Disclosure Committee
Members:
- Mr. Ed Shimoon (Designated Spokesperson)
- Mr. Tom Skupa
The Policy
Calvalley Petroleum Inc. and its subsidiaries (collectively, the “Corporation”) are committed to providing full, true and plain disclosure of material information about the Corporation, consistent with all applicable statutory and regulatory requirements.
This Disclosure Policy (the “Policy”) has been reviewed and adopted by the Board of Directors of the Corporation (the “Board”). The objective of this policy is to raise awareness of the Corporation’s approach to disclosure and promote compliance among the Board and management of the Corporation, other insiders, employees of and consultants to the Corporation. As such, this policy applies to the Board and management of the Corporation, other insiders, employees of and consultants to the Corporation and, to the extent possible, others who have non-public material information regarding the Corporation.
This policy covers disclosure in documents filed with the governing securities commissions and stock exchanges, in written statements made in the Corporation’s annual and quarterly reports, news releases, letters to shareholders, presentations by senior management and information contained on the Corporation’s website and in other electronic communications. The policy extends to verbal statements made in meetings, speeches by senior management and telephone conversations with analysts and investors, interviews with the media, press conferences and conference calls.
The Disclosure Committee
The Board has established a Disclosure Committee (the “Committee”) responsible for all regulatory disclosure requirements and for overseeing the Corporation’s disclosure practices. The Committee may consist of members of management, select employees of the Corporation, and/or members of the Board.
It is essential that the Committee be kept fully apprised of all current, pending and planned material developments in order to evaluate and discuss those events to determine the appropriateness and timing for public release of information. If it is deemed that material information should remain confidential, the Committee will determine how that information will be controlled.
The Committee will identify appropriate industry and corporate benchmarks for a preliminary assessment of materiality. Guided by these benchmarks, the Committee will use experience and judgement to determine the timing for public release of material information. The Committee is responsible for designing and implementing appropriate systems, processes and controls for disclosure and will review all news releases and material disclosure documents prior to their release or filing.
Quorum
Any two members of the Committee shall constitute a quorum for the transaction of Committee business. No business may be transacted by the Committee except at a meeting of its members at which a quorum of the Committee is present in person or by telephone or other communication device that permits all persons participating in the meeting to speak and hear each other, or by a resolution in writing signed by all members of the Committee.
Designated Spokespersons
The Chief Executive Officer or his designate(s) (collectively, the “Representatives”) of the Corporation shall be responsible for communication with the media, investors and analysts on behalf of the Corporation. The Representatives shall be the official spokespersons for the Corporation. A Representative may, from time to time, designate others within the Corporation to speak on behalf of the Corporation as an alternate or to respond to specific inquiries from the investment community or the media.
Any persons who are not authorized spokespersons must not respond under any circumstance to inquiries from the investment community or the media, and are prohibited from otherwise publicly communicating information about or on behalf of the Corporation unless specifically asked to do so by a Representative. All such inquiries shall be referred to a Representative.
Although the Representatives are responsible for communication with the media, investors and analysts on behalf of the Corporation, the Board and/or the Committee will review any public disclosure of the Corporation prior to its release. In particular: (i) the Committee will review all material disclosure documents prior to their release or filing; (ii) the Audit Committee of the Board will review the Corporation’s annual and interim financial statements and related financial reporting, including management's discussion and analysis and financial press releases and the Corporation’s renewal annual information form prior to their release; and (iii) the Reserves Committee of the Board will review any public disclosure or regulatory filings with respect to any reserves evaluation and the oil and gas activities of the Corporation prior to its release. Therefore, prior to the release of any such information, the Committee shall ensure that, as applicable, the Board and/or the appropriate committee of the Board has reviewed and approved of such information being released.
Responsibility for Electronic Communications
Any one of the Representatives or an individual designated by them shall be responsible for electronic communications. As such, they are responsible for monitoring all information placed on the Corporation’s website to ensure that it is accurate, complete and up to date. The Corporation's website must be updated immediately following the issuance of any press release announcing a material change in the then current information disclosed on the website. The website 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 data posted to the website, including text and audio-visual material, shall show the date that such material was posted.
Disclosure on the website alone does not constitute adequate disclosure of material information. Therefore, any disclosure of material information on the website must be in conjunction with a news release and, if appropriate, a securities regulatory filing.
Any one of the Representatives shall also be responsible for responses to electronic inquiries from the investment community or the media. Only public information or information which could otherwise be disclosed in accordance with this policy shall be utilized in responding to electronic inquiries.
Directors, officers and employees of the Corporation and consultants to the Corporation are prohibited from participating in internet chat-room or news-group discussions on any matters pertaining to the Corporation’s activities or securities of the Corporation. Directors, officers, employees and consultants who encounter a discussion pertaining to the Corporation should advise one of the Representatives immediately, in order that the discussion may be monitored.
Material Information
Securities legislation, stock exchange policies and this policy make frequent reference to material information. In this policy, material information is any information relating to the business and affairs of the Corporation that results in, or would reasonably be expected to affect, the investment decisions of a reasonable holder of securities of the Corporation or an investor or if the information would reasonably be expected to affect the market price or value of any of the securities of the Corporation.
Principles of Disclosure of Material Information
Material information that is not subject to confidentiality restrictions will be disclosed via news release and broadly disseminated to the public. Unfavourable material information will be disclosed in the same manner as favourable information. Disclosure shall be consistent among all audiences, including the investment community, the media, customers, employees and consultants and shall not be disclosed selectively. Disclosure must include any information which, if omitted, would make the rest of the disclosure misleading. If determined appropriate by the Committee, disclosure shall be updated if earlier disclosure has become misleading as a result of intervening events.
News releases containing earnings guidance and financial results will be reviewed by the Audit Committee, and approved by the Board or the Audit Committee, as applicable, and publicly released immediately thereafter.
The Corporation uses a wire service to disseminate news releases that provides simultaneous disclosure. In addition, news releases are simultaneously filed with the applicable regulatory authorities, posted on the Corporation’s website and faxed or e-mailed to interested parties who requested to receive such releases directly.
When necessary, the Corporation will file a material change report with the Canadian securities regulators.
Insider Trading
Securities laws prohibit “insider trading” or “tipping”. Insider trading occurs when a Director, officer or employee of the Corporation or consultant to the Corporation trades in securities of the Corporation or other affected securities while possessing material, non-public information. Tipping occurs when a Director, officer or employee of the Corporation or consultant to the Corporation passes on material, non-public information (“tips”) to someone else, who then uses the information to trade in securities of the Corporation.
The Corporation’s Insider Trading Policy contains further information on trading restrictions, trading windows and blackout periods.
News Releases
Once the Committee determines that certain information is material, it will authorize the issuance of a news release, unless such information must remain confidential for a certain time. In such circumstances, appropriate control of the non-public material information will be enforced and such information must not be disclosed to any officers, employees, consultants or third parties except as is necessary and all confidential filings will be made as required under applicable securities laws. Should material information inadvertently be disclosed in a selective forum, a news release will be issued immediately in order to fully publicly disclose that information.
News releases containing any earnings guidance and financial results will be reviewed by the Audit Committee prior to issuance. Financial results will be publicly released immediately following Audit Committee or Board approval of the MD&A and financial statements.
News releases will be disseminated through a news wire service that provides simultaneous disclosure. News releases will be transmitted to all stock exchange members, relevant regulatory bodies, major national financial media and local media in areas where headquarters are located.
If the stock exchange(s) listing the Corporation’s securities are open for trading at the time of a proposed announcement, prior notice will be provided (where practicable) to the market surveillance departments of the appropriate exchange(s). If the announcement is issued outside of normal trading hours, market surveillance will be notified (where practicable) before the markets opens.
News releases will be simultaneously posted on the Corporation’s website.
Rumours
Provided it is clear that the Corporation is not the source of the market rumour, spokespersons will consistently respond by saying “It is our policy not to comment on market rumours or speculation.” The Corporation will not respond to rumours on the internet. Should any stock exchange request a definitive statement be issued in response to a market rumour that is causing significant volatility in the Corporation’s shares, the Committee will consider the matter and decide on an appropriate response. If a rumour is correct in whole or in part or if it is determined that the Corporation is the source of the rumour, then the material information which relates to such rumour shall be promptly disclosed.
Forward-Looking Information
The Corporation will not release earnings or cash flow projections. However, where a significant increase or decrease in earnings is indicated in the near future, such as the next fiscal quarter, this fact will be disclosed. The Corporation may, from time to time, release forward-looking information to enable the investment community to better evaluate the Corporation and its prospects. The Corporation will not disclose significant data, and in particular financial information or earnings forecasts or any other information which would be material information, to analysts or investors unless such data or information has been previously publicly disseminated.
If forward-looking information is provided in a disclosure document, meaningful cautionary language should be included warning investors that the information is forward-looking and providing the material factors or assumptions that were used in making the forward-looking statement and the risks and uncertainties that could cause actual results to differ materially. In the case of a verbal forward-looking statement, the statement will be identified as such and the spokesperson will refer to the cautionary language included in written disclosure documents.
Contacts with Analysts, Investors and the Media
The Corporation recognizes that analysts are important avenues for disseminating information respecting the Corporation to the investing public and that they play a key role in interpreting and clarifying existing public data, as well as providing investors with background information and details that cannot practically be put in public documents. Representatives of the Corporation will meet with analysts and investors on an individual or small 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 Policy. The Corporation will provide only non-material information or publicly disclosed information to such analysts and will provide the same information that has been provided to analysts to individual investors who request it.
It is recognized that analyst disclosure does not constitute adequate disclosure of information that is considered material non-public information. If material information is to be announced at an analyst or shareholder meeting, press conference or conference call, its announcement must be in conjunction with a general public announcement via news release. One week prior to the release of quarterly or annual financial results, the Corporation will enact a “quiet period” where no discussions with analysts or the media will occur.
Reviewing Market Analyst Draft Reports and Models
It is the Corporation’s policy to review, upon request, market analysts’ draft research reports or models. If requested, the Corporation will review the report or model for the purpose of identifying publicly disclosed factual information that may affect the report or model or pointing out inaccuracies or omissions with reference to publicly available information. It is also the Corporation’s policy, when market analysts inquire with respect to their earnings and/or cash flow estimates, to (i) acknowledge what the current range of other market analysts’ estimates is, and (ii) question any market analyst’s assumptions if such estimate is significantly out of the current range. The Corporation will not confirm, provide any guidance or attempt to influence any market analyst’s opinions or conclusions and will not express comfort with such analyst's model and earnings estimates.
Market analyst reports are proprietary information belonging to the particular analyst’s firm. A list of all market analysts covering the Corporation, and their contact numbers, will be posted on the Corporation’s website and provided to anyone requesting such information.
Retention Period for Disclosure Material
A file will be maintained, containing all public information about the Corporation, including continuous disclosure documents, news releases, market analysts’ reports, debriefing notes and newspaper articles.
The minimum retention period for material information posted on the Corporation’s website and transcripts or tape recordings of conference calls shall be two years. More importantly, news releases, quarterly financials and annual reports shall be kept for a period of six years.
Maintaining Confidentiality
Any employee who is 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 to perform their duties, and such persons will be advised that the information is to be kept confidential.
All confidential information being transmitted over the internet must be secured by the strongest encryption and validation methods available. Where possible, employees should avoid using e-mail to transmit confidential information.
No material information should be disclosed by Directors, officers, employees or consultants to outside parties except in the necessary course of business. Outside parties who are privy to undisclosed material information concerning the Corporation will be told they must not divulge such information to anyone else, other than in the necessary course of business, and that they may not trade in securities of the Corporation until the information has been generally disclosed. the Corporation may, if deemed appropriate, require such outside parties to enter into a 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:
- Confidential matters should not be discussed in places where the discussion may be overheard.
- Confidential documents should not be read in public places and should not be discarded where others can retrieve them. Employees should not leave confidential information in their homes.
- Transmission of documents by electronic means 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.
- Documents and files containing confidential information should be kept in a safe place to which access is restricted to individuals who “need to know” in the necessary course of business. Code names should be used if necessary.
- All proprietary information, including computer programs and other records, remain the property of the Corporation and may not be removed, disclosed, copied or otherwise used except in the normal course of employment or with prior permission.
Communication and Enforcement
All Directors, officers and employees of the Corporation and consultants to the Corporation will be advised of this Policy and its importance.
An employee or consultant who violates this Policy may face disciplinary action up to and including termination of employment in the case of employees and termination of the consulting agreement in the case of consultants If it is discovered that the securities laws of any jurisdiction have been violated, this matter will be referred to the appropriate regulatory authorities.
The Internet
Employees and consultants using email and internet services will be made aware that the corporate email address and related personal sub email addresses (i.e., employee’s name attached to corporate address) are company addresses and that all correspondence received and sent via email are to be considered corporate correspondence. As all computer equipment belongs to the Corporation and is subject to access and monitoring, the Corporation reserves the right to read email messages. In this regard, employees and consultants will be advised to have no expectation of personal privacy and that email messages are written documents which are not secure and can be forwarded or circulated to unknown individuals and corporations.
Message Guidelines
Directors, officers and employees of the Corporation and consultants to the Corporation will be advised as follows:
- Do not transmit messages or attach documents containing the Corporation’s confidential or proprietary information. If proprietary information needs to be exchanged with legitimate business partners, ensure that secure communications have been established.
- Do not transmit messages using corporate credit card numbers, telephone calling numbers, log-in passwords, and other parameters which can be used to gain access to the Corporation’s records unless done so in a secure environment.
- Do not transmit messages or download or save attachments that are libelous, defamatory, pornographic, racist, sexist or disclose personal or private matters concerning someone else.
- Do not use another person’s email address to send messages.
- Do not access another person’s files or messages.
- Obey all copyright laws regarding material incorporated into messages.
- Do not attach executable programs, macros or other forms of computer software to messages, since software copyrights have specific protections under the Criminal Code (Canada).
- Do not download executable programs from the Web or from attachments to received messages without the approval and assistance of the Information System Co-ordinator, in order to avoid compatibility problems that can cause other applications to stop working. Contact the Information Systems Co-ordinator, for approval and assistance, if,additional software is required.
- Do not participate in, or forward, chain messages, or other forms of external solicitations.
- Do not broadcast personal messages or discussions relating to the Corporation or its securities to public-group lists or Internet chat-rooms.
Communication and Enforcement
All Directors, officers and employees of the Corporation and consultants to the Corporation will be advised of this Policy and its importance, on an annual basis.
An employee or consultant who violates this Policy may face disciplinary action up to and including termination of employment, in the case of an employee, and, in the case of a consultant, termination of the consulting contract with The Corporation. If it is discovered that securities laws have been violated, this matter will be referred to the appropriate regulatory authorities.
This Policy was originally reviewed and adopted by the Board, on behalf of the Corporation on the 21st day of March, 2006. Amendments to this Policy were reviewed and adopted by the Board, on behalf of the Corporation, on November 7, 2006.