Belle International Holdings Limited

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TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

(first adopted on 27 April 2007) (amended and re-adopted on 17 March 2012)

TERMS OF REFERENCE FOR THE AUDIT COMMITTEE

1 Constitution

1.1 The Audit Committee (the "Committee") was established in 2007 pursuant to a resolution passed by the board of directors (the "Board") of Belle International Holdings Limited (the "Company", and together with its subsidiaries the "Group") at its meeting held on 27 April 2007.
1.2 These terms of reference were first approved and adopted on 27 April 2007 and were amended, approved and re-adopted in 2012 pursuant to a resolution passed by the Board at its meeting held on 17 March 2012.

2 Responsibility

2.1 The Committee is to serve as a focal point for communication between other directors of the Board and external auditors of the Company as regards their duties relating to financial and other reporting, internal controls, external audits and such other matters as the Board determines from time to time.
2.2 The Committee is to assist the Board in fulfilling its responsibilities by providing an independent review and supervision of financial reporting, internal controls of the Group, and adequacy of the external audits.

3 Membership

3.1 The Committee shall consist of not less than three members appointed by the Board from time to time, all of whom shall be non-executive directors and a majority of whom shall be independent non-executive directors. At least one of the independent non-executive directors from the Committee shall have appropriate professional qualifications or accounting or related financial management expertise as required under the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange").
3.2 The Board shall appoint the chairman of the Committee who shall be an independent non-executive director.
3.3 A former partner of the Company's existing auditing firm shall be prohibited from acting as a member of the Committee for a period of 1 year from the date of his ceasing:
(a) to be a partner of the firm; or
(b) to have any financial interest in the firm, whichever is later.
3.4 Appointments to the Committee shall be co-terminus with the directorship of the relevant members (whether by retirement, rotation or otherwise).

4 Secretary

4.1 The company secretary of the Company or his nominee shall be the secretary of the Committee.
4.2 The secretary of the Committee must ensure that full minutes are kept of all meetings.

5 Frequency and proceedings of meetings

5.1 The Committee shall meet at least two times every year. Additional meetings should be held as the work of the Committee demands.
5.2 The chairman of the Committee may convene additional meetings at his discretion.
5.3 The quorum for a meeting shall be two members.
5.4 Proceedings of meetings of the Committee shall be governed by the provisions of the articles of association of the Company.
5.5 The chief financial manager and a representative of the external auditors shall be, where appropriate, invited by the Committee to attend the meetings.
5.6 Notice of Committee meetings shall be given to all members. Notice of the Committee meetings shall be deemed to be duly given to a member if it is given to him personally, by word of mouth or given to him in writing sent to his last known address or any other address given by him to the Company or by electronic means by transmitting it to any email address supplied by the member to the Company for this purpose.
5.7 Meetings can be held in person, by telephone or by video conference. Members may participate in a meeting by means of communication equipment through which all persons participating in the meeting are able to hear each other.
5.8 A resolution in writing signed by all members of the Committee shall be as valid and effective as if the same had been passed at a meeting of the Committee duly convened and held. Any such resolution shall be deemed to have passed at a meeting held on the date on which it was signed by the last member to sign.
5.9 Only members of the Committee are entitled to vote at the meetings.
5.10 Resolutions of the Committee shall be passed by a majority of votes of the members present.

6 Authority

6.1 The Committee is authorised by the Board to act within its terms of reference.
It is authorised to seek any information it requires from any employee of the Company and all employees are directed to co-operate with any request made by the Committee.
6.2 The Committee is authorised by the Board, subject to prior discussion concerning the cost, to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary.
6.3 The Committee shall report to the Board any suspected frauds and irregularities, failures of internal control or suspected infringement of laws, rules and regulations which come to its attention and are of sufficient importance to warrant the attention of the Board.
6.4 Where the Board disagrees with the Committee's view on the selections, appointment, resignation or dismissal of the external auditors, the Committee will arrange for the Corporate Governance Report in the Annual Report to include an explanation of the Committee's view and the reason why the Board has taken a different view.
6.5 The Committee shall be provided with sufficient resources to perform its duties.

7 Duties

The Committee shall:

Relationship with the Company's auditors

7.1 be primarily responsible for making recommendations to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;
7.2 review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Committee shall discuss with the external auditor before the audit commences, the nature and scope of the audit and reporting obligations, and ensure co-ordination where more than one audit firm is involved;
7.3 develop and implement policy on engaging an external auditor to supply non-audit services. For this purpose, "external auditor" includes any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party knowing all relevant information would reasonably conclude to be part of the audit firm nationally or internationally. The Committee shall report to the Board, identifying and making recommendations on any matters where action or improvement is needed;

Review of the Company's financial information

7.4 monitor integrity of the Company's financial statements and annual report and accounts, half-year report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in them. In reviewing these reports before submission to the Board, the Committee shall focus particularly on:
(a) any changes in accounting policies and practices; (b) major judgmental areas;
(c) adequacy of disclosure, consistency within the financial statements and with prior disclosures;
(d) significant adjustments resulting from the audit;
(e) the going concern assumptions and any qualifications; (f) compliance with accounting standards; and
(g) compliance with the Listing Rules and legal requirements in relation to financial reporting.
7.5 Regarding 7.4 above:-
(a) members of the Committee shall liaise with the Board, senior management and the person appointed as the Company's qualified accountant and the Committee must meet, at least twice a year, with the Company's auditors; and
(b) the Committee shall consider any significant or unusual items that are, or may need to be, reflected in the report and accounts, it shall give due consideration to any matters that have been raised by the Company's staff responsible for the accounting and financial reporting function, complaince officer or auditors;

Oversight of the Company's financial reporting system and internal control procedures

7.6 review the Company's financial controls, internal control and risk management systems;
7.7 discuss the internal control system with management to ensure that management has performed its duty to have an effective internal control system. This discussion shall include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function;
7.8 consider major investigation findings on internal control matters as delegated by the Board or on its own initiative and management's response to these findings;
7.9 review the Group's financial and accounting policies and practices. Special meetings may be called at the discretion of the chairman of the Committee or at the request of the senior management to review significant control or financial issues;
7.10 review the external auditor's management letter, any material queries raised by the auditor to management about accounting records, financial accounts or systems of control and management's response;
7.11 ensure that the Board will provide a timely response to the issues raised in the external auditor's management letter;
7.12 review management's reports on the effectiveness of systems for internal control and financial reporting;
7.13 act as the key representative body for overseeing the Company's relations with the external auditor;
7.14 make recommendation to the Board on the resolution of any disagreements between management and the external auditor regarding financial reporting;
7.15 discuss problems and reservations arising from the interim review and final audits, and any matters the external auditor may wish to discuss (in the absence of management where necessary);
7.16 review arrangements that employees of the Company can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters. The Committee shall ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;
7.17 report to the Board on the above matters; and
7.18 consider other topics, as defined by the Board. Corporate Governance Function
7.19 develop and review the Company's policies and practices on corporate governance and make recommendation to the Board;
7.20 review and monitor the training and continuous professional development of directors and senior management;
7.21 review and monitor the Company's policies and practices on compliance with legal and regulatory requirements;
7.22 develop, review and monitor the code of conduct and compliance manual, if any, applicable to employees and directors; and
7.23 review the Company's compliance with the Corporate Governance Code as set out in the Chapter 14 of the Listing Rules and disclosure in the Corporate Governance Report in the Annual Report.

8 Reporting procedures

8.1 The Committee shall report to the Board on a regular basis. At the next meeting of the board following a meeting of the Committee, the chairman of the Committee shall report the findings and recommendations of the Committee to the Board.
8.2 The secretary shall circulate the draft and final versions of minutes of meetings and reports of the Committee to all Committee members for their comment and records respectively within a reasonable time after the meeting.

9 Publication and Update of Terms of Reference

9.1 These terms of reference shall be updated and revised as and when necessary in light of changes in circumstances and changes in regulatory requirements, including those under the Listing Rules, in Hong Kong.
9.2 These terms of reference shall be made available to the public on both the
Company's website and the website of the Hong Kong Stock Exchange.

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This press release was issued by Belle International Holdings Limited and was initially posted at http://www.belleintl.com/wcms-common/temp/201203271824290952/E_Audit Com Terms of Ref.pdf . It was distributed, unedited and unaltered, by noodls on 2012-03-27 13:20:48 PM. The issuer is solely responsible for the accuracy of the information contained therein.