SEC Conflict Minerals Reporting Update

The first reports on Securities and Exchange Commission Form SD, regarding the presence of so-called "conflict minerals" in products manufactured or contracted for manufacture by SEC reporting companies, are due June 2, 2014. (The May 31 annual reporting deadline falls on a weekend in 2014, so it is extended to the next business day.)

Briefly:

• A company must determine whether any conflict mineral was "necessary to the functionality or production" of products that the company manufactures or contracts for manufacture; if so, the company must:
  • Make a reasonable inquiry into the country of origin (RCOI) of the conflict mineral;
  • File Form SD containing a "Conflict Minerals Disclosure," describing the inquiry and its results; and
  • Post the Disclosure on its website.
• Unless, from the RCOI, the company determines that the conflict minerals did not originate in the Democratic Republic of Congo or adjoining countries, a company must conduct "due diligence" regarding the origin of the conflict minerals and describe the results on Form SD, either in the Conflicts Minerals Disclosure or in a "Conflict Minerals Report" (and post the Report on its website).

For our earlier guidance regarding conflict minerals reporting, please see SEC Adopts Final Rules for "Conflict Minerals" and Guidance for Compliance with SEC Conflict Minerals Rules.

In April, the U.S. Court of Appeals for the District of Columbia upheld the validity of the conflict minerals disclosure rule, except for a company's potential obligation to describe its products as "not been found to be 'DRC conflict free.'" On May 15, 2014, the court denied an emergency motion to stay operation of the rule, in its entirety, based on the court's April 14, 2014, decision. As a result, the obligations of a company required to file Form SD remain largely intact except for the obligation to designate its products as being (or having been found to be) "DRC conflict free," "not DRC conflict free" or "DRC conflict undeterminable."

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