission to
prescribe the form of the statement by rule.
Rule 19a-1 [17 CFR 270.19a-1] under the Act is entitled: ``Written
Statement to Accompany Dividend Payments by Management Companies.''
Rule 19a-1 sets forth specific requirements for the information that
must be included in statements made under Section 19(a) by registered
investment companies. The rule requires that the statement indicate
what portions of the payment are made from net income, net profits and
paid-in capital.\2\ When any part of the payment is made from net
profits, the rule requires that the statement disclose certain other
information relating to the appreciation or depreciation of portfolio
securities. If an estimated portion is
[[Page 7153]]
subsequently determined to be significantly inaccurate, a correction
must be made on a statement made under Section 19(a) or in the first
report to shareholders following the discovery of the inaccuracy. The
purpose of Rule 19a-1 is to afford fund shareholders adequate
disclosure of the sources from which dividend payments are made.
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\2\ Rule 19a-1 requires, among other things, that every written
statement made under Section 19 of the Act by or on behalf of a
management company clearly indicate what portion of the payment per
share is made from the following sources: net income for the current
or preceding fiscal year, or accumulated undistributed net income,
or both, not including in either case profits or losses from the
sale of securities or other properties; accumulated undistributed
net profits from the sale of securities or other properties; and
paid-in surplus or other capital source.
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The Commission staff estimates that approximately 8,400 portfolios
of management companies may be subject to Rule 19a-1 each year.\3\ The
total average annual burden for Rule 19a-1 per portfolio is estimated
to be approximately 30 minutes.\4\ The total annual burden for all
portfolios is therefore estimated to be approximately 4,200 burden
hours.
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\3\ The Commission staff estimates that there are approximately
3,800 registered investment companies that are ``management
companies'' as defined by the Act, and each may have one or more
separate portfolios that report dividends to shareholders. The
Commission's records indicate that those 3,800 management companies
have approximately 8,400 portfolios that report paying dividends,
and so may be subject to Rule 19a-1.
\4\ According to respondents, no more than approximately 15
minutes is needed to make the determinations required by the rule
and include the required information in the shareholders' dividend
statements. The Commission staff estimates that, on average, each
portfolio mails two notices per year to meet the requirements of the
rule, for an average total annual burden of approximately 30
minutes.
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Rule 22d-1 [17 CFR 270.22d-1] under the Act provides registered
investment companies that issue redeemable securities an exemption from
Section 22(d) of the Investment Company Act to the extent necessary to
permit scheduled variations in or elimination of the sales load on fund
securities for particular classes of investors or transactions,
provided certain conditions are met. The rule imposes an annual burden
per series of a fund of approximately 15 minutes, so that the total
annual burden for the approximately 6,100 series of funds that might
rely on the rule is estimated to be 1,525 hours.
Rule 30b2-1 [17 CFR 30b2-1] under the Investment Company Act
requires the filing of four copies of every periodic or interim report
transmitted by or on behalf of any registered investment company to its
stockholders.\5\ This requirement ensures that the Commission has
information in its files to perform its regulatory functions and to
apprise investors of the operational and financial condition of
registered investment companies.\6\
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\5\ Most filings are made via the Commission's electronic filing
system; therefore, paper filings under Rule 30b2-1 occur only in
exceptional circumstances. Electronic filing eliminates the need for
multiple copies of filings.
\6\ Annual and periodic reports to the Commission become part of
its public files and, therefore, are available for use by
prospective investors and stockholders.
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It is estimated that approximately 3,700 registered management
investment companies are required to send reports to stockholders at
least twice annually. In addition, under recently proposed amendments
to Rule 30b2-1, if adopted, each registered investment company would be
required to file with the Commission new form N-CSR, certifying the
financial statements. The annual burden of filing the reports is
included in the burden estimate of form N-CSR.
Form ADV-E [17 CFR 279.8] is the cover sheet for accountant
examination certificates filed pursuant to Rule 206(4)-2 under the
Investment Advisers Act by investment advisers retaining custody of
client securities or funds. Registrants each spend approximately three
minutes, annually, complying with the requirements of the form.
The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act. The estimate is not derived
from a comprehensive or even a representative survey or study of the
costs of Commission rules and forms.
Written comments are invited on: (a) Whether the collections of
information is necessary for the proper performance of the functions of
the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimate of the burdens
of the collections of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burdens of the collections 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 in writing within 60 days of this
publication.
Please direct your written comments to Kenneth A. Fogash, Acting
Associate Executive Director/CIO, Office of Information Technology,
Securities and Exchange Commission, 450 5th Street, NW., Washington, DC
20549.
Dated: February 5, 2003.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-3491 Filed 2-11-03; 8:45 am]
BILLING CODE 8010-01-P