FirstPrinciples, OUR CODE OF BUSINESS CONDUCT AND ETHICS

	Introduction - Building on Our Traditions
	BMO's Key Business Conduct & Ethical Principles
		Principle 1 - Personal Integrity
		Principle 2 - Working to the Letter and Spirit of the Law
		Principle 3 - Protecting Information & Assets
		Principle 4 - Dealing with Conflicts of Interest
		Principle 5 - Personal Trading in Securities
		Principle 6 - Community Involvement
		Principle 7 - Raising Concerns
	Changes and Waivers
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INTRODUCTION - BUILDING ON OUR TRADITIONS

WHAT IS FirstPrinciples?

FirstPrinciples is our Code of Conduct. It reflects our commitment to high standards of business conduct and ethics – to doing what is fair, right and legal.

The Code must be followed in both letter and spirit. The preservation of our reputation is dependent on strict adherence to its principles. We will be judged not only in terms of how competent we are at conducting our business, but also on our integrity.

TO WHOM DOES FirstPrinciples APPLY?

FirstPrinciples applies to every director and employee (including contract, part-time and casual employees) of Bank of Montreal, its subsidiaries and affiliates (“BMO”), regardless of legal entity or jurisdiction, and to any other individual involved in a regular, ongoing engagement with BMO. Every director and employee has access to FirstPrinciples and is required to acknowledge when he or she joins BMO and annually thereafter, that he or she has read and understands its contents and has complied with the Code.

We also expect our suppliers and other service providers (e.g., external consultants) to maintain the same high standards of business conduct and ethics to which we hold ourselves. To that end, suppliers and service providers should receive a copy of the Code.

WHERE TO LOOK FOR GUIDANCE

We are all responsible for familiarizing ourselves with the Code and the Corporate Policies, Corporate Standards, Operating Procedures, and subsidiary policies that offer further guidance on how to interpret and apply its principles. Together, they inform us on how to perform our jobs effectively, while conducting ourselves in a fair and ethical manner.

If we are unsure of the legal, ethical or reputational implications of a situation, we can obtain guidance from any one of the persons or departments indicated on the directory of key contacts provided on the FirstPrinciples website or contact our manager or BMO Corporate Compliance for assistance.

CONSEQUENCES OF VIOLATION

Compliance with the Code is an integral part of our relationship with BMO. Any violation will be taken very seriously and may lead to disciplinary action. For employees this could range from counseling to suspension or termination of employment, and may also affect remuneration decisions. Similar consequences may result from any failure to cooperate in any investigation relating to a violation of the Code or retaliating against someone for filing a complaint under the Code. Where breaches of laws and/or regulations have occurred, the relevant external authorities may be contacted. BMO may also choose to pursue civil remedies for any damages or harm it may incur as a result of a violation.

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BMO’S KEY BUSINESS CONDUCT & ETHICAL PRINCIPLES

PRINCIPLE #1 PERSONAL INTEGRITY

To earn and retain the trust and respect of each other within BMO as well as our external stakeholders – including customers, suppliers, shareholders and the general public – honesty, integrity, fair dealing and the highest ethical standards must underlie everything we do and every decision we make. Examples of unacceptable behaviour include:

• Discrimination – Any form of discrimination against or from any internal or external party or group, including on the basis of race, colour, religion, national or ethnic origin, age, gender, gender identity/expression, sexual orientation, marital status, physical or mental disability, or a criminal offence for which a pardon has been granted.
• Harassment – Displays of offensive, unwelcome, intimidating or humiliating behaviour, intentional or otherwise, that could reasonably be interpreted as demeaning others and undermining efforts to maintain a safe, comfortable and productive workplace.
• Alcohol & Substance Abuse – Consuming alcoholic beverages in quantities that affect work performance or impair judgment during working hours. Except under special circumstances such as sanctioned and supervised receptions, alcohol use is prohibited on BMO premises. Abusing controlled substances or the consumption, possession, sale or distribution of illegal drugs while on BMO premises, at any BMO function, or at any time when you could be identified as a BMO employee is also prohibited.
• Gambling Activities that impair work performance.
• Misuse of Internet, Email and Electronic Media – Knowingly transmitting, viewing, generating, printing, retrieving, downloading or storing communications of a discriminatory, defamatory, obscene, damaging (such as computer viruses), threatening or harassing nature, or any material that is inappropriate for the business environment (e.g., sexually-oriented literature, chain letters).

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PRINCIPLE #2 WORKING TO THE LETTER AND SPIRIT OF THE LAW

We must be aware of and comply with applicable laws, rules and regulations of all levels of government, as well as public and regulatory agencies, in all jurisdictions in which BMO operates. We must also meet legal obligations we assume under contract or through the operation of law, including fiduciary obligations. Failure to do so may negatively reflect on BMO’s reputation and result in legal action or regulatory sanction.

BMO’s policy framework is designed to ensure that our actions are consistent with applicable legal and regulatory requirements and industry standards. We recognize our responsibility to understand and comply with the policies that affect how we do our work.

As well, our business decisions must always be based on a thorough knowledge of our clients and of the products and services we offer to them. Knowing our clients and products not only ensures that our business relationships and actions are consistent with legal and regulatory requirements but also plays an essential part in ensuring that our clients are well-served.

We are also committed to dealing with clients whose activities are compatible with our own high ethical standards and must be constantly on guard against those who would attempt to use our services or products to further their illegal activities. To that end, we will endeavour to properly establish and authenticate the identity of our clients and will report suspicious activities to the appropriate persons and authorities.

Some key legal and regulatory requirements and prohibitions are highlighted below.

• Fraud or Misappropriation - Embezzlement, kiting, float creation or any other form of improper conversion of funds, property or other assets, or knowingly assisting others to engage in such conduct is strictly prohibited.
• Corrupt Practices or Preferential Treatment – Acceptance or offering improper payments (e.g., bribes or other inducements) is strictly prohibited. Similarly, we do not give preferential treatment to politicians, political parties, or any other public official (or their family or related business enterprises), when they enter into business relationships with us, including where loan renewals or the pursuit of creditor remedies are being considered.
• Fair Dealing – We deal honestly and openly with our customers, competitors and suppliers and comply with laws and regulations governing marketplace competition, including those relating to marketing and advertising. We will not take unfair advantage of anyone through manipulation, concealment, abuse or misrepresentation of privileged or confidential information. Arrangements with others to lessen competition, prohibited tied selling practices, deceptive telemarketing or other improper marketing practices are strictly prohibited.
• Prevention of Money Laundering & Terrorist Financing – We are committed to conducting business and operations in full compliance with all laws and regulations relating to Money Laundering and Terrorist Financing activities.
• Official Language Communication – We will comply with applicable legislative requirements to communicate with customers, employees and other parties in the official language of their choice. We will also endeavour to communicate in other languages preferred by our clients whenever practicable.

We will also cooperate fully with investigations, audits, examinations or reviews by our internal corporate support groups or any external government, regulatory, self-regulatory or law enforcement agencies. In doing so, we will not make any false or misleading statements or otherwise attempt to frustrate or circumvent their inquiries. All requests or demands for information made by external investigators, regulators and auditors must be referred to the appropriate persons and departments indicated on the directory provided on the FirstPrinciples website, or the person identified to coordinate responses to such matters. We must also not take, threaten or permit the taking of retaliatory action against any BMO employee for cooperating with or providing information in respect of such investigations, audits, examinations or reviews.

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PRINCIPLE #3 PROTECTING INFORMATION & ASSETS

Information gathered or generated in the course of our business dealings is a valuable asset and respecting and protecting the confidentiality of information provided to us by our clients, suppliers and our fellow employees is key to maintaining their trust. Confidential information is all non-public information pertaining to BMO, its employees or customers (past, present or prospective). It includes material confidential information, personal information, BMO proprietary information and data generated by BMO that contains or is derived from such confidential information. Various laws and regulations also impose restrictions on the use, access, disclosure and retention of such information and we are committed to complying with all such requirements.

Some specific commitments are highlighted below.

• Personal Information - Privacy laws and BMO policy require that customer and employee information is protected and respected. We have strict policies and procedures for the proper handling and management of personal information entrusted to us.
•  Use and Disclosure of Customer and Employee Information – Information obtained directly or indirectly from a customer or an employee may be used or shared with others only for the specific purpose or transaction for which it was given or collected and cannot be disclosed without the consent of the individual except where permitted or required by law or regulation. Any use or disclosure of customer or employee personal information must adhere to BMO policy. When in doubt, we will not disclose without seeking advice from a manager or the appropriate person identified on the FirstPrinciples website.
• Accessing Customer Information – Employees are prohibited from accessing customer and employee information held in systems or other media unless there is a legitimate business purpose to do so. Any such information which is accessed must be kept strictly confidential and may only be used or disclosed in accordance with our policies and procedures. To ensure we respect and protect the information entrusted to us by customers and employees, we control and monitor access to their information and unauthorized access will be investigated.
• Disclosure of BMO Information – We are all responsible to ensure that the public disclosure of information concerning BMO is timely, factual, accurate, broadly disseminated and made in accordance with applicable legal and regulatory requirements and BMO’s Disclosure Policy. It is essential that all developments, facts or changes that could reasonably be considered material to BMO be communicated through the established escalation processes in order for the Chief Financial Officer to determine whether the potential development, fact or change is material and requires disclosure to the public. We should not disclose non-public financial information to anyone within BMO, except in accordance with the Disclosure Policy. We should never disclose material information about BMO that is not already public to anyone outside BMO, except in accordance with the Disclosure Policy. BMO has designated certain employees as authorized spokespersons to ensure that material information about BMO is disclosed to external parties properly and only those persons should respond to inquiries from the investor community or media.
•  Information Management & Security – We must comply with BMO policies designed to ensure the accuracy, completeness and proper maintenance and security of records, data and information we own, create, collect, use and manage – in all types of media. This includes
• • Being aware of retention periods for information records that may be relevant to any pending, threatened or foreseeable investigation, audit, regulatory examination or legal proceeding;
  • Bearing in mind that when creating an information record, including e-mail, it may be subject to scrutiny by internal or external third parties;
  • Being vigilant in our efforts to prevent the falsification, distortion, appropriation or misuse of information records, by, for example, protecting computer access codes, transmitting confidential information only when a proper security solution (e.g., encryption) is in place, and protecting our systems against information security threats and risks

We are committed to protecting other BMO assets, as well as those of our suppliers from improper use and will respect applicable intellectual and other property rights. BMO assets, including copyrights and trademarks associated with its brand, premises, technology, systems, products, information or processes, strategies, business plans, operations and client relationships are proprietary to BMO and should only be used for legitimate business purposes and with the proper authority. When making use of BMO assets, such as telephones, computers or related software, our use must be reasonable and appropriate. Similarly, we must respect the property rights of others. We should not duplicate copyrighted material such as software, printed, recorded or broadcast materials without the authorization of the copyright holders.

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PRINCIPLE #4 DEALING WITH CONFLICTS OF INTEREST

We must not permit a personal interest or BMO’s corporate interests to adversely affect, or even appear to adversely affect, our judgment, loyalty, objectivity or impartiality in our dealings with prospective or actual customers, suppliers or with BMO itself. The following are examples of situations where conflicts of interest may arise.

• Misuse of Position – The actual or perceived use of our position or connection with BMO to gain or attempt to gain a personal benefit or to confer a benefit upon others with whom we have a common interest (e.g., family members, business associates or colleagues) or to compromise the interests of BMO’s customers is strictly prohibited. Similarly, we must not personally benefit from our access to BMO assets or information or other assets, or take for ourselves opportunities that come our way as a result of any position we hold at BMO. We must also ensure that personal business relationships with BMO customers or suppliers are managed separately from our work for BMO and that any conflicts between the two are resolved in BMO’s favour.
• Gifts, Entertainment, Other Benefits and Payments – Offering, giving or receiving gifts, entertainment, or similar types of benefits must not compromise or create the perception that the recipient’s judgment or honest performance of her / his duties might be compromised. Generally, gifts and entertainment of more than nominal value are only acceptable when they are permitted by law, are consistent with industry standards and where their disclosure would not adversely affect the reputation of BMO, its employees or the recipient.
• Outside Business Activities – When engaging in an outside business activity such as taking a second job, running a personal business, or accepting a directorship, we must ensure that the interests and reputation of BMO and its customers are not adversely affected. For example, outside business activities that compete with any aspect of BMO’s business are typically not permitted. We should always follow the applicable procedures for reviewing and approving outside business activities in order to ensure that potential conflicts are addressed appropriately. Approval is not required to serve religious, educational, cultural, social and charitable or other non-profit entities in voluntary or unpaid roles, but we must ensure that our participation in such activities does not conflict with our responsibilities to BMO.

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PRINCIPLE #5 PERSONAL TRADING IN SECURITIES

Securities laws and internal policy prohibit trading in securities of a publicly traded entity, including Bank of Montreal, when we have material, non-public information. Material non-public information is non-public information relative to the business and affairs of an issuer that would reasonably be expected to have a significant effect on the market price or value of the issuer's securities if it were generally known. Passing such information along to others, either intentionally or inadvertently (“tipping”) is also prohibited. It is also very important to ensure that our personal trading activities do not interfere with our work for BMO and comply with BMO internal policy.

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PRINCIPLE #6 COMMUNITY INVOLVEMENT

BMO and its employees enjoy a long, honourable and very active tradition of community service. Participation in such endeavours is both encouraged and valued, and work time and BMO resources may in some cases be offered in support of employee involvement in these activities.

When engaged in activities outside of work, it is important to separate our work and personal lives and to make clear that BMO is not involved in or associated with the latter. Some specific examples include:

• Political Participation - We all have the right to participate in politics, both as candidates and as supporters of candidates, political parties and causes. However, when running for office, supporting others running for office, or backing a cause, it is important to make clear that the activity is personal and that BMO is in no way associated with our political views or allegiances. We must also observe all applicable laws, restrictions and prohibitions governing corporate or individual contributions to political parties, public officials, candidates or causes.
• Public Expression of Personal Views – It is acceptable to express personal views as long as it is clear we are not speaking on behalf of BMO. Before publicly expressing views on matters that could affect BMO, we should discuss the information with management and, in some instances, Media and Public Relations or Corporate Communications should be consulted. This is especially important for someone such as a branch or community banking manager who may have developed a public image as a spokesperson for BMO
• Written or Published Material – Although writing books or articles, maintaining a personal website or blog or sharing our own personal information on a social networking site is acceptable, we must pursue these interests in a way that makes it clear that BMO is not involved in or associated with the activity. The use of or reference to client information, BMO proprietary information or BMO brand assets such as its name, logo and other trademarked and copyrighted material, is also prohibited, unless prior permission has been obtained from appropriate management personnel.

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PRINCIPLE #7 RAISING CONCERNS

Maintaining BMO’s high ethical standards is the responsibility of every director  and employee. If we become aware of actual or potential breaches of the Code, any laws, rules, regulations or BMO policy, we should speak up. The principles set out in this Code are shared principles and the commitment to uphold them needs to come from all of us.

When raising a concern we should first consult our manager or the FirstPrinciples directory of key contacts for the appropriate person or department for dealing with our concern. Concerns about accounting, internal control over financial reporting, or auditing matters should be immediately reported to management in the appropriate Finance Department.

If, after raising a concern, we do not believe we have received a satisfactory response, we should then contact the BMO Ombudsman. BMO’s Ombudsman is unbiased, impartial and independent and is dedicated to resolving concerns in a fair and timely manner. BMO’s Ombudsman has also been designated to review and report on accounting, internal control over financial reporting, or auditing matters to the Audit Committee of the Board.

When requested, concerns can be raised anonymously and the confidentiality of the information provided will be respected.

An act of retaliation against anyone who reports concerns in good faith or otherwise assists or participates in any related review, investigation or proceeding will be viewed as a violation of the Code. Reports or complaints found to be made in bad faith will also be viewed as violations. Such violations may result in disciplinary action, up to and including dismissal.

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CHANGES AND WAIVERS

Waivers or exceptions to any provision of the Code will only be granted in the most unusual circumstances. Any waiver or exception for a Director or employee must be approved by the Audit Committee of the Board. When required by applicable law, rule or regulation waivers will be disclosed to the appropriate regulatory authorities.

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