Document ID: SEC-2005-0330-0001
Agency: sec
Document Type: Notice
Title: Agency information collection activities; proposals, submissions, and approvals
Posted Date: 2005-12-07T05:00Z

[Federal Register: December 7, 2005 (Volume 70, Number 234)]
[Notices]               
[Page 72864-72865]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07de05-129]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549.

Extension: Rule 18f-3; SEC File No. 270-385; OMB Control No. 3235-
0441

    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 collections of information to the Office of 
Management and Budget (``OMB'') for extension and approval.
    Section 18(f)(1) \1\ of the Investment Company Act of 1940 \2\ (the 
``Investment Company Act'') prohibits registered open-end management 
investment companies (``funds'') from issuing any senior security. Rule 
18f-3 under the Act \3\ exempts from section 18(f)(1) a fund that 
issues multiple classes of shares representing interests in the same 
portfolio of securities (a ``multiple class fund'') if the fund 
satisfies the conditions of the rule. In general, each class must 
differ in its arrangement for shareholder services or distribution or 
both, and must pay the related expenses of that different arrangement.
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    \1\ 15 U.S.C. 80a-18(f)(1).
    \2\ 15 U.S.C. 80a.
    \3\ 17 CFR 270.18f-3.
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    The rule includes one requirement for the collection of 
information. A multiple class fund must prepare, and fund directors 
must approve, a written plan setting forth the separate arrangement and 
expense allocation of each class, and any related conversion features 
or exchange privileges (``rule 18f-3 plan'').\4\ Approval of the plan 
must occur before the fund issues any shares of multiple classes and 
whenever the fund materially amends the plan. In approving the plan, a 
majority of the fund board, including a majority of the fund's 
independent directors, must determine that the plan is in the best 
interests of each class and the fund as a whole.
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    \4\ Rule 18f-3(d).
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    The requirement that the fund prepare and directors approve a 
written rule 18f-3 plan is intended to ensure that the fund compiles 
information relevant to the fairness of the separate arrangement and 
expense allocation for each class, and that directors review and 
approve the information. Without a blueprint that highlights material 
differences among classes, directors might not perceive potential 
conflicts of interests when they determine whether the plan is in the 
best interests of each class and the fund. In addition, the plan may be 
useful to Commission staff in reviewing the fund's compliance with the 
rule.
    There are approximately 1,142 multiple class funds.\5\ Based on a 
review of typical rule 18f-3 plans, the Commission's staff estimates 
that the 1,142 funds together make an average of 571 responses each 
year to prepare and approve a written rule 18f-3 plan, requiring 
approximately 10 hours per response and a total of 5,710 burden hours 
per year in the aggregate.\6\ The

[[Page 72865]]

staff estimates that preparation of the rule 18f-3 plan may require 4 
hours of the services of an attorney or accountant employed by the 
firm, at a cost of approximately $140 per hour for professional 
time,\7\ and approval of the plan may require 1 hour of the attention 
of each of 6 directors, at a cost of approximately $635 per hour per 
director.\8\ The staff therefore estimates that the aggregate annual 
cost of complying with the paperwork requirements of the rule is 
approximately $2,495,270 ((4 hours x 1 professional x 571 responses x 
$140) + (1 hour x 6 directors x 571 responses x $635)).
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    \5\ This estimate is based on data from Form N-SAR, the semi-
annual report that funds file with the Commission.
    \6\ The estimate reflects the assumption that each multiple 
class fund prepares and approves a rule 18f-3 plan every two years 
when issuing a new class or amending a plan (or that 571 of all 
1,142 funds prepare and approve a plan each year). The estimate 
assumes that the time required to prepare a plan is 4 hours per plan 
(or 2,284 hours for 571 funds annually), and the time required to 
approve a plan is an additional 1 hour per director per plan (or 
3,426 hours for 571 funds annually (assuming 6 directors per fund)).
    \7\ Hourly rates are derived from salary information compiled by 
the Securities Industry Association. We used the annual salary 
listed for the Deputy General Counsel position, adjusted upward by 
35% to reflect possible overhead costs and employee benefits, to 
make our estimate. See Securities Industry Association, Report on 
Management and Professional Earnings in the Securities Industry 
(2004) (available in part at http://www.careerjournal.com/salaryhiring
 (last visited Nov. 17, 2005)).

    \8\ Hourly rates are based on previous estimates, adjusted to 
reflect a 27% reported increase in compensation during the 2003-2004 
period. See Management Practice Inc. Bulletin: More Meetings Means 
More Pay for Fund Directors (April 2005) (available at http://www.mfgovern.com
).

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    The estimated annual burden of 5,710 hours represents an increase 
of 937 hours over the prior estimate of 4,773 hours. The increase in 
burden hours is attributable to a change in estimates of the number of 
multiple class funds that are subject to the rule based on recent 
Commission filings. For the most part, however, most funds require less 
time to prepare the rule 18f-3 plans because they only need to amend 
existing plans.
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act. The estimate is not derived 
from a comprehensive or even a representative survey or study of the 
costs of Commission rules. Complying with this collection of 
information requirement is mandatory. Responses will not be kept 
confidential. 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.
    Written comments are invited 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 collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burdens of the collections 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 R. Corey Booth, Director/
Chief Information Officer, Office of Information Technology, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549.

    Dated: November 29, 2005.
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-6980 Filed 12-6-05; 8:45 am]

BILLING CODE 8010-01-P