Risk, Audit and Governance Committee Charter
SPLITIT LTD (Company)
• The Risk, Audit and Governance Committee (Committee) has been established by the board of directors (Board) of the Company pursuant to article 47 of the Company’s articles of association. The Committee’s primary objective is, in addition to its functions mandated by the Israeli Companies Law, 1999 (Companies Law), to facilitate the proper execution of the responsibilities of the Board relating to accounting and reporting practices of the Company.
• The purpose of the Committee is to:
• oversee, review and supervise the Company’s risk management framework and promote a risk management culture;
• assist the Board in discharging its responsibilities relative to the financial reporting process, the system of internal control relating to all matters affecting the Company’s financial performance and the audit process;
• recommend to the shareholders of the Company to appoint and approve the compensation of the independent registered public accounting firm (external auditor) engaged to audit the Company’s financial statements;
• oversee and monitor (i) the integrity of the Company’s financial statements, (ii) the independent registered public accounting firm’s qualifications, independence and performance, and (iii) the Company’s internal accounting and financial controls;
• assist the Board in monitoring compliance with laws and regulations, especially as they relate to financial statements or accounting matters, and the Company’s Code of Conduct and Ethics;
• oversee and monitor the implementation of the Company’s internal governance policies and procedures;
• provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board;
• monitor deficiencies in the management of the Company, inter alia, in consultation with the internal auditor, and advise the Board on how to correct the deficiencies;
• decide whether to approve engagements or transactions that require Committee approval under the Companies Law, the Corporations Act 2001 (Cth) (Corporations Act) (if applicable), and the ASX Listing Rules, relating generally to certain related party transactions;
• meet and receive reports from both the internal auditors and independent registered public accounting firm dealing with matters that arise in connection with their audits;
• assist the Board to adopt and apply appropriate ethical standards in relation to the management of the Company and the conduct of its business; and
• review the adequacy of the Company’s insurance policies.
• The Committee has authority to:
• conduct or authorise investigations into any matters within its purpose and have direct access to the independent registered public accounting firm as well as anyone in the organization;
• seek external advice or assistance, at the expense of the Company, including the appointment of consultants and independent external advice; and
• seek information and communicate directly with the Company’s senior management, advisers, internal auditor (if appointed) and external auditor at any time.
• The Committee will make recommendations to the Board on all matters requiring a decision from the Board. The Committee does not have the power or authority to make a decision in the Board’s name or on its behalf.
• Members of the Committee shall comprise directors appointed by the Board, as further detailed in Section 6 below.
• The number of members of the Committee shall be a minimum of three directors, all of whom shall meet the following criteria (as
well as any other criteria required by the ASX or the Companies Law):
• Each “external director” appointed under the Companies Law (External Director) shall be a member of the Committee and at least one of such External Directors shall possess “accounting and financial expertise” consistent with the Companies Law (and to the extent required by it);
• A majority of the members of the Committee shall be “unaffiliated directors” (or “independent directors”) as defined in the Companies Law (Unaffiliated Directors);
• No member of the Committee may have participated in the preparation of the financial statements of the Company or any of the Company’s current subsidiaries during the preceding three years; and
• Each member of the Committee must be able to read and understand fundamental financial statements (including a company’s balance sheet, statement of operation and comprehensive income and statement of cash flows).
• All members of the Committee shall be financially literate and the members of the Committee, between them, should have the accounting and financial expertise and a sufficient understanding of the industry in which the Company operates to be able to discharge the Committee’s mandate effectively.
• The Board will nominate the Chair of the Committee from time to time. The Committee Chair will be an External Director who is not Chair of the Board. • Without limiting the foregoing, the following persons may not serve on the Committee:
• The Chair of the Board;
• Any person who is a holder of control (as defined in the Companies Law) or a relative of such a person; and
• Any person who is any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee.
• The Committee will meet, independently of the independent registered public accounting firm (external auditor), as often as the Committee members deem necessary to discharge its role effectively, but not less than twice a year having regard to the Company’s reporting and financial audit cycle.
• The Committee Chair shall convene a meeting of the Committee at any reasonable time or if required to do so by any Committee member or the Board. The internal auditor shall be invited to all Audit Committee meetings. In addition, the internal auditor may request that the Committee Chair convene a meeting to discuss a particular issue, and the Chair shall convene the Committee within a reasonable period of time, if the Chair finds it appropriate to do so.
• A quorum of the Committee will comprise a majority of the members of the Committee, and the act of a majority of those present at any meeting at which there is a quorum shall be the act of the Committee, provided, however, that the majority of those members present shall qualify as Unaffiliated Directors and that at least one of those Unaffiliated Directors present shall be an External Director.
• The Committee, in its discretion, will ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. The Committee will meet separately with the Chief Executive Officer and separately with the Chief Financial Officer of the Company at such times as are appropriate to review the financial affairs of the Company.
• If the Committee Chair is absent from a meeting and no acting chair has been appointed, the Committee members present may choose one of them to act as chair for that meeting.
• Reasonable notice of meetings and the business to be conducted shall be given to the members of the Committee and any other person invited by the Committee to attend.
• Meetings of the Committee may be held or participated in by conference call or similar means, and decisions may be made by circular or written resolution.
• Each member of the Committee will have one vote. The Committee Chair will not have a casting vote. If there is a tied vote, the motion will be referred to the Board for resolution.
• Following each meeting, the Committee Chair will report to the Board, at the next Board meeting, on any matter that should be brought to the Board’s attention and on any recommendation of the Committee that requires Board approval or action, and provide the Board with sufficient information upon which to make a decision in that regard.
• The Company Secretary shall co-ordinate the timely completion and dispatch of the Committee agenda, minutes and materials for
each meeting. The minutes of each Committee meeting will, following preliminary approval by the Committee Chair, be circulated to the Board.
• The responsibilities of the Committee are as follows:
• consider the overall risk management framework and risk profile and annually review its effectiveness in meeting sound corporate governance principles and keep the Board informed of all significant business risks;
• review with management the adequacy of the Company’s systems for identifying, managing, and monitoring the key risks to the Company in accordance with the Company’s Risk Management Policy;
• obtain reports from management on the status of any key risk exposures or incidents;
• review the adequacy of the Company’s process for managing risk and provide a recommendation to the Board regarding the same in accordance with the Company’s Risk Management Policy;
• review any incident involving fraud or other break down of the Company’s internal controls in accordance with the Company’s Risk Management Policy;
• review any incident involving any break down of the Company’s risk management framework in accordance with the Company’s Risk Management Policy;
• review the Company’s insurance program having regard to the Company’s business and the insurable risks associated with its business and inform the Board regarding the same;
• review whether the Company has any material exposure to any economic, environmental and social sustainability risks and if so, develop strategies to manage such risks to present to the Board;
• review the half-yearly and yearly financial statements and consider whether they are complete, consistent with information known to the Committee, reflect appropriate accounting policies and principles and otherwise provide a true and fair view of the financial position and performance of the Company;
• receive and consider in connection with the Company’s halfyearly and yearly financial statements letters of representation to the Board in respect of financial reporting and the adequacy and effectiveness of the Company’s risk management, internal compliance and control systems and the process and evidence adopted to satisfy those conclusions;
• review the financial sections of the Company’s Annual Report and related regulatory filings before release and consider the accuracy and completeness of the information;
• review with management and the external auditors the results of the audit;
• receive from the Company Chief Executive Officer and Chief Financial Officer a declaration that, in their opinion, the financial records of the Company have been properly maintained and that the financial statements comply with accounting standards and give a true and fair view of the financial position and performance of the Company and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively before the Board approves the halfyearly and yearly financial statements;
• review, in conjunction with counsel, any legal matters that could have a significant impact on the Company’s financial statements;
• monitoring of corporate risk assessment and the internal controls instituted in accordance with the Company’s Risk Management Policy;
• review the effectiveness of the Company’s internal controls regarding all matters affecting the Company’s financial performance and financial reporting, including information technology security and control;
• review the scope of internal (if one is appointed) and external auditors’ review of internal control, review reports on significant findings and recommendations, together with management’s responses, and recommend changes from time to time as appropriate;
• review with management and the internal auditor (if one is appointed) the plans and activities of the internal auditor; • meet with the internal auditor (if one is appointed) to review reports and monitor management response;
• review the scope and adequacy of the internal audit work plan (if any);
• meet separately, at least once a year, to discuss any matters that the Committee or internal auditor (if one is appointed) believes should be discussed privately;
• review the objectivity and performance of the internal audit activity (if any);
• review the independence of the internal auditors (if any) and their auditing practices;
• ensure there are no unjustified restrictions or limitations placed on the internal audit function, and review and concur in the appointment, replacement or dismissal of the internal auditor (if one is appointed);
• establish procedures for the selection, appointment and removal of the external auditor and for the rotation of external audit engagement partners; • review the external auditors’ proposed audit scope and approach;
• meet with the external auditor to review reports, and meet separately from management, at least once a year, to discuss in that regard any matters that the Committee or auditors believe should be discussed privately;
• establish policies as appropriate in regards to the independence, integrity and performance of the external auditor;
• review of the independence of the external auditors and the appropriateness of any services provided by them to the Company (if any), outside their statutory role;
• for the purpose of removing or appointing external auditors review their performance, including their proposed fees, and if appropriate conduct a tender of the audit. Any subsequent recommendation following the tender for the appointment of an external auditor will be put to the Board and then if a change is approved it will be put forward to shareholders for their approval;
• review any proposal for the external auditor to provide non-audit services and consider whether it might compromise the independence of the external auditor;
Compliance and Governance
• consider the workplan for Company compliance activities;
• obtain regular updates from management regarding compliance matters;
• consider and draft internal governance policies and procedures relating to the activities of the Company, including its commercial, legal and technology activities;
• assist with the implementation of the internal governance policies and procedures; • review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance; • review and assess the management process supporting external reporting; • review and assess, and where deemed required by the Committee, participate in the decision making and management process and provide support to management in respect of the decision making and management process based on determined delegation of authority as proposed by the Committee and approved by the Board; • review the findings of any examinations by regulatory agencies and authorities; • review the process for communicating the Code of Conduct and Ethics to Company personnel, and for monitoring compliance with that Code;
• regularly report to the Board about Committee activities, issues, and related recommendations. Such report should include the results of the Committee’s:
• assessment of whether external reporting is consistent with Committee members’ information and knowledge and is adequate for the needs of the Company’s shareholders;
• assessment of the management processes which supports external reporting;
• assessment of the decision making and management process, including in respect of any deviations from the decision making and management process;
• assessment of the Company’s corporate reporting processes;
• assessment of the appropriateness of the accounting choices made by management in preparing the Company’s financial statements;
• procedures for the selection and appointment of the Company’s external auditor and for the rotation of external audit engagement partners; • recommendations for the appointment or, if necessary, the removal of the external auditor;
• assessment of the performance and independence of the Company’s external auditor. Where the external auditor provides non-audit services, the report should also state whether the Committee is satisfied that provision of those services has not compromised the auditor’s independence;
• assessment of the performance and objectivity of the Company’s internal audit function;
• review of the Company’s risk management and internal control systems; and
• recommendations for the appointment, or if necessary, the dismissal of the head of internal audit;
• provide an open avenue of communication between internal audit, the external auditors and the Board. For the purpose of supporting the independence of their function, the external auditor and the internal auditor (if one is appointed) will have a direct line of reporting access to the Committee;
• review any other reports the Company issues that relate to Committee responsibilities;
Related party transactions
• review, monitor and approve related party transactions and investments involving the Company and its directors and/or officers, to the extent required under the Companies Law and other rules;
• review and approve all transactions in which the Company is a participant and in which any parties related to the Company (including its executive officers, Directors, beneficial owners of more than 5% (substantial holding) of the Company’s shares, immediate family members of the foregoing persons and any other persons whom the Board determines may be considered related parties of the Company) has or will have a direct or indirect material interest;
• the Committee should only approve those related party transactions that are determined to be in, or are not inconsistent with, the best interests of the Company and its shareholders, after taking into account all available facts and circumstances as the Committee or the Chair of the Company determines in good faith to be necessary. Transactions with related parties or shareholders who have voting power in at least 10% of the Company may also be subject to shareholder approval to the extent required by the ASX Listing Rules;
• review the adequacy of external reporting by the Company to meet the needs of shareholders; • review the adequacy of the Company’s and its subsidiaries insurance policies;
• perform other activities related to this Charter as requested by the Board including where requested by the Board, evaluate, approve and monitor major capital expenditure, capital management and all major acquisitions, divestitures and other corporate transactions, including the issue of securities of the Company;
• institute and oversee special investigations as needed;
• confirm annually that all responsibilities outlined in this Charter have been carried out; • evaluate the Committee’s and individual members’ performance on a regular basis;
• establish and maintaining free and open means of communication between the Committee, the Company’s internal auditor, the Company’s internal audit/financial control department and management with respect to auditing and financial control matters, including providing such parties with appropriate opportunities to meet privately with the Committee; and
• perform such additional activities and consider such other matters within the scope of its responsibilities or duties according to applicable law and/or as the Committee and/or the Board deems necessary or appropriate.
Review of Committee and Committee Charter
• The Committee will review annually its activities and the manner in which it has carried out its responsibilities, and report to the Board on the outcome of the review.
• The Committee will review annually the terms of the Charter. The Committee may recommend to the Board any changes to this Charter. Any amendments to this Charter must be approved by the Board.
• Members of the Committee may receive compensation for their service as Committee members, subject to the provisions of the Companies Law and the ASX Listing Rules.
• Members of the Committee may not receive any compensation from the Company except the fees that they receive for service as members of the Board or any committee thereof.
Delegation of Authority
• Subject to the provisions of the Companies Law, the Committee may delegate to one or more designated members of the Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full Committee at its scheduled meetings.