Audit and Compensation Committee Charter
The overall purpose of the Audit and Compensation Committee (the “Committee”) is to: assist the Board of Directors (the “Board”) of eCobalt Solutions Inc. (the “Corporation”) in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the Corporation’s process for monitoring compliance with laws and regulations and the code of conduct; and determine and make recommendations to the Board of the Corporation regarding compensation and evaluation of the Corporation’s Chief Executive Officer and senior executives.
The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:
- appoint, compensate, and oversee the work of any registered public accounting firm employed by the Corporation;
- resolve any disagreements between management and the auditor regarding financial reporting;
- pre-approve all auditing and non-audit services;
- retain independent counsel, accountants, or others to advise the committee or assist in the conduct of an investigation;
- seek any information it requires from employees—all of whom are directed to cooperate with the committee’s requests—or external parties;
- meet with the Corporation’s officers, external auditors, or outside counsel, as necessary; and
- access to such officers and employees of the Corporation and to such information respecting the Corporation and may engage independent compensation consultants at the expense of the Corporation, all as it considers to be necessary or advisable in order to perform its duties and responsibilities.
The Committee will consist of at least three and no more than six members of the Board. The Board or its nominating committee will appoint Committee members and the Committee members will appoint the Committee chair.
Each Committee member will be both independent and financially literate. At least one member shall be designated as the “financial expert,” as defined by applicable legislation and regulation.
The Committee will meet at least four times a year, with authority to convene additional meetings, as circumstances require. All committee members are expected to attend each meeting, in person or via teleconference or video conference. The Committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. It will hold private meetings with auditors (see below) and executive sessions. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared.
The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other.
The Chief Executive Officer shall be available to advise the Committee, shall receive notice of all meetings of the Committee and may attend meetings at the invitation of the Chair of the Committee.
The Committee will carry out the following responsibilities:
- Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
- Review with management and the external auditors the results of the audit, including any difficulties encountered.
- Review the annual financial statements, and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.
- Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
- Review with management and the external auditors all matters required to be communicated to the committee under generally accepted auditing standards.
- Understand how management develops interim financial information, and the nature and extent of internal and external auditor involvement.
- Review interim financial reports with management before filing with regulators, and consider whether they are complete and consistent with the information known to committee members.
- Consider the effectiveness of the Corporation’s internal control system, including information technology security and control.
- Understand the scope of internal and external auditors’ review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management’s responses.
Internal Audit Review with management and the charter, plans, activities, staffing, and organizational structure of the internal audit function. Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement, or dismissal of the chief audit executive. Review the effectiveness of the internal audit function, including compliance with Standards for the Professional Practice of Internal Auditing.
- Review the external auditors’ proposed audit scope and approach, including coordination of audit effort with internal audit.
- Review the performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors.
- Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non-audit services, and discussing the relationships with the auditors.
- On a regular basis, meet separately with the external auditors to discuss any matters that the Committee or auditors believe should be discussed privately.
- 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 noncompliance.
- Review the findings of any examinations by regulatory agencies, and any auditor observations.
- Review the process for communicating the code of conduct to the Corporation’s personnel, and for monitoring compliance therewith.
- Obtain regular updates from management and company legal counsel regarding compliance matters.
- Regularly report to the Board about committee activities, issues, and related recommendations.
- Provide an open avenue of communication between internal audit, the external auditors, and the Board.
- Report annually to the shareholders, describing the committee’s composition, responsibilities and how they were discharged, and any other information required by rule, including approval of non-audit services.
- Review any other reports the Corporation issues that related to Committee responsibilities.
- Recommend to the Board compensation policies and guidelines for senior executives of the Corporation.
- Ensure that the Corporation has in place programs to attract and develop management of the highest calibre and a process to provide for the orderly succession of management.
- Review, approve and recommend to the Board the appointment and compensation of, and the approval of the terms of employment of, the Chief Executive Officer, as well as all other senior executives of the Corporation as recommended by the Chief Executive Officer
- Review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer and, in light of those goals and objectives, to evaluate performance and recommend to the Board the annual salary, bonus and other benefits, direct and indirect, of the Chief Executive Officer and to approve compensation for all other senior executives of the Corporation, after considering the recommendations of the Chief Executive Officer, all within the compensation policies and guidelines approved by the Board.
- Implement and administer compensation policies approved by the Board concerning the following:
- executive compensation, contracts, stock plans or other incentive plans, including making recommendations to the Board regarding equity-based compensation and options; and
- proposed personnel changes involving officers reporting to the Chief Executive Officer;
- Annually receive from the Chief Executive Officer recommendations concerning annual compensation policies and budgets, including stock options, for all senior executive officers.
- Make a recommendation to the Board regarding compensation to be awarded to the directors on an annual basis;
- Report regularly to the Board on all of the Committee’s activities and findings during that year.
- Develop a calendar of activities to be undertaken by the Committee for each ensuing year and to submit the calendar in the appropriate format to the Board of Directors within a reasonable period of time following each annual general meeting of shareholders.
- Review executive compensation disclosure before the Corporation publicly discloses this information.
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