Enterprise Development Holdings Limited — Governance Information 2015

Dec 29, 2015

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ENTERPRISE DEVELOPMENT HOLDINGS LIMITED 企展控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1808)

Terms of reference for the Audit Committee

The Board of Directors (the “Board”) of Enterprise Development Holdings Limited (the “Company”) resolved on 18 December 2006 to establish a Committee of the Board known as the Audit Committee and the terms of reference of which (the “Terms of Reference”) has been revised at the Board meeting held on 14 December 2011 and further revised pursuant to the written resolutions of the Board of Directors passed on 29 December 2015.

Purpose

1. The purpose of the Audit Committee is to assist the board of directors (the “Board”) of Enterprise Development Holdings Limited (the “Company”) in considering how the Board should apply financial reporting, risk management and internal control principles and for maintaining an appropriate relationship with the Company’s auditor.

Membership

1. The Audit Committee shall comprise a minimum of three members consisting of non-executive directors only and a majority of which must be independent non-executive directors of the Company. The Audit Committee must comprise of at least one independent non-executive director who has appropriate professional qualifications or accounting or related financial management expertise as required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) (as amended from time to time). A quorum shall be two members.

2. The chairman of the Audit Committee shall be appointed by the Board and must be an independent non-executive director.

Attendance at meetings

1. The financial controller of the Company, the head of internal audit and a representative of the external auditors shall normally attend meetings. Other Board members shall also have the right of attendance. However, at least twice a year the Audit Committee shall meet with the external and internal auditors without executive Board members present.

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3. The company secretary of the Company (the “ Company Secretary ”) shall be the secretary of the Audit Committee.

Frequency of meetings

1. The Audit Committee shall meet at least twice annually or more frequently if circumstances require and shall act by unanimous written consent. The Board, any audit committee member and the external auditors may request a meeting if they consider that one is necessary.

Authority

1. The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees will be directed to co-operate with any request made by the Audit Committee.

2. The Audit Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise at meetings of the Audit Committee if it considers this necessary.

Duties

1. The duties of the Audit Committee shall include the following:-

2. (a) to be primarily responsible for making recommendations to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;

3. (b) to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Audit Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;

4. (c) to develop and implement policies on engaging an external auditor to supply 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 relevant information would reasonably conclude to be part of the audit firm nationally or internationally. The Audit Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;

5. (d) to monitor the integrity of the Company’s financial statements and annual report and accounts, half-yearly report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgements contained in them. In reviewing these reports before submission to the board, the Audit Committee should focus particularly on:-

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7. (i) any changes in accounting policies and practices;

8. (ii) major judgmental areas;

9. (iii) significant adjustments resulting from the audit;

10. (iv) the going concern assumptions and any qualifications;

11. (v) compliance with accounting standards; and

12. (vi) compliance with the Listing Rules and legal requirements in relation to financial reporting;

13. (e) Regarding to (d) above:-

14. (i) members of the Committee should liaise with the Board and senior management and the Committee must meet, at least twice a year, with the Company’s auditors; and

15. (ii) the Committee should consider any significant or unusual items that are, or may need to be, reflected in the report and accounts, it should give due consideration to any matters that have been raised by the Company’s staff responsible for the accounting and financial reporting function, compliance officer or auditors;

16. (f) to review the Company’s financial controls, risk management and internal control systems;

17. (g) to discuss the risk management and internal control systems with management to ensure that management has performed its duty to have effective systems. The discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company’s accounting and financial reporting functions;

18. (h) to consider major investigation findings on risk management and internal control matters as delegated by the Board or on its own initiative and management’s response to these findings;

19. (i) to ensure co-ordination between the internal auditors / external professionals and external auditors in respect of carrying out the internal audit function, and to ensure that the same is adequately resourced and has the appropriate standing within the Company, and to review and monitor its effectiveness;

20. (j) to review the Group’s financial and accounting policies and practices;

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22. (k) to review the external auditor’s management letter, any material queries raised by the auditor to management about accounting records, financial accounts or systems of control and management’s response;

23. (l) to ensure that the Board will provide a timely response to the issues raised in the external auditor’s management letter;

24. (m) to report to the Board on the matters in the Code on Corporate Governance Practices (Appendix 14 to the Listing Rules);

25. (n) to consider other topics, as defined by the Board;

26. (o) to review arrangements employees of the Company can use, in confidence, to raise concerns about possible improprieties in financial reporting, risk management, internal control or other matters and to ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;

27. (p) to act as the key representative body for overseeing the Company’s relationship with the external auditor;

28. (q) to review ongoing connected transactions of the Company and ensure compliance with terms of approval by shareholders of the Company; and

29. (r) to consider such other matters as the Board may from time to time determine.

Reporting procedures

1. The Company Secretary shall circulate the minutes of meetings of the Audit Committee to all members of the Board as soon as practicable after the conclusion of any meeting of the Audit Committee.

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