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SEC releases new guidelines governing conflict mineral disclosure

The guidelines come as a set “frequently asked questions,” following a similar pattern from a first disclosure on May 30, 2013

Worried about the potential presence of conflict minerals within your company’s supply chain? Top automakers and Apple sure are. Well, then it’s your lucky day, because the Securities and Exchange Commission (SEC) released a new set of guidelines on April 7 that govern conflict mineral disclosure requirements within the Dodd-Frank Act.

The guidelines come as a set “frequently asked questions,” following a similar pattern from a first disclosure on May 30, 2013. These guidelines primarily deal with conflict minerals coming from the Democratic Republic of the Congo (DRC) and its adjoining countries specifically.

These new questions and answers deal heavily with independent private sector audits (IPSA) of an issuer’s Conflict Minerals Report and the scope of disclosure within a company’s reports. Among the responses that the SEC issued are:

  • All auditors must meet applicable requirements under the Government Accountability Office’s Yellow Book.
  • For any product that is ruled “DRC conflict undeterminable,” the company is not required to undergo an audit of its Conflict Minerals Report. However, it is for any product labeled “DRC conflict free,” even if it is in the same report as an undeterminable product, the company must undergo an audit.
  • Even a company that mines conflict minerals, which includes milling, smelting or transporting them, would not be considered to be “manufacturing” them for the purposes of the rule.
  • If a company manufactures or contracts to manufacture packaging for a conflict mineral, then it does not run afoul of the rules.
  • Even if a company’s tools to make its product contain conflict minerals, the product itself is not considered to be against the rules.

The full guidelines as set out by the SEC can be found on the Commission’s website. In-house counsel or company compliance officers would do well to review them, especially as supply chain risks are proving to have a significant impact on company reputation.


For more supply chain news to know, check out these recent articles:

Top automakers release new supply chain standards

EU drafts conflict mineral compliance regulation

The relationship between reputation and trust

FTC investigates Herbalife’s operations after months of Ackman complaints

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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