Corporate Governance

Code of Conduct

  

All BMO directors, officers and employees are required to abide by the Bank's Code of Conduct, called FirstPrinciples. Employees are expected to acknowledge the FirstPrinciples annually. Only the Board of Directors can grant waivers of the code to senior officers or directors. To date, the Board has granted no waivers.

 

BMO Financial Group's FirstPrinciples

 

 

 

Tony Comper

President and CEO

 

 

 

 “Our industry is built upon public trust and confidence which, if ever lost, may be impossible to restore. Our ethical standards must always be above reproach, and our honesty beyond question. Our success depends upon it.” — Tony Comper, President and CEO, in a letter to BMO Financial Group employees

 

 

 

Introduction - Building on Our Traditions

 

What is FirstPrinciples?

 

FirstPrinciples is our code of conduct. It reflects our commitment to high standards of business conduct and ethics. BMO has a serious stake in ensuring that we all understand and follow this Code in both letter and spirit. The preservation of our reputation is dependent on strict adherence to its principles. We owe it to the people who built our proud traditions, and to the people we work with now, and to the people who will inherit our traditions. We can do no less.

 

Who Must Comply with FirstPrinciples?

 

 

 

This Code applies to every director, officer, and employee BMO Financial Group (BMO or “the Enterprise”). Every director, officer and employee has access to FirstPrinciples and is required to certify each year that they have complied with this Code.

 

 

 

It is our responsibility to ensure that we all understand and follow the Code – many Principles of which are supported by BMO’s Corporate Policies, Corporate Standards, subsidiary policies and operating directives, both at a corporate and a local level (together referred to as the “Enterprise policy framework”), and to act in accordance with the highest standards of personal and professional integrity. Similarly, we expect suppliers and consultants providing services (i.e. third party arrangements) to BMO to maintain the same high standards of business conduct and ethics to which we hold ourselves. To that end, such service providers should receive a copy of the Code.

 

 

 

Where Should We Look For Guidance?

 

 

 

If we are unsure of the legal, ethical or reputational implications of a situation, guidance can be obtained from any one of the persons or departments indicated on the directory of key contacts provided on the FirstPrinciples website or we may simply contact our manager or BMO Corporate Compliance. The Enterprise policy framework provides further guidance in our continuing efforts to comply with applicable legal and regulatory requirements and to conduct ourselves in a fair and ethical manner.

 

1.  Doing What is Fair, Honest and Ethical

 

In order to earn and retain the trust and respect of each other within BMO as well as external stakeholders – including customers, suppliers, shareholders and the general public – principles of honesty, integrity, fair dealing and the highest ethical standards must underlie everything we do and every decision we make. We must not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of facts, or any other unfair dealing or unethical activity.  We will be judged not only in terms of how competent we are at conducting our business, but also on our integrity and how we behave at work, in community or political involvement and in the public expression of personal views. Accordingly, before embarking on any course of action we need to be able to answer “yes” to each of the following questions: Is it fair? Is it right? Is it legal?

 

2.  Working to the Letter and Spirit of the Law

 

Each of us needs to be aware of and comply with applicable laws, rules and regulations of all levels of government, related public and regulatory agencies, as well as Enterprise policies that affect how we do our jobs. Corporately and individually, we must never knowingly violate laws or willfully blind ourselves to our legal or regulatory responsibilities or be a party to such actions or omissions. Fraud such as kiting or float creation, corrupt practices such as the acceptance or offering of bribes or other criminal actions are not only strictly prohibited but anyone who believes that they may be occurring must inform senior management immediately. Also, we are required by law to be constantly on guard against those who would attempt to use our services or products to further their illegal actions and we must report suspicious activities to the appropriate persons and authorities. Some key requirements are highlighted below.

 

 

 

(a) Anti-competitive Behaviour & fair Dealing

 

 

 

We must comply with applicable laws and regulations governing marketplace competition, including those relating to marketing and advertising. This includes not entering into arrangements with others to lessen competition, and not engaging in prohibited tied selling practices or deceptive telemarketing or other improper marketing practices (such as misleading advertising). All such activities may give rise to legal action or regulatory sanction and negatively reflect on BMO’s reputation for dealing honestly and openly with its customers and suppliers. Our Enterprise policy framework provides information on how to avoid anti-competitive practices and promote fair dealing. If unsure, we must consult directly with our manager, BMO Corporate Compliance or BMO Law Department.

 

 

 

(b) Compliance With Money Laundering and Terrorist Financing Laws

 

 

 

BMO is committed to conducting business and operations in full compliance with all laws and regulations relating to Money Laundering and Terrorist Financing activities. For more information, we should consult the Enterprise Policy and, where applicable, policies or guidance applicable to specific lines of businesses, legal entities and jurisdictions in which BMO conducts business (e.g. Harris and BMO Nesbitt Burns).

 

 

 

(c) Know Your Client Principles

 

 

 

Our business decisions must always be based on a thorough knowledge of our clients, an understanding of their objectives and our commitment to deal with clients whose reputation and activities are compatible with our own high ethical standards. This will ensure not only that our clients are well-served, but also that our business relationships and actions are consistent with legal requirements, regulatory authority and the Enterprise policy framework. To prevent being used by individuals or organizations to commit or further illegal or corrupt activities, we have a legal and ethical responsibility to properly identify, authenticate and understand our clients and customers. Failure to do so may expose BMO to the risk of legal sanctions, financial penalties and lasting damage to our reputation.

 

 

 

(d) Compliance With Enterprise Policies

 

 

 

We must be aware of the policy framework that guides and governs our behavior in the performance of our day-to-day activities and conduct ourselves in a manner consistent with those policies and the Code.

 

 

 

(e)  Protecting Information

 

 

 

Confidential Information

 

 

 

Information obtained directly or indirectly from a customer or an employee must be kept confidential. It may be used only for the specific purpose or transaction for which it was given or collected. Confidential information is all non-public information pertaining to BMO, its employees or customers (past, present or prospective). It includes material confidential information, personal information, BMO proprietary information and data generated by BMO that contains or is derived from such confidential information. Special circumstances may apply where the individual’s consent is not required to disclose confidential information. Examples include where it is necessary to protect BMO’s assets, or where there is a legal obligation, such as a court order, to disclose. Even then, we must be careful to act in accordance with applicable laws and Enterprise policies, and only under the direction of management. The rule of thumb is: When in doubt, we do not disclose without seeking advice from our manager or the appropriate person identified on the FirstPrincipleswebsite.

 

 

 

Proprietary Information

 

 

 

Similarly, we must protect BMO’s own non-public proprietary information. All third parties that provide services for BMO that include the handling of BMO’s non-public proprietary information are also bound by these requirements and are accountable to BMO for how this information is used and disclosed.

 

 

 

Personal Information

 

 

 

Personal information is information that identifies an individual and is provided to or collected by BMO. Privacy laws and Enterprise policy rests on the principle that customers and employees may choose how personal information about them is collected, used and disclosed. BMO respects this right and in doing so builds trust, customer loyalty and valued business. Accordingly, each of us has a duty to respect and protect an individual’s privacy by ensuring that personal information is properly handled.

 

 

 

Information Records Retention & Disposition

 

 

 

We all must comply with Enterprise policies relating to the creation, retention and maintenance of the accuracy of information records in all types of media its forms, including electronic messages such as e-mail, hard and soft copy documents, voice messages, etc. Appropriate retention periods are dependent on the nature and business purpose of the information, and employees should be aware of applicable policies relative to document retention. There are instances where information records should be maintained beyond the normal retention period, including when such information records are potentially relevant to a breach of law or any pending, threatened or foreseeable government investigation, audit, regulatory examination or proceeding. If we are unsure about whether an information record can be destroyed, we must escalate to management and/or the applicable Compliance Department. Initial escalation should be to your manager and/or applicable Compliance Department.

 

 

Information Security

 

 

 

The integrity of our organization is reinforced by the integrity of our records. We hold customer information in trust and therefore must obtain and maintain this information accurately. Information is an asset and should be treated as such. A key objective of our policies is to prevent the falsification, distortion, or misuse of our own or customer information. We need to be particularly vigilant in maintaining the confidentiality of all access codes for computing equipment, vaults and restricted areas.

 

 

Disclosure of Information

 

 

 

 

The release of customer or BMO information must be handled in full compliance with applicable laws, rules, and regulations and our corporate policy. Public communications must be timely, factual, accurate and broadly disseminated. In particular, all disclosure in reports and documents filed with, or submitted to, and all other communications with applicable authorities, including regulators and stock exchanges, and all disclosure in other public communications must meet these standards. To ensure that material information is disclosed as required by regulators and BMO policy, we must escalate all such information we become aware of to our manager and/or BMO Law Department. BMO does not comment on rumours, provide selective disclosure to anyone, or comment on analysts' models and reports, except to correct factual errors. If we are not authorized to speak on behalf of BMO, we should not respond to inquiries form the investor community or media unless expressly asked to do so by an authorized spokesperson. For our individual protection and that of BMO, we must follow Enterprise policies that set out very clear requirements on disclosure and clarify who talks to whom about what outside of BMO.

 

 

 

(f) Personal Trading in Securities

 

 

 

When we trade in securities, we must avoid actions that could give rise to even the appearance of an unfair or improper action. We are prohibited by securities laws from trading in securities of a publicly traded organization, including Bank of Montreal, when we have material confidential information. Material confidential information is non-public information relative to the business and affairs of an issuer that would reasonably be expected to have a significant effect on the market price or value of the issuer's securities if it was generally known. The same securities laws that prevent us from using material confidential information for our personal benefit also prohibit us from passing it along to (or “tipping”) others – all others – even if we do so inadvertently. Other trading abuses such as market timing or frequent trading mutual funds are also prohibited. It is very important to ensure that our personal trading does not interfere with our work for BMO and we must comply with Enterprise policies when we do trade in securities.

 

 

 

Restrictions on Trading in Bank Securities

 

 

 

By virtue of their positions and their deemed or actual access to material confidential information of Bank of Montreal, Directors of the Bank, as well as certain officers and employees may only trade in securities of Bank of Montreal during specified periods known as “trading windows” and must comply with related Enterprise policies, standards and procedures when trading in securities of the Bank.

 

 

 

(g) Dealing With Authorities

 

 

 

We must cooperate fully with all authorized investigations, audits, examinations or reviews being conducted by our internal corporate support group or any external government, regulatory, self-regulatory or law enforcement agencies. In doing so, we must not make any false or misleading statements or otherwise attempt to frustrate the review. All inquiries, requests or demands for information made by external investigators, regulators and auditors must be referred to the appropriate persons and departments indicated on the directory provided on the FirstPrinciples website, BMO Corporate Compliance, our manager, or the person identified to coordinate responses to such inquiries, requests and demands.

 

 

 

(h) Language of Communication

 

 

 

BMO recognizes its responsibility to comply with applicable legislative requirements to communicate with customers, employees and other parties in the official language of their choice. It also endeavours to communicate in other languages preferred by its respondents whenever possible and practicable.

 

3. Respecting the Rights of Others

 

Treating people, their property and the environment with respect is an important part of doing things right at BMO.

 

 

 

(a) Individual Rights

 

 

 

BMO is committed to an equitable workplace in which every employee has the opportunity to pursue a full and rewarding career unimpeded by artificial barriers. We are also committed to creating a workforce that reflects – at every job level – the diverse populations in the communities where we do business.

 

BMO does not tolerate any form of discrimination against or from any group or individual – fellow employees, clients, suppliers, or job applicants – including on the basis of race, colour, religion, national or ethnic origin, age, gender, sexual orientation, marital status, physical or mental disability, or a criminal offence for which a pardon has been granted.

 

Nor do we tolerate displays of offensive, unwelcome, intimidating or humiliating behaviour, intentional or otherwise. These types of conduct not only demean others, but also threaten our ability to build a workplace where we all can feel safe, comfortable and able to produce our best work. Appropriate disciplinary action will be taken against anyone who engages in this kind of behaviour.

 

 

 

(b) Property Rights

 

 

 

The premises, materials, systems, data, and assets of BMO are its property and should only be used for legitimate business purposes. We must protect it from theft, wilful destruction, carelessness, misuse and abuse. BMO’s property must not be used for our personal benefit. If we make use of BMO’s property, such as telephones, computers or related software, including software relating to email and the Internet, our use must be reasonable, efficient, for legitimate business purposes and in accordance with Enterprise policies. Likewise, we must respect the property rights of others. We do not duplicate copyrighted material such as software, printed, recorded or broadcast materials without the authorization of the copyright holders.

 

 

 

(c) Environmental Rights

 

 

 

BMO is committed both to the protection of the environment and to the principle of sustainable development – meeting the needs of the present without compromising the ability of future generations to meet their needs. Corporately and individually, we must always demonstrate high standards of environmental responsibility and must always endeavour to give due consideration to relevant environmental factors when conducting our business and operations.

 

BMO is willing to work with government and industry in support of the principles of sustainable development and accountability for the environment, and to openly discuss our environmental practices with all relevant audiences.

 

We must also take reasonable precautions to provide credit only to environmentally responsible borrowers. Internally, we should all help to improve our energy conservation and recycling programs and other environmental management practices.

 

 

 

(d) Safe Work Environment

 

 

 

BMO is committed to the health, safety and well-being of its employees. Officers and managers must take reasonable precautions to provide and maintain a healthy and safe workplace and take reasonable care to ensure our health and safety as well as that of our customers and visitors.

 

4. Dealing With Conflicts of Interest

 

A conflict of interest is any situation where any of us:

 

 

 

(a) has a personal interest that would be likely to adversely affect, or even appear to adversely affect, our loyalty to, or judgment on behalf of, BMO or a prospective or actual customer or supplier;

 

 

 

(b) has chosen, or may appear to have chosen, a personal interest over the interests of BMO, or a prospective or actual customer or supplier; or

 

 

 

(c) takes actions or has interests that may make it difficult to perform work at BMO objectively and effectively.

 

 

 

We must perform our responsibilities and conduct our professional and private business affairs in a manner that will prevent situations from arising where a personal interest could potentially or appear to potentially conflict with the interests of BMO, actual or prospective customers, or suppliers. The following are key examples of potential conflicts of interest.

 

 

 

Misuse of Position

 

 

 

A misuse of position may occur when we use or might be perceived as using our position or connection with BMO, or its property and information, to gain or attempt to gain directly or indirectly a personal benefit or to confer a benefit upon others with whom we have a common interest, whether business or personal - such as family members, friends business associates or colleagues - or to take for ourselves or others opportunities discovered through those means. Similarly, we must not personally benefit from information that comes our way as a result of any position we hold at BMO. A conflict of interest may also arise through involvement in a transaction involving a client or supplier with whom we have a business or personal connection and where we may personally gain, or lose, from the transaction.

 

 

 

Gifts, Entertainment, Other Benefits and Payments

 

 

 

Some, but not all, gifts, entertainment, other benefits and payments may also present an actual or potential conflict of interest. The circumstances are important, as is the timing and the nature of the gift, entertainment or payment. Generally, gifts, entertainment or other benefits offered by or to a client or supplier or a possible client or supplier must be permitted by law, in line with industry standards and cannot compromise or create the perception that the recipient’s honest performance of her/his duties might be compromised.. As a rule of thumb, gifts of more than nominal value are not acceptable. Also we must not give any improper payments, contributions, gifts, entertainment or benefits to domestic or foreign government officials, political candidates, customers, suppliers or others. Legal restrictions or outright prohibitions against such practices apply in certain situations and we must ensure that we comply with all applicable requirements. If we are uncertain whether a gift, benefit, contribution or payment is proper or legal under applicable law or this Code we must, prior to it being offered, consult directly with our manager or BMO Corporate Compliance or BMO Law Department.

 

 

 

Outside Business Activities

 

 

 

Where we engage in outside business activities – such as taking a second job, running our own business, accepting a directorship or generally doing anything for which we are compensated by someone or some organization other than BMO – we must discuss any plans or offers for outside business activities with our manager and adhere to the approval procedures outlined in the applicable Enterprise policies or standards, so that the potential for any conflicts can be assessed and dealt with appropriately. Typically, outside business activities that compete with any aspect of BMO’s business will be prohibited.

 

5. Conducting Ourselves Appropriately

 

BMO’s reputation rests on how customers, suppliers and the public perceive us individually – not only in terms of how competent we are at handling their business, but also on our integrity and how we behave. The following are some examples of situations where our individual actions could affect that perception.

 

 

 

(a) Community Involvement

 

 

 

We enjoy a long, honourable and very active tradition of community involvement. Such involvement is both encouraged and prized. In support of these activities, BMO may also authorize us to spend work time and resources on organizing community affairs such as charity events.

 

 

When considering whether to serve as a director or officer of religious, educational, cultural, social and philanthropic entities or non-profit corporations, it is wise to ensure that nothing we do in this role conflicts with BMO’s best interests. While such conflicts are unlikely, we owe it to ourselves, BMO and our organization-of-choice, to first check with our manager or Compliance. 

 

 

(b) Political Involvement

 

 

We all have the right to participate in politics, both as candidates and as supporters of candidates, political parties and causes. However, when running for office, or supporting others running for office, or backing a cause, it is important to make it clear that the activity is personal and that BMO is not involved.

 

 

As well, we must observe all applicable laws,restrictions and prohibitions governing corporate or individual contributions to political parties, public officials, candidates or causes. Such activities should not interfere with our duties at BMO, or put us in a conflict of interest situation involving BMO. Also, we do not permit any preferential treatment when entering into any banking transaction with a political party, constituency association, candidate, leadership contestant or any other public official (including a public official's family or related business enterprises). Transaction terms are to be the same as for all other clients in similar circumstances and the same equal treatment applies in situations where loan renewals or the pursuit of creditor remedies are being considered.

 

 

 

(c) Public Expression of Personal Views

 

 

 

It is acceptable to express personal views anywhere at any time, as long as it is clear we are not speaking on behalf of BMO. Before publicly expressing views on matters that could affect BMO, we should discuss the information with our manager and in some instances we should request the involvement of the Media and Public Relations Department or Corporate Communications. This precautionary measure is especially important for someone such as a branch or community banking manager who may have developed a public image as a spokesperson for BMO. And, as always, confidential information should remain confidential.

 

 

 

(d) Substance Abuse

 

 

 

While BMO believes it has no place in the private lives of employees, there are certain actions that simply cannot be allowed to spill over into the workplace, with use of illegal drugs, and abuse of drugs and/or alcohol topping the list. Alcohol and drug abuse have a negative impact on performance. In our business, where clear thinking and decisive action are the order of every day, and where our reputation is also very much at stake, drug or alcohol impairment on the job must be treated as an extremely serious matter. Except under special circumstances such as sanctioned and supervised receptions, alcohol use is prohibited on BMO property. In addition, the use or possession of illicit drugs on BMO property may lead to disciplinary action, including termination of employment, as well as criminal charges.

 

6. Changes and Waivers

 

Generally, waivers of any provision of this code will only be granted in exceptional circumstances. Any waiver for an employee must be approved by management and BMO’s Chief Compliance Officer. Waivers of this Code for directors and officers may only be granted in writing by the Chair of the Board of the Bank of Montreal (the “Board”) or the appropriate Board Committee with the prior approval of the Board. Such waivers granted by the Board or the appropriate Board Committee, as well as any changes to this Code, shall be disclosed to the appropriate regulatory authorities in a timely manner as required by applicable law, rule or regulation.

 

7. Being Part of the Solution

 

(a) Who is Accountable For Complying With This Code?

 

 

 

All employees, officers and directorsof BMO must comply with this Code as well as all other applicable Enterprise policies and standards. Individual business and corporate areas within the Enterprise may issue additional policies that provide more specific guidance about certain practices related to those particular areas. Key Enterprise polices and standards supporting the principles contained in this Code are set out on the FirstPrinciples website.

 

 

 

(b) Process for Reporting, Receiving, Retaining and Handling Concerns

 

 

 

If we suspect an actual or potential breach of this Code – whether it be a conflict of interest, a breach of applicable law, regulations, rules or what appears to be unethical, fraudulent or other illegal behaviour on the part of a colleague – we must do something about it. Why? Because by simply looking away, we become part of the problem. In order to be part of the solution, we must all be alert to activities that may point to a breach of any laws, rules, and regulations, any Enterprise Policies or this Code.

 

 

 

If we know of or suspect such breaches, either by ourselves personally or by another individual, we must immediately report to any one of the appropriate persons and departments indicated on the directory provided on the FirstPrinciples website or contact our manager or BMO Corporate Compliance for guidance. Those persons and departments are responsible for appropriately receiving, retaining, handling and, where appropriate, reporting and escalating verbal and written complaints and reports in relation to such matters in accordance with Enterprise policies. If we have already taken a concern to the appropriate persons and departments referred to above and we are not satisfied with the response, we should promptly refer the matter to BMO’s Ombudsman.

 

 

 

(c) Reporting Breaches of the Code on a Confidential, Ananymous Basis

 

 

 

If we wish to report a potential or actual breach of this Code on a confidential, anonymous basis we should promptly submit a verbal or written report to the appropriate persons and departments who receive such confidential, anonymous reports as indicated on the directory provided on the FirstPrinciples website.

 

 

 

In all cases, if we have concerns regarding questionable accounting, internal controls over financial reporting, or auditing matters we must immediately submit a verbal or written report to BMO’s Ombudsman and we are entitled to do so on a confidential, anonymous basis. BMO’s Ombudsman is unbiased, impartial and independent and is committed to ensuring that all concerns are resolved fairly and in a timely manner. BMO’s Ombudsmanwill act as an intermediary reporting directly to the Board or the appropriate Board Committeeto resolve complaints or issues raised by employees relating to accounting, internal accounting controls and auditing matters. BMO has established procedures for the receipt, retention and handling of complaints and submissions concerning accounting, internal accounting controls, or auditing matters received by the Ombudsman.

 

 

 

(d) Where Can We Go For Guidance?

 

 

 

If we are unsure of the best way to proceed on reporting or making complaints relating to potential or actual breaches of this Code, we must immediately consult any one of the appropriate persons and departments indicated on the directory provided on the FirstPrinciples website, our manager or BMO Corporate Compliance.

 

(e) Whistleblower Protection and Prohibition Against Retaliation

 

Protecting the People Who Report

 

Those who, in good faith, report concerns of the kind described above will be protected by BMO. Likewise, if any of us believes that we may have contravened this Code ourselves, we should report it to our manager, any one of the appropriate persons and departments indicated on the directory provided on the FirstPrinciples website, or to BMO Corporate Compliance as soon as possible. Furthermore, if any of us wants to take issue with a policy or practice of BMO that we feel is in conflict with FirstPrinciples, we should speak up. These are shared principles and the commitment to uphold them needs to come from us all. Where a complaint is found to be vexatious or made in bad faith, disciplinary action will be taken, up to and including dismissal of the complainant.

 

Participating in and Providing Information to Investigations and Proceedings

 

No one at BMO is permitted to retaliate against any BMO employee because of any lawful act we have done to provide information or otherwise assist or participate in any applicable investigation or proceeding.

 

Applicable investigations or proceedings are those conducted by BMO or by a government, regulatory or law enforcement agency or authority relating to what that person reasonably believes is a violation of any applicable laws, rules or regulations - such violations include violations of securities laws or any wage or discrimination laws, or an act of fraud.

 

 

Providing Information to Law Enforcement Authorities

 

 

We must also not take, nor may we threaten or permit the taking of, retaliatory action against any BMO employee with the intent to compel that person to abstain from providing information to a law enforcement agency or authority about an offence that he or she believes has been or is being committed by BMO or any of us. Nor may we retaliate against that person because he or she has provided information to a law enforcement agency authority.

 

 

 

 

What is meant by ‘Retaliation’?

 

 

Retaliation includes disciplining, firing, demoting, suspending, harassing, intimidating, discriminating, or undertaking any other adverse measures against an individual who has engaged in a course of lawful and appropriate conduct in accordance with this Code and its associated policies and procedures.

 

8. Consequences of Violations of this Code

 

Any violation of this Code or its related Corporate Standards may result in disciplinary action, taking into account the seriousness of the violation as well as any failure to cooperate in any investigation in relation to any violation. Disciplinary action can include, but is not limited to, counseling, an impact on the applicable individual's record or remuneration, suspension or termination of employment, pursuit of any and all remedies available to BMO for any damages or harm resulting to it from a violation (including injunctive relief), and referral to the appropriate legal or regulatory body. Generally, any employee who seriously breaches BMO policy will be dismissed. Where applicable, Corporate Security will refer the matter to the police.

 

 

November 2005