Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738)
Rules of procedure of the audit committee of the board of directors
(revised in April 2022)
Chapter I General Provisions
Article 1 in order to promote listed companies to improve the level of corporate governance and standardize the operation of the audit committee of the board of directors of listed companies, in accordance with the provisions of the company law, the securities law, the standards for the governance of listed companies, the basic norms of enterprise internal control, the Listing Rules of Shanghai Stock Exchange and other relevant normative documents, as well as the relevant provisions of the Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) articles of Association (hereinafter referred to as the articles of association), These rules of procedure are formulated in combination with the actual situation of the company.
Article 2 the audit committee is a special working body of the board of Directors established in accordance with the articles of association. It is responsible to the board of directors and reports its work to the board of directors.
Article 3 the members of the audit committee shall ensure sufficient time and energy to perform the duties of the committee, be diligent and responsible, effectively supervise the company’s external audit, guide the company’s internal audit, promote the company to establish effective internal control and provide true, accurate and complete financial reports and internal control reports.
Article 4 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 company’s management and relevant departments must cooperate.
Chapter II personnel composition
Article 5 the members of the audit committee are composed of five directors, including three independent directors. At least one independent director among the members is a professional accountant.
Article 6 the members of the audit committee shall be nominated by the chairman of the board of directors, more than half of the independent directors or one-third of all the directors, and shall be elected by the board of directors.
Article 7 in principle, the members of the audit committee shall be independent of the company’s daily operation and management.
Article 8 all members of the audit committee shall have professional knowledge and business experience competent for the duties of the audit committee.
Article 9 the audit committee shall have a chairman (convener), who shall be an independent director and be responsible for presiding over the work of the Committee; The chairman shall be elected from among the members and reported to the board of directors for approval. The chairman of the audit committee must have professional experience in accounting or financial management.
Article 10 the company shall organize the members of the audit committee to participate in relevant training to enable them to obtain the professional knowledge of law, accounting and company regulatory norms required for performing their duties in time.
Article 11 the board of directors of the company shall regularly evaluate the independence and performance of the members of the audit committee, and may replace the members who are not suitable to continue to serve when necessary.
Article 12 The term of office of the audit committee is the same as that of the board of directors. Upon expiration of the term of office, the members can be re elected. If any member ceases to hold the position of director of the company during the period, he will automatically lose the qualification of member, and the committee will make up the number of members according to the provisions of Articles 5 to 9 above.
Article 13 the audit committee shall set up an audit department as its daily working body, which shall be responsible for daily audit
Chapter III responsibilities and authorities
Article 14 the main responsibilities and authorities of the audit committee are as follows:
(I) propose to hire or replace the external audit institution;
(II) supervise and evaluate the work of external audit institutions;
(III) supervise the company’s internal audit system and its implementation;
(IV) be responsible for the communication between internal audit and external audit;
(V) review the company’s financial information and its disclosure and express opinions on it;
(VI) review the company’s internal control system and audit major related party transactions;
(VII) promote the company’s risk control and compliance management;
(VIII) be responsible for other matters authorized by laws and regulations, the articles of association and the board of directors of the company. Article 15 the responsibilities of the audit committee to supervise and evaluate the work of external audit institutions must at least 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.
The audit committee shall hold a separate communication meeting with the external audit institution without the participation of management at least once a year. The Secretary of the board of directors may attend the meeting as nonvoting delegates.
Article 16 the responsibilities of the audit committee in guiding internal audit shall at least include the following aspects:
(I) review the company’s annual internal audit work plan;
(II) supervise and urge the implementation of the company’s internal audit plan;
(III) review the internal audit work report, evaluate the results of internal audit work, and urge the rectification of major problems;
(IV) guide the effective operation of the internal audit department.
The internal audit department of the company shall report to the audit committee. 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.
Article 17 the duties of the audit committee to review the company’s financial reports and express opinions on them shall at least include the following aspects:
(I) review the company’s financial report and put forward opinions on the authenticity, completeness and accuracy of the financial report;
(II) focus on major accounting and audit issues of the company’s financial report, including major accounting error adjustment, major accounting policy and estimation changes, matters involving important accounting judgment, matters leading to non-standard unqualified audit report, etc;
(III) pay special attention to the possibility of fraud, fraud and material misstatement related to financial reporting;
(IV) supervise the rectification of financial reporting problems.
Article 18 the responsibility of the audit committee to evaluate the effectiveness of internal control shall at least include the following aspects:
(I) evaluate the appropriateness of the company’s internal control system design;
(II) review the internal control self-evaluation report;
(III) review the internal control audit report issued by the external audit institution, and communicate with the external audit institution the problems found and the improvement methods;
(IV) evaluate the results of internal control evaluation and audit, and urge the rectification of internal control defects. Article 19 the responsibilities of the audit committee in coordinating the communication between the management, internal audit department and relevant departments and external audit institutions include:
(I) coordinate the communication between the management and external audit institutions on major audit issues;
(II) coordinate the communication between internal audit department and external audit institutions and the cooperation of external audit.
Article 20 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. The audit committee shall cooperate with the board of supervisors in the audit activities.
Chapter IV decision making procedures
Article 21 the audit working group shall be responsible for the preliminary preparations for the decision-making of the audit committee and provide the written materials of relevant parties of the company:
(I) relevant financial reports of the company;
(II) work reports of internal and external audit institutions;
(III) external audit contract and related work report;
(IV) information disclosed by the company;
(V) audit report on major related party transactions of the company;
(VI) other relevant matters.
Article 22 at the meeting of the audit committee, the report provided by the audit working group shall be reviewed, and the relevant written resolution materials shall be submitted to the board of directors for discussion:
(I) work evaluation of external audit institutions, employment and replacement of external audit institutions; (II) whether the company’s internal audit system has been effectively implemented and whether the company’s financial report is comprehensive and true;
(III) whether the financial reports and other information disclosed by the company are objective and true, and whether the company’s major connected transactions comply with relevant laws and regulations;
(IV) work evaluation of the company’s financial department and audit department, including their principals;
(V) other relevant matters.
Chapter V rules of procedure
Article 23 the committee shall hold at least four regular meetings every year, and may hold meetings from time to time as necessary. Under any of the following circumstances, the chairman shall sign and issue the notice of convening the meeting within 7 days from the date of occurrence: all members shall be notified 2 days before the meeting. The meeting shall be presided over by the chairman. If the chairman is unable to attend, he may entrust another member to preside over the meeting. When an interim meeting needs to be held due to an emergency, the notice of the meeting may not be subject to the restrictions of the preceding paragraph on the premise that more than two-thirds of the members of the audit committee are present.
Article 24 the meeting of the audit committee shall be held only when two or more members are present; Each member has one vote; Resolutions made at the meeting must be adopted by more than half of all members.
Any member of the audit committee who has an interest in the matters discussed at the meeting shall withdraw in advance. If effective deliberation opinions cannot be formed due to the avoidance of members, relevant matters shall be directly deliberated by the board of directors.
Article 25 members of the audit committee shall attend the meeting in person and express clear opinions on the matters under consideration. If a member is unable to attend the meeting in person for some reason, he may submit a power of attorney signed by the member and entrust other members to attend and express their opinions on his behalf. The power of attorney must specify the scope and duration of authorization. Each member shall be entrusted by at most one member. If an independent director is unable to attend the meeting in person for some reason, he shall entrust other independent director members to attend the meeting on his behalf. Article 26 the voting method of the audit committee meeting is a show of hands or voting; An interim meeting may be held by means of communication voting.
Article 27 members of the audit working group may attend the meeting of the audit committee as nonvoting delegates, and may also invite directors, supervisors and other senior managers of the company to attend the meeting as nonvoting delegates when necessary.
Article 28 if necessary, the audit committee may employ an intermediary institution to provide professional advice for its decision-making, and the expenses shall be paid by the company.
Article 29 the convening procedures, voting methods and proposals adopted at the meeting of the audit committee must comply with the provisions of relevant laws, regulations, the articles of association and these rules.
Article 30 the meeting of the audit committee shall be recorded, and the members attending the meeting shall sign on the meeting minutes; The minutes of the meeting shall be kept by the Secretary of the board of directors of the company.
Article 31 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 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 Information Disclosure
Article 33 the company shall disclose the personnel of the audit committee, including the composition, professional background, working experience within five years and the changes of the personnel of the audit committee.
Article 34 while disclosing the annual report, the company shall disclose the annual performance of the Audit Committee on the website of Shanghai Stock Exchange, mainly including the performance of its duties and the convening of the meeting of the audit committee.
Article 35 If the major problems found by the audit committee in the performance of its duties touch the information disclosure standards specified in the stock listing rules of Shanghai Stock Exchange, the company shall disclose such matters and their rectification in a timely manner.
Article 36 the audit committee shall put forward deliberation opinions to the board of directors of the company on matters within its scope of responsibility. If the board of directors fails to adopt them, the company shall disclose the matter and fully explain the reasons. Article 37 the company shall disclose the special opinions issued by the Audit Committee on major matters of the company in accordance with laws, administrative regulations, departmental rules and relevant normative documents. Chapter VII supplementary provisions
Article 38 matters not covered in these rules of procedure shall be implemented in accordance with relevant national laws, regulations and the articles of Association; In case of any conflict between these rules of procedure 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 39 these rules of procedure shall be formulated, revised and interpreted by the board of directors of the company, and shall come into force after being reviewed and approved by the board of directors of the company. The original rules of procedure of the audit committee of the board of directors of Lanzhou minbai (Group) Co., Ltd. shall be repealed simultaneously.
