As of August 7, 2011
1. Introduction
MI Developments Inc. (the “Company”) encourages all directors, officers and employees to become shareholders of the Company on a long-term investment basis. However, these individuals will from time to time become aware of corporate developments or plans or other information that may affect the value of the Company’s securities before these developments, plans or information are made public. Trading securities of the Company while in possession of such information before it is generally disclosed (known as “insider trading”) or disclosing such information to third parties before it is generally disclosed (known as “tipping”) is against the law and may expose an individual to criminal prosecution or civil lawsuits. Such action will also result in a lack of confidence in the market for the Company’s securities, harming both the Company and its shareholders. Accordingly, the Company has established this Policy to assist its directors, officers and employees in complying with the prohibitions against insider trading and tipping.
The procedures and restrictions set forth in this Policy are only a general framework to assist Company Personnel, as defined below, in ensuring that any purchase or sale of securities occurs without actual or perceived violation of applicable securities laws. Company Personnel have the ultimate responsibility for complying with applicable securities laws and should obtain additional guidance, including independent legal advice, as may be appropriate for their own circumstances.
The Company’s Board of Directors will designate one or more individuals from time to time as Insider Trading and Blackout Policy Administrators for the purpose of administering this Policy. At the date hereof, the designated Insider Trading and Blackout Policy Administrators are the General Counsel, the Chief Executive Officer and the Chair of the Board of Directors. This Policy has been reviewed and approved by the Company’s Board of Directors and may be reviewed and updates recommended periodically by the Company’s Corporate Governance and Nominating Committee. Any amendments to this Policy shall be subject to approval by the Company’s Board of Directors.
2. Application
2.1 Persons that are Subject to this Policy
The following persons are required to observe and comply with this Policy:
(a) all directors, officers and employees of the Company or its subsidiaries;
(b) any other person retained by or engaged in business or professional activity on behalf of the Company or any of its subsidiaries (such as a consultant, independent contractor or adviser);
(c) any family member, spouse or other person living in the household or a dependent child of any of the individuals referred to in Sections 2.1(a) and (b) above; and
(d) partnerships, trusts, corporations, RRSPs and similar entities over which any of the above-mentioned individuals exercise control or direction.
For the purposes of this Policy, the persons listed above are collectively referred to as “Company Personnel”. Sections 2.1(c) and (d) should be carefully reviewed by Company Personnel; those sections have the effect of making various family members or holding companies or trusts of the persons referred to in Sections 2.1(a) and (b) subject to the Policy.
2.2 Trades that are Subject to this Policy
Under this Policy, all references to trading in securities of the Company include: (a) any sale or purchase of securities of the Company, including the exercise of stock options granted under the Company’s stock option plan and the acquisition of shares or any other securities pursuant to any Company benefit plan or arrangement, and (b) any derivatives-based or other transaction or arrangement that would be required to be reported by insiders in accordance with applicable laws or regulations relating to derivatives or equity monetization transactions (including Multilateral Instrument 55-103 – Insider Reporting for Certain Derivative Transactions (Equity Monetization).
3. Inside Information
“Inside Information” means:
• a change in the business, operations or capital of the Company that would reasonably be expected to have a significant effect on the market price or value of the securities of the Company (which includes any decision to implement such a change by the Company’s Board of Directors or by senior management who believe that confirmation of the decision by the Company’s Board of Directors is probable);
• a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of the securities of the Company; or
• any information which is not generally available to the public that a reasonable investor would be likely to consider important in deciding whether to buy, hold or sell securities of the Company,
in each case, which has not been generally disclosed. Examples of information that may constitute Inside Information are set out in Schedule “A” attached hereto. It is the responsibility of any Company Personnel contemplating a trade in securities of the Company to determine prior to such trade whether he or she is aware of any information that constitutes Inside Information. If in doubt, the individual should consult with the General Counsel. In addition, Section 6.1 of this Policy requires that certain Company Personnel pre-clear trades in securities of the Company.
4. Prohibition Against Trading on Inside Information
Company Personnel must not purchase, sell or otherwise trade securities of the Company with the knowledge of Inside Information until two full trading days after the disclosure to the public of the Inside Information, whether by way of press release or a filing made with securities regulatory authorities.
In addition, Company Personnel must not make any trades in securities of the Company during the blackout periods described in Section 6 of this Policy.
5. Prohibition Against Speculating, Short-Selling, Puts and Calls
Certain types of trades in securities of the Company by Company Personnel can raise particular concerns about potential breaches of applicable securities law or that the interests of the persons making the trade are not aligned with those of the Company. Company Personnel are therefore prohibited at any time from, directly or indirectly, undertaking any of the following activities:
(a) speculating in securities of the Company, which may include buying with the intention of quickly reselling such securities, or selling securities of the Company with the intention of quickly buying such securities (other than in connection with the acquisition and sale of shares issued under the Company’s stock option plan or any other Company benefit plan or arrangement);
(b) buying the Company’s securities on margin;
(c) short selling a security of the Company or any other arrangement that results in a gain only if the value of the Company’s securities declines in the future;
(d) selling a “call option” giving the holder an option to purchase securities of the Company; and
(e) buying a “put option” giving the holder an option to sell securities of the Company.
6. Restrictions on Trading of Company Securities
6.1 Trading Pre-Clearance
Company Personnel who are “Reporting Insiders” of the Company (as defined in National Instrument 55-104 – Insider Reporting Requirements and Exemptions) are required to obtain written pre-clearance of any proposed trade of securities of the Company from two Insider Trading and Blackout Policy Administrators before effecting the trade in order to confirm that there is no Inside Information that has not been generally disclosed.
Such pre-clearance may be requested by completing the trade notice set out in Schedule “B” attached hereto and sending it by email to all of the Insider Trading and Blackout Policy Administrators no later than 12:00 noon (Toronto time) on the second business day before the date of the proposed transaction. If a Reporting Insider who has requested pre-clearance for a proposed trade has not received such pre-clearance from at least two of the Insider Trading and Blackout Policy Administrators, the Reporting Insider may not proceed with such trade.
If any Company Personnel has any doubt with respect to whether they are a Reporting Insider, they should contact the General Counsel.
6.2 Scheduled Blackout Periods
No Company Personnel shall trade in securities of the Company during the period commencing on the first trading day after the end of each fiscal quarter and ending at the conclusion of the second full trading day following the issuance of a press release in respect of the Company’s interim or annual financial statements (otherwise known as a “blackout period”). The trading restrictions described above also apply to the exercise of stock options granted under the Company’s stock option plan and any other securities that may be acquired pursuant to any Company benefit plan or arrangement.
6.3 Extraordinary Blackout Periods
Additional blackout periods may be prescribed from time to time when it is determined there may be undisclosed Inside Information concerning the Company that makes it inappropriate for Company Personnel to be trading. In such circumstances, the General Counsel will issue a notice instructing the affected individuals not to trade in securities of the Company until further notice.
6.4 Exemptions
Individuals subject to a blackout period who wish to trade securities of the Company may apply to the Insider Trading and Blackout Policy Administrators for an exemption that permits them to trade securities of the Company during the blackout period. Any such request should describe the nature of and reasons for the proposed trade. The Insider Trading and Blackout Policy Administrators will consider such requests and inform the requisitioning individual whether or not the proposed trade may be made. The requisitioning individual may not make any such trade until he or she has received specific written approval from at least two Insider Trading and Blackout Policy Administrators.
7. Prohibition Against Tipping
Company Personnel are prohibited from communicating Inside Information to any person outside the Company, unless: (a) disclosure is in the necessary course of the Company’s business and the disclosure is made pursuant to the proper performance by such Company Personnel of his or her duties on behalf of the Company; or (b) disclosure is compelled by law.
Subject to the above, Inside Information is to be kept strictly confidential by all Company Personnel until after it has been generally disclosed.
If any Company Personnel has any doubt with respect to whether any information is Inside Information or whether disclosure of Inside Information is in the necessary course of business, the individual should contact the General Counsel.
8. Securities of Other Companies
In the course of the Company’s business, Company Personnel may obtain information about another publicly traded company that has not been generally disclosed. Securities laws generally prohibit such Company Personnel from trading in securities of that other company while in possession of such information or communicating such information to another person. The restrictions set out in this Policy apply to all Company Personnel with respect to both trading in the securities of another company while in possession of such information and communicating such information.
9. Reporting Requirements
The directors, certain officers and certain other employees of the Company and its subsidiaries are “Reporting Insiders” under applicable securities laws. Reporting Insiders are required to file reports of any direct or indirect beneficial ownership of, or control or direction over, securities of the Company and of any change in such ownership, control or direction with Canadian provincial securities regulators using the electronic filing system known as SEDI. In addition, Reporting Insiders must also include in their reports any monetization, non-recourse loan or similar arrangement, trade or transaction that changes the Reporting Insider’s economic exposure to, or interest in, securities of the Company and which may not necessarily involve a sale, whether or not required under applicable law.
It is the responsibility of each Reporting Insider to comply with these reporting requirements. The Company will assist Reporting Insiders in the preparation and filing of insider reports. To facilitate timely filings, Reporting Insiders should provide the General Counsel with information about any trade subject to insider reporting within 24 hours of such trade being made.
A person that is uncertain as to whether he or she is a Reporting Insider or whether he or she is exempt from these requirements should contact the General Counsel.
10. Penalties and Civil Liability
The applicable Canadian securities laws that impose insider trading and tipping prohibitions also impose substantial penalties and civil liability for any breach of those prohibitions, namely:
(a) Criminal fines of up to $5,000,000 and four times the profit made or loss avoided;
(b) Prison sentences for a term not exceeding 10 years for insider trading, and five years for tipping; and
(c) Civil liability for compensation to the seller or purchaser of the relevant securities for damages as a result of the trade.
Where a company is found to have committed an offence, the directors, officers and supervisory personnel of the company may be subject to the same or additional penalties.
U.S. securities laws similarly impose substantial penalties and civil liability for any such breaches.
11. Enforcement
Any director, officer, employee or consultant who violates this Policy may face disciplinary action up to and including termination of his or her employment or appointment with or engagement by the Company without notice. The violation of this Policy may also violate certain securities laws. If it appears that a director, officer, employee or consultant may have violated such securities laws, the Company may refer the matter to the appropriate regulatory authorities, which could lead to penalties, fines or imprisonment.
Should you have any questions or wish information concerning the above, please contact the General Counsel.
