(incorporated in Bermuda with limited liability)
(stock code: 927)
( )
( : 927)
Terms of reference of the Audit Committee-
Constitution
The Audit Committee (the "Committee") was established pursuant to a resolution passed by the Board of Directors (the "Board") of Fujikon Industrial Holdings Limited (the "Company") at its meeting held on 22 March 2000.
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Membership
Members of the Committee shall be appointed by the Board from amongst the non-executive directors of the Company (including independent non-executive directors of the Company) and shall consist of not less than three members, a majority of whom should be independent. At least one of whom is an independent non-executive director with appropriate professional qualifications or accounting or related financial management expertise as required in rule 3.10(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
The Chairman of the Committee shall be appointed by the Board and shall be an independent non-executive director.
A former partner of the Company's existing auditing firm should be prohibited from acting as a member of its audit committee for a period of 1 year from the date of his ceasing (a) to be a partner of the firm; or (b) to have any financial interest in the firm, whichever is the later.
The secretary of the Committee shall be appointed by the Board.
The appointment of the members of the Committee may be revoked, or additional members may be appointed to the Committee by resolutions passed by the Board.
* For identification purpose only
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Proceedings of the Committee
Notice of Meeting:
Unless otherwise agreed by all the Committee members, a meeting shall be called by at least seven days' notice.
A Committee member may and, on the request of a Committee member, the secretary to the Committee shall, at any time summon a Committee meeting. Notice shall be given to each Committee member in person orally or in writing or by telephone or by email or facsimile transmission at the telephone number or facsimile number or address from time to time notified to the secretary by such Committee member or in such other manner as the Committee members may from time to time determine.
Any notice given orally shall be confirmed in writing as soon as practicable and before the meeting.
Agenda together with other documents which may be required to be considered by the members of the Committee for the purposes of the meeting, shall be forwarded to each member of the Committee no later than 3 days before the date of the meeting.
Quorum: The quorum of the Committee meeting shall be 2 members of the Committee.
Attendance: The Finance Director, the Head of Internal Audit (or any officer(s) assuming the relevant functions but having a different designation) and a representative of the external auditors shall normally attend meetings of the Committee. Other Board members shall also have the right of attendance. However, at least once a year the Committee shall meet with the external auditors without the presence of members of the Executive Board members and the management of the Company.
Frequency: Meetings shall be held at least twice a year. The external auditors may request the Chairman of the Committee to convene a meeting, if they consider that one is necessary.
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Written resolutions
Written resolutions may be passed by all Committee members in writing.
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Alternate Committee members
A Committee member may not appoint any alternate.
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Authority of the Committee
The Committee may exercise the following powers:
to seek any information it requires from any employee of the Company and its subsidiaries (hereinafter collectively referred to as "Group") and any professional advisers (including auditors), to require any of them to prepare and submit reports and to attend Committee meetings and to supply information and address the questions raised by the Committee;
to monitor whether the Group's management has, in the performance of their duties, infringed any policies set by the Board or any applicable law, regulation and code (including the Listing Rules and other rules and regulations from time to time determined by the Board or a committee thereof);
to investigate any activity within these terms of reference and all suspected fraudulent acts involving the Group and request the management to make investigation and submit reports;
to review the Group's risk management and internal control systems;
to review the performance of the Group's employees in the accounting and internal audit department;
to make recommendations to the Board for the improvement of the Group's risk management and internal control systems;
to request the Board to convene a shareholders' meeting (if necessary) for purposes of revoking the appointment of any director and to dismiss any employees if there is evidence showing that the relevant director and/or employee has failed to discharge his duties properly;
to request the Board to take all necessary actions, including convening an extraordinary general meeting, to replace and dismiss the auditors of the Group;
to obtain outside legal or other independent professional advice at the expenses of the Company on any matters within these terms of reference as it considers necessary and to secure the attendance of outsiders with relevant experience and expertise, if it considers this necessary; and
to exercise such powers as the Committee may consider necessary and expedient so that their duties under section 7 below can be properly discharged.
The Committee should be provided with sufficient resources to perform its duties.
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Duties
The duties of the Committee shall be: Relationship with external auditors
to be primarily responsible for making recommendations to the Board on the appointment, re-appointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;
to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards;
to discuss with the external auditors before the audit commences, the nature and scope of the audit and reporting obligations and ensure co-ordination where more than one audit firm is involved;
to develop and implement policy on engaging an external auditor to supply non-audit services. For this purpose, "external auditor" includes any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party knowing all relevant information would reasonably conclude to be part of the audit firm nationally or internationally. The Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;
Review of financial information
to monitor integrity of the Company's financial statements and annual report and accounts, half-year report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in them.
In reviewing these reports before submission to the Board, the Committee should focus particularly on:-
any changes in accounting policies and practices;
major judgmental areas;
significant adjustments resulting from the audit;
the going concern assumptions and any qualifications;
compliance with accounting standards;
compliance with the Listing Rules and legal requirements in relation to financial reporting;