Section 1.0 PURPOSE OF THIS POLICY
The Securities Act (Ontario), National Instrument 55-104, other applicable provincial legislation, stock exchange requirements and federal corporate legislation contain rules governing the need to maintain the confidentiality of information and restrictions on insider trading (collectively, the “Insider Rules”). This Policy applies to the directors, officers and employees (including consultants) of Baylin Technologies Inc. and its subsidiaries (collectively, the “Company”) and acts as a companion policy to the Company’s Corporate Disclosure Policy. This Policy has been formulated to set out rules and procedures to assist the Company in complying with the Insider Rules.
This Policy has been reviewed and approved by the Corporate Governance and Compensation Committee of the Company’s board of directors (the “Board”) and the Board itself. The Corporate Governance and Compensation Committee, or its successor or renamed committee of the Board, is referred to in this Policy as the “Governance Committee”.
Section 2.0 APPLICATION, SCOPE AND DISTRIBUTION OF THIS POLICY
This Policy applies to the directors, officers and employees of the Company and relates to information regarding the Company and trading in shares of the Company.
If you have any question as to your legal obligations as set out in this Policy or the Insider Rules, including regarding confidentiality, trading in the Company’s shares, whether this Policy applies to a particular person or company in a particular circumstance, or reporting trades, please discuss that question with the Vice-Chairman, who is the Company’s “Trading doxycycline-buy.com Officer”.
A violation of this Policy can be a breach of the Insider Rules and/or result in acute embarrassment to the person who violated the Policy/Insider Rules and to the Company. The onus of complying with this Policy and the relevant rules is on each individual director, officer and employee of the Company, each of whom is expected to be familiar with this Policy and the Insider Rules and to comply fully with them. Directors, officers and employees of the Company are strongly encouraged to ensure their spouses, minor children or persons living in the same household as them do not disclose information or trade in securities at times that, if the director, officer or employee had completed this act, it would constitute a violation under this Policy/the Insider Rules. Actions of these related persons to a director, officer or employee of the Company could result in embarrassment to the director, officer or employee and the Company and the director, officer or employee may face legal liability under the Insider Rules.
A failure to comply with these rules and procedures may result in the Company taking action in accordance with Section 9.0 “Enforcement”.
This Policy will be posted to the Company’s intranet and copies of this Policy are made available to directors, officers, employees and consultants. All directors, officers and employees will be informed whenever significant changes are made and will be reminded of this Policy on an annual basis (or more frequently if required). New directors, officers, employees and consultants will be provided with a copy of this Policy.
Section 3.0 DEFINITIONS/EXPLANATIONS
3.1 Who is Prohibited from Trading in the Company’s Shares?
The Insider Rules provide that any person or company who is aware of confidential Material Information (defined below) about a public company is prohibited from purchasing or selling securities of the public company – an activity commonly known as “insider trading”. The Insider Rules also prohibit any person or company in a “special relationship” (defined below) with a public company from informing anyone, other than in the necessary course of business, of confidential Material Information – an activity commonly known as “tipping”.
Persons in a “special relationship” with a public company include, but are not limited to:
(a) insiders as defined under securities legislation (see Section 7.0);
(b) directors, officers and employees;
(c) persons engaging in professional or business activities for or on behalf of the company; and
(d) anyone (a “tippee“) who learns of material information from someone that the tippee knows or should know is a person in a special relationship with the company.
3.2 What is Material Information?
“Material Information” means information related to “material facts” and “material changes”. A “material fact” means a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of the securities of the Company. A “material change” means 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 and includes a decision to implement this type of change made by the Board or by senior management of the Company who believe that confirmation of the decision by the Board is probable. Examples of information that could be material are set out in Appendix A.
If you are uncertain whether information about the Company you have become aware of is Material Information to the Company, please ask the Trading Officer or a member of the Company’s Disclosure Committee (the “Disclosure Committee“).
3.3 When is Information Confidential?
Information is “confidential” if it has not been “Generally Disclosed” to the public. Information has been Generally Disclosed if it has been disseminated to the marketplace and public investors have been given a reasonable amount of time to analyze the information.
The Company views a two (2) trading day period after the dissemination of information to the marketplace to be a reasonable amount of time to elapse for the market to react to the information contained in the announcement and for that information to be Generally Disclosed.
Section 4.0 CONFIDENTIALITY RESTRICTIONS
4.1 Obligation to Keep Material Information Confidential
4.1.1 General Rule
All Material Information about the Company that has not been Generally Disclosed must be kept confidential.
Directors, officers and employees must assume that all information about the Company is confidential unless they are absolutely certain that the information has been Generally Disclosed or they have first consulted with the Trading Officer or a member of the Disclosure Committee and have been advised that the information has been Generally Disclosed.
4.1.2 Written Acknowledgments and Confirmations to be Obtained from Time?to?Time.
From time?to?time the Company may be (i) involved in material transactions or proposed material transactions involving other companies or (ii) conducting other material confidential business (a “Confidential Matter”) that may result in directors, officers or employees of the Company having confidential Material Information regarding the Confidential Matter. The rule in Section 4.1.1 above applies equally to all confidential Material Information acquired through involvement in a Confidential Matter, including with respect to counterparties or partners to the Company in a Confidential Matter.
Any director, officer or employee may be asked from time?to?time, prior to becoming involved in a Confidential Matter, to sign an acknowledgement and confirmation (a “Confidentiality Acknowledgment”) in the form Appendix B. Every director, officer and employee must comply with this Policy even if he or she has not signed a Confidentiality Acknowledgement. Nevertheless, every director, officer and employee will be obligated to sign a Confidentiality Acknowledgment when the Trading Officer or the Disclosure Committee deems it to be necessary, as a means to remind that person of his or her obligations under this Policy and the Insider Rules.
4.2 Communication in the Necessary Course of Business
Confidential Material Information may be disclosed to directors, officers and employees of the Company and to third parties only if disclosure is necessary in the course of the Company’s business. Disclosing confidential Material Information to any third party other than in the necessary course of business may constitute a criminal offence. It may also render the “tippor” civilly liable for damages if the tippee trades with knowledge of that information. Examples of situations when the disclosure of information occurs in the necessary course of business are provided in Appendix C. If after review of Appendix C you remain uncertain whether disclosure of information will occur in the necessary course of business, please consult the Trading Officer.
If confidential Material Information is disclosed in the necessary course of business, the recipient should be advised that the information is Material Information and that it has not been Generally Disclosed. Generally, a written confidentiality agreement should be entered into between the Company and the recipient. The Trading Officer can assist in the preparation of a suitable confidentiality agreement.
4.3 Avoidance of Inadvertent Disclosure
Confidential information should not be discussed in places or in a manner that may result in inadvertent disclosure, for example in public places or through electronic communication, including postings on social media sites, or in Internet chatrooms, newsgroups, bulletin boards or blogs.
If you become aware of any Material Information contained on the Internet or any other public place, you must promptly report it to the Trading Officer.
Documents containing confidential Material Information should be carefully monitored and kept in such a way that inadvertent disclosures of confidential Material Information do not occur. To prevent the inadvertent disclosure of confidential Material Information, the procedures in Appendix D should be followed.
Section 5.0 INSIDER TRADING RESTRICTIONS
5.1 Trading Restriction – Securities of the Company
Do not purchase or sell shares or exercise options to purchase shares of the Company if you are in possession of confidential Material Information regarding the Company.
This rule applies not only to securities of the Company but also to other securities whose price or value may reasonably be expected to be significantly affected by changes in the price of the Company’s securities (including derivatives or shares of a mutual fund) and to the exercise of employee stock options.
5.2 Trading Restriction – Other Companies
No director, officer or employee of the Company may purchase or sell securities or exercise options of other public companies where the Company is in a special relationship with that other public company (for example, a potential joint venture partner or a target acquisition candidate) and the director, officer or employee is in possession of confidential Material Information.
Accordingly, if you have confidential Material Information about another public company as a result of your dealings with the public company on behalf of the Company, it would be a violation of this Policy if (a) you trade in the other public company’s securities or (b) tell others the Material Information, except in the necessary course of business (see Section 4.2).
5.3 No Speculating
To ensure that perceptions of improper insider trading do not arise, directors, officers and employees may not “speculate” in securities of the Company.
For the purpose of this Policy, the word “speculate” means the purchase or sale of securities with the intention of reselling or buying back in a relatively short period of time in the expectation of a rise or fall in the market price of the securities. Speculating in the securities for short term profit is distinguished from purchasing and selling securities as part of a long term investment program.
5.4 Prohibitions Against Short Selling, Hedging and Certain Trading Activities
Directors, officers and employees may not at any time, with respect to securities of the Company, engage in short selling, monetization of equity awards (e.g. stock options, restricted stock units, performance stock units, deferred share units) before vesting, transactions in derivatives on securities of the Company such as put and call options or any other hedging or equity monetization transactions where the director, officer or employee’s economic interest and risk exposure in securities of the Company are changed.
For the purpose of this Policy, “short selling” means a transaction whereby an investor borrows a security from a broker and sells it, with the understanding that it must later be bought back and returned to the broker. It is a technique used by an investor who expects the price of a security to fall.
The prohibitions in this section do not apply to trades associated with the exercise of the Company’s stock options in accordance with the Company’s approved procedures.
Section 6.0 ADDITIONAL RESTRICTIONS
6.1 Blackout Periods
In addition to the restrictions in Section 5.0 above, to ensure that perceptions of improper insider trading do not arise, directors, officers and employees may not purchase or sell securities or exercise options (including employee stock options) of the Company during the period beginning at the end of each quarter and ending two (2) trading days following the date of public disclosure of the financial results for that quarter (or fiscal year) (“General Blackout Periods“).
From time?to?time, the Company may also institute additional trading restricted periods for directors, officers, selected employees and consultants and others because of the existence of confidential Material Information (“Specific Blackout Periods” and, together with General Blackout Periods, “Blackout Periods“). In the event a Blackout Period is initiated, the Trading Officer or the Chief Financial Officer will disseminate a notice to suspend trading in the Company’s securities instructing those people not to engage in any trading of the Company’s securities until further notice, without disclosing the facts giving rise to or the imposition of this suspension of trading.
Even outside of Blackout Periods, any person possessing confidential Material Information should not engage in any transactions related to the Company’s securities until two (2) trading days after this information has been publicly disclosed. All directors, officers, employees and other persons are expected to use their judgment in interpreting this Policy, and to err on the side of caution at all times. If you are uncertain, please ask the Trading Officer.
Trading by a director, officer or employee of the Company in securities of the Company, or the exercise of options of the Company during a Blackout Period may be permitted in exceptional circumstances with the prior approval of the Trading Officer and the Chair of the Governance Committee, provided that the director, officer or employee is not in possession of confidential Material Information at the time of the trade and the Trading Officer and the Chair of the Governance Committee believe that there is no possible perception that improper insider trading will have occurred. “Exceptional circumstances” may include the sale or exercise of securities in the case of pressing financial commitment that cannot be satisfied other than by the sale of securities of the Company, where options held by a director, officer or employee are expiring (including, to the extent relevant, as a result of the end of employment with the Company), or where the timing of the trade is important for tax planning purposes.
6.2 Pre-Approval of Trades
a ) Directors and other officers designated by the Governance Committee from time?to?time must obtain the written approval of the Trading Officer before they purchase or sell any securities or exercise any options of the Company;
b ) The Chief Executive Officer and Chief Financial Officer of the Company must obtain the written approval of the Chairman or Chair of the Governance Committee, before he or she purchases or sells any securities or exercises any options of the Company; and
c) The Trading Officer must obtain the written approval of the Chief Executive Officer or the Chairman before he or she purchases or sells any securities or exercises any options of the Company.
The rules above apply even if the trade is to occur outside of a Blackout Period.
The Trading Officer or his or her designate will advise individuals if they are subject to the pre-approval process described in this section.
The Trading Officer, Chief Executive Officer and Chair of the Governance Committee will not permit buying or selling by deemed insiders (defined below) in circumstances where he or she considers it necessary to ensure that there is no perception of improper insider trading having occurred.
Section 7.0 INSIDER REPORTING
7.1 Who Must File Reports?
Directors, certain officers and employees, and significant shareholders are “deemed insiders” for reporting purposes and these persons are required to submit insider reports to various regulatory authorities.
The Company will maintain a list of the directors, officers, employees and (to the Company’s knowledge) shareholders of the Company who are deemed insiders of the Company and to which each of the insider reporting process described in this section and the pre?approval process described in Section 6.0 apply.
You will be, or have been, notified by the Trading Officer, or his or her designate, as to whether you are a deemed insider with respect to the Company. It is the personal responsibility of each of these deemed insiders to ensure compliance with these reporting obligations.
7.2 Timing of Filing Insider Reports
Under the Insider Rules, subject to certain exceptions, deemed insiders of the Company are required to file an initial insider trading report within ten (10) days after becoming a deemed insider electronically through the System for Electronic Disclosure by Insiders (“SEDI“) at www.sedi.ca.
Deemed insiders are further required, subject to certain exceptions, to file an insider trading report on SEDI within five (5) days of a change in: (i) the beneficial ownership of, control or direction over, whether direct or indirect, securities of the Company; or (ii) a change in an interest in, or right or obligation associated with, a related financial instrument involving a security of the Company.
Deemed insiders must also file an insider trading report within five (5) days if the deemed insider enters into, materially amends, or terminates an agreement, arrangement or understanding that (i) has the effect of altering, directly or indirectly, the deemed insider’s economic exposure to the Company; or (ii) involves, directly or indirectly, a security of the Company or a related financial instrument involving a security of the Company.
The regulator’s view is that a trade is completed when an offer to buy or sell is accepted, not when the transaction is actually completed. In other words, the 5-day deadline begins on the day of the trade, not the day of settlement. There are fines and penalties for the late filing of insider reports that accrue daily and those fines and penalties are the responsibility of the deemed insider.
It is the responsibility of each deemed insider to set up and maintain their SEDI profile and to make the necessary filings. However, in order to ensure that the interests of the Company in securities law compliance are respected and that insider reports are filed on a timely basis, every deemed insider will be required to promptly inform the Trading Officer, or his or her designate, after a trade in the Company’s securities has been completed. The Trading Officer, or his or her designate, will coordinate with the deemed insider the preparation and filing of an insider report on behalf of the deemed insider. If the deemed insider files the insider report directly, he or she must submit a copy to the Trading Officer at the time of filing.
A person who is uncertain as to whether he or she is a deemed insider or whether he or she may be eligible to be exempted from these requirements should contact the Trading Officer.
Section 8.0 AMENDMENT
Any material amendment to this Policy requires the approval of the Governance Committee and the Board.
Section 9.0 ENFORCEMENT
Compliance with this Policy is essential for the Company to help to maintain its integrity in the financial markets. Accordingly, any director, officer, or employee who violates this Policy may face disciplinary action up to and including termination of his or her employment with the Company without notice or required resignation from the Board. The violation may also violate securities laws and thus, the Company may refer the matter of a violation to the appropriate regulatory authorities, which could lead to severe fines, imprisonment or other penalties.
EXAMPLES OF INFORMATION THAT COULD BE MATERIAL
The following list is reproduced from the Canadian Securities Administrators’ National Policy 51-201, which provides examples of the types of events or information that may be material to an issuer.
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 a company’s dividend payments or policies
- the possible initiation of a proxy fight
- material modifications to the 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 period
- 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 of directors 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 one 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
CONFIDENTIALITY ACKNOWLEDGMENT AND CONFIRMATION
|TO:||Baylin Technologies Inc. (the “Company”) and the Company’s Corporate Governance and Compensation Committee|
|RE:||The Company’s Confidentiality and Insider Trading Policy effective as of May 15, 2014, as amended from time?to?time (the “Confidentiality and Insider Trading Policy”)|
- The undersigned has been asked to participate in (i) a material transaction or proposed material transaction involving another company or companies or (ii) another material confidential business matter (the “Confidential Matter”) as described below;
- The undersigned is subject to the Confidentiality and Insider Trading Policy and is signing this form as an acknowledgement and confirmation of existing obligations under this Policy; and
- Capitalized terms used herein and not otherwise defined will have the meanings given to them in the Confidentiality and Insider Trading Policy.
I ACKNOWLEDGE AND CONFIRM that by participating in the Confidential Matter, I may acquire confidential Material Information regarding this Confidential Matter. This confidential Material Information could include any information I acquire regarding any company or companies that are counterparties or partners to the Company in any Confidential Matter. All information acquired as a result of participating in the Confidential Matter will be treated in accordance with the Confidentiality and Insider Trading Policy, which I hereby acknowledge and confirm that I am obligated to comply with in its entirety, including after the conclusion of the Confidential Matter.
DATED: _____________, 201____
NECESSARY COURSE OF BUSINESS
The following was sourced from the Canadian Securities Administrators’ National Policy 51-201.
“Necessary course of business” generally covers communication with:
- vendors, suppliers, or strategic partners on issues such as research and development, sales and marketing, and supply contracts;
- employees, officers, and board members of the Company;
- lenders, legal counsel, auditors, underwriters, and financial and other professional advisors to the company;
- parties to negotiations;
- labour unions and industry associations;
- government agencies and non-governmental regulators; and
- credit rating agencies (provided that the information is disclosed for the purpose of assisting the agency to formulate a credit rating and the agency’s ratings generally are or will be publicly available).
PROCEDURES FOR CONFIDENTIAL MATERIAL INFORMATION
To prevent the inadvertent disclosure of confidential Material Information, the following procedures should be followed:
- documents and files containing confidential Material Information should be kept in a secure place with access restricted to those individuals for whom access is necessary in the course of business;
- access to electronic documents should be restricted through the use of passwords;
- code names for confidential transactions or business projects should be used when it would be prudent to do so;
- confidential Material Information should not be discussed in places where the discussion may be overheard, such as elevators, hallways, restaurants, public transit, airplanes or taxis;
- documents containing confidential Material Information should not be read or displayed in public places and should not be discarded where others can retrieve them;
- directors, officers and employees should ensure that they maintain the confidentiality of information in their possession outside of the office as well as inside the office;
- transmission of documents containing confidential Material Information by electronic means may only be made only where it is reasonable to believe that the transmission can be made and received securely; and
unnecessary copying of documents containing confidential Material Information should be avoided and extra copies of documents should be promptly removed from meeting rooms and work areas at the conclusion of a meeting a