REF Holdings Limited

(the ‘‘Company’’)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1631)

Terms of reference — Audit Committee

(As adopted by the Board on 12 August 2015, amended with effect from 20 June 2017 and further amended with effect from 1 January 2019)

1. Constitution

Below are the Terms of Reference of the Audit Committee of the Company (the ‘‘Committee’’) established on 12 August 2015, as revised by the resolutions of the board of directors of the Company (the ‘‘Directors’’ and the ‘‘Board’’, respectively) with effect from 20 June 2017 and as further revised by the Board resolutions with effect from 1 January 2019.

2. Membership

2.1 Members of the Committee (the ‘‘Committee Members’’) shall be appointed by the Board from amongst the non-executive Directors and shall consist of not less than three members, a majority of whom shall be independent non-executive Directors (the ‘‘INEDs’’) and at least one of whom is an INED with 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 ‘‘Stock Exchange’’) (as amended from time to time) (the ‘‘Listing Rules’’).
2.2 The term of each Committee Member shall be the same as his/her term as a Director. Subject to the constitutions of the Company and the applicable laws and regulations, any Committee Member may be re-appointed by the Board and continue to act as a Committee Member upon the expiry of his/her term of appointment relating thereof.
2.3 A Committee Member who ceases to be a member of the Board shall immediately and automatically cease to be a Committee Member.
2.4 A former partner of the Company’s existing external auditors shall be prohibited from acting as a Committee Member for a period of two years from the date of his/her cessation:
2.4.1 to be a partner of the audit firm; or
2.4.2 to have any financial interest in the audit firm,

whichever is later.

– 1 –

2.5 The chairman of the Committee (the ‘‘Committee Chairman’’) shall be appointed by the Board from time to time and shall be an INED. In the absence of the Committee Chairman and/or an appointed deputy, the remaining Committee Members present at a Committee meeting shall elect one of themselves to chair the meeting.

3. Committee Secretary

The company secretary of the Company shall act as the secretary of the Committee (the ‘‘Committee Secretary’’). The Committee may, from time to time, appoint any other person with the appropriate qualification and experience as the Committee Secretary. The Committee Secretary or in his/her absence, his/her representative or any one Committee Member, shall be the secretary of the Committee meeting.

4. Frequency of Meetings

4.1 Meetings shall be held not less than twice a year at appropriate times in the reporting and audit cycle and otherwise as required.
4.2 The Committee Chairman shall convene a meeting upon request by any Committee Member. The external auditors may request a meeting if they consider that is necessary.

5. Conduct of Meetings

5.1 Unless specified by these terms of reference, meetings and proceedings of the Committee shall be governed by the Company’s articles of association regulating the meetings and proceedings of the Directors.
5.2 Unless otherwise waived by all Committee Members, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each Committee Member no later than 3 working days before the date of the meeting. Supporting papers shall be sent to the Committee Members and to other attendees as appropriate, at the same time. For this purpose, a working day includes every day other than a Saturday, Sunday or a public holiday in Hong Kong.
5.3 The quorum of the Committee shall be any two Committee Members. Meetings could be held in person, by telephone or by video conference. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.
5.4 Resolutions of the Committee at any meetings shall be passed by a majority of votes of the Committee Members present. Subject to compliance with the Listing Rules and the applicable laws and regulations, a resolution in writing signed by all the Committee Members shall be as valid and effectual as if it had been passed at a meeting of the Committee duly convened and held.

– 2 –

5.5 The Company’s officer, who is responsible for financial management and internal audit and a representative of the external auditors shall normally attend meetings of the Committee. The Committee may invite any member of the senior management of the Company (the ‘‘Senior Management’’), any Director, external advisers or any other persons to attend all or part of any meetings as the Committee considers appropriate, notwithstanding that the aforementioned persons shall not have a right to vote at such meetings. However, at least once a year the Committee shall meet with the external and internal auditors without the executive Directors present except by invitation of the Committee Chairman.

6. Annual General Meetings

The Committee Chairman or, in his/her absence, another Committee Member, or failing which his/her duly appointed alternate shall attend the annual general meetings of the Company and be available to answer questions thereat on the Committee’s activities and its responsibilities.

7. Authority

7.1 The 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 are directed to co-operate with any request made by the Committee.
7.2 The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to require the attendance of outsiders with relevant experience and expertise at meetings of the Committee if it considers this necessary.
7.3 Management of the Company (the ‘‘Management’’) is obliged to supply the Committee with adequate information in a timely manner, in order to enable it to make informed decisions. The information supplied must be complete and reliable. Where a Committee Member requires more information than information provided voluntarily by the Management, the relevant Committee Member should make additional necessary enquiries. Each Committee Member shall have separate and independent access to the Management.
7.4 The Committee shall be provided with sufficient resources to perform its duties.

8. Duties

8.1 The duties of the Committee shall include, without limitation, the following:

Relationship with the Company `’` s auditors

8.1.1 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 –

8.1.2 to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;
8.1.3 to develop and implement a policy 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 Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;

Review of the Company ’ s financial information

8.1.4 to monitor integrity of the Company’s financial statements and annual report and accounts, half-year 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 Committee should focus particularly on:
(a) any changes in accounting policies and practices;
(b) major judgmental areas;
(c) significant adjustments resulting from audit;
(d) the going concern assumptions and any qualifications;
(e) compliance with accounting standards; and
(f) compliance with the Listing Rules and legal requirements in relation to financial reporting;
8.1.5 regarding paragraph 8.1.4 above:
(a) Committee Members should liaise with the Board and the Senior Management and the Committee must meet, at least twice a year, with the Company’s external auditors; and
(b) the Committee should consider any significant or unusual items that are, or may need to be, reflected in the report and financial statements. 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;

– 4 –

Oversight of the Company ’ s financial reporting system, risk management and internal control systems

8.1.6 to review the Company’s financial controls, and unless expressly addressed by a separate Board risk committee, or by the Board itself, to review the Company’s risk management and internal control systems;
8.1.7 to discuss the risk management and internal control systems with management to ensure that management has performed its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company’s accounting and financial reporting function;
8.1.8 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;
8.1.9 where an internal audit function exists, to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor its effectiveness;
8.1.10 to review the financial and accounting policies and practices of the Company and its subsidiaries;
8.1.11 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;
8.1.12 to ensure that the Board will provide a timely response to the issues raised in the external auditor’s management letter;
8.1.13 to report to the Board on the matters in this paragraph headed ‘‘Duties’’;
8.1.14 to consider other topics, as defined by the Board; and
8.1.15 to make recommendations to the Board as it deems appropriate on any area within its scope of duties where action or improvement is needed.

Relationships with the employees of the Company

8.1.16 to review the arrangements that the employees of the Company and its subsidiaries can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters. The Committee should ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate followup action;
8.1.17 to act as the key representative body for overseeing the Company’s relations with the external auditor; and

– 5 –

8.1.18 to establish a whistleblowing policy and system for employees and those who deal with the Company or its subsidiaries (e.g. customers and suppliers) to raise concerns, in confidence, with the Committee about possible improprieties in any matter related to the Company or its subsidiaries.
8.2 Where the Board disagrees with the Committee’s view on the selection, appointment, resignation or dismissal of the external auditors, the Company should include in the corporate governance report of its annual report a statement from the Committee explaining its recommendation and also the reason(s) why the Board has taken a different view.

9. Reporting procedures

9.1 Full minutes of the Committee’s meetings should be recorded and kept by the Committee Secretary and shall be available for inspection at any reasonable time on prior reasonable notice by any Director.
9.2 Draft and final versions of minutes of the Committee meetings should be sent to all Committee Members for their comments and records, within a reasonable time after such meetings.
9.3 The Committee shall report back to the Board and keep the Board fully informed of its decisions and recommendations, unless prohibited by applicable laws and regulations.

10. Terms Available

The Committee shall make available these terms of reference on request and by including them on the respective websites of the Stock Exchange and the Company.

– 6 –

AI assistant

REF Holdings Limited Audit Report / Information 2019

50052_rns_2019-01-02_ae13709b-8d58-4ea5-80d1-defc9ca5cb5e.pdf