Disclosure Policy
Throughout this document, “Pacgen Biopharmaceuticals Corporation” and “Pacgen” and “the Corporation” refer to Pacgen Biopharmaceuticals Corporation and all of its consolidated subsidiaries and affiliates.
A. OBJECTIVE AND SCOPE
The objective of this disclosure policy is to ensure that communications of material information to the investing public about Pacgen Biopharmaceuticals Corporation are:
- timely, factual and accurate; and
- broadly disseminated in accordance with all applicable legal and regulatory requirements.
This disclosure policy confirms in writing our existing disclosure policies and practices. Its goal is to raise awareness of Pacgen’s approach to disclosure among the board of directors of the Corporation (the “Board”), senior management and employees.
This disclosure policy extends to all employees of Pacgen Biopharmaceuticals Corporation and its subsidiaries; their boards of directors; and those authorized to speak on their behalf. It covers disclosures in documents filed with the securities regulators and written statements made in Pacgen’s annual and quarterly reports, news releases, letters to shareholders, presentations by those authorized to speak on behalf of the Corporation, and information contained on the Corporation’s website and other electronic communications. It extends to oral statements made in meetings and telephone conversations with analysts and investors, interviews with the media, press conferences, conference calls and scientific presentations.
Pacgen, its directors, officers, authorized spokespersons and insiders may be liable to investors, subject to certain defences, for misrepresentations in public documents or public oral statements concerning Pacgen or for failing to make timely disclosure of material changes. It is, therefore, imperative that all employees and authorized spokespersons of Pacgen and its subsidiaries comply with this Policy.
B. QUESTIONS CONCERNING THIS POLICY
If there is any question or concern with respect to the application of this Policy to any employee or to any particular circumstance, a member of the Disclosure Committee (defined below) should be contacted for guidance.
C. DISCLOSURE COMMITTEE
Pacgen has established a disclosure committee (the “Disclosure Committee”) responsible for overseeing the Corporation’s disclosure practices. The Disclosure Committee consists of the Chief Executive Officer (the “CEO”), President and Chief Financial Officer (the “CFO”). In the event that two of these titles are held by the same person, a third member of the Committee will be appointed by the CEO. The Chair of the Disclosure Committee will be appointed by the CEO.
The Disclosure Committee will be responsible for (1) overall administration of this Policy, (2) educating employees regarding Pacgen’s disclosure obligations and trading and tipping restrictions, (3) ensuring that appropriate processes are in place for verifying the accuracy of information disclosed in documents filed with the securities regulatory authorities or otherwise publicly disseminated or contained in public oral statements and ensuring the timely disclosure of material changes in Pacgen’s affairs, (4) reviewing and authorizing disclosure (both written, including Pacgen core documents and non-core documents, and oral) before public release, (5) monitoring Pacgen’s website, (6) maintaining a disclosure record and documentation of Disclosure Committee decisions, (7) ensuring that when public disclosure requires a correction, such corrections are made promptly and under the direct supervision of the Disclosure Committee, and (8) monitoring the effectiveness of and compliance with this Policy and reporting thereon to the Board annually or more frequently if required.
The Disclosure Committee will set benchmarks for a preliminary assessment of materiality and will determine when developments justify public disclosure. If it is deemed that the information should remain confidential, the Disclosure Committee will determine how that inside information will be controlled. The Disclosure Committee will meet as conditions dictate, and documentation of the Disclosure Committee’s decisions will be maintained by an appointee of the Disclosure Committee.
It is essential that the Disclosure Committee be fully apprised by all employees of all material Pacgen developments in order to evaluate and discuss those events to determine the appropriateness and timing for public release of material information or whether the information should remain confidential (in keeping with securities regulations and stock exchange rules), and if so, how that undisclosed confidential information will be controlled and for what time period.
The Disclosure Committee will review and update, if necessary, this disclosure policy on an annual basis or as needed to ensure compliance with changing regulatory requirements. The Disclosure Committee will report to the Board on an annual basis.
D. DISCLOSURE OF MATERIAL INFORMATION
Material information means any information relating to the Corporation that significantly affects or could reasonably be expected to result in a significant change in the market price or value of any of the Corporation's securities.
Securities laws and securities commission and stock exchange policies require the immediate disclosure of all material information of the Corporation through news media.
In certain circumstances, the Disclosure Committee may determine that such disclosure would be unduly detrimental to the Corporation (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. In such circumstances, the Disclosure Committee will comply, as appropriate, with securities law provisions pertaining to filing of a confidential material change report with the applicable securities regulators, and, if filed, will periodically (at least every 10 days) review its decision to keep the information confidential. Until this material information is publicly disclosed, all insiders and selected senior management will be prohibited from trading in the Corporation’s shares.
It is expected that management of the Corporation will keep the Disclosure Committee fully apprised of all significant developments of the Corporation in order for the Disclosure Committee to determine the materiality and the appropriateness of and timing for public release of material information, or whether the information should remain confidential.
E. TRADING RESTRICTIONS AND BLACKOUT PERIODS
It is illegal for anyone to purchase or sell securities of any public company with knowledge of material information affecting that company that has not been publicly disclosed. Except in the necessary course of business, it is also illegal for anyone to inform any other person of material non-public information. Therefore, insiders and employees with knowledge of confidential or material information about Pacgen or counter-parties in negotiations of material potential transactions, are prohibited from trading shares in Pacgen or the counter-parties until the information has been fully disclosed and a reasonable period of time has passed for the information to be widely disseminated.
From time to time, the Disclosure Committee may advise its directors, officers and certain or all employees of the Corporation not to trade in securities of the Corporation. These advisories are called "trading blackout periods". Trading blackout periods occur in connection with the preparation and dissemination of the financial statements of the Corporation and in connection with pending events that constitute material information about the business affairs of the Corporation. The authority for imposing a trading blackout period rests solely with the Disclosure Committee.
Automatic trading blackout periods will apply to directors, senior management and those employees with access to financial undisclosed information regarding the Corporation during periods when financial statements are being prepared but results have not yet been publicly disclosed. The trading blackout period commences on the first day of the month following the end of a quarter and ends on the second day following the issuance of a news release disclosing quarterly results.
The Corporation’s Code of Business Conduct and Ethics provides additional restrictions on trading in securities and options on securities of the Corporation by employees and members of their families.
For trading blackout periods not covered above, the Chair of the Disclosure Committee will notify the directors, officers and all or some of the employees of the Corporation of the imposition of the trading blackout period and its duration, if known. The Chair of the Disclosure Committee will also be notify such persons when the trading blackout period is lifted, if the duration was not stated at the outset. Generally, the appropriate time to lift the trading blackout period will be at the close of business on the second day after the day on which the news release has been issued, which is when the information is deemed to be generally known.
The conflict-of-interest guidelines contained in the Code of Business Conduct and Ethics encourages directors, officers and employees who are not sure whether they should be trading in securities of the Corporation at any particular time to contact a member of the Disclosure Committee for guidance.
Insiders and employees of the Corporation may apply to the Chairman of the Disclosure Committee for approval to trade securities of the Corporation during a trading blackout period.
F. CONFIDENTIALITY
Any employee, or other agent of Pacgen, 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. Efforts will be made to limit access to such confidential information to only those who need to know the information and such persons will be advised that the information is to be kept confidential.
Outside parties privy to undisclosed material information concerning the Corporation will be told that they must not divulge such information to anyone else, other than in the necessary course of business and that they may not trade in the Corporation’s securities until the information is publicly disclosed. All employees are required to sign a confidentiality agreement as a condition of their employment. As a result, all employees are legally required to protect Pacgen’s confidential information. Pacgen will seek legal recourse against those in breach of their confidentiality obligations to the Corporation where appropriate.
In order to prevent the misuse or inadvertent disclosure of material information, the procedures set forth below should be observed at all times:
- documents and files (both physical and electronic) containing confidential information should be kept in a safe place to which access is restricted to individuals who “need to know” that information in the necessary course of business;
- code names should be used if necessary;
- all employees must take all necessary precautions to ensure that confidential matters will not be overheard in public places, such as elevators, hallways, restaurants, airplanes or taxis;
- confidential documents and emails should be exchanged only on Pacgen’s networks or other secure network connections;
- confidential documents should be shredded when no longer needed and should not be discarded where others can retrieve them;
- employees must not remove confidential documents from Pacgen’s premises unless strictly necessary to their work. Employees must ensure that they maintain the confidentiality of information in their possession outside of the office as carefully as if they at the office;
- transmission of documents by any means, including by courier, post or by fax, should be made only where it is reasonable to believe that the transmission can be made and received under secure conditions;
- 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. Extra copies of confidential documents should be shredded or otherwise destroyed;
- the legal affairs department will review, sign and maintain records of all confidentiality agreements signed with third parties; and
- Pacgen employees may disclose confidential information to third parties only under the following conditions:
a) the third party has signed a confidential disclosure agreement with the Corporation that is acceptable to the legal affairs department;
b) the third party is given only that information which is strictly necessary;
c) the information is clearly marked “Confidential – Property of Pacgen Biopharmaceuticals Corporation” or other similar legend;
d) the disclosing employee keeps records of what information was disclosed, when and to whom; and
e) employees routinely disclosing confidential information should check with the legal affairs department on a regular basis to ensure that the confidentiality agreements are still valid and cover the appropriate subject matter.
G. SPOKESPERSONS
The authorized spokespersons for the Corporation are members of the Disclosure Committee and the senior representative of the investor relations department (the “Investor Relations Department”). These spokespersons may, from time to time, designate others to speak on behalf of the Corporation or to respond to specific inquiries from the investment community or the media.
Employees other than the authorized spokespersons must not respond to inquiries from the investment community or the media unless specifically asked to do so by an authorized spokesperson. All such queries should be referred to an authorized spokesperson.
The Investor Relations Department will be involved in scheduling and developing communications and presentations for all meetings with the investment community and the media.
If there is any doubt about the appropriateness of supplying information to an outside party, an employee should contact a member of the Disclosure Committee or the Investor Relations Department for advice.
H. TIMING OF AND PROCEDURE FOR DISCLOSURE
Once a decision is made by the Disclosure Committee that information is material and will not be the subject of a confidential filing, it must be disclosed in a timely manner and broadly disseminated to the public. Pacgen will use an industry-accepted news wire service to disseminate news releases. In addition, news releases will be emailed to parties who have expressed a desire to receive such releases directly.
All Pacgen news releases including releases of material information will be managed by the Investor Relations Department under the direction of the Disclosure Committee, and by no other department of the Corporation.
The Investor Relations Department will submit all proposed news releases to the Disclosure Committee, with internal and/or external experts included in the review process as deemed appropriate by the Disclosure Committee. The Disclosure Committee will review all news releases in order to ensure that the proposed disclosure is in compliance with applicable securities laws and stock exchange requirements.
The Audit Committee of the Corporation will review and approve news releases regarding interim financial results and will review, approve and recommend to the Board news releases regarding annual financial results. The Board will review and approve news releases regarding annual financial results.
Prior to dissemination of a news release, written or electronic confirmation is required from two members of the Board. If immediate dissemination of a news release is required, the CEO can approve the news release and if the CEO is unavailable, the CFO can approve the news release.
When required by the policies of the TSX Venture Exchange, the Investor Relations Department will fax a copy of the release to Market Regulation Services Inc. (“RS”) before the planned news release time. The Investor Relations Department will fax a copy of all news releases to RS. Any request for a trading halt by the Corporation requires approval from a member of the Disclosure Committee.
After public dissemination, the Corporation's disclosures will be monitored to ensure accurate dissemination and take corrective measures, if necessary.
Upon the advice of the CFO, Pacgen will file a material change report with securities regulators.
The Disclosure Committee may elect, at any time, to adopt controls and procedures that are different than those which have been established under this Policy, provided that such controls and procedures are in the opinion of the Disclosure Committee, satisfactory to ensure that disclosure documents are accurate and are disclosed in compliance with applicable laws.
I. CONFERENCE CALLS
When determined by the CEO to be necessary, conference calls will be held for quarterly earnings reports and other major corporate developments, whereby discussion of key aspects will be made available simultaneously to all interested parties by telephone or via a webcast over the Internet. The call will be preceded by a news release containing all relevant material information. At the beginning of the call, a Pacgen spokesperson or the operator will provide appropriate cautionary language with respect to any forward-looking information and direct participants to publicly available documents containing the assumptions, sensitivities and a full discussion of the risks and uncertainties.
Pacgen will provide advance notice of the conference call and webcast by issuing a news release announcing the date and time and providing information on how interested parties may access the call and webcast. An archived audio webcast on the Internet will be made available to the public for a minimum of 30 days.
J. SPEECHES AND INVESTOR CONFERENCES
Whenever Pacgen’s spokespersons speak at public events such as conferences, they will guide themselves by this Policy. In the event that material information is disclosed selectively, such information will be announced broadly via news release as soon as reasonably possible. The Disclosure Committee will determine which presentations are appropriate for posting on the website.
K. RESPONDING TO MARKET RUMOURS
It is the Corporation's practice not to comment on market rumours or speculation, particularly where it is clear that the Corporation is not the source of the market rumour. If a stock exchange or a securities regulator requests the Corporation to make a statement in response to a market rumour, the Disclosure Committee will consider the matter and determine the nature and content of any Corporation response.
The Disclosure Committee will also recommend an appropriate course of action where the Corporation or an employee of the Corporation is the apparent source of the rumour.
L. COMMUNICATION WITH FINANCIAL ANALYSTS AND INVESTORS
Pacgen recognizes that meetings with analysts and investors are an important element of its investor relations program. Authorized Pacgen spokespersons will meet with analysts and investors on an individual or group basis as needed and will initiate contact or respond to analyst and investor calls in a timely, consistent and accurate fashion in accordance with this Policy.
Pacgen will not provide confidential, proprietary or material non-public information in communications with financial analysts or investors. The Corporation will only disclose factual information.
Pacgen will not discriminate among recipients of information. The Corporation will neither confirm nor attempt to influence a financial analyst's opinions or conclusions. Pacgen will provide the same information that has been provided to financial analysts to individual investors when requested.
Pacgen will not review financial analysts' reports or models but may confirm or correct publicly released historical information contained in analysts' reports.
The Investor Relations Department will assist authorized spokespersons to prepare for meetings with financial analysts and investors. If material non-public information is inadvertently disclosed at such a meeting, Pacgen will take immediate action to achieve broad public dissemination of the information.
M. FORWARD-LOOKING INFORMATION
Other than normal required disclosure, Pacgen will not provide forecasts of future earnings or other financial or operating results. Pacgen may provide sufficient forward-looking information to the investing public to enable reasoned evaluations of the Corporation and its future performance prospects provided that it is not undisclosed material information and it has been prepared or reviewed by the Disclosure Committee. Such information will be consistent with and complementary to information that has been otherwise provided via timely disclosure documents such as annual reports, news releases, interim reports, etc.
A forward-looking statement made in the Corporation's written documents will be identified as such and accompanied with meaningful cautionary language that warns investors that there is a risk that the statement could change materially. In the case of oral forward-looking statements, the statement will be identified as such and, if the cautionary language is not included in a previously released, readily available written document, it will immediately accompany the statement.
N. PACGEN WEBSITE
Pacgen has an Internet website that contains an investor information section. Documents that will be made available on the website include the annual report, quarterly reports, management proxy circular, investor fact sheets and news releases. The Investor Relations Department is responsible for ensuring that the information in the investor section of the website is up-to-date. News releases will be posted on the website as soon as possible after they are released to the wire service. Other documents and presentations will be placed on the web site as soon as possible after they are available.
O. MONITORING DEVELOPMENTS
The Disclosure Committee will appoint a person or persons (which may include outside counsel) to keep abreast of developments in securities law affecting disclosure practices and to monitor the disclosure practices of Pacgen’s competitors. Such person(s) will advise the Disclosure Committee periodically and promptly in the event of any major development in the law or such practices.
P. DISCLOSURE RECORD
The Corporation will maintain a historical record, extending back at least six years, of all disclosure documents prepared by the Corporation, including continuous disclosure documents, news releases and transcripts or tape recordings of conference calls.
Q. COMMUNICATION AND ENFORCEMENT
This Policy extends to all employees of the Corporation, its subsidiaries, its Board and authorized spokespersons. New directors, officers and employees will be provided with a copy of this Policy and will be educated about its importance. It will also be brought to the attention of all employees whenever significant changes are made.
Any employee who violates this Policy may face disciplinary action up to and including termination of his or her employment with the Corporation without notice. The violation of this Policy may also violate certain securities laws. If it appears that an employee may have violated such securities laws, the Corporation may refer the matter to the appropriate regulatory authorities, which could lead to penalties, fines or imprisonment.