Zhejiang Galaxis Technology Group Co., Ltd. (Galaxis Tech) published an updated Terms of Reference for its Audit Committee, outlining a broadened mandate that consolidates supervisory-board functions and aligns corporate governance with Hong Kong Main Board requirements. Key provisions are as follows:
1. Committee Structure • Membership: Minimum of three non-executive directors, with independent non-executive directors forming a majority; at least one member must hold professional accounting or financial qualifications. • Chairperson: Must be an independent non-executive director possessing accounting expertise; elected by a majority of committee members and endorsed by the Board. • Tenure: Members serve concurrent terms with the Board and may be re-elected. Vacancies must be filled within three months to maintain compliance.
2. Mandate and Powers • External Audit Oversight: Recommends appointment, dismissal and remuneration of external auditors; reviews auditor independence, scope and effectiveness; meets auditors without management present at least once a year. • Financial Reporting: Examines annual, interim and quarterly financial statements before Board review, focusing on accounting policy changes, significant judgments, audit adjustments and going-concern considerations. • Risk Management & Internal Control: Evaluates effectiveness of financial controls, risk management systems and ESG-related controls; ensures adequate resources and staff qualifications in finance, accounting and internal audit functions. • Internal Audit Coordination: Directs the Internal Audit Department, approves audit plans and reviews internal reports; meets external auditors at least twice a year to coordinate audit work. • Whistle-Blower Mechanism: Reviews arrangements for confidential employee reporting of improprieties and ensures independent investigation procedures. • Additional Statutory Powers: Can convene extraordinary shareholder meetings, propose litigation against directors or senior management under Article 189 of China’s Company Law and access all operational, financial and contractual information deemed necessary.
3. Meeting Protocol • Frequency: At least two regular meetings per year, including one before the annual report is reviewed by the Board; ad-hoc meetings may be convened as needed. • Quorum & Voting: Two-thirds attendance required, including at least one independent non-executive director; resolutions pass with a simple majority, with the chair holding a casting vote in a tie. • Reporting: Committee reports to the Board quarterly on audit progress, risk issues and internal control matters; meeting minutes are retained for a minimum of ten years.
4. Effectiveness & Transition The charter becomes effective after Board approval and shareholder consent to abolish the traditional supervisory board. The listed-company provisions take effect on the commencement date of Galaxis Tech’s H-share trading on the Hong Kong Main Board, replacing all prior audit-committee rules.
By integrating supervisory responsibilities into the Audit Committee and codifying expanded oversight on audit quality, risk management and ESG, Galaxis Tech aims to enhance governance transparency and align with international best practices.
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