ADAMA Ltd.The Implementation Rules of the Audit Committee of
the Board of Directors
Chapter I General Provisions
Article 1 In order to strengthen the decision-making functions of its Board of Directors,ensure the effective supervision of the Board of Directors over the management teamand other senior managers and improve the corporate governance, ADAMA Ltd.(hereinafter referred to as “the Company”) establishes the Audit Committee of theBoard of Directors and formulates these Rules according to the Company Law of thePeople's Republic of China, the Code of Governance for Listed Companies, the Articlesof Associations of ADAMA Ltd.(hereinafter referred to as “the Articles of Associations”)and other relevant regulations.
Article 2 As a dedicated working body established by the Board of Directors, the AuditCommittee is responsible for reviewing the Company's financial information and itsdisclosure, supervising and evaluating the internal and external auditing work andinternal control.
Chapter II Organizational Composition
Article 3 The Audit Committee should consist of three directors who are not seniormanagement of the Company, including two independent directors, and at least one ofthe two should be an accounting professional.
Article 4 The members of the Audit Committee should be nominated by either theChairman of the Board, one-half and above of the independent directors or one-thirdand above of all directors and be elected by the Board of Directors.
Article 5 The Audit Committee should have the accounting professional among theindependent directors as its chairperson and the convener, who should preside over thecommittee and be elected by the Board of Directors.
Article 6 The office term of the Audit Committee should be the same as that of theBoard. When the office term of any member expires, one can succeed oneself if beingre-elected consecutively. If any member ceases to be a director during the term, he/sheshould automatically lose his/her membership and the Committee should make up thenumber of members in accordance with above-mentioned provisions from Articles 3 to5.
Article 7 The Department of Securities and Legal Affairs and the Department of InternalAudit of the Company facilitate the Audit Committee in its daily work and take theresponsibility for its daily liaison and meeting organization.
Chapter III Responsibilities and Authorities
Article 8 The main responsibilities and authorities of the Audit Committee are asfollows.
(1) To oversee and evaluate the work of the external audit and propose the engagementor replacement of external auditors.
(2) To oversee and evaluate the Company's internal audit work and be responsible forcommunication between the external and internal auditing teams.
(3) To review the Company's financial statements and the disclosure.
(4) To review the Company's internal control system.
(5) Other responsibilities and authorities granted by the Board of Directors of theCompany.
Article 9 The following matters should be submitted to the Board of Directors fordeliberation after being agreed by a majority of all members of the Audit Committee,
(1) Disclosure of financial information in financial reports and periodic reports, andinternal control evaluation reports;
(2) Employment or dismissal of the accounting firm undertaking the audit of theCompany;
(3) Appointment or dismissal of the person in charge of finance of the Company;
(4) Changes in accounting policies and accounting estimates or correction of materialaccounting errors for reasons other than changes in accounting standards；
(5) Other matters as prescribed by laws, administrative regulations, CSRC regulations
and the Articles of Association of the Company.
Article 10 The duties of the Audit Committee to guide and supervise the work of theInternal Audit Department of the Company are as follows，
(1) To guide and supervise the establishment and implementation of the internal auditsystem.
(2) To review the annual internal audit work plan of the Company.
(3) To supervise the implementation of the Company’s internal audit plan.
(4) To guide the effective operation of the internal audit department. The internal auditdepartment of the Company should report to the Audit Committee. All types of auditreports submitted by the internal audit department to the management, plans forrectification of audit issues and the status of rectification should be submitted to theAudit Committee at the same time.
(5) To report to the Board of Directors on the progress and quality of the internal auditwork, as well as material issues identified.
(6) To coordinate the liaison between the internal audit department and external auditunits such as accounting firms and national audit institutions.
Article 11 The Audit Committee is responsible to the Board of Directors and itsproposals should be submitted to the Board of Directors for consideration and decision-making. The Audit Committee should cooperate with the Board of Supervisors in theconduct of the audit of the Company.
Chapter IV Decision-making Procedures
Article 12 The Departments of Finance and Internal Audit are responsible for thepreparation to facilitate the Audit Committee to make decisions and for providinginformation in written form related to the finance of the Company. The informationshould include,
(1) Relevant financial statements of the Company.
(2) Work reports drafted by internal and external auditors.
(3) Contracts with external audit and related work reports.
(4) Information disclosure of the Company.
(5) Audit reports on material related-party transactions of the Company.
(6) Other relevant matters.
Article 13 The reports provided by the Internal Audit Department should be deliberatedat the Audit Committee meetings and then the corresponding resolutions in written formshould be submitted to the Board of Directors for discussion regarding the following,
(1) The evaluation of the work performance, the engagement and replacement of theexternal auditors.
(2) Whether the internal audit system of the Company has been effectively operatingand whether the financial statements are comprehensive and true.
(3) Whether the Company's financial statements and other information disclosed to thepublic are objective and true, and whether the material related-party transactions are incompliance with relevant laws and regulations.
(4) The evaluation of the performance of the Company's finance and audit departments,including the persons in charge.
(5) Other relevant matters.
Chapter V Rules of Procedures
Article 14 The Audit Committee should hold at least one meeting per quarter and mayconvene an ad hoc meeting when proposed by two and above members or when theconvenor deems it necessary. In principle, all members should be notified of theconvening three days in advance. The chairperson of the Committee should presideover the meetings and may delegate another independent director to host in his/her placeif one cannot attend. With the unanimous agreement of all members of the AuditCommittee, the aforementioned notice requirement may be waived.
Article 15 The meetings of the Audit Committee should be held with the presence of atleast two-thirds of the members. Each member should have one vote, and any resolutionshould be made by the meeting only if a majority of members vote to approve.Any member of the Audit Committee who is a related-party to the matter underconsideration should recuse oneself. If effective deliberations cannot be formed due tothe recusal, the relevant matters should be considered directly by the Board of Directors.
Article 16 Members of the Audit Committee should attend the meetings in person and
express clear opinions on the matters under consideration. If any member of the AuditCommittee cannot do so for any reason, he or she may submit a power of attorneysigned by himself/herself and entrust other members to attend and express opinions onhis or her behalf. The power of attorney should specify the scope and duration of theauthorization. Each member should accept a maximum of one member's authorization.If any independent director of the Audit Committee is unable to attend the meeting inperson for any reason, he or she should appoint another independent director memberto participate on his or her behalf.
Article 17 The voting manner of the Audit Committee meeting is by a show of handsor a vote, and the meeting may also be held by correspondence (including a circulationof written resolution).
Article 18 The head of the Internal Audit Department can attend the meetings of theAudit Committee. Directors of the Board, supervisors and other senior managementmembers may also be invited to attend the meetings when necessary.
Article 19 If the Audit Committee deems it necessary, it can engage external agents toprovide professional advice for its decision making at the expense of the Company.
Article 20 The procedure for convening the meetings of the Audit Committee, themanner of voting and the motions adopted at the meetings should be in compliance withthe provisions of relevant laws and regulations, the Articles of Associations and theseRules.
Article 21 The meetings of the Audit Committee should always have meeting minuteswith signatures of all the attending members. The minutes should be kept by theDepartment of Securities and Legal Affairs of the Company.
Article 22 The proposals and voting results adopted at the meetings of the AuditCommittee should be presented to the Board of Directors in written form.
Article 23 All members present at any meeting should be obliged to keep the mattersdeliberated at the meeting confidential and should not disclose relevant information of
the Company before its public disclosure.
Chapter VI Supplementary Provisions
Article 24 When the provisions of the relevant laws, regulations, rules and othernormative documents on which these Rules are based are amended, the correspondingprovisions hereby should be repealed at the same time and the amended provisions ofthe relevant laws, regulations and other normative documents should prevail.
Article 25 These Rules should be formulated, amended and interpreted by the Board ofDirectors.
Article 26 These Rules should come into effect on the date of deliberation and approvalby the Board of Directors.
ADAMA Ltd.April 25
th, 2024