[Federal Register Volume 90, Number 122 (Friday, June 27, 2025)]
[Notices]
[Pages 27683-27684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11863]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0528]
Submission for OMB Review; Comment Request; Extension: Rule 237
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (SEC or ``Commission'') has submitted to the Office of
Management and Budget a request for extension and approval of the
collection 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''). These accounts, which operate in a
manner similar to individual retirement accounts in the United States,
encourage retirement savings by permitting savings on a tax-deferred
basis. Individuals who establish Canadian retirement accounts while
living and working in Canada and who later move to the United States
(``Canadian-U.S. Participants'' or ``participants'') often continue to
hold their retirement assets in their Canadian retirement accounts
rather than prematurely withdrawing (or ``cashing out'') those assets,
which would result in immediate taxation in Canada.
Once in the United States, however, these participants historically
have been unable to manage their Canadian retirement account
investments. Most securities 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 requirement of the Securities Act of 1933 (``Securities
Act'').\1\ As a result of this registration requirement, Canadian-U.S.
Participants previously were not able to purchase or exchange
securities for their Canadian retirement accounts as needed to meet
their changing investment goals or income needs.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 77; in addition, the offering and selling of
securities of investment companies (``funds'') that are not
registered pursuant to the Investment Company Act of 1940
(``Investment Company Act'') is generally prohibited by U.S.
securities laws. 15 U.S.C. 80a.
---------------------------------------------------------------------------
The Commission issued a rulemaking in 2000 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 Canadian retirement accounts.\2\ Rule 237
under the Securities Act \3\ 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.
---------------------------------------------------------------------------
\2\ 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)]; this rulemaking
also included new rule 7d-2 under the Investment Company Act,
permitting foreign funds to offer securities to Canadian-U.S.
Participants and sell securities to Canadian retirement accounts
without registering as investment companies under the Investment
Company Act. 17 CFR 270.7d-2.
\3\ 17 CFR 230.237.
---------------------------------------------------------------------------
Rule 237 requires written offering documents for securities offered
and sold in reliance on the rule to disclose prominently that the
securities are not registered with the Commission and are exempt from
registration under the U.S. securities laws. The burden under the 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 Commission understands that there are approximately 2,272
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.\4\ The staff estimates that in any given year
approximately 23 (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 23 issuers, on average, distributes 3 different
written offering documents concerning those securities, for a total of
69 offering documents.
---------------------------------------------------------------------------
\4\ This estimate is based on the following calculation: 3,431
total issuers-(63 closed-end funds + 1,096 exchange-traded products)
= 2,272 total equity and bond issuers; see The MiG Report, Toronto
Stock Exchange and TSX Venture Exchange (February 2025) (providing
number of issuers on the Toronto Exchange); this calculation
excludes Canadian funds to avoid double-counting disclosure burdens
under rule 237 and rule 7d-2.
---------------------------------------------------------------------------
The staff therefore estimates that during each year that rule 237
is in effect, approximately 23 respondents \5\ would be required to
make 69 responses by adding the new disclosure statements to
approximately 69 written offering documents. Thus, the staff estimates
that the total annual burden associated with the rule 237 disclosure
requirement would be approximately 12 hours (69 offering documents x 10
minutes per document). The total annual cost of internal burden hours
is
[[Page 27684]]
estimated to be $6,132 (12 hours x $511 per hour of attorney time).\6\
---------------------------------------------------------------------------
\5\ This estimate of respondents only includes foreign issuers;
the number of respondents would be greater if foreign underwriters
or broker-dealers draft stickers or supplements to add the required
disclosure to existing offering documents.
\6\ The Commission's estimate concerning the wage rate for
attorney time is based on salary information for the securities
industry compiled by the Securities Industry and Financial Markets
Association (``SIFMA''); the $511 per hour figure for an attorney is
from SIFMA's Management & Professional Earnings in the Securities
Industry 2013, modified by Commission staff to account for an 1,800-
hour work-year and multiplied by 5.35 to account for bonuses, firm
size, employee benefits, overhead, and adjusted to account for the
effects of inflation.
---------------------------------------------------------------------------
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. However, the staff
believes that the number of issuers from other countries that rely on
rule 237, and that therefore are 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 OMB Control Number.
Written comments are invited on: (a) whether this proposed
collection of information is necessary for the proper performance of
the functions of the SEC, including whether the information will have
practical utility; (b) the accuracy of the SEC's estimate of the burden
imposed by the proposed collection of information, including the
validity of the methodology and the assumptions used; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated,
electronic collection techniques or other forms of information
technology.
The public may view and comment on this information collection
request at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202504-3235-001 or email comment to
[email protected] within 30 days of the day
after publication of this notice, by July 28, 2025.
Dated: June 24, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-11863 Filed 6-26-25; 8:45 am]
BILLING CODE 8011-01-P