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Conflicts of Interest Policy

VET TO VET MAINE

CONFLICTS OF INTEREST POLICY

Article I

Purpose

The purpose of this Conflicts of Interest Policy (the “Policy”) is to protect the interests of Vet to Vet Maine (the “Corporation”) when entering into a financial transaction or business arrangement that might result in an excess benefit involving an individual associated with the Corporation.  The Policy and its requirements apply to any individual or entity who is defined below as an Interested Person andis in a position to exercise substantial influence over the Corporation;i.e., a disqualified person.  Examples of such individuals include officers, directors, and key employees.[1]  The Policy supplements Maine law governing conflicts of interest applicable to nonprofit and charitable corporations.  All directors, officers, and key employees of the Corporation will be advised as to the requirements of the Policy.

Article II

Definitions

  • Interested Person:  Any member of the Board of Directors (the “Board”), member of a committee with Board-delegated powers, principal officer, or key employee who has a direct or indirect Financial Interest, as defined below, may be deemed by the Internal Revenue Service (“IRS”) to be an Interested Person.  Moreover, if a person is “interested” with respect to any entity of which the Corporation is a part, he or she is an Interested Person with respect to all affiliates of the Corporation.
  • Financial Interest:  A person has a Financial Interest if the person has, directly or indirectly, through business, investment, trust, or a family member,[2]any one of the following:
    • An ownership or investment interest in any entity with which the Corporation has a financial transaction or business arrangement;
    • An existing compensation[3]arrangement with the Corporation or with any entity or individual with which the Corporation has a financial transaction or business arrangement; or
    • A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Corporation is negotiating a financial transaction or business arrangement.
  • Conflict of Interest:[4]  A Conflict of Interest exists when an Interested Person either directly participates in or tries to influence the Corporation’s decision-making process as to whether the Corporation may enter into a financial transaction or business arrangement involving the Interested Person.  An Interested Person is any person who, during the last five-year period, is or was in a position to exercise substantial influence over the Corporation’s decision.

Article III

Duties

  • Duty to Disclose a Conflict of Interest:  In connection with any actual or possible Conflicts of Interest, an Interested Person must disclose to the Board the existence of his or her Financial Interest. In addition, the Interested Person must be given the opportunity to disclose all material facts to the Board, taking into consideration the proposed transaction or arrangement.
  • Duty of Confidentiality: Pursuant to Maine law and this Policy, all directors, officers, and employees of the Corporation recognize that there is a duty of confidentiality to the Corporation, and no such director, officer, or employee will make a disclosure of any confidential information for the purpose of personal gain.  Confidential information includes, but is not limited to, business plans and proposals, strategic plans, personnel data and evaluations, financial statements, the proceedings of the Board and/or any committee of the Board, Corporation attorney-client communications and attorney work product and vendor and supplier information.

Article IV

Determining Whether a Conflict of Interest Exists: After an Interested Person discloses a Financial Interest and all material facts, and after any necessary follow-up discussion with the Board, the Interested Person shall leave the Board or committee meeting while a determination is made as to whether a Conflict of Interest exists and a vote of the Board taken and recorded.  A majority vote by the remaining Directors or committee members will control.

Procedure for Determining and Addressing a Conflict of Interest:  If it is determined that a Conflict of Interest exists, the following procedure applies:

  • At the discretion of the Board or the appropriate committee, an Interested Person may make a presentation to the Board or at the appropriate committee meeting, but after such presentation, he or she shall leave the meeting during the discussion and voting on the transaction or arrangement that created the Conflict of Interest.
  • If appropriate, the chairperson of the Board or committee shall appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
  • After exercising due diligence, the Board or committee shall also determine whether the Corporation can, with reasonable efforts, obtain a more advantageous transaction or arrangement from a person or entity that would not give rise to a Conflict of Interest.
  • If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a Conflict of Interest, the Board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Corporation’s best interest and for its own benefit.  The transaction must be fair and reasonable to the Corporation and the decision as to whether to enter into the transaction or arrangement in conformity with such a determination.

Violations of the Policy:

  • If the Board or committee has reasonable cause to believe that an individual has failed to disclose an actual or possible Conflict of Interest, it shall inform the individual of the basis for such belief and afford the individual an opportunity to explain the alleged failure to disclose.
  • If, after hearing the individual’s response and conducting such further investigation as may be warranted in the circumstances, the Board or committee determines that the individual has, in fact, failed to disclose an actual or possible Conflict of Interest, it may  take appropriate disciplinary and corrective action.

Article V

Records of Proceedings

The minutes of the Board and all committees with Board-delegated powers shall contain the following:

  • The names of the persons who disclosed or were otherwise determined by the Board or the committee to have a Financial Interest;
  • The nature of the Financial Interest;
  • Any action taken to determine whether a Conflict of Interest was present; and
  • The decision of the Board or committee as to whether a Conflict of Interest in fact existed and such action, if any, taken in response to such decision.
  • The names of the directors or committee members who were present for the discussion and vote relating to the transaction or arrangement, a brief summary of the discussion (including alternatives to the proposed transaction or arrangement) and a record of any votes taken in connection therewith shall be maintained.

Article VI

Compensation

  • In general, individuals who are employees of the Corporation shall not be voting members of the Board. In those instances, however, where an individual is both a member of the Board and an employee, as a voting member of the Board who receives compensation from the Corporation either directly or indirectly, he or she is precluded from voting on matters pertaining to his or her compensation.
  • In general, individuals who are employees of the Corporation shall not be voting members of Board committees.  In those instances, however, where an individual is both a committee member and an employee, as a voting member of the committee who receives compensation from the Corporation either directly or indirectly, he or she is precluded from voting on matters pertaining to his or her compensation.
  • No member of the Board is prohibited from providing information regarding compensation to any committee.

Article VII

Annual Statements

Each director, member of a committee with Board-delegated powers, principal officer or key employee shall annually sign a statement which affirms that such person:

  • Has received a copy of the Policy;
  • Has read and understands the Policy;
  • Has agreed to comply with the Policy; and
  • Understands that the Corporation is a charitable organization and that, in order to maintain federal tax-exempt status, the Corporation must engage primarily in activities which accomplish one or more of its tax-exempt purposes while avoiding any activity that would provide an impermissible private benefit to an Interested Person.

Article VIII

Periodic Reviews

To ensure that the Corporation operates in a manner consistent with its charitable purposes and does not engage in activities that could jeopardize its status as an organization exempt from federal income tax, periodic reviews shall be conducted.  The periodic reviews shall, at a minimum, include the following subjects:

  • Whether compensation arrangements and benefits are reasonable and are the result of arm’s-length bargaining;
  • Whether the business activities of the Corporation are resulting in private inurement or impermissible private benefit; and
  • Whether business arrangements conform to organizational goals, are properly recorded, reflect reasonable payments for goods and services, and further the Corporation’s charitable purposes.

Article IX

Use of Outside Experts

In conducting the periodic reviews provided for in Article VIII, the Corporation may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the Board of its responsibility for ensuring that periodic reviews are conducted.

Last Updated:  August 17, 2018

 

[1] A key employee is an employee of the Corporation who (i) receives reportable compensation from the Corporation and all related organizations in excess of $150,000; (ii) has responsibilities, powers, or influence over the Corporation that is similar to an officer or director; (iii) manages a discrete segment or activity of the Corporation that represents 10% or more of its activities, assets, income, or expenses; or (iv) has or shares authority to control or determine 10% or more of the Corporation’s capital expenditures, operating budget, or compensation for employees.

[2] A family member includes an individual’s spouse, ancestors, brothers and sisters (whole or half-blood), children (natural or adopted), grandchildren, great grandchildren, and spouses of brothers, sisters, children, grandchildren, and great grandchildren.

[3] Compensation includes direct and indirect remuneration as well as gifts or favors that are substantial in nature.

[4] The mere fact that an individual is an Interested Person and has a Financial Interest does not automatically create a Conflict of Interest. Under Article II, Section 2, an individual who has a Financial Interest will only have a Conflict of Interest if the Board or an appropriate committee with Board-delegated powers decides, pursuant to this Policy and the IRS regulations that a Conflict of Interest exists.