PURPOSE

The Corporate Governance and Nominating Committee (the “Committee”) is a standing committee appointed by the Board of Directors (the “Board”) of Greenpro Capital Corp. (the “Company”) and is mainly responsible for governance functions and nominating functions. The Committee’s responsibilities include: (1) overseeing and evaluating the Board’s performance and the Company’s compliance with applicable corporate governance regulations, guidelines and principles, (2) identifying individuals qualified to become Board members, (3) making recommendations to the Board regarding proposed nominees for Board membership, and (4) making recommendation to the Board regarding directors to serve on each standing committee.

 

COMMITTEE MEMBERSHIP

  • The Committee shall be comprised of no fewer than two members as determined from time to time by the Board.
  • Each member of the Committee shall meet the “independence” requirements of U.S. securities laws and of any U.S. or foreign national securities exchange on which the Company’s stock may be listed from time to Notwithstanding anything to the contrary in this charter, if permitted by applicable SEC and stock exchange laws and regulations in effect from time to time, the Board may appoint one or more members to the Committee that do not meet the requirements for independence.
  • The members and chair of the Committee shall be appointed and removed by the Board

 

AUTHORITY OF THE COMMITTEE

The Committee:

  • shall have reasonable access to all information necessary in fulfilling its responsibilities and all employees shall be directed to cooperate as reasonably requested by members of the Committee;
  • shall have the sole authority to obtain advice and assistance from outside legal or other advisors in its sole discretion to assist the Committee in fulfilling its responsibilities;
  • shall have the sole authority to retain and terminate any search firm to be used to identify director candidates and shall have sole authority to approve the search firm’s fees and other retention terms;
  • may require officers and employees of the Company to produce such information and reports as the Committee may deem appropriate in fulfilling its responsibilities;
  • shall have the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion; and
  • shall have such other authority as may be delegated by resolution of the

 

COMPOSITION

  • Membership

    • The Committee will consist of:
      • non-executive independent directors; and
      • a minimum of two members.

The members will be appointed by the Board.

If a member ceases to be a director of the Board, that member ceases to be a member of the Committee.

  • Chair

    • The Chair of the Committee:
      • will be appointed by the Board;
      • will be an independent director; and
      • may be the Chair of the Board.

If the Chair of the Committee is unable to attend a Committee meeting, the Chair, or the members present, will appoint another member who is an independent director to act as Chair at that meeting.

 

MEETINGS

  • Frequency of meetings

The Committee shall meet at such times and with such frequency as the Committee shall determinate as appropriate to meet its responsibilities. Additional Committee meetings may be convened as the Chair of the Committee considers necessary, taking in to account requests from any other member of the Committee.

  • Quorum

A majority of the total number of members of the Committee shall constitute a quorum at all Committee meetings.

  • Minutes of Meeting

Meetings may be in person, telephonically or through video conference, and actions may be taken by unanimous written consent. The Committee will maintain written minutes of its meetings and copies of its actions by written consent, and will cause such minutes and copies of written consents to be filed with the minutes of the meetings of the Board. The Chair will periodically report to the Board on the Committee’s deliberations and actions. The minutes of the Committee and actions by the unanimous written consent of the Committee members will be made available to the other members of the Board.

 

RESPONSIBILITIES OF THE COMMITTEE

  • Corporate Governance

    • The Committee shall:
      • oversee all aspects of the Company’s corporate governance functions on behalf of the Board;
      • recommend to the Board corporate governance polices, practices and procedures applicable to the Company;
      • monitor compliance with the corporate governance policies and provide advice on issues of corporate governance to the Board;
      • monitor and assess the relationship between the Board and management and make such recommendations as it may deem necessary with a view to ensuring that the Board is able to function independently of management;
      • review and recommend for approval to the Board any changes requested by management regarding the Company’s corporate disclosure policies, and periodically review and if desirable recommend to the Board amendments to the Company’s corporate governance policies, including its policy with respect to insider trading in the Company’s securities and its codes of business conduct and ethics for directors, officers and employees; and
      • annually review its own performance.
  • Director Nomination and Evaluation

    • The Committee shall:
      • make recommendations to the Board regarding minimum qualifications of director candidates, and processes for identifying and nominating directors;
      • evaluate the business experience, specialized skills and experience of director candidates. Diversity of background and experience, including diversity of race, ethnicity, international background, gender and age, may be considered by the Committee when evaluating candidates for Board membership;
      • determine each proposed nominee’s qualifications for service on the Board and conduct appropriate inquiries into the backgrounds and qualifications of possible nominees. Each nominee should be a person of integrity and be committed to devoting the time and attention necessary to fulfill his or her duties to the Company;
      • consider issues involving possible conflicts of interest of directors and potential directors;
      • identify individuals qualified to become Board members, select or recommend director nominees, and recommend to the Board the director nominees for the next annual meeting of shareholders;
      • evaluate and recommend to the Board when new members should be added to the Board, and recommend a replacement member to the Board when a vacancy occurs on the Board by reason of disqualification, resignation, retirement, or death; and
      • evaluate the performance of each director before recommending to the Board his or her nomination for an additional term as director.

 

RESOURCES AND AUTHORITY

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including full access to the Company’s executives, as necessary, as well as the authority to select, retain, terminate and approve the fees and other retention terms of search firms used to assist in the identification of director candidates, as well as special counsel or other experts or other consultants, as it deems appropriate to assist the Committee in the performance of its responsibilities.

Adopted: March 17, 2017

INTRODUCTION

This Code of Business Conduct and Ethics (the “Code”) covers a wide range of business practices and procedures. It does not cover every issue that may arise but it sets out basic principles to guide all employees of Greenpro Capital Corp. (the “Company”). All of our officers, directors and employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The Code should also be provided to and followed by the Company’s agents and representatives, including consultants.

If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor or an officer of the company.

Those who violate standards in this Code will be subject to disciplinary action, up to and including termination of employment.

 

COMPLIANCE WITH LAWS, RULES AND REGULATIONS

Obey the law, both in letter and in spirit, is the foundation on which our ethical standards are built. All employees must respect and obey the laws of the cities, states and countries in which we operate. Although not all employees are expected to know the details of these laws, it is important to know enough about them to determine when to seek advice from supervisors, managers or other appropriate personnel.

 

CONFLICTS OF INTEREST

A “conflict of interest” exists when a person’s private interests interferes in any way with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and efficiently. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest.

It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by our board of directors (“BOARD OF DIRECTORS”). Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management. Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult with the procedures described in Section 14 of this Code.

 

INSIDER TRADING

Employees who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.

 

CORPORATE OPPORTUNITIES

Employees, officer and directors are prohibited from taking for themselves personally, opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No employee may use corporate property, information or position for improper personal gain, and no employee may compete with the Company, directly or indirectly.

 

COMPETITION AND FAIR DEALING

We seek to outperform our competition fairly and honestly. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each officer, director and employee should respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift, or entertainment should ever be offered, given, provided or accepted by any Company employee, family member of an employee or agent, unless it (a) is not in cash, (b) is consistent with customary business practices, (c) is not excessive in value, (d) cannot be construed as a bribe or payoff and (e) does not violate any laws or regulations. Please discuss with your supervisor any gifts or proposed gifts that you are not certain are appropriate.

 

DISCRIMINATION AND HARASSMENT

The diversity of the Company’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all respects aspects of employment and will not tolerate illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.

 

HEALTH AND SAFETY

The Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of alcohol and/or illegal drugs in the workplace will not be tolerated.

 

RECORD-KEEPING

The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported.

Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or the Company’s controller or chief financial officer (“CFO”).

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform to both applicable legal requirements and to the Company’s systems of accounting and internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable laws or regulations.

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos and formal reports. Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with these policies, in the event of litigation or governmental investigation please consultant your supervisor. All e-mail communications are the property of the Company and employees, officers and directors should not expect that Company or personal e-mail communications are private. All e-mails are the property of the Company. No employee, officer or director shall use Company computers, including to access the internet, for personal or non-Company business.

 

CONFIDENTIALITY

Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends. In connection with this obligation, employees, officers and directors may be required to execute confidentiality agreements confirming their agreement to be bound not to disclose confidential information. If you are uncertain whether particular information is confidential or non-public, please consult your supervisor.

 

PROTECTION AND PROPER USE OF COMPANY ASSETS

All officers, directors and employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business.

The obligation of officers, directors and employees to protect the Company’s assets includes it proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.

 

PAYMENTS TO GOVERNMENT PERSONNEL

The Unites States Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the U. S. government has a number of laws and regulations regarding business gratuities that may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gist, favor or other gratuity in violation of these rules would not only violate Company policy, but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.

 

WAIVERS OF THE CODE OF BUSINESS CONDUCT AND ETHICS

Any waiver of the provisions of this Code may be made only by the Board of Directors and will be promptly disclosed as required by law or stock exchange rule or regulation.

 

REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR

Employees are encouraged to talk with supervisors, managers or Company officials about observed illegal or unethical behavior, and when in doubt about the best course of action in an particular situation. It is the Company’s policy not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct, and the failure to do so could serve as grounds for termination. Any employee may submit a good faith concern regarding questionable accounting or auditing matters without fear of dismissal or retaliation of any kind.

 

COMPLIANCE PROCEDURES

We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations, it is difficult to know if a violation has occurred. Since we cannot anticipate every situation that may arise, it is important that we have a way to approach a new question or problem. These are steps to keep in mind:

MAKE SURE YOU HAVE ALL THE FACTS. In order to reach the rights solutions, we must be as fully informed as possible.

ASK YOURSELF, WHAT SPECIFICALLY AM I BEING ASKED TO DO – DOES IT SEEM UNETHICAL OR IMPROPER? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.

CLARIFY YOUR RESPONSIBILITY AND ROLE. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

DISCUSS THE PROBLEM WITH YOUR SUPERVISOR. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Keep in mind that it is your supervisor’s responsibility to help solve problems. If your supervisor does not or cannot remedy the situation, or you are uncomfortable binging the problem to the attention of your supervisor, bring the issue to the attention of the human resources supervisor, or to an officer of the Company.

YOU MAY REPORT ETHICAL VIOLATIONS IN CONFIDENCE AND WITHOUT FEAR OF RETALIATION. If your situation requires that your identity be kept secret, your anonymity will be protected. The Company does not permit retaliation of any kind for good faith reports of ethical violations.

ALWAYS ASK FIRST – ACT LATER. If you are unsure of what to do in any situation, seek guidance BEFORE YOUR ACT.

I. BACKGROUND

Section 201 of the Sarbanes-Oxley Act of 2002 (the “Act”) prohibits certain activities by the external auditor of the Company which is charged with performing the audit of the Company’s financial statements for the purpose of expressing an opinion thereon (the “primary external auditor”). The Audit Committee (the “Committee”) of the Board of Directors of Greenpro Capital Corp. (the “Company”) will not approve nor will the independent auditor perform for the Company any services that constitute prohibited activities. The prohibited non-audited services are showed in Exhibit 1.

The Committee of the Company is responsible for the appointment, compensation and oversight of the work of independent auditor. As part of this responsibility and in compliance with applicable laws, regulations and listing standards, the Audit Committee must pre-approve the audit, audit-related, other services performed by the independent auditor and ensure that the provision of such services does not impair the auditor’s independence. All audit services, audit related services and non-audit services to be provided by the external auditor should be:

  • Approved by the Audit Committee as general pre-approval with the details of the particular services and do not delegate Audit Committee responsibilities to the management or
  • Specifically approved by the Audit Committee as specific services (Specific pre-approval). These services may be entered into pursuant to this Preapproval Policy.

The Committee shall annually review and pre-approve the audit and non-audit services supplied by the external auditor as to the nature and scope of the services to see if any services may effects the auditors’ independence. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee with periodically revise the list of pre-approved services based on subsequent determinations.

 

II. PURPOSE

The Audit Committee of the Company has adopted this Auditor Services Pre-approval Policy (the “Policy”) as part of the Company’s comprehensive Corporate Governance Policy in order to provide the policies and procedures followed by the Audit Committee in reviewing and pre-approving audit, audit-related and non-audit services to be provided by the Company’s independent external auditor, and to disclose those policies and procedures to the Company’s shareholders. The policies and procedures in this policy are set forth as guidelines and they do not constitute requirements or create legal obligations. The Audit Committee may supplement or modify the policies and procedures as appropriate in its discretion, or it may choose to pre-approve External Auditor services in other ways that it deems advisable in its business judgement.

 

III. PRE-APPROVAL PROCESS

a. Audit Services

The Audit Committee will approve that all audit services to be performed by the primary external auditor will be performed pursuant to a written engagement letter which outlines the scope and nature of the services and the fees to be paid for such services, and review the annual audit engagement terms and related fees to see if any change in terms, conditions and fees needed resulting from changes in audit scope.

In addition to the annual audit services engagement, the Audit Committee may grant pre-approval for other audit services, which are those services that only the independent auditor can reasonably provide. The Audit Committee has pre-approved the audit services listed in Appendix A. All other audit services not listed in Appendix A must be separately pre-approved by the Audit Committee.

b. Audit-Related Services

Audit-related services, including internal control-related services, are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and/or the Company’s internal control over financial reporting and that are traditionally performed by the independent auditor. The Audit Committee believes that the provision of the audit-related services does not impair the independence of the auditor and is consistent with the SEC’s rules on auditor’s independence. The Audit Committee has pre-approved the audit-related services listed in Appendix B and all other audit-related services not listed in Appendix B must be specifically pre-approved by the Audit Committee.

c. Non-audit services

The Audit Committee may grant preapproval for those permissible non-audit services classified as all other services that it believes would not impair the independence of the auditor and that are consistent with SEC’s rules on auditor independence, including those that are routine and recurring services. The Audit Committee has given policy-based preapproval for the other services listed in Appendix C.

All requests for non-audit services to be provided by the independent director that are not included in the pre-approval policy will be approved by the audit committee and include a detailed description of the services. Permissible all other services not listed in Appendix C must be specifically pre-approved by the Audit Committee.

A list of the Securities and Exchange Commission’s (“SEC”) prohibited non-audit services is attached to this Preapproval Policy as Exhibit 1. The Company will not engage its independent auditor for such services. The rules of the SEC and the Public Company Accounting Oversight Board (“PCAOB”) should be consulted to determine whether there are possible exceptions of the prohibitions.

d. Delegation of Authority

As provided in the Act, the Audit Committee may delegate pre-approval authority to one or more of its members. The Chairman of the Audit Committee is authorized to give specific pre-approval to any audit or non-audit services to be provided by the independent auditor. The Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent auditor. All pre-approval decisions must be reported to the Audit Committee at its next scheduled meeting for informational purpose only.

 

Appendix A

Dated:  March 23, 2016

Pre-Approved services

Pre-Approved Audit Services for Fiscal year 2016

  • Statutory audits or financial audits for subsidiaries or affiliates of the Company
  • Audit of the Company’s internal control over financial reporting
  • Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters, consents), and assistance in responding to SEC comment letters
  • Consultations by the Company’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board (“FASB”), Public Company Accounting Oversight Board (“PCAOB”) or other regulatory or standard setting bodies


A
ppendix B  

Pre-Approved Audit-Related Services for Fiscal year 2016   

  • Assistance with financial due diligence performed pertaining to potential business acquisitions/dispositions
  • Audit of pension and other benefit plans
  • Agreed-upon or expanded audit procedures or attestation services related to accounting records required to respond to or comply with financial, accounting or regulatory reporting matters
  • Assistance with statutory financial reporting, such as providing technical advice and compliance (preparation) services in connection with required statutory filings.
  • Internal control, risk management and corporate governance reviews and assistance with associated reporting requirement
  • Review of the effectiveness of the internal audit function
  • General assistance with implementation of the requirements of SEC rules or listing standards promulgated pursuant to the Sarbanes-Oxley Act
  • Consultations by the Group’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, IASB, or other regulatory or standard-setting bodies. (Note: Under SEC rules, some consultations may be “audit” services rather than “audit-related” services)


A
ppendix C

Pre-Approved All Other Services for Fiscal year 2016

  • Special projects

 

Exhibit 1

Prohibited Non-audit Services include:

  1. Bookkeeping or other services related to the accounting records or financial statements of the Company;
  2. Financial information systems design and implementation;
  3. Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
  4. Actuarial services;
  5. Internal audit outsourcing services;
  6. Management functions or human resources;
  7. Broker or dealer, investment adviser, or investment banking services;
  8. Legal services, and expert services unrelated to the audit;
  9. Services provided for a contingent fee or commission;
  10. Services related to marketing, planning or opining in favor of the tax treatment of (i) a confidential transaction, or (ii) an aggressive tax position transaction that was initially recommended, directly or indirectly, by the primary external auditor; and
  11. Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

PURPOSE

The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Greenpro Capital Corp., a Nevada corporation (the “Company”), is appointed by the Board for the purpose of oversight(1) the integrity of the financial reporting of the company, (2) the disclosure of financial statement of the company (3) the independence, qualifications and performance of the Company’s external independent auditor and internal auditors, (4) the Company’s compliance with law and regulatory requirements, (5) the company’s monitoring, (6) the performance of the Company’s internal controls functions. The Committee is responsible for oversighting and reviewing. It is the responsibility of the Company’s management to prepare the financial statements that are in accordance with generally accepted accounting principles in the United Stated (GAAP). The Committee does not provide any expert assurance as to such financial statement that are compliance with the law and regulations.

 

AUTHORITY

The Committee has authority to retain such independent legal, accounting or other adviser as it determines necessary to carry out its duties and to conduct or authorize special investigations. The Committee may request any officer or employee of the Company, or the Company’s outside counsel or independent registered public accounting firm:

  • to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
  • to provide any pertinent information to the Committee or to any other person or entity designated by the Committee

 

FUNDING

The Company shall provide the Committee with appropriate funding, as determined by the Committee in its capacity as a committee of the Board, for the payments of:

  • compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company;
  • compensation to any independent advisers retained by the Committee in carrying out its duties;
  • And ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

 

COMMITTEE MEMBERSHIP

The Committee shall be comprised of at least three (3) Board members and each of which shall be a member of the Board. The members shall be appointed by the Board and shall serve at the discretion of the Board. The Board shall designate one Committee member as the Committee’s chair (The Chairman). The following membership requirements shall also apply:

  • Each audit committee member will meet the applicable standards of independence as defined in the rules and regulations [SEC Rule 10A of the Exchange Act, NYSE Corporate Governance Rules 303A.6 and 7(a) and 7(b), and NASDAQ Corporate Governance Rule 5605(c)(2)(A)]
  • Each audit committee member must be a member of the board of directors of the listed issuer, and must otherwise be independent; provided that, where a listed issuer is one of two dual holding companies, those companies may designate one audit committee for both companies so long as each member of the audit committee is a member of the board of directors of at least one of such dual holding companies.
  • Each audit committee member must not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three (3) years;
  • Each audit committee member must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement; and
  • At least one (1) Member must have:
  • past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background which results in such Member’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities;
  • Or through appropriate education and/or experience, satisfy the definition of “audit committee financial expert” as defined by rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

Notwithstanding each audit committee member shall meet the applicable standards of independence. However, one (1) director who: (a) is not independent as defined in NASDAQ Marketplace Rule 4200(a)(15); (b) meets the criteria set forth in Section 10A(m)(3) under the Act and the rules promulgated thereunder; and (c) is not a current officer or employee of the Company or Family Member (as defined in NASDAQ Marketplace Rule 4200(a)(14)) of such an officer or employee, may be appointed to the Committee if the Board, under exceptional and limited circumstances.

The Board determines that membership on the Committee by the individual is required by the best interests of the Company and its shareholders, and the Board discloses, in the Company’s next annual proxy statement subsequent to such determination, the nature of the relationship and the reasons for that determination.  Moreover, a member appointed under the exception must not serve longer than two (2) years and must not serve as chairperson of the Committee.

If a current Member of the Committee ceases to be independent under the requirements of subparagraphs (1) and (2) above for reasons outside the Member’s reasonable control, the affected Member may remain on the Committee until the earlier of the Company’s next annual shareholders meeting or one year from the occurrence of the event that caused the failure to comply with those requirements.

 

DUTIES AND RESPONSIBILITIES

In fulfilling its purposes as stated in this Charter, the Committee shall undertake the specific duties and responsibilities listed below and such other duties and responsibilities as the Board shall from time to time prescribe, and shall have all powers necessary and proper to fulfill all such duties and responsibilities.  Subject to applicable Board and shareholder approvals, the Committee shall:

  • Financial Statement & Disclosure Matters

    • Review the policies and procedures adopted by the Company to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the SEC and NASDAQ (or such other exchange on which the Company’s common stock is traded);
    • Oversee the Company’s accounting and financial reporting processes;
    • Oversee audits of the Company’s financial statements;
    • Discuss policies with respect to risk assessment and risk management, and discuss the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures;
    • Review with the Company’s independent registered public accounting firm, management and internal auditors any information regarding “second” opinions sought by management from any other accounting firm with respect to the accounting treatment of a particular event or transaction;
    • Review and discuss with management and the Company’s independent registered public accounting firm the effect of regulatory and accounting initiatives, as well as off-balance sheet arrangements and aggregate contractual obligations, on the Company’s financial statements;
    • Review and discuss reports from the Company’s independent registered public accounting firm regarding: (a) all critical accounting policies and practices to be used by the Company; (b) all alternative treatments of financial information within GAAP that have been discussed with management, including ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent registered public accounting firm; and (c) other material written communications between the independent registered public accounting firm and management, such as any management letter or schedule of unadjusted differences;
    • Review all certifications required to be made by the Company’s principal executive officer and principal financial officer in connection with the Company’s periodic reports under the Act or pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act;
    • Review and discuss with management the Company’s audited financial statements and review with management and the Company’s independent registered public accounting firm the Company’s financial statements (including disclosures made under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) prior to the filing with the SEC of any report containing such financial statements.
    • Discuss the Company’s earnings press releases (including type and presentation of information, paying particular attention to any use of “pro forma,” or “adjusted” non-GAAP, information), as well as financial information and earnings guidance provided to analysts and ratings agencies;
    • If deemed appropriate, recommend to the Board that the Company’s audited financial statements be included in its annual report on Form 10-K for the last fiscal year;
    • Prepare and approve the report required by the rules of the SEC to be included in the Company’s annual proxy statement in accordance with the requirements of Item 7(d)(3)(i) of Schedule 14A and Item 407 of Regulation S-K;
    • Meet separately, periodically, with management, with the Company’s internal auditors (or other personnel responsible for the internal audit function) and with the Company’s independent registered public accounting firm;

 

  • Matters Regarding Oversight of the Company’s Independent Registered Public Accounting Firm

    • Be directly responsible, in its capacity as a committee of the Board, for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged (including resolution of disagreements between management and such firm regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; provided also that each such registered public accounting firm shall report directly to the Committee;
    • Receive and review a formal written statement and letter from the Company’s independent registered public accounting firm delineating all relationships between the independent registered public accounting firm and the Company, consistent with Independence Standards Board Standard 1, as may be modified or supplemented;
    • Actively engage in a dialogue with the Company’s independent registered public accounting firm with respect to any disclosed relationship or services that may impact the objectivity and independence of the independent registered public accounting firm;
    • Take, or recommend that the Board take, appropriate action to oversee and ensure the independence of the Company’s independent registered public accounting firm;
    • Establish clear policies regarding the hiring of employees and former employees of the Company’s independent registered public accounting firm;
    • Establish policies and procedures for review and pre-approval by the Committee of all audit services and permissible non-audit services (including the fees and terms thereof) to be performed by the Company’s independent registered public accounting firm, with exceptions provided for de minimis amounts under certain circumstances as permitted by law; provided, however, that: (a) the Committee may delegate to one (1) or more Members the authority to grant such pre-approvals if the pre-approval decisions of any such delegate Member(s) are presented to the Committee at its next-scheduled meeting; and (b) all approvals of non-audit services to be performed by the independent registered public accounting firm must be disclosed in the Company’s applicable periodic reports;
    • Ensure that the Company’s independent registered public accounting firm is registered as a public accounting firm with the Public Company Accounting Oversight Board, as provided for in Section 102 of the Sarbanes-Oxley Act of 2002. Obtain and review, at least annually, a report by the Company’s independent registered public accounting firm describing: (a) the independent registered public accounting firm’s internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review, of the independent registered public accounting firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five (5) years, respecting one or more audits carried out by the independent registered public accounting firm, and any steps taken to deal with any such issues; and (c) all relationships between the independent registered public accounting firm and the Company (to assess such firm’s independence);
    • Meet with the Company’s independent registered public accounting firm prior to its audit to review the planning and staffing of the audit;
    • Discuss with the Company’s independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as may be modified or supplemented;
    • Review with the Company’s independent registered public accounting firm any audit problems or difficulties and management’s response, including any restrictions on the scope of such firm’s activities or access to requested information, any significant disagreements with management, any accounting adjustments that were noted or proposed by such firm but were “passed” (as immaterial or otherwise), any communications between the audit team and the audit firm’s national office respecting auditing or accounting issues presented by the engagement, any “management” or “internal control” letter issued, or proposed to be issued, by the firm to the Company, and a discussion of the responsibilities, budget and staffing of the Company’s internal audit function;
    • Oversee the rotation of the lead (or coordinating) audit partner of the Company’s independent registered public accounting firm having primary responsibility for the audit and the audit partner responsible for reviewing the audit at least every five (5) fiscal years;

 

  • Matters Regarding Oversight of the Company’s Internal Audit Function

    • Review the Company’s annual audited financial statements with management, including any major issues regarding accounting and auditing principles and practices, and review management’s evaluation of the adequacy and effectiveness of internal controls that could significantly affect the Company’s financial statements, as well as the adequacy and effectiveness of the Company’s disclosure controls and procedures and management’s reports thereon;
    • Review major changes to the Company’s auditing and accounting principles and practices as suggested by the Company’s independent registered public accounting firm, internal auditors or management;
    • Review the appointment of, and any replacement of, the Company’s senior internal auditing executive;
    • Review the significant reports to management prepared by the Company’s internal auditing department and management’s responses;

 

  • Matters Regarding Oversight of Compliance Responsibilities

    • Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations;
    • Obtain reports from the Company’s management, senior internal auditing executive and independent registered public accounting firm that the Company’s subsidiaries and foreign affiliated entities are in compliance with applicable legal requirements, including the Foreign Corrupt Practices Act;
    • Establish procedures for: (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;
    • Review all related party transactions for potential conflict of interest situations on an ongoing basis and approve all such transactions (if such transactions are not approved by another independent body of the Board);
    • Review and address any concerns regarding potentially illegal actions raised by the Company’s independent registered public accounting firm pursuant to Section 10A(b) of the Act; and cause the Company to inform the SEC of any report issued by the Company’s independent registered public accounting firm to the Board regarding such conduct pursuant to Rule 10A-1 under the Act;
    • Obtain from the Company’s independent registered public accounting firm assurance that such firm has complied with Section 10A of the Act;

 

  • Additional Duties & Responsibilities

    • Review and reassess the adequacy of this Charter annually;
    • Review and assess the performance and effectiveness of the Committee at least annually;
    • Report regularly to the Board with respect to the Committee’s activities and make recommendations as appropriate;
    • Review with the Company’s outside counsel and internal legal counsel any legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquiries received from regulators or governmental agencies;
    • Provide oversight and review of the Company’s asset management policies, including an annual review of the Company’s investment policies and performance for cash and short-term investments;
    • Review with management and the Company’s independent registered public accounting firm any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting; and
    • Take any other actions that the Committee deems necessary or proper to fulfill the purposes and intent of this Charter.

 

Although the Committee has the responsibilities, duties and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete, accurate and in accordance with GAAP.  Rather, those duties are the responsibility of management and the independent registered public accounting firm.

Nothing contained in this Charter is intended to alter or impair the operation of the “business judgment rule” as interpreted by the courts under the laws of the State of Nevada.  Further, nothing contained in this Charter is intended to alter or impair the right of the Members to rely, in discharging their duties and responsibilities, on the records of the Company and on other information presented to the Committee, Board or Company by its officers or employees or by outside experts and advisers such as the Company’s independent registered public accounting firm.

 

STRUCTURE, MEETINGS AND QUORUM

The Committee shall conduct its business and meetings in accordance with this Charter, the Company’s bylaws and any direction set forth by the Board.  The chairperson of the Committee shall be designated by the Board or, in the absence of such a designation, by a majority of the Members.  The designated chairperson shall preside at each meeting of the Committee and, in consultation with the other Members, shall set the frequency and length of each meeting and the agenda of items to be addressed at each meeting. In the absence of the designated chairperson at any meeting of the Committee, the Members present at such meeting shall designate a chairperson pro tem to serve in that capacity for the purposes of such meeting (not to include any adjournment thereof) by majority vote.  The chairperson (other than a chairperson pro tem) shall ensure that the agenda for each meeting is distributed to each Member in advance of the applicable meeting.

The Committee shall meet as often as it determines to be necessary and appropriate, but not less than quarterly each year.  The Committee may establish its own schedule, provided that it shall provide such schedule to the Board in advance.  The chairperson of the Committee or a majority of the Members may call special meetings of the Committee upon notice as is required for special meetings of the Board in accordance with the Company’s bylaws.

A majority of the appointed Members, but not less than two (2) Members, shall constitute a quorum for the transaction of business.  Members may participate in a meeting through use of conference telephone or similar communications equipment, so long as all Members participating in such meeting can hear one another, and such participation shall constitute presence in person at such meeting.

The Committee may meet with any person or entity in executive session as desired by the Committee.  The Committee shall meet with the Company’s independent registered public accounting firm, at such times as the Committee deems appropriate, to review the independent registered public accounting firm’s examination and management report.

Unless the Committee by resolution determines otherwise, any action required or permitted to be taken by the Committee may be taken without a meeting if all Members consent thereto in writing or via electronic transmission and the same are filed with the minutes of the proceedings of the Committee.  The Committee may form and delegate authority to subcommittees when appropriate.

 

MINUTES

The Committee shall maintain written minutes of its meetings in paper or electronic form, which minutes shall be filed with the minutes of the meetings of the Board.

PURPOSE

The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Greenpro Capital Corp. (the “Company”) through delegation from the Board, has principal responsibility to assist the Board with respect to compensation matters.

With respect to its compensation functions, the Committee’s purpose is to assist the Board with respect to compensation matters, including:

  • evaluating, recommending, approving and reviewing executive officer compensation arrangements, plans, policies and programs maintained by the Company;
  • administering the Company’s equity-based compensation plans and the Company’s annual bonus plan, whether adopted prior to or after the date of adoption of this charter (the “Charter”) (including issuance of stock options and other equity-based awards granted other than pursuant to a plan);
  • considering and making recommendations regarding non-employee director compensation; and
  • making recommendations to the Board regarding its remaining responsibilities relating to executive compensation.

This Charter sets forth the authority and responsibility of the Committee in fulfilling its purpose. Unless approval by the Committee is specifically required pursuant to this Charter or applicable law, the responsibility for overseeing and approving the Company’s compensation arrangements resides with the Company’s management. For the avoidance of doubt, any action that may or is to be taken by the Committee may, to the extent permitted by law or regulation, be taken directly by the Board in lieu of Committee action.

 

MEMBERSHIP

The Committee will consist of two or more members of the Board, with the exact number determined from time to time by the Board. Each member of the Committee will:

  • be an “independent director” as defined under the applicable rules, regulations and listing requirements of the stock exchange upon which the Company’s securities are listed for trading (the “Exchange Rules”), except as may otherwise be permitted by the Exchange Rules;
  • be free from any relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment as a Committee member; and
  • meet any other requirements imposed by applicable law, regulations or rules, including rules and regulations promulgated by the Securities and Exchange Commission (the “Commission Rules”), subject to any applicable exemptions and transition provisions.

All members of the Committee will be appointed by, and will serve at the discretion of, the Board. The members shall each serve until their respective terms as members of the Board shall expire, subject to earlier resignation or removal by the Board.

The Board may appoint a member of the Committee to serve as the chairperson of the Committee (the “Chair”); if the Board does not appoint a Chair, the Committee members may designate a Chair by their majority vote. The Chair will set the agenda for Committee meetings and conduct the proceedings of those meetings.All members of the Committee will be appointed by, and will serve at the discretion of, the Board. The members shall each serve until their respective terms as members of the Board shall expire, subject to earlier resignation or removal by the Board.

 

RESPONSIBILITIES AND DUTIES

The principal responsibilities and duties of the Committee in serving the purposes outlined in Section I of this Charter are set forth below. These duties are set forth as a guide, with the understanding that the Committee will carry them out in a manner that is appropriate given the Company’s needs and circumstances. The Committee may supplement them as appropriate and

may establish policies and procedures from time to time that it deems necessary or advisable in fulfilling its responsibilities.

With respect to its compensation functions, the Committee will:

  1. Annually review the Company’s overall compensation strategy, including base salary, incentive compensation and equity-based grants, to assure that it promotes stockholder interests and supports the Company’s strategic and tactical objectives, and that it provides for appropriate rewards and incentives for the Company’s management and employees, taking into account whether such rewards and incentives encourage undue or inappropriate risk taking by such personnel.
  2. Annually review and approve the factors to be considered in determining the compensation of the Chief Executive Officer (the “CEO”) of the Company and the Company’s other “executive officers” as defined under Rule 3b-7 and “officers” as defined under Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”) (collectively with the CEO, the “Executive Officers”), and evaluate the performance of the CEO and Executive Officers in light of these factors. Based on this evaluation, including an evaluation of the Company’s performance, the Committee will have the authority, subject to any approval by the Board which the Committee or legal counsel determines to be desirable or is required by applicable law, the Commission Rules or the Exchange Rules, to make decisions (including any formal approvals) respecting (i) salary paid to the CEO and other Executive Officers, (ii) the grant of all cash-based incentive compensation and equity-based compensation to the CEO and other Executive Officers, (iii) the entering into or amendment or extension of any offer letter, employment contract or similar arrangement with the CEO and other Executive Officers, (iv) the entering into or amendment or extension of any CEO or other Executive Officer severance or change in control arrangements, and (v) any other CEO or other Executive Officer compensation matters; provided that the Committee may take account of the recommendations of the Board (or other members of the Board) with respect to CEO and other Executive Officer compensation. The Committee may also make similar compensation related decisions with respect to other employees of the Company if Board or Committee approval is required or desirable as determined by legal counsel. The Committee may take account of the recommendations of the CEO or the Chief Financial Officer (the “CFO”) of the Company with respect to other Executive Officers for each of the foregoing items. Neither the CEO nor the CFO may be present during voting or deliberations regarding his or her own compensation.
  3. Annually review and approve (or make recommendations to the Board with respect to the approval of) all equity-based incentive compensation plans and the Company’s annual bonus plan, or any amendments thereto, and the aggregate cash amounts and numbers of shares to be paid or reserved for issuance thereunder after taking into consideration the Company’s strategies with respect to cash-based and equity-based compensation.
  4. Review and approve policies and procedures relating to perquisites and expense accounts of the CEO and other Executive Officers.
  5. Administer and interpret the Company’s cash-based and equity-based compensation plans and agreements thereunder, and in that capacity:
  • approve equity awards to officers, employees or other service providers to the Company;
  • amend equity plans (subject to stockholder approval when required) as may be necessary or appropriate to carry out the Company’s compensation strategy;
  • determine whether awards that have performance-related criteria have been earned;
  • authorize the repurchase of shares from terminated employees pursuant to applicable law;
  • have the authority to correct any defect, supply any omission, or reconcile any inconsistency in any equity compensation plan, award, exercise agreement or other arrangement;
  • have the authority to, when appropriate, modify existing equity awards (with the consent of the grantees, if required) and approve authorized exceptions to provisions of the equity plans; and
  • administer any required or appropriate equity award timing policy.
  1. Meet with the CEO or CFO annually to discuss the incentive compensation programs to be in effect for the Executive Officers and other employees of the Company or any subsidiary for such fiscal year and the basis for evaluating the performance of the CEO, the other Executive Officers and employees thereunder.
  2. Recommend to the Board, for determination by the Board, the form and amount of cash-based and equity-based compensation to be paid or awarded to the Company’s non-employee directors, including compensation for service on the Board or on committees of the Board.
  3. Oversee the Company’s compliance with regulatory requirements associated with compensation of its directors, Executive Officers and other employees.
  4. Review with management the Company’s major compensation-related risk exposures and the steps management has taken, or should consider taking, to monitor or mitigate such exposures.
  5. Review and discuss the “Compensation Discussion and Analysis” and other compensation disclosure prepared in response to the requirements of Items 402(b) and (s) of Regulation S-K (or any successor disclosure items) if required pursuant to the Exchange Rules or the Commission Rules. Based on such review and discussion recommend to the Board whether such “Compensation Discussion and Analysis” and other compensation disclosure should be included in the Company’s annual report on Form 10-K, proxy statement, information statement, registrations statement or similar document. Prepare a report of the Committee on executive compensation to the Company’s stockholders for inclusion in the annual report or the proxy statement for the Company’s annual meeting in accordance with Item 407(e)(5) of Regulation S-K (or any successor disclosure item) so long as the Company is subject to the periodic reporting requirements of the Exchange Act and such disclosure is required pursuant to the Exchange Rules or the Commission Rules.
  6. Periodically review the Company’s procedures with respect to employee loans.

 

MEETINGS, ACTIONS WITHOUT A MEETING AND STAFF

The Committee will meet at such times and with such frequency as the Committee shall determinate as appropriate to meet its responsibilities. The Chair, in consultation with the other member(s) of the Committee will set the dates, times and places of such meetings. The Committee will report to the Board from time to time with respect to the activities of the Committee. A quorum of the Committee for the transaction of business will be a majority of its members. Meetings may be held via telephone or video conference. The Committee may also act by unanimous written consent in lieu of a meeting in accordance with the Company’s Bylaws. Subject to the requirements of this Charter, applicable law, the Exchange Rules and the Commission Rules,, the Committee and the Chair may invite any director, executive or employee of the Company, or such other person, as it deems appropriate in order to carry out its responsibilities, to attend and participate (in a non-voting capacity) in all or a portion of any Committee meeting. The Committee may exclude from all or a portion of its meetings any person it deems appropriate in order to carry out its responsibilities. The Chair will designate a secretary for each meeting, who need not be a member of the Committee. The secretary of the Company shall provide the Committee such staff support as it may require.

 

MINUTES AND REPORTS

The Committee will maintain written minutes of its meetings and copies of its actions by written consent, and will cause such minutes and copies of written consents to be filed with the minutes of the meetings of the Board. The Chair will periodically report to the Board on the Committee’s deliberations and actions. The minutes of the Committee and actions by the unanimous written consent of the Committee members will be made available to the other members of the Board.

 

COMPENSATION CONSULTANTS

The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking into consideration the following factors:

  • the provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
  • the amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
  • the policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
  • any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
  • any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and
  • any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with a member of senior management.

Notwithstanding the foregoing contained in Section VI above, the Committee is not required to conduct an independence assessment for a compensation adviser that acts in a role limited to the following activities for which no disclosure is required under Item 407(e)(3)(iii) of Regulation S-K promulgated by the SEC: (a) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees; and/or (b) providing information that either is not customized for the Company or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide advice.

 

DELEGATION OF AUTHORITY

The Committee may from time to time, as it deems appropriate and to the extent permitted under applicable law, the Exchange Rules and the Commission Rules, and the Company’s Certificate of Incorporation and Bylaws, form and delegate authority to subcommittees and to the officers of the Company.

 

COMPENSATION

Members of the Committee will receive such fees, if any, for their service as Committee members as may be determined by the Board, which may include additional compensation for the Chair. Such fees may include retainers or per meeting fees and will be paid in such form of consideration as is determined by the Board in accordance with applicable law, the Exchange Rules and the Commission Rules.

 

REVIEW OF COMMITTEE COMPOSITION, PERFORMANCE AND CHARTER

The Committee will evaluate the Committee’s composition and performance on an annual basis and submit a report to the Board. The Committee will also review and reassess the adequacy of this Charter, the Code of Conduct for employees and directors, and the Corporate Governance Guidelines at least annually, and recommend to the Board any changes the Committee determines are appropriate.

Adopted: March 17, 2017

In order to take an active role in the prevention of insider trading violations by its directors, officers and other employees, as well as by other related individuals, Greenpro Capital Corp. (the “Company”) has adopted the policies and procedures described in this Memorandum.

 

APPLICABILITY OF POLICY

This Policy applies to all transactions in the Company’s securities, including shares of common stock, options for shares of common stock and any other securities the Company may issue from time to time, such as preferred shares, warrants and convertible debentures, as well as to derivative securities relating to the Company’s shares, whether or not issued by the Company, such as exchange-traded options. It applies to all directors, officers and all other employees of, or consultants or contractors to, the Company, as well as family members of such persons, and others, in each case where such persons have or may have access to Material Nonpublic Information (as defined below). This group of people, and members of their immediate families, and members of their households, who are sometimes referred to as  “Designated Insiders,” are  collectively referred to in this Policy as “Insiders.” This Policy also applies to any person who receives Material Nonpublic Information from any Insider.

Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as the information is not publicly known. Any employee can be an Insider from time to time, and would be subject to this Policy.

 

COMPLIANCE OFFICER

The Company has appointed Gilbert Loke, Chief Financial Officer, as the Company’s Insider Trading Compliance Officer. Please contact him (or anyone that he has designated to field questions) with questions as to any of the matters discussed in this Policy.

 

STATEMENT OF POLICY

General Policy

It is the policy of the Company to oppose the unauthorized disclosure of any nonpublic information acquired in the workplace and the misuse of Material Nonpublic Information in securities trading.

Specific Policies

  1. Trading on Material Nonpublic Information. No director, officer or other employee of, or consultant or contractor to, the Company, and no member of the immediate family or household of any such person, shall engage in any transaction involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Nonpublic Information concerning the Company, and ending at the open of business on the second full Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. As used herein, the term “Trading Day” shall mean a day on which the NASDAQ Stock Market is open for trading. A Trading Day begins at the time trading begins on such day. This restriction on trading does not apply to transactions made under a trading plan that has been adopted pursuant to Rule 10b5-1(c) promulgated under the Securities Exchange Act of 1934, as amended, and that has been approved in writing by the Company (an “approved Rule 10b5-1 trading plan”).
  2. Tipping. No Insider shall disclose (“tip”) Material Nonpublic Information to any other person (including family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor shall such Insider or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities.
  3. Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is forbidden. In the event any director, officer or other employee receives any inquiry from outside the Company, such as from a stock analyst, for information (particularly financial results and/or projections) that may be Material Nonpublic Information, the inquiry should be referred to the Company’s Compliance Officer, who is responsible for coordinating and overseeing the release of such information to the investing public, analysts and others in compliance with applicable laws and regulations.
  4. Blackout Period. All Section 16 Persons and Designated Insiders (contact the Compliance Officer if you are unsure whether you fall into either of these categories) must refrain from engaging in transactions involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, during the period in any fiscal quarter commencing two weeks prior to the end of the fiscal quarter and ending at the open of market on the second full Trading Day following the date of public disclosure of the financial results for the prior fiscal quarter or year.  This is a particularly sensitive period of time for transactions in the Company’s shares from the perspective of compliance with applicable securities laws.  This sensitivity is due to the fact that directors, officers and certain other employees will, during that period, often possess Material Nonpublic Information about the expected financial results for the quarter. All Section 16 Persons and Designated Insiders of the Company are prohibited from trading during the Blackout Period. The prohibition against trading during the Blackout Period encompasses the fulfillment of “limit orders” by any broker for a Section 16 Person or Designated Insider, and the brokers with whom any such limit order is placed must be so instructed at the time it is placed.
  5. Trading Window. The “Trading Window” is that period of a fiscal quarter during which the Section 16 Persons and Designated Insiders of the Company are not precluded (assuming they do not possess Material Nonpublic Information) from trading in the Company’s securities as described in Paragraph 2 below.
  6. The safest period for trading in the Company’s securities, assuming the absence of Material Nonpublic Information, is generally the first 20 days of the Trading Window. However, even during the Trading Window any person possessing Material Nonpublic Information concerning the Company should not engage in any transactions in the Company’s securities until such information has been known publicly for at least one full Trading Day. This trading restriction does not apply to transactions made under an approved Rule 10b5-1 trading plan. Each person is individually responsible at all times for compliance with the prohibitions against insider trading.
  7. Pre-clearance of Trades. The Company has determined that all Section 16 Persons and Designated Insiders of the Company should refrain from trading in the Company’s securities, even during the Trading Window, without first complying with the Company’s “pre-clearance” process. Each Section 16 Person and Designated Insider should contact the Company’s Insider Trading Compliance Officer prior to commencing any trade in the Company’s securities. The Company may also find it necessary, from time to time, to require compliance with the pre-clearance process from certain other employees who have access to Material Nonpublic Information. A Section 16 Person or Designated Insider wishing to trade pursuant to an approved Rule 10b5-1 trading plan need not seek pre-clearance from the Company’s Insider Trading Compliance Officer before each such trade takes place; however, such person must obtain Company approval of the proposed Rule 10b5-1 trading plan before adopting it.
  8. Prohibition Against Margining of Company Securities. No Section 16 Person of the Company shall margin, or make any offer to margin, any of the Company’s securities as collateral to purchase the Company’s securities or the securities of any other issuer at any time. Notwithstanding the previous sentence, this paragraph is not meant to, and shall not be construed so as to, affect the ability of any Section 16 Person of the Company, from using his or her Company’s securities as collateral to securitize a bona fide loan.
  9. Prohibition Against Short Sales. No Section 16 Person or other employee of the Company shall, directly or indirectly, sell any equity security of the Company if the person selling the security or his principal (1) does not own the security sold, or (2) if owning the security, does not deliver it against such sale (a “short sale against the box”) within 20 days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation. Generally, a short sale, as defined in this Policy, means any transaction whereby one may benefit from a decline in the Company’s share price. While employees who are not executive officers or directors are not prohibited by law from engaging in short sales of the Company’s securities, the Company believes it is inappropriate for employees to engage in such transactions.
  10. Prohibition Against Trading in Derivative Securities. No Section 16 Person or other employee of the Company shall purchase or sell, or make any offer to purchase or offer to sell, derivative securities relating to the Company’s securities, whether or not issued by the Company, such as exchange traded options to purchase or sell the Company’s securities (so called “puts” and “calls”). This paragraph is not meant to, and shall not be construed as to, affect the ability of the Company to grant options to officers, directors and employees under employee benefit plans or agreements adopted by the Board of Directors or the ability of officers, directors and employees to exercise such options and sell the underlying shares, provided that any such sale is otherwise in accordance with this Policy.
  11. Prohibition Against Internet Disclosure. It is inappropriate for any unauthorized person to disclose Company information on the Internet and more specifically in forums (chat rooms) where companies and their prospects are discussed. Examples of such forums include but are not limited to Yahoo! Finance, Silicon Investor and Motley Fool. The posts in these forums are typically made by unsophisticated investors who are sometimes poorly informed, and generally are carelessly stated or, in some cases, malicious or manipulative and intended to benefit their own stock positions. Accordingly, no director, officer, employee, consultant or contractor or other party related to the Company may discuss the Company or Company-related information in such a forum regardless of the situation. Despite any inaccuracies that may exist (and often there are many), posts in these forums can result in the disclosure of material non-public information and may bring significant legal and financial risk to the Company and are therefore prohibited, without exception. Any post that is made by any person with access to Material Nonpublic Information, or information supplied by any such person for someone else to post, will be treated as a violation of this Policy.

 

POTENTIAL CRIMINAL AND CIVIL LIABILITY AND/OR DISCIPLINARY ACTION

Liability for Insider Trading. Pursuant to federal and state securities laws, Insiders may be subject to criminal and civil fines and penalties as well as imprisonment for engaging in transactions in the Company’s securities at a time when they have knowledge of Material Nonpublic Information regarding the Company.

Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities. The Securities and Exchange Commission (the “SEC”) has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the stock exchanges and the Financial Industry Regulatory Authority, Inc. use sophisticated electronic surveillance techniques to uncover insider trading.

Possible Disciplinary Actions. Employees of the Company who violate this Policy shall also be subject to disciplinary action by the Company, which may include ineligibility for future participation in the Company’s equity incentive plans or termination of employment.

Individual Responsibility. Every person subject to this Policy has the individual responsibility to comply with this Policy against insider trading, and appropriate judgment should be exercised in connection with any trade in the Company’s securities. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.

 

APPLICABILITY OF POLICY TO INSIDE INFORMATION REGARDING OTHER COMPANIES

This Policy and the restrictions and guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“business partners”), when that information is obtained in the course of employment with, or other services performed for, the Company. Civil and criminal penalties, and termination of employment, may result from trading on inside information regarding the Company’s business partners. All directors, officers and other employees should treat Material Nonpublic Information about the Company’s business partners with the same care required for information related directly to the Company.

 

DEFINITION OF MATERIAL NONPUBLIC INFORMATION

It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the Company’s securities. In this regard, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. Examples of such information include:

  • Financial Related Events
    • Financial results
    • Projections of future earnings or losses
    • Stock splits
    • New equity or debt offerings
    • Impending bankruptcy or financial liquidity problems
    • Creation of a material direct or contingent financial obligation
  • Corporate Developments
    • Pending or proposed merger or acquisition
    • Disposition or acquisition of significant assets
    • Significant litigation exposure due to actual or threatened litigation
    • Major changes in senior management
    • Material agreement not in the ordinary course of business (or termination thereof)

Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public. Either positive or negative information may be material.

 

CERTAIN EXCEPTIONS

For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s option plans or the purchase of shares under the Company’s employee share purchase plan (but not the sale of any such shares), if any, is exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan.

 

ADDITIONAL INFORMATION – DIRECTORS AND OFFICERS

Directors and officers of the Company must also comply with the reporting obligations and limitations on short-swing transactions set forth in Section 16 of the Exchange Act. The practical effect of these provisions is that officers and directors who purchase and sell the Company’s securities within a six-month period must disgorge all profits to the Company whether or not they had knowledge of any Material Nonpublic Information. Under these provisions, and so long as certain other criteria are met, neither the receipt of an option under the Company’s option plans, nor the exercise of that option, nor the purchase of shares under the Company’s employee share purchase plan, if any, is deemed a purchase under Section 16(b); however, the sale of any such shares is a sale under Section 16.

Persons subject to the reporting requirements of Section 16 must file their statements of change in ownership on Form 4 before the end of the second business day following such change in ownership and, within 45 days of the end of the fiscal year, file their annual statement of beneficial ownership, if necessary. These reports will be made available on our corporate website and are publicly accessible on the SEC’s website at www.sec.gov.

 

INQUIRIES

Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer.

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