Amedeo Air Four Plus

Corporate Governance

AMEDEO AIR FOUR PLUS LIMITED

(the “Company”)

Terms of Reference for the Audit Committee (the “Committee”)

(Reviewed by the Board on 30 September 2016)

(Updated by the Secretary on 9 December 2019 and approved by the Board on 15 July 2020)

 

Function

  1. The function of the Audit Committee (the “Committee”) is to ensure that the Company, and its subsidiaries, maintain high standards of integrity in their financial reporting and internal controls as appropriate.

Membership

  1. The Committee shall be appointed by the Board and shall consist of all directors of the Company, at least one of whom shall have recent and relevant financial experience. The Committee may retain third party persons and firms as advisers to the Committee to assist with the Committee’s scrutiny of the Company’s financial reports to shareholders, as well as to provide any other relevant advice requested by the Committee. Such third party retention shall be subject to the prior approval of the Board.
  1. A quorum for a meeting of the Committee shall be any two members.
  1. The Chairman of the Committee shall be John Le Prevost or, failing him, be appointed by the members of the Committee. The appointment of the Chairman of the Committee will be reviewed on an annual basis by the Board of directors of the Company. The Chairman of the Company shall not be a member of the Committee.

Meetings

  1. The Committee shall meet at least two times a year at appropriate times in the reporting and audit cycle, including when the Company’s half-yearly and annual financial reports are to be considered by the Board and, where possible, shall precede such a Board meeting. The Committee will meet the external auditor at least once a year (by telephone or in person).
  1. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.
  1. Meetings may be held more frequently if the Committee deem necessary, and any member of the Committee may request a meeting, or if requested by the Company’s auditors.
  1. The Company’s auditors shall be advised of the timing of Committee meetings to consider the Company’s half-yearly and annual financial reports 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 once post audit at the reporting stage, and shall ensure that any auditor’s management letters and management’s responses are reviewed.
  1. The Committee shall also have direct access to the Administrator and Secretary if deemed necessary or advisable.
  1. The Company’s Secretary shall be the secretary of the Committee and attend all meetings.
  1. The Secretary shall circulate the minutes of meetings of the Committee, once approved, to all members of the Board.

Duties

  1. The Committee should carry out the duties below for the parent company, major subsidiary undertakings and the group as a whole, as appropriate.
  1. Financial reporting

13.1. The Committee shall monitor the integrity of the financial statements of the company, including its annual and half-yearly reports and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgements which they contain.

13.2. In particular, the Committee shall review and challenge where necessary:

13.2.1. the consistency of, and any changes to, accounting policies both on a year on year basis and across the Company/group;

13.2.2. the extent to which the financial statements are affected by significant or unusual transactions and their treatment in the financial reports;

13.2.3. the methods used to account for significant or unusual transactions where different approaches are possible:

13.2.3.1. whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the auditor;

13.2.3.2. the clarity of disclosure in the Company’s financial reports and the context in which statements are made; and

13.2.3.3. all material information presented with the financial statements, such as the business review/operating and financial review and the corporate governance statement (insofar as it relates to the audit and risk management).

13.3. The Committee shall, as appropriate, provide advice to the Board on whether the annual financial report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.

13.4. Internal controls and risk management systems

The Committee shall:

13.4.1. keep under review the adequacy and effectiveness of the Company’s internal financial controls and internal control and risk management systems, including those of the Company’s service providers and make recommendations to the Board;

13.4.2. consider on an annual basis whether there is a need for an internal audit function and make a recommendation to the Board accordingly; and

13.4.3. review and approve the statements to be included in the annual report concerning internal controls and risk management.

13.5. Compliance, whistleblowing and fraud

The Committee shall, as appropriate:

13.5.1. review the adequacy and security of the Company’s arrangements for its service providers to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action;

13.5.2. review the Company’s procedures for prevention, detection and reporting of fraud;

13.5.3. review the Company’s systems and controls for the prevention of bribery and receive reports on non-compliance;

13.6. External Audit

The Committee shall

13.6.1. conduct the tender process and make recommendations to the board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the Company’s external auditor. The Committee shall oversee the selection process for a new auditor and if an auditor resigns the Committee shall investigate the issues leading to this and decide whether any action is required;

13.6.2. oversee the relationship with the external auditor including (but not limited to):

13.6.2.1. recommendations on their remuneration, whether fees for audit or non-audit services and that the level of fees is appropriate to enable an adequate audit to be conducted;

13.6.2.2. approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;

13.6.2.3. review and monitor their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services;

13.6.2.4. satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Company (other than in the ordinary course of business);

13.6.2.5. monitoring the auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partner, the level of fees paid by the company compared to the overall fee income of the firm, office and partner and other related requirements;

13.6.2.6. assessing annually the qualifications, expertise and resources of the auditor and the effectiveness of the audit process, which shall include a report from the external auditor on their own internal quality procedures;

13.6.3. meet regularly with the auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Committee shall meet the auditor at least once a year, to discuss the auditor’s remit and any issues arising from the audit;

13.6.4. review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement;

13.6.5. review the findings of the audit with the auditor. This shall include but not be limited to, the following:

13.6.5.1. a discussion of any major issues which arose during the audit;

13.6.5.2. any accounting and audit judgements;

13.6.5.3. levels of errors identified during the audit;

13.6.5.4. the effectiveness of the

13.6.6. The Committee shall also

13.6.6.1. review any  representation  letter(s)  requested  by  the  auditor before they are signed by management;

13.6.6.2. develop and implement a policy on the supply of non-audit services by the external auditor, taking into account any relevant ethical guidance on the matter, and report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.

  1. Reporting responsibilities

14.1. The Committee chairman shall report formally to the board on its proceedings after each meeting on all matters within its duties and responsibilities.

14.2. The Committee shall make whatever recommendations to the board it deems appropriate on any area within its remit where action or improvement is needed.

14.3. The Committee shall produce a report on its activities to be included in the Company’s annual report, including :

14.3.1. the significant issues it considered in relation to the financial statements and how these were addressed;

14.3.2. an explanation of how it has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, and information on the length of tenure of the current audit firm and when a tender was last conducted; and

14.3.3. if the external auditor provides non-audit services, an explanation of how the auditors objectivity and independence is safeguarded.

Other matters

  1. The Committee shall:

15.1. have access to sufficient resources in order to carry out its duties, including access to the company secretariat for assistance as required;

15.2. be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members;

15.3. give due consideration to laws and regulations, the provisions of the UK Corporate Governance Code and the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and any other applicable Rules, as appropriate;

15.4. oversee any investigation of activities which are within its terms of reference;

15.5. arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the board for approval.

Authority

  1. The Committee is authorised:

16.1. to seek any information it requires from any service provider of the Company in order to perform its duties;

16.2. to obtain, at the Company’s expense, outside legal or other professional advice on any matter within its terms of reference;

16.3. 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.