Last week, the US Court of Appeals for the District of Columbia (“DC Circuit”) issued its long-awaited opinion relating to legal challenges to the Securities and Exchange Commission’s (“SEC”) conflict minerals disclosure rules. The DC Circuit upheld all of the challenged aspects of the SEC’s final disclosure rules, but struck down on free speech grounds the SEC mandate that reporting companies describe certain products in their SEC filings (and on their websites) as being “not Democratic Republic of the Congo conflict free.” A copy of the decision is available here. The decision is important to the extent that it upholds the government’s ability to require public companies to disclose information relating to social responsibility and human rights, even though that information may not be financially material to a company’s operations. This decision, however, also limits the government’s ability to force public companies to characterize certain of their corporate activities in negative ways.
What the SEC Conflict Minerals Rules Require -
The SEC’s conflict minerals rules (the “Rules”) implement Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) by requiring SEC-reporting issuers (companies filing under Sections 1 (a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) to disclose information annually about their use of specified “conflict minerals” originating in the Democratic Republic of the Congo (“DRC”) and certain adjoining countries. The “conflict minerals” are especially important to the electronics industry and include gold, columbite tantalite (coltan), cassiterite and wolframite (including their derivatives, tantalum, tin and tungsten).
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