Pantronics : Terms of Reference - Audit Committee (in PDF)

These terms of reference are prepared in English. In case of any inconsistency between the Chinese version and the English version, the English version shall prevail.

Pantronics Holdings Limited

ࣶϓછٰϞࠢʮ̡

(Incorporated in the British Virgin Islands with limited liability)

(Stock code: 1611)

(the "Company")

Audit Committee

Terms of Reference

• 1. Organisation

  The board (the "Board") of directors (the "Directors") of the Company established an audit committee of the Board (the "Committee") on 27 October 2016.

• 2. Objective

  The main objective of the Committee is to be responsible for the relationship with the Company's external auditors, reviewing of the Company's financial information and monitoring of the Company's financial reporting system and internal control procedures.

  The Committee is accountable to the Board.

• 3. Composition

• 3.1 The Committee shall comprise three non-executive Directors who are appointed or removed by the Board. If any member of the Committee (the "Member") ceases to be a Director, he/she will cease to be a Member automatically. The vacancy will be filled by appointment of new Member by the Board. The Committee must comprise a minimum of three Members, at least one of whom is an independent non-executive Director with appropriate professional qualifications or accounting or related financial management expertise as required under Rule 3.10(2) of the Rules Governing the Listing of Securities (the "Listing Rules")on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

• 3.2 The majority of the Members shall be independent non-executive Directors.

• 3.3 The chairman of the Committee shall be appointed by the Board and shall be an independent non-executive Director.

3.4

A former partner of the Company's existing audit firm is prohibited from acting as a Member for a period of two years from the date of his/her ceasing: (a) to be a partner of the firm or (b) to have any financial interest in the firm, whichever is later.

• 4. Secretary

  Save as otherwise appointed by the Committee, the secretary to the Committee shall be the secretary to the Company.

• 5. Powers

• 5.1 The Board authorises the Committee to conduct any investigation within its scope of powers. The Committee shall have the powers to demand any information necessary from any employees of the Company and its subsidiaries (together, the "Group"), and all employees shall be instructed to cooperate with the Committee and satisfy any of its requests.

• 5.2 The Board authorises the Committee to seek external legal advice or other independent professional advice, and may invite outsiders who possess relevant experience and professional knowledge to attend meetings if necessary.

• 5.3 The Committee should be provided with sufficient resources to perform its duties.

• 6. Duties

  The duties of the Committee are as follows:

  Relationship with the Company's auditors

  • (a) to be primarily responsible for making recommendations to the Board on the appointment, reappointment and removal of the Company's external auditor, and to approve the remuneration and terms of engagement of the Company's external auditor, and any questions of its resignation or dismissal;

  • (b) to review and monitor the Company's external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Committee should discuss with the external auditor the nature and scope of the audit and reporting obligations before the audit commences. Should there be more than one audit firm participating, the Committee shall ensure the coordination between them;

(c)to develop and implement policy on engaging the Company's 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 the Company's financial information

(d) 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 judgements contained in them. In reviewing these reports before submission to the Board, the committee should focus particularly on:-

• (i) any changes in accounting policies and practices;

• (ii) major judgmental areas;

• (iii) significant adjustments resulting from audit;

• (iv) the going concern assumptions and any qualifications;

• (v) compliance with accounting standards; and

• (vi) compliance with the Listing Rules and legal requirements in relation to financial reporting;

(e)Regarding (d) above:-

(i) Members should liaise with the Board and senior management of the Company and the Committee must meet, at least twice a year, with the Company's external auditors; and

(ii)the Committee should consider any significant or unusual items that are, or may need to be, reflected in the report and accounts, it should give due consideration to any matters that have been raised by the Company's staff responsible for the accounting and financial reporting function, compliance officer or auditors;

(f) to discuss with the Company's external auditors questions and doubts arising in audit of interim and annual accounts, and other matters that the external auditors wish to discuss (may conduct in the absence of the Company's management if necessary);

• (g) to review the letter to the Company's management from the Company's external auditors and the management's response;

• (h) if the Company's annual report includes statement about the Company's internal control system, to review such statement prior to submission for the Board's approval;

Oversight of the Company's financial reporting system, risk management and internal control systems

• (i) to review the Company's financial reporting, financial controls, risk management and internal control systems;

• (j) to discuss the risk management and internal control system with the Company's management to ensure that management has performed its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function;

• (k) to consider major investigation findings on risk management and internal control matters as delegated by the Board or on its own initiative and management's response to these findings;

• (l) where an internal audit function exists in the Company, to ensure co-ordination between the Company's internal and external auditors, and to ensure that the Company's internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor its effectiveness;

• (m) to review the financial and accounting policies and practices of the Group;

• (n) to review the external auditor's management letter, any material queries raised by the external auditor to management about accounting records, financial accounts or systems of control and management's response;

(o)to ensure that the Board will provide a timely response to the issues raised in the external auditor's management letter;

(p) to review the compliance issues in relation to the Mandatory Provident Fund

Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) reported by the financial controller of the Company;

• (q) to ensure compliance with the laws and regulations relevant to the Group;

• (r) to report to the Board on the matters in this terms of reference;

• (s) to consider other topics, as defined by the Board;

Others

• (t) to review arrangements employees of the Company can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters. The Committee should ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;

• (u) to act as the key representative body for overseeing the Company's relations with the Company's external auditor; and

(v) to conform to any requirement, direction, and regulation that may from time to time be contained in the memorandum and articles of association of the Company or imposed by the Listing Rules or applicable law.

7. Meetings of the Committee

• 7.1 Number of meeting

  There shall be at least two meetings of the Committee annually to be convened and held by attending in person, by telephone or video conference. Any Member or the Company's external auditors may demand meeting to be convened if required.

• 7.2 Notice of meeting

  Unless waived by all Members on notice, the secretary to the Committee shall give seven days prior notice to all Members for any meeting to be convened and circulate the meeting agenda to the Members. Irrespective of the length of notice being given, attendance of a meeting by a Member should be deemed waiver of the requisite length of notice by the Member. Notice of any adjourned meeting is not required if the adjournment is less than seven days.