Shanxi Shanxi Huayang New Materialco.Ltd(600281) Material Co., Ltd
Implementation rules of the financial audit committee of the board of directors
(revised in April 2022)
Chapter I General Provisions
Article 1 in order to strengthen the scientificity of the decision-making of the board of directors of Shanxi Huayang New Materialco.Ltd(600281) (hereinafter referred to as the “company”), improve the level of decision-making and ensure the effective supervision of the board of directors over the management, in accordance with the company law of the people’s Republic of China (hereinafter referred to as the “company law”), the standards for the governance of listed companies, and the guidelines for the self-discipline supervision of listed companies of Shanghai Stock Exchange No. 1 – standardized operation According to the Shanxi Huayang New Materialco.Ltd(600281) articles of Association (hereinafter referred to as the “articles of association”) and other relevant provisions, the company hereby establishes the financial audit committee of the board of directors (hereinafter referred to as the “financial audit committee”) and formulates these rules.
Article 2 the financial audit committee is a special working body under the board of directors and is responsible to the board of directors. The proposal of the committee shall be submitted to the board of directors for deliberation and decision. The financial audit committee has the responsibility to cooperate with the board of supervisors in the audit activities. Chapter II personnel composition
Article 3 the members of the financial audit committee shall be composed of three directors, and the independent directors shall account for the majority.
Article 4 the members of the financial audit committee shall be nominated by the chairman of the board of directors, or more than half of the independent directors or one-third of all directors, and shall be elected by the board of directors.
Article 5 the financial audit committee shall have a chairman (convener), who shall be an independent director member of an accounting professional, who shall be responsible for presiding over the work of the Committee; The chairman is elected by the board of directors among the members.
Article 6 The term of office of the financial audit committee is the same as that of the board of directors. When the term of office expires, 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 3 to 5 above.
Article 7 the securities affairs department is the working body of the financial audit committee, which is responsible for daily work liaison and meeting organization.
The financial audit committee may set up a working group to be specifically responsible for the data collection and research, daily work liaison and meeting organization of the Committee. The working group is led and coordinated by the securities affairs department, and the specific members are determined by the financial audit committee. In principle, the members of the working group are only selected from the employees of the company.
Chapter III responsibilities and authorities
Article 8 the main responsibilities and authorities of the financial audit committee are as follows:
(I) supervise and evaluate the work of external audit institutions;
(II) supervise and evaluate the internal audit work;
(III) review the financial reports of listed companies and express opinions on them;
(IV) supervise and evaluate the company’s internal control;
(V) coordinate the communication between the management, internal audit department and relevant departments and external audit institutions;
(VI) other matters authorized by the board of directors of the company and other matters involved in laws, regulations and relevant provisions of the exchange. The financial audit committee shall report to the board of directors on the measures or improvements it deems necessary and put forward suggestions.
Article 9 when the company hires or replaces an external audit institution, the financial audit committee of the board of directors shall form a review opinion and put forward suggestions to the board of directors before the board of directors can review relevant proposals.
The financial audit committee shall propose to the board of directors to hire or replace the external audit institution, and review the audit fees and employment terms of the external audit institution, which shall not be unduly affected by the company’s major shareholders, actual controllers or directors, supervisors and senior managers.
The financial audit committee shall urge the external audit institutions to be honest, trustworthy, diligent and responsible, strictly abide by the business rules and industry self-discipline norms, strictly implement the internal control system, verify and verify the company’s financial and accounting reports, perform the obligation of special care, and prudently express professional opinions.
Article 10 the financial audit committee shall perform the following duties in supervising and evaluating internal audit:
(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 shall report its work 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 shall 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 11 the duties of the financial audit committee to review the company’s financial reports and express opinions on them must 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 auditing issues in the financial reports of listed companies;
(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 12 the financial audit committee shall issue an annual self-evaluation report on internal control according to the evaluation report and relevant materials issued by the internal audit department. The internal control evaluation report shall include the following contents:
(I) statement of the board of directors on the authenticity of the internal control evaluation report;
(II) overall evaluation of internal control;
(III) basis, scope, procedures and methods of internal control evaluation;
(IV) defects in internal control 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.
The accounting firm shall verify and evaluate the internal control evaluation report of the company with reference to the relevant provisions of the competent department.
Article 13 the financial audit committee shall evaluate the establishment and implementation of the company’s internal control according to the internal audit report of the listed company and relevant information, and form an internal control evaluation report. The board of directors shall form a resolution on the internal control evaluation report of the company while considering the annual report and other matters.
The company shall disclose the annual internal control evaluation report and the internal control audit report issued by the accounting firm at the same time as the annual report.
Article 14 unless otherwise provided by laws and regulations, the financial audit committee shall supervise the internal audit department to inspect the following matters at least once every six months, issue an inspection report and submit it to the financial audit committee. If it is found that the listed company has violations of laws and regulations and non-standard operation, it shall report to the board of directors in a timely manner:
(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 financial 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.
Article 15 the financial audit committee shall regularly check the transactions between the company and related parties to understand whether the company has the possibility of related parties occupying and transferring the company’s funds, assets and resources.
Once any abnormality is found, it shall immediately request the board of directors and the board of supervisors to take corresponding measures and report to the regulatory authority in a timely manner.
Chapter IV decision making procedures
Article 16 the daily office of the financial audit committee shall be responsible for making decisions before the financial audit committee
Prepare for the period, and collect and provide written materials on audit and related party transactions:
(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) related party transaction agreement;
(VI) audit opinions issued by independent intermediaries on related party transactions (if any);
(VII) audit report and evaluation report of the company’s major connected transactions (if any);
(VIII) explanations and basis materials on the legality, necessity, objectivity, fairness and rationality of related party transactions;
(IX) description of the performance of the company’s related party transactions (mainly including the transaction party, transaction content, transaction price, transaction quantity, total transaction amount, etc., which shall be jointly prepared by the company’s financial department and the business department with specific related party transactions according to the actual situation);
(x) other relevant written materials.
Article 17 the financial audit committee shall review the reports provided by the internal financial audit department at the meeting, and submit the relevant written resolution materials or suggestions to the board of directors for discussion:
(I) work evaluation of external audit institutions, employment and replacement of external audit institutions;
(II) the appropriateness of the accounting policies adopted by the company and whether they comply with the provisions of relevant national laws and regulations;
(III) whether the company’s internal audit system has been effectively implemented and whether the company’s financial report is comprehensive and true;
(IV) whether the financial reports and other information disclosed by the company are objective and true and comply with relevant laws and regulations; (V) work evaluation of the company’s internal financial department and audit department, including their principals;
(VI) whether the connected transactions to be submitted to the board of directors for consideration comply with the principles of good faith, openness, fairness and impartiality;
(VII) whether related party transactions are really necessary and in line with the long-term interests of the company;
(VIII) the pricing principle of related party transactions and the fairness and rationality of pricing;
(IX) the specific implementation of related party transactions and whether there is any infringement on the interests of the company and non related shareholders;
(x) whether the related party transactions comply with the provisions of relevant laws and regulations and the requirements of the company’s internal decision-making system; （11） Evaluation of the impact of related party transactions on the independence of the company;
（12） Express special independent opinions to the board of directors or the general meeting of shareholders on the conclusion and implementation of the company’s related party transaction agreement in each fiscal year;
（13） Other relevant matters.
Chapter V rules of procedure
Article 18 the financial audit committee may hold relevant meetings at any time as required. The meeting shall be proposed by the members of the financial audit committee and notified to all members three days before the meeting (in special circumstances, all members may be notified by telephone one day before the meeting). The meeting shall be presided over by the chairman (convener). If the chairman is unable to attend, he may entrust another member to preside over the meeting.
Article 19 the meeting of the financial audit committee shall be held only when more than two-thirds of the members are present; Each member has one vote; A resolution made at the meeting shall be valid only if it is approved by more than half of all members.
Article 20 the voting method of the meeting of the financial audit committee is a show of hands or a vote; The meeting can be held by means of communication voting.
Article 21 the financial audit committee may invite directors, supervisors and other senior managers of the company to attend the meeting as nonvoting delegates when necessary.
Article 22 if necessary, the financial audit committee may employ an intermediary institution to provide professional advice for its decision-making, and the relevant expenses shall be paid by the company.
Article 23 the convening procedures, voting methods and proposals adopted at the meeting of the financial audit committee must comply with the provisions of relevant laws, regulations, the articles of association and these rules.
Article 24 the meeting of the financial 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 25 the proposals and voting results adopted at the meeting of the financial audit committee shall be reported to the board of directors of the company in writing.
Article 26 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 27 these Rules shall come into force as of the date of adoption of the resolution of the board of directors.
Article 28 matters not covered in these Rules shall be implemented in accordance with relevant national laws, regulations, articles of association and other relevant provisions; In case of any conflict between the implementation 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, revised immediately and reported to the board of directors for deliberation and approval.
Article 29 the detailed rules shall be revised and interpreted by the board of directors of the company.
