APPENDIX 8

CODE OF
BUSINESS CONDUCT

GROUP INTERNAL AUDIT 1 January 1997

XYZ
 XYZ London Limited
150 River Walk
London WC2 3XD

(Chairman’s name)
Chairman

(Date)

CODE OF BUSINESS CONDUCT

XYZ is a major multinational corporation whose business partners range from governments and
multinationals through to small suppliers, and whose ultimate customers are the many individuals
who rely on the quality of our products for their well-being. So it is appropriate that we are seen
to operate responsibly and with ethical integrity in our business conduct and in our corporate
governance - to a standard which would usually be associated with the major public, listed
companies who are so often our competitors - and we should avoid even the suggestion of
impropriety. This should be so even when the law is permissive. In principle, there should be no
risk to our local or international reputation if any details about our business affairs were to
become public knowledge. At all times our business must be conducted honestly and
scrupulously, free of deception and fraud.

To these ends, this Code provides detailed guidance on the application to issues of business
conduct of the policies outlined in XYZ’s Statement of Corporate Principles. A separate Code
of Ethical Conduct applies those policies to scientific and environmental issues in particular. You
will find some wording in common between the Statement and the two Codes where similar
principles and practices are set out.

Copies of the three documents are available at all locations to all staff - from regional and country
managers, and from divisional and business unit heads. They are also available from
Environmental Affairs staff or through Internal Audit locally or at Group level, from whom
guidance on interpretation and application may be sought by staff.

This document has been approved by the Executive Committee and adopted by the Board of
XYZ. The Executive Committee reviews annually the Code’s appropriateness and effectiveness,
and advises the Board accordingly. As part of this review, line managers annually are required to
formally monitor their and their staff’s performance in observing the requirements of this Code
within their areas of responsibility and, where judged appropriate, to develop initiatives to
provide reasonable assurance of future compliance.

The Board places particular importance upon timely actions to be taken whenever necessary to
identify, contain and eliminate illegal acts.

A fundamental principle of the way XYZ conducts its business affairs is that applicable laws and
regulations are to be scrupulously observed at all times. Practical difficulties may arise in many
cases, such as when there are conflicts between the law of different countries, when local business
custom and practice is inconsistent with local law or when there is ambiguity as to the legal
position. Any case of actual or prospective non-compliance with law should be raised urgently
with management and, if material, with the Group Chief Executive.

The XYZ person responsible should endeavour to ensure that equivalent standards to those set
out in this Code are followed in companies in which XYZ has an interest but does not have
control and also in those businesses with whom XYZ has contractual relationships. Where they
are not, the XYZ person responsible should refer the matter upwards within XYZ.

The Board of XYZ regards it as the duty of every individual employed by or acting for XYZ to
follow all the requirements of this Code. Any proposed action which appears to be in breach of
any requirement of this Code should not be progressed without full disclosure to and prior
approval of the Group Chief Executive or as delegated to the Group Financial Controller or the
Group Director of Internal Audit. Appropriate behaviour by individuals which is in compliance
with this Code and also specifically approved departures from this Code will be supported by the
company under the principle of collective responsibility.

Your duty to comply with this Code includes a duty both to yourself and to XYZ to raise any
concerns you may have on any matter of business conduct which appears to be a violation of this
Code and in which you are actively involved. In addition you have a right to raise similar
concerns about the conduct of others even where you are not directly involved. Usually you
should first raise a matter of concern with your line manager and you should do so at the earliest
opportunity. At your discretion you may raise your concerns directly with senior management,
with local internal audit or with the Group Director of Internal Audit and you should do so where
an issue remains unresolved to your satisfaction after you have consulted your immediate
management about it.

Conflicts of interest
Directors and employees of XYZ are responsible to avoid any real or apparent conflict between
their own personal interests and those of XYZ. This may be at risk with respect to:
· Dealings with suppliers, customers and other parties doing, or seeking to
do, business with XYZ;
· Transactions in securities of XYZ or of any company with whom XYZ
has or is likely to have a business relationship;
· Acceptance of outside positions whether or not for a fee.
In appropriate circumstances XYZ encourages its directors and staff to be active outside the
company.
XYZ’s assets and other resources should not be used for any purpose other than for XYZ’s
business. They are not to be used for personal gain. These resources include but are not limited
to staff time, materials, property, plant, equipment, cash, software, trade secrets and confidential
information.
In cases of doubt, an employee should discuss the matter with his or her manager.

Business gifts, favours and entertainment

XYZ operates in many host countries of the world with widely differing laws, regulations,
customs and business practices. As a multinational XYZ is expected by its host in each case to
conform to local societal norms and values whether enshrined in their laws, regulations, customs
or business practices. Ethical dilemmas abound and have to be managed in harmony with the
requirements of this Code.
By way of illustration these may be some of the dilemmas:
· Inconsistency between different applicable laws within one country;
· Inconsistency between the laws of different countries involved in a
transaction;
· Inconsistency between law on the one hand and customs and practice on
the other hand;
· An opportunity to achieve a considerable social good (such as by
successfully marketing an effective product) but only at an ethical cost (such as by
making a facilitating payment);
· The difficulty of distinguishing convincingly between on the one hand
facilitating payments which may in some circumstances be permissible (to
facilitate a legal right which might otherwise be withheld or delayed) and bribes
which should not be permissible even when legal (to influence a business decision
or gain an unfair commercial advantage which is not a right);
· At what level a payment becomes extravagant.
As a general rule XYZ does not encourage the practice of giving or receiving gifts, even those of
nominal value. Employees should use their best endeavours to ensure so far as is possible that
commercial criteria, rather than the influence of gifts, favours or entertainment, best serve XYZ’s
business interests and their ongoing maintenance.
In determining whether any given or received business gift, favour and/or entertainment is
permissible under this Code each occurrence (and all connected ones taken together) are required
to pass all of the following tests unless a requirement is specifically waived by the Group Chief
Executive or his or her delegatee. These tests should also be applied equally to gifts etc made
indirectly by another party such as by an agent using funds which could be construed as having
originated in XYZ.
The tests:
· It could not be interpreted reasonably as an improper inducement;
· It is necessary;
· It would be considered nominal or moderate, and neither extravagant nor
too frequent;
· It would be considered appropriate to the business responsibilities of the
individual concerned;
· In the case of a gift etc received, it would be capable of reciprocation as a
normal business expense;
· Unless of nominal value, there is appropriate prior specific approval
usually of regional management;
· It is properly recorded, whether given or received;
· The Group Financial Controller and the Group Director of Internal Audit
have both been made fully aware of it beforehand;
· It is lawful and ethical.

Confidentiality
All of XYZ’s employees and contractors have a general duty to ensure that all XYZ’s data and
information which they encounter is handled with discretion.
XYZ personnel are not permitted to use confidential price sensitive information or to engage in
other ways with competitors or others to fix the market price for products.
XYZ’s information (whether technical, commercial, financial, personnel or other) must not be
disclosed so as to place XYZ at a potential or actual commercial disadvantage, or for the benefit
of another party who is not entitled to receive it.
Employees and contractors must ensure they act so as not to jeopardise (a) the rights of staff and
others under privacy legislation and (b) the responsibilities and restrictions which apply to XYZ
under data protection and other legislation.

Internal control
All businesses and projects owned, managed or controlled by XYZ must maintain an adequate
system of internal control which is in accordance with XYZ’s control policies. Management and
staff are responsible to ensure that, within their respective areas of responsibility, necessary
arrangements at acceptable cost are in place and are complied with to give reasonable assurance
that the objectives of internal control are met. These objectives include:
· The achievement of business objectives efficiently and economically;
· The reliability of information used internally and for external reporting;
· The safeguarding of corporate resources;
· Compliance with laws, regulations and policies of the company.
The necessary arrangements comprise proper attention to the following:
· The control environment;
· Information and communication;
· Risk analysis;
· Control activities or procedures;
· Monitoring.
All incidents involving a breakdown of control leading to any actual or potential losses should be
reported upwards immediately to management and to internal audit. For companies in which
XYZ has an interest but does not have control, the XYZ person responsible should endeavour to
ensure that equivalent standards are applied and should refer the matter upwards within XYZ
when they are not.

Operational and accounting records

Responsible staff must ensure that all the operational records and books of account of the
business represent a reliable, truthful, accurate, complete and up-to-date picture in compliance
with prescribed corporate procedures and external standards and regulations; and that they are
suitable to be a basis for informed management decisions. The prompt recording and proper
description of operations and of accounting transactions is a duty of responsible staff.
Falsification of records and books is strictly prohibited.
No secret or unrecorded bank accounts, funds of money or other assets are to be established or
maintained; no liabilities should knowingly go unrecorded or unprovided for; and there should be
no off-books transactions.

Relationships with suppliers

It is as important for XYZ to secure satisfactorily its sources of supply as it is for XYZ to achieve
and maintain market penetration. To this end, the viability and well-being of XYZ’s suppliers
must be a key concern of XYZ’s management and staff. Employees have a duty to ensure that
XYZ observes the terms of purchase orders and contracts - including the payment of suppliers
according to agreed payment terms.
While it is appropriate that due weight be given to the quality of past service to XYZ rendered by
a supplier, the placing of an order for goods or services should always be demonstrably defensible
on commercial grounds, and as a general principle XYZ’s employees should be active in seeking
new sources of supply. Excessive dependence upon particular sources of supply should be
avoided whenever possible.
Political activities and contributions
XYZ recognises that a healthy political climate is, in the long term, an essential attribute of a
prosperous and stable society as well as a key ingredient for the long term success of XYZ whose
mission is to improve the quality of life of ordinary people through the responsible application of
its expertise. XYZ acknowledges that a healthy political climate depends in part upon adequate
funding of the political process, upon there being active participation by many in the political
process, and upon open and well informed debate on societal issues.
XYZ Group companies are authorised to make political donations in the countries where they
operate in so far as the objective is to facilitate a healthy political process by contributing to the
adequacy of funding, by raising the level of participation or by enhancing the quality of informed
debate on issues related to the XYZ business - but only to the extent that such contributions are:
· Entirely lawful;
· In the public domain;
· Modest in amount and not disproportionate in size to local conditions and
to XYZ’s public profile;
· Not designed to prejudice political or commercial outcomes;
· Properly recorded in the accounting records;
· Authorised in advance by the appropriate Managing Director.

XYZ has an enlightened self interest in communicating information and views on issues of public
concern which have an important impact upon the XYZ business: management should be active
in looking for appropriate opportunities to do so. The information and views so communicated
must be relevant, reliable and responsible.
XYZ strives to be a good employer with regard to individual staff who are actively involved in
politics. Accordingly XYZ management should facilitate and not unnecessarily impede the
process when individual XYZ staff exercise their legal rights to become actively involved in local
or national politics. In turn, staff who are politically active, or minded to become so, should be
candid with their XYZ management so that management are best able to be cooperative and
difficulties are more likely to be avoided. Staff so involved have an obligation to XYZ to weigh
carefully their obligations to XYZ when actual or potential conflicts of interest arise - in their use
of time, in campaigning of issues of relevance to the XYZ business, and so on. Employees
engaging in political activity do so as private individuals and not as representatives of XYZ.

Conduct towards employees

XYZ is committed to its employees. An underlying principle is to maximise the extent to which
all employees have the opportunity to achieve their personal potential through their work with
XYZ. XYZ believes that it succeeds through the dedication of all its employees. Their motivated
involvement, work satisfaction and security are high priorities. In part this depends upon the
implementation of appropriate commercial policies so that employees share in the company’s
success; in part upon policies which relate to health and safety. Apart from the inalienable right of
every person to their personal dignity, practices which intentionally or unintendedly infringe upon
personal dignity are likely to interfere with an individual’s work performance.
In the conduct of his or her business responsibilities every XYZ employee is expected to apply
the principle of equal opportunity in employment. No member of staff shall discriminate so that
another member of staff (or a member of staff of a contractor, supplier or customer) is victimised
or less favourably treated than another on grounds of race, colour, marital status, religion, sex,
sexual orientation, ethnic or national origin, or legal political activity. Treatment shall at all times
be fair in terms of compensation, job security, work experiences, recognition of achievement and
opportunities for advancement.
Staff shall be recruited for their relevant aptitudes, skills, experience and ability; and their
advancement shall be on the same grounds according to the opportunities available within XYZ.
Employment practices including recruitment practices, contract terms and working conditions
shall be sensitive to the culture of the country concerned so as to ensure that company conduct
does not contribute to unacceptable social tensions or malaise. At the same time, care must
always be taken to ensure so far as is reasonably possible (a) that no harm occurs to those whose
services the company employs while they are engaged in work-related activity, and (b) that the
equal opportunity principles outlined in the preceding two paragraphs are applied.
XYZ seeks to ensure that employees have and exhibit mutual respect for each other at all times -
both at work and also at business-related functions. XYZ staff are expected to behave in this way
towards other employees, contractors, suppliers and customers. Harassment is unacceptable.
Discrimination - in action, writing or through remarks - is a form of harassment. Unwelcome
verbal and physical advances and derogatory remarks are other forms of harassment. It is a duty
of all XYZ employees to ensure that their behaviour at no time contributes towards the creation
of an intimidating, offensive or hostile work environment.
For staff to identify with XYZ and for XYZ to benefit most from the potential within its staff, the
approach to their staff of XYZ’s managers and supervisors must be as open and candid as
possible. Staff also must be made to feel that they can communicate upwards without formality,
rebuff, rancour or victimisation. While not abdicating their personal responsibility, managers
should delegate downwards to as great an extent as possible so as to empower and develop their
staff. Rigid hierarchical styles of management should be discouraged and staff may address any
issues directly above the level of their immediate supervisor if they judge this to be appropriate.

Conduct by people acting on XYZ’s behalf

In the introduction to Code I indicated that the XYZ person responsible should endeavour to
ensure that equivalent standards to those set out in this Code are followed in companies in which
XYZ has an interest but does not have control, and also in those businesses with whom XYZ has
contractual relationships. I also stated that it is the policy of the Board of XYZ that those
employed by or acting for XYZ should follow all the requirements of this Code. For instance,
contractors working on behalf of XYZ must ensure they act in accordance with this Code with
respect to confidentiality, conflicts of interest, the making and receiving of gifts and with respect
to their and their employees’ conduct towards XYZ’s employees and towards those whom the
contractors employ on XYZ’s business.
It is not accepted that management and staff of XYZ circumvent their obligations under this
Code by deputing unacceptable practices to intermediaries acting directly or indirectly on XYZ’s
behalf so that XYZ may achieve a desired end while endeavouring to avoid any opprobrium.

Conduct in the community, and charitable contributions

XYZ accepts that it has community obligations where it does business. We have a general duty
to avoid conduct prejudicial to the best interests of the communities where we do business. We
have a positive duty as well as a self interest, as corporate citizens committed within our business
to improving the well-being of individuals, to use our best endeavours to enhance community life.
Apart from altruistic motivations which are important, we believe that a positive approach to our
community relations is in the best long term interests of our company, of those who work within
it, and of our present and future customers.
Staff are asked to assist XYZ to be proactive in searching out appropriate opportunities to
contribute positively to community affairs and staff will be encouraged by XYZ to do likewise as
individuals. Our contributions may be in leadership by initiating or steering community projects;
they may be supportive in terms of donations of facilities, equipment, materials, time or cash.
To avoid waste, our community support should be targeted to improving economic or social
well-being in demonstrable ways with a particular emphasis upon improving the quality of life of
ordinary people. In nature and scale our support should be appropriate in each community while
bearing favourable comparison with other companies of similar standing. Our support should be
consistent with XYZ’s business interests and corporate image, and should have a clear potential
to enhance both of these.

Customer relations and product quality

XYZ has no future unless it continues to satisfy customer needs in a competitive environment
characterised by rapid technological advances. The company acknowledges the primacy of the
following business principles which it expects its staff, as of duty, to apply consistently in practice
and to encourage those who supply our ultimate customers to do likewise:
· We strive to ensure that the specifications of our products meet or exceed
customer requirements at economical price;
· We strive to provide services which are excellent value for money and are
delivered courteously and with sensitivity to our clients’ requirements;
· We endeavour in all circumstances to ensure that all information about
our products and services is reliable and a sufficient basis for fully informed
customer decision making and customer use;
· We will be truthful and not misleading in our public relations, marketing
and advertising;
· We are committed to satisfying enquiries, complaints and suggestions
thoroughly and promptly;
· We are committed to meeting or exceeding all statutory requirements with
regard to our products and services as well as to their marketing, sale, distribution
and subsequent after-sales support.

Grievance procedures
Every XYZ operating unit must have in place and comply with suitable procedures to ensure that
the concerns of staff on any issue related to this Code are considered promptly and thoroughly,
and that remedial action is taken where appropriate.

Please use your best endeavours to bring this Code appropriately to the attention of all personnel,
to all new employees, to our business partners and contractors as well as their staff and to any
others with whom we are associated or do business.

(Chairman’s Signature)