Guidelines for buying and selling securities


     
1.
Introduction
     

These guidelines set out the policy on the sale and purchase of securities in Cellmid Limited (“the Company”) by its directors and employees. In addition, this policy applies to advisers, contractors and consultants who may obtain confidential or price sensitive information in relation to the Company.

Directors of the Company and employees are encouraged to be long-term holders of the Company’s securities. However, it is important that care is taken in the timing of any purchase or sale of such securities.

The purpose of these guidelines is to assist directors and employees to avoid conduct known as ‘insider trading’. In some respects, the Company’s policy extends beyond the strict requirements of the Corporations Act.

 

     
2.
What type of transactions are covered by this policy?
     

This policy applies to both the sale and purchase of any securities of the Company and its subsidiaries on issue from time to time.

 

 

 

3.
What is insider trading?
     

3.1

Prohibition

     

Insider trading is a criminal offense. It may also result in civil liability. In broad terms, a person will be guilty of insider trading if:

     

a.

that person possesses information which is not generally available to the market and, if it were generally available to the market, would be likely to have a material effect on the price or value of the Company’s securities (ie, information that is ‘price sensitive’);

b.

and that person:

 

i.

buys or sells securities in the Company; or

 

ii.

procures someone else to buy or sell securities in the Company; or

 

iii.

passes on that information to a third party where that person knows, or ought reasonably to know, that the third party would be likely to buy or sell the securities or procure someone else to buy or sell the securities of the Company

     

3.2

Examples

     

To illustrate the prohibition described above, the following are possible examples of price sensitive information which, if made available to the market, may be likely to affect materially the price of the Company’s securities:

     
 

a.

the Company considering a major acquisition or disposal of assets;

 

b.

the threat of major litigation against the Company;

 

c.

the Company’s sales and profit results materially exceeding (or falling short of) the market’s expectations;

 

d

a material change in debt, liquidity or cash flow;

 

e.

a significant new development proposal ie, new product or technology;

 

f.

the granting (or loss) or a major contract;

 

g.

management or business restructuring proposal;

 

h.

a share issue proposal;

 

i.

an agreement or option to acquire an interest in a mining tenement, or to enter into a joint venture or farm-in or farm-out arrangement in relation to a mining tenement; and

 

j.

significant discoveries, exploration results, or changes in reserve/resource estimates from mining tenements in which the Company has an interest.

     

3.3

Dealing through third parties

     

A person does not need to be a director or employee of the Company to be guilty of insider trading in relation to securities in the Company. The prohibition extends to dealings by directors and employees through nominees, agents or other associates, such as family members, family trusts and family companies (referred to as “Associates” in these guidelines).

     

3.4

Information however obtained

     

It does not matter how or where the person obtains the information – it does not have to be obtained from the Company to constitute inside information.

     

3.5

Employee share schemes

     

The prohibition does not apply to acquisitions of shares or options by employees made under employee share or option schemes, nor does it apply to the acquisition of shares as a result of the exercise of options under an employee option scheme. However, the prohibition does apply to the sale of shares acquired under an employee share scheme and also to the sale of shares acquired following the exercise of an option granted under an employee option scheme.

 

     
4.
Guidelines for trading in the company's securities
     

4.1

General rule

     

The Company does not have set “closed periods”, where directors and employees can not trade in Company securities.

However, if a director or employee of the Company is in possession of price sensitive information which is not generally available to the market, then he or she must not deal in the Company’s securities at any time.

If a director or employee is in doubt about whether all sensitive information has been released to the market they should make a request, in writing, to the Chairman or CEO.

     

4.2

General Restrictions on the ability of Directors and Employees to trade in Securities

     

Notwithstanding any of the other sections in this document:

Directors and employees shall in all circumstances be prohibited from;

     
 
  • short-selling” Shares (or an interest in Shares) – that is selling Shares, or an interest in Shares, beyond the level of the directors or employee’s holdings;
 
  • Trading in Securities which operate to limit the economic risk associated with a director or employee’s holding of unvested Shares which are to be issued subject to the employee having satisfied certain performance conditions, under the Company’s Share Option Plan; or
 
  • Trading in Securities which enable a director or employee to profit from a decrease in the market price of Shares.
     

4.3

No short-term trading in the Company’s securities

     

Directors and employees should never engage in short-term trading of the Company’s securities except for the exercise of options where the shares will be sold shortly thereafter.

     

4.4

Securities in other companies

     

Buying and selling securities of other companies with which the Company may be dealing is prohibited where an individual possesses information which is not generally available to the market and is ‘price sensitive’. For example, where an individual is aware that the Company is about to sign a major agreement with another company, they should not buy securities in either the Company or the other company.

     

4.5

Exceptions

     

a.

Directors and all employees may at any time:

 

i.

acquire ordinary shares in the Company by conversion of securities giving a right of conversion to ordinary shares;

 

ii.

acquire Company securities under a bonus issue made to all holders of securities of the same class;

 

iii.

acquire Company securities under a dividend reinvestment, or top-up plan that is available to all holders or securities of the same class;

 

iv.

acquire, or agree to acquire or exercise options under a Company Share Option Plan;

 

v.

withdraw ordinary shares in the Company held on behalf of the employee in an employee share plan where the withdrawal is permitted by the rules of that plan;

 

vi.

acquire ordinary shares in the Company as a result of the exercise of options held under an employee option scheme;

 

vii.

transfer securities of the Company already held into a superannuation fund or other saving scheme in which the restricted person is a beneficiary;

 

viii.

make an investment in, or trade in units of, a fund or other scheme (other than a scheme only investing in the securities of the Company) where the assets of the fund or other scheme are invested at the discretion of a third party;

 

ix.

where a restricted person is a trustee, trade in the securities of the Company 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;

 

x.

undertake to accept, or accept, a takeover offer;

 

xi.

trade 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 or 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 the entitlements and the sale of entitlements required to provide for the take up of the balance of entitlements under a renounceable pro rata issue;

 

xii

dispose of securities of the Company resulting from a secured lender exercising their rights, for example, under a margin lending arrangement;

 

xiii.

exercise (but not sell securities following exercise) an option or a right under an employee incentive scheme, or convert 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 the Company has been in an exceptionally long prohibited period or the Company has had a number of consecutive prohibited periods and the restricted person could not reasonably have been expected to exercise it at a time when free to do so; or

 

xiv.

trade under a non-discretionary trading plan for which prior written clearance has been provided in accordance with procedures set out in this Policy.

b.

The Company does have in place an active share or option plan. Accordingly:

     

Where the exercise price of options is being provided by a margin loan or other form of lending arrangement then there may be a risk that the employee or director may need to sell shares to avoid providing additional capital or security to the lender in the event of a decrease in the value of the shares.

     

Were this to occur at a time when the person possessed inside information then the sale of Company securities would be a breach of insider trading laws, even though the person’s decision to sell was not influenced by the inside information that the person possessed and the person may not have made a profit on the sale. Where Company securities are provided to a lender as security by way of mortgage or charge a sale that occurs under that mortgage or charge as a consequence of default would not breach insider trading laws.

 

     
5.
Approval and notification requirements
     

5.1

Approval Requirements – Directors

     

a.

Any Director wishing to buy, sell or exercise rights in relation to the Company’s securities should obtain the prior approval of the Chairman or the Board before doing so; or

b.

If the Chairman wishes to buy, sell or exercise rights in relation to the Company’s securities the Chairman should obtain the prior approval of the Board before doing so.

     

5.2

Approval Requirements – Key Management Personnel

     

a.

Any Key Management Personnel wishing to buy, sell or exercise rights in relation to the Company’s securities should obtain the prior written approval of the Chief Executive Officer before doing so.

b.

For the purpose of this policy, “Key Management Personnel” are defined as:

 

i.

any first line reports of the Chief Executive Officer and their direct reports; an

 

ii.

any other person designated by the Chief Executive Officer as key management personnel on the basis that they have authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly.

     

5.3

Notification

     

Any Director or employee who (or through his or her Associates) buys, sells, or exercises rights in relation to Company securities must notify the company Secretary in writing of the details of the transaction within five (5) business days of the transaction occurring. This notification obligation operates at all times but does not apply to acquisitions of shares or options by employees made under employee share or option schemes, nor does it apply to the acquisition of shares as a result of the exercise of options under an employee option scheme.

     

5.4

Approvals to buy or sell securities

     

a.

All requests to buy or sell securities must include the intended volume of securities to be purchased or sold and an estimated time frame for the sale or purchase.

b.

Copies of written approvals must be forwarded to the Company Secretary prior to the approved purchase or sale transaction.

     

5.5

Director and Key Management Personnel sales of securities

     

Directors and executives need to be mindful of the market perception associated with any sale of Company securities and possibly the ability of the market to absorb the volume of shares being sold. With this in mind, the management of the sale of any significant volume of Company securities (i.e. a volume that would represent a volume in excess of 10% of the total securities held by the seller prior to the sale, or a volume to be sold that would be in excess of 10% of the average daily traded volume of the shares of the Company on the ASX for the preceding 20 trading days) by a Director, the Chief Executive Officer or other Key Management Personnel needs to be discussed with the board and the Company’s legal and financial advisers prior to the execution of any sale. These discussions need to be documented in the form of a file note, to be retained by the Company Secretary


     
6.
ASX notification for directors
     

The ASX Listing Rules require the Company to notify the ASX within 5 business days after any dealing in securities of the Company (either personally or through an Associate) which results in a change in the relevant interests of a Director in the securities of the Company. The Company has made arrangements with each Director to ensure that the Director promptly discloses to the Company Secretary all the information required by the ASX.


     
7.
Effect of compliance with this policy
     

Compliance with these Guidelines for trading in the Company’s securities does not absolve that individual from complying with the law, which must be the overriding consideration when trading in the Company’s securities. The responsibility for trading Company's Securities remains with the individual at all times.