HAMPSHIRE GROUP, LIMITED
& SUBSIDIARIES
COMPLAINT PROCEDURES FOR
ACCOUNTING AND AUDITING MATTERS
Pursuant to the provisions of Section 301 of the Sarbanes-Oxley Act of 2002
and Rule 10A-3 under the Securities Exchange Act of 1934, the Audit Committee of
the Board of Directors of Hampshire Group, Limited (the "Committee") has
established the procedures set forth below for the receipt, retention and
treatment of complaints regarding accounting, internal accounting controls and
auditing matters and for the confidential, anonymous submissions by employees or
shareholders of Hampshire Group, Limited and its subsidiaries (the "Company") of
concerns regarding questional accounting or auditing matters.
I. RESPONSIBILITIES OF COMMITTEE WITH RESPECT TO COMPLAINTS
A. The Committee shall receive, retain, investigate and act on complaints
and concerns ("Reports") of employees and shareholders ("Associates")
regarding:
1. Questionable accounting, internal accounting controls and
auditing matters, including those regarding the circumvention or
attempted circumvention of internal accounting controls or that
would otherwise constitute a violation of the Company's
accounting policies (an "Accounting Allegation");
2. Compliance with legal and regulatory requirements (a "Legal
Allegation"); and
3. Retaliation against employees who make Accounting Allegations or
Legal Allegations (a "Retaliatory Act").
B. In the discretion of the Committee, responsibilities of the Committee
created by these procedures may be delegated to the Chair of the
Committee or to a subcommittee of the Committee.
II. PROCEDURES FOR RECEIVING REPORTS
A. Any Report that is made directly to management, whether openly,
confidentially or anonymously, shall be promptly reported to the
Committee.
B. Each Report forwarded to the Committee by management and each Report
that is made directly to the Committee, whether openly, confidentially
or anonymously, shall be reviewed by the Committee, who may, in their
discretion, consult with any member of management who is not the
subject of the allegation and who may have appropriate expertise to
assist the Committee. The Committee shall determine whether the
Committee or management should investigate the Report, taking into
account the considerations set forth in Section C below.
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C. If the Committee determines that management should investigate the
Report, the Committee shall notify the Chief Executive Officer in
writing of that conclusion. Management shall thereafter promptly
investigate the Report and shall report the results of its
investigation, in writing, to the Committee. Management shall be free
in its discretion to engage outside auditors, counsel or other experts
to assist in the investigation and in the analysis of results.
D. If the Committee determines that it should investigate the Report, the
Committee shall promptly determine what professional assistance, if
any, it needs in order to conduct the investigation. The Committee
shall be free in its discretion to engage outside auditors, counsel or
other experts to assist in the investigation and in the analysis of
results.
III. SCOPE OF MATTERS COVERED BY THESE PROCEDURES
These procedures relate to complaints made by Associates relating to any
questionable accounting or auditing matters. The following is a non-exclusive
list of the matters that may be reported:
A. Fraud or deliberate error in the preparation, evaluation, review or
audit of any financial statement of the Company;
B. Fraud or deliberate error in the recording and maintaining of
financial records of the Company;
C. Deficiencies in or noncompliance with the Company's internal
accounting controls;
D. Misrepresentation or false statement to or by a senior officer or
accountant regarding a matter contained in the financial records,
financial reports or audit reports of the Company; or
E. Deviation from full and fair reporting of the Company's financial
condition.
IV. CONSIDERATIONS RELATIVE TO WHO SHOULD INVESTIGATE A REPORT
In determining whether management or the Committee should investigate a Report,
the Committee shall consider, among any other factors that are appropriate under
the circumstances, the following:
A. Who is the alleged wrongdoer? If an executive officer, senior
financial officer or other high management official is alleged to have
engaged in wrongdoing, that factor alone may militate in favor of the
Committee conducting the investigation.
B. How serious is the alleged wrongdoing? The more serious the alleged
wrongdoing, the more appropriate that the Committee should undertake
the investigation. If the alleged wrongdoing would constitute a crime
involving the integrity of the financial statements of the Company,
that factor alone may militate in favor of the Committee conducting
the investigation.
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C. How credible is the allegation of wrongdoing? The more credible the
allegation, the more appropriate that the Committee should undertake
the investigation. In assessing credibility, the Committee should
consider all facts surrounding the allegation, including but not
limited to whether similar allegations have been made in the press or
by analysts.
V. TREATMENT OF COMPLAINTS
Upon receipt of a complaint, the Chairman of the Committee will (i) determine
whether the complaint actually pertains to accounting or auditing matters and
(ii) when possible, acknowledge receipt of the complaint to the sender. Copies
of all complaints will be provided to the members of the Committee, along with
the determination of whether or not an accounting or auditing matter has been
raised.
A. Complaints relating to accounting and auditing matters will be
reviewed under Committee direction and oversight by the Chairman,
internal auditor or such other persons as the Committee determines to
be appropriate. Confidentiality will be maintained to the fullest
extent possible, consistent with the need to conduct an adequate
review.
B. Prompt and appropriate corrective action will be taken when and as
warranted in the judgment of the Committee.
C. The Company will not discharge, demote, suspend, threaten, harass or
in any manner discriminate against any Associate in the terms and
conditions of employment based upon any lawful actions of such
Associate with respect to good faith reporting of complaints regarding
Accounting Matters or otherwise as specified in Section 806 of the
Sarbanes-Oxley Act of 2002.
VI. PROTECTION OF ASSOCIATES
Consistent with the policies of the Company, the Committee shall not retaliate,
and shall not tolerate any retaliation by management or any other person or
group, directly or indirectly, against anyone who, in good faith, makes an
Accounting Allegation or Legal Allegation, reports a Retaliatory Act or provides
assistance to the Committee, management or any other person or group, including
any governmental, regulatory or law enforcement body, investigating a Report.
The Committee shall not, unless compelled by judicial or other legal process,
reveal the identity of any person who makes an Accounting Allegation or Legal
Allegation or reports a Retaliatory Act and who asks that his or her identity as
the person who made such Report remain confidential and shall not make any
effort, or tolerate any effort made by any other person or group, to ascertain
the identity of any person who makes a Report anonymously.
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VII. RECORDS
The Committee shall retain for a period of five years all records relating to
any Accounting Allegation or Legal Allegation or report of a Retaliatory Act and
to the investigation of any such Report.
VIII. PROCEDURES FOR MAKING COMPLAINTS
In addition to any other avenue available to an Associate, any employee or
shareholder may report to the Committee openly, confidentially or anonymously
any Accounting Allegation or Legal Allegation or report of a Retaliatory Act.
Accounting Allegations, Legal Allegations and reports of a Retaliatory Act may
be made in writing to Mr. Irwin Winter, Chairman of the Committee, 149 West 40th
Street, New York, NY 10010, or by Email to iwinter007@aol.com. Reports may be
made orally by calling the Ethics Hotline at (212) 737-0214 at any time. The
line is managed by the Chairman of the Committee and allows anyone to make a
Report without divulging his or her name if so desired. Such Reports can also be
made directly to management either (a) confidentially by contacting the Chief
Executive Officer in writing or in person at the Company's offices or by phone
at (864) 225-6232. Management is required to share the information provided in
the Report with the Committee, if requested by the individual making the Report,
as promptly as practicable
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