Compliance Procedures

1. Compliance Procedures

1.1 The Contractor is obligated to comply with the Employer’s Code of Conduct, cf. Schedule [x], including the laws, regulations, and standards set out therein (the “Regulatory Requirements”), and with this Schedule [x] (hereinafter jointly referred to as the “Compliance Procedures”).

1.2 The Contractor has in connection with its bid for the [Contract] provided to the Employer a description of how the Contractor intends to ensure and verify compliance with the Compliance Procedures (the “Contractor’s Compliance Procedure”).

1.3 [If the Contractor complies with the Contractor’s Compliance Procedure, there is a rebuttable presumption that the Contractor complies with the Compliance Procedures.]

2. Integrating due diligence

2.1 The Contractor shall integrate due diligence into the Contractor’s relevant policies and risk management systems and have in place a due diligence policy that ensures risk-based due diligence.

2.2 The due diligence policy referred to in clause 2.1 shall at least contain the following elements: (a) a description of the Contractor’s approach, including in the long term, to due diligence. (b) a code of conduct that ensures compliance with the Regulatory Requirements and that describes the rules and principles to be followed by the Contractor and the Contractor’s direct or indirect subcontractors in accordance with clause 4.2; and (c) a description of the processes put in place to integrate due diligence into the Contractor’s relevant policies and to implement due diligence, including the measures taken to verify compliance with the code of conduct referred to in point 2.2(b) and to extend that code’s application to subcontractors.

2.3 The Contractor shall update its policies without undue delay after any significant changes relevant for the policies have occurred, and shall review and, where necessary, update such policies at least every 12 months.

3. Identifying and assessing non-compliance

3.1 The Contractor shall take appropriate measures to identify, assess, and document potential and actual non-compliance with the Regulatory Requirements arising from its own operations and/or from its subcontractors’ operations in accordance with this clause 3 (“Risk Assessment”).

3.2 As part of the obligation set out in clause 3.1, taking into account relevant risk factors, such as geographical location and the nature of the products and services, the Contractor shall take appropriate measures to: (a) map its own operations and the operations of its subcontractors in order to identify general areas where non-compliance with the Regulatory Requirements is most likely to occur; and (b) based on the results of the mapping as referred to in point 3.2(b), the Contractor shall carry out an in-depth assessment of its own operations and its subcontractors’ operations in the areas where non-compliance with the Regulatory Requirements is most likely to occur.

3.3 The Contractor shall carry out its Risk Assessment before entering into any contracts or relations with a subcontractor, and the Risk Assessment shall be repeated at such intervals as is appropriate for the risk level associated with the subcontractor in question.

4. Preventing and bringing to an end potential and actual non-compliance

4.1 The Contractor shall take appropriate measures to prevent potential non-compliance with the Regulatory Requirements. a. The Contractor shall be required to seek contractual assurances from direct subcontractors that they will ensure compliance with the Contractor’s code of conduct, including by establishing corresponding contractual assurances from their subcontractors.

4.2 The contractual assurances referred to in clause 4.3 shall be accompanied by appropriate measures to verify compliance with the Regulatory Requirements. Such measures shall include, but not be limited to: (i) establishing a right of audits for the Contractor and the Employer of the subcontractors’ operations; (ii) requiring subcontractors to gather and retain full documentation and traceability for all products throughout the supply chain, including raw materials and components thereof, i.a. purchase orders, bill of materials showing batch numbers; and (iii) an obligation to provide any information requested by the Contractor in order for the Contractor to comply with the Compliance Procedures. For the purposes of verifying compliance, the Contractor is required, if deemed necessary by the Contractor or the Employer, to refer to independent third-party verification.

4.3 If the Contractor becomes aware of actual non-compliance with the Regulatory Requirements that have been, or should have been, identified pursuant to clause 3, the Contractor shall prepare a root cause analysis (“RCA”) and take corrective and preventive actions (“CAPA”). The RCA and the CAPA shall be provided to the Employer for approval before implementation and must contain the following: (a) a remediation plan for how the Contractor will: a. end the non-compliance; b. mitigate the impact of the non-compliance; and c. mitigate the risk of similar non-compliance in the future; (b) a timeline and objectives for remediation; and (c) objective standards for determining when such remediation is completed and the non-compliance ended.

4.4 As regards potential or actual material non-compliance with the Regulatory Requirements that cannot be prevented or ended, the Contractor shall be required to terminate the contract with the subcontractor immediately after becoming aware that the potential or actual material non-compliance with the Regulatory Requirements cannot be prevented or brought to an end.

5. Monitoring and audits

5.1 The Contractor shall carry out periodic assessments of its own operations and measures and its subcontractors’ operations and measures to assess the implementation, cf. clause 2, and to monitor the adequacy and effectiveness of the identification, prevention, and bringing to an end of non-compliance with the Regulatory Requirements, cf. clauses 3 and 4.

5.2 The assessments described in clause 5.1 shall be carried out without undue delay after a significant change occurs, but at least every 12 months and whenever there are reasonable grounds to believe that new risks of non-compliance with the Regulatory Requirements may arise. Where appropriate, the due diligence policy, cf. clause 2, and the appropriate measures taken, cf. clauses 3 and 4, shall be updated in accordance with the outcome of such assessments.

5.3 The Contractor shall retain documentation regarding the actions carried out to fulfil its obligations under this Schedule [x] and documentation received from subcontractors, cf. clause 4.3, for the purpose of demonstrating compliance with the Compliance Procedures, including supporting evidence, for at least [3] years from the moment when such documentation was produced or obtained.

5.4 Upon written request from the Employer, the Contractor shall disclose the documentation referred to in clause 5.3 to the Employer no later than [5] working days after the Employer’s request has been sent unless a specific alternative arrangement has been agreed.

5.5 The Employer shall have a right to audit the Contractor’s operations and any subcontractors’ operations, cf. clause 4.3(i), with [3] working days written notice. The purpose of the audit is to ensure and verify compliance with the Compliance Procedures. The right to audit shall include, but not be limited to, access to any of the Contractor’s or subcontractors’ plant-, production, and/or factory sites. The Employer shall have unrestricted access to talk with the Contractor’s and any subcontractors’ employees, including on a one-on-one basis.

6. Notification

6.1 The Contractor shall notify the Employer of any potential or actual non-compliance with the Regulatory Requirements by the Contractor or any of its subcontractors that have been, or should have been, identified pursuant to clause 3 immediately after becoming aware thereof.

7. Remedies for non-compliance

7.1 In case of material non-compliance with the Compliance Procedures, the Employer shall have the remedies set out in clause 6 in the Employer’s Code of Conduct, cf. Schedule [18], and the remedies set out below.

7.2 The Employer can terminate the [Contract] in whole or in part in the event of the Contractor’s material non-compliance with the Compliance Procedures.

7.3 The Employer can without prejudice opt not to terminate the [Contract] in accordance with clause 7.2.

7.4 The following shall without limitation be considered material non-compliance: (i) […] (ii) […] 7.5 In the event of non-compliance with clauses [x, y, z], the Contractor shall incur a penalty of [10 %] of the Contractor’s fee. The amount can be deducted from the Contractor’s fee. 7.6 The Contractor’s payment of the penalty stipulated in clause 7.5 does not exclude the Employer from demanding compensation from the Contractor in accordance with general rules under Danish law.