Shaanxi Micot Pharmaceutical Technology Co., Ltd. (MICOT PHARMA-B) released a detailed Terms of Reference for its Board Audit Committee, aligning corporate governance practices with the Company Law of the PRC, Hong Kong Listing Rules and CSRC requirements.

Key highlights:

1. Committee Structure • Minimum of three non-executive directors, with a majority being independent non-executive directors. • At least one member must possess professional accounting or financial expertise; the committee chair must be an independent director with accounting credentials. • Former partners of the current external auditor are barred from committee membership for two years after leaving the audit firm or divesting their interest.

2. Mandate and Authority • Oversight of the company’s financial reporting, internal controls and risk-management systems. • Primary responsibility for recommending auditor appointment, reappointment, removal and remuneration. • Empowered to obtain information from any employee, engage external legal or professional advisers and secure adequate resources to perform duties.

3. Core Responsibilities • Review integrity of annual, half-year and (if prepared) quarterly reports, focusing on changes in accounting policies, significant judgements, material audit adjustments, going-concern assumptions and regulatory compliance. • Monitor auditor independence and effectiveness, including setting policy on non-audit services. • Evaluate the adequacy of accounting resources, staff experience, training programmes and budget allocations. • Coordinate internal and external audit work, review the external auditor’s management letter and ensure timely management responses. • Exercise supervisory powers stipulated in the Company Law, including convening shareholder meetings if necessary and accepting shareholder requests to pursue legal action against directors or senior management for statutory breaches.

4. Meeting Procedures • Minimum quarterly meetings; additional sessions may be convened by two members, the committee chair or the external auditor. • Quorum set at two-thirds of members; resolutions require majority approval. • The committee will meet at least once annually with external and internal auditors without management present.

5. Reporting and Disclosure • The committee reports to the Board after each meeting and provides an annual summary of its work. • The charter will be published on both the company’s and the Hong Kong Stock Exchange’s websites and updated to reflect regulatory changes.

By formalising these guidelines, MICOT PHARMA-B seeks to fortify oversight mechanisms, enhance transparency in financial reporting and ensure sustained alignment with evolving regulatory standards.