101 103 105 Proposing Release-PRA Supporting Statement.07-21-2020

SUPPORTING STATEMENT FOR PROPOSED AMENDMENTS TO MODERNIZE
REGULATION S-K ITEMS 101, 103, AND 105
This supporting statement is part of a submission under the Paperwork Reduction Act of
1995, 44 U.S.C. §3501, et seq.
A.

JUSTIFICATION
1. CIRCUMSTANCES MAKING THE COLLECTION OF INFORMATION
NECESSARY

In Release No. 33-10668,1 the Commission proposed amendments to modernize and
simplify the description of business (Item 101), legal proceedings (Item 103), and risk factor
disclosures (Item 105) that registrants are required to make pursuant to Regulation S-K.2 The
proposed amendments contain “collection of information” requirements within the meaning of
the Paperwork Reduction Act of 1995 (“PRA”). The titles of the collections of information
impacted by the amendments are:


“Form S-1” (OMB Control No. 3235-0065);



“Form S-3” (OMB Control No. 3235-0073);



“Form S-4” (OMB Control No. 3235-0324);



“Form S-11” (OMB Control No. 3235-0067);



“Form F-1” (OMB Control No. 3235-0258);



“Form F-3” (OMB Control No. 3235-0256);



“Form F-4” (OMB Control No. 3235-0325);



“Form SF-1” (OMB Control No. 3235-0707);



“Form SF-3” (OMB Control No. 3235-0690);



“Form 10” (OMB Control No. 3235-0064);



“Form 10-K” (OMB Control No. 3235-0063);

1

Release No. 33-10668 (Aug. 8, 2019), a copy of which is attached.

2

The paperwork burdens for Regulation S-K are imposed through the forms that are subject to the requirements
in these regulations and are reflected in the analysis of those forms. OMB has discontinued the OMB Control
Number for this regulation so that the PRA inventory would not reflect duplicative burdens.



“Form 10-Q” (OMB Control No. 3235-0070); and



“Schedule 14A” (OMB Control No. 3235-0059)

2. PURPOSE AND USE OF THE INFORMATION COLLECTION
The regulations and forms listed above were adopted under the Securities Act or the
Exchange Act and set forth the disclosure requirements for registration statements, annual and
periodic reports, and proxy statements filed by registrants to help investors make informed
investment and voting decisions.
The purpose of the proposed amendments is to revise Items 101(a) (description of the
general development of the business), 101(c) (narrative description of the business), and 105
(risk factors) to emphasize a more principles-based approach because businesses differ in terms
of which aspects of these disclosures are material to them. Such a flexible approach, as opposed
to prescriptive requirements, may elicit more relevant disclosures about these items. The
proposed amendment of Item 103 (legal proceedings) would continue the current prescriptive
approach because that requirement depends less on the specific characteristics of registrants.
The proposed amendments are intended to update those rules to account for
developments since their adoption or last amendment, to improve these disclosures for investors,
and to simplify compliance efforts for registrants. More specifically, the proposed amendments
are intended to improve the readability of disclosure documents, as well as discourage repetition
and disclosure of information that is not material.
3. CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY
The collection of information requirements of the amendments will be set forth in
Regulation S-K and the respective Forms. The information required by these rules is filed
electronically with the Commission using the Commission’s Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system.
4. DUPLICATION OF INFORMATION
We are not aware of any rules that conflict with or substantially duplicate the final rules.
5. REDUCING THE BURDEN ON SMALL ENTITIES
The proposed amendments would affect some companies that are small entities that have
a class of securities that are registered under Section 12 of the Exchange Act. The Commission
performed an Initial Regulatory Flexibility Act Analysis and estimated that there are
approximately 2,283 issuers that may be considered small entities and are potentially subject to
the proposed amendments.
Although the proposed amendments would have an impact on a substantial number of small
entities, the Commission expects that the impact on entities affected by the proposed rule would not

2

be significant. The primary effects of the rule proposal would be to: (1) increase the flexibility for
an entity when providing disclosure regarding its business, including its general business
development, so that it can tailor its disclosure to its particular circumstances; (2) eliminate or reduce
disclosure about matters that are not material to an understanding of the business or to an entity’s
legal proceedings; and (3) encourage risk factor disclosure that is shorter and concerns only material
risks. As a result of these effects, we expect that the impact of the rule proposal would be a reduction
in the paperwork burden of affected entities, including small entities, and that the overall impact of
the paperwork burden reduction would be modest and would be beneficial to small entities.

6. CONSEQUENCES OF NOT CONDUCTING COLLECTION
The regulations and forms listed above set forth the disclosure requirements for
registration statements, annual and periodic reports, and proxy statements filed by registrants to
help investors make informed investment and voting decisions. Failure to conduct these
collections of information would reduce the information available to investors to make these
decisions. We believe that the proposed amendments will improve the description of business,
legal proceedings, and risk factors disclosures for investors contained in these collections of
information.
7. SPECIAL CIRCUMSTANCES
There are no special circumstances in connection with these amendments.
8. CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY
The proposed rule amendments are part of a comprehensive evaluation of the
Commission’s disclosure requirements that was recommended in the Commission staff’s Report
on Review of Disclosure Requirements in Regulation S-K (“S-K Study”). Based on the S-K
Study’s recommendation, the staff initiated an evaluation of the information that the
Commission’s rules require registrants to disclose, how this information is presented, where this
information is disclosed, and how the Commission can better leverage technology as part of
these efforts (collectively, the “Disclosure Effectiveness Initiative”). In connection with the S-K
Study and the launch of the Disclosure Effectiveness Initiative, the Commission’s staff received
public input on how to improve registrant disclosures. A separate Concept Release issued in
2016 revisited the business and financial disclosure requirements in Regulation S-K, among
other things, and requested public comment on whether they elicit the information that investors
need to make informed investment and voting decisions, and whether any of our rules have
become outdated or unnecessary. In developing the proposed amendments, the staff considered
input from comment letters received in response to these disclosure modernization efforts.3
9. PAYMENT OR GIFT TO RESPONDENTS
No payment or gift has been provided to any respondents.

3

Comments cited in Release No. 33-10688 are to the public comments on the Concept Release, which are
available at https://www.sec.gov/comments/s7-06-16/s70616.htm.

3

10. CONFIDENTIALITY
All documents submitted to the Commission are available to the public.
11. SENSITIVE QUESTIONS
No information of a sensitive nature, including social security numbers, will be required
under the following collections of information in connection with these rulemaking amendments:
Form S-1, Form S-3, Form S-4, Form S-11, Form F-1, Form F-3, Form F-4, Form SF-1,
Form SF-3, Form 10, Form 10-K, Form 10-Q and Regulation 14A (Schedule 14A). The
information collections collect basic Personally Identifiable Information (PII) that may include a
name and job title. However, the agency has determined that the information collections do 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 these collections of information. The EDGAR PIA, published on February 5, 2020, is
provided as a supplemental document and is also available at https://www.sec.gov/privacy.
12./13. ESTIMATES OF HOUR AND COST BURDENS
The paperwork burden estimates associated with the proposed rule amendments include
the burdens attributable to collecting, preparing, reviewing, and retaining records.
i.

Item 101(a) (General Business Development)
The proposed amendment of Item 101(a) would:



make that Item largely principles-based by providing a non-exclusive list of the types of
information that a registrant may need to disclose, and by requiring disclosure of a topic
only to the extent such information is material to an understanding of the general
development of a registrant’s business;



include as a listed disclosure topic, to the extent material to an understanding of the
registrant’s business, transactions and events that affect or may affect the company’s
operations, including material changes to a registrant’s previously disclosed business
strategy;



eliminate a prescribed timeframe for this disclosure; and



permit a registrant, in filings made after a registrant’s initial filing, to provide only an
update of the general development of the business that focuses on material
developments in the reporting period, and with an active hyperlink to the registrant’s
most recent filing that, together with the update, would contain the full discussion of
the general development of the registrant’s business.

We expect that a more principles-based disclosure requirement, elimination of a prescribed
timeframe, and, for registration statements subsequent to the initial registration statement,
4

requiring only an update with a hyperlink to the most recently filed disclosure that, together with
the update, would present a complete discussion of the general development of a registrant’s
business, would decrease the paperwork burden by reducing repetitive and immaterial
information about a registrant’s business development. Although the addition of material
changes to a registrant’s business strategy as a potential disclosure topic could increase the
paperwork burden for some registrants, we expect such increase to be minimal as many
registrants already provide such disclosure.
We expect the proposed amendment to Item 101(a) would affect Forms S-1, S-4, 10, and
10-K, and Schedule 14A. We expect that the proposed amendment would result in a 2 hour net
decrease in compliance burden per form for Forms S-1, S-4, 10, and 10-K, and a 0.2 hour net
decrease in compliance burden per schedule for Schedule 14A. The lower estimated average
incremental burden for Schedule 14A reflects the Commission staff’s estimate that no more than
10% of the Schedule 14As filed annually includes Item 101 disclosures.
ii.

Item 101(c) (Description of Business)

The proposed amendment of Item 101(c) would:


clarify and expand that Item’s principles-based approach, by including disclosure
topics drawn from a subset of the topics currently contained in Item 101(c);



include, as a disclosure topic, human capital resources, including any human capital
measures or objectives that management focuses on in managing the business, to
the extent such disclosures would be material to an understanding of the registrant’s
business; and



refocus the regulatory compliance requirement by including material government
regulations, not just environmental provisions, as a topic.

A more principles-based disclosure requirement is expected to decrease the paperwork
burden. Although the addition of material government (and not just environmental) regulations
as a potential disclosure topic could increase the paperwork burden for some registrants, such
increase is expected to be minimal as many registrants already provide such disclosure.
However, the addition of human capital resources as a potential disclosure topic would likely
increase the paperwork burden.
We expect the proposed amendment to Item 101(c) would affect Forms S-1, S-4, 10, and
10-K, and Schedule 14A. We expect the proposed amendment would result in a 3 hour net
increase in compliance burden per form for Forms S-1, S-4, 10, and 10-K, and a 0.3 hour net
increase in compliance burden per schedule for Schedule 14A.

5

iii.

Item 103 (Legal Proceedings)

The proposed amendment of Item 103 would:


expressly state that the required information about material legal proceedings may be
provided by including hyperlinks or cross-references to legal proceedings disclosure
located elsewhere in the document in an effort to encourage registrants to avoid
duplicative disclosure; and



revise the $100,000 threshold for disclosure of environmental proceedings to which the
government is a party to $300,000 to adjust for inflation.

Expressly providing for the use of hyperlinks or cross-references is expected to decrease
the paperwork burden by discouraging repetitive disclosure. Raising the disclosure threshold for
governmental environmental proceedings could also decrease the paperwork burden by reducing
disclosure of immaterial proceedings.
We expect the proposed amendment to Item 103 would affect Forms S-1, S-4, S-11, 10,
10-K, and 10-Q, and Schedule 14A, and would result in a 3 hour net decrease in compliance
burden per form or schedule.
iv.

Item 105 (Risk Factors)

The proposed amendment of Item 105 would:


require summary risk factor disclosure if the risk factor section exceeds 15 pages;



refine the principles-based approach of that rule by changing the disclosure standard from
the “most significant” factors to the “material” factors required to be disclosed; and



require risk factors to be organized under relevant headings, with any risk factors that
may generally apply to an investment in securities disclosed at the end of the risk factor
section under a separate “General Risk Factors” caption.

The summary risk factor disclosure provision could increase the paperwork burden for
some registrants, although such increase is expected to be minimal as the summary would consist
of a bulleted list. This proposed provision could decrease the paperwork burden for other
registrants to the extent that it incentivizes them to provide streamlined risk factor disclosure
focusing on the most salient risks. The “General Risk Factors” heading provision could
marginally increase the paperwork burden while the substitution of “material” risks for “most
significant” risks could marginally decrease the paperwork burden.
We expect that the proposed amendment to Item 105 would affect Forms S-1, S-3, S-4,
F-1, F-3, F-4, SF-1, SF-3, 10, 10-K, and 10-Q. We expect that the proposed amendment would

6

result in a 3 hour net decrease in compliance burden per form for Forms S-1, S-3, S-4, F-1, F-3,
F-4, SF-1, and SF-3, and a 2 hour net decrease in compliance burden per form for Forms 10,
10-K, and 10-Q. The reduced estimated average incremental burden for Forms 10, 10-K and 10Q reflects the fact that smaller reporting companies, which comprise approximately one-third of
the registrants filing those forms, are not required to provide Item 105 risk factor disclosure.
Because Form S-11 already has a summary risk factor disclosure requirement, the proposed Item
105 amendment is not expected to affect the compliance burden for Form S-11 registrants.
v. Overall Estimated Effect of the Proposed Amendments Per Form or Schedule
As a result of the above described changes, we estimate that the proposed amendments to
Items 101, 103, and 105 would result in a net decrease in compliance burden per form or
Schedule as follows:
PRA Table 1. Estimated Effect Per Form or Schedule
Form
Forms S-1 and S-4
Forms S-3, S-11, F-1, F-3, F-4, SF-1, and SF-3
Forms 10 and 10-K
Form 10-Q
Schedule 14A

Estimated Total Effect Per Form
5 hrs. net decrease per form4
3 hrs. net decrease per form5
4 hrs. net decrease per form6
5 hrs. net decrease per form7
2.9 hrs. net decrease per schedule 8

vi. Incremental and Aggregate Burden and Cost Estimates for the Proposed
Amendments
Below we estimate the incremental and aggregate change in paperwork burden as a result
of the proposed amendments. These estimates represent the average burden for all registrants,
both large and small. In deriving our estimates, we recognize that the burdens will likely vary
among individual registrants based on a number of factors, including the nature of their business.
We do not believe that the proposed amendments would change the frequency of responses to
the existing collections of information; rather, we estimate that the proposed amendments would
change only the burden per response.
The burden estimates were calculated by multiplying the estimated number of responses
by the estimated average amount of time it would take a registrant to prepare and review
4

This results from an overall 8 hrs. decrease (2 hrs. from Item 101(a) + 3 hrs. from Item 103 + 3 hrs. from It em
105 amendments) offset by a 3 hrs. increase from Item 101(c) amendment.

5

This results from a 3 hrs. decrease from Item 105 amendment for Forms S-3, F-1, F-3, F-4, SF-1, and SF-3 and
a 3 hrs. decrease from Item 103 amendment for Form S-11.

6

This results from an overall 7 hrs. decrease (2 hrs. from Item 101(a) + 3 hrs. from Item 103 + 2 hrs. from Item
105 amendments) offset by a 3 hrs. increase from Item 101(c) amendment.

7

This results from a 3 hrs. decrease from Item 103 + 2 hrs. decrease from Item 105 amendments.

8

This results from an overall 3.2 hrs. decrease (0.2 hr. from Item 101(a) + 3 hrs. from Item 103 amendments)
offset by 0.3 hr. increase from Item 101(c) amendment.

7

disclosure required under the proposed amendments. For purposes of the PRA, the burden is to
be allocated between internal burden hours and outside professional costs. The table below sets
forth the percentage estimates we typically use for the burden allocation for each form. We also
estimate that the average cost of retaining outside professionals is $400 per hour.9
PRA Table 2. Standard Estimated Burden Allocation for Specified Forms and Schedules
Form / Schedule Type

Internal

O utside Professionals

Forms 10-K, 10-Q, Schedule
14A

75%

25%

Forms S-1, S-3, S-4, S-11, F-1,
F-3, F-4, SF-1, SF-3, and 10

25%

75%

The table below illustrates the incremental change to the total annual compliance burden of
affected forms, in hours and in costs, as a result of the proposed amendments.

PRA Table 3. Calculation of the Incremental Change in Burden Estimates of Current
Responses Resulting from the Proposed Amendments
Form

Number of
Estimated
Affected
Responses
(A)10

Burden Hour
Reduction
per Current
Affected
Response
(B)

Reduction in
Burden Hours for
Current Affected
Responses
(C)

Reduction in
Company Hours
for Current
Affected
Responses
(D)

Reduction in
Professional Hours
for Current
Affected
Responses
(E)

Reduction in
Professional Costs
for Current
Affected
Responses
(F)

= (A) x (B)11

S-1
S-3
S-4
S-11
F-1
F-3
F-4
SF-1
SF-3
10
10-K
10-Q
Sch.
14A
Total

9

901
1,657
551
64
63
112
39
6
71
216
8,137
22,907
5,586

5
3
5
3
3
3
3
3
3
4
4
5
2.9

= (C) x 0.25 or
0.75
1,126
1,243
689
48
47
84
29
5
53
216
24,411
85,901
12,149

4,505
4,971
2,755
192
189
336
117
18
213
864
32,548
114,535
16,199

40,310

126,001

= (C) x 0.75 or
0.25
3,379
3,729
2,066
144
142
252
88
14
160
648
8,137
28,634
4,050

= (E) x $400
$1,351,600
$1,491,600
$826,400
$57,600
$56,800
$100,800
$35,200
$5,600
$64,000
$259,200
$3,254,800
$11,453,600
$1,620,000
$20,577,200

We recognize that the costs of retaining outside professionals may vary depending on the nature of the
professional services, but for purposes of this PRA analysis, we estimate that such costs would be an average of
$400 per hour. This estimate is based on consultations with several registrants, law firms , and other persons
who regularly assist registrants in preparing and filing reports with the Commission.

10

The number of estimated affected responses is based on the number of responses in the Commission’s current
OMB PRA filing inventory. The OMB PRA filing inventory represents a three-year average. We do not expect
that the proposed amendments will materially change the number of responses in the current OMB PRA filing
inventory.

11

The estimated reductions in Columns (C), (D) and (E) are rounded to the nearest whole number.

8

The following table summarizes the requested paperwork burden, including the estimated
total reporting burdens and costs, under the proposed amendments.

PRA Table 4. Requested Paperwork Burden under the Proposed Amendments
Current Burden

Program Change

Form

Current
Annual
Responses
(A)

Current
Burden Hours
(B)

Current Cost
Burden
(C)

S-1
S-3
S-4
S-11
F-1
F-3
F-4
SF-1
SF-3
10
10-K
10-Q
Sch.
14A

901
1,657
551
64
63
112
39
6
71
216
8,137
22,907
5,586

147,208
193,626
562,465
12,214
26,692
4,441
14,049
2,076
24,552
11,855
14,198,780
3,209,558
551,101

$180,319,975
$236,198,036
$677,378,579
$14,925,768
$32,275,375
$5,703,600
17,073,825
$2,491,200
$29,463,225
$14,091,488
$1,895,224,719
$425,120,754
$73,480,012

Total

40,310

18,958,,617

$3,603,746,556

14.

Number of
Affected
Responses
(D)

Requested Change in Burden

Reduction in
Company
Hours
(E)12

Reduction in
Professional
Costs
(F)13

Annual
Responses
(G) = (A)

Burden Hours
(H) = (B) +
(E)

Cost Burden
(I) = (C) + (F)

901
1,657
551
64
63
112
39
6
71
216
8,137
22,907
5,586

(1,126)
(1,243)
(689)
(48)
(47)
(84)
(29)
(5)
(53)
(216)
(24,411)
(85,901)
(12,149)

($1,351,600)
($1,491,600)
($826,400)
($57,600)
($56,800)
($100,800)
($35,200)
($5,600)
($64,000)
($259,200)
($3,254,800)
($11,453,600)
($1,620,000)

901
1,657
551
64
63
112
39
6
71
216
8,137
22,907
5,586

146,082
192,383
561,776
12,166
26,645
4,357
14,020
2,071
24,499
11,639
14,174,369
3,123,657
538,952

$178,968,375
$234,706,436
$676,552,179
$14,868,168
$32,218,575
$5,602,800
$17,038,625
$2,485,600
$29,399,225
$13,832,288
$1,891,969,919
$413,667,154
$71,860,012

40,310

(126,001)

($20,577,200)

40,310

18,832,616

$3,583,169,356

COSTS TO FEDERAL GOVERNMENT

The annual cost of reviewing and processing disclosure documents, including registration
statements, post-effective amendments, proxy statements, annual reports and other filings of
operating companies amounted to $103,479,690 in fiscal year 2019, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
15.

REASON FOR CHANGE IN BURDEN

As explained above, the proposed rule amendments are expected to decrease the compliance
burden for each affected form or schedule by reducing both the internal company hours and external
professional costs required to prepare, review, and retain the forms and schedule. We estimate for
PRA purposes that the proposed amendments would result in a total of $20,577,200. We do not
expect that the proposed amendments would change the number of annual responses filed reduction
in company hours of 126,001 hours and a total reduction in professional costs for each form or
schedule.

12

From Column (D) in PRA Table 3.

13

From Column (F) in PRA Table 3.

9

16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL PURPOSES
The information collections do not employ statistical methods.

17.

APPROVAL TO OMIT OMB EXPIRATION DATE

We request authorization to omit the expiration date on the electronic version of the
forms and schedule. Including the expiration date on the electronic version of the form and
schedule will result in increased costs, because the need to make changes to the form and
schedule may not follow the application’s scheduled version release dates. The OMB control
number will be displayed.
18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION ACT
SUBMISSIONS
There are no exceptions for Paperwork Reduction Act submissions.

B.

STATISTICAL METHODS
The information collections do not employ statistical methods.

10

Form S-1 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form S-1, the proposed amendments

would result in a reduction of 1,126 burden hours and a reduction in the cost burden of
$1,351,600 for the services of outside professionals.

11

Form S-3 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form S-3, the proposed amendments

would result in a reduction of 1,243 burden hours and a reduction in the cost burden of
$1,491,600 for the services of outside professionals.

12

Form S-4 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form S-4, the proposed amendments

would result in a reduction of 689 burden hours and a reduction in the cost burden of $826,400
for the services of outside professionals.

13

Form S-11 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form S-11, the proposed amendments

would result in a reduction of 48 burden hours and a reduction in the cost burden of $57,600 for
the services of outside professionals.

14

Form F-1 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form F-1, the proposed amendments

would result in a reduction of 47 burden hours and a reduction in the cost burden of $56,800 for
the services of outside professionals.

15

Form F-3 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form F-3, the proposed amendments

would result in a reduction of 84 burden hours and a reduction in the cost burden of $100,800 for
the services of outside professionals.

16

Form F-4 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form F-4, the proposed amendments

would result in a reduction of 29 burden hours and a reduction in the cost burden of $35,200 for
the services of outside professionals.

17

Form SF-1 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form SF-1, the proposed amendments

would result in a reduction of 5 burden hours and a reduction in the cost burden of $5,600 for the
services of outside professionals.

18

Form SF-3 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form SF-3, the proposed amendments

would result in a reduction of 53 burden hours and a reduction in the cost burden of $64,000 for
the services of outside professionals.

19

Form 10 Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form 10, the proposed amendments

would result in a reduction of 216 burden hours and a reduction in the cost burden of $259,200
for the services of outside professionals.

20

Form 10-K Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form 10-K, the proposed amendments

would result in a reduction of 24,411 burden hours and a reduction in the cost burden of
$3,254,800 for the services of outside professionals.

21

Form 10-Q Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Form 10-Q, the proposed amendments

would result in a reduction of 85,901 burden hours and a reduction in the cost burden of
$11,453,600 for the services of outside professionals.

22

Regulation 14A (Schedule 14A) Short Statement
The proposed rule amendments would modernize and simplify the description of business
(Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants
are required to make pursuant to Regulation S-K. The primary effects of the proposed
amendments would be to: (1) increase the flexibility for an entity when providing disclosure
regarding its business, including its general business development, so that it can tailor its disclosure
to its particular circumstances; (2) eliminate or reduce disclosure about matters that are not material
to an understanding of the business or to an entity’s legal proceedings; and (3) encourage risk factor
disclosure that is shorter and concerns only material risks. As a result of these effects, we expect that
the impact of the rule proposal would be a modest reduction in the paperwork burden of affected
entities. For purposes of the PRA, we estimate that, for Schedule 14A, the proposed amendments

would result in a reduction of 12,149 burden hours and a reduction in the cost burden of
$1,620,000 for the services of outside professionals.

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