Subject to certain exceptions, under the listing standards of the American Stock Exchange (“AMEX”), a listed company’s board of directors must consist of a majority of independent directors. Although we are eligible for an exemption from this requirement because we are considered a “controlled company” pursuant to Section 801(a) of the AMEX Company Guide as one of our shareholders owns more than 50% of our voting power, we have a majority of independent directors. Our Board of Directors has determined that three of the five members of our Board of Directors are independent under the listing standards of AMEX, as follows:
Siu Po Lee,
Dr. Ching Wah Leung, and
Hok Lun Wu
Audit Committee
We established our audit committee in January 2008. The audit committee consists of Siu Po Lee, Dr. Ching Wah Leung, and Hok Lun Wu, each of whom is an independent director. Siu Po Lee is an “audit committee financial expert” as defined under Item 407(d) of Regulation S-K. The purpose of the audit committee is to represent and assist our board of directors in its general oversight of our accounting and financial reporting processes, audits of the financial statements and internal control and audit functions. The audit committee’s responsibilities include:
- The appointment, replacement, compensation, and oversight of work of the independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting, for the purpose of preparing or issuing an audit report or performing other audit, review or attest services.
- Reviewing and discussing with management and the independent auditor various topics and events that may have significant financial impact on our company or that are the subject of discussions between management and the independent auditors.
Our Board of Directors does not maintain a separate nominating or compensation committee. Functions and duties customarily performed by such committees are performed by a majority of our independent directors in compliance with the requirements for listing on AMEX. Such responsibilities include:
- The design, review, recommendation and approval of compensation arrangements for our directors, executive officers and key employees, and for the administration of any equity incentive plans, including the approval of grants under any such plans to our employees, consultants and directors.
- The review and determination of compensation of our executive officers, including our Chief Executive Officer.
- The selection of director nominees, the approval of director nominations to be presented for shareholder approval at our annual general meeting and filling of any vacancies on our board of directors, the consideration of any nominations of director candidates validly made by shareholders, and the review and consideration of developments in corporate governance practices.
Adopted by the Board on March 3, 2008
The Audit Committee reviews the scope and results of the audit and other services provided by Asia Time's independent registered public accounting firm. The Board has determined that all members of the Audit Committee are financially literate as that term is currently defined by AMEX and by applicable SEC rules.
MISSION
The Audit Committee of Asia Time Corporation (the “Company”) shall assist the Company's Board of Directors with the Board's oversight of the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company.
Specifically, the Committee shall assist the Board in monitoring:
- the integrity of the Company's financial statements;
- the independent auditor's qualifications and independence; and
- the performance of the Company's internal audit function and internal auditors.
In so doing, the Committee shall endeavor to maintain free and open communication among the directors, the independent auditors and the financial management of the Company.
COMPOSITION
The Committee members and its Chair shall be appointed annually by the Board. The Committee shall consist of three or more members of the Board, each of whom shall be both an independent director and financially literate. At least one member of the Committee shall be an “audit committee financial expert” within the meaning of applicable Securities and Exchange Commission and American Stock Exchange rules in effect from time to time (the "SEC and AMEX rules").
For these purposes, an “independent director” is one who is “independent” within the meaning of applicable SEC and AMEX rules, and:
- is free from any relationship that, in the business judgment of the Board, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director; and
- accepts no consulting, advisory or other compensatory fee, either directly or indirectly, from the Company other than in his or her capacity as a member of the Committee, the Board or any other committee of the Board; and
- is not otherwise an affiliated person of the Company. “Financial literacy” and “audit committee financial expert” shall be determined by the Board in the exercise of its business judgment; “financial literacy” shall include the ability to read and understand financial statements.
MEETINGS AND REPORTS
The Committee shall meet at least quarterly. It shall have executive sessions with the internal auditor and separately with the independent auditors, from time to time, and shall have executive sessions with management as it deems appropriate. The Committee shall report on a regular basis to the Board and shall make such recommendations to the Board as it deems appropriate.
AUTHORITY
The Committee shall have the authority to:
- conduct or authorize investigations into any matters within the Committee's scope of responsibilities;
- seek any information it requires from Company employees and advisors, all of whom are directed to cooperate with the Committee's requests;
- engage independent legal, accounting and other advisors, as it determines necessary or appropriate to carry out its duties; and
- compensate the foregoing advisors and arrange for its administrative expenses without obtaining the further approval of the Board or approval of the management of the Company.
RESPONSIBILITIES
Management is responsible for maintaining the Company's books of account and preparing the financial statements based thereon, and the independent auditor is responsible for auditing the Company's annual financial statements and reviewing the Company’s interim financial statements. The independent auditor is ultimately accountable to the Committee.
This Charter sets forth the responsibilities of the Committee as a guide and should remain adaptable to changing conditions and circumstances.
1. Independent Auditor
(a) Authority with Respect to Independent Auditor - As a committee of the Board, the Committee is directly responsible for the appointment, compensation, oversight, evaluation and, where appropriate, replacement of the Company's independent auditor. In this capacity, the Committee shall have sole authority to recommend the appointment or removal of the independent auditor, and shall have the ultimate authority to approve all audit engagement fees and terms.
(b) Audit Plan - The Committee shall review the independent auditor's annual audit plan, including the scope of the audit and the quarterly reviews.
(c) Review of Audit Issues - The Committee shall review with the independent auditor and, as appropriate under the circumstances, the internal auditor and management:
- any significant changes required in the independent auditor's audit plan;
- any difficulties or disputes with management encountered during the course of the audit; and
- any alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative treatments and the treatment preferred by the independent auditor.
(d) Competence of Independent Auditor - Once each year (and otherwise as the Chair may consider appropriate) the Committee shall obtain and review a written report by the independent auditor describing:
- the independent auditor's internal quality-control procedures; and
- any issues regarding the independent auditor’s quality-control or its independent audits identified since its last report by any internal review, peer review, or investigation (within the preceding five years) by the Public Company Accounting Oversight Board or any other governmental or professional authorities and any steps taken to deal with any such issues.
(e) Independence - The Committee shall satisfy itself as to the independence of the independent auditor, including a review of the services provided by the independent auditor and related fees. As part of this process:
- The Committee shall require the independent auditor to report periodically in writing on all its relationships with the Company and its management, and any relationships that may interfere with the exercise of its independence from management, as well as the firm’s compliance with all independence requirements under applicable professional standards and SEC and AMEX rules. The Committee shall discuss any potential independence issues raised in the report with the Board and recommend any actions that it deems appropriate to maintain adequate auditor independence.
- The Committee shall pre-approve any audit and non-audit services provided by the independent auditor and shall consider whether these services are compatible with the independent auditor's independence. The Committee may delegate to one or more Committee members the authority to grant pre-approvals required by the foregoing sentence. The decisions of any Committee member to whom authority is delegated hereunder shall be presented to the Committee at its next scheduled meeting. The Committee shall not engage the independent auditors to perform the specific non-audit services proscribed by law or regulation.
- The Committee shall require management to report periodically in writing regarding compliance with the Company’s policy prohibiting hiring of members of the independent auditor engagement team for positions with a financial reporting oversight role.
2. Financial and Related Information
(a) Annual Financial Statements - The Committee shall review and discuss with management and the independent auditor, the Company's annual financial statements and the auditor's report thereon to be included in the Company's Annual Report on Form 10-K. The Committee shall make a recommendation to the Board whether such financial statements should be included in the Company's Annual Report.
(b) Interim Financial Statements – The Committee shall review and discuss with management and the independent auditor, the Company's interim financial statements before quarterly results are released publicly.
(c) Accounting Treatment and Other Matters - At the completion of the annual audit and such other times as the Committee may deem appropriate, the Committee shall review with the independent auditors, management and the internal auditor, as applicable:
- The quality of, and major issues regarding, the Company's accounting principles and financial statement presentations, including all critical accounting policies and practices used and any significant changes in the Company's selection or application of accounting principles.
- Any analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements.
- The effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company.
- Other matters related to the conduct of the audit and other material written communications between the independent auditor and management which are to be communicated to the Committee under generally accepted auditing standards and applicable SEC and AMEX rules, such as any management letter or schedule of unadjusted differences. Periodically, as appropriate, the Committee shall review with the independent auditor, the internal auditor, and/or management:
- any significant deficiencies in the design or operation of internal controls;
- any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and
- any significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions taken with regard to deficiencies and weaknesses.
(d) Disclosure of Other Financial Information - The Committee shall discuss with management and, where appropriate, the independent auditor:
- the types of information to be disclosed and the type of presentation to be made in connection with any earnings press release;
- the type of financial information and earnings guidance (if any) which may be provided to analysts and rating agencies; and
- the use of “pro forma” or “adjusted” non-GAAP information in Company disclosure documents.
3. Internal Auditor
(a) Regular Reporting - The internal auditor shall report regularly to the Committee and the Committee shall have direct communication with the internal auditor to discuss and review specific issues as appropriate.
(b) Internal Audit Plan and Findings - The Committee shall review from time to time the internal audit plan and significant findings.
(c) Independence - The Committee shall ensure that there are no significant limitations on the internal auditor, and review and concur in the appointment, replacement or dismissal of the internal auditor.
4. Compliance and Other Oversight Responsibilities
(a) Whistleblower - In compliance with SEC and AMEX rules, the Committee shall establish procedures for the receipt, retention and treatment of complaints or concerns, including confidential and anonymous submissions received by the Company regarding accounting, internal accounting controls or auditing matters.
(b) Risk Management - The Committee shall consider the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures.
(c) Legal Compliance - The Committee shall review with the Company's internal legal counsel any legal and regulatory matters that could have a significant impact on the Company's financial statements, the Company's compliance with applicable laws and regulations pertaining to financial disclosure, and any correspondence with regulators or governmental agencies that raise material issues regarding the Company's financial statements or accounting policies.
(d) Related Party Transactions - The Committee, or one or more Committee members with delegated authority, shall review and, if appropriate, approve all proposed related party transactions for potential conflicts of interest. “Related party transactions” means those transactions required to be disclosed as such pursuant to applicable SEC and AMEX rules.
(e) Disclosure of Certain Matters - The Committee shall oversee compliance with the requirements of the SEC and AMEX rules for disclosure of the independent auditor's services, the identity of the Committee members and the Committee's activities, and shall provide a report for the Company's proxy statement in accordance with SEC rules.
(f) Code of Business Ethics - The Committee shall review management's monitoring of the CEO’s and finance personnel’s compliance with the Company's Code of Business Ethics.
In addition to the above responsibilities, the Committee shall undertake such other duties as the Board delegates to it.
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This Charter shall govern the operations of the Audit Committee. It shall be deemed to be updated to reflect at all times any legislative, regulatory and listing requirements applicable to the Committee. The Committee shall formally review this Charter at least annually and recommend any proposed changes to the Board for approval.