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- The purpose of this Policy is to:
- provide a brief summary of the law on insider trading and other relevant laws;
- set out the restrictions on dealing in securities by key management personnel of Australian Vanadium Limited (“AVL”); and
- assist in maintaining market confidence in the integrity of dealings in AVL’s securities.
- Any person who does not understand any part of this Policy or how it applies should discuss the matter with the Company Secretary before dealing in any AVL securities.
Statement of Policy
- Whenever persons have inside information which may affect the value of securities, they must not:
- deal in those securities; or
- communicate the information to anyone else.
- This prohibition applies regardless of how the inside information was learned. It applies not only to AVL securities, but also to securities of other companies. Definitions of “inside information”, “securities” and “dealing” are set out below.
Who is Covered by this Policy?
- This Policy applies to key management personnel (as defined in Accounting Standard AASB 124 Related Party Disclosure) (“Restricted Persons”).
- The restrictions on dealings by a Restricted Person are equally applicable to any dealings:
- by their spouses or de facto spouses;
- by or on behalf of a dependant under 18 years of age; and
- any other dealings in which, for the purposes of the Corporations Act 2001, the Restricted Person is to be treated as interested. For example, if a Restricted Person is a trustee of a trust and is also a beneficiary of the trust, the Restricted Person must not purchase or procure the purchase of AVL securities on behalf of the trust.
What Securities are Covered by this Policy?
- This policy applies to the following securities:
- AVL shares;
- any other securities which may be issued by AVL, such as options;
- derivatives (such as exchange-traded options and warrants) and other financial products issued or created over or in respect of AVL securities; and
- securities of any other company or entity that may be affected by inside information (such as another party involved in a joint venture or corporate transaction with AVL or a AVL contractor or shareholder).
What is Dealing?
- For the purposes of this Policy, dealing in securities includes:
- trading in securities (i.e. subscribing for, buying, selling or entering into an agreement to do any of those things); and
- advising, procuring or encouraging any other person (including a family member, friend, associate, colleague, broker, financial planner, investment adviser, family company or family trust) to trade in securities.
- Communicating information includes passing it on to any other person including a family member, friend, associate, colleague, broker, financial planner, investment adviser, family company or family trust.
What is Insider Trading?
- In broad terms, a person will commit insider trading if they:
- deal in AVL securities or securities of another entity whilst having inside information; or
- communicate inside information to another person knowing (or where you should reasonably have known) that the other person would, or would be likely to use that information to deal in, or procure someone else to deal in, securities. This is commonly known as “tipping”.
- Individuals who contravene the insider trading provisions of the Corporations Act 2001 are liable to prosecution or to civil penalty action by the Australian Securities and Investments Commission (ASIC).
- Separately, someone who engages in insider trading may be sued by another party or AVL in a civil action for any loss suffered as a result of the insider trading.
What is Inside Information?
- Inside information is information that:
- is not generally available to people who commonly invest in securities; and
- if it was generally available, would (or would be likely to) influence experienced investors in deciding whether or not to subscribe for, purchase or sell AVL securities or securities of another entity.
- It does not matter how someone comes to have the inside information – for example whether it is learnt by a person in the course of carrying out their responsibilities, in passing in the corridor, in the lift or at a dinner party.
- The financial impact of the information is important, but strategic and other implications can be equally important in determining what amounts to inside information. The definition of “information” is broad enough to include rumours, matters of supposition, intentions of a person (including AVL) and information that is not definite enough to warrant public disclosure.
What are some examples of inside information?
- The following list is illustrative only. Inside information about AVL could include:
- a material variance in the financial performance of AVL against its budget;
- the entry into or termination of a major joint venture;
- a proposed or actual takeover or amalgamation;
- an unexpected liability or possible claim against AVL;
- material drill results or the likely discovery of a major ore body;
- significant change in senior management;
- a proposed new share issue; and/or
- a proposed dividend or change in dividend policy.
Securities of other companies
- In the course of their duties a Restricted Person of AVL or a AVL Group company may obtain inside information in relation to another company. For example:
- in the course of negotiating a transaction with AVL, another company might provide confidential information about itself.
- in the course of negotiating a transaction with AVL, another company might provide confidential information about a third party; or
- information concerning a proposed transaction or other action by AVL might have a material effect on a third party.
- The prohibition on insider trading is not restricted to information affecting AVL securities. Accordingly, a Restricted Person in possess of inside information in relation to securities of another company or entity must not deal in those securities.
What Else is Prohibited?
- Restricted Persons must not engage in short term or speculative dealing in AVL securities.
When is Dealing Permitted?
- Subject to the rules of any AVL employee or executive share or option plans, Restricted Persons can deal in AVL securities at any time:
- other than during a Prohibited Period;
- provided they do not have inside information; and
- provided they are not involved in short term or speculative dealing.
- A Restricted Person may seek a waiver to purchase the Company’s securities during a Prohibited Period provided they do not have inside information and they are not involved in short term or speculative dealing in the Company’s securities. Written (including email or similar electronic communications) waiver applications should be made to the Company Secretary or, in the case of the Company Secretary, to the Managing Director.
- Prior approval of such a waiver may be granted by two directors in writing. Discretion will be applied taking into account the circumstances of the Restricted Person, the number of securities to be acquired and weighing this against any perceived detriment to AVL’s reputation or risk to a stable market for AVL securities.
- Restricted Persons are not permitted to deal in AVL securities during Prohibited Periods.
- Prohibited Periods means:
- any Closed Period; or
- additional periods when Restricted Persons are prohibited from trading, which is imposed by AVL from time to time when the company is considering matters which are subject to Listing Rule 3.1A.
- Closed Periods are defined as the following:
- the ten trading day period immediately leading up to the day of the announcement of the Company’s Quarterly, Half-Yearly and Annual Report, and two trading days after this announcement is made.
- the five trading day period prior to the anticipated release of drill results.
- A Prohibited Period may be called at any time by direction of the Managing Director or the Chairman.
- Notice of Prohibited Periods or changes thereto will be distributed by the Company Secretary to Restricted Persons by email. Changes to Prohibited Periods are effective immediately.
Trading Under Exceptional Circumstances
- A Restricted Person, who is not in possession of inside information in relation to AVL, may be given prior written clearance to sell or otherwise dispose of the securities of AVL during a Prohibited Period under this policy where the Restricted Person is in severe financial hardship or there are other exceptional circumstances.
- Examples of what constitutes exception circumstances are:
- a pressing financial commitment that has arisen unexpectedly and which cannot be met by other reasonable means;
- a court order requiring the sale or transfer of AVL securities.
Applications to Trade under Exceptional Circumstances
- An application to trade under Exceptional Circumstances must be submitted in writing (including in any electronic format) to the relevant Designated 0fficer(s). Any such approval must be obtained in advance. It cannot be given after the event.
- Designated Officer(s) who may grant approvals under exceptional circumstances are:
- the Managing Director, or if absent, the Company Secretary in their discretion to Restricted Persons other than a Director;
- the Chairman, in their discretion to any other Director, including the Managing Director; and
- the Managing Director and one other Director, in their discretion to the Chairman.
- Discretion will be applied with caution taking into account the exceptional circumstances of the Restricted Person and weighing this against any perceived detriment to AVL’s reputation.
- Any approval granted under exceptional circumstances will expire within 14 days of being granted, or for such shorter or longer period as is specified in the approval documentation.
- A dealing for which exceptional circumstances approval is given remains subject to insider trading rules and the prohibition on speculative trading.
Trading which is not subject to this Policy
- The following types of trading are specifically excluded from the operation of this Policy:
- transfers of securities of AVL already held into a superannuation fund or other saving scheme in which the Restricted Person is a beneficiary;
- an investment in, or trading in units of, a fund or other scheme (other than a scheme only investing in the securities of AVL) where the assets of the fund or other scheme are invested at the discretion of a third party;
- where a Restricted Person is a trustee, trading in the securities of AVL by that trust provided the restricted person is not a beneficiary of the trust and any decision to trade during a Prohibited Period is taken by the other trustees or by the investment managers independently of the Restricted Person;
- undertaking to accept, or the acceptance of, a takeover offer;
- trading under an offer or invitation made to all or most of the security holders, such as, a rights issue, a security purchase plan, a dividend distribution reinvestment plan and an equal access buy-back, where the plan that determines the timing and structure of the offer has been approved by the board. This includes decisions relating to whether or not to take up entitlements and the sale of entitlements required to provide for the take up of the balance of entitlements under a renounceable pro rata issue;
- a disposal of securities of AVL that is the result of a secured lender exercising their rights, for example, under a margin lending arrangement;
- the exercise (but not the sale of securities following exercise) of an option or a right under a Director or employee incentive scheme, or the conversion of a convertible security, where the final date for the exercise of the option or right, or the conversion of the security, falls during a Prohibited Period and AVL has had a number of consecutive Prohibited Periods and the Restricted Person could not reasonably have expected to exercise it at a time when free to do so; and
- trading under a non-discretionary trading plan for which prior written clearance has been provided in accordance with procedures set out in the Trading Policy and where:
- the Restricted Person did not enter into the plan or amend the plan during the Prohibited Period;
- the trading plan does not permit the restricted person to exercise any influence or discretion over how, when or whether to trade; and
- AVL’s Trading Policy does not allow for the cancellation of a trading plan during a Prohibited Period other than in exceptional circumstances.
Procedures for Dealing in AVL Securities
- For Restricted Persons, the following rules apply:
- a Restricted Person intending to deal in AVL securities must first notify the Company Secretary in writing of their intention to deal. If the Restricted Person is the Company Secretary they must notify the Managing Director.
- If a Restricted Person subsequently deals in those securities the Restricted Person must confirm the dealing in writing to the Company Secretary within 3 business days after the dealing. If the Restricted Person is the Company Secretary they must provide confirmation to the Managing Director. The confirmation must include:
- Restricted Person’s name;
- the name of any person who dealt on Restricted Person’s behalf e.g. family trust or company, spouse, etc;
- details of Restricted Person’s interest in the AVL securities the subject of the dealing;
- the date of the dealing;
- the number of AVL securities bought or sold;
- the amount paid or received for those securities; and
- the number of AVL securities held by the Restricted Person’s (directly or indirectly) before and after the dealing.
Dealings in AVL Securities which need Prior Approval
- For Restricted Persons intending to acquire AVL securities under a margin lending or some other arrangement which results in a secured lender holding a right to dispose of such securities, prior written approval is required.
- An application setting out the details of the proposed acquisition and arrangement must be submitted in writing to the relevant Designated 0fficer(s). Any such approval must be obtained in advance. It cannot be given after the event.
- Designated Officer(s) who may grant approvals are:
- the Managing Director, or if absent, the Company Secretary in their discretion to Restricted Persons other than a Director;
- the Chairman, or if absent, the Chairman of the Audit Committee, in their discretion to a Director;
- the Chairman and the Chairman of the Audit Committee, in their discretion to the Managing Director; and
- the Managing Director and the Chairman of the Audit Committee, in their discretion to the Chairman.
- Discretion will be applied taking into account the circumstances of the Restricted Person, the number of securities to be acquired and weighing this against any perceived detriment to AVL’s reputation or risk to a stable market for AVL securities.
ASX Disclosure Obligations
- The acquisition or sale of AVL securities by Directors of AVL must be disclosed to ASX under Listing Rule 3.19A within 5 business days of the transaction taking place.
- The information described under 2 above must be provided to the Company Secretary within 3 business days of the transaction to allow the Company Secretary adequate time for any follow up, completion and release of the notification to ASX on the Director’s behalf. Details of any changes in Directors’ interests in AVL securities are required to be recorded in the Register of Directors’ Interests and noted in the minutes of the next Board meeting.
- Restricted Persons with a substantial shareholding in AVL securities (i.e. more than 5% of issued capital) are also required to comply with the substantial shareholding notification provisions of section 671B of the Corporations Act 2001 when there is a change in their holding. In this instance a notice must be provided to ASX and to AVL in the prescribed form within 2 business days of the change.
- In addition to the insider trading and other restrictions in this policy, Restricted Persons also owe a duty of confidentiality to AVL and the AVL group of companies. Restricted Persons must not reveal any confidential information concerning AVL or any AVL group company, use that information in any way that may injure or cause loss to AVL or any AVL group company or use that information to gain an advantage for themselves. Under the Corporations Act 2001, a breach of these duties may result in:
- liability for a civil penalty;
- criminal liability if recklessness or dishonesty is involved; and/or
- liability to compensate AVL for any damage it suffers as a result of the disclosure.
- Strict compliance with this Policy is mandatory for all Restricted Persons covered by this Policy. Contravention of the Corporations Law 2001 is a serious matter which may result in criminal or civil liability.
- In addition, breaches of this Policy may damage AVL’s reputation in the investment community and undermine confidence in the market for AVL securities. Accordingly, breaches will be taken very seriously by AVL and will be subject to disciplinary action, including possible termination of a person’s employment or appointment. Reports of any breaches of this Policy will be forwarded to the Audit Committee.