Conflict of Interest Policy
1. INTRODUCTION
1.1. The Daman group of companies (“Daman”) values highly the trust and confidence of it’s Clients. To maintain that trust and confidence, Daman requires its employees (“Employees”) to maintain the highest standards of ethical conduct and to avoid conflicts of interest (“Conflicts”).
1.2. This document (“Policy”) sets out the standards of conduct for Daman Employees regarding Conflicts, including situations where an Employee’s personal interests or relationships may interfere with their ability to act in the best interest of Daman’s Clients (“Client(s)”). This Policy shall be read together with the Daman Personal Dealing Policy and the Daman Code of Business Conduct & Ethics.
1.3. All directors, employees and consultants of Daman (permanent and temporary) shall always comply with this Policy.
2. DEFINITION
2.1. Employee Conflict – An Employee Conflict exists when an Employee’s personal interests or relationships interfere, or appear to interfere, with the Employee’s ability to act in the best interest of Daman and/or it’s Clients. A Conflict may arise when an Employee’s actions or decisions could benefit the Employee or their family, friends, or associates, at the expense of Daman and/or it’s Clients.
2.2. Corporate Conflict – A corporate Conflict also exists when Daman’s corporate interests or relationships interfere, or appear to interfere, with its ability to act in the best interest of Daman’s Clients. A Conflict may arise when a Daman’s actions or decisions could benefit the Daman, at the expense of Daman’s Clients.
3. COMPANY ACTIVITIES
A Conflict might arise in any following activities carried on by Daman:
(a) trading on behalf of Clients;
(b) managing investment portfolios or
funds on behalf of other companies;
(c) managing its own investment
portfolios or funds;
(d) introducing or promoting investments;
(e)
providing investment advice; and
(f) publishing investment research.
4. TYPES OF CONFLICT OF INTEREST
Daman and its employees may be exposed to the following types of conflict of interest:
4.1. Daman / Client Conflict – where the interest of a Client conflict with the interests of Daman, including where Daman may be unfairly advantaged at the expense of a Client. Examples include:
(a) Daman providing investment advice or recommending
a transaction to a Client in the which Daman has a material interest,
relationship or arrangement; or
(b) Daman acting as an adviser to a Client
operating in the same market as Daman.
4.2. Client / Client Conflict – where the interests of one Client conflict with the interests of another Client, with the risk that one Client receives preferential treatment that could negatively impact another Client. Examples include:
(a) Daman being an adviser to a company whose
securities are being bought or sold for a Clients; or
(b) Daman matching
one Client’s transaction with the transaction of another Client by acting on
behalf of both Clients.
4.3. Employee / Daman Conflict – where the interests of an Employee conflict with the interests of Daman, with the Employee acting in their own best interest, and not in the best interests of Daman. Examples include:
(a) having a second job that conflicts with the
interests of Daman, either by being in competition with daman or affected by
Daman’s activities;
(b) not acknowledging errors to protect personal
reputation at the expense of Daman.
4.4. Employee / Daman Conflict – where the interest of an employee conflict with the interests of the Client, with the employee acting in their own best interest, and not in the best interests of the Client. Examples include:
(a) advising the Client to invest in a company in
which the employee has a shareholding;
(b) recommending a company to
provide service to a Client in which the employee has a shareholding
4.5. Daman / Daman Conflict – where the interests of business units in Daman being in conflict with another business unit in Daman. Examples include:
(a) the interests of Daman Securities being different
to those of Daman Investments;
(b) the interest of one Daman unit carrying
on licensed activity being in conflict with another Daman unit carrying on a
different licensed activity.
4.6. Law & Regulation Conflict – where the interests of a Client, Daman or an employee conflict with applicable laws and regulations
5. ROLES AND RESPONSIBILITIES
The prevention and management of Conflicts is an essential part of Daman’s internal governance and control environment. Daman’s Employees have a collective responsibility to identify any actual or potential Conflict that could adversely affect Daman or its Clients. When Conflicts cannot be avoided, Daman shall manage the conflict to an appropriate level and/or disclose it, as appropriate.
5.1. Compliance & Risk Officer (“CRO”)
The CRO shall be responsible for assessing and addressing all Conflicts to mitigate all ethical, legal, regulatory, and reputational risks for Daman including assessing:
(a) whether an actual or potential Conflict exists
and who may be conflicted;
(b) whether a potential Conflict could become an
actual Conflict;
(c) how serious the Conflict is;
(d) whether and how
the conflict can be managed; and
(e) whether a Conflict should be escalated
to Senior Management for further assessment.
The CRO shall maintain a register of Conflicts (“Conflicts Register”) which shall record all Conflicts that have been identified. See section 8.1 below.
The CRO shall have reporting obligations as set out in 8.2 below.
5.2. Board of Directors
The Board of Directors shall:
(a) ensure that Daman has adequate policies and
procedures to avoid, to the extent possible, all Conflicts and/or reduce their
impact;
(b) ensure that proper measures are taken to avoid, to the extent
possible, all conflicts at Board level and/or reduce their impact; and
(c)
review reports from the Risk & Audit Committee of the Board of Directors of
Daman (“BRAC”) regarding Conflicts and approving and/or mandating action as
recommended by the BRAC.
5.3. Individual Directors
Individual Directors shall:
(a) avoid getting into any situation where their
personal interests could conflict with those of Daman or any of its
Clients;
(b) comply with this Policy;
(c) notify the Board prior to
their involvement in an activity that could cause or increase a Conflict (e.g.
serving on the board of another company);
(d) notify the Board of any
matter where he may have a Conflict or his objectivity or ability to properly
fulfill duties may otherwise be compromised; and
(e) abstain from voting on
any matter where he may have a Conflict or his objectivity or ability to
properly fulfill duties may otherwise be compromised.
5.4. Board Risk & Audit Committee
The BRAC shall:
(a) ensure that the Company’s Conflict of Interest
Policy is adequate and fit for purpose;
(b) oversee compliance with
Company’s Conflict of Interest Policy;
(c) review all Conflict reports
submitted by the CRO to the BRAC;
(d) report to the Board periodically on
Conflict matters and on an ad hoc basis and as and when any Conflict requires
the attention of the Board.
5.5. All Employees
All Daman employees shall:
(a) avoid getting into any situation where their
personal interests could conflict with those of Daman or any of its
Clients;
(b) comply with this Policy;
(c) apply good judgment and act
with integrity;
(d) immediately report any actual or potential Conflict to
the CRO
(e) not advise any Client on any matter in which they have a
personal interest until steps have been taken to satisfactorily manage the
conflict;
(f) not take any decision on behalf of Daman if those decisions
are connected to their personal or external business affairs until steps have
been taken to satisfactorily manage the conflict
(g) engage in an
additional job, role or personal appointments, such as a trusteeship, whether
full time or part time, without first obtaining the approval of the CRO.
6. MANAGING CONFLICTS OF INTEREST
6.1. General
Daman shall:
(a) identify potential Conflicts that might
arise;
(b) maintain a register of Conflicts identified;
(c) put
effective arrangements in place to prevent or manage Conflict, especially with
regard to activities undertaken under separate regulatory licenses;
(d)
disclose all conflicts where appropriate;
(e) ensure that Employees do not
hold multiple functions with contradictory interests;
(f) ensure that
Employees do not receive remuneration other than for the performance of
functions directly assigned to them;
(g) record the measures taken to
reduce and manage Conflicts.
All decisions relating to Conflicts shall be based on the following two principles:
(a) securing fair treatment for all parties involved;
and
(b) reducing any legal, regulatory and reputational risk to Daman.
6.2. Identification of Conflicts of Interest
Daman shall identify any Conflicts that arise in its activities. In doing so it shall disregard (i) any financial loss; (ii) the motivations of those involved; and (iii) whether the acts of those involved are intentional or not.
Daman shall consider whether it and/or its Employees:
(a) are likely to make a financial gain, or avoid a
financial loss, at the expense of the Client;
(b) have an interest in the
outcome of the service, or a transaction carried out for Client, which differs
from the Client’s interest;
(c) have a financial incentive, or another type
of incentive, to favor one Client (or group of Clients) over the interests of
another;
(d) deals in the same or similar business to the Client;
(e)
receive an inducement from a third party in the execution of the service
provided to the Client other than the standard fee for that service;
and/or
(f) uses investment data specific to a Client in order to achieve
benefits or interests that do not serve the Client concerned.
Daman shall also consider whether a Client could be unfairly affected by carrying out activities for a Company affiliate.
6.3. Internal Disclosure
All Employees shall report all actual or potential Conflicts to the CRO as soon as they are identified.
6.4. Preventive Controls
Daman shall:
(a) implement measures to prevent and/or control the
exchange of information between employees engaged in activities involving a risk
of Conflict if the exchange of that information may unfairly benefit or harm the
interests of any Client(s);
(b) segregate duties that may give rise to
Conflicts if carried out by the same employee;
(c) implement measures to
prevent and/or control the involvement of employees in activities that may
impair the proper management of Conflicts; and
(d) prohibit employees
holding external positions or business interests that conflict with the
interests of Daman or its Clients without the prior approval of Daman’s CRO.
6.5. Managing Conflicts
If a Conflict exists and the CRO decides that the Conflict cannot be managed to an acceptable level, the CRO shall require that one or more of the following actions shall be taken:
(a) Establish an Information Barrier – establishing and maintaining an information barrier, also known as a ‘Chinese wall’. This requires that parts of Daman withhold information from other parts of Daman, including segregation of data and information systems as well as physical separation, at the discretion of the CRO. The CRO shall coordinate the establishment of the Information Barrier and monitor compliance to it. The Information Barrier shall stay in place as long as is necessary.
(b) Disclose to the Client – If there is a risk of damage to the Client’s interests or the CRO decides the Conflict otherwise requires it, a disclosure shall be made to the Client immediately. The disclosure shall be made in writing and shall be in sufficient detail as to the nature and extent of the Conflict to enable the Client to take an informed decision regarding the Conflict and how it impacts on the service provided and the Client’s interests. The Client shall be asked to consent to the Conflict on the basis of the disclosure made to the Client.
(c) Decline to provide the service – If the CRO decides that the Conflict is so material that establishing an information barrier or making a disclosure to the Client would not be effective, or the Client refuses to consent to the Conflict following disclosure, Daman shall decline the service requested.
7. GIFTS, HOSPITALITY & OTHER BENEFITS
7.1. All Daman Employees are prohibited from accepting any form of gift, hospitality, or benefit from any individual or organisation that does business with or on behalf of Daman, including Clients, vendors, suppliers, or other third parties. This includes any gift or benefit that could be perceived as an attempt to influence a business decision or could compromise the integrity of the company or its Employees.
7.2. Gifts and hospitality include, but are not limited to, the following:
(a) cash or cash equivalent gifts;
(b) gift
cards or certificates;
(c) discounts or coupons;
(d) personal loans or
advances;
(e) free or discounted products or services;
(f) meals or
drinks;
(g) tickets to events or shows; and/or
(h) travel or
accommodation arrangements.
7.3. There may be limited circumstances where it is appropriate for an Employee to accept a gift or hospitality, such as:
(a) attending a business conference or meeting where meals or refreshments are
provided; and
(b) benefits that be capable of enhancing the quality of a
service provided by Daman that are reasonable, proportionate and of a scale that
is unlikely to influence Daman’s behaviour in any way or that could not be
judged to impair regulatory obligations, neutrality, fairness or professionalism
In these limited cases, Employees must seek approval from the CRO before accepting any such gift or hospitality.
7.4. Employees may also receive a gifts with insignificant or no commercial value, such as corporate stationary or other small branded merchandise without first seeking the approval from the CRO. A very low threshold shall be applied in deciding whether a gift is of with insignificant or no commercial value
8. MONITORING & REPORTING
8.1. Conflicts Log
Daman shall keep and maintain a comprehensive register of all reported Conflicts (“Conflict Register”). The CRO shall be responsible for maintaining the Conflict Register.
The CRO shall enter promptly all reported Conflicts in the Conflicts Register. An individual Conflict Record shall contain the following information:
(a) description of the Conflict;
(b) description
of the context in which the conflict was identified;
(c) description of the
circumstances which constituted or may have constituted the Conflict;
(d)
names and roles of the persons/entities involved.
(e) name of the person
responsible for managing the conflict;
(f) description of the steps taken
to mitigate the conflict;
(g) where appropriate, evidence of disclosure to
the Client and/or Client consent;
(h) such other information as is
necessary to ensure a full and complete record of all facts and circumstances
relating to the Conflict.
Each entry in the Conflict Register shall be updated on an ongoing basis and maintained for a minimum of 5 years following the conclusion of the relationship with the Client(s) or other parties applicable to the recorded Conflict.
8.2. Reviews
(a) Ongoing Review – From time to time, the CRO shall review and check the effectiveness of this Policy and its implementation and operation in respect of all aspects of Daman’s business.
(b) Semi-Annual Reporting – The CRO shall report, at minimum, semi-annually to the BRAC on all Conflicts identified and managed.
9. INTERNAL AUDIT
Daman shall ensure that this Policy is being successfully implemented and operated by conducting internal audits of the Policy and its implementation. Those carrying our such audits shall, in addition, focus on any shortcomings of or omission from the Policy and make recommendations to the CRO of any necessary improvements to this Policy. Such audit review shall:
(a) assess the application and effectiveness of this
Policy and its procedures and controls;
(b) assess the appropriateness of
the conflict mitigation actions taken on identification of a Conflict;
(c)
confirm records in the Conflict Register are adequately maintained; and
(d)
review compliance with all relevant legal and regulatory requirements.
