[Federal Register Volume 70, Number 116 (Friday, June 17, 2005)]
[Notices]
[Pages 35317-35319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3120]


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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

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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 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

    The staff estimated that there are 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. The staff estimates that approximately 65 (5 percent) additional 
Canadian funds may rely on the rule each year 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 approximately 65 respondents would make 195 responses by 
adding the new disclosure statement to approximately 195 written 
offering documents. The staff therefore estimates that 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). The total annual cost of these burden hours is estimated to 
be $2,155.08 (32.5 hours x $66.31 per hour of professional time).\4\
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    \4\ The Commission's estimate concerning the wage rate for 
professional time is based on salary information for the securities 
industry compiled by the Securities Industry Association. See 
Securities Industry Association, Report on Management and 
Professional Earnings in the Securities Industry 2003 (September 
2003).
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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.\5\ 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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    \5\ 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 \6\ 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). The total annual cost of burden hours is 
estimated to be $1,160.43 (17.5 hours x $66.31 hour of professional 
time).\7\ 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.
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    \6\ This estimate of respondents also assumes that all 
respondents are foreign issuers. The number of respondents may be 
greater if foreign underwriters or broker-dealers draft a sticker or 
supplement to add the required disclosure to an existing offering 
document.
    \7\ See supra note 4.
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    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.
    General comments regarding the above information should be directed 
to the following persons: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503 or e-mail to: [email protected]; and (ii) R. Corey Booth, Director/Chief 
Information Officer, Office of Information Technology, Securities and 
Exchange Commission, 450 5th Street, NW., Washington, DC 20549. 
Comments must

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be submitted to OMB within 30 days of this notice.

    Dated: June 6, 2005.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-3120 Filed 6-16-05; 8:45 am]
BILLING CODE 8010-01-P