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SEC Issues Conflict Minerals Small Entity Compliance Guide
Practical Law Legal Update 0-522-5363 (Approx. 3 pages)
SEC Issues Conflict Minerals Small Entity Compliance Guide
by PLC Corporate & Securities
| Published on 20 Nov 2012 • USA (National/Federal) |
The SEC released a compliance guide outlining conflict minerals disclosure requirements for small business entities.
On November 13, 2012, the SEC published a Small Entity Compliance Guide (Guide) outlining conflict minerals disclosure requirements for small business entities. The Guide summarizes and explains final rules adopted by the SEC on August 22, 2012 requiring reporting companies to publicly disclose their use of specified minerals and derivative metals contained in their products, as required under Section 1502 of the Dodd-Frank Act. The sale of the minerals and metals covered by the rule, which are included in many common products, is believed to be financing conflict in the Democratic Republic of the Congo (DRC).
The new disclosure rules apply to any company that uses any conflict minerals if:
- The company files reports with the SEC under Sections 13(a) or 15(d) of the Exchange Act.
- The minerals are "necessary to the functionality or production" of a product manufactured by the company or contracted by the company to be manufactured.
All affected companies must disclose certain information about conflict minerals use on new Form SD:
- A company that either knows that its conflict minerals did not originate in the DRC or an adjoining country (together, Covered Countries) or that they came from recycled or scrap sources or has no reason to believe that its conflict minerals may have originated in the Covered Countries or may not be from recycled or scrap sources must:
- disclose its reasonable country of origin inquiry determination in its Form SD;
- describe its reasonable country of origin inquiry and the results of the inquiry in its Form SD;
- disclose this information on its website; and
- provide the internet address of that site in its Form SD.
- A company that knows or has reason to believe that its conflict minerals may have originated in the Covered Countries and knows or has reason to believe that its conflict minerals may not be from recycled or scrap sources must:
- undertake "due diligence" on the source and chain of custody of its conflict minerals;
- unless the company determines during its due diligence that its conflict minerals are not from the Covered Countries or that they come from recycled or scrap sources, file a Conflict Minerals Report (which includes additional information about its due diligence and conflict minerals use) as an exhibit to its Form SD;
- disclose in its Form SD that its Conflict Minerals Report is filed as an exhibit;
- make its Conflict Minerals Report publicly available on its website; and
- provide the internet address of that site in its Form SD.
The first Form SD must cover calendar year 2013, regardless of a company's fiscal year and must be filed with the SEC by May 31, 2014. Form SD reports must be filed for each calendar year after 2014 by May 31 of the following year.
For more information on the conflict minerals disclosure rules, see Practice Note, Conflict Minerals Diligence.