Procedures Established by the Audit Committee for Receipt, Retention and Treatment of Complaints and Concerns Regarding Accounting Matters

 January 23, 2004

Genelabs Technologies, Inc. (the "Company") and all of its subsidiaries are committed to compliance with applicable securities and other laws, rules, and regulations, accounting standards and internal accounting controls. These procedures, which have been adopted by the Audit Committee of the Company, describe the methods employed by the Company for the receipt, retention and treatment of complaints and concerns regarding accounting, internal accounting controls, and auditing matters, and the submission by employees of concerns regarding questionable accounting or auditing matters. Accounting, internal accounting controls and auditing matters shall be referred to herein as “Accounting Matters.”

Scope of Matters Covered by These Procedures

These procedures relate to the reporting of concerns or complaints regarding Accounting Matters that pertain to the Company or any of its subsidiaries.

Examples of concerns or complaints regarding Accounting Matters that are covered by these procedures include allegations of:

• deviation from full, fair and accurate reporting of the Company’s financial condition, including inadequate disclosures in any reports or documents that the Company files with or submits to the Securities and Exchange Commission;

• deficiencies in or noncompliance with the Company’s internal accounting controls;

• fraud or error in the preparation of the Company's books and records;

• fraud or error in the preparation, review or audit of any financial statement of the Company;

• tampering with or altering the Company's financial statements or books and records; and

• misrepresentation or false statement to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Company.

Employee Concerns and Complaints

It is the responsibility of each director, officer and employee of the Company promptly to report complaints or concerns regarding Accounting Matters.

Where Employees Report

The Company has set up a telephone number (the "Compliance Helpline"), a post-office box (the "Compliance Mailbox") and an email account (the "Compliance Emailbox") where employees may report suspected misconduct, including concerns or complaints regarding Accounting Matters, or seek guidance on compliance and ethics issues. The Compliance Helpline is available to employees through voicemail access 24 hours a day, seven days a week. Messages left on the Compliance Helpline, written to the Compliance Mailbox or sent to the Compliance Emailbox will be responded to by the Company's Compliance Officer, who will be trained to respond to employees' questions about compliance and ethics issues or their reports of suspected illegal or improper conduct and to ask questions to gather additional information.

The Compliance Officer will then prepare a written summary of each concern or complaint and will promptly notify the head of the Legal Department and Chairman of the Audit Committee of the Board of Directors if the call concerns an Accounting Matter. With respect to other matters, appropriate Company personnel are designated to provide a response to the question or to investigate the report of suspected misconduct.

Anonymous Reporting

Employees may report concerns or complaints to the Compliance Helpline, Compliance Mailbox or Compliance Emailbox, anonymously.

Publication of Reporting Procedures to Employees

The Company's procedures for reporting concerns and complaints regarding Accounting Matters will be publicized to employees (i) in the Company's Code of Business Ethics and Conduct (the "Code"), which is disseminated to each employee and published on the Company's Intranet site; and (ii) in a letter to employees, which will be disseminated to employees electronically and posted on the Company's Intranet site (the "Reporting Policy Letter"). The Code and the Reporting Policy Letter each contain a separate section regarding reporting concerns or complaints regarding Accounting Matters. Both the Code and the Reporting Policy Letter contain the Compliance Helpline number, Compliance Mail address and the Compliance Email address in bold text.  Employees are informed that (i) they should report concerns or complaints regarding Accounting Matters to the Compliance Helpline, Compliance Mailbox or the Compliance Emailbox in the first instance; (ii) the Compliance Helpline is available through voicemail access 24 hours a day, seven days a week and the Compliance Emailbox is available 24 hours a day, seven days a week; and (iv) no employee will be subject to retaliation because of a good faith report of a concern or complaint.

Protection Against Retaliation

The Audit Committee is committed to the policy that no employee will be subject to retaliation because of a good faith report of a concern or complaint regarding Accounting Matters or any suspected violation of Company policy or the law.  This policy extends to discrimination against employees in any of the terms and conditions of their employment, including but not limited to job assignment, promotion, compensation, training, discipline and termination, because of a good faith report. The Reporting Policy Letter informs employees that any suspected acts of retaliation must be reported immediately to the Compliance Officer, the Compliance Helpline, Compliance Mailbox or the Compliance Emailbox.

Submission of Concerns and Complaints by Interested Parties

The following concerns the procedure for the receipt of complaints and concerns regarding Accounting Matters submitted to the Company by individuals not employed by the Company (“Interested Parties”).

Where Interested Parties Report

Interested Parties may report concerns and complaints regarding Accounting Matters by regular mail sent to Genelabs Technologies, Inc., Compliance Officer, 505 Penobscot Drive, Redwood City, CA 94063-4738.

Publication of Reporting Procedures to Interested Parties

The Company's reporting procedures for reports of concerns or complaints relating to Accounting Matters from Interested Parties will be posted on the Company's Internet site in the section of that site relating to Investor Information.

Treatment of Concerns and Complaints

The Compliance Officer will notify the Chairman of the Audit Committee of the Board of Directors upon receiving any concern or complaint relating to an Accounting Matter, from the Compliance Helpline, the Compliance Mailbox, the Compliance Emailbox, or any other source. Supervisors and the Compliance Officer are instructed that all concerns or complaints relating to Accounting Matters that they receive from employees or others must be reported to the head of the Legal Department as soon as practicable.

Investigations of Concerns and Complaints

The Audit Committee will investigate any report regarding an Accounting Matter on its own or with the assistance of the Compliance Officer, the Legal Department, any officer of the Company, outside counsel or any other outside party. Until such time as the Audit Committee determines how an investigation regarding an Accounting Matter shall proceed, the Compliance Officer shall have the authority to investigate or direct the investigation of any report regarding an Accounting Matter, with the assistance of the Legal Department.

Confidentiality will be maintained to the extent reasonably possible, consistent with applicable law and regulations, the need to conduct an adequate investigation, and any resolution of the matter or corrective action.

Corrective Action

If the investigation of the concern or complaint indicates that a violation of law, regulations or Company policy has occurred, the Compliance Officer, with the assistance of the head of the Legal Department, shall determine appropriate disciplinary measures or other corrective action. Any disciplinary measures or corrective action taken in response to a concern or complaint regarding an Accounting Matter shall be reported to the Audit Committee. Notwithstanding the foregoing, the Audit Committee may elect to determine the appropriate disciplinary measures or corrective action or to confer with the head of the Legal Department with respect to appropriate discipline or corrective action.

Reporting to the Audit Committee and Retention of Documents

The Compliance Officer will maintain a log of all concerns and complaints purportedly relating to Accounting Matters that are received by the Compliance Officer, the Compliance Helpline, the Compliance Mailbox, the Compliance Emailbox or any other source. The Compliance Officer shall track the receipt, investigation, and resolution of all such concerns and complaints, and shall provide a periodic report thereof to the head of the Legal Department and Audit Committee.

Copies of records relating to concerns and complaints received will be maintained in accordance with the Company’s records retention policies and practices.

No Rights Created

This Policy is a statement of certain fundamental principles and key policies and procedures that govern the conduct of the Company's business. It is not intended to and does not create any rights in any employee, client, supplier, competitor, shareholder or any other person or entity. The Policy does not, in any way, constitute an employment contract or an assurance of continued employment.

back to top

© Genelabs Technologies, Inc. All rights reserved. - Terms of Use