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EXHIBIT 99.CODE ETH
H&Q LIFE SCIENCES INVESTORS
H&Q HEALTHCARE INVESTORS
CODE OF ETHICS
I. INTRODUCTION
The Board of Trustees of H&Q Life Sciences Investors and H&Q Healthcare
Investors (each, a "Fund") has established this Code of Ethics ("Code") in
accordance with the Sarbanes-Oxley Act of 2002 and the rules promulgated
thereunder. This Code does not supersede or otherwise affect the separate code
of ethics that the Fund and its investment adviser have adopted pursuant to Rule
17j-1 under the Investment Company Act of 1940, as amended ("1940 Act").
This Code is designed to deter wrongdoing and promote: (i) honest and ethical
conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships; (ii) full, fair,
accurate, timely, and understandable disclosure in reports and documents that
the Fund files with, or submits to, the Securities and Exchange Commission
("SEC") and in other public communications made by the Fund; (iii) compliance
with applicable governmental laws, rules, and regulations; (iv) the prompt
internal reporting of violations of the Code to an appropriate person or
persons; and (v) accountability for adherence to the Code. The Code applies to
the Fund's Chief Executive Officer, Chief Financial Officer, and Chief
Accounting Officer (collectively, "Covered Officers," each of whom is set forth
in Exhibit A). For the purposes of this Code, the Compliance Officer is the
Secretary of the Fund.
II. PRINCIPLES OF HONEST AND ETHICAL CONDUCT
A. GENERAL OBJECTIVES
The Fund expects all Covered Officers to adhere to the highest possible
standards of honest and ethical conduct. All Covered Officers are expected to
handle actual or apparent conflicts of interest between personal and
professional relationships in a manner that is above reproach, and to place the
interests of the Fund above their own personal interests.
B. CONFLICTS OF INTEREST
All Covered Officers should be scrupulous in avoiding a conflict of interest
with regard to the Fund's interests. A conflict of interest occurs when an
individual's private interest interferes in any way -- or even appears to
interfere -- with the interests of the Fund. A conflict situation can arise when
a Covered Officer takes actions or has interests that may make it difficult to
perform his or her work for the Fund objectively and effectively. Conflicts of
interest also arise when a Covered Officer, or a member of his or her family,
receives improper benefits as a result of his or her position with the Fund,
whether such benefits are received from the Fund or a third party. Any conflict
of interest that arises in a specific situation or transaction must be disclosed
by the Covered Officer and resolved before taking any action.
Conflicts of interest may not always be evident, and Covered Officers should
consult with the Compliance Officer or the Fund's legal counsel if they are
uncertain about any situation.
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Examples of possible conflicts of interest include:
1. OUTSIDE EMPLOYMENT OR ACTIVITIES
Covered Officers may not engage in any outside employment or activity that
interferes with their performance or responsibilities to the Fund or is
otherwise in conflict with or prejudicial to the Fund. A Covered Officer must
disclose to the Compliance Officer any outside employment or activity that may
constitute a conflict of interest and obtain the Compliance Officer's approval
before engaging in any such employment or activity.
2. GIFTS
Covered Officers may not accept gifts or other items of more than de minimis
value from any person or entity that does business with or on behalf of the
Fund.
3. OTHER SITUATIONS
Because other conflicts of interest may arise, it would be impractical to
attempt to list all possible situations in this Code. If a proposed transaction
or situation raises any questions or doubts, a Covered Officer should consult
with the Compliance Officer or Fund counsel before engaging in the transaction
or activity.
C. CORPORATE OPPORTUNITIES
Covered Officers may not exploit for their own personal gain, or for the
personal gain or their family members or relatives, opportunities that are
discovered through the use of Fund property, information, or position, unless
the opportunity is first disclosed fully in writing to the Board of Trustees and
the Board of Trustees declines to pursue such opportunity.
III. FULL, FAIR, ACCURATE, TIMELY, AND UNDERSTANDABLE DISCLOSURE IN FUND
DISCLOSURE AND REPORTING DOCUMENTS
As a registered investment company, it is of critical importance that the Fund's
public communications, reports, and filings contain full, fair, accurate,
timely, and understandable disclosure. Accordingly, Covered Officers are
expected to consider it central to their roles as officers of the Fund to
promote full, fair, accurate, timely, and understandable disclosure in the
Fund's public communications and reports, and in the documents that the Fund
files with, or submits to, the Securities and Exchange Commission (the "SEC").
Depending on his or her position with the Fund, a Covered Officer may be called
upon to provide necessary information to make the Fund's public reports,
communications, and SEC filings and submissions complete, fair, and
understandable. The Fund expects Covered Officers to take this responsibility
very seriously and to provide prompt and accurate answers to inquiries related
to the Fund's public disclosure requirements. Covered Officers may be asked to
certify the accuracy of all responses and information provided for inclusion in
the Fund's public reports, communications, and SEC filings and submissions.
IV. COMPLIANCE WITH APPLICABLE GOVERNMENTAL RULES AND REGULATIONS
As a registered investment company, the Fund is subject to regulation by the SEC
and must comply with Federal securities laws and regulations, as well as other
applicable laws. The Fund insists on strict compliance with the spirit and the
letter of these laws and regulations. Each Covered Officer shall cooperate with
Fund counsel, the Fund's independent accountants, and the Fund's other service
providers
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with the goal of maintaining the Fund's material compliance with applicable
governmental rules and regulations.
The Fund expects its Covered Officers to comply with all laws, rules, and
regulations applicable to the Fund's operations and business. Covered Officers
should seek guidance whenever they are in doubt as to the applicability of any
law, rule, or regulation, or regarding any contemplated course of action.
Covered Officers should also make use of the various guidelines which the Fund
and its service providers have prepared on specific laws and regulations. If in
doubt on a course of action, a good guideline is "always ask first, act later"
- -- if you are unsure of what to do in any situation, seek guidance before you
act.
Covered Officers are encouraged to attend courses and seminars for the purpose
of keeping themselves apprised of developments relating to those governmental
statutes, rules, and regulations applicable to the Fund.
Upon obtaining knowledge of any material violation of any applicable law, rule,
or regulation by the Fund or a person acting with or on behalf of the Fund, a
Covered Officer shall report such violation to the Compliance Officer, Fund
counsel, or both. (See Section VI of the Code for a discussion of reporting Code
violations.) Each Covered Officer shall cooperate or take such steps as may be
necessary or appropriate to remedy any such material violation.
V. CONFIDENTIALITY
Covered Officers must maintain the confidentiality of information entrusted to
them by the Fund, except when disclosure is authorized by Fund counsel or
required by laws or regulations. Whenever possible, Covered Officers should
consult with Fund counsel if they believe they have a legal obligation to
disclose confidential information. Confidential information includes all
non-public information that might be of use to competitors, or harmful to the
Fund or its shareholders, if disclosed. The obligation to preserve confidential
information continues even after employment as a Covered Officer ends.
VI. PROMPT INTERNAL REPORTING OF VIOLATIONS OF THE CODE; EVALUATION OF
POSSIBLE VIOLATIONS; DETERMINATION OF SANCTIONS
A. REPORTING TO COMPLIANCE OFFICER. A Covered Officer shall
promptly report knowledge of, or information concerning, any material violation
of this Code to the Compliance Officer. Any such report shall be in writing, and
shall describe in reasonable detail the conduct that such Covered Officer
believes to have violated this Code. The Compliance Officer shall also have the
authority to draft a report of a suspected material violation of the Code, if no
written report is made by a Covered Officer.
B. EVALUATION OF REPORTS. The Compliance Officer shall then consult
with Fund counsel to the extent necessary to determine whether the reported
conduct actually violates the Code. If it is determined that there has been a
violation of the Code, the Compliance Officer will determine (in consultation
with Fund counsel) whether the violation has had or may have, in the reasonable
judgment of the Compliance Officer, a material adverse impact upon the Fund.
1. NO MATERIAL ADVERSE IMPACT ON THE FUND. If the
Compliance Officer determines that the violation has not caused a material
adverse impact upon the Fund, the Compliance Officer shall determine what
sanctions, if any, may be appropriate for the violation. (See Section VIII of
the Code for a discussion of possible sanctions.)
2. MATERIAL ADVERSE IMPACT ON THE FUND. If the Compliance
Officer determines that the violation has caused a material adverse impact upon
the Fund, the Compliance Officer shall promptly notify the Board of such
violation. The Board shall be entitled to consult with independent legal counsel
to determine whether the violation actually has had a material adverse impact
upon the Fund; to formulate
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sanctions, if any, appropriate for the violation; or for any other purpose that
the Board, in its business judgment, determines to be necessary or advisable.
(See Section VIII of the Code for a discussion of possible sanctions.)
C. PERIODIC REPORTS BY COMPLIANCE OFFICER TO BOARD OF TRUSTEES. The
Compliance Officer shall report to the Board at each regularly scheduled Board
meeting all violations of this Code (whether or not they caused a material
adverse impact upon the Fund) and all sanctions imposed.
VII. WAIVERS OF PROVISIONS OF THE CODE
A. WAIVERS. A Covered Officer may request a waiver of a provision
of this Code if there is a reasonable likelihood that a
contemplated action would be a material departure from a
provision of the Code. Waivers will not be granted except under
extraordinary or special circumstances.
The process of requesting a waiver shall consist of the
following steps:
a. The Covered Officer shall set forth a request
for waiver in writing and submit such request to
the Compliance Officer. The request shall
describe the conduct, activity, or transaction
for which the Covered Officer seeks a waiver,
and shall briefly explain the reason for
engaging in the conduct, activity, or
transaction.
b. The determination with respect to the waiver
shall be made in a timely fashion by the
Compliance Officer, in consultation with Fund
counsel, and submitted to the Board for
ratification.
c. The decision with respect to the waiver request
shall be documented and kept in the Fund's
records for the appropriate period mandated by
applicable law or regulation.
B. DISCLOSURE OF WAIVERS. To the extent required by applicable law,
waivers (including "implicit waivers") shall be publicly
disclosed on a timely basis. An "implicit waiver" is defined as
the Fund's failure to take action within a reasonable period of
time regarding a material departure from a provision of the Code
that has been made known to an "executive officer" of the Fund.
For this purpose, an "executive officer" is a Fund's President
or Chief Executive Officer, Vice President (who is in charge of
a principal policymaking function), or any other person who
performs similar policymaking functions for the Fund. For the
purpose of determining whether an "implicit waiver" has
occurred, if a material departure from a provision of the Code
is known only by the Covered Officer who has caused the material
departure, the material departure will not be considered to have
been made known to an executive officer of the Fund.
VIII. ACCOUNTABILITY FOR ADHERENCE TO THE CODE
The matters covered in this Code are of the utmost importance to the Fund and
its shareholders, and are essential to the Fund's ability to conduct its
business in accordance with its stated values. Covered Officers are expected to
adhere to these rules in carrying out their duties for the Fund.
The Fund will, if appropriate, take action against any Covered Officer whose
actions are found to violate this Code. Sanctions for violations of the Code may
include, among other things, a requirement that the violator undergo training
related to the violation, a letter of sanction, the imposition of a monetary
penalty, and/or suspension or termination of the employment of the violator.
Where the Fund has
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suffered a loss because of violations of this Code or applicable laws,
regulations, or rules, it may pursue its remedies against the individuals or
entities responsible.
IX. RECORDKEEPING
A. GENERAL. The Fund requires accurate recording and reporting of
information in order to make responsible business decisions. All of the Fund's
books, records, accounts and financial statements must be maintained in
reasonable detail, must appropriately reflect the Fund's transactions and must
conform both to applicable legal requirements and to the Fund's system of
internal controls.
B. CODE OF ETHICS RECORDS. A copy of this Code, any amendments
hereto, and any reports or other records created in relation to waivers of or
amendments to provisions of this Code shall be kept as records of the Fund for
six years from the end of the fiscal year in which such document was created.
Such records shall be furnished to the SEC or its staff upon request.
X. AMENDMENTS TO THE CODE
The Covered Officers and the Compliance Officer are encouraged to recommend
improvements to this Code to the Board, and the Board may amend the Code in its
discretion. In connection with any amendment to the Code, the Compliance Officer
shall prepare a brief description of the amendment, in order that this
description may be disclosed in accordance with applicable law and regulations.
DATED: November 10, 2003.
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EXHIBIT A
COVERED OFFICERS
Daniel R. Omstead, Chief Executive Officer
Kimberley Carroll, Chief Financial Officer
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