The prospectus contains two parts. Part 1 of the Registration Statement. Part I of the registration statement is the prospectus which requires that the company provide certain disclosures.
SEC rules allow smaller reporting companies to provide less financial information than larger reporting issuers. Preliminary Prospectus l Initial Public Offerings. Although rule is not limited to investment companies, the Commission believes that it will be used mainly by mutual funds and by broker-dealers that deliver mutual fund prospectuses. The Commission is unable to estimate the number of issuers other than mutual funds that will rely on the rule. The Commission estimates that there are approximately 2, mutual funds, approximately of which engage in direct marketing and therefore deliver their own prospectuses.
The Commission estimates that each direct marketed mutual fund will spend an average of 20 hours per year complying with the notice requirement of the rule, for a total of 10, hours. The Commission estimates that each direct marketed fund will spend 1 hour complying with the explanation of the right to revoke requirement of the rule, for a total of hours.
The Commission estimates that as of year-end there were approximately broker-dealers that carry customer accounts and, therefore, may be required to deliver mutual fund prospectuses. The Commission estimates that each affected broker-dealer will spend, on average, approximately 20 hours complying with the notice requirement of the rule, for a total of 6, hours. Each broker-dealer would also spend 1 hour complying with the annual explanation of a right to revoke requirement, for a total of hours.
Therefore, the total number of respondents for rule is mutual funds plus broker-dealers , and the estimated total hour burden is 17, hours 11, hours for mutual funds plus 6, hours for broker-dealers. With respect to the amendments to rules 30d-1 and 30d-2 under the Investment Company Act, rule 30d-1 requires management investment companies to send annual and semiannual reports to their shareholders.
Rule 30d-2 requires unit investment trusts "UITs" that invest substantially all of their assets in shares of a management investment company to send their unitholders annual and semiannual reports containing financial information on the underlying company. The amendments to rules 30d-1 and 30d-2 will permit management investment companies and UITs to household these shareholder reports under substantially the same conditions as those in rule Every registered management investment company is subject to the reporting requirements of rule 30d We estimate that there are approximately 3, registered management investment companies.
The Commission currently estimates that the hour burden associated with rule 30d-1 is approximately hours per company. As discussed above, the Commission estimates that the burden associated with the notice requirement of the amendments to rules 30d-1 and 30d-2 is approximately 20 hours per company. The Commission estimates that the burden associated with the explanation of the right to revoke is 1 hour per company. Therefore, the Commission estimates that the total burden associated with rule 30d-1 is hours per company, or a total of , hours.
Rule 30d-2 applies to approximately UITs. The Commission estimates that the annual burden associated with rule 30d-2 is hours per respondent, including the estimated 20 hours associated with the notice requirement and the 1 hour associated with the explanation of a right to revoke requirement. The total hourly burden is therefore approximately 77, hours. With respect to the amendments to rules 14a-3, 14c-3 and 14c-7, those rules are included in Regulations 14A and 14C, which contain information collection requirements related to proxy and information statements.
Companies that have a class of securities registered under section 12 of the Exchange Act are subject to these requirements. The Commission estimates that the time required to prepare and arrange delivery of the notice will be approximately 20 hours per respondent per year. The Commission estimates that 9, respondents are subject to Regulation 14A and that approximately of these will deliver the notice.
The Commission estimates that the burden associated with Regulation 14A as revised per registrant delivering the notice will be approximately 74 hours, and 54 hours per registrant not delivering the notice, for a total annual burden of , hours.
An estimated respondents are subject to Regulation 14C and it is estimated that 25 of these will deliver the notice. The estimated burden associated with Regulation 14C as revised per registrant delivering the notice is 74 hours, and 54 hours for a registrant not delivering the notice, for a total annual burden of 14, hours.
Those issuers or broker-dealers that decide not to obtain that benefit are not required to rely on the rule. Responses to the collection of information will not be kept confidential. No comments were received on the IRFA. The FRFA discusses the need for, and objectives of, new rule and the amendments to rules 14a-3, 14c-3, 14c-7, 30d-1, and 30d The FRFA states that duplicate copies of prospectuses and shareholder reports are often mailed to a household if more than one investor in the household owns the same security.
The new rule and amendments are designed to reduce the number of duplicate documents delivered to investors by permitting the delivery of one prospectus or shareholder report to two or more investors who share an address. The FRFA provides descriptions and estimates of the number of small entities to which the rules will apply. Thus, the Commission estimates that among issuers other than registered investment companies, very few small issuers, as defined in rule under the Securities Act, will be affected by rule Closed-end funds and UITs will be affected by rule only when they are offering their shares.
A broker-dealer generally is a small entity if it has total capital i. The Commission staff estimates that as of year-end , broker-dealers carrying public customer accounts numbered approximately firms, 40 of which were small businesses. Rule 30d-1 applies to management funds i. The staff estimates that out of approximately 3, active management funds, approximately are considered small entities.
The staff estimates that out of approximately registered UITs that are subject to rule 30d-2, approximately 19 are considered small entities. Rules 14a-3, 14c-3 and 14c-7 apply to companies that are subject to the Exchange Act reporting requirements. Persons who rely on the rules would be required to obtain investors' written or implied consent before householding documents.
Investors householded with implied consent must receive a notice 60 days in advance notifying them that their documents will be householded unless the person relying on the rule receives contrary instructions. The rule also requires that if householding is done with investors' implied consent the investors must have the same last name or be reasonably believed to be members of the same family, and the address must be a post office box or a street address reasonably believed to be a residence.
The FRFA states that in adopting the amendments, the Commission considered: i the establishment of differing compliance requirements that take into account the resources available to small entities; ii simplification of the rule's requirements for small entities; iii the use of performance rather than design standards; and iv an exemption from the rules for small entities.
The FRFA states that we concluded that different requirements for small entities would be inconsistent with investor protection. The Commission is adopting rule under the authority set forth in section 19 a of the Securities Act [15 U. The Commission is adopting amendments to rules. Authority: 15 U. If you must deliver a prospectus under the federal securities laws, for purposes of sections 5 b and 2 a 10 of the Act 15 U.
You do not need to obtain written consent from an investor under paragraph a 3 of this section if all of the following conditions are met:. The notice must be a separate written statement and:. Alternatively, if the notice is delivered separately from other communications to investors, this statement may appear either on the notice or on the envelope in which the notice is delivered;.
You can assume a street address is a residence unless you have information that indicates it is a business. If an investor, orally or in writing, revokes consent to delivery of one prospectus to a shared address provided under paragraphs a 3 or b of this section , you must begin sending individual copies to that investor within 30 days after you receive the revocation.
If the individual's consent concerns delivery of the prospectus of a registered open-end management investment company, at least once a year you must explain to investors who have consented how they can revoke their consent. The explanation must be reasonably designed to reach these investors. For purposes of this section, address means a street address, a post office box number, an electronic mail address, a facsimile telephone number, or other similar destination to which paper or electronic documents are delivered, unless otherwise provided in this section.
If you have reason to believe that an address is the street address of a multi-unit building, the address must include the unit number. This section does not apply to the delivery of a prospectus filed as part of a registration statement on Form N 17 CFR Section The registrant need not obtain written consent from a security holder under paragraph e 1 i C of this section if all of the following conditions are met:. A The security holder has the same last name as the other security holders, or the registrant reasonably believes that the security holders are members of the same family;.
B The registrant has sent the security holder a notice at least 60 days before the registrant begins to rely on this section concerning delivery of annual reports to that security holder. The notice must:. C The registrant has not received the reply form or other notification indicating that the security holder wishes to continue to receive an individual copy of the annual report, within 60 days after the registrant sent the notice; and.
D The registrant delivers the report to a post office box or to a residential street address. The registrant can assume a street address is a residence unless it has information that indicates it is a business. If a security holder, orally or in writing, revokes consent to delivery of one report to a shared address, the registrant must begin sending individual copies to that security holder within 30 days after the registrant receives the revocation.
If the registrant has reason to believe that the address is a street address of a multi-unit building, the address must include the unit number.
A State that only one report will be delivered to the shared address unless the company receives contrary instructions;. B Include a toll-free telephone number or be accompanied by a reply form that is pre-addressed with postage provided, that the shareholder can use to notify the company that he or she wishes to receive a separate report;.
Typically, the preliminary prospectus is used to gauge interest in the market for the security being proposed. The final prospectus contains the complete details of the investment offering to the public. The final prospectus includes any finalized background information, as well as the number of shares or certificates to be issued and the offering price.
A prospectus includes some of the following information:. Some companies are allowed to file an abridged prospectus, which is a document that contains some of the same information as the final prospectus. Another reason a prospectus is issued is to inform investors of the risks involved with investing in the security or fund. Although a company might be raising capital through stock or bond issuance, investors should study the financials of the company to ensure the company is financially viable enough to honor its commitments.
Risks are typically disclosed early in the prospectus and described in more detail later. The age of the company, management experience, management's involvement in the business, and capitalization of the stock issuer are also described. The prospectus information also guards the issuing company against claims that pertinent information was not fully disclosed.
In the case of mutual funds, a prospectus contains details on the fund's objectives, investment strategies , risks, performance, distribution policy, fees, expenses, and fund management. Fees for purchases, sales, and moving among funds are also included, which simplifies the process of comparing the costs of various mutual funds. Typically, high-cost funds charge fees in excess of 1. The senior note being offered to the public is a bond or a promissory note to pay a specific yield by maturity.
For review, senior notes are debt securities, or bonds, that take precedence over other unsecured notes in the event of bankruptcy. Senior notes must be paid first if assets are available in the event of company liquidation. A senior note pays a lower coupon rate of interest compared to junior unsecured bonds since the senior debt has a higher level of security and a reduced risk of default. Below is a portion of the prospectus from the table of contents, which provides basic information about the offering.
We can see the following information listed:. It is very useful to investors as it informs them of the risks involved with investing in the security or fund. The name of the company and its principals, age of the company, management experience, and management's involvement in the business. Furthermore, the number of shares being issued, the type of securities being offered, whether an offering is public or private, and the names of the banks or financial companies performing the underwriting are also listed.
Securities and Exchange Commission. Prospectus B5. Corporate Bonds. Mutual Funds.
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