SEC Sets Vote In August On 'Conflict Minerals' Disclosure Rules

Author:Mr D. Cameron Prell, J. Patrick Rowan, Jill Webb, Rakesh Gopalan and Kurt E. Wolfe
Profession:McGuireWoods LLP
 
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On July 2, 2012, the U.S. Securities and Exchange Commission (SEC) announced that it will likely vote on August 22, 2012, to finalize a contentious rule that would require public companies to fully disclose whether they produce or use designated "conflict minerals" (tantalum, tin, gold or tungsten) mined or sourced in the Democratic Republic of the Congo or any adjoining country.

The rule was proposed pursuant to Section 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which directed the SEC to devise and implement rules that would compel a public company to annually assess and disclose their conflict minerals usage.

The proposed rule requires issuers to prepare and disclose in their annual report any conflict minerals that are necessary to the functionality or production of a product manufactured or contracted to be manufactured by the issuer. Companies that use or rely on even small amounts of any conflict mineral must prepare a detailed Conflict Minerals Report, which would include conducting supply chain due diligence to identify the source and chain of custody of any such conflict minerals. If a CM Report is necessary, companies would also have to obtain an independent private sector audit of the report,...

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