Code of Business Conduct and Ethics
This Code of Business Conduct and Ethics (the "Code") has been adopted by the Board of Directors and summarizes the standards that must guide our actions. While covering a wide range of business practices and procedures, these standards cannot and do not cover every issue that may arise, or every situation where ethical decisions must be made, but rather set out key guiding principles reflected in company policies and with which staff are expected to abide.
A breach of this policy may result in disciplinary action, up to and including dismissal.
As part of the annual compliance program, all employees are required to reconfirm that they have read and understood the Code of Business Conduct and Ethics Policy along with the 4 Company policies that are referenced:
§ Company Rules
§ Whistle Blowing Policy
§ Share Dealing, Inside Information & Announcements Policy
§ IT Policy
All ARM employees are also expected to understand the scope of all Company policies.
We strive to foster a culture of honesty and accountability. Our commitment to the highest level of ethical conduct should be reflected in all of the Company's business activities including, but not limited to, relationships with employees, customers, suppliers, competitors, government and government agencies and the public, including our shareholders. All of our employees, officers and directors must conduct themselves according to the language and spirit of this Code and seek to avoid even the appearance of improper behaviour. Even well intentioned actions that violate the law of any country or this Code may result in negative consequences for the Company and for the individuals involved.
One of our Company's most valuable assets is our reputation for integrity, professionalism and fairness. We should all recognize that our actions are the foundation of our reputation and adhering to this Code and all applicable laws is imperative.
2. Conflicts of Interest
Our employees, officers and directors must conduct themselves in an honest and ethical manner and act in the best interests of the Company. All employees, officers and directors should endeavour to avoid situations that present a potential or actual conflict between their interests and the interests of the Company.
A "conflict of interest" occurs when a person's private interests interfere in any way, or even appear to interfere, with the interests of the Company, including its subsidiaries and affiliates. A conflict of interest can arise when an employee, officer or director takes an action or has an interest that may make it difficult for him or her to perform his or her work objectively and effectively. Conflicts of interest may also arise when an employee, officer or director (or his or her family members) receives improper personal benefits as a result of the employee's, officer's or director's position in the Company.
Although it would not be possible to describe every situation in which a conflict of interest may arise, the following are examples of situations which may constitute a conflict of interest:
Situations involving a conflict of interest may not always be obvious or easy to resolve. You should report actions or situations that may involve a conflict of interest to the General Counsel &Company Secretary.
In order to avoid conflicts of interests, employees must disclose to the General Counsel & Company Secretary any material transaction or relationship that reasonably could be expected to give rise to such a conflict and the General Counsel & Company Secretary shall notify the Board of Directors or any duly authorized Committee of the Board of any such disclosure.
In the event that an actual or apparent conflict of interest arises between the personal and professional relationship or activities of an employee, officer or director, the employee, officer or director involved is required to handle such conflict of interest in an ethical manner in accordance with the provisions of this Code.
3. Anti-Bribery and Corruption Policies
As part of ARM's commitment to conducting business ethically and to the protection of its reputation, ARM and its directors, officers and employees must not offer, pay, give, make or receive bribes, 'kickbacks' or other payments or other kinds of financial or other advantages to induce improper conduct by any person or to win business or to obtain any other advantage in the conduct of our business. We do not tolerate any of our employees or any external party engaging in such conduct on our behalf.
1) ARM employees and any third party working for, or representing, ARM must never offer, promise or give anything to any person (whether a public official, a person working in the private sector or any other person) or receive anything from such persons which could be construed as an attempt to improperly influence a decision about ARM or in order to win business or a business advantage for ARM.
2) All corporate promotional expenditure such as the provision of gifts, hospitality and corporate entertainment must be reasonable and proportionate, for a legitimate business purpose and approved in accordance with the Promotional Expenditure Policy set out at section 4 below.
3) In accordance with section 15 of this Code, no political donations may be made on behalf of ARM without approval of the board of ARM Holdings plc.
4) No charitable donations may be made on behalf of ARM unless they have first been approved in writing in accordance with the Charities Sponsorship and Donations Policy.
5) We expect those engaged on our behalf to comply with high ethical standards similar to our own and for them to expressly promise not to engage in any conduct which could be regarded as bribery. No third party, including but not limited to agents, distributors consultants or, intermediaries etc, shall be engaged to work for or represent ARM unless satisfactory due diligence has been conducted on them and their engagement and contractual terms have been approved through the Legal Approvals process.
6) Facilitation payments to public officials, such as customs officials, to carry out their duties expeditiously, irrespective of the amount are considered bribes under UK law and must not be made.
7) Any attempt to extract a bribe, no matter how small, from ARM or one of its employees must be reported to the General Counsel & Company Secretary as soon as possible.
8) Any suspicion of bribery by or on behalf of an ARM company, whether by any director, officer, employee or third party acting on ARM's behalf, should be reported to the General Counsel & Company Secretary. Alternatively, it, can be reported in confidence (and anonymously if desired) in accordance with our Whistle Blowing Policy.
9) Should you be unclear about any aspect of this policy you should contact the General Counsel & Company Secretary for clarification.
10) ARM's anti-bribery policy and procedures will be subject to periodic review.
All employees must ensure that they familiarise themselves with and adhere to this Code and the Company Rules and not do anything that could be perceived as bribery. They should ensure that those acting on our behalf behave in a similar way. There will be zero tolerance of any such activities by employees or anyone acting on ARM's behalf. Any contravention of the Code or Company Rules will have serious implications for future employment up to and including summary dismissal for gross misconduct. In addition, employees, directors and officers could face individual prosecution potentially leading to imprisonment, while ARM could face corporate prosecution and fines.
4. Promotional Expenditure Policy: corporate hospitality, entertainment and gifts.
Promotional expenditure in the form of hospitality and entertainment and the giving of gifts can be an important part of demonstrating our products and services and cementing business relationships with existing and potential customers and suppliers. However, excessive or inappropriate promotional expenditure of this kind can lead to allegations that we have sought to bribe. The provision of gifts hospitality or entertainment to public officials in any part of the world will not normally be permitted.
The following provisions apply equally to the giving and receiving of gifts, hospitality or entertainment.
Any promotional expenditure should be in accordance with the following:
1) The proposed gift, hospitality or entertainment should have a clear business purposes and be both reasonable and proportionate.
2) Gifts, hospitality or entertainment in any form that could result in a feeling or expectation of personal obligation should not be given or accepted. Gifts must never take the form of cash or cash equivalents and gifts and entertainment must always be in good taste.
3) Gifts, hospitality or entertainment should be of an occasional nature.
4) The value of any gifts given or received should be very modest.
5) Any proposed expenditure on gifts, hospitality and entertainment and the receipt of gifts hospitality or entertainment of more than very modest value should be pre-approved by your line manager, provided he or she meets the seniority criteria.
6) Any proposed expenditure on gifts, hospitality and entertainment for public officials should be pre-approved in writing by the General Counsel & Company Secretary. Such approval will be given only rarely.
7) A record should be kept by each approver of gifts, hospitality or entertainment of more than very modest value given by ARM or received by an ARM employee, director or officer. Such records will need to be logged in accordance with the procedures specified by the Company from time to time.
5. Quality of Public Disclosures
The Company has a responsibility to provide full and accurate information in our public disclosures, in all material respects, about the Company's financial condition and results of operations. Our reports and documents filed with or submitted to the United States Securities and Exchange Commission or to the United Kingdom Listing Authority or Financial Services Authority and our other public communications shall include full, fair, accurate, timely and understandable disclosure. The Company's Disclosure Committee consisting of senior management assists in monitoring such disclosures.
6. Compliance with Laws, Rules and Regulations
We are committed to conducting our business affairs with honesty and integrity and in full compliance with all applicable laws, rules and regulations. No employee, officer or director of the Company shall commit an illegal or unethical act, or instruct others to do so, for any reason.
If you believe that any practice raises questions as to compliance with any applicable law, rule or regulation or if you otherwise have questions regarding any law, rule or regulation, you should take action in accordance with the Company's Whistle Blowing Policy.
7. Compliance with Export Regulations
ARM exports IP and tangible goods to customers around the world every day. ARM is committed to complying with all export laws and regulations wherever we conduct business. It is the responsibility of all ARM employees and contractors to understand that export controls govern certain ARM technology, and to comply with laws and regulations as they conduct their daily activities.
An export is the transfer of goods, technology, services or information from one country, entity, or individual to another. An export can be physically shipped, sent by email, transmitted electronically, orally disclosed or even hand carried in personal luggage.
Export of controlled technology or product without the necessary permissions can result in severe monetary and criminal penalties for ARM and for the individual employees involved in the violation. ARM can also lose export privileges and have goods confiscated, which would seriously impact our customers, our revenue and our corporate reputation.
8. Compliance with this Code and Reporting of Any Illegal or Unethical Behaviour
All employees, directors and officers are expected to comply with all of the provisions of this Code and the Company Rules. The Code will be strictly enforced and violations will be dealt with immediately, including subjecting persons to corrective and/or disciplinary action up to and including dismissal or removal from office. Violations of the Code that involve illegal behaviour will be reported to the appropriate authorities.
Situations which may involve a violation of this Code may not always be clear and may require you to make difficult judgments. Employees, officers and directors should promptly report any concerns about violations of this Code to their line managers or the General Counsel & Company Secretary or, in the case of accounting, internal accounting controls or auditing matters, to the Audit Committee of the Board of Directors. Alternatively employees should take action in accordance with the Company's Whistle Blowing Policy.
The Company recognizes the need for this Code to be applied equally to everyone it covers. The General Counsel & Company Secretary will have primary authority and responsibility for the enforcement of this Code, subject to the supervision of the Board of Directors or any Committee appointed for the purpose and the Company will devote the necessary resources to enable the General Counsel & Company Secretary to establish such procedures as may be reasonably necessary to create a culture of accountability and facilitate compliance with this Code. Questions concerning this Code should be directed to the General Counsel & Company Secretary.
9. Waivers and Amendments
Any waivers (including any implicit waivers) of the provisions in this Code for executive officers or directors may only be granted by the Board of Directors and will be promptly disclosed to the Company's shareholders. Any such waivers will also be disclosed in the Company's annual report on Form 20-F. Amendments to this Code must be approved by the Board of Directors and will also be disclosed in the Company's annual report on Form 20-F.
10. Trading on Inside Information
Using non-public Company information to trade in securities, or providing a family member, friend or any other person with a "tip", is illegal. All such non-public information should be considered inside information and should never be disclosed or used for personal gain. You are required to familiarize yourself and comply with the Company's policy against insider trading, details of which are available in the Share Dealing, Inside Information and Announcements Policy (including the UK Listing Authority's Model Code on Securities Dealings). You should contact the General Counsel & Company Secretary with any questions about your ability to buy or sell securities.
11. Protection of Confidential Proprietary Information
Confidential proprietary information generated and gathered in our business is a valuable company asset. Protecting this information plays a vital role in our continued growth and ability to compete therefore all proprietary information should be maintained in strict confidence, except when disclosure is authorized by the Company or required by law.
Proprietary information includes all non-public information that might be useful to competitors or that could be harmful to the Company, its customers or its suppliers if disclosed. Intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, research and new product plans, objectives and strategies, records, databases, salary and benefits data, employee medical information, customer, employee and suppliers lists and any unpublished financial or pricing information must also be protected.
Unauthorized use or distribution of proprietary information violates company policy and could be illegal. Such use or distribution could result in negative consequences for both the Company and the individuals involved, including potential legal and disciplinary action. We respect the property rights of other companies and their proprietary information and require our employees, officers and directors to observe such rights.
Your obligation to protect the Company's proprietary and confidential information continues even after you leave the Company, and you must return all proprietary information in your possession upon leaving the Company.
12. Protection and Proper Use of Company Assets
Protecting Company assets against loss, theft or other misuse is the responsibility of every employee, officer and director. Loss, theft or misuse of Company assets directly impacts our profitability. Any suspected loss, misuse or theft should be reported to your line manager.
The sole purpose of the Company's equipment, vehicles, supplies and electronic resources (including, hardware, software and the data thereon) is the conduct of our business. They may only be used for Company business consistent with Company guidelines.
13. Corporate Opportunities
Employees, officers and directors are prohibited from taking for themselves business opportunities that arise through the use of corporate property, information or position. No employee, officer or director may use corporate property, information or position for personal gain, and no employee, officer or director may compete with the Company. Competing with the Company may involve engaging in the same line of business as the Company, or any situation where the employee, officer or director takes away from the Company opportunities for sales or purchases of property, products, services or interests.
14. Fair Dealing
Each employee, officer and director of the Company should endeavour to deal fairly with customers, suppliers, competitors, the public and one another at all times and in accordance with ethical business practices. No one should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice. The Company and the employee, officer or director involved may be subject to disciplinary action as well as potential civil or criminal liability for violation of this policy.
15. Compliance with Competition Law (also known as Antitrust Law)
Competition promotes expanded output, lower pricing, innovation and enhanced quality, which in turn enhances consumer choice and welfare. The purpose of competition law is to ensure that competition in markets is maintained, for the benefit of consumers.
We are committed to conducting our business in compliance with all applicable competition laws. Fair competition is in the best interests of ARM, its shareholders and the partnership. The consequences of infringement are serious, including:
Competition law regulates:
The behaviour of companies with market dominance
A company is dominant when, due to its position of economic strength, it is not subject to the "normal" competitive constraints which foster competition in a market. While it is not illegal to be dominant, the behaviour of a dominant company may hinder effective competition, so the dominant company has a special responsibility to ensure that it does not abuse its position.
The assessment of dominance is complex. While ARM faces competition in all markets, for compliance purposes we take a conservative approach, assuming that the laws on abuse of dominance may apply to ARM in some situations. There is no exhaustive list of behaviour which is abusive. Examples of abusive conduct are: tying, predatory pricing, discriminating against competitors, bundling, refusal to license and refusal to provide essential interoperability information.
ARM follows the UK Competition and Markets Authority's four-step compliance process (see https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306902/CMA19-staticwheel.pdf)..
All employees must complete basic online competition law training. Employees whose roles involve significant involvement with customers and competitors may be required to do additional training.
Competition law can be complex and the consequences of infringement are serious. If you have any questions or concerns, you must consult the Legal Department, including reporting any incidents immediately.
16. Political Contributions and Activities
It is the Company's current policy not to make any political contributions and any such contributions would require approval of the board of ARM Holdings plc. This policy applies solely to the use of Company assets and is not intended to discourage or prevent individual employees, officers or directors from making political contributions or engaging in political activities in their personal capacity. No one may be reimbursed directly or indirectly by the Company for personal political contributions.
17. Environment, Health and Safety
We are committed to conducting our business in compliance with all applicable environmental and workplace health and safety laws and regulations. We strive to provide a safe and healthy work environment for our employees and to avoid adverse impact and injury to the environment and communities in which we conduct our business. Achieving this goal is the responsibility of all officers, directors and employees.
18. Accuracy of Company Financial Records
We maintain the highest standards in all matters relating to accounting, financial controls, internal reporting and taxation. All financial books, records and accounts must accurately reflect transactions and events, and conform both to required accounting principles and to the Company's system of internal controls. Records shall not be distorted in any way to hide, disguise or alter the Company's true financial position.
19. Human Rights Policy
ARM's Human Rights Policy is to avoid adverse impact on human rights in our own operations, and to seek to avoid adverse impact on human rights directly resulting from our products, services and business relationships. The Chief Operating Officer and the General Counsel & Company Secretary are the primary contact points for questions or concerns about the implementation of this Policy whether from within or outside the Company.
20. Group Companies
No subsidiary or other companies should be set up without prior approval from Finance, Tax and the General Counsel & Company Secretary.