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SCOTT’S LIQUID GOLD-INC. AND ITS SUBSIDIARIES
CODE OF BUSINESS CONDUCT AND ETHICS POLICY
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 Scott’s Liquid Gold-Inc. and its subsidiaries (called the “Company”, “we”, “our”, or “us”). All of our employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The Code must also be followed by the Company’s directors, agents and representatives, including consultants.
If a law conflicts with a policy in this Code, you must comply with the law; however, if a local custom or policy conflicts with this Code, you must comply with the Code. If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.
Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination of employment. If you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described in this Code.
Obeying the law, both in letter and in spirit, is the foundation on which this Company’s 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 to determine when to seek advice from supervisors or other appropriate Company personnel.
A “conflict of interest” exists when a person’s private interest 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 effectively. 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, officers or directors and their family members may create conflicts of interest.
It is a conflict of interest for a Company employee, officer, director or consultant to work simultaneously for a competitor, customer or supplier. The best policy is to avoid any direct or indirect business connection with our competitors, customers or suppliers, except on our behalf.
Conflicts of interest are prohibited as a matter of Company policy, except as approved by our Board of Directors. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with the Company’s Chief Financial Officer. Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of our Chief Financial Officer or consult the procedures described in this Code.
Employees, officers and directors are prohibited from taking for themselves opportunities that are discovered through the use of corporate property, information or position without the consent of our Board of Directors. No employee may use corporate property, information, or his or her position for improper personal gain, and no employee may compete with the Company directly or indirectly. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.
Employees must maintain the confidentiality of confidential information entrusted to them by the Company, or its customers and suppliers, except when disclosure is authorized by our Chief Financial Officer or 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 and suppliers, if disclosed. The obligation to preserve confidential information continues even after employment ends.
Employees, officers and directors who are aware of confidential information (a) are not permitted to trade directly or indirectly in stock of the Company or any interest in that stock if the information may be considered material and (b) are not permitted to use or share that information for any other purpose except the conduct of our business. These restrictions on trading and tipping are described in greater detail in the Company’s Securities Trading Policy, which should be reviewed by all employees, officers and directors.
The Company is a public company and as a result files reports and other documents with the Securities and Exchange Commission (the “SEC”). The Company also issues press releases and makes other public statements that include financial and other information about the business, financial condition and results of operations. The Company endeavors to make full, fair, accurate, timely and understandable disclosure in reports and documents it files with, or submits to, the SEC and in its press releases and public communications.
The Company maintains disclosure controls and procedures to ensure that the information included in the reports filed with or submitted to the SEC is collected and communicated to senior management in order to permit timely disclosure of the required information. While the ultimate responsibility for the information included in these reports rests with senior management, numerous other employees participate in the preparation of these reports or provide information included in these reports. If you are requested to provide, review or certify information in connection with such disclosure controls and procedures, you must provide the requested information or otherwise respond in a full, accurate and timely manner. Moreover, even in the absence of a specific request, you should report to management any significant information that you believe should be considered for disclosure in the Company’s reports to the SEC.
It is illegal to take any action to fraudulently influence, coerce, manipulate, or mislead any internal or external auditor engaged in the performance of an audit of the Company’s financial statements.
If you have questions or are uncertain as to how disclosure controls and procedures may apply in a specific circumstance, promptly contact our Chief Financial Officer.
The diversity of the Company’s employees is an asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. The Company’s anti-harassment policy is outlined in the Company’s Employee Handbook.
The Company strives to provide each employee with a safe and healthful 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. As explained in our Drug Free Workplace Policy, employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs or alcohol, or the abuse, unauthorized possession or misuse of legal drugs, in the workplace will not be tolerated.
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.
Some employees 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 our Chief Financial Officer. Rules and guidelines are available from the Company’s Accounting Department.
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 both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation. Business records and communications often become public, and employees must 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 in accordance with the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation, please consult our Chief Financial Officer.
All employees should protect the Company’s assets and ensure their efficient use. The obligation of employees to protect the Company’s assets includes its proprietary information. Theft, carelessness, and waste have a direct impact on the Company’s profitability, and could also be illegal and result in civil or even criminal penalties. Any suspected incident of fraud or theft should be immediately reported for investigation to your supervisor or our Chief Financial Officer. Company equipment should not be used for non-Company business.
We seek to compete fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. 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 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.
To maintain the Company’s valuable reputation, compliance with our quality processes and safety requirements is essential. In the context of ethics, quality requires that our products and services be designed and manufactured to meet our obligations to customers. All inspection and testing documents must be handled in accordance with all applicable regulations.
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: (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations. Please discuss with our Chief Financial Officer any gifts or proposed gifts which you are not certain are appropriate.
The U.S. 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 which 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 gift, 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. The Company’s Chief Financial Officer can provide guidance to you in this area.
Any waiver of this Code for executive officers or directors may be made only by our Board of Directors or a Board committee and may be promptly disclosed as required by law or trading market regulation.
Employees are encouraged to talk to supervisors or any of the Company’s executive officers about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is the policy of the Company 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.
We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations it is difficult to know right from wrong. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps to keep in mind:
Human Resources – February 2016