- Audit Committee Charter
Audit Committee Charter
The primary focus of the Audit Committee (the “Committee”) is to assist the Board of Directors (the “Board”) in its general oversight of the Corporation’s financial reporting, internal control and audit functions. Management is responsible for the preparation, presentation and integrity of the Corporation’s financial statements, accounting and financial reporting principles, internal controls and procedures designed to assure compliance with accounting standards, applicable laws and regulations. The Corporation’s independent auditing firm is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards. The Committee serves a board level oversight role in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with the auditors and the experience of the members in business, financial and accounting matters.
Audit Committee members shall meet the requirements of the exchange(s) upon which the Corporation is listed as well as all governing regulatory bodies. The Committee shall comprise three or more Directors as determined by the Board of Directors, a majority of whom shall be independent non-management Directors, free from any relationship that would interfere with the exercise of his or her independent judgment. All members of the Committee shall be financially literate. The Committee members shall be appointed by the Board of Directors. The Board of Directors shall designate the Chairman of the Committee annually. The Corporation relies on certain exemptions from the requirement that all members of the audit committee be independent set forth in National Instrument 52-110 to the extent that one or more members of the audit committee are not independent.
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. At least one meeting (or more frequently as appropriate) should be with management and the independent auditors in separate executive sessions to discuss any matters that the Committee or any of these groups believe should be discussed privately. Meetings may be held in person in or by telephone conference. The Committee shall report on a regular basis its activities to the Board and shall make such recommendations to the Board as it deems appropriate.
Responsibilities And Processes
The primary responsibility of the Audit Committee is to oversee the Corporation’s financial reporting process on behalf of the Board and report the results of its activities to the Board. The Committee should take the appropriate actions to set the overall corporate example for quality financial reporting, sound business risk practices and ethical behaviour. The Committee is not expected to audit the Corporation, to define the scope of the audit, to control the Corporation’s accounting practices, or define the standards to be used in preparing the Corporation’s financial statements. Corporation management is responsible for preparing the financial statements and the independent auditors are responsible for auditing those statements. The following shall be the principal recurring processes of the Committee in carrying out its oversight responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement or deviate from them as appropriate. The Committee shall:
Evaluate, review and recommend to the Board the selection (or, where appropriate, replacement) of the Corporation’s independent auditors, subject to approval by the Corporation’s shareholders.
Provide guidance to, and receive reports from, the Corporation’s independent auditors and financial management.
Review the interim financial statements and earnings release (if any) with management, prior to releasing the same to the public. The Chairperson (or other Committee delegate) may represent the entire Committee for purposes of review with management and the independent auditors.
Discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards.
Review with management and the independent auditors the financial statements as required in Canadian jurisdictions where the Corporation is a reporting issuer and provide judgments about the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments and the clarity of the disclosure in the financial statements.
Meet annually with the independent auditors to review the scope, proposed audit fees and related detail of the forthcoming annual year-end audit to be conducted by the independent auditors. Review the extent of “non-audit” services and related fee proposals that may be requested from the independent auditors from time to time.
Discuss with management and the independent auditors the adequacy and effectiveness of the accounting and financial controls, including the Corporation’s system to monitor and manage business risk, as well as legal and ethical compliance programs.
Evaluate the professional competency of the financial staff and the internal auditors, as well as the quality of their performance in discharging their respective responsibilities.
Consult with management in an effort to resolve areas of questionable performance or deficiencies in structure or personnel.
Discuss with the independent auditors the auditors’ independence from management and the Corporation.
Review this Charter annually and recommend to the Board appropriate changes to it.
Date Effective: _______________, 2008
Approved by the Audit Committee
- Compensation Committee Charter
CHARTER OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF MICROMEM TECHNOLOGIES INC.
The Compensation Committee (the “Committee”) is appointed by the Board of Directors of Micromem Technologies Inc. (the “Company”) to assist the Board in fulfilling its oversight responsibilities relating to the compensation of the Company’s executive officers and directors; to provide general oversight of the Company’s compensation plans and benefits programs; and to perform the additional specific duties and responsibilities set out herein. The primary duties and responsibilities of the Committee are to:
establish the compensation and benefits for the President and Chief Executive Officer and other executive officers of the Company;
evaluate the performance of the President and Chief Executive Officer and other senior executive officers of the Company;
review and recommend executive compensation, equity and retirement plans and any amendments to the same.
II. Composition of the Committee
The Committee shall consist of at least two (2) independent directors. Members of the Committee shall be appointed by the Board annually, subject to removal at any time by the Board. The Board shall designate one (1) committee member as Chair of the Committee.
The Board’s policy is that each Committee member shall meet the independence requirements for an independent director for an audit committee as described in Multilateral Instrument 52-110 – Audit Committees. Committee members shall have, to the extent feasible, background and experience in compensation, retirement plans or employment matters.
Annually, the Board shall determine if Committee members continue to be independent and meet applicable requirements.
III. Operations of the Committee
The Committee shall meet at least four (4) times annually, or more frequently as circumstances dictate and as the Committee shall deem necessary. The Committee Chair shall prepare, approve and distribute to each member of the Committee an agenda in advance of each meeting. If the Chair is not present, the members of the Committee may designate a Chair by a majority vote of those present. Meetings shall be of sufficient duration and scheduled at such times as the Committee deems appropriate to discharge properly its responsibilities. A majority of the members of the Committee will be present to constitute a quorum for the transaction of the Committee’s business. The Committee may ask members of management or others to attend meetings or portions thereof and provide pertinent information as necessary. The Committee shall meet in executive session annually to review the performance of the President and Chief Executive Officer and shall present a full report to the Board annually. The Committee also may meet in executive session from time to time to discuss any other matters that it believes should be discussed without management or any employee present. The Committee shall maintain minutes of its meetings.
All decisions of the Committee shall require the affirmative vote of a majority of the directors then serving on the Committee.
Compensation for service on the Committee shall be established by the full Board based on the recommendations of the Committee.
The Committee has the authority to access any consultant of the Company, including actuaries, compensation consultants or attorneys, in order to fulfill its responsibilities. The Committee in consultation with management is authorized to retain, at the Company’s expense, such compensation, legal or other consultants or experts as it may deem necessary in the performance of its duties.
IV. Responsibilities and Duties
Review and recommend corporate goals and objectives relevant to the compensation of the Company’s President and Chief Executive Officer and other executive officers; periodically evaluate the performance of the President and Chief Executive Officer and other executive officers in light of such goals and objectives; and determine and recommend the compensation for the President and Chief Executive Officer and other executive officers based upon these evaluations.
Periodically review the Company’s general executive compensation policies and strategies and make recommendations to the Board with respect thereto, including without limitation with respect to incentive compensation plans and equity compensation plans.
Examine base, short-term and long-term compensation for executives of similar sized technology companies at a similar stage of development as the Company and benchmark such compensation to the Company’s executive compensation structure.
Review and recommend (i) annual compensation strategy for Company officers and employees (ii) merit budget for officers and employees and (iii) short-term and long-term incentive plans and goals for executive officers.
Identify, in consultation with the management of the Company, performance targets for eligibility for bonuses of executive officers and recommend bonus awards, including any equity-based bonus awards, to executive officers.
Provide oversight for the administration of each of the Company’s equity compensation plans.
Recommend grants of awards under equity compensation plans to key employees of the Company.
Review and recommend compensation for Board members and committee members.
Review and recommend perquisites provided to executive officers.
Review executive compensation disclosure before the Company publicly discloses this information.
B. Retirement Plans
Review and make recommendations regarding the Company’s retirement plan strategy and recommend to the Board modifications, amendments and/or termination of qualified retirement plans.
Review and make recommendations regarding the terms of the Company’s supplemental retirement plans or agreements.
Review and make recommendations regarding participation of executives in supplemental retirement plans or agreements.
C. Severance and Change in Control
Review and make recommendations regarding the form of any agreement which provides severance to the executive officers of the Company in connection with a termination of employment following a change in control of the Company.
Review and make recommendations regarding any severance plan which provides severance to employees of the Company in connection with a termination of employment following a change in control of the Company.
D. Employment and Other Agreements
Review and recommend any employment, retention, consulting or other compensatory agreement between the Company and any director or executive officer of the Company.
E. Equity Ownership Guidelines
Review and recommend stock ownership guidelines for executive officers and directors.
F. Management Succession
Annually review succession planning for the President and Chief Executive Officer and key members of executive management.
G. Annual Report
Annually prepare a report of the Committee for inclusion in the Company’s annual proxy statement in accordance with the requirements of the Ontario Securities Commission, the TSX Venture Exchange, Canadian Securities Administrators’ statements and other relevant authorities.
H. Evaluation and Review of Charter
Review and assess annually the performance of the Committee, and report the results to the Board.
Review and assess annually the adequacy of this Charter and, if appropriate, recommend changes to the Charter to the Board.
I. Other Responsibilities
Report to the Board of Directors on a quarterly basis on the significant results of the Committee’s activities.
Perform any other activities consistent with this Charter, the Company’s bylaws and applicable laws and regulations as the Committee or the Board deems necessary or appropriate.
Date: Effective 2008 – Approved by the Compensation Committee
- Conflict of Interest
MICROMEM TECHNOLOGIES INC
CONFLICT OF INTEREST POLICY
Effective Date: 2007
Revised Date: June 25, 2008
Integrity and commitment are among Micromem Technologies Inc. (“the Company”) core values. These values imply that each Employee, Officer and Board Director acts in the best interest of the Company and refrains from any conduct or activity that is actually or potentially detrimental to the well being of the Company, or that may be so perceived.
A conflict of interest arises when an individual, or the organization he or she represents or has an interest in, has a real, potential or perceived, direct or indirect competing interest to the Company’s activities. This competing interest may result in the employee, or an immediate family member to them or entities in which they have an interest, being in a position to benefit from the situation or resulting in the Company not being able to achieve a result which would be in the best interests of the Company.
This policy shall indicate certain areas which are of concern to the Company so that conflicts of interest or situations where such interests might exist will be fully disclosed so that any necessary corrective action may be taken.
For the purpose of this policy, an employee is defined as:
a) a “Supervisor” being any person employed by the Company in a supervisory capacity, together with any other persons or positions identified by Management as being subject to this Policy;
b) an “Officer” being an individual appointed or designated as an officer of the Company;
c) a “Director” being a member of the Board of Directors of the Company, together with any non-Director member of a committee of the Board of Directors;
Independent Director means a Director, or a member of their immediate family, who has no direct or indirect material relationship with the Company within the last three (3) years as an Employee or Executive Officer of the Company; and
Has not received any direct compensation during any twelve (12) month period over the last three years as an Employee, Executive Officer or as a Consultant.
an “Immediate Family Member” being any person who resides in the same house of an employee where a familial relationship exists; and
a “Consultant” being an individual hired to perform services for a specific project or period of time; the nature of the work performed will determine whether or not they are perceived to be subject to this policy.
A conflict of interest shall be deemed to exist in the following circumstances:
a) Employees shall not acquire or maintain any private or personal interest that interferes in any way (or would appear to interfere) with the Company’s interests. Among other things, no employee shall take any action or have any interest that may make it difficult to perform his or her duties objectively or effectively or shall receive improper personal benefits as a result of his or her position with the Company. No employee shall provide or promote any advantage to any friend, family member, or to any business or personal acquaintance to the detriment of the Company or of any person seeking to do business with the Company. An employee shall report to the President & CEO or other person as may be designated from time to time by the Board, any conflict of interest or potential conflict of interest, as soon as practicable after becoming aware thereof.
b) Employees owe a duty to the Company to advance the Company’s legitimate interests when the opportunity to do so arises and shall not:
Take for themselves personally, opportunities that are discovered through the use of corporate property, information or position;
Use corporate property, information or position for personal gain; or
Compete with the Company.
c) Employees shall maintain the confidentiality of information entrusted to them by the Company and those with whom it does business, except when disclosure is authorized or legally mandated. “Confidential information” includes all non-public information that might be harmful to the Company or its stakeholders, if disclosed.
d) Each employee shall deal fairly with the Company’s stakeholders, partners, suppliers, competitors, directors or employees. An employee shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practices in an effort toward personal gains.
e) No employee shall not offer, solicit or accept transfers of economic benefit to or from any third party with whom the Company has, or is considering having, any contractual or binding relationship or arrangement of interest, other than incidental gifts, customary hospitality or other benefits of nominal value, as defined in the Company’s Travel and Expense Policy.
f) Employees who are in full-time employment of the Company shall not solicit or accept corporate directorships or acquire a disclosable interested (defined as more than 5% of the shares of any company) without prior written approval of the President & CEO. In this regard, any person who holds such a directorship or who owns such shares at the time of becoming a full-time employee of the Company should immediately seek written approval of the above mentioned individual with respect thereto. This prohibition extends to the directorship of any non-profit or public service corporation or organization if the holding of such directorship creates, or has the potential of creating a conflict of interest.
g) The Company will not knowingly enter into a material contract or engage in any material transaction in which an employee has an interest without the prior approval of the Board.
For the purposes of this Policy, an employee is deemed to have interest in a contract or transaction under the following circumstances:
Is a party to the contract or transaction;
Is an officer, director, partner (or person in any similar relationship to the party in question) of a party to the contract or transaction; or
Has an investment interest in a party to the contract or transaction that is material to the employee or immediate family member of the employee.
Each employee shall be required to submit in writing a “Declaration of Interest” detailing the interests that arise personally or from an immediate family member on an annual basis or as soon as the interest becomes known to the employee to the Manager, Human Resources & Administration.
If at any time an employee finds that they have or are considering the assumption of an outside relationship for financial benefit or personal interest; or if he or she is in doubt as to the proper application of this policy statement, he or she should promptly make all facts known the President & CEO and refrain from any exercises of responsibility in any manner which might reasonably be considered to be affected by such adverse interest. Upon full disclosure of the facts, the President & CEO will determine the validity of whether or not a conflict of interest exists.
Any employee who violates this Policy shall face disciplinary action up to and including termination of his or her employment or other relationship with the Company. The violation of this Policy may also violate certain laws. If the Company discovers that an employee has violated such laws, it may refer the matter to the appropriate authorities.
- Governance Committee Charter
CHARTER OF THE GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS OF MICROMEM TECHNOLOGIES INC.
The Board of Directors of the Corporation (the “Board”) has established a Governance Committee (the “Committee”) for purpose of providing the Board with recommendations relating to corporate governance in general, including, without limitation: (a) all matters relating to the stewardship role of the Board in respect of the management of the Corporation, (b) Board size and composition, including the candidate selection process and the orientation of new members, (c) the relationship and interaction of the Board and management, and (d) the consideration and implementation of such procedures as many be necessary of allow the Board to function independently of management. The Committee will also oversee compliance with policies associated with the efficient system of corporate governance, having regard to best practices and published guidelines of the Toronto Stock Exchange, the Ontario Securities Commission, the OTCBB and such other regulatory bodies as may from time to time be applicable. The Committee will endeavor to stay abreast of legal and regulatory developments in the field of corporate governance with a view to being able to provide timely advice to the Board about such developments, including recommendations for the revision of existing committee mandates of the addition of new committees, to ensure the Board remains proactive in discharging its legal duties.
The Board will in each year appoint a minimum of three (3) directors as members of the Committee. The Committee will have an appropriate representation of independent directors as required and defined by law and all regulatory orders and exemption orders issued in respect of the Corporation by applicable securities regulatory authorities.
The Chief Executive Officer (“CEO”) of the Corporation and, to the extent the Chairman of the Board is not otherwise a member of the Committee, the Chairman, and all other directors who are not members of the Committee may attend all meetings of the Committee in an ex officio capacity and will not vote. The CEO shall not attend in-camera sessions.
The Committee will have the following duties:
The Committee will review and make recommendations to the Board respecting:
corporate governance in general and regarding the Board’s stewardship role in the management of the Corporation, including defining the roles and responsibilities of directors and recommending appropriate policies and procedures for directors to carry out their duties with due diligence and in compliance with all legal and regulatory requirements;
the size and composition of the Board (including with reference to applicable rules, regulations or guidelines promulgated by regulatory authorities related to corporate governance; whether any compensation committee interlocks exist; general responsibilities and functions of the Board and its members, including position descriptions for the CEO and the Chairman; the organization and responsibilities of Board committees; and the procedures for effective Board meetings to ensure that the Board functions independently of management and without conflicts of interest;
the long term plan for the composition of the Board of directors that takes into consideration the current strengths, skills and experience on the Board and the strategic direction of the Corporation. This plan will include: (i) a written outline describing the desired qualifications, demographics, skills and experience for potential directors, (ii) the appropriate rotation of directors on Board committees, (iii) an interview process for potential candidates for Board membership, and (iv) a list of future candidates for Board membership;
when required, a candidate for appointment of the office of Chairman of the Board;
annually, in consultation with the Chairman of the Board and the CEO, the Board nominees for election as members of the Board, and for those individuals it has identified as qualified to become new members of the Board, to conduct background checks in respect of such individuals;
as required, candidates to fill any Board or Committee vacancies;
at appropriate intervals, the scope, duties and responsibilities of each committee of the Board, and where advisable, any amendments to the charters of such committees, as well as the establishment or disbanding of Board committees and change to their composition, including the Chair there of;
considering appropriate levels and scope of coverage of director and officers liability insurance coverage; and
the framework for delegating authority from the Board to management.
The Committee will review, approve and report to the Board on:
the orientation process for new directors and plans for the ongoing development of existing Board members;
the establishment of appropriate processes for the regular evaluation of the effectiveness of the Board, its committee and its members;
annually, in conjunction with the Chairman of the Board, the performance evaluation of individual directors, the Board as a whole, and committees of the Board;
together with the Chairman of the Board (where appropriate), concerns of individual directors about matters that are not readily or easily discussed at full Board meetings, to ensure the Board can operate independently of management; and
the corporate governance disclosure section in the Corporation’s annual report, and any other corporate governance matters as required by public disclosure requirements.
The Committee will oversee compliance with the Corporation’s Employee Code of Conduct by officers of the Corporation; authorize any waiver granted in connection with this policy; and confirm with management the appropriate disclosure of any such waiver.
The Committee will oversee compliance by members of the Board with the Corporation’s Board Code of Conduct (the “Board Code”); monitor compliance by Directors; authorize any waiver granted in connection with this policy; and oversee the appropriate disclosure of any such waiver.
The Committee will oversee compliance with any rules, regulations or guidelines promulgated by regulatory authorities relating to corporate governance.
The Board will in each year appoint the Chair of the Committee from among the members of the Committee. In the Chair’s absence, or if the position is vacant, the Committee may select another member as Chair. The Chair will have the right to exercise all powers of the Committee between meetings, but will attempt to involve all other members as appropriate prior to the exercise of any powers and will, in any event, advise all other members of any decisions made of power exercised.
The Committee will meet at the request of its Chair, but in any event it will meet at least two times per year to consider matters referred to it by the Board. Notices calling meetings will be sent to all Committee members, to the CEO of the Corporation, the Chairman of the Board and all other directors.
A majority of members of the Committee, present in person, by teleconferencing, or by videoconferencing will constitute a quorum.
Removal and Vacancy
A member may resign from the Committee, and may also be removed and replaced at any time by the Board, and will automatically cease to be a member as soon as the member ceases to be a director. The Board will fill vacancies on the Committee by appointment from among the directors of the Board in accordance with Section 2 of this Charter. Subject to quorum requirements, if a vacancy exists on the Committee, the remaining members will exercise all its powers.
Experts and Advisors
The Committee may retain or appoint, at the Corporation’s expense, and with the approval of the Board, an outside advisor or expert, as it deems necessary to carry out its duties. The Committee will receive and consider all such requests for the retention of outside advisors and experts from an individual director, the Board, and all of its committees (except for the Audit Committee, which will notify the Committee of its actions in this regard).
Secretary and Minutes
The secretary of the Corporation or such other person as may be appointed by the Chair of the Committee will act as secretary of the Committee. The minutes of the Committee will be in writing and duly entered into the books of the Corporation, and will be circulated to all members of the Board.
The Committee will establish a procedure for the receipt, retention and follow-up of complaints of all members of the Board.
Date Effective: _____________, 2008
Approved by the Governance Committee
- Insider Trader Policy
Insider Trading Policy
Micromem Technologies Inc. (Company or Corporation)
A principle of securities legislation is that everyone investing and potentially investing in securities should have equal access to information that may affect their decision as to whether to buy, sell or hold securities.
Directors, officers and employees the Company and consultants to the Company sometimes acquire knowledge of “Material Information” concerning the business and affairs of the Company, which has not yet been disclosed to the public. If that is the case, they have an unfair advantage in buying or selling securities because the seller or buyer on the other side of the transaction may have made a different investment decision had they been aware of that information.
“Material Information” is any information relating to the business and affairs of a corporation and its subsidiaries that results in, or would reasonably be expected to result in, a significant change in the market price or value of any of the Company’s securities or would reasonably be expected to affect the investment decisions of a reasonable investor. Examples include the release of quarterly financial results, business partnerships, pending acquisitions or dispositions, mergers, developments in operations, changes in capital structure, dividend announcements and significant changes in earnings or cash flow prospects.
Similarly, if such a person informs another person of undisclosed Material Information, and such person buys or sells securities on the basis of that information, the seller or buyer on the other side of the transaction is, once again, at a disadvantage.
Certain securities laws in Canada have been enacted so as to prevent and deter such inequitable trading in securities by providing that:
persons receiving undisclosed material information are prohibited from buying or selling securities of the Company while in possession of such material information and prior to dissemination of such information to the public;
directors, officers and employees are prohibited from disclosing Material Information relating to the corporation to third parties, other than when it is necessary to do so in the course of business of the corporation; and
significant shareholders, directors and officers must report their trades in securities of the Company.
The Company has formulated this Policy to assist directors, officers, employees and consultants of the Corporation in complying with these laws. The purpose of this Policy is to confirm in writing the existing policies and procedures and guidelines relating to trading by directors, officers, employees and consultants in securities of the Company. This Policy, does not reduce the obligations imposed by law on directors, officers and employees. Compliance with insider trading and disclosure requirements remains the personal responsibility of such persons.
1. Application of the Policy
This Policy applies to all directors, officers, employees and consultants of the Company, as well as to securities over which such director, officer, employee or consultant exercises control or direction and securities which are indirectly owned. Directors, officers, employees and consultants are responsible for ensuring compliance by their families and other members of their households with the terms of this Policy.
This Policy applies to any transactions in all the Company’s securities, including options, trust units, warrants, debentures, as well as other derivative securities that are not issued by the Company’s but are based on the value of the Company’s securities.
In addition, this Policy applies to Material Information relating to another company that directors, officers, employees or consultants of the Company may learn in the course of a proposed or pending transaction.
2. Trading Restrictions and Blackout Periods
Directors, officers, employees and consultants may trade in the Corporation’s securities, either directly or indirectly, or may exercise direction or control over the trading of its securities, except as follows:
Trading by directors, officers, employees and consultants is prohibited when they are in possession of Material Information which is being kept confidential and which has not been made public. Directors, officers, employees and consultants of the Company, with knowledge of confidential or material information about the Company are prohibited from tipping or trading until the information has been fully disclosed. Employees who are not sure whether they should be trading in securities at any particular time may contact the CEO, COO, CFO or CIO, collectively (the “Designated Officers”).
Under this Policy, trading by directors, officers, employees and consultants should not take place until after the first full business day following a broadly disseminated news release of any Material Information.
No trading should take place by directors, officers, employees or consultants of the Company who have access to undisclosed financial information during periods when financial statements are being prepared but results have not yet been publicly disclosed. The blackout period commences ten business days prior to the proposed public announcement of the results for a fiscal quarter or year-end and ends after the first full business day following the issuance of a news release disclosing the quarterly financial results. Directors, officers, employees and consultants should confirm the timing for issuance of financial results prior to engaging in a transaction involving securities of the Company.
Blackout periods may be prescribed from time to time as a result of special circumstances relating to the Company pursuant to which all directors, officers, employees and consultants of the Company may be precluded from trading in securities of the Company.
Ontario Securities Commission Rule 48-501 Trading during Distributions, Formal Bids and Share Exchange Transactions (“OSC Rule 48-501”) imposes restrictions on the ability of certain insiders of the Company to purchase or sell securities of the Fund during certain restricted periods including those during which the Fund is involved in an offering of its securities by way of a prospectus or a private placement. The Rule provides for a number of exemptions from the trading restrictions. The Company will institute a blackout for such periods during which the Company is in the course of distributing its securities. To the extent that you wish to rely on an exemption available to you pursuant to OSC Rule 48-501 you must first seek the prior approval of one of the Designated Officers on your intended reliance on such exemption.
To protect the reputation of the Company and avoid the appearance of impropriety, directors, officers and other insiders can inquire prior to making proposed trades in the Company’s securities one of the Designated Officers to determine if there is undisclosed Material Information about the Company that is to be announced.
If you are uncertain as to your status as an “insider” of the Company, you should enquire one of the Designated Officers as to the existence of any trading restrictions before entering into a transaction.
3. Prohibition on Short Selling
A director, officer, employee or consultant must not, at any time, enter into a sale of the Company’s securities where such person does not own or has not fully paid for the securities being sold.
4. Insider Reporting Requirements
The following is a general overview of obligations regarding insider-trading reporting.
Who is an Insider?
You are deemed to be an “Insider” of the Corporation, for reporting purposes, if you are a director or senior officer of the Company or if you are a shareholder of any Fund that controls 10% or more of the securities of the Fund. The definition of the term “insider” in securities legislation is very technical and you are encouraged to contact a Designated Officer if you are unsure whether you qualify as an insider of the Company.
“Senior Officer” includes the Chair of the Board of Directors, the CEO & President, Chief Operating Officer (COO) Vice-President, Company Secretary, Accounting Manager and CFO. It also includes any other individuals who perform functions similar to those normally performed by an individual occupying such office. In addition, each of the five highest paid employees of an issuer, including any individual referenced above, is deemed to be an insider for insider trading purposes. Thus if you do not hold a senior office title, but are one of the top five highest paid employees of the Company, you are considered to be an insider.
Filing of an Initial Insider Report
Securities regulations stipulate that, within 10 days of becoming an insider, insiders of the Fund must file an initial insider report with the securities commissions in certain of the Fund’s reporting jurisdictions. Irrespective of the fact that not all jurisdictions require the filing of an initial insider report, it is prudent to file an initial insider report with all jurisdictions to which the Fund is subject upon becoming an insider of the Fund, even though the insider may not hold securities of the Fund at that time. The initial insider report will show the insider’s holdings in the Fund’s securities including options, warrants, trust units, debentures and other debt instruments.
Filing of a Subsequent Insider Report
Reports should be filed for all purchase and sale transactions of the company’s securities, option grants and exercises of options, changes in the nature of ownership within 10 days of the trade, award or transaction. The onus is on the individual to ensure filing is on time. The Company is not responsible for this action.
Preparation and Filing of Insider Reports
Insider trading reports are required to be filed electronically on the “System for Electronic Disclosure by Insiders” or “SEDI”. SEDI is an Internet-based system for reporting insider trading information and can be located at www.sedi.ca. Insider reports (excluding certain personal information) that are filed on SEDI are now accessible to the public via the Internet.
The Company may be able to assist an insider with their filing but the Company is a resource only.
5. Insider Liability
Both the British Columbia and Ontario Securities Commissions levy fees for late filing of insider reports. In British Columbia, the late payment fee is currently $50 per late report and in Ontario, the late payment fee is $50 per business day, subject to a maximum of $1,000 per issuer per financial year. It is the insider’s obligation to pay any late payment fees.
Each insider who fails to comply with insider trading laws is exposed to potential civil liability to third parties, fines of up to $1 million, and/or imprisonment up to five years less one day. Further, the reputation of the Corporation may be damaged, and it may be exposed to liability. A breach of this Policy is considered a breach of the employment contract with the Corporation and as such, violators may be immediately dismissed for cause.
6. Further Information
Any questions concerning insider-trading matters should be directed to any one of the Disclosure Policy Officers.
- MAST Organizational Chart (Directors & Officers)
- Micromem Corporate Disclosure Policy
CORPORATE DISCLOSURE POLICY MICROMEM TECHNOLOGIES INC.
MICROMEM TECHNOLOGIES INC.
Corporate Disclosure policy
1. Purpose of this Policy
The board of directors (the “Board”) of Micromem Technologies Inc. (the “Company”) has adopted this Corporate Disclosure Policy (the “Policy”) to ensure that the Company’s communications with the investment community, the media and the general public are: (i) timely, factual and accurate; and (ii) broadly disseminated in accordance with all applicable legal and regulatory requirements.
It is fundamental that everyone investing in securities of the Company has equal access to information that may affect their investment decisions. All Company Personnel (as hereinafter defined) are required to make the Disclosure Committee (as hereinafter defined) aware of any circumstances or events that could reasonably be considered to be “material information” in the context of this Policy.
The Policy confirms in writing the Company’s existing disclosure policies and practices. Its goal is to raise awareness of the Company’s approach to disclosure among Company Personnel (as defined below).
2. Application of the Policy
The Policy applies to all directors, officers, employees and contractors of the Company and its subsidiaries (who are collectively referred to as “Company Personnel”).
The Policy covers disclosures in documents filed with securities regulators, financial and non-financial disclosure, including management’s discussion and analysis (“MD&A”) and written statements made in the Company’s annual and quarterly reports, news releases, letters to shareholders, presentations by senior management and information contained on the Company’s website and other electronic communications. It extends to oral statements in meetings and telephone conversations with analysts and investors, interviews with the media, as well as speeches, press conferences and conference calls.
3. Disclosure Committee/Audit Committee
The Company has established a committee responsible for all regulatory disclosure requirements and for overseeing the Company’s disclosure practices (the “Disclosure Committee”). The Disclosure Committee shall for the moment operate as a component of the Audit Committee. The Disclosure Committee shall consist of a majority of independent Directors, and include the CFO on all correspondence and Chief Information Officer (“CIO”).
The Disclosure Committee is responsible for:
(a) Developing and implementing the Policy;
(b) Monitoring the effectiveness of and compliance with the Policy;
(c) Educating Company Personnel about disclosure issues and the Policy;
(d) Reviewing and authorizing disclosure (including electronic, written and oral disclosure) in advance of its public release; and
(e) Monitoring the Company’s website.
The Disclosure Committee is also responsible for:
(a) Reviewing and updating, if necessary, the Policy annually or as needed to ensure compliance with changing regulatory requirements;
(b) Ensuring appropriate systems, processes and controls for disclosure;
(c) Reviewing all news releases and core disclosure documents prior to their release or filing, including the Company’s MD&A; and
(d) Ensuring that Company spokespersons receive adequate training.
It is essential that the Disclosure Committee be kept fully apprised of all pending material Company developments in order to evaluate and discuss those events to determine the appropriateness and timing for public release of information. The Disclosure Committee will meet quarterly (as part of the Audit Committee) or as conditions dictate.
In discharging it duties, the Disclosure Committee shall have full access to all books, records, facilities and personnel. In addition, in discharging its duties, the Disclosure Committee shall seek and obtain all such advice from the Company’s external legal counsel and auditors as is appropriate from time to time.
4. Disclosure Controls and Procedures
The Disclosure Committee will be responsible for undertaking the following matters:
(a) Reviewing the annual and interim filings (as these terms are defined in Multilateral Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings) of the Company;
(b) Ensuring that the annual and interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the periods covered by the annual and interim filings;
(c) Ensuring that the annual and interim financial statements together with the other financial information included in the annual and interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date and for the periods presented in the annual and interim filings; and
(d) Establishing and maintaining disclosure controls and procedures for the Company, and:
(i) Designing such disclosure controls and procedures, or causing them to be designed under the Disclosure Committee’s supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to the Disclosure Committee by others within those entities, particularly during the period in which the annual and interim filings are being prepared; and
(ii) Evaluating the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the annual filings and causing the Company to disclose in the annual MD&A conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.
5. Authorized Company Spokespersons
The number of people who are authorized to speak on behalf of the Company to the investment community, regulators and the media is limited to the following persons: the Chief Executive Officer, Chief Financial Officer and the Chairman of the Board. Such persons are knowledgeable about the Company’s disclosure record and aware of analysts’ reports relating to the Company.
Everyone in the Company should know whom the Company spokespersons are and refer all inquiries from analysts, investors and the media to them. Having a limited number of company spokespersons should help to reduce the risk of:
(a) Unauthorized disclosures;
(b) Inconsistent statements by different people in the Company; and
(c) Statements that is inconsistent with the public disclosure record of the Company.
More specifically, employees who are not authorized spokespersons must not respond under any circumstances to inquiries from the investment community, the media or others, unless specifically asked to do so by an authorized spokesperson.
Statements made by Company Personnel who are not formally designated by the Company as a Company spokesperson may nonetheless be viewed as being made on behalf of the Company. Therefore, all Company Personnel should familiarize themselves with this Policy and take care to comply with it, to ensure that they do not inadvertently cause the Company, as well as themselves, to run afoul of the law.
6. Audit Committee Review of Certain Disclosure
The Audit Committee will review the following disclosures in advance of their public release by the Company:
(a) The Company’s financial statements, MD&A and annual and interim earnings news releases;
(b) Earnings guidance;
(c) News releases containing financial information based on the Company’s financial statements prior to the release of such statements; and
(d) The contents of all other major disclosure documents, including the Company’s annual report, quarterly reports to shareholders, annual information form, and management information circular.
The Board of Directors will be provided an advance copy of all news releases prior to release to the public.
The Company will indicate at the time such information is publicly released whether the Audit Committee has reviewed the disclosure.
Where feasible, the Company will issue its earnings news release concurrently with the filing of its quarterly or annual financial statements.
7. Disclosure Record
The Chief Information Officer will make reasonable best efforts to maintain a 5-year record of all public information about the Company, including continuous disclosure documents, news releases, analysts’ reports, transcripts or tape recordings of conference calls, notes from meetings and telephone conversations with analysts and investors.
8. Material Changes
(a) Timely Disclosure Requirements
The Company is required by law to immediately disclose a “material change” in its business. A material change is: (i) a change in the business, operations or capital of the Company that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the Company; or (ii) a decision to implement a change referred to in (i) made by the Board or other persons acting in a similar capacity or by senior management of the Company who believe that confirmation of the decision by the Board or such other persons acting in a similar capacity is probable. The Company must disclose a material change by issuing and filing a news release describing the change. The Company must also file a material change report as soon as practicable, and no later than 10 days after the change occurs.
Announcements of material changes should be factual and balanced. Unfavourable news must be disclosed just as promptly and completely as favourable news. If the Company discloses positive news but withholds negative news, the Company could find its disclosure practices subject to scrutiny by securities regulators. The Company’s news releases should contain enough detail to enable the media and investors to understand the substance and importance of the change the Company is disclosing. The Company must avoid including unnecessary details, exaggerated reports or promotional commentary.
(b) Confidentiality of Material Changes
Securities legislation permits the Company to delay disclosure of a material change and to keep it confidential temporarily where immediate release of the information would be unduly detrimental to the Company’s interests. For example, where immediate disclosure might interfere with the Company’s pursuit of a specific objective or strategy, with ongoing negotiations, or with its ability to complete a transaction. If the harm to the Company’s business from disclosing outweighs the general benefit to the market of immediate disclosure, withholding disclosure may be justified. In such cases, the Company may withhold public disclosure, but it must make a confidential filing with the securities commission. Certain jurisdictions also require the Company to renew the confidential filing every 10 days should it want to continue to keep the information confidential. Companies are discouraged from delaying disclosure for a lengthy period of time as it becomes less likely that confidentiality can be maintained beyond the short term.
(c) Maintaining Confidentiality of Material Changes
Where disclosure of a material change is delayed, the Company must maintain complete confidentiality. During the period before a material change is disclosed, market activity in the Company’s securities will be carefully monitored. Any unusual market activity may mean that news of the matter has been leaked and that certain persons are taking advantage of it. If the confidential material change, or rumours about it, have leaked or appear to be impacting the share price, the Company will take immediate steps to ensure that a full public announcement is made. This would include contacting the Toronto Stock Exchange and asking that trading be halted pending the issuance of a news release.
Where a material change is being kept confidential, the Company is under a duty to make sure that persons with knowledge of the material change have not made use of such information in purchasing or selling its securities. Such information should not be disclosed to any person or company, except in the necessary course of business.
9. Material Information
The Company is also required by stock exchange rules to immediately disclose “material information” via news release. Material information is any information relating to the business and affairs of the Company that results in, or would reasonably be expected to result in, a significant change in the market price or value of any of the Company’s listed securities.
In making materiality judgements, it is necessary to take into account a number of factors that cannot be captured in a simple bright-line standard or test. These include the nature of the information itself, the volatility of the Company’s securities and prevailing market conditions. The materiality of a particular event or piece of information may vary between companies according to their size, the nature of their operations and many other factors. An event that is “significant” or “major” for a smaller company may not be material to a larger company. The Company should avoid taking an overly technical approach to determining materiality. Under volatile market conditions, apparently insignificant variances between earnings projections and actual results can have a significant impact on share price once released. For example, information regarding the Company’s ability to meet consensus earnings published by securities analysts should not be selectively disclosed before general public release.
The Company will monitor the market’s reaction to information that is publicly disclosed. Ongoing monitoring and assessment of market reaction to different disclosure will be helpful when making materiality judgements in the future. As a guiding principle, if there is any doubt about whether particular information is material, the Company will err on the side of materiality and release information publicly.
Examples of the types of events or information which may be material are set out in Schedule 1 hereto. This list is not exhaustive and is not a substitute for the Disclosure Committee exercising its own judgement in making materiality determinations.
In complying with the requirement to immediately disclose all material information under applicable laws and stock exchange rules, the Company will adhere to the following additional basic disclosure principles:
(a) Material information will be publicly disclosed immediately via news release;
(b) In certain circumstances, the Disclosure Committee may determine that such disclosure would be unduly detrimental to the Company (for example, if release of the information would prejudice negotiations in a corporate transaction), in which case the information will be kept confidential until the Disclosure Committee determines it is appropriate to publicly disclose and, in these circumstances, the Disclosure Committee will cause a confidential material change report to be filed with the applicable securities regulators, and will periodically (at least every 10 days) review its decision to keep the information confidential;
(c) Disclosure must include any information the omission of which would make the rest of the disclosure misleading (half truths are misleading);
(d) Unfavourable material information must be disclosed as promptly and completely as favourable information;
(e) There must be no selective disclosure and previously undisclosed material information must not be disclosed to selected individuals (for example, in an investor meeting or during a telephone conversation with an analyst); if previously undisclosed material information is inadvertently disclosed, this information must be broadly disclosed immediately via news release;
(f) Disclosure should be consistent among all audiences, including the investment community, the media, customers and employees;
(g) Disclosure on the Company’s website alone does not constitute adequate disclosure of material information; and
(h) Disclosure must be corrected immediately if the Company subsequently learns that earlier disclosure contained a material error at the time it was given.
10. Maintaining Confidentiality
Any employee privy to confidential information is prohibited from communicating such information to anyone else, unless it is necessary to do so in the course of business. Company Personnel must make efforts to limit access to confidential information to only those who need to know the confidential information and those persons need to be advised that the information is to be kept confidential.
Outside parties privy to undisclosed material information concerning the Company will be told that they must not divulge this information to anyone else, other than in the necessary course of business and that they may not trade in the Company’s securities until the information is publicly disclosed. Such outside parties will confirm their commitment to non-disclosure in the form of a written confidentiality agreement.
To prevent the misuse or inadvertent disclosure of material information, the following procedures should be observed at all times:
(a) Documents and files containing confidential information should be kept in a safe place, with access restricted to individuals who “need to know” that information in the necessary course of business and code names should be used if necessary;
(b) Confidential matters should not be discussed in places where the discussion may be overheard, such as elevators, hallways, restaurants, airplanes or taxis;
(c) Confidential matters should not be discussed on cell phones or other wireless devices;
(d) Confidential documents should not be read or displayed in public places and should not be discarded where others can retrieve them;
(e) Employees must ensure they maintain the confidentiality of information in their possession outside of the office as well as inside the office;
(f) Transmission of documents by electronic means, such as by fax, email or directly from 1 computer to another, should be made only where it is reasonable to believe that the transmission can be made and received under secure conditions;
(g) Unnecessary copying of confidential documents should be avoided and documents containing confidential information should be promptly removed from conference rooms and work areas after meetings have concluded and extra copies of confidential documents should be shredded or otherwise destroyed; and
(h) Access to confidential electronic data should be restricted through the use of passwords.
Communication by email leaves a physical track of its passage that may be subject to later decryption attempts. Caution should be exercised whenever confidential material information is to be transmitted over the Internet.
11. Model for Planned Disclosure of Material Corporate Information
The Company will use the following disclosure model when making a planned disclosure of material corporate information, such as a scheduled earnings release:
(a) Issue a news release containing the information (for example, the Company’s quarterly financial results) through a widely circulated news or wire service;
(b) Provide advance public notice by news release of the date and time of a conference call to discuss the information, the subject matter of the call and the means for accessing it;
(c) Hold the conference call in an open manner, permitting investors and others to listen either by telephone or through Internet webcasting; and
(d) Provide dial-in and/or web replay or make transcripts of the call available for a reasonable period of time after the analyst conference call.
The combination of news release disclosure of the material information and an open and accessible conference call to subsequently discuss the information should help to ensure that the information is disseminated in a manner calculated to effectively reach the marketplace and minimize the risk of an inadvertent selective disclosure during the follow-up call.
12. News Releases
News releases will be disseminated through an approved news wire service that provides simultaneous national distribution. Full-text news releases will be transmitted to all stock exchange members, relevant regulatory bodies, major business wires, national financial media, and the local media in areas where the Company has its headquarters and operations. News releases will be posted on the Company’s website immediately after confirmation of dissemination over the news wire. The website will include a notice that advises the reader that the information posted was accurate at the time of posting, but may be superseded by subsequent disclosures.
If the stock exchange upon which shares of the Company are listed is open for trading at the time of a proposed announcement, prior notice of a news release announcing material information must be provided to its market surveillance division to enable a trading halt, if deemed necessary by the stock exchange. If a news release announcing material information is issued outside of trading hours, the exchange must be notified promptly and in any event before the market reopens.
All news releases will include appropriate cautionary language regarding any forward-looking information and direct participants to publicly available documents containing the assumptions, sensitivities and a full discussion of the risks and uncertainties applicable to the news.
13. Analyst Calls and Industry Conferences
Analyst conference calls and industry conferences are to be held in an open manner, allowing any interested party to listen either by telephone and/or through a webcast. This will help to reduce the risk of selective disclosure.
Unless determined otherwise by the Disclosure Committee, conference calls will be held for quarterly earnings and major corporate developments, accessible simultaneously to all interested parties, some as participants by telephone and others in a listen-only mode by telephone or via a webcast over the Internet. A call will be preceded by a news release containing all relevant material information.
The Company will provide advance notice of the conference call and webcast by issuing a news release announcing the date, time and topic and providing information on how interested parties may access the call and webcast. These details will be provided on the Company’s website. In addition, the Company may send invitations to analysts, institutional investors, the media and others. Any non-material supplemental information provided to participants will also be posted to the website for others to view. At the beginning of the call, a Company spokesperson will provide appropriate cautionary language regarding any forward-looking information and direct participants to publicly available documents containing the assumptions, sensitivities and a full discussion of the risks and uncertainties applicable to the news.
Company officials should meet before an analyst conference call, private analyst meeting or industry conference. Where practical, statements and responses to anticipated questions should be scripted in advance and reviewed by the appropriate people within the Company. Scripting will help to identify any material corporate information that may need to be publicly disclosed through a news release.
Detailed records and/or transcripts of any conference call, meeting or industry conference will be kept. These should be reviewed to determine whether any unintentional selective disclosure has occurred. If so, the Company will take immediate steps to ensure that a full public announcement is made, including contacting the Toronto Stock Exchange and asking that trading be halted pending the issuance of a news release.
A tape replay of the conference call will be made available for a minimum of 7 days and an archived audio webcast and/or text transcript will be made available on the Company’s website for a minimum of 90 days. The Disclosure Committee will hold a debriefing meeting immediately after the conference call and if it determines that selective disclosure of previously undisclosed material information has occurred, the Company will immediately disclose the information broadly via news release.
14. Reviewing Analyst Reports
The Company has established a policy for reviewing analyst reports or commentary from the public at large. There is a serious risk of violating the tipping prohibition if the Company expresses comfort with or provides guidance on an analyst’s report, earnings model or earnings estimates. There is also a risk of selectively disclosing material non-financial information in the course of reviewing an analyst’s report. As a result, the Company does not permit the review of analyst reports or commentary from the public at large.
15. Forecasts, Forward-Looking Information and Updates
The Company must ensure that it has a reasonable basis for making forward-looking statements and must include with such statements appropriate statements of risks and cautionary language. Forward-looking statements may be misleading when they are unreasonably optimistic or aggressive, lack objectivity or are not adequately explained. Any forward-looking statement (whether written or oral) must contain:
(a) A statement that the information is forward-looking;
(b) The factors that could cause actual results to differ materially from the forward-looking statement; and
(c) A description of the factors or assumptions that were used in making the forward-looking statement.
Full and clear disclosure of these matters greatly reduces the risk that reasonably-based forward-looking statements will be misleading. Disclosure might include a range of reasonably possible outcomes, a sensitivity analysis, or other qualitative information that helps to explain the related risks.
This disclosure should go beyond mere boilerplate. The Company’s warnings should be substantive and tailored to the specific future estimates or opinions that are being forecast. The Company should also identify and quantify the risks.
When making voluntary forward-looking statements, the Company will clearly indicate what its practice is for updating those statements. Updating forward-looking information in light of subsequent developments is a good practice that can enhance the Company’s credibility with analysts and investors. The Company will disclose its practice at the time it makes any forward-looking statement and adhere to it consistently.
16. Private Briefings with Analysts, Institutional Investors and Other Market Professionals
Disclosure in individual or group meetings does not constitute adequate disclosure of information that is considered material non-public information. If the Company intends to announce material information at an analyst or shareholder meeting or a press conference or conference call, the announcement must be preceded by a news release.
The Company recognizes that meetings with analysts and significant investors are an important element of its investor relations program. The Company will meet with analysts and investors individually or in small groups as needed and will initiate contacts or respond to analyst and investor calls in a timely, consistent and accurate fashion in accordance with this Policy. All analysts will receive fair treatment regardless of whether they are recommending buying or selling the Company’s securities.
The Company has a policy of providing only non-material information and publicly disclosed information to analysts. The Company should not disclose significant data, and in particular financial information such as sales and profit figures, to analysts, institutional investors and other market professionals selectively rather than to the market as a whole. Earnings forecasts are in the same category.
The Company cannot make material information immaterial simply by breaking the information into seemingly non-material pieces. At the same time, the Company is not prohibited from disclosing non-material information to analysts, even if these pieces help the analyst complete a “mosaic” of information that, taken together, is material undisclosed information about the Company.
The Company will provide the same sort of detailed, non-material information to individual investors or reporters that it has provided to analysts and institutional investors and may post this information on its website. Spokespersons will keep notes of telephone conversations with analysts and investors and where practicable more than 1 Company representative will be present at all individual and group meetings. A debriefing will be held after these meetings and if it is determined that selective disclosure of previously undisclosed material information has occurred, the Company will immediately disclose the information broadly via news release.
17. Providing Earnings Guidance
The Company will try to ensure, through it regular public dissemination of quantitative and qualitative information, that analysts’ estimates are in line with the Company’s expectations. The Company will not confirm, or attempt to influence, an analyst’s opinions or conclusions and will not express comfort with analysts’ financial models and earnings estimates. If the Company has determined that it will be reporting results materially below or above publicly held expectations, it may decide to disclose this information in a news release to enable discussion without risk of selective disclosure.
18. Quiet Periods
The Company observes a quarterly quiet period, during which no earnings guidance or comments with respect to the current quarter’s operations or expected results will be provided to analysts, investors or other market professionals.
The Company does not need to stop all communications with analysts or investors during the quiet period. However, communications should be limited to responding to inquiries concerning publicly available or non-material information.
19. Unintentional Selective Disclosures
Securities legislation in Canada does not provide a safe harbour, which allows companies to correct an unintentional selective disclosure of material information. If the Company makes an unintentional selective disclosure it should take immediate steps to ensure that a full public announcement is made. This includes contacting the Toronto Stock Exchange and requesting that trading be halted pending the issuance of a news release. Pending the public release of the material information, the Company should also tell those parties who have knowledge of the information that the information is material and that it has not been generally disclosed.
20. Electronic Communications
The Policy also applies to electronic communications. Accordingly, officers and personnel responsible for written and oral public disclosures are also responsible for electronic communications.
The Disclosure Committee will be responsible for maintaining the Company’s website. The website should be up to date and accurate. All material information will be dated when it is posted or modified. Outdated information will be moved to an archive. Archiving will allow the public to continue accessing information that may have historical or other value even though it is no longer current. The Disclosure Committee will establish minimum retention periods for information that is posted to and archived on the Company’s website. Retention periods may vary depending on the kind of information posted. On the website, the Company will explain how the website is set up and maintained. Posting material information on the Company’s website is not acceptable as the sole means of satisfying legal requirements to “generally disclose” information.
The Company will use current technology to improve investor access to the Company’s information. The Company will concurrently post to the website all documents that the Company files on SEDAR. The Company will also post on the investor relations part of the website all supplemental information that it gives to analysts, institutional investors and other market professionals. This includes data books, fact sheets, slides of investor presentations and other materials distributed at analyst or industry presentations. When Company representatives make a presentation at an industry-sponsored conference, they should try to have their presentation and “question and answer” session webcast.
If the Company’s website allows viewers to send it email messages, the risk of selective disclosure should be considered prior to responding. The CIO will be responsible for responses to electronic inquiries. Only public information or information that could otherwise be disclosed in accordance with this Policy shall be used to respond to electronic inquiries.
21. Chat Rooms, Bulletin Boards and Emails
No one should participate in, host or link to chat rooms or bulletin boards. Employees are prohibited from discussing corporate matters in these forums. This prohibition is intended to protect the Company from the liability that could arise from the well-intentioned, but sporadic, efforts of employees to correct rumours or defend the Company. Employees should report to the Chief Financial Officer any discussion pertaining to the Company, which they find on the Internet.
22. Handling Rumours
The Company has adopted a “no comment” policy with respect to market rumours and this policy must be applied consistently. Otherwise, an inconsistent response may be interpreted as “tipping”. The Company may be required by the Toronto Stock Exchange to make a clarifying statement where trading in the Company’s securities appears to be heavily influenced by rumours. If material information has been leaked and appears to be affecting trading activity in the Company’s securities, the Company will take immediate steps to ensure that a full public announcement is made. This includes contacting the Toronto Stock Exchange and asking that trading be halted pending the issuance of a news release.
The Company does not comment, affirmatively or negatively, on rumours. This also applies to rumours on the Internet. The Company’s spokespersons will respond consistently to any rumours, saying, “It is our policy not to comment on market rumours or speculation.”
Should the Toronto Stock Exchange request that the Company make a definitive statement in response to a market rumour that is causing significant volatility in the stock, the Disclosure Committee will consider the matter and decide whether to make a policy exception. If the rumour is true in whole or in part, this may be evidence of a leak, and the Company will immediately issue a news release disclosing the relevant material information.
23. Communication and Enforcement
The Policy applies to all Company Personnel. New Company Personnel will be provided with a copy of the Policy and educated about its importance. The Policy will be posted on the Company’s internal website and changes will be communicated to all employees.
Any employee who violates the Policy may face disciplinary action up to and including termination of employment with the Company without notice. The violation of the Policy may also violate certain securities laws, which could expose Company Personnel to personal liability. If it appears that an employee may have violated such securities laws, the Company may refer the matter to the appropriate regulatory authorities, which could lead to fines or other penalties.
All enquiries or questions regarding this Policy should be directed to the CIO who will report to the Disclosure Committee.
25. Black out Periods and Insider Trading Policy
It is illegal for anyone with knowledge of material information affecting a public company that has not been publicly disclosed to purchase or sell securities of that company. It is also illegal for anyone to inform any other person of material non-public information, except in the necessary course of business. Therefore, insiders and employees with knowledge of confidential or material information about the Company or counter-parties in negotiations of material transactions are prohibited from trading securities of the Company or any counter-party until the information has been fully disclosed and a reasonable period has passed for the information to be widely disseminated.
Insiders are personally responsible for filing accurate and timely insider trading reports. Insiders are required to provide a copy of all insider reports to the Corporate Secretary or other designated person concurrent with their filing to regulatory authorities.
Quarterly trading black out periods will apply to all employees during periods when financial statements are being prepared but results have not yet been publicly disclosed.
Black out periods may also be prescribed from time to time by the Disclosure Committee as a result of special circumstances relating to the Company when insiders would be precluded from trading in its securities. The black out should cover all parties with knowledge of such special circumstances. These parties may include external advisors such as legal counsel, investment bankers, investor relations consultants and other professional advisors, and counter-parties in negotiations of material potential transactions.
Changes in Corporate Structure
· Changes in share ownership that may affect control of the Company
· Major reorganizations, amalgamations, or mergers
· Take-over bids, issuer bids, or insider bids
Changes in Capital Structure
· The public or private sale of additional securities
· Planned repurchases or redemptions of securities
· Planned splits of common shares or offerings of warrants or rights to buy shares
· Any share consolidation, share exchange, or stock dividend
· Changes in the Company’s dividend payments or policies
· The possible initiation of a proxy fight
· Material modifications to rights of security holders
Changes in Financial Results
· A significant increase or decrease in near-term earnings prospects
· Unexpected changes in the financial results for any periods
· Shifts in financial circumstances, such as cash flow reductions, major asset write-offs or write-downs
· Changes in the value or composition of the Company’s assets
· Any material change in the Company’s accounting policy
Changes in Business and Operations
· Any development that affects the Company’s resources, technology, products or markets
· A significant change in capital investment plans or corporate objectives
· Major labour disputes or disputes with major contractors or suppliers
· Significant new contracts, products, patents, or services or significant losses of contracts or business
· Significant discoveries by resource companies
· Changes to the Board or executive management, including the departure of the Company’s CEO, CFO, COO or president (or persons in equivalent positions)
· The commencement of, or developments in, material legal proceedings or regulatory matters
· Waivers of corporate ethics and conduct rules for officers, directors, and other key employees
· Any notice that reliance on a prior audit is no longer permissible
· De-listing of the Company’s securities or their movement from 1 quotation system or exchange to another
Acquisitions and Dispositions
· Significant acquisitions or dispositions of assets, property or joint venture interests
· Acquisitions of other companies, including a take-over bid for, or merger with, another company
Changes in Credit Arrangements
· The borrowing or lending of a significant amount of money
· Any mortgaging or encumbering of the Company’s assets
· Defaults under debt obligations, agreements to restructure debt, or planned enforcement procedures by a bank or any other creditors
· Changes in rating agency decisions
· Significant new credit arrangements
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