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SEC Adopts Conflict Minerals Disclosure Requirements
Practical Law Legal Update 7-521-0508 (Approx. 3 pages)
SEC Adopts Conflict Minerals Disclosure Requirements
by PLC Corporate & Securities
| Published on 23 Aug 2012 • USA (National/Federal) |
The SEC issued final rules implementing conflict mineral disclosure requirements under the Dodd-Frank Act.
On August 22, 2012, the SEC announced that it had adopted final rules implementing use of conflict minerals disclosure requirements set out in Section 1502 of the Dodd-Frank Act. Section 1502 added new Section 13(p) to the Exchange Act, which directs the SEC to adopt rules requiring reporting companies to disclose their use in the products they manufacture of conflict minerals that originate from the Democratic Republic of the Congo or an adjoining country.
The final rules differ from the originally proposed rules in several ways, including:
- A company must disclose information regarding its use of conflict minerals in a new report, Form SD, instead of in its annual report on Form 10-K or Form 20-F. This means that the conflict mineral information will not
- be covered in the chief executive officer's and chief financial officer's Sarbanes-Oxley certifications; or
- incorporated by reference into the company's registration statements, unless the company specifically states that it is incorporating this information.
However, the Form SD is considered "filed," not "furnished," so the company will have liability under Section 18 of the Exchange Act for this information. - The disclosure in Form SD must cover the calendar year, rather than a company's fiscal year.
- Companies that use conflict minerals derived from recycled or scrap sources do not have to conduct supply chain due diligence or file a conflict minerals report, but these companies must disclose this information on Form SD.
- Companies that cannot determine the source of their conflict minerals after conducting due diligence can, for the first two years after implementation, describe their products containing the minerals as "conflict undeterminable," rather than "not conflict free." Smaller reporting companies can use this characterization for four years.
For information on the original proposal, see Practice Note, Conflict Minerals Due Diligence.
Companies must begin reporting on conflict minerals for the first full year after final rules are adopted. The first conflict minerals report will cover calendar year 2013, regardless of a company's fiscal year, and must be filed by May 31, 2014.