Document:

f8k120408ex10i_chinavalves.htm

     

     

    
      Exhibit
10.1

      

      CHINA
VALVES TECHNOLOGY, INC.

      AUDIT
COMMITTEE CHARTER

      

      

      The
Purpose of the Audit Committee

      

      The
purpose of the Audit Committee of China Valves Technology, Inc. (the “Company”)
is to represent and assist the board of directors in its general oversight of
the Company’s accounting and financial reporting processes, audits of the
financial statements, and internal control and audit
functions.  Management is responsible for (a) the preparation,
presentation and integrity of the Company’s financial statements; (b) accounting
and financial reporting principles; and (c) the Company’s internal controls and
procedures designed to promote compliance with accounting standards and
applicable laws and regulations.  The Company’s independent auditing
firm is responsible for performing an independent audit of the consolidated
financial statements in accordance with generally accepted auditing
standards.

      

      The Audit
Committee members are not professional accountants or auditors and their
functions are not intended to duplicate or to certify the activities of
management and the independent auditor.  Consequently, it is not the
duty of the Audit Committee to conduct audits or to determine that the Company’s
financial statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and applicable rules
and regulations.  These are the responsibilities of management and the
independent auditor.  The Audit Committee serves a board level
oversight role where it oversees the relationship with the independent auditor,
as set forth in this charter, receives information and provides advice, counsel
and general direction, as it deems appropriate, to management and the auditors,
taking into account the information it receives, discussions with the auditor,
and the experience of the Audit Committee’s members in business, financial and
accounting matters.

      

      Membership
and Structure

      

      The Audit
Committee is comprised of at least three directors determined by the board of
directors to meet the director and audit committee member independence
requirements and financial literacy requirements of The NASDAQ Stock Market,
Inc. (“NASDAQ”), the Securities and Exchange Commission or any other applicable
requirements.  At least one member of the Audit Committee must be
financially sophisticated, as determined by the Board, and no Audit Committee
member may have participated in the preparation of the financial statements of
the Company or any of the Company’s current subsidiaries at any time during the
past three years, each as required by NASDAQ listing
standards.  Appointment to the Audit Committee, including the
designation of the Chair of the Audit Committee and the designation of any Audit
Committee members as “audit committee financial experts”, shall be made on an
annual basis by the full Board upon recommendation of the Governance and
Nominating Committee.  Meetings of the Audit Committee shall be held
at such times and places as the Audit Committee shall determine, including by
written consent.  When necessary, the Audit Committee shall meet in
executive session outside of the presence of any senior executive officer of the
Company.  The Chair of the Audit Committee shall report on activities
of the Audit Committee to the full Board.  In fulfilling its
responsibilities the Audit Committee shall have authority to delegate its
authority to subcommittees, in each case to the extent permitted by applicable
law.

       

       

      
        
           

        

        
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      Operations

      

      The Audit
Committee meets at least four times a year, on a quarterly
basis.  Additional meetings may occur as the Audit Committee or its
chairperson deems advisable.  The Audit Committee shall meet in
executive session privately, with the independent auditor, without the chief
internal auditor and management present, not less frequently than
quarterly.  The Audit Committee will cause adequate minutes of all its
proceedings to be kept, and will report on its actions and activities at the
next quarterly meeting of the board of directors of the
Company.  Audit Committee members will be furnished with copies of the
minutes of each meeting and any action taken by unanimous
consent.  The Audit Committee is governed by the same rules regarding
meetings (including meetings by conference telephone or similar communications
equipment), action without meetings, notice, waiver of notice, and quorum and
voting requirements as are applicable to the board of directors of the
Company.  The Audit Committee is authorized to adopt its own rules of
procedure not inconsistent with (a) any provision of this Charter, (b) any
provision of the Bylaws of the Company, or (c) the laws of the state of
Nevada.

      

      The
Chairman of the Audit Committee is to be contacted directly by the chief
internal auditor or the independent auditor (1) to review items of a sensitive
nature that can impact the accuracy of financial reporting or (2) to discuss
significant issues relative to the overall Board responsibility that have been
communicated to management but, in their judgment, may warrant follow-up by the
Audit Committee.

      

      Authority

      

      The Audit
Committee will have the resources and authority necessary to discharge its
duties and responsibilities.  The Audit Committee shall have the
authority to engage independent legal, accounting and other advisers, as it
determines necessary to carry out its duties. The Audit Committee shall have
sole authority to approve related fees and retention terms.  Any
communications between the Audit Committee and legal counsel in the course of
obtaining legal advice will be considered privileged communications of the
Company and the Audit Committee will take all necessary steps to preserve the
privileged nature of those communications.

      

      The Audit
Committee may form and delegate authority to subcommittees and may delegate
authority to one or more designated members of the Audit Committee.

      

      Responsibilities

      

      The Audit
Committee:

      

      1.           is
directly responsible for the appointment, compensation, retention and oversight
of the work of the independent auditor (including resolution of disagreements
between management and the auditors regarding financial reporting), who shall
report directly to the Audit Committee;

       

       

      
        
           

        

        
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      2.           obtains
and reviews annually a report by the independent auditor describing the firm’s
internal quality-control procedures, any material issues raised by the most
recent internal quality-control review or peer review or by any inquiry or
investigation by governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried out by the firm,
and any steps taken to deal with any such issues;

      

      3.           reviews
and discusses with the independent auditor the written statement from the
independent auditor concerning any relationship between the auditor and the
Company or any other relationships that may adversely affect the independence of
the auditor, and, based on such review, assesses the independence of the
auditor;

      

      4.           establishes
policies and procedures for the review and pre-approval by the Audit Committee
of all auditing services and permissible non-audit services (including the fees
and terms thereof) to be performed by the independent auditor;

      

      5.           reviews
and discusses with the independent auditor (a) its audit plans, and audit
procedures, including the general audit approach, scope, staffing, fees and
timing of the audit, (b) the results of the annual audit examination and
accompanying management letters, and (c) the results of the independent
auditor’s procedures with respect to interim periods;

      

      6.           reviews
and discusses reports from the independent auditor on (a) all critical
accounting policies and practices used by the Company, (b) alternative
accounting treatments within GAAP related to material items that have been
discussed with management, including the ramifications of the use of the
alternative treatments and the treatment preferred by the independent auditor,
and (c) other material written communications between the independent auditor
and management;

      

      7.           reviews
and discusses with the independent auditor the independent auditor’s judgments
as to the quality, not just the acceptability, of the Company’s accounting
principles and such further matters as the independent auditors present the
Audit Committee under generally accepted auditing standards;

      

      8.           discusses
with management and the independent auditor quarterly earnings press releases,
including the interim financial information and business discussion included
therein, reviews and discusses with management and independent auditor the
unaudited quarterly or interim financial statements and the management
discussion and analysis in the quarterly report or the annual report, the
year-end audited financial statements and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and, if deemed appropriate,
recommends to the board of directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year;

      

      9.           reviews
and discusses with management and the independent auditor various topics and
events that may have significant financial impact on the Company or that are the
subject of discussions between management and the independent
auditors;

       

       

      
        
           

        

        
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      10.           reviews
and discusses with management the Company’s major financial risk exposures and
the steps management has taken to monitor and control such
exposures;

      

      11.           reviews
and approves related-party transactions (as defined in the relevant NASDAQ
requirements);

      

      12.           reviews
and discusses with management, the independent auditor, and the Company’s chief
internal auditor (a) the adequacy and effectiveness of the Company’s internal
controls (including any significant deficiencies and significant changes in
internal controls reported to the Audit Committee by the independent auditor or
management), (b) the Company’s internal audit procedures, and (c) the adequacy
and effectiveness of the Company’s disclosure controls and procedures, and
management reports thereon;

      

      13.           reviews
annually with the chief internal auditor the scope of the internal audit
program, and reviews annually the performance of both the internal audit group
and the independent auditor in executing their plans and meeting their
objectives;

      

      14.           reviews
and concurs in the appointment, replacement, reassignment, or dismissal of any
chief internal auditor of the Company;

      

      15.           reviews
the use of auditors other than the independent auditor in cases such as
management’s request for second opinions;

      

      16.           reviews
matters related to the corporate compliance activities of the
Company;

      

      17.           establishes
procedures for the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls, or auditing
matters, and the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters;

      

      18.           establishes
policies for the hiring of employees and former employees of the independent
auditor;

      

      19.           publishes
the report of the Audit Committee required by the rules of the Securities and
Exchange Commission to be included in the Company’s annual proxy
statement;

      

      20.           periodically
reviews with the Company’s in-house and independent counsel any legal matters
that could have a significant impact on the Company’s financial statements, the
Company’s compliance with applicable laws and regulations, and any material
reports or inquiries received from regulators or governmental
agencies;

      

      21.           obtains
timely reports from management and the Company’s senior internal auditing
executive and counsel that the Company and its subsidiaries are in conformity
with applicable legal requirements and the Company’s Code of Ethics, including
disclosures of insider and affiliated party transactions;

       

       

      
        
           

        

        
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      22.           advises
the Board of Directors with respect to the Company’s policies and procedures
regarding compliance with applicable laws and regulations and with the Company’s
Code of Ethics;

      

      23.           reviews
and approves the Company’s Code of Ethics, as it may be amended and updated from
time to time, and ensures that management has implemented a compliance program
to enforce such Code (which shall include reporting of violations of such Code
to the Audit Committee);

      

      24.           reviews
reported violations of the Company’s Code of Ethics;

      

      25.           reviews
and approves (a) any change or waiver in the Company’s Code of Ethics for
principal executives and senior financial officers and (b) any disclosures made
on Form 8-K regarding such change or waiver;

      

      26.           when
appropriate, designates one or more of its members to perform certain of its
duties on its behalf, subject to such reporting to or ratification by the Audit
Committee as the Audit Committee shall direct; and

      

      27.           will
engage in an annual self-assessment with the goal of continuing improvement, and
will annually review and reassess the adequacy of its charter, and recommends
any changes to the full Board.

      

      The Audit
Committee shall consult with management but may not delegate these
responsibilities, except as specifically provided for above.

      

      

      Adopted
by the Board of Directors on December 4, 2008

      
 

      -5-f8k120408ex10ii_chinavalves.htm

     

     

    
      Exhibit 10.2

      

      CHINA
VALVES TECHNOLOGY, INC.

      COMPENSATION
COMMITTEE CHARTER

      

      The
Purpose of the Compensation Committee

      The
purpose of the Compensation Committee of China Valves Technology, Inc. (the
“Company”) is to discharge the responsibilities of the Company’s Board of
Directors relating to compensation of the Company’s executives, to produce an
annual report on executive compensation for inclusion in the Company’s proxy
statement, and to oversee and advise the Board of Directors of the Company on
the adoption of policies that govern the Company’s compensation programs,
including stock and benefit plans.

       

      Membership
and Structure

      The
membership of the Compensation Committee consists of at least three directors,
all of whom shall (a) meet the independence requirements established by the
Board of Directors of the Company and applicable laws, regulations and listing
requirements of The NASDAQ Stock Market, Inc., (b) be a “non-employee director”
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, and
(c) be an “outside director” within the meaning of Section 162(m) of the
Internal Revenue Code.  The Board of Directors of the Company appoints
the members of the Compensation Committee and the chairperson of the
Compensation Committee.  The Board of Directors of the Company may
remove any member from the Compensation Committee at any time with or without
cause.

       

      Operations

      The
Compensation Committee meets at least twice a year.  Additional
meetings may occur as the Compensation Committee or its chairperson deems
advisable.  The Compensation Committee will cause adequate minutes of
all its proceedings to be kept, and will report on its actions and activities at
the next quarterly meeting of the Board of Directors of the
Company.  Compensation Committee members will be furnished with copies
of the minutes of each meeting and any action taken by unanimous
consent.  The Compensation Committee is governed by the same rules
regarding meetings (including meetings by conference telephone or similar
communications equipment), action without meetings, notice, waiver of notice,
and quorum and voting requirements as are applicable to the Board of Directors
of the Company.  The Compensation Committee is authorized to adopt its
own rules of procedure not inconsistent with (a) any provision of this Charter,
(b) any provision of the Bylaws of the Company, or (c) the laws of the state of
Nevada.

       

      Authority

      The
Compensation Committee will have the resources and authority necessary to
discharge its duties and responsibilities.  The Compensation Committee
has sole authority to retain and terminate outside counsel, compensation
consultants retained to assist the Compensation Committee in determining the
compensation of the Chief Executive Officer or senior executive officers, or
other experts or consultants, as it deems appropriate, including sole authority
to approve the firms’ fees and other retention terms.  Any
communications between the Compensation Committee and legal counsel in the
course of obtaining legal advice will be considered privileged communications of
the Company and the Compensation Committee will take all necessary steps to
preserve the privileged nature of those communications.

       

      The
Compensation Committee may form and delegate authority to subcommittees and may
delegate authority to one or more designated members of the Compensation
Committee.

       

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

       

       

      Responsibilities

      Subject
to the provisions of the Company’s Corporate Governance Guidelines, the
principal responsibilities and functions of the Compensation Committee are as
follows:

       

      1.           Review
the competitiveness of the Company’s executive compensation programs to ensure
(a) the attraction and retention of corporate officers, (b) the motivation of
corporate officers to achieve the Company’s business objectives, and (c) the
alignment of the interests of key leadership with the long-term interests of the
Company’s stockholders.

       

      2.           Review
trends in management compensation, oversee the development of new compensation
plans, and, when necessary, approve the revision of existing plans.

       

      3.           Review
and approve the compensation structure for corporate officers at the level of
corporate vice president and above.

       

      4.           Oversee
an evaluation of the performance of the Company’s executive officers and approve
the annual compensation, including salary, bonus, incentive and equity
compensation, for the executive officers.

       

      5.           Review
and approve Chairman and CEO goals and objectives, evaluate Chairman and CEO
performance in light of these corporate objectives, and set Chairman and CEO
compensation consistent with Company philosophy.  The CEO may not be
present during deliberations or voting concerning the CEO’s
compensation.  The CEO will be reviewed by the Chairman of the
Nominating Committee acting as the Lead Independent Director.  The
results of the annual CEO evaluation will be considered in setting CEO salary
and other compensation.

       

      6.           Review
and approve compensation packages for new corporate officers and termination
packages for corporate officers as requested by management.

       

      7.           Review
and discuss with the Board and senior officers plans for officer development and
corporate succession plans for the CEO and other senior officers.

       

      8.           Review
and make recommendations concerning long-term incentive compensation plans,
including the use of equity-based plans.  Except as otherwise
delegated by the Board of Directors of the Company, the compensation committee
will act on behalf of the Board of Directors as the “Committee” established to
administer equity-based and employee benefit plans, and as such will discharge
any responsibilities imposed on the Compensation Committee under those plans,
including making and authorizing grants, in accordance with the terms of those
plans.

       

      9.           Review
periodic reports from management on matters relating to the Company’s personnel
appointments and practices.

       

      10.         Produce
an annual report of the Compensation Committee on executive compensation for the
Company’s annual proxy statement in compliance with applicable Securities and
Exchange Commission rules and regulations and relevant listing
authority.

       

      11.           Regularly
review and make recommendations about changes to the charter of the
Committee.

       

      12.           Obtain
or perform an annual evaluation of the Compensation Committee’s performance and
make applicable recommendations.

      

      Adopted
by the Board of Directors on December 4, 2008

      
-2-

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