Sichuan Baicha Baidao Industrial Co., Ltd. (Baicha Baidao) released a comprehensive “Terms of Reference and Rules of Procedures of Audit Committee,” detailing the committee’s structure, meeting protocols, responsibilities and decision-making authority.
Key Points
1. Committee Composition • Minimum of three non-executive directors; a majority must be independent. • At least one member must hold professional accounting or financial management qualifications. • The chairperson must be an independent non-executive director. • Former partners of the company’s current audit firm are barred from committee service for one year after ending the relationship.
2. Meeting Requirements • At least two meetings annually; additional meetings can be convened by external auditors if necessary. • Quorum: two members, including at least one independent non-executive director. • Resolutions require a simple majority and may be passed by written consent. • Minutes must capture sufficient detail and be available for board review.
3. Core Responsibilities • Recommend appointment, re-appointment or removal of external auditors, and approve their remuneration. • Review and monitor auditor independence, audit scope and non-audit services policy. • Oversee integrity of annual, interim and—if prepared—quarterly financial statements, focusing on accounting policy changes, significant judgments, audit adjustments and going-concern assumptions. • Evaluate financial reporting controls, risk management and internal control systems, including resources, staff qualifications and training within accounting functions. • Ensure coordination between internal and external audit functions and assess internal audit effectiveness. • Review whistle-blowing arrangements and ensure fair, independent investigations of reported improprieties. • Lead oversight of corporate governance practices, including director training, compliance monitoring and code-of-conduct implementation.
4. Authority and Resources • Empowered to inspect all company accounts and records, request relevant data from management and obtain independent professional advice at the company’s expense. • Required to report to the board after each meeting.
5. Annual General Meeting Obligation • The committee chair (or an independent member in the chair’s absence) must attend the AGM to answer shareholder questions related to the committee’s activities.
The published charter formalises governance procedures aimed at strengthening Baicha Baidao’s financial reporting transparency, risk oversight and compliance framework.
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