17 June, 2003, as amended 18 May, 2004 and 20 September, 2005
Adastra Minerals Inc. (the “Company”) and its affiliates (together, the “Group”) expect each of their directors and officers (the “fiduciaries”) to act ethically and with the greatest integrity. The Group’s fiduciaries have an obligation to avoid potential ethical, legal, financial and other conflicts of interest and to refrain from making personal profits from their positions.
A conflict of interest exists if a fiduciary has personal financial interests or other opportunities for personal benefit of such a nature or extent that they could reasonably be expected to exert a substantial and improper influence upon the fiduciary’s professional judgment in exercising any duty or responsibility to a member of the Group.
One of the purposes of this document (the “Policy”) is to assist the Group and its fiduciaries in identifying potential conflicts of interest and to establish a procedure to deal with them. As such, the Policy is intended for the benefit of both the individual and the Group. If properly observed, in appropriate circumstances, the Policy will allow a contract to be treated as valid and binding even though a fiduciary has or may have a conflict of interest with respect to it.
Since the possibilities for conflict of interest are almost limitless and cannot all be covered in procedures, the Group’s fiduciaries are expected to conduct themselves at all times with the highest ethical standards in a manner that will bear the closest scrutiny, and are responsible for seeking appropriate guidance before embarking on activities that might be questionable.
The Policy is intended to comply with the procedure prescribed in the Business Corporations Act (Yukon) (the “Act”). In the event there is an inconsistency between the requirements and procedures prescribed herein and those in the Act, the Company’s articles of continuance or by-laws or any existing agreement between the Company and any of its fiduciaries, then the Act, articles of continuance or by-laws or agreement will prevail. If there is an inconsistency between the requirements and procedures prescribed herein and those in the legislation governing a corporate affiliate of the Company, the affiliate’s constating documents or any existing agreement between the affiliate and the fiduciary, then the legislation, constating documents or agreement will prevail.
The Policy is also intended to comply with the requirements of the rules, instruments and policies promulgated by the Canadian Securites Administers, U.S. Securities and Exchange Commission as mandated by the Sarbanes-Oxley Act of 2002 and the stock exchanges and on which the Company’s securities are listed for trading from time to time and the corresponding listing authorities.
Each fiduciary is required to become familiar with and adhere to the Policy. Notwithstanding the foregoing, the Compliance Committee has the discretion to exempt from the requirements of any part or parts of the Policy, including the requirement to sign and return a copy of the Policy and the requirement to complete and submit a Conflict of Interest Questionnaire annually, any fiduciary who is an employee or agent of a federal, provincial, state, municipal or local government, parliament or legislature or any regulatory authority, agency, commission, board or affiliated entity of any government, parliament or legislature.
A fiduciary should notify the Company of any concerns or difficulties in interpretation or application of the Policy. The Policy is subject to modification and further development in light of the Group’s ongoing experience with it. The Group reserves the right unilaterally to amend the Policy and any of its provisions without advance notification. A copy of any amendment to the Policy will be delivered to each fiduciary. In addition, the Group reserves the right to use discretion when applying the Policy in particular instances.
(a) Act. “Act” means the Business Corporations Act (Yukon).
(b) Affiliate. The word “affiliate” has the meaning given to it under Section 2 of the Act, as set out on Appendix 1.
(c) Applicable Laws. “Applicable Laws” means all applicable federal, provincial, state, municipal or local government laws, statutes, rules, by-laws and regulations, and all applicable official rules, policies, notices, directives, orders, judgments and decrees of Governmental Bodies.
(d) Board. “Board” means the board of directors of the Company.
(e) Company. “Company” means Adastra Minerals Inc.
(f) Conflict of Interest. Subject to paragraph 1.2 below, a “conflict of interest” exists if a fiduciary has personal financial interests or other opportunities for personal benefit of such a nature or extent that they could reasonably be expected to exert a substantial and improper influence upon the fiduciary’s professional judgment in exercising any duty or responsibility to a member of the Group. Without limiting the generality of the foregoing, and subject to paragraph
1.2 below, the following circumstances constitute a conflict of interest:
(i) a contract or proposed contract between a member of the Group and a fiduciary or a family member of a fiduciary;
(ii) a contract or proposed contract in which a member of the Group is or is proposed to be a party, and (A) in which a fiduciary or a family member of a fiduciary has, other than by reason solely of his or her relationship with the Group, a direct or indirect material financial interest; or (B) one of the other parties to the contract or proposed contract is an entity in or for which a fiduciary or a family member of a fiduciary is a principal, agent, director, officer, employee, consultant, shareholder, investor or legal representative;
(iii) a fiduciary directly or indirectly competing with a member of the Group;
(iv) a fiduciary directly or indirectly (i) having a material financial interest in; (ii) serving as a principal, agent, director, officer, employee, consultant, shareholder, investor or legal representative of or to; (iii) advising, lending money to or guaranteeing the debts or obligations of; or (iv) permitting his or her name to be used or employed by or associated with, an entity that competes with a member of the Group;
(v) a fiduciary or a family member of a fiduciary demanding, accepting or offering or agreeing to accept a direct or indirect commission, reward, advantage, benefit, gift, entertainment or other favour from any individual or entity that:
(i) does or is seeking to do business with a member of the Group, or
(ii) has received, is receiving or is seeking to receive a loan or investment, or secure other financial commitments from a member of the Group,
under circumstances where it reasonably might be inferred that such action does not constitute entertainment of the normal course of business and was intended to influence the fiduciary in the performance of his or her duties; and
(vi) a fiduciary engaging in any business or transaction or having a material financial interest or other personal interest that is incompatible with the discharge of the fiduciary’s duties and responsibilities.
(g) Director. A “director” means a director of the Company or any of its affiliates.
(h) Family Member. A “family member” is a spouse (including a common law spouse), domestic partner, parent, child, sibling or a spouse of a child or sibling.
(i) Fiduciaries. The “fiduciaries” are the directors and officers of the Company and its affiliates and a “fiduciary” is any one such individual.
(j) Governmental Bodies. A “Governmental Body” or “Governmental Bodies”, as the case may be, is any federal, provincial, state, municipal or local government, parliament, legislature or any regulatory authority, agency, commission or board of any government, parliament or legislature, or any court or, without limitation to the foregoing, any other law, regulation or rule-making entity (including, without limitation, any central bank, fiscal or monetary authority or authority regulating banks, and any stock exchange, inter-dealer quotation network or other organized trading facility or securities regulatory body), having or purporting to have jurisdiction in the relevant circumstances, or any person acting or purporting to act under the authority of any of the foregoing (including, without limitation, any arbitrator).
(k) Group. “Group” means the Company and its affiliates.
(l) Material Financial Interest. A “material financial interest” includes a material ownership or investment interest as well as a compensation arrangement.
(m) Permitted Conflict. A “Permitted Conflict” includes the following:
(i) a conflict of interest or potential conflict of interest that results from a fiduciary directly or indirectly acting for a member of the Group in a professional advisory capacity;
(ii) a conflict of interest or potential conflict of interest that results from a fiduciary directly or indirectly acting for an entity that competes with a member of the Group in a professional advisory capacity;
(iii) an arrangement by way of security for money lent to or obligations undertaken by a fiduciary, or by an entity in which he or she has an interest, for the benefit of a member of the Group;
(iv) a contract relating primarily to a fiduciary’s remuneration as a director, officer, employee or agent of a member of the Group;
(v) a contract between a member of the Group and a fiduciary for indemnity or insurance; and
(vi) a conflict of interest or potential conflict of interest that results from a contract between two different members of the Group.
(n) Policy. “Policy” means this Ethics and Conflict of Interest Policy.
Notwithstanding anything else contained in the Policy, no conflict of interest will exist solely by virtue of:
(a) a fiduciary directly or indirectly holding any class of publicly traded securities of:
(i) an entity that is or is proposed to be a party to a contract or a proposed contract in which a member of the Group is or is proposed to be a party; or
(ii) an entity that competes with a member of the Group,
provided that the fiduciary, alone or in conjunction with any other individual or entity, does not directly or indirectly hold more than 1% of the securities of any such class; or
(b) an investment in:
(i) an entity that is or is proposed to be a party to a contract or a proposed contract in which a member of the Group is or is proposed to be a party; or
(ii) an entity that competes with a member of the Group,
by a mutual fund, pension or other institutional investment over which a fiduciary and his or her family members has no control.
2.1 Good Faith.
When discharging his or her duties and responsibilities to the Company or another member of the Group, a fiduciary must at all times act in good faith, responsibly and with due care and diligence. A fiduciary must strive to ensure that his or her independent judgment is not compromised.
2.2 Corporate Assets.
A fiduciary must strive to protect the Group’s assets and resources. A fiduciary must use any corporate assets and resources employed by the fiduciary or entrusted with the fiduciary in a responsible manner.
2.3 Advance Interests.
A fiduciary must act to advance the Group’s legitimate interests when the opportunity arises.
2.4 Fair Dealing.
A fiduciary must not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practise.
3.1 Disclosure of Conflict.
A fiduciary who has a conflict of interest or potential conflict of interest, or who is unsure as to whether a conflict of interest or potential conflict of interest exists, must disclose in writing to the Compliance Committee the nature and extent of the actual or possible conflict of interest or potential conflict of interest. The disclosure must be made forthwith after the fiduciary becomes aware of the actual or possible conflict of interest or potential conflict of interest and in sufficient detail and form as to afford the Compliance Committee an understanding of the relevant facts.
The Compliance Committee will review any disclosure made in accordance with this paragraph 3.1 as well as any disclosure made in any Conflict of Interest Questionnaire and determine whether it reasonably requires additional information. If a request for additional information is reasonably made, the fiduciary must provide it to the Compliance Committee forthwith.
Provided a conflict of interest or potential conflict of interest is found to exist, then as soon as the Compliance Committee has completed its review, and in any event within 15 days following the date of initial disclosure, the Compliance Committee will report to the Board with its findings and its recommendations.
Within five days of receiving a report from the Compliance Committee, the Board will issue a written directive to the fiduciary advising the fiduciary of the findings of the Compliance Committee and the steps that the Board requires the fiduciary to take. In general, the directives will follow the guidelines established under Article 4 of the Policy. However, the Group reserves the right to use discretion when applying the guidelines in any particular instance.
In addition, fiduciaries must ensure they satisfy the disclosure requirements of section 122 of the Act (or the requirements of equivalent legislation governing them), a copy of which is attached as Appendix 1.
4.1 Avoidance of Conflicts of Interest.
Unless otherwise provided herein, a fiduciary must structure his or her activities and interests to avoid conflicts of interest and potential conflicts of interest and refrain from making personal profits from his or her position. A fiduciary must act at all times with honesty and integrity and refrain from using corporate assets, information, opportunities or the fiduciary’s position for personal gain or taking for himself or herself personally opportunities that are discovered through the use of corporate assets, information, opportunities or the fiduciary’s position.
As a general rule, fiduciaries are prohibited from engaging in any activity described under sections 1.1(f)(iii), (iv), (v) or (vi) above, unless the activity is a Permitted Conflict.
4.3 Approval of Proposed Contracts.
As a general rule, a board of directors of the Group should not approve a proposed contract that places a fiduciary in a conflict of interest, unless the conflict of interest is a Permitted Conflict or one of the following two exceptions applies:
1. the proposed contract provides no benefit, or only minimal benefit, to the fiduciary or to the relevant family member of the fiduciary; or
2. the benefit to the relevant member of the Group is such that the conflict of interest should be tolerated.
Even if one of the foregoing two exceptions applies, the proposed contract should not be approved unless:
(a) overall, the contract is fair and reasonable and in the best interests of the relevant member of the Group;
(b) the board of directors has made reasonable inquiries and has received information in response confirming there is no alternative to the contract that is both reasonable and as favourable to the relevant member of the Group; and
(c) tolerating the conflict will not impair public confidence in the Company or any other member of the Group or their reputations.
Notwithstanding anything to the contrary, no board of directors of the Group will directly or indirectly extend or maintain credit or arrange for an extension of credit or renew an extension of credit, in the form of a personal loan, to or for any fiduciary of the Company or another member of the Group.
4.4 Board Meetings.
As a general rule, if a director is in a conflict of interest or potential conflict of interest as a result of a proposed contract, including a Permitted Conflict that relates to the director’s own remuneration, that director will not participate in or be permitted to hear the discussion of the matter at any meeting of directors except to disclose material facts and to respond to questions. The director will not be counted in determining the presence of a quorum for purposes of the vote. The director will not vote on any resolution to approve the proposed contract and will not be present in the meeting room when the vote is taken, unless the vote is by secret ballot, nor participating be telephone if the meeting is being held by telephone conference call.
The foregoing does not apply if the conflict of interest or potential conflict of interest is a Permitted Conflict, other than a Permitted Conflict that relates to the director’s own remuneration.
5.1 Compliance Committee.
To administer and monitor compliance with the Policy, the Board will create a committee on ethics and conflicts of interest (the “Compliance Committee”), ther terms of reference for which are set out on the Company's "Board Mandate and Charter for Board Committees". The Compliance Committee will require each fiduciary to review a copy of the Policy and acknowledge in writing that he or she has done so and agrees to comply with it. The Compliance Committee will also require each fiduciary to complete and submit a Conflict of Interest Questionnaire annually.
6.1 Confidential Information.
Each fiduciary will exercise care not to disclose confidential information acquired in connection with his or her position or information the disclosure of which might be adverse to the interests of the Company or another member of the Group. No fiduciary will disclose or use information relating to the business of the Company or another member of the Group for the personal profit or advantage of the fiduciary or a family member of the fiduciary.
7.1 Compliance with Laws and Policies.
Each fiduciary must:
(a) comply with all Applicable Laws, including, without limitation, insider trading and tipping laws, the Corruption of Foreign Officials Act (Canada), the Foreign Corrupt Practices Act (United States) and the Anti-Terrorism Act (United Kingdom);
(b) observe the OECD Guidelines for Multinational Enterprises;
(c) wherever appropriate, observe the principles set out in the statement of Principles and Agreed Actions of the Extractive Industries Transparency Initiative to promote the prudent use of natural resource wealth and the transparency of payments and revenues;
(d) comply with all applicable policies and procedures established from time to time by the Company or another member of the Group including, without limitation, policies and procedures with respect to protection of material, non-public and other confidential information, prevention of insider trading and tipping and pre-clearance of trades of the Company’s securities; and
(e) comply with all applicable corporate governance mandates, internal controls, policies and procedures developed or adopted by a board of directors of the Group or a committee of a board of directors of the Group from time to time.
7.2 Responsibilities of the Directors.
The directors are responsible, collectively and individually, for the Group’s compliance with Applicable Laws. A director must disclose without delay all information that the Company or another member of the Group needs in order to comply with Applicable Laws, insofar as that information is known to the director or could with reasonable diligence be ascertained by the director. Whenever appropriate, directors are required to seek advice from the Group’s advisors regarding the Group’s compliance with Applicable Laws and take that advice into account.
8.1 Additional Provisions for Financial Officers.
The Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Financial Controller, and any person performing a similar function, are also required to adhere to the provisions set out in Appendix 2 to the Policy, which forms a part of the Policy.
9.1 Report Violations.
Individuals are strongly encouraged to speak with a member of the Compliance Committee about any possible violation of the Policy and to report any actual violation of the Policy or any other illegal or unethical behaviour. With the exception of violations of Appendix 2 of the Policy, the report should be made to the Compliance Committee. With respect to violations of Appendix 2 of the Policy, the report should be made to the Audit Committee. Upon receiving a report, the Compliance or Audit Committee, as applicable, will conduct a prompt, thorough and fair examination, document the situation and, if appropriate, recommend to the Board appropriate disciplinary and corrective action.
To the extent practicable, all reports will be kept confidential. The Group will not condone any retaliation for a report made in good faith.
9.2 Failure to Disclose Conflict of Interest.
If the Compliance Committee has reasonable cause to believe that a fiduciary has failed to disclose a conflict of interest or potential conflict of interest, it will inform the fiduciary of the basis for such belief and afford the fiduciary an opportunity to explain the alleged failure to disclose.
If, after hearing the response of the fiduciary and making such further investigation as may be warranted in the circumstances, the Compliance Committee determines that the fiduciary has in fact failed to disclose an actual or potential conflict of interest, it will recommend to the Board appropriate disciplinary (not excluding the possibility of summary dismissal) and corrective action.
9.3 Violation of Policy or Board Directive.
The violation of the Policy including any directive issued by the Board, is a serious matter and, in addition to any fines or penalties imposed under Applicable Laws, may constitute cause for the removal or dismissal of a fiduciary.
2.(1) For the purposes of this Act,
(a) one body corporate is affiliated with another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person, and
(b) if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.
(2) For the purposes of this Act, a body corporate is controlled by a person if
(a) securities of the body corporate to which are attached more than 50 percent of the votes that may be cast to elect directors of the body corporate are held, other than by way of security only, by or for the benefit of that person, and
(b) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate.
(3) For the purposes of this Act, a body corporate is the holding body corporate of another if that other body corporate is its subsidiary.
(4) For the purposes of this Act, a body corporate is a subsidiary of another body corporate if
(a) it is controlled by
(i) that other,
(ii) that other and one or more bodies corporate, each of which is controlled by that other, or
(iii) two or more bodies corporate, each of which is controlled by that other, or
(b) it is a subsidiary of a body corporate that is that other's subsidiary.
Section 122 of the Business Corporations Act (Yukon)
122.(1) A director or officer of a corporation who
(a) is a party to a material contract or proposed material contract with the corporation, or
(b) is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with the corporation,
shall disclose in writing to the corporation or request to have entered in the minutes of meetings of directors the nature and extent of his interest.
(2) The disclosure required by subsection (1) shall be made, in the case of a director,
(a) at the meeting at which a proposed contract is first considered,
(b) if the director was not interested in a proposed contract at the time of the meeting referred to in paragraph (a), at the first meeting after he becomes so interested,
(c) if the director becomes interested after a contract is made, at the first meeting after he becomes so interested, or
(d) if a person who is interested in a contract later becomes a director, at the first meeting after he becomes a director.
(3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,
(a) forthwith after he becomes aware that the contract or proposed contract is to be considered or has been considered at a meeting of directors,
(b) if the officer becomes interested after a contract is made, forthwith after he becomes so interested, or
(c) if a person who is interested in a contract later becomes an officer, forthwith after he becomes an officer.
(4) If a material contract or proposed material contract is one that, in the ordinary course of the corporation's business, would not require approval by the directors or shareholders, a director or officer shall disclose in writing to the corporation, or request to have entered in the minutes of meetings of directors, the nature and extent of his interest forthwith after the director or officer becomes aware of the contract or proposed contract.
(5) A director referred to in subsection (1) shall not vote on any resolution to approve the contract unless the contract is
(a) an arrangement by way of security for money lent to or obligations undertaken by him, or by a body corporate in which he has an interest, for the benefit of the corporation or an affiliate,
(b) a contract relating primarily to his remuneration as a director, officer, employee or agent of the corporation or an affiliate,
(c) a contract for indemnity or insurance under section 126, or
(d) a contract with an affiliate.
(6) For the purpose of this section, a general notice to the directors by a director or officer is a sufficient disclosure of interest in relation to any contract made between the corporation and a person in which the director has a material interest or of which he is a director or officer if
(a) the notice declares he is a director or officer of or has a material interest in the person and is to be regarded as interested in any contract made or to be made by the corporation with that person, and states the nature and extent of his interest,
(b) at the time disclosure would otherwise be required under subsection (2), (3) or (4), as the case may be, the extent of his interest in that person is not greater than that stated in the notice, and
(c) the notice is given within the 12 month period immediately preceding the time at which disclosure would otherwise be required under subsection (2), (3) or (4), as the case may be.
(7) If a material contract is made between a corporation and one or more of its directors or officers, or between a corporation and another person of which a director or officer of the corporation is a director or officer or in which he has a material interest,
(a) the contract is neither void nor voidable by reason only of that relationship, or by reason only that a director with an interest in the contract is present at or is counted to determine the presence of a quorum at a meeting of directors or committee of directors that authorized the contract, and
(b) a director or officer or former director or officer of the corporation to whom a profit accrues as a result of the making of the contract is not liable to account to the corporation for that profit by reason only of holding office as a director or officer, if the director or officer disclosed his interest in accordance with subsection (2), (3), (4) or (6), as the case may be, and the contract was approved by the directors or the shareholders and it was reasonable and fair to the corporation at the time it was approved.
(8) If a director or officer of a corporation fails to disclose his interest in a material contract in accordance with this section, the Supreme Court may, on the application of the corporation or a shareholder of the corporation, set aside the contract on any terms it thinks fit.
(9) This section is subject to any unanimous shareholder agreement.
A2.1 Presentation of Information.
The Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Financial Controller, and any person performing a similar function (collectively, the “Financial Officers”), must, to the best of their abilities:
(a) present financial information fully, honestly and professionally so that it will be understood in its context; and
(b) ensure that financial information is maintained in a manner that describes clearly the true nature of business transactions, assets or liabilities and entries are classified and recorded in a timely and proper manner.
A2.2 Disclosure in Reports and Documents.
The Financial Officers will perform their duties and responsibilities with a view to ensuring that all reports and documents required to be filed with Governmental Bodies contain full, fair, accurate, timely and understandable disclosure.
A2.3 Supply of Information.
The Financial Officers must put procedures in place to ensure that they are supplied in a timely manner with all information in a form and of a quality appropriate to enable them to discharge their duties under the Policy and Applicable Laws.