Want Want China : Terms of Reference for the Audit and Risk Management Committee

WANT WANT CHINA HOLDINGS LIMITED 中國旺旺控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 0151)

Terms of Reference for the

Audit and Risk Management Committee of

Want Want China Holdings Limited

Last revised: 1 December 2018 Adoption date: 18 February 2008

Definitions

1.

For the purposes of these terms of reference (the Terms):Audit and Risk Management Committee means the audit and risk management committee (formerly known as audit committee) established by resolution of the Board in accordance with clause 2 of these Terms.

Board means the board of directors of the Company.

Chief Financial Officer means the senior officer of the Company responsible for financial management as appointed by the Board from time to time.

Company Secretary means the company secretary of the Company.

Directors means the members of the Board.

Group means the Company and its subsidiaries and associated companies at the relevant time or, where the context so requires, in respect of the period before the Company became the holding company of its present subsidiaries and associated companies, the present subsidiaries and associated companies of the Company or the businesses operated by its present subsidiaries and associated companies or (as the case may be) its predecessor.

Listing Rules mean the Rules Governing the Listing of securities on The Stock Exchange of Hong Kong Limited (as amended from time to time).

Senior Management means the chairman, chief executive, vice chairman, chief operating officer, Chief Financial Officer, Company Secretary and any other officer of the Group determined by the Board from time to time as senior management of the Company.

Shareholders means the shareholders of the Company.

Stock Exchange means The Stock Exchange of Hong Kong Limited.

Constitution

2. The Audit and Risk Management Committee (formerly known as audit committee) was established by resolutions of the Board on 18 February 2008.

Membership

3. The members of the Audit and Risk Management Committee shall be appointed by the Board from among the non-executive Directors and shall consist of not less than three members, a majority of whom shall be independent non-executive Directors and at least one of whom shall be an independent non-executive Director with appropriate professional qualifications or accounting or related financial management expertise as required by the Listing Rules. The quorum for meetings of the Audit and Risk Management Committee shall be two members.

4. A former partner of the Company's existing auditing firm shall be prohibited from acting as a member of the Audit and Risk Management Committee for a period of two years from the date of his ceasing:

• (a) to be a partner of the firm; or

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

5. The chairman of the Audit and Risk Management Committee shall be appointed by the Board and shall be an independent non-executive Director.

Attendance at meetings

6. The Chief Financial Officer, the head of internal audit of the Company and a representative of the external auditors shall normally attend meetings of the Audit and Risk Management Committee. However, at least once a year the Audit and Risk Management Committee shall meet with the external and internal auditors without the executive Directors present.

Frequency and conduct of meetings

7. Meetings shall be held not less than twice a year. The external auditors may request a meeting if they consider that one is necessary.

8. As far as practicable, an agenda and accompanying board papers should be sent in full to all Directors in a timely manner and at least 3 days before the intended date of a meeting of the Audit and Risk Management Committee (or such other period as agreed by its members).

9. Senior Management is obliged to supply the Audit and Risk Management Committee with adequate information in a timely manner, in order to enable it to make informed decisions. The information supplied must be complete and reliable. Where a Director requires more information than is volunteered by Senior Management, the relevant Director should make additional necessary enquiries. The Board and each Director shall have separate and independent access to the Senior Management.

Annual General Meetings

10. The chairman of the Audit and Risk Management Committee, or in his or her absence, another member of the Audit and Risk Management Committee, or failing this, the duly appointed delegate of a member of the Audit and Risk Management Committee, shall attend the Company's annual general meetings and be prepared to respond to any Shareholder's questions on the Audit and Risk Management Committee's activities. Senior Management

should ensure the external auditor attend the annual general meeting to answer questions about the conduct of the audit, the preparation and content of the auditors' report, the

accounting policies and auditor independence.

Authority

11. The Audit and Risk Management Committee is authorised by the Board to investigate any activity within these Terms. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Audit and Risk Management Committee.

12. The Audit and Risk Management Committee is authorised by the Board to obtain outside independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. The Audit and Risk Management Committee shall be provided with sufficient resources to perform its duties. The Audit and Risk Management Committee shall be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any external party who advises the Audit and Risk Management Committee.

Duties

13. The duties of the Audit and Risk Management Committee shall include:

Relationship with the Group's auditors

• (a) being primarily responsible for making recommendations 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 its resignation or dismissal;

• (b) reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards;

• (c) developing and implementing policy on engaging an external auditor to supply non-audit services and reporting to the Board, identifying and making recommendations on any matters where action or improvement is needed ;

• (d) discussing with the external auditor before the audit commences, the nature and scope of the audit and reporting obligations, and ensuring co-ordination where more than one audit firm is involved;

• (e) discussing problems and reservations arising from the interim and final audits, and any matters the external auditor may wish to discuss (in the absence of Senior Management where necessary);

Review of financial information of the Group

• (f) monitoring integrity of the Group's financial statements and annual reports and accounts, half-year reports and, if prepared for publication, quarterly reports, and reviewing significant financial reporting judgments contained in them. In reviewing these reports and accounts before submission to the Board, the Audit and Risk Management Committee shall focus particularly on: -

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

  • (ii) major judgmental areas;

  • (iii) significant adjustments resulting from audit;

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

  • (v) compliance with accounting standards; and

  • (vi) compliance with the Listing Rules and legal requirements in relation to financial reporting;

• (g) in respect of (f) above:

  • (i) liaising with the Board and Senior Management;

  • (ii) meeting, at least twice a year, with the Group's auditors; and

  • (iii) considering any significant or unusual items that are, or may need to be, reflected in the financial statements, reports and accounts and giving due consideration to any matters that have been raised by the Group's staff responsible for the accounting and financial reporting function, compliance officer or auditors;

• (h) reviewing the draft representation letter prior to approval by the Board;

Oversight of the Group's financial reporting system, risk management and internal control systems

• (i) reviewing the Group's financial controls, risk management and internal control systems;

• (j) discussing the risk management and internal control systems with Senior Management to ensure that Senior Management has performed its duty to have effective systems, including discussing the adequacy of resources, staff qualifications and experience, training programmes and budget of the Group's accounting and financial reporting function;

• (k) considering major investigation findings on risk management and internal control matters as delegated by the Board or on its own initiative and Senior Management's response to these findings;

• (l) where an internal audit function exists, ensuring co-ordination between the internal and external auditors, ensuring that the internal audit function is adequately resourced and has appropriate standing within the Group, and reviewing and monitoring its effectiveness;

• (m) reviewing the Group's financial and accounting policies and practices;

• (n) reviewing the external auditor's management letter, any material queries raised by the auditor to Senior Management about accounting records, financial accounts or systems of control and Senior Management's response;

• (o) ensuring that the Board will provide a timely response to the issues raised in the external auditor's management letter;

• (p) reporting to the Board on the matters in these Terms;

• (q) reviewing arrangements employees of the Group can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters and ensuring that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;

• (r) acting as the key representative body for overseeing the Group's relations with the external auditor; and

• (s) considering any other topics, as defined by the Board.

Disagreement as to external auditors

14. In the event the Board disagrees with the Audit and Risk Management Committee's view on the selection, appointment, resignation or dismissal of the external auditors, the Audit and Risk Management Committee shall provide a statement explaining its recommendations to the Company and the reasons why the Board has taken a different view for inclusion in the Corporate Governance Report .

Reporting procedures

15. Full minutes of the Audit and Risk Management Committee's meetings shall be kept by a duly appointed secretary of the meeting (who should normally be the Company Secretary), and such minutes shall be available for inspection at any reasonable time on reasonable notice by any Director.