19 April 2017

US corporate law weekly news: SEC suspends enforcement of certain provisions of conflict minerals rule

On April 7, 2017, just weeks before 2017′s conflict minerals disclosure deadline, the SEC suspended the enforcement of Item 1.01( c ) of Form SD, the most onerous and costly due diligence requirement under the Conflict Minerals Rule (Securities Exchange Act Section 13(p)(1) and Rule 13p-1 thereunder), in response to the April 3, 2017 judgment issued by the U.S. District Court for the District of Columbia in a case where the Court found that the Rule violated the First Amendment.

Due to the suspension of Item 1.01( c ), public companies will not be required to conduct an independent private sector audit (IPSA) and disclose the audit findings on their websites when their reasonable country of origin inquiry (RCOI) shows that they know or have reason to believe that their conflict minerals may have originated in Democratic Republic of Congo or an adjoining country and are not from recycled or scrapped sources. However, public companies must still comply with Items 1.01(a) and (b), requiring them to conduct RCOIs and if they conclude based on the RCOIs that their conflict materials do not come from a covered country or from recycled or scrapped sources, they must disclose such conclusions on Form SD and on their websites.

For more information, see https://www.sec.gov/news/public-statement/piwowar-statement-court-decision-conflict-minerals-rule and https://www.sec.gov/news/public-statement/corpfin-updated-statement-court-decision-conflict-minerals-rule.

Category: Blog