Audit committee

(1) The audit committee referred to in section 44 shall consist of at least three directors– (a) a majority of whom must be independent (b) at least one of whom must be a financial expert. (2) The audit committee shall be established within three months of the commencement of this Act. (3) A licensee or a financial holding company which fails to comply with the requirements of the provisions of sub-section (1) shall be liable to pay, on being called upon in writing to do so by the Central Bank, a fine not exceeding ten thousand dollars for every day of such failure to comply. (4) The audit committee shall report directly to the Board of (5) The chair of the audit committee shall be an independent (6) Without limiting the generality of section 44 (2) the audit committee of a licensee and a financial holding company shall– (a) review the audited financial statement of the licensee and financial holding company as well as the observations and recommendations to management of the external auditing firm; (b) review such reports of the licensee and financial holding company as the Central Bank may specify; 96 (c) require the management of the licensee or financial holding company to implement and maintain appropriate procedures, and review, evaluate and approve those procedures; (d) ensure adherence to (e) review such investments and transactions that could adversely affect the well-being of the licensee or financial holding company as the auditor or auditors or any officer of the licensee or financial holding company may bring to the attention of the committee; (f) recommend the external auditing firm; (g) review the internal audit functions and approve all audit plans; (h) ensure compliance with laws, regulations, practice directions and directives made pursuant to this Act and review the compliance officer’s reports to ensure compliance; (i) report to the board of directors following each meeting of the audit committee; and (j) maintain written records of its proceedings and reports. (7) The audit committee of a local licensee or financial holding company may call a meeting of the directors of the licensee to consider any matter of concern to the committee. 97 (8) For the purposes of this section– (a) a “financial expert” means a person who has the necessary education and substantive experience as– (i) a qualified accountant; (ii) an auditor; (iii) a chief financial officer; (iv) a comptroller; (v) a chartered financial analyst; or who otherwise possesses a sound understanding of generally accepted accounting principles, financial statements and the way in which financial statements are prepared and audited; (b) a “qualified accountant” means a person who is a member of the Institute of Chartered Accountants of or such professional association as may be approved by the Central Bank; and (c) an “independent director” means a director who– (i) is not the holder of five per cent or more of the shares of the licensee or financial holding company or of a related party of the licensee or (ii) is not a current officer of the licensee or financial holding company or of a 98 related party of the licensee or (iii) is not a relative or spouse of a current officer or director, or of a person who was an officer or director of the licensee or financial holding company or a related party of the licensee or financial holding company within two years prior to his appointment; (iv) is not the auditor, nor has been employed by the auditor of a licensee or financial holding company nor the auditor of any of the related parties of the licensee or financial holding company within three years prior to his appointment; (v) has not been employed by the licensee or financial holding company or any of its related parties within three years prior to his appointment; (vi) is not an incorporator of the licensee or financial holding company or of a related party of the licensee; (vii) is not a professional adviser of the licensee or financial holding company or of a related party of the licensee; (viii) is not a supplier to the licensee or financial holding company or of a related party of the licensee; 99 (ix) is not indebted to the licensee or any of its affiliates, other than by virtue of: (a) a fully collateralized loan; or (b) an outstanding credit card balance not exceeding fifty thousand dollars.