The Dodd Frank Wall Street Reform and Consumer Protection Act came into effect on January 1 this year, and Section 1502 on Conflict Minerals requires compliance from all public companies that are listed with the Securities and Exchange Commission (S.E.C.) under Sections 13(a) or 15(d). The law requires these issuers to examine their supply chain to determine if they manufacture or contract to manufacture products that contain conflict minerals that are necessary to the functionality or production of those products. If so, issuers must then investigate whether those conflict minerals originated in any of the ten countries covered by this law.  Conflict minerals are defined as cassiterite, columbite-tantalite (coltan), gold, and wolframite, as well as their “3T” derivatives tin, tantalum and tungsten.

The law and the S.E.C.’s Final Rule on the law are complex and nuanced.  With that in mind, here are some key insights, provisions and subtleties of the law and Final Rule that can help your compliance efforts:

1. Be careful what sources you trust.

• The law and the regulation are very complicated with many nuances – even experts and trusted lawyers have (unintentionally) misrepresented the tenets of the rule in their articles and presentations.
• Question any source published prior to August 22, 2012. This is the date the S.E.C.’s Final Rule was adopted which amended and clarified prior interpretations of the law.

2. Exemption for minerals that are outside your supply chain.

If your conflict minerals are outside your supply chain by January 31, 2013, you are exempt from this rule. ‘Outside the supply chain’ means outside of the covered countries, or, if the minerals are still in the covered countries, if they have already been smelted or fully refined by January 31. The ‘covered countries’ are: the Democratic Republic of the Congo (DRC) and its nine adjoining countries: Tanzania, Zambia, Republic of Congo, Central African Republic, Angola, Uganda, Rwanda, South Sudan and Burundi.

3. No de minimis.

There is no de minimis exception. Even if only trace amounts of a conflict mineral are in your products, you are still subject to this rule.

4.Acquisitions.

If you acquire a company that must comply with this law, and that company had not previously been obligated to provide a specialized disclosure report for its conflict minerals, then you may be able to delay reporting on the acquired company’s products until a following reporting period.