Document ID: SEC-2016-0130-0001
Agency: sec
Document Type: Notice
Title: Agency Information Collection Activities; Proposals, Submissions, and Approvals: Simplification of Disclosure Requirements for Emerging Growth Companies and Forward Incorporation by Reference on Form S-1 for Smaller Reporting Companies
Posted Date: 2016-01-25T05:00Z

[Federal Register Volume 81, Number 15 (Monday, January 25, 2016)]
[Notices]
[Pages 4072-4074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01304]

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SECURITIES AND EXCHANGE COMMISSION

Office of the Secretary

Agency Information Collection Activities; Submission for OMB 
Review; Comment Request; Simplification of Disclosure Requirements for 
Emerging Growth Companies and Forward Incorporation by Reference on 
Form S-1 for Smaller Reporting Companies

ACTION: Notice.

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SUMMARY: The Securities and Exchange Commission (``Commission'') has 
submitted the sponsored information collection request (ICR) titled, 
``Simplification of Disclosure Requirements for Emerging Growth 
Companies and Forward Incorporation by Reference on Form S-1 for 
Smaller Reporting Companies,'' to the Office of Management and Budget 
(OMB) for review and clearance under the emergency processing 
procedures in accordance with the Paperwork Reduction Act of 1995 (Pub. 
L. 104-13, 44 U.S.C. Chapter 35) (``PRA'') and 5 CFR 1320.13. OMB 
approval has been requested by January 19, 2016. In addition, this 
notice solicits comment on the three-year extension of the same 
information collection under 5 CFR 1320.12.

ADDRESSES: A copy of this ICR with applicable supporting documentation, 
including a description of the likely respondents, proposed frequency 
of response, and estimated total burden may be obtained free of charge 
from the RegInfo.gov Web site at http://www.reginfo.gov/public/do/PRAMain.
    OMB Control Numbers 3235-0065 (Form S-1) and 3235-0258 (Form F-1)
    Comments should be directed to: (i) Desk Officer for the Securities 
and Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503, or by sending an email to: 
Shagufta_Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email 
to: PRA_Mailbox@sec.gov.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``Commission'') is requesting that OMB authorize emergency processing 
of the submission of collection of information for ``Simplification of 
Disclosure Requirements for Emerging Growth Companies and Forward 
Incorporation by Reference on Form S-1 for Smaller Reporting 
Companies.'' This request should also serve to notify the public that 
the Commission is seeking PRA approval from OMB on an emergency basis 
for the collections of information associated with the interim final 
rule amendments to Form S-1 and Form F-1 adopted by the Commission on 
January 13, 2016 \1\ to implement Sections 71003 and 84001 of the 
Fixing America's Surface Transportation (``FAST'') Act, which was 
enacted on December 4, 2015.\2\ In addition, the Commission is 
providing notice of the three-year extension under 5 CFR 1320.12.
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    \1\ See Release No. 33-10003 [81 FR 2743].
    \2\ Public Law 114-94.
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    As adopted, the amendments implement Sections 71003 and 84001 of 
the FAST Act, which require that the Commission revise Forms S-1 and F-
1, OMB Control Numbers, 3235-0065 (Form S-1) and 3235-0258 (Form F-1), 
to permit emerging growth companies to omit financial information for 
certain historical periods and revise Form S-1 to permit forward 
incorporation by reference for smaller reporting companies.
    Form S-1 (17 CFR 239.11) is the form used by domestic issuers to 
register the offer and sale of securities under the Securities Act of 
1933 (15 U.S.C. 77a et seq.) when no other form is authorized or 
prescribed, and Form F-1 (17 CFR 239.31) is the corresponding form used 
by foreign private issuers. Item 512 of Regulation S-K (17 CFR 229.512) 
describes the undertakings that an issuer must include in a 
registration statement.
    The amendments revise Form S-1 and Form F-1 to make them conform to 
the requirements in Sections 71003 and 84001 of the FAST Act. Section 
71003 of the FAST Act allows an emerging growth company that is filing 
a registration statement (or submitting the registration statement for 
confidential review) on Form S-1 or Form F-1 to omit financial 
information for historical periods otherwise required by Regulation S-X 
if it reasonably believes the omitted information will not be required 
to be included in the filing at the time of the contemplated offering, 
so long as the issuer amends the registration statement prior to 
distributing a preliminary prospectus to include all financial 
information required by Regulation S-X at the time of the amendment. 
The amendments revise the general instructions to Form S-1 and Form F-1 
to reflect this self-executing change, as directed by Section 71003.

[[Page 4073]]

    Section 84001 of the FAST Act requires the Commission to revise 
Form S-1 to permit a smaller reporting company to incorporate by 
reference into its registration statement any documents filed by the 
issuer subsequent to the effective date of the registration statement. 
The amendments add a new paragraph to Item 12 of Form S-1 and make a 
conforming change to Item 512(a) of Regulation S-K to effect this 
provision.
    The Commission, for good cause, found that notice and comment were 
unnecessary because the amendments merely conform the specified forms 
to the requirements of a newly enacted statute, the FAST Act. The 
amendments revised the Commission's forms to make them consistent with 
the provisions of the FAST Act pertaining to simplified disclosure 
requirements for emerging growth companies and forward incorporation by 
reference for smaller reporting companies on Form S-1 and therefore did 
not involve the exercise of Commission discretion. Section 71003 of the 
FAST Act was effective 30 days after enactment, and Section 84001 
required the Commission to revise Form S-1 within 45 days of enactment. 
The Commission also found there was good cause for the amendments to 
take effect on January 19, 2016 because without the amendments the 
Commission's applicable forms did not conform to the requirements of 
Sections 71003 and 84001 of the FAST Act. Additionally, the Commission 
found that the amendments relieve restrictions in the Commission's 
forms.
    This information collection is subject to the PRA. A federal agency 
generally cannot conduct or sponsor a collection of information, and 
the public is generally not required to respond to an information 
collection, unless it is approved by the OMB under the PRA and displays 
a currently valid OMB Control Number. In addition, notwithstanding any 
other provisions of law, no person shall generally be subject to 
penalty for failing to comply with a collection of information if the 
collection of information does not display a valid OMB Control Number. 
See 5 CFR 1320.5(a) and 1320.6. The SEC obtains OMB approval for this 
information collection under OMB ICR Reference Numbers 201409-3235-039 
(Form S-1) and 201407-3235-008 (Form F-1).
    Interested parties are encouraged to send comments to the OMB, 
Office of Information and Regulatory Affairs at the address shown in 
the ADDRESSES section within 15 days of publication of this notice in 
the Federal Register. In order to help ensure appropriate 
consideration, comments should reference OMB Control Numbers 3235-0065 
(Form S-1) and 3235-0258 (Form F-1). The OMB is particularly interested 
in comments that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    For purposes of the PRA, we estimate the total annual decrease in 
the paperwork burden for all affected issuers to comply with our 
collection of information requirements to be approximately 70,214 hours 
of company personnel time and the reduction in cost to be approximately 
$84,256,400 for the services of outside professionals. These estimates 
include the time and cost of preparing and reviewing disclosure, filing 
documents, and retaining records. We estimate that 25% of the burden of 
preparation is carried by the issuer internally and is reflected in 
hours, and that 75% of the burden is carried by outside professionals 
retained by the issuer at an average cost of $400 per hour.\3\ Our 
methodologies for deriving the above estimates are discussed below.
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    \3\ Consistent with other recent rulemakings, we estimate an 
average hourly rate of $400 for hiring outside professionals to 
assist issuers in preparing disclosures and conducting registered 
offerings.
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1. Omission of Financial Information for Historical Periods by Emerging 
Growth Companies

    For purposes of the PRA, we estimate that the amendment to allow 
emerging growth companies to omit financial information for historical 
periods that the issuer reasonably believes will not be required to be 
included in the Form S-1 or F-1 at the time of the contemplated 
offering would reduce incrementally the annual paperwork burden by 
approximately 17,089 hours of issuer personnel time and by a cost of 
approximately $20,506,400 for the services of outside professionals. 
The estimate reflects the reduction in disclosure preparation time 
resulting from the omission of one year of audited financial statements 
\4\ multiplied by the average number of Forms S-1 and F-1 filed by 
emerging growth companies over a three-year period.\5\
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    \4\ We estimated the audit fee for emerging growth companies by 
using the median audit fee of $46,300 for smaller reporting 
companies. See John Pakaluk, Audit Fees for Smaller Reporting 
Companies, AUDIT ANALYTICS (Feb. 26, 2015), http://www.auditanalytics.com/blog/audit-fees-for-smaller-reporting-companies.
    \5\ The number of responses equals the average number of Forms 
S-1 or Form F-1, respectively, filed by emerging growth companies 
(EGCs) during a three-year period. In 2012, EGCs filed 295 Forms S-
1; in 2013, EGCs filed 404 Forms S-1; and in 2014, EGCs filed 504 
Forms S-1. In 2012, EGCs filed 25 Forms F-1; in 2013, EGCs filed 31 
Forms F-1; and in 2014, EGCs filed 65 Forms F-1.
    \6\ We estimate that $46,300 divided by $400, or 116 hours, 
represents the cost of services of outside professionals, or 75% of 
the burden, and we estimate that the reduction in burden hours for 
the issuer equals 39 hours, or 25% of the burden. These estimates 
were rounded up to nearest whole hour.

    Table 1--Revised PRA Burden Under the Amendment Permitting Emerging Growth Companies To Omit Financial Information for Certain Historical Periods
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                                                                            Incremental        Total
                                                             Number of     burden hours     incremental     25% company         75%        Professional
                                                             responses       \6\/form      burden hours                    professional        costs
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                                                                     (A)             (B)     (C) = (A) *     (D) = (C) *  E = (C) * 0.75     (F) = (E) *
                                                                                                     (B)            0.25                            $400
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Form S-1................................................             401           (155)        (62,155)        (15,539)        (46,616)   $(18,646,400)
Form F-1................................................              40           (155)         (6,200)         (1,550)         (4,650)    $(1,860,000)
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[[Page 4074]]

 
Total...................................................  ..............  ..............        (68,355)        (17,089)  ..............   $(20,506,400)
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2. Forward Incorporation by Reference on Form S-1 by Smaller Reporting 
Companies

    For purposes of the PRA, we estimate that all smaller reporting 
companies will take advantage of the election to forward incorporate by 
reference. We estimate that the amendments to permit smaller reporting 
companies to incorporate by reference into the prospectus contained in 
the registration statement on Form S-1 all documents subsequently filed 
by the issuer with the Commission after the effective date of the 
registration statement would reduce incrementally the annual paperwork 
burden by approximately 53,125 hours of issuer personnel time and by a 
cost of approximately $63,750,000 for the services of outside 
professionals. The estimate reflects the decrease in disclosure 
preparation time by eliminating the need to file certain post-effective 
amendments when that information is disclosed in Exchange Act filings 
after the effectiveness of the Form S-1. We estimate that forward 
incorporation by reference would reduce the paperwork burden in Form S-
1 for smaller reporting companies by 212,500 hours on the assumption 
that the burden to complete a Form S-1 that incorporates by reference 
would be the same as the burden currently imposed by Form S-3 (472 
hours). Therefore, the amount of time eliminated for each Form S-1 that 
incorporates by reference would be 500 hours (972 hours for a Form S-1 
that does not incorporate information by reference minus 472 hours for 
a Form S-1 that does incorporate information by reference).

         Table 2--Revised PRA Burden Under the Amendment Permitting Smaller Reporting Companies To Forward Incorporate by Reference on Form S-1
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                                                                            Incremental        Total
                                                             Number of     burden hours/    incremental     25% company         75%        Professional
                                                           responses \7\       Form        burden hours                    professional        costs
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                                                                     (A)             (B)     (C) = (A) *      (D) = (C)*  E = (C) * 0.75     (F) = (E) *
                                                                                                     (B)            0.25                            $400
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Form S-1................................................             425           (500)       (212,500)        (53,125)       (159,375)   $(63,750,000)
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    Title of Collection: Simplification of Disclosure Requirements for 
Emerging Growth Companies and Forward Incorporation by Reference on 
Form S-1 for Smaller Reporting Companies.
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    \7\ The number of responses equals the average number of Forms 
S-1 filed by smaller reporting companies (SRCs) during a three-year 
period. In 2012, SRCs filed 394 Forms S-1; in 2013, SRCs filed 432 
Forms S-1; and in 2014, SRCs filed 448 Forms S-1.
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    OMB Control Numbers: 3235-0065 (Form S-1) and 3235-0258 (Form F-1).
    Type of Review: Emergency.
    Requested Duration of Authorization: 6 Months.

    Dated: January 19, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01304 Filed 1-22-16; 8:45 am]
BILLING CODE 8011-01-P