Code of Ethics
American Oriental Bioengineering Inc. Professional Code of Ethics
Principle
Said professional Code of Ethics (referred to as “the Code”) is to comply with “Sarbanes-Oxley Act” of 2002, No.406, and its related provisions on the definition of “Code of Ethic,” and to become the guideline for the highest business ethics of the operations for American Oriental Bioengineering Inc. (referred to as “AOBO”). In the case the Code is stricter than other usual business practices or provisions or regulations, we will adhere to the stricter standard. “AOBO” refers to the company and all its subsidiaries to be included in merged financial report of publicly traded company according to U.S. generally accepted accounting principles (namely U.S. GAAP), including but not limited to AOBO and all its subsidiaries in the mainland China.
The Code is to prevent any forms of misconduct, and encourage the following behavior at the same time:
Honest moral conduct, including maintain professional code of conduct while conducting personal affairs and resolving conflicts between self and the company or other employees.
Disclose all reports, documents filed with Securities and Exchange Commission (referred to as “SEC”), and other information to the public in a thorough, accepted, accurate and timely fashion.
Scope of applicable personnel
All directors, managers, workers and consultants etc, regardless they are full time, part time, consultant or temporary employees (referred to as “employees”), shall adhere to the Code. The Code also provided special provisions for CEO, CFO, vice Presidents, chief inspectors and other similar employees (namely all the high level managers) of AOBO.
In order to fully implement the Code, AOBO Board of Directors is determined to institute the allegation procedures and establish the Department of Auditing/Inspecting. If any employee has any question regarding the Code, or wishes to report any misconduct that violates the Code, please contact the Department of Auditing/Inspecting.
Contact Person: Yao, BinHua
Contact Telephone: (0451)-8246-8087
Fax: (0451)-8246-8989
E-Mail: help@bioaobo.com
Competition and Fair Trade
On the basis of honesty and fairness, AOBO will operate under superior management, rather than via immoral or illegal practices, in order to outperform its competitors. AOBO strictly prohibits the violation of third party intellectual properties, including copy rights, trademarks, trade names, and trade secrets. At the same time, AOBO strictly prohibits similar Infringing behavior by badgering or encouraging previous or current employees of other companies. Every employee of AOBO shall treat its clients, suppliers and competitors with respect and fairness. No employee shall treat any other person unfairly by means of manipulation, concealment, abusing of privileged information, distorting facts, and other illegal trade practices.
Conflict of Interest
Recognition of Conflict of Interest
Conflict of interest refers to the situation where the interest of employee interferes or may interfere with interest of AOBO as a whole. Every employee shall actively avoid personal interests that may hinder the professional interest of AOBO or prevent him from performing his duty objectively.
Business Competition
No employee of AOBO is permitted to work at the companies that are the business competitors of AOBO or the companies that may harm the business interest of AOBO.
Business Opportunity
No employee of AOBO is permitted to appropriate any business opportunity of AOBO to himself/herself using the resource, information or professional rank of AOBO. In the case any employee obtained any business opportunity within the scope of AOBO trading practice using the resource, information or professional rank of AOBO, the employee shall report such opportunity to AOBO prior to acquiring it using personal effort.
Monetary Interest
Employee cannot own monetary interest of other business entities directly or indirectly through spouse or other members of family (including ownership or other forms), if such monetary interest affects the performance and obligation of the employee negatively at AOBO, or such monetary interest requires time of the employee at AOBO.
No employee is permitted to hold any ownership interest of any non-publicly traded company which is a business competitor of AOBO.
Employee may hold ownership interest of AOBO’s competitors, provided the competitors are publicly listed and the ownership interest is no more than
In the case an employee is responsible for managing and monitoring the business relations of AOBO and another company, the employee is not permitted to hold any ownership interest of the said company.
In the case an employee holds more than 5% of ownership interest as described in item (3), the employee shall report such ownership immediately to the Board of Directors.
Loan and Other Financial Trade
Employee is not permitted to obtain loans or personal debt guarantees from major clients, suppliers and competitors of AOBO, nor any other forms of financial trade. Said provision does not prohibit employee conducting transactions with banks or other financial institutions under fair and normal circumstances.
Duty at the Board of Directors or Committee
Employee is not permitted to perform any duty on the board of directors or committee in a real entity which maybe considered having conflict of interest with AOBO, regardless the entity is non-profit or for profit organization. Employee must obtain approval from AOBO board of directors before accepting such post. AOBO may review and affirm the appropriateness of such post at any time.
The above scenarios of conflicts of interest are for reference only. It shall not be considered the limits for employee obligation of avoiding conflicts of interest. When facing problematical situations in resolving conflict of interest, employees shall verify the following questions:
Is it legal?
Is it fair and honest?
Is it in the maximum interest of AOBO?
Exposing Conflict of Interest
Employees must expose in full any situation that may cause conflict of interest. In the case an employee suspects or others have reason to suspect conflict of interest, the employee must report it to Department of Auditing/Inspecting immediately. Only Board of Directors or officer with proper authorization from Board of Directors may exempt conflict of interest, and disclose it promptly to the public within limits of law.
Family Members and Duty
Family members may cause conflict of interest because they may influence the objectivity of decisions made by employees for the interest of AOBO. In the case family members of employee wish to conduct business with AOBO, the principle on whether to collaborate or whether to maintain the cooperation of such business relations, as well as the length and condition of cooperation should be: the benefit that AOBO obtained is not less than the benefit brought by unrelated third parties who cooperate with AOBO under the same conditions.
Employees shall report to their superiors or the Department of Auditing/Inspecting promptly any situation that may cause conflict of interest by family members.
Gifts and Presents
Presenting gifts and receiving presents are usual business practice. Appropriate presents and hospitality are necessary to establish business relations and enhance mutual understanding. However, presents and hospitality cannot influence the fair and objective decision of employees when conducting business.
Employees have the responsibility to make the correct decision. As a general principle, employee shall not tempt clients or suppliers to make special business arrangement by presenting gifts or displaying hospitality. All gifts and hospitality expense that represent AOBO must be recorded accordingly in the expense report.
Employee may only receive appropriate gifts. We encourage employee to submit received gifts to AOBO. Small gifts will not be retracted compulsory. However, in the case the gifts exceed RMB 1000, they must be submitted to Department of Administration immediately.
The business practice of AOBO is found on the basis of “fair trade.”Therefore, no employee is permitted to receive kickback, bribe others, receive payment privately or other personal benefits.
<<Foreign Corrupt Practices Act>>
U.S. <<Foreign Corrupt Practices Act>> (“FCPA”) prohibits corrupt payments directly or indirectly to foreign governments or foreign party candidates for the purpose of obtaining or keeping business. AOBO must adhere to FCPA. Violation of <<Foreign Corrupt Practices Act>> not only is violation of regulation of AOBO, but also may subject to civil or criminal prosecution. Therefore, no employee shall make illegal payments or authorize such payments directly or indirectly to any foreign officials. Per FCPA regulation, under certain special circumstances, it is permissible to present some symbolic monetary gifts. But such monetary items must be approved by upper management in advance.
The protection and usage of AOBO resource
Employee shall protect resource of AOBO and ensure it is utilized properly and legally. Theft, abuse and waste affect the interest of AOBO directly. Regardless whether the ultimate gain is personal, any illegal or improper use of AOBO resource will be strictly prohibited.
In order to protect and properly utilize the resource of AOBO, every employee must adhere to the following:
Vigilantly prevent theft, damage or abuse of company resource;
Promptly report actual or possible occurrence of theft, damage, or abuse of company resource;
Protect the safety of all software, data, communication and written documents and prevent their contact with irrelevant personnel;
Utilize company resource only for legal operating intentions.
Unless with prior authorization of CEO or CFO of AOBO, company prohibits any employee making political contributions with company name (including direct contribution or contribution through professional associations, etc.), include but not limited to:
Any contribution made with capital or resource of the company for political purpose;
Encourage employee to make similar personal contribution;
Reimburse political contribution for employees.
Policy on Protection and Securing of Intellectual Property
Inventions, creative production, computer software, trade secrets and technological development obtained by employee while performing his duty or during his stay at AOBO, and mostly utilizing material and technical resource of the company shall be considered the property of AOBO.
AOBO implements stringent security policy. During employee’s stay at the company, employee shall abide by and perform all duty and obligation stipulated in the security policy regardless it is written or otherwise.
With the exception of performing duty on the assigned job, employee cannot disclose, publish or release trade secrets or other sensitive documents of AOBO without prior authorization from AOBO. Furthermore, employee cannot handle such sensitive documents while employed at a position outside AOBO.
While not in a working situation, employee must be vigilant, and must not disclose valuable information of AOBO, and information of related business, clients and employees.
Even with the termination of employment, employee still has obligation to maintain secrecy, unless AOBO has disclosed the related information to the public for certain reason, or the disclosure of the information was not the fault of the employee.
When leaving the company, employee must return all company property per AOBO regulations, including all forms of sensitive documents, and must not withhold copies of such documents.
All employees must abide by the regulations on protection and securing of intellectual property approved by board of directors.
The accuracy of financial report and other public information.
As a public company, AOBO has to disclose its financial report and other important commercial information to the public and SEC. AOBO Policy stipulates that disclosure of corporation's business information, financial status and operations result should be timely,, accurately, and completely. The employees must abide by rules, laws, code and policy with respect to insider transactions, assumptions and/or predicted accounting and financial report. It is unacceptable if the financial report is inaccurate, incomplete and not in time, and it would cause serious damage to the interest of AOBO, or even might result in applicablelegal liabilities.
Employees should rigorously prevent and report on accurate or incomplete financial reporting, if there is one. Especially pay attention to the points listed below:
Financial report is not in conformity with basic performance.
Transactions without obvious commercial purpose.
Attempt to avoid regulatory investigation and approval procedures.
The senior financial management and other financial staff have the responsibility to ensure integrity, fairness, accuracy, timeliness and legibility of AOBO's financial report. Any behavior and situation that violates above requirements should be reported to the auditing and supervision department.
It is strictly prohibited any and all employee behavior or actions, including but not limited to, which may cause errors in financial reporting, direct or indirect influence on independent auditor’s work through force, manipulation, misleading, or fraud.
（Owing to violate America Recognition Accounting Standards,recognized audit criteria and other professional standard) Issue or reissue a unapproved company financial report.
The issuing or an reissuingof the financial report that fails to passing through the approval procedures (a violation of the US GAAP, or other relevant professional principles)
Unable to conduct audit, review and other procedure according to recognized audit criteria or other professional standard.
Unable to cancel published report;
company record
Accurate and reliable record is critical to AOBO's operation. It is the basis of producing profit statement, financial report and other information which disclose to the public. Corporation's record is an important data support to company's decision and strategic program. The company record is including but not limited to: account information, pay-roll , timecard, travel and expenditure report, E-Mail, financial data, examinations and records of performance, electronic documents as well as all other records during regular operation process.
All company's record information must be complete, accurate, reliable, any fraud or misleading is not acceptable. Prohibit non-disclosure, non-recorded fund, expense and collecting behavior. Employees have the responsibility to understand and observe record related to AOBO and keep relative company record. Please contact senior
management or Audit Supervision Department if any problem arises.
Abide by legal requirements
Every employee must abide by provincial, municipal , regional and state law and regulations, including but not limited to: commercial bribery, kickback, copyright, trademark right and trade secret, private information, insider trading, providing or accepting gift, employment discrimination and harassment, environmental protection, occupation health and safety, false or misleading financial information, abusing of company asset and foreign exchange. We hope all employees understand and abide by applicable law and regulation.
Miscellaneous
Discrimination and Harrasment
AOBO is dedicated to equal employment opportunity in all aspects. We prohibit discrimination or harassment based on race, religion, sex, age, nationality or any other protected area.
Health and Safety
AOBO is dedicated to provide a safe and healthy working environment for its staff. Each employee has the responsibility to maintain a safe and healthy working environment, including adhere to stipulations on safety and health; report any accidental injury and unsafe equipment, operation and environment. Any violent and threatening behaviors are prohibited.
Each employee needs to perform his/her duty on safety and health，free from influence of alcohol, narcotics or other controled substance. The using of narcotics and other illegal substance in the work place is strictly prohibited.
Violation of Regulation
All employees have the responsibility to report any known violation or possible violation of regulations, including violation of law, regulation, prodedure and policy of AOBO. Reporting of such violations is not an indication of disloyal, on the contrary, it is protecting the honor and reputation of AOBO and its employees.
Employees have the responsibility to report known or suspicious illegal behavior to AOBO Department of Auditing and Supervision, AOBO and Department of Auditing and Supervision shall maintain the employee secrecy to the best of its ability,and shall collect the necessary evidence within the limit of law based on needs of the company.
Any employee who violates the said regulation shall receive disciplinary action, including termination of employment. As employees of AOBO, violation of law or code of ethics could result in severe consequences for himself/herself and the company.
AOBO strictly prohibits employee retaliation for reporting known or questionable behavior. The retaliating employee shall receive disciplinary action, and possibly termination of employment.
Exemption
Exemption is given onlyto extraordinary cases. Only the Board of Directors or its authorized officer have the exemption power and to disclose the findings to the public in a timely fashion.
Summary
The regulation is the highest standard guide line of AOBO, that is in conformity with business ethics. For any question on above terms, please contact Department of Auditing and Supervision. We expect that every employee adhere to the regulations. Each employee should bear his respective responsibility on his behavior. Any behavior in violation of law or regulation would not be exempted by claiming directed by superior or other senior managers. Employee who is in violation of law or regulation will be considered dereliction of duty, and will receive disciplinary action, or even termination of employment.
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