82 FR 11375 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 34 (February 22, 2017)

[Federal Register Volume 82, Number 34 (Wednesday, February 22, 2017)]
[Notices]
[Page 11375]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03424]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 
20549-2736.

Extension:
    Rule 32a-4, SEC File No. 270-473, OMB Control No. 3235-0530.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the collections 
of information summarized below. The Commission plans to submit these 
existing collections of information to the Office of Management and 
Budget (``OMB'') for extension and approval.
    Section 32(a)(2) of the Investment Company Act of 1940 (15 U.S.C. 
80a 31(a)(2)) (``Act'') requires that the selection of a registered 
management investment company's or registered face-amount certificate 
company's (collectively, ``funds'') independent public accountant be 
submitted to shareholders for ratification or rejection. Rule 32a-4 
under the Investment Company Act (17 CFR 270.32a-4) exempts a fund from 
this requirement if, among other things, the fund has an audit 
committee consisting entirely of independent directors. The rule 
permits continuing oversight of a fund's accounting and auditing 
processes by an independent audit committee in place of a shareholder 
vote.
    Among other things, in order to rely on rule 32a-4, a fund's board 
of directors must adopt an audit committee charter and must preserve 
that charter, and any modifications to the charter, permanently in an 
easily accessible place. The purpose of these conditions is to ensure 
that Commission staff will be able to monitor the duties and 
responsibilities of an audit committee of a fund relying on the rule.
    Commission staff estimates that on average the board of directors 
takes 15 minutes to adopt the audit committee charter. Commission staff 
has estimated that with an average of 8 directors on the board,\1\ 
total director time to adopt the charter is 2 hours. Combined with an 
estimated \1/2\ hour of paralegal time to prepare the charter for board 
review, the staff estimates a total one-time collection of information 
burden of 2\1/2\ hours for each fund. Once a board adopts an audit 
committee charter, the charter is preserved as part of the fund's 
records. Commission staff estimates that there is no annual hourly 
burden associated with preserving the charter in accordance with this 
rule.\2\
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    \1\ This estimate is based on staff experience and on 
discussions with a representative of an entity that surveys funds 
and calculates fund board statistics based on responses to its 
surveys.
    \2\ This estimate is based on staff experience and discussions 
with funds regarding the hour burden related to maintenance of the 
charter.
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    Because virtually all existing funds have now adopted audit 
committee charters, the annual one-time collection of information 
burden associated with adopting audit committee charters is limited to 
the burden incurred by newly established funds. Commission staff 
estimates that fund sponsors establish approximately 112 new funds each 
year,\3\ and that all of these funds will adopt an audit committee 
charter in order to rely on rule 32a-4. Thus, Commission staff 
estimates that the annual one-time hour burden associated with adopting 
an audit committee charter under rule 32a-4 is approximately 280 
hours.\4\
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    \3\ This estimate is based on the average number of 
notifications of registration on Form N-8A filed from 2013-2015.
    \4\ This estimate is based on the following calculation: (2.5 
burden hours for establishing charter x 112 new funds = 280 burden 
hours).
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    When funds adopt an audit committee charter in order to rely on 
rule 32a-4, they also may incur one-time costs related to hiring 
outside counsel to prepare the charter. Commission staff estimates that 
those costs average approximately $1500 per fund.\5\ As noted above, 
Commission staff estimates that approximately 112 new funds each year 
will adopt an audit committee charter in order to rely on rule 32a-4. 
Thus, Commission staff estimates that the ongoing annual cost burden 
associated with rule 32a-4 in the future will be approximately 
$168,000.\6\
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    \5\ Costs may vary based on the individual needs of each fund. 
However, based on the staff's experience and conversations with 
outside counsel that prepare these charters, legal fees related to 
the preparation and adoption of an audit committee charter usually 
average $1500 or less. The Commission also understands that model 
audit committee charters are available, which reduces the costs 
associated with drafting a charter.
    \6\ This estimate is based on the following calculations: ($1500 
cost of adopting charter x 112 newly established funds = $168,000).
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    These estimates of average costs are made solely for the purposes 
of the Paperwork Reduction Act. The estimates are not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules. The collections of information required by rule 32a-4 
are necessary to obtain the benefits of the rule. The Commission is 
seeking OMB approval, because 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.
    Written comments are invited on: (a) Whether the collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimates of the burdens 
of the collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burdens of the collections of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Please direct your written comments to Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Remi 
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email 
to: [email protected].

    Dated: February 15, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03424 Filed 2-21-17; 8:45 am]
 BILLING CODE 8011-01-P