The U.S. Securities and Exchange Commission has proposed specific rules to implement the Dodd-Frank Act requirements for audits and reports by public companies to show whether certain minerals used in their manufactured goods originate in war-torn Congo or adjoining countries in Africa. The law is intended to address widespread corruption, human abuse and genocide in that region by imposing supply-chain due diligence on manufacturers that use in their products “conflict minerals” that fund groups responsible for the atrocities. Public U.S. manufacturers should closely monitor and comment on this rulemaking to ensure practicable compliance.
As reported earlier in July 2010, Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended Section 13 of the Securities Exchange Act of 1934 to impose a new reporting requirement on publicly traded companies that manufacture products for which “conflict minerals” are necessary to their functionality or production. (See “The ‘Conflict Minerals’ Provision in the Dodd-Frank Act Imposes New Disclosure Requirements on Manufacturers” for more information.) The U.S. Securities and Exchange Commission (SEC) has now issued proposed rules to implement several sections of the Dodd-Frank Act, including section 1502. The proposed rule is available in a December 23, 2010, Federal Register notice. Final regulations must be issued by April 15, 2011, and the requirements of Section 1502 will become effective for a company’s first full fiscal year following issuance of final rules, i.e., the first full fiscal year after April 2011.
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