AUDIT COMMITTEE (TOR)

1. Objectives of Audit Committee

   The primary function of the Audit Committee (the "Committee") is to assist the Board of Directors in fulfilling its fiduciary duties as well as the following oversight objectives on the activities of the Group:

   • oversee financial reporting; and
   • evaluate the internal and external audit processes, including issues pertaining to the system of internal control and risk management within the Group.

2. Composition of Audit Committee

   The Board shall elect the Committee members from amongst themselves, comprising no fewer than three (3) Directors and entirely Non-Executive Directors, the majority of whom must be Independent. In respect of the Independent Non-Executive Director, the Board adopts the definition of "independent directors" under Paragraph l.0l of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities"). All the members shall be financially literate, i.e. the ability to read, analyze and interpret financial statements, and at least one (l) member of the Committee shall be;

   • a member of the Malaysian Institute of Accountants ("MIA"); or
   • if the member is not a member of the MIA, member must have at least three (3) years of working Experience; and
     1. the member must have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967; or
     2. the member must be a member of the Association of Accountants specified in Part II of the First Schedule of the Accountants Act.1967; or
     3. fulfils such other requirements as prescribed or approved by Bursa Securities.

   If a member of the Committee resigns, dies or for any reason ceases to be a member and results in the number of members being reduce to below three (3), the Board shall within three (3) months of the event appoint a new member to fill the vacancy.

   The Chairman of the Committee shall be an Independent Non-Executive Director. No alternate Director of the Board shall be appointed as a member of the Committee,

   The term of office and performance of the Committee and each of its members shall be reviewed by the Board at least once in every three (3) years to determine whether the Committee and its members have carried out their duties in accordance with the terms of reference.

3. Meeting Quorum and Procedures

   Meetings shall be conducted at least four (4) times annually, and more frequently as circumstances dictate. The Chairman may call for a meeting of the Committee if a request is made by any Committee member, the Board Chairman, the Chief Executive Officer, or the internal or external auditors.

   In order to form a quorum for the meeting, the majority of members present must be Independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present. For the purpose of determining the presence of the requisite quorum, members attending the meeting, by way of telephone or video conferencing or whatever forms for an effective meeting to be considered, shall be considered.

   The Company Secretary shall be appointed the Secretary of the Committee (the "Secretary"). The Secretary, together with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant support papers, at least seven (7) days prior to each meeting to members of the Committee. The draft minutes of all Committee meetings shall be circulated to members of the Board within ten (10) days after conclusion of the respective meetings.

   The Committee may, as and when deemed necessary, invite other Board members, Senior Management members or third parties to attend the meetings to address matters that require the input of such persons.

   The Chairman shall brief the Board on the outcome of every Committee meeting following the conclusion of the Committee meeting and shall submit an annual report to the Board, summarizing the Committee's activities during the year and the related significant results and findings thereof, including details of relevant training attended by each Committee member.

   The Committee shall meet at least twice annually with the external auditors without the presence of any Executive Board members, Management or Employees of EFB. In addition, Management, the external or internal auditors may request a private session with the Committee to discuss any matters of concern.

   The Committee shall regulate the manner of' proceedings of its meetings, having regard to normal conventions on such matter.

4. Authority of Audit Committee

   The Committee is authorized by the Board to investigate any activity within its terms of reference. It is also authorized to seek any information it requires from any employee and employees are directed to co-operate with any request made by the Committee. The Committee can obtain, at the expense of the Company, outside legal or other independent professional advice it considers necessary in the discharge of its responsibilities.

   The Committee shall have full and unlimited access to any information pertaining to EFB and any of its subsidiaries. The Committee shall have direct communication channels with the internal and external auditors and with Senior Management of the Group and shall be able to convene meetings with the external auditors, the person(s) carrying out the internal audit function or activity or both, excluding the attendance of other directors and employees of the Group, whenever deemed necessary. The Committee shall be provided with the resources that are required to perform its duties.

   Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of Bursa Securities, the Committee shall promptly report such matter to Bursa Securities.

5. Responsibilities and duties of Audit Committee

   In fulfilling its primary objectives, the Committee shall undertake the following responsibilities and duties:-

   • review the Committee's terms of reference as conditions dictate for any relevant updates to be made in tandem with changes to regulatory requirements affecting the Audit Committee;
   • review with the external auditors, the audit scope and plan, including any changes to the scope of the audit plan;
   • ensure the internal audit function is independent of the activities it audits and the head of internal audit reports functionally to the Audit Committee directly, which reviews its performance on an annual basis. The Head of Internal Audit shall be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control, and governance processes within the Group. In conducting internal audit covering the companies in the Group, the internal audit function is expected to deploy professional standards recognized by the Institute Of Internal Auditors, Malaysia.
   • take cognizance of resignations of any internal audit member and provide the resigning internal audit member an opportunity to submit the member’s reasons for resigning;
   • review the adequacy of the internal audit scope and plan, including the internal audit program, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;
   • review the external and internal audit reports to ensure that appropriate and prompt remedial action is taken by Management on major deficiencies in internal controls, risk management or governance processes that are identified;
   • review major audit observations and Management's response during the year with Management, external and internal auditors, including the status of previous audit recommendations;
   • review the assistance given by the Group's officers to the auditors, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information;
   • review the independence and objectivity of the external auditors and their services, including non-audit services and the professional fees in line with EFB's policy of non-audit services provided by the external auditors, so as to ensure a proper balance between objectivity and value for money;
   • review the appointment and performance of external auditors, the audit fee and any question of resignation or dismissal before making recommendations to the Board;
   • review the risk profile of the Group (including risk registers) and the Risk Management team's plans to mitigate business risks as identified from time to time;
   • review the adequacy and integrity, including effectiveness, of risk management and internal control systems, management information system, and the internal auditors' and/or external auditors' evaluation of the said systems;
   • direct and, where appropriate, supervise any special projects or investigation considered necessary, and review investigation reports on any major defalcations, frauds and thefts;
   • review the quarterly results and the year-end financial statements, prior to approval by the Board, focusing particularly on:
     1. changes in, or implementation of, major accounting policy changes:
     2. use of the going concern assumption;
     3. significant or unusual events; and
     4. compliance with The Malaysian Financial Reporting Standards and other legal requirements;
   • review procedures to ensure that the Group is in compliance with the Companies Act 1965, Main Market Listing Requirements of Bursa Securities and other legislative and reporting requirements;
   • review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises question on Management's integrity;
   • prepare reports, at least once (l) a year, to the Board summarizing the activities/work performed in fulfilling the Committee's primary responsibilities, including details of relevant training attended by each Committee member;
   • undergo relevant training annually on topics which are commensurate with the Committee's specific terms of reference to enable the Committee to effectively discharge its responsibilities and
   • any other activities, as authorized by the Board.

   In carrying out the above tasks entrusted by the Board, the Committee is required to report back to the Board the outcome of the work carried out, unless specified otherwise, the Committee does not have specific authority or power to approve any of the tasks so entrusted by the Board.

6. Ongoing engagement by Committee Chairman

   The Chairman of the Committee shall engage on a continuous basis, apart from the scheduled Audit Committee meeting, with Executive Directors and Senior Management, the head of Internal Audit and the External Auditors in order to be kept informed of matters affecting the Group.

This Terms of Reference was first adopted by the Board on 31st January 2005 and has been last reviewed on 08 April 2015 and approved by the Board. It is made available for reference on the Company’s website at www.evergreengroup.com.my.