Shenzhen SDMC Technology Co., Ltd. (SDMC, stock code 00901) has released the “Terms of Reference of the Audit Committee of the Board”, approved at the Board’s 14th meeting of its sixth session on 30 April 2025 and slated to take effect upon the company’s H-share listing on The Stock Exchange of Hong Kong Limited (HKEX).

Key Features of the New Charter

1. Committee Structure • Composition: Three non-executive directors, with independent non-executive directors (INEDs) forming the majority; at least one INED must possess accounting expertise. • Independence Safeguards: Former partners of the company’s incumbent external audit firm are barred from committee membership for two years after leaving the audit firm or ceasing economic ties. • Tenure & Succession: Members serve concurrent terms with the Board and may be re-elected. Any loss of director status or INED independence leads to automatic disqualification and replacement.

2. Expanded Responsibilities • Auditor Oversight: Recommends appointment, re-appointment or removal of external auditors; assesses their independence, remuneration and scope of work; and supervises non-audit service engagements. • Financial Reporting: Reviews annual and interim financial statements, focusing on accounting policies, significant judgments, major audit adjustments and going-concern assumptions. • Internal Control & Risk Management: Examines the effectiveness of internal audit, financial supervision and broader risk-control frameworks; evaluates adequacy of resources and staff capabilities in finance and reporting functions. • Supervisory Authority: In line with China’s Company Law, empowered to review financial condition, propose dismissal of directors or senior managers for misconduct, call extraordinary shareholder meetings and initiate legal actions if necessary. • Whistle-blowing Mechanism: Establishes confidential procedures for handling accounting, audit or control-related complaints, including anonymous employee reports.

3. Working Procedures • Meeting Frequency: At least two regular meetings annually, with additional ad-hoc meetings permissible. Quorum set at two-thirds of members; resolutions pass by simple majority. • Audit Cycle Coordination: On-site external audit work must commence no later than 20 working days before annual report disclosure. The committee meets external auditors at least twice a year and reports audit findings and recommendations to the Board. • Reporting & Disclosure: Written resolutions on key matters—such as financial disclosures, auditor engagement and significant accounting policy changes—must be submitted to the Board. Meeting minutes are archived for a minimum of ten years. • AGM Presence: The committee chair, or a designated member, will attend the annual general meeting to address shareholder queries relating to audit and risk oversight.

4. Authority & Resources The committee may engage independent advisers, including legal and accounting professionals, at the company’s expense to support its functions.

Implementation Timeline The charter becomes effective on the date SDMC’s H-shares commence trading on HKEX, subject to regulatory approvals. The Board retains responsibility for future amendments and interpretation of the document.

This comprehensive framework enhances SDMC’s corporate governance by formalising the Audit Committee’s mandate over financial reporting integrity, auditor independence and internal control supervision as the company advances toward its planned overseas listing.