asymmetries between managers of companies and investors, which can
enhance capital formation and the allocative efficiency of the capital
markets.
---------------------------------------------------------------------------

    \330\ See, Akerlof, George A., The Market for ``Lemons'':
Quality Uncertainty and the Market Mechanism, 84 Q. J. ECON. 488-500
(1970).
---------------------------------------------------------------------------

    Materiality is a key principle of public company reporting.\331\
Efforts to make disclosures more effective typically focus on
evaluating whether existing or proposed disclosures provide material
information to those using the disclosures. Material disclosures can
reduce information asymmetries between managers of companies and
investors, decrease the cost of capital, and lead to more efficient
share prices and heightened accountability of the managers of
companies.\332\
---------------------------------------------------------------------------

    \331\ See Report of the Advisory Committee on Corporate
Disclosure to the Securities and Exchange Commission, Cmte. Print
95-29, House Cmte. On Interstate and Foreign Commerce, 95th Cong.,
1st. Sess. (Nov. 3, 1977), at 320. available at http://opc-ad-ils/
InmagicGenie/DocumentFolder/
report%20of%20the%20advisory%20committee%20on%20corporate%20disclosur
e%20to%20the%20sec%2011011977.pdf.
    \332\ See Br[uuml]ggemann, Ulf and Kaul, Aditya and Leuz,
Christian and Werner, Ingrid M., The Twilight Zone: OTC Regulatory
Regimes and Market Quality (June 14, 2017). IGM Working Paper #95;
Fisher College of Business Working Paper No. 2013-03-09; European
Corporate Governance Institute (ECGI)--Law Working Paper No. 224/
2013; Charles A. Dice Center Working Paper No. 2013-09. Available at
SSRN: https://ssrn.com/abstract=2290492 or http://dx.doi.org/10.2139/ssrn.2290492.
    See also C. Leuz and P. Wysocki, 2016, The Economics of
Disclosure and Financial Reporting Regulation: Evidence and
Suggestions for Future Research, Journal of Accounting Research Vol.
54, 525-622 and M. Lang, K. Lins, and M. Maffett. Transparency,
Liquidity, and Valuation: International Evidence on When
Transparency Matters Most, Journal of Accounting Research 50 (2012):
729-774.
---------------------------------------------------------------------------

2. The Costs of Disclosure
    Although disclosure requirements benefit investors and financial
markets, there are potential drawbacks associated with these
requirements. For example, disclosure can be costly for registrants to
produce and disclosure of sensitive information can result in
competitive disadvantages.
    Disclosure of information that is unnecessary or that may not be
material also entails costs to investors, if it affects their ability
to discern material information effectively. While material disclosures
provide important information to investors about their investments,
sorting through information that is unnecessary or not material can
obscure material information that investors find useful. Consistent
with this view, research has found that attention to one subject
generally leaves less attention available for others.\333\
---------------------------------------------------------------------------

    \333\ See Pashler, H.E., The Psychology of Board: Attention
(Cambridge, MA: MIT Press 1998) and Hirshleifer, David & Siew Hong
Teoh, Limited attention, information disclosure, and financial
reporting, 36 J. Acct. & Econ. 337-386 (2003).
---------------------------------------------------------------------------

    In the economic analysis that follows, we first examine the current
regulatory and economic landscape that forms the baseline for our
analysis. We then analyze the likely economic effects arising from the
proposed amendments relative to that baseline. These economic effects
include the costs and benefits and impact on efficiency, competition,
and capital formation.

B. Baseline

    To assess the economic effect of the proposed amendments, we are
using as our baseline the current state of the Commission's filing and
disclosure regime. In characterizing the baseline, it is useful to
distinguish between operating companies and investment companies.
Although both types of registrants are subject to similar registration
and reporting requirements, there are differences in the specific rules
and forms applicable to each. In particular, on March 1, 2017, the
Commission adopted amendments requiring registrants that file
registration statements and reports subject to the exhibit requirements
under Item 601 of Regulation S-K, or that file Form F-10 or Form 20-F,
(i.e., operating companies) to submit these filings in HTML format and
to include a hyperlink to each exhibit listed in the exhibit index of
these filings.\334\ In contrast, there is currently no comparable
requirement for investment companies; however, this proposal includes
amendments to a set of forms under the Investment Company Act that
would apply HTML and hyperlinking requirements to filers of those
forms.
---------------------------------------------------------------------------

    \334\ While compliance with these rules was required by
September 1, 2017, smaller reporting companies, as well as
registrants that are neither accelerated filers nor large
accelerated filers, are not required to comply until September 1,
2018. Although these registrants are not yet required to comply with
the exhibit hyperlinks and HTML rules, we are treating these rules
as part of the baseline for all filers subject to Regulation S-K.
---------------------------------------------------------------------------

    For operating companies, the baseline includes the disclosure
requirements in Regulation S-K and related rules and forms as well as
Commission and staff guidance on the application of those requirements.
Table 1 below suggests that the proposed amendments to Regulation S-K
and related rules and forms would apply to a substantial number of
operating companies. On average, 7,800 different registrants per year
have filed periodic reports on Form 10-K and Form 10-Q in recent years.
As shown in the table below, approximately 800 foreign private issuers
provided periodic information to investors in the U.S. capital markets
using Form 20-F and Form 40-F. The number of registrants filing
definitive proxy statements on Schedule 14A has exceeded 5,000 each
year.\335\
---------------------------------------------------------------------------

    \335\ We note that, in addition to operating companies,
registered investment companies file proxy statements as well.

                  Table 1--Number of Registrants Filing Various Disclosure Forms From 2012-2016
----------------------------------------------------------------------------------------------------------------
              Year                     10-K            10-Q            20-F            40-F           DEF 14A
----------------------------------------------------------------------------------------------------------------
2012............................            8240            8381             712             153            5371
2013............................            7898            8031             690             145            5382
2014............................            7857            7872             669             143            5259
2015............................            7767            7676             687             131            5390
2016............................            7373            7147             675             126            5126
----------------------------------------------------------------------------------------------------------------

    As discussed above, investment companies that file certain forms
required by the Investment Company Act would also be affected by the
proposed amendments. Table 2 below lists the number of filings filed by
investment companies in fiscal year 2016 using EDGAR submission types
potentially affected by the proposed amendments, broken out by the
number of filings in HTML and ASCII format. From January 1, 2016 to
December 31, 2016, investment companies filed 64,522 filings using
EDGAR submission types potentially affected by the proposed amendments.
Of these filings, the vast majority (58,429) were filed in HTML, while
fewer than ten percent (6,093) were filed in ASCII format. As shown in
Table 2, most of the filers had substantially more HTML filings than
ASCII filings, while the Form S-6 filers had more ASCII filings than
HTML filings in 2016.
---------------------------------------------------------------------------

    \336\ The figures in this table are presented on the basis of
filer type, not on the basis of the form on which the document was
filed. Therefore, not all of the filings presented in the table
would be subject to the proposed requirements.

 Table 2--Number of Potentially Affected Filings From January 1, 2016 to
                           December 2016 \336\
------------------------------------------------------------------------
                                                 Number of    Number of
                                                    HTML        ASCII
                                                  Filings      Filings
------------------------------------------------------------------------
N-1A Filers...................................       48,150        1,280
N-2 Filers....................................        2,965           77
N-3 Filers....................................           42            6
N-4 Filers....................................        5,247          758
N-6 Filers....................................        1,549          245
S-6 Filers....................................          476        3,727
                                               -------------------------
  Total.......................................       58,429        6,093
------------------------------------------------------------------------

    The proposed amendments would require registrants to include
hyperlinks in the case of exhibits included with the forms and exhibits
that are incorporated by reference from a previously filed document. To
draw a baseline indicative of current disclosure practices, we selected
a random sample of 400 filings (359 in HTML and 41 in ASCII) submitted
in 2016 that may be affected by the proposed amendments. Table 3 below
shows the average and median number of exhibits listed in the sampled
filings by the type of exhibit (i.e., filed with the form vs.
incorporated by reference).

                                                  Table 3--Number of Exhibits in Sampled Filings \337\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Number of exhibits listed in    Number of exhibits filed with        Number of exhibits
                                                     the index                      the filing               incorporated by reference       Number of
                                         ------------------------------------------------------------------------------------------------     sampled
                                              Average         Median          Average         Median          Average         Median          filings
--------------------------------------------------------------------------------------------------------------------------------------------------------
N-1A....................................             5.8               0             0.6               0             5.2               0             267
N-2.....................................             7.4               2             2.1               2             5.0               0              21
N-3.....................................               0               0               0               0               0               0               1
N-4.....................................            13.6               0             0.7               0            12.9               0              31
N-6.....................................            11.1               0             0.8               0            10.3               0              11
N-14....................................            38.0            38.5             1.5               1            36.5            37.0               6
N-CSR...................................             2.3               3             1.9               0             0.1               0              43
S-6.....................................              36              36             5.0             5.0            31.0            31.0              30
                                         ---------------------------------------------------------------------------------------------------------------
    All Filings.........................             6.7             N/A             0.9             N/A             5.8             N/A             400
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 3 shows a significant variation in the number of exhibits
listed in the exhibit index across different types of filings.
Registration statements on Form N-4, Form N-14, and Form S-6 typically
contain a large number of exhibits and had significantly more exhibits
incorporated by reference than filings on other forms affected by the
proposed amendments. Of the 400 sampled filings, we found that none of
them included hyperlinked indexes.
---------------------------------------------------------------------------

    \337\ In counting the number of exhibits, we did not include the
following exhibits: 101.INS XBRL Instance Taxonomy; 101.SCH XBRL
Taxonomy Extension Schema Document; 101.CAL XBRL Taxonomy Extension
Calculation Linkbase Document; 101.DEF XBRL Taxonomy Extension
Definition Linkbase Document; 101.LAB XBRL Taxonomy Extension Labels
Linkbase Document; and 101.PRE XBRL Taxonomy Extension Presentation
Linkbase Document because XBRL exhibits are not covered by the
proposal.
    Average represents the sum of the number of exhibits divided by
the number of sampled forms for each form type. Median represents
the middle number of exhibits for each form type when the numbers of
exhibits are listed from the smallest to the largest. For instance,
for Form N-2, the number of exhibits listed in the index ranged from
0 to 55, with 2 as the middle number.
---------------------------------------------------------------------------

    As discussed above, disclosure requirements involve trade-offs
between benefits to investors in terms of reducing information
asymmetries and costs to registrants associated with producing
disclosure. While the proposed amendments would apply to all
registrants subject to the regulation, the trade-offs between the costs
and benefits of disclosure requirements would vary across different
types of registrants. For example, smaller companies typically have
proportionately higher disclosure costs as well as proportionately
higher disclosure benefits.\338\ That is, the fixed costs of disclosure
requirements typically constitute a higher percentage of revenues for
smaller companies than

for larger companies. However, the benefits of disclosure may be
greater for smaller companies because information asymmetries between
investors and managers of smaller companies are typically higher than
for larger, more seasoned companies with a large following.\339\
Compliance costs could be also higher for foreign registrants to the
extent that the disclosure requirements in the United States are
different from the disclosure requirements in their home countries.
---------------------------------------------------------------------------

    \338\ In its 2015 proposing release to amend the definition of
``smaller reporting company,'' the Commission observed that, based
on a review of filings, approximately 42% of registrants qualified
as smaller reporting companies. See Amendments to Smaller Reporting
Company Definition, Release No. 33-10107 (Jun. 27, 2017) [81 FR
43130 (Jul. 1, 2016)], available at https://www.sec.gov/rules/proposed/2016/33-10107.pdf.
    \339\ See, e.g., R. Frankel and X. Li, Characteristics of a
firm's information environment and the information asymmetry between
insiders and outsiders, 37 J. Acct. Econ. 229, 229-259 (June 2004).
See also, L. Cheng, S. Liao, and H. Zhang, The Commitment Effect
versus Information Effect of Disclosure--Evidence from Smaller
Reporting Companies, 88 Acct. Rev. 1239, 1239-1263 (2013).
---------------------------------------------------------------------------

C. Economic Analysis of the Proposed Amendments: General Assessment,
Including Impact on Efficiency, Competition, and Capital Formation

    In this subsection, we evaluate the broad economic effects of the
proposed amendments, including a discussion of their impact on
efficiency, competition, and capital formation. The proposals amend a
well-established and robust disclosure regime that has existed for many
years. As a result, we expect the aggregate impact of the proposed
amendments to be incremental to the effects that have already been
realized from the existing disclosure regime.
    As discussed above, disclosure provides benefits to participants in
financial markets by reducing information asymmetries that exist
between investors in a company and managers tasked with operating the
company. Both registrants and investors alike would generally benefit
from the proposed amendments, because they would simplify the
requirements and resulting content of existing disclosures while still
providing all material information. The proposed changes to the
requirements and resulting improved presentation are expected to
increase the usefulness of the disclosures for investors and generally
lower the regulatory burden (and compliance costs) for registrants. In
addition, the improved information environment associated with
modernized and simplified disclosures is expected to incrementally
enhance capital formation and the allocative efficiency of the capital
markets through more accurate share prices, better accountability of
managers and increased capital market liquidity.
    We expect some of the proposed amendments to entail modest initial
implementation costs. However, we believe that the initial costs would
be in manageable amounts. Furthermore, those costs would be offset by
future savings as a result of simplified and streamlined disclosure
requirements, after implementation. Some of the proposed amendments,
such as those that impose new data tagging, hyperlinking, or disclosure
requirements, would involve not only implementation costs but would
also increase compliance costs for registrants going forward, although
as discussed below, we do not expect these additional costs to be
significant.
    While the purpose of the proposed amendments is to simplify and
modernize public company disclosure requirements without loss of
material information, we acknowledge that the proposed amendments could
result in a loss of some information in specific cases, as discussed
below. This loss of information could potentially increase information
asymmetry in those cases, which may have negative implications for
investor protection, market transparency, efficiency, and capital
formation. In turn, such loss of information could raise the firm's
cost of capital.\340\ However, we believe this potential adverse effect
would be mitigated by the fact that registrants will continue to be
required to provide further material information, if any, as may be
necessary to make the required statements, in the light of the
circumstances under which they are made, not misleading.\341\
---------------------------------------------------------------------------

    \340\ See Easley, D., Hvidkjaer, S., & M. O'Hara, Is information
risk a determinant of asset returns? 57 J. Finance. 2185-2221
(2002).
    \341\ See Rule 12b-20 [17 CFR 240.12b-20] and Rule 408(a) [17
CFR 230.408(a)].
---------------------------------------------------------------------------

D. Economic Analysis of the Specific Amendments: Proposals That Clarify
and Update Existing Rules

1. Proposals That Clarify or Streamline a Rule's Requirements
a. Description of Property (Item 102)
    Item 102 requires disclosure of the location and general character
of the principal plants, mines, and other materially important physical
properties of the registrant and its subsidiaries. The staff has
observed, however, that the item may elicit disclosure that is not
material.\342\ The proposed amendments to Item 102 would clarify that a
description of property is required only to the extent physical
properties are material to the registrant and make other clarifying
amendments.\343\ The proposed amendments would not modify the Item 102
requirements for companies in the mining, real estate, and oil and gas
industries.
---------------------------------------------------------------------------

    \342\ See FAST Act Report, supra note 2, at Recommendation B.1.
See also Concept Release, supra note 6, at Section IV.A.6.b and SEC
Staff's Report of the Task Force on Disclosure Simplification (Mar.
5, 1996) available at https://www.sec.gov/news/studies/smpl.htm.
    \343\ See Section II.A (Description of Property).
---------------------------------------------------------------------------

    The main benefit of the proposed amendments would be to reduce the
amount of duplicative disclosure that is not material by emphasizing
materiality and harmonizing the rule's thresholds for disclosure. The
proposed amendments also could facilitate compliance and avoid any
confusion associated with different disclosure standards. The aggregate
reduction in regulatory burden due to the proposed amendments to Item
102 may extend to approximately 6,500 registrants.\344\
---------------------------------------------------------------------------

    \344\ We derive this number by taking the average number of
registrants filing annual reports as reported in Table 1 and
excluding all companies in the mining, oil and natural gas, and real
estate industries.
---------------------------------------------------------------------------

    When Item 102 was originally adopted, registrants were more likely
to maintain large physical properties and other assets, such as mines
and manufacturing plants.\345\ However, the nature of enterprise has
changed dramatically over the last thirty years. Currently, many of the
largest and most profitable firms operate in the services and
technology industries that are often not characterized by large
physical assets. Nevertheless, many modern firms are highly
geographically dispersed. As a consequence, information about the
geographic operations of these companies--including information about
the location of physical properties--could be highly relevant for
investors by providing information about important firm customers and
employees. We expect that any risk of exclusion of relevant information
under the proposed amendment would be minimal, because Item 102
explicitly solicits the disclosure of material information. This risk
is further mitigated by the fact that registrants may disclose relevant
property information elsewhere in their filings, such as in response to
Item 101 (Description of Business).
---------------------------------------------------------------------------

    \345\ Since 1935, we have required disclosure similar to that
required under Item 102. See Release No. 33-276 (January 14, 1935)
[not published in the Federal Register].
---------------------------------------------------------------------------

b. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Item 303)
    We are proposing a series of amendments to Item 303. In this
subsection, we discuss all amendments to Item 303 that are intended to
clarify the rule's requirements, while in

Subsection E.1 below, we discuss proposals intended to amend the
content of MD&A. Instruction 1 to Item 303(a) provides that, generally,
MD&A shall cover the three-year period covered by the financial
statements and either use year-to-year comparisons or any other formats
that in the registrant's judgment would enhance a reader's
understanding. Additionally, the instruction states that reference to
the five-year selected financial data may be necessary where trend
information is relevant.
    We are proposing to amend the instructions to Item 303(a) to
emphasize that a registrant may use any presentation that would enhance
a reader's understanding. As discussed above, our proposed amendments
to Item 303(a) are consistent with the Commission's existing
interpretive guidance on MD&A. We are also proposing to eliminate
mention of the five-year selected financial data in the instructions to
Item 303(a) because disclosure requirements for liquidity, capital
resources, and results of operations already require trend disclosure.
    The proposed amendments emphasize the flexibility available to
registrants with respect to the form of MD&A presentation. The major
benefit of flexibility is that it allows registrants to frame the
information in a way that emphasizes material information. One
potential cost associated with this aspect of the rule is that, in
framing the discussion in a way that emphasizes material information,
registrants may inadvertently de-emphasize information that investors
nevertheless find useful or relevant. To the extent the proposed
amendment leads to more tailored disclosure, it also could make
disclosure less comparable across registrants and over time.
    To maintain a consistent approach to MD&A for domestic registrants
and foreign private issuers, we are proposing changes to Form 20-F
similar to the proposed changes to Item 303(a).\346\ The disclosure
requirements for Item 5 of Form 20-F are substantively comparable to
the MD&A requirements under Item 303 of Regulation S-K. The economic
effects of the proposed amendments to Form 20-F are therefore similar
to those for the proposed amendments to Item 303(a) described above.
---------------------------------------------------------------------------

    \346\ See supra Section II.C.B.2.
---------------------------------------------------------------------------

c. Risk Factors (Item 503(c))
    Item 503(c) requires disclosure of the most significant factors
that make an offering speculative or risky. We are proposing to
relocate Item 503(c) from Subpart 500 to Subpart 100 of Regulation S-
K.\347\ We believe that Subpart 100 is a more appropriate location for
the risk factor disclosure requirements, because it covers a broad
category of business information and is not limited to offering-related
disclosure. Additionally, our proposed amendments would eliminate the
risk factor examples that are enumerated currently in Item 503(c).\348\
---------------------------------------------------------------------------

    \347\ See supra Section II.D.2.
    \348\ See id.
---------------------------------------------------------------------------

    We do not expect that relocating the disclosure requirement within
Regulation S-K would pose any additional costs to registrants or
investors because we are only proposing to change the location of the
requirement. The content of the requirement would not change.
    With respect to the proposed elimination of the examples in Item
503(c), we believe that this could prompt registrants to more carefully
evaluate and classify their risk exposures, which could ultimately
benefit investors through more specific and relevant risk factor
disclosures. Although examples could be useful to registrants in some
cases, they could also anchor or skew the registrant's risk analysis in
the direction of the examples. \349\
---------------------------------------------------------------------------

    \349\ There is extensive evidence in psychology and economics
that individuals tend to rely too heavily on the first piece of
information offered (the ``anchor'') when making decisions. See
e.g., Tversky, A. & Kahneman, D., Judgment under Uncertainty:
Heuristics and Biases. 185 Science. 1124-1131 (1974).
---------------------------------------------------------------------------

    An alternative to the proposed amendments, as suggested by some
commenters, would be to expand or update the list of examples or revise
them to specify generic risks that should not be disclosed. While such
an approach might lead to incremental improvements in existing
disclosures, it would not eliminate the anchoring effect discussed
above nor would it serve to discourage generic or ``boilerplate''
disclosures as effectively as the proposed amendments. It is also
possible that a list of generic risks could inadvertently be viewed as
exhaustive. In addition, specifying a list of generic risks that should
not be disclosed may create a rule that needs to be regularly updated.
d. Plan of Distribution (Item 508)
    Item 508 requires disclosure about the plan of distribution for
securities in an offering, including information about underwriters. We
are proposing to amend Rule 405 to define the term ``sub-underwriter''
to clarify its application in Item 508 of Regulation S-K.\350\ We
believe that defining the term ``sub-underwriter'' would reduce
compliance costs by helping registrants to more easily determine what
disclosure is required under Item 508. We also believe that a defined
term could help investors better understand the role of ``sub-
underwriters'' in the offering process. We do not believe there would
be additional costs associated with the proposed amendment, since it
merely clarifies an existing disclosure requirement.
---------------------------------------------------------------------------

    \350\ See supra Section II.D.3.
---------------------------------------------------------------------------

e. Material Contracts (Item 601(b)(10))
    Item 601(b)(10)(i) currently requires registrants to file every
material contract not made in the ordinary course of business, provided
that the contract meets one of two tests: (i) The contract must be
performed in whole or in part at or after the filing of the
registration statement or report, or (ii) the contract was entered into
not more than two years before that filing.
    The second test, the two-year look back, captures material
contracts that were fully performed before the filing date. We are
proposing amendments to Item 601(b)(10)(i) that would limit the two-
year look back test to newly reporting registrants.\351\ Proposed
Instruction 1 to Item 601(b)(10)(i) defines a ``newly reporting
registrant'' as any registrant filing a registration statement that, at
the time of such filing, is not subject to the reporting requirements
of Section 13(a) or 15(d) of the Exchange Act, whether or not such
registrant has ever previously been subject to the reporting
requirements of Section 13(a) or 15(d), and any registrant that has not
filed an annual report since the revival of a previously suspended
reporting obligation.\352\ As an example, a registrant that is filing
its first registration statement under the Securities Act or the
Exchange Act, or filing its first Form 10-K since the revival of its
reporting obligation, would be required to file material agreements
under Item 601(b)(10)(i) for the two-year look back period. The
definition of ``newly reporting registrant'' under the proposed
instruction also would include any registrant that (a) was a shell
company, other than a business combination related shell company, as
defined in Rule 12b-2 under the Exchange Act, immediately before
completing a transaction that has the effect of causing it to cease
being a shell company, and (b) has not filed a registration statement
or Form 8-K, as required by Item 2.01 and Item 5.06 of that form, since
the completion of the

transaction (or in the case of foreign private issuers, has not filed a
Form 20-F since the completion of the transaction).\353\ Under the
proposed amendments, a registrant meeting this definition would be
required to file material agreements for the two-year look back period.
---------------------------------------------------------------------------

    \351\ See supra Section II.E.3.
    \352\ See supra Section II.E.3.
    \353\ See supra Section II.E.3
---------------------------------------------------------------------------

    We expect that the proposed amendments would streamline reporting
obligations while maintaining investor protections. Although the two-
year look back test captures material contracts that were fully
performed before the filing date, this test does not provide any new
information to the market for registrants with established reporting
histories. Excluding these registrants from the two-year look back
requirement would marginally reduce their compliance burdens, because
they would not need to re-file (or incorporate by reference) agreements
that were previously filed and are no longer in effect. At the same
time, investors would continue to have access to any material
agreements that a registrant previously filed on EDGAR.
f. Proposals With a Minor Effect on Disclosure
    The following proposed amendments are expected to have minor
impacts on the disclosure provided:
     Item 401--proposal would clarify what disclosure about
executive officers does not need to be repeated in proxy or information
statements if it is already included in Form 10-K.
     Item 405--proposal would simplify the Section 16 reporting
process by allowing registrants to rely on a review of Section 16
reports submitted on EDGAR instead of gathering reports furnished to
the registrant.\354\
---------------------------------------------------------------------------

    \354\ The proposal would also eliminate the requirement for
reporting persons to furnish Section 16 reports to registrants,
which could ease the compliance burden on reporting persons.
---------------------------------------------------------------------------

     Item 501(b)(1)--proposal would eliminate the portion of
the item that discusses when a name change may be required and the
exception to that requirement.
     Item 501(b)(3)--proposal would allow registrants to move
details of an offering price method or formula from the prospectus
cover page to another location in the prospectus; the proposal also
would require registrants to state that the price will be more fully
explained in the prospectus and accompany that statement with a cross-
reference to the more detailed offering price disclosure.
     Item 501(b)(10)--proposal would streamline the prospectus
legend requirements.
     Incorporation by Reference--proposals would (i) provide
clearer guidance on cross-referencing; (ii) consolidate the
requirements for incorporation by reference in Securities Act Rule 411,
Exchange Act Rule 12b-23 and related rules under the Investment Company
Act and Investment Advisers Act to eliminate redundant or unnecessary
requirements; and (iii) allow registrants more flexibility in excluding
item numbers and captions or creating their own captions tailored to
their disclosure in Form 10, Form 10-K and Form 20-F.
    Since the proposed amendments listed above would alter existing
disclosure practices only to a minor degree, their implementation would
have little economic effect. We believe that the proposed amendments
would allow registrants to improve the readability and navigability of
disclosure documents and reduce repetition. The proposed amendments
also would reduce compliance costs for registrants while preserving all
material information. We do not envision any significant incremental
costs associated with the proposed amendments because they do not
significantly change the required disclosures.
2. Proposals To Update Rules to Account for Subsequent Developments
    The following proposed amendments would update existing rules to
account for subsequent developments and are expected to have minor
impacts on the disclosure provided:
     Item 407(d)--proposal would update the outdated reference
to AU sec. 380 in Item 407(d)(3)(i)(B).
     Item 407(e)--proposal would update requirements for
compensation committee disclosure to exclude EGCs because they are not
required to include a CD&A.
     Item 512--proposal would eliminate certain undertakings
that are redundant and obsolete.
    We believe that the proposed amendments listed above would reduce
potential confusion in applying our rules, result in more consistent
disclosure practices, and ease compliance burdens for registrants, with
a minimal impact on the information available to investors. We do not
envision any significant incremental costs associated with the proposed
amendments, because the substance of the rules would not change.

E. Economic Analysis of the Specific Amendments: Proposals That
Simplify the Disclosure Process or Eliminate Disclosures

1. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Item 303)
    Under the proposed amendments to Item 303 of Regulation S-K, when
the financial statements included in a filing cover three years,
discussion about the earliest year would not be required if (i) this
discussion is not material to an understanding of the registrant's
financial condition, changes in financial condition, and results of
operations, and (ii) the registrant has filed its prior year Form 10-K
on EDGAR containing MD&A of the earliest of the three years included in
the financial statements of the current filing.
    We believe that the main economic benefit of the proposed
amendments would be to simplify and modernize MD&A as well as increase
its readability while still providing all material information. This
may facilitate a better understanding of the firm's financial
prospects. Because MD&A is typically one of the most labor-intensive
pieces of disclosure to produce, eliminating the requirement to discuss
the earliest year financial statements in some circumstances could
meaningfully reduce compliance costs for registrants.
    One potential cost of the proposed amendments is that investors may
receive less comparative discussion about earlier period financial
results within a filing. Although previously disclosed information
could provide helpful context for the new information being disclosed,
this information would have been incorporated into market prices when
it was originally presented. There may be certain situations in which
this context may be particularly useful in assessing a firm's financial
condition--for example, in the case of restatements of prior period
financials. Although we recognize these potential costs, we believe
their impact would be mitigated by the fact that discussion of earlier
year financial results could be excluded only under specified
conditions, including that the discussion was not material to an
understanding of the registrant's financial condition, changes in
financial condition, and results of operations.
    An alternative to the proposed amendments would be to retain the
earliest year requirement but permit registrants to hyperlink to the
prior year's report in lieu of repeating this disclosure. This
alternative would likely reduce search costs for investors and allow
efficient access to previously

disclosed information about a firm's financial condition. However, we
believe that this alternative would not reduce compliance costs to
registrants as effectively as the proposed amendments. Furthermore,
this alternative may detract from investor understanding of material
information about a firm's financial condition to the extent that it
resulted in hyperlinking to information that is no longer material to
such an understanding.
2. Information Omitted From Exhibits (Item 601): Item 601(a)(5), Item
601(a)(6), and Item 601(b)(10)(iv)
    Proposed Item 601(a)(5) would permit registrants to omit schedules
and attachments to exhibits unless they contain information material to
an investment or voting decision and that information is not otherwise
disclosed in the exhibit or the disclosure document.\355\ The proposed
amendments also would require registrants to provide with each exhibit
a list briefly identifying the contents of all omitted schedules and
attachments.\356\ In addition, registrants would be required to
provide, on a supplemental basis, a copy of any of the omitted
schedules or attachments to the Commission staff upon request.\357\
---------------------------------------------------------------------------

    \355\ See supra Section II.E.2.a (Exhibits--Information Omitted
from Exhibits, Schedules and Attachments).
    \356\ See id.
    \357\ See id.
---------------------------------------------------------------------------

    Allowing registrants to omit schedules and attachments that are not
material to all exhibits would lower their filing costs. As noted in
Section II.E.2.a above, some commenters have noted that these burdens
are exacerbated if the schedules contain commercially sensitive
information that would require registrants to file confidential
treatment requests. The omission of schedules that are not material
would also help investors more clearly focus on the material
disclosures.
    Based on our review of confidential treatment requests submitted
under Rule 406 and Rule 24b-2 granted in fiscal year 2016, we estimate
that over 90% of confidential treatment requests are granted for
material contracts based on competitive harm to the registrant,
discussed below. For the subset of confidential treatment requests that
were granted for reasons other than competitive harm to the registrant,
we expect that many of those exhibits likely contain schedules or
attachments that could be omitted under proposed Item 601(a)(5),
although we are unable to reliably estimate how many, because this
would depend, in part, on whether the schedules contain material
information. Any reduction in burden would be incremental to that
attributable to the proposed amendments to Item 601(b)(10)(iv), which
would likely address over 90% of confidential treatment requests.
    Item 601(a)(6), as proposed to be amended, would permit registrants
to omit PII without submitting a confidential treatment request under
Rule 406 or Rule 24b-2.\358\ Under the proposed amendment, registrants
also would not be required to provide an analysis in order to redact
PII from exhibits. Since the proposed amendment leaves the decision
about omission of PII entirely to the registrant, it could result in
more liberal redactions. Thus, there is a tradeoff between reduced
compliance costs and the potentially adverse effects of reduced
disclosure. However, our analysis indicates that the Commission granted
very few confidential treatment requests in reliance on the Freedom of
Information Act \359\ (``FOIA'') exemption concerning PII. As an
illustration, in fiscal year 2016 only nine confidential treatment
requests were granted pursuant to this FOIA exemption. Presumably, most
registrants are currently taking advantage of existing staff guidance
that PII may be omitted without filing a confidential treatment
request. As a result, we do not expect that codifying this
accommodation would significantly alter existing disclosure practices.
---------------------------------------------------------------------------

    \358\ See supra Section II.E.2.b.
    \359\ 5 U.S.C. 552.
---------------------------------------------------------------------------

    We are also proposing to add paragraph (b)(10)(iv) to Item 601 to
permit registrants to omit confidential information in material
contract exhibits filed pursuant to that item that is both (i) not
material and (ii) competitively harmful if publicly disclosed, without
submitting a confidential treatment request.\360\ Instead, registrants
would be required to mark the exhibit index to indicate that portions
of the exhibit or exhibits have been omitted and include a prominent
statement on the first page of each redacted exhibit that certain
information is omitted from the filed version of the exhibit.\361\ The
registrant would also be required to indicate with brackets where the
information is omitted from the filed version of the exhibit.\362\
---------------------------------------------------------------------------

    \360\ See supra Section II.E.2.c.
    \361\ See id.
    \362\ See id.
---------------------------------------------------------------------------

    Registrants could be asked by the Commission staff to provide on a
supplemental basis an unredacted copy of the exhibit.\363\ The staff
also could request that the registrant provide an analysis of why the
redacted information is both (i) not material and (ii) competitively
harmful.\364\ Registrants could request confidential treatment of this
supplemental information pursuant to Rule 83 while it is in the
possession of the staff.
---------------------------------------------------------------------------

    \363\ See id.
    \364\ See id.
---------------------------------------------------------------------------

    The proposed amendment would significantly reduce the costs
associated with preparing confidential treatment requests and expedite
the filing process. In this regard, one commenter on the Concept
Release reviewed seven different confidential treatment requests on
which it assisted clients since 2012 and found that legal fees alone
ranged from approximately $35,000 to over $200,000.\365\
---------------------------------------------------------------------------

    \365\ See Letter from Fenwick.
---------------------------------------------------------------------------

    Because more than 90% of the confidential treatment requests
granted by the Commission in fiscal year 2016 were made in reliance on
the FOIA exemption concerning competitive harm, the proposed amendments
to Item 601(b)(10) to allow registrants to omit competitively harmful
information that is not material without filing a confidential
treatment request could correspondingly reduce the number and cost of
confidential treatment requests pursuant to Rule 406 and Rule 24b-2 by
over 90%. However, this reduction in cost would be partially offset by
the proposed amendment's provision that the staff may request an
analysis similar to the current competitive harm analysis. Registrants
would incur costs to prepare and provide this analysis in response to
any request from the staff.
    One potential cost of the proposed amendments is that information
may be redacted that would not otherwise be afforded confidential
treatment by the staff. However, based on previous experience and a
review of confidential treatment requests, we believe that such
instances would be rare. Over the past five fiscal years, very few
confidential treatment requests were denied by the staff. Specifically,
of the confidential treatment requests filed over the last five fiscal
years, on average, approximately 1.0% were withdrawn because the staff
determined that the information likely was material to investors.\366\
During this time, on

average, approximately 95% of confidential treatment requests filed
were granted, and requests were rarely denied.\367\ Also during the
past five fiscal years, on average, approximately 12% of confidential
treatment requests filed were revised prior to the request being
granted to limit the number of terms redacted based on likely
materiality or over broad redactions.\368\ Under the proposed
amendments, the Commission staff would continue its selective review of
registrant filings and would selectively assess whether redactions from
exhibits appear to be limited to information that is not material and
that would subject the registrant to competitive harm if publicly
disclosed.
---------------------------------------------------------------------------

    \366\ The following confidential treatment requests were filed
and withdrawn for likely materiality during the last five fiscal
years: 2016: 1,271 filed and approximately 7 withdrawn; 2015: 1,369
filed and approximately 14 withdrawn; 2014: 1,413 filed and
approximately 19 withdrawn; 2013: 1,290 filed and approximately 16
withdrawn; and 2012: 1,466 filed and approximately 6 withdrawn.
    \367\ In fiscal years 2016 and 2015, no confidential treatment
requests were denied. In fiscal years 2014, 2013, and 2012, one, two
and one CTR(s) were denied, respectively. On average, during the
last five fiscal years, approximately 95% of confidential treatment
requests were granted in full and approximately 5% were withdrawn.
In addition to withdrawals based on staff determinations that the
information was likely material, other reasons confidential
treatment requests are withdrawn include that the offering is no
longer going forward, the information is already public, or the
contract is no longer material.
    \368\ Confidential treatment requests revised based on
materiality and/or overbroad redactions in fiscal years 2016, 2015,
2014, 2013, and 2012, were approximately 119, 139, 183, 184, and
182, respectively.
---------------------------------------------------------------------------

F. Economic Analysis of the Specific Amendments: Proposals That Require
More Disclosure or the Incorporation of New Technology

1. Description of Registrant's Securities (Item 601(b)(4))
    Item 202 requires registrants to provide a brief description of
their registered capital stock, debt securities, warrants, rights,
American Depositary Receipts, and other securities. We are proposing to
amend Item 601(b)(4) to require registrants to provide Item 202
disclosure as an exhibit to Form 10-K for each class of securities that
is registered under the Exchange Act, rather than limiting this
disclosure to registration statements. The proposed amendments would
not change existing disclosure obligations under Form 8-K and Schedule
14A, which currently require registrants to disclose certain
modifications to the rights of their security holders and amendments to
their articles of incorporation or bylaws. Any modifications and
amendments during a fiscal year to the information called for by Item
202 would now also be reflected in an exhibit to the registrant's next
annual report.
    Information about Exchange Act registered securities allows
investors to assess the existing capital structure of registrants,
which can help investors understand better their exposure to risks and
their control rights. Requiring Item 202 disclosure as an exhibit to
annual reports would improve investors' access to information about
their rights as security holders, thereby facilitating more informed
investment and voting decisions.
    The proposed requirements would impose some incremental compliance
costs for registrants to include the proposed disclosure with their
annual reports. Table 1 above shows that on average 7,800 registrants
file Form 10-K each year and therefore would be subject to the new Item
601(b)(4) exhibit filing requirement. However, because registrants
already prepare very similar disclosure to satisfy existing disclosure
obligations under Form 8-K and Schedule 14A and would be able to
incorporate by reference and hyperlink to prior disclosure, so long as
there has not been any change to the information called for by Item
202, we expect these incremental costs to be minimal.
2. Subsidiaries of the Registrant and Entity Identifiers (Item
601(b)(21))
    Item 601(b)(21) requires a registrant to list in an exhibit its
subsidiaries, the state or other jurisdiction of incorporation or
organization of each, and the names under which those subsidiaries do
business. We are proposing amendments to Item 601(b)(21)(i) that would
require registrants to include in the exhibit the LEI, if one has been
obtained, of the registrant and each subsidiary listed.\369\
---------------------------------------------------------------------------

    \369\ See supra Section II.E.4.
---------------------------------------------------------------------------

    A key benefit of LEIs is that they allow for unique identification
of entities engaged in commercial and financial transactions. For
various reasons, firm and subsidiary names can be spelled and recorded
differently across filings, corporate websites, and standard databases.
In addition, subsidiaries can share the same (or very similar) names.
These issues can make names poor identifiers of market participants,
which could be an obstacle in some forms of investment analysis
involving computerized data access.
    In contrast, LEIs provide clear and unique identification of market
participants that facilitates the statistical analysis and aggregation
of firm financial data. In this regard, some commenters have observed
that improved identifiers would allow investors to link third-party
data with structured data from Commission filings to produce more
meaningful analysis.\370\ As a consequence, a standard identifier of
firms and firm subsidiaries has the potential to improve not only
individual investment decisions but also the efficiency of the overall
market.
---------------------------------------------------------------------------

    \370\ See id.
---------------------------------------------------------------------------

    Disclosure of LEIs would also facilitate the ability of investors
and the Commission to link the information disclosed in Commission
filings with data from other filings or sources as LEIs become more
widely used by regulators and the financial industry. This could aid in
the performance of market analysis studies, surveillance activities,
and systemic risk monitoring by the Commission and other regulators.
    The proposed amendments would impose an incremental cost on
registrants to include LEIs in the Item 601(b)(21) exhibit. We do not
expect this incremental cost to be significant, however, given that
this information should be readily available to registrants. Our
proposals would require disclosure of LEIs only for those registrants
and subsidiaries that have obtained this identifier, thereby not
imposing additional costs.\371\ As a result, the benefits of LEI
disclosure outlined above may be limited to the extent that not all
reporting entities obtain an identifier.
---------------------------------------------------------------------------

    \371\ The use of and access to LEIs is free for investors. All
of the associated reference data needed to understand, process and
use LEIs is also widely and freely available. However, the cost of
obtaining a LEI for registrants currently entails a one-time fee of
$75-$119, and $50-$99 per year in annual maintenance fees.
---------------------------------------------------------------------------

    Moreover, standard identifiers, such as LEIs, are most beneficial
to registrants and investors when a broad array of firms in the market
adopt them. For example, a widely adopted identifier would facilitate
the electronic link and cross-referencing of various informational
items over a large group of registrants. Staff experience indicates
that LEI adoption rates are currently low, which limits its benefits to
investors and other users of financial information.\372\ If LEIs are
not widely used, firms may not have incentives to obtain an LEI. Since
coordination among firms with regard to adoption is difficult to
accomplish, LEIs could remain underutilized.
---------------------------------------------------------------------------

    \372\ For example, in the context of Form ADV, which similarly
requires an LEI to be reported only if the entity already has one,
the Commission has noted that just 6.8% of registered investment
advisers report an LEI when filing the form. See Form ADV and
Investment Advisers Act Rules, Release No. IA-4509 (Aug. 25, 2016)
[81 FR 60417 (Sept. 1, 2016)], at 114.
    However, see also the discussion in the text around note 220,
supra. Although overall adoption rates appear low, the use of LEIs
may be increasing as a result of global regulatory efforts. See
Glob. Legal Entity Identifier Found., Regulatory Use of the LEI,
available at https://www.gleif.org/en/about-lei/regulatory-use-of-the-lei (last visited July 13, 2017).

---------------------------------------------------------------------------

3. Tagging Cover Page Data
    We are proposing to require registrants to tag all of the
information on the cover page of Form 10-K, Form 10-Q, Form 8-K, Form
20-F, and Form 40-F using Inline XBRL (or, if the Commission's recent
proposal to require Inline XBRL for the submission of operating company
financial statements is not adopted, in an XBRL exhibit to the relevant
filing) in accordance with the EDGAR Filer Manual. To implement the
cover page tagging requirements, we propose to add new Rule 406 to
Regulation S-T, new Item 601(b)(104) to Regulation S-K, new paragraph
104 to the ``Instructions as to Exhibits'' of Form 20-F and new
paragraph B.17 to the ``General Instructions'' of Form 40-F to require
registrants to file with each of the specified forms a ``Cover Page
Interactive Data File'' containing cover page data. We are also
proposing to revise Rule 11 of Regulation S-T to add the term ``Cover
Page Interactive Data File.'' Our proposals also would amend the cover
pages of these forms to include the trading symbol for each class of
the registrant's registered securities.\373\
---------------------------------------------------------------------------

    \373\ Because the cover pages of Form 10-K, Form 20-F, and Form
40-F already require disclosure of the title of each class of
securities registered pursuant to Section 12(b) of the Exchange Act
and each exchange on which they are registered, our proposed
amendments to these forms would revise the cover page to include a
corresponding field for the trading symbol. Unlike these forms,
however, the cover pages of Form 10-Q and Form 8-K do not currently
require disclosure of the title of each class of securities and each
exchange on which they are registered. Accordingly, to ensure that
registrants and their registered securities are identified in a
consistent manner across forms, we are proposing to revise the cover
pages of Form 10-Q and Form 8-K to include this disclosure in
addition to the trading symbol.
---------------------------------------------------------------------------

    Investment analysis increasingly relies on quantitative statistical
methods. Machine-readable formats greatly facilitate quantitative
analysis because they allow for the corresponding items to be imported
directly into various platforms for data analysis. Thus, tagging all
the data points on the cover pages of Form 10-K, Form 10-Q, Form 8-K,
Form 20-F, and Form 40-F could decrease the costs to investors for
implementing quantitative data analysis. We acknowledge that the
amendment would impose additional costs on registrants but expect the
additional burden to be minimal, given that registrants already furnish
a substantial amount of information contained in these forms in a
structured format.
    An alternative to the Inline XRBL or traditional XBRL format is to
specify an XML format for the cover pages of Form 8-K, Form 10-K, Form
10-Q, Form 20-F, and Form 40-F. An XML format could have a variety of
implementations ranging from filers submitting the data according to a
designated technical framework to inputting the cover page information
in a web-fillable format within EDGAR. We are not proposing this
approach, because the Inline XBRL and traditional XBRL format provide
more precise rules that facilitate consistent input and data validation
by filers and enhance the analytical capabilities of data users.
Moreover, the Inline XBRL and traditional XBRL format have more robust
data validation capabilities, which could help to ensure better data
quality for investors. Inline XBRL also would not suffer from possible
data quality discrepancies that may occur from filers rekeying the
information from their cover page for submission in XBRL or XML.
4. Proposals for Additional Disclosure With Minimal Additional Costs to
Registrants
    The following proposed amendments are expected to impose only
limited compliance costs on registrants:
     Incorporation by Reference--proposal would require
hyperlinks internal to EDGAR for documents incorporated by
reference.\374\
---------------------------------------------------------------------------

    \374\ See supra Section II.F.2.
---------------------------------------------------------------------------

     Item 501(b)(4)--proposal would require disclosure on the
prospectus cover page of any national securities exchange where the
securities being offered are listed or, if not listed, the principal
United States market or markets for the securities being offered and
the corresponding trading symbols, if any. \375\
---------------------------------------------------------------------------

    \375\ See supra Section II.D.1.c.
---------------------------------------------------------------------------

    Requiring registrants to include hyperlinks to information that is
incorporated by reference could improve the readability and
navigability of disclosure documents by allowing users to be taken
directly to the incorporated information by clicking on a link rather
than having to locate the information on EDGAR. Although requiring the
inclusion of hyperlinks for incorporated information would impose an
additional compliance burden on registrants, we do not expect this
burden to be significant given that hyperlinks are relatively easy to
implement and involve minimal cost.
    In the case of Item 501(b)(4), expanding the existing requirements
for trading market disclosure to encompass information about markets
that are not ``national securities exchanges'' would benefit investors
by helping them to better assess their trading costs. The disclosure
would impose some additional disclosure costs on registrants. However,
we do not expect these costs to be significant given that registrants
should have ready access to this information. In this regard, we note
that the required disclosure would be limited to the principal United
States market or markets where the registrant, through the engagement
of a registered broker-dealer, has actively sought and achieved
quotation.

G. Economic Analysis of HTML and Hyperlinking Requirements of Forms
Under the Investment Company Act

    As discussed above, we are proposing HTML and hyperlinks
requirements for filers of certain forms under the Investment Company
Act. Broadly speaking, we believe the proposed amendments would reduce
search costs for investors. In particular, we believe that exhibit
hyperlinks would help investors and other users to access a particular
exhibit more efficiently as they would not need to search within the
filing or through different filings made over time to locate the
exhibit. Requiring exhibit hyperlinks may make it easier for investors
and other users to find and access a particular exhibit that was
originally filed with a previous filing.
    To the extent that hyperlinks ease the navigation process for
investors and other users, hyperlinks may also facilitate a more
thorough review of a registrant's registration statements,
applications, and reports and encourage more effective monitoring over
time. The potential reduction of search costs and the enhanced ability
of investors to review a registrant's disclosure may result in more
informed investment and voting decisions, potentially enhancing
allocative efficiency, and capital formation by registrants.
    We expect that hyperlinks would be more beneficial in reducing
search costs in the case of exhibits incorporated by reference than in
the case of exhibits filed with the filing, and in particular, we
expect these benefits to be most pronounced in the case of
incorporation by reference from a filing that was not recently filed
because more recent filings are displayed first on the EDGAR search
results page. Further, we expect hyperlinks would have greater benefits
in the case of registrants that submit more filings.
    As a result of the proposed amendments, we expect that both HTML
and ASCII registrants would incur compliance costs to include
hyperlinks in their exhibit indexes. The cost of inserting a hyperlink
to an exhibit incorporated by reference would likely be greater than
the cost of

inserting a hyperlink to an exhibit filed with the document. While the
average cost itself of inserting a hyperlink is minimal, the total
hyperlinking costs for registrants would be a function of two main
factors: (1) How many registration statements, applications and reports
a registrant files that require an exhibit index; and (2) how many
exhibits in the exhibit index of these registration statements,
applications, and reports are either filed with the filing or
incorporated by reference.
    Filers reporting in ASCII would incur costs to switch to HTML, in
addition to the costs of including hyperlinks in their exhibit indexes.
We expect that the costs of switching to HTML would not be significant
because the cost of software with built-in HTML and hyperlink features
is minimal. Overall, given the modest costs involved, we do not expect
that the proposed amendments would have significant competitive effects
for registrants.
Request for Comment
    We request comment on all aspects of our economic analysis,
including the potential costs and benefits of the proposed amendments
and whether the rules, if adopted, would promote efficiency,
competition, and capital formation or have an impact on investor
protection. Commenters are requested to provide empirical data,
estimation methodologies, and other factual support for their views, in
particular, on costs and benefits estimates.

IV. Paperwork Reduction Act

A. Background

    Certain provisions of our rules and forms that would be affected by
the proposed amendments contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\376\ The Commission is submitting the proposal to the Office
of Management and Budget (``OMB'') for review in accordance with the
PRA.\377\ The hours and costs associated with preparing and filing the
forms and reports constitute reporting and cost burdens imposed by each
collection of information. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
requirement unless it displays a currently valid OMB control number.
Compliance with the information collections is mandatory. Responses to
the information collections are not kept confidential and there is no
mandatory retention period for the information disclosed. The titles
for the collections of information are:
---------------------------------------------------------------------------

    \376\ 44 U.S.C. 3501 et seq.
    \377\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    ``Regulation S-K'' (OMB Control No. 3235-0071); \378\
---------------------------------------------------------------------------

    \378\ The paperwork burdens for Regulation S-K, Regulation S-T,
Regulation C and Regulation 12B are imposed through the forms that
are subject to the requirements in these regulations and are
reflected in the analysis of those forms. To avoid a PRA inventory
reflecting duplicative burdens and for administrative convenience,
we assign a one-hour burden to each of these regulations.
---------------------------------------------------------------------------

    ``Regulation S-T'' (OMB Control No. 3235-0424);
    ``Regulation 12B'' (OMB Control No. 3235-0062);
    ``Regulation C'' (OMB Control No. 3235-0074);
    ``Family of rules under section 8(b) of the Investment Company Act
of 1940'' (OMB Control No. 3235-0176);
    ``Form S-1'' (OMB Control No. 3235-0065);
    ``Form S-3'' (OMB Control No. 3235-0073);
    ``Form S-4'' (OMB Control No. 3235-0324);
    ``Form S-6'' (OMB Control No. 3235-0184);
    ``Form S-11'' (OMB Control No. 3235-0067);
    ``Form N-14'' (OMB Control No. 3235-0336);
    ``Form F-1'' (OMB Control No. 3235-0258);
    ``Form F-3'' (OMB Control No. 3235-0256);
    ``Form F-4'' (OMB Control No. 3235-0325);
    ``Form F-7'' (OMB Control No. 3235-0325);
    ``Form F-8'' (OMB Control No. 3235-0378);
    ``Form F-80'' (OMB Control No. 3235-0404);
    ``Form F-10'' (OMB Control No. 3235-0380);
    ``Form SF-1'' (OMB Control No. 3235-0707);
    ``Form SF-3'' (OMB Control No. 3235-0690);
    ``Form 10'' (OMB Control No. 3235-0064);
    ``Form 20-F'' (OMB Control No. 3235-0288);
    ``Form 40-F'' (OMB Control No. 3235-0381);
    ``Form 10-K'' (OMB Control No. 3235-0063);
    ``Form 10-Q'' (OMB Control No. 3235-0070);
    ``Form 8-A'' (OMB Control No. 3235-0056);
    ``Form 8-K'' (OMB Control No. 3235-0060);
    ``Form 10-D'' (OMB Control No. 3235-0604);
    ``Schedule 14A'' (OMB Control No. 3235-0059);
    ``Schedule 14C'' (OMB Control No. 3235-0057); ``Form N-1A'' (OMB
Control No. 3235-0307); ``Form N-2'' (OMB Control No. 3235-0026);
``Form N-3'' (OMB Control No. 3235-0316); ``Form N-4'' (OMB Control No.
3235-0318); ``Form N-5'' (OMB Control. No. 3235-0169); ``Form N-6''
(OMB Control No. 3235-0503); and ``Form N-CSR'' (OMB Control No. 3235-
0570).
    The forms, reports, and regulations listed above were adopted under
the Securities Act, the Exchange Act or the Investment Company Act. The
regulations, schedules, and forms set forth the disclosure requirements
for registration statements, periodic and current reports, distribution
reports and proxy, and information statements filed by registrants to
help investors make informed investment and voting decisions. Other
forms and reports are filed by entities regulated by the Investment
Company Act in connection with the Commission's oversight of these
entities.
    We are proposing amendments, which are described in more detail in
Section II above, based on the recommendations made in the FAST Act
Report, as required by Section 72003 of the FAST Act. The proposed
amendments are intended to modernize and simplify certain disclosure
requirements in Regulation S-K and related rules and forms in a manner
that reduces the costs and burdens on registrants while continuing to
provide all material information to investors. The proposed amendments
are also intended to improve the readability and navigability of the
Commission's disclosure documents and discourage repetition and
disclosure of immaterial information. In addition, we are proposing
parallel amendments to several rules and forms applicable to investment
companies and investment advisers to provide for a consistent set of
incorporation by reference and hyperlinking rules for these entities,
including proposed amendments that would require certain investment
company filings to be submitted in HTML format.

B. Summary of the Proposed Amendments' Impact on Collection of
Information

    In this section, we summarize the proposed amendments and their
general impact on the paperwork burden associated with the forms listed
in Section IV.A. In Section IV.C. below, we provide revised burden
estimates for each form.

1. Proposed Amendments Expected To Decrease Burdens
a. Description of Property (Item 102)
    The proposed amendments to Item 102 of Regulation S-K would clarify
that a description of property is only required to the extent physical
properties are material to the registrant and make other clarifying
amendments.\379\ The staff has observed that the current disclosure
standard may lead registrants, in some instances, to devote resources
to providing disclosure on properties that are not material. Although
the proposed amendments to Item 102 are expected to help registrants
avoid unnecessary disclosure in some instances, the amendments are
clarifying in nature and therefore we do not believe they would
significantly affect the paperwork burden associated with affected
forms. Accordingly, we estimate that the paperwork burden would be
reduced by 0.5 hours for each form affected by the proposed amendments.
We expect that Form S-1,\380\ Form S-4,\381\ Form 10, and Form 10-K
would be affected by this proposed amendment.
---------------------------------------------------------------------------

    \379\ See supra Section II.A.
    \380\ 17 CFR 239.11.
    \381\ 17 CFR 239.25.
---------------------------------------------------------------------------

b. Management's Discussion and Analysis (Item 303)
    The proposed amendments to Item 303 would allow registrants, in
some circumstances, to eliminate the earliest year of the MD&A
discussion.\382\ The proposed amendments would also eliminate the
reference to five-year selected financial data in Instruction 1 to Item
303(a) and clarify that registrants may use their discretion in
selecting the best format for their MD&A presentation.\383\ The
combined effects of these amendments would be to eliminate the burden
on registrants to prepare and provide repetitive disclosure that is not
material. The proposed amendments are of particular significance,
because MD&A is typically one of the most labor-intensive sections of
any form in which it is required. We anticipate that the proposed
amendments to simplify and clarify the MD&A requirements would reduce
the paperwork burden associated with related forms.
---------------------------------------------------------------------------

    \382\ See supra Section II.B.
    \383\ See supra id.
---------------------------------------------------------------------------

    We estimate that the aggregate impact of the proposed amendments
would be a four hour reduction in paperwork burden each time Item 303
information is required to be included in a form. We estimate that the
aggregate impact of the proposed corresponding amendments to Form 20-F
would result in a four hour reduction each time information under Item
5 of that form is required. We expect that Form S-1,\384\ Form S-
4,\385\ Form S-11,\386\ Form F-1,\387\ Form F-4,\388\ Form 10, Form 10-
K, Form 10-Q, and Form 20-F would be affected by this proposed
amendment.
---------------------------------------------------------------------------

    \384\ 17 CFR 239.11.
    \385\ 17 CFR 239.25.
    \386\ 17 CFR 239.18.
    \387\ 17 CFR 239.31.
    \388\ 17 CFR 239.34.
---------------------------------------------------------------------------

c. Directors, Executive Officers, Promoters and Control Persons (Item
401, Item 405 and Item 407)
    The proposed amendments to Item 401, Item 405, and Item 407 of
Regulation S-K would simplify and modernize executive officer, Section
16(a) compliance and corporate governance disclosure requirements. The
proposed amendments to Item 401 would simplify the rules for
determining what disclosure about executive officers may be included in
Form 10-K when other disclosure in Part III of Form 10-K will be
incorporated by reference to the registrant's definitive proxy or
information statement.\389\ The proposed amendments to Item 405 would
allow registrants to rely on a review of Section 16 reports submitted
on EDGAR rather than reports furnished to the registrant when providing
disclosure about Section 16(a) compliance.\390\ Finally, the proposed
amendments to Item 407 clarify the applicable auditing standard and the
disclosure requirements for the compensation committees of EGCs.\391\
---------------------------------------------------------------------------

    \389\ See supra Section II.C.
    \390\ See id.
    \391\ See id.
---------------------------------------------------------------------------

    The proposed amendments to Item 401, Item 405, and Item 407 would
clarify and streamline existing disclosure requirements, and in that
respect are expected to marginally reduce compliance costs for
registrants. We estimate that the proposed amendments would reduce the
paperwork burden for each affected form by 0.5 hours. We expect that
Form S-1, Form S-4, Form S-11, Form 8-K, Form 10, Form 10-K, and Form
10-Q would be affected by this proposed amendment.
d. Exhibits (Item 601)
i. Information Omitted From Exhibits (Item 601(a)(5), Item 601(a)(6),
and Item 601(b)(10)(iv))
    We are proposing several amendments to Item 601 of Regulation S-K.
Many of these amendments affect provisions related to the Commission's
confidential treatment process. Specifically, the proposed amendments
to Item 601(a)(5), Item 601(a)(6), and Item 601(b)(10)(iv) would permit
registrants to omit, without submitting a confidential treatment
request, schedules and attachments that are not material, personally
identifiable information and confidential information in material
contract exhibits that is both (i) not material and (ii) competitively
harmful if publicly disclosed.
    For purposes of the PRA, we consider the time and cost to prepare
and submit a confidential treatment request to be part of the paperwork
burden associated with preparing and filing the related disclosure
form. We estimate that elimination of the need to prepare and submit a
confidential treatment request to omit confidential information from
exhibits filed pursuant to Item 601(b)(10) that is both (i) not
material and (ii) competitively harmful if publicly disclosed would
reduce internal burden hours by ten hours per request for an estimated
20% of registrants that prepare the confidential treatment request
without relying on outside counsel, and reduce external costs by $4,000
per request for an estimated 80% of registrants that retain outside
counsel for this work.\392\
---------------------------------------------------------------------------

    \392\ The $4,000 cost estimate is calculated as follows: 10
hours x $400 per hour of outside counsel work = $4,000. See infra
note 412.
---------------------------------------------------------------------------

    Proposed Item 601(a)(5) would permit registrants to omit entire
schedules and attachments to exhibits unless the schedules contain
information material to an investment or voting decision and that
information is not otherwise disclosed in the exhibit or the disclosure
document. The threshold for omission under proposed Item 601(a)(5) is
lower than for omission under the proposed amendment to Item 601(b)(10)
because registrants would not be required to show that the information
would cause competitive harm if publicly disclosed.
    Based on our review of confidential treatment requests granted in
fiscal year 2016, we estimate that over 90% of these requests were
granted for material contracts based on competitive harm to the
registrant. For the remainder, we expect that many of those exhibits
likely contain schedules that could be omitted under proposed Item
601(a)(5). However, we are unable to reliably estimate how many of
these requests would be unnecessary under the proposed amendments to
Item 601(a)(5) because this would depend, in part, on whether the
schedules contain material

information. Given that the proposed amendments to Item 601(b)(10)
would likely address over 90% of the confidential treatment requests
submitted to the Commission, and to avoid overestimating the decrease
in paperwork burden arising from the proposed amendments, we are not
making an additional adjustment to our burden estimates in respect of
the amendment to Item 601(a)(5) but are soliciting comment on ways to
reasonably estimate such an adjustment.\393\
---------------------------------------------------------------------------

    \393\ For similar reasons, we are making no additional
adjustment to our burden estimates in respect of the amendments to
Item 601(a)(6). In fiscal year 2016, only nine confidential
treatment requests were granted by the Commission for documents
containing PII. This suggests that most registrants are currently
taking advantage of existing staff guidance that PII may be omitted
without filing a confidential treatment request.
---------------------------------------------------------------------------

    Based on these assumptions, we expect the annual internal burden
hours and professional costs devoted to the confidential treatment
process to decrease each time exhibit information described in Item
601(a)(5), Item 601(a)(6), or Item 601(b)(10)(iv) is omitted or
redacted. In fiscal year 2016, 43% of confidential treatment requests
were filed for Form 10-Q, 18% for Form 10-K, 13% for Form 8-K, 8% for
Form S-1, 4% for Form 20-F, and 1% each for Form 10 and Form F-1. We
are therefore ascribing changes in paperwork burdens and costs to these
forms in these same proportions.
ii. Material Contracts Exhibits (Item 601(b)(10)(i))
    The proposed amendment to Item 601(b)(10)(i) would limit the two-
year look back filing requirement for material contracts to newly
reporting registrants. Registrants that are not newly reporting
registrants would no longer be required to comply with this filing
requirement and thus would incur reduced compliance burdens. However,
we believe that the current burden associated with the two-year look
back requirement is minimal. Therefore, the proposed amendments are not
expected to result in a significant reduction of the paperwork burden
associated with the affected forms. We estimate that the paperwork
burden would be reduced by 0.5 hours for each form affected by the
proposed amendment. We expect that Form 10, Form 10-K, Form S-1, Form
S-4, Form F-1, Form F-3, Form F-4, Form S-11, and Form SF-1 would be
affected by this proposed amendment.
2. Proposed Amendments Expected To Increase Burdens
a. Registration Statement and Prospectus Provisions (Item 501(b))
    We are proposing to amend Item 501(b) to require disclosure on the
cover page of the prospectus of any national securities exchange where
the securities being offered are listed or, if not listed, the
principal United States market or markets for the securities being
offered and the corresponding trading symbols, if any.\394\ The
proposed amendments would incrementally increase the compliance burden
on registrants by requiring them to provide disclosure about trading
markets other than national exchanges. Because we are proposing to
limit the incremental disclosure to those trading markets where the
registrants, through the engagement of a registered broker-dealer, has
actively sought and achieved quotation, we believe this information
should be readily available to registrants and impose only a minimal
paperwork burden.
---------------------------------------------------------------------------

    \394\ See supra Section II.D.
---------------------------------------------------------------------------

    Accordingly, we estimate that the proposed amendment would slightly
increase the paperwork burden associated with each affected form by
0.25 hours. We expect that Form S-1, Form S-3, Form S-4, Form S-11,
Form F-1, Form F-3, Form F-4, Form SF-1,\395\ and Form SF-3 \396\ would
be affected by this proposed amendment.
---------------------------------------------------------------------------

    \395\ 17 CFR 239.44.
    \396\ 17 CFR 239.45.
---------------------------------------------------------------------------

b. Exhibits (Item 601(b)(4)(vi) and (b)(21))
    Proposed new Item 601(b)(4)(vi) would require registrants to file
an Item 202 description of their Exchange Act registered securities as
an exhibit to Form 10-K. The proposed amendments to Item 601(b)(21)
would require disclosure of an LEI (if one has been obtained) for each
registrant and any subsidiaries required to be disclosed in the
exhibit.
    We expect that the new requirements under Item 601(b)(4)(vi) would
slightly increase the paperwork burden on registrants because
registrants would be required to provide a description of registered
securities annually. However, registrants would be able to incorporate
by reference and hyperlink to prior disclosure if the information
called for by Item 202 remains unchanged from prior years, thus
mitigating any increase in the anticipated burden. Accordingly, we
estimate the proposed amendments would increase the paperwork burden
associated with Form 10-K and Form 20-F by 0.5 hours.
    We expect that the proposed amendments to Item 601(b)(21) would
also increase the burden on registrants; however, we expect this
increase to be slight because LEI information should be readily
available and would be only required if an identifier has already been
obtained. Those registrants that have not obtained LEIs would not incur
an additional burden. Accordingly, we estimate that the proposed
amendments to Item 601(b)(21) would increase the paperwork burden
associated with each affected form by 0.25 hours. We expect that Form
S-1, Form S-4, Form F-1, Form 10, Form 10-K, Form S-11, Form SF-1, and
Form SF-3 would be affected by the proposed amendment to Item
601(b)(21).
c. Manner of Delivery
    Proposed new Rule 406, proposed new Item 601(b)(104), proposed new
paragraph 104 to ``Instructions as to Exhibits'' of Form 20-F and
proposed new Instruction 17 to ``Information To Be Filed on this Form''
of Form 40-F would require registrants to tag every data point on the
cover pages of Form 10-K, Form 10-Q, Form 8-K, Form 20-F, and Form 40-F
using Inline XBRL, including certain new data points added pursuant to
the proposed amendments.\397\ Although expanded data tagging would
result in an increase in the burden associated with related forms, we
note that registrants are already required to tag certain cover page
information as well as financial statement information. For this
reason, we believe most registrants already will have developed the
internal resources or engaged outside professionals to assist them in
complying with existing data tagging requirements.\398\ In this
respect, we do not believe the cover page tagging requirement would
result in significant additional burdens for registrants.
---------------------------------------------------------------------------

    \397\ See supra Section II.G.1.
    \398\ As discussed above, the Commission recently proposed to
require the use of the Inline XBRL format instead of the traditional
XBRL format for the submission of operating company financial
statements, and we intend for the cover page data to be tagged in
the same format as this other information. See id. In the Inline
XBRL Proposing Release, we provided estimates of the change in
paperwork burden associated with the transition to Inline XBRL. See
supra note 310. Because we expect to require the Inline XBRL format
for tagging cover page data only if the Inline XBRL proposal has
been adopted, we are not including PRA burden estimates related to
the transition to Inline XBRL in this release.
---------------------------------------------------------------------------

    Accordingly, we estimate that the requirement to tag additional
cover page items would impose an increased paperwork burden of one hour
for each affected form. We expect that Form 10-

K, Form 10-Q, Form 8-K, Form 20-F, and Form 40-F would be affected by
the proposed new rules and form amendments.
    As described in more detail above, we are proposing amendments to
certain of our forms that are used by investment companies and
amendments to Rule 102 of Regulation S-T to apply hyperlinking and HTML
requirements to those registrants to facilitate access to most exhibits
for investors and other users of the information.\399\ We anticipate
that the proposed amendments will increase the burdens and costs for
registrants to prepare and file registration statements and reports on
the affected forms. Because the software tools to prepare and file
documents in HTML are widely used and available at minimal cost, we do
not believe this requirement would appreciably change the existing
burden estimates for the affected registration statements or reports,
which already include the time and expense to prepare and file in
electronic format on EDGAR. We believe the burdens associated with
hyperlinking exhibits would be small as the registrant would already be
preparing the exhibits and exhibit index for the related filing and
would have readily available all the information necessary to create
the hyperlinks. We assume that the average burden hours of requiring
exhibit hyperlinks would vary based on the number of exhibits that are
included with a filing, as discussed in detail below.\400\
---------------------------------------------------------------------------

    \399\ See supra Section II.G.2.
    \400\ See infra Section IV.C.4.
---------------------------------------------------------------------------

3. Proposed Amendments Not Expected to Meaningfully Affect Burdens
a. Registration Statement and Prospectus Provisions (Item 501(b), Item
503(c), Item 508 and Item 512)
    The proposed amendments to Item 501(b)(1), Item 501(b)(3), and Item
501(b)(10) would, respectively, eliminate misleading company name
disclosure requirements, explicitly allow registrants to include a
clear statement that the offering price will be determined by a
particular method or formula (and require a cross reference to the
offering price method or formula disclosure), and permit registrants to
exclude some portion of the legend relating to state law in the
prospectus for an offering that is not prohibited by state blue sky
law.\401\ The proposed amendments to Item 503(c) would relocate the
current risk factor disclosure requirements to Subpart 100 and
eliminate the risk factor examples without substantively changing the
underlying disclosure requirements.\402\ The proposed amendment to Item
508 would define the term ``sub-underwriter'' to clarify one aspect of
the required disclosure about the plan of distribution for a registered
securities offering.\403\ The proposed amendments to Item 512 would
eliminate certain undertakings that are redundant or obsolete.\404\
---------------------------------------------------------------------------

    \401\ The proposed amendments would also streamline 501(b) by
combining paragraphs (b)(10) and (b)(11) without substantive change.
    \402\ See supra Section II.D.2.
    \403\ See supra Section II.D.3.
    \404\ See supra Section II.D.4.
---------------------------------------------------------------------------

    We believe these proposed amendments would not meaningfully affect
the paperwork burden associated with the related forms because these
amendments modernize and clarify certain requirements and do not
substantively change the required disclosure. Therefore, we are not
making any adjustments to the paperwork burden of affected forms due to
these proposed amendments.
b. Incorporation by Reference
    We are proposing amendments to simplify and modernize the rules and
forms governing incorporation by reference. Under the proposed
amendments, certain existing requirements for incorporation by
reference would be consolidated into Rule 411, Rule 12b-23, Rule 0-4,
and Rule 0-6.\405\ The proposed amendments would also eliminate several
redundant or outdated requirements. In addition, the proposed
amendments would provide registrants with additional flexibility in
organizing the disclosure in Form 10, Form 10-K, and Form 20-F by
permitting them to exclude item numbers and captions or create their
own captions tailored to the disclosure in these forms \406\ These
proposals are expected to decrease reporting burdens associated with
incorporating information by reference in Commission filings, leading
to an estimated 0.5 hour reduction in paperwork burden per affected
form. However, this decrease would be offset by an estimated 0.5 hour
increase in paperwork burden per affected form due to the proposed
amendments requiring registrants to include hyperlinks to information
incorporated by reference when that information is available on
EDGAR.\407\ Accordingly, we are not making any adjustments to the
paperwork burden of affected forms due to these proposed amendments.
---------------------------------------------------------------------------

    \405\ See supra Section II.F.
    \406\ See id.
    \407\ See id.
---------------------------------------------------------------------------

C. Burden and Cost Estimates to the Proposed Amendments

    As discussed below, we expect that the proposed amendments would,
in the aggregate, reduce the paperwork burden on respondents. The
change in burden, however, would differ depending on the form because
not all of the proposed amendments would apply to each form.
    These estimates represent the average burden for all registrants,
both large and small. In deriving our estimates, we recognize that the
burdens will likely vary among individual registrants based on a number
of factors, including the nature of their business.
    The burden estimates were calculated by multiplying the estimated
number of responses by the estimated average amount of time it would
take a registrant to prepare and review disclosure required under the
proposed amendments. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the registrant internally is reflected in hours.
1. Form 10-K and Form 10-Q; Schedule 14A and Schedule 14C
    The proposed amendments are estimated to significantly reduce the
paperwork burdens associated with Form 10-K \408\ and Form 10-Q as well
as Schedule 14A and Schedule 14C.\409\ For purposes of the PRA, we
estimate that 75% of the burden of preparation for these Exchange Act
reports is carried by the registrant internally and that 25% of the
burden of preparation is carried by outside professionals retained by
the company at an average cost of $400 per hour.\410\
---------------------------------------------------------------------------

    \408\ Schedules 14A and 14C require disclosure under Subpart 400
of Regulation S-K. This disclosure is often incorporated, in
relevant part, into Part III of a registrant's Form 10-K. Therefore,
our burden estimates for Form 10-K contemplate that Part III
disclosure may be incorporated by reference to Schedules 14A or 14C.
    \409\ Schedule 14A requires that registrants, under certain
circumstances, provide disclosure under Item 303. Our burden
estimate for Schedule 14A assumes that registrants would duplicate
the disclosure provided under this Item in the most recent Form 10-K
and/or Form 10-Q.
    \410\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $400 per hour. This estimate is
based on consultations with several registrants, law firms and other
persons who regularly assist registrants in preparing and filing
reports with the Commission.
---------------------------------------------------------------------------

    Table 4 below illustrates the total annual compliance burden, in
hours and in costs, \411\ of the affected

collections of information resulting from the proposed amendments.\412\
---------------------------------------------------------------------------

    \411\ For convenience, the estimated hour and cost burdens in
the tables in this section have been rounded to the nearest whole
number.
    \412\ The burdens associated with the proposed amendments to the
forms listed in Table 4, other than the confidential treatment
request proposal, have been estimated by assuming that 75% of the
burden is borne by the company and 25% is borne by outside counsel
at $400 per hour. The burdens associated with submitting
confidential treatment requests in connection with the forms listed
in Table 4 have been estimated by assuming that the average request
requires approximately ten hours of preparation and that 20% of the
burden is borne by the company and 80% of the burden is borne by
outside counsel at $400 per hour.

                               Table 4--Incremental Paperwork Burden Under the Proposed Amendments for Exchange Act Forms
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Proposed
                                          Current annual     number of    Current burden     Change in       Change in       Change in       Change in
                                             responses       affected          hours       burden hours    company hours   professional    professional
                                                             responses                                                         hours           costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K....................................           8,137           8,137      12,228,620        (32,703)        (23,325)         (9,378)    ($3,715,600)
10-Q....................................          22,907          22,907       3,220,037        (73,181)        (63,884)         (9,297)     (3,718,800)
8-K.....................................         118,387         118,387         507,665         116,867          88,490          28,377      11,350,800
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Form S-1, Form S-3, Form S-4, Form F-3, Form F-4, Form SF-1, Form
SF-3, Form 10, and Form 20-F
    The proposed amendments are estimated to significantly reduce the
paperwork burden associated with Form S-1, Form S-3, Form S-4, Form F-
3, Form F-4, and Form 20-F. For registration statements on Form 10,
Form S-1, Form S-3, Form S-4, Form F-1, Form F-3, Form F-4, Form SF-1,
and Form SF-3, and Exchange Act report Form 20-F, we estimate that 25%
of the burden of preparation is carried by the company internally and
that 75% of the burden of preparation is carried by outside
professionals retained by the company at an average cost of $400 per
hour.
    Table 5 below illustrates the total annual compliance burden, in
hours and in costs, of the affected collections of information
resulting from the proposed amendments.\413\
---------------------------------------------------------------------------

    \413\ The burdens associated with the proposed amendments to the
forms listed in Table 5, other than the confidential treatment
request proposal, have been estimated by assuming that 25% of the
burden is borne by the company and 75% is borne by outside counsel
at $400 per hour. The burdens associated with submitting
confidential treatment requests in connection with the forms listed
in Table 5 have been estimated by assuming that the average request
requires approximately ten hours of preparation and that 20% of the
burden is borne by the company and 80% of the burden is borne by
outside counsel at $400 per hour.

                             Table 5--Incremental Paperwork Burden Under the Proposed Amendments for Registration Statements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Proposed
                                          Current annual     number of    Current burden     Change in       Change in       Change in       Change in
                                             reponses        affected          hours       burden hours    company hours   professional    professional
                                                             responses                                                         hours           costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
S-1.....................................             901             901         150,242         (5,514)         (1,325)         (4,189)    ($1,675,600)
S-3.....................................           1,082           1,082         127,806           (301)            (78)           (223)        (89,200)
S-4.....................................             551             551         564,731         (2,803)           (700)         (2,103)       (841,200)
S-11....................................             100             100          19,476           (450)           (112)           (338)       (135,200)
SF-3....................................              71              71          24,495              36               9              27          10,800
F-1.....................................              63              63          26,917           (431)            (98)           (333)       (133,200)
F-3.....................................             107             107           4,467            (10)             (1)             (9)         (3,600)
F-4.....................................              68              68          24,769           (281)            (70)           (211)        (84,400)
10......................................             238             238          12,805          (1390)           (342)         (1,048)       (419,200)
20-F....................................             725             725         479,501          (2454)           (588)         (1,866)       (746,400)
40-F....................................             160             160          17,197             160              40             120          40,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

              Table 6--Current and Revised Burdens Under the Proposed Amendments for Securities Act
                                             and Exchange Act Forms
----------------------------------------------------------------------------------------------------------------
                                                       Current burden                    Revised burden
                                             -------------------------------------------------------------------
                                                Burden hours                      Burden hours
                                                    (A)            Cost (B)           (C)           Costs (D)
----------------------------------------------------------------------------------------------------------------
10-K........................................       12,228,620   $1,631,470,000       12,205,295   $1,627,754,400
10-Q........................................        3,220,037      429,368,808        3,156,153      425,650,008
8-K.........................................          507,665       67,688,700          596,155       79,039,500
S-1.........................................          150,242      180,290,100          148,917      178,614,900
S-3.........................................          127,806      153,367,008          127,728      153,277,808
S-4.........................................          564,731      677,677,104          564,031      676,835,904
S-11........................................           19,476       23,371,200           19,364       23,236,000
SF-3........................................           24,495       29,394,000           24,504       29,404,800
F-1.........................................           26,917       32,300,100           26,819       32,166,900
F-3.........................................            4,467        5,360,700            4,465        5,357,100
F-4.........................................           24,769       29,722,800           24,699       29,638,400
10..........................................           12,805       15,366,042           12,463       14,946,842
20-F........................................          479,501      575,400,600          478,913      574,654,200

40-F........................................           17,197       20,636,800           17,237       20,684,800
----------------------------------------------------------------------------------------------------------------

3. Form 8-A, Form 10-D, Form 40-F, Form F-7, Form F-8, Form F-10, and
Form F-80
    The proposed amendments to Form 8-A,\414\ Form 10-D, Form 40-F,
Form F-7,\415\ Form F-8,\416\ Form F-10, and Form F-80 \417\ are not
expected to meaningfully reduce the associated paperwork burden for
these forms. Accordingly, we have not included a tabular presentation
of the impact on the total annual compliance burden of these forms as a
result of these proposed amendments.
---------------------------------------------------------------------------

    \414\ 17 CFR 249.208a.
    \415\ 17 CFR 239.37.
    \416\ 17 CFR 239.38.
    \417\ 17 CFR 239.41.
---------------------------------------------------------------------------

4. Form S-6, Form N-1A, Form N-2, Form N-3, Form N-4, Form N-5, Form N-
6, Form N-14, and Form N-CSR
    The proposed amendments to Form S-6,\418\ Form N-1A,\419\ Form N-
2,\420\ Form N-3,\421\ Form N-4,\422\ Form N-5,\423\ Form N-6,\424\
Form N-14, and Form N-CSR \425\ are expected to increase the burdens
and costs for registrants to prepare and file registration statements
and reports on the affected forms, but we believe the burdens
associated with hyperlinking exhibits would be small.\426\ We assume
that the average burden hours of requiring exhibit hyperlinks would
vary based on the number of exhibits that are included with a filing.
For purposes of the PRA, based on the average and median number of
exhibits shown in Table 3 above and the staff's experience, we estimate
that the average burden for a registrant to hyperlink to exhibits would
be one hour per response for each of the affected forms. As discussed
above, we are not making any adjustments to the paperwork burden of
affected forms due to the proposed amendments to simplify and modernize
the rules and forms governing incorporation by reference.\427\
---------------------------------------------------------------------------

    \418\ 17 CFR 239.16.
    \419\ 17 CFR 239.15A and 17 CFR 274.11A.
    \420\ 17 CFR 239.14 and 17 CFR 274.11a-1.
    \421\ 17 CFR 239.17a and 17 CFR 274.11b.
    \422\ 17 CFR 239.17b and 17 CFR 274.11c.
    \423\ 17 CFR 239.24 and 17 CFR 274.5.
    \424\ 17 CFR 239.17c and 17 CFR 274.11d.
    \425\ 17 CFR 249.331 and 17 CFR 274.128.
    \426\ See supra Section IV.B.2.c.
    \427\ See supra Section IV.B.3.b.
---------------------------------------------------------------------------

    The table below shows the total annual compliance burden, in hours
and in costs, of the collections of information resulting from the
proposed amendments.\428\ The burden estimates were calculated by
multiplying the estimated number of responses by the estimated average
amount of time it would take an issuer to prepare and review the
exhibit hyperlinks. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the issuer internally is reflected in hours. For purposes of
the PRA, we estimate that 25% of the burden of preparation is carried
by the registrant internally and that 75% of the burden of preparation
is carried by outside professionals retained by the company at an
average cost of $400 per hour.\429\
---------------------------------------------------------------------------

    \428\ For convenience, the estimated hour and cost burdens in
the table have been rounded to the nearest whole number.
    \429\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $400 per hour. These estimates are
based on our estimates for the parallel requirement for operating
companies. Exhibit Hyperlinks Adopting Release, supra note 14 at
14139.

                          Table 6--Incremental Paperwork Burden Under the Proposed Amendments to Forms for Investment Companies
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Proposed number
                 Forms                     of affected        Incremental     Total incremental     25% internal       75% outside        Professional
                                            responses      burden hours/form     burden hours          burden          professional          costs
                                                      (A)                (B)    (C) = (A) x (B)   (D) = (C) x 0.25   (E) = (C) x 0.75     (F) = E x $400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form S-6..............................              2,498                  1              2,498                625              1,874           $749,600
Form N-1A.............................              6,002                  1              6,002              1,501              4,502          1,800,800
Form N-2..............................                166                  1                166                 42                125             50,000
Form N-3..............................                 20                  1                 20                  5                 15              6,000
Form N-4..............................              1,653                  1              1,653                413              1,240            496,000
Form N-5..............................                  1                  1                  1                  0                  1                400
Form N-6..............................                472                  1                472                118                354            141,600
Form N-14.............................                192                  1                192                 48                144             57,600
Form N-CSR............................              6,898                  1              6,898              1,725              5,174          2,069,600
                                       -----------------------------------------------------------------------------------------------------------------
    Total.............................  .................  .................             17,902  .................  .................          5,371,600
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Request for Comment

    Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
     Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility;
     Evaluate the accuracy of our assumptions and estimates of
the

burden of the proposed collection of information;
     Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected;
     Evaluate whether there are ways to minimize the burden of
the collection of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
     Evaluate whether the proposed amendments would have any
effects on any other collection of information not previously
identified in this section.
    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct their comments to the Office of
Management and Budget, Attention: Desk Officer for the U.S. Securities
and Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and send a copy to, Brent J. Fields, Secretary,
U.S. Securities and Exchange Commission, 100 F Street NE., Washington,
DC 20549, with reference to File No. S7-08-17. Requests for materials
submitted to OMB by the Commission with regard to the collection of
information should be in writing, refer to File No. S7-08-17 and be
submitted to the U.S. Securities and Exchange Commission, Office of
FOIA Services, 100 F Street NE., Washington DC 20549. OMB is required
to make a decision concerning the collection of information between 30
and 60 days after publication of this proposed rule. Consequently, a
comment to OMB is best assured of having its full effect if the OMB
receives it within 30 days of publication.

V. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996,\430\ a rule is ``major'' if it has resulted, or is likely
to result in:
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    \430\ 5 U.S.C. 801 et seq.
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     An annual effect on the U.S. economy of $100 million or
more;
     a major increase in costs or prices for consumers or
individual industries; or
     significant adverse effects on competition, investment, or
innovation.
    We request comment on whether our proposal would be a ``major
rule'' for purposes of the Small Business Regulatory Enforcement
Fairness Act. We solicit comment and empirical data on:
     The potential effect on the U.S. economy on an annual
basis;
     any potential increase in costs or prices for consumers or
individual industries; and
     any potential effect on competition, investment, or
innovation.

VI. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Act Analysis has been prepared
in accordance with the Regulatory Flexibility Act.\431\ It relates to
proposed amendments to modernize and simplify certain disclosure
requirements in Regulation S-K and related rules and forms to implement
Section 72003 of the FAST Act and provide consistent incorporation by
reference and hyperlinking requirements in the rules and forms
applicable to investment companies and investment advisers.
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    \431\ 5 U.S.C. 601 et seq.
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A. Reasons for, and Objectives of, the Proposed Action

    The purpose of the proposed amendments is to modernize and simplify
Commission disclosure requirements in a manner that reduces costs and
burdens on companies while still providing all material information.
Specifically, the proposed amendments would modernize and simplify
these disclosure requirements by clarifying, consolidating, relocating
and eliminating, or updating various Commission rules that govern
public company disclosure. The proposed amendments would also modernize
the rules by requiring cover page data to be tagged in a machine-
readable format, requiring disclosure of LEIs and requiring hyperlinks
to be included in some documents filed on EDGAR. The proposed
amendments would largely implement the staff's recommendations in the
FAST Act Report, as required by Section 72003(d) of the FAST Act. In
addition, the proposed amendments would apply parallel incorporation by
reference and hyperlinking requirements in the rules and forms used by
investment companies and investment advisers to provide a consistent
set of requirements for these registrants.

B. Legal Basis

    We are proposing the rule and form amendments contained in this
document under the authority set forth in Sections 7, 10, 19(a), and 28
of the Securities Act of 1933, as amended, Sections 3(b), 12, 13, 14,
15, 16, 23(a), and 36 of the Securities Exchange Act of 1934, as
amended, Sections 6(c), 8, 24(a), 30, and 38 of the Investment Company
Act of 1940, as amended and Sections 204, 206A, 210, and 211 of the
Investment Advisers Act of 1940, as amended.

C. Small Entities Subject to the Proposed Rules

    The proposed amendments would affect some registrants that are
small entities. The Regulatory Flexibility Act defines ``small entity''
to mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \432\ For purposes of the Regulatory
Flexibility Act, under our rules, an issuer, other than an investment
company or an investment adviser, is a ``small business'' or ``small
organization'' if it had total assets of $5 million or less on the last
day of its most recent fiscal year and is engaged or proposing to
engage in an offering of securities that does not exceed $5
million.\433\ An investment company, including a business development
company,\434\ is considered to be a ``small business'' if it, together
with other investment companies in the same group of related investment
companies, has net assets of $50 million or less as of the end of its
most recent fiscal year.\435\ An investment adviser generally is a
small entity if it: (1) Has assets under management having a total
value of less than $25 million; (2) did not have total assets of $5
million or more on the last day of the most recent fiscal year; and (3)
does not control, is not controlled by, and is not under common control
with another investment adviser that has assets under management of $25
million or more, or any person (other than a natural person) that had
total assets of $5 million or more on the last day of its most recent
fiscal year.\436\ We estimate that there are 837 issuers that file with
the Commission, other than investment companies and investment
advisers, that may be considered small entities.\437\ In addition, we
estimate that, as of

December 2016, there are 130 investment companies that would be subject
to the proposed amendments that may be considered small entities.
Finally, we estimate that, as of August 1, 2017, there are 557
investment advisers that may be subject to the proposed amendments that
may be considered small entities.\438\
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    \432\ 5 U.S.C. 601(6).
    \433\ See Securities Act Rule 157 [17 CFR 230.157] and Exchange
Act Rule 0-10(a) [17 CFR 240.0-10(a)].
    \434\ Business development companies are a category of closed-
end investment company that are not registered under the Investment
Company Act [15 U.S.C. 80a-2(a)(48) and 80a-53-64].
    \435\ See Investment Company Act Rule 0-10(a) [17 CFR 270.0-
10(a)].
    \436\ See Investment Advisers Act Rule 0-7(a) [17 CFR 275.0-
7(a)].
    \437\ This estimate is based on a review of Form 10-K and 20-F
filings (from EDGAR XBRL) with fiscal periods ending between January
31, 2015 and January 31, 2016.
    \438\ This estimate is based on Commission-registered investment
adviser responses to Form ADV, Item 5.F and Item 12.
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D. Reporting, Recordkeeping, and Other Compliance Requirements

    As noted above, the purpose of the proposed amendments is to
modernize and simplify the Commission's disclosure requirements and
provide consistent incorporation by reference and hyperlinking rules
for investment companies and investment advisers. If adopted, the
majority of the proposed amendments are expected to have an incremental
effect on existing reporting, recordkeeping and other compliance
burdens for all issuers, including small entities.\439\ Many of the
proposed amendments would simplify and streamline existing disclosure
requirements in ways that are expected to reduce compliance burdens.
Some of the proposed amendments, like those that impose new data
tagging,\440\ hyperlinking \441\ or disclosure requirements \442\ would
increase compliance costs for registrants, although we do not expect
these additional costs to be significant.
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    \439\ We recognize that the fixed costs of disclosure
requirements typically constitute a higher percentage of revenues
for smaller companies than for larger companies. However, the
benefits of disclosure may be greater for smaller companies because
information asymmetries between investors and managers of smaller
companies are typically higher than for larger, more seasoned
companies with a large following. See, e.g., R. Frankel and X. Li,
Characteristics of a firm's information environment and the
information asymmetry between insiders and outsiders, 37 J. Acct.
Econ. 229, 229-259 (June 2004). See also, L. Cheng, S. Liao, and H.
Zhang, The Commitment Effect versus Information Effect of
Disclosure--Evidence from Smaller Reporting Companies, 88 Acct. Rev.
1239, 1239-1263 (2013).
    \440\ See, e.g., supra Section 0 (Tagging Cover Page Data).
    \441\ See, e.g., supra Section 0 (Exhibit Hyperlinks and HTML
format for Investment Companies).
    \442\ See e.g., supra Section II.D.1.c (Market for the
Securities (Item 501(b)(4)).
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E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe that the proposed amendments would not duplicate,
overlap, or conflict with other federal rules.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed amendments, we considered the following alternatives:
     Establishing different compliance or reporting
requirements that take into account the resources available to small
entities;
     Clarifying, consolidating, or simplifying compliance and
reporting requirements under the rules for small entities;
     Using performance rather than design standards; and
     Exempting small entities from all or part of the
requirements.
    We believe the proposed amendments would clarify, consolidate and
simplify compliance and reporting requirements for small entities and
other registrants. As discussed above, we believe the majority of the
proposed amendments would simplify and streamline disclosure
requirements in ways that are expected to reduce compliance
burdens.\443\ We do not believe that the proposed amendments would
impose any significant new compliance obligations. Accordingly, we
generally do not believe it is necessary to establish different
compliance and reporting requirements or timetables or to exempt small
entities from all or part of the proposed amendments. We note in this
regard that the Commission's existing disclosure requirements provide
for scaled disclosure requirements and other accommodations for small
entities, and the proposed amendments would not alter these existing
accommodations.
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    \443\ See supra Sections (Economic Analysis) and IV (Paperwork
Reduction Act).
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    Finally, with respect to using performance rather than design
standards, the proposed amendments generally use design rather than
performance standards in order to promote uniform filing requirements
for all registrants. In some instances, the proposed amendments would
modernize and simplify existing design standards. For example, the
proposed amendments to Item 303(a) would emphasize the flexibility
currently available to registrants with respect to the form of MD&A
presentation.\444\ In other instances, the proposed amendments may
result in additional flexibility when preparing disclosures. For
example, proposed Item 601(a)(5) would expand registrants' ability to
omit schedules and attachments that are not material to exhibits.\445\
As another example, the proposed amendments to Item 102 would clarify
that the threshold for disclosure about registrants' physical
properties is based on materiality.\446\
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    \444\ See supra Section (Year-to-Year Comparisons (Instruction 1
to Item 303(a)).
    \445\ See supra Section (Schedules and Attachments to Exhibits).
    \446\ See supra Section (Description of Property).
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G. Request for Comment

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     how the proposed rule and form amendments can achieve
their objective while lowering the burden on small entities;
     the number of small entity companies that may be affected
by the proposed rule and form amendments;
     the existence or nature of the potential effects of the
proposed amendments on small entity companies discussed in the
analysis; and
     how to quantify the effects of the proposed amendments.
    Commenters are asked to describe the nature of any effect and
provide empirical data supporting the extent of that effect. Comments
will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rules are adopted, and will be
placed in the same public file as comments on the proposed rules
themselves.

VII. Statutory Authority and Text of Proposed Rule and Form Amendments

    We are proposing the rule and form amendments contained in this
document under the authority set forth in Sections 7, 10, 19(a), and 28
of the Securities Act of 1933, as amended, Sections 3(b), 12, 13, 14,
15, 16, 23(a), and 36 of the Securities Exchange Act of 1934, as