In 2010, the U.S. Congress passed a law called the “Dodd-Frank Wall Street Reform and Consumer Protection Action of 2010 (the Dodd-Frank Act).” The Dodd-Frank Act is generally known as the legislative response to the financial crisis that existed from 2007-2010 and it included widespread changes to the regulation of financial institutions.
So you might ask: why are we writing about it in the Manufacturing Law Blog?
The answer is that “buried” in the Act itself is a mandate requiring the Securities and Exchange Commission (SEC) to develop a rule that impacts countless manufacturers/distributors in either a direct or indirect way. That rule, which was adopted in 2012, requires all publicly traded companies to publicly disclose their use of “conflict minerals” that orginated in the Democratic Republic of the Congo or an adjoining country. Examples of the “conflict minerals” are tantalum, tin, tungsten, and gold.
Does this Rule Impact Publicly Traded Companies?
Yes. According to the SEC, if a company files a report under the Exchange Act, it is required to disclose its use of conflict minerals if those minerals are “necessary to the functionality or production of a product” manufactured by those companies. Click here to see the SEC form. As with any regulatory mandate, the analysis that goes into the filing of this report can be complicated so seeking legal advice from both in-house lawyers or your manufacturing counsel is essential. In addition, if you have not done so, you should consider whether to develop a “Conflicts Mineral Policy” to distribute to those in your supply chain.
Does this Rule Impact Privately Held Companies?
Most Likely. Although privately held companies are not regulated directly, that does not mean that they are not impacted by the SEC rule. Simply stated, if you operate inside a supply chain that involves the manufacture of products that use conflict minerals, it is likely that you will be asked to provide documentation supporting your compliance with the SEC rule at some point. Indeed, the SEC rule requires “due diligence” for the reporting companies and as a result, many entities pass this diligence down the supply chain. As a result, it is advisable to develop a framework for responding to these requests now instead of later.