Chapter 1 General Provisions
Article 1 To establish and regulate the audit system and procedures of Huagong Technology Industrial Co., Ltd. (hereinafter referred to as the "Company"), in accordance with the "Company Law of the People's Republic of China" (hereinafter referred to as the "Company Law") and other relevant laws, administrative regulations, departmental rules, normative documents, securities regulatory rules of the Company's stock listing locations (including Shenzhen Stock Exchange and The Stock Exchange of Hong Kong Limited), and the "Articles of Association of Huagong Technology Industrial Co., Ltd." (hereinafter referred to as the "Articles of Association"), and the "Rules of Procedure for the Board of Directors of Huagong Technology Industrial Co., Ltd." (hereinafter referred to as the "Rules of Procedure for the Board of Directors"), the Board of Directors hereby establishes the Audit Committee (hereinafter referred to as the "Committee") and formulates these Rules of Procedure.
Article 2 The Committee is a specialized working body established by the Board of Directors, responsible for providing consultation or advice for the Board of Directors' relevant decision-making, and reporting to the Board of Directors.
Article 3 These Rules apply to the Committee and relevant personnel and departments involved in these Rules.
Chapter 2 Committee Composition
Article 4 All members of the Committee shall be non-executive directors, and the Committee shall comprise at least three members, of whom independent directors shall constitute more than half. The Chairman (Convener) of the Committee shall be an accounting professional. Committee members shall be nominated by the Chairman of the Board, by more than one-half of the independent directors, or by one-third of the directors, and shall be elected by the Board of Directors.
For the purpose of these Rules, the meaning of "independent director" is consistent with that of "independent non-executive director" in the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited" (hereinafter referred to as the "Hong Kong Listing Rules").
Committee members shall possess the professional knowledge and experience necessary to perform the duties of the Committee.
Article 5 The Committee shall have one Chairman (Convener), who shall be an independent director and shall be responsible for chairing the Committee's work. The Chairman shall be elected from among the members and approved by the Board of Directors. If the Chairman (Convener) of the Committee is unable or incapable of performing his duties, he shall designate another member to act on his behalf.
Article 6 The term of office of the Committee shall be the same as the term of office of the current Board of Directors, and the term of office of the members shall be the same as the term of office of the directors. Members may be re-elected upon the expiration of their term. If a Committee member ceases to be a director of the Company during his term of office, his qualification as a member shall be automatically forfeited, and the Board of Directors shall supplement the number of members in accordance with these Rules.
Article 7 Committee members may resign from the Board of Directors before the expiration of their term. Resignation reports shall include necessary explanations regarding the reasons for resignation and matters that require the attention of the Board of Directors.
Article 8 Upon the proposal of the Chairman of the Board and with the approval of the Board of Directors, the members of the Committee may be adjusted during their term of office.
Article 9 When the number of Committee members falls below the number stipulated in these Rules, the Board of Directors shall supplement the number of members in accordance with these Rules.