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The purpose of this Policy is to summarize the insider trading restrictions to which directors, officers, employees and certain other persons are subject under applicable securities laws, and to set forth a policy governing trading in securities of The Churchill Corporation (the “Corporation”) and the reporting thereof which is consistent with such laws.
This Policy is not intended to discourage investment in, or trading of, the Corporation’s securities. Rather, it is intended to highlight the obligations and the restrictions imposed on insiders by relevant securities legislation.
Insider trading rules are an aspect of the securities regulatory system which prohibit a person or company from trading in the securities of an issuer (a public company) where that person or company is in a “special relationship” with the issuer and has knowledge of Material Information (a “material fact” or “material change” with respect to the issuer -- i.e. a fact or change which would reasonably be expected to affect the trading price or value of the issuer's shares) which has not been generally disclosed to the public. A material change is specifically defined to include any decision by a board of directors to implement a material change, as well as any decision made to implement such a change by senior management if Board approval is probable.
Persons in a “special relationship” with the Corporation include, but are not limited to:
a) directors, officers and employees of the Corporation;
b) persons who have engaged in, are engaging in or propose to engage in professional or business activities for or on behalf of the Corporation and that person's directors, officers and employees; and
c) any person who learns of Material Information with respect to the Corporation from someone who is known or ought to be known to be a person in a special relationship with the Corporation.
You should note that any person who is associated with you, including any member of your family, your spouse or any person living with you, is also deemed to be a person in a special relationship with the Corporation, and is subject to the same legal obligations and duties.
Securities laws specify that anyone in a “special relationship” with the Corporation, who (a) informs any other person, other than in the “necessary course of business”, of a material fact or material change in respect of the Corporation before it has generally been disclosed or (b) has knowledge of a material fact or material change in respect of the Corporation before it has generally been disclosed and recommends or encourages another person to trade in the Corporation's securities, is found to be “tipping”. This is prohibited activity and both the person who provides the information and the person who receives the information could be liable under securities laws. Tipping is prohibited so that everyone in the market has equal access to, and opportunity to act upon, material information. It is important to keep in mind that the prohibition against “tipping” is broad and includes any unauthorized disclosure, even if made by non-management employees.
Insiders are a more distinct sub-group of those in a “special relationship”. An "insider" is a person or company which falls into any one of the following categories:
a) a director or officer of the Corporation;
b) a director or officer of a person or company that is itself an insider of the Corporation or subsidiary of the Corporation;
c) a person or company that beneficially owns or that exercises control or direction over, directly or indirectly, or a combination of beneficial ownership of and control or direction over, directly or indirectly, securities of the Corporation carrying more than 10% of the voting rights attached to all issued securities of the Corporation (excluding voting securities held by the person or company as an underwriter in the course of a distribution); and
d) the Corporation, if it has purchased, redeemed or otherwise acquired any of its securities for so long as it holds any of its securities.
Under applicable securities laws, insiders that are a "reporting insider" (as defined in National Instrument 55-104 ("NI 55-104")) are required to file an insider report (the “Insider Report”) with securities regulators (a) within 5 calendar days of becoming a reporting insider and (b) within 5 calendar days of any change in the reporting insider's: (i) beneficial ownership of, or control or direction over, whether direct or indirect, "securities" of the Corporation; or (ii) interest in, or right or obligation associated with, a "related financial instrument" involving a "security" of the Corporation. The change is at the transaction date (time of agreement) not the settlement date.
In addition, under applicable securities laws, reporting insiders are required to file an Insider Report within 5 calendar days of entering into, materially amending or terminating an agreement, arrangement or understanding which (a) has the effect of altering, directly or indirectly, the reporting insider's economic exposure to the Corporation; (b) involves, directly or indirectly, a security or related financial instrument of the Corporation; and (c) the reporting insider is not otherwise required to file an Insider Report in respect of the event under Part 3 of NI 55-104 or any corresponding provision of applicable securities legislation. An Insider Report must also be filed in respect of a person's agreements, arrangements and understandings of the nature referred to above within 5 calendar days of that person becoming a reporting insider.
Reporting insiders must file an Insider Report electronically through the “System for Electronic Disclosure by Insiders” (“SEDI”). It is each reporting insider’s personal responsibility to ensure that all requisite Insider Reports are filed with the appropriate securities commissions within the statutory time limits. The Corporation has assigned the Executive Assistant to the President the task of assisting each reporting insider with their filings. Reporting insiders can deliver a copy of the particulars of the trade to her, and she will ensure it is filed with the applicable securities commissions. The Executive Assistant will maintain a register of insider share positions in the Corporation for the purposes of monitoring compliance with this Policy. Note that it is still the reporting insider’s responsibility to ensure that the filing of Insider Reports is completed within the regulatory deadlines. If you are unsure of whether you are a reporting insider, contact the Executive Assistant to the President.
What constitutes a "security" or a "related financial instrument" is extremely broad and it is not always clear whether something is a "material fact" or "material change". Accordingly, you should contact the VP Investor Relations or Chief Financial Officer of the Corporation if you are uncertain about your disclosure or trading restrictions or whether you have a reporting obligation.
The Corporation adopts as general guidelines the basic guidelines set out in “Insider Trading in Canada: Recommendations and Guidelines of Boardroom Practice”, published by the Institute of Corporate Directors in Canada which states the following:
1) Do Not Trade - do not purchase or sell securities of the Corporation when you possesses knowledge of a “material fact” or a “material change” which is not disclosed to the public.
2) Do Not Advise - Information about a material change which you have by reason of your position within the Corporation should not be communicated to anyone, including co-workers and consultants, except on a need-to-know basis and only for the purpose of allowing such persons to carry on their duties to the Corporation. No advice with respect to trading in securities should be given by you to anyone when you have knowledge of material undisclosed information.
3) Encourage Timely Disclosure - Prompt public disclosure of material undisclosed information should be made by the Corporation unless there are good and valid business reasons for not doing so.
4) Do Not Speculate - you should not speculate in securities where knowledge of material undisclosed information exists or may exist.
In light of the foregoing, all directors, officers and employees of the Corporation will be subject to the following policy relating to trading in the Corporation’s securities and securities of other public issuers:
1) If one has knowledge of a material fact or material change related to the affairs of the Corporation’s stock or any public issuer’s stock involved in a transaction with the Corporation which is not generally known, no purchase or sale may be made until the information has been generally disclosed to the public and the blackout periods set forth below have expired.
2) If one has knowledge of a material fact or material change related to the affairs of the Corporation’s stock or any public issuer’s stock involved in a transaction with the Corporation which is not generally known, no recommendation or encouragement to another person or company to purchase or sell may be made until the information has been generally disclosed to the public and the blackout periods set forth below have expired.
3) Knowledge of a material fact or material change must not be conveyed to any other person other than in the necessary course of business until the information has been generally disclosed to the public and the blackout periods set forth below have expired.
4) The practice of selling “short” securities of the Corporation at any time is not permitted.
5) The practice of buying or selling a “call” or “put” or any other derivative security in respect of any securities of the Corporation is not permitted.
6) Trading is prohibited in the event that the Corporation has provided notice of a pending material fact or material change until the information has been generally disclosed to the public and the blackout periods set forth below have expired.
For purposes of this Policy, a “public issuer” includes any issuer, whether a corporation or otherwise, whose securities are traded in a public market, whether on a stock exchange or “over the counter”.
In order to ensure uniform compliance with securities legislation, the Corporation has made the following provision for blackout periods during which restricted persons, directors, officers and employees who are routinely in possession of undisclosed material information, are prohibited from trading in the Corporation’s securities:
Notwithstanding the above, it is the responsibility of the individual to be informed of the activities or circumstances that would preclude that individual from trading in the securities of the Corporation.
Directors, officers and all other insiders of the Corporation must provide prior notice to the VP Investor Relations and the Chief Financial Officer of the Corporation when they wish to trade in any securities or related financial instruments of the Corporation. In response to such notice, one of such officers or both will advise whether or not a blackout period is currently in effect. In addition, if any director, officer or employee is unsure whether or not he or she may trade in a given circumstance, he or she should contact the VP Investor Relations or the Chief Financial Officer to determine if the particular undisclosed information is or is not material.
Any individual who is subject to a blackout period should not disclose to any third party that such blackout period is in effect, unless approved by the VP Investor Relations or the Chief Financial Officer.
If a director, officer or employee knows that the Corporation is about to make a news release on material information at any time, the director, officer or employee should not trade from the time of such knowledge of pending release until after two (2) business days have elapsed from the date of the issue of the release.
Officers and managers of the Corporation are to bring this Insider Trading Policy to the attention of the Corporation's employees and any officers or employees of subsidiary or affiliated corporations who have or may have access to annual or interim reports or earnings of the Corporation prior to their public disclosure or to information with regards to any material developments, changes, or occurrences in the affairs of the Corporation prior to their public disclosure. All directors and officers of the Corporation should annually certify they have received and reviewed the most current Insider Trading Policy.
Insiders are cautioned as to the use of standing sell orders or standing purchase orders. If these are left with a broker they may create an inadvertent conflict with applicable securities laws and these guidelines, as a transaction could be executed during blackout periods or when undisclosed material information is known. A similar caution applies to margin trading whereby the broker may inadvertently buy or sell during blackout periods or when undisclosed material information is known in order to satisfy a margin call.
The Churchill Employee Share Purchase Plan is considered an “automatic securities purchase plan” for the purposes of applicable securities regulations and accordingly, any acquisition under the Plan (other than under a “lump sum provision” of the Plan) must be reported on a yearly basis for each calendar year, such filing to be completed within 90 days of the end of the calendar year.
In addition, any “specified dispositions” of shares under the Plan also can be reported on an annual basis within 90 days of the end of the calendar year. A specified disposition includes a disposition incidental to the operation of the Plan and not involving a discrete investment decision by the insider or a disposition made to satisfy a tax withholding obligation arising from a distribution of securities under the Plan. Any other dispositions by a reporting insider require the filing of an Insider Report within 5 calendar days of the sale.
If you require assistance in respect of reporting of acquisitions and dispositions under the Plan, please contact the Executive Assistant to the President.
The Corporation may, from time to time, circulate a notice prohibiting all or certain directors, officers and employees from trading. In the case of pending transactions (other than the release or quarterly or annual financial statements) the circumstances of each case will be considered in determining when and who to prohibit trading. In some cases, prohibition may be appropriate as soon as discussions about the transaction begin. Securities legislation dictates that trading must be prohibited once the negotiations have progressed to a point where it reasonably could be expected that the market price of the Corporation’s securities would materially change if the status of the transaction were publicly disclosed.
Under the Securities Act (Alberta), if a person or company in a special relationship with the Corporation:
(a) has purchased or sold a security with knowledge of a material fact or material change with respect to the Corporation that has not generally been disclosed; or
(b) informs another person of a material fact or material change with respect to the Corporation before the material fact or material change has been generally disclosed; or
(c) recommends or encourages another person or company to purchase or sell a security or enter into a transaction involving a security;
then that person or company is liable to a fine which shall not be less than the profit made by the person or company, and not more than the greater of $5,000,000 or an amount equal to three times the profit made or loss avoided by the person or company by reason of the contravention or to imprisonment for five years, or to both. If it is not possible to determine the profit made or loss avoided, then that person or company is liable to a fine of not more than $5,000,000 or to imprisonment for five years, or to both.
In implementing this Insider Trading Policy, the Corporation wishes to eliminate any transaction by an insider which would not be in full compliance with the law or which, by implication, might suggest that such rules may have not been strictly followed. This Insider Trading Policy is established to ensure that insiders are following the basic guidelines: