Document ID: SEC-2008-1505-0001
Agency: sec
Document Type: Rule
Title: Mandatory Electronic Submission of Applications for Orders Under the Investment Company Act and Filings Made Pursuant to Regulation E
Posted Date: 2008-11-04T05:00Z

[Federal Register: November 4, 2008 (Volume 73, Number 214)]
[Rules and Regulations]               
[Page 65516-65526]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04no08-10]                         

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 232 and 270

[Release Nos. 33-8981; 34-58874; IC-28476 File No. S7-25-07]
RIN 3235-AJ81

 
Mandatory Electronic Submission of Applications for Orders Under 
the Investment Company Act and Filings Made Pursuant to Regulation E

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting several amendments to rules regarding our 
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. 
Specifically, we are amending our rules to make mandatory the 
electronic submission on EDGAR of applications for orders under any 
section of the Investment Company Act of 1940 (``Investment Company 
Act'') as well as Regulation E filings of small business investment 
companies and business development companies. We also are amending the 
electronic filing rules to make the temporary hardship exemption 
unavailable for submission of applications under the Investment Company 
Act. Finally, we are amending Rule 0-2 under the Investment Company 
Act, eliminating the requirement that certain documents accompanying an 
application be notarized and the requirement that applicants submit a 
draft notice as an exhibit to an application.

DATES: Effective Date: January 1, 2009.

FOR FURTHER INFORMATION CONTACT: If you have questions about the rules, 
please contact one of the following members of our staff in the 
Division of Investment Management, at the Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-0506: in the Office 
of Legal and Disclosure, Ruth Armfield Sanders, Senior Special Counsel 
(EDGAR), at (202) 551-6989; in the Office of Investment Company 
Regulation, Michael W. Mundt, Assistant Director, at (202) 551-6821; 
or, in the Office of Insurance Products, Keith Carpenter, Senior 
Special Counsel, at (202) 551-6766; for technical questions relating to 
the EDGAR system, in the Office of Information Technology, Richard D. 
Heroux, EDGAR Program Manager, at (202) 551-8168.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``Commission'') is adopting amendments to Rules 101 and 201 of 
Regulation S-T \1\ relating to electronic filing on the EDGAR system 
and to Rule 0-2 \2\ under the Investment Company Act.\3\
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    \1\ 17 CFR 232.101 and 232.201.
    \2\ 17 CFR 270.0-2.
    \3\ We proposed these amendments in November 2007. See 
Rulemaking for EDGAR System; Mandatory Electronic Submission of 
Applications for Orders under the Investment Company Act and Filings 
Made Pursuant to Regulation E, Release No. 33-8859 (Nov. 1, 2007) 
[72 FR 63513 (Nov. 9, 2007)] (``Proposing Release'').
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I. Background

    In the last several years, we initiated a series of amendments to 
keep EDGAR current technologically and to make it more useful to the 
investing public and Commission staff.\4\ In April 2000, we adopted 
rule and form amendments in connection with the modernization of 
EDGAR.\5\ In the Modernization Proposing Release, we noted that, as the 
use of electronic databases grows, it becomes increasingly important 
for members of the public to have electronic access to our filings. We 
also stated that we were contemplating future rulemaking to require 
more of our filings to be filed on EDGAR. In May 2002, we adopted rules 
requiring foreign private issuers and foreign governments to file most 
of their documents electronically.\6\ In May 2003, we adopted rules 
requiring electronic filing of beneficial ownership reports filed by 
officers, directors and principal security holders under section 16(a) 
\7\ of the Securities Exchange Act of 1934 (``Exchange Act'').\8\ In 
July 2005, we adopted rules requiring certain open-end management 
investment companies and insurance companies separate accounts to 
identify in their EDGAR submissions information relating to their 
series and classes (or contracts, in the case of separate accounts) and 
mandating that fidelity bonds filed under section 17(g) \9\ and sales 
literature filed with us under section 24(b) \10\ be

[[Page 65517]]

made by electronic submission on the EDGAR system.\11\ In December 
2006, we adopted amendments to the rules and forms under section 17A of 
the Exchange Act requiring that the forms filed with respect to 
transfer agent registration, annual reporting, and withdrawal from 
registration be filed with the Commission electronically on EDGAR.\12\ 
On February 6, 2008, we adopted amendments to make mandatory the 
electronic submission of Form D on the EDGAR system.\13\
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    \4\ We recently announced the successor to the EDGAR Database. 
The new system is called IDEA, short for Interactive Data Electronic 
Applications, and will at first supplement and then eventually 
replace the EDGAR system. See ``SEC Announces Successor to EDGAR 
Database; ``IDEA'' Will Make Company and Fund Information 
Interactive,'' Press Release No. 2008-179, Aug. 19, 2008.
    \5\ See Rulemaking for EDGAR System, Release No. 33-7855 (Apr. 
27, 2000) [65 FR 24788] (the ``Modernization Adopting Release''). 
See also Release No. 33-7803 (Mar. 3, 2000) [65 FR 11507] 
(``Modernization Proposing Release'').
    \6\ See Mandated EDGAR Filing for Foreign Issuers, Release No. 
33-8099 (May 14, 2002) [67 FR 36678].
    \7\ 15 U.S.C. 78p(a).
    \8\ See Mandated EDGAR Filing and Web Site Posting for Forms 3, 
4 and 5, Release No. 33-8230 (May 7, 2003) [68 FR 25788] (the 
``EDGAR Section 16 Release'').
    \9\ 15 U.S.C. 80a-17(g).
    \10\ 15 U.S.C. 80a-24(b).
    \11\ See Rulemaking for EDGAR System, Release No. 33-8590 (July 
18, 2005) [70 FR 43558 (July 27, 2005)].
    \12\ See Electronic Filing of Transfer Agent Forms, Release No. 
34-54864 (Dec. 4, 2006) [71 FR 74698 (Dec. 12, 2006)].
    \13\ See Electronic Filing and Revisions of Form D, Release No. 
33-8891 (Feb. 6, 2008) [73 FR 10592 (Feb. 27, 2008)].
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    Today, we are amending our rules to require that applicants submit 
electronically on the EDGAR system their applications for orders under 
any section of the Investment Company Act (``applications''). In 
addition, we are adding Regulation E filings to the list of those that 
must be filed electronically through EDGAR. These amendments are 
designed to facilitate the efficient submission of applications and 
Regulation E filings, to enable the public to access them more quickly 
and search them more easily, and to improve the Commission's ability to 
track and process such applications and Regulation E filings. We are 
also making related amendments to Regulation S-T, our electronic filing 
rules, and revising Rule 0-2.

II. Mandatory Electronic Submission of Investment Company Applications

    The rules under Regulation S-T previously provided that 
applications for exemptive relief under any section of the Investment 
Company Act shall not be made in electronic format.\14\ The only 
applications under the Investment Company Act that were mandatory EDGAR 
submissions were applications for deregistration filed by investment 
companies.\15\ Applicants for orders under the Investment Company Act 
can include registered investment companies, affiliated persons of 
registered investment companies, and issuers seeking to avoid 
investment company status, among other entities.\16\ These applications 
were submitted in paper and available only from the Commission's public 
reference room or electronically from private services. Private 
services usually charge fees for electronic copies of applications; 
also, there is a delay of about thirty days between the submission of 
applications to the Commission and their electronic availability from 
the private sources.
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    \14\ Rule 101(a)(1)(iv) and (c)(11) of Regulation S-T [17 CFR 
232.101(a)(1)(iv) and (c)(11)].
    \15\ These include applications and amendments submitted on Form 
N-8F [17 CFR 274.218] (EDGAR submission types N-8F and N-8F/A) and 
those submitted pursuant to Investment Company Act Rule 0-2 [17 CFR 
270.0-2] (EDGAR submission types 40-8F-2 and 40-8F-2/A). See Release 
No. IC-23786 (Apr. 15, 1999) [76 19469 (Apr. 21, 1999)].
    \16\ There are several sections of the Investment Company Act 
pursuant to which entities may make applications for relief. For 
example, Section 6(c) [15 U.S.C. 80a-6(c)] provides the Commission 
with authority to exempt persons, securities or transactions from 
any provision of the Investment Company Act, or the regulations 
thereunder, if and to the extent that such exemption is in the 
public interest and consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the 
Investment Company Act.
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    We are amending certain provisions of Regulation S-T and Investment 
Company Act Rule 0-2 \17\ to require electronic submission on EDGAR of 
applications pursuant to Rule 0-2 under the Investment Company Act. We 
are amending Rule 101(a)(1)(iv) of Regulation S-T to include within its 
mandatory electronic filing provisions any application for an order 
under any section of the Investment Company Act.\18\
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    \17\ Rule 0-2 is the Investment Company Act rule under which 
applications are submitted.
    \18\ See amendment to Rule 101(a)(1)(iv) under Regulation S-T. 
Paragraph (11) of Rule 101(c) provided that filings under Section 
6(c) of the Investment Company Act, i.e., applications for orders, 
be submitted in paper format only. As proposed, we are removing and 
reserving this paragraph.
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    In the Proposing Release, we requested comment on the impact of our 
making the submission of requests for orders under the Investment 
Company Act mandatory electronic submissions and whether we should 
implement this rule. We requested comment on whether it would be 
burdensome for us to require applicants to submit applications 
electronically. We also sought comments as to which applications the 
rule should apply. We asked commenters to address the issue of what the 
transition period should be for investment companies and other 
applicants to prepare for the mandatory electronic submission of these 
applications.
    We requested comment not only on the specific issues that we 
discussed in the Proposing Release, but on any other approaches or 
issues that we should consider in connection with the submission of 
applications for orders and Regulation E filings on the EDGAR system. 
We sought comment from any interested person, including those required 
to file information with us on the EDGAR system, as well as investors, 
disseminators of EDGAR data, EDGAR filing agents, and other members of 
the public who have access to and use information from the EDGAR 
system.
    We asked commenters to provide detailed information on any 
difficulties and considerations unique to these proposed requirements. 
In the event commenters believed that any aspect of the proposed 
requirements would be burdensome, we asked for specific details and 
alternative approaches.
    We received two comment letters in response to our requests for 
comment. Both commenters expressed support for the rulemaking proposal 
to require that all applications be submitted electronically through 
the EDGAR system.\19\ Both commenters expressed views about 
applications that are sent to the staff in draft that have not been 
officially filed. One commenter inquired about applications made under 
both the Investment Company Act and the Investment Advisers Act of 1940 
(``Investment Advisers Act'') \20\ and had certain concerns about 
amendments to Rule 0-2.\21\ We received no comments in connection with 
the portion of our proposal related to Regulation E filings.
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    \19\ In support of the proposal, one commenter stated:
    Like the Commission, the Institute believes that the proposal 
will help to facilitate both the efficient submission of 
applications and the retrieval of those applications by interested 
parties. We also applaud this effort by the Commission to improve 
its ability to track and process exemptive applications, which are 
of vital importance to the fund industry and, ultimately, to fund 
investors.
    See Comment Letter dated Dec. 14, 2007, of Karrie McMillan, 
General Counsel, Investment Company Institute (the ``ICI Comment 
Letter''). See also Comment Letter dated Dec. 14, 2007, of Mercer 
Bullard, Founder and President, Fund Democracy (the ``Fund Democracy 
Comment Letter'').
    \20\ 15 U.S.C. 80b-1 et seq.
    \21\ See ICI Comment Letter.
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    We are adopting these amendments, in light of the primary goals of 
the EDGAR system, to facilitate the rapid dissemination of financial 
and business information in connection with filings, including filings 
by investment companies. Requiring applications to be submitted 
electronically will benefit members of the investing public and the 
financial community by making information contained in these filings 
readily available and more easily searchable. In this age of 
information, we believe that filings and applications made with the 
Commission are more valuable to the public if they are available in 
electronic form and that adding applications to the EDGAR database will 
provide a more complete picture for the investing public. We believe 
that the amendments will benefit the public by making the EDGAR

[[Page 65518]]

page of our Web site a more comprehensive resource for most information 
on file with us related to the operation of investment companies.
    Both of the commenters on the Proposing Release raised the issue of 
applications submitted to the Commission's staff in draft form. One 
commenter strongly believed that ``the Commission staff's willingness 
to consider exemptive applications in draft form and to grant requests 
for confidential treatment, when appropriate, is critical to 
encouraging innovation in the fund industry.'' \22\ The other commenter 
was concerned that the new filing requirement might result in an 
increase of the use of draft applications to the detriment of the 
public interest.\23\
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    \22\ See ICI Comment Letter. In support of its position, the 
commenter stated:
    The development of new investment products and more efficient 
and effective business practices can be a costly and time-consuming 
endeavor for fund sponsors and other applicants. In return for their 
investment of intellectual and financial capital, applicants should 
be rewarded for their innovation and creativity by being the ``first 
to market'' with their new product or practice.
    \23\ Noting this concern, the commenter stated that:
    Permitting applicants to file draft applications is contrary to 
fundamental principles of administrative law and the public 
interest. It also is unfair to other applicants for Commission staff 
to spend time on draft applications while applications that have 
been properly filed are left on hold. In its adopting release, the 
Commission should clarify that the staff will not accept or review 
draft applications, and that concerns regarding the confidentiality 
of proprietary information should be addressed by appropriate 
redactions in a filed request.
    See Fund Democracy Comment Letter.
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    The staff's policy, as first stated in a Commission release in 
1985, is that the staff will not, except in the most extraordinary 
situations, review draft applications.\24\ Consistent with this policy, 
the staff will continue to accept draft applications only in situations 
where the applicant clearly demonstrates the extraordinary 
circumstances that necessitate the submission of a draft 
application.\25\ We believe that this approach continues to strike an 
appropriate balance between encouraging innovation in the fund 
industry, making effective use of staff resources, and serving the 
interests of the public. While it is possible that applicants will seek 
permission to submit more applications as draft applications, as 
discussed above the staff's policy of reviewing draft applications only 
in the most extraordinary situations will not change, and as a result, 
we do not believe that the number of draft applications will increase. 
The new filing requirement will only change the format (from paper to 
electronic) of documents that were and will be publicly available.
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    \24\ See Commission Policy and Guidelines for Filing of 
Applications for Exemption, Investment Company Act Release No. 14492 
(Apr. 30, 1985).
    \25\ See IM Exemptive Application Processing, SEC Office of the 
Inspector General, Audit Report No. 408, Recommendation C (Sept. 29, 
2006).
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    As we noted in the Proposing Release, from time to time, an 
applicant may wish to submit an application for exemption under both 
the Investment Company Act and the Investment Advisers Act.\26\ We did 
not propose to require that applications under the Investment Advisers 
Act be made on EDGAR. We noted that any document that is intended as an 
application for an order under both the Investment Company Act and the 
Investment Advisers Act should be submitted separately under each Act.
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    \26\ See footnote 18 of the Proposing Release.
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    One commenter expressed the view that we should consider 
alternative approaches that would allow a single EDGAR filing for an 
application requesting relief under both Acts.\27\ We note that, to 
date, the EDGAR system has not been a vehicle for the submission of 
Investment Advisers Act filings. Further, based on staff review of the 
contents of all Advisers Act applications submitted to us, we are not 
aware of any within the past ten years that also requested relief from 
Investment Company Act provisions. Therefore, we believe it is not 
cost-effective for us to make the programming changes at this time so 
that EDGAR would accept applications under both Acts, given that 
recently no applications requested relief from both statutes. EDGAR 
will accept applications under the Investment Company Act as proposed.
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    \27\ See ICI Comment Letter.
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    As with other entities that make submissions on EDGAR, applicants 
will be subject to the provisions of Regulation S-T \28\ and the EDGAR 
Filer Manual. Regulation S-T includes detailed rules concerning 
mandatory and permissive electronic EDGAR submissions; it also makes 
clear that requests for confidential treatment must be made in paper 
format.\29\
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    \28\ For a comprehensive discussion of Regulation S-T and 
electronic filing, see ``Electronic Filing and the EDGAR System: A 
Regulatory Overview,'' available on the Information for EDGAR Filers 
page of the Commission's Web site, http://www.sec.gov/info/
edgar.shtml.
    \29\ See Rule 101 of Regulation S-T [17 CFR 232.101].
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    Regulation S-T requires the electronic filing of any amendments and 
related correspondence and supplemental information pertaining to a 
document that is the subject of mandated EDGAR submission.\30\ These 
requirements also apply to companies and persons who submit 
applications.\31\ The requirement to file amendments electronically 
applies to applications filed electronically on EDGAR as well as to 
pending applications initially filed in paper.\32\
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    \30\ Regulation S-T Rule 101(a)(2) [17 CFR 232.101(a)(2)].
    \31\ See amendments to paragraphs (a)(2) and (3) of Rule 101 of 
Regulation S-T. Related correspondence and supplemental information 
are not automatically disseminated publicly through the EDGAR system 
but are immediately available to the Commission staff.
    \32\ This provision dates back to 1993. See text at footnote 83 
of Rulemaking for EDGAR System, Release No. 33-6977 (Feb. 23, 1993) 
[58 FR 14628 (Mar. 18, 1993)] (``Once a filer becomes subject to the 
mandated electronic filing rules, any documents, including 
amendments and supplements to documents previously filed in paper, 
will be required to be filed in electronic format, absent a hardship 
exemption.'').
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    The Regulation also covers such matters as providing for the 
override of formatting requirements applicable to paper 
submissions.\33\ The EDGAR Filer Manual contains detailed technical 
specifications concerning EDGAR submissions. The Manual also provides 
technical guidance concerning how to commence submissions on EDGAR by 
submitting Form ID to obtain a CIK \34\ and confidential access codes 
and how to maintain and update company data, e.g., how to change 
company names and contact information.\35\
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    \33\ The paper formatting requirements continue to be applicable 
to paper submissions made pursuant to temporary and continuing 
hardship exemptions under Rules 201 and 202 of Regulation S-T [17 
CFR 232.201 and 232.202].
    \34\ A filer's CIK (or ``central index key'') is a ten-digit 
number uniquely identifying that filer.
    \35\ We remind filers that, in the case of name changes, the 
changes must be made via the EDGAR filing Web site in advance of the 
change being reflected on an EDGAR submission. The name on past 
submissions will not change. The CIK and file number(s) of the 
company will provide a link to filings under the old name.
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    One technical specification that the EDGAR Filer Manual includes is 
the electronic ``submission type'' for each submission made on EDGAR. 
The EDGAR electronic submission types for applications are designed to 
facilitate and expedite the review of these applications.
    Consistent with our amendments, the EDGAR Filer Manual and the 
EDGARLink software provide for three EDGAR electronic submission types 
for applications: 40-APP, 40-OIP, and 40-6B. Applicants whose 
applications are typically processed by the Division of Investment 
Management's Office of Investment Company Regulation will use EDGAR 
submission type 40-APP; these applicants will submit amendments using 
EDGAR submission

[[Page 65519]]

type 40-APP/A. Applicants whose applications are typically processed by 
the Division's Office of Insurance Products will use the new EDGAR 
submission type 40-OIP; these applicants will submit amendments using 
EDGAR submission type 40-OIP/A. Employees' securities company 
applications (also processed by the Office of Investment Company 
Regulation) will use EDGAR submission type 40-6B and submission type 
40-6B/A for amendments. Applicants that have currently pending 
applications that were submitted in paper and recorded as submission 
type 40-6C will submit amendments to their applications using either 
EDGAR submission type 40-APP/A or 40-OIP/A, as appropriate.
    The EDGAR Filer Manual provides guidance for applicants in choosing 
the correct submission type. Most applicants will submit their 
applications under EDGAR submission type 40-APP, the submission type 
designated for the Office of Investment Company Regulation. Applicants 
submitting the following categories of applications will use EDGAR 
submission type 40-OIP, the submission type for the Office of Insurance 
Products:
    (1) Applications with regard to mixed and shared funding filed 
under section 6(c) of the Investment Company Act, for exemptions from 
the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the 
Investment Company Act,\36\ and Rules 6e-2(b)(15) and 6e-3(T)(b)(15); 
\37\
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    \36\ 15 U.S.C. 80a-9(a), 80a-13(a), 80a-15(a), 80a-15(b).
    \37\ 17 CFR 270.6e-2(b)(15), 270.6e-3(T)(b)(15).
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    (2) Applications relating to the recapture of bonus credits filed 
under section 6(c) of the Investment Company Act for exemptions from 
the provisions of sections 2(a)(32) and 27(i)(2)(A) of the Investment 
Company Act \38\ and Rule 22c-1; \39\
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    \38\ 15 U.S.C. 80a-2(a)(32), 80a-27(i)(2)(A).
    \39\ 17 CFR 270.22c-1.
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    (3) Applications relating to the substitution of securities held by 
a variable insurance separate account filed under section 26(c) of the 
Investment Company Act; \40\ and
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    \40\ 15 U.S.C. 80a-26(c).
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    (4) Applications for approval of the terms of an exchange offer 
involving variable insurance contracts filed under section 11(a) of the 
Investment Company Act.\41\
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    \41\ 15 U.S.C. 80a-11(a).
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    These three submission types are designed to facilitate and 
expedite staff review of the submissions. Our internal system will 
quickly route the application to the appropriate Office. If applicants 
have any questions as to the appropriate EDGAR submission type, we 
encourage them to verify in advance the correct submission type so that 
the application can be routed automatically to the appropriate 
Office.\42\ As proposed, for applications with multiple co-applicants, 
the applicants will submit the application with all co-applicants 
included in one submission. The applicants will choose one applicant to 
list first as the ``primary'' co-applicant. Then, they will include in 
the EDGAR template the information for all other co-applicants, i.e., 
the CIK of each co-applicant and, for amendments, the file number 
assigned to each co-applicant when the original application was filed. 
Applicants can be dropped from or added to an application with each 
amendment submission.\43\
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    \42\ In case of doubt, applicants may call the IM EDGAR Inquiry 
Line (202-551-6989) in the Division of Investment Management for 
assistance.
    \43\ As is the case currently with paper applications, for each 
application, an applicant will receive a unique file number which 
will begin with the prefix ``812,'' or ``813'' in the case of 
applications made by employees'' securities companies. As also is 
currently the case with paper filings, each co-applicant's file 
number will be composed of the primary applicant's file number with 
an appended numerical suffix unique to that co-applicant. Each 
applicant or co-applicant will include this file number, in addition 
to its CIK, in the EDGAR template of all amendments to the 
application, which will also be required electronic submissions.
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    Our internal EDGAR system has been enhanced to allow for the upload 
and public dissemination via the EDGAR system of notices and orders in 
connection with applications. These documents will, of course, still be 
available in the Federal Register. The staff will commence the upload 
and dissemination of notice and orders on the EDGAR system as of the 
effective date of the amendments. The staff will upload and disseminate 
any notice or order issued on or after the effective date, regardless 
of whether the application, or any amendment to it, was submitted in 
paper or on EDGAR.
    We asked commenters to address the issue of what the transition 
period should be for investment companies and other applicants to 
prepare for the mandatory electronic submission of these applications. 
We received no comments in response to this request other than the 
comments regarding draft applications. We believe applicants are 
prepared to submit their applications electronically on EDGAR as soon 
as our amendments become effective.

III. Amendments to Rule 0-2 and to Temporary Hardship Exemption of 
Regulation S-T

    Rule 0-2 requires that every application for an order for which a 
form is not specifically prescribed and which is executed by a 
corporation, partnership or other company and filed with the Commission 
contain a statement of the applicable provisions of the articles of 
incorporation, bylaws or similar documents, relating to the right of 
the person signing and filing such application to take such action on 
behalf of the applicant, and a statement that all such requirements 
have been complied with and that the person signing and filing the 
application is fully authorized to do so. If such authorization is 
dependent on resolutions of stockholders, directors, or other bodies, 
such resolutions must be attached as an exhibit to or quoted in the 
application. Any amendment to the application must contain a similar 
statement as to the applicability of the original statement of 
authorization. When any application or amendment is signed by an agent 
or attorney, Rule 0-2 requires that the power of attorney evidencing 
his authority to sign shall state the basis for the agent's authority 
and shall be filed with the Commission. Every application subject to 
Rule 0-2 must be verified by the person executing the application by 
providing a notarized signature in substantially the form specified in 
the rule. Each application subject to Rule 0-2 must state the reasons 
why the applicant is deemed to be entitled to the action requested, the 
name and address of each applicant, and the name and address of any 
person to whom any questions regarding the application should be 
directed. Rule 0-2 requires that a proposed notice of the proceeding 
initiated by the filing of the application accompany each application 
as an exhibit and, if necessary, be modified to reflect any amendment 
to the application.
    We proposed three amendments to Rule 0-2 governing the form of 
applications under the Investment Company Act and requested comment on 
these proposed amendments. The commenters supported the proposed 
amendments to Rule 0-2, and we are adopting these amendments as 
proposed. First, we are eliminating the requirement to have 
verifications of applications and statements of facts made in 
connection with applications notarized.\44\ We believe that this 
requirement is unnecessary in the

[[Page 65520]]

context of an electronic filing.\45\ Second, we are eliminating the 
requirement that applicants include draft notices as exhibits to 
applications.\46\ The staff has found these exhibits to be of limited 
value because the staff prefers to draft its own notices of 
applications. Finally, we are amending Rule 0-2 to remove the last 
sentence of paragraph (b),\47\ which was added in the initial EDGAR 
rulemaking and is inconsistent with mandatory electronic submission of 
applications on EDGAR.\48\
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    \44\ See Rule 0-2(d).
    \45\ Regulation S-T requires that each signatory to an 
electronic filing manually sign a signature page or other document 
authenticating, acknowledging or otherwise adopting his or her 
signature that appears in typed form in the electronic filing. This 
document must be executed before or at the time the electronic 
filing is made, must be retained by the filer for a period of five 
years, and must be made available to the Commission upon request. 
See Rule 302(b) of Regulation S-T [17 CFR 232.302(b)]. We believe 
that this requirement provides sufficient assurance of the 
legitimacy of signatures contained in the electronic filings so that 
notarization is unnecessary.
    \46\ See Rule 0-2(g).
    \47\ The last sentence of Rule 0-2(b) read as follows: ``Every 
application for an order under any provision of the Act and every 
amendment to such application shall be submitted to the Commission 
in paper only, whether or not the applicant is otherwise required to 
file in electronic format, unless instructions for electronic filing 
are included on the form, if any, prescribed for such application.''
    \48\ See Rulemaking for EDGAR System--Investment Companies and 
Institutional Investment Managers, Release No. 33-6978 (Feb. 23, 
1993) [58 FR 14848 (Mar. 18, 1993)].
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    One commenter suggested that we further amend Rule 0-2 by 
eliminating from paragraph (c)(1) the requirement that a copy of any 
board resolution authorizing the actions of the person signing and 
filing the application be included as an exhibit to the application 
(or, alternatively, that the pertinent provisions of such resolution be 
quoted in the application).\49\
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    \49\ See ICI Comment Letter. The commenter also noted:
    In our view, this requirement is unnecessary because the person 
signing the application is required to attest to such resolutions in 
the verification required by paragraph (d) of the rule. We further 
note that board resolutions do not have to be submitted with other 
types of filings with the Commission, such as fund registration 
statements and proxy statements, nor are we aware of any history of 
abuse that would suggest this requirement must be maintained.
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    Because this suggestion goes beyond the scope of our proposal, we 
are not adopting the recommendation at this time. We may consider this 
recommendation in the future.
    We proposed and are adopting an amendment to Rule 201 of Regulation 
S-T. Rules 201 and 202 \50\ of Regulation S-T address hardship 
exemptions from EDGAR filing requirements, and Rule 13(b) of Regulation 
S-T \51\ addresses the related issue of filing date adjustments.
---------------------------------------------------------------------------

    \50\ 17 CFR 232.202.
    \51\ 17 CFR 232.13(b).
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    A filer may obtain a temporary hardship exemption under Rule 201 if 
it experiences unanticipated technical difficulties that prevent the 
timely preparation and submission of an electronic filing by filing a 
properly legended paper copy \52\ of the filing under cover of Form 
TH.\53\ This process is self-executing. A filer who files in paper 
under the temporary hardship exemption must submit an electronic format 
copy of the filed paper document within six business days of the filing 
of the paper format document.\54\
---------------------------------------------------------------------------

    \52\ See 17 CFR 232.201(a).
    \53\ 17 CFR 239.65, 249.447, 269.10, and 274.404.
    \54\ See 17 CFR 232.201(b).
---------------------------------------------------------------------------

    A filer may apply for a continuing hardship exemption under Rule 
202 if it cannot file all or part of a filing without undue burden or 
expense.\55\ In contrast to the self-executing temporary hardship 
exemption process, a filer can obtain a continuing hardship exemption 
only by submitting a written application, upon which the Commission, or 
Commission staff pursuant to delegated authority, may then act.
---------------------------------------------------------------------------

    \55\ See 17 CFR 232.202(a).
---------------------------------------------------------------------------

    We proposed making the temporary hardship exemption unavailable for 
submission of applications under the Investment Company Act, since 
there is generally no submission exigency or submission deadline 
associated with these submissions. We asked for comments on this 
proposed amendment. We received one comment questioning whether, if 
this provision were adopted, the staff would work with applicants that 
need additional time to file amendments, to prevent applications from 
being placed in an inactive status.\56\ As has been the practice in the 
past, the staff will continue to work with applicants experiencing 
unanticipated technical or other difficulties to establish appropriate 
timeframes for the submission of amendments and ensure the timely 
processing of all applications.
---------------------------------------------------------------------------

    \56\ See ICI Comment Letter. The staff typically places 
applications in an inactive status if the applicant does not respond 
to staff comments within sixty days of receiving the comments, such 
as by filing an amendment.
---------------------------------------------------------------------------

    We are amending Rule 201(a) of Regulation S-T as proposed to make 
the temporary hardship exemption unavailable for submission of 
applications under the Investment Company Act.\57\ We restate our 
belief that there is generally no submission exigency or submission 
deadline associated with these submissions. An applicant will continue 
to have the ability to apply for a continuing hardship exemption under 
Rule 202 if it cannot submit all or part of an application without 
undue burden or expense. Also, while we expect the circumstances to be 
rare, the staff could use its delegated authority to grant a filing 
date adjustment pursuant to Rule 13(b) of Regulation S-T [17 CFR 
232.13(b)]. While we do not expect an applicant to need a filing date 
adjustment in the context of an application, it will be available in 
the unlikely event it is needed. And, as stated above, the staff will 
continue to work with applicants experiencing unanticipated 
difficulties.
---------------------------------------------------------------------------

    \57\ See amendment to Rule 201(a) of Regulation S-T. As we noted 
in the Proposing Release, we have previously made unavailable the 
ability for filers to use the temporary hardship exemption for EDGAR 
submissions of beneficial ownership reports filed by officers, 
directors and principal security holders under Section 16(a) of the 
Exchange Act [15 U.S.C. 78p(a)]. See Mandated EDGAR Filing and Web 
Site Posting for Forms 3, 4 and 5, Release No. 33-8230 (May 7, 2003) 
[68 FR 25788].
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IV. Amendments To Mandate That Certain Filings of Small Business 
Investment Companies and Business Development Companies Be Made 
Electronically

    Regulation E \58\ provides for the exemption from registration of 
securities issued by small business investment companies registered 
under the Investment Company Act and business development companies 
regulated under the Investment Company Act, subject to the terms and 
conditions of the regulation. Rule 604 \59\ of Regulation E requires 
the filing of notification on Form 1-E \60\ of sales of securities 
under Regulation E. Rule 607 \61\ of Regulation E requires the filing 
of sales material used in connection with the offering. Rule 609 \62\ 
of Regulation E requires the filing of reports of sales on Form 2-
E.\63\
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    \58\ 17 CFR 230.601 to 230.610a.
    \59\ 17 CFR 230.604.
    \60\ 17 CFR 239.200.
    \61\ 17 CFR 230.607.
    \62\ 17 CFR 230.609.
    \63\ 17 CFR 239.201.
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    We proposed that Regulation E filings be mandatory electronic 
filings on the EDGAR system. Regulation E filers make most of their 
filings electronically on the EDGAR system. Since these filers are 
already EDGAR filers and most will have available electronic copies of 
their Form 1-E (and any related sales material) \64\ and Form 2-E, we 
believe that making these filings electronically

[[Page 65521]]

on EDGAR will impose very little burden or cost on these companies. We 
requested but received no comment on this proposal. We are adopting the 
amendments as proposed, making these filings mandatory electronic 
submissions.\65\
---------------------------------------------------------------------------

    \64\ Requiring electronic filing on EDGAR of Rule 607 sales 
literature is consistent with the requirement to file electronically 
on EDGAR omitting prospectuses under Rule 482 of the Securities Act 
of 1933 (the ``Securities Act'') (referred to as ``482 ads'') and 
sales literature under Section 24(b) of the Investment Company Act.
    \65\ See amendments to paragraphs (a)(1)(v) and (c)(6) of Rule 
101 of Regulation S-T.
---------------------------------------------------------------------------

V. Effective Date

    Beginning on January 1, 2009, applications for orders under the 
Investment Company Act and Regulation E filings will become mandatory 
electronic submissions on the EDGAR system. This effective date will 
provide time for filers to prepare for the mandatory requirements. 
Also, since the effective date will be the start of a calendar year, 
the public will have a clear reference point for determining whether 
any particular application or Regulation E filing has been submitted 
either in paper or electronically.

VI. Cost-Benefit Analysis

    We are sensitive to the costs and burdens of our rules. The rules 
we are adopting today reflect the addition of applications under the 
Investment Company Act as mandatory electronic submissions on EDGAR. In 
addition, they amend Rule 0-2 and make unavailable to applicants 
Regulation S-T's provision for temporary hardship exemptions. They also 
add Regulation E filings to the list of those that must be filed 
electronically through EDGAR.

A. Expected Benefits

    We expect that the addition of applications under the Investment 
Company Act as mandatory electronic submissions on EDGAR will result in 
considerable benefits to the securities markets, investors, and other 
members of the public, by expanding the accessibility of information, 
and increasing the types of information, filed and made available for 
public review through the EDGAR system. The primary goal of the EDGAR 
system since its inception has been to facilitate the rapid 
dissemination of financial and business information in connection with 
filings, including filings by investment companies. The amendments will 
benefit investors, financial analysts and others by increasing the 
efficiency of retrieving and disseminating these applications. The 
mandated electronic transmission of these documents will enable the 
public to access them more quickly and search them more easily. Instead 
of having to come in person or through an agent to the Commission's 
public reference room to conduct a search for a particular submission 
that is in paper or microfiche, the public will be able to find and 
review the application on any computer with an Internet connection by 
accessing the EDGAR system through the Commission's Web site or through 
a third party Web site that links to EDGAR. We received one comment 
stating the belief that it is unlikely that investors would choose to 
access and review exemptive applications available via EDGAR.\66\ We 
believe that these documents should be publicly available via EDGAR for 
any investors who do choose to access and review them.
---------------------------------------------------------------------------

    \66\ See ICI Comment Letter at footnote 7.
---------------------------------------------------------------------------

    The amendments will benefit the public by making the EDGAR page of 
our Web site a more comprehensive resource for most information on file 
with us related to the operation of investment companies. A further 
benefit will be to ensure that all applications are available to the 
public free of charge on our Web site without the cost of paying a 
third party for a copy.
    Persons who may consider requesting a hearing on an application on 
the basis of a notice will be able to more easily obtain the actual 
application so that they can better evaluate the issues raised by the 
application. We believe this will be a significant improvement in the 
applications process.
    We also expect that applicants will benefit from the increased 
efficiencies in the filing process for these submissions resulting from 
the amendments. By electronically transmitting these documents directly 
to the Commission, applicants will avoid the uncertainties and delays 
that can occur with the manual delivery of paper documents; we believe 
that it will be a simpler and more efficient means to submit 
applications. Applicants also will benefit from no longer having to 
submit multiple copies of paper documents to the Commission.
    Because the Commission's staff will be able to retrieve and analyze 
information contained in these submissions more readily than under our 
current paper system, mandated electronic submission of these documents 
should facilitate the staff's retrieval and review of a particular 
document. Applicants and investors should benefit from increased 
efficiencies in the Commission's storage, retrieval, and analysis of 
these submissions which should result from the amendments.
    We believe the amendments to Rule 0-2 will benefit applicants. 
Removing the notarization requirement will remove a requirement from 
filers that is unnecessary for electronic filings, and removing the 
requirement to include a draft notice as an exhibit will result in a 
cost-savings to applicants. And, we believe that making unavailable to 
applicants Regulation S-T's Rule 201 provision for temporary hardship 
exemptions will benefit applicants because applicants will not bear the 
cost of both submitting an application in paper and in electronic form 
as a confirming copy within six business days as required by the 
temporary hardship exemption rule. This is true in light of the fact 
that there is no deadline for the submission of an application.
    We also expect that the addition of Regulation E filings as 
mandatory electronic submissions on EDGAR will result in benefits to 
the securities markets, investors, and other members of the public, by 
expanding the accessibility of information, and increasing the types of 
information, filed and made available for public review through the 
EDGAR system. Requiring these Regulation E filings to be submitted on 
EDGAR will benefit members of the investing public and the financial 
community by making information contained in these Commission filings 
more easily searchable and readily available to them. The amendments 
will result in the benefit to the public of the EDGAR page of our Web 
site being a comprehensive source from which to find filings of small 
business investment companies and business development companies.
    We also expect that Regulation E filers will benefit from the 
amendments by increased efficiencies in the filing process for these 
submissions. By electronically transmitting these documents directly to 
the Commission, these filers will avoid the uncertainties and delays 
that can occur with the manual delivery of paper documents; we believe 
that it will be a simpler and more efficient means to submit these 
Regulation E filings. Regulation E filers also will benefit from no 
longer having to submit multiple copies of paper documents to the 
Commission.
    The amendments will benefit investors, financial analysts and 
others by increasing the efficiency of retrieving and disseminating 
these filings. The mandated electronic transmission of these documents 
will enable the public to access them more quickly. Instead of having 
to come in person or through an agent to the Commission's public 
reference room to conduct a search for a particular submission that is 
in paper or microfiche, the public will be able to find and review the 
filing on any computer with an Internet connection

[[Page 65522]]

by accessing the EDGAR system through the Commission's Web site or 
through a third party Web site that links to EDGAR. The amendments will 
also enable financial analysts and others to retrieve, analyze and 
disseminate more rapidly this information.
    An investor will be able to more efficiently gather information of 
interest about Regulation E filers. Also, Regulation E filers and 
investors should benefit from the amendments by increased efficiencies 
in the Commission's storage, retrieval, and analysis of these 
submissions. Mandated EDGAR submission of these documents will result 
in their addition to the Commission's central electronic repository of 
filings that is free to anyone who has access to a computer linked to 
the Internet. Because the Commission's staff will be able to retrieve 
and analyze information contained in these Regulation E submissions 
more readily than under our current paper system, mandated electronic 
submission of these documents should facilitate the staff's retrieval 
and review of a particular document.
    In the Paperwork Reduction Act section we estimate that, the 
amendments to Rule 0-2 will reduce the total burden by approximately 
$52,550 annually.

B. Expected Costs

    We expect that the amendments will result in some initial and 
ongoing costs to applicants. We also expect, however, that many 
applicants will not bear the full range of costs that will result from 
the amendments for the reasons described below. Initial costs are those 
associated with filing a Form ID in order to obtain the access codes 
needed to submit an application electronically and otherwise preparing 
to make an application submission.\67\ In order to file a Form ID, an 
applicant will need to learn the related electronic filing 
requirements, obtain access to a computer and the Internet, use the 
computer to access the Commission's EDGAR Filer Management Web site, 
respond to Form ID's information requirements and fax to the Commission 
a notarized authenticating document.
---------------------------------------------------------------------------

    \67\ Applicants that already have EDGAR access codes will not 
need to file a Form ID. As further discussed in Part IX, however, we 
assume that a small number of applicants per year will not already 
have the codes.
---------------------------------------------------------------------------

    Ongoing costs are those associated with maintaining the framework 
developed through the initial costs (for example, updating information 
required by Form ID) and additional costs arising from each subsequent 
submission of an application.
    We expect that the vast majority of applicants will need to incur 
few, if any, additional costs related to obtaining computer and 
Internet access. We believe that the vast majority of applicants 
already will have access to a computer and the Internet.\68\
---------------------------------------------------------------------------

    \68\ An applicant that did not already own a computer with 
Internet access could, for example, go to a public library to use 
its computer and obtain Internet access.
---------------------------------------------------------------------------

    We expect no additional costs to applicants from amendments to Rule 
0-2. We requested but received no comment on whether our amendments to 
Rule 0-2 to remove the current requirements for notarization and 
provision of a draft notice as an exhibit will result in any additional 
costs, although the two commenters supported these proposals. We expect 
no additional costs to applicants from our amendment to make 
unavailable to applicants Regulation S-T's Rule 201 provision for 
temporary hardship exemption. An applicant will still be able to 
request a continuing hardship exemption under Regulation S-T Rule 202 
under appropriate circumstances.
    We believe that mandatory EDGAR submission of Regulation E filings 
will result in minimal cost to these filers. For the following reasons, 
we also expect that Regulation E filers will not bear the full range of 
costs frequently associated with new electronic filing requirements. 
Initial costs are those associated with the purchase of compatible 
computer equipment and software, including EDGAR software if obtained 
from a third-party vendor and not from the Commission's Web site. 
Initial costs also include those resulting from the training of 
existing employees to be EDGAR proficient or the hiring of additional 
employees or agents that are already skilled in EDGAR processing. 
Initial costs further include those associated with the formatting and 
transmission of an applicant's first document submitted on EDGAR. These 
transmission costs may include those related to subscribing to an 
Internet service provider. Regulation E filers already file on EDGAR 
and will have minimal or no initial costs.
    Ongoing costs are those associated with the electronic formatting 
and transmission of subsequent EDGAR filings. Regulation E filers may 
also incur future costs resulting from the training or hiring of 
employees regarding updated EDGAR filing requirements. The magnitude of 
these costs will depend on the filers' levels of technological 
proficiency and their previous familiarity with EDGAR filing 
requirements. Regulation E filers will incur the ongoing costs 
associated with formatting and transmitting their subsequent EDGAR 
filings. Consequently, the mandated EDGAR requirements should result 
only in costs related primarily to the electronic formatting of these 
documents in a format compatible with EDGAR, and transmission of the 
EDGAR formatted documents to the Commission. In any event, we believe 
that any costs for transmission, formatting, and education will be 
comparable to savings from not having to incur similar costs related to 
paper submissions.

VII. Burden on Competition; Promotion of Efficiency, Competition, and 
Capital Formation

    Section 23(a)(2) of the Exchange Act requires us, in adopting rules 
under the Exchange Act, to consider the anti-competitive effects of any 
rules that we adopt thereunder. Furthermore, section 2(b) of the 
Securities Act,\69\ section 3(f) of the Exchange Act,\70\ and section 
2(c) \71\ of the Investment Company Act require us, when engaging in 
rulemaking, and considering or determining whether an action is 
necessary or appropriate in the public interest, to consider whether 
the action will promote efficiency, competition, and capital formation. 
We requested comment on whether the amendments, if adopted, will burden 
competition and whether they will promote efficiency, competition, and 
capital formation. We encouraged commenters to provide empirical data 
or other facts to support their views. We received no comments in 
response.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 77b(b).
    \70\ 15 U.S.C. 78c(f).
    \71\ 15 U.S.C. 80a-2(c).
---------------------------------------------------------------------------

    The amendments regarding mandated electronic filing of applications 
and the related amendments to Rule 0-2 and Regulation S-T's Rule 201 
are intended to simplify the requirements for submitting applications 
and facilitate more efficient transmission, analysis, storage and 
retrieval of information. We believe this will improve the 
accessibility and usefulness of information available to all applicants 
and the public, including those wishing to request a hearing on an 
application. It may make the investment products offered by applicants 
more competitive, since all applicants will have ready access to the 
applications of others. We believe the amendments will also improve the 
accessibility of information available to the public and investors 
about the operation of investment

[[Page 65523]]

companies. We believe the amendments will not impose a burden on 
competition and will not have an adverse impact on capital formation.
    The amendments regarding mandated electronic filings under 
Regulation E by small business investment companies and business 
development companies are intended to facilitate more efficient 
transmission, analysis, storage and retrieval of information. We 
believe this will improve the accessibility and usefulness of 
information available for use by filers, investors, and the public. It 
may make the investment products offered by filers more competitive, 
since all filers will have immediate on-line access to Regulation E 
filings of their competitors. We believe that the amendments will also 
improve the accessibility of information available to the public about 
the operation of small business investment companies and business 
development companies and thereby improve investors' ability to make 
informed investment decisions. We believe the amendments will not 
impose a burden on competition and will not have an adverse impact on 
capital formation.

VIII. Final Regulatory Flexibility Act Analysis

    This Final Regulatory Flexibility Act Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to our amendments adding 
applications for orders under the Investment Company Act to the list of 
submissions that must be made electronically, amendments to amend Rule 
0-2 and make unavailable to applicants the provision for temporary 
hardship exemptions in Rule 201 of Regulation S-T, and amendments 
adding Regulation E filings to the list of those that must be filed 
electronically through EDGAR.

A. Need for the Rule Amendments

    The amendments will require applications for orders under any 
section of the Investment Company Act to be submitted electronically on 
EDGAR. The amendments to Rule 0-2 remove the requirements for 
notarization and provision of a draft notice, and the amendments to 
Rule 201 of Regulation S-T make applications ineligible for temporary 
hardship exemptions. We make these amendments because the absence of an 
electronic system for submitting applications for orders in the past 
limited the usefulness of the information collected and to reduce the 
burdens of submitting applications.
    The amendments add Regulation E filings made by small business 
investment companies and business development companies to the list of 
those that must be filed electronically through EDGAR. We also make 
these amendments because the absence of an electronic system for 
submitting Regulation E filings in the past limited the usefulness of 
the information collected.

B. Significant Issues Raised by Public Comment

    In the Initial Regulatory Flexibility Act Analysis (``IRFA'') for 
the proposed amendments, we encouraged the submission of written 
comments with respect to any aspect of the IRFA. We requested 
specifically comment on the number of small entities that will be 
affected by the amendments and the likely impact on small entities. We 
asked commenters to describe the nature of any impact and provide 
empirical data supporting the extent of the impact. We received no 
comments with respect to this section of the proposal.

C. Small Entities Subject to the Rule

    For purposes of the Regulatory Flexibility Act, an investment 
company is a small entity if it, together with other investment 
companies in the same group of related investment companies, has net 
assets of $50 million or less as of the end of its most recent fiscal 
year.\72\ Approximately 159 registered investment companies meet this 
definition.\73\ Approximately 38 business development companies may be 
considered small entities.\74\ We estimate that few, if any, separate 
accounts registered on Form N-3, N-4, or N-6 are small entities.\75\
---------------------------------------------------------------------------

    \72\ Rule 0-10(a) under the Investment Company Act [17 CFR 
240.0-10(a)].
    \73\ The estimated number of reporting investment companies that 
may be considered small entities is based on December 2007 data from 
the Commission's EDGAR database and a third-party data provider.
    \74\ This estimate is based on analysis by the Division of 
Investment Management staff of information from databases compiled 
by third-party information providers.
    \75\ This estimate is based on figures compiled by the Division 
of Investment Management staff regarding separate accounts 
registered on Forms N-3, N-4, and N-6. In determining whether an 
insurance company separate account is a small entity for purposes of 
the Regulatory Flexibility Act, the assets of insurance company 
separate accounts are aggregated with the assets of their sponsoring 
insurance companies. Rule 0-10(b) under the Investment Company Act 
[17 CFR 270.0-10(b)].
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    The amendments require applicants to submit requests for orders and 
small business investment companies and business development companies 
to submit Regulation E filings electronically on the EDGAR system. The 
Commission estimates some one-time formatting and ongoing burdens that 
will be imposed on all applicants and Regulation E filers, including 
those that are small entities. We note, however, that all Regulations E 
filers and most applicants currently make other filings on EDGAR. 
Furthermore, we believe that non-investment company applicants will 
have no greater burden than that of those filers of Section 16 reports 
or Schedules 13D and 13G \76\ who will not otherwise make EDGAR filings 
and that the electronic submission should create only a de minimis 
burden.
---------------------------------------------------------------------------

    \76\ 17 CFR 240.13d-101 and 240.13d-102.
---------------------------------------------------------------------------

    There will be no change in reporting or recordkeeping requirements. 
The amendments to Rule 0-2 reduce compliance requirements to the extent 
that they will remove the requirements for notarization of the 
application and provision of a draft notice with the application.
    We solicited comment on the effect the amendments would have on 
small entities. We received no comments in response.

E. Agency Action To Minimize Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that will accomplish our stated objectives, while 
minimizing any significant adverse impact on small entities. In 
connection with the amendments, the Commission considered the following 
alternatives: (i) The establishment of differing compliance or 
reporting requirements or timetables that take into account the 
resources available to small entities; (ii) the clarification, 
consolidation, or simplification of compliance and reporting 
requirements under the amendments for small entities; (iii) the use of 
performance rather than design standards; and (iv) an exemption from 
coverage of the amendments, or any part thereof, for small entities.
    The Commission believes at the present time that special compliance 
or reporting requirements for small entities, or an exemption from 
coverage for small entities, is not appropriate or consistent with 
investor protection. Different requirements for applicants or 
Regulation E filers that are small entities could make it more 
difficult for the public to locate Commission filings and disclosure 
documents for these applicants. We believe it is important that the 
benefits resulting from the amendments be provided to the public

[[Page 65524]]

for all applications and Regulation E filings, not just for 
applications and Regulation E filings for entities that are not 
considered small entities.
    We have endeavored throughout the amendments to minimize the 
regulatory burden on all applicants and Regulation E filers, including 
small entities, while meeting our regulatory objectives. Small entities 
should benefit from the Commission's reasoned approach to the 
amendments to the same degree as others. The Commission believes that 
further clarification, consolidation, or simplification of the 
amendments for those that are small entities would be inconsistent with 
the Commission's concern for investor protection. Further 
clarification, consolidation, or simplification of the amendments for 
those that are small entities would result in less information 
available about them. Similarly, we conclude that using performance 
rather than design standards would not be consistent with our statutory 
mandate of investor protection. We believe that the standard provided 
in the amendments (EDGAR filing) is already sufficiently clear and 
appropriately simple. A major goal of making these mandatory EDGAR 
submissions is a more complete and searchable EDGAR database of 
filings; we do not believe that there is a comparable performance 
standard that will achieve this goal.

IX. Paperwork Reduction Act

    The rule amendments contain ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 1995 
(``PRA'').\77\ We submitted the collections of information to the 
Office of Management and Budget (``OMB'') for review in accordance with 
44 U.S.C. 3507(d) and 5 CFR 1320.11. 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.
---------------------------------------------------------------------------

    \77\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

A. Rule 0-2

    The title for the collection of information is ``General 
Requirements of Papers and Applications.'' OMB approved this collection 
of information under control number 3235-0636 (expiring on February 28, 
2011). Provision of information under the rule is necessary to obtain a 
benefit. The information is not kept confidential. Respondents to the 
collection are applying for orders of the Commission under the 
Investment Company Act. The Commission uses the information required by 
Rule 0-2 to decide whether the applicant should be deemed to be 
entitled to the action requested by the application. The amendments to 
Rule 0-2 eliminate the requirement to have verifications of 
applications and statements of facts made in connection with 
applications notarized \78\ and eliminate the requirement that 
applicants include draft notices as exhibits to applications.\79\
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    \78\ See Rule 0-2(d).
    \79\ See Rule 0-2(g).
---------------------------------------------------------------------------

Burden Estimate for Rule 0-2
    Applicants file applications as they deem necessary. The Commission 
receives approximately 125 applications per year under the Investment 
Company Act. Although each application typically is submitted on behalf 
of multiple entities, the entities in the vast majority of cases are 
related companies and are treated as a single applicant for purposes of 
this analysis.
    Much of the work of preparing an application is performed by 
outside counsel. The cost outside counsel charges applicants depends on 
the complexity of the issues covered by the application and the time 
required for preparation. Based on conversations with applicants and 
attorneys, the cost ranges from approximately $7,000 for preparing a 
well-precedented, routine application to approximately $80,000 to 
prepare a complex and/or novel application. We estimate that the 
Commission receives 20 of the most time-consuming applications 
annually, 80 applications of medium difficulty, and 25 of the least 
difficult applications. This distribution gives a total estimated 
annual cost burden to applicants of filing all applications of 
$5,255,000 [(20 x $80,000) + (80 x $43,500) + (25 x $7,000)].
    In addition, based on conversations with applicants, we estimate 
that in-house counsel spend from ten to fifty hours helping to draft 
and review an application. We estimate a total annual hour burden to 
all respondents of 3,650 hours (50 hours x 20 applications) + (30 hours 
x 80 applications) + (10 hours x 25 applications).
    We have decreased the burden associated with the existing 
collection of information for Rule 0-2 to reflect the amendments. The 
amendments to Rule 0-2 eliminate the requirement to have verifications 
of applications and statements of facts made in connection with 
applications notarized. The notary service was provided by a secretary 
or similar administrative employee of the applicant or the outside 
counsel preparing the application and represented a negligible cost or 
hour burden to the applicant, so elimination of the notarization 
requirement will not be likely to decrease the burden measurably.
    The amendments also eliminate the requirement that applicants 
include proposed notices as exhibits to applications. A proposed notice 
is merely a summary of the statements in the application. We estimate 
that preparation of the proposed notice by outside counsel represents 
approximately 1% of the cost of preparing an application. Elimination 
of this requirement will reduce the estimated cost burden by 
approximately $52,550 (1% of $5,255,000). The amendments will not 
change the hour burden.
    We estimate the total reduction in the burden will be approximately 
$52,550.

B. Regulation S-T

    The title for the collection of information is ``General Rules and 
Regulations for Electronic Filing.'' (OMB Control No. 3235-0424, 
expiring on September 30, 2008). The purpose of Regulation S-T is to 
implement the Commission's EDGAR system. The EDGAR system enables the 
Commission to receive, store, process and disseminate information filed 
with the Commission under the provisions of the federal securities 
laws. The Commission's forms and rules require filings that make 
information available to the investing public and that permit the 
Commission to verify compliance with the federal securities laws. 
Electronic filing improves the availability to the public and to the 
Commission of information filed with the Commission. Regulation S-T 
specifies the requirements that govern the electronic submission of 
documents to the Commission. Provision of the information required by 
the Regulation is mandatory. Responses are not kept confidential.
Burden Estimate for Regulation S-T
    The amendments to Regulation S-T revise Rule 101 under Regulation 
S-T to require electronic filing of applications for orders of the 
Commission under the Investment Company Act and of forms required by 
Regulation E under the Securities Act of 1933. The burden associated 
with the filing of applications under Rule 0-2 is reflected in the 
collection of information entitled ``General Requirements of Papers and 
Applications.'' We are not amending Regulation E. The burden associated 
with the filing of documents required by Regulation E is reflected in 
the collections of information required by

[[Page 65525]]

Regulation E, and will not change as a result of the amendments to 
Regulation S-T. We are also amending Rule 201 under Regulation S-T, 
which governs temporary hardship exemptions from electronic filing. 
Rule 201 is part of Regulation S-T and does not impose any burden on 
respondents separate from Regulation S-T. The amendments to Rule 201 
will not change the burden of Regulation S-T. The Paperwork Reduction 
Act requires that we obtain OMB approval for a collection of 
information, whether the collection has a burden or not. Regulation S-T 
is a collection of information with no burden to respondents. OMB 
requires us to assign a burden of one hour to Regulation S-T and to 
indicate that the Regulation has one respondent so the automated OMB 
system will be able to handle approval of the Regulation. OMB has 
already approved a burden of one hour for one respondent to the 
Regulation.

C. Form ID

    The Commission estimates that each year a small number of 
applicants for orders under the Investment Company Act will need to 
file a Form ID (OMB Control Number 3235-0328, expiring April 30, 2009) 
with the Commission in order to gain access to EDGAR. Form ID is used 
to request the assignment of access codes to file on EDGAR. Most 
applicants will not need to file a Form ID because any applicant that 
has made at least one filing with the Commission since 2002 has been 
entered into the EDGAR system by the Commission and will not need to 
file Form ID to file electronically on EDGAR. However, applicants that 
have never made a filing with the Commission will need to file Form ID.
    The Commission estimates that it will receive approximately 10 
Forms ID a year under the amendments. Because the actual number of 
Forms ID the Commission receives each year is less than the current 
estimate, we are not revising the estimated number of respondents that 
file a Form ID.
    We received no comments on the PRA section of the proposal.

X. Statutory Basis

    We adopt the rule amendments outlined above under sections 6, 7, 8, 
10 and 19(a) of the Securities Act [15 U.S.C. 77f, 77g, 77h, 77j, and 
77s(a)], sections 3, 12, 13, 14, 15(d), 23(a) and 35A of the Exchange 
Act [15 U.S.C. 78c, 78l, 78m, 78n, 78o(d), 78w(a), and 78ll], and 
sections 8, 30, 31 and 38 of the Investment Company Act [15 U.S.C. 80a-
8, 80a-29, 80a-30, and 80a-37].

List of Subjects

17 CFR Part 232

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 270

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

Text of the Rule Amendments

0
In accordance with the foregoing, the Commission amends Title 17, 
Chapter II of the Code of Federal Regulations as follows.

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

0
1. The authority citation for part 232 continues to read, in part, as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a), 
78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll (d), 80a-8, 80a-29, 80a-
30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *

0
2. Section 232.101 is amended by:
0
a. Revising paragraphs (a)(1)(iv) and (v), the introductory text of 
paragraph (a)(2), paragraph (a)(2)(i), the first sentence of paragraph 
(a)(3);
0
b. Removing ``and Regulation E (Sec. Sec.  230.601-230.610a of this 
chapter)'' from paragraph (c)(6); and
0
c. Removing and reserving paragraph (c)(11).
    The revisions read as follows:

Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (iv) Documents filed with the Commission pursuant to sections 8, 
17, 20, 23(c), 24(b), 24(e), 24(f), and 30 of the Investment Company 
Act (15 U.S.C. 80a-8, 80a-17, 80a-20, 80a-23(c), 80a-24(b), 80a-24(e), 
80a-24(f), and 80a-29) and any application for an order under any 
section of the Investment Company Act (15 U.S. C. 80a-1 et seq.);
    (v) Documents relating to offerings exempt from registration under 
the Securities Act filed with the Commission pursuant to Regulation E 
(Sec. Sec.  230.601-230.610a of this chapter);
* * * * *
    (2) The following amendments to filings and applications, including 
any related correspondence and supplemental information except as 
otherwise provided, shall be submitted as follows:
    (i) Any amendment to a filing or application submitted by or 
relating to a registrant or an applicant that is required to file 
electronically, including any amendment to a paper filing or 
application, shall be submitted in electronic format;
* * * * *
    (3) Supplemental information, including documents related to 
applications under any section of the Investment Company Act, shall be 
submitted in electronic format except as provided in paragraph (c)(2) 
of this section. * * *
* * * * *

0
3. Amend Sec.  232.201 by revising paragraph (a) introductory text to 
read as follows:

Sec.  232.201  Temporary hardship exemption.

    (a) If an electronic filer experiences unanticipated technical 
difficulties preventing the timely preparation and submission of an 
electronic filing other than a Form 3 (Sec.  249.103 of this chapter), 
a Form 4 (Sec.  249.104 of this chapter), a Form 5 (Sec.  249.105 of 
this chapter), a Form ID (Sec. Sec.  239.63, 249.446, 269.7 and 274.402 
of this chapter), a Form TA-1 (Sec.  249.100 of this chapter), a Form 
TA-2 (Sec.  249.102 of this chapter), a Form TA-W (Sec.  249.101 of 
this chapter), a Form D (Sec.  239.500 of this chapter), or an 
application for an order under any section of the Investment Company 
Act (15 U.S.C. 80a-1 et seq.), the electronic filer may file the 
subject filing, under cover of Form TH (Sec. Sec.  239.65, 249.447, 
269.10 and 274.404 of this chapter), in paper format no later than one 
business day after the date on which the filing was to be made.
* * * * *

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

0
4. The authority citation for Part 270 continues to read in part as 
follows:

    Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, and 80a-
39, unless otherwise noted.
* * * * *

0
5. Amend Sec.  270.0-2 by:
0
a. Removing the last sentence in paragraph (b):
0
b. Revising paragraph (d);
0
c. Removing paragraph (g);
0
d. Redesignating paragraph (h) as paragraph (g); and
0
e. Removing the authority citation following the section.
    The revision reads as follows:

Sec.  270.0-2  General requirements of papers and applications.

* * * * *
    (d) Verification of applications and statements of fact. Every 
application for an order under any provision of the Act, for which a 
form with instructions is not

[[Page 65526]]

specifically prescribed and every amendment to such application, and 
every statement of fact formally filed in support of, or in opposition 
to, any application or declaration shall be verified by the person 
executing the same. An instrument executed on behalf of a corporation 
shall be verified in substantially the following form, but suitable 
changes may be made in such form for other kinds of companies and for 
individuals:
    The undersigned states that he or she has duly executed the 
attached ------------ dated ------------, 20 ------ for and on behalf 
of (name of company); that he or she is (title of officer) of such 
company; and that all action by stockholders, directors, and other 
bodies necessary to authorize the undersigned to execute and file such 
instrument has been taken. The undersigned further states that he or 
she is familiar with such instrument, and the contents thereof, and 
that the facts therein set forth are true to the best of his or her 
knowledge, information and belief.

-----------------------------------------------------------------------

(Signature)
* * * * *

    Dated: October 29, 2008.

    By the Commission.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26183 Filed 11-3-08; 8:45 am]

BILLING CODE 8011-01-P