Conflict Minerals Rule
Acting SEC Chairman Michael S. Piwowar issued a statement on January 31, 2017 directing the SEC staff to reconsider whether the 2014 Guidance is still appropriate and whether any additional relief is appropriate. The statement also included a 45-day public comment period.
In addition, there has been a leaked draft executive order and rumors that President Donald Trump is going to issue an order that will temporarily suspend the conflict minerals rule for two years based on a “national security interests” rationale.
Additionally, a final ruling on the conflict minerals litigation may be looming. On February 10, 2017, the district court judge ordered the parties in the conflict minerals litigation to file a joint status report, on or before March 10, 2017, indicating whether any further proceedings are necessary, and whether the court should enter an order of final judgement to effectuate the circuit’s decision.
At the recent SEC Speaks conference, Shelly Parratt, acting director of the Division of Corporation Finance, stated that companies must continue to comply with the conflict minerals disclosure rules and that even though the SEC is seeking comments thereon, the rules remain in effect.
What the outcome of the above will ultimately be is unknown. The likelihood of the conflict minerals rule being completely overturned prior to the upcoming May 31st Form SD due date is slim. Accordingly, issuers should steam ahead in their due diligence efforts.
Pay Ratio Rule
A week after issuing the conflict minerals statement described above, Acting SEC Chairman Michael S. Piwowar issued a statement on February 6, 2107 related to the pay ratio disclosure rule in which he explained that it was his “understanding that some issuers have begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline.” Therefore, Piwowar stated that he is seeking public comment within 45 days on any unexpected challenges that issuers have experienced as they prepare for compliance and whether relief is needed. In addition, Piwowar directed the SEC staff to reconsider the implementation of the pay ratio rule and whether additional guidance or relief may be appropriate.
At the recent SEC Speaks conference, Shelly Parratt, acting director of the Division of Corporation Finance, stated that companies must continue to comply with the pay ratio disclosure rules and that even though the SEC is seeking comments thereon, the rules remain in effect.
It seems likely that this disclosure rule will be revisited and could be changing. Nevertheless, at this time, issuers should continue their work in preparing to comply with the pay ratio disclosure rules for the next proxy season.