SEC Issues FAQs On Conflict Minerals Rules

The SEC has issued twelve frequently asked questions, or FAQs, on the conflict minerals rules.  Although few in number, you could almost hear the cheers at law firms throughout the world as the staff offered mostly common sense advice on some often-debated questions.

Guidance offered by the FAQs include:

  • Failure to timely file a Form SD does not result in the loss of  S-3 eligibility.
  • Merely having an issuer’s logo etched onto a generic product manufactured by a third party is not considered “contracting to manufacture the product.”  The same goes for serial numbers and other identifiers.
  • Conflict minerals included in packaging are not considered necessary to the functionality or production of the product, even if necessary to preserve the usability of the product.
  • Issuers need not file a Form SD with respect to equipment that they manufacture or contract to manufacture if that equipment is used for the service provided by the issuer and the equipment is retained by the service provider, is required to be returned to the service provider, or is intended to be abandoned by the customer following the terms of service.
  • The issuer is not required to file a Form SD if an issuer manufactures or contracts to manufacture equipment for the use in the manufacture of other products, and the manufacturing equipment is subsequently sold.

On the other side of the ledger, the FAQs provide:

  • Voluntary filers must comply with the conflict mineral rules.
  • The rules apply to consolidated subsidiaries of the issuer.
  • Including generic components which include conflict minerals in contracts manufactured by the issuer means the issuer needs to conduct a reasonable country of origin inquiry regarding the component.

Check frequently for updated information on the JOBS Act, the Dodd-Frank Act and other important securities law matters.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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