SEC Issues Proposed Disclosure Rules Pursuant to Dodd-Frank Act Relating to Conflict Minerals, Mine Safety and Resource Extraction Payments
December 19, 2010
On December 15, 2010, the Securities and Exchange Commission voted unanimously to propose rules governing specialized disclosure relating to (a) conflict minerals, (b) mine safety and (c) payments to governments by companies engaged in resource extraction. The proposed rules implement Sections 1502, 1503 and 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which added three disclosure provisions to Section 13 of the Securities Exchange Act of 1934. Although the mine safety and resource extraction payments provisions are generally applicable only to companies in those industries, the conflict minerals rules will have much broader applicability, and companies should carefully consider whether they will be subject to the new rules.
In the Dodd-Frank Act, Congress substantially fixed the contours of these disclosure requirements and directed the Commission’s rulemaking activities, requiring the Commission to adopt rules implementing Section 1502 (conflict minerals) and Section 1504 (resource extraction payments) by April 15, 2011. The final rules will apply beginning with the annual report for the first full fiscal year after the enactment of the final rules – i.e., for a calendar-year company, the annual report for 2012 to be filed early in 2013. The Commission is also proposing regulations to clarify reporting under Section 1503 (mine safety), which did not require Commission rulemaking under the Dodd-Frank Act and is already in effect. Although the timing for the mine safety rules is unclear, companies should take them into account in preparing their annual reports for the 2010 fiscal year, as they largely clarify the existing statutory requirements.
The comment period for all of the proposals expires on January 31, 2011. The memorandum summarizes the key provisions and issues in the proposed rules. The rule proposals can be found at the following links:
