SEC Releases Conflict Minerals FAQ

The U.S. Securities and Exchange Commission has just published a 12 part frequently asked questions form on the Dodd-Frank Wall Street Reform and Consumer Protection Act.  These FAQs offer clarity and guidance on various aspects of Section 13(p), Rule 13p-1 and Item 1.01 of Form SD relating to conflict minerals sourced from the Democratic Republic of the Congo and adjoining countries. 

Of the 12 FAQs, the most notable are questions 6 and 7.  Question 6 addresses whether packaging is considered part of the product and states that packaging is not considered part of the product even if the product’s packaging or container is necessary to preserve the usability of that product.  The only circumstance in which packaging will fall under the ruling, is if the packaging is sold independently of the product it is then considered a product. Question 7 addresses equipment manufactured as a service and states that issuers are exempt if the equipment is used for the service provided by the issuer and the equipment is retained by the service provider, is required to be returned to the service provider, or is intended to be abandoned by the customer following the terms of the service.

While these 12 FAQs offer some clarity on the ruling, they only scratch the surface on the numerous questions issuers have in implementing their conflict minerals compliance programs.

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