Conflict Minerals’ Effective Date Gets a Stay
Announced on May 2nd, the U.S. Securities and Exchange Commission (“the Commission”; “SEC”) issued a stay of the effective date for companies to comply with parts of its final rule, Conflict Minerals. The stay affects parts of Exchange Act Rule 13p-1 and Form SD, which mandates public disclosure of a company’s use of conflict minerals from the Democratic Republic of the Congo or neighboring countries. Due to last month’s decision by the Court of Appeals for the District of Columbia Circuit (“the Court”), such disclosure was ruled as violating the First Amendment.
As companies move forward applying the final rule on conflict minerals, they are asked to use previous guidance from the Commission’s Division of Corporation Finance (“Corp Fin”). The Corp Fin guidance suggests that companies are still anticipated to file any required reports on or before June 2nd. On the other hand, Form SD and reports associated with conflict minerals should meet the final rule’s provisions that were upheld by the Court.
Additionally, the guidance explains that companies are not obliged to use language like “DRC conflict free” or “DRC conflict undeterminable” in reference to their products. If a company decides to use such language in its Conflict Minerals Report, however, it would be allowed as long as an independent private sector audit was obtained, as required by the final rule. Awaiting additional action by Corp Fin or the Commission, an independent private sector audit would not be mandated unless a company voluntarily describes its products as “DRC conflict free” in its report.
Topics: Assurance & Accounting "A&A", Conflict Minerals, Court of Appeals, Democratice Republic of Congo "Congo", Division of Corporation Finance "Corp Fin", U.S. Securities and Exchange Commission "SEC"