Code of Ethics
REGULUS RESOURCES INC.
CODE OF ETHICS FOR SENIOR MANAGEMENT
(Effective October 1, 2010)
This Code of Ethics applies to the Senior Management of Regulus Resources Inc. or its subsidiaries (collectively, “Regulus”).
The Board of Directors (the “Board”) of Regulus (the “Corporation”) has the responsibility for the overall stewardship of the conduct of the business of the Corporation and its subsidiaries and the activities of management of the Corporation, which is responsible for the day-to-day conduct of the business.
Employees of Regulus are required to exercise good judgment and common sense in the execution of the Corporation’s business. Every employee is personally responsible for ensuring that the Corporation’s day-to-day business activities are conducted in a fair, honest and ethical manner. While everyone is responsible for ensuring an ethical workplace, senior management must set the “tone at the top,” which includes assuming additional responsibilities for fostering the proper environment, and encouraging ethical practices. If in doubt, employees are expected to err on the side of caution to maintain the Corporation’s high level of integrity, social responsibility and ethics.
Conflicts of Interest
Regulus and its employees are expected to avoid situations where their respective personal interests could conflict or could appear to conflict with their employment duties and responsibilities.It is imperative that you avoid any investment, interest, association or other relationship that interferes, might interfere, or might be thought to interfere, with your independent exercise of judgment in the Corporation’s best interest and otherwise with your professional obligations to the Corporation.
Any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest must be disclosed as required by the Business Corporations Act (Alberta) and any other applicable legislation, and without restricting the generality of the foregoing, as soon as possible to the Chairman of the Board of Directors and the Chairman of the Audit Committee.
Relationship with Auditors
No member of management shall, directly or indirectly, make or cause to be made a materially false or misleading statement, or omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which such statements were made, not misleading to an accountant in connection with:
- any audit or examination of the financial statements of the Corporation; or
- the preparation or filing of any document or report required to be filed with any securities or other regulatory authority having jurisdiction in the matter.
No member of management, or any other person acting under the direction thereof, shall directly or indirectly take any action to fraudulently influence, coerce, manipulate, or mislead any independent public, certified public or chartered accountant engaged in the performance of an audit or review of the financial statements of the Corporation that are required to be filed with any securities or other regulatory authority having jurisdiction in the matter, if that person knew or should have known that such action could, if successful, result in rendering such financial statements materially misleading.
Disclosure in Reports
The recording and reporting of information, including financial information, must be done honestly and accurately. Members of management must exercise the highest standard of care in preparing reports and documents that the Corporation files with any securities or other regulatory authority having jurisdiction in the matter, and other public communications, or in ensuring that such reports, documents and other public communications are prepared, in accordance with the guidelines set forth below.
- Compliance with applicable generally accepted accounting principles (“GAAP”) is required at all times. However, technical compliance with GAAP may not be sufficient and, to the extent that technical compliance with GAAP would render financial information that the Corporation reports misleading, additional disclosure will be required.
- Compliance with the Corporation’s system of internal accounting controls and procedures is required at all times, and no action designed to circumvent such controls and procedures will be tolerated.
- Compliance with the Corporation’s disclosure controls and procedures is required at all times, and no action designed to circumvent such controls and procedures will be tolerated.
The Corporation must comply with all applicable laws and governmental rules and regulations, which require certain books and records to be kept with respect to transactions undertaken by the Corporation. Members of management are responsible for establishing and managing procedures to ensure these requirements are met. In addition, management are responsible for establishing and m anaging the Corporation’s financial reporting systems. In particular, management is responsible for ensuring that:
- books, records and accounts are kept which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Corporation’s assets, liabilities, revenues and expenses;
- all business transactions are properly authorized;
- transactions are recorded as necessary to permit the preparation of financial statements in conformity with generally accepted accounting principles (or any other applicable criteria);
- transactions are recorded as necessary to maintain accountability for assets;
- access to assets is permitted only in accordance with proper authorization;
- the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;
- all records fairly and accurately reflect the transactions or occurrences to which they relate;
- the Corporation’s accounting records do not contain any false or intentionally misleading entries;
- all transactions are supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period; and
- no information is concealed from the internal auditors, the independent auditors, the audit committee or the full board of directors.
No members of management shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify or misclassify any transaction, book, record or account described in this section.
Compliance with Laws
Financial Supervisors are expected to comply with both the letter and spirit of all applicable laws and governmental rules and regulations, and will be responsible for establishing and maintaining procedures to:
- educate members of the accounting department about applicable laws and governmental rules and regulations;
- monitor compliance of the accounting department with applicable laws and governmental rules and regulations; and
- identify any possible violations of applicable laws and governmental rules and regulations and report to the audit committee and correct in a timely and effective manner any violations of applicable laws or governmental rules and regulations.
Management must promote the highest standards of ethical and honest conduct in the accounting department. You will be responsible for establishing and maintaining procedures that:
- encourage and reward professional integrity;
- eliminate any pressure or incentive to achieve specific financial results by altering any records or other entries, or wilfully misapplying accounting policies or generally accepted accounting practices, or by entering into transactions that are designed to circumvent accounting controls or otherwise disguise the true nature of the transaction; and
- encourage members of the accounting department to report deviations from accounting policies and practices.
Public Availability of this Code
This Code will be made publicly available by the Corporation through one of the following means: (1) the text of this Code and any amendment thereto may be posted on the Corporation’s website, or (2) the Corporation may provide, without charge, a copy of this Code to any person upon request.
Observance of this Code
Each member of management is personally accountable for learning; endorsing, promoting and applying this Code to their own conduct and work. Management will hold employees accountable for their conduct and be accountable for their own conduct. Management will be asked to review this Code annually during the objective setting process and make a written or electronic declaration that they understand their individual responsibilities.
Actions that violate this Code will result in disciplinary action, up to and including termination of employment and, if appropriate, possible legal action. Directing or pressuring others to violate a provision of this Code, failure to properly report Code violations, or retaliation against an employee for reporting a concern or violation with respect to this Code will also result in the same disciplinary action.
Members of management must report any violations of this Code promptly to the Chairman of the Audit Committee.
Health & Safety
(Effective October 1, 2010)
Regulus and its subsidiaries are committed to proactive and sustainable health, safety, environmental management, labour and community best practice policies. Policy statements in each specific area are contained in this document.
In respect of the above the Company will:
- Build on international best practices for exploration and mining,
- Implement environmental and social requirements as laid down by the Peru and Argentina authorities,
- Implement labour, health and safety best practices,
- As a minimum comply with national laws and regulations, and operate in compliance with IFC’s Performance Standards and Environmental, Health and Safety Guidelines,
- Establish and implement appropriate communication, consultation and information disclosure plan and procedures taking all stakeholders into consideration.
The Company will ensure that wherever possible and necessary it will assist in the development of sustainable local policies and procedures that will minimize the impact of exploration and mining on the natural landscape and local communities, and which will ensure a safe and healthy environment for the communities and natural resources, including wildlife, that may reside in the areas where exploration and possible subsequent mining may occur.
The above principles will also apply in respect of the approach to health and safety for all employees and those individuals, communities and companies that may become involved with or affected by the planned exploration programme, and all subsequent evaluation and mining programmes.
Appropriate community liaison, disclosure and interaction will be undertaken at all stages by Regulus. The level of consultation and disclosure will increase with the increased scale of activities.
Please refer to the full text of the HSELC plan in file below.
HSELC Policy, Policy Guidelines and Due-Diligence Checklist v1.0 (January, 2012)
Business Conduct Policy
(Effective October 1, 2010)
All activities by Regulus Resources Inc. (“Regulus”) and its employees must be lawful.
Lawfulness, however, is merely a starting point. It is equally important that all activities be conducted in an ethical manner. Ethical conduct means conduct that is honest, fair and free from deception and impropriety. Employees and other representatives of Regulus must, at all times, act in accordance with a high standard of ethical behaviour and with constant regard for Regulus’ reputation. As discussed in the next several pages, these requirements apply to dealings with Regulus, fellow employees, shareholders, other businesses and the community at large.
Ultimately, each individual should test his or her own behaviour by asking: “Is there any reason why I would not want another person – Regulus, a co-worker, a business associate, and the government – to be fully aware of my conduct and motives?” If this question causes any discomfort the individual should reconsider his or her conduct.
Ethical Business Practices
For Regulus’ reputation in the business community to be maintained, all dealings on Regulus’ behalf must reflect high standards of ethical behaviour. In particular, the following specific principles must be observed:
- Compliance with Laws
Regulus must be aware of and comply with all relevant laws and regulations in all jurisdictions in which it conducts business. Individual employees have a duty to inform themselves of any laws relevant to their particular activities. Anyone with questions regarding legal issues should consult with the President and Chief Executive Officer, who will consult with our counsel.
- Integrity in Business Dealings
Employees must act with integrity in dealings with all persons inside and outside the Company, including government officials, customers, suppliers and members of the community. Employees must follow established standards in procurement, and must treat tenderers fairly and equally.
No person may give to outside companies or individuals, or accept from them, any material gift or extravagant entertainment, or any similar benefit. (A “material” gift is one of such value that it constitutes a personal enrichment for the recipient such that it could be a factor in influencing that person’s behaviour. Entertainment will be considered “extravagant” if it would appear excessive to an objective observer and would typically be of a value greater than US$500). Employees must properly record in Regulus’ accounts any amounts spent on gifts or entertainment.
- Questionable or Improper Payments
Where commissions, consultants’ fees, retainers and similar payments are required to be made and can be justified in the normal course of business, those payments must be clearly commensurate with the services performed and must be properly recorded in the accounts of Regulus. No other payments may be given or received. In particular, no employee may, in the context of his or her employment, receive any payment that is not for the direct and exclusive benefit of Regulus.
- Political Donations
All political contributions made on Regulus’ behalf will be made directly by Regulus’ President and Chief Executive Officer, provided that any amount greater than US$500 will be approved by the Board of Directors.
- Compliance with Accounting Policies
Employees must comply strictly with prescribed accounting policies, audit procedures and other such controls. All accounts must properly describe and accurately reflect the transactions recorded and all assets, liabilities, revenues and expenses must be properly recorded in the books of Regulus. No secret or unrecorded funds or other assets are to be established or maintained.
- Contract Workers
The Company considers that the compliance obligations arising out of this Policy apply not only to employees of the Company, but also to independent contract workers to the extent that they conduct activities on the Company’s behalf. The Company therefore expects all such contractor personnel to familiarize themselves with this Policy, and to comply with it, in the same manner as is expected of Regulus employees.
- Business Associates
The Company will make all reasonable efforts to promote the application of these ethical business practices by our third party suppliers.
Regulus worldwide growth has been accompanied by increased exposure to legal and ethical issues arising in international business activities.
- Compliance with Anti-Bribery Legislation
Regulus is subject to legislation in Canada that prohibits corrupt practices in dealing with foreign governments. The Canadian Corruption of Foreign Public Officials Act, make it an offence to make or offer a payment, gift or benefit to a foreign government official in order to induce favourable business treatment, such as obtaining or retaining business or some other advantage in the course of business. Violation of this legislation may result in substantial penalties to Regulus and to individuals.Regulus, as well as individual employees, must take all reasonable steps to ensure that the requirements of this legislation are strictly met. No payments, material gifts or other benefits are to be given, directly or indirectly, to foreign government officials, political parties or political candidates for the purpose of influencing government decisions in Regulus’s favour. Furthermore, no such payments are to be made to agents or other third parties in circumstances where it is likely that part or all of the payment will be passed on to a foreign government official, political party or political candidate. For the purpose of this paragraph, a material gift or benefit has a value in excess of US$500.
- Facilitation Payments
There are certain types of payments to foreign government officials that are allowed under both the Canadian, called “facilitation” or “facilitating” payments. These are small payments or tips that are accepted custom in certain foreign countries in the context of having routine administrative actions performed by government officials. Employees should be aware that such payments are permissible only under very limited circumstances and must be properly documented. As well, they must advise the Chief Financial Officer in advance of any anticipated payments and provide written request for reimbursement of any such payment. If there are any questions regarding the permissibility of any particular payment, advice should be sought from the President and Chief Executive Officer. Moreover, employees must ensure that any such payments are properly recorded in accordance with the Company’s accounting procedures.A copy of the Canadian foreign corrupt practices legislation is available from the President and Chief Executive Officer. Anyone with questions regarding these legal issues should consult the President and Chief Executive Officer.
- Work-related Conduct and Conflicts of Interest
Regulus employees must comply with the standards of ethical behaviour in all aspects of their employment. This includes their dealings with people outside the Company as well as their relationships with their fellow employees and with Regulus as their employer. In addition, Regulus expects that employees will act with loyalty to the Company at all times.
In particular, individuals must not:
- pursue personal gain or advantage from their employment activities;
- misuse Company resources, including computer systems;
- engage in insider trading;
- compromise the confidentiality of corporate information; and
- permit any actual or perceived conflict of interest between their personal interests and those of the Company. Employees must not enter into outside activities, including business interests or other employment, that might interfere with or be perceived to interfere with their performance at Regulus or otherwise compromise their duty of loyalty to Regulus.
- Personal Conduct
In general, Regulus does not wish to dictate the personal conduct of individual employees outside working hours. Nevertheless, it expects employees to act lawfully at all times and to conduct their personal affairs as good and responsible citizens, in such a manner that reflects well on Regulus.
Regulus recognizes that it must earn the loyalty that it expects from its employees. Regulus is committed to treating its employees ethically and fairly. In particular, Regulus strives to ensure the following:
- no discrimination on the basis of gender, physical or mental disability, age, marital status, sexual orientation, religious belief, race, colour, ancestry or place of origin;
- fair and competitive compensation;
- fairness in performance appraisals and job advancement;
- protection of employees from harassment; and
- confidentiality of employee records.
All employees, and particularly managers, must maintain and promote these principles in their hiring practices and in their relationships with other employees.
Health, Safety and Environment
Effectiveness in occupational health, safety and environmental standards is an essential part of achieving efficiency and profitability in the oil and gas business. Regulus will therefore work at continuous improvement in these areas and will be guided by the following principles:
- creating a safe work environment;
- minimizing the environmental impacts of its activities;
- building co-operative working relationships with local communities and governments in the Company’s areas of operation;
- reviewing and monitoring environmental and safety performance; and
- prompt and effective response to any environmental and safety concerns
Disclosure of Information
All corporate information is the property of Regulus. Corporate information includes trademarks, patents, software developments and applications, strategic and operational knowledge and financial information. It also includes any confidential information received by Regulus from third parties.
Employees are in a position of trust with respect to corporate information in the same manner as with any other corporate property. Employees must take care to protect the confidentiality of corporate information. In particular:
- employees must not use corporate information for personal gain;
- employees may not disclose corporate information other than for legitimate Regulus purposes and with appropriate safeguards, unless written approval is obtained from the appropriate manager;
- media and investor communications are to be handled by the President and Chief Executive Officer and Chief Financial Officer;
- employees must not disclose undisclosed corporate information in public speeches. Employees who give public speeches on behalf of Regulus must remit to the Company any payments or material gifts received.
Ensuring Compliance with this Policy
As part of its efforts to ensure compliance with this Policy, Regulus requires that each senior employee complete an annual Compliance Certificate certifying compliance with this Policy. Employees whose positions may include involvement with foreign operations may be asked to complete more frequent Compliance Certificates so as to ensure corporate compliance with anti-bribery legislation (see previous section entitled “International Business”). Completed certificates are to be returned directly to the President and Chief Executive Officer.Any proposed non-compliance such as a proposed material gift, must be pre-approved by the Board of Directors.
The Company demands that employees report any observed breaches of this Policy to the President and Chief Executive Officer.
An employee or consultant who violates this Policy may face disciplinary action up to and including termination of employment, in the case of an employee, and, in the case of a consultant, termination of the consulting contract with the Corporation. Violation of this Policy may also cause violation of certain laws. If it is discovered that laws have been violated, this matter may be referred to the appropriate regulatory authorities. Questions with respect to this Policy may be referred to the Corporation’s Secretary.