Deadline Looms For Conflict Mineral Disclosure Requirements: Update For Suppliers Of Reporting Companies

by Varnum LLP

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") addressed concerns that proceeds from the trade and exploitation of certain minerals originating in several central African countries were helping to finance extraordinary violence in the Democratic Republic of the Congo. In 2012, the Securities and Exchange Commission ("SEC") issued the long awaited conflict minerals rule (the "Rule") promulgated as new Rule 13p-1 under the Securities and Exchange Act of 1934. Since the Rule was issued, manufacturers and interest groups across the country (e.g., the National Association of Manufacturers, the Chamber of Commerce, and the Business Roundtable) have been trying to fight the Rule because they believe it is well-intentioned, but poorly crafted.

In general, the Rule requires any reporting company having conflict minerals (i.e., tantalum, tin, tungsten, gold) that are necessary to the functionality or production of a product manufactured or contracted to be manufactured by that reporting company to file a report with the SEC on Form SD, disclosing whether those conflict minerals originated in a covered country and whether those conflict minerals benefit or finance armed groups in the covered countries. The reports must also be posted on the reporting company’s website for one year.

SEC reporting companies are not the only companies affected by the Rule. Non-reporting companies that supply goods indirectly or directly to SEC reporting companies must provide information about conflict minerals in the products they sell. To provide that information, the non-reporting company suppliers will need to perform their own diligence, even if they are not required to file disclosure reports with the SEC.

In most cases, the reporting company will send its direct suppliers templates to be completed certifying that the products sold do not contain conflict minerals. In order to make that certification, the reporting company may ask its direct suppliers to send the same template to the supplier's vendors so that the products and minerals can be traced all the way up the supply chain. Therefore, the Rule can have an impact on multiple levels of the supply chain.

On April 29, 2014, reporting companies received an eagerly-awaited update from the SEC on the effect of a recent Court of Appeals decision, which concluded that the Rule violated the First Amendment because it required reporting companies to report and post on their websites whether any of their products have "not been found to be 'DRC conflict free.'"

Manufacturers and reporting companies had been hoping that the SEC would delay the June 2, 2014 deadline for submitting SEC Form SD. Unfortunately for manufacturers and reporting companies, the SEC's reaction to the Court of Appeals, April 29, 2014, decision was to issue only a partial stay of the reporting requirements.

Specifically, the SEC partial stay, SEC guidance permit a reporting company: (i) decline to identify its products on Form SD or in a related Conflict Minerals Report as (a) either DRC conflict free, (b) having not been found to be DRC conflict free or (c) DRC conflict undeterminable; and (ii) to decline to obtain an independent private sector audit, unless the issuer voluntarily elects to describe its products as "DRC conflict free" in its Conflict Minerals Report.

Despite the SEC's partial stay, the reporting deadline still looms for those issuers who are subject to conflict mineral disclosure obligations. Suppliers to SEC reporting companies should be aware of the fact that manufacturers may have delayed their diligence and compliance with the conflict minerals rule and therefore may be scrambling to meet the June 2, 2014 deadline for submitting the Form SD to the SEC.  Thus, suppliers may be asked by some of their top customers to complete conflict minerals reports and send them back to their customers on a short turnaround. Suppliers must be careful on how they answer the questions posed by their customers and how they complete the reporting templates.


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.

© Varnum LLP | Attorney Advertising

Written by:

Varnum LLP

Varnum LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.