Conflict Minerals Rulemaking Petition

By Cydney Posner

A petition for rulemaking has been filed with the SEC requesting a temporary delay in the conflict minerals disclosure, as long as specified alternative disclosure is provided instead. The basis for the request is that compliance with the conflict minerals rules is proving more involved and time-consuming than originally anticipated. Of course, how receptive the SEC and staff will be to these requests remains to be seen, especially in light of the anticipated pushback by activists and NGOs that have strongly supported the conflict minerals rules and would likely battle against any delays. Rulemaking petitions do not often end up as rules.

More specifically, the petition requests an amendment of the rules to provide that companies that comply with specified alternative provisions would not need to file Form SD reports prior to (a) May 31, 2015, with respect to products manufactured within the United States, and (b) May 31, 2016, with respect to products manufactured outside the United States. However, in lieu of the Form SD filing, commencing with their first periodic reports initially due under Section 13(a) or 15(d) of the Exchange Act on or after October 1, 2013, companies would need to furnish as an Exhibit 99 to each periodic report (until the first Form SD is filed) a detailed status report on the actions taken to date and currently anticipated to be taken to comply with their Form SD filing obligations.

This alternative disclosure would, at a minimum, include the following:

i. Confirmation that the registrant does not in good faith believe that it currently is able to comply fully with the Form SD requirements.

ii. The title of the individual with day-to-day oversight responsibilities for compliance with Form SD.

iii. If a management committee is active in overseeing compliance, the titles of the members of the committee and a brief summary of its activities, highlighting activities since the prior report.

iv. The identity of each consulting firm retained by the registrant to assist in any material respect in facilitating compliance and a description of the scope of its engagement.

v. The status of the development by the registrant of a conflict minerals policy and its expected date and location of publication.

vi. The identity of the board (or similar) committee with ultimate oversight of registrant's compliance with Form SD and the date of management's most recent report to the committee.

vii. The status of the registrant's review of its products to determine whether they contain conflict minerals, highlighting changes since the prior report.

viii. The status of the registrant's reasonable country of origin inquiry and discussions with its suppliers as a whole regarding compliance, including, with respect to its 10 largest suppliers (by dollar amount of purchases during its most recently completed fiscal year), a summary of the status of the inquiry and discussions with each such supplier (provided that the registrant shall be permitted to use confidential labeling in lieu of naming such suppliers).

ix. The status of any information technology or other process modifications being made by the registrant to facilitate compliance, highlighting changes since the prior report.

x. The registrant's current timing expectations with respect to being able to file a compliant Form SD, highlighting key gating issues."

Under the petition, foreign private issuers could file reports on any available form no less frequently than every 120 days, commencing within 120 days after October I, 2013.

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