Dragon Crown : TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

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Dragon Crown Group Holdings Limited

龍翔集團控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 935)

TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

(Adopted by the Company pursuant to the Board resolution passed on 25 January 2016)

1. MEMBERSHIP

   
   

2. Members of Audit Committee shall be appointed by the board of directors (the "Board") of the Company.

   
   

3. The Audit Committee must consist of a minimum of three members, all of whom must be non-executive directors.

   
   

4. The members shall be appointed from amongst the non-executive Directors of the Company. The majority of the members of the Audit Committee must be independent non-executive directors ("INEDs"), at least one of whom must have appropriate professional qualifications or accounting or related financial management expertise as required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

   
   

5. A former partner of the Company's existing auditing firm shall not act as a member of the Audit Committee until one year after the commencement of the later of the date of his ceasing

6. to be a partner of the firm; or (b) to have any financial interest in the firm, whichever is the later.

   
   

7. The term of each appointment to the members of the Audit Committee shall be determined by the Board upon appointment.




1. CHAIRMAN

   
   

2. The chairman of the Audit Committee shall be appointed by the Board and must be an INED.

3. SECRETARY

   
   

4. The company secretary shall be the secretary of the Audit Committee. In the absence of the company secretary, his/her delegate(s) or any person elected by the members present at the meeting of the Audit Committee, shall attend the meeting of the Audit Committee and take minutes.

   
   

5. The Audit Committee may from time to time appoint another secretary with appropriate qualification and experience.

   
   

6. PROCEEDINGS OF THE AUDIT COMMITTEE




Unless otherwise specified hereunder, the provisions contained in the Company's Articles of Association (as amended from time to time) for regulating meetings and proceedings of directors shall apply to the meetings and proceedings of the Audit Committee.




1. Quorum

   
   

2. The quorum for meetings of the Audit Committee shall be any two members, one of them should be an INED.

   
   

3. Frequency of meetings

   
   

4. The Audit Committee shall hold at least two regular meetings in a year to review and discuss the interim and annual financial statements of the Company. Additional meetings of the Audit Committee may be held as and when required.

   
   

5. The Audit Committee shall meet with the external auditors at least twice a year without executive Board members present (except those invited by the Audit Committee). The external auditors may request a meeting if they consider necessary.

   
   

6. Attendance at meetings

   
   

7. Members of the Audit Committee may attend meetings of the Audit Committee either in person, by telephone or through other electronic means of communication or in such other manner as the members may agree.

   
   

8. Upon invitation by the Audit Committee, the following persons may attend all or any of the meeting: (a) the head of internal audit (if absence) the representative of internal audit; (b) the financial controller; (c) other Board members.

   
   

9. Only the members shall have the voting powers.

10. Notice of meetings

    
    

11. A meeting of the Audit Committee may be convened by any of its members or by the company secretary.

    
    

12. Unless otherwise agreed, notice of each meeting confirming the venue, time and date shall be sent to each member of the Audit Committee, and to any other person required to attend in relation to all regular meetings of the Audit Committee, at least 14 days before the date of the meeting; in relation to continued meetings held within 14 days, no prior notice is required.

    
    

13. Agenda and accompanying supporting papers shall be sent to all members of the Audit Committee and to other attendees as appropriate at least 3 days before the date of the meeting (or such other period as the members may agree).

    
    

14. Minutes of meetings

    
    

15. Draft and final versions of minutes of Audit Committee meetings shall be sent to all Audit Committee members for their comment and records within a reasonable time after the meeting. Once they are agreed, the secretary of the Audit Committee shall circulate the minutes and reports of the Audit Committee to all members of the Board.

    
    

16. Minutes of the Audit Committee shall be kept by the company secretary and shall be available for inspection by any member of the Audit Committee or the Board at any reasonable time on reasonable notice.

    
    

17. Written resolutions

    
    

18. Resolutions of the Audit Committee shall be passed with a majority of votes.

    
    

19. Without prejudice to any requirement under the Listing Rules, written resolution may be passed and adopted by all members of the Audit Committee.




1. RESPONSIBILITIES AND AUTHORITIES OF THE AUDIT COMMITTEE

   
   

2. The responsibilities and authorities of the Audit Committee shall include such responsibilities and authorities set out in the relevant code provisions of the Corporate Governance Code (the "CG Code") as contained in Appendix 14 of the Listing Rules (as amended from time to time).

3. Without prejudice to any requirement under the CG Code, the duties of the Audit Committee include the following:

   
   
4. Relationships with the Company's auditors

   
   

5. To act as the key representative body for overseeing the Company's relation with the external auditor, and to be primarily responsible for making recommendation to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and to consider any questions of their resignation or dismissal.

   
   

6. To review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable accounting standard, and to discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences.

   
   

7. To develop and implement policy on engaging an external auditor to supply non- audit services. For this purpose, "external auditor" includes any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party knowing all relevant information would reasonably conclude to be part of the audit firm nationally or internationally. The Audit Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed.

   
   

8. Review of the Company's financial information




1. To monitor integrity of the Company's financial statements and annual report and accounts, half-year report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in them. In reviewing these reports before submission to the Board, the Audit Committee should focus particularly on:

   
   

2. any changes in accounting policies and practices;

   
   

3. major judgmental areas;

   
   

4. significant adjustments resulting from audit;

   
   

5. the going concern assumptions and any qualifications;

   
   

6. compliance with accounting standards; and

   
   

7. compliance with the Listing Rules and legal requirements in relation to financial reporting.