INSIDER TRADING POLICY
Throughout this document, “CRH” and the “Corporation” refer to CRH Medical Corporation and all of its consolidated subsidiaries and affiliates.
A. OBJECTIVE AND SCOPE
- Restricted Persons (as defined herein) will from time to time become aware of information (i) relating to the Corporation that results in, or would reasonably be expected to result in, a significant change in the market price or value of any of the Corporation’s securities; or (ii) that a reasonable investor would consider important to a decision to buy, hold or sell the Corporation’s securities, in either case that has not been adequately publicly disclosed (“Inside Information”). It is important to note that information is not necessarily public merely because it has been discussed in the press or on social media, which will sometimes report rumors. You should presume that information is nonpublic, unless you can point to its official release by the Corporation. In general, it is illegal for anyone to purchase or sell securities of any public company with knowledge of Inside Information. It is also generally illegal for anyone to disclose Inside Information to any other person who may reasonably be expected to trade thereon. Such actions will also result in a lack of confidence in the market for the Corporation’s securities, harming both the Corporation and its shareholders. Accordingly, the Corporation has established this Insider Trading Policy to assist its Restricted Persons in complying with the prohibitions on such actions.
- The procedures and restrictions set forth in this Insider Trading Policy are only a general framework to assist Restricted Persons in ensuring that any purchase or sale of securities occurs without actual or perceived violation of applicable securities laws. Restricted Persons have the ultimate responsibility for complying with applicable securities laws and should obtain additional guidance, including independent legal advice, as may be appropriate for their own circumstances.
- The Corporation’s Board of Directors will designate one or more individuals from time to time as the Insider Trading Policy Administrator for the purpose of administering this Policy. At the date hereof, the designated Insider Trading Policy Administrator is the Corporation’s Chief Financial Officer. In the event the Chief Financial Officer is not available or conflicted, the Chairman of the Board of Directors will be designated as the Insider Trading Policy Administrator. In the event such individual is not available or conflicted, the Chair of the Corporate Governance and Nominating Committee.
B. QUESTIONS CONCERNING THIS POLICY
- If there is any question or concern with respect to the application of this Policy to CRH Personnel or to any particular circumstance, the Insider Trading Policy Administrator should be contacted for guidance.
C. TRADING RESTRICTIONS AND BLACKOUT PERIODS
- For the purposes of this Policy, a “Restricted Person” means:
a) any person who is a director, officer or employee of CRH and its subsidiaries (collectively, “CRH Personnel”);
b) any person who is former CRH Personnel still in possession of Inside Information; and
c) family members, such as spouses, minor children, adult family members who share the same household of CRH Personnel, as well as partnerships, trusts, corporations, RRSP’s and similar entities over which any person who is CRH Personnel exercises control or discretion.
The Corporation may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to Insider Information.
- Restricted Persons are prohibited from communicating Inside Information about CRH unless: (a) disclosure is in the necessary course of the Corporation’s business and the Restricted Person is properly authorized to make such disclosure, provided that (except in cases of authorized public disclosure) the person receiving such information first enters into a confidentiality agreement in favour of CRH or otherwise owes a duty of confidentiality to the Corporation; (b) disclosure is compelled by judicial process, law, regulation or the rules of any self-regulatory organization with authority over the Corporation; or (c) disclosure is authorized by the Insider Trading Policy Administrator.
- Restricted Persons with Inside Information about CRH or counter-parties, where such information is learned in connection with the performance of the applicable CRH Personnel’s duties, are prohibited from transacting in securities in CRH or the counter-parties until either: (i) the information has been fully disclosed and a reasonable period of time (CRH and the Insider Trading Policy Administrator generally consider that a reasonable period of time should be at least two clear trading days, as interpreted in this Policy) has passed for the information to be widely disseminated; or (ii) such Restricted Person has been informed by the Insider Trading Policy Administrator that the information has ceased to be Inside Information. The foregoing does not apply in the case of trades of CRH’s securities pursuant to a pre-existing Automatic Securities Disposition Plan (“ASDP”) or Automatic Securities Purchase Plan (“ASPP”) in compliance with requirements under applicable securities laws and the requirements of this Policy set out below. These prohibitions will generally not apply to transactions made solely between a Restricted Person and the Corporation, such as an exercise of stock options or other equity awards in which no shares are disposed of other than to the Corporation, although the Corporation reserves the right to limit or restrict any such transaction in appropriate circumstances if it is not made pursuant to a standing election.
- From time to time, the Insider Trading Policy Administrator may advise the directors, officers and certain or all employees of the Corporation not to trade in securities of the Corporation or a counter-party. These advisories are called “trading blackout periods”. Trading blackout periods occur in connection with the preparation and dissemination of the financial statements of the Corporation and in connection with potential pending events that might constitute Inside Information about the business affairs of the Corporation or a counter-party. Unless otherwise determined by the Insider Trading Policy Administrator, any advisory regarding a trading blackout period in connection with potential pending events, the existence of such trading blackout period and the identity or any other information regarding a potential counter-party must be kept confidential by Restricted Persons. The authority for imposing a trading blackout period rests solely with the Insider Trading Policy Administrator. Gifts and estate-planning transactions can present many of the same issues as sales and will be considered transactions subject to the restrictions on trading arising under this Policy unless determined otherwise by the Insider Trading Policy Administrator.
- Automatic trading blackout periods will apply to Restricted Persons during periods when financial statements are being prepared but results have not yet been publicly disclosed. The trading blackout commences on the first day of the month following the end of a quarter or financial period and ends at the close of business on the second clear trading day following the issuance of a news release disclosing financial results. For greater certainty, if a news release is issued before the opening of markets on a trading day, the day of the release will be considered under this Policy as the first clear trading day.
- For trading blackout periods not covered above, the Insider Trading Policy Administrator will notify the directors, officers and all or some of the employees of the Corporation of the imposition of the trading blackout period and its duration, if known. The Insider Trading Policy Administrator will also notify such persons when the trading blackout period is lifted, if the duration was not stated at the outset. Generally, the appropriate time to lift the trading blackout period will be at the close of business on the second clear trading day after the news release has been issued, which is when the information is deemed to be generally known.
- Persons to whom a blackout period applies may apply to the Insider Trading Policy Administrator for approval to trade securities of the Corporation during a trading blackout period. The Insider Trading Policy Administrator may apply to the CEO for approval to trade securities of the Corporation during a trading blackout period. It is anticipated that such approval shall only be given in limited and exceptional circumstances and, for example would not ordinarily be given in circumstances where CRH is aware that the Restricted Person has knowledge of undisclosed Inside Information.
- To provide assistance in preventing inadvertent violations of this Policy and the Corporation’s Code of Business Conduct and Ethics and avoiding even the appearance of an improper transaction, the following persons must not at any time, directly or indirectly, trade in the Corporation’s securities unless such person obtains the prior approval of the Insider trading Policy Administrator (trades by the Insider Trading Policy Administrator shall require the approval of the Chair of the Board of Directors):
a) Any director or officer of the Corporation; or
b) Any individual who has been notified by the CEO or CFO that they are subject to pre-clearance in accordance with this Policy.
- Unless otherwise specified by the Insider Trading Policy Administrator, clearance for a transaction is only valid for two business days after such clearance is received. If the trade is not completed within that two business day period, clearance for the transaction must be re-requested. If clearance for the trade is denied, the fact of such denial of clearance must be kept confidential by the applicant. The pre-clearance request must specify the amount and nature of the proposed trade(s), and the applicant must attest that he or she is not in possession of any Inside Information concerning the Corporation. If the applicant becomes possessed of Inside Information concerning the Corporation before the proposed trade is completed, the trade must not take place. Likewise, the Insider Trading Policy Administrator may in his or her discretion revoke any clearance given.
- Restricted Persons are prohibited at any time from, directly or indirectly, undertaking any of the following activities:
a) speculating in CRH securities, which may include buying with the intention of quickly reselling such securities or making recommendations to others to invest in CRH securities with such intent (other than in connection with the acquisition and sale of shares issued under CRH’s stock option plan or other equity based compensation plan or arrangement);
b) buying CRH’s securities on margin or pledging CRH’s securities in support of a loan;
c) placing standing or limit orders on CRH securities;
d) short selling a security of CRH or any other arrangement that results in a gain only if the value of CRH’s securities declines in the future;
e) engaging in hedging transactions that may allow a Restricted Person to continue to own CRH securities, but without the full risks and rewards of ownership;
f) selling a “call option” giving the holder an option to purchase CRH securities; and
g) buying a “put option” giving the holder an option to sell CRH securities
other than deposits of securities into a margin account that may be created pursuant to an ASDP or ASPP that is established in compliance with requirements under applicable securities laws and the requirements of this Policy set out below.
- The conflict-of-interest guidelines contained in the Code of Business Conduct and Ethics encourage CRH Personnel who are not sure whether they should be trading in securities of the Corporation at any particular time to contact the Insider Trading Policy Administrator for guidance.
- Notwithstanding other provisions of this Policy, a Restricted Person may purchase or sell securities of the Corporation while in possession of Inside Information about the Corporation, regardless of whether a trading blackout period is then in effect, and without complying with the requirement to obtain the approval of the Insider Trading Policy Administrator, if such purchase or sale is made in compliance with requirements under applicable securities laws and is effected pursuant to a pre-existing ASDP or ASPP, as applicable, established in accordance with the following procedures.
Automatic Securities Disposition and Purchase Plans
- The Board may approve the adoption by Restricted Persons of ASDPs and ASPPs. An ASDP may enable a Restricted Person to arrange for the exercise of stock options and the automatic sale or donation of securities of CRH (including common shares underlying stock options) in accordance with pre-arranged instructions notwithstanding that the Restricted Person is then aware of or in possession of Inside Information or a trading blackout has been imposed. Similarly, an ASPP may enable a Restricted Person to arrange for purchases of CRH’s securities in accordance with pre-arranged instructions notwithstanding that the Restricted Person is then aware of or in possession of material, non-public information or a trading blackout has been imposed. In each case, the Restricted Person must clear in advance with the Insider Trading Policy Administrator (or the CEO in the case of an ASDP or ASPP to be established by the Insider Trading Policy Administrator), the adoption of the ASDP or ASPP, and the ASDP or ASPP must comply with applicable Canadian and U.S. securities laws, including the interpretive guidance set out in Ontario Securities Commission Staff Notice 55-701 (“OSC Staff Notice 55-701”) and Rule 10b5-1(c) under the United States Securities Exchange Act of 1934 (the “Exchange Act”).
- Before an ASDP or ASPP that is proposed to be adopted will be cleared under this Policy, the Restricted Person must provide a draft of the ASDP or ASPP to the Insider Trading Policy Administrator or the CEO, as applicable, together with a schedule of all transactions to occur under such ASDP or ASPP, such as planned exercises of options, sales, donations or purchases, and the Restricted Person must certify that: (i) he or she is not then in possession of Inside Information, and (ii) he or she is entering into the ASDP or ASPP in good faith and not as part of a plan or scheme to evade the prohibitions of applicable Canadian and U.S. securities laws.
- In determining whether to clear the adoption of an ASDP or ASPP, the Insider Trading Policy Administrator or the CEO, as applicable, shall consider whether the ASDP or ASPP complies with the following guidelines:
- Timing for Adopting an ASDP or ASPP – An ASDP may not be adopted during a trading blackout period. An ASDP or ASPP may only be adopted at a time when the Restricted Person is not in possession of Inside Information.
- Cooling-Off Period – A “cooling-off” period of not less than 60 days will generally be required between the adoption of the ASDP or ASPP and the first disposition or acquisition under the ASDP or ASPP.
- Duration – An ASDP or ASPP should have a limited duration (e.g., 12-24 months).
- Modification and Termination – The ASDP or ASPP must contain “meaningful restrictions” on the ability of the insider to modify or terminate the ASDP (within the meaning of OSC Staff Notice 55-701). Following the adoption of the ASDP, the Restricted Person may not modify or terminate the ASDP or ASPP unless: (i) an explanation of the reasons for such modification or termination is provided to the Insider Trading Policy Administrator or the CEO, as applicable, and pre-clearance of such modification or termination is obtained from the Insider Trading Policy Administrator or the CEO, as applicable; (ii) in connection with such pre-clearance, the Restricted Person certifies that (a) he or she is not then in possession of Inside Information, (b) he or she is modifying or terminating the ASDP or ASPP in good faith and not as part of a plan or scheme to evade the prohibitions of applicable Canadian securities laws; and (iii) if the ASDP or ASPP was established by an “insider” that is required to file insider reports in accordance with applicable Canadian securities laws, such person notifies the public via a System for Electronic Disclosure by Insiders (“SEDI”) filing (or other filing approved by the Board) of the modification or termination and includes in such filing a representation that such insider is not in possession of any Inside Information. No such modification or termination may occur during a trading blackout period. In addition, the ASDP or ASPP should include a delay period (e.g., 30-45 days) for any instructions to modify or terminate an ASDP or ASPP.
- Simplicity – The Restricted Person should avoid complex sales formulae that may be hard to apply, misinterpreted or that may require the broker under the ASDP or ASPP to seek guidance from the Restricted Person.
- Disclosure – CRH will generally disclose by press release the adoption of an ASDP or ASPP by a director or officer in accordance with applicable securities laws.
- Manner of Trades – The ASDP or ASPP should generally provide for regular sales or purchases of smaller amounts (relative to a Restricted Person’s holdings) over a period of time rather than large sales or purchases during a short period of time after adoption of the ASDP or ASPP.
- Broker – A Restricted Person should use a broker that is familiar with ASDPs and/or ASPPs, as applicable. The broker responsible for the ASDP or ASPP should not have an established relationship with the Restricted Person to prevent allegations of influence.
- The Insider Trading Policy Administrator or the CEO, as applicable, may also consider such other “best practices” as they exist at such time with respect to ASDPs and ASPPs, and may impose such additional requirements, or grant such exceptions, as it determines are necessary or appropriate.
- In pre-clearing the adoption, modification or termination of an ASDP or ASPP, none of the Corporation, the Insider Trading Policy Administrator or the CEO shall be responsible for determining whether such ASDP or ASPP is in compliance with the provisions of applicable securities laws. Compliance with applicable securities laws is the responsibility of the Restricted Person, who should consult with his or her own legal advisors before adopting an ASDP or ASPP.
- The Corporation’s “affiliates” (as defined in Rule 144 under the U.S. Securities Act of 1933 (the “Securities Act”)) who sell the Corporation’s securities in a public transaction in the United States, such as on the NYSE American, must comply with the volume, manner of sale, notice and other applicable requirements of Rule 144 under the U.S. Securities Act of 1933, unless a resale registration statement is applicable to such sale. The Corporation’s Section 16 Insiders (as defined below) are also presumed to be affiliates of the Corporation.
D. REQUIREMENTS FOR REPORTING INSIDERS AND SECTION 16 INSIDERS
- The directors, Chief Executive Officer, Chief Financial Officer and Chief Operating Officer (if applicable) and certain other officers and employees of the Corporation and its subsidiaries are “Reporting Insiders” under applicable Canadian securities laws. Reporting Insiders are required to file reports with Canadian provincial securities regulators, through SEDI, of any direct or indirect beneficial ownership of, or control or direction over, securities of the Corporation and of any change in such ownership, control or direction. In addition, Reporting Insiders must also include in their reports any monetization, non-recourse loan or similar arrangement, trade or transaction that changes the Reporting Insider’s economic exposure to or interest in securities of the Corporation and which may not necessarily involve a sale, whether or not required under applicable law.
- If the Corporation ceases to qualify as a foreign private issuer within the meaning of Rule 3b-4 under the Exchange Act based on a determination made as of the end of the second quarter of any fiscal year, then officers (as defined in Rule 16a-1(f) under the Exchange Act), directors and beneficial owners (within the meaning of Section 13(d) of the Exchange Act and the rules thereunder) of more than 10% of the outstanding shares of any class of the Corporation’s voting equity securities registered under Section 12 of the Exchange Act (collectively, the “Section 16 Insiders”) will be subject to Section 16 (“Section 16”) of the Exchange Act starting on the first day of the subsequent fiscal year.
Section 16 requires each subject person to disclose his, her or its direct and indirect beneficial ownership (as defined in Rule 16a-1 under the Exchange Act) of the Corporation’s equity securities (as defined in Rule 16a-1(d) under the Exchange Act and which includes derivative securities as defined in Rule 16a-1(c) under the Exchange Act) within ten days after becoming subject to Section 16 (or on the first day of the fiscal year following the Corporation’s determination that it has ceased to be a foreign private issuer, for persons who are then subject to Section 16), and generally to report any change in such beneficial ownership, typically no later than 10 p.m. Eastern time on the second business day following such change. The reporting requirements of Section 16 are broad and may reach to any change in beneficial ownership (not only purchases and sales), whether made directly or indirectly (including by members of immediate family, through partnerships, trusts, corporations or contractual arrangements). There are only very limited exemptions from the two-business-day reporting obligation, although certain transactions, primarily bona fide gifts, may be eligible for deferred reporting following the end of the Corporation’s fiscal year. Section 16 disclosures are required to be made by electronically filing Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes in Beneficial Ownership) and 5 (Annual Statement of Beneficial Ownership) on the Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system (http://www.sec.gov/edgar.shtml) operated by the U.S. Securities and Exchange Commission. In order to make such EDGAR filings, any person subject to Section 16 must have EDGAR filer codes. The Insider Trading Policy Administrator will assist officers and directors of the Corporation who do not already have EDGAR filer codes with obtaining them.
Notwithstanding other provisions of this Policy, any profit realized by a Section 16 Insider from any purchase and sale of any equity security of the Corporation within a period of less than six months is subject to recovery by the Corporation. This rule applies to Section 16 Insiders without regard to whether they possess material, non-public information (or use an ASDP or ASPP), without regard to whether the securities sold were the same securities bought, without regard to the order of the transactions, without regard to whether the entirety of any series of transactions gave rise to a loss, and without regard to whether the subject person’s beneficial ownership of the securities involved was direct or indirect. The Corporation may not waive or release any person’s obligation under Section 16 or indemnify any person for losses suffered under this obligation. Should the Corporation fail to enforce its right to recover such profit, any shareholder may seek to enforce that right on behalf of the Corporation. Further, and in addition to the provisions of this Policy, Section 16 Insiders are prohibited by law from selling short any of the Corporation’s equity securities.
- It is the responsibility of each Reporting Insider and Section 16 Insider (and not the Corporation) to comply with these requirements, and Reporting Insiders and directors or officers of the Corporation subject to Section 16 are required, upon request by the Insider Trading Policy Administrator, to provide the Insider Trading Policy Administrator with a copy of any insider report completed by such subject person concurrent with or in advance of its filing. The Corporation will assist any Reporting Insider or director or officer of the Corporation subject to Section 16 in the preparation and filing of any insider reports pursuant to Canadian securities laws or Section 16 upon request. In light of the short filing deadlines imposed by Section 16, any director or officer of the Corporation who is seeking assistance with a filing pursuant to Section 16 must contact the Insider Trading Policy Administrator immediately upon making any transaction subject to Section 16 (which shall be in addition to any preclearance requirement) and be prepared to assist the Corporation with obtaining all information necessary to prepare the resulting filing.
- A person that is uncertain whether he or she is a Reporting Insider or Section 16 Insider should contact the Insider Trading Policy Administrator. Some officers of the Corporation or its subsidiaries may be Reporting Insiders but may be eligible to be exempted from Reporting Insider status by applicable Canadian securities laws from the requirements to file insider reports. Reporting Insiders who are exempted from these requirements remain subject to all of the other provisions of applicable securities laws and this Policy. Any questions concerning the availability of an exemption from Reporting Insider requirements should be directed to the Insider Trading Policy Administrator.
E. COMMUNICATION AND ENFORCEMENT
- This Policy extends to all CRH Personnel. New directors, officers and employees will be provided with a copy of this Policy and will be educated about its importance. It will also be brought to the attention of all employees whenever significant changes are made.
- CRH Personnel who violate this Policy may face disciplinary action up to and including termination of his or her employment with the Corporation without notice. Waivers granted under this Policy may be subject to public disclosure. The violation of this Policy may also violate certain securities laws. If it appears that an employee may have violated such securities laws, the Corporation may refer the matter to the appropriate regulatory authorities, which could lead to penalties, fines or imprisonment.
Approved by the Board: December 6, 2018