REG - Air China Ld - Working Rules of Audit Committee

Air ChinaAnnouncement

27/10/2023 07:00

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RNS Number : 4891R  Air China Ld  27 October 2023

Air China Limited

Working Rules of the Audit and Risk Management Committee (the Supervision
Committee) of the Board of Directors (Amended in 2023)

 

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 maintain a sound 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, 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 by the Board in accordance with the
            shareholders' resolution in a general meeting of the Company, the Committee is
            accountable to the Board, and provides advice and recommendations for the
            decision-making of the Board. The Committee is mainly responsible for
            supervising and assessing the external audit works, proposing the engagement
            or replacement of the external auditing firms, supervising and assessing the
            internal audit works, coordinating the internal and external auditing of the
            Company, reviewing the financial information of the Company and its
            disclosures, supervising and assessing the internal control and risk
            management of the Company as well as other matters authorized by the laws and
            regulations, the AOA and the Board.
            Members of the Committee should ensure that they dedicate sufficient time and
            energy to dutifully perform their duties and responsibilities. The Company
            should 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 non-executive directors, and a
            majority of the Committee members shall be independent non-executive
            directors. The Committee shall include at least one independent non-executive
            director who has adequate expertise in accounting or financial management. All
            members of the Committee shall have adequate professional skills and business
            experience to perform the Committee's responsibilities.
 Article 4  The members of the Committee shall not be directors that serve as senior
            management of the Company, and shall be appointed by the Board upon nomination
            by the chairman of the Board, more than half of the independent non-

            executive directors, or more than one-third of all directors of the Board.
 Article 5  The Committee shall have one chairman (the "Chairman"), who shall be an
            accounting professional and an independent non-executive director being a
            member of the Committee and elected by all Committee members. 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 concurrently cease to be a member of the Committee if he
            or she ceases to be a director of the Company. The vacancy shall be filled by
            the Board in accordance with Articles 3 to 5 herein.
            The Board should 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 law, 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) Make recommendations to the Board on the appointment, reappointment and
            removal of the external auditor, approve the remuneration and terms of
            engagement of the external auditor pursuant to the relevant authorizations

            and deal with any questions of its resignation or dismissal;

   (2)  Review and monitor the external auditor's independence and objectivity
   and the effectiveness of the auditing process in accordance with the
   applicable standards. The Committee should discuss with the external auditor
   the nature and scope of the audit and relevant reporting obligations before
   the audit commences;
   (3)  Formulate and implement policies on engaging external auditor to provide
   non-audit services. Review and monitor the external auditor's independence and
   objectivity in the provision of 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 the relevant information would reasonably conclude to
   be part of the audit firm nationally or internationally;
   (4)     Supervise and assess the internal audit work of the Company,
   including but not limited to:
   1.      Guiding and supervising the establishment and implementation of
   the internal audit system;
   2.      Reviewing the annual internal audit work plan of the Company;
   3.      Supervising and urging the implementation of the internal audit
   plan of the Company;
   4.  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
   problems submitted by the internal audit department to the management shall be
   submitted to the Committee concurrently;
   5.      Reviewing the internal audit reports, assessing the internal
   audit results and supervising rectification of material issues;
   6.  Supervising the internal audit department to carry out inspection, at
   least semi-annually, on the implementation of significant 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-value transactions and the

   transactions with directors, supervisors, senior management,

   controlling shareholders and de facto controller and their respective
   associates, and issue an inspection report and submit it to the Committee;
   7.      Reporting to the Board on the progress and quality of internal
   audit and major problems identified;
   8.  The Committee shall issue assessment opinions in writing in respect of
   the effectiveness of the internal control of the Company based on the internal
   audit report and relevant information submitted by the internal audit
   department, and report to the Board. In the event that the Committee considers
   that there is a material deficiency or material risk in the internal control
   of the Company, the Board shall report to the stock exchange where the Company
   is listed and make disclosure

   in a timely manner;
   9. Overseeing the coordination between the Company's management, the internal
   auditing department, other related departments and the external auditor,
   ensuring that the internal audit is adequately resourced and has appropriate
   standing within the Company, and reviewing the effectiveness of internal
   audits.
   (5) Monitor the Company's financial information and disclosures, review the
   truthfulness, accuracy and integrity of the Company's financial statements,
   annual reports and accounts, interim reports, quarterly reports, and the key
   opinions relating to financial reporting in any of the above. In reviewing
   these reports before submission to the Board, the Committee should focus on:
   i.       any changes in accounting policies and practices;
   ii.      any matters that involve significant judgements;
   iii.     any significant adjustments made in the course of auditing work;
   iv.     any going concern assumptions and any reservation;
   v.      compliance with accounting standards;
   vi.     any potential fraud, fraudulent conducts or false statements
   relating to the financial reporting;
   vii.    compliance with the Hong Kong Listing Rules and other legal
   requirements in relation to financial reporting; and

   viii.  any issues over financial reporting that are subject to
   rectifications.
   (6)  In connection with the duties as set forth in item (5) above, liaise
   with the Board and the senior management of the Company and meet with the
   external auditor conducting the annual audits for at least twice a year;
   consider any significant or unusual matters that are, or may need to be,
   reflected in the reports and accounts, and give due consideration to any
   matters that have been raised by the person in charge of the accounting,
   financial reporting, compliance and auditing of the Company;
   (7) Discuss the establishment of the Company's risk management system and
   internal control system with the management of the Company to ensure that the
   management has performed its duty to establish an effective control system.
   The discussion should cover the adequacy of resources of the Company's
   accounting and financial reporting function as well as the internal audit
   function, staff qualification and experience, training programs and  budget
   of  the  Company's  accounting  and  financial  reporting

   departments.
   Review the Company's risk management system, internal control system and legal
   and compliance management system, and assess the effectiveness and
   implementation of the relevant systems. The aforesaid review and assessment
   shall cover aspects including financial control, operational control and
   compliance control; assess the effectiveness of the rules and specifications
   for the Company's risk investment (including but not limited to any investment
   in any financial derivative instruments), and review the strategy and
   implementation plan of the Company for such investment.
   Review the internal control audit plan and audit report issued by the external
   auditors and communicate with the external auditor regarding deficiency
   identified and any improvement plan in response to it.
   (8) Consider major investigation findings on risk management and internal
   control matters and the management's responses to the above, as delegated by
   the Board or on its own initiative; supervise the rectifying actions to

   address the deficiencies in the Company's internal control.
   (9)  Review the audit notes submitted to the management by the external
   auditor for the annual audit, any material enquiries raised by the external
   auditor to the management regarding accounting records, financial accounts and
   control systems, and the management's responses to such enquiries, and ensure
   that the Board will provide a timely response to the issues raised in the
   audit notes submitted to the management by the external auditor for the annual
   audit;

            (10) Review the financial and accounting policies and practices adopted by the
            Company and its subsidiaries;
            (11) Supervise the Company's connected transactions control and the daily
            management of such transactions. Review any major connected transactions of
            the  Company  and  submit  written  opinions  to  the  Board  for
            its

            consideration;
            (12) Listen to the Company's reports on any fraudulent conducts and the
            whistle- blower reports of such conducts; review the following arrangements
            set up by the Company: the employees of the Company can raise concerns about
            possible improprieties in the financial reporting, internal control or other
            matters. The Committee shall ensure that proper arrangements are in place for
            the Company to conduct fair and independent investigations and appropriate
            actions of these matters. The employees of the Company and those who deal with
            the Company, such as customers and suppliers, can make anonymous reports to
            the Committee regarding any possible improprieties related to the Company.
            (13) Report to the Board and make recommendations on any matters where action
            or improvement is needed and other matters as stipulated in these working
            rules.
            (14) Address other matters authorized by the Board and other matters as
            required by the laws and regulations as well as the relevant regulations of
            the stock exchange 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 Committee shall cooperate with

            the supervision and audit activities of the board of supervisors of the
            Company.
            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 chartered 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 external auditor for the annual audit is
             engaged to audit the annual financial report of the Company commences its
             auditing assignment, review and form its opinion in writing on the financial
             report prepared by the Company.
             The Committee shall, after the external auditor for the annual audit commences
             its auditing assignment, communicate with such external auditor for the annual
             audit on material issues identified in the auditing process. After the
             preliminary audit opinion is issued by such external auditor for the annual
             audit, the Committee shall review the audit opinion and form its opinion in
             writing on the financial report of the Company.
 Article 12  The Committee shall vote and reach a decision on the annual financial report,
             and submit the decision to the Board for review and approval. 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
 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 non-executive
             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 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
             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 resolution cannot be passed due to the abstention of the Committee
             member(s), the relevant matter shall be submitted to the Board for its review
             and decision.

 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.
             Each Committee member may only accept one other Committee member's proxy.
             Should a Committee member who is an independent non-executive director cannot
             attend the meeting in person, he or she shall authorize another Committee
             member who is an independent non-executive director to attend on his or her
             behalf.
 Article 16  Should the Committee deems it necessary, the directors, supervisors 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.
 Article 17  The Committee shall establish a joint working group, comprising the senior
             management of the Company and/or the person in charge of the relevant
             functional departments, to provide support to the Committee. The Committee
             may, if necessary, engage experts or intermediary institutions to provide
             professional opinions in its decision-making process and any reasonable cost
             arising therefrom shall be borne by the Company.
 Article 18  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 19  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 20  The resolutions passed by, and the results of voting conducted at, the
             Committee meetings shall be reported in writing to the Board.
 Article 21  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.

 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 or
             the AOA promulgated after these working rules come into effect, such
             provisions of the laws, administrative regulations, other relevant regulatory
             documents or the AOA shall prevail.
 Article 24  The Board reserves the rights to amend and interpret these working rules.

 

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