Bank of Zhengzhou has released an updated version of the “Terms of Reference of the Audit Committee of the Board of Directors,” detailing expanded mandates, membership criteria, and meeting procedures aimed at reinforcing the bank’s corporate-governance framework and internal-control oversight.
Key highlights include:
1. Committee Composition • Membership must comprise at least three non-executive directors, with a majority being independent directors. • At least one independent member must possess accounting or financial management expertise that meets Hong Kong Listing Rules requirements. • The committee chair must be an independent non-executive director and an accounting professional. • Former partners of the bank’s incumbent external auditor are barred from committee service for two years after ending their partnership or financial interest in the audit firm.
2. Expanded Duties and Authority • Supervises risk and compliance, reviews financial disclosures, and oversees both internal and external audit processes. • Evaluates the bank’s internal-control and risk-management systems, ensuring adequate resources, staff qualifications, and training for financial-reporting functions. • Holds power to recommend appointment or dismissal of external auditors and the bank’s chief financial officer, propose extraordinary shareholder meetings, and initiate legal proceedings against directors or senior management for breaches. • Reviews annual, interim, and (where applicable) quarterly reports with special focus on material judgments, accounting-policy changes, audit adjustments, and going-concern assumptions.
3. Meeting Protocols • Convenes at least quarterly, with additional sessions as necessary; a quorum requires two-thirds attendance. • Members must attend in person; proxy attendance is limited to one authorization per member. • Resolutions demand majority approval and may be passed via on-site or written procedures. • Minutes and related documents are retained for a minimum of 10 years.
4. Reporting and Coordination • The internal audit department reports quarterly to the Audit Committee and annually to the full board, and must immediately escalate significant findings to the committee. • The committee serves as the primary liaison between external auditors and internal auditors, ensuring coordinated audit efforts and timely management responses to audit findings.
5. Resource Allocation and Confidentiality • The bank commits to providing sufficient resources for the committee’s work; external professional advice may be sought at the bank’s expense, subject to confidentiality safeguards. • All participants in committee meetings are required to maintain strict confidentiality regarding deliberations and documents.
The revised charter takes effect upon board approval and aligns the Audit Committee’s operations with the Company Law, regulatory guidelines for banking institutions, the Hong Kong Listing Rules, and the bank’s Articles of Association.
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