Supporting Statement Rule 489 and Form F-N

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 489 and Form F-N
A.

JUSTIFICATION
1.

Necessity for the Information Collection

The Investment Company Act of 1940 (“Investment Company Act”) 1 requires
investment companies to register with the Commission before conducting any
business in interstate commerce. 2 In the absence of an exemption, foreign banks and
foreign insurance companies and their holding companies and finance subsidiaries
may be considered investment companies for purposes of the Investment Company
Act and may therefore be subject to its requirements. 3
Rule 3a-6 under the Investment Company Act exempts foreign banks and foreign
insurance companies from the definition of “investment company” under the Act,
and therefore from the requirement to register under the Act. 4 In connection with the
exemption provided by rule 3a-6, the holding companies and finance subsidiaries of
foreign banks and insurance companies are eligible for exemption from the definition
of “investment company” by rule 3a-1 and rule 3a-5 under the Investment Company
Act, respectively. 5 Rule 489 under the Securities Act of 1933 (the “Securities Act”) 6
requires foreign banks and foreign insurance companies and holding companies and
finance subsidiaries of foreign banks and foreign insurance companies that are
exempted from the definition of “investment company” by virtue of rules 3a-6, 3a-1,
and 3a-5 to file Form F-N to appoint an agent for service of process when making a
public offering of securities in the United States. 7 Form F-N under the Securities Act
designates an agent for service of process in the United States. 8

1

15 U.S.C. 80a-1 et seq.

2

15 U.S.C. 80a-7.

3

15 U.S.C. 80a-3(a).

4

17 CFR 270.3a-6(a).

5

17 CFR 270.3a-1; 17 CFR 270.3a-5.

6

15 U.S.C. 77a et seq.

7

17 CFR 230.489.

8

17 CFR 239.43.

2.

Purpose and Use of the Information Collection

The information is collected so that the Commission and private plaintiffs may
serve process on foreign entities in actions and administrative proceedings arising out
of or based on the offer or sales of securities in the United States by such foreign
entities. Without an agent for service in the United States, serving process on such
foreign entities could be difficult and expensive.
3.

Consideration Given to Information Technology

The Commission’s Electronic Data Gathering, Analysis, and Retrieval System
(“EDGAR”) automates the filing, processing, and dissemination of full disclosure
filings. This automation has increased the speed, accuracy, and availability of
information, generating benefits to investors and financial markets. Form F-N is
required to be filed electronically on EDGAR. 9 The public may access filings on
EDGAR through the Commission’s website (http://www.sec.gov) or at EDGAR
terminals located at the Commission’s public reference rooms.
4.

Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or a
change in a rule. There is no other rule that requires the entities subject to rule 489 to
provide the Commission with the same information.
5.

Effect on Small Entities

Foreign businesses are not small entities for the purposes of the Regulatory
Flexibility Act. 10 Rule 489 and Form F-N, therefore, place no burden on small
entities. The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, to identify methods to minimize reporting or recordkeeping
requirements affecting small businesses.
6.

Consequences of Not Conducting Collection

Form F-N is required to be filed only when a foreign bank, foreign insurance
company, or a finance subsidiary or holding company of a foreign bank or insurance
company makes a public offering of securities in the United States. In the absence of
the filing requirements in rule 489 and Form F-N, it would be difficult and expensive

9

Regulation S-T, rule 101(a)(1)(v) [17 CFR 232.101(a)(1)(v)].

10

5 U.S.C. 603.

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for the Commission and private plaintiffs to serve process on the foreign entities in
actions and administrative proceedings arising out of or based on the offer or sales of
securities in the United States by such foreign entities.
7.

Inconsistencies With Guidelines in 5 CFR 1320.5(d)(2)

The collection is not inconsistent with 5 CFR 1320.5(d)(2).
8.

Consultation Outside the Agency

The Commission and staff of the Division of Investment Management
participate in an ongoing dialogue with representatives of the investment company
industry through public conferences, meetings, and informal exchanges. These
various forums provide the Commission and the staff with a means of ascertaining
and acting upon the paperwork burdens confronting the industry. The Commission
requested public comment on the collection of information requirements in rule 489
and Form F-N before it submitted this request for extension and approval to the
Office of Management and Budget. The Commission received no comments in
response to its request.
9.

Payment or Gift

No payment or gift to respondents was provided.
10.

Assurance of Confidentiality

No assurance of confidentiality was provided.
11.

Sensitive Questions

No information of a sensitive nature will be required under this collection of
information. The information collection collects basic Personally Identifiable
Information (PII) that includes the name of the U.S. person serving as an agent for
service of process, and his/her business address and telephone number. It also
requires the signatory’s name and title. However, the agency has determined that the
information collection does not constitute a system of record for purposes of the
Privacy Act. Information is not retrieved by a personal identifier. In accordance with
Section 208 of the E-Government Act of 2002, the agency has conducted a Privacy
Impact Assessment (PIA) of the EDGAR system, in connection with this collection
of information. The EDGAR PIA, published on 1/29/2016, is provided as a
supplemental document and is also available at https://www.sec.gov/privacy.

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12.

Burden of Information Collection

The following estimates of average burden hours are made solely for purposes of
the Paperwork Reduction Act of 1995 11 and are not derived from a comprehensive or
even representative survey or study of the cost of Commission rules and forms.
Compliance with the information collection requirements of rule 489 and Form F-N
is mandatory to obtain the benefit of the exemption. Responses to the collection of
information requirements will not be kept confidential.
Foreign banks, foreign insurance companies, and holding companies and finance
subsidiaries of foreign banks and foreign insurance companies are required to file
Form F-N each time they make a public offering of securities in the United States.
The form is required to be amended only if the entity appoints a successor agent or if
the name or address of the agent changes. The Commission received an average of
30 Form F-N filings from 22 unique filers each year for the last three years (20142016). The information requested in Form F-N is minimal and should be readily
available to the entity filing the form. The Commission has previously estimated that
the total annual burden associated with information collection and Form F-N
preparation and submission is one hour per filing. Based on the Commission’s
experience with disclosure documents generally, the Commission continues to believe
that this estimate is appropriate. Thus the estimated total annual burden for rule 489
and Form F-N is 30 hours. 12 Using an estimated hourly wage rate of $66 for a
compliance clerk, 13 the Commission estimates that the total annual cost of the hour
burden imposed by rule 489 and Form F-N is $1,980. 14
13.

Costs to Respondents

Cost burden is the cost of services purchased to comply with rule 489 and Form
F-N, such as for the services of computer programmers, outside counsel, financial
printers, and advertising agencies. The cost burden does not include the cost of the
11

44 U.S.C. 3501 et seq.

12

30 responses per year × 1 hour per response = 30 hours per year.

13

The Commission’s estimate concerning the wage rate is based on salary information for
the securities industry compiled by the Securities Industry and Financial Markets
Association. The estimated wage figure is based on published rates for compliance clerks,
modified to account for an 1,800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead, yielding an effective hourly rate of
$66. See Securities Industry and Financial Markets Association, Report on Management
& Professional Earnings in the Securities Industry 2013 (updated for inflation).

14

30 hours per year × $66 per hour = $1,980 per year.

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hour burden discussed in Item 12 above. If a respondent does not have an office in
the United States, it may incur the cost of paying an agent to accept service of
process. The Commission continues to believe that this cost is minimal.
14.

Costs to Federal Government

Because the sole purpose of Form F-N is to appoint an agent for service of
process in the event of a suit against the registrant, Commission staff does not review
Form F-N submissions when they are filed. Also, Form F-N submissions are filed
electronically. Processing Form F-N submissions thus involves minimal cost to the
Federal government.
15.

Changes in Burden

The estimated hourly burden associated with rule 489 and Form F-N has
increased from 16 to 30 hours (an increase of 14 hours). The increase is due to an
increase in the estimated number of responses per year.
16.

Information Collection Planned for Statistical Purposes

The results of any information collected will not be published.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to not display the expiration date for
OMB approval.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

The Commission is not seeking an exception to the certification statement.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information will not employ statistical methods.

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