Red Star Macalline Group Corporation Ltd. (RS Macalline) has released its revised “Working Rules of the Audit Committee under the Board of Directors,” outlining a comprehensive framework aimed at strengthening corporate governance, financial disclosure quality and internal control oversight.
Key structural changes • Composition: The Audit Committee will comprise three to five non-executive directors, with independent non-executive directors (INEDs) forming the majority. At least one INED must be a qualified accounting professional and will chair the committee. • Tenure & Independence: Members’ terms align with their board tenure; former partners of the company’s external auditor are barred from committee service for two years after leaving the audit firm or relinquishing financial interests. • Support Functions: An internal Audit and Supervision Department will serve as the committee’s working body, while the Securities Affairs Department will handle meeting coordination.
Expanded responsibilities The committee now assumes duties equivalent to those of a statutory supervisory board under PRC Company Law, including: 1. Financial reporting oversight—reviewing annual, semi-annual and quarterly statements, focusing on accounting policy changes, major judgements, and potential misstatements. 2. Audit supervision—evaluating internal audit effectiveness, approving annual audit plans, and maintaining direct dialogue with external auditors at least twice yearly to assess independence, scope and performance. 3. Internal control and risk management—guiding the establishment of internal control systems and monitoring rectification of identified issues. 4. Governance and compliance—proposing appointments or dismissals of the chief financial officer and external auditors, initiating legal action against directors or executives for misconduct, and preliminarily reviewing connected transactions. 5. ESG oversight—conducting risk assessments and reviewing the company’s sustainable development (ESG) reports.
Operational protocols • Meeting cadence: Minimum of one meeting per quarter; extraordinary sessions can be convened by two members or the committee chair. • Quorum & voting: At least two-thirds of members must attend, with resolutions passed by a majority; conflicted members must abstain. • Reporting: Decisions and recommendations are submitted in writing to the board; the committee will attend annual general meetings to address shareholder queries. • Resources: The company will provide requisite funding for external advisory support when the committee deems professional opinions necessary.
Effectiveness and governance alignment The updated rules take effect upon board approval and will supersede any conflicting provisions in prior policies. Interpretation rights reside with the board, ensuring alignment with PRC regulations, Shanghai and Hong Kong listing requirements, and Red Star Macalline’s Articles of Association.
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