CIRI's Code of Ethics & Practice Guidelines
CIRI’s Code of Ethics and Practice Guidelines are essential to achieving its mission to contribute to the transparency and integrity of the Canadian capital market by advancing the practice of investor relations, the professional competency of its members and the stature of the profession.
CIRI members must comply with the Code of Ethics and Practice Guidelines. CIRI members who are sanctioned by regulatory or judicial bodies for violating laws or regulations in conjunction with their IR responsibilities may, upon recommendation of the CIRI Membership Committee, have their memberships terminated and/or the CPIR designation revoked by the CIRI Board of Directors, in keeping with the provisions of CIRI's Bylaws.
An effective investor relations program enables companies to achieve the highest sustainable price for its securities – accurately and fully reflecting the company’s fundamental value. The practice of investor relations involves identifying current and potential investors and providing them with publicly available information that facilitates informed investment decisions.
Investor Relations Defined
Investor relations (IR) 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.
IR activities are diametrically opposed to ‘stock promotion’, which seeks the highest attainable share price as quickly as possible without regard to fundamental value. Unlike stock promoters, IR professionals 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 IR at every opportunity.
Establishing and maintaining corporate and personal credibility is essential to an effective IR 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.
IR professionals – like all corporate spokespersons – must be completely familiar with their company's or clients’ disclosure records in order to guard against unauthorized release of material, non-public information. (See CIRI's Standards and Guidance for Disclosure and Model Disclosure Policy, Fourth Edition).
A successful IR program requires the commitment and support of senior management and the Board of Directors – and recognition of IR’s value creation potential. Corporate IR professionals must be fully informed participants in their company’s 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 professionals listen to the investment community and relay shareholder and analyst perceptions, issues and concerns to management and the Board of Directors reflecting the important role of IR in strategic planning.
IR professionals 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, if applicable) 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. IR professionals are expected to avoid providing clients or employers with inside information gleaned from other work experience.
IR professionals may hold securities of companies for which they work but should inform the companies of such holdings.
Generally, IR professionals 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 the IR professional.
Approved by CIRI Board of Directors - July 2003
Revised by CIRI Board of Directors - April 2013