Practice Guidelines

Effective investor relations enables companies to achieve the highest sustainable price for their securities - accurately and fully reflecting their fundamental value. The practice of investor relations involves identifying current and potential investors and providing them with publicly available information that facilitates knowledgeable investment decisions.

Investor Relations Defined

Investor relations is the strategic management responsibility that integrates the disciplines of finance, communications and marketing to achieve an effective two-way flow of information between a public company and the investment community, in order to enable fair and efficient capital markets.

Investor relations is diametrically opposed to stock promotion, which seeks the highest attainable share price as quickly as possible without regard to fundamental value. Unlike stock promoters, investor relations practitioners do not attempt to directly influence trading volume, liquidity or stock price. Moreover, they do not recommend stocks or trading strategies, provide investment advice or forecast share price performance. Some promoters attempt to confuse investors by calling themselves IR consultants. It is therefore important that CIRI and its members continue to underline the distinction by clearly communicating the practice of professional investor relations at every opportunity.

Establishing and maintaining corporate and personal credibility is essential to an effective investor relations program. Credibility is developed by building relationships with the investment community based on honesty, reliability and integrity.

Credibility is a fragile commodity. Disregarding its significance can cause long-term or irreparable damage to investor perceptions of companies and their representatives.

Information must be disclosed consistent with timely disclosure rules and presented in a clear and truthful manner.

Investor relations practitioners - like all corporate spokespersons - must be completely familiar with companies' disclosure records in order to guard against unauthorized release of material, nonpublic information. (See CIRI's Standards and Guidance for Disclosure and Model Disclosure Policy, Fourth Edition).

A successful investor relations program requires the commitment and support of senior management and the board of directors - and recognition of its value creation potential. Investor relations officers must be fully informed participants in their companies' strategic decision-making processes in order to communicate with authority and confidence. Senior executives must be prepared to share key strategies with investors and disclose pertinent financial and operating information.

In addition to effectively relaying corporate information to external audiences, IR practitioners assess investor perceptions of companies, their competitors and industries. Market intelligence should be provided to managements and boards of directors - reflecting investor relations' important role in strategic planning.

IR practitioners must remain free of conflicts of interest in discharging their professional responsibilities and protect the confidentiality and integrity of corporate information. They must be sensitive to situations where conflicts of interest or the perception of conflicts could exist. Consultants may work for clients with conflicting goals only with the parties' consent after disclosure of all relevant facts.

Consultants are virtually always insiders of client companies and therefore must observe their clients' insider trading policies, in addition to securities laws. Insiders should pre-clear transactions in their employers' or clients' securities, including the exercise of stock options, with their employers' or clients' corporate secretaries or other designated officers. This practice is intended to protect the reputation of everyone involved and avoid even the appearance of impropriety. Consultants - and IROs - are expected to avoid providing clients or employers with inside information gleaned from other work experience.

IROs and consultants may hold securities of companies for which they work but should inform the companies of such holdings.

Generally, consultants and IROs are compensated in cash but they may also receive stock, stock options and/or warrants. While some non-cash compensation is common for IROs, it is relatively rare for consultants and usually involves small companies with limited cash flow. Compensation should be structured in a manner that does not compromise the objectivity and professionalism of IROs or consultants.

Approved by CIRI Board of Directors - July 2003