The objective of this disclosure policy is to ensure that communications to the investing public about the Corporation are: timely, factual and accurate; and broadly disseminated in accordance with all applicable legal and regulatory requirements. This disclosure policy confirms in writing our existing disclosure policies and practices. Its goal is to raise awareness of the Corporations’ approach to disclosure among the board of directors, senior management and employees. This disclosure policy extends to all employees of the Company, its board of directors and those authorized to speak on its behalf. It covers disclosures in documents filed with the securities regulators and written statements made in the Corporations’ annual and quarterly reports, news releases, letters to shareholders, presentations by senior management and information contained on the Corporations’ website and other electronic communications. It extends to oral statements made in meetings and telephone conversations with analysts and investors, interviews with the media as well as speeches and press conferences
Disclosure Policy Committee
The board of directors will determine disclosure policy, and has established a disclosure committee (“Committee”) responsible for overseeing the Company’s disclosure practices. The Committee consists of the chief executive officer (CEO), the chief financial officer (CFO), the chief operating officer (COO) and the Corporate Secretary (CS), who are the four individuals to whom potentially material information arrives by phone, fax, e-mail and mail. Where necessary, the Committee will seek advice from the Company’s legal counsel. The Committee will consider the Corporation’s prior disclosure record to determine whether new information is likely to have a material impact on the price or value of the Company’s common shares or whether a reasonable investor would likely consider the information important in making an investment decision and will determine when developments require public disclosure. The Corporation’s policy is, “when in doubt, disclose”. The Committee will meet as conditions dictate and will report to the board of directors on an annual basis. It is essential that the Committee be kept fully apprised of all pending material Corporation developments in order to evaluate and discuss those events and to determine the appropriateness and timing for public release of information. If it is deemed that the information should remain confidential, the Committee will determine how that inside information will be controlled. The Committee will review and recommend to the board updates, if necessary, to this disclosure policy on an annual basis or as needed to ensure compliance with changing regulatory requirements. Updates and/or modifications to this disclosure policy will be subject to the approval of the board of directors.
Principles Of Disclosure of Material Information
Material information is any information relating to the business and affairs of the Corporation that results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company’s securities or that would reasonably be expected to have a significant influence on a reasonable investor’s investment decisions. In complying with the requirement to disclose forthwith all material information under applicable laws and stock exchange rules, the Company will adhere to the following basic disclosure principles:
- Material information will be publicly disclosed immediately via news release, the wording of which will be approved by all members of the Committee if practicable but by a minimum of two Committee members one of which must be the CEO, or in his absence the COO, or in his absence, the CFO. In certain circumstances, the Committee may determine that such disclosure would be unduly detrimental to the Company (for example if release of the information would prejudice negotiations in a corporate transaction), in which case the information will be kept confidential until the Committee determines it appropriate to publicly disclose. In such circumstances, the Committee will cause a confidential material change report to be filed with the applicable securities regulators, and will periodically (at least every 10 days) review its decision to keep the information confidential (also see ‘Rumours’). In areas where the Company has joint venture partners, the Committee will inform the joint venture partners of a material information disclosure prior to its release. Should any joint venture partner release information that pertains to the Company, the Committee should immediately determine if the information is material. If the information is determined to be material to the Company, the Committee should immediately disclose the information via news release. Disclosure must include any information the omission of which would make the rest of the disclosure misleading (half-truths are misleading).
- Unfavourable material information must be disclosed as promptly and completely as favourable information. No selective disclosure. Previously undisclosed material information must not be disclosed to selected individuals (for example, in an interview with an analyst or in a telephone conversation with an investor). If previously undisclosed material information has been inadvertently disclosed to an analyst or any other person not bound by an express confidentiality obligation, such information must be broadly disclosed immediately via news release.
- Disclosure on the Company’s website alone does not constitute adequate disclosure of material information. As required by the TSX Venture Exchange (“TSX.V”) , upon which the common shares of the Corporation are listed, material information is put into a press release. Disclosure must be corrected immediately if the Corporation subsequently learns that earlier disclosure by the Corporation contained a material error at the time it was given.
Trading Restrictions and Blackout Periods
It is illegal for anyone to purchase or sell securities of any public corporation with knowledge of material information affecting the Corporation that has not been publicly disclosed. Except in the necessary course of business, it is also illegal for anyone to inform any other person of material non-public information. Therefore, insiders and employees with knowledge of confidential or material information about the Corporation or counter parties in negotiations of material potential transactions are prohibited from trading shares in the Company or any counter-party until the information has been fully disclosed and a reasonable period of time has passed for the information to be widely disseminated. See the Company’s Insider Trading Policy. Blackout periods occur every quarter, beginning with the 15th day following the reporting period and lasting until one full trading day following disclosure of the results for the applicable quarter, unless the Committee requests the blackout period to commence earlier. Other blackout periods may be imposed by the Committee as required in the course of business. All staff and directors will be informed via email of the start of a blackout period and again its termination.
Any employee privy to confidential information is prohibited from communicating such information to anyone else, unless it is necessary to do so in the course of business. Efforts will be made to limit access to such confidential information to only those who need to know the information and such persons will be advised that the information is to be kept confidential. Outside parties privy to undisclosed material information concerning the Company will be told that they must not divulge such information to anyone else, other than in the ordinary course of business and that they may not trade in the Company’s securities until the information is publicly disclosed. Such outside parties will confirm their commitment to non-disclosure in the form of a written confidentiality agreement. In order to prevent the misuse or inadvertent disclosure of material information, the procedures set forth below should be observed at all times:
- Documents and files containing confidential information should be kept in a safe place to which access is restricted to individuals who “need to know” that information in the necessary course of business and code names should be used if necessary. Confidential matters should not be discussed in places where the discussion may be overheard, such as elevators, hallways, restaurants, airplanes or taxis. Confidential matters should not be discussed on wireless telephones or other wireless devices.
- Confidential documents should not be read or displayed in public places and should not be discarded where others can retrieve them. Employees must ensure they maintain the confidentiality of information in their possession outside of the office as well as inside the office. Transmission of documents by electronic means, such as by fax or directly from one computer to another, should be made only where it is reasonable to believe that the transmission can be made and received under secure conditions.
- Unnecessary copying of confidential documents should be avoided and documents containing confidential information should be promptly removed from conference rooms and work areas after meetings have concluded. Extra copies of confidential documents should be shredded or otherwise destroyed.
- Access to confidential electronic data should be restricted through the use of passwords.
The Corporation designates a limited number of spokespersons responsible for communication with the investment community, regulators or the media. The CEO, the CFO, the COO and the CS shall be the official spokespersons for the Corporation. The Chairman of the Company or individuals holding these offices may, from time to time, designate others within the Company to speak on behalf of the Company as back-ups or to respond to specific inquiries. Employees who are not authorized spokespersons must not respond under any circumstances to inquiries from the investment community, the media or others, unless specifically asked to do so by an authorized spokesperson, or unless the response is limited to providing investors with copies of information which had already been disseminated, such as press releases or financial statements. All other inquiries shall be referred to the CEO.
Once the Committee determines that a development is material, it will authorize the issuance of a news release, unless the Committee determines that such developments must remain confidential for the time being, appropriate confidential filings are made and control of that inside information is instituted. Should a material statement inadvertently be made in a selective forum, the Company will immediately issue a news release in order to fully disclose that information. If the TSX.V is open for trading at the time of a proposed announcement, prior notice of a news release announcing material information must be provided to the market surveillance department to enable a trading halt, if deemed necessary by the TSX.V. If a news release announcing material information is issued outside of trading hours, a copy of the news release should still be transmitted to the respective stock exchanges’ market surveillance department. Annual and interim financial results will be publicly released as soon as practicable following board approval of the financial statements. News releases will be disseminated through Marketwire, an approved news wire service that provides simultaneous national and U.S. distribution. News releases will be transmitted by Marketwire to all stock exchange members, major business wires and national financial media. The Corporation will cause the news release to be filed with the Canadian securities commissions via SEDAR and with the U.S. Securities and Exchange Commission via EDGAR. News releases will be posted on the Company’s website immediately after release over the news wire. The news release page of the website shall include a notice advising the reader that the information posted was accurate at the time of posting, but may be superseded by subsequent news releases.
The Corporation does not comment, affirmatively or negatively, on rumours. This also applies to rumours on the Internet. The Corporations’ spokespersons will respond consistently to those rumours, saying, “It is our policy not to comment on market rumours or speculation.” Should the TSX.V request that the Company make a definitive statement in response to a market rumour that is causing significant volatility in the stock, the Disclosure Committee will consider the matter and decide whether to make a policy exception. If the rumour is true, in whole or in part, the Company will immediately issue a news release disclosing the relevant material information.
Contacts with Analysts, Investors and the Media
Disclosure in individual or group meetings does not constitute adequate disclosure of information that is considered material non-public information. If the Company intends to discuss material information at an analyst or shareholder meeting or a press conference or telephone call, the announcement must be preceded by a news release. The Company recognizes that meetings with analysts and significant investors are an important element of the Company’s investor relations program. The Company will meet with analysts and investors on an individual or group basis as needed and will initiate contacts or respond to analyst and investor calls in a timely, consistent and accurate fashion in accordance with this disclosure policy. The Company will provide only non-material information through individual and group meetings, in addition to regular publicly disclosed information, recognizing that an analyst or investor may construct this information into a mosaic that could result in material information. The Company cannot alter the materiality of information by breaking down the information into smaller, non-material components. Spokespersons will keep notes of telephone conversations with analysts and investors and where practicable more than one Company representative will be present at all individual and group meetings. A debriefing may occur. After such meetings and if such debriefing uncovers selective disclosure of previously undisclosed material Information the Corporation will immediately disclose such information broadly via news release.
Reviewing Analyst Draft Reports and Models
It is the Corporation’s policy to review, upon request analysts’ draft research reports or models. The Company will review the report or model for the purpose of pointing out errors in fact based on publicly disclosed information. It is the Company’s policy, when an analyst inquires with respect to his/her estimates, to question an analyst’s assumptions if the estimate is a significant outlier among the range of estimates and or the Corporation’s published earnings guidance, if any. The Corporation will limit its comments in responding to such inquiries to non-material information. The Corporation will not confirm, or attempt to influence, an analyst’s opinions or conclusions and will not express comfort with the analyst’s model and earnings estimates. In order to avoid appearing to “endorse” an analyst’s report or model, the Company will provide its comments orally or will attach a disclaimer to written comments to indicate the report was reviewed only for factual accuracy.
Distributing Analyst Reports
Analyst reports are proprietary products of the analyst’s firm. The Corporation has determined that a range of firms provide commentary about the Company, not all of which firms are members of the Investment Dealers’ Association or the National Association of Securities Dealers, and the quality of such commentary varies. For these reasons, the Corporation will not attempt to provide complete lists of all the investment firms and analysts who provide research coverage on the Company. The Company limits references to analyst reports on its website to a list of the analysts’ names and houses they work for.
Forward Looking Information
Should the Corporation elect to disclose forward-looking information (“FLI”) in continuous disclosure documents, speeches, telephone calls, etc. the following guidelines will be observed:
- The information, if deemed material, will be broadly disseminated via news release, in accordance with this disclosure policy.
- The information will be clearly identified as forward looking.
- The Company will identify all material assumptions used in the preparation of the FLI.
- The information will be accompanied by a statement that identifies, in very specific terms, the risks and uncertainties that may cause the actual results to differ materially from those projected in the statement, including a sensitivity analysis to indicate the extent to which different business conditions from the underlying assumptions may affect the actual outcome.
- The information will be accompanied by a statement that disclaims the Company’s intention or obligation to update or revise the FLI, whether as a result of new information, future events or otherwise. Notwithstanding this disclaimer, should subsequent events prove past statements about current trends to be materially off target, the Company may choose to issue a news release explaining the reasons for the difference. In this case, the Company will update its guidance on the anticipated impact on revenue and earnings (or other key metrics).
- The information relating to reserves or resources (both discovered and undiscovered), will be prepared by a qualified reserves evaluator (“QRE”) in accordance with National Instrument 51-101. If the Company has issued a forecast or projection in connection with an offering document covered by National Policy 48, the Company will update that forecast or projection periodically, as required by National Policy 48.
The Corporation will try to ensure, through its regular public dissemination of quantitative and qualitative information that analysts’ estimates are in line with the Company’s own expectations. The Company will not confirm, or attempt to influence, an analyst’s opinions or conclusions and will not express comfort with analysts’ models and earnings estimates. If the Corporation has determined that it will be reporting results materially below or above publicly held expectations, it will disclose this information in a news release in a timely fashion in order to enable discussion without risk of selective disclosure.
The Corporation will maintain a five-year file containing all public information about the Company, including continuous disclosure documents and news releases.
Responsibility of Electronic Communications
This disclosure policy also applies to electronic communications. Accordingly, officers and personnel responsible for written and oral public disclosures shall also be responsible for electronic communications. The Disclosure Committee is responsible for updating the Company’s website and is responsible for monitoring all Company information placed on the website to ensure that it is accurate, complete and up-to-date. The Committee must approve all links from the Corporations’ website to a third party website. Every attempt will be made to limit the number of such links. Investor relations material shall be contained within a separate section of the Corporations’ website and shall include a notice that advises the reader that the information posted was accurate at the time of posting, but may be superseded by subsequent disclosures. All date posted to the website, including text and audiovisual material, shall show the date such material was issued. Any material changes in information must be updated immediately. Disclosure on the Corporation’s website alone does not constitute adequate disclosure of information that is considered material non-public information. Any disclosures of material information on its website will be preceded by the issuance of a news release. The CEO shall be responsible for responses to electronic inquiries. Only public information or information which could otherwise be disclosed in accordance with this disclosure policy shall be utilized in responding to electronic inquiries. In order to ensure that no material undisclosed information is inadvertently disclosed, employees are prohibited from participating in Internet chat rooms or newsgroup discussions on matters pertaining to the Company’s activities or its securities.
Communication and Enforcement
This disclosure policy extends to all employees of the Company, its board of directors and authorized spokespersons. New directors, officers and employees will be provided with a copy of this disclosure policy and will be educated about its importance. This disclosure policy will be circulated to all employees on an annual basis and whenever changes are made. Any employee who violates this disclosure policy may face disciplinary action up to and including termination of his or her employment with the Corporation without notice. The violation of this disclosure policy may also violate certain securities laws. If it appears that an employee may have violated such securities laws, the Company may refer the matter to the appropriate regulatory authorities, which could lead to penalties, fines or imprisonment.
The purpose of this policy is to ensure that the Corporation and its directors, officers, employees and consultants satisfy the legal and ethical obligations related to proper and effective disclosure of corporate information and the trading of securities with that information. The Corporation’s reputation for integrity, its shareholders, the market generally and securities regulators all require MENA Hydrocarbons Inc. and its directors, officers, employees and consultants, as well as anyone in a “special relationship” (as defined by the Securities Acts (BC, Alberta and Ontario) with the Corporation and “tippees” thereof to provide appropriate disclosure of material information when it is proper to do so, and to ensure they do not unjustly benefit from having such information. It is the Corporation’s goal to raise awareness among the Board of Directors, management and employees of the need for a commitment to the timely, factual, accurate and broad dissemination of information, in accordance with all applicable legal and regulatory requirements to enable orderly behavior in the market, which is covered by the Corporation’s Disclosure Policy, and of the need for a commitment to trade (including the grant or exercise of stock options and warrants as well as buying and selling the Corporation’s shares or other securities) only when it is proper to do so. Trading any securities while there is material, undisclosed information relating to MENA Hydrocarbons Inc. may, under Canadian securities laws, result in liability for the Corporation and for the individual involved.
This policy applies to all directors, officers, employees and consultants of MENA Hydrocarbons Inc. and its subsidiaries. In addition, anyone in a “special relationship” (as defined by the Securities Acts (BC, Alberta and Ontario)) with the Corporation (including spouses, relatives, holding companies and “tippees” thereof) while the Corporation has no authority to require them to comply with this policy, are subject to all applicable laws and would be well advised to comply with this policy.
MENA Hydrocarbons Inc. Shares refers to the Common Shares of the Corporation which are listed for trading on the TSX Venture Exchange.
Blackout Period is the time frame when Insiders cannot trade in the Corporation’s securities (including the grant or exercise of stock options and warrants as well as buying and selling the Corporation’s shares or other securities) because of their actual or deemed knowledge of Material Undisclosed Information. The Corporate Spokespersons are responsible for Public Disclosure and other external communication with the public (being anyone not an Insider, including, but not limited to, the press, securities analysts, investors, joint venture partners, personnel of other oil companies and the general public) on behalf of the Corporation. Corporate Spokespersons will be limited to the CEO, CFO, COO and Corporate Secretary (“CS”), who together comprise the Corporation’s Disclosure Committee. Insiders who are not Corporate Spokespersons must not initiate or respond to any public communication, unless specifically asked to do so by a Corporate Spokesperson. See the Corporation’s Disclosure Policy. Insiders for the purposes of this Trading Policy are any director, officer, employee of the Corporation or of any of its subsidiaries, as well as the Corporation itself, and anyone else with knowledge of Material Undisclosed Information. A Material Change, as defined under securities legislation in many Canadian provinces and territories, is a change in the business, operations or capital of the Corporation that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the Corporation. It also includes a decision to implement such a change made by the Board of Directors of the Corporation, or by senior management of the Corporation who believe that confirmation of the decision by the Board of Directors is probable. Material Information, for the purposes of this policy, is any information a reasonable investor would consider important in making an investment decision regarding MENA Hydrocarbons Inc. securities, and includes a Material Change. Some examples include drilling results, pending property acquisitions or dispositions, earnings information, prospective mergers or acquisitions, changes in control or management, and a change in auditors. Material Undisclosed Information is Material Information for which no Public Disclosure has been made. At any time when Material Information is being withheld from the public, the Corporation is under a duty to take precautions to keep the information completely confidential, and Insiders are under a duty not to trade the Corporation’s securities. Public Disclosure is a news release authorized by a member of the Corporation’s Disclosure Committee and disseminated by Marketwire (or equivalent) in accordance with the Corporation’s Disclosure Policy. More generally, “public disclosure” is an obligation requiring public companies (e.g., ones listed on a stock exchange) to disclose Material Information about their operations and financial performance, both in documents submitted to securities regulators and through timely news releases via a wire service. A Trading Plan is a written program entered into by an Insider in accordance with the Securities Act (Alberta) s. 147 as well as all other applicable laws.
Policy for Trading By Insiders
See the Corporation’s Disclosure Policy, available from the CEO, COO, CFO or CS. All Insiders with knowledge of Material Undisclosed Information must notify the CEO (or another member of the Disclosure Committee) and request that a Blackout Period be imposed. The CEO (or another officer, if the CEO is unavailable) will consider whether it is indeed Material Undisclosed Information and if so, will institute a Blackout Period. A Blackout Period will thereafter be deemed to exist until at least 24 hours after the release of Public Disclosure. Unless the Insider was previously authorized in writing by a member of the Disclosure Committee to trade such securities pursuant to a Trading Plan in form and substance satisfactory to the Corporation, Insiders must not trade (this includes the granting of options to acquire MENA Hydrocarbons Inc. Shares, the purchase or sale of securities, the exercise of outstanding warrants or stock options and subsequent sale of securities), either directly or indirectly, in MENA Hydrocarbons Inc. Shares or in any securities of companies that have a direct relationship with MENA Hydrocarbons Inc. (1) during a Blackout Period, (2) while in the possession of Material Undisclosed Information, or (3) without first confirming with the CEO, COO, CFO or CS that no Blackout Period exists for the time the trade occurs. No Insider will engage in disclosing Material Undisclosed Information to any person, including friends and family members, other than in accordance with the Disclosure Policy.
Insider Trade Reporting
All Insiders of the Corporation required by law to do so (generally, all directors, officers and certain senior employees) will prepare and file, or cause to be prepared and filed, insider trading reports as required by all applicable laws, reporting each and every purchase or sale of MENA Hydrocarbons Inc. Shares, grant or exercise of stock options or warrants and all other transactions in the manner and within the time required under applicable securities legislation, and will forthwith provide a copy to the Corporation’s executive administrator for filing. Assistance is available from the Corporation’s executive administrator, but it is the responsibility of each Insider, not the Corporation’s executive administrator, to prepare and file, or cause to be prepared and filed, insider trading reports as required by all applicable laws, and the Corporation accepts no responsibility if the executive administrator makes a mistake on such report: it is the responsibility of the Insider to ensure that all reports are accurate, complete and timely.
If an Insider discloses any Material Undisclosed Information to any person, and the person receiving that disclosure directly or indirectly trades on that information (this includes the granting of options to acquire MENA Hydrocarbons Inc. Shares, the purchase or sale of other securities, the exercise of outstanding warrants or stock options, or the subsequent sale of MENA Hydrocarbons Inc. Shares), the Insider providing the information and those persons who receive the information may be equally criminally and civilly liable for trading on the Material Undisclosed Information, even if the Insider was unaware of the subsequent trading and the recipients of the information are not employed or associated in any way with the Corporation. In particular, this includes spouses, holding companies etc. As well, any person with power to influence or control the direction or management, policies or activities of another person, which may include directors and individuals in a supervisory position over that other person, who were aware that a violation was likely to occur and failed to take appropriate steps to prevent such an act from occurring, may be liable. The Canadian securities legislation imposes severe penalties including a maximum jail term of 10 years, civil penalties relevant to the circumstances, and compensation for damages to those that suffered because of the transaction. If you fail to observe this policy, you and the Corporation may be legally liable under Canadian securities laws, as described above, which may also result in administrative penalties by the applicable securities commission, e.g. your being prohibited from trading any securities at all for years. Any violation may also require the Corporation to take appropriate actions, up to and including possible suspension or termination of your employment. All employees must sign and return the attached Trading and Disclosure Policies.
The Corporation’s Trading Policy and the Corporation’s Disclosure Policy are important not only to prevent violations of Canadian securities laws, but also to avoid any situation which could damage MENA Hydrocarbons Inc.’s reputation for integrity and ethical conduct – assets of immeasurable value to the Corporation. If you have any questions concerning these policies, please contact the CEO, COO or the CFO.