HONMA GOLF LIMITED
本間高爾夫有限公司
TERMS OF REFERENCE FOR THE AUDIT COMMITTEE(Adopted by the Company pursuant to the Board Resolution
passed on November 20, 2018)
Constitution
1.

The audit committee (the “ Committee ” ) is established pursuant to a resolution passedby the board of directors (the “ Board ” ) of Honma Golf Limited (the “ Company ” ) on
September 18, 2016.

Membership
2.

Members of the Committee shall be appointed by the Board from the non-executive

LR3.21

directors only and shall consist of not less than three members, a majority of whom,including the chairman, shall be independent non-executive directors.
3.

At least one of the independent non-executive directors serving as a member of theLR3.21

Committee shall have appropriate professional qualifications or accounting or related
financial management expertise as required under rule 3.10(2) of the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing
Rules ” ).
4.

A former partner of the existing auditing firm of the Company shall not act as a memberof the Committee for a period of two years from the date of his/her ceasing (a) to be apartner of such firm; or (b) to have any financial interest in the firm, whichever is later.

5.

If a member resigns, ceases to be a director or for any other reason ceases to bea member of the Committee resulting in the number of members to fall below theminimum, the Board shall, within three months of that event, appoint such number of
new members as may be required to make up the minimum.

6.

The Board or the Committee shall from time to time appoint any particular memberof the Committee or any officer or employee of the Company or its subsidiaries as
the secretary of the Committee. In the absence of the secretary of the Committee, theremaining members present shall elect one of themselves or appoint another person as
the secretary for that meeting.
–1–App 14C.3.2

Frequency of meetings
7.

The Committee shall meet not less than twice a year. Additional meetings may be held
as and when required.

8.

The Committee shall meet with the external auditors at least twice a year. At least oncea year, the Committee shall meet with the external auditors without the management
present. The external auditors may request a meeting if necessary.

Notice of meetings
9.

A meeting of the Committee may be convened by any of its members or the secretary of
the Committee.

10. Unless otherwise agreed by all the members of the Committee, notice of each meeting
stating the time, date and place of the meeting shall be given to each member of theCommittee and any other person invited to attend at least seven days prior to the date of
the meeting.
11. Agenda and any supporting documents and papers shall be forwarded to each member of
the Committee and any other person invited to attend at least three days prior to the dateof the meeting (or such other period as the members may agree).
Proceedings of meetings and resolutions
12. No business shall be transacted at any meeting of the Committee unless a quorum ispresent. The quorum of a meeting shall be two members of the Committee (at least oneof whom should be an independent non-executive director).
13. Only members of the Committee have the right to attend Committee meetings. Otherpersons including but not limited to any director, management, external advisor orconsultant may be invited by the Committee to attend for all or part of any meeting as
and when appropriate.
14. Meetings of the Committee may be held either in person or through electronic means ofcommunication or in such other manner as the members may agree.

–2–App 14
C.3 Note 1

15. Questions arising at any meeting shall be determined by a majority of votes of themembers of the Committee present. Each member of the Committee shall have one vote.
In the case of any equality of votes the chairman of the meeting shall have an additionalor casting vote.
16. Members must abstain from voting in respect of any resolution which he/she is aninterested party.
17. A resolution in writing signed by all members of the Committee shall be as valid andeffectual as if it had been passed at a meeting of the Committee. Any such resolution
may be contained in a single document or may consist of several documents in like form
each signed by one or more of the members of the Committee.
18. Draft and final versions of minutes of the Committee meetings shall be sent to all

App 14 C.3.1
A.1.4 & A.1.5

Committee members for their comment and records respectively within a reasonable
time after the meeting.
19. The secretary of the Committee shall cause full minutes with sufficient details to be

App 14 C.3.1
A.1.4 & A.1.5

made in books to be provided for the purpose of the proceedings of all meetings of theCommittee and of the attendances thereat and of all business transacted, resolutions
passed and orders made at such meetings. Such minutes of meetings of the Committee
shall be open for inspection at any reasonable time on reasonable notice by any Director.
Any such minutes of any meeting, if purporting to be signed by the chairman of suchmeeting or by the chairman of the next succeeding meeting of the Committee, shall be
sufficient evidence without any further proof of the facts therein stated.
20. Save as otherwise provided herein expressly, proceedings of meetings of the Committee
shall be governed by the provision of the articles of association of the Company for
regulating the proceedings of meetings of the Board mutatis mutandis.
Authority

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21. The authorities of the Committee shall include such authorities set out in the relevant
code provisions of the Corporate Governance Code and Corporate Governance Report(the “ Corporate Governance Code and Corporate Governance Report ” ) as containedin Appendix 14 of the Listing Rules (as amended from time to time).

–3–22. The Committee is authorized by the Board to investigate any activity within its terms ofreference. 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 Committee.
23. The Committee is authorized by the Board to obtain any independent professional
advice, at the Company ’ s expense, from any person if it considers necessary to perform
its duties.
24. The Committee is to be provided with sufficient resources to discharge its duties.
Duties and functions

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25. The duties and functions of the Committee shall include such duties and functions set
out in the relevant code provisions of the Corporate Governance Code and Corporate
Governance Report. Without prejudice to the foregoing, the Committee shall:Relationship with the Company ’ s auditors(a) be primarily responsible for making recommendations to the Board on theApp 14
C.3.3(a)appointment, re-appointment and removal of the external auditor, and approve theremuneration and terms of engagement of the external auditor, and any questions of
its resignation or dismissal;(b) review and monitor the external auditor ’ s independence and objectivity and theApp 14
C.3.3(b)effectiveness of the audit process in accordance with applicable standards, anddiscuss with the auditor the nature and scope of the audit and reporting obligations
before the audit commences;(c) develop and implement policy on engaging an external auditor to supply nonaudit services. For this purpose, “ external auditor ” includes any entity that is undercommon control, ownership or management with the audit firm or any entity thata reasonable and informed third party knowing all relevant information wouldreasonably conclude to be part of the audit firm nationally or internationally. TheCommittee should report to the Board, identifying and making recommendations on
any matters where action or improvement is needed;–4–App 14
C.3.3(c)(d) where the Board disagrees with the Committee ’ s view on the selection, appointment,

App 14C.3.5

resignation or dismissal of the external auditors, the Company should include in
the Corporate Governance Report a statement from the Committee explaining itsrecommendation and also the reason(s) why the Board has taken a different view;
Review of the Company ’ s financial information(e) monitor integrity of the Company ’ s financial statements and annual report andApp 14
C.3.3(d)accounts, half-year report and, if prepared for publication, quarterly reports, review
significant financial reporting judgments contained in them. In reviewing thesereports before submission to the Board, the Committee should focus particularly
on:(i)

any changes in accounting policies and practices;(ii) major judgmental areas;(iii) significant adjustments resulting from audit;(iv) the going concern assumptions and any qualifications;(v) compliance with accounting standards; and(vi) compliance with the Listing Rules and legal requirements in relation tofinancial reporting.
(f) regarding (e) above:(i)App 14C.3.3(e)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 ’ sauditors; and(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, complianceofficer or auditors.
–5–Oversight of the Company ’ s financial reporting system, risk management and internalcontrol systems(g) review the systems on financial controls of the Company, and unless expressly

App 14C.3.3(f)addressed by a separate board risk committee, or by the board itself, review theCompany ’ s internal control system (including without limitation the procedures forcompliance with the requirements of Listing Rules) and risk management system;(h) discuss the risk management and internal control systems with management to

App 14C.3.3(g)ensure that management has performed its duty to have effective systems. This
discussion should include the adequacy of resources, staff qualifications andexperience, training programmes and budget of the Company ’ s accounting andfinancial reporting function;(i)

consider major investigation findings on risk management and internal control

App 14C.3.3(h)matters as delegated by the Board or on its own initiative and management ’ s
response to these findings;(j)where an internal audit function exists, ensure co-ordination between the internal

App 14C.3.3(i)and external auditors, and ensure that the internal audit function is adequately
resourced and has appropriate standing within the Company, and review andmonitor its effectiveness;(k) review the financial and accounting policies and practices of the Company and its

App 14C.3.3(j)subsidiaries;(l)review the external auditor ’ s management letter, any material queries raised by theApp 14
C.3.3(k)auditor to management about accounting records, financial accounts or systems ofcontrol and management ’ s response;(m) ensure that the Board will provide a timely response to the issues raised in theexternal auditor ’ s management letter;–6–App 14
C.3.3(l)(n) review arrangements employees of the Company can use, in confidence, to raise

App 14C.3.7(a)concerns about possible improprieties in financial reporting, internal control orother matters. The Committee should ensure that proper arrangements are in place
for fair and independent investigation of these matters and for appropriate followup action;(o) act as the key representative body for overseeing the Company ’ s relations with theApp 14
C.3.7(b)external auditor;(p) report to the Board on the matters set out herein;

App 14C.3.3(m)(q) The Committee should establish a whistleblowing policy and system for employees

App 14C.3.8

and those who deal with the Company to raise concerns, in confidence, with theCommittee about possible improprieties in any matter related to the Company; and(r) consider other topics, as defined by the Board.

App 14C.3.3(n)Reporting procedures
26. The Committee shall report directly to the Board on its findings, decisions and/orrecommendations, unless there are legal or regulatory restrictions on its ability to do so(such as restriction on disclosure due to regulatory requirements). At the next meeting of
the Board following a meeting of the Committee, the chairman of the Committee shallreport the findings, decisions and/or recommendations of the Committee to the Board.
The secretary of the Committee shall also circulate the minutes of meetings, reports and/or written resolutions (if any) of the Committee to all members of the Board.
Audit Committee report
27. The work of the Committee during each financial year shall be summarized in thecorporate governance report which constitutes part of the annual report.

–7–App 14
D.2.2

Annual general meeting
28. The chairman of the Committee or in his/her absence, another member of the Committee
or failing this, his/her duly appointed delegate, shall attend the annual general meetingof the Company and be prepared to answer questions at the annual general meeting on
the Committee ’ s work and its responsibilities.
Amendment
29. Subject to the compliance with the articles of association of the Company and theListing Rules, any amendment to these terms of reference shall be authorized by theBoard.
Publication
30. The Committee shall make available these terms of reference by publishing them on thewebsites of The Stock Exchange of Hong Kong Limited and the Company.
(If there is any inconsistency between the English and Chinese version of these terms ofreference, the English version shall prevail.)–8–