In August 2012, the SEC adopted a rule mandated by the Dodd-Frank Act to require companies to publicly disclose their use of certain conflict minerals that originated in the Democratic Republic of the Congo. Conflict minerals are minerals mined in conditions of armed conflict and the profits from the sales of these minerals finance continued fighting and contribute to an emergency humanitarian crisis. The rules require certain companies to disclose their use of conflict minerals that include tantalum, tin, gold or tungsten if those minerals are necessary to the functionality or production of a product manufactured by those companies. Industries that could be impacted include dentistry, circuit board manufacturers, aerospace and defense, and medical technology, among many others.
Under the rule, a company that uses any of the designated materials must in good faith conduct a reasonable “country of origin” inquiry. The companies required to file a Conflict Minerals Report must exercise due diligence on the source and chain of custody of conflict minerals used, and the due diligence measures must conform to a recognized framework. The rule also requires a company to obtain an independent private sector audit of its Conflict Minerals Report, certify that it obtained such an audit and include the audit report as part of the Conflict Minerals Report. Companies will be required to file these reports in a specialized disclosure report with the SEC (Form SD) annually on a calendar year, regardless of their fiscal year, with the first filing due May 31, 2014 for the 2013 calendar year.
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