Form N-54C Supporting Statement

OMB CONTROL NUMBER: 3235-0236
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
FORM N-54C
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Certain investment companies can elect to be regulated as business development
companies, as defined in section 2(a)(48) of the Investment Company Act of 1940
(“Investment Company Act”), under sections 55 through 65 of the Investment Company
Act. Under section 54(a) of the Investment Company Act, 1 any company defined in
section 2(a)(48)(A) and (B) of the Investment Company Act may, if it meets certain
enumerated eligibility requirements, elect to be subject to the provisions of Sections 55
through 65 of the Investment Company Act by filing with the Commission a notification
of election. Under section 54(c) of the Investment Company Act, 2 any business
development company may voluntarily withdraw its election under section 54(a) of the
Investment Company Act by filing a notice of withdrawal of election with the
Commission. The Commission has adopted Form N-54C as the form for the notification
of withdrawal of election to be subject to Sections 55 through 65 of the Investment
Company Act.

1

15 U.S.C. 80a-53(a).

2

15 U.S.C. 80a-53(c).

2.

Purpose and Use of the Information Collection

The purpose of Form N-54C is to notify the Commission that the business
development company withdraws its election to be subject to Sections 55 through 65 of
the Investment Company Act.
3.

Consideration Given to Information Technology

Form N-54C is electronically filed with the Commission. The Commission’s
electronic filing system (Electronic Data Gathering, Analysis and Retrieval or
“EDGAR”) automates the filing, processing and dissemination of full disclosure filings.
The system permits publicly held companies to transmit their filings to the Commission
electronically. This automation has increased the speed, accuracy and availability of
information, generating benefits to investors and financial markets.
4.

Duplication

The Commission periodically evaluates reporting and recordkeeping requirements
for duplication and reevaluates them whenever it proposes a rule or form or a change in a
rule or form. The information required by Form N-54C is not generally duplicated
elsewhere.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 3 to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The current disclosure requirements for Form
N-54C do not distinguish between small entities and other business development
companies. Although the burden on small business development companies may be
3

5 U.S.C. 601 et seq.

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greater than on larger ones, the Commission believes the burden imposed on any business
development company is small due to the extent and type of information required by the
form.
6.

Consequences of Not Conducting Collection

A business development company that withdraws its election to be subject to
Sections 55 through 65 of the Investment Company Act is required to file the notification
of withdrawal on Form N-54C only once, and therefore the filing of Form N-54C is not a
recurring event requiring periodic collection.
7.

Inconsistencies with Guidelines in 5 C.F.R. § 1320.5(d)(2)

Not applicable.
8.

Consultations Outside the Agency

The Commission and the Division of Investment Management staff participate in
an ongoing dialogue with representatives of the investment company industry through
public conferences, meetings, and informal exchanges. These various forums provide the
Commission and the staff with a means of ascertaining and acting upon paperwork
burdens that may confront the industry. The Commission requested public comment on
the collection of information requirements in Form N-54C before it submitted this request
for extension and approval to the Office of Management and Budget. The Commission
received no comments in response to its request.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.

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11.

Sensitive Questions

No information of a sensitive nature will be required under this collection of
information. The information collection collects basic Personally Identifiable
Information (PII) that may include the name and title of the signatory. However, the
agency has determined that the information collection does not constitute a system of
record for purposes of the Privacy Act. Information is not retrieved by a personal
identifier. In accordance with Section 208 of the E-Government Act of 2002, the agency
has conducted a Privacy Impact Assessment (PIA) of the EDGAR system, in connection
with this collection of information. The EDGAR PIA, published on January 29, 2016, is
provided as a supplemental document and is also available at
https://www.sec.gov/privacy.
12. and 13.

Estimates of Hour and Cost Burdens

The Commission estimates that on average approximately eight business
development companies file notifications on Form N-54C each year. Each of those
business development companies need only make a single filing of Form N-54C. The
Commission further estimates that this information collection imposes a burden of one
hour, resulting in a total annual burden of eight hours.
Cost burden is the cost of services purchased to prepare and file the Form N-54C,
such as for the services of outside counsel. The Commission estimates that most filers
use for third-party vendors in connection with their filings on Form N-54C. The table
below summarizes the PRA burden estimates associated with complying with Form N54C.
Table: Form N-54C PRA Estimates

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Internal
annual
burden
hours
Filing Form N-54C

1 hours

Number of affected entities

Total annual burden

x

Wage rate1

Internal time
costs

Annual
external cost
burden

$368 (compliance
attorney)

$368

$70

$2,944

$560

8

8 hours

Notes:
1. Wage rates are based on salary information for the securities industry compiled by the Securities Industry and
Financial Markets Association’s Office Salaries in the Securities Industry 2013 (“SIFMA Report”), modified by
Commission staff to account for an 1800-hour work year and inflation, and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead.

The estimates of average burden hours and costs are made solely for purposes of
the Paperwork Reduction Act of 1995 (“PRA”) 4 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission rules
and forms. Compliance with Form N-54C is mandatory for companies electing to no
longer be subject to Sections 55 through 65 of the Investment Company Act. Responses
to the disclosure requirements will not be kept confidential.

14.

Cost to the Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, and shareholder
reports of investment companies amounted to approximately $21.2 million in fiscal year
2019, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead.
15.

4

Change in Burden

44 U.S.C. 3501 et seq.

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The increase in estimated burden hours for Form N-54C is attributable to an
increase in the estimated number of respondents from four to eight, resulting in an
increase of four hour. The estimated cost burden for outside professionals associated
with the filing of Form N-54C increased to $560 because the Commission believes that
filers use third-party vendors to comply with this requirement.
Annual Number of Responses

Annual Time Burden (hours)

Annual Cost Burden (dollars)

Currently
Approved

Revised
Estimate

Change

Currently
Approved

Revised
Estimate

Change

Currently
Approved

Revised
Estimate

Change

4

8

+4

4

8

+4

$1380

$2944

+$1564

Form
N54C

16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.
18.

Exceptions to Certification Statement for Paperwork Reduction Act

Not applicable.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
Not applicable.

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