China Shenhua Energy : Rules of Procedures of Me...

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(These rules were passed on 26 August 2005 at the 5th meeting of the first session of the board of directors, and were revised on 17 August

2007 at the 16th meeting of the first session of the board of directors of the Company and on 28 March 2014 at the 43rd meeting of the second session of the board of directors of the Company.)

(1) to review and supervise the work of the external audit institutions; (2) to guide the internal audit work;
(3) to review and provide opinions on the financial reports of the Company; (4) to evaluate the effectiveness of internal control;
(5) to coordinate communications between the management, internal control function and relevant departments, and the external audit institutions;
(6) other duties authorized by the Board or other issues related to relevant laws and regulations.

(1) To review and monitor the external auditor's independence, objectivity and professionalism, and the effectiveness of audit procedures under applicable standards; to supervise and evaluate whether the external audit institutions fulfill their duties diligently;
(2) To evaluate the influence of non-audit services provided by the external audit institutions on their independence; to develop and implement policies on the engagement of an external auditor to provide non-audit services;
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(3) To review the remuneration for audit service and appointment terms applicable to the external audit institutions;
(4) To discuss with the external auditor the nature and scope of the audit and reporting obligations before the audit commences; to discuss and communicate on the audit scope, audit plan, audit method, and any material matters identified in the audit process, and consider and approve the external audit (review) plan;
(5) To be 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 handle any questions of resignation or dismissal of that auditor;
(6) To review the external auditor's management letter, any material queries raised by the auditor to the management in respect of the accounting records, financial accounts or systems of control and management's response.

(1) To supervise the appointment and dismissal of the head of internal audit function and make relevant recommendations;
(2) To supervise the internal audit system of the Company and its implementation; (3) To review the annual internal audit plan of the Company;
(4) To supervise the implementation of the internal audit plan;
(5) To review the internal audit reports, evaluate the results of internal audit and supervise the rectification of material matters;
(6) To guide the internal audit department on effective operation, and to review and monitor the effectiveness of the internal audit function;
(7) To ensure that the internal audit function is adequately resourced and has appropriate standing within the Company;
(8) To review various audit reports, rectification plans and rectification progress related to audit matters submitted by the internal audit department of the Company to the management.

interim and annual financial statements before submitting to the Board, and provide opinions on the truthfulness, completeness and accuracy of the Company's financial reports;
(2) To focus on significant accounting and audit matters of the Company's financial reporting, including adjustments to material accounting errors, changes in significant accounting policies and estimates, issues involving significant accounting judgments, and items resulting in a failure to receive standard unqualified opinion audit reports;
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(3) To pay special attention to the possibilities of fraud, corrupt practice and material misstatements relating to financial reporting;
(4) To supervise the rectification of financial reporting matters;
(5) Members of the Audit Committee shall communicate with the Board, President and other senior officers of the Company and its qualified accountant. Members of the Audit Committee shall consider any significant or unusual items that are, or may need to be, reflected in reports and accounts and must give due consideration to any matters that have been raised by the Company's qualified accountant, compliance chief or external auditors;
(6) To review the Company's financial and accounting policies and practices. Article 8 The Audit Committee evaluates the effectiveness of internal control. (1) To evaluate the adequacy of the Company's internal control system;
(2) To review the self-evaluation reports of internal control;
(3) To review the internal control audit reports issued by the external audit institutions, as well as the matters and improvement measures formulated after communication with the external audit institutions;
(4) To evaluate the internal control assessment and audit results, and to supervise the rectification of deficiencies in internal control;
(5) To review and examine the Company's internal control mechanism; to discuss with the management the system of internal control and ensure that the management has discharged its duty to establish an effective internal control system;
(6) To consider any findings of major investigations of internal control matters on its own initiative or as delegated by the Board and the management's response.

(1) To coordinate communications between the management and the external audit institutions on material audit matters;
(2) To coordinate communications between the internal audit department and the external audit institutions and accommodation provided by the internal audit department for the external audit;
(3) To ensure that the Board will provide a timely response to the issues raised in the external auditor's management letter.
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(1) the remuneration for audit service and the services related to audit, review and verification as provided by the external audit institutions;
(2) the remunerations for intermediaries engaged by the Audit Committee.

In performing its powers and duties hereunder, the Audit Committee has no obligation for planning and implementing audit activities or for ensuring the Company's financial reports are complete and accurate or for preparation of the financial reports. The management of the Company shall be responsible for preparation of the financial reports, and the external auditors are responsible for the audit issues.

The Audit Committee shall consist of three members or above, all being non-executive directors and with a majority of independent directors. At least one of the independent non-executive directors shall be an accounting professional with "appropriate professional qualifications or accounting or related financial management expertise" as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"). All members of the Audit Committee must be competent of performing the duties of the Audit Committee by possessing professional knowledge and commercial experience.

(1) to convene and chair the meetings of the Audit Committee;
(2) to supervise and inspect the implementation of resolutions of meetings of the Audit Committee; (3) to sign important documents of the Audit Committee;
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(4) to report to the Board on a regular basis;
(5) other duties and powers authorized by the Board.

1. when he/she ceases to be a partner of the external audit institution; or
2. when he/she ceases to have any financial interests in the external audit institution.

The convenor of the Audit Committee shall convene and chair the meetings of the Audit Committee. When the convenor of the Audit Committee fails or refuses to perform the duties, an independent director shall be nominated to perform the duties instead.

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