1 PURPOSE

1.1 Purpose

The purpose of this Anti-Bribery and Anti-Corruption Policy (the Policy) is to outline guidelines and procedures underlying the commitment of Avivagen Inc. and its subsidiaries (Avivagen or the Corporation) to the strict prohibition of payment, offer or authorization of a bribe as well as the receipt or acceptance of a bribe by any Avivagen Team Members (as defined below) employed by or otherwise associated with the Corporation, including for the purpose of:

(a) influencing any act or decision of a government official or private actor;

(b) inducing such persons to do any act in violation of lawful duties;

(c) securing an improper advantage from a public official or private actor; or

(d) improperly exercising influence with a public official, private actor or institution.

Non-compliance with this Policy may result in criminal or civil penalties which will vary according to the offence.  An employee acting in contravention of this Policy will also face disciplinary action up to and including termination.

No policy can offer a complete guide to cover all possible situations that might be encountered. This Policy is intended, however, to provide an overview of key areas and scenarios in which compliance with this Policy is required.

This Policy supplements the Corporation’s Ethics Policy.

1.2 Scope

This Policy applies to all directors, officers, employees and external consultants of Avivagen (Avivagen Team Members). Compliance with this policy is a condition of employment, contract or office.

This Policy extends across all of the Corporation’s business dealings and in all jurisdictions in which the Corporation operates.

It is the responsibility of every Avivagen Team Member and Associated Entity (as defined below) acting on behalf of the Corporation to understand this Policy.  If an Avivagen Team Member has a question or concern, then they should contact Avivagen’s Chief Financial Officer and contact details are provided in this Policy.

1.3 Definitions

(a) Associated Entities includes, but is not limited to any subsidiaries, agents, intermediaries, business partners, contractors or suppliers (individuals or organizations) of the Corporation.

(b)Bribery, for the purposes of this policy is defined in reference to the Canada Corruption of Foreign Public Officials Act, as

(i) making or authorizing any contribution, payment, loan, reward, benefit or gift of funds or property or anything else of value to any official, employee or agent of any governmental authority or public international organization, or to any person for the benefit of any governmental authority or public international organization;

(ii) for the purpose of bribing any governmental authority established or maintained accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and auditing standards, making transactions that are not recorded or that are inadequately identified, recording non-existent expenditures, entering liabilities with incorrect identification of their object, knowingly using false documents, or intentionally destroying accounting books and records earlier than permitted by law; or

(iii) making any contribution to any candidate for public office; where either the payment or the purpose of such contribution, payment, loan, reward or gift was, is, or would be prohibited under the Canada Corruption of Foreign Public Officials Act and any related or similar rules, regulations or guidelines made, issued, administered or enforced by any governmental authority thereunder.

(c) Corruption involves the misuse of power by someone to whom it has been entrusted, for personal gain.

(d) Facilitation Payments are typically small, unofficial payments (sometimes known as ‘grease’ payments) made to secure or expedite a routine action or service to which an individual or Corporation is routinely and otherwise legally entitled (e.g. routine processing of government papers such as visas).

(e) A public official is a person who:

(i) holds a legislative, administrative or judicial position in a government at any level;

(ii) an official or employee of a crown corporation;

(iii) who performs public duties or functions for a government, including a person employed by a board, commission, corporation or other body or authority that is established to perform a duty or function on behalf of the government, or is performing such a duty or function;

(iv) an official or agent of a public international organization; or

(v) an immediate family member of any of the above.

2 GENERAL CONDUCT AND BEHAVIOUR

2.1 Obligations on all Avivagen Team Members

The Board of Directors of the Corporation (the Board) is committed to this Policy and will provide the necessary leadership, resources and active support for management’s implementation of this Policy.

The Chief Executive Officer is responsible for ensuring that this Policy is carried out consistently with clear lines of authority.

The Audit Committee is responsible for reviewing the adequacy of this Policy and regularly reporting on its progress and implementation to the Board.

2.2 Facilitation Payments

While legal prohibitions on Facilitation Payments vary by the jurisdiction, the Corporation does not condone Facilitation Payments and it is the policy of the Corporation to refrain from making any corrupt payments, including Facilitation Payments, directly or indirectly (including through intermediaries).

When Avivagen Team Members and Associated Entities encounter demands for Facilitation Payments they should do the following:

(a) report such incidents in accordance with this this Policy; and

(b) report any public officials who refuse to co-operate without Facilitation Payments to any superiors they may have and/or to local enforcement authorities.

2.3 Gifts, entertainment and travel

All business gifts, entertainment and travel given or received by Avivagen Team Members to whom this Policy applies must be directly related to the promotion, demonstration or explanation of the Corporation’s business products or services, or the execution or performance of a contract, so long as such payment is reasonably based on industry norms and in compliance with applicable laws. Any such expenses must be paid or authorized only in accordance with this Policy.  Moreover, ANY and ALL gifts offered to a Government Official, regardless of its value, MUST be vetted beforehand by the Corporation’s Chief Financial Officer.

Wherever possible, the purpose of any expenses paid in accordance with this Policy should be defined and approved in advance.  Reimbursement will be subject to bona fide supporting documentation which must be kept on file.

Any exceptions to this rule can be made only with the prior written authorization of the Chief Executive Officer or Chief Financial Officer.

2.4 Avivagen Team Members

Avivagen Team Members are expected, as part of their normal duties, to do the following:

(a) familiarize themselves with this Policy and related policies;

(b) participate in any anti-bribery training provided by the Corporation;

(c) familiarize themselves with and comply with any policy and procedure manuals which apply to their jobs;

(d) immediately report any actual or suspected bribe;

(e) immediately report any allegation of bribery made by a third party;

(f) immediately report any breaches of the policies and procedures in this Policy which may come to their attention; and

(g) ensure that they complete any anti-corruption training that they are required to undertake as directed by the Board or management, from time to time.

2.5 Associated Entities

It is a violation of this Policy to make any corrupt payments, including Facilitation Payments, through Associated Entities or to make any payment to a third party where there is any reason to believe that all or a portion of the payment will go towards a bribe.

The relationship with Associated Entities must be fully documented using the Corporation’s standard terms and conditions for appointment, which shall include compliance with this Policy and shall prohibit Associated Entities from making or receiving any bribes on the Corporation’s behalf.

Compensation paid to Associated Entities must be appropriate and justifiable and for the purpose of legitimate services rendered.

Associated Entities are required to keep proper books and records available for inspection by the Corporation, its auditors and/or investigating authorities.

2.6 Risk assessments

Standard business risk assessments will be conducted on a regular basis (at least annually) to determine the level of controls necessary for a particular aspect of the Corporation’s operations, including in relation to procurement and tender processes.

Risk assessments should give consideration to:

(a) “jurisdiction risks”, which includes an assessment of the overall risks of corruption and bribery associated with a particular jurisdiction;

(b) “transactional risks”, which includes an assessment of the risks associated with a business transaction undertaken by the Corporation or its Associated Entities;

(c) “business opportunity risks”, which includes the risk that pursuing or obtaining business opportunities may result in acts of bribery or corruption; and

(d) “business partnership risks”, which includes risks deriving from relationships with or partnership with other Associated Entities.

Records and documentation must be kept of each risk assessment as part of the system of internal controls and record keeping discussed below.

2.7 Due diligence

The Corporation will conduct appropriate due diligence to inform risk assessments and ensure compliance with this Policy.

While the list is not exhaustive, and warning signs will vary by the nature of the transaction, expense or payment request, geographical market or business line, common warning signs that should be considered as part of any due diligence include:

(a) that an Associated Entity has current business, family or some other close personal relationship with a customer or government official, has recently been a customer or government official or is qualified only on the basis of his influence over a customer or government official;

(b) a customer or government official recommends or insists on the use of a certain business partner or Associated Entity;

(c) an Associated Entity refuses to agree to anti-corruption contractual terms, uses a shell Corporation or other unorthodox corporate structure, insists on unusual or suspicious contracting procedures, refuses to divulge the identity of its owners, or requests that its agreement be backdated or altered in some way to falsify information;

(d) an Associated Entity has a poor reputation or has faced allegations of bribes, kickbacks, fraud or other wrongdoing or has poor or non-existent third-party references;

(e) an Associated Entity does not have an office, staff or qualifications adequate to perform the required services; or

(f) an expense or payment request by an Associated Entity is unusual, is not supported by adequate documentation, is unusually large or disproportionate to products to be acquired, does not match the terms of a governing agreement, involves the use of cash or an off-the-books account, is in a jurisdiction outside the country in which services are provided or to be provided, or is in a form not in accordance with local laws.

Records and documentation must be kept of due diligence as part of the system of internal controls and record keeping discussed in this Policy.

2.8 Other policies

Avivagen Team Members should ensure that they read and comply at all times with all other applicable internal policies, procedures and guidelines in addition to this Policy.  Should any other policies of the Corporation appear inconsistent with this Policy, this Policy shall prevail and be adhered to at all times.

2.9 Reporting and escalation

Avivagen Team Members must immediately report in accordance with the procedures set out in this Policy when they:

(a) uncover an instance of bribery; or

(b) suspect that a bribe has been, or is in the process of being, paid or received or merely discussed; or

(c) receive or otherwise become aware of information which suggests that a bribe is in the process of being, paid or received or merely discussed.

Where an Avivagen Team Member becomes aware of or suspects that bribery has taken place, the information shall be reported to the Chief Financial Officer.

Reports under this Policy received by the Chief Financial Officer must also be reported to the Chair of the Audit Committee.

All reports will be treated in confidence and fully investigated. Every effort will be made to provide anonymity if it is requested, consistent with legal requirements to report to appropriate legal authorities or comply with investigations.

Once an Avivagen Team Member has reported a suspicion or concern to the appropriate person, the matter should not be discussed with any person other than those responsible for investigating it until the information is made public.

No Avivagen Team Member will suffer demotion, penalty or other adverse consequences for refusing to pay bribes even if such refusal may result in the Corporation losing business.

Avivagen Team Members are entitled to raise concerns about violations or potential violations of this Policy in confidence and without risk of reprisal.

2.10 Internal controls and record keeping

As part of the Corporation’s system of record keeping, the Corporation will maintain an effective system of internal controls to counter violations of this Policy, including financial and organizational checks and balances over the Corporation’s accounting practices and other business processes.

All transactions must be executed in accordance with management’s general or specific authorization. Transactions must be recorded as necessary to permit preparation of financial statements in conformity with International Financial Reporting Standards.

All business partners of the Corporation should have in place internal controls and procedures that fit these criteria and enhance compliance with this Policy.

The Corporation will maintain available for inspection accurate books and records that fairly document all financial transactions, risk assessments and due diligence.

The use of false documents and invoices is prohibited, as is the making of inadequate, ambiguous or deceptive bookkeeping entries and any other accounting procedure, technique or device that would hide or otherwise disguise illegal payments.

To ensure the effectiveness of internal controls, business and finance Avivagen Team Members of the Corporation will review transactions and expense/payment requests for warning signs that signal an inadequate commercial basis or present excessive risks.

2.11 Training Program

Directors, officers, employees, consultants and agents are required to comply with all mandatory training activities, seminars, and read required materials, including this Policy.

2.12 Red Flags

Examples of red flag situations are given in the Schedule “A” attached hereto.

2.13 Questions or Concerns

All Avivagen Team Members are encouraged and invited to contact the Chief Executive Officer or his designate should they have any questions or concerns regarding this Policy itself or any actual or potential situation which they are faced with in relation thereto:

Avivagen Inc.
Attention: Chief Executive Officer
100 Sussex Drive
Ottawa, ON  K1A 0R6
Canada
Tel: +1-613-949-8164
Email : ceo@avivagen.com

2.14 Reporting Violations

Any Avivagen Team Member who has a complaint or preoccupation regarding compliance with, or is aware of an action, omission or practice which violates or could possible violate Anti-Corruption Laws or this Policy is required to promptly report such violation or possible violation to  the Chief Financial Officer of Avivagen:

On a confidential basis

Avivagen Inc.
Attention: Chief Financial Officer
100 Sussex Drive
Ottawa, ON  K1A 0R6
Canada
Tel: +1-613-949-8164
Email : chris.boland@avivagen.com

If an Avivagen Team Member is of the view that he or she cannot report such information to the Chief Financial Officer of Avivagen, for reasons of conflict of interests or other reasons, the information must be reported directly to the Chair of the Audit Committee:

Avivagen Inc.
Chair of the Audit Committee of the Board
100 Sussex Drive
Ottawa, ON  K1A 0R6
Canada
Tel:  (613) 949-8164
E-mail: auditchair@avivagen.com
Website: www.avivagen.com

All complaints, preoccupations and reports will be handled promptly. Avivagen is committed to maintain adequate procedures for the confidential reporting by Avivagen Team Members and any complaint, preoccupation and report of violation or possible violation will be treated on a confidential basis.

The Corporation has a strict no retaliation policy and will not tolerate any kind of retaliation against any Avivagen Team Member who reports, in good faith, a complaint, preoccupation or a violation or potential violation of this Policy or who cooperates in an investigation regarding any violation or possible violation.

2.15 Acknowledgement

Please review this Policy carefully, sign the form of acknowledgement attached as Appendix A where indicated and return it to the Chief Executive Officer or Chief Financial Officer.

Effective Date:  [December 19], 2016

Date of Last Amendment:  [December 19], 2016

SCHEDULE A
EXAMPLES OF RED FLAG SITUATIONS

SERVICES, HIRING, MEETINGS

  • A lack of transparency about services rendered
  • Requests from Government Officials or agencies to engage or hire specific third parties
  • A desire to keep third party representation secret
  • Private meetings between third party and Government Officials

AGREEMENTS

  • Refusal to execute a written agreement or requests to perform services without a written agreement where one is sought
  • Refusal to sign a confidentiality agreement

COMPENSATION, FEES

  • Excessive or unusually high compensation
  • Fee, commission, or volume discount provided is unusually high compared to market rate

INVOICES

  • Requests an invoice to reflect a higher amount than the actual price of goods provided
  • Invoices vaguely describe the services provided or lack detail (e.g., “services rendered”)
  • Invoices that cannot be matched to the associated work product, purchase orders or contracts
  • Missing or inadequate documentation to support services and invoices
  • Over-invoicing or false invoices
  • Invoices unprofessional in appearance
  • Payment of unjustified high prices
  • Payments to P.O. boxes or non-existent addresses

PURCHASING

  • Purchase of unnecessary or inappropriate items
  • Purchase items in quantities beyond which there is demonstrated need

REIMBURSEMENT/EXPENSES

  • Poor or non-existent documentation for travel and expense reimbursements or other disbursements
  • Travel expenses for costumers/third party for which there is no legitimate business purpose

GIFTS

  • A gift offered for something in return
  • Any gift that appears excessive

CHARITABLE CONTRIBUTIONS

  • Request for charitable contributions or other favours as a way of influencing official action
  • Charitable contribution made to an organization having an affiliation with a Government Official, customer or costumer representative

 


Acknowledgement

I (print name) ________________________________ acknowledge that I have read, understood and agree to comply with the Anti-Bribery and Anti-Corruption Policy of Avivagen Inc. I have not violated the provisions of this Policy and am not aware of any violations of the Policy as of the date hereof.

Signature: ________________________              Date: _________________

Directors and senior officers of the Corporation will be required to complete an annual acknowledgement certification.