Shanghai Jin Jiang Htl : 28/06/2019 TERMS OF REFERENCE FOR AUDIT AND RISK CONTROL COM...

Shanghai Jin Jiang International Hotels (Group) Company Limited*

上 海 錦 江 國 際 酒 店（ 集 團 ）股 份 有 限 公 司

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

(Stock Code: 02006)

TERMS OF REFERENCE FOR AUDIT AND RISK CONTROL

COMMITTEE UNDER THE BOARD OF DIRECTORS

Chapter 1 Legal Basis for the Establishment of Audit and Risk Control Committee

Rule 1 According to Rule 3.21 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules''), Shanghai Jin Jiang International Hotels (Group) Company Limited (the ''Company'') shall establish the audit and risk control committee (the ''Audit and Risk Control Committee''). The Audit and Risk Control Committee is a committee established under the board of directors of the Company (the ''Board''), which is mainly responsible for the examination and supervision of the procedures for financial reporting, risk management and internal control of the Company. The operation of the Audit and Risk Control Committee shall comply with ''A Guide for Effective Audit Committee'' issued by the Hong Kong Institute of Certified Public Accountants in February 2002.

Chapter 2 Composition

Rule 2 The members of the Audit and Risk Control Committee shall be elected and appointed by the Board, who shall have a term of office consistent with that of the Board. The member of the Audit and Risk Control Committee can be re-elected.

Rule 3 All members of the Audit and Risk Control Committee shall be non- executive directors of the Company, of which, at least one member shall be an independent non-executive director who possesses the appropriate accounting or relevant financial management expertise satisfying the requirements under Rule 3.10(2) of the Listing Rules. The Audit and Risk Control Committee shall comprise at least three members, and the majority of whom shall be independent non-executive directors of the Company.

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Rule 4 The Audit and Risk Control Committee shall have a chairman, who shall be an independent non-executive director and elected by the members of the Audit and Risk Control Committee.

Rule 5 The Audit and Risk Control Committee shall have a secretary, who shall be appointed by the chairman of the Audit and Risk Control Committee.

Rule 6 Apart from directors' remuneration, members of the Audit and Risk Control Committee shall not, whether directly or indirectly, receive any consultation fee, advisory fee or other remuneration from the Company.

Rule 7 A former partner of the Company's existing auditing firm should be prohibited from acting as a member of the Audit and Risk Control Committee for a period of two years from the date of his ceasing (whichever is later):

1. to be a partner of the auditing firm; or
2. to have any financial interest in the auditing firm.

Chapter 3 Attendants of the Meeting of the Audit and Risk Control Committee

Rule 8 All members of the Audit and Risk Control Committee, qualified accountants of the Company, financial manager, the head of internal audit department and representatives of the external auditor shall be entitled to attend the meeting of the Audit and Risk Control Committee. Other members of the Board are also entitled to attend the meeting. However, the Audit and Risk Control Committee shall convene at least one meeting without the presence of any executive director of the Company annually.

Rule 9 The secretary of the Audit and Risk Control Committee is entitled to attend the meeting.

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Chapter 4 Minutes

Rule 10 Full minutes of Audit and Risk Control Committee meetings should be kept by the secretary of the Board/company secretary. Minutes of Audit and Risk Control Committee meetings should be kept by secretary of the Board/company secretary and should be open for inspection at any reasonable time on reasonable notice by any director. Minutes of Audit and Risk Control Committee meetings should record in sufficient detail the matters considered by the Board and decisions reached, including any concerns raised by directors or dissenting views expressed.

Chapter 5 Frequency of Meetings

Rule 11 The Audit and Risk Control Committee shall hold at least two meetings annually. The Audit and Risk Control Committee shall convene at least two meetings with the external auditor of the Company annually.

Chapter 6 Authorities of the Audit and Risk Control Committee

Rule 12 The Audit and Risk Control Committee shall possess the necessary fees, other resources and relevant power for the performance of its duties, including the power of choosing, employing and dismissing any special or independent legal advisors, accountants or other experts and advisors based on its needs, as well as the power of approving the fees and other terms of engagement of the above advisors without the approval of the Board or management.

Rule 13 The Audit and Risk Control Committee may obtain any necessary information from any employees of the Company, and all employees shall co-operate with the Audit and Risk Control Committee upon its request.

Rule 14 The Audit and Risk Control Committee may seek for external legal or other independent and professional advices, and may invite external parties with relevant experience and professional knowledge to attend its meeting whenever necessary. The Company shall provide the necessary fees and other resources to the Audit and Risk Control Committee for its performance of duties.

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Chapter 7 Duties of the Audit and Risk Control Committee

Rule 15 The duties of the Audit and Risk Control Committee are:

1. to be responsible for making recommendations to the Board on the appointment, reappointment, removal and discontinuance of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal of that auditor and propose any matters required to be voted in the general meeting to the general meeting through the Board for final consideration and approval. The Committee is also responsible for monitoring the work of external auditors, including reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards.
2. To approve in advance all audit and non-audit services provided by the independent auditor or formulate appropriate procedures for such advanced approval, and to consider whether the independence of the external auditor would be affected by the provision of non- audit service to the Company by such external auditor. The Audit and Risk Control Committee may in its discretion authorize one or more members to make advanced approval on any audit or non-audit services to be performed by the external auditor, but the above approval shall be submitted to the next meeting of the Audit and Risk Control Committee for its approval.
3. to develop and implement policies on engaging an external auditor to supply non-audit services. For this purpose, the ''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) and report to the Board, identifying and making recommendations on any action or improvement that must be taken and make recommendations.
4. to request the external auditor to provide the report on the relevant audited annual financial statements of the Company for any audit on a timely basis. The report shall include the followings:
5. 1. all critical accounting policies adopted and their application;

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1. 1. all other processing method which have been discussed with the management and complies with the requirements of applicable accounting standards, the result of adopting such other disclosures and processing methods, and the processing method which the external auditor thinks fit;
   2. any important written communication between the external auditor and management personnel, such as any letter to the management and list of disagreement.
2. to monitor the integrity of the financial statements of the Company, and the annual report and account as well as interim report of the Company, and to review significant financial reporting judgments contained the statements and reports; to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit procedure in accordance with appropriate standards; to discuss with the external auditor on the nature and scope of audit and the relevant reporting obligations before the commencement of audit procedures, if more than one auditing firm participate in the work, co-ordination of the work among all firms shall be ensured; to discuss with the management on the time and procedures for changing major partner in charge, consenting partner and other partners actively involved in the auditing work of the Company of the auditing firm.
3. To monitor the integrity of the annual and interim financial statements and reports of the Company before submitting relevant statements and reports to the Board, and to review significant financial reporting judgments contained in the statements and reports, particularly the followings:
4. 1. any changes in accounting policies and practices;
   2. major judgmental areas;
   3. significant adjustments to be made after auditing the account;
   4. the going concern assumptions and any qualifications;
   5. compliance with accounting standards; and
   6. compliance with the Listing Rules and legal requirements in relation to financial reporting.

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