Samsonite Group S.A. — Governance Information 2018

Dec 31, 2018

ETERNITY INVESTMENT LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 764)

TERMS OF REFERENCE FOR AUDIT COMMITTEE

(Adopted on 31 August 2005 and amended on 23 March 2012, 30 December 2015 and 31 December 2018)

CONSTITUTION

1. The board (the 'Board') of directors (the "Directors") of Eternity Investment Limited (the "Company") has resolved to establish a committee of the Board to be known as the Audit Committee.

MEMBERSHIP

1. The Audit Committee 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 should be independent. A quorum shall be a majority of members.

2. A former partner of the Company's existing auditing firm should be prohibited from acting as a member of the Audit Committee for a period of two years from the date of the person ceasing:

(a) to be a partner of the firm; or
(b) to have any financial interest in the firm,

whichever is later (C.3.2).

1. The chair of the Audit Committee shall be appointed by the Board and should be an independent non-executive Director.

ATTENDANCE AT MEETINGS

1. The Chief Financial Officer and a representative of the external auditor shall normally attend meetings. However, at least once a year the Audit Committee shall meet with the external auditor without executive Board members and the Company's management presence.

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FREQUENCY OF MEETING

1. Meetings shall be held at least two times a year. The external auditor may request a meeting if they consider that one is necessary.

AUTHORITY

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

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

DUTIES

1. The duties of the Audit Committee shall be:

Relationship with external auditor

(a) to be primarily responsible making recommendations to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and the terms of engagement of the external auditor, and any questions of its resignation or dismissal (C.3.3(a));

(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 external auditor the nature and scope of the audit and reporting obligations before the audit commences (C.3.3(b)); and

(c) to develop and implement 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 Audit Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed (C.3.3(c));

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Review of financial information

(d) to monitor integrity of the Company’s financial statements and annual report and accounts, interim 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:

(i) any changes in accounting policies and practices;

(ii) major judgemental areas;

(iii) significant adjustments resulting from audit;

(iv) the going concern assumption and any qualifications;

(v) compliance with accounting standards; and

(vi) compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and legal requirements in relation to financial reporting (C.3.3(d));

(e) in conducting the review described in (d) above:

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

(ii) the Audit 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 external auditor (C.3.3(e));

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

(f) 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 (C.3.3(f));

(g) 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 (C.3.3(g));

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(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 (C.3.3(h));

(i) where an internal audit function exits, 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 (C.3.3(i));

(j) to review the financial and accounting policies and practices of the Company and its subsidiaries (C.3.3(j));

(k) to review the external auditor’s management letter, any material queries raised by the external auditor to management about the accounting records, financial accounts or systems of control and the management’s response (C.3.3(k));

(l) to ensure that the Board will provide a timely response to the issues raised in the external auditor’s management letter (C.3.3(l));

(m) to report to the Board on the matters in Code Provision C.3.3 in the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 of the Listing Rules (C.3.3(m));

(n) to consider other topics, as defined by the Board (C.3.3(n));

(o) to review arrangements employees of the Company can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters. The Audit Committee should ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action (C.3.7(a)); and

(p) to act as the key representative body for overseeing the Company’s relations with the external auditor (C.3.7(b)).

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PROCEDURES

1. The Company Secretary shall be the secretary of the Audit Committee. The secretary shall circulate the draft and final versions of the minutes of meetings and reports of the Audit Committee to all members for comments and records within a reasonable time after each meeting. The chair shall report in the forthcoming Regular Board Meeting any key decisions made and shall table before the Board an index of meetings and issued discussed (C.3.1)(D.2.2). The chair, in consultation with the Chief Financial Officer and the secretary of the Audit Committee, should be primarily responsible for drawing up and approving the agenda of each Audit Committee meeting. The chair, with the assistance of the Chief Financial Officer, shall ensure that all members shall have sufficient information in a timely manner to enable effective discussion at an Audit Committee meeting and be briefed of the issues arising at each Audit Committee meeting. The secretary shall record minutes of all duly constituted meetings of the Audit Committee. All minutes shall record in sufficient detail the matters considered, decisions reached or recommendations made and any concerns raised by any member, the external auditor including dissenting views of any member.

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