The SEC recently proposed rules to implement the conflict minerals disclosure requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Section 1502 of Dodd-Frank (the “Conflict Minerals Provision”) amended the Securities Exchange Act of 1934 (the “Exchange Act”) to require annual disclosures from any company for which the use of conflict minerals is necessary to the functionality or production of a product manufactured by that company. The SEC anticipates that thousands of public companies will be affected by the new disclosure requirements due to the numerous commercial applications of conflict minerals.
The proposed rules would require any company that is subject to SEC reporting requirements pursuant to Section 13(a) or 15(d) of the Exchange Act and for which conflict minerals are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by that company to disclose in its annual report whether its conflict minerals originated in the Democratic Republic of the Congo or an adjoining country. If so, the company would be required to furnish a separate report as an exhibit to its annual report that would include, among other things, a description of the measures taken by the company to exercise due diligence on the source and chain of custody of its conflict minerals and an independent private sector audit of the company’s report. The SEC is soliciting comments on the proposed rules through January 31, 2011 and is required to adopt final rules implementing the conflict minerals disclosure requirements no later than April 15, 2011.