Understanding Which Registrants Must File and Why the Scope Is Broader Than It Appears
Under Rule 13p-1 promulgated pursuant to Section 1502 of the Dodd-Frank Act, any issuer that files periodic reports under Sections 13(a) or 15(d) of the Exchange Act must assess whether tin, tantalum, tungsten, or gold (often referred to as 3TG) are necessary to the functionality or production of a product that the issuer manufactures or contracts to manufacture. If so, the issuer must file a Form SD annually and, when triggered, prepare and furnish a Conflict Minerals Report. This regime applies to domestic registrants and foreign private issuers alike, without a categorical exemption for smaller reporting companies or emerging growth companies.
Many companies underestimate this scope. The rule reaches beyond electronics to aerospace, automotive, industrial machinery, medical devices, jewelry, and any sector utilizing solders, plating, coatings, or capacitors containing 3TG. “Contracts to manufacture” is intentionally broad: if the issuer exerts sufficient influence over materials, parts, or specifications, the obligation may attach even if a third party builds the finished product. A highly fact-specific inquiry is required, and competent counsel should evaluate product lines, bill of materials, and procurement influence to avoid both over- and under-reporting.
Key Definitions That Determine Obligations and Shape the Analysis
The threshold phrase “necessary to the functionality or production” is frequently misunderstood. It requires a product-level assessment, not merely a corporate-level inventory. Functionality asks whether 3TG are needed for the product to operate as intended. Production asks whether 3TG are intentionally added in the manufacturing process, even if they are not ultimately functional in the final good. Incidental presence from tools used to produce the item, or impurities not intentionally added, usually does not trigger the rule. There is no de minimis threshold; even trace amounts may be sufficient if intentionally added and necessary to functionality or production.
“DRC and adjoining countries” refers to the Democratic Republic of the Congo and specified neighboring states. “Recycled or scrap sources” are treated distinctly, recognizing lower risk profiles for 3TG derived from post-consumer materials. Smelters and refiners sit at the fulcrum of the framework because they transform ore to metals, and thus supplier mappings that stop at distributors will not suffice. Understanding these definitions is indispensable, since misinterpretations drive flawed Reasonable Country of Origin Inquiries and unnecessary reputational exposure.
The Annual Timeline, Calendar-Year Basis, and Form SD Mechanics
Reporting operates on a calendar-year basis, regardless of fiscal year. Each issuer must assess product status for the period January 1 through December 31 and file Form SD by May 31 of the following year. Form SD itself contains discrete items: the initial disclosure of whether the issuer has determined that 3TG are necessary to the functionality or production of its products, a description of the Reasonable Country of Origin Inquiry (RCOI), and, when required, an exhibit containing the Conflict Minerals Report. In addition, the issuer must make specified disclosures publicly available on its website and maintain relevant records for an appropriate period.
Calendar-year reporting sounds deceptively simple. In practice, aligning product engineering changes, supplier transitions, mergers and acquisitions, and year-end validations to a fixed May 31 deadline requires cross-functional orchestration. SEC filers with multiple divisions, contract manufacturers, and global procurement channels should treat January and February as critical months for supplier outreach, smelter and refiner validation, and legal review to ensure that Form SD and any Conflict Minerals Report are accurate, consistent, and timely.
RCOI Versus Due Diligence: Distinct Phases with Different Evidentiary Expectations
The regulatory framework separates two phases. First, the issuer must conduct an RCOI to determine whether the 3TG originated in a covered country or came from recycled or scrap sources. The RCOI must be reasonable in light of the issuer’s facts and circumstances and should leverage industry-standard tools, such as smelter and refiner lists, supplier questionnaires, and intelligence from recognized responsible sourcing initiatives. If the RCOI indicates no reason to believe that 3TG may have originated in covered countries, or that they come from recycled or scrap sources, the issuer can conclude the process with a Form SD narrative describing the RCOI and its results.
Second, if the RCOI is inconclusive or indicates potential origin in covered countries, the issuer must perform due diligence on the source and chain of custody of the 3TG. This due diligence should conform with a nationally or internationally recognized framework, most commonly the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. The due diligence phase is not a paperwork formality. It requires mapping to smelters and refiners, evaluating red flags, and vetting audit status of smelter/refiner facilities. Conflating RCOI with due diligence is a common and costly mistake that can compromise both the accuracy and credibility of the Conflict Minerals Report.
Preparing the Conflict Minerals Report: Substantive Elements and Common Pitfalls
When due diligence is required, the Conflict Minerals Report must discuss the due diligence framework applied, describe the steps taken to identify and mitigate risk, list the smelters and refiners believed to be in the supply chain, identify the countries of origin when determinable, and summarize efforts to determine the mine or location of origin. The report should give a clear account of the company’s design, implementation, and results of its due diligence, including supplier engagement, escalation procedures, and any improvements planned for the next reporting cycle.
Registrants frequently stumble by providing generic statements that lack specificity or by copying supplier assertions without verification. Vague references to “industry standards” without tying activities to concrete controls undermine credibility. Another pitfall is inconsistent terminology between Form SD, the Conflict Minerals Report, and website disclosures. Precision is essential: the narrative must align with the actual scope of the inquiry, the number of smelters validated, and the percent of suppliers responding. An experienced attorney and CPA can calibrate disclosures to avoid either implying certainty that the evidence does not support or understating risks that a reasonable investor or stakeholder would deem material.
Independent Private Sector Audit (IPSA): Current Expectations and Strategic Considerations
As a result of judicial developments and subsequent regulatory guidance, the requirement to obtain an IPSA has been effectively limited. At present, an IPSA is generally required only if the issuer describes any of its products as “DRC conflict free.” If the issuer does not make that assertion, the Conflict Minerals Report may be filed without an IPSA, provided the company still describes due diligence in good faith and in conformity, in all material respects, with the recognized framework.
Despite the narrowed requirement, many issuers elect voluntary assurance for credibility with customers, investors, and rating agencies. Where undertaken, the IPSA assesses whether the design of the due diligence framework conforms to the selected standard and whether the issuer’s description of due diligence in the Conflict Minerals Report is consistent with the process undertaken. It is not a financial statement audit, but it does introduce controls scrutiny and documentation demands. Companies that anticipate customer audits, governmental tenders, or investor ESG diligence may benefit from building toward assurance readiness even if they do not immediately commission an IPSA.
Misconceptions that Lead to Noncompliance and Reputational Harm
A prevalent misconception is that off-the-shelf components purchased from reputable brands obviate the need to inquire. In reality, your obligations do not disappear simply because a supplier is well-known. Another misconception is that minuscule quantities of 3TG are irrelevant. There is no de minimis exception in the rule. If 3TG are intentionally added and necessary to functionality or production, quantity is not determinative. Further, confusing tools and equipment used in production with materials contained in the product can lead to erroneous exclusions.
Additionally, some believe that a global supplier code of conduct alone satisfies RCOI. It does not. A code may be part of your control environment, but you must execute a substantively reasonable inquiry and, where appropriate, due diligence that traces to smelters and refiners. Others assume that using recycled or scrap sources eliminates all obligations. Even then, you must disclose and describe your reasonable inquiry and the basis for concluding that the materials are recycled or scrap. Getting these nuances wrong can result in incomplete filings, stakeholder criticism, or challenges from customers demanding robust responsible sourcing programs.
Practical Steps to Build a Defensible Program and Align with Internal Controls
Effective programs begin with a risk-based scoping exercise that maps products, subassemblies, and components where 3TG are likely present. Establish a cross-functional team that includes legal, supply chain, engineering, compliance, and finance. Standardize supplier outreach using recognized reporting templates, but do not stop at collection. Implement escalation triggers for incomplete, inconsistent, or high-risk responses, and maintain evidence of follow-ups. Create a smelter/refiner validation process against reputable conformance lists and maintain audit-ready logs of which facilities have been verified, which remain unknown, and what remediation steps are underway.
From a controls perspective, embed the program into procurement and new product introduction processes. Integrate contract clauses requiring suppliers to provide 3TG data, cooperate with RCOI and due diligence, and support smelter disclosure. Align documentation with disclosure controls and procedures, ensuring that Form SD and any Conflict Minerals Report are subject to rigorous legal review and management certification processes. Although Sarbanes-Oxley internal controls over financial reporting do not directly govern these disclosures, inaccurate statements in Form SD can still trigger liability theories under the antifraud provisions and lead to reputational damage, making robust disclosure controls imperative.
Mergers, Acquisitions, and Divestitures: Transitional Rules and Integration Complexity
Transactions complicate reporting in ways that are frequently overlooked. When you acquire a business that manufactures or contracts to manufacture products containing 3TG, you generally must include that business in your conflict minerals reporting beginning with the first reporting calendar year that starts no sooner than four months after the acquisition is consummated. This window is intended to allow integration of compliance processes. However, it is not an excuse for inaction. Early diligence should inventory inherited product lines, supplier data availability, and smelter/refiner mapping gaps to determine whether a transitional disclosure will still require substantial remediation and outreach.
Divestitures and carve-outs present different challenges. You must ensure clean handoffs of supplier data and records retention policies that allow you to substantiate prior filings. Joint ventures and contract manufacturing arrangements require meticulous contract drafting to allocate responsibilities for data collection and reporting. An attorney and CPA experienced in transactional diligence can flag 3TG issues during deal negotiation, incorporate covenants and indemnities, and align closing conditions with compliance readiness, thereby reducing the risk of filing inaccuracies and post-closing disputes.
Website Posting, Record Retention, and Stakeholder Engagement
The framework imposes public transparency requirements. Beyond filing Form SD and any Conflict Minerals Report with the Commission, you must make specific disclosures publicly available on your website for at least one year. Internally, you should maintain records supporting your RCOI and due diligence for an appropriate period, commonly at least five years, consistent with your document retention policies and the expectations of the OECD framework. The public posting is not a mere technicality; stakeholders will scrutinize your disclosures for consistency and progress year over year.
Consider a stakeholder engagement plan that anticipates inquiries from customers, non-governmental organizations, and investors. Prepare Q&A materials that reconcile year-over-year changes in smelter lists, explain remediation steps for non-conformant facilities, and document supplier improvement programs. These communications should be aligned with your Conflict Minerals Report and substantiated by internal records. Consistency and candor are essential; overstating certainty or omitting known gaps risks eroding credibility and intensifying scrutiny.
Intersections with Trade, Sanctions, and Emerging ESG Expectations
Conflict minerals diligence does not occur in a vacuum. Supply-chain transparency regimes continue to expand, including forced labor import restrictions, sanctions programs, and broader ESG disclosures. While the legal predicates differ, the operational building blocks overlap: supplier mapping, country-of-origin verification, and corrective action plans. Companies that harmonize these processes can reduce duplication, strengthen data integrity, and respond more efficiently to audits by customers and government agencies.
In parallel, investors and rating agencies increasingly view responsible sourcing practices as part of enterprise risk management. Even where the rule does not require an IPSA, independent validation, or granular facility-level disclosure, some stakeholders will expect it. Resist the temptation to add aspirational statements that outpace your actual controls. A calibrated approach—rooted in verified facts, tied to clear improvement initiatives, and reviewed by counsel—protects against allegations of greenwashing and supports consistent, defensible ESG narratives.
Enforcement, Liability, and the Real-World Cost of Getting It Wrong
Although headline-grabbing enforcement actions have been relatively infrequent, the legal and business risks are real. Inaccurate or misleading statements in Form SD or the Conflict Minerals Report can create exposure under the antifraud provisions, invite comment letters or inquiries, and damage customer relationships. Procurement disqualifications, lost bids, or mandated corrective action plans can impose costs that far exceed the expense of robust compliance programs. Moreover, advocacy groups and media outlets often publicize lapses, magnifying reputational harm.
From a governance perspective, boards are increasingly attentive to supply-chain risks, particularly those involving human rights and conflict financing. Audit committees should receive periodic briefings on program design, supplier response rates, smelter/refiner validation status, and remediation plans. As with any disclosure regime, contemporaneous documentation is your best defense. An experienced attorney and CPA can help determine materiality thresholds for optional disclosures, align program metrics with investor communications, and implement corrective disclosures if errors are discovered post-filing.
Actionable Roadmap for the Upcoming Filing Cycle
Begin with a refresh of your scoping analysis: update product catalogs, engineering changes, and supplier lists to identify where 3TG are likely present. Reissue supplier surveys early, prioritize high-spend and high-risk categories, and track responses with dashboards that capture smelter/refiner coverage. Where suppliers provide company-level responses that are not product-specific, escalate for additional detail. Concurrently, run smelter lists against recognized conformance programs and flag non-validated facilities for follow-up. If gaps persist into March, initiate contingency plans to complete due diligence sufficient for accurate disclosures by May 31.
Update your written policy, supplier code, and contract templates to align with current expectations. Conduct a gap assessment against the OECD framework and document improvements since the prior year, such as enhanced supplier training or expanded audit verification. Schedule legal and executive reviews of draft Form SD and the Conflict Minerals Report early enough to incorporate revisions based on evolving supplier data. Finally, prepare your website disclosure and internal Q&A, ensuring consistency across all statements. A disciplined cadence, grounded in defensible evidence and clear governance, is the hallmark of a mature conflict minerals compliance program.
