3 Code of Ethics Index Section I General Principles 1 Introduction Page 11 Scope 12 Addressees 13 The value of corporate credibility and reputation 14 The contents of the code of Ethics 15 Contractual value of the code 16 Updates to the code 2 General Principles Page 21 Responsibilities 22 Transparency 23 Fairness 24 Efficiency 25 The value of human resources 1 25 Section II Corporate Governance 1 Shareholders Page 11 Shareholders commitment 12 Transparency of information 2 Management and Directors Page 21 Commitment of Management and directors 22 Business behaviour 23 Conflict of interest 24 Obligations towards employees 25 Responsibilities and accounting principles 26 Use of corporate information and assets 3 Controls and Audit Page 31 Audit Committee 32 External Audit 27 27 30 Section III Behaviour towards stakeholders 1 Relations with employees Page 31 1
11 Health & safety 12 Personal rights 13 Personnel selection 14 Starters 15 Working hours 16 Salaries 17 Duties of employees 18 Other duties: accounting records and entries 19 Conflict of interest 110 Use of corporate information and assets 111 Rules for use of information technology 112 Gifts 113 Privacy and data protection 114 Physical security 2 Relationships with Customers Page 21 Equality and impartiality 22 Contracts and communications 23 Interaction with customers 3 Participation in tenders and relations with buyers Page 31 Participation in comparison with competitors 32 Correctness in commercial offers 4 Relationships with suppliers Page 41 Choice of supplier 42 Transparency 43 Correctness and diligence in formulating contracts 5 Relations with local authorities and other institutions Page 51 Relations with administrative authorities 52 Relations with judicial authorities 6 Relationships with subsidiaries and associated companies Page 7 Relationship with the environment Page 8 Relations with political parties, trades unions and associations Page 9 Relations with mass media Page 40 41 42 43 44 45 46 47 2
Section IV Operation 1 Application of the Ethical Code Page 11 Communication of violations 12 Sanctions 48 3
Section I General Principles 1 Introduction 11 Scope This Code of Ethics describes the general principles and behavioural rules for all those who have a relationship with UFI Filters SpA The Code of Ethics was approved by the Board of Directors of the company on 1st December 2009, and since it is part of the application of Italian law (Article 6 of DLgs n 231 of 8th June 2001), is part of the set of regulations by which the company must abide, together with the current organisation model The Code is a way to prevent possible irresponsible behaviour, ambiguous or illegal situations, by anyone acting on behalf of the company, and it calls for: a) Identification of areas where offences could occur; b) Specific procedures directed to prevent offences; c) Obligation to inform the Surveillance Committee on the function and observance of the organisation model d) Introduction of an appropriate disciplinary code in order to carry out sanctions for offences committed The Code of Ethics, while considering existing differences in corporate regulations, economic, social and cultural differences, should be applied by the company in all its overseas activities, as is explained further in the section on subsidiaries and associated companies The company is committed to publishing the Code by distributing copies to managers, directors and employees, and by making it available to all those who have relationships with the company The code is also available on the corporate Intranet in Lotus Notes 4
12 Addressees The current Code of Ethics applies to all those who have a relationship with the company As such, all those parties should respect all the provisions of the Code In particular, addressees include: shareholders; members of the Board of Directors, the Audit Committee and the external auditors; the directors, employees and all those who represent the company; consultants, agents and suppliers customers The Directors of the company, who are required to observe and apply the Code, are also obliged to communicate the contents to all their colleagues Knowledge of the code is the right of all employees and carries the obligation to apply the rules contained therein Employees also have the right to explanations, to report offences and where necessary to request updates 13 The value of corporate credibility and reputation Corporate credibility and reputation are fundamental resources which improve relations with local institutions, the loyalty of customers, the development of human resources and correctness with suppliers With the adoption of the Code of Ethics, the company intends to guarantee to its stakeholders behaviour which will increase the value of their activity, creating conditions for building relationships which will add value for everyone 14 Contents of the Code of Ethics The Code of Ethics contains: general ethical principles which define corporate values 5
criteria for behaviour towards each stakeholder, method for applying and continual improvement of the Code of Ethics 15 Contractual value of the Code of Ethics The Code will be applicable from the date of approval by the Board of Directors According to Article 2014, 2105 1nd 2106 of the Civil Code, observance of the code is obligatory for all employees 16 Updating the Code of Ethics The Code of Ethics can be modified and updated by subsequent legislation, by changes in corporate activity or policy, or by suggestions from the Surveillance Committee, which must be approved by the Board of Directors 2 General Principles 21 Responsibilities All the addressees of the Code must follow the ethic of responsibility, evaluating the consequences of their actions, considering the impact on the community and the environment The company has adopted as an absolute principle the observance of all local laws in Italy and in all countries where the company operates All adherents to the code must follow any existing laws; in no case is it allowed to put the interests of the company ahead of the law 22 Transparency Transparency is an attitude which concerns both the area of company management, which must be clear and verifiable, and communication with outside parties 6
The completeness and correctness of information given out, plays a fundamental role in the credibility of the company regarding its relations with both internal and external parties For this reason it is necessary to establish relations in a clear and comprehensible way, following established procedures, laws and regulations, with particular attention to environmental issues 23 Correctness For the company, correctness means principally respect for people, both as regards privacy and equal opportunity Being correct means maintaining obligations with others As far as relations within the company are concerned, particular attention should be paid to physical and emotional well being of people, as well as eliminating any discrimination or conflict of interest Regarding outside parties this means maintaining completely professional relationships with clients and suppliers and also stakeholders 24 Efficiency The principle of efficiency requires an obligation from everyone whilst carrying out their work in the best way possible, contributing to good company management on the basis of decisions made clearly This means: guaranteeing that high standards are followed in processes and actions; efficient use of available resources; respecting and maintaining assets; developing risk management systems; respecting contractual obligations and ensuring an adequate level of service 7
25 The value of Human Resources Human resources represent a fundamental factor for the development of the company UFI Filters SpA encourages and promotes the professional development of its employees Section II Corporate Governance 1 Shareholders 11 Commitment of shareholders The shareholders are committed to respect the provisions of this Code of Ethics, and to encourage the sharing of its contents Another prime objective of the shareholders is to not carry out operations which would be contrary to the company s principles or to gain personal interest, for themselves or third parties, at the expense of the company 12 Information transparency The company, in respecting the principle of transparency, guarantees complete accessibility to company information and data, both to those who have a right to access because of their duties, and to authorities who request access in the carrying out of their duties The company and the owner are aware of the importance of correct information and intend to observe the principle towards all the company s stakeholders 2 Management and Directors 21 Commitment of managers and directors The managers and directors of UFI Filters SpA, following this Code of Ethics, must act as examples to employees and to all who have relationships with the company In carrying out their duties, they are committed to behave with the maximum professionalism and diligence towards the company itself, to shareholders and to all third parties 8
22 Business behaviour Managers and directors must behave in accordance with ethical principles and avoid offering or promising to third parties money or other favours in whatever form, however indirect, to promote the interest of the company, even when subject to pressure They can not accept any consideration either for themselves or others, to promote or favour the interests of third parties in their relations with the company Practices such as corruption, favouritism, collusion, solicitation, carried out to obtain economic and professional advantage are prohibited and will be severely punished 23 Conflict of interest Managers and directors must carry out their duties according to principles of correctness and integrity, refraining from acting in situations where there is a conflict of interest, and they should not take personal advantage from knowledge which becomes available to them through their work for the company Possible situations where a conflict of interest may arise: top management or director level (or relatives) having economic interest with a company supplier purchasing staff of UFI Filters SpA working for those suppliers, even indirectly via family members; accepting money, gifts or favours from people or companies who intend to commence a relationship with the company According to Italian law, the Managing Director must advise the Audit Committee of any behaviour that may constitute a conflict of interest The Surveillance Committee must be informed and will evaluate each case 9
24 Duties towards employees All employees have the same opportunity to demonstrate their own qualities and potential and to have the possibility for professional and career growth, in a work atmosphere where personal qualities are valued and differences concerning politics, religion, race, nationality or sex do not give rise to discrimination or disturbances of any kind To that end, HR is committed to: develop a system of research and selection to avoid any type of discrimination allow all employees to follow necessary training courses to maintain their professional level regarding technological innovations and changes in work processes 25 Responsibilities and accounting principles The company respects fully the principles included in current company law, with particular regard to transparency, completeness and accuracy of information contained in the accounting records The managers and directors are responsible for ensuring that the principles are respected Every operation must be correctly recorded and supported by adequate documentation The managers and directors are also required to respect the law and regulations regarding accuracy and clearness of data and valuations in the preparation of the accounts Furthermore they must give utmost and prompt collaboration to all the controlling organisations who in the carrying out of their duties request information and documentation about the running of the company 26 Use of company information Any confidential information regarding projects or negotiations, contracts, company procedures, software in use, evaluations of suppliers and/or customers, and research and development activity may not be transmitted to outside parties by any manager or director, except with specific authorisation Managers and directors must guarantee correct use of company assets by their employees 10
3 Audits 31 Audit Committee (Collegio Sindacale) According to current legislation, the Audit Committee reviews the observance of company law and statutes, regarding the principles of correct administration and in particular the adequacy of the company structure The Audit Committee operates impartially, autonomously and independently, to guarantee an efficient control and a constant protection of the economic and financial situation of the company 32 External Audit The company is required to have its accounts certified This is carried out by external auditors The Audit committee and the external auditors have the right to complete access to data, information and documents necessary to carry out their duties 11
Section III Behaviour towards stakeholders 1 Relations with employees 11 Health & Safety The company is committed to take care of the moral integrity and physical wellbeing of its employees and any temporary partners To that end, the company promotes responsible and safe behaviour and adopts all measures required by technological changes to guarantee a safe and healthy work environment The risk evaluation summary must be regularly updated and the company doctor should write health protocols and carry out medical visits required by law The company employees are invited to point out any anomalies or irregularities to the committee for Health & Safety Employees are also required to prevent any situation which may prevent the best work environment, such as: being at work under the influence of alcohol, drugs or similar substances; not using protective items where they are obligatory; not respecting the non-smoking regulations 12 Personal well-being UFI Filters SpA is committed to guarantee respect for the conditions necessary for a work environment of collaboration and not hostility and to prevent discriminatory behaviour of any kind The company requires the collaboration of everyone to maintain a climate of respect for the dignity, honour and reputation of every individual 12
The company will ensure personal rights regarding race, class, nationality, religion, sexual orientation, disability, age, political or trade union affiliations The company requests all addressees of the code to follow the legal requirements regarding the dignity of men and women at work (92/131 CEE), avoiding sexual or moral harassment, thereby including the requirement to support anyone who makes such a claim UFI Filters SpA is committed to prevent any bullying or violent behaviour (psychological abuse, harassment, persecution, demotion, marginalization, humiliation, slander, ostracism, etc) carried out by superiors or colleagues on another worker, over a period of time, which is damaging to the personal and professional dignity and psychological health of the individual Workers who consider themselves to have been subject to the above may refer the incident to a member of the Surveillance Committee who will determine any effective violation of the code Inequalities based on objective evaluations will not be considered to be discriminatory 13 Personnel selection Taking into consideration local laws, personnel selection should be based on the suitability of the candidate to the required job description, respecting equal opportunities for all In no case should the research advert include any reference to race, sex, or other personal and discriminatory qualities Employment applications should not be judged on discriminatory bases 14 Hiring Hiring should be made according to the appropriate Labour Contract where applicable Once hired, every employee should receive details of their remuneration, rules and procedures to avoid health and safety risks, and internal rules about data privacy and use of computer equipment The treatment of employees is in accordance with their level of service, duties performed and professional qualifications For the same duties the same training opportunities should be available 13
15 Working hours The company follows local law and contracts where applicable 16 Salaries The company will not enter into false apprenticeships which are intended to avoid its obligations towards employees Payslips will not contain deductions for disciplinary actions or other discriminatory items 17 Employees duties Employees are committed to respect duties included in this code and local law and to carry out their duties with integrity, correctness, loyalty and in good faith The use of recorders, cameras, video recorders etc for purposes not expressly agreed by the relative Director is forbidden The company will not install video cameras unless previously agreed and will install appropriate signs It is required that a decorous dress code is followed, that appropriate language is used, and in general behaviour based on mutual respect is adhered to regarding in particular: each person s contribution at work; maintaining a positive work environment where everyone has the possibility to grow professionally; not getting involved in discriminatory, illegal or violent act and not allowing them to happen; not using colourful language, swear words or blasphemy; carrying out impartial and constructive evaluations; recognising equally all colleagues; respecting the importance of each person even outside the work environment 14
18 Other duties: accounting entries Accounting staff are required to carry out entries accurately, completely, truthfully and clearly and to allow any verifications to be made Accounting evidence must be based on precise and verifiable information and must respect internal procedures Every entry must allow a complete reconstruction of the related operation and be accompanied by adequate documentation Anyone who is aware of omissions or errors should report this to their own immediate superior; anyone who becomes aware of false entries must report this to a member of the Surveillance Committee 19 Conflict of interest Employees should avoid any situation or activity which could give rise to a possible conflict It is forbidden, whilst carrying out duties for the company, to enter into economic relations either personally or through immediate family members which would be in conflict with the interests of the company For example: having economic relations with a supplier either directly or through immediate family members; whilst dealing with suppliers, to work for those suppliers either directly or through immediate family members; accepting money or other consideration from persons or companies who intend to enter into relations with the company Where there is even the appearance of a conflict of interest, the employee is obliged to communicate this to the appropriate member of the Surveillance Committee 15
110 Obligations regarding company information and assets Every employee is obliged to refrain from communicating confidential information regarding projects or bids in process, contracts, company procedures, or software purchased, to third parties, without specific authorisation Research projects for new products, current research and contract conditions with both suppliers and customers are completely confidential; they must not be distributed outside the company without specific authorisation Company assets include physical assets, for example plant and machinery, tooling, motor vehicles, furniture, computer hardware and software, plus intangibles such as know-how, technical knowledge and confidential information developed within the company The protection and conservation of these assets is a fundamental value for the company, and employees are responsible while carrying out their duties, not just to protect those assets but also to prevent fraudulent or improper use Use of these assets by employees can only be for work purposes, during work hours 111 Use of information technology The instructions below refer to the company regulation regarding data privacy and use of company assets with particular reference to information technology Computers, pc s, laptops, palmtops etc are entrusted to employees by specific requests from management, together with HR Such items must be considered as work instruments and furthermore: must be taken care of appropriately; must only be used for professional purposes using only files and programmes which are strictly necessary installation of unauthorised programmes is forbidden In case of theft or damage, caused by not respecting the above regulations, the cost may have to be reimbursed to the company 16
Internet Where a PC has access to the internet this may only be used for work purposes E-mails The e-mail address is a company asset and as such its use must be limited exclusively to professional purposes 112 Gifts etc Employees may not ask, either for themselves or for others, gifts or other consideration; neither should they accept them, except where they are of insignificant value, in order that third party may obtain benefit from the company Gifts and consideration offered but not accepted must be communicated to the Surveillance Committee so that they can carry out an evaluation UFI Filters SpA has also established a standard behaviour for gifts to third parties For this reason, employees may not offer gifts or other consideration to third parties who may attempt to receive preferential treatment from the company 113 Privacy and data protection The company assures the privacy of its employees according to the provisions of local laws and is obliged to keep personal data private, except where required by law, except where the employee gives their specific authorisation Obtaining, dealing with and conserving such information is covered by specific internal procedures to guarantee that no unauthorised person can have access to the information Each employee is forbidden to pass on any type of information to which they may have had access during the course of their duties unless previously authorised by an appropriate manager In no case is it allowed to furnish private data: 17
regarding religious, philosophical, political, trade union affiliations or opinions or regarding a person s sexual orientation; related to facts which are not relevant to making a professional evaluation of an employee; in violation of local law against discrimination or equality; without specific authorisation The employee must observe their duty of confidentiality even after the end if their employment as per the privacy laws 114 Physical security Physical security is covered by a number of protective measures established to prevent unauthorised access to data Good practice: keep documents containing private data in places which are not accessible by unauthorised persons; consider the possible risk of natural disasters; pay attention to visitors making sure that they are not left waiting where confidential data is available Close windows and lock doors at the end of each working day or whenever the offices are empty; File documents and activate system standby on pc s when absent from desk Maintain good procedure for authorisation of visitors and access given to them 2 Relations with customers 18
21 Equality and impartiality The company is committed to satisfy its customers in accordance with contractual obligations The company is committed to behave indiscriminately towards its clients and to maintain relationships of high professionalism, with respect and courtesy 22 Contracts and communications In its relations with customers, UFI Filters SpA is committed to not act fraudulently in matters regarding declarations of manufacture and origin, ownership of products, the nature of the products and their packaging The company is committed to communicate on a timely basis and in the most appropriate manner any information regarding eventual modifications or variations in contractual relations 23 Interaction with customers The company is committed, via its customer service department, to deal with customer requests on a timely basis, preferring interaction to eventual claims The company maintains the privacy of its customers, according to local legislation 3 Participation in bids and other relations with competitors 31 Participation against competitors When acting in comparison with competitors, the company should evaluate carefully the feasibility of services requested, with particular regard to legal restrictions, both technical and economical, noting wherever possible any anomalies, and in no case assuming contractual obligations which would require unacceptable savings in quality, personnel costs or health and safety considerations Where participating in tenders no request should be made to receive confidential information 19
32 Fairness in commercial dealings In relations with competitors, the company will act correctly and clearly in all commercial dealings and contractual obligations, as well as faithful and diligent application thereof 4 Relations with suppliers 41 Choice of supplier The choice of supplier and purchase of goods and services of any type must be made respecting competition principles and equality of conditions presented and must be made on the basis of objective evaluation of the offers considering competitiveness, quality and price In this choice the company must adopt objective and transparent criteria according to local laws and internal regulations and must not preclude any supplier who fulfills the necessary requirements In selecting a supplier the company must also take account of the supplier s ability to guarantee the quality of its systems and where necessary the availability of means, its organisational structure and its capacity to fulfill privacy obligations Wherever a supplier is considered strategic but does not fulfil all the necessary requirements, UFI Filters SPA will undertake a process of development to enable the supplier to achieve the organisational and qualitative standard required Within the scope of its own quality system, the company has adopted a specific procedure (P74 purchases and monitoring of suppliers) which includes a list of qualified suppliers, subject to quarterly performance audits, and includes a list of qualifying criteria 42 Transparency Relations with suppliers, including financial contracts and consultants, are regulated by this code of ethics and are subject to constant monitoring by the company regarding consistency of supply The company adopts procedures to guarantee maximum transparency in its dealings with suppliers 20
The company does not consider it correct to make a supplier stipulate a contract which would be unfavourable to him, with the underlying promise of further supplies with more advantageous conditions The company requires all suppliers to be aware of the Code of Ethics and to guarantee that the conditions included will be respected This is considered fundamental for the agreement of a contract and to maintain a relationship 43 Correctness and diligence within contracts The company and the supplier must operate in a way which will ensure collaboration and mutual trust The company is committed to keep the supplier informed in a correct and timely manner regarding the nature of its activity, the form and terms of payment The supplier must, in fulfilling its contractual obligations, conform to principles of fairness, correctness, diligence and good faith All documentation regarding the choice of suppliers must be kept so that the decision can be justified 5 Relations with regulatory institutions 51 Relations with Administrative Authorities In relations with institutions, employees as well as external contributors whose actions may in some way refer to the company, must behave correctly, independently of market competitiveness and the importance of the business being transacted Any form of corruption, favours, collusion, abusive payments to authorities (especially Public Administration), direct or indirect solicitation to obtain personal or any other advantage is forbidden Gifts or hospitality towards government representatives, public officials or employees are only allowed for immaterial amounts which would not compromise the integrity, independence and reputation of either party In any case, this type of expenditure must be authorised and supported by adequate documentation 21
During business negotiations or commercial relations with the Public Administration no action should be taken which could be of personal benefit to their employees or their relatives Where the company is represented by a third party or consultants during its relations with the Public Administration the same principles apply and every possible conflict should be avoided Payments or reward of any kind, made directly or indirectly, to facilitate or purchase an official act contrary to the duty of the Public Administration officer, even when related to a judicial matter, carried out to the benefit and/or interest of the company, are expressly forbidden 52 Relations with judicial authorities In the same way, similar conduct towards administrators, employees and consultants who may be involved in a civil, penal or administrative case, in order to obtain a direct or indirect benefit to the company are also expressly forbidden The company will give complete cooperation to the Judicial Authorities during any inspections, controls, investigations and judicial procedures 6 Relations with subsidiaries and associated companies UFI Filters SpA recognises the independence of its subsidiaries and associated companies and requires that they also adhere to this Code of Ethics, whilst respecting all the local laws and regulations Whilst carrying out its activities, the company will avoid any behaviour which may be prejudicial to the integrity and image of the Group, even where it is acting in the company s interest Equally, UFI Filters SpA requires that its subsidiaries and associated companies refrain from actions or decisions which, even though they may lead to benefits to the company, may be damaging to the integrity or image of other companies within the Group UFI Filters SpA operates within its own market in conjunction with its subsidiaries, optimising synergies that this may create As such, each subsidiary, whilst carrying out its own activities and responsibilities, is committed to follow the holding companies in respecting fully this Ethics Code To that end, UFI Filters SpA submits this Code of Ethics to its subsidiaries so that they formally adopt 22
the code Furthermore this code must be applied to all subsidiaries and all its administrators, associates, suppliers and employees 7 Relationship with the environment Care of the environment is one of the key elements in the responsibilities of UFI Filters SpA One dimension of the social responsibility of the company is avoidance of waste and attention to environmental consequences of its decisions UFI Filters SpA believes it can have a significant impact in terms of sustaining the environment, particularly in its environmental and social contest both in the short and long term This impact refers to use of resources and to the generation of emissions and refuse (direct impact) and to activities not directly controller by the company such as by its customers and suppliers (indirect impact) In this respect, UFI Filters SpA: Guarantees full and complete respect for environmental legislation and maintenance of environmental certification through ISO 14001; Researches continually innovative and efficient environmental solutions, including offering specific products and services to customers and suggestions to its suppliers Relating to responsible and efficient use of resources, the company: Follows a conscientious use of the resources necessary to carry out its activities, including the use of an environmental operating policy and continuous improvement of energy efficiency; Aims for a continuous improvement of its environmental footprint by monitoring relevant data Finally, in respect of its environmental and social responsibilities the company: recognises its responsibilities towards the environment throughout the supply chain and is committed to encourage its suppliers and sub-suppliers to adopt policies for the environment, human and workers rights 23
Views sympathetically suppliers with positive environmental policies who adopt necessary measures to reduce negative effects caused by their activities 8 Relationships with political parties, trades unions and associations The company will not make financial contributions to parties, movements, committees, political organisations and trades unions, their representatives and candidates A relationship with political and trades union representatives, with residents associations or voluntary organisations, may take the form of sponsorship where there may be a possibility for cultural growth, for promoting social and environmental objectives, or for reasons of cooperation, solidarity or equal opportunities 9 Relationship with the mass media All communications and publications must be made only by the appropriately authorised person All information released must be based on the principles of truth, transparency, accuracy and prudence, respecting the ethics code, internal procedures and environmental policies It is forbidden to communicate data or news unless authorised by the company 24
Section IV - Application of the Code 1 Application of the Code 11 Communication of Violations All interested parties, both internal and external, are obliged to inform, either verbally or in writing (about the nature of the violation), and not anonymously, any contraventions of this Code of Ethics or any request to contravene the code, to a member of the Surveillance Committee The company will protect the person who reports the contravention against any repercussions and will protect the identity of the person except where unavoidable for legal purposes 12 Sanctions The company has the right/obligation to monitor the observance of this code, putting in place any necessary controls or preventative actions The contents of this Code forcibly underline the requirement for the company s employees to precisely and punctually respect the law in the carrying out of their duties To render efficient and operational the method of prevention, management and control implemented by the company to prevent offences under legislation n 231/01, it has been necessary to formulate an appropriate system for sanctions Violations of this code will in fact damage the relationship of trust between the company and its employee and must therefore lead to disciplinary action, quite apart from any eventual criminal process which may arise following behaviour which may be considered the commitment of an offence In the case of employees, any sanction must respect the provisions of local employment law The competent authority, depending upon the seriousness of the offence, will take the necessary action independently from any criminal proceedings In imposing sanctions, the competent authority will take account of: The circumstances in which the violation took place; 25
The type of violation perpetrated; The seriousness of the behaviour concerned; The fact that the behaviour was only an attempted violation; The possibility of a recurrence Behaviour not respecting this Code will lead to: For employees, sanctions in line with local employment law (in Italy CCNL and Lgs 20 May 1070, Art 7); For management, just cause for revoking their contract with immediate effect; For suppliers, external associates, sub-contractors and temporary workers, cause for termination of their agreements In all these situations, the company will have the right to claim damages caused by the violation committed Determination and application of the sanctions must take account of the seriousness and proportion of the alleged offence 26