Supporting Statement_Form 1-E (2024)

OMB CONTROL NUMBER: 3235-0232
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form 1-E, Regulation E
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Rule 602 of Regulation E exempts securities issued by small business investment
companies (SBICs) registered under the Investment Company Act of 1940 (“Investment
Company Act”) (15 U.S.C. 80a-1 et seq.) or a closed-end investment company that has elected to
be regulated as a business development companies “(BDC”) under the Investment Company Act
from registration under the Securities Act. 1 This exemption is conditional on the aggregate
offering price of all of the issuer’s securities that may be sold within a 12-month period not
exceeding $5,000,000, provided that certain other conditions are met. Under rule 604 of
Regulation E, companies wishing to obtain the exemption must notify the Commission of their
interest in claiming the exemption by filing a notification on Form 1-E (17 CFR 239.200) with
the Commission. Rule 605 of Regulation E requires an issuer seeking a securities registration
exemption under Regulation E to provide an offering circular to persons solicited by the issuer
and to file the offering circular with the Commission if the offering is in excess of $100,000.
2.

Purpose and Use of the Information Collection

Form 1-E is filed with the Commission by SBICs and BDCs to claim an exemption from
registration. The notification must include the names and addresses of the issuer, its affiliates,
directors, officers, and counsel; a description of events which would make the exemption
unavailable; the jurisdictions in which the issuer will offer the securities; information about

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17 CFR 230.602.

unregistered securities issued or sold by the issuer within one year before filing the notification
on Form 1-E; information as to whether the issuer is presently offering or contemplating offering
any other securities; and exhibits, including copies of the offering circular and any underwriting
contracts. The notification on Form 1-E requires less information than would be required in a
registration statement under the Securities Act and, thus, results in a reduction of costs and
savings of time for a qualified issuer engaged in a small offering. In addition to notifying the
Commission of an issuer’s intent to make a limited offering, Form 1-E assists the staff to
determine whether an exemption is available for the issuer.
A company claiming an exemption under Regulation E must also file an offering circular
with the Commission as an exhibit to Form 1-E and provide the offering circular to investors.
The offering circular must contain information specified in Schedule A or B of Regulation E (17
CFR 230.610a). In general, Schedules A and B of Regulation E require disclosure about the
business and investment policies of the issuer, its management, and its financial condition.
Because the offering circular requires less information than would normally be furnished to
investors in a prospectus, the burden on the issuer is reduced, while at the same time, investors
receive pertinent information. The Commission uses the information provided in the offering
circular to determine whether the offering qualifies for exemption.
3.

Consideration Given to Information Technology

Beginning on January 1, 2009, Form 1-E and the offering circular have been filed
electronically on the Commission’s electronic filing system, called EDGAR (for Electronic Data
Gathering, Analysis and Retrieval), which is designed to automate the filing, processing, and

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dissemination of all disclosure filings. This automation has increased the speed, accuracy, and
availability of information, generating benefits to investors and financial markets.
4.

Duplication

Not applicable.
5.

Effect on Small Entities

The exemption under Regulation E is intended to relieve small entities of the reporting
burden of registering their offering under the Securities Act.
6.

Consequences Not Conducting Collection

Without the information provided in Form 1-E, the Commission would have no notice of
the offering and could not determine whether an offering qualified for the exemption. In
addition, without the collection of information in the offering circulars, the Commission would
not be able to review the content of the offering and would not be able to determine whether the
offerings qualified for the exemption.
7.

Inconsistencies With Guidelines in 5 CFR 1320.5(d)(2)

Not applicable.
8.

Consultation Outside the Agency

The Commission and the staff of the Division of Investment Management participate in
an ongoing dialogue with representatives of the investment company industry and through public
conferences, meetings, and informal exchanges. These various forums provide the Commission
and staff with a means of ascertaining and acting upon paperwork burdens confronting the
industry. The Commission also requested public comment on the collection of information
requirements with respect to Form 1-E, Regulation E before it submitted this request for
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extension and approval to the Office of Management and Budget. The Commission received no
comments in response to its request.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.
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 the name and address of each officer and director
of the issuer. The agency has determined that the information collection constitutes a system of
record for purposes of the Privacy Act and is covered under System of Records Notice (SORN) #
SEC-02. SORN # SEC-02, published on February 15, 2018, is available at
https://www.sec.gov/privacy. 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 March 22, 2023
is available at https://www.sec.gov/about/privacy/pia/pia-edgar.pdf.
12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for purposes
of the Paperwork Reduction Act (“PRA”) and are not derived from a quantitative,
comprehensive, or even representative survey or study of the burdens associated with
Commission rules and forms.
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The Commission estimates that, each year, one issuer files two notifications on Form 1-E,
together with offering circulars, with the Commission. 2 Based on the Commission’s experience
with disclosure documents, we estimate that the burden of complying with Form 1-E and the
offering circular requires approximately 100 hours per filing. The annual burden hours for
compliance with Form 1-E and the offering circular would be 200 hours (2 responses x 100
hours per response).
TABLE 1: CHANGE IN BURDEN ESTIMATES
Annual Number of Responses

Annual Time Burden (hours)

Cost Burden (dollars)

Previously
Approved

Revised
Estimate

Change

Previously
Approved

Revised
Estimate

Change

Previously
Approved

Revised
Estimate

Change

2

2

0

200

200

0

$100,000

$100,000

0

Form 1-E

13.

Cost to Respondents

Consistent with the prior renewal, the Commission estimates that the cost of outside
services used in preparing and filing Form 1-E, including the offering circular, would be
approximately $50,000 per filing (this cost burden includes services provided by outside counsel,
independent certified public accountants, and printers). Thus, the annual cost burden estimate is
$100,000 (2 responses x $50,000 per response).
14.

Cost to the Federal Government

The annual cost of reviewing and processing registration statements, post-effective
amendments, proxy statements, shareholder reports, and other filings of investment companies,
including notifications on Form 1-E, amounted to approximately $33 million in fiscal year 2023,

2

According to Commission records, during 2015, 2016, and 2017, one issuer filed seven
notifications on Form 1-E, together with offering circulars. No Form 1-E has been filed
with the Commission since 2017.
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based on the Commission’s computation of the value of staff time devoted to this activity and
related overhead.
15.

Changes in Burden

As discussed in items 12 and 13, above, the Commission does not estimate any change in
the hour or cost burdens associated with Form 1-E.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.
18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable.

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