Conflict Minerals Compliance: FREQUENTLY ASKED QUESTIONS

Conflict Minerals ComplianceWhile handling environmental compliances, suppliers and manufacturers from various industries face multiple challenges. After having provided successful compliance services to the all our Clients across geographies, we decided to compile our set of frequently asked questions pertaining to Conflict Minerals Compliance. Below is the set for your reference: 1. What if a company decides not to comply with Section 1502 or SEC filing? If a company does not comply with the laws of SEC, it will not be able to raise new capital under the Exchange Act. 2. Is SEC filing applicable for private companies? Private companies are not required to file annual reports under SEC but if their customers are publicly-traded on the US stock exchange and are liable to file conflict minerals report, then the company should also report under SEC on the Origin and mining procedures of the minerals. 3. Which framework can be suggested for due diligence process? Due diligence process should be carried out by a nationally or internationally recognized framework. Currently the only recognized framework is OECD (Organization for Economic Cooperation & Development) which performs Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Affected and High-Risk Areas. 4. When will an issuer NOT be considered as “contract to manufacture”? In the following cases the issuer cannot be considered as “contract to manufacture”
  • If the issuer is involved in
    • Specifying or negotiating contractual terms with manufacturer
    • Affixing brand, logo, marks or label to a generic product
    • Services, maintenance or repair activity
  • If the issuer is not directly or indirectly involved in manufacturing process
5. What do you mean by “DRC conflict free”? “DRC conflict free” means the product manufactured does not contain any of the 4 conflict minerals (Tantalum, Tin, Gold and Tungsten) that have been identified to directly or indirectly benefiting militants in the DRC- Democratic Republic of Congo, countries. 6. When can an issuer describe the products as “DRC conflict undeterminable”? If the issuer is not able to determine that the conflict minerals mined from DRC countries, are benefiting armed groups even after due diligence process then the products are considered to be “DRC conflict undeterminable”. The undeterminable status of the product would be based on the due diligence process (conducted by OECD). 7. Can a company provide Conflict minerals policy stating that “we are conflict free”? No. For most cases a conflict minerals compliance process is recommended. However in certain cases, if a company chooses to provide complete due diligence information and supporting data in the form of CMRT to prove that its products are conflict free, Policy statement can be accepted. Due diligence for conflict minerals is a mandatory requirement that cannot be evaded. 8. Which CMRT should be used for 2016 filings? We recommend to use the latest CMRT v4.01a which has been released after examining the errors in the prior versions. Moreover, the most updated Standard smelter list is included in CMRT v4.01a.
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