Great Wall Motor : AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TERMS OF REFERENCE

13186 (Eng).indd

GREAT WALL MOTOR COMPANY LIMITED

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TERMS OF REFERENCE

(These terms of reference were passed at the 16th meeting of the 5th session of the board of directors held on 28 January 2016 and took effect from 1 January 2016 retrospectively)

GREAT WALL MOTOR COMPANY LIMITED

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TERMS OF REFERENCE Chapter 1 General

Article 1 Great Wall Motor Company Limited (the "Company") has established the audit committee (the "Audit Committee") of the board of directors (the "Board") and formulated these terms of reference in accordance with the regulations governing the listing of the Company, Company Law of the People's Republic of China, Code of Corporate Governance for Listed Companies, the Rules Governing the Listing of Stocks on Shanghai Stock Exchange (the "Listing Rules of the SSE"), the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules of the Stock Exchange"), the Articles of Association of Great Wall Motor Company Limited, the Operational Guidelines of the Shanghai Stock Exchange for the Audit Committee under the Board of Directors of Listed Companies, the Guidelines of the Shanghai Stock Exchange on Connected Transactions of Listed Companies and other applicable rules to enhance the decision- making function of the Board by conducting preliminary internal audit and organizing professional audit to ensure effective supervision of the management by the Board and to improve its corporate governance.

Article 2 The Audit Committee is set up by the Board, which shall be accountable to and report to the Board.

Article 3 Members of the Audit Committee shall ensure sufficient time and energy for discharge of the duties of the Audit Committee, be diligent and responsible, supervise the external audit of the Company in a practical and efficient way, guide the internal audit of the Company and cause the Company to establish an effective internal control and risk management system and provide authentic, accurate and complete financial reports.

Chapter 2 Composition

Article 4 The Audit Committee shall comprise a minimum of three non-executive directors and the number of Audit Committee members shall be decided by the Board from time to time. The majority of the members of the Audit Committee shall be independent non-executive directors (the "Independent Directors"). All members of the Audit Committee shall possess the professional knowledge and business experience enabling them to fulfill the duties of the Audit Committee.

Article 5 The members of the Audit Committee shall be elected by the Board.

Article 6 The Audit Committee shall have a chairman who shall be an Independent Director with professional qualifications or expertise in accounting or related financial management. The chairman shall be in charge of the work of the Audit Committee.

Article 7 The term of office of the members of the Audit Committee shall be three years, which is the same as that of a director of the Company. A member of the Audit Committee may serve consecutive terms if he is re-elected upon the expiration of his term. If any member resigns from the position of director of the Company during his term of office, he shall ipso facto and immediately cease to hold the position of Audit Committee member. The vacancy shall be filled by the Audit Committee in accordance with Articles 4 to 6 above.

Article 8 A former partner of the existing external auditors of the Company shall be prohibited from acting as a member of the Audit Committee for a period of 1 year from the date of his ceasing (whichever is later):

1. to be a partner of such auditing firm; or

   
   

2. to have any financial interest in such auditing firm

Article 9 The Audit Committee shall establish an auditing unit for daily operation. The auditing unit shall be responsible for the routine work of the Audit Committee, including liaison, organization of Audit Committee meetings, preparation of materials and file management of the Audit Committee. The management and relevant departments of the Company shall provide support and relevant information as requested to the Audit Committee for discharge of its duties.

Article 10 The Board shall evaluate the independence and performance of the members of the Audit Committee on a regular basis, and replace members who are not suitable to remain in the position when necessary.

Article 11 The Company shall arrange members of the Audit Committee to participate in relevant training to obtain expertise required for discharge of their duties in respect of laws, accounting, and regulations on listed companies in a timely manner.

Chapter 3 Duties and Powers

Article 12 The main duties and powers of the Audit Committee are:

1. monitoring and evaluating the external auditor;

   
   

2. providing guidance on work of internal audit;

   
   

3. reviewing financial statements, annual reports, interim reports and quarterly reports of the Company and making comments thereon;

   
   

4. assessing the effectiveness of internal control and risk management;

   
   

5. reviewing and identifying the list of connected parties;

   
   

6. coordinating communication between the management, internal audit departments and relevant departments with the external auditors;

7. other matters as authorized by the Board and other matters involved in the relevant laws and regulations.

Article 13 The duties and powers of the Audit Committee to monitor and evaluate the external auditors shall include but are not limited to:

1. evaluating, reviewing and monitoring the independence, objectivity and competence of the external auditors and the effectiveness of the audit procedures in accordance with applicable standards, in particular, the effect of providing non-auditing services by the external auditors on their independence. The Audit Committee shall discuss the nature, scope and reporting obligations with external auditors before the audit commences;

   
   

2. making recommendations to the Board on the appointment, reappointment or removal of the external auditors; dealing with any issues concerning resignation or dismissal of the external auditors;

   
   

3. reviewing the remuneration and terms of engagement of the external auditors;

   
   

4. discussing and communicating with the external auditors over the audit scope, audit plan, audit practice and significant matters found during the auditing;

   
   

5. developing and implementing policies on engaging an external auditor to supply non-audit services. For this purpose, "external auditor" includes any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party knowing all relevant information would reasonably conclude to be part of the audit firm nationally or internationally. The Audit Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;

   
   

6. monitoring and evaluating the diligence of external auditors.

The members of the Audit Committee shall liaise with the Board and senior management. The Audit Committee shall hold at least two meetings with the external auditors each year. The Audit Committee shall hold at least one meeting annually with the external auditors, in the absence of management, and the secretary of the Board may present at such meeting.

Article 14 The duties and powers of the Audit Committee to provide guidance on work of internal audit shall include but are not limited to:

1. reviewing the annual internal audit plan of the Company;

   
   

2. supervising the implementation of the internal audit plan of the Company;

   
   

3. reviewing the internal audit report, assessing the internal audit results and supervising the rectification of material issues;

   
   

4. guiding the effective functioning of the internal audit department.