Corporate governance
Audit Committee Charter
The mandate, membership and duties of the board committee that oversees RecycLiCo’s financial reporting, internal controls and external auditors.
1.
Mandate
The primary mandate of the audit committee (the “Committee”) of the board of directors (the “Board”) of the Company is to assist the Board in overseeing the Company’s financial reporting and disclosure. This oversight includes:
(a)
reviewing the financial statements and financial disclosure that is provided to shareholders and disseminated to the public;
(b)
reviewing the systems of internal controls to ensure integrity in the financial reporting of the Company; and
(c)
monitoring the independence and performance of the Company’s external auditors and reporting directly to the Board on the work of the external auditors.
2.
Composition and Organization of the Committee
(a)
The Committee shall be comprised of at least three directors.
(b)
The majority of the Committee members must be independent. A member of the Committee is independent if the member has no direct or indirect material relationship with an issuer. A material relationship means a relationship, which could, in the view of the issuer’s board of directors, reasonably interfere with the exercise of a member’s independent judgment.
(c)
Every Committee member must be financially literate. Financial literacy is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the issuer’s financial statements.
(d)
The members of the Committee shall be appointed for one-year terms by the Board at its first meeting following the annual shareholders’ meeting. Members may serve for any number of consecutive terms.
(e)
Unless the Board shall have appointed a chair of the Committee (the “Chair”), the members of the Committee shall elect a Chair, who may serve as such for any number of consecutive terms.
(f)
The Board may at any time remove or replace any member of the Committee and may fill any vacancy of the Committee.
3.
Meetings
(a)
The Audit Committee will meet at least twice per year.
(b)
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 communicate with each other.
(c)
The Audit Committee Chair will set the agenda for each meeting, after consulting with management and the external auditor. Agenda materials such as draft financial statements must be circulated to Audit Committee members for members to have a reasonable time to review the materials prior to the meeting.
4.
Responsibilities and Duties of the Committee
The Audit Committee will perform the following duties:
External Auditor
(a)
Select, evaluate and recommend to the Board, for shareholder approval, the external auditor to examine the Company’s accounts, controls and financial statements, and verify the independence of such auditors;
(b)
Evaluate, prior to the annual audit by external auditors, the scope and general extent of their review, including their engagement letter, and the compensation to be paid to the external auditors and recommend such payment to the Board;
(c)
Obtain written confirmation from the external auditor that it is objective and independent within the meaning of the Rules of Professional Conduct/Code of Ethics adopted by the provincial institute or order of Chartered Accountants to which it belongs;
(d)
Review annually the performance of the external auditors who shall be ultimately accountable to the Board and the Committee as representatives of the shareholders of the Company;
(e)
Recommend to the Board, if necessary, the replacement of the external auditor;
(f)
Meet at least annually with the external auditors, independent of management, and report to the Board on such meetings;
(g)
Pre-approve all audit and audit-related services and any non-audit services to be provided to the Company by the external auditor and the fees related thereto;
Financial Statements and Financial Information
(a)
Review and discuss with management and the external auditor the annual audited financial statements of the Company and recommend their approval by the Board;
(b)
Review and discuss with management, the quarterly financial statements and recommend their approval by the Board;
(c)
Review and recommend to the Board for approval the financial content of the annual report;
(d)
Review the process for the certification of financial statements by the Chief Executive Officer and Chief Financial Officer;
(e)
Review the Company’s management discussion and analysis, annual and interim earnings or financial disclosure press releases, and audit committee reports before the Company publicly discloses this information;
(f)
Review annually with external auditors, the Company’s accounting principles and the reasonableness of managements judgments and estimates as applied in its financial reporting;
(g)
Review and consider any significant reports and recommendations issued by the external auditor, together with management’s response, and the extent to which recommendations made by the external auditors have been implemented;
Risk Management, Internal Controls and Information Systems
(a)
Review with the external auditors and with management, the general policies and procedures used by the Company with respect to internal accounting and financial controls;
(b)
Review adequacy of security of information, information systems and recovery plans;
(c)
Review management plans regarding any changes in accounting practices or policies and the financial impact thereof;
(d)
Review with the external auditors and, if necessary, legal counsel, any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Company and the manner in which these matters are being disclosed in the financial statements;
(e)
Consider and approve, if appropriate, changes to the Company’s auditing and accounting principles and practices as suggested by the external auditors and management;
(f)
Discuss with management and the external auditor correspondence with regulators, employee complaints, or published reports that raise material issues regarding the Company’s financial statements or disclosure;
(g)
Assisting management to identify the Company’s principal business risks;
(h)
Review the Company’s insurance, including directors’ and officers’ coverage, and provide recommendations to the Board;
Other
(a)
Review and update this Charter annually;
(b)
Review Company loans to employees/consultants;
(c)
Review any related party transactions; and
(d)
Conduct special reviews and/or other assignments from time to time as requested by the Board.
5.
Process for Handling Complaints Regarding Financial Matters
(a)
The Audit Committee shall establish a procedure for the receipt, retention and follow-up of complaints received by the Company regarding accounting, internal controls, financial reporting, or auditing matters.
(b)
The Audit Committee shall ensure that any procedure for receiving complaints regarding accounting, internal controls, financial reporting, or auditing matters will allow the confidential and anonymous submission of concerns by employees.
6.
Reporting
The Audit Committee will report to the Board on:
(a)
The external auditor’s independence;
(b)
The performance of the external auditor and the Audit Committee’s recommendations;
(c)
Regarding the reappointment or termination of the external auditor;
(d)
The adequacy of the Company’s internal controls and disclosure controls;
(e)
The Audit Committee’s review of the annual and interim financial statements;
(f)
The Audit Committee’s review of the annual and interim management discussion and analysis;
(g)
The Company’s compliance with legal and regulatory matters to the extent they affect the financial statements of the Company; and
(h)
All other material matters dealt with by the Audit Committee.
7.
Authority of the Committee
(a)
The Audit Committee will have the resources and authority appropriate to discharge its duties and responsibilities. The Audit Committee may at any time retain outside financial, legal or other advisors at the expense of the Company without approval of management.
(b)
The external auditor will report directly to the Audit Committee.
RecycLiCo Battery Materials Inc. is a critical minerals refining company specializing in the use of advanced hydrometallurgical technologies for processing mined ore and the upcycling of lithium-ion battery materials.
RecycLiCo Innovation Centre
110 – 7858 Hoskins St.
Delta, BC, Canada V4G 1M4
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www.RecycLiCo.com