TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
CORPORATE GOVERNANCE CHARTER
This Corporate Governance Charter (the “Charter”) has been adopted by the Board of Directors of the Company (the “Board”) to:
• outline the manner in which its constitutional powers and responsibilities will be exercised and discharged; and
• outline the core principles of corporate governance to which the Company ascribes.
The Board places great importance on the governance of the Company and this Charter reflects the Board’s position. The Board intends that the Company should adopt and comply with best practice principles and all applicable laws, including the requirements of the Canada Business Corporations Act (the “CBCA”) and policies of the Canadian Securities Exchange (or such other stock exchange as the Company securities may be listed and posted for trading) (the “Exchange”), to address corporate governance issues. The Board is of the opinion that the development and implementation of best practice corporate governance is a performance enhancement opportunity, rather than just a compliance issue.
1. THE BOARD OF DIRECTORS
The Board of the Company Limited is ultimately responsible for the oversight and review of management, administration and the overall governance of the Company and its strategic direction.
• the protection of shareholders’ interests by seeking to ensure that the Company’s strategic direction provides value for its shareholders;
• establishing goals for management and monitoring the achievement of those goals;
• engaging and replacing the Chief Executive Officer;
• authorising policies and overseeing the strategic implementation of these policies; and
• seeking to ensure that the Company’s internal control and reporting procedures are adequate, effective and ethical and that the Company’s strategic direction provides value for its shareholders.
This is an active, not a passive responsibility and the Board’s role is to seek to ensure that in good times as well as in difficult times, management is capably executing its responsibilities. To this end, the Board’s policy is that it must regularly monitor the effectiveness of management policies and decisions, including the execution of its strategies.
The Board oversees the implementation and operation of a risk management system. In addition to fulfilling its obligations to generate rewards for shareholders who invest their capital in the Company, the Board recognises that the Company has responsibilities to its customers, employees and suppliers and to the welfare of the communities in which the Company operates. In carrying out its responsibilities and powers as set out in this Charter, the Board will at all times recognise its ultimate responsibility to:
• maintain good corporate governance standards;
• act honestly, fairly and diligently;
• seek to prevent bribery by persons associated with the Company and to foster a culture in which bribery is never acceptable;
• act in accordance with laws and regulations;
• avoid or manage conflicts of interest;
• promote the Company as a good corporate citizen; and
• achieve and maintain community respect.
Non-executive directors should use all reasonable endeavours to satisfy themselves that the Company’s transactions are conducted in accordance with the law and the highest standards of propriety.
2. BOARD COMPOSITION
It is intended that the composition of the Board of the Company be determined using the following principles:
• the Board shall comprise at least 3 directors;
• the Board should comprise a majority of independent and/or non-executive directors;
• recognising that the composition of the Board is subject to shareholder approval, the Board considers that it should comprise directors with an appropriate range and mix of skills, experience, expertise and diversity that will enable the Board to effectively function;
• the positions of Chairman and Chief Executive Officer are required to be held by separate persons;
• the position of Chairman of the Board is always to be filled by a non-executive director. This does not prevent another director chairing all or a part of a meeting in the absence of the Chairman; and
• the Chairman is the official spokesperson for the Board, unless the Board determines otherwise.
It is the Board’s intention that there are a sufficient number of non-executive directors to:
• bring an “independent” view to the Board’s deliberations;
• help the Board (and the Chairman) to provide the Company with effective leadership and to seek to ensure that the Company is competently run in its own best interests and consequently in the best interests of all stakeholders; and
• foster the continuing effectiveness of the Chief Executive Officer and management.
3. BOARD INDEPENDENCE
At any given point, at least two of the directors of the Corporation will be independent. The Board recognises that various principles and factors are relevant in determining independence, but considers that true independence is a matter of judgement in the particular circumstances and will be determined by the Board with due recognition of the guidelines set out below.
A non-executive director will be considered to be independent where the director:
• is not a substantial shareholder of the Company or an officer of or otherwise associated directly or indirectly with a substantial shareholder of the Company;
• has not within the last 3 years been employed in an executive capacity by the Company or an affiliate of the Company or been a director after ceasing to hold such employment;
• has not within the last 3 years been a principal or employee of a material professional adviser or a material consultant to the Company or an affiliate of the Company;
• is not a material supplier or customer of the Company or an affiliate of the Company or an officer of or otherwise associated directly or indirectly with a material supplier or customer;
• has no material contractual relationship with the Company or an affiliate of the Company other than as a director of the Company; and
• is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company.
A director who is also an executive of the Company will not be considered to be independent. In determining independence, the Board will consider “materiality” on an on-going basis, having regard to the need to continually re-assess corporate governance practices in the light of the changing circumstances facing the Company. As such, the Board chooses not to take a prescriptive approach to independence, but to consider the true independence of each director, on a case by case basis, by applying the following guiding principles;
• relevant accounting standards generally indicate that an interest of more than 10% of the relevant base will prima facie be material and an interest of less than 5% of the relevant base will prima facie not be material. Interests of between 5% and 10% of the relevant base may be material, depending on the circumstances. In the context of each situation the Board determines the appropriate base to apply (for example, revenue, equity or expenses); and
• overriding the quantitative assessment is the qualitative assessment. Specifically, the Board considers whether there are any factors or considerations which may mean that the director’s interest, business or relationship could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company.
The Board reviews the independence of each director on an on-going basis, in light of interests disclosed to the Board.
4. ROLE OF THE BOARD
The Board has ultimate responsibility to set strategic direction and policy regarding the business and affairs of the Company and its controlled entities for the benefit of the shareholders and other stakeholders of the Company. The Board is accountable to shareholders for the performance of the Company.
4.1 Key responsibilities
In particular, the following are regarded as the key responsibilities and functions of the Board and may be considered with the benefit of recommendations from Board committees:
4.1.1 Senior appointments and succession planning
• the appointment, the terms of the appointment, delegation of authority to, review of performance of and removal of the Chief Executive Officer;
• succession planning for the Chief Executive Officer and his/her direct reports;
• the appointment, review of performance of and, where appropriate, the removal of the Chief Financial Officer;
• the appointment, the terms of the appointment and review of performance and, where appropriate, the removal, of other executive directors;
• the appointment, review of performance and, where appropriate, the removal of, the Corporate Secretary; and
• ratification of the terms of appointment of senior management – i.e. the Chief Executive Officer’s direct reports.
4.1.2 Board and senior management
• ratification of the organisation chart for senior management;
• ratification of evaluation and reward of senior management (including ratification of remuneration and incentive policies);
• seeking to ensure effective executive and Board succession planning;
• assessment of the organisation’s and Board’s performance;
• requiring that there is continuing education and information provided to directors regarding:
o the Company’s various businesses; and
o the role of the Board and its functions and obligations; and
• other corporate governance issues.
4.1.3 Business Strategy
• approval of budgets and the strategic plan;
• evaluating the performance of the Company against strategies and business plans in order to:
o monitor the performance of functions delegated to management; and
o assess the suitability of the Company’s overall strategies, business plans and resource allocation;
• approval of the capital and operating expenditure budget and any alterations to it;
• approval of significant mergers, acquisitions and divestitures of members of the Company; and
• approval of expenditure and/or commitments that are in excess of budget or the CEO’s delegation.
4.1.4 Relations with members
• oversight of relations with members by monitoring communications to members and the Exchange, including monitoring:
o arrangements for the annual general meeting and other members’ meetings (if any);
o matters relating to reports as required by law; and
o disclosures made under the Exchange’s continuous disclosure requirements.
4.1.5 Financial matters
• approval of annual and interim accounts and directors’ reports;
• approval of accounting policies;
• approval of the internal and external audit plan;
• approval of major borrowing or giving of security over assets; and
• acceptance of audit reports including management letters.
• approval of donations and sponsorships above approved limits.
5. DAY TO DAY OPERATIONS AND CHEQUE SIGNING AUTHORITY
The Board does not manage the day-to-day operations of the Company. This is delegated to management through the Chief Executive Officer; however, the Board shall approve no resolution that permits cheques of the Company to be authorized for issuance by fewer than two authorized signatories of the Company.
6. BOARD RENEWAL
All directors (except the Chief Executive Officer) are required to submit themselves for re-election at regular intervals and at least every three years.
Board renewal is important and is promoted to enhance the overall performance of the Board and the Company. Reappointment is not automatic. When recommending a director for re-election, the Board will balance its composition, skills and competences with the tenure, performance, skills and competence of the incumbent director. Tenure is a consideration after ten years of office.
7. NEW APPOINTMENTS
The Board as a whole sets and reviews the criteria for appointment of new directors having regard to the composition of the Board.
8. REVIEW OF BOARD PERFORMANCE
Every 12 months, the Board conducts a formal review of its performance, policies and practices.
The review includes:
• examination of the effectiveness and composition of the Board, including the required mix of skills, experience, expertise and diversity which the non-executive directors should bring to the Board for it to function competently and efficiently;
• review of the Company’s strategic direction and objectives;
• assessment of whether corporate governance practices are appropriate; and
• assessment of whether the expectations of differing stakeholders have been met.
As part of this process, the Chairman:
• meets at least annually with the senior executive team to discuss with them their views of the Board’s performance and level of involvement;
• meets at least annually with the other non-executive directors without executive directors or senior management present; and
• provides feedback to each individual director in relation to his or her contributions and performance, as appropriate.
Informal reviews of the Board’s performance are conducted as necessary. In addition, any director may suggest that the Board conduct a formal review earlier than the 12-month timeframe which generally applies.
9. BOARD REVIEW OF CHIEF EXECUTIVE OFFICER AND MANAGEMENT
The Board is responsible for establishing performance criteria applicable to the Chief Executive Officer. The Board formally conducts a performance review of the Chief Executive Officer at least annually.
All employment, consulting or other compensation arrangements between the Company (including its subsidiaries) and any director or senior officer of the Company shall be considered and approved by non-executive directors.
10. CONFLICTS AND DECLARATIONS OF INTEREST
The CBCA imposes obligations on directors in relation to disclosure of interests. Specifically, Section 120 of the CBCA provides that:
120(1) A director or officer of a corporation who
(a) is a party to a material contract or material transaction or proposed material contract or proposed material transaction 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 material transaction or proposed material contract or proposed material transaction 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 the director’s or officer’s interest.
(2) Subject to subsection (3), the disclosure required by subsection (1) shall be made, in the case of a director,
(a) at the meeting at which a proposed contract or transaction is first considered,
(b) if the director was not interested in a proposed contract or transaction at the time of the meeting referred to in clause (a), at the first meeting after the director becomes so interested,
(c) if the director becomes interested after a contract or transaction is made, at the first meeting after the director becomes so interested, or
(d) if a person who is interested in a contract or transaction later becomes a director, at the first meeting after the director becomes a director.
(3) Where a proposed contract or transaction is dealt with by resolution under section 117 instead of at a meeting, the disclosure that would otherwise be required to be made in accordance with subsection (2)(a) or (b) shall be made
(a) forthwith on receipt of the resolution, or
(b) if the director was not interested in the proposed contract or transaction at the time of receipt of the resolution, at the first meeting after the director becomes so interested.
(4) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,
(a) forthwith after the officer becomes aware that the contract or transaction or proposed contract or transaction is to be considered or has been considered at a meeting of directors,
(b) if the officer becomes interested after a contract or transaction is made, forthwith after the officer becomes so interested, or
(c) if a person who is interested in a contract or transaction later becomes an officer, forthwith after the officer becomes an officer.
(5) If a material contract or material transaction or proposed material contract or proposed material transaction 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 the director’s or officer’s interest forthwith after the director or officer becomes aware of the contract or transaction or proposed contract transaction.
(6) A director referred to in subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contract or transaction is
(a) an arrangement by way of security for money lent to or obligations undertaken by the director, or by a body corporate in which the director has an interest, for the benefit of the corporation or an affiliate,
(b) a contract or transaction relating primarily to the director’s remuneration as a director, officer, employee or agent of the corporation or an affiliate,
(c) a contract or transaction for indemnity or insurance under section 124, or
(d) a contract or transaction with an affiliate.
(7) 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 or transaction made between the corporation and a person in which the director has a material interest or of which the director is a director or officer if
(a) the notice declares the director is a director or officer of or has a material interest in the person and is to be regarded as interested in any contract or transaction made or to be made by the corporation with that person, and states the nature and extent of the director’s interest,
(b) at the time disclosure would otherwise be required under subsection (2), (3), (4) or (5), as the case may be, the extent of the director’s 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), (4) or (5), as the case may be.
(8) If a material contract or material transaction 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 the director or officer has a material interest,
(a) the contract or transaction is neither void nor voidable by reason only of that relationship, or by reason only that a director with an interest in the contract or transaction 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 or transaction, 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 or transaction 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 the director’s or officer’s interest in accordance with subsection (2), (3), (4), (5) or (7), as the case may be, and the contract or transaction was approved by the directors or the shareholders and it was reasonable and fair to the corporation at the time it was approved.
As a matter of practice, therefore, the Board has developed the following protocol:
• directors and officers must disclose all interests and other directorships and shall ensure proper public dissemination is made of the material interest of any officer or director of the Company (including its subsidiaries) in any material agreement or proposed agreement between the Company (including its subsidiaries) and that director or officer;
• directors may choose to submit standing notices of interest to all Board members, or must disclose their interest in a matter being considered by the Board at that time;
• directors must warn of any potential conflict with duty to another company and ensure any change in circumstances is advised;
• the Board will continually consider the application of the relevant provisions of the CBCA and, if the Chairman determines that a director’s interest in a matter is sufficiently material, or would result in a conflict of interest arising:
o the director will not receive information on the subject of interest that would normally have been distributed to directors in advance of a Board meeting, but will be advised that certain materials have been excluded;
o the director cannot be present at the meeting when the matter is considered unless the other directors resolve that the director in question can stay; and
o each material agreement or proposed agreement between the Company (including its subsidiaries) and any director or officer of the Company will be considered and approved by a majority of the disinterested directors; and
o directors must obtain the Company’s consent before disclosing company information to another company or third party.
Each director has a duty to avoid conflicts of interest, and, as noted above, must notify the Board of any potential conflicts he or she may have, including any which may arise as a result of his or her duty to another company.
Each director has a duty to maintain the confidentiality of information he or she learns by virtue of his or her position as director. Disclosure of such information by the director should only be made after consultation with the Chairman or the Board.
The Chief Executive Officer does not participate in deliberations of the Board or a Board Committee when matters could affect his position.
11. DELEGATION TO MANAGEMENT
The Board has retained ultimate responsibility for the strategic direction and control of the Company. The Board delegates management of the Company’s resources to the senior management team under the leadership of the Chief Executive Officer, to deliver the strategic direction and goals determined by the Board. A key function of the Board is to monitor the performance of senior management in this function.
The Chief Executive Officer conducts a formal review each year assessing the performance of senior management and reports back to the Board.
12. DELEGATION TO COMMITTEES
The Board from time-to-time establishes committees to streamline the discharge of its responsibilities. For each standing committee, the Board adopts a formal charter setting out the matters relevant to the composition, role, function, responsibilities and administration of such committees.
The Board has, at the date of this Charter, established the:
• Audit Committee; and
• Compensation Committee.
Committee Charters are reviewed annually. It is intended that each standing committee has a nonexecutive director as Chairman of the committee, and that only non-executive directors can be members of the committees.
As a matter of principle, committee members have access to the appropriate external and professional advice needed to assist the committee in fulfilling its role.
The Board also delegates specific functions to ad hoc committees on an “as needs” basis. The terms of reference and powers delegated to any such committee will be agreed by the Board at the time the committee is established as set out in Board resolutions.
13. DIRECTORS’ AND EXECUTIVE MANAGEMENT’S SHAREHOLDINGS AND REMUNERATION
All directors’ shareholdings are required to be disclosed publicly. The disclosed interests in shares held by directors and their associated entities are the same as their economic interest.
Directors and senior management are prohibited from hedging their shareholdings.
Executive directors and senior management participating in the Company’s Stock Option Plan are prohibited from hedging their options. Executives and directors may not trade (including hedging) their shares prior to vesting of shares or options.
Executives and directors shall adhere to the Company’s blackout policies which provide that the Company’s shares may not be bought or sold during certain periods as dictated by the Board
Non-executive directors do not participate in the Company’s incentive schemes, other than participating in the Company’s Stock Option Plan. Non-executive directors are not entitled to any retirement or termination benefits from the Company.
14. BOARD OPERATIONAL STANDARDS AND POLICIES
The Company currently has (or will be adopting) a number of Board operational standards and policies including the following:
• ensuring all directors have access to the Corporate Secretary;
• ability for directors to obtain independent advice with the prior approval of the Chairman;
• maintenance of an appropriate level of Directors and Officers insurance cover for the Company’s directors and other officers;
• informal induction and training programs for new directors, refresher programs for existing directors and educational sessions for directors on contemporary issues of relevance to the Company and its operations (including site visits);
• Continuous Disclosure Policy detailing the procedures for assessing whether information must be disclosed to the Exchange under the Listing Rules and who is authorised to make announcements to the Exchange; and
• Blackout Policy which outlines the prohibition against insider trading and specifies the closed periods during which directors, executives and employees must not deal in the Company securities;
• policy for notification of holdings of company securities by directors which details the requirements and obligations of directors to notify the securities regulatory authorities of their holdings of the Company securities.
15. ETHICAL STANDARDS AND CODE OF CONDUCT
As a matter of Board policy, directors and management are expected to conduct themselves with the highest ethical standards. All directors, executives and staff are expected to behave ethically and professionally at all times and thereby protect and promote the reputation and performance of the Company.
All the Company directors, executives and staff are expected to:
• act honestly and fairly in all their business dealings;
• prevent bribery by persons associated with the Company, to foster a culture in which bribery is never acceptable and commit to zero tolerance towards bribery;
• comply with the law and respect the local communities wherever the Company operates;
• be accurate, diligent and professional in all activities and in preparing all documents; and
• work together to promote a safe, ethical and professional workplace.
The Board is responsible for establishing a Code of Conduct and for compliance and evaluating the effectiveness thereof.
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
AUDIT COMMITTEE CHARTER
1. Establishment of Audit Committee: The directors of the Corporation (the “Directors”) have established an audit committee (the “Audit Committee”).
2. Membership: The membership of the Audit Committee shall be as follows:
(a) The Audit Committee shall be composed of three members or such greater number as the Directors may from time to time determine.
(b) The majority of the members of the Audit Committee shall be independent Directors and not less than one-quarter (1/4) of the members shall be Canadian residents.
(c) Each member of the Audit Committee shall be financially literate. For purposes hereof “financially literate” has the meaning set forth under MI 52-110 (as amended from time to time) and currently means the ability to read and understand a set of financial statements that present the breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can be reasonably be expected to be raised by the Corporation’s financial statements.
(d) Members shall be appointed annually from among members of the Directors. A member of the Audit Committee shall ipso facto cease to be a member of the Audit Committee upon ceasing to be a Director of the Corporation.
3. Oversight Responsibility: The external auditor is ultimately accountable to the Directors and the Audit Committee, as representatives of the shareholders and such shareholders representatives have the ultimate authority and responsibility to select, evaluate, and where appropriate, replace the external auditors (or to nominate the external auditors to be proposed for shareholder approval in any management information circular and proxy statement). The external auditor shall report directly to the Audit Committee and shall have the responsibilities as set forth herein.
4. Mandate: The Audit Committee shall have responsibility for overseeing:
(a) the accounting and financial reporting processes of the Corporation; and
(b) audits of the financial statements of the Corporation.
In addition to any other duties assigned to the Audit Committee by the Directors, from time to time, the role of the Audit Committee shall include meeting with the external auditor and the senior financial management of the Corporation to review all financial statements of the Corporation which require approval by the Directors, including year end audited financial statements. Specifically, the Audit Committee shall have authority and responsibility for:
(a) reviewing the Corporation’s financial statements, MD&A and earnings press releases before the information is publicly disclosed;
(b) overseeing the work of the external auditors engaged for purpose of preparing or issuing, an audit report or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the external auditors regarding financial reporting;
(c) reviewing annually and recommending to the Directors:
(i) the external auditors to be nominated for purposes of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation; and
(ii) the compensation of the external auditors.
(d) discussing with the external auditor:
(i) the scope of the audit, in particular their view of the quality of the Corporation’s accounting principles as applied in the financials in terms of disclosure quality and evaluation methods, inclusive of the clarity of the Corporation’s financial disclosure and reporting, degree of conservatism or aggressiveness of the Corporation’s accounting principles and underlying estimates and other significant decisions made by management in preparing the financial disclosure and reviewed by the auditors;
(ii) significant changes in the Corporation’s accounting principles, practices or policies; and
(iii) new developments in accounting principles, reporting matters or industry practices which may materially affect the Corporation.
(e) reviewing with the external auditor and the Corporation’s senior financial management the results of the annual audit regarding:
(i) the financial statements;
(ii) MD&A and related financial disclosure contained in continuous disclosure documents;
(iii) significant changes, if any, to the initial audit plan;
(iv) accounting and reporting decisions relating to significant current year events and transactions;
(v) the management letter, if any, outlining the auditor’s findings and recommendations, together with management’s response, with respect to internal controls and accounting procedures; and
(vi) any other matters relating to the conduct of the audit, including such other matters which should be communicated to the Audit Committee under Canadian generally accepted auditing standards.
(f) reviewing and discussing with the Corporation’s senior financial management and, if requested by the Audit Committee, the external auditor:
(i) the interim financial statements;
(ii) the interim MD&A; and
(iii) any other material matters relating to the interim financial statements, including, inter alia, any significant adjustments, management judgments or estimates, new or amended accounting policies.
(g) receipt from external auditor of a formal written statement delineating all relationships between the auditor and the Corporation and considering whether the advisory services performed by the external auditor during the course of the year have impacted their independence, and also ensuring that no relationship or services between ) the external auditor and the Corporation is in existence which may affect the objectivity and independence of the auditor or recommending appropriate action to ensure the independence of the external auditor.
(h) pre-approval of all non-audit services to be provided to the Corporation or its subsidiary entities by the external auditors or the external auditors of the Corporation’s subsidiary entities, unless such pre-approval is otherwise appropriately delegated or if appropriate specific policies and procedures for the engagement of non-audit services have been adopted by the Audit committee.
(i) reviewing and discussing with the external auditors and senior financial management: the adequacy of procedures for review of disclosure of financial information extracted or derived from financial statements, other than the disclosure referred to in subparagraph (a) above.
(j) establishing and reviewing of procedures for:
(i) receipt, retention and treatment of complaints received by the Corporation and its subsidiary entities regarding internal accounting controls, or auditing matters;
(ii) anonymous submission by employees of the Corporation and its subsidiary entities of concerns regarding questionable accounting or auditing matters; and
(iii) hiring policies regarding employees and former employees of present and former external auditors of the Corporation and its subsidiary entities.
(k) reviewing with the external auditor, the adequacy of management’s internal control over financial reporting relating to financial information and management information systems and inquiring of management and the external auditor about significant risks and exposures to the Corporation that may have a material adverse impact on the Corporation’s financial statements, and inquiring of the external auditor as to the efforts of management to mitigate such risks and exposures.
(1) reviewing and/or considering that, with regard to the previous fiscal year,
• management has reviewed the Corporation’s audited financial statements with the Audit Committee, including a discussion of the quality of the accounting principles as applied and significant judgments affecting the financial statements;
• the external auditors and the Audit Committee have discussed the external auditors’ judgments of the quality of the accounting principles applied and the type of judgments made with respect to the Corporation’s financial statements;
• the Audit Committee, on its own (without management or the external auditors present), has considered and discussed all the information disclosed to the Audit Committee from the Corporation’s management and the external auditor; and
• in reliance on review and discussions conducted with senior financial management and the external auditors, the Audit Committee believes that the Corporation’s financial statements are fairly presented in conformity with Canadian Generally Accepted Accounting Principles (GAAP) in all material respects and that the financial statements fairly reflect the financial condition of the Corporation.
5. Administrative Matters: The following general provisions shall have application to the Audit Committee:
(a) A quorum of the Audit Committee shall be the attendance of a majority of the members thereof, provided that at least one member in attendance is a Canadian resident. No business may be transacted by the Audit Committee except at a meeting of its members at which a quorum of the Audit Committee is present or by a resolution in writing signed by all the members of the Audit Committee.
(b) Any member of the Audit Committee may be removed or replaced at any time by resolution of the Directors of the Corporation. If and whenever a vacancy shall exist on the Audit Committee, the remaining members may exercise all its powers so long as a quorum remains. Subject to the foregoing, each member of the Audit Committee shall hold such office until the close of the annual meeting of shareholders next following the date of appointment as a member of the Audit Committee or until a successor is duly appointed.
(c) The Audit Committee may invite such Directors, directors, officers and employees of the Corporation or affiliates thereof as it may see fit from time to time to attend at meetings of the Audit Committee and to assist thereat in the discussion of matters being considered by the Audit Committee. The external auditors are to appear before the Audit Committee when requested to do so by the Audit Committee.
(d) The time and place for the Audit Committee meetings, the calling and the procedure at such meetings shall be determined by the Audit Committee having regard to the Articles and By-Laws of the Corporation.
(e) The Chair shall preside at all meetings of the Audit Committee and shall have a second and deciding vote in the event of a tie. In the absence of the Chair, the other members of the Audit Committee shall appoint a representative amongst them to act as Chair for that particular meeting.
(f) Notice of meetings of the Audit Committee may be given to the external auditors and shall be given in respect of meetings relating to the annual audited financial statements. The external auditors have the right to appear before and to be heard at any meeting of the Audit Committee. Upon the request of the external auditors, the Chair of the Audit Committee shall convene a meeting of the Audit Committee to consider any matters which the external auditors believe should be brought to the attention of the Directors or shareholders of the Corporation.
(g) The Audit Committee shall report to the Directors of the Corporation on such matters and questions relating to the financial position of the Corporation or any affiliates of the Corporation as the Directors of the Corporation may from time to time refer to the Audit Committee.
(h) The members of the Audit Committee shall, for the purpose of performing their duties, have the right to inspect all the books and records of the Corporation and its affiliates, and to discuss such books and records that are in any way related to the financial position of the Corporation with the Directors, directors, officers, employees and external auditors of the Corporation and its affiliates.
(i) Minutes of the Audit Committee meetings shall be recorded and maintained. The Chair of the Audit Committee will report to the Directors on the activities of the Audit Committee and/or the minutes of the Audit Committee meetings will be promptly circulated to the Directors or otherwise made available at the next meeting of Directors.
(j) The Audit Committee shall have the authority to:
(i) engage independent counsel and other advisors or consultants as it determines necessary to carry out its duties;
(ii) set and pay the compensation for any advisors employed by the Audit Committee; and
(iii) communicate directly with the internal (if any) and external auditors and qualified reserves evaluators or auditors.
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
CODE OF BUSINESS CONDUCT AND ETHICS
Code of Business Conduct and Ethics (“Ethics Code”) Applicable to the Directors, Officers, Employees and Consultants (collectively, “Employees”) of Tree of Knowledge International Corp., its Subsidiaries and Affiliates (collectively, “TOKI”)
1. Statement of Purpose
This Ethics Code extends to all Employees of TOKI. Employees include full time, part-time and temporary Employees and full and part time contractors and consultants of TOKI.
Employees will be provided with a copy of this Ethics Code and will be required to acknowledge, through their signature, their understanding and acceptance of compliance as a term of employment. Any Employee who violates this Ethics Code may face disciplinary action up to and including termination of their employment for just cause with TOKI without notice or payment in lieu of notice. Each Employee is expected to review this Ethics Code annually to satisfy themselves that they have adhered to the stated principles and standards.
In carrying out their duties, Employees of TOKI are expected to act honestly and in good faith with a view to the best interests of TOKI and its stakeholders. To this end, TOKI has committed to maintain a high standard of Corporate Governance that incorporates the principles of good conduct and high ethical behavior. Accordingly, the following principles for business conduct and ethical behavior have been adopted.
2. Compliance with Laws, Rules and Regulations
Employees will conduct the business of TOKI in compliance with laws, rules, regulations and other legal requirements applicable wherever TOKI is carrying on business.
No Employee shall directly or indirectly give, offer or agree to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official in contravention of the Corruption of Foreign Public Officials Act.
Employees must comply with all laws prohibiting improper payments to Canadian, U.S. and non-Canadian or U.S. officials, including the U.S. Foreign Corrupt Practices Act of 1977.
These laws can be complicated and result in serious and adverse enforcement proceedings against TOKI if they are violated. If any employee is in doubt about whether a particular practice may violate such laws, such employee should contact the Chief Financial Officer.
Employees shall adhere to TOKI’s Policy on Trading and Confidentiality of Insider Information with respect to buying or selling shares of TOKI.
3. Conflicts of Interest
Employees shall conduct their business affairs in a manner that ensures their private or personal interests do not interfere with the interests of TOKI including conflicts relative to personal, financial, or other gain. Should conflicts arise, or be perceived to arise, disclosure shall be made in an appropriate manner and the disclosing Employee shall not participate in any decision or action in which there is a conflict. It is not always easy to determine whether a conflict of interest exists, so any potential conflict of interest must be reported immediately to senior management, a supervisor or a member of human resources.
4. Fair Dealing
The conduct required by fair dealing requires honesty in fact and the observance of reasonable commercial standards of fair dealing. Employees should endeavor to deal fairly with TOKI’s stakeholders. No Employee should do anything that could be interpreted as being dishonest or outside reasonable commercial standards of fair dealing.
Employees shall maintain the confidentiality of information entrusted to them except in circumstances where disclosure is authorized or legally mandated. Confidential information shall not be used for personal gain. Confidential information includes all non-public information that may be of use to competitors or harmful to TOKI or its stakeholder or its customers or Employees if disclosed. It includes information deemed to be proprietary to TOKI, whether patented or not. It includes information that suppliers and customers have entrusted to us. Employees who leave TOKI retain the ongoing obligation to keep such information confidential. Employees of TOKI shall adhere to TOKI’s Corporate Disclosure Policy.
6. Protection and Proper Use of TOKI’s Assets
Employees shall ensure that TOKI’s assets are protected and properly used for legitimate business purposes. Any suspected incidents of fraud or theft should be immediately reported to that person’s supervisor or as detailed in paragraph 11 of this Ethics Code.
7. Corporate Opportunities
Employees owe a duty to advance TOKI’s legitimate interests whenever an opportunity arises and are prohibited from:
(a) taking personal advantage of opportunities discovered through the use of TOKI’s assets, property, information or their position that would be contrary to TOKI’s interests;
(b) using or deploying TOKI’s assets, property, or information or their position for personal gain; and
(c) competing with TOKI.
Employees shall protect TOKI’s assets in a manner that could be reasonably expected from them, and TOKI’s managers are specifically responsible for establishing and maintaining appropriate internal controls to safeguard TOKI’s assets against loss from unauthorized or improper use or disposition.
8. Reporting Integrity
No false, artificial or misleading entries in the books, records and documents of TOKI shall be knowingly made for any reason and no Employee shall engage in any arrangement that results in such prohibited acts. All periodic reports filed by TOKI shall be in accordance with TOKI’s Corporate Disclosure Policy and will include full, fair, accurate, timely and understandable disclosure.
9. Encouraging the Reporting of Any Illegal or Unethical Behavior
Employees are encouraged to promote ethical behavior in things they do and to ensure a healthy, ethical workplace. Violations of laws, rules, regulations or this Ethics Code are to be reported on the basis set forth in paragraph 11 of this Ethics Code.
Management shall not retaliate against any Employee who reports, in good faith, on any matter which is in contravention of this Ethics Code.
TOKI’s directors will not knowingly allow any retaliation by officers or management in respect of reports made in good faith by any Employee.
Employees whose conduct or actions have failed to meet, or whose conduct or actions may not meet the principles and standards set out in this Ethics Code must immediately report the failure to our Legal Counsel. If the reporting contains a request for a waiver of such conduct, that request shall be filed with our Legal Counsel for review and recommendation by that Committee. The Legal Counsel shall examine the circumstances related to the failure and the requested waiver and make an appropriate recommendation to the Board of Directors. TOKI will promptly disclose waivers of this Ethics Code as required by law or stock exchange regulations.
11. How to Raise a Concern
If an Employee becomes aware of a breach or possible breach of applicable laws, rules or regulations or of this Ethics Code, that Employee is expected to report such.
The report should be made to their immediate supervisor, if appropriate. If the Employee is of the view that it would be more appropriate under the circumstances to take the breach or possible breach of this Ethics Code or other laws, rules or regulations to higher levels, due to either the nature of the breach or, if earlier reports through normal channels have not been acted upon, then that Employee has the right to directly contact the Legal Counsel to report suspected illegal or improper activities within TOKI. Employees need not identify themselves.
To have messages delivered directly to the Legal Counsel, Employees can use any of the following methods:
1. Email – firstname.lastname@example.org to send a message directly to the Legal Counsel. To use this system with complete anonymity, employees should use a non-identifiable email address, such as Hotmail.com or Yahoo.com.
2. VoiceMail – Call (403) 571-8015 to leave a message with the Legal Counsel.
This Ethics Code does not address all of the situations you may encounter. There may be occasions where you are confronted by circumstances not covered by policy or procedure and where you must make a judgment as to the appropriate course of action. In those circumstances you are encouraged to use common sense, and to contact senior management for guidance.
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
COMPENSATION COMMITTEE – TERMS OF REFERENCE
1. Establishment of Compensation Committee: The board of directors hereby establishes a committee to be called the Compensation Committee.
2. Membership: The Compensation Committee shall be composed of three members or such greater number as the board of directors may from time to time determine, of whom at least one-half will be resident Canadians and each of whom will be outside and unrelated to the Corporation. Members shall be appointed annually from among the members of the board of directors. The following persons shall be initially appointed to the Compensation Committee, with the Chairman to be as designated
3. Mandate: The Compensation Committee shall, in addition to any other duties and responsibilities specifically delegated to it by the board of directors, generally assume responsibility for assisting the board of directors in respect of compensation policies for the Corporation and to review and recommend compensation strategies for the Corporation and proposals relating to compensation for officers, directors and employees and to assess the performance of the officers of the Corporation in fulfilling their responsibilities and meeting corporate objectives. In discharging its responsibilities, the Compensation Committee will report and, where appropriate, make recommendations to the board of Poplar Point in respect of the matters identified in this mandate. Specifically, the Compensation Committee shall have authority and responsibility for:
(a) establishing and recommending remuneration strategies and benefit plan strategies for the Corporation, with particular emphasis on the officers and directors of the Corporation and key consultants to the Corporation;
(b) assessing the performance of the Chief Executive Officer and, through the Chief Executive Officer, that of the other officers of the Corporation;
(c) reviewing and assisting, where appropriate, in management succession planning and professional development planning for the officers of the Corporation;
(d) establishing and recommending the compensation levels of the Chief Executive Officer and the other officers of the Corporation;
(e) establishing policy and recommending compensation for directors;
(f) reviewing the overall parameters of the Corporation’s stock option program and recommending option allocations for officers, directors and other employees of the Corporation;
(g) retaining advisors and/or consultants, as considered necessary, to assist the Committee in the discharge of its responsibilities;
(h) periodically reviewing the Corporation’s benefit plans to ensure the appropriateness thereof; and
(i) preparing and reviewing, as required, public or regulatory disclosure respecting compensation and the basis on which performance is measured.
4. Administrative Matters: The following general provisions shall have application to the Compensation Committee:
(1) Two members of the Compensation Committee shall constitute a quorum. No business may be transacted by the Compensation Committee except at a meeting of its members at which a quorum of the Compensation Committee is present or by a resolution in writing signed by all the members of the Compensation Committee.
(2) Any member of the Compensation Committee may be removed or replaced at any time by the board of directors and shall cease to be a member of the Compensation Committee as soon as such member ceases to be a director. The board of directors may fill vacancies on the Compensation Committee by appointment from among its members. If and whenever a vacancy shall exist on the Compensation Committee, the remaining members may exercise all its powers so long as a quorum remains. Subject to the foregoing, each member of the Compensation Committee shall hold such office until the close of the annual meeting of shareholders next following the date of appointment as a member of the Compensation Committee.
(3) The Compensation Committee may invite such officers, directors and employees of the Corporation as it may see fit from time to time to attend at meetings of the Compensation Committee and assist thereat in the discussion and consideration of the matters being considered by the Compensation Committee.
(4) The time at which and place where the meetings of the Compensation Committee shall be held and the calling of meetings and the procedure in all respects at such meetings shall be determined by the Compensation Committee, unless otherwise determined by the by-laws of the Corporation or by resolution of the board of directors.
(5) Unless otherwise designated by the board of directors, the members of the Compensation Committee shall elect a Chairman from among the members and the Chairman shall preside at all meetings of the Compensation Committee. The Chairman of the Compensation Committee shall have a second and deciding vote in the event of a tie. In the absence of the Chairman, the members of the Compensation Committee shall appoint one of their members to act as Chairman.
(6) Minutes of the Compensation Committee will be recorded and maintained and circulated to directors who are not members of the Compensation Committee or otherwise made available at a subsequent meeting of the board of directors.
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
I acknowledge that I have read and understand the policies of Tree of Knowledge International Corp. attached to this document, and I agree to comply with such policies and practices as a condition of my employment. Specifically, I acknowledge that I have received and read the following policies by marking in the allotted space in the chart below, and I agree to abide by the terms of those policies as a condition of my employment.
|Tree of Knowledge International Corp.||Please mark “√” if have received and read the policy|
|Policy on Trading and Confidentiality of Insider Information|
|Corporate Disclosure Policy|
|Code of Business Conduct and Ethics|
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
CORPORATE DISCLOSURE POLICY
Statement of policy
Tree of Knowledge International Corp. (“TOKI”) is committed to a policy of full, true and plain public disclosure of all material information in a timely manner, in order to keep security holders and the investing public informed about the company’s operations.
This policy extends to the conduct of directors, officers, spokespersons and other employees of TOKI, and all methods that TOKI uses to communicate to the public, such as written statements made in the company’s annual and quarterly reports, news and earnings releases, letters to shareholders, speeches by senior management and information contained in the company’s internet web site. It also covers oral statements made in group and individual meetings with financial analysts and investors, telephone calls with financial analysts and investors, interviews with the media and press conferences.
This policy statement outlines TOKI’s approach toward the determination and dissemination of material information, the circumstances under which the confidentiality of information will be maintained, and restrictions on employee trading. It also provides guidelines in order to achieve consistent disclosure practices across the company.
The Disclosure Committee will oversee the company’s corporate disclosure practices and ensure adherence to this policy. It will make recommendations to the Chief Executive Officer on disclosure policy and will keep the company’s recent public statements under review to determine whether any updating or correcting is appropriate. The Disclosure Committee will review this disclosure policy at least annually and up-date it as necessary, and will meet as necessary.
The Disclosure Committee consists of the Chief Financial Officer, Corporate Secretary, General Counsel, and Investor Relations Manager, or their designates.
The TOKI spokespersons for the company are the Chief Executive Officer and Chief Financial Officer. These spokespersons may, from time to time, designate others to speak on behalf of the company or to respond to specific inquiries from the investment community or the media.
Employees other than the authorized spokespersons are not to 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 manager 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 investor relations for advice.
In securities law, the term “material information” means any information relating to the company that significantly affects or would reasonably be expected to result in a significant change in the market price or value of any of the company’s securities.
Securities law and securities commission and stock exchange policies require immediate disclosure of all material information through news media.
In certain circumstances, company officials may withhold information from public disclosure for legitimate business purposes. The information, if it constitutes material information, must still be filed with Canadian securities regulators on a confidential basis and is reviewed by the company every 10 days. TOKI will only withhold information consistent with the circumstances outlined in Canadian securities laws and in such cases will take appropriate precautions to keep the information confidential.
It is expected that executives will keep the Disclosure Committee fully apprised of all significant company developments in order for the Disclosure Committee to determine their materiality and the appropriateness of and timing for public release of the information, or whether the information should remain confidential.
Timing of and procedure for disclosure
All TOKI news releases including releases of material information will be managed by the investor relations department of the company and by no other department.
The investor relations department will ensure that the company’s securities counsel first reviews all news releases where the subject matter has been determined to be material, in order to ensure that the company’s disclosure is in compliance with applicable securities laws and stock exchange requirements.
Once a decision is made that information is material and will not be the subject of a confidential filing, it must be disclosed immediately and broadly disseminated to the public. TOKI uses a Canadian Securities Exchange recognized wire service to disseminate news releases. In addition, news releases will be faxed or e-mailed to parties who have expressed a desire to receive such releases directly.
The investor relations manager will fax a copy of the release to the market surveillance group of the company’s lead stock exchange, at least one-half hour before the planned news release time. In accordance with the stock exchanges’ existing practices, the Exchange will advise TOKI and may provide direction regarding the timing of the release during or after market hours.
After public dissemination, all of the company’s disclosures will be monitored to ensure accurate media reporting and take corrective measures, if necessary.
When necessary, TOKI will file a material change report with securities regulators.
Responding to market rumours
It is the company’s practice not to comment on market rumours or speculation, particularly where it is clear that the company is not the source of the market rumour. If a stock exchange or a securities regulator requests the company to make a statement in response to a market rumour, the Disclosure Committee will consider the matter and make a recommendation to the Chief Executive Officer as to the nature and content of any company response.
The Disclosure Committee will also recommend an appropriate course of action where the company or an employee of the company is the apparent source of the rumour.
Communications with financial analysts and investors
One of the most important functions of TOKI’s investor relations group is to act as spokesperson in providing financial analysts and investors with information about the company.
Investor relations will also be responsible for preparing senior management for meetings with financial analysts and investors. Whenever possible, the investor relations manager will attend the meetings. If material non-public information is inadvertently disclosed at such a meeting, TOKI will take immediate action to achieve broad public dissemination of the information. Presentation materials from such meetings will be made available on the TOKI Internet web site as soon as possible after the presentation is made. Interested investors who lack access to the Internet will be mailed a copy of the presentation material upon request.
If a TOKI employee other than the investor relations manager holds a one-on-one meeting with an outside party such as a financial analyst or investor, the investor relations manager will ascertain whether any new material information was disclosed during the discussion. If so, that information will be publicly disclosed immediately.
TOKI will not provide confidential, proprietary or material non-public information in communications with financial analysts or investors. The company will only disclose information that does not impair its own effectiveness. Any information disclosed will be factual and not speculative.
TOKI will not discriminate among recipients of information. Under no circumstances will TOKI ban a financial analyst from access to information, nor will the company confirm or attempt to influence a financial analyst’s opinions or conclusions. TOKI will provide the same information that has been provided to financial analysts to individual investors when requested.
TOKI will not review financial analysts’ reports or models but it may confirm or correct publicly released historical information contained in analysts’ reports.
In the month of an earnings release, prior to the release, the TOKI spokespersons will not provide guidance or forward-looking information or comments on matters potentially impacting earnings outlooks.
TOKI will not re-circulate financial analysts’ reports outside the company or place them on its internet web site. Financial analysts’ reports on the company may be provided periodically to the board of directors and to senior management.
TOKI will not provide forecasts of future earnings or other financial results. TOKI may provide sufficient forward-looking information to the investing public to enable reasoned evaluations of the company and its future performance prospects provided that it is not undisclosed material information, it does not deal with future earnings, and it has been prepared or reviewed by investor relations. Such information could include forecasts respecting volumes, expenses, capital expenditures, new projects, fiscal terms and market, commercial and technical considerations. 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 company’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.
Earnings outlook information may be discussed in the necessary course of business with directors, officers and selected employees on a need-to-know basis. However, individuals involved need to be aware of the sensitivity of the information, the requirement to keep it confidential and the requirement not to trade in TOKI securities with knowledge of it until the information has been publicly disclosed.
Company management will refrain from speaking to consolidated earnings outlooks or plans with the general employee population. Discussions with employees about the corporate plan and stewardship targets should be focused on operating components, e.g., volumes and costs, which are in the group’s direct control. In general group reviews, TOKI earnings discussions should be limited to historic results already in the public domain.
Internet web site
TOKI intends to create an internet web site that contains an investor information section. Documents of interest to investors that are available in paper copy will be made available on the web site. These include the annual report, quarterly reports, annual information form, management proxy circular, the information for investors fact book and news releases. Investor relations is responsible for ensuring that the information in the investor section of the web site is up-to-date. News releases will be mounted on the web site 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.
Restrictions on employee trading
Securities laws provide that employees with access to material information are prohibited from trading in TOKI securities until the information has been fully disclosed and a reasonable period of time has passed for the information to be disseminated to the public.
Company policy as set out in our corporate ethics and in the conflict-of-interest guidelines provides additional restrictions on trading in securities and options on company securities by employees and members of their families.
From time to time, TOKI advises its directors, and employees in certain positions (“insiders”) not to trade in TOKI securities. These advisories are called “trading bans”. Trading bans occur in connection with the directors’ pending consideration of the financial statements of the company (the unaudited financial statements for each quarter) and in connection with pending events that constitute material information about the business affairs of the company.
The authority for imposing a trading ban rests with the chief executive officer or his delegate.
The corporate secretary’s office will notify the insiders of the imposition of the ban and its duration, if known. They will also be notified when the ban is lifted, if the duration was not stated at the outset. (The appropriate time to lift the ban will usually be at the close of business of the 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 provide that employees who are not sure whether they should be trading in securities at any particular time may contact the corporate secretary for clearance to do so.
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
INSIDER TRADING POLICY
Canadian and U.S. Securities laws impose severe penalties on persons who trade shares or other securities (including options or debentures) of publicly-traded companies (“securities”) if they possess non-public material (“inside”) information concerning that company. This Insider Trading Policy (the “Policy”) outlines corporate policies regarding the prohibition against trading securities based on inside information adopted by Tree of Knowledge International Corp. and its subsidiaries (collectively, “TOKI” or the “Company”).
The term inside information means material information about TOKI or another organization that has not been disclosed or released to the general public. Material Information is any information that an investor would consider important to a decision to buy, hold or sell securities of TOKI. In other words, it is information (negative or positive) that could reasonably be expected to affect the price of the securities of TOKI.
Some examples of material information might include:
(a) quarterly or annual financial results;
(b) significant partnerships or affiliations with big-name influencers;
(c) projections of future earnings or losses;
(d) news of a pending or proposed merger, joint venture or acquisition;
(e) news of a disposal of significant assets or a subsidiary;
(f) impending bankruptcy or financial liquidity problems;
(g) changes in dividend or distribution policy;
(h) significant events affecting revenue;
(i) significant pricing changes or agreements that may affect pricing;
(j) new equity or debt financings;
(k) significant litigation exposure due to actual or threatened litigation; and
(l) changes in senior management.
Either positive or negative information may be material.
3. Application of Policy
This Policy applies to all TOKI employees, officers and directors, as well as its consultants and contractors, as well as to the family members of all of the foregoing. This group of people are sometimes referred to in this Policy as “insiders”.
4. Policy and Penalties
4.1 Policy Statement
It is the policy of TOKI that the following practices or activities are not permitted:
(a) Trading on Inside Information
No director, officer, employee, consultant or contractor engaged by TOKI is permitted to buy or sell securities of TOKI (or options, including the exercise thereof) if that person is in the possession of inside information concerning TOKI. No director, officer, employee, consultant or contractor engaged by TOKI is permitted to buy or sell securities of any other organization (including investee companies, joint venture partners, customers, vendors and suppliers of the Company) based on inside information, or otherwise misuse that inside information, if it was obtained in the course of activities carried out on behalf of TOKI.
No insider shall disclose (“tip”) inside information to any other person (including family members), except on a need to know basis. Further, no insider shall recommend or encourage another person to buy or sell securities of TOKI while in possession of inside information.
(c) No Short Selling or Derivatives
No director, officer, employee, consultant or contractor engaged by TOKI is permitted to sell “short” or purchase a “call option” on any of TOKI’s securities or purchase a “put option” where they do not own the underlying security, or trade any derivative or synthetic instrument based on TOKI shares.
4.2 Potential Criminal and Civil Liability and / or Disciplinary Action
Securities commissions and stock exchanges in Canada and the United States use sophisticated electronic surveillance techniques to detect insider trading. Insiders are not only liable for insider trading on their own behalf but may also be liable for trading on inside information done by a person (commonly referred to as a “tippee”) to whom they have disclosed inside information even if the person disclosing the inside information did not profit from the trading.
The penalties under applicable laws range from fines, disgorgement of any profits to imprisonment. In addition to those penalties prescribed by law or regulation, insiders who violate this Policy may be subject to disciplinary action by TOKI, which may include termination of employment or restrictions on future participation in incentive plans offered by TOKI.
4.3 Trading Guidelines
(a) No Trade Periods for Officers, Directors and Designated Employees
To ensure compliance with this Policy and applicable securities laws, all directors, officers and employees, consultants or contractors engaged by TOKI and having access to internal financial statements or other information (“inside information”) shall not buy or sell TOKI’s securities during the following periods:
(i) Quarterly/Annual Periods: In respect of every fiscal quarter or year of TOKI, commencing on the date that such persons first have access to inside information relating to that quarter or year (in any event not later than the date quarterly or annual materials are distributed to the Board for review) and ending at the end of the second trading day following public disclosure of that quarterly or annual information;
(ii) Designated Blackout Periods: At any time, TOKI may establish (and shall communicate to affected persons) trading blackout periods applicable to any of its directors, officers and employees, consultants or contractors; and
(iii) When in possession: Beginning on the date the person becomes aware of or comes into possession of inside information and ending at the end of the second trading day following public disclosure of that inside information.
(b) Pre-Clearance of Trades
Before initiating any trade in TOKI’s securities (including an exercise of options), each officer, director and designated employee shall notify the Chief Financial Officer and a designated director of his or her intention to trade, the details of the proposed trade and receive approval therefore prior to executing such trade. The current Director designee is Mr. ● until such time it is changed by the Chair of the Board.
5. Individual Responsibility
This Policy only sets out a general framework within which a director, officer, employee, consultant or contractor engaged by TOKI may purchase and sell TOKI securities. Each individual has the ultimate responsibility for complying with the relevant and applicable laws in Canada and the United States. If there are any concerns regarding a particular situation, additional guidance should be sought either from TOKI management or its legal counsel.
ACKNOWLEDGMENT CONCERNING INSIDER TRADING POLICY
By my signature below, I acknowledge that I have read and I understand the Insider Trading Policy of Tree of Knowledge International Corp. and that I agree to abide by its provisions.
TREE OF KNOWLEDGE INTERNATIONAL CORP. (the “CORPORATION”)
INTRODUCTION TO WHISTLEBLOWER POLICY
The Corporation’s Whistleblower Policy (the “Policy”) follows. While the full text of the Policy should always be consulted, the basics of the Policy and mechanics of the whistleblower program may be summarized as follows:
If you believe that you have witnessed operating, accounting or auditing practices that you feel are inappropriate or wrong and which are material you should report your concerns in sufficient detail to enable the recipient of the complaint to investigate. When reporting your concerns you may identify yourself or, if you prefer, report anonymously. Your letter should be marked “Personal and Confidential” and addressed to our Legal Counsel as follows:
1250, 639-5th Ave. S.W.
or your immediate supervisor.
The mail received will only be opened by the person to whom it is addressed.
All concerns that are reported must provide sufficient details to ensure that the Audit Committee can assess whether or not there exists reasonable grounds to initiate a review.
Upon receiving a complaint, the recipient will report to and forward your complaint to the Chairman of the Audit Committee. The Chairman of the Audit Committee will review your concerns and oversee and provide direction on the investigation of your concerns and resolution of the matter. Depending on the nature of your concerns, the Chairman may conduct the investigation utilizing internal management and staff or may choose to obtain external assistance. At the conclusion of the investigation, if the Audit Committee determines that a violation of the Policy has occurred, appropriate corrective measures will be taken to address the violation with the accused party commensurate with the severity of the offence. Steps will also be taken to prevent further violations of the Policy. The Corporation may also report the matter to the appropriate outside agency, to ensure compliance with all laws and regulations.
The Corporation is committed to achieving and maintaining the highest standards of corporate governance. The Policy may be amended from time to time to ensure compliance with changing and developing laws and to incorporate improvements to the whistleblower program as we learn from our own experience and the experience of others.
WHISTLEBLOWER POLICY OF TREE OF KNOWLEDGE INTERNATIONAL CORP.
As a public company, the integrity of the financial and other information of Tree of Knowledge International Corp. (the “Corporation”) is vital. The Corporation’s financial and other information guides the decisions of the Board of Directors of the Corporation (the “Board of Directors”), and is relied upon by our shareholders and the financial markets. For these reasons, the Corporation must maintain a workplace where the Corporation can receive, retain and address all reports and complaints received by the Corporation concerning (i) accounting, internal accounting controls, or auditing matters, and the confidential submission by employees and consultants of the Corporation of concerns regarding questionable accounting or auditing matters (collectively “Accounting/Audit Matters Concerns”) and (ii) the potential violation of any law relating to fraud against shareholders, including without limitation the reporting of fraudulent financial or other information to our shareholders, the government or the financial markets (a “Potential Violation”). The purpose of this Whistleblower Policy is to provide the Corporation’s employees and consultants with a mechanism by which they can raise these concerns free of any discrimination, retaliation or harassment. This policy applies to all consultants and employees, including senior officers of the Corporation.
The Corporation recognizes the value of transparency and accountability in its administrative and management practices, and therefore also supports the making of disclosures to the Corporation, or, if applicable, to law enforcement agencies that reveal “Grave Misconduct”, i.e., conduct which constitutes or could result in a violation of law by the corporation or in a substantial mismanagement of corporation resources and if proven constitutes a criminal offence or reasonable grounds for dismissal of the person engaging in such conduct.
Therefore, it is the policy of the Corporation to require employees and consultants, when based on their reasonable belief they have Accounting/Audit Matters Concerns, or believe that a Potential Violation or Grave Misconduct has occurred or is occurring, to report those concerns to Corporation’s management (on an anonymous basis, if employees or consultants so desire) or to raise those concerns by informing their immediate supervisor or the Corporation’s legal counsel, on an anonymous basis, as described below. All reports will be taken seriously and will be promptly investigated. The specific action taken in any particular case depends on the nature and gravity of the conduct or circumstances reported, and the quality of the information provided. Where the reported Accounting/Audit Matters Concerns are found to be accurate, and where Potential Violations or Grave Misconduct has been found to have occurred or be occurring, those matters will be corrected and, if appropriate, the persons responsible will be disciplined.
In addition, the Corporation is committed to providing a work environment in which employees and consultants, when based on their reasonable belief they have Accounting/Audit Matters Concerns, or believe that a Potential Violation or Grave Misconduct has occurred or is occurring, can raise those concerns free of discrimination, retaliation, threats or harassment. Accordingly, the Corporation strictly prohibits discrimination, retaliation, threats or harassment of any kind against any employee or consultant who, based on the employee’s or consultant’s reasonable belief that such conduct or practices have occurred or are occurring, reports that information to the Corporation in accordance with this Whistleblower Policy or to a regulatory or law enforcement agency. In addition, discrimination, retaliation, threats and harassment are strictly prohibited against such employees or consultants who file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the Corporation) related to an alleged violation of current, proposed and future securities rules, regulations or legislation in Canada or any other applicable jurisdiction, or any provision of law relating to fraud against shareholders.
REPORTING AND INVESTIGATION
If you have Accounting/Audit Matters Concerns, or believe that a Potential Violation or Grave Misconduct has occurred or is occurring, you must immediately report those facts to your immediate supervisor or to the Corporation’s legal counsel either identifying yourself or on an anonymous basis. If you identify yourself, you may then be requested to document your report in writing. You may notify Legal Counsel by sending an anonymous letter to TingleMerrett LLP, Attn: Scott Reeves, marked “Private and Confidential” 1250, 639-5th Ave, S.W. Calgary, Alberta T2P 0M9. Upon receiving such reports or complaints, the immediate supervisor or the Legal Counsel shall promptly forward the same to the Chairman of the Audit Committee who will oversee and provide direction on the investigation and resolution of the matter.
If you later believe that you have been subject to discrimination, retaliation, threats or harassment for having made a report under this Policy, you must immediately report those facts to your immediate supervisor or the General Counsel. If, for any reason, you do not feel comfortable discussing the matter with your immediate supervisor or the Legal Counsel, you should bring the matter to the attention of the supervisor of your immediate supervisor, and if you are not comfortable with discussing the matter with any of those individuals, you should bring the matter to the attention of a member of the Audit Committee. It is imperative that you bring the matter to the Corporation’s attention promptly so that any concern of discrimination, retaliation, threats or harassment can be investigated and addressed promptly and appropriately.
All reports and complaints under this Policy will be promptly and thoroughly investigated, and all information disclosed during the course of the investigation will remain confidential, except as necessary to conduct the investigation and take any remedial action, in accordance with applicable law. All employees, consultants and supervisors have a duty to cooperate in the investigation of reports of Accounting/Audit Matters, Concerns, Potential Violations or Grave Misconduct, or of discrimination, retaliation, threats or harassment resulting from the reporting or investigation of such matters. In addition, an employee or consultant shall be subject to disciplinary action, possibly including the termination of their employment or contract, if the employee or consultant fails to cooperate in an investigation, or deliberately provides false information during an investigation. If, at the conclusion of its investigation, the Corporation determines that a violation of this Policy has occurred, the Corporation will take effective remedial action commensurate with the severity of the offense. This action may include disciplinary action against the accused party, up to and including termination. Reasonable and necessary steps will also be taken to prevent any further violations of policy.
DISCRIMINATION, RETALIATION OR HARASSMENT
The Corporation strictly prohibits any discrimination, retaliation, threats or harassment against any person who reports or who participates in an investigation of reports or complaints about Accounting/Audit Matters Concerns, a Potential Violation or Grave Misconduct.
Any complaint that any managers, supervisors, employees or consultants are involved in discrimination, retaliation or harassment in contravention of the Policy shall be promptly and thoroughly investigated in accordance with the Corporation’s investigation procedures. If a complaint of discrimination, retaliation or harassment is substantiated, appropriate disciplinary action, up to and including discharge, will be taken.
All documents related to reporting, investigation and enforcement of and under this Policy, or of the discrimination, retaliation or harassment of an employee that made a report or complaint hereunder, shall be kept in accordance with the Corporation’s record retention policy and applicable law.
ADDITIONAL ENFORCEMENT INFORMATION
In addition to the Corporation’s internal complaint procedure, employees and consultants should also be aware that certain federal, provincial, state and local law enforcement agencies may be authorized to review Accounting/Auditing Matters Concerns, Potential Violations or Grave Misconduct. The Corporation’s policies and practices have been developed as a guide to our legal and ethical responsibilities to achieve and maintain the highest business standards. Conduct that violates the Corporation’s policies will be viewed as unacceptable under the terms of employment at the Corporation. Certain violations of the Corporation’s policies and practices could even subject the Corporation and any individual employees and consultants involved to civil and criminal penalties. Before issues or behavior can rise to that level, employees and consultants are encouraged to report to the Corporation Accounting/Audit Matters Concerns, suspicion of Potential Violations or Grave Misconduct, or discrimination, retaliation, threats or harassment related to such reports. Nothing in this Policy is intended to prevent an employee or consultant from reporting information to the appropriate agency when the employee or consultant has reasonable cause to believe that the violation of a federal, provincial, state or local statute or regulation has occurred.
The Audit Committee or the Board of Directors of the Corporation can modify this Policy unilaterally at any time without notice. Modification may be necessary, among other reasons, to maintain compliance with federal, provincial or local regulations and/or accommodate organizational changes within the Corporation.
Please sign the acknowledgment form and return it to the Chief Financial Officer. This will let the Corporation know that you have received the Whistleblower Policy and are aware of the Corporation’s commitment to a work environment free of discrimination, retaliation, threats or harassment for reporting of Accounting/Auditing Matters Concerns, Potential Violations or Grave Misconduct, as well as your obligations to report such information.
ACKNOWLEDGMENT AND AGREEMENT REGARDING
THE WHISTLEBLOWER POLICY
This is to acknowledge that I have received a copy of the Corporation’s Whistleblower Policy. I understand that, as a public corporation, the integrity of the financial information and other information of the Corporation is vital. I further understand that the Corporation is committed to a work environment free of discrimination, retaliation, threats or harassment for employees and consultants who have raised concerns regarding Accounting/Auditing Matters Concerns, or concerns regarding Potential Violations or Grave Misconduct and that the Corporation specifically prohibits discrimination, retaliation, threats or harassment whenever an employee or consultant makes a good faith report regarding such concerns. Accordingly, I specifically agree that to the extent I have concerns that I reasonably believe to be related to Accounting/Auditing Matters Concerns, Potential Violations or Grave Misconduct, or which is otherwise in violation of the Corporation’s policies, I will immediately report such conduct in accordance with the Corporation’s Whistleblower Policy.
I understand and agree that to the extent I do not use the procedures outlined in the Whistleblower Policy, the Corporation and its officers and directors shall have the right to presume and rely on the fact that I have no knowledge of or concern regarding any such information or conduct.