Aftermarket Insider Issue 83 - (Page 15)

country of origin inquiry” (RCOI) to determine whether the conflict minerals originated in the Covered Countries. The required inquiry depends on each issuer’s “facts and circumstances,” and the actual steps of a RCOI are not prescribed. However, to satisfy the RCOI requirement, the final rule states that the inquiry must be reasonably designed to determine whether any of the conflict minerals that are not from recycled or scrap sources originated in the Covered Countries, and it must be performed in good faith. Reporting Requirements The final rule requires an issuer that determines that its conflict minerals did not originate in the Covered Countries or did come from recycled or scrap sources to provide a special disclosure report annually and to briefly describe the RCOI it used in reaching its determination. If, however, based on its RCOI, the issuer knows — or has reason to believe — that it has used necessary conflict minerals that originated in the Covered Countries and did not come from recycled or scrap sources, it must conduct further due diligence on the source and chain of custody of its conflict minerals emanating from the Covered Countries, and potentially provide a detailed Conflict Minerals Report. Reporting companies required to exercise this additional due diligence must use due diligence measures that conform to a nationally or internationally recognized due diligence framework, such as the guidance approved by the Organisation for Economic Cooperation and Development (OECD). In most circumstances, the reporting company also is required to obtain an independent private sector audit of the reporting company’s Conflict Minerals Report. Next Steps, timing and Court Challenge Issuers must comply with the new rule for the 2013 calendar year, with the first reports on due on May 31, 2014. With the 2013 calendar year half over, all reporting companies must now engage in the required analysis. This will take time, require the input of several groups within an issuer’s organization, necessitate careful planning and implementation, and will likely require the participation of outside consultants. A legal challenge to the new rule filed by several business organizations with the U.S. Court of Appeals for the District of Columbia was rejected on July 23. Although the plaintiffs may appeal this decision to a higher court, the appeal process can be lengthy and unpredictable. As it stands, the conflict minerals reporting requirements remain in effect as adopted. Therefore, companies who are impacted by the new rule should begin reviewing their internal compliance procedures and making preparations for any internal audits and reports that may be required. Please contact Andrés Castrillon with any questions regarding the conflict mineral regulations at andres.castrillon@aftermarket. org or at 301-654-6664. additional Resources SEC Frequently Asked Questions on Conflict Minerals: http://www. sec.gov/divisions/corpfin/guidance/ conflictminerals-faq.htm. New Rule at a Glance The rule only applies to public companies who file reports with the SEC. The rule only applies to public companies that manufacture or “contract to manufacture” products that contain certain minerals that originated in certain African countries. Private companies may be impacted to the extent they supply covered products to downstream manufacturers who will be required to collect supply chain information. Public retailers and WDs are not required to report on products they simply buy and resell, but may be required to report on private label brands or any product they contract to manufacture. Public companies whose products contain conflict minerals from covered countries must perform a country of origin inquiry, provide certain disclosures to the SEC, and may be required to perform a third-party audit. Covered companies must comply with the new rule for the 2013 calendar year, with the first reports on due on May 31, 2014. The rules are complex and applicability depends on nuanced, case-by-case factors. Companies that may be impacted should consult legal counsel for a definitive determination of applicability and required actions. SEC Final Rules on Conflict Minerals: http://www.sec.gov/rules/ final/2012/34-67716.pdf AFTERMARKET INSIDER | VOLUME 83 | 15 http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm http://www.sec.gov/rules/final/2012/34-67716.pdf

Table of Contents for the Digital Edition of Aftermarket Insider Issue 83

Health Care Help:industry News
Millennials:The Aftermarket Generation
Talking Telematics:INSIDE TECHNOLOGY
Dress for Success
Workplace Wear:TOOLBOX
Conflict Minerals
Facts and Feedback:MARKET INTELLIGENCE
Words from a Winner:HEAD OF THE CLASS

Aftermarket Insider Issue 83