Code of Conduct and Business Ethics
INTRODUCTION
NORTH EUROPEAN OIL ROYALTY TRUST (the “Trust”) and its Trustees
(the “Trustees”) have a strong commitment to business ethics and to complying with the laws
that govern the conduct of the Trust worldwide. To implement this commitment, the Trustees
have developed this Code of Conduct and Business Ethics (the “Code”).
The Code applies to all employees, trustees, officers, agents and consultants
(together, “employee or employees”) of the Trust. The Chairman of the Audit Committee of the
Trustees serves as a compliance contact for any violation related to the Trust’s financial practices
and dealings (the “Compliance Director”).
The Code is available in printed form and every employee must read and
understand the Code and provide an annual certification that they have read and understand and
have complied with the Code.
THE CODE
A. CONDUCT AND DISCIPLINE
The Trust’s objective is to maintain a creative, productive and positive work
environment. In order to provide such an environment (and also to comply with laws applicable
to the Trust and ensure our ability to provide high quality services to the unit owners), the
Trustees have adopted this Code, which establishes rules and standards regarding employee
behavior and performance and constitutes a part of the terms and conditions of employment of
each employee of the Trust.
B. CONFLICT OF INTEREST/CORPORATE OPPORTUNITIES
An actual or potential conflict of interest occurs when an employee is in a position
to influence a decision that may result in a personal gain for that employee or for a relative as a
result of the Trust’s business dealings. For the purposes of this policy, a relative is any person
who is related by blood or marriage, or whose relationship with the employee is similar to that of
persons who are related by blood or marriage. Personal gain may result not only is cases where
an employee or relative has a significant ownership in a firm with which the Trust does business,
but also when an employee or relative receives any kickback, bribe, substantial gift, or special
consideration as a result of any transaction or business dealings involving the Trust.
Full-time employees have a primary, professional obligation and duty to the
Trust. Therefore, all such employees should keep any outside activity (such as self-employment)
totally separate from employment with the Trust. Full-time employees are expected to devote
the use of the Trust’s time working on behalf of the Trust. No outside activities should involve
the use of the Trust’s time, name, influence, assets, funds, materials, facilities or employees.
Employees, officers and directors are prohibited from taking for themselves
personally opportunities that are discovered through the use of Trust property, information or
position without the consent of the Trustees. No employee may use Trust property, information,
or position for improper personal gain. Employees, officers and Trustees owe a duty to the Trust
to advance its legitimate interests when the opportunity to do so arises.
C. CONFIDENTIALITY
All employees are required to keep all confidential information (as described
below) confidential during employment as well as thereafter, and not to use, disclose or
communicate that confidential information other than as an employee.
The use of the term “confidential information” includes information in whatever
form regarding the business, accounts, finances, trading, planning, software or know-how of the
Trust. It also includes such information designated by the Trust as confidential or information
that an employee is aware is subject to an obligation of confidentiality. Trust records, reports,
data, software and documents are confidential and employees are not permitted to disclose or
release them to persons who are not Trustees, officers or employees of the Trust, remove them or
make copies of them, in whole or in part, without prior written approval of your supervisor.
Except as required in the performance an employee’s duties, or if required by law
after consulting with the Trust’s Compliance Director, employees should not discuss Trust
business with anyone who does not work for the Trust. Furthermore, employees should refrain
from discussing or disclosing confidential information while in any non-private setting.
D. CORPORATE COMMUNICATIONS POLICY
The Trust strives to be consistent in its communications with others. To achieve
this goal, all contact with investors, analysts and members of the media should be handled by the
Managing Director or his designee. Employees of the Trust should direct any and all inquiries
from investors, analysts or members of the media, including requests for information and
interviews, to the Managing Director. All inquiries from regulatory authorities or government
representatives should be referred either to the Managing Director or the Audit Committee
Chairman.
E. DRUGS AND ALCOHOL
The Trust prohibits the unauthorized use of alcoholic beverages while on Trust
premises, on Trust time, or reporting for work while under the influence of alcohol. Likewise,
the Trust prohibits the unlawful possession, manufacture, sale, distribution or use of a controlled
substance, or reporting for work while under the influence of such a substance, other than
medically prescribed drugs. This policy also requires that the Trust abide by applicable laws and
regulations relative to the use of alcohol or other controlled substances.
F. POLICY AGAINST DISCRIMINATION
The Trust prohibits discrimination against any employee or prospective employee on the basis of sex, race, color, age, religion, sexual preference, marital status, national origin,
disability, ancestry, political opinion or any other basis prohibited by the laws that govern our
operations.
G. POLICY AGAINST HARASSMENT
The Trust prohibits all forms of unlawful harassment. The Trust expects all
personnel to adhere to a simple standard, namely, that all employees must be treated with
respect. The Trust will vigorously enforce its policy regarding harassment. All employees are
expected to understand what constitutes harassment and accordingly avoid behavior or situations
which could have even the appearance of or be interpreted as harassment of another person.
Examples include derogatory comments based on racial or ethnic characteristics and unwelcome
sexual advances.
H. ELECTRONIC COMMUNICATION
Electronic communications include all aspects of voice, video, and data
communications, such as voice mail, e-mail, fax, and Internet. Employees should use electronic
communications primarily for business purposes. Occasional personal use is permitted so long
as such use does not interfere with the Trust’s needs and operations, is not for personal gain or
for any other improper purpose and does not otherwise violate this Code. Among other things,
employees should not participate in any online forum where the business of the Trust or its unit
owners or suppliers is discussed: this may give rise to a violation of the Trust’s confidentiality
policy or subject the Trust to legal action for defamation. The Trust reserves the right to inspect
all electronic communications involving the use of the Trust’s equipment, software, systems, or
other facilities (“Systems”) and Employees should not have an expectation of privacy when
using Trust Systems.
I. INTEGRITY OF RECORDS AND ACCOUNTING
Accuracy and reliability in the preparation of all business records is mandated by
law and is of critical importance to the Trust’s decision-making process and to the proper
discharge of the Trust’s financial, legal and reporting obligations. The books and records
provisions of the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other applicable laws
require the Trust to maintain accurate books and records and to devise an adequate system of
internal controls. Such laws may provide for criminal and civil penalties for violations of these
requirements.
All business records, expense accounts, vouchers, bills, payrolls, service records,
reports to government agencies and other reports must accurately reflect the facts. All corporate
funds and assets must be recorded in accordance with Trust procedures. The books and records
of the Trust must be prepared with care and honesty and must accurately reflect each transaction
recorded therein. It is the Trust’s policy that all transactions will be recorded promptly and
documented properly and accurately on the books of the Trust. False or misleading entries in
such records are unlawful and are not permitted. No undisclosed or unrecorded funds or assets
shall be established for any purpose.
J. ENTERTAINMENT, GIFTS AND PAYMENTS
The payment of Trust funds to any officer, employee or representative of any
customer or supplier in order to obtain any benefit is strictly prohibited. Trust employees shall
not seek or accept any personal gifts, payments, fees, services, valuable privileges, vacations, or
pleasure trips without a business purpose, or loans from any person or business organization that
does or seeks to do business with, or is a competitor of, the Trust. No employee shall accept
anything of value in exchange for referring business opportunities to another business.
Gifts or entertainment of nominal value motivated by commonly accepted
business courtesies may be offered or accepted, but not if such gifts or entertainment would
reasonably be expected to cause favoritism or a sense of obligation to the donor.
K. TRADING IN TRUST UNITS
While the Trust encourages its officers, employees and Trustees to own units of
beneficial interest in the Trust, and thus indicate their commitment to the long term prospects of
the Trust, such ownership is subject to restrictions imposed by the Rules of the Securities and
Exchange Commission and of the New York Stock Exchange. No officer, employee or Trustee
may purchase or sell units without coordination with and permission of the Compliance Officer
for the Trust. At the present time, the Managing Director is designated as the Compliance
Officer (except for his own trades for which the Chairman of the Audit Committee is so
designated). No officer, employee or Trustee may engage in short selling transaction for units of
the Trust.
L. RELATED PERSON TRANSACTIONS
The Trust recognizes that Related Person Transactions (as defined below) may
raise questions among unit owners as to whether those transactions are consistent with the best
interests of the Trust and its unit owners. It is the Trust’s policy to enter into or ratify Related
Person Transactions only when the Trustees determine that the Related Person Transaction in
question is in, or is not inconsistent with, the best interests of the Trust and its unit owners. In
making such determinations, the Trustees shall consider all of the relevant facts and
circumstances available to the Trustees, including (if applicable): the benefits to the Trust; the
impact on a Trustee’s independence; the availability of other sources for comparable products or
services; the terms of the transaction; and the terms available to unrelated third parties or to
employees generally. No Trustee shall participate in any review, consideration or approval of
any Related Person Transaction with respect to which such Trustee or any of his or her
immediate family members is the Related Person.
A “Related Person Transaction” is a transaction, arrangement or relationship (or any series of
similar transactions, arrangements or relationships) in which the Trust was, is or will be a
participant, and in which any Related Person had, has or will have a direct or indirect material
interest.
A “Related Person” means (1) any person who is, or at any time since the beginning of the
Trust’s last fiscal year was, a Trustee or executive officer of the Trust or a nominee to become a
Trustee of the Trust; (2) any person who is known to be the beneficial owner of more than 5% of
Trust’s units; and (3) any immediate family member of any of the foregoing persons, which
means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, sonin-
law, daughter-in-law, brother-in-law, or sister-in-law of the Trustee, executive officer,
nominee or more than 5% beneficial owner, and any person (other than a tenant or employee)
sharing the household of such Trustee, executive officer, nominee or more than 5% beneficial
owner.
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