Chengdu PUTIAN Telecommunications Cable Company Ltd. is one of the largest telecommunications cable manufacturers in the People's Republic of China. The company was listed on The Stock Exchange of Hon >>>>>>
Implementation Rules of Audit Committee of the Board
Chapter 1 General Provisions
Article 1

In order to strengthen the decision-making function of the board of directors (the "Board") of Chengdu PUTIAN Telecommunications Cable Company Limited (the "Company"), accomplish audit in advance and professional audit, ensure effective supervision over the management by the Board and improve the corporate governance structure, the Company sets up the Audit Committee(the "Committee") of the Board and formulates these implementation rules("Rules") in accordance with the Company Law of the People's Republic of China, the Code on Corporate Governance Practices set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"), the Articles of Association and other regulations.

Article 2
The Audit Committee is a body specifically set up according to the resolution of the general meeting of the Company, mainly responsible for the communication, supervision and review of the internal and external audit of the Company.
Chapter 2 Composition
Article 3
The Audit Committee shall consist of no less than three independent non-executive directors, at least one of which shall have accounting or related financial management expertise as required by the Rule 3.10(2) of the Listing Rules.
Article 4
Members of the Audit Committee shall be nominated by the Chairman of the Board, more than half of the independent non-executive directors or more than one thirds of the directors, and be elected by the Board.
Article 5
The Audit Committee shall have one chairman who shall be an independent non-executive director and be in charge of the work of the Committee.
Article 6
The term of office of members of the Committee shall be in congruence with the term of the directors, and may be re-elected and re-appointed upon the expiry of the current term of office. If during the term, any member of the Committee no longer maintains the position as a director, he or she shall automatically lose the qualification as a member and the replacement shall be appointed by the Board in accordance with Articles 3 to 5 above.
Article 7
The Audit Committee shall have one or two designated personnel responsible for the routine work liaison and organizing meetings.
Article 8
A former partner of the Company’s existing auditor may not act as a member of the Company’s Audit Committee within 1 year commencing from the later of the following date:
when he/she ceases to be a partner of the auditor; or
when he/she ceases to have any financial interests in the auditor.
Chapter 3 Terms of Reference
Article 9
Main duties and functions of the Audit Committee include:

To propose engagement, reappointment or change of external audit institutions, approve the remuneration and terms of engagement of the external auditor, and handle any matters relating to resignation or dismissal of the auditor;

to supervise the internal auditing mechanism of the Company and its implementation;

to communicate between the internal auditing department and the external auditing department;

to monitor the integrity of the Company's financial statements, annual report and accounts, and interim report, and to review the significant opinions in relation to the financial reporting contained therein. In this regard, in reviewing the Company’s annual report and accounts, and interim report before their submission to the Board, the Committee shall focus particularly on:

(1) any changes in accounting policies and practices;


(2)any matters involving major judgments;


(3)significant adjustments resulting from audit;


(4)the going concern assumptions and any qualified opinions;


(5)compliance with accounting standards; and

(6)compliance with the Listing Rules and other legal or regulatory requirements in relation to financial reporting;
to liaise with the Board and senior management. The Committee shall meet, at least once a year, with the Company’s auditors.
to review the financial control, internal control and risk management systems;
to discuss with the management the internal control system and ensure that management has discharged its duty and establish an effective internal control system, including considering whether the Company has adequate accounting and financial reporting resources, whether its personnel possess adequate qualifications and experience, and whether adequate staff training has been provided and the related budget is sufficient;
to consider any findings of major investigations in relation to internal control matters and management’s response;
to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced, and to review and monitor the effectiveness of the internal audit function;
to review the Group’s financial and accounting policies and practices;
to review the external auditor’s Explanatory Letter About Audit to the management, any material queries raised by the auditor to management in respect of the accounting records, financial accounts or control systems and management’s response;
to ensure the timely response by the Board to the matters set out in the external auditor’s Explanatory Letter About Audit to the management;
to review and monitor the external auditor’s independence, objectivity and the validity of the audit process. The Audit Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;
to develop and implement policies on the engagement of an external auditor to provide non-audit services;
In reviewing the financial information of the Company and its disclosure, the Committee shall consider any material or unusual matters reflected or required to be reflected in such report and accounts, and shall appropriately consider any matters raised by the personnel responsible for accounting and financial reporting, director of the supervision office or auditors of the Company.
to review internal control system of the Company and to audit material connected transactions;

to review the following arrangements made by the Company: employees of the Company can raise concerns in strict confidence on potential misconduct in respect of financial reporting, internal control or other aspects. The Audit Committee should ensure that appropriate arrangements are made to enable the Company to conduct a fair and independent investigation and take proper measures;


to act as the key representative body for overseeing the company's relation with the external auditor;

other matters authorized by the Board.
Article 10

The Audit Committee shall report to the Board and submit proposals to the Board for consideration and approval. The Audit Committee shall cooperate with respect to the review by supervisors of the Company.

Chapter 4 Decision-making Procedure
Article 11
The audit working team is responsible for making the preliminary preparations and providing the relevant information on the Company in written for the Audit Committee to make decisions:

1.relevant financial reports of the Company; reports of internal and external audit institutions;
3.external audit contract and the relevant work reports;
4.public disclosure of information made by the Company;
5.audit reports regarding material connected transactions of the Company;
6.other relevant matters.

Article 12
The Audit Committee shall convene meetings to discuss reports submitted by the audit working team, and shall submit its relevant written resolutions to the Board for consideration:

1.Duty performance appraisal on external audit institutions, and the engagement and change of external audit institutions;
2.whether the internal audit system of the Company has been effectively implemented and whether the financial reports of the Company are authentic in all aspects;
3.whether information disclosed publicly by the Company are objective and authentic, and whether the material connected transactions of the Company are in compliance with the relevant laws and regulations;
4.duty performance appraisal of the internal financial department and audit department, including the persons-in-charge;
5.other relevant matters.

Chapter 5 Rules of Procedure
Article 13

The Audit Committee shall convene regular meetings and extraordinary meeting. Regular meetings shall be convened at least two times every year and one meeting shall be convened in each half year. Extraordinary meeting shall be convened when proposed by members of the Audit Committee.
Members of the Committee shall be notified five days prior to the convening of a regular meeting. For extraordinary meeting, such arrangement also shall be adopted where applicable.
The meetings of the Audit Committee shall be chaired by the Chairman of the Committee. If the Chairman is unable to attend the meeting, he or she may appoint another member to chair the meeting.

Article 14
The meetings of the Audit Committee shall be convened only with the presence of more than two thirds of the members. Each member shall be entitled to one vote. The resolutions made by the meeting must be approved by over half of all members.
Article 15
At the meeting of the Committee, voting shall be made by a show of hands or by poll. In case of emergencies, voting may be made by telecommunication.
Article 16
Members of the audit working team may attend the meetings of the Audit Committee as observers. Directors, supervisors and other senior management members of the Company may be invited to attend such meetings if necessary.
Article 17
If necessary, the Audit Committee may appoint intermediate institutions to provide professional advice for its decision-making at its meeting at the expense of the Company.
Article 18
The convening procedure and voting method of the meeting of the Audit Committee and the resolutions passed at such meetings shall comply with the relevant laws, regulations, Articles of Association and these Rules.
Article 19
The meeting of Audit Committee shall have minutes on which members of Committee attending the meeting shall sign their names; the minutes of the meeting shall be kept by the secretary to the Board. The draft and final versions of the minutes of the Audit Committee meetings should be sent to all members of the Committee for their comment and records respectively, in both cases within a reasonable time after the meeting.
Article 20
Resolutions passed by and voting results of the meeting of the Committee shall be reported to the Board in written form.
Article 21
Members present at the meeting shall have an obligation to keep all matters discussed in such meetings confidential, and shall not disclose the relevant information without authorization.

Chapter 6 Supplementary Provisions

Article 22
These Rules shall come into effect and be implemented on the date when being considered and approved by the Board.
Article 23
Any matters not covered by these Rules shall be implemented in accordance with the provisions of the relevant laws and regulations of the PRC and the Articles of Association of the Company. Should there be discrepancy between these Rules and the laws and regulations promulgated later by the State or the Articles of Association amended through lawful procedures, the State laws and regulations and the Articles of Association of the Company shall prevail, and these Rules shall be revised immediately and the revised Rules shall be reported to the Board for consideration and approval.
Article 24
The rights to interpret these rules shall belong to the Board.