Code of conduct for the Board of Directors and Senior Management
This Code of Conduct is for the Board of Directors and the Senior Management of the Company to enable them to adhere to the high standards of business conduct and to ensure compliance with legal requirements, specifically section 406 of the Sarbanes-Oxley Act of 2002, and the SEC rules promulgated there under. The code would deter wrong doing, promote ethical conduct and ensure conduct of business with values. This code is intended to supplement the Quadrant 4 Code of Conduct.
The code is applicable to the following persons, referred to as Management Team Members:
- Our principal executive officer,
- Our principal financial officer,
- All professionals serving in the roles of finance, tax, accounting, purchase, treasury, internal audit and investor relations. Further, this includes all disclosure committee members, all members of senior management, the members of the audit committee, and the members of the board of Quadrant 4 and its subsidiaries.
The code would be circulated to all the Management Team Members each year. All executives would sign this code of conduct at the beginning of the financial year.
Disclosure to the Stock Exchange and the Public
The Company’s policy is to provide full, fair, accurate, timely and understandable disclosure in reports and documents filed with the exchange and other public communications. Quadrant 4 executives should ensure that they comply with all disclosure norms and procedures and other financial reporting.
Compliance with Governmental Laws, Rules and Regulations
Management Team Members must comply with all applicable government laws, rules and regulations. Management Team Members must acquire appropriate knowledge of all legal requirements relating to their duties. Violation of laws, rules and regulations may subject Management Team Members to individual criminal or civil liability, as well as disciplinary action by the Company. It may also subject the Company to civil or criminal liability or loss of business.
Directors and Management Team Members must fulfill three essential duties while performing their corporate functions
Business Judgement Rule
Even for decisions that may later prove to be mistakes, directors and Management Team Members are presumed to have satisfied their basic duties if the Business Judgment Rule (BJR) applies. This important defense protects directors and Management Team Members who make informed and disinterested business decisions in good faith. Given that the directors are not insurers of corporate success, the business judgment rule specifies that the court will not review the business decisions of directors who performed their duties
- In good faith
- With the care that an ordinarily prudent person in a like position would exercise under similar circumstances.
- In a manner the directors reasonably believe to be in the best interests of the corporation.
Conflict of Interest
Even the appearance of a conflict of interest should be avoided if possible, and disclosed if unavoidable. Directors and Management Team Members should avoid situations where their personal interest may, or appears to, conflict with the best interest of the company. This rule applies both to obvious situations, where the individual has interests on both sides of a transaction, and to more subtle situations. If a director has a close relationship with someone dealing with the company, the director could be challenged on conflict-of-interest grounds. Because this is fertile ground for liability, directors and Management Team Members must remain sensitive towards conflict-of-interest issues. Analysis for potential conflict should be incorporated into various corporate procedures. When a potential conflict exists, that person should fully disclose to the decision makers all material information regarding the conflict and then remove himself or herself from any discussion and vote on the issue. For example, only outside directors should act on items affecting the inside directors, such as compensation arrangements and employment contracts. Having directors or Management Team Members also serving as plan fiduciaries of company employee benefit plans is another potentially dangerous conflict-of-interest situation. Inherent conflicts of interest can arise when balancing the sometimes-competing interests of the company and plan participants. when in doubt as to whether a conflict exists, advice from legal counsel should be obtained.
Securities Law Compliance
Claims under the federal securities laws present the greatest exposure for directors and Management Team Members of public companies. A material upward or downward movement in the company’s stock price, if perceived to be caused by surprising disclosures, litigation will likely be filed alleging that the company and the responsible directors and Management Team Members misled the investing public. Investors who traded in the company’s stock during the period the information was allegedly withheld or misrepresented may claim they suffered financial damage to the extent the stock price was different when they traded than what it would have been if proper disclosure of the information had been made. The goal of the federal securities laws, and thus the goal of a securities law loss prevention program, is to ensure the full, accurate, and timely disclosure of material information. Some general loss prevention concepts in this area include:
A. Coordinated team approach
No one person or department can fully satisfy the securities law disclosure requirements. Rather, an integrated team of outside professionals and representatives from various segments of the company must work together, with how, and who identifies and discloses material information. Inadequate internal communication frequently leads to inadequate disclosures to the investing public. Delegation of responsibility although many aspects of the disclosure process are typically delegated to lower management or outside professionals, senior management and, where appropriate, directors should personally review all important securities law filings and disclosure statements and assure themselves that the company has taken reasonable steps to accurately and completely disclose all relevant material information.
B. Detailed disclosures
The more specific and detailed a disclosure, the more likely it will satisfy investors and the courts. Vague or veiled references to negative information invite false expectations by investors and therefore serve little benefit.
C. Exaggerated disclosures
Companies should not overly tout good news, nor downplay negative news. The company should resist the temptation to maintain or unduly increase investor confidence at the risk of disclosing misleading information. Appropriate restraint in disclosing good news and openness in disclosing negative news builds long-term credibility and helps prevent unreasonable expectations.
D. Company Spokespersons
New SEC rules against “selective disclosure” (regulation FD) make it more imperative than ever that disclosures be communicated through a relatively small number of clearly identified company spokespersons who are experienced and schooled in investor relations issues.
E. Monitor investment expectations
A company’s disclosures should be based, in part, upon the expectations of investors. If the company detects that those expectations are diverging from reality, appropriate corrective disclosure may be appropriate even if such disclosure is not otherwise required. Timely advance disclosure of potentially troubling information or trends, thus resulting in a gradual decline in stock price, makes the company unattractive as a target of shareholder litigation.
G. Insider trading
The corporation should distribute to all appropriate employees a policy statement informing employees of their obligation to safeguard information and instructing them not to trade on the basis of material, non-public information. Many companies also implement a “blackout” period usually immediately preceding the quarterly earnings announcement or other important disclosure during which a defined group of insiders may not buy or sell company securities; Even if all blacked-out executives are not aware of the soon-to-be-released information, such a policy avoids transactions that create an appearance of insider trading.
Violation of Code
Management Team’s job is to help Company to enforce this code. Violations should be reported to the Audit Committee. Officer must cooperate with internal or external investigations for any violations. The Company will take appropriate action against the officer whose actions are found to violate the code or any other policy of the Company. Disciplinary action would include termination of employment. Where the Company suffers a loss it may purse its remedies against the individuals responsible.
Waivers and Amendments to the Code
Company would review and update the policies and procedures. The code is subject to modification. Any amendment to the code is subject to the approval of the Board of Directors and disclosed to all the Management Team Members and is pursuant to the applicable laws and regulations.
All Management Team Members shall declare that they have received and read the Company’s code and understand the standards and policies contained in the code and shall agree to comply with the code.