In order to comply with the Sarbanes-Oxley Act of 2002 (the "Act") together with the implementing rules of the Securities and Exchange Commission (the "Commission"), the Audit Committee of the Board of Directors of EuroDry Ltd. (the "Company") has developed and approved a procedure to receive certain complaints and allegations as described herein.
A. RESPONSIBLITIES OF AUDIT COMMITTEE WITH RESPECT TO SPECIFIED REPORTS
1. The Audit Committee shall receive, retain, investigate and act on complaints and concerns of employees ("Reports") regarding:
a. questionable accounting, internal accounting controls and auditing matters, including those regarding the circumvention or attempted circumvention of internal accounting controls or that would otherwise constitute a violation of the Company's accounting policies (an "Accounting Allegation") which may include the following:
b. compliance with legal and regulatory requirements (a "Legal Allegation.").
c. retaliation against employees who make Accounting Allegations or Legal Allegations (a "Retaliatory Act").
Any employee of EuroDry Ltd. may submit a good faith report regarding accounting or auditing matters to the Chairman of the Audit Committee without fear of dismissal or retaliation of any kind. EuroDry Ltd. is committed to achieving compliance with all applicable securities law and regulations, accounting standards, accounting controls and audit practices. The Audit Committee will oversee treatment of employee concerns in this area.
As the ethical and professional conduct of our business is of outmost importance to us, members of the public who become aware of or suspect breaches of our internal policies or illegal actions by any employee of the company are also encouraged to report their concerns through the Whistleblower hotline." In order to facilitate the reporting of employee complaints, the Audit Committee has established the accompanying procedures for (1) the receipt, the retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters; and (2) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
B. PROCEDURES FOR RECEIVING REPORTS
1. Any Report whether open, confidential or anonymous shall be made directly to the Chairman of the Audit Committee. The Chairman of the Audit Committee will designate one member of the Audit Committee to oversee and direct the Company's whistleblower policies and procedures. The contact information will be distributed to all Company employees.
2. Each Report that is made directly to the Chairman of the Audit Committee, whether openly, confidentially or anonymously, shall be reviewed by the Chairman of the Audit Committee, who may, in his discretion, consult with any member of senior management who is not the subject of the allegation and who may have appropriate expertise to assist the Audit Committee. The Audit Committee shall determine whether the Audit Committee or management should investigate the Report, taking into account the considerations set forth in Section C below.
C. CONSIDERATIONS RELATIVE TO WHETHER THE AUDIT COMMITTEE SHOULD INVESTIGATE A REPORT
In determining whether the Audit Committee should investigate a Report, the Chairman of the Audit Committee shall consider, among other factors that are appropriate under the circumstances, the following:
1. Who is the alleged wrongdoer? If an executive officer or other management official is alleged to have engaged in wrongdoing, that factor alone may influence the decision in favor of the Audit Committee conducting the investigation.
2. How serious is the alleged wrongdoing? The more serious the alleged wrongdoing, the more appropriate that the Audit Committee should undertake the investigation. If the alleged wrongdoing would constitute a crime involving the integrity of the financial statements of the Company, that factor alone may influence the decision in favor of the Audit Committee conducting the investigation.
3. How credible is the allegation of wrongdoing? The more credible the allegation, the more appropriate that the Audit Committee should undertake the investigation. In assessing credibility, the Audit Committee should consider all facts surrounding the allegation, including but not limited to whether similar allegations have been made in the press or by analysts.
The Chairman of the Audit Committee will maintain a log of all complaints, tracking their receipt, investigation and resolution and shall prepare a quarterly summary report thereof for the Audit Committee.
The Audit Committee and/or management shall maintain records of all steps taken in connection with any investigation of a Report including investigation of Reports that are found to be unsubstantiated. Such records will be retained for a period of seven years.
E. PROCEDURES FOR MAKING REPORTS
Any employee may report to the Audit Committee openly, confidentially or anonymously any Accounting Allegation or Legal Allegation or report of a Retaliatory Act. Accounting Allegations, Legal Allegations and reports of a Retaliatory Act can be made in writing to the Chairman of the Audit Committee as follows:
Mr Panos Kyriakopoulos
PO BOX 61303
151 04 AMAROUSION -GREECE
Alternatively anyone may also report violations in writing to the following email address firstname.lastname@example.org. As mentioned above any information will be kept strictly confidential, thus there should be no fear of any form of retaliation. The whistleblower email will be accessible only to the Chairman of the Audit Committee.