1. Composition of the Audit Committee

According to Article 282 of Decree 155/2020/ND-CP stipulates:

–       A public company that organizes management and operates according to the model specified at Point b, Clause 1, Article 137 of the Law on Enterprises must have an Audit Committee under the Board of Directors.

–       The audit committee has 02 or more members. The Chairman of the Audit Committee must be an independent member of the Board of Directors. Other members of the Audit Committee must be non-executive Board members.

–       Members of the Audit Committee must have knowledge of accounting and auditing, have a general understanding of the law and operation of the company and not fall into the following cases:

• Working in the accounting and finance department of the company;
• Be a member or employee of an auditing organization approved to audit the company’s financial statements for the previous 03 years.

–       The Chairman of the Audit Committee must have a university diploma or higher in one of the majors in economics, finance, accounting, auditing, law, business administration, unless otherwise provided for in the company’s charter.

–       The appointment of the Chairman of the Audit Committee and other members of the Audit Committee must be approved by the Board of Directors at the meeting of the Board of Directors.

Article 137 of the Enterprise Law 2019 stipulates the organizational structure and management of joint-stock companies as follows:

–       Unless otherwise provided for by the law on securities, a joint-stock company has the right to choose a management organization and operate according to one of the following two models:

• General Meeting of Shareholders, Board of Directors, Supervisory Board and Director or General Director. In case a joint-stock company has less than 11 shareholders and institutional shareholders own less than 50% of the total number of shares of the company, it is not required to have a Supervisory Board;
• General Meeting of Shareholders, Board of Directors and Director or General Director. In this case, at least 20% of the members of the Board of Directors must be independent members and have an Audit Committee under the Board of Directors. The organizational structure, functions and tasks of the Audit Committee are specified in the company’s charter or the operation regulations of the Audit Committee promulgated by the Board of Directors.

2. Rights and obligations of the Audit Committee

Pursuant to Article 283 of Decree 155/2020/ND-CP and Article 161 of the Law on Enterprises stipulates:

–       Have the right to access documents related to the operation of the Company, exchange with other members of the Board of Directors, General Director (Director), Chief Accountant and other managers to collect information for the operation of the Audit Committee.

–       Have the right to request representatives of approved audit organizations to attend and respond to issues related to audited financial statements at meetings of the Audit Committee.

–       Use legal, accounting, or other external advice as necessary.

–       Develop and submit to the Board of Directors policies for risk detection and management; propose to the Board of Directors solutions to handle risks arising in the company’s operations.

–       Make a written report to the Board of Directors when detecting that members of the Board of Directors, General Director (Director) and other managers fail to fulfill their responsibilities as prescribed in the Law on Enterprises and the company’s charter.

–       Formulate operation regulations of the Audit Committee and submit them to the Board of Directors for approval. The Minister of Finance shall guide the sample of the Operation Regulations of the Audit Committee for public companies to refer to to develop the Operation Regulations of the Audit Committee.

–       The audit committee must meet at least 02 times a year. The minutes of the meeting of the Audit Committee are made in detail and clearly. The person recording the minutes and members of the Audit Committee attending the meeting must sign the minutes of the meeting. The minutes of meetings of the Audit Committee must be kept in full.”

3. Report on activities at the General Meeting of Shareholders

According to the provisions of Article 284 of Decree 155/2020/ND-CP on the report on activities of independent members of the Board of Directors in the Audit Committee at the Annual General Meeting of Shareholders, the following contents must be ensured:

–       Remuneration, operating expenses and other benefits of the Audit Committee and each member of the Audit Committee in accordance with the Law on Enterprises and the company’s charter;

–       Summarize meetings of the Audit Committee and conclusions and recommendations of the Audit Committee;

–       Monitoring results for financial statements, operation situation, financial situation of the company;

–       Report on assessment of transactions between companies, subsidiaries, companies controlled by a public company with more than 50% or more of charter capital and members of the Board of Directors, General Director (Director), other executives of the enterprise and related persons of that object; transactions between the company and the company in which a member of the Board of Directors, General Director (Director), other executives of the enterprise are founding members or managers of the enterprise during the last 03 years before the time of transaction;

–       Results of an assessment of the company’s internal control and risk management systems;

–       Monitoring results for the Board of Directors, General Director (Director) and other executives of the enterprise;

–       The results of evaluating the coordination of activities between the Audit Committee and the Board of Directors, the General Director (Director) and shareholders.

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