Release Date: September 27, 2012
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On August 22, 2012, the Securities and Exchange Commission adopted rules 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 (the "DRC") or an adjoining country. The mandate for rules under the Dodd-Frank Act came directly from a concern that armed groups in the Congo region are engaged in the trade of conflict minerals and are contributing to a significant humanitarian crisis.
Companies that file Exchange Act reports with the
Contracting to Manufacture
A company is considered to be contracting to manufacture a product and therefore subject to the rules if it has some actual influence over the manufacturing of that product. This determination focuses on the facts and circumstances, including a consideration of the degree of influence a company has over the product's manufacturing.
A company is deemed not to have the requisite influence over the manufacturing if it merely:
Determining Origination of Materials
Companies using any of the designated materials are required to conduct a reasonable inquiry in good faith regarding the country of origin. The inquiry must be reasonably designed to determine whether any of the minerals originated in the covered countries or are from scrap or recycled sources.
If the inquiry reveals that the company knows the minerals did not originate in the covered countries or are from scrap or recycled sources or the company has no reason to believe that the minerals may have originated in the covered countries or may not be from scrap or recycled sources, then the company must disclose its determination, briefly describe the inquiry process and the results of the inquiry on Form SD. In addition, the company must more..