On August 22, 2012, the US Securities and Exchange Commission (SEC) adopted final rules implementing Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Those final conflict minerals rules require diligence and disclosure of a reporting company’s use of "conflict minerals."
We offer reference materials and resources that we have developed since the Conflict Minerals Rule was issued in August of 2012. Several of the most widely used reference materials and resources are available via our blog so that you can use them as you develop your own policies and procedures.
The final rules are found in Rule 13p-1 to the Securities Exchange Act of 1934 and require that an SEC reporting company:
having conflict minerals that are necessary to the functionality or production of a product manufactured or contracted by that [reporting company] to be manufactured, shall file a report on Form SD within the period specified in that Form disclosing the information required by the applicable items of Form SD…
If a reporting company’s conflict minerals originated in the covered countries, that reporting company is required to submit a report to the SEC that includes a description of the measures it took to exercise due diligence on the conflict minerals’ source and chain of custody. The report disclosing those measures must, in most cases, be certified by an independent private sector auditor. In addition, the report also must include a description of the products manufactured or contracted to be manufactured that are not "DRC conflict free," the facilities used to process the conflict minerals, the country of origin of the conflict minerals and the efforts to determine the mine or location of origin of the conflict minerals.
Conflict minerals are currently limited to tantalum, tin, tungsten and gold.
"Covered countries" are the Democratic Republic of the Congo, Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia.
The new disclosure is required on Form SD which must be filed on a calendar year basis and is due by May 31 of each year (starting with May 31, 2014) covering the previous year.
The SEC has estimated that thousands of reporting companies and hundreds of thousands of suppliers will be affected by the conflict minerals rules. Our conflict minerals team works with our clients' legal, procurement and compliance teams to:
- Analyze application of the rules
- Develop policies and codes of conduct
- Prepare training for board, executive and relevant staff
- Review existing supply chains
- Develop processes to authorize new suppliers
- Recommend revisions to procurement agreements
- Plan communications with customers and suppliers
- Propose data gathering and retention policies
- Develop text for reporting and disclosure
- Propose audit procedures