Liuliumei has formalised a comprehensive Terms of Reference for its Board-level Audit Committee, aiming to reinforce financial oversight, pre-audit scrutiny and overall corporate governance in line with China’s Company Law, the Articles of Association and Hong Kong Listing Rules.
Key Provisions
1. Committee Structure • The Audit Committee will comprise three non-executive directors, with a majority and the chair drawn from independent non-executive directors (INEDs). • At least one member must hold professional accounting or related financial management qualifications, satisfying HKEX Rule 3.10(2). • Former partners of the Company’s external auditor are barred from committee service for two years after leaving the audit firm or relinquishing any financial interest in it.
2. Appointment & Tenure • Members are nominated by the Board chair, over half of INEDs, or one-third of directors, and elected by the Board. • Tenure aligns with the Board’s term; re-election is permitted. Vacancies must be filled within three months to maintain a two-thirds quorum.
3. Core Responsibilities • Recommend appointment, reappointment or removal of the external auditor, approve its remuneration and monitor independence. • Review annual, interim and (if issued) quarterly financial statements, focusing on changes in accounting policies, significant judgments, audit adjustments, going-concern assumptions and regulatory compliance. • Oversee financial controls as well as risk management and internal control systems; ensure management allocates adequate resources and expertise to these functions. • Coordinate internal and external audit activities, evaluate their effectiveness, and scrutinise any “Letter of Explanation on Audit” and management’s responses. • Establish whistle-blowing mechanisms for confidential reporting of financial or control irregularities.
4. Meeting Framework • At least four regular meetings per year, with additional sessions convened by request of the Board chair, Audit Committee chair, two members, or the external auditor. • A minimum of two-thirds of members must attend for a quorum; resolutions require majority approval. • Minutes are retained for at least 10 years and outcomes are reported in writing to the Board.
5. Conflict-of-Interest Safeguards • Members must disclose any direct or indirect interests related to agenda items and abstain from voting unless remaining members unanimously deem the interest immaterial.
6. Disclosure Commitments • The Company will publish the committee’s composition, mandate, meeting records and annual performance report via the Hong Kong Stock Exchange. Significant issues identified by the committee and any Board decisions diverging from committee recommendations must be promptly disclosed with full explanations.
Effective Date The Terms of Reference take effect upon Board approval and the listing of Liuliumei’s H-shares on the Hong Kong Stock Exchange.
The detailed charter signifies Liuliumei’s commitment to aligning its governance practices with international standards, enhancing transparency and safeguarding shareholder interests.
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