The Squire Sanders Conflict Minerals Practice Group, led by partner Dynda A. Thomas, published a three-part series between July and October 2012. The series offered timely insights on the proposed and final rules.
Part I of III – What You Need to Disclose (July 2012)
Section 1502 of the Dodd-Frank Act of 2010 required the Securities and Exchange Commission (SEC) to establish additional disclosure and reporting requirements to report the use of “conflict minerals” that are sourced from the Democratic Republic of Congo and several neighboring countries. For this purpose, “use” includes minerals necessary to the functionality of a product manufactured (or contracted to be manufactured) by an SEC reporting company or minerals used in production processes. The current list of “conflict minerals” includes gold, tantalum, tin and tungsten. It is possible that other minerals may be added to that list.
The SEC has not yet adopted the final rules, but it is expected to do so shortly after the August 22, 2012 open meeting at which the proposed rule is to be discussed.
Notwithstanding the fact that no final rule has been issued, a few reporting companies have elected to disclose, in their periodic reports, background about the proposed rule, the potential impact of the proposed rule, and – in some cases – actions they have taken to conduct due diligence regarding conflict minerals in their supply chains. To date, this disclosure has been included in risk factors and, in some cases, in the business section of the filing.
Continue reading Part I:
Part II of III – SEC Adopts Final Rule Regarding Disclosure (August 2012)
Highlights of the Final Rule Issued August 22, 2012
As required by Section 1502 of Dodd-Frank, the SEC adopted a final rule regarding disclosure of the use of conflict minerals that originate from the Democratic Republic of the Congo or adjoining countries (now called “covered countries”).
This publication summarizes key changes from the rules as proposed by the SEC:
Part III of III – What M&A Lawyers Should Know About the Conflict Minerals Rule (October 2012)
On August 22, 2012, the SEC promulgated the long-awaited Conflict Minerals Rule, setting out new disclosure and reporting requirements concerning the use of certain minerals originating in several central African countries because those minerals were helping to finance extraordinary violence in the Democratic Republic of the Congo. The Rule requires any reporting company having conflict minerals 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, whether those conflict minerals came from recycled or scrap sources, and the activities performed to reach those conclusions.
We have prepared an overview of the Rule, its key terms and requirements, and noting the M&A implications. Also included is a list of sample due diligence questions, and representations and warranties for acquisition agreements.