November 14, 2007
SEC Proposes Mandatory EDGAR
Submission of Order Applications
The Securities and Exchange Commission (SEC) has proposed several rule amendments relating to the filing of
applications seeking orders from the SEC. The proposed rules would require order applications made under any
section of the Investment Company Act of 1940 (the Company Act), including requests for exemptive relief
submitted by investment companies, to be filed electronically via the SEC’s Electronic Data Gathering, Analysis,
and Retrieval (EDGAR) system. As a result, all investment company exemptive applications would become public
upon filing. The new rules would also implement various technical changes, as described below.
Background and Comments
This proposal comes as the latest in a string of SEC electronic filing and delivery initiatives that include the
January 2007 amendment to Section 17A of the Securities Exchange Act of 1934 (requiring transfer agents to file
their registration materials electronically) and the paperless proxy (or “e-proxy”) rule that became effective in July
2007. The stated purpose of the proposal is “to facilitate the efficient submission of applications by applicants, to
enable the public to access them more quickly and search them more easily, and to improve the Commission’s
ability to track and process such applications.”
The proposed rule amendments are open for public comment until December 14, 2007. Among other issues, the
SEC specifically seeks comment in the proposal as to whether more than three submission types should be
available to applicants, and whether the rule should apply to all, or only certain, order applications made under the
Company Act. The full text of the proposing release and an electronic comment submission form are available
online at http://www.sec.gov/rules/proposed. If you are interested in commenting on any aspect of the proposal,
we are available to assist you with the preparation and submission of your comment letter.
Applications for Orders under the Company Act
Regulation S-T, which governs electronic filings, presently prohibits most persons – including investment
companies seeking exemptive relief – from filing via EDGAR. The SEC’s proposal would amend Rule
101(a)(1)(iv) of Regulation S-T, with a conforming amendment to Rule 0-2 under the Company Act, to make it
mandatory for all applicants seeking orders under the Company Act (besides those seeking deregistration) to file
their applications on EDGAR. The SEC anticipates that upon adoption of the new rules, the EDGAR Filer Manual,
which provides technical guidance on making EDGAR filings, would provide for three application submission
types: Type 40-APP (for most applications filed by investment companies and other persons under the Company
Act), Type 40-OIP (for variable insurance product applications*), and Type 40-6B (for employee securities
company applications).
Elimination of the Rule 201 Temporary Hardship Exemption
Rule 201 of Regulation S-T currently provides a hardship exception that allows paper filings in instances of
“unanticipated technical difficulties that prevent the timely preparation and submission” of mandatory electronic
filings. The proposed new rules would prohibit exemptive and other order applications made under the Company
*
Type 40-OIP submissions would include, among others, mixed and shared funding exemptive applications made under
Section 6(c) of the Company Act.
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Act from being filed in paper in reliance on the Rule 201 exception. The SEC’s rationale for this proposed change
is that “there is generally no submission exigency or submission deadline associated with these submissions.”
Removal of the Rule 0-2 Verification and Drafting Requirements
Rule 0-2 under the Company Act, which governs the submission of applications, now requires order applicants to
verify their applications and the statements made therein with a notarized form. In proposing the removal of these
Rule 0-2(d) verification/notarization requirements, the SEC describes them as unnecessary in the context of
electronic filings made in compliance with Regulation S-T (including the electronic signature requirements
contained in Rule 302(b)). Similarly, in proposing to remove the provisions of Rule 0-2(g) that require order
applicants to include with their applications a draft of the notice of order sought, the SEC cites the requirement as
“inconsistent with mandatory electronic submission of applications on EDGAR.”
Regulation E Filings
Regulation E is an offering exemption under the Securities Act of 1933 (the Securities Act) that allows small
business investment companies (SBICs) and business development companies (BDCs) that are regulated under
the Company Act to offer their securities without registration under the Securities Act. In the proposal, the SEC
posits that Regulation E registration exemptions should be mandatory EDGAR filings, reasoning that SBICs and
BDCs are currently required to make their other filings through EDGAR and that as such the mandate would not
be burdensome or costly for these filers.
For further information, please contact Cameron Avery 312-807-4302, Kevin Bettsteller 312-807-4442, Paul
Dykstra 312-781-6029, Jennifer Esquibel 312-807-4262, Alan Goldberg 312-807-4227, Elizabeth Hudson 312-807-4376,
Anna Paglia 312-781-7163, Alicia Perla 312-807-4318, Andrew Pfau 312-807-4386, Paulita Pike 312-781-6027, Eric Purple
202-955-7081, Bruce Rosenblum 202-955-7087, Donald Weiss 312-807-4303, Gwendolyn Williamson 202-955-7059 or Stacy
Winick 202-955-7040 of Bell Boyd’s Investment Management and Financial Markets Group or visit our Web site at
www.bellboyd.com.
This publication has been prepared by the Investment Management and Financial Markets Group of Bell, Boyd & Lloyd for
clients and friends of the firm and is for information only. It is not a substitute for legal advice or individual analysis of a
particular legal matter. Readers should not act without seeking professional legal counsel. Transmission and receipt of this
publication does not create an attorney-client relationship.
© 2007 Bell, Boyd & Lloyd LLP All Rights Reserved
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