[Federal Register Volume 75, Number 128 (Tuesday, July 6, 2010)]
[Notices]
[Pages 38854-38856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-16309]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor

[[Page 38855]]

Education and Advocacy, Washington, DC 20549-0213.

Extension:
    Rule 7d-1; SEC File No. 270-176; OMB Control No. 3235-0311.

    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 collection of information to the Office of 
Management and Budget for extension and approval.
    Section 7(d) of the Investment Company Act of 1940 (15 U.S.C. 80a-
7(d)) (the ``Act'' or ``Investment Company Act'') requires an 
investment company (``fund'') organized outside the United States 
(``foreign fund'') to obtain an order from the Commission allowing the 
fund to register under the Act before making a public offering of its 
securities through the United States mail or any means of interstate 
commerce. The Commission may issue an order only if it finds that it is 
both legally and practically feasible effectively to enforce the 
provisions of the Act against the foreign fund, and that the 
registration of the fund is consistent with the public interest and 
protection of investors.
    Rule 7d-1 (17 CFR 270.7d-1) under the Act, which was adopted in 
1954, specifies the conditions under which a Canadian management 
investment company (``Canadian fund'') may request an order from the 
Commission permitting it to register under the Act. Although rule 7d-1 
by its terms applies only to Canadian funds, other foreign funds 
generally have agreed to comply with the requirements of rule 7d-1 as a 
prerequisite to receiving an order permitting those foreign funds' 
registration under the Act.
    The rule requires a Canadian fund that wishes to register to file 
an application with the Commission that contains various undertakings 
and agreements by the fund. The requirement of the Canadian fund to 
file an application is a collection of information under the Paperwork 
Reduction Act. Certain of the undertakings and agreements, in turn, 
impose the following additional information collection requirements:
    (1) The fund must file agreements between the fund and its 
directors, officers, and service providers requiring them to comply 
with the fund's charter and bylaws, the Act, and certain other 
obligations relating to the undertakings and agreements in the 
application;
    (2) The fund and each of its directors, officers, and investment 
advisers that is not a U.S. resident, must file an irrevocable 
designation of the fund's custodian in the United States as agent for 
service of process;
    (3) The fund's charter and bylaws must provide that (a) the fund 
will comply with certain provisions of the Act applicable to all funds, 
(b) the fund will maintain originals or copies of its books and records 
in the United States, and (c) the fund's contracts with its custodian, 
investment adviser, and principal underwriter, will contain certain 
terms, including a requirement that the adviser maintain originals or 
copies of pertinent records in the United States;
    (4) The fund's contracts with service providers will require that 
the provider perform the contract in accordance with the Act, the 
Securities Act of 1933 (15 U.S.C. 77a), and the Securities Exchange Act 
of 1934 (15 U.S.C. 78a), as applicable; and
    (5) The fund must file, and periodically revise, a list of persons 
affiliated with the fund or its adviser or underwriter.
    As noted above, under section 7(d) of the Act the Commission may 
issue an order permitting a foreign fund's registration only if the 
Commission finds that ``by reason of special circumstances or 
arrangements, it is both legally and practically feasible effectively 
to enforce the provisions of the (Act).'' The information collection 
requirements are necessary to assure that the substantive provisions of 
the Act may be enforced as a matter of contract right in the United 
States or Canada by the fund's shareholders or by the Commission.
    Rule 7d-1 also contains certain information collection requirements 
that are associated with other provisions of the Act. These 
requirements are applicable to all registered funds and are outside the 
scope of this request.
    The Commission believes that one foreign fund is registered under 
rule 7d-1 and currently active. Apart from requirements under the Act 
applicable to all registered funds, rule 7d-1 imposes ongoing burdens 
to maintain records in the United States, and to update, as necessary, 
certain fund agreements, designations of the fund's custodian as 
service agent, and the fund's list of affiliated persons. The 
Commission staff estimates that each year under the rule, the active 
registrant and its directors, officers, and service providers engage in 
the following collections of information and associated burden hours:
    For the fund and its investment adviser to maintain records in the 
United States: \1\
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    \1\ The rule requires an applicant and its investment adviser to 
maintain records in the United States (which, without the 
requirement, might be maintained in Canada or another foreign 
jurisdiction), which facilitates routine inspections and any special 
investigations of the fund by Commission staff. The registrant and 
its investment adviser, however, already maintain the registrant's 
records in the United States and in no other jurisdiction. 
Therefore, maintenance of the registrant's records in the United 
States does not impose an additional burden beyond that imposed by 
other provisions of the Act. Those provisions are applicable to all 
registered funds and the compliance burden of those provisions is 
outside the scope of this request.

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0 hours: 0 minutes of compliance clerk time.

     For the fund to update its list of affiliated persons:

2 hours: 2 hours of support staff time.

     For new officers, directors, and service providers to 
enter into and file agreements requiring them to comply with the fund's 
charter and bylaws, the Act, and certain other obligations:

0.5 hours: 7.5 minutes of director time; 2.5 minutes of officer time; 
20 minutes of support staff time.

     For new officers, directors, and investment advisers who 
are not residents of the United States to file irrevocable designation 
of the fund's custodian as agent for process of service:

0.25 hours: 5 minutes of director time; 10 minutes of support staff 
time.
    Based on the estimates above, the Commission estimates that the 
total annual burden of the rule's paperwork requirements is 2.75 
hours.\2\ We estimate that directors perform 0.21 hours of these burden 
hours at a total cost of $945,\3\ officers perform 0.04 of these burden 
hours at a total cost of 16.72,\4\ and support staff perform 2.5 of 
these burden hours at a total cost of $147.50.\5\ Thus, the Commission

[[Page 38856]]

estimates the aggregate annual cost of the burden hours associated with 
rule 7d-1 is $1109.\6\
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    \2\ This estimate is based on the following calculation: (0 + 2 
+ 0.5 + 0.25) = 2.75 hours.
    \3\ The director estimates are based on the following 
calculations: (7.5 minutes + 5 minutes)/60 minutes per hour = 0.21 
hours; and 0.21 hours x $4500/hour = $945. The per hour cost 
estimate is based on estimated hourly compensation for each board 
member of $500 and an average board size of 9 members.
    \4\ The officer estimates are based on the following 
calculations: 2.5 minutes/60 minutes per hour = 0.04 hours; 0.04 
hours x $418/hour = $16.72. The per hour cost estimate is based on 
the figure for chief compliance officers found in SIFMA's Management 
& Professional Earnings in the Securities Industry 2009, modified by 
Commission staff to account for an 1800-hour work-year and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits and overhead.
    \5\ The support staff estimates are based on the following 
calculations: 2 hours + 20 minutes + 10 minutes = 2.5 hours; and 2.5 
hours x $59/hour = $147.50. The per hour cost estimate is based on 
the figure for compliance clerks found in SIFMA's Management & 
Professional Earnings in the Securities Industry 2009, modified by 
Commission staff to account for an 1800-hour work-year and 
multiplied by 2.93 to account for bonuses, firm size, employee 
benefits and overhead.
    \6\ This estimate is based on the following calculation: 
$1109.22 = $945 + $16.72 + 147.50.
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    If a fund were to file an application under the rule, the 
Commission estimates that the rule would impose initial information 
collection burdens (for filing an application, preparing the specified 
charter, bylaw, and contract provisions, designations of agents for 
service of process, and an initial list of affiliated persons, and 
establishing a means of keeping records in the United States) of 
approximately 90 hours for the fund and its associated persons. The 
Commission is not including these hours in its calculation of the 
annual burden because no foreign fund has applied under rule 7d-1 to 
register under the Act in the last three years.
    As noted above, after registration, a Canadian fund may file a 
supplemental application seeking special relief designed for the fund's 
particular circumstances. Rule 7d-1 does not mandate these 
applications. The active registrant has not filed a substantive 
supplemental application in the past three years. Therefore, the 
Commission has not allocated any burden hours for these applications.
    The estimates of burden hours are made solely for the purposes of 
the Paperwork Reduction Act. The estimates are not derived from a 
comprehensive or even a representative survey or study of Commission 
rules and forms.
    If a Canadian or other foreign fund in the future applied to 
register under the Act under rule 7d-1, the fund initially might have 
capital and start-up costs (not including hourly burdens) of an 
estimated $17,280 to comply with the rule's initial information 
collection requirements. These costs include legal and processing-
related fees for preparing the required documentation (such as the 
application, charter, bylaw, and contract provisions), designations for 
service of process, and the list of affiliated persons. Other related 
costs would include fees for establishing arrangements with a custodian 
or other agent for maintaining records in the United States, copying 
and transportation costs for records, and the costs of purchasing or 
leasing computer equipment, software, or other record storage equipment 
for records maintained in electronic or photographic form.
    The Commission expects that a fund and its sponsors would incur 
these costs immediately, and that the annualized cost of the 
expenditures would be $17,280 in the first year. Some expenditures 
might involve capital improvements, such as computer equipment, having 
expected useful lives for which annualized figures beyond the first 
year would be meaningful. These annualized figures are not provided, 
however, because, in most cases, the expenses would be incurred 
immediately rather than on an annual basis. The Commission is not 
including these costs in its calculation of the annualized capital/
start-up costs because no fund has applied under rule 7d-1 to register 
under the Act pursuant to rule 7d-1 in the last three years.
    We request written comment on: (a) Whether the collections of 
information are 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 collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection 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 Charles Boucher, Director/
CIO, Securities and Exchange Commission, C/O Shirley Martinson, 6432 
General Green Way, Alexandria, VA, 22312; or send an e-mail to: [email protected].

    Dated: June 29, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16309 Filed 7-2-10; 8:45 am]
BILLING CODE 8010-01-P