Conduct and Ethics
OF BUSINESS CONDUCT AND ETHICS
OF ROHM AND HAAS COMPANY
(As Amended, Approved and Adopted September 21, 2006)
Introduction and General Principles
Implementation of Code
INTERNAL CONTROL PROCEDURES
(INCORPORATING THE FOREIGN CORRUPT PRACTICES ACT COMPLIANCE RULES) OF ROHM AND HAAS COMPANY
Provisions for Authorizing Exceptions to the Internal
Internal Control Procedures
Preamble to the Code of Business Conduct and Ethics
The long-term prosperity, if not survival, of any institution is dependent on the character of its people and how they conduct themselves. When the public trust is in jeopardy, the franchise of the institution is profoundly diminished. Rohm and Haas Company has codified the behavior required of all employees, officers and directors in this Code of Business Conduct and Ethics. These materials were prepared to accommodate all relevant statutes, rules and regulations issued by regulatory authorities and, therefore, have a compliance orientation.
This Code, however, serves a much higher purpose. Employees, officers and directors of the current company enjoy a heritage grounded in a genuine respect for the well-being of all company stakeholders. In producing and distributing this Code, it is my hope that newer employees will gain useful insights into the traditions that have made this company unique. More experienced employees will be reminded we have a shared obligation to live the principles that define a world-class organization and a world-class workforce. It all starts with respect, with integrity and with individual accountability. Nothing is more vital or takes priority over our collective stewardship of these behaviors.
Introduction and General Principles
Rohm and Haas Company strongly believes uncompromising adherence to ethical excellence is integral to creating and maintaining a world-class company. The Company conducts its business practices honestly and ethically, in full compliance with all applicable laws, rules and regulations, in a socially responsible manner, and with a commitment to sustainable development and workforce diversity.
This Code expresses principles of lawful, respectful and ethical conduct and behavior that is expected to be exhibited and practiced by every director, officer and employee of the Company, its subsidiaries and controlled affiliates. The Company and its directors, officers and employees, wherever they may be located, must conduct their business and personal affairs with uncompromising honesty and integrity and adhere to the highest legal and ethical standards. The Company conducts its business in accordance with applicable laws, rules and regulations of the countries in which its operates. When a conflict arises between the Company’s policies and the customs or practices of a country, the Company seeks to resolve the conflict consistent with its ethical beliefs.
In addition to legal, ethical and respectful behavior, all employees are expected to protect and safeguard the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability and performance. All Company assets should be used strictly for legitimate business purposes.
Each director, officer and employee is expected to immediately alert the General Counsel, the Chief Compliance and Governance Officer, the Internal Audit Director or the Compliance Hotline to any illegal or unethical acts discovered or suspected. There will never be a penalty for reporting in good faith these discoveries or suspicions, and the Company will appropriately sanction anyone who tries to retaliate against someone who has made such a good faith report. All Company personnel are encouraged to talk to a supervisor, manager or other appropriate personnel when in doubt as to the best course of action to take in a particular situation.
Each director, officer and employee is accountable for his/her strict adherence to the letter and spirit of the Code, and violation of the Code will result in appropriate disciplinary sanctions, which may include termination of employment, forfeiture of benefits, initiation of a claim for restitution if the Company suffers a loss and referral to appropriate governmental authorities for prosecution.
Every year, each director, officer and employee must certify that he/she is in compliance with the Code, that all people who report to him/her are in compliance with the Code, that he/she is unaware of any violations of the Code by others that have not been already addressed and that all required compliance training has been taken. An example of the certification form to be signed is provided at the end of this document.
1. Behaving Ethically
This Code is the Company’s codification of standards designed to deter misconduct and to promote:
2. Making Political Payments
(a) Rohm and Haas encourages individual participation in the political process, and recognizes participation is a matter for individual, not Company, determination.
(c) Directors, officers and employees may make contributions
3. Giving and Receiving Gifts and Entertainment
(a) It is prohibited to offer or make gifts of cash or property to any director, officer or employee of a customer, supplier or government official or employee, unless the gift is (1) nominal in value (less than $100 US or the equivalent amount in a foreign currency) and (2) legal under the laws of the U.S. or the country in which the gift is offered or made. A gift valued at more than $100 US but less than $500 US, or the equivalent amount in a foreign currency, may be offered or made only if approved in advance by an appropriate member of the Leadership Council. Any gift valued over $500 US, or the equivalent amount in a foreign currency, may be offered or made only if approved in advance by either the CEO or the President of Rohm and Haas Company. Because it is illegal for corporations to make gifts to government officials or government employees in most countries, approval must be obtained in advance from the General Counsel before offering or making any such gift.
(b) Company personnel should refrain from accepting gifts
offered to them from persons that do (or may expect to do) business with the
Company if greater than nominal value (less than $100 US dollars or the
equivalent amount in a foreign currency). Cash or the equivalent of cash
(for example, a coupon with a cash value) may never be accepted. If a
gift of more than nominal value is offered, the gift should be declined.
If declining the gift would offend the donor, then the gift may be accepted on
behalf of the Company and immediately turned over to the Company. If
uncertain whether or not to accept a gift or entertainment, a supervisor or
manager should be consulted.
(c) An offer of business entertainment may be made or accepted so long as the entertainment has a business purpose, is not excessive, and otherwise is a legal activity. Business entertainment of government officials or government employees generally is illegal or regulated in most countries. Therefore, the legality and appropriateness of making or accepting an offer of such entertainment must be reviewed in advance with the General Counsel.
4. Avoidance of Conflicts of Interest
Any personal activity, investment, association or interest that interferes in any way – or appears to interfere - with the Company’s interests must be avoided. A conflict of interest is presented when actions or personal interests make it difficult to perform company work or exercise best judgment objectively and effectively in support of the Company’s interests. A conflict of interest may also arise when a director, officer or employee, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Company.
Each director, officer and employee is prohibited from being involved in situations that present a conflict of interest, unless that involvement (i) has been disclosed to the Company by immediately reporting it to the General Counsel or a lawyer in the Law Department, a supervisor or manager, or on the Compliance Hotline, (ii) has been expressly authorized by the Board of Directors (for directors and members of the Leadership Council) or an appropriate member of the Leadership Counsel (for other employees) and (iii) otherwise is permitted by law. If a director, officer or employee has any question or concern about whether his/her involvement in a situation presents a conflict of interest, he/she is required to immediately discuss the matter with the General Counsel or a lawyer in the Law Department.
As examples, but not intended to be exhaustive, a likely conflict of interest that must be disclosed to the Company can result when an individual:
5. Refraining from Benefiting from
Company personnel, relatives and friends are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of Company property, information or position, (b) using Company property, information or position for personal gain, and (c) competing with the Company.
6. Refraining from Trading in the
Company’s Securities in Certain
The Securities and Exchange Commission and the New York Stock Exchange require prompt public disclosure of material information about the Company; that is, information that could affect the market price or investor decisions about our securities. There may be times when important information is known that has not been released publicly. In those instances, this information must be held in strict confidence. Individuals may not buy or sell or advise others to buy or sell Rohm and Haas securities until the information has been made public and enough time has passed to allow for public reaction. Similarly, individuals may not buy or sell or advise others to buy or sell securities of another company (including customers, suppliers or competitors) based on any nonpublic information gained as a result of work for the Company. Questions about this sensitive and complicated area should be discussed with the General Counsel or the Chief Compliance and Governance Officer.
7. Maintaining Accurate and Complete
and Business Records
The Company’s financial statements and the books and business records on which they are based must accurately and completely reflect all corporate transactions. All receipts and disbursements of corporate funds must be properly recorded, and records must disclose the nature and purpose of corporate transactions. One of the duties of internal and outside auditors is to ensure that the Company strictly follows these rules. Each director, officer and employee is expected to fully cooperate with internal and outside auditors and under no circumstances withhold or conceal information from them.
8. Compliance with Environmental,
Safety Laws and Policies
Rohm and Haas conducts its businesses so that its worldwide operations and products (1) minimize any potential harm to the environment and risk of harm to the health and safety of its employees, customers and the public, and (2) fully comply with all applicable laws. The Company provides to all employees and the public information on the safety, health and environmental effects of its products and workplace chemicals, and information on how to handle and use them safely. The Company conducts periodic reviews of its products and operations to monitor legal compliance. Any questions regarding the interpretation of or compliance with environmental, health and safety laws and policies should be directed to the General Counsel.
9. Compliance with Employment Laws
Company personnel must comply with all employment laws and the Company’s policies regarding the employment laws. Copies of the Company’s employment policies may be found under “Corporate Policies” on the Company’s intranet web page. The Company has zero tolerance for violation of the employment laws and Company policies. A single instance of conduct violating these laws or policies is subject to discipline including termination of employment. Questions regarding the interpretation of and compliance with these laws and policies should be directed to the General Counsel.
(a) The Company prohibits any discrimination in the hiring, discharge, compensation, promotion, or benefits offered to any employee, applicant or retiree on the basis of race, sex, religion, age, disability, or any other unlawful basis. The Company respects the privacy and dignity of all employees, and expects the same conduct from all personnel.
(b) Sexual harassment and harassment of any type is prohibited.
(c) Each person must be accorded equal opportunity regardless of age, race, gender, sexual orientation or preference, religion, national origin, marital status, veteran’s status, handicap or disability.
(d) The Company prohibits any actions by an individual that libel, slander, disparage or defame another individual.
10. Antitrust, Intellectual Property and Other Legal Matters
Rohm and Haas conducts its businesses in compliance with the U.S. antitrust laws and the competition laws of the countries in which it operates. Each person is expected to deal with the Company’s competitors fairly and ethically, and to comply with all antitrust and competition laws in the U.S. and other countries.
Rohm and Haas respects the intellectual property rights of others, including their patents, licenses, trademarks and logos, service marks, trade secrets, proprietary and confidential information and other forms of intellectual property. Each director, officer and employee is expected to safeguard the Company’s intellectual property, and to take no actions that improperly or illegally affect or interfere with the intellectual property rights of others.
Each director, officer and employee is expected to always act legally and in compliance with all laws, rules and regulations.
Company personnel must maintain the confidentiality of the Company’s information and refrain from disclosure of this information and trade secrets, except when disclosure is authorized by the Company or legally mandated. Confidential information includes all non-public information or trade secrets that might be of use by competitors, or harmful to the Company or its business partners, if disclosed.
12. Administration of the Code
The Code is administered and enforced by the Chief Executive Officer and the General Counsel through the Chief Compliance and Governance Officer and the Leadership Council. Each director, officer and employee annually must certify that he/she is in compliance with the Code, that he/she is unaware of any violations of the Code by others, that each supervised employee is in compliance with the Code, and that he/she has completed, during the last 24 months, the compliance program overview training as well as the other supplemental training modules required for his/her position. Suspected violations of the Code must be reported immediately to the General Counsel, the Chief Compliance and Governance Officer, the Internal Audit Director or the Compliance Hotline. The Company’s internal auditors also monitor compliance with the Code and periodically report their findings to the Audit Committee of the Board of Directors.
No waiver of or exception from the Code as to any director, officer or employee is permitted.
14. Exceptions to the Internal Control Procedures (incorporating the Company’s Foreign Corrupt
Practices Act Compliance Rules)
The Company maintains internal control procedures to provide reasonable assurance that the Company is in compliance with the accounting and internal control provisions of the Foreign Corrupt Practices Act. Unlike the Code, exceptions to these internal control procedures may be granted if the exception has been properly approved in accordance with the process specified in the internal code procedures. These exceptions do not constitute a waiver of or exception from the Code itself.
Implementation of the Code
Available Languages and Translation
This Code will be prepared in English, Chinese, French, German, Italian, Japanese, Portuguese and Spanish. Other translations will be prepared if necessary to ensure that recipients of the Code are able to understand it fully. The General or Resident Manager in each country will be responsible for translations.
1. A copy of the Code in the appropriate language is available to all directors, officers and employees of the Company (including employees of domestic and foreign subsidiaries and controlled affiliates). New employees will be given a copy of the Code at the time of their employment. The Code also is available on the Company’s website, www.rohmhaas.com.
2. The Regional or Staff Division Human Resources Directors are responsible for dissemination of the Code.
1. All directors, officers and employees of the Company (its subsidiaries and controlled affiliates) are required to certify annually in writing his/her compliance with the Code in the form required by the Chief Compliance and Governance Officer.
2. Leadership Council members shall be responsible for obtaining these certifications not later than February 1 of the year following the year for which the certification is being made.
INTERNAL CONTROL PROCEDURES (INCORPORATING THE FOREIGN CORRUPT PRACTICES ACT COMPLIANCE RULES) OF ROHM AND HAAS COMPANY
The following internal control procedures are enforced to ensure, among other things, the Company’s compliance with the Foreign Corrupt Practices Act. These procedures shall be followed at all Company locations, except where other practices are expressly authorized in advance in accordance with the provisions described below.
Provisions for Authorizing Exceptions to
the Internal Control Procedures
Exceptions to these procedures may be granted for justifiable business needs and in accordance with the laws of the U.S. and the countries in which the Company does business. The purpose of an exception is to facilitate the conduct of business in accordance with local business practices and customs. Any exception requires notification to and the pre-approval of the Chief Financial Officer of Rohm and Haas Company (hereinafter “Chief Financial Officer”) (where noted, the granting of exceptions to certain procedures additionally requires the pre-approval of the General Counsel). The Internal Audit Department maintains a log of all granted exceptions. An exception will lapse by its own terms within five (5) years, and a request for an extension of the exception requires the same level of business justification as the original request. Any exceptions that are granted must have appropriate mitigating controls and are regularly reviewed by the Internal Audit Department.
Internal Control Procedures
1. Bank Accounts
The Corporate Treasurer must approve the opening of any new account at any bank or financial institution. All such accounts must be listed in the name of the appropriate company, not private individuals.
2. Authorized Check Signers
The Corporate Treasurer, or designee who is approved in writing by the Corporate Treasurer, must approve all changes in the list of individuals authorized to sign checks, drafts, payment orders, giros, wire transfers, applications for letters of credit, and any other means of disbursing funds. Only active employees of the Company may be authorized to sign checks or disburse funds.
3. Financial Arrangements
The Corporate Treasurer, or designee who is approved in writing by the Corporate Treasurer, must approve all arrangements with banks or other types of financial institutions to allow specific individuals acting on behalf of the Company to borrow money, purchase or sell marketable securities, purchase or sell foreign currencies, enter into foreign exchange contracts, issue guarantees, or enter into custody agreements. Financial managers must send the Corporate Treasurer a copy of all instructions to banks and financial institutions which designate or change the limits within which an employee is authorized to perform any of the above acts.
4. Blank Checks
Custody of blank checks must be assigned to an individual who has no responsibility for signing checks, processing supplier invoices, preparing checks for signature or reconciling bank accounts. Clear segregation of duties must exist between the custody, preparation, and signing of checks.
5. Cash Commitments and Disbursements
The Board of Directors of Rohm and Haas Company annually authorizes identified employees to execute contracts and disburse funds through the adoption of Enabling Resolutions, and to designate others to do the foregoing on behalf of the Company. Except as authorized through this delegation of authority process, no employee may enter into contracts or disburse funds, whether for capital projects or otherwise, on behalf of the Company. By signing the Code of Business Conduct and Ethics, all employees involved in procurement activities that may influence either the selection of suppliers or the price of a material or service, will effectively be certifying their compliance with the Purchasing Code of Conduct.
Cash disbursements must
be supported by an approved Purchase Order, Wire Transfer, or Check Request,
unless performed through a Company approved electronic medium that contain
appropriate internal controls. Except for small petty cash disbursements,
all payments must be made from approved bank accounts by authorized signers
within established limits for signing. The full name of the payee must be
recorded on the disbursements document and in the Cash Disbursement
Ledger. Documents must not be made payable to “Bearer”, “Cash” nor the
individual approving the transaction. Petty cash must be kept on an impress
6. Responsibility of Check Signer or Approver of
Transfer of Funds
The check signer or approver of transfer of funds is fully
responsible for determining that supporting documentation is reviewed and that
the disbursement is a legitimate Company expense, is reasonable in amount and
has been properly approved. When a check signing machine is used, the
individual whose signature appears on the check must be assured that
appropriate controls have been established over the use of the signature plate
and the check signing machine, including reconciliation of the meter on the
machine with the number of checks approved for signing. When an
electronic transfer of funds is made, the approver of transfer of funds must be
assured that appropriate controls are established with the institution
completing the transfer.
7. Travel Expenses
The employee must ensure that the expense statement accurately describes the purpose of the expense, is reasonable in amount and is limited to authorized expenses for business travel or business entertainment. The supervisor is responsible for approving travel expenses, advances, transportation tickets purchased by the Company and hotel and restaurant bills charged to the Company. The local financial manager (or designated individual) must make certain that travel expense statements are computed accurately, properly supported by receipts and approved by an appropriate supervisor. Travel expense statements must not be used for reimbursement of other types of expenditures (such as commissions, rebates, consultant fees, personal travel or other non-business expense) nor for the purchase of assets.
8. Employee Loans
Loans to employees and salary advances that are not prohibited by law may be made according to local policies duly approved by a Regional Director and the Chief Financial Officer.
9. Employee Compensation
All payments to employees as wages, salaries, bonuses, etc. must be justified based on services rendered the Company and recorded as compensation on the Company’s books and tax reports. Employees may not be asked to refund a portion of their compensation or to spend it in an illegal or unethical manner. Employees will be paid in the currency of the legal entity by which they are employed. This includes cases when an employee is on temporary assignment to another country.
10. Financial Organization
Financial management personnel are responsible for the credit function, accounts receivable, and cash receipts. Sales personnel must not release material without credit approval, deliver invoices or credit notes to customers nor make collections from customers.
Sales personnel calling on customers must not establish selling prices except within pre-established guidelines approved in writing by marketing or business management. All price reductions (such as discounts, allowances, rebates, credit notes, samples, and free-of-charge shipments) must be approved by a sales or marketing manager.
12. Credit Notes
A credit note may be issued only for a valid business reason, which must be accurately stated on the face of the credit note and must refer specifically to the original invoice. The responsible legal entity or business unit finance manager or his or her finance designee must review all credit notes for accuracy, reasonableness, and approval by an authorized manager unless an alternative practice has been approved in writing by the CFO of the Rohm and Haas Company. Customers must not be overbilled and given an offsetting credit.
All shipments must be billed promptly and accurately. Pre-billing is permitted only under the following conditions:
a. the request is initiated by the customer and approved by sales management;
b. there is no change in standard credit terms (i.e., the collection period begins with the date of the invoice);
c. the material is available, physically segregated and marked as “Held for Customer”; and
the invoice states the following: “Material billed at customer request,
not shipped. Per our agreement, title and risk of loss to all material shall
pass to customer on the date of this invoice or order confirmation. The
customer may wish to insure material against damage
The business management organization that is responsible for the order to cash function is responsible for the accuracy of the billing function.
14. Cash Receipts
All checks payable to the Company and cash receipts, including refunds and rebates received from suppliers for any reason (such as price reduction, return of material, return of deposit, cancellation of contract, duplicate payment, erroneous payment), must be deposited promptly in a Company-named bank account. Checks received from customers must not be endorsed to a third party as a means of paying invoices. Cash receipts must not be added to petty cash funds. Third-party checks endorsed to the Company must not be accepted.
15. Bank Account Reconciliation
Bank accounts are to be reconciled in accordance with corporate policy. Bank accounts must be reconciled monthly by an individual who has no responsibility for cash receipts or cash disbursements. The bank must be instructed to mail the statements directly to the individual who is responsible for ensuring the accounts are reconciled properly. The bank account reconciliation must be reviewed and approved by the local financial manager or designated finance individual and agreed to the paper bank statements.
16. Sales Agents And Distributors
All new sales agents and distributors and changes in arrangements with existing sales agents and distributors must be approved in advance by a Business Unit Director or designated individual. The background and business ability of any new agent or distributor must be reviewed carefully to determine experience, ability and financial resources. Only respected and competent agents and distributors who can obtain business for the Company on the merits of our products may be approved. The services required and compensation to be paid to the agent or discount allowed to the distributor must be specified and a written contract executed. All contracts must be retained according to corporate retention policies and stored appropriately. Exceptions to the above additionally must be approved by the General Counsel.
17. Sales Commissions And Rebates
The amount of the commission must be as provided in the written agreement and commensurate with the services rendered by the sales agent. The commission rate must be uniform for a given product in a given area for similar services provided. Payments must not be made in cash or to unnamed or otherwise disguised bank accounts. All commissions must be recorded in the Company’s financial records with full documentation indicating payees, rates, customer orders and products and must be supported by authorized credit notes. No payments may be made in a country other than the country of the agent’s or distributor’s residence, where the agent or distributor or Rohm and Haas contracting entity has its principal place of business, or where the services are rendered.
Sales Rebates must be supported by written documentation and authorized credit notes. Accounting entries must be made so that the net selling price for the product reflects the final price to the customer. All payments must be payable to the customer and sent to the same country as the original invoice.
Exceptions to the above additionally must be approved by the General Counsel and must be supported by appropriate documentation.
18. Consultants And Other Advisors
All arrangements with consultants, import agents, purchasing agents, attorneys, accountants and other individuals or organizations providing professional services must be based on the Company’s need for technical or professional advice or assistance. The background and professional ability of any new agent/consultant should be reviewed carefully, and only respected and competent individuals and organizations may be engaged. All new agents/consultants and changes in arrangements with existing agents/consultants must be approved by a Business Unit Director, Corporate Staff Division Director or designated individual. Arrangements with accountants or financial consultants must be approved by the Chief Financial Officer, and arrangements with attorneys, by the General Counsel. Whenever possible, the fee or method of determining the fee (for example hourly billing) should be established before the services are rendered, a contract should be executed, and Purchase Order completed and approved. In all cases, the invoice received must fully and accurately describe the services rendered and the bases for the fee charged. All contracts are to be approved according to Company policies and procedures.
19. Unusual Business Transactions
All transactions outside the Company’s normal course of business (such as the sale of scrap or surplus equipment, sale of off-grade or obsolete materials or supplies, sale of utilities or services, lease or rental of Company-owned land, buildings or equipment, raising crops or livestock on company property, or engaging in new business activities) must be approved by a Vice President of Rohm and Haas Company, a Business Unit Director, Corporate Staff Division Director or an individual designated by a Vice President, Business Unit Director, or Corporate Staff Division Director in writing. The local financial or site manager is responsible for establishing procedures to monitor the price and quantity of assets and services sold, to prepare invoices promptly, and to deposit receipts in the Company’s bank account. The use of an auction or other means of disposal in which price and customer cannot be determined in advance must be approved by the local financial or site manager.
20. Accounting Records
All records and documents supporting the Company’s financial statements and government reports must accurately reflect the nature, purpose and date of corporate transactions. All accounting entries must be controlled by the local financial manager or designated individual so that no fictitious or unauthorized entries will be made in the Company’s book of account. Required correcting entries should be recorded in a transparent and timely manner without consideration to either financial performance or the availability of offsetting adjustments during the period. Such adjustments should not be amortized to reduce their impact to the financial statements. The account classification of correcting entries should be based on the classification of the original error without regard to budgetary matters or the existence of offsetting adjustments.