REG - Air China Ld - Rules of Audit and Risk Management Committee

Air ChinaAnnouncement

31/12/2025 10:00

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RNS Number : 3051N  Air China Ld  31 December 2025

 

中國國際航空股份有限公司

AIR CHINA LIMITED

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

(Stock Code: 00753)

 

Working Rules of the Audit and Risk Management Committee

(the Supervision Committee) of the Board of Directors

(Amended on 30 December 2025)

Chapter 1   General Principles

 

Article 1              In order to improve the decision-making
function of the board of directors (the "Board") of Air China Limited (the
"Company"), enhance the effective supervision over the management by the Board
and improve the corporate governance structure, the Company established the
Audit and Risk Management Committee (the Supervision Committee) of the Board
of Directors (hereinafter referred to as the "Committee") and these working
rules in accordance with the Company Law of the People's Republic of China and
with reference to the Code of Corporate Governance for Listed Companies issued
by the China Securities Regulatory Commission and the listing regulatory rules
of the jurisdictions in which the shares of the Company are listed such as the
Rules Governing the Listing of Stocks on Shanghai Stock Exchange, the
Self-regulatory Guidelines for the Companies Listed on the Shanghai Stock
Exchange No. 1 - Standardized Operation (the "Standardized Operation
Guidelines"), and the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the "Hong Kong Listing Rules"), the Articles of
Association of Air China Limited (the "AOA") and other relevant rules and
regulations.

 

Article 2               As a dedicated committee established
under the Board, the Committee provides advice and recommendations for the
decision-making of the Board and is accountable to the Board.

 

Members of the Committee shall ensure that they dedicate sufficient time and
energy to dutifully perform their duties and responsibilities. The Company
shall provide the necessary working conditions for the Committee. When the
Committee performs its duties and responsibilities, the Company's management
and the relevant departments should cooperate with the Committee.

 

Chapter 2    Composition

 

Article 3               The Committee shall consist of three to five
directors who are not senior management of the Company, with more than half of
them being independent directors. The Committee shall include at least one
independent director who has adequate expertise in accounting or relevant
financial management. The members of the Committee shall have adequate
professional knowledge and business experience to perform the Committee's
responsibilities.

 

Article 4                  The composition of the Committee
and adjustment thereof shall be proposed by the chairman of the Board after
consultation with the relevant directors, and shall take effect after being
approved by the Board.

 

Article 5             The Committee shall have one chairman (the
"Chairman"), who shall be an accounting professional and an independent
director appointed by the Board. The Chairman shall preside over the work of
the Committee.

 

Article 6                  Members of the Committee shall
have a term equal to the term of a director of the Company and may be
re-elected upon expiration of such term. Any member of the Committee shall
automatically cease to be a member of the Committee from the time he or she
ceases to be a director. The vacancy shall be filled by the Board in
accordance with Articles 3 to 5 herein.

 

Where the resignation of a member of the Committee results in the number of
Committee members falling below the minimum quorum, or results in the
Committee lacking a member with accounting expertise, the original member
shall continue to perform his or her duties before a new member takes office.

 

The Board shall regularly assess the independence of the Committee members and
their performance of their duties and responsibilities. The Board may replace
any unsuitable Committee members as it deems necessary.

 

The Company shall provide trainings to the Committee members to equip them
with adequate professional skills in the areas of laws, accounting and
corporate regulations that are necessary to perform their duties in a timely
manner.

 

Chapter 3    Powers and Responsibilities

 

Article 7                  The Committee shall have the
powers and authorities to:

 

(1)     Be responsible for the appointment and removal, supervision and
assessment of works related to external audit.

 

1.      Making recommendations to the Board on the appointment,
reappointment and removal of the external audit firm, approving the
remuneration and engagement terms of the external audit firm pursuant to the
relevant authorizations and handling any matters related to its resignation or
dismissal;

2.      Reviewing and overseeing the external audit firm's independence
and objectivity and the effectiveness of the audit procedures in accordance
with the applicable standards, and supervising and assessing whether the
external audit firm dutifully performs its duties and responsibilities;

 

3.      Formulating policies regarding the provision of non-audit
services by the external audit firm and ensuring their implementation.
Assessing and monitoring the independence and objectivity of the external
audit firm when providing non-audit services;

 

4.      Discussing with the external audit firm the nature, scope and
disclosure responsibilities of the audit prior to the commencement of the
audit work; discussing and communicating about the audit scope, audit plan,
audit methodology and major issues discovered during the audit;

 

5.      Reviewing the audit-related notes submitted to the management by
the external audit firm, any material queries raised by the auditors to the
management regarding accounting records, financial accounts and control
systems, as well as the management's responses; and ensuring that the Board
provides a timely response to the issues raised in the audit-related notes
submitted to the management by the certified public accountants for the annual
audit;

 

6.      Supervising and urging the external audit firm to act with
integrity and due diligence, strictly comply with business rules and industry
self-regulatory standards, and rigorously implement internal control system.

 

(2)     Guide, supervise and assess the internal audit work of the
Company, and coordinate internal and external audit works.

 

1.      Guiding and supervising the establishment and implementation of
the internal audit system;

 

2.      Reviewing the annual internal audit work plan and key audit tasks
of the Company, and supervising and urging the implementation of the internal
audit plan of the Company;

 

3.      Guiding the effective operation of the internal audit department.
The internal audit department shall report its work to the Committee, and
various audit reports, the rectification plan and rectification progress of
audit issues submitted by the internal audit department to the management
shall be submitted to the Committee concurrently;

 

4.      Reviewing the internal audit reports, assessing the internal
audit outcomes and supervising the rectification of material issues;

 

5.      Reporting to the Board on the progress and quality of internal
audit and major issues identified;

 

6.      Making recommendations to the Board on the appointment or
dismissal of the Company's financial officer and the person in charge of the
internal audit department;

 

7.      Supervising the internal audit department to carry out inspection
at least once every six months on the implementation of significant company
matters, such as the use of proceeds of the Company, provision of guarantees,
connected transactions, securities investment and derivatives transactions,
provision of financial assistance, purchase or sale of assets and external
investments, large-scale capital transaction and the transactions involving
directors, senior management, controlling shareholders and de facto controller
and their respective associates, and preparing an inspection report and
submitting it to the Committee;

 

8.      Based on the internal audit reports and relevant materials
submitted by the internal audit department, the Committee shall issue
assessment opinions in writing in respect of the effectiveness of the
Company's internal controls and report to the Board. In the event that the
Committee considers that there are material deficiencies or material risks in
the Company's internal controls, the Board shall promptly report and disclose
such information to the stock exchange(s) where the Company is listed;

 

9.      Being responsible for coordinating communication among the
Company's management, the internal audit department, other related departments
and the external audit firm, ensuring that the internal audit is adequately
resourced and has appropriate standing within the Company, and reviewing the
effectiveness of internal audits.

 

(3)     Monitor the Company's financial information and disclosures.

 

1.      Reviewing the Company's financial reports and financial
information in periodic reports, and providing opinions on the truthfulness,
accuracy and completeness of the reports;

 

2.      Reviewing the Company's financial and accounting policies, with a
focus on material accounting and auditing issues in the Company's financial
reports, including adjustments for material accounting errors, changes in
major accounting policies and estimates, matters involving significant
accounting judgments, and issues leading to audit reports with non-standard
opinions;

 

3.      Focusing particularly on any potential fraud, fraudulent conducts
and false statements relating to the financial reporting;

 

4.      Regarding financial reporting issues, urging the relevant
responsible departments within the Company to formulate rectification measures
and rectification timelines, conduct follow-up reviews, and monitor the
implementation of the corrective actions;

 

5.      Members of the Committee shall convene meetings with the external
auditing firm at least twice a year.

 

(4)     Guide, supervise and assess works related to risk management,
internal control and compliance management.

 

1.      Examining the compliance with relevant laws, regulations and
rules, providing guidance in reviewing the establishment of the Company's risk
management system, internal control system, compliance management system and
accountability mechanism for non-compliant operations and investments, and
ensuring that the management has established an effective monitoring and
control system;

 

2.      Assessing the effectiveness and implementation of the Company's
financial control as well as its risk management, internal control, compliance
management, and accountability mechanisms for non-compliant operations and
investments along with their related systems. Evaluating the effectiveness of
the Company's risk investment (including but not limited to financial
derivatives) management rules and operational procedures, and reviewing the
Company's risk investment strategies and plans;

 

3.      Reviewing the internal control audit plans and audit reports
issued by the internal control audit firm and communicating with the internal
control audit firm regarding identified issues and any improvement plan in
response to it;

 

4.      Proactively or as delegated by the Board, reviewing significant
findings related to risk management and internal control matters and the
management's responses to these findings;

 

5.      Where the Company is found to have major internal control
deficiencies or is determined to engage in financial fraud, misappropriation
of funds, improper guarantees, or similar issues, the Committee shall urge the
Company to properly carry out follow-up corrective actions and internal
accountability measures, urge the Company to formulate rectification plans and
corrective measures and complete the rectifications within a specified
timeframe.

 

(5)     Exercise the functions and powers of a supervisory committee as
stipulated in the Company Law, including but not limited to:

 

1.      Inspecting the Company's finances;

 

2.      Supervising the conduct of the directors and senior management in
performing their duties;

 

3.      Requiring the directors and senior management to rectify actions
detrimental to the Company's interests;

 

4.      Proposing the convening of an extraordinary Board meeting;

 

5.      Proposing the convening of an extraordinary shareholders'
meeting, and convening and presiding over the shareholders' meeting when the
Board fails to perform its duties in relation to the convening and presiding
over the shareholders' meeting as required by the laws;

 

6.      Submitting proposals to the shareholders' meeting;

 

7.      Exercising other functions and powers of a supervisory committee.

 

(6)     Other relevant work.

 

1.      Reviewing the implementation of Board resolutions and the
exercise of Board authorizations, conducting post-investment project
evaluations in accordance with regulations and provide suggestions to the
Board;

 

2.      Supervising the rectification of issues identified through
internal and external audits, state-owned assets supervision, special
inspections and other oversight activities, and promoting the application of
the findings;

 

3.      Being responsible for overseeing and managing the Company's
connected transactions; reviewing major connected transactions of the Company
and providing written opinions to the Board for its deliberation;

 

4.      During its supervision and inspection, if the Committee
identifies any emergency situations where the Company's operations may
jeopardize the safety of its assets, result in asset loss, infringe upon
shareholders' rights, or involve significant financial irregularities or major
financial risks, it shall promptly report these matters to the Board and the
relevant higher competent authorities;

 

5.      Establishing and reviewing the whistleblowing policies and
systems, enabling employees and other stakeholders to raise concerns
confidentially and anonymously to the Committee regarding any potential
improper matters related to the Company. Ensuring appropriate arrangements are
in place for the Company to conduct fair and independent investigations into
such matters and to take appropriate actions;

 

6.      Preparing and disclosing the Committee's annual work performance,
mainly including the performance of its duties and the exercise of its
functions and powers, as well as the convening of its meetings.

 

(7)     Other matters stipulated by laws, administrative regulations,
regulatory authorities, the listing rules of the stock exchange(s) where the
Company is listed and the AOA, and those authorized by the Board and other
matters as required by the laws and regulations as well as the relevant
regulations of the stock exchange(s) where the Company is listed.

 

Article 8                  Resolutions adopted by the
Committee shall be submitted to the Board for its consideration. The Committee
shall identify and make recommendations on any matters where any improvement
is required.

 

The following matters shall be submitted to the Board for consideration after
the approval of more than half of all the members of the Committee:

 

(1)     disclosure of financial information and internal control
assessment report in the financial accounting report and periodic report;

 

(2)     appointment or dismissal of the accounting firm undertaking the
auditing business of the Company;

 

(3)     appointment or dismissal of the chief financial officer of the
Company;

 

(4)     change of accounting policies, accounting estimates or correction
of material accounting errors for reasons other than changes in accounting
standards;

 

(5)     other matters as stipulated by laws, regulations, the regulatory
rules of the jurisdictions in which the shares of Company are listed and the
AOA.

 

Article 9                  The relevant functional
departments of the Company shall actively provide support and create necessary
conditions for the discharge of its duties by the Committee, such as providing
information and relevant materials and coordinating the communication with the
accounting firm.

 

Chapter 4  Rules for Annual Financial Reporting

 

Article 10                The Committee shall, at the end of
each fiscal year, but before the start of the annual audit, agree with the
accounting firm engaged for the annual audit on a timetable for auditing the
financial statements of the Company.

 

The Committee shall urge the accounting firm to submit its audit report within
the agreed timetable, and record how and for how many times the Committee has
done so, and the results, in a written note, which shall be signed by the
relevant person in charge.

 

Article 11                The Committee shall, before the
commencement of the audit work by the certified accountants engaged for the
annual financial report audit, review and form its opinion in writing on the
financial accounting statements prepared by the Company.

 

The Committee shall, after the certified accountants for the annual audit
commences its auditing assignment, strengthen communication with such
certified accountants for the annual audit on material issues identified
during the auditing process. After the preliminary audit opinion is issued by
such certified accountants for the annual audit, the Committee shall review
the financial accounting statements of the Company and the audit opinion again
to form a written opinion.

 

Article 12                The Committee shall vote on the
annual financial report, and submit it to the Board for consideration after
the approval by more than half of all the members. The Committee shall also
submit to the Board a summary report on the audit work done by the accounting
firm of this year, and its decision on the renewal of the engagement of the
existing accounting firm or the engagement of a new accounting firm for the
new year.

 

The documents relating to the audit of the annual financial report of the
Company (as considered and reviewed by the Committee) shall be disclosed in
the annual report of the Company.

 

Chapter 5   Procedural Rules and Safeguards

 

Article 13                The Committee may hold regular or ad
hoc meetings. The Committee meeting shall be called and presided by the
Chairman, or if the Chairman is unable or unwilling to perform such duties, a
member who is an independent director shall be appointed to perform such
duties on his or her behalf. Regular meetings shall be held at least four
times a year. Ad hoc meetings may be held when so requested by more than two
members of the Committee or when the Chairman deems it to be necessary.

 

The Committee shall hold a meeting at least once a year to communicate with
the external auditor without the presence of the management of the Company.
The secretary of the Board may attend the meeting in a non-voting capacity.

 

The meeting notice shall be issued 5 days before the date of the meeting, and
the aforesaid advance notice period may be waived by the unanimous consent of
all Committee members. Meeting papers shall be sent 3 days before the date of
the meeting.

 

Article 14                The quorum of a meeting of the
Committee shall be two-thirds of all Committee members. Each member present
shall have one vote. The resolution of the meeting must be passed by more than
half of all the members before such resolution becomes effective.

 

Should a committee member have any conflict of interest with respect to any
matters to be decided at a meeting of the Committee, he or she shall abstain.
If a valid deliberation opinion cannot be formed due to the abstention of the
Committee member(s), the relevant matter shall be submitted to the Board
directly for its consideration.

 

Article 15                The Committee's meetings may be held
in the form of, including but not limited to, physical meetings,
teleconferences such as video meetings and conference call meetings,
combination of physical meeting and teleconference, or by way of written
resolutions. The Committee members should attend the meetings in person and
express whether they vote in favor of, against or abstain from voting for the
matters to be decided. Should any Committee member be unable to attend the
meeting in person, he or she may deliver a proxy letter in writing duly signed
by such Committee member, appointing another Committee member to attend the
meeting and to express opinions on his or her behalf. The proxy letter should
clearly state the extent of authorization and its time limit.

 

Article 16                The secretary of the Board shall be
responsible for organizing and coordinating the work between the Committee and
all relevant departments. The secretary of the Board shall be present at
meetings of the Committee.

 

Should the Committee deem it necessary, the directors and senior management of
the Company may be invited to attend the meeting, and representatives of the
external auditor, internal auditors, financial officers, legal counsels and
other relevant personnel may also be invited to attend the meeting and provide
necessary information. The Committee may carry out its work through various
methods, including receiving work reports from members of the management,
attending relevant meetings of the Company, reviewing financial and accounting
information and information related to members of the management and
employees, making special inquiries on major issues, and organizing special
supervision and inspection.

 

Article 17                The procedures for holding, methods
of voting of, and resolutions passed by the meeting of the Committee must
comply with the relevant laws and regulations, the AOA and these working
rules.

 

Article 18                The Committee shall prepare minutes
of its meetings, which shall be signed by the Committee members who have
attended the meeting and shall be kept by the office of the Board.

 

Article 19                The resolutions passed by, the
results of voting conducted and the opinions studied at, the Committee
meetings shall be reported in writing to the Board.

 

Article 20                Members attending a Committee meeting
shall keep any matter discussed at the meeting confidential, and shall not
disclose any related information unless duly authorized for such disclosure.

 

Article 21                The Committee shall establish a joint
working group, comprising the senior management of the Company and heads of
functional departments such as audit, finance and legal affairs, to provide
support and safeguards for its work.

 

As the lead support department, the audit department conducts internal audits
and internal control evaluations and other related tasks in accordance with
relevant national laws and regulations as well as the Company's relevant
policies. It regularly reports to the Committee and completes other tasks
assigned by the Committee. The finance department handles budgeting,
accounting, fund management, taxation and other work in accordance with
relevant regulations, and reports to the Committee. The legal department
conducts legal, internal control, risk management, compliance and other work
in accordance with relevant regulations, and reports to the Committee. The
Board office assists the secretary of the Board with routine liaison and
meeting organization for the Committee. Other relevant units and departments
provide support to the work of the Committee as required by their respective
responsibilities.

 

If necessary, the Committee may independently engage experts, accounting firms
and other intermediary institutions to provide professional support for the
performance of its duties, with the related expenses borne by the Company.

 

Chapter 6    Miscellaneous

 

Article 22                These working rules are formulated by
the Board and shall become effective upon the approval of the Board.

 

Article 23                In case of any matters not provided
herein or conflicts with the provisions of the laws, administrative
regulations, other relevant regulatory documents, the relevant regulations of
the stock exchange(s) where the Company is listed or the AOA promulgated after
these working rules come into effect, such provisions of the laws,
administrative regulations, other relevant regulatory documents, the relevant
regulations of the stock exchange(s) where the Company is listed or the AOA
shall prevail.

 

Article 24                The Board reserves the rights to
amend and interpret these working rules.

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