Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd
Rules of procedure of the audit committee of the board of directors
Chapter I General Provisions
Article 1 in order to strengthen the decision-making function of the board of directors of Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. (hereinafter referred to as “the company”), achieve prior audit and professional audit, improve the audit evaluation and supervision mechanism of the board of directors, ensure the effective supervision of the board of directors over the company, and improve the corporate governance structure, according to the company law of the people’s Republic of China and the standards for the governance of listed companies According to the articles of association of Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. (hereinafter referred to as the “articles of association”) and other relevant provisions, the company hereby establishes the audit committee of the board of directors and formulates these rules.
Article 2 the audit committee of the board of directors is mainly responsible for the communication, supervision and verification of the company’s internal and external audit. Chapter II personnel composition
Article 3 the audit committee shall be composed of five directors, of which independent directors shall account for more than half of the total number of members of the audit committee, and at least one independent director shall be an accounting professional.
Article 4 the audit committee shall have a convener, who shall be an independent director member, who shall be responsible for convening and presiding over the meetings of the Committee. When the convener is unable or unable to perform his duties, he shall appoint another member to perform his duties on his behalf; When the convener neither performs his duties nor designates other members to perform his duties on his behalf, any member can report the relevant situation to the board of directors of the company, and the board of directors of the company designates a member to perform the duties of the convener.
Article 5 the audit committee of a listed company shall be composed of three or more board members appointed by the board of directors, and the convener of the audit committee shall be an accounting professional. Members of the audit committee shall be diligent and responsible, effectively supervise and evaluate the internal and external audit work of listed companies, promote the company to establish effective internal control and provide true, accurate and complete financial reports.
Members of the audit committee shall have professional knowledge and business experience in performing the duties of the audit committee.
Article 7 before the expiration of a member’s term of office, he shall not be dismissed without reason unless he is prohibited from holding office by the company law, the articles of association or these rules. If a member ceases to serve as a director of the company during the period, his membership will be automatically lost when he ceases to serve as a director. The board of directors shall add new members in accordance with the articles of association and these rules.
Article 8 when the number of members of the committee is less than two-thirds of the required number, the board of directors of the company shall timely add new members. When the number of members of the committee is less than two-thirds of the specified number, the committee shall suspend the exercise of its functions and powers specified in these rules.
Chapter III responsibilities and authorities
Article 9 the main responsibilities and authorities of the audit committee are as follows:
（1） Propose to hire or replace the external audit institution;
（2） Responsible for the communication between internal audit and external audit;
(III) supervise and evaluate the work of external audit institutions;
（4） Guide the internal audit work;
（5） Review the company’s financial information;
（6） Review the company’s internal control system;
（7） Participate in the meeting with the annual audit certified public accountants together with independent directors before the annual audit accounting firm enters the audit;
(VIII) perform the control and daily management responsibilities of the company’s related party transactions;
（9） Other matters authorized by the board of directors of the company.
Article 10 the responsibilities of the committee to supervise and evaluate the work of external audit institutions include the following aspects:
(I) evaluate the independence and professionalism of external audit institutions, especially the impact of non audit services provided by external audit institutions on their independence;
(II) propose to the board of directors to hire or replace the external audit institution;
(III) review the audit fees and employment terms of the external audit institution;
(IV) discuss and communicate with external audit institutions on audit scope, audit plan, audit methods and major matters found in the audit;
(V) supervise and evaluate whether the external audit institutions are diligent and responsible.
Article 11 when supervising and evaluating the work of the internal audit department, the committee shall perform the following main responsibilities:
(I) guide and supervise the establishment and implementation of internal audit system;
(II) review the company’s annual internal audit work plan;
(III) supervise and urge the implementation of the company’s internal audit plan;
(IV) guide the effective operation of the internal audit department. The internal audit department of the company must report to the audit committee, and all kinds of audit reports, rectification plans and rectification conditions of audit problems submitted by the internal audit department to the management must be submitted to the audit committee at the same time;
(V) report to the board of directors on the progress and quality of internal audit and major problems found;
(VI) coordinate the relationship between the internal audit department and external audit units such as accounting firms and national audit institutions.
Article 12 the audit committee shall supervise the internal audit department to inspect the following matters at least once every six months, issue inspection reports and submit them to the audit committee. If the inspection finds that the company has violations of laws and regulations and non-standard operation, it shall report to Shenzhen Stock Exchange in time:
(I) the implementation of major events such as the use of raised funds, provision of guarantees, related party transactions, securities investment and derivatives transactions, provision of financial assistance, purchase or sale of assets, foreign investment and so on;
(II) the company’s large amount of capital transactions and capital transactions with directors, supervisors, senior managers, controlling shareholders, actual controllers and their affiliates.
The audit committee shall issue a written evaluation opinion on the effectiveness of the company’s internal control according to the internal audit report and relevant materials submitted by the internal audit department, and report to the board of directors. If the audit committee considers that there are significant defects or risks in the company’s internal control, or the sponsor, independent financial consultant or accounting firm points out that there are significant defects in the effectiveness of the company’s internal control, it shall report to the board of directors in time, and the board of directors shall report to and disclose it to Shenzhen Stock Exchange. The company shall disclose in the announcement the major defects or risks in internal control, the consequences that have been or may be caused, and the measures that have been taken or are to be taken.
Article 13 the audit committee shall issue an annual self-evaluation report on internal control based on the evaluation report and relevant materials issued by the internal audit department and submit it to the board of directors for deliberation. The internal control self-evaluation report shall at least include the following contents:
(I) statement of the board of directors on the authenticity of the internal control report;
(II) overall situation of internal control evaluation;
(III) basis, scope, procedures and methods of internal control evaluation;
(IV) internal control defects and their identification;
(V) rectification of internal control defects of the previous year;
(VI) proposed rectification measures for internal control defects this year;
(VII) conclusion on the effectiveness of internal control.
Article 14 the audit committee shall be responsible to the board of directors, and the proposals of the committee shall be submitted to the board of directors for deliberation and decision.
Article 15 the company shall provide necessary working conditions for the audit committee and allocate special personnel or institutions to undertake the daily work of the audit committee, such as work liaison, meeting organization, material preparation and file management. When the audit committee performs its duties, the management and relevant departments of the listed company shall cooperate.
If the Audit Committee deems it necessary, it may hire an intermediary institution to provide professional opinions, and the relevant expenses shall be borne by the company. Article 16 when the company hires or replaces an external audit institution, the board of directors can consider relevant proposals only after the Committee forms deliberation opinions and puts forward suggestions to the board of directors.
Chapter IV Rules of procedure
Article 17 the board of directors, convener or more than half of the members have the right to propose to convene the audit committee meeting.
Article 18 the convener shall notify all members two days before the meeting. If an emergency meeting needs to be held for special reasons, it may not be subject to the above-mentioned notice period, but the convener shall make an explanation at the meeting.
Article 19 the meeting notice can be sent in written forms such as personal service, fax, express mail or e-mail. The meeting notice shall at least include the meeting time, place, convening method, topics to be discussed at the meeting, meeting contact person and contact information, and the sending date of the meeting notice. If the time is urgent, it can be notified by telephone. In this case, the meeting notice shall at least include the time, place, convening method, topics to be discussed at the meeting, as well as the description of the urgent need to convene the meeting as soon as possible, and send a written notice afterwards.
Article 20 the meeting of the audit committee shall be held only when more than half of the members are present; Each member has one vote; Resolutions made at the meeting must be adopted by more than half of all members.
Article 21 members of the audit committee may attend the meeting in person or entrust other members to attend the meeting and exercise their voting rights on their behalf. A member can only entrust one other member to exercise the voting right on his behalf at a time. If two or more members are entrusted to exercise the voting right on his behalf, the entrustment is invalid.
Article 22 If a member of the audit committee entrusts other members to attend the meeting and exercise voting rights on his behalf, he shall submit a power of attorney to the chairman of the meeting. The power of attorney shall be submitted to the chairman of the meeting no later than the premise of the meeting. Article 23 the power of attorney shall at least include the following contents:
(I) name of the client;
(II) name of the principal;
(III) entrusted matters;
(IV) instructions on the exercise of voting rights on the topics of the meeting (consent, objection, abstention) and instructions on whether the entrusted person can vote according to his own will in the absence of specific instructions;
(V) the period of authorization;
(VI) signing date of power of attorney.
The power of attorney shall be signed by the principal and the principal.
Article 24 If a member of the audit committee neither attends the meeting in person nor entrusts other members to attend the meeting on his behalf, he shall be deemed not to attend the relevant meeting. If a member of the committee fails to attend the meeting for two consecutive times, he shall be deemed unable to properly perform his functions and powers. The board of directors may remove its members from office.
Article 25 the meeting of the audit committee may be in the form of on-site meeting or off-site meeting. Unless otherwise specified in the articles of association or these rules, on the premise of ensuring the full expression of opinions of the members, the committee may make a resolution by means of communication voting, which shall be signed by the members participating in the meeting.
Article 26 the voting method of the audit committee meeting is a show of hands or voting. If communication voting is adopted, the members of the committee who sign the resolution of the meeting shall be deemed to have attended the relevant meeting and agreed to the content of the resolution.
Article 27 the audit committee may invite directors, supervisors and senior managers of the company to attend the meeting as nonvoting delegates when necessary.
Article 28 the convening procedures, voting methods and proposals adopted at the meeting of the audit committee must comply with the provisions of relevant laws and regulations, the articles of association and these rules.
Article 29 the meeting of the audit committee shall have minutes, which shall be signed by the members attending the meeting; The minutes of the meeting shall be kept by the Secretary of the board of directors of the company.
Article 30 the proposals and voting results adopted at the meeting of the audit committee shall be reported to the board of directors of the company in writing.
Article 31 the minutes of the audit committee meeting shall at least include the following contents: the date and place of the meeting and the name of the convener; The names of the persons attending the meeting and those entrusted by others to attend the meeting shall be specially indicated; Agenda of the meeting; Key points of members’ speeches; Voting methods and results of each resolution or proposal; Other matters that should be explained and recorded in the minutes of the meeting.
Article 32 all members present at the meeting shall have the obligation to keep confidential the matters discussed at the meeting and shall not disclose relevant information without authorization.
Chapter VI supplementary provisions
Article 33 These Rules shall come into force from the date of deliberation and adoption by the board of directors.
Article 34 matters not covered in these Rules shall be implemented in accordance with relevant national laws, regulations and the articles of Association; In case of any conflict between these rules and the laws and regulations promulgated by the state in the future or the articles of association modified by legal procedures, the provisions of relevant national laws, regulations and the articles of association shall be implemented, and the rules shall be revised immediately and submitted to the board of directors for deliberation and approval.
Article 35 the terms “above” and “within” mentioned in these rules include this number; “Over”, “less than”, “more than”, excluding this number.
Article 36 the power of interpretation of these rules belongs to the board of directors of the company.
