Shanghai Dasheng Agrcltr Fin Tech : Announcements and Notices - Terms of Reference of the Audit Committee of the Board of Directors

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoeve 上海 大生 農 業 金 融 股 份 有 限 公 司

SHANGHAI DASHENG AGRICULTURE FINANCE TECHNOLOGY CO., LTD.*

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock code: 1103)

Terms of Reference of the Audit Committee of the Board of Directors

(revised with effect from 1 January 2016)

1. General Provisions

   
   

2. This Terms of Reference is formulated for the audit committee ("Audit Committee") of the board of Directors (the "Board") which was established by Shanghai Dasheng Agriculture Finance Technology Co., Ltd. (the "Company") in accordance with the Company Law of the People's Republic of China (the "Company Law"), the Standards on Corporate Governance of Listed Companies, the Corporate Governance Code as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the Articles of Association of Shanghai Dasheng Agriculture Finance Technology Co., Ltd. (the "Articles of Association") and other relevant regulations, in order to strengthen the decision-making function of the Board, achieve pre-audit and professional audit, ensure effective supervision over the senior management by the Board and optimise the corporate governance structure of the Company.

   
   

3. The Audit Committee is a body specifically set up by the Board, mainly responsible for the communication between internal and external audit functions and the supervision and review of the risk management and internal control system of the Company.




4. Constitution of the Committee

   
   

5. The Audit Committee shall comprise four (4) non-executive Directors, of which, more than half of them shall be independent non-executive Directors.

   
   

6. Members of the Audit Committee shall be nominated by the chairman of the Board or more than half of the independent Directors or more than one-third of all Directors and shall be elected by the Board.

   
   

7. The Audit Committee shall have one (1) chairman (i.e. the Chairman of the Audit Committee) (the convener) who shall be an independent non-executive Director and shall preside over the work of the Committee. He shall be elected by more than half of the members of the Audit Committee. The Chairman of the Audit Committee shall have appropriate professional qualifications or accounting or related financial management expertise.

8. The term of office of the Audit Committee shall be in congruence with that of the Board. Members may be re-elected and re-appointed upon the expiry of their terms of office. If a member no longer assumes the position of Director in the Company during the term of office, he/she shall automatically lose his/her identity as a committee member, and the Audit Committee shall fill up the vacancy in accordance with the aforesaid provisions from rule

   2.1 to rule 2.3.

   
   

9. The Company shall establish an internal audit department which shall report to the Audit Committee. The internal audit department shall review the following matters, prepare a review report and submit it to the Board on a half-yearly basis:

   
   

10. implementation of significant matters including use of raised proceeds, external guarantees, connected transactions, securities investment, venture capital investment, external financial assistance, purchase or sale of assets and external investment; and

    
    

11. large-value transactions of the Company and the transactions with Directors, supervisors, senior management members, controlling shareholder and de facto controller and their respective associates.

    
    

    A former partner of the Company's existing auditor may not act as a member of the Audit Committee within one (1) year commencing from the later of the following date:

    
    

12. when he/she ceases to be a partner of the auditor; and

    
    

13. when he/she ceases to have any financial interests in the auditor.




14. Duties and Authorisations




1. Main duties and authorisations of the Audit Committee include:

   
   

2. to propose for engagement or replacement of external auditor; approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;

   
   

3. to review and monitor the external auditor's independence and objectivity and evaluate its duty performance;

   
   

4. 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 Audit Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;

5. to monitor establishment, improvement and implementation of the internal audit system of the Company;

   
   

6. to facilitate communications and coordination between internal and external auditors and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor its effectiveness;

   
   

7. to perform audit on the Company's financial information and relevant disclosure; monitor integrity of the financial statements and annual report, interim report and accounts of the Company, and to review significant financial reporting judgements contained therein. In reviewing these reports before submission to the Board, the Committee should focus particularly on:-

   
   

8. any changes in accounting policies and practices;

   
   

9. major judgmental areas;

   
   

10. significant adjustments resulting from audit;

    
    

11. the going concern assumptions and any qualifications;

    
    

12. compliance with accounting standards; and

    
    

13. compliance with the Listing Rules and legal requirements in relation to financial reporting;

    
    

14. regarding (6) above:-

    
    

15. members of the Committee shall liaise with the Board and senior management and the Committee shall meet, at least twice a year, with the auditors of the Company; and

    
    

16. the Committee shall 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;

    
    

17. to review internal control system and to audit and monitor material connected transactions of the Company;

    
    

18. to evaluate duty performance of the Company's financial department and audit department, including their persons in charge;

    
    

19. to discuss the risk management and internal control systems with 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;

    
    

20. 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;

    
    

21. to review the Company's financial controls, risk management and internal control systems;

    
    

22. to review the Company and its subsidiaries' financial and accounting policies and practices;

    
    

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

    
    

24. to ensure that the Board will provide a timely response to the Company raised in the external auditor's management letter;

    
    

25. to cooperate with the Supervisory Committee of the Company on audit activities;

    
    

26. 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 Audit Committee shall ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;

    
    

27. to act as the key representative body for overseeing the Company's relations with the external auditor;

    
    

28. to report to the Board on the matters in this terms of reference; and

    
    

29. other duties and authorisations as delegated by the Board.

    
    

30. The members of the Audit Committee shall superintend the internal audit department to review the following matters, prepare a review report and submit it to the Board at least once every half year. The Audit Committee shall timely report to the Board any non-compliance or non-standard operation as it identified:

    
    

31. implementation of significant matters including use of raised proceeds, external guarantees, connected transactions, securities investment, venture capital investment, external financial assistance, purchase or sale of assets and external investment; and

    
    

32. large-value transactions of the Company and the transactions with Directors, supervisors, senior management members, controlling shareholder and de facto controller and their respective associates.