株式会社ニラクジーシーホールディングス
NIRAKU GC HOLDINGS, INC.*(Incorporated in Japan with limited liability)(Stock Code: 1245)

Audit CommitteeRules* for identification purposes only–1–Preamble
1. 株 式 会 社 ニ ラ ク  ジ ー  シ ー  ホ ー ル デ ィ ン グ ス (NIRAKU GC HOLDINGS, INC.*) (the“Company”) was listed on the Main Board of The Stock Exchange of Hong KongLimited (the “HKEx”) on 8 April 2015.
In compliance with the code of provision of the Corporate Governance Codes issued bythe HKEx (the “Corporate Governance Code”), an audit committee (the “AuditCommittee”) needs to be established with the terms of reference as set out and adopted
herein.
Constitution
2. The Audit Committee was established by on 25 June 2014. These rules were adopted by
the Audit Committee on 16 March 2015 in substitution for and to the exclusion of theexisting rules of the Audit Committee.
Membership
3. The members of the Audit Committee shall be appointed by the Board of the Company(the “Board” , each director of the Board, a “Director”) from amongst the non-executive
Directors and shall consist of not less than three members, a majority of whom should beindependent non-executive Directors and at least one of whom should be an independent
non-executive Director with appropriate professional qualifications or accounting or related
financial management expertise as required by the Rules Governing the Listing ofSecurities on HKEx (the “Listing Rules”). The quorum of an Audit Committee meetingshall be all members of the Audit Committee.
4. A former partner of the Company’s existing auditing firm shall be prohibited from acting asa 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 the later.

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5. The chairman of the Audit Committee shall be appointed by the Board and should be an
independent non-executive Director.
6. The term of office of a member of the Audit Committee shall expire at the conclusion of
the annual general meeting of the Company relating to the most recent business year
ending within one year following the date of these rules.
Attendance at meetings
7. The accounting auditors, financial controller, the head of internal audit of the Companyand representatives of the accounting auditors shall normally attend meetings.
Frequency and procedure of meetings
8. Unless otherwise stated herein, the meetings of the Audit Committee are governed by theprovisions regulating the meetings and proceedings of Directors in the Company’s articles
of incorporation.
9. Meetings shall be held not less than twice a year or more frequently if the Audit
Committee determines it to be necessary. Meetings may be conducted by way oftelephone or other electronic means.
10. The secretary of the Audit Committee shall be a company secretary of the Company or her
appointed delegate.
11. An agenda and any accompanying Committee papers should be sent in full to allmembers of the Audit Committee in a timely manner and at least seven days before theproposed date of a meeting of the Audit Committee (or other agreed period).
12. The Company is obliged to supply the members of the Audit Committee with adequate
information, in a timely manner, in order to enable them to make informed decisions.
Where more detailed and complete information is requested from the member of the Audit
Committee, the respective Director shall make further inquiries if needed. The Audit
Committee or individual member(s) of the Audit Committee could contact the executive
officers and/or senior management of the Company individually and independently.

–3–Annual General Meeting
13. The chairman of the Audit Committee shall attend the Company’s annual general
meeting and be prepared to respond to any shareholder’s questions on the Audit
Committee’s activities.
14. If the chairman of the Audit Committee is unable to attend an annual general meeting ofthe Company, he shall arrange for another member of the Audit Committee, or failing this,his duly appointed delegate, to attend in his place. Such person shall be prepared torespond to any shareholder’s questions on the Audit Committee’s activities.
Authority
15. The Audit Committee is authorised to seek any information it requires from any employeeof the Company or its subsidiaries in order to perform its duties unless the relevant
subsidiaries are reasonably justified not to provide such information under Article 405,
Paragraph 3 of the Companies Act of Japan (Act No. 86 of 2005 of the law of Japan) andthe relevant employees are directed to co-operate with any request made by the Audit
Committee. It is also authorised to investigate any activity mentioned in these rules orotherwise affecting the integrity of the Company.
16. The Audit Committee is authorised to obtain outside independent professional advice, at
the Company’s expense, and to secure the attendance of outsiders with relevant
experience and expertise if it considers this necessary. The Audit Committee shall be
exclusively responsible for establishing the selection criteria, selecting, appointing andsetting the terms of reference for any accounting auditors who advise the AuditCommittee.
17. The Audit Committee is authorised to review the effectiveness of the Company’s and its
subsidiaries’ internal control systems, covering all material controls, including financial,
operational and compliance controls and risk management functions including financial,business, operational and other risks of the Company and its subsidiaries to undertake
any related investigations.

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Duties
18.

The duties of the Audit Committee shall include:
Relationship with the Company’s auditors(a) making proposal to the shareholders on the appointment, reappointment and/orremoval of the accounting auditors, and to approve the remuneration and terms ofengagement of the accounting auditors, and to consider any questions of resignation
or dismissal of those auditors;(b) reviewing and monitoring the accounting auditor’s independence and objectivity andthe effectiveness of the audit process in accordance with applicable standards;(c) developing and implementing policy on the engagement of the accounting auditors to
supply non-audit services, and to report to the Board, identifying and making
recommendations on any matters requiring action or improvement;(d) discussing with the accounting auditors before the audit commences, the nature andscope of the audit, and ensuring co-ordination where more than one audit firm isinvolved;(e) discussing problems and reservations arising from the interim and final audits, andany matters the accounting auditors may wish to discuss;
Review of financial information of the Company(f) monitoring the integrity of financial statements, annual reports and accounts, interimreports and, if prepared for publication, quarterly reports, and to review significant
financial reporting judgments contained in them. In reviewing these reports andbefore submission to the Board, the Audit Committee should focus particularly on:(i)any changes in accounting policies and practices;(ii) major judgmental areas;(iii) significant adjustments resulting from audit;–5–(iv) the going concern assumptions and any qualifications;(v) compliance with accounting standards; and(vi) compliance with any requirements from the HKEx and other legal requirements
in relation to financial reporting;(g) in regard to (f) above:(i)liaising with the Board, financial controller and the person appointed as theCompany’s accounting auditors;(ii) meeting, at least twice a year, with the Company’s accounting auditors; and(iii) considering any significant or unusual items that are, or may need to be,reflected in such financial statements, reports and accounts and giving due
consideration to any matters that have been raised by the Company’s staff
responsible for the accounting and financial reporting function, complianceofficer or accounting auditors;
Oversight of the Company’s risk management, financial reporting system and internal
control procedures(h) reviewing the Company’s financial controls, internal control and risk management
systems;(i)discussing the risk management and internal control systems with the senior
management and to ensure that the senior management has performed its duties inestablishing and maintaining effective systems, including adequacy of resources,
staff qualifications and experience, training programmes and budget of theCompany’s accounting and financial reporting function;(j)considering the findings of major investigations on risk management and internal
control matters as delegated by the Board or on its own initiative and the senior
management’s response to those findings;–6–

(k) where an internal audit function exists, ensuring co-ordination between the internal
and accounting auditors and further ensuring that the internal audit function isadequately resourced and has appropriate standing within the Company, reviewing
and monitoring its effectiveness, monitoring the planning of internal audit processes
and overseeing the result of the work of the internal audit function;(l)reviewing the financial and accounting policies and practices of the Company and its
subsidiaries and associated companies at the relevant time or, where the context so
requires, in respect of the period before the Company became the holding companyof its present subsidiaries and associated companies, the present subsidiaries andassociated companies of the Company or the businesses operated by its presentsubsidiaries and associated companies or (as the case may be) its predecessor;(m) reviewing the accounting auditor’s management letter, any material queries raisedby the auditor to the senior management about accounting records, financial
accounts or systems of control and the senior management’s response;(n) ensuring that the Board will provide a timely response to the issues raised in theaccounting auditor’s management letter;(o) reporting to the Board on the matters set out in these rules;(p) where internal audit function exist, to ensure cooperation between the internal andindependent auditors, to ensure that the internal audit function is adequately
resourced and has appropriate standing within the Company, and to review andmonitor the effectiveness thereof:•the Audit Committee shall maintain close contact with the internal audit team of
the Company and its subsidiaries to enable organized and effective oversight ofthe operations and financial conditions of the Company and its subsidiaries, aswell as any other audit tasks;•providing instructions and assistance to the internal audit team upon receipt of areport from the same regarding any particular audit conducted thereby which, inthe opinion of the Audit Committee requires verification; and–7–•

where an audit support staff has provided instructions to the internal audit teamor have received reports from the same, or under other similar circumstances,
the Audit Committee shall formulate a system whereby such audit support staff
shall report to the Audit Committee on the status and details of the relevant
circumstances in a timely and appropriate manner.

(q) reviewing and monitoring the effectiveness of the implementation of the whistleblowing policy and other means that employees and those who deal with theCompany can use, in confidence, to raise concerns about possible improprieties inany matters related to the Company and to ensure that proper arrangements are inplace for fair and independent investigation of these matters and for appropriate
follow-up action and ensuring the effectiveness of the internal control committee, asub-committee of the Audit Committee;(r)acting as the key representative body for overseeing the Company’s relation with its
accounting auditors;

Oversight of the Company’s corporate governance functions(s) reviewing and monitoring the Company’s policies and practices on compliance withlegal and regulatory requirements;(t)reviewing and monitoring the training and continuous professional development ofDirectors and senior management;(u) developing, reviewing and monitoring the code of conduct and compliance manual (ifany) applicable to employees and Directors;(v) developing and reviewing the Company’s policies and practices on corporate
governance and making recommendations to the Board and report to the Board on
matters;(w) reviewing the Company’s compliance with the Corporate Governance Code anddisclosure in the Corporate Governance Report;–8–

(x) reviewing and monitoring the Company’s compliance with the Company’s whistleblowing policy; and(y) considering any other topics, as determined by the Board.
Litigation between the Company and its directors and Executive Officers
19. The Audit Committee may, by resolution, nominate a member thereof to represent theCompany in litigation between the latter and any Director or executive officer thereof(including former directors and executive officers, but not including the members of theAudit Committee; the same below).
20. The Audit Committee member nominated by virtue of the preceding Paragraph shallrepresent the Company for the following purposes:•

to receive a request from the Company’s shareholders to initiate litigation
proceedings for pursuing liability against a Director or executive officer;•

to approve that demands for initiating the aforementioned legal action be effected
electronically; and•to receive a notice of an action from the Shareholder(s) under Article 849(3) of theCompanies Act or a settlement notice from the court under Article 850(2) of theCompanies Act.

Reporting Responsibility and Right to Seek Injunctions
21. The Audit Committee shall report to the Board without undue delay in the event that it
has come to its attention that any of the Company’s directors or executive officers has
engaged in, or are likely to engage in, misconducts that are actually or potentially inviolation of the Company’s articles of incorporation, or any applicable laws andregulations in Hong Kong and Japan.

–9–22. The members of the Committee may demand an executive officer or Director to ceaseand desist any act that actually or potentially violates the Company’s articles ofincorporation, or any applicable laws and regulations in Hong Kong and Japan, in casewhere such act may cause material damages to the Company.
Post-Audit Review Activities
23. In connection with or following the completion of its review of the external audit andinternal audit, the Audit Committee or its chairman may in their discretion meet with theaccounting auditors, internal auditors or financial controller to discuss any changes
required in the audit plans for future periods and any other appropriate matters regardingthe audit process.
Failure to reach an agreement regarding accounting auditors
24. Where the Shareholders has taken a different view from the Audit Committee regarding
the selection, appointment, resignation or dismissal of accounting auditors, the Audit
Committee shall submit a statement to the Shareholders explaining its recommendation,
which statement will be disclosed by the Company in the Corporate Governance Reportin accordance with Appendix 14 of the Listing Rules.
Reporting procedures
25. Full minutes of the Audit Committee’s meetings should be kept by the secretary of thehead office of the Company. The minutes shall be available for inspection at any
reasonable time on reasonable notice by any Director.
26. Minutes of meetings of the Audit Committee should record in sufficient detail the mattersconsidered by the Audit Committee and decisions reached, including any concerns
raised by the Directors, members or dissenting views expressed. Draft and final versionsof minutes of such meetings should be sent to all members of the Audit Committee for
their comment and records respectively, in both cases within a reasonable time after
such meetings. The minutes of the meeting shall be signed and sealed or electronicallysigned, by all committee members present.

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27. Without prejudice to the generality of the duties of the Audit Committee set out above,
the Audit Committee shall report back to the Board and keep the Board fully informed ofits decisions and recommendations, unless there are legal or regulatory restrictions on
doing so.
Provision of Rules
28. The Audit Committee should provide these rules upon request and upload it to theHKEx’s website and the Company’s website to explain the duties of the Audit Committee
and the authority the Board has granted to it.
Approval of Disclosure Statements
29. The Audit Committee shall be responsible for approving all disclosure statements inrelation to the Audit Committee, including but not limited to relevant disclosurestatements in annual reports, interim reports and information uploaded on the HKEx’s
website and the Company’s website.
Review of Rules
30. The Audit Committee shall review these rules annually, and may consider and submit to
the Board any proposed changes that the Audit Committee deems appropriate oradvisable.

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