Related Party Transaction Policy
- A. Statement of Policy
The Board of Directors (the “Board”) of Flora Growth Corp. (the “Company”) has adopted this Related Party Transaction Policy (the “Policy”) to ensure that Related Party Transactions (as defined below) are properly reviewed, approved and fully disclosed in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and the NASDAQ Stock Market (the “NASDAQ”).
The Company’s Code of Business Conduct and Ethics (the “Code”) is its primary guide to ethical decision-making. Through the policy contained in the Code, the Company strives to avoid any circumstances that may create a conflict, or the appearance of a conflict, between the personal interests of a Related Party (as defined herein) and the interests of the Company. This Policy is intended to be a supplement to, and an extension of, the Code, and nothing herein shall be deemed to amend or supersede any provision of the Code or any such rules on conflicts of interest.
As a general rule, all Related Party Transactions should be on terms that are customary in the sector concerned and that are reasonably comparable to those that could be obtained by the Company in arm’s length dealings with unrelated third parties.
- B. Approval Required
All proposed Related Party Transactions must be promptly disclosed in advance (or otherwise at the earliest possible opportunity) to the person designated by the Chief Executive Officer of the Company as the compliance officer and approved, ratified or rejected by either the Audit Committee of the Board or the full Board. As a general rule, any director who has a direct or indirect material interest in the Related Party Transaction should not participate in the Audit Committee or Board deliberations or decision making regarding whether to approve or ratify the transaction.
- C. Approval Process
In the case of a proposed Related Party Transaction not involving a director, all material information regarding the proposed transaction and the Related Party shall be brought to the attention of the Audit Committee. The Audit Committee shall approve, ratify or reject the transaction or refer the transaction to the full Board or other appropriate Committee, in its discretion. All Related Party Transactions shall be disclosed to the full Board. In the case of a proposed Related Party Transaction involving a director, all material information regarding the proposed transaction and any director concerned shall be brought to the attention of the full Board. The full Board shall approve, ratify or reject the transaction.
As a general rule, all Related Party Transactions should be approved in advance, in accordance with this Policy. However, the Company recognizes that certain circumstances may require or result in a Related Party Transaction being entered into subject to ratification in accordance with this Policy. If ratification of a previously consummated Related Party Transaction shall not be forthcoming, management shall make all reasonable efforts to cancel or annul such transaction. Nothing in this Policy shall make such transaction void or voidable by the other parties thereto. Management shall promptly
report its efforts to cancel or annul the transaction to the Audit Committee or the full Board, as applicable.
- D. Definitions
For purposes of this Policy, a “Related Party” is:
- (i) any person who is or was a director, nominee for director, or executive officer of the Company at any time since the beginning of the last fiscal year, even if such person does not presently serve in that role;
- (ii) any person known by the Company to be the beneficial owner of more than 5% of the Company’s ordinary shares when the Related Party Transaction in question is expected to occur or exist (or when it occurred or existed); and
- (iii) any person who is or was an immediate family member of any of the foregoing when the Related Party Transaction in question is expected to occur or exist (or when it occurred or existed);
“Immediate Family Member” means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of any director, executive officer, nominee for director or 5% or more shareholder, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer or 5% or more shareholder of the Company, as the case may be;
“Related Party Transaction” is any transaction directly or indirectly involving any Related Party that is required to be disclosed under Item 404(a) of Regulation S-K. Under Item 404(a), the Company is required to disclose any transaction occurring since the beginning of its last fiscal year, or any currently proposed transaction, involving the Company where the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest; provided, however, that disclosure is not required to be provided if the transaction is one where the rates or charges involved are determined by competitive bids or in certain other limited circumstances enumerated in the instructions to Item 404(a). “Related Party Transaction” also includes any material amendment or modification to an existing Related Party Transaction.
- E. Scope and Waivers
This Policy has been adopted by the Board as the general guidelines for approving and disclosing Related Party Transactions. Without prejudice to the rules applicable to the Board concerning conflicts of interest, waivers or exceptions to this Policy may be granted by either the Audit Committee or the full Board, depending on whether the Audit Committee or Board is authorized to approve the proposed transaction. Any waiver or exception to this Policy granted by the Audit Committee shall be promptly reported to the full Board.
- F. Review of Policy
The Audit Committee will review this Policy periodically and will report the results of this review to the Board.
- G. Disclosure
All Related Party Transactions are to be disclosed in the Company’s filings as required by the rules and regulations of the SEC and NASDAQ.
This Policy will be described in the Company’s filings as required by the rules and regulations of the SEC and NASDAQ.