DYNACQ International Dynacq Healthcare Inc. - The Surgical Model of the Future

Whistleblower Policy

I. PURPOSE

To establish “whistleblower” procedures pursuant to Section 301 of the Sarbanes-Oxley Act of 2002, Section 10A of the Securities Exchange Act of 1934, as amended, Rule 10A-3 thereunder and the Charter of the Audit Committee (the “Committee”) of the board of directors of Dynacq Healthcare, Inc. (the “Company”).  Specifically, the “whistleblower” procedures set forth herein are intended to facilitate disclosures, encourage proper individual conduct and alert the Audit Committee to potential issues before encountering serious consequences.

 II.  POLICY

It is the policy of the Company to establish and maintain a structured and formal process to facilitate (1) the receipt, retention and treatment of complaints received by the Company regarding its accounting, internal accounting controls, auditing matters or violations of the Company’s Code of Conduct or Code of Ethics, and (2) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

In furtherance of this policy, the Company shall forward to all employees a notice (the “Notice”) in the form as attached hereto as Exhibit A that, among other things, (i) advises employees of their ability to make confidential and anonymous complaints regarding the Company’s accounting, internal accounting controls, auditing, or violations of the Company’s Code of Conduct or Code of Ethics, and (ii) provides employees with the contact information for making such complaints.  Such Notice shall be distributed in a manner designed to reach all employees (including those who do not have access to e-mail).  Finally, the Company shall publish its “whistleblower policy” with contact information on the Company’s website and include such information in any investor information kit to provide an avenue for complaints, regardless of source, to make confidential and anonymous complaints regarding the Company’s accounting, internal accounting controls, auditing, or violations of the Company’s Code of Conduct or Code of Ethics.

 III.  PROCEDURES

Employees or other persons with concerns regarding the matters above in the Policy section above may report their concerns and/or complaints to the following address, e-mail address and/or phone number or any other entity designated by the Company to receive such concerns and/or compliants.

Phone Number
Address
E-Mail Address
1-877-888-0002

Dynacq Healthcare, Inc.
Atten: Administrator of Whistleblower Policy
4301 Vista Road
Pasadena, Texas 77504

acc@dynacq.com

Immediately upon receipt of a complaint, the entity designated by the Company to receive such concerns and/or complaints will forward the complaint to the Administrator. The Administrator shall forward a copy of any written complaint (or a written description of the substance thereof of any verbal complaints) to the Committee chairperson or other designated member of the Committee.  The copy of the written complaint or written description of the verbal complaint forwarded to the Administrator will be initially evaluated to determine if the complaint involves accounting, internal accounting controls, auditing matters, or violations of the Company’s Code of Conduct or Code of Ethics.  If the complaint does not appear to involve accounting, internal accounting controls, auditing matters, or violations of the Company’s Code of Conduct or Code of Ethics, the complaint will be forwarded by the Committee chairperson or other designated member to the Company’s general counsel to handle such complaint in a manner in which he or she deems appropriate.          

However, if the complaint appears to involve accounting, internal accounting controls, auditing matters, or violations of the Company’s Code of Conduct or Code of Ethics, the complaint will be reviewed by the Committee chairperson at which time he or she will provide an initial inquiry into the allegation.  A formal Committee meeting will be scheduled within 20 days of receipt of the alleged complaint if the Committee chairperson deems the written complaint or written description of the verbal complaint to rise to the level of a potential problem that may result in a serious consequence of an immediate nature.

One or more members of the Committee or the Company’s general counsel may be delegated the authority to investigate the complaint.  In conducting any such investigation, the Committee or designee shall maintain the confidentiality of any party making a complaint or submission on a confidential basis, to the fullest extent possible consistent with the need to conduct an adequate review thereof.  If the Committee so requests, a written report to the Committee of all findings of fact, conclusions and proposed recommendation for remedial action, if any, will be submitted within the timeframe set by the Committee.  Delegation decisions will be made on a case-by-case basis, depending on the nature and significance of the complaint.

For complaints reviewed by the Committee chairperson that do not appear to rise to the level of a potential problem that may result in a serious consequence of an immediate nature, the Committee will convene as appropriate to review both written and verbal complaints and their impact on the Company’s financial statements and public reports.  Such meetings to review complaints will be held without the Company’s independent auditors or internal personnel being present unless requested by the Committee. 

Those conducting an investigation on behalf of the Committee are vested with all of the authority and power of the Committee, including the power to retain advisors and independent counsel.

The proceedings of the Committee and investigation will be documented and retained for a period of at least seven (7) years.  All records will be treated as confidential information.

To the fullest extent practicable consistent with the need to conduct an adequate review thereof, the Committee shall involve in-house counsel or outside counsel in such investigation in order to maintain, to the extent possible, attorney-client privilege with respect to any documents or other materials received or prepared in connection with the investigation of any complaint.

The status of all pending complaints will be reviewed at each regularly scheduled Committee meeting and any and all complaints that involve accounting, internal accounting controls, auditing matters, or violations of the Company’s Code of Business Conduct and Ethics and have not previously been presented to the Committee will be reviewed

The Committee will provide a regular update of the status of the investigation of any pending complaint to the Company’s general counsel not less than once each fiscal quarter for the evaluation of whether any disclosure is required with respect to such complaint in the Company’s filings with the SEC.  In addition, in the case of any complaint or development with respect to a pending complaint that may be material to the Company, the Committee will immediately notify the general counsel as to such complaint or development.

For record-keeping purposes, within 10 days following the end of each fiscal quarter, the Administrator shall forward to the Company’s general counsel a list of each complaint forwarded by the Administrator to the Committee chairperson or other designated member of the Committee. 

Should the identity of the employee making the complaint be known, the Committee will monitor any disciplinary action against the employee to determine whether it could subject the Company to anti-retaliation liability.  Pursuant to Section 806 of the Sarbanes-Oxley Act of 2002, the Company and its officers, employees and agents shall not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of his or her employment based upon lawful actions of such employee with respect to good faith reporting of complaints regarding the Company’s accounting and auditing matters or as otherwise specified in Section 806 of the Sarbanes-Oxley Act of 2002.

The Committee will review these “whistleblower” procedures annually.

 IV.  ADMINISTRATION

The Audit Committee has responsibility for administration of this policy.


Approved: Chiu Chan, Chief Executive Officer                                        Date: October 28, 2004         

Exhibit A

DYNACQ HEALTHCARE, INC.

Procedures for Submitting Complaints or Concerns Relating
to the Company’s Accounting, Internal Accounting Controls,
Auditing Practices or Violations of the Company’s Code of Conduct and Code of Ethics

Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the Audit Committee of the board of directors of Dynacq Healthcare, Inc. (the “Company”) has established procedures for:

  • the receipt, retention and treatment of complaints received by the Company regarding its accounting, internal accounting controls, auditing matters or violations of the Company’s Code of Conduct and Code of Ethics; and
  • the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

If you have any good faith complaints or concerns about the Company’s accounting, internal accounting controls, auditing practices or violations of the Company’s Code of Conduct and Code of Ethics, we encourage you take advantage of these procedures to make us aware of your complaint or concern.

Employees or other persons with concerns regarding the matters in the Policy section above may report their concerns and/or complaints to the following address, e-mail address and/or phone number or any other entity designated by the Company to receive such concerns and/or complaints.

Phone Number
Address
E-Mail Address
1-877-888-0002

Dynacq Healthcare, Inc.
Atten: Administrator of Whistleblower Policy
4301 Vista Road
Pasadena, Texas 77504

acc@dynacq.com

Immediately upon receipt of a complaint, the entity designated by the Company to receive such concerns and/or complaints will forward the complaint to the Administrator. The Administrator shall forward a copy of any written complaint (or a written description of the substance thereof of any verbal complaints) to the Committee chairperson or other designated member of the Committee. The copy of the written complaint or written description of the verbal complaint forwarded to the Administrator will be initially evaluated to determine if the complaint involves accounting, internal accounting controls, auditing matters, or violations of the Company's Code of Conduct or Code of Ethics. If the complaint does not appear to involve accounting, internal accounting controls, auditing matters, or violations of the Company's Code of Conduct or Code of Ethics, the complaint will be forwarded by the Committee chairperson or other designated member to the Company's general counsel to handle such complaint in a manner in which he or she deems appropriate.

In making a complaint or submission, an employee of the Company may request that such complaint be treated in a confidential manner (including the identity of the employee making the complaint to remain anonymous).

Under the Sarbanes-Oxley Act, the Company and its management are prohibited from discharging, demoting, suspending, threatening, harassing or in any manner discriminating against any employee in the terms and conditions of his or her employment based upon any lawful actions of such employee with respect to a complaint relating to the Company’s accounting, internal accounting controls, auditing matters or violations of the Company’s Code of Conduct and Code of Ethics that is made in good faith.

 

Copyright © 2004 Dynacq Healthcare, Inc. All rights reserved.
Privacy Policy