- Corporate ethics is the practice of our shared values.
These shared values define who we are and what we can expect
from each other. This Code of Business Conduct sets out
the basic standards of ethics and conduct to which all Chindex
personnel are held. The code applies to all Chindex personnel,
which includes officers and employees, consultants, board
members and sub-distributors, as well as senior financial
officers of the Company and the Chief Executive Officer.
The Code applies to all Chindex companies, including subsidiaries
and Joint Ventures.
We, as a Company, require honest
and ethical conduct from everyone subject to this Code.
Each of you has a responsibility to all other directors,
officers and employees of Chindex, and to our Company itself,
to act in good faith, responsibly, with due care, competence
and diligence, without misrepresenting material facts or
allowing your independent judgment to be subordinated and
otherwise to conduct yourself in a manner that meets with
our ethical and legal standards.
In addition to
emphasizing Chindex’s shared values, this Code of
Business Conduct is designed to define individual and corporate
responsibility. Every employee must understand that he or
she is responsible for his or her own conduct. No one has
the authority to make another employee violate Chindex’s
Code of Business Conduct, and any attempt to direct or otherwise
influence someone else to commit a violation is a violation
in itself. Alleged violations will be investigated and those
who violate the standards set out in this Code will be subject
to disciplinary action.
People in management
positions, in particular, set an example for other workers
and are often responsible for directing the actions of their
subordinates. Chindex requires all employees, particularly
managers, to know and understand the Code of Business Conduct
outlined in this publication.
Upon joining Chindex
employees will be required to certify that they have received
and read the Chindex Code of Business Conduct. This certification
confirms that the person will comply with the Code.
It must be noted
that this code has been prepared to outline the broad principles
of legal and ethical business conduct embraced by Chindex.
It is not a complete list of legal or ethical questions
you might face in the course of business, and, therefore,
this code mustbe used together with your common sense and
good judgment. If you are in doubt or have a specific business
conduct question, you should contact your management, or
the Chindex Legal Counsel .
It is Chindex
policy to provide full, fair, accurate, timely and understandable
disclosure in all reports and documents that we file with,
or submit to, the Securities and Exchange Commission and
in all other public communications made by our Company.
In this regard, the Chief Executive Officer (CEO), the Chief
Financial Officer (CFO) and all senior financial officers
are responsible for full, fair, accurate, timely and understandable
disclosure in the periodic reports required to be filed
by the Company with the Securities and Exchange Commission
(SEC) as well as in other public communications made by
the Company. Accordingly, it is the responsibility of the
CEO, CFO and each senior financial officer promptly to bring
to the attention of the Company’s Audit Committee
any material information of which he or she may become aware
that affects the disclosures made by the Company in its
public filings or otherwise assist the Audit Committee in
fulfilling its responsibilities.
and regulations are ever-present in the healthcare industry,
affecting virtually every functional area of Chindex business.
Regardless of what job you do or what country you work in,
there are legal, regulatory and ethical standards that must
be considered and upheld.
to be a good corporate citizen in every community where it
conducts business and will comply with all applicable laws
and regulations. As individuals, employees must strive to
be aware of and understand the national, state and local laws
as well as the business requirements and practices that affect
their business unit and area of responsibility.
Disregard of the
law cannot and will not be tolerated. Violation of U.S. or
Chinese laws and regulations may subject an individual, as
well as Chindex, to civil and/or criminal penalties. Employees
should be aware that conduct and records are subject to internal
and/or external audits. Therefore, it is in everyone’s
best interest to know and comply with Chindex’s legal
and ethical obligations. Although you are not expected to
know the details of all of the applicable laws, rules and
regulations, we expect you to seek advice from the Chindex
Legal Counsel if you have any questions about what conduct
may be required to comply with any law, rule or regulation.
In the United States,
and in China it is illegal to provide, offer or accept a kickback
or bribe. A kickback or bribe may be defined as any money,
fee, commission, credit, gift, gratuity, thing of value or
compensation of any kind that is provided directly or indirectly,
and that has as one of its purposes, the improper obtaining
or rewarding of favorable treatment in a business transaction.
Chindex policy on kickbacks and bribes is clear - they are
illegal and are not allowed. Standard sales incentives such
a discounts for prompt payment are not considered kickbacks.
In general, if there is a request for a payment to an individual
then that should raise a red flag as a likely improper payment.
Many countries including
the United` States, have specific laws on conducting business
with foreign government officials. Under the U.S. Foreign
Corrupt Practices Act, for example, a company (including its
shareholders, directors, agents, officers and employees) is
prohibited from directly or indirectly offering, promising
to pay, or authorizing the payment of money or anything of
value to a foreign government official to win or retain business
or favorable treatment. Note that for purposes of the Act
officials who work for organizations that are owned by the
government are considered to be “government employees.”
The above prohibition on payments does not apply to any fees
charged by government or non-government bodies as required
by law or for provision of a required service. There are some
other limited exceptions as well. Because the laws and interpretations
are complex, it is very important that you consult the Chindex
Legal Counsel before authorizing or making any payments.
In the course of
business, employees may become aware of certain types of operations
of Chindex. Such material information could include potential
acquisitions, earnings, major contract awards, stock splits,
major management changes, upcoming litigation or regulatory
proceedings, and joint ventures. This is information that
an investor could consider important in deciding whether to
buy, sell or hold Chindex stock.
Prior to a public
announcement, some employees may have knowledge of such confidential
or “inside” information. Employees must exercise
the utmost care in handling such material inside information
to avoid legal and ethical violations.
- Securities laws prohibit employees from trading securities
based on non-public (inside) material information for as
long as it remains undisclosed. If you have questions about
whether it has been made public, contact the Chindex Legal
Counsel before buying or selling securities.
- Employees are also prohibited from disclosing confidential
information to someone outside the corporation. Such “tips”
may result in friends, relatives or others trading on the
basis of inside information, which is also prohibited by
Violators of securities
laws are subject to severe civil and criminal punishments.
Severe penalties may even apply where the disclosing person
did not engage in the transaction or personally benefit
from the trading. Note also that the prohibition on insider
trading applies not only to our Company’s securities,
but also to securities of other companies if you learn of
material non-public information about these companies in
the course of your duties to Chindex.
Chindex senior management
and directors of the parent company are presumed to have inside
information of a financial nature and therefore may not trade
in the company’s securities during a blackout period
which is defined as “the period from the first day after
the end of a quarter until 48 hours after the financial results
from that quarter are released to the public.” Senior
management consists of those with the title of Vice-President
or above as well as the heads of the company’s subsidiaries
or joint ventures. However, if a senior manager is in possession
of additional inside information such as described above (a
pending merger, for example) that person may not trade in
the company’s securities at any time until the particular
event becomes public knowledge.
|Business Courtesies and Gifts
general, the giving or receiving of gifts and gratuities in
return for the use or purchase of Chindex products is prohibited.
However, gifts of modest value that are part of ordinary business
practice, such as an occasional meal or souvenirs, are usually
As a leader in the
Chinese health care market Chindex may have opportunities
to further medical practice and knowledge of products marketed
by Chindex by providing seminar sponsorship, research grants,
speaker honoraria, training events, and so on. Payments and
reimbursements for such activities should be made only in accordance
with applicable laws and regulations, following review by the
Chindex Legal Counsel or as part of established budgeted programs
that comply with the established internal financial controls
of the Company.
Every Chindex employee
is obligated to protect the corporation’s confidential
information as well as that of its customers, patients, suppliers,
shareholders, fellow employees, and their parties who disclosed
information to Chindex in confidence. While some information
may not be regulated by legal obligations, it is Chindex’s
policy that all information developed or shared as a result
of the business process is proprietary to Chindex and must
be treated as confidential. Such confidential information
includes pricing, financial data, research and development
information, marketing and sales programs, employment records,
potential contracts or ventures, customer data and patient
files. It also includes internal correspondence, regulatory
reports, and computer passwords or software. Materials that
contain confidential information, such as memos, notebooks,
computer disks, and so on, should be stored securely and shared
only with those persons with a need to know. Employees should
be especially careful not to inadvertently disclose confidential
information through the ever-growing electronic media, such
as e-mail, telephone voice mail or the Internet. It is also
prudent to refrain from discussing sensitive company information
in public places like airports and restaurants.
Employees are responsible
for complying with rules and procedures established by the
IT Department for control of Company information and computer
and records (in any form or media) are part of the corporation’s
assets, and employees are charged with maintaining their accuracy
and safety. Employees are required to use excellent record-management
skills by recording information accurately and honestly, and
retaining records as long as necessary to meet business objectives
and government regulations. As required and directed, all
employees are obliged to diligently search their files for
any requested records.
must accurately reflect all financial transactions of Chindex
and its subsidiaries. No false, artificial or misleading entries
shall be made in the books and records of the company for
any reason. Hospital data, such as patient records, must be
maintained according to regulation and corporate confidentiality
A conflict of interest
exists when a personal interest or activity of an employee
influences or interferes with that employee’s performance
of duties, responsibilities or loyalties to Chindex. All employees
must avoid any personal or business influences or relationships
that affect, or appear to affect, their ability to act in
the best interest of the corporation. Some situations in which
employees might encounter conflicts of interest are:
with, or employment in any capacity by a competitor, supplier
or customer of Chindex
directly or indirectly, a significant financial interest in
any business that does or seeks to do business with Chindex,
or seeks to compete with Chindex. A significant financial
interest is defined as an employee’s and family members’
combined interest that represents either, more than 1% of
the outstanding securities of a corporation (or ownership
interests if an unincorporated business), or more than 5%
of the total assets of such an employee and family members
• the employment
of family members or close personal friends as contractors,
suppliers or employees of Chindex
relationships between a supervisor and subordinate
• using corporate
assets, including company time, name, information, equipment
or facilities, for personal use.
You should not indirectly,
through a spouse, family member, affiliate, friend, partner,
or associate, have any interest or engage in any activity
that would violate this Code if you directly had the interest
or engaged in the activity. Any such relationship should be
fully disclosed to the Legal Counsel or CEO who will make
a determination whether the relationship is inappropriate,
based on standards set forth in this Code.
If any matter exists that might be
a conflict of interest or creates the appearance of a conflict
of interest, employees should consult their supervisors to
assess whether a problem exists. If there is a real or perceived
conflict of interest, the matter should be referred to the
Chindex Legal Counsel for interpretation and resolution.
Use of Corporate Assets
Every employee is obligated to protect
the assets of Chindex. Corporate property, such as office
supplies, production equipment, products and buildings, may
not be used for personal reasons. Any misuse or misappropriation
of corporate funds, information, equipment, facilities or
other assets may be considered criminal behavior and can bring
severe consequences. Expenses may not be charged to the corporation
unless they are for Chindex business purposes. Also, corporate
computers may not be used as vehicles for unauthorized software
(i.e. pirated or unlicensed), as this is a direct violation
of copyright law.
You are prohibited from taking for
yourself, personally, opportunities that are discovered through
the use of corporate property, information or position, unless
the Board of Directors has declined to pursue the opportunity.
You may not use corporate property, information, or position
for personal gain, or to compete with Chindex directly. You
owe a duty to our Company to advance its legitimate interests
whenever the opportunity to do so arises.
You should endeavor
to deal fairly with our Company’s suppliers, competitors
and employees and with other persons with whom Chindex does
business. You should not take unfair advantage of anyone through
manipulation, concealment, abuse of privileged information,
misrepresentation of material facts, or any other unfair-dealing
Each employee is
responsible for knowing and executing the responsibilities
of his or her job. This means that the individual is held
accountable for the quality of the work he or she produces
and for the accuracy of the applicable documentation. For
example, this policy of personal accountability prohibits
an employee from signing off on a process without properly
performing it, or from representing the work of another employee
as his or her own.
|Health and Safety
seeks to provide each employee with a clean, safe, and healthy
place to work. To achieve that goal, all employees must understand
the shared responsibilities of abiding by all safety rules
and practices, taking the necessary precautions to protect
oneself and coworkers, and reporting immediately any unsafe
conditions, practices or accidents.
in the Workplace/Harassment
conduct on the job means treating oneself and others with
respect and fairness. Workplace harassment is any unwelcome
or unwanted attention or discriminatory conduct based on an
individual’s race, creed, religion, national origin,
gender, marital status, age disability, or any illegal or
inappropriate basis. It can include verbal, nonverbal, or
physical abuse. Something that is considered harmless by one
individual may be perceived as harassment by another. Chindex
expects all employees to conduct themselves in a manner appropriate
to the workplace and, to keep all work environments free of
If workplace harassment
does occur, employees should report incidents as soon as possible
to their management or a human resources representative.
has the right to work in an environment free of workplace
harassment. Harassment creates an intimidating or hostile
work environment, and disrupts or interferes with another’s
expects all employees to report for work in condition to perform
their duties, free from drugs or alcohol. The use, possession,
manufacture, sale, or distribution of drugs for nonmedical
purposes is prohibited on company premises or on the job.
Every employee has the right to confidentiality
of certain employment records as well as the privacy of personal
activities outside of business hours. In turn, Chindex has
the rights of access to all company property and all communication,
records and information created in the business setting. Using
company property and/or creating such records and information
grants the employees consent to such access. Chindex emphasizes
the need for balance between work, personal and family life,
and encourages employees to pursue interests and activities
outside the workplace. Personal interests and beliefs, however,
must not be imposed on other employees or upon the corporation.
the highest level of quality requires Chindex employees to
focus on continuous improvement of work activities. This includes
enhancing value to customers through new and improved products
and services; reducing errors, defects and waste; improving
responsiveness to the customer; and improving productivity
and effectiveness in the use of all resources. To this end,
all employees are expected to know, understand, and comply
with their business unit’s applicable quality policies
and procedures. Employees are also obligated to raise questions
or concerns regarding quality issues to appropriate persons
in management, as outlined in their business unit’s
If you are uncertain
whether a particular activity or relationship is improper
under this Code or requires a waiver of this Code, you should
disclose it to our Company's Legal Counsel or CEO (or the
Board of Directors if you are a director), who will make a
determination first, whether a waiver of this Code is required
and second, if required, whether a waiver will be granted.
You may be required to agree to conditions before a waiver
or a continuing waiver is granted. However, any waiver of
this Code for an executive officer or director may be made
only by the Company’s Board of Directors and will be
promptly disclosed to the extent required by applicable law,
rule (including any rule of any applicable stock exchange)
|Reporting a Potential Violation
Each employee is responsible for
conducting him or herself according to legal and ethical standards.
Employees are required to talk to supervisors, managers or
other appropriate personnel when in doubt about the best course
of action in a particular situation. In addition, everyone
has a responsibility to report in a timely fashion any violations
of the Chindex Code of Business Conduct. Any report or allegation
of a violation of applicable laws, rules, regulations or this
Code need not be signed and may be sent anonymously.
All reports of violations
of this Code, including reports sent anonymously, will be
promptly investigated and, if found to be accurate, acted
upon in a timely manner. If any report of wrongdoing relates
to accounting or financial reporting matters, or relates to
persons involved in the development or implementation of our
Company’s system of internal controls, a copy of the
report will be promptly provided to the chairman of the Audit
Committee of the Board of Directors, which may participate
in the investigation and resolution of the matter. Questions
or concerns about any ethical or legal issue may be raised
without concern for disciplinary action as long as they are
made in good faith. Employees will not be subject to reprisals
for reporting or supplying information about potential violations,
except in cases where those employees are responsible for
the violation. The company expects employees to fully cooperate
in any investigation of a potential violation. If possible,
all such reports will be held in confidence. Please see the
Company Whistleblower Policy for details on reporting illegal
or unethical conduct and the protections the Company provides.
This Policy is attached as an Annex to this document.
If an employee needs
guidance on a legal or ethical question or has witnessed or
has knowledge of an illegal or unethical activity, he or she
should seek the counsel of his or her supervisor. If approaching
the supervisor is uncomfortable, or if the response is unsatisfactory,
employees should consult higher management or Chindex legal
and Corrective Action
Reports of alleged
violations will be investigated by the company, and will be
treated confidentially to the extent consistent with corporate
interests and legal obligations. If the results of an investigation
indicate that corrective action is required, the corporation
will decide the appropriate steps to take, including employee
discipline, dismissal and possible legal proceedings. If appropriate,
the investigation may be turned over to applicable outside
authorities, and outside investigators may assist in the inquiry.
As part of the closure process, results of an investigation
may be shared with the initiator of the report.
The CEO, CFO and
each senior financial officer shall promptly bring to the
attention of the Legal Counsel or the CEO and to the Audit
Committee any information he or she may have concerning any
violation of the Company’s Code of Business Conduct,
including any actual or apparent conflicts of interest between
personal and professional relationships, involving any management
or other employees who have a significant role in the Company
financial reporting, disclosures or internal controls.
The CEO, CFO and
each senior financial officer shall promptly bring to the
attention of the Legal Counsel or the CEO, and to the Audit
Committee any information he or she may have concerning evidence
of a material violation of the securities or other laws, rules
or regulations applicable to the Company and the operation
of its business, by the Company or any agent thereof, or of
violation of the Code of Business Conduct.
The Board of Directors
of the Company shall determine, or designate appropriate persons
to determine, appropriate actions to be taken in the event
of violations of the Code of Business Conduct. Such actions
will be reasonably designed to deter wrongdoing and to promote
accountability for adherence to the Code of Business Conduct
and may include written notices to the individual involved
that the Board has determined that there has been a violation,
censure by the Board, demotion or re-assignment of the individual
involved, suspension with or without pay or benefits and termination
of the individual’s employment or such other action
as the Board may determine is appropriate under the circumstances.
In determining what action is appropriate in a particular
case, the Board (or its designee) shall take into account
all relevant information, including the nature and severity
of the violation, whether the violation was a single occurrence
or repeated occurrences, whether the violation appears to
have been intentional or inadvertent, whether the individual
in question had been advised prior to the violation as to
the proper course of action and whether or not the individual
in question has committed other violations in the past.
In the past, companies
engaged in the sale and marketing of products have been the
subject of various government inquiries and/or investigations.
It is Chindex’s policy to cooperate fully with valid
government investigations. While not likely, it is possible
that Chindex employees may be contacted by government officials
conducting an investigation. Employees should be aware that
such investigations may be complex, and, if contacted by an
investigator, are encouraged to check with their supervisor.
and Discipline for Violations
Each employee is
responsible and accountable for adhering to the Code of Business
Conduct. Employees who violate provisions outlined in this
code could be subject to appropriate disciplinary action,
Employees who violate
the laws and government regulations previously mentioned in
this code could expose themselves and Chindex to substantial
criminal fines, prison terms and civil damages.
Standards and Procedures
This Code is intended
as a statement of basic principles and standards and does
not include specific rules that apply to every situation.
Its contents have to be viewed within the framework of our
Company’s other policies, practices, instructions and
the requirements of the law. This Code is in addition to other
policies, practices or instructions of our Company that must
be observed. Moreover, the absence of a specific corporate
policy, practice or instruction covering a particular situation
does not relieve you of the responsibility for exercising
the highest ethical standards applicable to the circumstances.
In some situations,
it is difficult to know right from wrong. Because this Code
does not anticipate every situation that will arise, it is
important that each of you approach a new question or problem
in a deliberate fashion:
(a) Determine if you know all the facts.
(b) Identify exactly
what it is that concerns you.
(c) Discuss the problem with a supervisor or, if you are
a director, the Company's Legal Counsel .
(d) Seek help from other resources such as other management
personnel or our Company’s Legal Counsel .
(e) Seek guidance before taking any action that you believe
may be unethical or dishonest.
You will be governed
by the following compliance standards:
• You are personally responsible for your own conduct
and for complying with all provisions of this Code and for
properly reporting known or suspected violations;
• If you are a supervisor, manager, director or officer,
you must use your best efforts to ensure that employees
understand and comply with this Code;
• No one has the authority or right to order, request
or even influence you to violate this Code or the law; a
request or order from another person will not be an excuse
for your violation of this Code;Any attempt by you to induce
another director, officer or employee of our Company to
violate this Code, whether successful or not, is itself
a violation of this Code and may be a violation of law;
• Any retaliation or threat of retaliation against
any director, officer or employee of our Company for refusing
to violate this Code, or for reporting in good faith the
violation or suspected violation of this Code, is itself
a violation of this Code and our Whistleblower Policy and
may be a violation of law; and
• Our Company
expects that every reported violation of this Code will
Violation of any
of the standards contained in this Code, or in any other
policy, practice or instruction of our Company, can result
in disciplinary actions, including dismissal and civil or
criminal action against the violator. This Code should not
be construed as a contract of employment and does not change
any person's status as an at-will employee.
This Code is for
the benefit of our Company, and no other person is entitled
to enforce this Code. This Code does not, and should not
be construed to, create any private cause of action or remedy
in any other person for a violation of the Code.
The names, addresses,
telephone numbers, facsimile numbers and e-mail addresses
of the Legal Counsel and CEO of our Company are set forth
China Arts and Crafts
103 Jixiangli Chaoyangmenwai
Phone: (8610) 6552-8822
Fax: (8610) 6552-8833
Email: [email protected]
Robert C. Goodwin,
7201 Wisconsin Avenue
Bethesda, MD 20814
Phone: (301) 215-7777
Fax: (301) 215-7719
Email: [email protected]
Procedures for complaints
made to the Audit Committee of Chindex regarding accounting, internal
accounting controls, or auditing matters.
In accordance with the
requirements section 301 of the Sarbanes-Oxley Act, enacted in 2002
by the U.S. Congress, Chindex International, Inc. (hereafter “Chindex”
or “the Company”) has established procedures for the
receipt, retention, and treatment of complaints received from company
employees or third parties related to accounting, internal accounting
controls, or auditing matters. Note that these procedures relate
only to accounting, internal accounting controls or auditing matters.
Complaints of any other nature should be presented to your supervisor
in accordance with standard procedures.
These procedures are being
established because all U.S. public companies are now required to
The Sarbanes-Oxley Act
creates new responsibilities for all public companies and for the
audit committees. The Chindex audit committee is composed of those
directors of the Company who are not employees of Chindex, called
“independent directors”. The Audit Committee has special
responsibilities related to ensuring the integrity of the Company’s
financial reports. As required by U.S. law, the complaint procedures
discussed in this notice provide a mechanism whereby the Audit Committee
can receive directly information relating to matters that could
affect the integrity of the financial reports. Thus, the types of
information covered would be information related to financial fraud,
theft from the Company, improper use or disposal of Company assets,
illegal transactions or any similar information that could compromise
the accuracy and reliability of the Company’s financial information.
The following are the
procedures that the Audit Committee of Chindex has adopted:
1. Who May File a Complaint
Any employee or third
party such as competitors, vendors and consumers may file a complaint
pursuant to these procedures.
2. Who Has Access to the
The complaint goes directly
to the Chairman of the Audit Committee of Chindex. The Audit Committee
is composed of the Company’s “independent” directors,
that is those directors of Chindex who are not employed by Chindex.
The Chairman of the Audit Committee will share the information in
the complaint with the other members of the Audit Committee and,
except as limited by number 3 below, will also provide information
regarding the complaint to the senior management of the Company.
3. Anonymous Submissions
Complaints submitted by
Company employees are to remain anonymous to the management of the
Company. This means that the Audit Committee may not disclose to
Chindex management the name or email address of any Chindex employee
who submits a complaint. Complaints from third parties who are not
employees of Chindex are not entitled to anonymous treatment.
4. How to Submit
Complaints are to be submitted
by sending an email to [email protected]. Only the Chairman of the
Audit Committee has access to this email address.
The Audit Committee will
be responsible for determining whether an investigation is warranted
and, if so, for conducting an appropriate investigation of complaints
received. The Committee has delegated certain responsibilities to
the Chairman who will make an initial determination as to whether
a complaint has sufficient merit to be investigated in greater detail.
This determination will be made by the Chairman promptly after receipt
of the complaint. The determination will be based on the Chairman’s
evaluation of all relevant factors and will be communicated to the
Audit Committee and the executive management of the Company in writing.
If the Chairman concludes that a complaint does not have sufficient
merit to be investigated in greater detail that would ordinarily
be the end of the matter, although the Audit Committee may, by a
majority vote, decide to override the Chairman’s decision.
If an investigation is found to be warranted and therefore is undertaken,
the Audit Committee will utilize such information and resources
as is appropriate to the task. Members of the Company management
are required to cooperate fully with any such investigation.
The Audit Committee will
keep complete records of all complaints received and the disposition
thereof. Such records will include a summary of the substance of
the complaint, the category of person who submitted it (for example,
employee, vendor, etc) and the dates when various actions were taken.
These records will be retained for a minimum period of one year.
Revision - USA -
May 23, 2007