Conflict Minerals - Form SD and Conflict Minerals Reports
 

Like this? Share it with your network

Share

Conflict Minerals - Form SD and Conflict Minerals Reports

on

  • 6,215 views

Assent Compliance replay of latest Webinar: Conflict Minerals - Form SD and Conflict Minerals Reports. Visit www.assentcompliance.com or email info@assentcompliance.com for more info.

Assent Compliance replay of latest Webinar: Conflict Minerals - Form SD and Conflict Minerals Reports. Visit www.assentcompliance.com or email info@assentcompliance.com for more info.

Statistics

Views

Total Views
6,215
Views on SlideShare
5,017
Embed Views
1,198

Actions

Likes
0
Downloads
43
Comments
0

7 Embeds 1,198

http://assentcompliance.com 1072
http://blog.assentcompliance.com 74
http://feeds.feedburner.com 28
http://assentsvhc.com 14
http://www.assentsvhc.com 5
http://www.assentcompliance.com 4
http://webcache.googleusercontent.com 1
More...

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Conflict Minerals - Form SD and Conflict Minerals Reports Presentation Transcript

  • 1. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Section 1502 Conflict MineralsStep 3 – FORM SD & Conflict Minerals Reports Assent Compliance Jonathan Hughes 613.290.8044 jon.hughes@assentcompliance.comC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 2. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Agenda • Assent Compliance Corporate Overview • Brief recap of Dodd-Frank Act Section 1502 • Assent Compliance involvement with Dodd-Frank Act • Form SD • What does the Law State? • Sample Form • Conflict Minerals Report • What does the Law State? • Different Conflict Mineral Report Statuses • Application of OECD Due Diligence • Lessons Learned • Assent Compliance Services • Q&A C u s t o m s o l u t i o n s f o r c o m p l i a n c y [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 3. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 About Assent Assent Compliance delivers SaaS Environmental Compliance Services to companies who must comply with local, national and global environmental regulations. Assent also supports its software division with a team of highly experienced industry consultants to provide our clients with turnkey compliance solutions. Industry experts at Tier 1 companies rank Assent Compliance amongst the top environmental compliance solutions in the world and one of the only global solution providers to offer a full service solution from end to end.Our MissionIs to help our clients comply with environmental regulations in themost efficient and cost effective manner possible. This is achievedthrough SaaS automation of processes and working with clientsto build efficient internal compliance programs that meet globalcompliance requirements.C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 4. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 How The Assent Compliance Management System Works Integrates with Pulls Bill of Material (BOM) Communicates with Supply Major ERP/PLM into a centralized compliance Chain in bi-directional fashion Systems data base or operates as a to procure environmental stand-alone system. information from suppliers Modules to Comply with All Major Environmental Build IPC 1752-A FORMS. Regulations Import/Export via XML Built-in CRM for compliance Homogenize proprietarytasks, due diligence reporting supplier DOC formats in xml and audit trails Allows internal Staff to Acts as a repository for any Make Engineering Override compliance related material assessments C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 5. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Consulting Services  Compliance Assessment Services For Environmental Regulations  Internal Standard Operating Procedure Consulting  Compliance Plan Development  Compliance Strategy Consulting  Conflict Mineral Compliance  IT System IntegrationC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 6. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 our offices Munich, Germany london, UK Ottawa, Ontario Can- ada (HQ) Taipei, Taiwan Bangalore, IndiaNew York,New York Kenya (Conflict Minerals) C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 7. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044Section 1502 – Dodd-Frank Wall StreetReform and Consumer Protection ActThe basics• The Conflict Minerals (3TGs) • Tin (Cassiterite Ore) • Tungsten (Wolframite) • Tantalum (Coltan Ore) • Gold• The Countries • Democratic Republic of Congo • Congo Republic • Central Africa Republic • Tanzania • South Sudan • Burundi • Zambia • Rwanda • Angola • UgandaC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 8. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044• Conflict Minerals Definition: • Mined in conditions of armed conflict and abuses of human rights As per 17 CFR Parts 229 and 249 “The Conflict Minerals” Rule: “It is the sense of the Congress that the exploitation and trade of conflict minerals originat- ing in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual – and gender-based violence, and contributing to an emergency humanitarian situ- ation therein”• This situation attracts Media attention • Child Soldiers • Sexual assault on a mass scale • Intimidation and abuse of local populace • Armed control of mines, trading routes, and other strategic areasMore Media attention = More Consumer attentionC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 9. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Section 1502 – Dodd-Frank Wall Street Reform and Consumer Protection Act SCOPE • Companies that register with the SEC • 10K (US) • 20F (Foreign) • 40F (Canadian) Legal Wording: Issuers that File Reports Under Sections 13(a) and 15(d) of the Exchange Act • Conflict Minerals “necessary to the functionality or production” of its products manufactured (or contracted to be manufactured) • Suppliers to impacted SEC filing companies are affected by the process, even if they are not an SEC filing company themselves C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 10. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Principal Requirements (as part of annual reporting to SEC) – FINAL RULES • Reasonable Country of Origin Inquiry • Trace back of all 3TGs to country of origin • Determine if 3TGs are from scrap or recycled sources Possible Scenarios and Requirements stemming from the RCOI: Scenario 1: • If the Issuer knows all 3TGs did not originate in DRC Countries or are from scrap or recycled sources OR • If the Issuer has no reason to believe that the 3TGs may have originated in the covered coun- tries and may not be from scrap or recycled sources. C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 11. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044Requirements: • Disclosure of the RCOI on Issuer Internet website • File Form SD with the SEC as part of annual filings: »» Disclose the determination »» Disclose the process »» Disclose the internet address of the site with the RCOI Information• Maintenance of reviewable business records to support a reasonable country of origin conclusion is not required but it is mentioned in the final rules that maintenance of appropriate records may be useful in demonstrating compliance with the final rule. Additional Note from the Final Rules: These reviewable records may be required by any nation- ally or internationally recognized due diligence framework applied by an issuer.C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 12. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044Principal Requirements (as part ofannual reporting to SEC) – FINAL RULESCONT’DScenario 2:• If the Issuer knows or has reason to believe that the 3TGs may have originated in the covered countries.OR• If the Issuer knows or has reason to believe that the 3TGs may not be from scrap or recycled sources.Requirements: • All the above tasks plus • Create Conflict Minerals Report • Filed as exhibit to the Form SD • Make report available on the Internet website• Same as proposed – All of the above must be audited by a 3rd party • 10K/20F audited as a part of overall SEC filing • Independent Private Sector Audit - Required for the Conflict Minerals Report (exceptions surrounding the “Undeterminable Status” exist)C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 13. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Final Rules Flowchart Does the issuer file re- Does the issuer ports with the SEC under manufacture or Are conflict minerals necessary to the YES YES sections 13(a) or 15(D) of the contract to functionality or production of the product exchange act? manufacture products? manufactured or contracted to be manufactured? No No File does not apply. No END YES YES Were the conflict minerals outside the sup- ply chain prior to January 31, 2013? No, if newly mined No, if potentially scrap or recycled On a reasonable country of origin inquiry (RCOI), NoYES does the issuer know or have reason to believe that the conflict minerals may have originated in the DRC Based on the RCOI, does the issuer know or reasonably or an adjoining country (the covered countries)? believe that the conflict minerals come from scrap or recycled? No YES File a form SD that discloses the issuer’s determination and Exercise due diligence on the source and chain of custody of its conflict minerals follow- briefly describes the RCOI and the results of the inquiry. ing a nationally or internationally recognized due diligence framework, if such framework END is available for a specific conflict mineral. In exercising this due diligence does the issuer determine the conflict minerals are not from Yes the covered countries or are from scrap or recycled. File a form SD the discloses the issuer’s determination and No briefly describes the RCOI and due diligence measures taken and the results thereof. File a form SD with a conflict minerals Report as an exhibit, which includes a description of END the measures the issuer has taken to exercise due diligence. In exercising due diligence, was the issuer able to determine whether the conflict minerals No Is it less than two years after the financed or benefitted armed groups? effectiveness of the rule (four years for smaller Reporting companies)? YesThe conflict minerals report must also include and independent private sector audit report, The Conflict minerals Report must also includewhich expresses an opinion or conclusion as to whether the design of the issuer’s due diligence No Yes a description of products that are “DRC Conflictmeasures is in conformity with the criteria set forth in the due diligence framework and wheth- Undeterminable” and the steps taken or that willer the description of the issuer’s due diligence measures is consistent with the process under- be taken, if any, since the end of the period coveredtaken by the issuer. Also, include a description of the products that have not been found to be in the last Conflict Minerals Report to mitigate theDRC Conflict free, the facilities used to process the necessary conflict minerals in those prod- risk that the necessary conflict minerals benefitucts, the country of origin of the minerals and the efforts to determine the mine or location or armed groups, including any steps to improve dueorigin of those minerals with the greatest possible specificity. END diligence. No audit is required. END C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 14. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044Section 1502 – Dodd-Frank Wall StreetReform and Consumer Protection ActAssent Compliance’s Involvement with Dodd-FrankSection 1502• Meeting with SEC • Over the course of Monday December 12th and Tuesday December 13th, Assent Compliance met separately with Commissioner Paredes, Commissioner Walter and Commissioner Aguilar for 1 hour each to discuss the following items in respect to Dodd Frank Section 1502 »» NAM and Tulane Reports »» Compliance costs »» Practical compliance activities »» Impact on industry »» Impact on supply chains »» Feedback on proposed rulesC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 15. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044• On Wednesday December 14th, Assent Compliance participated in Conflict Mineral discussion panel with the following panelists: • GE • AMD • Brookings Institute • RIM • Claigan Environmental • KEMET• The panel discussed various issues surrounding Conflict Minerals and fielded questions from the audience (which was comprised of congress staff, journalists, industry groups and business representatives)• Assent Compliance is included 4 times in the Final Rules from the SEC based on our input at the meeting and on a separate submitted letter we provided to the SEC.C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 16. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Form SD What does the Law State? • All companies in scope of the Conflict Minerals provision must file Form SD. • This will be done yearly on May 31st, for the previous calendar year. • NOTE - This is done on a yearly basis and is independent of your company’s fiscal year • The first report is due May 31st, 2014 for calendar year 2013 • Under the heading “Conflict Minerals Disclosure”, you must provide the following information: • RCOI Determination »» Do you have reason believe...? • RCOI Results »» Stats, Ex: 1,500 surveyed, 1400 responses, 125 stated source unknown, etc • Description of your RCOI methodology »» How was it carried it, what are your policies, how & where is the data stored etc. • Link to your website where this disclosure is made publically available »» www.yourcompanyname.com/conflict_minerals_disclosure C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 17. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Form SD What does this mean? • You need to have a clear, transparent process that can effectively meet the requirements of the RCOI • Remember that it is a Reasonable COUNTRY of Origin, not a Reasonable direct supplier survey – IE: You must have an RCOI methodology in place that allows you to map your supply chain to determine source where necessary • You will need to coherently explain the compliance checking process that lead to your determination. • A simple “We have no Conflict Minerals because we got a spreadsheet from all our suppliers” is not going to cut it with the SEC or the public • The key terms used are “reasonable” and “good faith execution” • Your plan should account for allow for an enable accountable and traceable improvements in the long term. • This information is PUBLIC and must be disclosed on your website • Keep in mind that all your policies regarding Conflict Minerals will be on your website. • Think of your brand image • Do not contradict yourself »» Your website statements must match up with your SEC disclosures as well as statements you have given to your customers! C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 18. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Form SD Example A. Acme Corporation’s Conflict Minerals Disclosure (Reasonable Country of Origin Determination) Acme Corporation has reason to believe that some of the Conflict Minerals used in its products may have originated from DRC or adjoining countries. B. Description of Acme Corporation’s Reasonable Country of Origin Inquiry Acme Corporation has enlisted the assistance of a 3rd party Consultant – Assent Compliance - to help design and implement a Conflict Minerals Compliance Plan that will enable compliance with Dodd-Frank Section 1502. In order to order to achieve these goals, Acme Corporation has taken the following steps: 1. Conflict Minerals Policy Acme Corporation has instituted a DRC Conflict Free sourcing policy. Acme Corporation does not accept the use of Conflict Minerals in its products. All Acme Corporation suppliers are required to sign the Conflict Minerals policy statement as part of the terms and conditions of doing business with Acme Corporation. Acme Corporation’s Conflict Minerals Policy statement can be found here: www.acme.com/conflict_minerals_policy.html In addition, Acme Corporation supports its suppliers in seeking a mutually sustainable solu- tion for its entire supply chain, including its indirect suppliers by providing Conflict Minerals educational materials, guidance and flow-down contract clauses for use by its suppliers. C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 19. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 2. Internal Standard Operating Procedures Acme Corporation has created internal standard operating procedures (SOPs) for all depart- ments and business units that are affected by Conflict Minerals. These SOPs provide a step by step process that each business unit, department and employee must follow in order to generate and maintain the necessary information needed for Acme Corporation’s compliance with Dodd-Frank Section 1502. 3. Risk Assessment & Risk Mitigation As part of Acme Corporation’s Compliance Plan design, all products and suppliers were as- sessed in order to identify Conflict Minerals scope and risk. High risk suppliers and products were flagged in Assent Compliance’s Database for prioritization of due diligence and supply chain sourcing activities. High risk suppliers and products are required to provide a greater level of proof, in order to demonstrate a reason to believe that their conflict minerals do not originate in the covered countries. In addition, Acme Corporation has established a separate Risk Mitigation committee which will specifically address high risk suppliers and products who do not meet the minimum requirements of Acme Corporation’s Conflict Mineral compliance program. This committee is responsible for resolving these supply chain issues by assisting the supplier, mapping mineC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 20. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 of origin or changing the source of the materials in question. 4. Supplier Corrective Actions Acme Corporation has created a list of Supplier Corrective actions to be taken with vendors who cannot provide sufficient compliance information. The specific supplier corrective ac- tions depend on factors such as vendor size, risk level and vendor capabilities. Suppliers who do not improve their responses in a timely fashion are removed from Acme Corporation’s supply chain. Acme Corporation will assist suppliers with their source mapping efforts and provide flow- down contract clauses where appropriate in the effort to support a mutually sustainable program for all of its suppliers. 5. Reasonable Country of Origin Methodology Acme Corporation will be utilizing Assent Compliance’s Conflict Minerals software and services to conduct its reasonable country of origin inquiry. This will involve sending the EICC-GESI Conflict Minerals Reporting template to all of Acme Corporation’s direct sup- pliers. This form must be completed and signed by an appropriate supplier signatory. All responses are reviewed and sent back to supplier for any corrective measures as prescribed in Acme Corporation’s Conflict Minerals compliance plan. High risk responses are sent to the risk mitigation committee for review and further actionC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 21. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 as per Acme Corporation’s Conflict Minerals compliance plan and SOPs. 6. Maintenance of Reviewable Business records Acme Corporation uses Assent Compliance’s database in order to maintain reviewable busi- ness records. This includes, supplier responses, supplier corrective actions and risk mitiga- tion processes. Although no longer part of the mandatory requirements under final rules, the storage of these metrics is an important part of demonstrating transparency and is in accordance with compliance to recommended OECD due diligence. This will also allow Acme Corporation to show the long-term evolution and improvement of its program to its shareholders.C. Results of Acme Corporation’s Reasonable Country of Origin InquiryBased on the process described above, Acme Corporation received the following results from itsReasonable Country of Origin Inquiry: Initial Assessment and Survey: Total number of Acme Corporation Suppliers: 1,750 Suppliers in Scope of Conflict Minerals requirements: 1,500 Suppliers surveyed: 1,500 Responses received: 1,500C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 22. AS SENTCOM PLIANCEinfo@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Approximately 85% of Acme Corporation’s suppliers were designated as being in scope of Acme Corporation’s Conflict Minerals Compliance Program. Supplier Responses No Conflict Minerals in materials provided to Acme Corporation: 200 Conflict Minerals do not originate from DRC or adjoining countries: 1200 Conflict Minerals source is unknown: 100 Through its Conflict Minerals Compliance Program, Acme Corporation was able to deter- mine that over 94% of all its suppliers either do not provide materials that contain Conflict Minerals or do not provide any reason to believe that their Conflict Minerals originate in the covered countries. The 100 suppliers that were unable to provide sufficient Conflict Minerals source infor- mation as part of the initial Reasonable Country of Origin inquiry underwent additional OECD Due Diligence activities which are describe in Acme Corporation’s Conflict Minerals report. Provided below is a link to Acme Corporation’s internet disclosure for Conflict Minerals: www.acme.com/conflict_Minerals_DisclosureC u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 23. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report Preface • First we should examine what triggers the requirement for a Conflict Minerals report: • “requires an issuer that, after its reasonable country of origin inquiry, had reason to believe that its minerals may have originated in the Covered Countries and may not have come from recycled or scrap sources and, after the exercise of due diligence, still has reason to believe that its minerals may have originated in the Covered Countries and may not have come from recycled or scrap sources, to provide a Conflict Minerals Report that includes a description of the measures the issuer has taken to exercise due diligence on the source and chain of custody of those conflict minerals.” (Pg. 182-183) • This is an important and often overlooked change between the proposed and final rules. • Before you jump to conclusions and rush right into a Conflict Minerals Report, you must first determine if you have “reason to believe”. • Make sure your RCOI is setup to allow your company to make that determination. C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 24. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report Conflict Mineral Report Status • Differs from your RCOI determination • RCOI Determination = “reason to believe” »» Based on outcome of your RCOI • Conflict Minerals report = DRC Conflict Mineral status »» Based on outcome of your Due Diligence measures • One of three statuses »» “DRC Conflict Free” »» “do not contain minerals that directly or indirectly finance or benefit armed groups in the Covered Countries” (Pg. 185) »» “Not DRC Conflict Free” »» “The Conflict Minerals Statutory Provision does not define “Not DRC Conflict Free” but instead only defines “DRC Conflict Free”” (Pg. 183) »» “DRC Conflict Undeterminable” »» Temporary status for issuers that are “unable to determine that their conflict minerals did not originate in the Covered Countries” (Pg. 186) »» Only permitted for 2 years for larger issuers and 4 years for smaller issuers »» Smaller issuers defined as issuers with less than $25,000,000 in revenue as per Rule 12b-2 [17 CFR 240.12b-2] under the Exchange Act. (Pg. 29) C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 25. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report Principal Requirements – “Not DRC Conflict Free” • Conflict Minerals Report must include some of the following items (Pg. 167 of the Final Rules): • “description of the measures taken by the issuer to exercise due diligence on the source and chain of custody of its conflict minerals” • These measures must include “an independent private sector audit” of the Conflict Minerals Report • Entity that conducted the audit • “provide a description of the products “manufactured or contracted to be manufactured that are not ‘DRC conflict free’” • “facilities used to process the conflict minerals” • “the country of origin of the conflict minerals” • “efforts to determine the mine or location of origin with the greatest possible specificity” C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 26. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report Principal Requirements – “DRC Conflict Undeterminable” • Conflict Minerals Report must include some of the following items (Pg. 167 of the Final Rules): • “description of the measures taken by the issuer to exercise due diligence on the source and chain of custody of its conflict minerals” • “provide a description of the products “manufactured or contracted to be manufactured that are not ‘DRC conflict free’” – If known • “facilities used to process the conflict minerals” – If known • “the country of origin of the conflict minerals” – If known • “efforts to determine the mine or location of origin with the greatest possible specificity” If Applicable • “the steps it has taken or will take, if any, since the end of the period covered in its most recent prior Conflict Minerals Report to mitigate the risk that its necessary conflict minerals benefit armed groups, including any steps to improve its due diligence” (Pg. 186) • NOTES – No audit required, but you must still carry out OECD Due Diligence and state your plan to mitigate risk going forward C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 27. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report Principal Requirements – “DRC Conflict Free” • Conflict Minerals Report must include some of the following items (Pg. 167 of the Final Rules): • “description of the measures taken by the issuer to exercise due diligence on the source and chain of custody of its conflict minerals” • These measures must include “an independent private sector audit” of the Conflict Minerals Report • Entity that conducted the audit • NOTE – No need to list products, processes, mine with greatest specificity etc. C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 28. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report What does this mean? • OECD has the only nationally recognized due diligence framework • It is de-facto legislated that you use this process • Your initial Compliance Plan should start with OECD Due Diligence as a base for your meth- odologies, processes, policies, etc. • Make sure your Compliance Plan and RCOI is in-line with OECD Due Diligence and you will not need to re-invent the wheel • Can also then incorporate those initial steps as proof of your due diligence measures • Evolution – expect your plan to improve and evolve over time as more info and infrastructure is available to support your Conflict Minerals compliance program • This information is public – if you do have to write a Conflict Minerals Report, write it as if every customer and shareholder is reading it. C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 29. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Conflict Minerals Report OECD - Practical Applications • There are 5 steps outlined under the OECD framework: 1. Establish strong company management systems »» Compliance Plan »» RCOI Methodology »» Due Diligence Plan 2. Identify and assess risks in the supply chain »» Supplier & Product Profiling 3. Design and implement a strategy to respond to identified risks »» Risk Mitigation Committee 4. Carry out 3rd party audit of smelter/refiner’s due diligence practices »» Not applicable to 99% 5. Report annually on supply chain due diligence »» Part of Conflict Minerals Reporting C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 30. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Lessons Learned • Follow the rules • Guidelines, formats, methodologies and processes exist – use them! • Don’t re-invent the wheel • Focus on Risk • Final rules and OECD both recommend a risk based approach • Profile your risk 1. Suppliers 2. Products • Mitigate your risk 1. Risk Committee 2. Supplier Corrective Actions • Getting an EICC spreadsheet from 100% of your direct suppliers is not the same as miti- gating 100% of your risk. • Make your life easy: • Give yourself time to design an effective a plan • Give your suppliers time but make sure your deadlines are firm • Setup a multi-departmental Risk Committee • Start sooner rather than later 1. The longer you wait, the more resources you will need over a shorter period of time C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 31. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 How Assent can help Assent Compliance offers turnkey Conflict Mineral Compliance services including  Conflict Minerals Scope Assessments, Conflict Minerals Reasonable Country of Origin Inquiry, Conflict Minerals Report generation and Conflict Minerals Software. Assent Compliance can help you complete your Form SD or Conflict Minerals Report. In support of these reports, we offer the following services: • Conflict Minerals Scope Assessments • RCOI Services • Conflict Minerals Software • Due Diligence Support • Risk Profiling & Risk Mitigation • Supply Chain Mapping • Risk Committee participation If you’d like to know more about our services, contact info@assentcompliance.com C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]
  • 32. AS SENTCOM PLIANCE info@assenTcompliance.com w w w. a s s e n T c o m p l i a n c e . c o m Tel: 613.290.8044 Questions? C u s t o m s o l u t i o n s f o r c o m p l i a n c e [ REAC H | R o H S | CP s i a | RSL | p r o p 6 5 ]