China Technology Solar Power Hldgs : Announcements and Notices - Terms of reference of the Audit Committee of the Board of Directors (77KB, PDF)

CHINA TECHNOLOGY SOLAR POWER HOLDINGS LIMITED 中科光電控股有限公司*

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8111)

Terms of reference of the Audit Committee

of the Board of Directors

* for identification purpose only

China Technology Solar Power Holdings Limited ("Company")

Terms of reference of the Audit Committee ("AC")

of the Board of Directors ("Board") of the Company

• 1. Membership

• 1.1 The AC shall comprise not less than three members to be appointed by the Board. All members of the AC must be non-executive directors ("Directors", each a "Director") of the Company, at least one of whom is an independent non-executive Director with appropriate professional qualifications or accounting or related financial management expertise and the majority of whom should be independent non-executive Directors.

• 1.2 The Board shall appoint the chairman of the AC who should be one of the independent non-executive Directors sitting on the AC.

• 1.3 Only members of the AC have the right to attend the AC meetings. However, any Director, executive members of the Company or other person may be invited to attend the meetings when the AC considers that their attendance can assist it to discharge its duties.

• 1.4 An AC member may not appoint any alternate.

• 1.5 A former partner of the Company's existing auditing firm should be prohibited from acting as a member of the AC for a period of 2 years from the date of the person ceasing:

  • (a) to be a partner of the firm; or

  • (b) to have any financial interest in the firm, whichever is later.

• 2. Frequency and proceedings of meetings

• 2.1 The AC shall meet at least four times a year and at such other times as the chairman of the AC shall require. The external auditors may request a meeting if they consider that one is necessary.

• 2.2 The quorum for meetings of the AC shall be two and of such a number that the independent non-executive Directors shall form the majority in the meeting. A duly convened meeting of the AC at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in the AC.

• 2.3 AC members may pass resolutions by way of written resolutions, but such must be passed by all AC members in writing.

• 3. Secretary

• 3.1 The company secretary of the Company (or a duly appointed secretary of the meeting) shall act as the secretary of the AC.

• 4. Notice of Meetings

• 4.1 Meetings of the AC shall be convened by the chairman of the AC. In the absence of the chairman of the AC, the remaining members present shall elect one of them to chair the meeting.

• 4.2 Unless otherwise agreed, notice of each meeting setting out the venue, time and date together with the agenda of items to be discussed, shall be forwarded to each of the members of the AC and any other person required to attend at least seven working days before the date of meeting. Supporting papers of the meeting shall be sent to all members of the AC and other attendees (if any) at least three working days before the meeting.

• 4.3 Any AC member may or, on the request of a AC member, the secretary to the AC shall, at any time summon a AC meeting. Notice shall be given to each AC member in person orally or in writing or by telephone or by email or by facsimile transmission at the correspondence address or telephone number or email address or facsimile number from time to time notified to the secretary by such AC member or in such other manner as the AC members may from time to time determine.

• 4.4 Any notice given orally shall be confirmed in writing as soon as practicable and before the meeting.

• 4.5 The finance director of the Company, the head of internal audit of the Company (or any officer(s) assuming the relevant functions but having a different designation) and a representative of the external auditors shall normally attend meetings. However, the AC shall meet at least annually with the external auditors without the executive Directors present.

• 5. Minutes of the Meetings

• 5.1 Minutes of the AC meetings shall record in sufficient detail the matters considered in the meetings and decisions reached, including any concerns raised and dissenting views expressed.

  Draft and final versions of minutes of the meetings should be sent to all AC members for their comment and records within fourteen working days after the meeting and unless there is a conflict of interest, to all other members of the Board for their information.

• 5.2 The secretary of the AC shall keep the minutes and resolutions passed at the AC meetings and they should be open for inspection at any reasonable time on reasonable notice by any Director save when there is a conflict of interest.

• 6. Annual General Meeting

• 6.1 The chairman of the AC shall attend the Annual General Meeting of the Company and be prepared to respond to shareholders' questions on the activities of the AC.

• 7. Duties

• 7.1 The AC shall:

  • 7.1.1 consider, and make recommendations to the Board on the appointment, reappointment and removal of the external auditor, and approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;

  • 7.1.2 review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards;

  • 7.1.3 discuss with the auditors before the audit commences the nature and scope of the audit and reporting obligations and ensure co-ordination where more than one audit firm is involved;

  • 7.1.4 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 AC should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;

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

    • (a) any changes in accounting policies and practices;

    • (b) major judgmental areas;

    • (c) significant adjustments resulting from audit;

    • (d) the going concern assumptions and any qualifications;

• (e) compliance with accounting standards;

• (f) compliance with the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited ("GEM Listing Rules") and legal requirements in relation to financial reporting;

• (g) the fairness and reasonableness of any connected transaction and the impact of such transaction on the profitability of the Company;

• (h) whether all relevant items have been adequately disclosed in the Company's financial statements and whether the disclosures give a fair view of the Company's financial conditions;

• (i) any significant or unusual items that are, or may need to be, reflected in such reports and accounts; and

• (j) the cash flow position of the Company;

and provide advice and comments thereon to the Board;

• 7.1.6 as regards to paragraph 7.1.5 above:

  • (a) members of the AC should liaise with the Board and senior management of the Company and the AC must meet, at least twice a year, with the Company's auditors; and

  • (b) the AC should consider any significant or unusual items that are, or may need to be, reflected in the report and accounts, it should give due consideration to any matters that have been raised by the Company's staff responsible for the accounting and financial reporting function, compliance officer or auditors;

• 7.1.7 discuss problems and reservations arising from the interim and final audits, and any matters the auditors may wish to discuss (in the absence of management where necessary);

• 7.1.8 review the Company's financial controls, and unless expressly addressed by a separate board risk committee, or by the Board itself, review the Company's risk management and internal control systems;

• 7.1.9 discuss the risk management and internal control systems with management to ensure that management has performed its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function;