Form N-14 (P-Fee Tagging) Supporting Statement

OMB CONTROL NUMBER: 3235-0336
SUPPORTING STATEMENT FOR ADOPTED AMENDMENTS TO MODERNIZE
FILING FEE DISCLOSURE AND PAMENT METHODS
Form N-14
This supporting statement is part of a submission under the Paperwork Reduction Act of
1995 (“PRA”), 44 U.S.C. §3501, et seq.
A.

JUSTIFICATION
1. NECESSITY FOR THE INFORMATION COLLECTION
In Release No. 33-10997, 1 the Commission adopted amendments to modernize filing fee

disclosure and payment methods. The amendments will revise most fee-bearing forms,
schedules, statements, and related rules to require each filing fee table and accompanying
disclosure to include all required information for fee calculation in a structured format 2 using
Inline eXtensible Business Reporting Language (“XBRL”). 3 The amendments also will add
options for fee payment via Automated Clearing House (“ACH”) and debit and credit cards, and
eliminate options for fee payment via paper checks and money orders. Finally, the amendments
also will make other fee-related revisions.

1

Filing Fee Disclosure and Payment Methods Modernization, Release No. 33-10997 (Oct. 13, 2021) [86 FR
70166 (Dec. 9, 2021)] (“Adopting Release”), available at https://www.sec.gov/rules/final/2021/33-10997.pdf.
The amendments were proposed in Filing Fee Disclosure and Payment Methods Modernization, Release No.
33-10720 (Oct. 24, 2019) [84 FR 71580 (Dec. 27, 2019)] (“Proposing Release”), available at
https://www.sec.gov/rules/proposed/2019/33-10720.pdf.

2

Structured data is data that is tagged to make it machine-readable, facilitating its use by investors and other
market participants, such as data aggregators (i.e., entities that, in general, collect, package, and resell data).

3

Inline XBRL allows filers to embed XBRL data directly into a HyperText Markup Language (“HTML”)
document, eliminating the need to tag a copy of the information in a separate XBRL exhibit.

The amendments affect “collection of information” requirements within the meaning of
the PRA. 4 The titles of the collections of information impacted by the amendments to
investment company forms are:
•

Form N-2 (OMB 3235-0026);

•

Form N-14 (OMB 3235-0336); and

•

Investment Company Interactive Data (for Forms N-2 and N-14) (OMB No. 3235-0642).

2. PURPOSE AND USE OF THE INFORMATION COLLECTION
The forms listed above, which were adopted under the Securities Act of 1933 (“Securities
Act”) or the Investment Company Act of 1940 (“Investment Company Act”), set forth the
disclosure requirements for these fee-bearing documents.
The purpose of the amendments is to improve filing fee preparation and payment
processing by facilitating both enhanced validation through filing fee structuring and lower-cost,
easily routable payments through the ACH and debit and credit card payment options.
3. CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY
The collection of information requirements of the amendments will be set forth in the
respective forms and related rules. The information required by these provisions will continue to
be filed electronically with the Commission using the Commission’s Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system.

4

This supporting statement relates only to the amendments that will affect investment companies that file on
Forms N-2 and N-14, and are required to use Inline XBRL to tag specified disclosures. A separate supporting
statement will be submitted for the amendments that will affect operating companies.

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4. DUPLICATION
The amendments will require fee-related information to be presented in both traditional
human-readable (i.e., HTML) and structured format. When the information is solely in
traditional format, it cannot be used as effectively as when also in a structured format that a
variety of software applications can recognize and process, enabling efficient automated access
to, and processing of, information relevant to fee calculation.
5. EFFECT ON SMALL ENTITIES
The amendments will affect some companies that are small entities. The Commission
performed a Final Regulatory Flexibility Act Analysis and estimated that there are approximately
2 investment companies that file on forms N-2 and N-14 that may be considered small entities
and are potentially subject to the amendments.
Although the amendments will have an impact on a few small entities, the
Commission expects that the impact on entities affected by the amendments will not be
significant. Some of the amendments, like those that will require the structuring of filing fee
disclosures and related information, will increase compliance costs for registrants, but are
expected to have a small incremental effect on existing burdens for all issuers, including
small entities.
The Commission believes the amendments will clarify, consolidate and simplify
compliance and reporting requirements for small entities and other registrants. The
amendments will modernize and streamline the filing fee payment process and filing fee
disclosures by requiring more complete disclosure of filing fee-related information and
requiring the filing fee information to be presented in a structured format. The amendments
should make it easier to validate filing fee calculations and payments made by small entities

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and other registrants. The Commission is adopting a transition period for the fee-related
information structuring requirements under the amendments for all registrants. Small
entities will be in the last group phased in under the transition and this transition will occur
after they already have experience with the financial statement and cover page Inline XBRL
structuring requirements. Accordingly, the Commission does not believe it is necessary to
establish different compliance and reporting requirements or timetables for small entities,
beyond their transition period treatment, or to exempt small entities from all or part of the
amendments.
6. CONSEQUENCES OF NOT CONDUCTING COLLECTION
The new filing fee disclosures and structured data requirements for fee-bearing
documents are designed to help investors make informed investment and voting decisions.
Failure to conduct these collections of information would reduce the information available to
investors to make these decisions. The amendments are intended to improve filing fee
preparation and payment processing by facilitating both enhanced validation through filing fee
structuring and lower-cost, easily routable payments through the ACH and debit and credit card
payment options.
7. SPECIAL CIRCUMSTANCES
There are no special circumstances in connection with these amendments.
8. CONSULTATIONS OUTSIDE THE AGENCY
The Commission issued a release soliciting comment on the new “collection of
information” requirements and the associated paperwork burdens. 5 The Commission’s
5

Proposing Release, supra note 1.

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solicitation of public comments included estimating and requesting public comments on updated
burden estimates for all information collections under the OMB control numbers specified above
(i.e., both changes associated with the rulemaking and other burden updates). Comments on
Commission releases are generally received from registrants, investors, and other market
participants. In addition, the Commission and staff participate in ongoing dialogue with
representatives of various market participants through public conferences, roundtables and
meetings. All comments received on the proposal are available at
https://www.sec.gov/comments/s7-20-19/s72019.htm. The Commission considered all
comments received prior to publishing the final rules as required by 5 CFR 1320.11(f).
The Commission received one comment letter related to the PRA estimates in the
Proposing Release. The commenter provided the results of a survey it conducted of nine XBRL
preparation vendors regarding some of the questions raised in the Proposing Release. 6 The
vendors estimated that the structuring of fee-related information would result in 30 minutes to
two hours of additional preparation time for the first filing containing this information, but
indicated that the time would decline with subsequent filings. 7 Five of the nine vendors also
responded that a price increase of 5-10% could occur as a result of the requirement to structure
filing fee information for registrants that outsource XBRL preparation, and that registrants who
structure their own submissions using a disclosure management tool may or may not realize a
modest price increase. These burden estimates are consistent with the one-hour burden increase

6

Letter from XBRL US (Feb. 25, 2020).

7

Four of the vendors estimated that the costs would decline significantly after the first filing. Four other vendors
estimated that the costs would decline somewhat after the first filing.

5

per form for structuring data that was included in the Proposing Release, so we made no changes
based on these comments.
9. PAYMENT OR GIFT
No payment or gift has been provided to any respondents.
10. CONFIDENTIALITY
All documents submitted to the Commission under these collections of information are
available to the public.
11. SENSITIVE QUESTIONS
No information of a sensitive nature, including social security numbers, will be required
under the following collections of information in connection with the amendments to Forms N-2
and N-14. The information collections collect basic Personally Identifiable Information (“PII”)
that may include a name and job title. However, the agency has determined that the information
collections do not constitute a system of records 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 these collections 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./13. ESTIMATES OF HOUR AND COST BURDENS
The paperwork burden estimates associated with the rule amendments include the
burdens attributable to collecting, preparing, reviewing, and retaining records.

6

The Investment Company Interactive Data collection of information references current
requirements for registered investment companies and BDCs that must submit to the
Commission in Inline XBRL format certain information that is included in their registration
statements, post-effective amendments thereto, prospectuses filed pursuant to Rule 424(b) or Rule
497(c) or (e) under the Securities Act, reports and schedules filed pursuant to the requirements of

the Securities Exchange Act of 1934 that are incorporated by reference into a fund’s registration
statement, and for BDCs, their financial statements, pursuant to specified form and rule
requirements. 8
The final amendments will include new filing fee-related disclosure requirements, along
with corresponding structured data requirements, for (non-interval) registered closed-end funds
and BDCs as set forth in the General Instructions to Forms N-2 and Form N-14 and Regulation
S-T. 9 The estimated compliance burdens associated with fund disclosure requirements are
reflected in the collections of information for Forms N-2 and N-14. Consistent with prior
practice, the estimated compliance burdens associated with fund Inline XBRL tagging
requirements are separately reflected in the collection of information for Investment Company
Interactive Data.

8

See Interactive Data for Mutual Fund Risk/Return Summary, Release No. IC-28617 (Feb. 11, 2009) [74 FR
7748 (Feb. 19, 2009)] (requiring Form N-1A prospectus risk/return summary information to be submitted in
XBRL); Inline XBRL Filing of Tagged Data, Release No. 33-10514 (June 28, 2018) [83 FR 40846 (Aug. 16,
2018)] (requiring Form N-1A prospectus risk/return summary information to be submitted in Inline XBRL,
which embeds the tagged information in the document); Variable Annuity and Variable Life Insurance
Contracts, Release No. IC-33814 (Mar. 11, 2020) [85 FR 25964 (May 1, 2020)] (requiring specified Form N-3,
N-4, and N-6 prospectus items to be submitted in Inline XBRL); and Securities Offering Reform for ClosedEnd Investment Companies, Release No. IC-33836 (Apr. 8, 2020) [85 FR 33290 (June 1, 2020)] (requiring
Form N-2 cover page information and specified Form N-2 prospectus items, as well as financial statement
information (for BDCs only), to be submitted in Inline XBRL).

9

Adopting Release, supra note 1. Regulation S-T specifies the requirements that govern the electronic
submission of documents. We are adopting new Rule 408 of Regulation S-T, which requires the filing fee
exhibits for specified fee-bearing forms, including Forms N-2 and N-14, to be submitted in Inline XBRL.

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The Commission estimates that the amendments will affect the collections of information
listed above on a per form basis as follows:
PRA Table 1. Estimated Paperwork Burden Changes Due to the Amendments Per Form,
Schedule, or Rule
Amendments
Disclosure of Fee-Related Information:
• Moving the filing fee-related information to a
separate exhibit document, rather than requiring it
on the cover, and making conforming changes to
Forms N-2 and N-14.
• Adding new rows and columns to the filing fee
tables for Forms N-2 and N-14.
• Adding or revising instructions regarding
presentation, calculations and related disclosure in
general and, in particular, associated with Rule
415(a)(6), Rule 424(g), Rule 429, Rule 457(a),
(b), (f), (h), (o), (p), (r), (s), and (u), and Rule 011(a)(2), as applicable, to Forms N-2 and N-14.
Structuring of Fee-Related Information:
• Require structuring, in Inline XBRL of all the
fee-related information that will be required in the
filing fee exhibit of Forms N-2 and N-14. The
structured information will include each fee table
in the filing fee exhibit, together with a related
explanatory section.

Affected Forms,
Schedules, and
Documents

Estimated Burden
Change

• Forms N-2 and N-14

• 0.25 hour net increase in
compliance burden

• Forms N-2 and N-14

• 1 hour net increase in
compliance burden per
form (as reflected in the
hour and cost burden
estimate for Investment
Company Interactive Data)

Below is the Commission’s estimate of the incremental change in internal burden and
outside professional cost as a result of the amendments. 10 These estimates represent the average
burden for all registrants, both large and small. In deriving these estimates, the Commission
recognizes that the burdens will likely vary among individual registrants based on a number of
factors, including the nature of their business. The Commission does not believe that the

10

All of the changes in burden stem from the rulemaking, rather than an update of burden estimates not associated
with the rulemaking.

8

amendments will change the frequency of responses to the existing collections of information;
rather, it estimates that the amendments will change only the burden per response.
The burden estimates were calculated by multiplying the estimated number of responses
by the estimated average amount of time it will take a filer to prepare and review the disclosures
required under the amendments. For purposes of the PRA, the burden is allocated between
internal burden hours and outside professional costs.
The table below sets forth the percentage estimates the Commission typically uses for the
burden allocation for each form. The Commission also estimates that the average cost of
retaining an outside professional is $400 per hour.
PRA Table 2. Standard Estimated Burden Allocation for Specified Forms and Schedules
Form / Schedule / Other
Forms N-2 and N-14; and

Internal

Outside Professionals

25%

75%

Investment Company Interactive
Data.

9

The table below illustrates the incremental change to the total annual compliance burden of
affected forms, in hours and in costs, as a result of the amendments.

PRA Table 3. Calculation of the Incremental Change in Annual Burden Estimates of
Affected Responses Resulting from the Amendments
Form

N-2
N-14
Interactive Data
Totals

11

Estimated
Number
of
Affected
Responses
(A)

Estimated
Incremental
Burden
Hours/Form
(B)

Total
Incrementa
l Burden
Hours (C) 11
= (A) x (B)

Estimated
Internal
Burden Hours
(D)
= (C) x
(Allocation %)

275
54
329
658

.25
.25
1.0
1.5

69
14
329
411

17
3
82
103

The estimates in Columns (C), (D) and (E) are rounded to a whole number.

10

Estimated
Outside
Professional
Hours
(E)
= (C) x
(Allocation %)
52
10
247
308

Estimated
Outside
Professional
Costs/Affected
Responses
(F)
= (E) x $400
$20,625
$4,050
$98,700
$123,375

The following table summarizes the requested paperwork burden, including the estimated
total reporting burdens and costs, under the amendments.

PRA Table 4. Requested Paperwork Burden under the Amendments
Current Burden
Form/
Collec
tion

Current
Annual
Responses
(A)

Current
Burden
Hours
(B)

N-2

298

94,627

N-14

253

IC
Interactive
Data

19,817

Current
External Cost
Burden
(C)

Program Change

Requested Change in Burden

Number
of
Affected
Responses
or New
Responses
(D)

Increase
in Internal
Burden
Hours
(E) 1

Increase in
External
Professional
Costs
(F) 2

Annual
Responses
(G) = (A)

$6,260,392

275

17

$20,625

298

94,644

$6,281,017

125,260

$5,842,000

54

3

$4,050

253

125,263

$5,846,050

252,602

$15,350,750

54

82

$98,700

19,817

252,684

$15,449,450

1

From Column (D) in PRA Table 3.

2

From Column (F) in PRA Table 3.

11

Internal
Burden
Hours
(H) = (B)
+ (E)

External Cost
Burden
(I) = (C) + (F)

The Commission staff separately estimates that funds will also incur internal costs of
$33,693,264 to comply with Form N-2; $44,593,628 to comply with Form N-14; and $89,955,504 to
tag their disclosures using Inline XBRL. 12 These estimates are not included in the external cost
burdens associated with outside professionals.

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
investment companies amounted to $25.7 million in fiscal year 2020, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
15.

CHANGE IN BURDEN
The rule amendments will modernize filing fee disclosure and payment methods. They

will revise most fee-bearing forms, schedules, statements, and related rules to require each fee
table and accompanying disclosure to include all required information for fee calculation in a
structured format using Inline XBRL. The amendments also will add options for fee payment
via ACH and debit and credit cards, and eliminate options for fee payment via paper checks and

12

The estimated cost associated with the total internal burden for each collection of information is calculated by
multiplying burden hours by $356, which is the blended wage rate for an in-house compliance attorney ($373)
and a senior programmer ($339), the types of professionals we assume would be involved in complying with the
disclosure and tagging requirements (($373+$339 = $712) ÷2 = $356). The estimated 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, modified to account for an 1,800 hour work year,
and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overheard, and adjusted for
inflation.
Estimated internal costs are calculated as follows: Form N-2 (94,644 burden hours x $356) = $33,693,264;
Form N-14 (125,263 burden hours x $356) = $44,593,628; and Investment Company Interactive Data (252,684
burden hours x $356) = $89,955,504.
.

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money orders. Finally, the amendments also will make other fee-related revisions. The
Commission anticipates that the amendments will, in the aggregate, increase the burdens and
costs on affected entities due to changes in fee calculation disclosure requirements and the new
requirement to structure fee-related information.
As explained above, the rule amendments are expected to increase the compliance burden for
each affected form by increasing either or both the internal company hours and external professional
costs required to collect, prepare, review, and retain records in connection with the forms.
The Commission estimates for PRA purposes that the amendments to the disclosure-related
requirements for Forms N-2 and N-14, and the Inline XBRL tagging-related requirements for the
new filing fee exhibit(s) associated with same, will result in an incremental increase of:
•

17 internal burden hours, and a total increase in professional costs of $20,625 for
Form N-2;

•

3 internal burden hours, and a total increase in professional costs of $4,050 for Form
N-14; and

•

82 internal burden hours, and a total increase in professional costs of $98,700 for
Investment Company Interactive Data.

The Commission does not expect that the amendments will change the number of annual
responses filed for each form or collection. 13
Including the new burdens associated with the rulemaking, we estimate that, in the aggregate,
investment companies annually will spend approximately:
•

13

94,644 total burden hours, and $6,281,017 in total external costs for the services of
outside professionals to comply with Form N-2’s disclosure requirements;

The changes in burden also reflect the Commission’s revision and update of burden estimates for all
information collections under the OMB control numbers specified above (whether or not associated with
rulemaking changes), and the Commission requested public comment on all those information collection burden
estimates for these OMB control numbers. All of the changes in burden stem from the rulemaking rather than
an update of burden estimates not associated with the rulemaking.

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16.

•

125,263 total burden hours, and $5,846,050 in total external costs for the services of
outside professionals to comply with Form N-14’s disclosure requirements; and

•

252,684 total burden hours, and $15,449,450 in total external costs for the services of
outside professionals to comply with the Inline XBRL tagging requirements for
investment companies.

INFORMATION COLLECTION PLANNED FOR STATISTICAL PURPOSES
The information collections do not employ statistical methods.

17.

APPROVAL TO OMIT OMB EXPIRATION DATE
The Commission requests authorization to omit the expiration date on the electronic

version of the forms and schedules. Including the expiration date on the electronic version of the
forms and schedules will result in increased costs, because the need to make changes to the
forms and schedules may not follow the application’s scheduled version release dates. The
OMB control number will be displayed.
18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION ACT
SUBMISSIONS
There are no exceptions to certification for Paperwork Reduction Act submissions.

B.

STATISTICAL METHODS
The information collections do not employ statistical methods.

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