Complying with the SEC’s Conflict Minerals Rules

by Christopher Cunningham, Josh Gaul

On August 22, 2012, the U.S. Securities and Exchange Commission (the “SEC”) adopted new rules (the “Conflict Minerals Rules”) pursuant to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requiring specialized due diligence and disclosure regarding the use of “conflict minerals” by issuers registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Conflict Minerals Rules are intended to help end human rights abuses in the Democratic Republic of the Congo (“DRC”) and adjoining countries by reducing the financing of armed groups that benefit from commercial activity involving conflict minerals.

The Conflict Minerals Rules affect a large number of issuers, including issuers in which many Sovereign Wealth Funds (“SWFs”) may have a direct or indirect interest, and complying with the rules will be costly and time-consuming. Many issuers will need to revise their policies and procedures affecting their supply chains in order to ensure compliance with the Conflict Minerals Rules and such revisions may result in increased costs for such issuers.

This paper gives an introduction to what the conflict minerals rules are and their definition, when they will come into effect, which issuers are they relevant for, how to determine whether an issuer is in contravention of the rules and ways to address it, what are the potential liabilities to issuers, what are the challenges with the rules and lastly the impact of the rules on SWFs.

Complying with the SEC’s Conflict Minerals Rules


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