Effective June 2005, National Policy 58-201 – Corporate Governance Guidelines set out an amended series of guidelines for effective corporate governance. The guidelines address matters such as the constitution and independence of corporate boards, the function to be performed by boards and their committees and the effectiveness of their board members. National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI-58-101?) requires the disclosure by each listed corporation of its approach to corporate governance with reference to the guidelines, as it is recognized that the unique characteristics of individual corporations will result in varying degrees of compliance.
GPM METALS INSIDER TRADING AND BLACKOUT POLICY
This memorandum sets forth GPM Metals Inc.’s (the “Corporation”) policy on insider trading and trading blackouts in order to ensure the strict compliance by all insiders with the prohibition against insider trading.
All those with access to material confidential information are prohibited from using such information in trading in the Corporation’s securities until the information has been fully disclosed and a reasonable period of time has passed for the information to be disseminated. In general, the Corporation has stipulated that a minimum of two clear trading days be allowed after the release of all such disclosures, including after the release of financial statements as well as certain black-out periods noted below.
This prohibition applies not only to trading in the Corporation’s securities, but also to trading in other securities whose value may be affected by changes in the price of the Corporation’s securities.
If an employee becomes aware of undisclosed material information about another public Corporation, the employee may not trade in securities of that other Corporation.
Insider trading is strictly regulated by the corporate and securities laws in Canada, as well as The Toronto Stock Exchange.
All directors, seniors officers and major shareholders (over 10%) of the Corporation are insiders and must file an initial report with the applicable securities commissions and with all other securities regulatory authorities in Canada upon acquiring any securities in the Corporation or upon becoming an insider (whichever last occurs) and to report all trades made in the securities of the Corporation within ten days of the day any trade is made. Trades include a change in nature of the ownership of the securities (e.g. a disposition to a company controlled by the insider or a determination that the securities are to be held in trust for another person). A “senior officer” is defined as:
(a) a chair or vice-chair of the board of directors, the president, a vice-president, the secretary, the treasurer or the general manager of a company or any other individual who performs functions for an issuer similar to those normally performed by an individual occupying such office; and
(b) each of the five highest paid employees of an issuer, including any individual referred to in clause (a).
Each person that is obligated to file a report is responsible for filing his or her own report.
Any person or company that is in a “special relationship” with the Corporation is prohibited from trading on the basis of undisclosed material information concerning the affairs of the Corporation. A person or company considered to be in a “special relationship” includes the following:
(b) affiliates or associates of the Corporation which include, for example, the Corporation’s subsidiaries and all employees, their spouses and other relatives that live with the employee;
(c) a person or company proposing to make a take-over bid of the Corporation or to become a party to a reorganization, amalgamation or merger with the Corporation; and
(d) a person involved in the provision of business or professional services for the Corporation, including employees.
Securities laws also prohibit “tipping” which is defined as communicating non-public material information, other than in the necessary course of business, to another person. All employees must ensure that they do not divulge such non-public information to any unauthorized person, whether or not such person may trade on the information. If in doubt about the need to disclose, the matter should be discussed with the President of the Corporation.
Speculation In Securities
In order to ensure that perceptions of improper insider trading do not arise, insiders should not “speculate” in securities of the Corporation. For the purpose of this Policy, the word “speculate” means the purchase or sale of securities with the intention of reselling or buying back in a relatively short period of time in the expectation of a rise or fall in the market price of such securities. Speculating in such securities for a short term profit is distinguished from purchasing and selling securities as part of a long term investment program.
Insiders should not at any time sell securities of the Corporation short or buy or sell a call or put option in respect of securities of the Corporation or any of its affiliates.
Liability For Insider Trading
Liability is imposed by the Securities Act (Ontario) (the “Act“) on certain persons who, in connection with the purchase or sale of securities, make improper use of material information that has not been publicly disclosed.
The relevant provincial securities legislation provides that persons who are in a special relationship with the Corporation and purchase or sell securities of the Corporation with knowledge of material information which has not been generally disclosed may be liable for damages to the person on the other side of the trade. In addition, any such person who informs or tips a seller or a purchaser of securities of confidential material information may be liable for damages. The purchaser, vendor or informer is also liable to account to the Corporation for his or her gain. Under the Act, a person could also be fined up to the greater of $1,000,000 and three times any profit made and/or imprisoned for up to two years.
Please note that anyone who learns of material undisclosed information from any person in a special relationship with the Corporation is also considered to be in a special relationship with the Corporation.
What Is A Security?
The definition of “security” includes shares, options, subscriptions or other interests in or to a security and includes puts, calls, or other rights or obligations to purchase or sell securities, the market price of which varies materially with the market price of the securities of the Corporation.
A trading blackout prohibits trading of a security (as defined above and including, for greater certainty, the grant and/or exercise of stock options):
(a) before a scheduled material announcement is made;
(b) before an unscheduled material announcement is made; and
(c) for a specific period of time after a material announcement has been made.
Management will consider pending transactions to determine when to prohibit trading. In some cases, the prohibition on trading may occur as soon as discussions about a transaction begin. During blackout periods, the Corporation must also avoid discussions with analysts, private briefings and interviews to the maximum extent reasonable. An appropriate response (not involving disclosure of material and/or non-public information) should be developed ahead of meetings that cannot be avoided to handle questions about the information which is the subject of the blackout.
3. Pre-announcement Trading Blackout
(a) Scheduled material announcements
All directors, officers and employees are prohibited from trading securities of the Corporation, and stock options of the Corporation may not be granted, for a minimum of ten (10) trading days before the release of financial statements.
(b) Unscheduled material announcements
The Corporation will impose a blackout period if there is a pending undisclosed material development on all directors, officers and employees where they are prohibited from trading in securities of the Corporation, and during which stock options will be prohibited from being granted. The blackout period will commence at the time that the Corporation becomes aware of material undisclosed information.
4. Post-announcement Trading Blackout
The Corporation must allow the market time to absorb the information before directors, officers and employees can resume trading after the release of material information.
(a) Scheduled material announcements
All directors, officers and employees are prohibited from trading in securities of the Corporation, and no stock options of the Corporation shall be granted, for two trading days after the release of financial statements.
(b) Unscheduled material announcements
All directors, officers and employees are prohibited from trading in securities of the Corporation, and no stock options of the Corporation shall be granted, for two trading days after the announcement has been made.
The Chief Executive Officer of the Corporation will keep a record of the dates of all trading black-out periods and the reason for the black-out period.
5. Expiry of Stock Options During a Blackout period
If a stock option held by an insider (who is not otherwise exempted under part 6) expires during a blackout period, the Corporation will use its reasonable best effort to secure approval for the extension of such option from the TSX-V for a period ending seven days following the end of the blackout period in question. If the Corporation is unable to secure the approval of the TSX-V in accordance with this part 5, then the Corporation may determine (in its sole and unfettered discretion) to permit the holder of an expiring option to exercise such option during a blackout period if and only if the insider in question consents to the Corporation holding all securities received upon exercise thereof in trust until the third day following the end of the relevant blackout period and executes all documentation reasonably required in connection therewith.
6. Insider Reporting Exemptions
In connection with the requirements of National Instrument 55-101 (“NI 55-101“), the Corporation will maintain a list (the “List“) of all insiders of the Corporation who may be eligible for an exemption from insider reporting requirements as set in Sections 2.1, 2.2, 2.3 and 3.2 of NI 55-101.
Unless an insider is included in the List, they shall be deemed to be subject to all relevant insider reporting requirements and not be eligible for any exemptions contained in NI 55-101. The Chief Financial Officer of the Corporation will be responsible for maintaining the List.
GPM Metals Inc. Extractive Sector Transparency Measures Act Report: click here
GPM Code of Business Ethics: click here
GPM Metals Inc. Mandate of Corporate Governance, Compensation and Nominating Committee: click here