Conflict Minerals Compliance Basics: Who Will Have To File

This time on “Conflict Minerals Reporting Basics” we will cover who is required to to file a conflict minerals report.

Most covered companies who manufacture products containing the four stated minerals will have to report. The rule requires public companies to conduct supply chain due diligence and make disclosures concerning specified minerals and their derivatives contained in their products. The rule is intended to reduce a significant source of funding for armed groups that are committing human rights abuses in the eastern Democratic Republic of the Congo (DRC). The Conflict Minerals Rule imposes substantial compliance obligations on a significant portion of the public company universe across a wide range of industries. The SEC estimates that approximately 6,000 registrants are impacted by the rule and that 75 percent of these registrants will be required to file a Conflict Minerals Report thereunder.

Private companies don’t file annual reports with the SEC, so they will not have to determine if they have to file a Conflict Minerals Report. Although private companies are not directly subject to the Rule, to the extent that they are part of a public company’s supply chain, they will need to follow many of the same compliance procedures as public companies. If they have any customers who are publicly traded on a US stock exchange and are liable to file a Conflict Minerals Report, the supplying companies will have to report on the origin and mining conditions for their clients to report.

If you still have questions whether or not your company is required to file a conflict minerals report, please contact Source Intelligence. 

Issuers who trigger the reporting requirements but do not report may be subject to SEC enforcement for non-reporting (i.e., fines and penalties) and possibly third party lawsuits, especially from investors and activist organizations. Companies who are not issuers potentially risk losing revenues/violating contract terms by not responding to CM information requests from customers. Depending on the company, product and level of importance that the company’s customers place on this issue, the company may also face reputational damage by not reporting/responding to CM information requests.