SEMCO Energy, Inc.
Audit Committee Approved -- 2/19/2003
Board Approved -- 2/20/2003
EXHIBIT 99.2
CODE OF BUSINESS CONDUCT
AND ETHICS
CODE OF BUSINESS CONDUCT
AND ETHICS
TABLE OF CONTENTS
1. General Statement
2. Conflicts of Interest
3. Payments to Government Officials or Employees
4. Anti-Boycott Laws
5. Foreign Transactions and Payments
6. Employment Policies
7. Antitrust Compliance
8. Environmental Compliance
9. Confidential Information
10. Compliance with the Securities Laws
11. Campaign Contributions
12. Use of Computer Software and Copyright Laws
13. Corporate Governance, Audit Committee
14. Monitoring Compliance
Appendix A. Antitrust Policy
SEMCO ENERGY, INC.
CODE OF BUSINESS CONDUCT AND ETHICS
This Code of Business Conduct and Ethics applies to SEMCO Energy, Inc., its
divisions and subsidiaries ("SEMCO" or "Company"), and its directors, officers,
employees, affiliates, agents, consultants, advisors and representatives
("Company representatives").
1. GENERAL STATEMENT
This Code reflects the strong commitment of SEMCO to the highest standards of
legal and ethical conduct in its business practices. All Company representatives
are expected to adhere to the highest personal and professional standards in
their dealings with customers, employees, shareholders, the public, and public
officials. Company representatives shall comply with the letter and spirit of
all applicable laws and regulations and the highest standards of business,
professional and personal ethics. Employees and representatives shall exercise
proper and reasonable care in the use, protection and conservation of SEMCO's
assets. Company employees are responsible for compliance with specific policies
and procedures such as the Standard Operating Procedures and other Company
operating and administrative policies.
It is not possible for a Code such as this to address all situations that may
confront Company representatives. The following policies establish minimum
standards and guidelines that shall be observed by all Company representatives.
In certain cases, regional, state or local laws may vary somewhat from the
policies set forth in this Code. In all cases, any federal, state, or local law
that sets forth a requirement or standard of conduct, which is higher or more
restrictive than any standard stated in this Code, must be observed.
Although some employees may not believe portions of this Code are applicable to
their position, it is important that all employees are aware of this Code and
these business policies. Compliance is enhanced by observation and participation
in the process.
2. CONFLICTS OF INTEREST
A. General Guidelines
Employees should avoid conflict-of-interest situations and report any such
situation immediately to the appropriate Compliance Officer listed at the end of
this Code for their respective company, division, or subsidiary. Whenever
possible, even the appearance of a conflict of interest should be avoided.
Conflicts of interest may exist whenever an employee enters into a transaction
or activity that:
- - Involves a matter directly or indirectly adverse to SEMCO's interests;
- - Might affect or appear to affect the employee's judgment or decisions on
behalf of SEMCO; or
- - Might cause criticism of SEMCO.
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B. Prohibited Activities
Employees shall not knowingly:
- - Begin or maintain a relationship that involves compensation (including
financial or non-financial benefits to the employee) with a company that is
in direct competition with SEMCO or with a company that is likely to
purchase an interest in any company that is in direct competition with
SEMCO. An employee may, however, purchase securities in a competing public
company that represent less than 1% of any class of securities of that
public company.
- - Accept compensation from a company or its representatives for arranging
business between that company and SEMCO.
- - Maintain any outside employment that interferes with the employee's
performance of his or her duties to SEMCO. Officers of the company may not
engage in any outside employment other than work as a volunteer for
charitable or community organizations.
C. Activities Requiring Prior Approval
The following activities may involve potential conflicts of interest and require
the prior written approval of a corporate officer:
- - Receiving compensation from a company doing business with SEMCO or likely
to do business with SEMCO.
- - Acquiring or maintaining an interest that is not otherwise prohibited by
this Code in a company which does business with SEMCO or is likely to. This
includes representing SEMCO in dealing with a company when the employee or
a member of his or her immediate family had an interest in SEMCO within the
past 12 months. Exceptions:
- Investments in mutual funds do not need to be reported.
- Employees need not report any interest in a public company that
represents less than 1% of any class of securities of that public
company.
- Participation as a co-operative member in any electric utility or the
receipt of any utility service as a customer.
- - Use of Company property for personal benefit.
- - Participation in any vendor-sponsored, out-of-town entertainment. Such
approval shall only be given when it is clear that 1) the entertainment
contemplated is reasonable to the extent of and in accordance with
generally accepted industry practice; 2) other industry companies are being
entertained at the particular vendor-sponsored event; and 3) the
entertainment is not excessive.
D. Activities Not Requiring Prior Approval
- - Appropriate business entertainment: Prior approval is not required to:
- Permit the host or another person present at a business meeting or
discussion to provide lunch, dinner or beverages;
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- Attend a recreational or social outing provided by the host either
preceding or following a business meeting or discussion (provided that
such outing is not in a different state or province as the business
meeting or discussion);
- Accept or participate in a type of entertainment or event with a
person or group similar to the type of entertainment or event that
SEMCO has furnished that person or group for business reasons and in
the best interest of SEMCO; or
- Accept or participate in entertainment such as local sporting or arts
events.
- - Gifts to individuals representing entities with which SEMCO has a business
relationship or gifts received by employees are permitted to the following
extent:
- Gifts are of nominal value and could include:
(a) Candy, beverages and fruit;
(b) Flowers given on traditional occasions;
(c) Souvenirs given at Company functions; and
(d) Gifts of value that are usually given to employees upon
promotions, transfers, or retirement, or under a Company
award program.
- Gifts shall be identified on SEMCO's records and accurately reflected
for tax and other purposes; and
- Specific prior approval of a SEMCO Compliance Officer or corporate
officer shall be obtained when any gift (other than for sporting or
arts events) is to be given with a value in excess of $100, and in no
event may the value of any gift exceed $1,000.
These limitations shall not apply to gifts made openly and in public
presentations, the nature of which indicates that the gift is being made to an
individual acting upon behalf of SEMCO.
Gifts when made or received must be legal, in accordance with generally
acceptable business practices with the governing jurisdictions, consistent with
good business practices, of a nature which could not be construed as a business
inducement and public disclosure of which would not embarrass SEMCO.
3. PAYMENTS TO GOVERNMENT OFFICIALS OR EMPLOYEES
None of SEMCO's assets shall be paid, loaned or transferred, directly or
indirectly, to any government official or employee, or any entity in which such
an official or employee is known to have an interest unless approved by a SEMCO
Compliance Officer or corporate officer.
A. Retention as Attorneys or Consultants
- - No government official or employee shall be retained by SEMCO to perform
any services within the scope of his or her official duties or the duties
of the governmental body of which he or she is an official or employee.
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- - No government official or employee shall be retained as an attorney or
consultant by SEMCO except under written contract specifying the nature and
scope of services to be rendered, approved by a SEMCO Compliance Officer or
corporate officer.
B. Social Amenities, Gifts and Entertainment
SEMCO's relations with government officials and employees shall be conducted
under the same standards and practices applicable to other business
relationships. However, social amenities, gifts or entertainment of certain
government officials may be limited and/or require reporting under state and
federal law. For example, some government officials may be precluded from being
entertained at SEMCO's expense or such entertainment may be required to be
reported to a federal or state agency. Any Company employee, who in his/her
capacity as an employee might be in a situation where he or she may provide a
social amenity, gift or entertainment to a government official, should first
contact the appropriate Compliance Officer or corporate officer to determine
whether such amenity, gift or entertainment is appropriate or might require
reporting.
4. ANTI-BOYCOTT LAWS
SEMCO does not allow its employees in their capacity as employees of SEMCO, to
engage in, further or support a restrictive trade practice or boycott imposed by
any foreign country against a country friendly to the United States, such as
refusing to do business with or in a boycotted country, with any business
concern organized under the laws of a boycotted country or with any national or
resident of a boycotted country. Further, it is contrary to Company policy for
it or its employees to agree to participate in or cooperate with a foreign
economic boycott that is not sanctioned by the United States. SEMCO and its
employees, in their capacity as employees of SEMCO, may not agree to:
- - Refrain from doing business with or in a boycotted country or with its
companies or nationals;
- - Refrain from doing business with any American individual or company engaged
in trade with or in a boycotted country or with its companies or nationals;
- - Refrain from doing business with a company whose ownership or management is
composed (in whole or in part) of individuals of a particular race,
nationality or religion;
- - Refrain from employing such individuals of a particular nationality, race
or religion;
- - Furnish information that may be used for boycott purposes, such as
information about business relationships with boycotted countries or firms
or information about the race, religion, sex or nationality of a person;
- - Refrain from shipping or insuring a product on a carrier owned, leased or
operated by a person who does not cooperate with or participate in an
international boycott; or
- - Comply with the laws of a country that participates in a boycott against a
country friendly to the United States.
Employees, in their capacity as employees of SEMCO, receiving a request to
further or support a boycott, to furnish boycott-related information or to agree
to participate in or cooperate with an international boycott should report the
occurrence to the appropriate Compliance Officer or corporate officer and
consult with him/her before taking any further action. (The anti-boycott laws
impose reporting
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requirements when a boycott-related request is received by SEMCO.) Should any
questions arise on reporting requirements, please contact the appropriate
Compliance Officer or corporate officer.
5. FOREIGN TRANSACTIONS AND PAYMENTS
A. Foreign Contributions
Company policy prohibits contributions to foreign political parties or
candidates for foreign political office for the purpose of influencing their
actions to secure, retain or direct business for SEMCO. Company policy also
prohibits any use of Company assets for the benefit of any foreign government
official, political party or candidate for political office.
B. Foreign Corrupt Practices Act
SEMCO does not allow any employee or representative acting on its behalf to pay
anything of value to any foreign government official to influence any official
action in securing, retaining or directing company business. Each employee
should consult with the appropriate Compliance Officer or corporate officer
before concluding any company transaction that even appears to involve a foreign
payment. Consequently, all employees must follow the following summary
guidelines:
- - All accounts established and maintained by SEMCO abroad shall be identified
on SEMCO's books and records. All cash payments received by SEMCO abroad
shall be promptly recorded on SEMCO's books of account and deposited in an
account maintained with a bank or other approved institution.
- - Each payment by SEMCO for goods or services (including the payment of fees
to lawyers or other representatives) outside the United States shall be
supported by documentation reflecting the purpose and nature of the
payment.
- - Other than with the prior consent of the appropriate Compliance Officer or
corporate officer, no payment shall be made to an account maintained by a
person in a country other than that in which the person resides, maintains
a place of business, or has rendered the services for which the payment is
made.
U.S. citizens employed by SEMCO abroad shall comply with all applicable tax and
currency control laws of their place of principal employment and will not be
paid any portion of their salary other than in their country of residence
without the written approval of the appropriate Compliance Officer or corporate
officer.
6. EMPLOYMENT POLICIES
SEMCO requires compliance with all applicable employment laws and regulations,
including those prohibiting discrimination and sexual harassment and those
fostering a commitment to the health and safety of all employees, including
without limitation, the Age Discrimination in Employment Act, the Older Worker
Benefit Protection Act, Title VII of the Civil Rights Act of 1964 and 1991, the
Equal Pay Act, the Fair Labor Standards Act, the Americans with Disabilities
Act, the Family Medical Leave Act, the Occupational Safety and Health Act, the
Whistleblower Protection Act, the Immigration Reform and Control Act, the Worker
Adjustment and Retraining Notification Act, the Employee Retirement Income
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Security Act, and comparable and applicable state statutes. The following
includes topics that may be described in greater detail in other specific
administrative policies, including employee handbooks, within each division or
subsidiary:
A. Discrimination and Equal Employment Opportunity
All personnel actions and Company sponsored programs will be administered
without regard to race, color, religion, sex, age, national origin, disability,
height, weight or veteran's status or other protected status as may be
established by federal, state, or local law. Discrimination based on any of
these factors will not be tolerated.
B. Harassment and Discrimination
SEMCO will not tolerate either sexual harassment or discrimination against any
of its employees because of their protected status. SEMCO prohibits:
- - Unwelcome sexual advances (either verbal or physical);
- - Requests for sexual favors and other verbal or physical conduct of a sexual
nature where: (1) submission to the conduct is made either an explicit or
implicit condition of employment, promotion or economic or professional
advancement; (2) submission to or rejection of the conduct is used as the
basis for any decision affecting the harassed employee; or (3) the
inappropriate conduct interferes with an employee's work performance or
creates an intimidating, hostile or offensive work environment;
- - Offensive comments, jokes, innuendoes and other sexually oriented
statements or behavior; and
- - Employment decisions based on an individual's protected status.
C. Safety and Health
Safe work practices and procedures are essential to the continued well being of
all employees, and to the maintenance of a healthy work environment as well as
for the protection of the public. All work activities should be conducted in
accordance with Company safety and operating manuals, directives, and standard
operating procedures. Employees are required to wear SEMCO approved personal
protective equipment when performing any task that may expose them to physical
or chemical hazards. In addition, all Company motor vehicles must be operated in
a safe manner by authorized employees. Seat belts must be worn at all times by
all occupants of Company vehicles that are equipped with seat belts. Questions
regarding safety practices should be addressed to supervisory, manager, or
safety administrative staff.
D. Drug and Alcohol Abuse
Employee health and safety are of utmost concern to SEMCO. It is the policy of
SEMCO to provide a work environment that is free from the use, possession, sale
or distribution of illegal drugs, or the improper or abusive use of alcohol,
prescription drugs, or over-the-counter- drugs. Employees are required to comply
with the drug and alcohol policy established for their respective division or
subsidiary.
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7. ANTITRUST COMPLIANCE
The United States antitrust laws are designed to promote competition and to
preserve the free enterprise system. Because the antitrust laws can provide for
civil and criminal penalties against a corporation and its employees who violate
the law, it is imperative that each employee responsible for transacting Company
business comply with the antitrust laws. The following is a quick reference to
assist in recognizing and avoiding potential antitrust problems:
1. Don't ever discuss prices with competitors.
2. Don't agree with competitors to restrict or increase levels of
service.
3. Don't divide customers, markets or territories with
competitors.
4. Don't require a customer to buy services only from SEMCO
without consulting the Company's legal counsel.
5. Don't agree with competitors to boycott suppliers or
customers.
6. Don't offer a customer prices or terms more favorable than
those offered competing customers unless justified by cost
savings, the need to meet competition or changed market
conditions.
7. Don't use one product or service as leverage to force or
induce a customer to purchase another product or service.
8. Don't forget that the federal antitrust laws apply to
activities engaged in overseas if they affect United States
commerce.
9. Don't prepare documents or make presentations without
considering the antitrust implications.
10. Don't cover up any wrongdoing, but report it promptly to
Company legal counsel.
11. Do not engage in reciprocal dealing.
12. Compete vigorously, but fairly. Do not disparage competitors.
In addition to the above matters, certain other activities might raise antitrust
concerns, including the creation of joint ventures and partnerships with
competitors, the acquisition of the stock or assets of a company or the
termination of certain long-time business relationships.
Included with this Code as an Appendix is the Company's Antitrust Policy, which
provides additional guidance.
Any questions as to whether a proposed course of action would violate the U.S.
antitrust laws must be referred to the appropriate Compliance Officer or
corporate officer and General Counsel.
8. ENVIRONMENTAL COMPLIANCE
SEMCO is committed to conducting its business in an environmentally responsible
manner. Wherever SEMCO operates, its employees and representatives will:
- - Conduct operations in such a manner to protect the quality of the
environment and in accordance with Company environmental policies, manuals,
directives, and standard operating procedures, and all applicable laws and
regulations.
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- - Operate safely to protect SEMCO's human, physical and financial resources
and the health and well being of all affected citizens.
Functional responsibility and accountability for environmental compliance rests
with each supervisor. However, each employee is responsible for working in an
environmentally aware and responsible manner. If an employee is uncertain about
what action to take, he or she should discuss the contemplated action with a
supervisor and SEMCO's environmental administrative staff.
9. CONFIDENTIAL INFORMATION
Employees often have access to confidential information about SEMCO's business
or that of its customers, suppliers, and other business associates. An employee
will not remove, disclose to any unauthorized person, or improperly use any
confidential information about SEMCO's business or that of its customers,
suppliers or other business associates.
10. COMPLIANCE WITH THE SECURITIES LAWS
A. Insider Trading
OVERVIEW
Insider trading is prohibited by both federal law and company policy. Insider
trading generally involves the purchase or sale of a company's securities while
in possession of material nonpublic information ("inside information") about the
company. It also involves disclosing or "tipping" inside information about a
company to others who purchase or sell the securities of that company. Enforcing
insider trading laws is one of the Securities and Exchange Commission's top
enforcement priorities; and violations can result in severe criminal and/or
civil penalties.
SUMMARY OF LAW
Under federal securities laws, "insider trading" is illegal. Insider trading
would occur in the following circumstances:
- - A director, officer or employee of SEMCO buys or sells SEMCO's debt or
equity securities while in possession of material nonpublic information
concerning SEMCO, regardless of whether the information was the reason for
the transaction and regardless of whether such activities are undertaken
through brokers or investment managers, privately negotiated transactions,
or otherwise. Buying or selling can include:
- providing new or different instructions to buy or sell common stock in
the Company's plans involving SEMCO common stock;
- enrolling in, making cash contributions to, or directing the purchase
or sale of common shares held in SEMCO's Dividend Reinvestment Plan;
or
- exercising stock options for SEMCO stock pursuant to SEMCO's stock
option plans.
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- - A director, officer or employee of SEMCO discloses or provides material
nonpublic information concerning SEMCO to another person to enable that
person to either buy or sell SEMCO's debt or equity securities or advise
others to do so.
- - A director, officer or employee of SEMCO:
- buys or sells the debt or equity securities of another company while
in possession of material nonpublic information concerning that
company if that information was obtained in the official course and
scope of employment with SEMCO; or
- discloses material nonpublic information regarding another company
obtained in the official course and scope of employment with SEMCO to
another person to enable that person to either buy or sell the
securities of that company or advise others to do so.
Information is considered "material" if it would likely affect a reasonable
investor's decision to buy, sell or hold securities or would affect the market
value of the securities if publicly disclosed.
Examples of material information may include:
- - dividend increases or decreases;
- - earnings estimates or results, or a change in previously announced earnings
estimates;
- - a significant expansion or curtailment of operations or a significant
increase or decline in business;
- - a stock split or stock dividend;
- - a significant merger or acquisition proposal or agreement, or an agreement
or proposal to sell a significant subsidiary or business, or a proposal or
agreement to purchase or sell substantial assets;
- - significant new products, services or discoveries;
- - unusual or large borrowing;
- - offerings or proposals to offer debt or equity securities for sale;
- - commencement or settlement of a major claim or lawsuit;
- - liquidity problems; or .
- - significant management developments.
Information is "nonpublic" if it either has not been disclosed to the public or,
if it has been disclosed, the time elapsed since disclosure has not been
sufficient for investors to fully evaluate the information.
Penalties for insider trading violations are severe. They can include both of
the following:
- - civil penalties of up to three times the profit gained or loss avoided,
injunctions, and forfeiture of profits; and/or
- - criminal penalties up to $1,000,000 and/or ten years in prison for each
violation.
SEMCO, as well as its officers, directors and other managers, also may be
subject to monetary civil and criminal penalties for insider trading violations
of SEMCO employees.
SEMCO's policy forbids any director, officer or employee from engaging in any of
the activities which would violate the insider trading laws.
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GUIDELINES
General guidelines to avoid insider trading are as follows:
- Refrain from trading in SEMCO securities (e.g. through your private
stock broker or investment manager, by providing instructions to buy
or sell SEMCO's stock in employee benefit plans or the dividend
reinvestment plan) from the time a material development involving
SEMCO is known until three trading days after it has been publicly
disclosed.
- Officers, directors and other key employees must pre-clear all
transactions with the General Counsel.
- SEC Rule 10b5-1(c) provides a rule-based defense to insider trading
liability. A person will not be viewed as having traded "on the basis"
of material nonpublic information if the person demonstrates that the
transaction was effected pursuant to a contract, instructions or a
written plan that was established before the person became aware of
the information. Employees, officers and directors who desire to take
advantage of this Rule should have the arrangement pre-approved by the
General Counsel. Existing arrangements under company benefit plans
generally fit this category.
- - Do not disclose material nonpublic information concerning SEMCO to another
person unless that person has a need to know the information.
- - While in possession of material nonpublic information concerning another
company obtained in the course and scope of your employment with SEMCO, do
not:
- trade in that company's securities until three days after the
information has been publicly disclosed, or
- disclose that information to another person unless that person has a
need to know the information.
- Finally, when in doubt, don't trade and don't provide information
concerning SEMCO or another company if obtained in your position with
SEMCO to any person without prior legal review and approval.
- - Consider any proposed transaction "with the benefit of hindsight" (e.g.,
how it might look six months from now).
For more information on insider trading, or to report a suspected insider
trading violation contact the General Counsel.
B. Public Disclosure and Dealing with the Investment Community
1. It is the policy of SEMCO to comply fully with the letter and
spirit of the SEC Regulation FD (Fair Disclosure). Whenever
SEMCO or someone acting on SEMCO's behalf discloses material
nonpublic information to securities market professionals or
holders of SEMCO's securities who may well trade on the basis
of that information, SEMCO must make public disclosure of that
same information simultaneously (for intentional disclosures)
and promptly (for non-intentional disclosures).
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2. The following individuals are responsible for compiling,
drafting, and filing all federal Securities Act and Exchange
Act reports and any other reports containing material
information that are required to be filed with regulatory
agencies:
Chief Executive Officer
Chief Financial Officer
Corporate Secretary
General Counsel
3. The Chief Executive Officer, the Chief Financial Officer, the
Director of Investor Relations and the General Counsel, in
cooperation with Corporate Communications, are responsible for
reviewing and clearing all Company press releases and other
shareholder and investor communications for content, accuracy
and legal compliance. The Chief Executive Officer, the Chief
Financial Officer, Director of Investor Relations and General
Counsel are responsible for monitoring the dissemination of
press releases and other shareholder and investor
communications to ensure that information which is circulating
is accurate. If a release has been incorrectly quoted, it may
be necessary to issue a follow-up release. Other officers of
SEMCO are responsible for making the Chief Executive Officer,
the Chief Financial Officer, Director of Investor Relations
and General Counsel aware of any new developments which would
make an earlier release misleading, so that an updated release
can be disseminated promptly.
4. The Chief Executive Officer, the Chief Financial Officer and
the Director of Investor Relations are the only persons
authorized to speak to members of the investment community and
holders of SEMCO's securities. All requests for information
from the investment community or holders of SEMCO's securities
should be directed to the Director of Investor Relations.
5. No item of material non-public information should be disclosed
to or discussed with the investment community or holders of
SEMCO's securities unless it has been or is then being
disclosed to the public by the following means:
- A press release distributed through regular channels, or
- A report on Form 8-K and, where appropriate,
- A scheduled conference call and/or webcast to discuss
the information.
6. Conference calls and webcasts shall be held in an open manner,
permitting participants to listen in either by telephonic
means or through Internet webcasting. The public shall be
given adequate notice of such calls. The webcast or call shall
be made available for a reasonable period of time to enable
persons who missed the original webcast or call to access the
disclosures made therein.
7. If it is expected that any material non-public information
will be disclosed in meetings with the investment community, a
press release should be prepared in advance and released prior
to the meeting. If material non-public information is
disclosed inadvertently at a meeting, a press release should
be issued as soon thereafter as reasonably practicable, but in
no event after the later of 24 hours or the commencement of
the next day's trading on the New York Stock Exchange.
8. Copies of speeches to be given to the investment community
should be prepared in advance and reviewed by the Chief
Executive Officer, the Chief Financial Officer, Director of
Investor Relations and General Counsel.
9. The Company has the responsibility to send promptly copies of
press releases to the New York Stock Exchange.
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10. The Director of Investor Relations and the Chief Financial
Officer's organization should maintain appropriate records
which identify requests for information, including the date of
the request, the circumstances of such request, the response
given, and the individual to whom the information was provided
, particularly if such information is requested by analysts or
members of the financial community.
11. Unless SEMCO contributed (directly or indirectly) to the
dissemination of a rumor or is closely associated with the
individual who did, SEMCO may decide not to respond to rumors.
If rumors or unusual market activity indicate that a leak has
occurred, an announcement may be required. If rumors are false
or inaccurate, they should be promptly denied or clarified.
Where not misleading, SEMCO may take the position that it
never comments on rumors.
12. In deciding whether to disclose information, the following
factors, among others, should be considered:
- The significance of the information;
- Whether there is a good faith business reason for
non-disclosure;
- Whether the facts are in a state of flux and,
therefore, make meaningful disclosure premature;
- Whether the information relates to information
previously released; and
- The presence of rumors and unusual market activity in
SEMCO's stock.
- Public disclosure should be considered for the
following subjects:
- Proposed significant mergers and acquisitions;
- Changes in dividend policy;
- Determination of earnings;
- Acquisition or loss of a significant contract;
- Major management changes;
- A significant change in capital investment plans;
- Incurrence of significant debt or sale of significant
amounts of securities;
- Significant regulatory developments;
- Pending significant litigation or investigations; and
- The marketing of significant new products or services.
13. SEMCO will comply with New York Stock Exchange rules regarding
disclosure.
14. SEMCO should constantly monitor the market for signs that
SEMCO's stock is the subject of unusual trading activity as
one means of determining if material non-public information
has been leaked.
15. SEMCO should correct prior statements made by it that are
still "alive" and have become misleading by virtue of the
passage of time or the occurrence of subsequent events.
16. Projections of earnings or guidance should not be given
without advice from counsel. Responses to others' projections
should be handled in a similar manner. Discussions regarding
earnings forecasts should take place only during calls or
meetings to which the public is invited. In all such
discussions, the participants should be referred to Company
filings containing cautionary language regarding forward
looking statements.
17. Discussion of sensitive information and issues should be
confined as much as reasonably practicable to top management
and, in some cases, confidential advisors. These individuals
should be informed that they should not trade in SEMCO's stock
unless otherwise advised by SEMCO or until such information is
made public. If material non-
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public information must necessarily be disclosed to outsiders
(consultants, investment bankers, etc.) appropriate
confidential disclosure agreements first should be obtained.
18. SEMCO should be prepared to make prompt disclosure in the
event material non-public information is leaked.
19. SEMCO's policy is to comply fully with the Disclosure Controls
and related requirements of the Sarbanes-Oxley Act.
11. CAMPAIGN CONTRIBUTIONS
CONTRIBUTIONS: United States federal law prohibits SEMCO from making
contributions of Company funds, goods, or services to candidates for, or holders
of, federal offices. It is the policy of SEMCO to comply strictly with this law.
Contributions may be permitted by law in some states for some state and local
activities. Company policy prohibits all such contributions for any purpose, to
any office seeker or officeholder anywhere, unless permitted by law. This also
applies to Company support of campaign committees and political parties.
EMPLOYEE POLITICAL PARTICIPATION: On the other hand, SEMCO encourages political
participation by each of its employees, including contributions to campaigns of
any candidates employees choose. While encouraging such contributions, SEMCO
will not, under any circumstances, reimburse employees for political
contributions or expenses.
POLITICAL ACTION COMMITTEES: Existing federal and state laws permit SEMCO to
sponsor political action committees ("PACs"). At the present time SEMCO has
established SEMPAC, a Michigan PAC. The membership of that committee is
voluntary. This committee is administered in strict conformance with the law.
Those who choose to participate contribute personal money to SEMPAC. SEMPAC
contributes this money to candidates who appear to support SEMCO's strategic
plan and core values. Contributions to office holders are made without regard to
political affiliation.
12. USE OF COMPUTER SOFTWARE AND COPYRIGHT LAWS
Much of the computer software used at SEMCO was created by outside companies. In
most cases, software created by these outside companies is not owned by SEMCO
but rather is licensed to SEMCO. Most of these license agreements restrict the
copying and use of the software. Copyright laws also restrict the ability of
SEMCO personnel to copy or reproduce copyright materials, including computer
software. It is against SEMCO policy to copy or use software or other
copyrighted materials or publications in violation of applicable license
agreements or copyright laws.
13. CORPORATE GOVERNANCE; AUDIT COMMITTEE
The directors and officers of SEMCO Energy, Inc. are committed to the highest
standards of corporate governance. This includes, without limitation, compliance
with
- - NYSE Listing Standards
- - The requirements of the Sarbanes-Oxley Act
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- - The regulations of the SEC
- - Accounting and auditing standards, financial disclosure requirements and
Disclosure Controls.
Consistent with the requirements of the Sarbanes-Oxley Act, employees are
encouraged to report to the Audit Committee any complaints they may have
concerning questionable accounting or auditing matters. The procedures for this
reporting are these:
1. Report the matter to your immediate supervisor or to a
Compliance Officer, with a request that such person report
back to you when the complaint has been forwarded to the Audit
Committee; or
2. Use the company's Hotline.
As with other reports of non-compliance with this Code, employees may make such
reports without fear of retaliation, reprisal or prejudice. The Company has a
zero-tolerance policy in this regard. Complaints regarding any violation of this
policy should be brought to the attention of the appropriate Compliance Officer.
14. MONITORING COMPLIANCE
SEMCO requires all of its employees and representatives to read and observe this
Code. The importance of this Code cannot be overstated, because its observance
or lack of observance will determine how SEMCO and its employees and
representatives are judged by stockholders, customers, suppliers, the
communities SEMCO serves and the governmental agencies and officials which have
jurisdiction over its business.
Therefore, SEMCO has taken the following steps to ensure that this Code is
applied in practice as an integral part of managing its business:
- - All current employees and newly hired employees will receive a copy of this
Code and each must review it.
- - At least annually, all supervisory personnel are responsible for making
sure that their employees review this Code and that it is being followed.
Should an employee become aware of a violation of this Code, he or she should
immediately notify his or her supervisor. If for any reason an employee would
prefer to discuss the situation with someone else, he or she should feel free to
contact the appropriate Compliance Officer, a Company executive, or SEMCO's
General Counsel. In addition, a company "Hotline" is available for this purpose.
Every employee's cooperation is required in assuring that instances of
violations of the Code are called to the attention of SEMCO's management.
Employees who make such reports can do so without fear of retaliation, reprisal
or prejudice. Consistent with SEMCO's obligations under the law and the
enforcement process, management will, if requested, keep confidential the
identity of the employee making the report. Similarly, management will, if
requested, keep confidential the identity of the individual against whom a
violation of this Code is alleged, consistent with applicable law and sound
business practice.
If, after investigation, a violation of this Code is found to have occurred,
appropriate disciplinary action, up to and including, if deemed appropriate,
dismissal, will be taken with respect to the individual or
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individuals involved in the violation, subject to any applicable collective
bargaining agreement. Violation of this Code is considered by SEMCO to
constitute personal misconduct.
To avoid inadvertent violations, employees are encouraged to ask questions when
there is uncertainty as to whether or not some act or conduct complies with this
Code. In order to encourage openness of communication, employees may choose to
discuss the matter with their supervisor, or the appropriate Compliance Officer
or corporate officer or use the "Hotline."
Compliance Officers
THE COMPANY'S COMPLIANCE OFFICERS ARE:
Chief Compliance Officer, General Counsel
Chief Financial Officer
Vice President, Human Resources
Corporate Secretary
President, Aretech
President, SEMCO Energy Gas Company
President, the Construction Businesses Segment
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Appendix A
SEMCO ENERGY, INC.
ANTITRUST POLICY
Antitrust laws are designed to preserve and foster fair and honest competition
within the free enterprise system. To accomplish this goal, the language of
these laws is deliberately broad, prohibiting such activities as "unfair methods
of competition" and agreements "in restraint of trade." Such language gives
enforcement agencies the right to examine many different business activities to
judge their effect on competition.
COMPETITIVE PRACTICES/ANTITRUST LAWS
The Company competes vigorously, but fairly. As we expand our business, all
employees must be aware of the applicable antitrust laws and the statutory
restraints on competitive practices. These laws, which at the federal level
include the Sherman, the Clayton, the Robinson-Patman and the Federal Trade
Commission acts, all seek to advance and maintain the free enterprise system,
which the Company endorses. Price fixing, restrictive agreements, boycotts,
tying arrangements, exclusive or reciprocal dealings, monopolization, price
inducements and discriminatory allowances are almost always illegal. Employees
should scrupulously avoid any conduct which may be construed as a violation of
the antitrust laws. Violation of the antitrust laws can subject both the Company
and individual employees to criminal as well as civil liability. For willful
civil violations, triple damages can be assessed. Foreign sales and the conduct
of our business in foreign countries also require compliance with their business
competition laws.
Below is a general guide to compliance with the federal antitrust laws. The
General Counsel should always be consulted before engaging in any business
practice that may involve antitrust implications. These laws are not always
clear, and court interpretation and regulatory enforcement frequently change.
RELATIONSHIPS WITH COMPETITORS
DISCUSSIONS WITH COMPETITORS.
You may never, except where specifically authorized by the government or by an
approved cooperative business agreement (e.g. joint venture; teaming agreement),
discuss (directly or indirectly) with a competitor, any of the following
information not already in the public domain:
- - Prices;
- - Costs;
- - Profits;
- - Product or service offerings;
- - Terms and conditions of sale or service;
- - Facilities or capabilities;
- - Sales volume;
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- - Market share;
- - Decisions to quote or bid or not to quote or bid;
- - Customer or supplier classification, allocation or selection;
- - Sales territories; or
- - Potential acquisitions
MEETINGS WITH COMPETITORS; PROFESSIONAL SOCIETIES AND TRADE ASSOCIATIONS.
Meetings with competitors are troublesome because they too often give appearance
of impropriety. However, in the ordinary conduct of business, contact with
competitors can be expected to occur and, when properly controlled, is
acceptable in carrying out lawful business activities. To avoid any appearance
of impropriety, you should avoid meeting with a competitor outside of a
controlled environment. A hotel room, a bar, on a golf course or other informal
meeting places are not considered controlled environments.
- - Contact with competitors in an uncontrolled environment cannot always be
avoided (e.g., when entering or leaving the office of a customer). When
chance meetings occur, limit conversations to the exchange of mere
pleasantries. Avoid business talk.
- - Attending trade shows, trade association meetings or professional
gatherings which employees of competitors also attend is both legal and
acceptable to further legitimate business interests. Since such meetings
may be treated with suspicion by some, including the U.S. Department of
Justice, and may imply that collusive activities occur, thus violating the
antitrust laws, your membership in trade associations or participation in
their meetings should be carefully considered. In general, participation
should be limited to nationally recognized trade associations that have
professional staffs knowledgeable of the antitrust issues facing such
associations.
- - The content of and discussions at meetings in which competitors are in
attendance should be carefully controlled by adhering to a prescribed
meeting agenda and maintaining minutes recording the activity conducted at
the meeting. You should never discuss Company business except as it may
relate to the specific issues addressed on the meeting agenda. If a
competitor brings up business topics of a prohibited nature, the dialogue
should be cut short by a reminder to the competitor that it is strict
Company policy not to discuss such topics. If the competitor persists with
such activity, you and any other employees of the Company also in
attendance must leave the meeting immediately in such a manner as to draw
the attention of others in attendance to your departure. You should report
any such incident to the General Counsel.
SELLING TO COMPETITORS
Although it is permissible to do business with a competitor who is also a
customer or supplier, such relationships have many legal pitfalls that must be
reviewed carefully. Doing business with a competitor is permissible so long as
there is no action taken, conscious or otherwise, that has the appearance of, or
can be construed by another, as being collusive. You are permitted to
communicate with or meet with competitors in controlled situations so long as
the communications and meetings are relevant and appropriate to a bona fide
prospective or existing buyer-seller relationship. You should seek advance
advice of the General Counsel with regard to these special situations. When the
Company is both buying from and selling to the same customer/supplier, our
management should take steps to avoid violations such as reciprocal dealings.
One way to reduce this risk is to restrict communications between Company people
who are buying from and those who are selling to the same customer/supplier.
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UNFAIR COMPETITION AGAINST COMPETITORS
You must avoid actions taken against a competitor that are unethical or which
constitute unfair competition. The following illustrates some common forms of
unfair competition:
- - When selling to a customer, or dealing with a supplier, if they have a firm
contract commitment with a competitor, action by us to induce them to break
their contract would be unfair competition and could be construed as
unlawful interference with contractual relations.
- - Stealing or misappropriating a competitor's confidential information (e.g.,
through industrial espionage, hiring away a competitor's personnel to
disclose such information, obtaining such information without consent of a
competitor) is unfair competition (such conduct can also be grounds for
civil or criminal actions against the Company and/or its employees).
- - Destroying a competitor's literature, harassing it by fictitious inquiries,
coercing or intimidating its suppliers or passing off its products and
services as the products and services of some other firm are unfair
competition.
DECEPTIVE TRADE PRACTICES
Statements made by employees regarding the capabilities of the Company's
products or services, either verbally or in advertising brochures and literature
describing our products or services must be accurate and complete, with
disclosure of relevant information that keeps such statements from being
misleading. Always be guided by the fact that the Company is bound by the claims
we make about our products and services. All statements must be true and within
the bounds of good taste and must be backed by documentation of the claims of
superiority to the products or services of competitors. Although factual
comparisons of the Company's products with a competitor's products are perfectly
permissible, it is unlawful and against Company policy to make false remarks
about competitors, their products or services.
RELATIONSHIPS WITH SUPPLIERS
Supplier relationships are valuable and must be protected. When dealing with
suppliers, certain activities must be avoided for both ethical and legal
reasons. You should not have any relationship with a supplier, financial or
otherwise, which has the appearance of, or may cause, a conflict of interest or
other impropriety. When dealing with suppliers, it is important to obtain the
best possible (but lawful) price, terms and conditions. For example, you may
bargain diligently with respect to price, but you may not lie about receiving a
more favorable price or terms from another supplier.
- - You should not attempt to develop any business relationships through
reciprocity. (Reciprocity is the use of our buying leverage to induce
others to buy Company products or services.) It is legal to sell to a
supplier so long as the supplier is not compelled to deal with us because
of our buying leverage. To avoid the appearance of reciprocity, it is best
that marketing and purchasing personnel not trade information as to who is
buying from and who is selling to the Company. If you are approached by
either a supplier or a customer concerning any form of reciprocal
agreements, you should inform the General Counsel.
- - Care must be taken about agreements obligating us not to buy from another.
Such boycott activity may be unlawful.
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RELATIONSHIPS WITH CUSTOMERS
The Company's customer relationships are valuable and all dealings with
customers must be carried out fairly, ethically and legally. Activities such as
the following are not only unfair and unethical, but illegal:
- - It is unlawful for you to tie the sale or lease of one Company product or
service as a condition to the sale or lease of another Company product or
service. Forbidden tying arrangements also extend to service and warranty
arrangements.
- - To avoid the appearance of any reciprocity between the Company and a
customer, whenever a customer-supplier relationship may exist, do not
negotiate with a customer by reference to the Company's past or expected
future purchases from such customer/supplier.
- - Although the law permits the Company to do business with anyone it chooses,
the right to refuse to deal with a current or potential customer is not
without limitations. The Company may refuse to deal with any customer when
such decision has been made unilaterally and not in furtherance of any
anti-competitive activity. Any refusal to deal with a customer after
consultation with other customers may be an illegal boycott. Although the
problems inherent with the refusal to deal with new customers are not
severe, you should consult the General Counsel when terminating an existing
relationship with a customer of any size.
- - Avoid exclusive dealing arrangements which could suggest that the Company
is prohibited or restraining a customer from buying or handling competitive
products or services.
- - You may not charge different prices to competing customers purchasing a
product or service of like grade and quality where the effect of such price
discrimination may be to lessen substantially or injure competition. You
may not grant a promotional allowance, service or facility to one customer
upon terms not accorded to all competing customers on substantially equal
terms. The issues of price discrimination are complex and all questions
with respect to the pricing of products must be reviewed with the General
Counsel before implementation;
- - You should not price below cost. This may be construed as predatory
pricing, an antitrust violation.
- - You may not pay any brokerage fees or commissions to any customer or to any
agent or intermediary controlled by the customer. Brokerage fees or
commissions may be paid only to an independent agent providing a beneficial
service for a customer.
Certain acts you commit under the antitrust laws are completely indefensible no
matter how good a reason may have existed when the violation was committed.
These indefensible acts are known as "per se" violations; they include the
following prohibited conduct:
Price Fixing - any agreement or understanding between competitors with
respect to raising, lowering or stabilizing prices. Any agreement or
understanding between a supplier and its customers as to the price at which
the customers may resell the goods or services purchased from the supplier
also constitutes price fixing.
Limitation of Supply - any agreement or understanding between competitors
to restrict the volume of goods or services they will produce or make
available for sale.
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Allocation of Business - any agreement or understanding that a competitor
will confine its business to a different geographical area, to a different
line of business or to different customers or classes of customers.
Boycott - any agreement or understanding between a supplier and a customer
or between a customer and its supplier that they will not sell to, or
purchase from, particular outsiders.
Tying - any arrangement whereby a seller compels the buyer of a product to
buy a different one (the tied product) from the seller.
The application of these principles to our lines of business are different,
compared to manufacturers of goods. However, the construction businesses, the
information technology businesses and the utility businesses do pose potential
antitrust problems.
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