On 18 November 2014, the United States Court of Appeals for the District of Columbia Circuit granted a petition filed by the US Securities and Exchange Commission ("SEC") and Amnesty International for rehearing of a case that invalidated a portion of the SEC reporting requirements regarding conflict minerals originating in the Democratic Republic of the Congo and adjoining countries (the "Conflict Minerals Rule"). The court's decision, once the case is reheard, could potentially affect the existing scope and application of the Conflict Minerals Rule. The Conflict Minerals Rule is set forth in Form SD – Specialized Disclosure Report, which is required under Rule 13p-1 under the Securities Exchange Act of 1934 (the "Exchange Act").
Under the Conflict Minerals Rule, SEC reporting companies that manufacture products that contain tantalum, tin, tungsten or gold face specific reporting requirements. Conflict minerals disclosure for the year ended 31 December 2014 must be filed with the SEC on Form SD on or before 1 June 2015. Each SEC reporting company is required to make its Form SD available on its company website for one year.
Following a decision of the Court of Appeals in April 2014, which struck down a portion of the Conflict Minerals Rule, the SEC issued a statement clarifying that no company is required to describe its products as "DRC conflict free", having "not been found to be "DRC conflict free", or "DRC conflict undeterminable". If a company voluntarily elects to describe any of its products as "DRC conflict free" in its Conflict Minerals Report, it would be permitted to do so provided it had obtained an independent private sector audit as required by the rule. Pending further action, such an independent private sector audit will not be required unless a company voluntarily elects to describe a product as "DRC conflict free" in its Conflict Minerals Report.
Subject to any further developments, companies should plan to prepare and file Form SD and, if required, a Conflict Minerals Report in the same manner as last year. However, now that the first year of Conflict Minerals Rule compliance is behind us, there is a universe of precedents that companies can use to benchmark their conflict minerals disclosure against peer companies and from which best practices can develop.
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