PEREGRINO HERMITAGE LTD.
Conflict of Interest Policy
What is the Purpose of this Policy?
Peregrino Hermitage Ltd. (the “Organization”) requires individuals responsible for its activities to advance the interests of the Organization over any interests which may be adverse to the Organization. The public trust upon which the Organization relies requires from the Organization, and specifically from those individuals responsible for its activities, a mark of integrity that assures the public that contributions made to the Organization are used exclusively to further its activities and not to benefit individuals at the expense of such activities. Further, such individuals owe fiduciary duties to the Organization that require them to act in good faith, with ordinary care, and in a manner they believe to be in the best interests of the Organization, and that prohibit them from benefiting personally to the detriment of the Organization. Finally, as a nonprofit, tax-exempt organization, the Organization must comply with the requirements of state corporation law and the Internal Revenue Code.
This Policy provides general guidelines designed to help ensure that all actions taken by directors and officers of the Organization satisfy the above standards.
To Whom Does This Policy Apply?
This Policy applies to directors and officers of the Organization. These individuals shall be referred to as “Responsible Individuals.”
What is a Conflict of Interest?
A Responsible Individual has a conflict of interest when he or she either has the potential to benefit personally at the expense of the Organization or has a fiduciary duty to another entity that may prevent him or her from acting in the best interests of the Organization. For example, a Responsible Individual has a conflict of interest if he or she has a contractual or employment relationship (or proposed relationship) with the Organization. More generally, conflicts of interest commonly arise through material interests that Responsible Individuals have in entities whose best interests may be adverse to the best interests of the Organization. Such entities include those with whom the Organization has business relationships, as well as those which provide services or perform activities similar to those of the Organization and which obtain support from sources likely to support the Organization (these entities are referred to in this Policy as “Related Entities”). The material interests in Related Entities that might give rise to a conflict of interest include both direct interests and indirect interests.
Examples of direct interests in a Related Entity include:
(a) owning stock, holding debt, or having other proprietary interests (e.g., partner, trustee, beneficiary) in the entity;
(b) being an officer, director or employee of the entity;
(c) receiving payment for services with respect to individual transactions between the entity and the Organization; and
(d) receiving personal gifts or loans from the entity.
Examples of indirect interests in a Related Entity include when any of the following persons have a direct interest in a Related Entity:
(a) a family member of a Responsible Individual (family member is defined for these purposes as all persons related by blood or marriage);
(b) an estate or trust of which the Responsible Individual or member of his or her family is a beneficiary, personal representative, or trustee; and
(c) a company of which a member of the family of the Responsible Individual is an officer, director, or employee, or in which he or she has ownership or other proprietary interests.
When and How Must a Conflict of Interest Be Disclosed?
Responsible Individuals shall scrutinize their interests, direct or indirect, in other entities to identify any conflicts of interest. Disclosure as to any conflict of interest (or confirmation that there are not any conflicts of interests) is to be made in writing annually by all Responsible Individuals. Further, in the event a conflict of interest arises which has not previously been disclosed, the Responsible Individual shall disclose such conflict of interest as soon as possible. The information disclosed in the form shall be treated as confidential and shall not be disclosed by the Organization, except to the extent disclosure is required to consider a conflict of interest or for any other legitimate business purpose as determined in the sole discretion of the Organization. All information disclosed shall remain on file in the corporate records of the Organization.
What Procedures are Required to Authorize a Transaction Involving a Conflict of Interest?
The Organization shall not enter into a transaction in which a Responsible Individual has a conflict of interest unless a determination is made according to the following procedures that the transaction is in the Organization’s best interests and that its terms are fair to the Organization.
The Board of Directors may approve a transaction involving a conflict of interest if a majority of the disinterested Directors, even though they may be less than a quorum, determine in good faith that the transaction is fair and reasonable as to the Organization and in the Organization’s best interests. Such determination must be made after disclosure of all of the material facts as to the relationship of the Responsible Individual with the Related Entity and after reasonable investigation and deliberation regarding the transaction, and it should be documented in the official minutes of the Board of Directors.
Any transaction which, but for the presence of a conflict of interest, could be approved by an officer or employee of the Organization must receive prior approval by two officers of the Organization, none of whom shall have a conflict of interest in the transaction. If such approval is not feasible, the transaction must receive approval by the Board of Directors or a committee of the Board as described above.
When May a Responsible Individual Appropriate a Corporate Opportunity?
A Responsible Individual appropriates a corporate opportunity when he or she is aware of an opportunity for the Organization to engage in an activity that is related to its present or prospective activities and takes advantage of the opportunity personally or for the benefit of one or more third parties. Before appropriating a corporate opportunity, a Responsible Individual must inform the Organization of the opportunity and obtain approval from the Organization. The Organization may provide approval only after informed evaluation and a determination by disinterested officers or directors (depending upon whether the opportunity would normally require approval by the Board of Directors) that the Organization should not pursue such corporate opportunity.
How Does This Policy Relate to Other Legal Requirements?
In the event that a Responsible Individual is also a “disqualified person” (as defined by the intermediate sanction rules applicable to tax-exempt organizations as set forth in the Internal Revenue Code and the Treasury Regulations promulgated thereunder), any transaction between the Organization and the Responsible Individual (including family members and entities related to such person) shall be approved by the Board of Directors in accordance with this Policy and with such other substantive and procedural requirements as may be necessary to satisfy the applicable intermediate sanction rules.
This Policy and the requirements set forth herein are not intended to affect the validity of a transaction as provided under applicable state law.