Rule 163 SupportingStatement.2020

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT INFORMATION COLLECTION
SUBMISSION FOR SECURITIES ACT RULE 163

A.

JUSTIFICATION

1. and 2.

Circumstances Making the Collection of Information Necessary and
Purpose and Use of the Information Collection

Rule 163 was adopted on July 19, 2005 in connection with new communication
rules in Release No. 33-8591 (“Securities Offering Reform”). Rule 163 provides an
exemption from Section 5(c) under the Securities Act for certain communications by, or
on behalf of, a well-known seasoned issuer. A primary purpose of the rule is to give
eligible well-known seasoned issuers freedom to communicate with investors at any time,
including by means of a written offer other than a statutory prospectus.
3.

Consideration Given to Information Technology

Rule 163 communications are filed with the Commission electronically using the
Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR).
4.

Duplication of Information
There are no other filing requirements that duplicate this information collection.

5.

Reducing the Burden on Small Entities

All issuers, including small business issuers, have discretion as to whether or not
they want to disseminate written communications under Rule 163. Furthermore, Rule
163 was adopted in connection with other revisions, all of which were intended to
decrease costs and burdens for all issuers, including small business issuers, and enhance
communications between issuers and investors.
6.

Consequences of Not Conducting Collection

Rule 163 requires filing of written communications only when issuers choose to
disseminate them. Less frequent collection could compromise investor protection.
7.

Special Circumstances
There are no special circumstances.

2

8.

Consultations with Persons Outside the Agency

No comments were received on this request during the 60-day comment period
prior to OMB’s review of this submission.
9.

Payment or Gift to Respondents
No payment or gift has been provided to any respondents.

10.

Confidentiality
The information filed under Rule 163 is publicly available.

11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be
required under this collection of information. The information collection collects basic
Personally Identifiable Information (PII) that may include name, job title, work address,
work email address, and work phone number. 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 February 5, 2020, is provided as a
supplemental document and is also available at https://www.sec.gov/privacy.
12.

Estimate of Respondent Reporting Burden
Table of Reporting Burden Due to an Extension Request
Information
Collection
Title
Rule 163

OMB Control
Number

Number of
Responses

Burden
Hours

3235-0619

10

1

We estimate that it takes approximately 0.24 burden hours per response to provide
the information required under Rule 163 and that the information is filed by
approximately 10 issuers. We derived our burden hour estimates by estimating the
average number of hours it would take an issuer to compile the necessary information and
data, prepare and review disclosure, file documents and retain records. In connection
with rule amendments to the form, we occasionally receive PRA estimates from public
commenters about incremental burdens that are used in our burden estimates. We believe
that the actual burdens will likely vary among individual issuers based on the nature of

3

their operations. We further estimate that 25% of the collection of information burden is
carried by the issuer internally and that 75% of the burden of preparation is carried by
outside professionals retained by the company. Based on our estimate, we calculate that
25% of the 0.24 hours per response (0.06 hours) is prepared by the issuer for a total
annual reporting burden of 1 hour (0.06 hours per response x 10 responses). For
administrative convenience, the presentation of the totals related to the paperwork burden
hours have been rounded to the nearest whole number and the cost totals have been
rounded to the nearest dollar. The estimated burden hours are made solely for the
purpose of the Paperwork Reduction Act.
13.

Estimate of Total Annualized Cost Burden
Table of Cost Burden Due to Extension Request
Information
Collection Title

OMB Control
Number

Number of
Responses

Cost
Burden

Rule 163

3235-0619

10

$720

We estimated that 75% of the 0.24 hours per response (0.18 hours) is prepared by
the issuer outside counsel. We estimate that Rule 163 compliance will cost $400 per hour
($400 x 0.18 hours per response x 10 responses) for a total cost of $720. We estimate an
hourly cost of $400 for outside legal and accounting services used in connection with
public company reporting. This estimate is based on our consultations with registrants
and professional firms who regularly assist registrants in preparing and filing disclosure
documents with the Commission. Our estimates reflect average burdens, and therefore,
some companies may experience costs in excess of our estimates and some companies
may experience costs that are lower than our estimates. For administrative convenience,
the presentation of the totals related to the paperwork burden hours have been rounded to
the nearest whole number and the cost totals have been rounded to the nearest dollar.
The cost estimate is made solely for the purpose of the Paperwork Reduction Act.
14.

Costs to Federal Government

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

4

15.

Reason for Change in Burden
There is no change in burden.

16.

Information Collection Planned for Statistical Purposes
The information collection is not planned for statistical purposes.

17.

Approval to Omit Expiration Date
The Commission is not seeking approval to omit the expiration date.

18.

Exceptions to Certification for Paperwork Reduction Act Submissions

There are no exceptions to certification for the Paperwork Reduction Act
submissions.
B.

STATISTICAL METHODS
The information collection does not employ statistical methods.