Rule236.SS.02-25-2021

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT INFORMATION COLLECTION
SUBMISSION FOR RULE 236

A.

JUSTIFICATION
1.

Circumstances Making the Collection of Information Necessary

Section 3(b) of the Securities Act of 1933 (the “Securities Act”) gives the
Commission the authority to adopt rules and regulations, including exemptions, from the
registration requirements of the Act, if the Commission determines that such registration is
not necessary by reason of the small amount involved. Rule 236 exempts from registration
shares of stock or similar securities which are publicly offered by companies to provide
funds to be distributed to security holders in lieu of fractional shares, scrip certificates, order
forms, or other evidences of such fractional interests, in connection with a stock dividend,
stock split, reverse stock split, conversion, merger or similar transaction. The aggregate
gross proceeds from the sale of the shares may not exceed $300,000.
While Rule 236 alleviates the need for registration under the Act, a company is
eligible for the exemption only if it is a reporting company and files a letter with the
Commission, at least ten days prior to the offering of the shares that provides the limited
information specified by the rule. A company relying on the exemption must disclose the
following information: (1) that it proposes to offer shares in reliance upon the exemption; (2)
the estimated amount of shares to be offered; (3) the aggregate market value of such
shares as of the latest practicable date; and (4) a brief description of the transaction in
connection with which the shares are to be offered.
2.

Purpose and Use of the Information Collection

The principal function of Commission forms and rules under the securities laws
disclosure provisions is to make information available to the securities market. The
Commission uses very little of the collected information itself (except on an occasional basis
in the enforcement of the securities laws). In this respect, the Commission’s collections
differ significantly from most other federal information collections, which are primarily for
the use and benefit of the collecting agency.
The information required to be filed with the Commission permits verification of
compliance with securities law requirements and assures the public availability and
dissemination of such information. Private contractors reproduce much of the filed
information, and provide it to private parties; and many other persons obtain information
directly from the Commission’s public files. The letter filed by issuers relying on the
exemption provided by Rule 236 is publicly available to purchasers so that they may have
information concerning the investment transaction.

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3.

Consideration Given to Information Technology

The Commission will consider electronic filing of the information required by Rule
236 using the Commission’s Electronic Data Gathering, Analysis and Retrieval (EDGAR)
System.
4.

Duplication of Information
No similar data is made available to investors.

5.

Reducing the Burden on Small Entities

Small issuers, as well as other issuers, benefit from the exemption from registration
requirements provided by Rule 236. The Commission determined that certain limited
information is required to enable the Commission to fulfill its statutory mandate under
Section 3(b) of the Securities Act.
6.

Consequences of Not Conducting Collection

The information is needed to establish qualification for reliance on the prescribed
exemption.
7.

Special Circumstances
There are no special circumstances.

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 236 is publicly available.

11.

Sensitive Questions

The information collection does not collect personally identifiable information (PII).
The Privacy Office has determined that a system of records notice (SORN) and a privacy
impact assessment (PIA) are not required in connection with this rule

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12.

Estimate of Respondent Reporting Burden

For purposes of the Paperwork Reduction Act (“PRA”), we estimate that Rule 236
takes approximately1.5 hours per response to comply with the collection of information
requirements and is filed by 10 respondents. 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 their operations. We further estimate that 100% of the collection of information burden is
carried by the issuers internally. Based on our estimates, we calculated the total reporting
burden to be 15 hours (1.5 total burden hours per response x 10 responses). The estimated
burden hours are made solely for the purpose of the Paperwork Reduction Act.
13.

Estimate of Total Annualized Cost Burden

We estimate that there is no cost associated with this information collection because
100% of the burden is borne by the issuer.
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.
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 OMB 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.

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B.

STATISTICAL METHODS
The information collection is not planned for statistical purposes.