SLF Realisation Fund : TOR ARC May 2022

Terms of Reference of the Audit and Risk Committee

SLF Realisation Fund Limited

Adopted: 22 April 2021

Updated : May 2022

• CONSTITUTION

1.1 The Board hereby resolves to establish a committee of the Board to be known as the Audit and Risk Committee (the "Committee").

• MEMBERSHIP

1. The Committee shall be appointed by the Board and shall consist of a Chairman and at least two other members, all of whom shall be independent non-executive directors of the Company with no links to the Company's external auditors. At least one member shall have recent and relevant financial experience and must have competence in accounting or auditing, or both. The Committee as a whole should have competence relevant to the sector in which the Company operates. A quorum shall be two members. The Committee may ask other invitees to attend meetings either regularly or by invitation, but the invitees shall have no right of attendance, will not participate in decision making and their attendance will not count towards a quorum of the Committee. All other non-executive directors have the right of attendance at meetings of the Committee.
2. The Chairman of the Committee and Committee members shall be appointed by the Board.
3. The current Chairman is Brendan Hawthorne.

• MEETINGS

1. The Committee shall meet not less than twice a year, held to coincide with key dates in the financial reporting and audit cycle. The Committee will meet the external auditor at least once a year (by telephone or in person) without non-independent directors or the AIFM and the Consultants present
2. A sufficient interval should be allowed between Audit and Risk Committee meetings and main Board meetings to allow any work arising from the Audit and Risk Committee meeting to be carried out and reported to the Board as appropriate.
3. Meetings may be held more frequently if the Committee deem necessary or if requested by the Company's auditors.
4. The Company's auditors shall be advised of the timing of Committee meetings to consider the Company's annual accounts and at any meeting the Committee shall have access to the auditors if it so requires. The Committee shall meet with the external auditors at least twice each year, once at the planning stage, where the scope of the audit will be considered and where appropriate should coincide with key dates in the Company's financial reporting cycle, and once post audit at the reporting stage, and shall ensure that any auditor's management letters and management's responses are reviewed. The Company's auditors may request a further meeting if they consider one necessary.
5. The Company's Secretary shall be the secretary of the Committee and attend all meetings. The Company's Secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly.

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3.6 The Secretary shall circulate the minutes of meetings of the Committee to all members of the Committee and, once agreed, to all members of the Board.

• ANNUAL GENERAL MEETING ("AGM")

4.1 The Chairman of the Committee, or, in his or her absence, a duly authorised representative of the Committee, shall be available at the AGM of the Company to answer questions on the separate section of the annual report describing the Committee's activities and matters within the scope of the Committee's responsibilities.

• AUTHORITY

1. The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised at the Company's expense to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise as it considers necessary.
2. The Committee shall:
3. 1. have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required;
   2. be provided with such training as shall be deemed appropriate, both in the form of an induction programme for new members and on an ongoing basis for all members;
   3. give due consideration to laws and regulations, the provisions of the Association of Investment Companies ("AIC") Code and the requirements of the UK Listing Authority's Listing, Prospectus and Disclosure Guidance and Transparency Rules and any other applicable Rules, as appropriate;
   4. to have the right to publish in the Company's annual report details of any issues that cannot be resolved between the Committee and the Board.

• DUTIES

6.1 Financial reporting

1. to monitor the integrity of the financial statements of the Company, including its annual and half-yearly reports and any informal reports issued by the Company, such as preliminary statements of annual accounts, analyst presentations, and to review, and report to the Board on, the significant financial reporting issues and judgments which they contain, having regard to matters communicated by the auditor;
2. to report its views to the Board if it is not satisfied with any aspect of the proposed financial reporting by the Company;
3. in relation to 6.1.1, in particular to review and challenge where necessary:
4. 1. significant accounting policies and practices, and any changes to them and any significant estimates or judgements;
   2. the methods used to account for significant or unusual transactions where different approaches are possible;

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1. whether the Company has adopted appropriate accounting policies and, where necessary, made appropriate estimates and judgements, taking into account the views of the auditor;
2. the Company's policy in relation to the valuation of investments including unquoted or other unusual investments;
3. the clarity and completeness of disclosure in the company's financial statements and consider whether such disclosures made are properly set in context;
4. all related information presented with financial statements, including the strategic report, long term viability and corporate governance statements relating to the audit and to financial risk management;

6.1.4 to review the contents of the annual report and accounts and advise the Board whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's, position and performance, business model and strategy. This review will assess whether other information presented in the annual report is consistent with the financial statements;

6.2 Internal controls and risk management

1. to review the Company's internal financial controls, that is the systems established to identify, assess, manage and monitor financial risks as part of their expected roles and responsibilities in the AIC Code of Corporate Governance;
2. to ensure the design and implementation of appropriate risk management and internal control systems;
3. to determine the nature and extent of principal and emerging risks facing the Company that would threaten its business model, future performance, solvency or liquidity and ascertain the level of risk the organisation is willing to take (risk appetite) to achieve its strategic objectives;
4. notwithstanding the responsibilities of the AIFM, to perform a robust assessment of the principal risks and determine how they should be mitigated;
5. to ensure that the internal control and risk management systems of the service providers are satisfactory. To receive reports from the Company's key service providers covering internal and risk management systems and procedures supported, as appropriate, by SSAE16 or AAF Reports. In light of the above, to review the Company's statement on internal control and risk management systems prior to endorsement by the Board;
6. consider the level of assurance it is getting on the risk management and internal control systems, including internal financial controls, and whether this is enough to help the Board in satisfying itself that they are operating effectively;
7. to review and recommend to the Board the disclosures included in the annual report in relation to internal control, risk management and the viability statement;

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6.3 Appointment, resignation and fees of external auditor, and tendering

1. to consider and make recommendations to the Board, to be put to shareholders for approval at the AGM, on the appointment, reappointment and removal of the external auditors;
2. to assess annually, and report to the Board on, the qualification, expertise, resources, and independence of the auditor and the effectiveness of the audit process (including a report from the auditor on their own internal quality procedures and consideration of the audit firms' annual transparency reports) and to include in its assessment a recommendation on whether to propose to shareholders that the auditor should be re- appointed;
3. if the auditor resigns, to investigate the issues surrounding the resignation and consider whether any action is required;
4. to evaluate the quality and effectiveness of the financial reporting process;
5. to approve the terms of engagement and the remuneration to be paid to the external auditor in respect of the audit services provided;
6. to review and agree the engagement letter issued by the external auditor at the start of each audit, ensuring it has been updated to reflect changes in circumstances arising since the previous year. The scope of the audit should be reviewed by the Committee with the auditor. If the Committee is not satisfied as to its adequacy it should arrange for additional work to be undertaken;
7. to approve or recommend to the Board the remuneration to be paid to the external auditor in respect of audit services provided and to satisfy itself that the level of fee payable is appropriate and that an effective, high quality audit can be conducted for such a fee;
8. to consider when the external audit contract should be put out to tender (taking into account the requirement in the AIC Code of Corporate Governance);
9. if and when the Company puts the external audit contract out to tender, to oversee the external audit tendering process and as part of that process to ensure that all tendering firms have access as necessary to information and individuals during the tendering process and to compare the quality and effectiveness of the services provided by the external auditor with those of other audit firms.

6.4 Independence of auditor, including the provision of non-audit services

6.4.1 to assess annually the independence and objectivity of the auditor, taking into account relevant UK and Guernsey law, the Ethical Standard, regulation and other professional requirements. The Committee should consider the annual disclosure from the statutory auditor and discus with the auditor the threats to independence and the safeguards applied to mitigate those threats;

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