海通恆信國際融資租賃股份有限公司

Haitong Unitrust International Financial Leasing Co., Ltd.

(A joint stock company incorporated in the People's Republic of China with limited liability)

AUDIT COMMITTEE UNDER THE BOARD OF DIRECTORS

TERMS OF REFERENCE

The English version is for reference only. Should there be any inconsistency between the English and Chinese versions, the latter shall prevail.

1

Chapter 1  General Provisions

Clause 1 In order to strengthen the decision-making of the board of directors, further improve the development of the internal control system of Haitong Unitrust International Financial Leasing Co., Ltd. (the "Company"), ensure the effective supervision of the management by the board of directors and continuously optimize the corporate governance structure, the Audit Committee under the board of directors of the Company is established with these terms of reference in accordance with the Company Law of the People's Republic of China, the Articles of Association of Haitong Unitrust International Financial Leasing Co., Ltd. (the "Articles"), the Terms of Reference of the Board of Directors of Haitong Unitrust International Financial Leasing Co., Ltd. and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Hong Kong Listing Rules").

Clause 2 The Audit Committee of the board of directors is a special committee set up by the board of directors, mainly responsible for the communications between the Company and the external auditor and its supervision and review, overseeing internal audit, evaluating and improving the internal control system of the Company and conducting risk analyses on major investment projects in operation by the Company. The Audit Committee of the board of directors shall be accountable and report to the board of directors.

Chapter 2  Composition

Clause 3 The Audit Committee shall consist of three non-executive directors, with a majority of whom being independent non-executive directors. At least one of the independent non-executive directors shall possess the applicable professional qualifications as prescribed by the Hong Kong Listing Rules, or have appropriate accounting or relevant financial management expertise.

Clause 4 Members of the Audit Committee shall be nominated by not less than half of the independent non-executive directors or one-third of all the directors, and shall be elected by more than half of all the members of the board of directors of the Company. A former partner of the existing external auditor responsible for auditing the accounts of the Company shall be prohibited from acting as a member of the Audit Committee for a period of two years from the date of his/her ceasing (whichever is later):

  1. to be a partner of the external auditor; or
  1. to have any financial interest in the external auditor.

2

Clause 5 The Audit Committee shall have one chairman (convener) who shall be an independent non-executive director with accounting expertise and preside over the Audit Committee. The chairman shall be elected from members of the Audit Committee.

Clause 6 The term of office of the Audit Committee shall be the same as that of the board of directors. A member may serve consecutive terms if re-elected upon the expiry of his/her term of office. A member shall cease to be a member when he/she is no longer a director of the Company, and the board of directors shall fill up the vacancy in accordance with Clauses 3 to 5 above.

Clause 7 The Audit Control Department of the Company is an internal audit department and the executive body of the Audit Committee.

Clause 8 If a member of the Audit Committee fails to attend meetings of the Audit Committee in person for two consecutive times and does not delegate another member to act on his/her behalf, he/she shall be deemed as incapable of performing his/her duties, and shall be replaced by the board of directors.

Clause 9 Save as the circumstances set out in the aforesaid clauses and the circumstances in which a person is prohibited from acting as a director or independent non-executive director in the Articles, a member of the Audit Committee shall not be removed without reasons before the expiry of his/her term of office.

Clause 10 A member of the Audit Committee may tender his/her resignation during his/her term of office in compliance with the laws, regulations, the Hong Kong Listing Rules and the relevant requirements in the Articles in relation to the resignation of directors or independent non-executive directors.

Clause 11 Where the board of directors removes a member of the Audit Committee pursuant to Clause 8 hereof or a member resigns from his/her position as a member of the Audit Committee before expiry of his/her term of office pursuant to Clause 10 hereof, he/she may continue to perform his/her duties as a director or independent non-executive director of the Company during his/her term of office without any prejudice.

Chapter 3  Duties and Authorities

Clause 12 The responsibilities of the Audit Committee include:

  1. Relationship with external auditor of the Company
    1. proposing the appointment, re-appointment or change of the external auditor, approving the remuneration and terms of engagement of the external auditor, and dealing with any matters in relation to the resignation or dismissal of the external auditor;

3

    1. reviewing and monitoring the independence and objectivity of the external auditor and the effectiveness of the audit process in accordance with the applicable standards. The Audit Committee shall discuss with the external auditor the nature and scope of the audit and the relevant reporting obligations before the audit commences;
    2. developing and implementing policies on the provision of non-audit services by the external auditor. For the purpose of this clause, an external auditor shall include any entity that is under common control, ownership or management with the audit firm or any entity that a third party having reasonable knowledge of all relevant information would reasonably conclude as part of the local or international business of the audit firm. The Audit Committee shall report and propose to the board of directors any matters where action or improvement is needed;
    3. acting as the representative of the Company and the external auditor and monitoring their relationship;
  1. Reviewing the financial information of the Company
    1. reviewing the financial information of the Company and its disclosure;
    2. monitoring integrity of the financial statements and annual reports and accounts, interim reports and quarterly reports (if any) of the Company, and reviewing significant opinions contained therein in respect of relevant financial reporting. Before submitting relevant statements and reports to the board of directors, the Audit Committee should focus particularly on and review:
      1. any changes in accounting policies and practices;
      2. matters involving material judgements;
      3. significant adjustments resulting from audit;
      4. the going concern assumptions and any qualifications;
      5. compliance with accounting standards; and
      6. compliance with the Hong Kong Listing Rules and legal requirements in relation to financial reporting;
    3. in relation to 6 above:
      1. members of the Audit Committee should liaise with the board of directors and senior management. The Audit Committee must meet, at least twice a year, with the external auditor of the Company; and

4

    1. the Audit Committee shall consider any significant or unusual items that are, or may need to be, reflected in such reports and accounts, it should give due consideration to any matters that have been raised by the staff responsible for accounting and financial reporting function, compliance officer or external auditor of the Company;
  1. Supervising the financial reporting and internal control procedures of the Company
    1. reviewing and evaluating the financial control system and internal audit system of the Company;
    2. discussing the internal control system with the management to ensure that the management has performed its duty to have an effective internal control system. The discussion should include adequacy of the resources, staff qualifications and experience, training programs and budgets thereof in relation to accounting and financial reporting function of the Company;
    3. considering major investigation findings on internal control matters and the response of the management to these findings on its own initiative or as delegated by the board of directors;
    4. conducting all types of specific audits and liaising with the internal audit department and external auditor so as to coordinate their works; ensuring that the internal audit department is adequately resourced and has appropriate standing within the Company, and reviewing and examining the effectiveness of internal audit function;
    5. reviewing the financial and accounting policies and practices of the group;
    6. reviewing the external auditor's management letter, any material queries raised by the external auditor to the management about accounting records, financial accounts or control systems and the response of the management;
    7. ensuring that the board of directors will provide a timely response to the issues raised in the external auditor's management letter;
    8. reviewing the following arrangements of the Company: the employees of the Company can, in confidence, raise concerns about possible irregularities in financial reporting, internal control or other matters. The Audit Committee shall ensure that proper arrangements are in place for the Company to conduct fair and independent investigations and to take appropriate actions accordingly;

5

  1. providing advice and suggestions on the appraisals and replacement of the head of the internal audit department of the Company;
  2. convening meetings regularly to review the working plans and reports submitted by the internal audit department; reporting to the board of directors regularly on matters including but not limited to progress and quality of internal audit and major problems identified;

(IV)

Others

18. other responsibilities as stipulated in the Articles;

19. other relevant matters as authorized by the board of directors.

Clause 13

The Audit Committee shall be accountable to the board of directors and its

proposals shall be submitted to the board of directors for consideration and

approval. The Audit Committee shall coordinate with the board of supervisors in

respect of the supervisory and audit activities.

Chapter 4  Responsibilities of the Chairman

Clause 14

The chairman of the Audit Committee shall mainly perform the following

responsibilities:

(I)

convening regular meetings of the Audit Committee;

(II)

convening extraordinary meetings of the Audit Committee under special

circumstances;

(III)

presiding over meetings of the Audit Committee;

(IV)

arranging and preparing research reports on audit projects;

(V)

reviewing and finalizing daily research reports;

(VI)

other duties as authorized by the board of directors and the Audit

Committee.

Chapter 5  Working Procedures

Clause 15

The Audit Supervision Department is responsible for making the preliminary

preparations for decision making of the Audit Committee and facilitating the

functional departments such as the Finance Department to provide the relevant

written information of the Company:

(I)

relevant financial reports of the Company;

6

  1. work reports of the internal audit department and external auditor;
  1. external audit contracts and the relevant work reports;

(IV) public disclosure of information made by the Company;

  1. audit reports on major connected transactions of the Company;

(VI)

financial and legal materials in relation to major investment projects;

(VII)

other relevant matters.

Clause 16 The reports collected and submitted by the internal audit department shall be discussed by the Audit Committee, and the relevant written materials shall be submitted to the board of directors for discussion:

  1. work appraisal on the external auditor, and the appointment and replacement of the external auditor;
  1. whether the internal audit system of the Company has been effectively implemented and whether the financial reports of the Company are comprehensive and true;

(III)

whether information such as financial reports disclosed publicly by

the Company is objective and true, and whether the major connected

transactions of the Company are in compliance with the relevant laws and

regulations;

(IV)

work appraisal on the internal finance department and the Audit Supervision

Department of the Company, including their persons-in-charge;

  1. other relevant matters.

Chapter 6  Procedures of Meetings

Clause 17 The Audit Committee shall convene at least two meetings every year. The chairman may propose to convene extraordinary meetings, and the notice of the meeting shall be served to all members five days before such meeting. The meetings shall be presided over by the chairman. In the event that the chairman is unable to attend the meeting, he/she may authorize another member to preside over the meeting.

Clause 18 Meetings of the Audit Committee shall not be held without the presence of no less than two-thirds of the members. Each member shall be have one vote. A resolution of the meeting shall be passed by a simple majority of the votes of all members.

7

Clause 19 Meetings of the Audit Committee shall be held in the form of physical meetings in general. Under special circumstances, on the premise that the members are able to sufficiently express their opinions, with the consent of the chairman, meetings may be held by means of correspondence.

Clause 20 Heads of the Audit Supervision Department and the Finance Department may observe meetings of the Audit Committee and the directors, supervisors and senior management of the Company may be invited to observe the meetings when necessary.

Clause 21 The Audit Committee may, if necessary, engage intermediary institutions to provide

professional advice on its decisions at the expense of the Company.

Clause 22 The convening, voting and passing of resolutions of the meetings of the Audit Committee shall be in compliance with the requirements under the relevant laws, regulations, the Hong Kong Listing Rules, the Articles and these terms of reference.

Clause 23 Minutes shall be kept for the meetings of the Audit Committee and shall be signed by members present at the meetings. The minutes of the meetings shall be filed by the Company. Upon the reasonable notice of any directors, such minutes shall be available for inspection by the director in a reasonable period of time.

Minutes of the meetings of the Audit Committee shall record in sufficient detail the matters considered and decisions reached at the meetings, including any concerns raised by the directors or dissenting views expressed by the members. Draft and final versions of the minutes shall be sent to all members of the Audit Committee for review and record, respectively, within a reasonable period of time after the meetings.

According to laws, regulations, the Articles and relevant procedures of meetings, if the resolutions passed by the meetings of the Audit Committee are within the scope of approval by the board of directors, the relevant resolutions passed by, and voting results of, the Audit Committee shall be submitted in writing to the board of directors of the Company for approval.

Clause 24 All members of the Audit Committee and persons observing the meeting shall keep the matters discussed at the meetings confidential, and shall not disclose the relevant information without authorization.

8

Chapter 7  Supplementary Provisions

Clause 25 Unless otherwise specified, terms used herein shall have the same meanings ascribed to them in the Articles.

Clause 26 For any matters not covered by these terms of reference, the relevant laws and regulations of the PRC, the Hong Kong Listing Rules and the Articles shall prevail. In the event that these terms of reference are in contravention with the laws and regulations subsequently promulgated by the PRC government, the Hong Kong Listing Rules or the Articles as amended under lawful procedures, the relevant laws and regulations of the PRC, the Hong Kong Listing Rules and the Articles shall prevail. Amendments to these terms of reference shall be made forthwith and submitted to the board of directors for approval.

Clause 27 These terms of reference have been approved by the board of directors and shall become effective and applicable from the date on which the overseas listed foreign shares (H shares) of the Company are issued and listed on The Stock Exchange of Hong Kong Limited. Since the date on which these terms of reference become effective, the original "Terms of Reference of the Audit Committee under the Board of Directors" of the Company will lapse automatically. The board of directors of the Company shall be responsible for amending and interpreting these terms of reference.

9

Attachments

  • Original document
  • Permalink

Disclaimer

Haitong UniTrust International Leasing Co. Ltd. published this content on 10 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2020 10:53:21 UTC