I
tem
10.
Directors, Executive Officers And Corporate Governance
The
following table sets forth information concerning management of our
Company as of the date of filing of this report.
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Name
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Age
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Position
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Gordon
Dihle
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62
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Chief
Executive Officer, President, Director
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Charlene
Fowler
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38
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Chief
Financial Officer and Secretary
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Resumes
Gordon Dihle
– Mr. Dihle received a B.S. in Accounting
and Business Administration, Summa Cum Laude (1976) at Dickinson
State University, Dickinson, ND, and earned a J.D. with distinction
at the University of North Dakota (1980) in Grand Forks, ND. Mr.
Dihle is a CPA licensed with the state of North Dakota, a member of
the AICPA, and an attorney licensed with the state of Colorado. Mr.
Dihle has been employed as an attorney and has been principal of
Corporate Legal, LLC in Centennial Colorado since 1996 and was
concurrently employed at Spencer Edwards, Inc., a securities
brokerage firm from 2002 until November 2013 in various capacities
as a general and financial principal. Mr. Dihle has been the Chief
Executive Officer of the Company since May 22, 2017, a Director and
Chairman of the Board of the Company since November 7, 2013, and
had previously acted as general counsel for the Company from
September 2009 until February 2011. Previously, Mr. Dihle served as
a Director and President of Capital Natural Resources, Inc., a
former subsidiary of the Company. Mr. Dihle also serves as in house
legal counsel to the Company.
Charlene Fowler
– Ms. Fowler was appointed the Chief
Financial Officer and Secretary of the Company effective November
15, 2018. Ms. Fowler had been employed as the Corporate Accountant
for the Company since March 2018, and was previously the Corporate
Accountant and HR Analyst for the Company from 2010 through 2012.
From 2013 to 2018, Ms. Fowler was employed with unaffiliated
entities as an Accounting Assistant, Compliance Program Analyst and
Guest Service Manager in Minot, North Dakota, Lynchburg, Virginia
and Minot, North Dakota, respectively.
Director Independence
The market where the Company is listed does not have listing rules
which requires the Company to have a board comprised of a majority
of independent directors or separate committees comprised of
independent directors. We use the definition of
“independence”
under the NASDAQ Rules, as applicable
and as may be modified or supplemented from time to time and the
interpretations thereunder, to determine if the members of our
Board are independent. . Moreover, the Company falls within the
definition of a “Controlled Company” under NASDAQ Rule
4530(c)(5). In making this determination, our Board considers,
among other things, transactions and relationships between each
director and his immediate family and us, including those reported
in this Proxy Statement under the caption
“Certain Relationships
and Related Transactions.”
The purpose of this review is to determine whether
any such relationships or transactions are material and, therefore,
inconsistent with a determination that the directors are
independent. On the basis of such review and its understanding of
such relationships and transactions, our Board has determined that
none of our Board members is an independent
director.
The
Board of Directors will continually assess its size, structure and
composition, taking into consideration its current strengths,
skills and experience, and the requirements and strategic direction
of
the Company
. As required,
The Board of Directors will seek out and recommend suitable
candidates for consideration as members of the Board of
Directors.
Board Committees
Audit Committee
The
Company’s Audit Committee is presently composed of Gordon
Dihle, who does not meet the independence requirements of the
national securities exchanges or national securities associations
with respect to audit committee membership. As discussed above, the
Company is not listed on a national securities exchange, but is
listed on the OTC Link LLC market, which has no requirement
mandating its listing companies to have independent directors.
However, also as discussed above, the Company has adopted (and
identified) with the NASDAQ Market’s definition of
“independence.” As also identified above, the Company
is a Controlled Company and is therefore exempt from the
requirements of NASDAQ Rule 4530 which requires members of the
audit committee be independent. The Audit Committee oversees the
external audit coverage, including the annual nomination of the
independent accountants, reviews accounting policies and policy
decisions, reviews the financial statements, including interim
financial statements and annual financial statements, together with
auditor’s opinions, inquiries about the existence and
substance of any significant accounting accruals, reserves or
estimates made by management, meets privately with the independent
accountants to discuss all pertinent matters and reports to the
Board regarding its activities. The Audit Committee held four
regular meetings in 2017.
The
Board has determined with the assistance of our outside counsel
that Gordon Dihle, Chairman and sole member of the Audit Committee,
shall be the “
audit
committee financial expert
” as such term is defined in
Item 407(d)(5)(ii) of Regulation S-K adopted by the
SEC.
The
Audit Committee has adopted a formal, written charter, which was
amended and adopted on June 23, 2016. The charter specifies the
scope of the Audit Committee’s responsibilities and how it
should carry out those responsibilities. The charter also outlines
the Audit Committee’s pre-approval policies and procedures
that require the Audit Committee to review and approve, in advance,
fees proposed to be charged to the Company by the auditors for each
audit and non-audit service. The Audit Committee Charter must be
filed every three years and will be refiled in 2019.
Audit Committee Related Party Transaction Policy and
Procedures
It is
the policy of the Board of Directors of the Company that all
related party transactions shall be submitted for review to the
Company’s Audit Committee in accordance with the
Company’s Related Party Transaction Policy and Procedures.
The Board has determined that the Audit Committee is best suited to
review all related party transactions.
Report of Audit Committee
The
Audit Committee met to review the audited financials for the fiscal
year ended December 31, 2017, with members of management and the
independent accountants. The independent accountants discussed with
the Audit Committee new accounting policies, management’s
judgments and use of accounting estimates in the preparation of the
financial statements and significant audit adjustments. Annually,
the independence of the auditors is discussed and the auditors
provide information regarding their independence required by
Independence Standards Board No. 1, as may be modified or
supplemented.
As of
the date of this report we do not have a Compensation Committee, a
Corporate Governance Committee, and a Nominating Committee, but
expect to form such Committees in the near future. Thus, there is a
potential conflict of interest in that our directors have the
authority to determine issues concerning management compensation,
in essence their own, and audit issues that may affect management
decisions. We are not aware of any other conflicts of interest with
any of our executives or directors.
There
are no family relationships among any of our officers or
directors.
Involvement in Certain Legal Proceedings
To our
knowledge, except as disclosed below none of our directors and
executive officers have been involved in any of the following
events during the past ten years:
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1.
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any
bankruptcy petition filed by or against such person or any business
of which such person was a general partner or executive
officer;
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2.
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any
conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
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3.
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being
subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any type of business,
securities or banking activities or to be associated with any
person practicing in banking or securities
activities;
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4.
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being
found by a court of competent jurisdiction in a civil action, the
SEC or the Commodity Futures Trading Commission to have violated a
Federal or state securities or commodities law, and the judgment
has not been reversed, suspended, or vacated;
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5.
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being
subject of, or a party to, any Federal or state judicial or
administrative order, judgment decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of
any Federal or state securities or commodities law or regulation,
any law or regulation respecting financial institutions or
insurance companies, or any law or regulation prohibiting mail or
wire fraud or fraud in connection with any business entity;
or
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6.
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being
subject of or party to any sanction or order, not subsequently
reversed, suspended, or vacated, of any self-regulatory
organization, any registered entity or any equivalent exchange,
association, entity or organization that has disciplinary authority
over its members or persons associated with a member.
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Section 16(a) Beneficial Ownership Reporting
Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company’s directors and executive officers file
initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission. Directors and
executive officers are required to furnish the Company with copies
of all Section 16(a) forms they file. Based solely upon a review of
the copies of such forms furnished to the Company and written
representations from the Company’s directors and executive
officers, all Section 16(a) filing requirements were met for the
fiscal year ended December 31, 2017, with the exception that John
Carlson failed to file an exit Form 5 within 45 days of the
Company’s fiscal year end reporting disposition of shares
held by him, directly and beneficially, during the Company’s
2017 fiscal year and to report the termination of his reporting
obligations under Section 16.
CODE OF ETHICS
A code
of ethics relates to written standards that are reasonably designed
to deter wrongdoing and to promote:
●
Honest and ethical
conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
●
Full, fair,
accurate, timely and understandable disclosure in reports and
documents that are filed with, or submitted to, the SEC and in
other public communications made by an issuer;
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Compliance with
applicable governmental laws, rules and regulations;
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The prompt internal
reporting of violations of the code to an appropriate person or
persons identified in the code; and
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Accountability for
adherence to the code.
The
Board has adopted a code of ethics for the principal executive
officer, principal financial officer, controller and all persons
performing similar functions. The code of ethics is designed to
deter wrongdoing and to promote honest and ethical conduct, the
avoidance of conflict of interest, full and accurate disclosure and
compliance with all applicable laws, rules and regulations. The
code of ethics is available on the Company’s website at
www.capitalfinancialholdings.com
.