Revisions to Form S-11 To Permit Historical Incorporation by Reference, 72274-72280 [E7-24617]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 244 (Thursday, December 20, 2007)]
[Proposed Rules]
[Pages 72274-72280]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24617]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR PART 239

[Release No. 33-8871; File No. S7-30-07]
RIN 3235-AK02


Revisions to Form S-11 To Permit Historical Incorporation by 
Reference

AGENCY: Securities and Exchange Commission.

[[Page 72275]]


ACTION: Proposed rule.

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SUMMARY: We are proposing to amend Form S-11, a registration statement 
used by real estate entities to register offerings under the Securities 
Act of 1933. The amendments would permit an entity that has filed at 
least one annual report and that is current in its reporting 
obligations under the Securities Exchange Act of 1934 to incorporate by 
reference into Form S-11 information from its previously filed Exchange 
Act reports and documents. The proposed amendments are identical to 
amendments to Forms S-1 and F-1 previously adopted by the Commission 
and effective as of December 1, 2005.

DATES: Comments should be received on or before January 22, 2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form https://
www.sec.gov/rules/proposed.shtml);
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-30-07 on the subject line; or
     Use the Federal Rulemaking Portal (https://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number S7-30-07. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (https://www.sec.gov/rules/proposed.shtml). Comments 
are also available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Michael McTiernan at (202) 551-3852 or 
Daniel Greenspan at (202) 551-3430, Division of Corporation Finance, 
U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, 
DC 20549-3010.

SUPPLEMENTARY INFORMATION: On June 29, 2005, we adopted rules \1\ that 
modified the registration, communications and offering processes under 
the Securities Act of 1933.\2\ In order to integrate further the 
Securities Act and the Securities Exchange Act of 1934,\3\ the 
Commission adopted amendments to Form S-1 \4\ and Form F-1 \5\ to 
permit a reporting issuer that has filed at least one annual report and 
that is current in its reporting obligation under the Exchange Act to 
incorporate by reference into its Form S-1 or Form F-1 information from 
its previously filed Exchange Act reports and documents. At that time, 
we did not adopt similar amendments to Form S-11.\6\ We believe it is 
appropriate to extend to issuers using Form S-11 the same ability to 
take advantage of incorporation by reference. The proposed amendments 
therefore would make the requirements of Form S-11 consistent with 
Forms S-1 and F-1 with respect to incorporation by reference.
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    \1\ See Securities Offering Reform, Release No. 33-8591 (Jul. 
19, 2005) [70 FR 44722].
    \2\ 15 U.S.C. 77a et seq.
    \3\ 15 U.S.C. 78a et seq.
    \4\ 17 CFR 239.13.
    \5\ 17 CFR 239.33.
    \6\ 17 CFR 239.18.
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I. Discussion

A. Background

    Form S-11 is the form that real estate entities must use to 
register offerings under the Securities Act.\7\ The form is mandatory 
for the registration of securities issued by real estate investment 
trusts and securities issued by other issuers whose business is 
primarily that of acquiring and holding for investment real estate, 
interests in real estate, or interests in other issuers whose business 
is primarily that of acquiring and holding real estate or interests in 
real estate for investment.\8\ Form S-11 currently does not permit an 
issuer to satisfy the disclosure requirements of the form through 
incorporation by reference to the reports and other documents that the 
issuer previously has filed under the Exchange Act.
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    \7\ Real estate entities may also use Forms S-3 and S-4 if they 
meet the applicable eligibility requirements of those forms. When no 
other form is available, these entities are required to file on Form 
S-11 rather than Form S-1.
    \8\ See General Instruction A of Form S-11.
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B. Reasons For Proposal

    On June 29, 2005 we adopted amendments to Forms S-1 and F-1 to 
permit companies filing those forms to incorporate by reference 
information from their previously filed Exchange Act reports and 
documents.\9\ The purpose of the amendments was to integrate further 
the Exchange Act and the Securities Act.\10\ The ability to incorporate 
by reference is conditioned on the company having filed its annual 
report for the most recent fiscal year, being current in its reporting 
obligations under the Exchange Act, and making the incorporated 
Exchange Act reports and documents available and accessible on a Web 
site maintained by or for the registrant.\11\ Blank check companies, 
shell companies and penny stock registrants are not permitted to use 
incorporation by reference. Successor registrants may incorporate by 
reference if their predecessors are eligible.\12\
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    \9\ See Release No. 33-8591.
    \10\ Id. at 237.
    \11\ See General Instruction VII of Form S-1 and General 
Instruction VI of Form F-1.
    \12\ Id.
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    At that time, we did not adopt a similar amendment to Form S-11. 
However, we believe that Form S-11 should be consistent with Form S-1 
with respect to incorporation by reference. Both Form S-11 and Form S-1 
are long-form registration statements intended for new and unseasoned 
issuers. The only substantive difference between the two forms is that 
Form S-11 contains certain additional disclosure requirements specific 
to real estate entities. Since the Commission's interest in integrating 
disclosure under the Exchange Act and Securities Act extends equally to 
the disclosure obligations of real estate entities, we propose to amend 
Form S-11 to permit incorporation by reference on the same terms as we 
permit it in Forms S-1 and F-1.

C. Proposed Amendments to Form S-11

1. Eligibility
    We are proposing to permit a reporting issuer that has filed at 
least one annual report and that is current in its reporting 
obligations under the Exchange Act to incorporate by reference into its 
Form S-11 information from previously filed Exchange Act reports and 
documents. Under the proposal, a successor registrant would be able to 
incorporate information by reference on the same terms if its 
predecessor were eligible to do so.\13\ Consistent with Form S-1, the

[[Page 72276]]

following issuers would not be able to incorporate by reference into a 
Form S-11:
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    \13\ The succession would have to be either primarily for the 
purpose of changing the state or jurisdiction of incorporation of 
the issuer or forming a holding company and the assets and 
liabilities of the successor would have to be substantially the same 
as the predecessor at the time of the succession, or all of the 
predecessor issuers would have to be eligible at the time of the 
succession and the issuer must continue to be eligible.
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     Reporting issuers who are not current in their Exchange 
Act reports; \14\
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    \14\ As with Forms S-1, F-1 and S-3, under the proposal, to be 
current, at the time of filing the registration statement, the 
issuer must have filed all materials required to be filed pursuant 
to Exchange Act Sections 13, 14 or 15(d) [15 U.S.C. 78m, 78n, or 
78o(d)] during the preceding 12 calendar months (or for such shorter 
period that the issuer was required to file such materials).
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     Issuers who are or were, or any of whose predecessors were 
during the past three years:
    [cir] Blank check issuers;
    [cir] Shell companies (other than business combination related 
shell companies); or
    [cir] Issuers for offerings of penny stock.\15\
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    \15\ See Securities Act Rule 419(a)(2) [17 CFR 230.419(a)(2)], 
Exchange Act Rule 3a51-1 [17 CFR.240.3a51-1] and Securities Act Rule 
405 [17 CFR 230.405)] for definitions of ``blank check company,'' 
``penny stock'' and ``shell company,'' respectively.
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    In addition, to enhance the availability to investors of 
incorporated information, the ability to incorporate by reference would 
be conditioned on the issuer making its incorporated Exchange Act 
reports and other materials readily accessible on a Web site maintained 
by or for the issuer. By conditioning the ability to incorporate by 
reference on the ready accessibility of an issuer's incorporated 
Exchange Act reports and other materials on its Web site, we are 
proposing to provide investors the ability to obtain the information 
from those reports and materials at the same time that they would have 
been able to obtain the information if it was set forth directly in the 
registration statement. Issuers would be able to satisfy this condition 
by including hyperlinks directly to the reports or other materials 
filed on EDGAR or on another third-party Web site where the reports or 
other materials are made available in the appropriate time frame and 
access to the reports or other materials is free of charge to the user.
2. Procedural Requirements
    As proposed, the prospectus in the registration statement at 
effectiveness would identify all previously filed Exchange Act reports 
and materials, such as proxy and information statements, that are 
incorporated by reference. There would be no permitted incorporation by 
reference of Exchange Act reports and materials filed after the 
registration statement is effective--known as ``forward incorporation 
by reference.'' Under the proposal, an issuer eligible to incorporate 
by reference its Exchange Act reports and other materials into its Form 
S-11 would include the following in the prospectus that is part of the 
registration statement:
     A list of the incorporated reports and materials;
     A statement that it will provide copies of any 
incorporated reports or materials on request;
     An indication that the reports and materials are available 
from us through our EDGAR system or our public reference room;
     Identification of the issuer's Web site address where such 
incorporated reports and other materials can be accessed; and
     Required disclosures regarding material changes in, or 
updates to, the information that is incorporated by reference from an 
Exchange Act report or other material required to be filed.

D. Request for Comment

    We request and encourage any interested person to submit comments 
on the proposal and any other matters that might have an impact on the 
proposal. With respect to any comments, we note that such comments are 
of greatest assistance to our rulemaking initiative if accompanied by 
supporting data and analysis of the issues addressed in those comments.

II. Paperwork Reduction Act

A. Background

    The proposed amendments to Form S-11 contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995.\16\ We are submitting these to the Office of 
Management and Budget for review and approval in accordance with the 
Paperwork Reduction Act.\17\ The title for this information is ``Form 
S-11'' (OMB Control No. 3235-0067).
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    \16\ 44 U.S.C. 3501 et seq.
    \17\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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    We adopted existing Form S-11 pursuant to the Securities Act. This 
form sets forth the disclosure requirements for registration statements 
prepared by real estate entities to provide investors with the 
information they need to make informed investment decisions in 
registered offerings.
    Our proposed amendments to Form S-11 are intended to allow issuers 
that are required to use Form S-11 to incorporate by reference 
previously filed Exchange Act reports and documents. The proposed 
amendments would conform Form S-11 to Forms S-1 and F-1 with respect to 
incorporation by reference.
    The hours and costs associated with preparing disclosure, filing 
forms, and retaining records constitute reporting and cost burdens 
imposed by the 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 control 
number. The information collection requirements related to registration 
statements on Form S-11 are mandatory. There is no mandatory retention 
period for the information disclosed, and the information disclosed 
would be made publicly available on the EDGAR filing system.

B. Summary of Information Collections

    The proposals would decrease existing disclosure requirements for 
eligible issuers by eliminating the need to repeat information in a 
Form S-11 when that information was previously disclosed in Exchange 
Act filings. Any reporting issuer that has filed at least one annual 
report and that is current in its reporting obligation would be 
permitted to incorporate information by reference into its registration 
statement on Form S-11.

C. Paperwork Reduction Act Burden Estimates

    For purposes of the Paperwork Reduction Act, we expect the annual 
decrease in the paperwork burden for companies to comply with Form S-11 
to be approximately 36,811.5 hours of in-house company personnel time 
and approximately $44,173,800 for the services of outside 
professionals.\18\ These estimates include the time and the cost of 
preparing and reviewing disclosure, filing documents, and retaining 
records. These estimates were based on the following assumptions:
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    \18\ Consistent with recent rulemakings and based on discussions 
with several private law firms, we estimate that the cost of outside 
professionals retained by the issuer is an average of $400 per hour.
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     Each year, 82 registration statements on Form S-11, 
including post-effective amendments, would incorporate information by 
reference; \19\
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    \19\ We estimate that issuers that would have been eligible to 
incorporate by reference under the proposals filed 14 new 
registration statements on Form S-11 and 68 post-effective 
amendments to registration statements on Form S-11 (excluding post-
effective amendments filed for the purpose of deregistering shares) 
from September 1, 2006 to August 31, 2007. With the elimination of 
small business registration forms, we estimate that the number of 
registration statements filed on Form S-11 will increase by 15 for a 
total of 29 new registration statements. See SEC Press Release No. 
2007-233 (Nov. 15, 2007), available at https://www.sec.gov/news/
press/2007/2007-233.htm.

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[[Page 72277]]

     The estimated paperwork burden for a Form S-11 that does 
not incorporate information by reference is 1,977 hours, which consists 
of 494.25 internal hours and 1,482.75 professional hours.\20\
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    \20\ Assumes that 25% of total burden is borne by internal staff 
and 75% by professionals.
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     The estimated paperwork burden for a Form S-11 that 
incorporates information by reference would be the same as the burden 
currently imposed by Form S-3, which is 459 hours, which consists of 
114.75 internal hours and 344.25 professional hours.
     The amount of time eliminated for each Form S-11 that 
incorporates information by reference would be 1,518 hours per form 
(1,977 hours for a Form S-11 that does not incorporate information by 
reference minus 459 hours for a Form S-11 that incorporates information 
by reference).
     We estimate that the annual decrease in compliance burden 
resulting from the proposal would be 147,246 hours (97 registration 
statements multiplied by 1,518 hours per form). This would include 
36,811.5 hours of issuer personnel time (97 registration statements 
times 379.5 \21\ hours of issuer personnel time per registration 
statement) and 110,434.5 hours of professional time (97 registration 
statements times 1,138.5 \22\ hours of professional time per 
registration statement).
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    \21\ Reflects the difference between the amount of internal time 
required to prepare a Form S-11 without incorporation by reference 
(494.25 hours) and the amount of internal time required to prepare a 
Form S-11 with incorporation by reference (114.75 hours).
    \22\ Reflects the difference between the amount of professional 
time required to prepare a Form S-11 without incorporation by 
reference (1,483 hours) and the amount of professional time required 
to prepare a Form S-11 with incorporation by reference (344.25 
hours).
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     The annual cost savings would be approximately $44,173,800 
for the services of outside professionals.

D. Request for Comment

    We request comment in order to evaluate the accuracy of our 
estimate of the burden of the collection of information. Any member of 
the public may direct to us any comments concerning the accuracy of 
these burden estimates. Persons submitting comments on the collection 
of information requirements should direct their comments to the OMB, 
Attention: Desk Officer for the Securities and Exchange Commission, 
Office of Information and Regulatory Affairs, Washington, DC 20503, and 
send a copy of the comments to Nancy M. Morris, Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090, 
with reference to File No. S7-30-07. Requests for materials submitted 
to OMB by the Commission with regard to these collections of 
information should be in writing, refer to File No. S7-30-07, and be 
submitted to the Securities and Exchange Commission, Public Reference 
Room, 100 F Street, NE., Washington, DC, 20549-0609. OMB is required to 
make a decision concerning the collection of information between 30 and 
60 days after publication of this release. Because the OMB is required 
to make a decision concerning the collections of information between 30 
and 60 days after publication, your comments are best assured of having 
their full effect if the OMB receives them within 30 days of 
publication.

III. Cost-Benefit Analysis

A. Summary of Proposal

    We are proposing revisions to Form S-11 that would allow real 
estate entities to take advantage of incorporation by reference for 
their previously filed Exchange Act reports and documents. Forms S-1 
and F-1, which are similar long-form registration statements, currently 
permit this type of incorporation by reference. The proposed amendment, 
if adopted, would amend Form S-11 to permit incorporation by reference 
on the same terms as currently provided in Forms S-1 and F-1. The 
purpose of the amendments is to integrate further the disclosure 
obligations of the Exchange Act and the Securities Act for real estate 
entities.

B. Benefits

    We anticipate that our proposal would enable real estate entities 
to access the capital markets at a lower cost. It would enable eligible 
issuers to use their Exchange Act filings to satisfy a portion of their 
Form S-11 disclosure requirements without having to incur costs to 
replicate information that they already have disclosed in previously 
filed Exchange Act reports and other documents. For purposes of our 
Paperwork Reduction Act analysis, we estimate that our proposed 
amendments to Form S-11 would reduce the annual paperwork burden by 
approximately 36,811.5 hours for issuer personnel time at a cost of 
approximately $6,442,013 \23\ and by a cost of approximately 
$44,173,800 for the services of outside professionals. In addition, we 
believe that the reduction in the size of the prospectus as a result of 
incorporation by reference would also result in some cost savings and 
efficiencies in printing and delivering prospectuses.
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    \23\ Consistent with recent rulemaking releases, we estimate the 
value of work performed by the company internally at a cost of $175 
per hour.
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    The proposed amendments are intended to result in regulatory 
simplification and efficiency by permitting incorporation by reference 
on Form S-11 and conforming the requirements of Form S-11 to the 
requirements of Forms S-1 and F-1 in that respect. Incorporation by 
reference would allow eligible issuers to avoid duplicating disclosure 
in Form S-11 when the information has already been disclosed in 
Exchange Act reports. In addition, the revisions would simplify the 
disclosure regime for long-form registration statements by permitting 
incorporation by reference equally, regardless of industry.

C. Costs

    We expect that, if adopted, the proposed amendments would result in 
some ongoing costs to issuers that elect to use incorporation by 
reference. These potential costs relate to the issuer's obligation to 
make the incorporated Exchange Act reports and documents available on 
its Web site and include creating and/or maintaining a Web site as well 
as actually posting the required filings on the Web site. However, we 
believe that a substantial majority of issuers eligible to use 
incorporation by reference already maintain Web sites and thus would 
not have to incur any additional costs to establish a new Web site for 
this purpose. In addition, we believe that many issuers eligible to use 
incorporation by reference already post their Exchange Act reports on 
their Web sites. Those that do not would incur incremental costs to 
post the required filings. Given that the proposed amendments would not 
mandate use of incorporation by reference, issuers that are unwilling 
to bear the cost of complying with the Web site requirement could 
simply elect not to incorporate information by reference.
    We also recognize that permitting incorporation by reference may 
impose an analytical burden on investors. For example, for offerings on 
Form S-11 today, much of the relevant information regarding an offering 
and the issuer is required to be contained in the registration 
statement. Under our proposal, offerings pursuant to Form S-11 could 
require an investor to assemble and assimilate information from various 
Exchange Act reports and the registration statement in order to compile 
all of the relevant information regarding an offering. Investors would 
have to compile the information integrated into the registration 
statement

[[Page 72278]]

or delivered by means outside of the prospectus. We note, however, that 
Securities Act Forms S-3 and F-3 have long permitted incorporation by 
reference from the issuer's Exchange Act reports, as have Forms S-1 and 
F-1 since December 2005, and we know of no indications that investors 
are unduly burdened when investing in offerings registered on these 
forms.

D. Requests for Comments

    We request comment on all aspects of the cost-benefit analysis, 
including identification of any additional costs or benefits of, or 
suggested alternatives to, the proposed amendments. We also request 
that those submitting comments provide empirical data and other factual 
support for their views to the extent possible.

IV. Consideration of Promotion on Efficiency, Competition and Capital 
Formation

    Section 2(b) of the Securities Act,\24\ requires us, when engaged 
in rulemaking where we are required to consider or determine whether an 
action is necessary or appropriate in the public interest, to consider, 
in addition to the protection of investors, whether the action will 
promote efficiency, competition and capital formation.
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    \24\ 15 U.S.C. 77b(b).
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    The proposed amendment, if adopted, would amend Form S-11 to permit 
incorporation by reference on terms equivalent to that currently 
provided in Forms S-1 and F-1. We believe the amendments would provide 
benefits, as discussed in further detail above, by reducing the costs 
of complying with the Form S-11 disclosure requirements by enabling 
eligible issuers to incorporate their Exchange Act filings. Eased 
filing burdens resulting from the proposed amendments would promote 
efficiency in capital formation for real estate entities and may 
provide a competitive benefit to entities filing on Form S-11 by 
allowing them to incorporate their periodic reports by reference to the 
same extent as registrants filing on Forms S-1 and F-1.
    We request comment on whether the proposed amendment, if adopted, 
would promote efficiency, competition and capital formation. We request 
that commenters provide empirical data and other factual support for 
their views if possible.

V. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to proposed amendments to Form 
S-11.

A. Reasons for the Proposed Action

    In 2005, the Commission adopted revisions to Forms S-1 and F-1 to 
permit incorporation by reference from previously filed Exchange Act 
reports and other documents. Currently, real estate entities are not 
permitted to use Form S-1 to register offerings under the Securities 
Act. Consequently, these entities are unable to take advantage of the 
important benefit of incorporation by reference that is enjoyed by 
companies in all other industries that file registration statements on 
Form S-1. The ability to use a prospectus that does not need to include 
information provided in previous Exchange Act filings permits companies 
to streamline the preparation of registration statements and raise 
capital more efficiently. Companies that are not permitted to 
incorporate by reference have a greater burden in preparing 
registration statements in connection with their public offerings. We 
believe there is no reason to distinguish between real estate entities 
and other industries for purposes of incorporation by reference.

B. Objectives

    The purpose of the proposed amendments is to further integrate the 
Exchange Act and Securities Act by amending Form S-11 to permit 
incorporation by reference of Exchange Act filings on terms equivalent 
to that currently provided in Forms S-1 and F-1. The amendments would 
extend an important benefit to real estate entities.

C. Legal Basis

    We are proposing the amendments under the authority in Sections 6, 
7, 8, 10 and 19(a) of the Securities Act, as amended.

D. Small Entities Subject to the Proposed Amendments

    The Regulatory Flexibility Act defines ``small entity'' to mean 
``small business,'' ``small organization,'' or ``small governmental 
jurisdiction.'' \25\ The Commission's rules define ``small business'' 
and ``small organization'' for purposes of the Regulatory Flexibility 
Act for each of the types of entities regulated by the Commission.\26\ 
Roughly speaking, a ``small business'' and ``small organization,'' when 
used with reference to an issuer other than an investment company, 
means an issuer with total assets of $5 million or less on the last day 
of its most recent fiscal year. We estimate that there are 
approximately 1,100 issuers, other than investment companies, that may 
be considered reporting small entities.\27\ The proposed amendments 
would apply to all issuers required to file registration statements on 
Form S-11.
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    \25\ 5 U.S.C. 601(6).
    \26\ Rules 157 under the Securities Act [17 CFR 230.157], 0-10 
under the Exchange Act [17 CFR 240.0-10] and 0-10 under the 
Investment Company Act [17 CFR 270.0-10] contain the applicable 
definitions.
    \27\ The estimated number of reporting small entities is based 
on 2007 data, including the Commission's EDGAR database and Thomson 
Financial's Worldscope database.
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    As previously noted, in the 12 months ended August 31, 2007, 82 
registration statements on Form S-11 were filed, including new 
registration statements and post-effective amendments. We estimate that 
four of those were filed by small entities. We also estimate that 
approximately 15 registration statements were filed on Form SB-2 in the 
last fiscal year covering transactions by real estate entities that in 
the future will be required to register on Form S-11.\28\ Thus, we 
estimate that 19 registration statements by small entities would be 
subject to the proposed amendments.
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    \28\ See SEC Press Release No. 2007-233 (Nov. 15, 2007), 
available at https://www.sec.gov/news/press/2007/2007-233.htm.
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    We request comment on the number of small entities that would be 
impacted by our proposals, including any available empirical data.

E. Reporting, Recordkeeping and Other Compliance Requirements

    The proposed amendments are expected to impact all capital raising 
and selling security holder transactions that are registered under the 
Securities Act on Form S-11. Small entities required to register on 
Form S-11 would be able to take advantage of the ability to incorporate 
by reference previously filed Exchange Act reports and documents. We 
expect that permitting the incorporation by reference of previously 
filed Exchange Act reports and documents would reduce the costs 
incurred by small entities of preparing a registration statement on 
Form S-11 by $9,914,438.\29\
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    \29\ See n. 18 and n. 23.
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    These estimates were based on the following assumptions:
     Each year, 19 registration statements filed by small 
entities on Form S-11, including post-effective amendments, could 
incorporate information by reference.
     The paperwork burden for a Form S-11 that does not 
incorporate information by reference is 1,977 hours,

[[Page 72279]]

which consists of 494.25 internal hours and 1,482.75 professional 
hours.\30\
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    \30\ Assumes that 25% of total burden borne by internal staff 
and 75% by professionals.
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     The paperwork burden for a Form S-11 that incorporates 
information by reference would be the same as the burden currently 
imposed by Form S-3, which is 459 hours, which consists of 114.75 
internal hours and 344.25 professional hours.
     The amount of time eliminated for each Form S-11 that 
incorporates information by reference would be 1,518 hours per form 
(1,977 hours for a Form S-11 that does not incorporate information by 
reference minus 459 hours for a Form S-11 that incorporates information 
by reference).
     We estimate that the annual decrease in compliance burden 
to small entities resulting from the proposal would be 28,842 hours (19 
registration statements multiplied by 1,518 hours per form). This would 
include 7,210.5 hours of issuer personnel time (19 registration 
statements times 379. 5 \31\ hours of issuer personnel time per 
registration statement) and 21,631.5 hours of professional time (19 
registration statements times 1,138.5 \32\ hours of professional time 
per registration statement).
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    \31\ Reflects the difference between the amount of internal time 
required to prepare a Form S-11 without incorporation by reference 
(494.25 hours) and the amount of internal time required to prepare a 
Form S-11 with incorporation by reference (114.75 hours).
    \32\ Reflects the difference between the amount of professional 
time required to prepare a Form S-11 without incorporation by 
reference (1,483 hours) and the amount of professional time required 
to prepare a Form S-11 with incorporation by reference (344.25 
hours).
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     The annual cost savings to small entities would be 
approximately $8,652,600 for the services of outside professionals.
    We expect that small entities eligible to register on Form S-11 may 
need to incur some insignificant additional costs related to complying 
with the Web site requirements related to incorporation by reference, 
although issuers could avoid such costs by electing not to incorporate 
information by reference.
    We encourage written comments regarding this analysis. We solicit 
comments as to whether the proposed amendments could have an effect 
that we have not considered. We request that commenters describe the 
nature of any impact on small entities and provide empirical data to 
support the extent of the impact.

F. Duplicative, Overlapping or Conflicting Federal Rules

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

G. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that would accomplish the stated objective, while 
minimizing any significant adverse impact on small entities. In 
connection with the proposal, the Regulatory Flexibility Act requires 
us to consider the following alternatives:
    1. Establishing different compliance or reporting requirements that 
take into account the resources of small entities;
    2. The clarification, consolidation, or simplification of 
disclosure for small entities;
    3. Use of performance standards rather than design standards; and
    4. Exempting smaller entities from coverage of the disclosure 
requirements or any part thereof.
    Our proposal would extend the benefit of incorporation by reference 
to small entities that are required to file registration statements on 
Form S-11. Establishing a different standard for small business 
entities would impose a greater compliance burden on small entities and 
would be inconsistent with the benefits provided for small entities 
that register on Form S-1 and Form F-1.

H. Solicitation of Comment

    We encourage comments with respect to any aspect of this Initial 
Regulatory Flexibility Analysis. In particular, we request comments 
regarding:
     The number of small entities that may be affected by the 
proposed amendments;
     The existence or nature of the potential impact of the 
proposed amendments on small entities as discussed in this analysis; 
and
     How to quantify the impact of the proposed amendments.
    We ask those submitting comments to describe the nature of any 
impact and provide empirical data supporting the extent of the impact. 
These comments will be considered in the preparation of the Final 
Regulatory Flexibility Analysis, if the proposed amendments are 
adopted, and will be placed in the same public file as comments on the 
proposed amendments themselves.

VI. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996,\33\ a rule is ``major'' if it has resulted, or is likely 
to result in:
---------------------------------------------------------------------------

    \33\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     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.

VII. Statutory Authority and Text of the Proposed Amendments

    The amendments described in this release are being proposed under 
the authority set forth in Sections 6, 7, 8, 10 and 19(a) of the 
Securities Act, as amended.

List of Subjects in 17 CFR Part 239

    Reporting and recordkeeping requirements, Securities.

    For the reasons set out in the preamble, the Commission proposes to 
amend title 17, chapter II, of the Code of Federal Regulations as 
follows:

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    1. The authority citation for part 239 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 77mm, 80a-
2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 
80a-30, and 80a-37, unless otherwise noted.
* * * * *
    2. Amend Form S-11 (referenced in Sec.  239.18) as follows:
    a. Add General Instruction H;
    b. In Part I, add Item 28A;
    c. Redesignate Item 29 as Item 29A; and
    d. Add new Item 29.
    The additions read as follows:

    Note: The text of Form S-11 does not, and this amendment will 
not, appear in the Code of Federal Regulations.


[[Page 72280]]


FORM S-11
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF 
CERTAIN REAL ESTATE COMPANIES
GENERAL INSTRUCTIONS
* * * * *

H. Eligibility To Use Incorporation by Reference

    If a registrant meets the following requirements immediately prior 
to the time of filing a registration statement on this Form, it may 
elect to provide information required by Items 3 through 28 of this 
Form in accordance with Item 28A and Item 29 of this Form:
    1. The registrant is subject to the requirement to file reports 
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act 
of 1934 (``Exchange Act'').
    2. The registrant has filed all reports and other materials 
required to be filed by Sections 13(a), 14, or 15(d) of the Exchange 
Act during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports and materials).
    3. The registrant has filed an annual report required under Section 
13(a) or Section 15(d) of the Exchange Act for its most recently 
completed fiscal year.
    4. The registrant is not:
    (a) And during the past three years neither the registrant nor any 
of its predecessors was:
    (i) A blank check company as defined in Rule 419(a)(2) (Sec.  
230.419(a)(2) of this chapter);
    (ii) A shell company, other than a business combination related 
shell company, each as defined in Rule 405 (Sec.  230.405 of this 
chapter); or
    (iii) A registrant for an offering of penny stock as defined in 
Rule 3a51-1 of the Exchange Act (Sec.  240.3a51-1 of this chapter).
    (b) Registering an offering that effectuates a business combination 
transaction as defined in Rule 165(f)(1) (Sec.  230.165(f)(1) of this 
chapter).
    5. If a registrant is a successor registrant it shall be deemed to 
have satisfied conditions 1, 2, 3, and 4(b) above if:
    (a) Its predecessor and it, taken together, do so, provided that 
the succession was primarily for the purpose of changing the state of 
incorporation of the predecessor or forming a holding company and that 
the assets and liabilities of the successor at the time of succession 
were substantially the same as those of the predecessor; or
    (b) All predecessors met the conditions at the time of succession 
and the registrant has continued to do so since the succession.
    6. The registrant makes its periodic and current reports filed 
pursuant to Section 13 or Section 15(d) of the Exchange Act that are 
incorporated by reference pursuant to Item 28A or Item 29 of this Form 
readily available and accessible on a Web site maintained by or for the 
registrant and containing information about the registrant.
* * * * *

PART I--INFORMATION REQUIRED IN PROSPECTUS

* * * * *

Item 28A. Material Changes

    If the registrant elects to incorporate information by reference 
pursuant to General Instruction H, describe any and all material 
changes in the registrant's affairs which have occurred since the end 
of the latest fiscal year for which audited financial statements were 
included in the latest Form 10-K or Form 10-KSB and which have not been 
described in a Form 10-Q, Form 10-QSB, or Form 8-K filed under the 
Exchange Act.

Item 29. Incorporation of Certain Information by Reference

    If the registrant elects to incorporate information by reference 
pursuant to General Instruction H:
    (a) It must specifically incorporate by reference into the 
prospectus contained in the registration statement the following 
documents by means of a statement to that effect in the prospectus 
listing all such documents:
    (1) The registrant's latest annual report on Form 10-K or Form 10-
KSB filed pursuant to Section 13(a) or Section 15(d) of the Exchange 
Act which contains financial statements for the registrant's latest 
fiscal year for which a Form 10-K or Form 10-KSB was required to have 
been filed; and
    (2) All other reports filed pursuant to Section 13(a) or 15(d) of 
the Exchange Act or proxy or information statements filed pursuant to 
Section 14 of the Exchange Act since the end of the fiscal year covered 
by the annual report referred to in paragraph (a)(1) of this Item.

    Note to Item 29(a). Attention is directed to Rule 439 (Sec.  
230.439 of this chapter) regarding consent to use of material 
incorporated by reference.

    (b)(1) The registrant must state:
    (i) That it will provide to each person, including any beneficial 
owner, to whom a prospectus is delivered, a copy of any or all of the 
reports or documents that have been incorporated by reference in the 
prospectus contained in the registration statement but not delivered 
with the prospectus;
    (ii) That it will provide these reports or documents upon written 
or oral request;
    (iii) That it will provide these reports or documents at no cost to 
the requester;
    (iv) The name, address, telephone number, and e-mail address, if 
any, to which the request for these reports or documents must be made; 
and
    (v) The registrant's Web site address, including the uniform 
resource locator (URL) where the incorporated reports and other 
documents may be accessed.

    Note to Item 29(b)(1). If the registrant sends any of the 
information that is incorporated by reference in the prospectus 
contained in the registration statement to security holders, it also 
must send any exhibits that are specifically incorporated by 
reference in that information.

    (2) The registrant must:
    (i) Identify the reports and other information that it files with 
the SEC; and
    (ii) State that the public may read and copy any materials it files 
with the SEC at the SEC's Public Reference Room at 100 F Street, NE., 
Washington, DC 20549 on official business days between the hours of 10 
a.m. and 3 p.m. State that the public may obtain information on the 
operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330.
    If the registrant is an electronic filer, state that the SEC 
maintains an Internet site that contains reports, proxy and information 
statements, and other information regarding issuers that file 
electronically with the SEC and state the address of that site (https://
www.sec.gov).
* * * * *

    By the Commission.

    Dated: December 14, 2007.
Nancy M. Morris,
Secretary.
 [FR Doc. E7-24617 Filed 12-19-07; 8:45 am]
BILLING CODE 8011-01-P