Terms of Reference for Audit Committee

CHINA XLX FERTILISER LTD.AUDIT COMMITTEETERMS OF REFERENCENote: The Terms of Reference was approved by the board of directors of the Company on 26 April 2013and adopted on 26 April 2013.– 1 –

1. INTRODUCTIONAUDIT COMMITTEETERMS OF REFERENCE1.1 The Listing Manual (the “Listing Manual”) of the Singapore ExchangeSecurities Trading Limited (“SGX-ST”), Singapore Code of CorporateGovernance 2012 (the “CCG”), the Companies Act (Chapter 50 of Singapore)(the “Act”) and the Rules Governing the Listing of Securities (the “ListingRules”) on The Stock Exchange of Hong Kong Limited (“SEHK”) require everylisted company to establish an Audit Committee (“AC”), which report to theboard of directors of the listed company.1.2 This Charter of the AC sets out the terms of reference (the “Terms ofReference”) of the AC of China XLX Fertiliser Ltd. (the “Company”), includingits authority and duties as well as the procedures regulating the conduct of itsmeeting.1.3 The overall objective of the AC is to ensure that the management of theCompany (the “Management”) has created and maintained an effective controlenvironment in the Company, and that Management demonstrates and stimulatesthe necessary respect of the internal control structure among all parties.2. COMPOSITION2.1 The AC shall be appointed by the board of directors of the Company (the“Board”) from among the members of the Board.2.2 The AC is required to have at least three members, all of whom have tobe non-executive and the majority, including the chairman of the AC (the“Chairman”), have to be independent.2.3 The AC should have broad business experience, knowledge of the operations,finance and auditing procedures of the Company and its subsidiaries (the“Group”) with at least two members, including the Chairman, having accountingor related financial management expertise or experience as the Board mayinterpret at its business judgement in accordance with the requirements of theListing Rules and the Listing Manual from time to time.– 2 –

2.4 The AC comprises:–(a)(b)(c)Mr. Ong Kian Guan (Chairman);Mr. Ong Wei Jin; andMr. Li Shengxiao2.5 A member who wishes to retire or resign from the AC shall notify the Board inwriting giving three (3) months’ notice or such shorter notice as may be agreedby the Board.2.6 A member shall notify the AC immediately, of any change in circumstances thatmay result in him not being able to meet the criteria for independence (withinthe meaning of Section 201B of the Act, the CCG and the Listing Rules).The Board may, after considering the change in circumstances, require theresignation of the member.2.7 Pursuant to Section 201B(4) of the Act, Rule 704(8) of the Listing Manualand Rule 3.23 of the Listing Rules, where, by virtue of any vacancy in themembership of the AC for any reason, the number of members of the AC isreduced to less than 3, the Board shall, within 2 months (but in any case notlater than 3 months), appoint such number of new members to the AC as maybe required to make up the minimum number of 3. Any new member appointedshall hold office for the remainder of the term of office of the member of theAC in whose place he is appointed.2.8 The members of the AC may elect from their number a Chairman. Until thatelection, the Chairman shall be the person appointed by the Board.2.9 A member shall automatically cease to be a member of the AC if he is removed/disqualified under the rules of the Act and any other applicable laws and rules,or if he resigns/retires/is not re-elected as a Board member.2.10 Pursuant to paragraph 12.9 of the CCG and the Corporate Governance Code (the“CG Code”) as contained in Appendix 14 to the Listing Rules, a former partneror director of the Company’s existing auditing firm or auditing corporationshould not act as a member of the Company’s AC: (a) within a period of 12months commencing on the date of his ceasing to be a partner of the auditingfirm or director of the auditing corporation; and (b) within a period of 12months commencing on the date of his/her ceasing to have any financial interestin the auditing firm or auditing corporation, whichever is later.– 3 –

3. PROCEDURES GOVERNING MEETINGSThe AC being a committee of the Board shall conform to any regulations whichmay be from time to time imposed by the Board.4. QUORUMThe quorum of the AC meeting shall be 2 members.5. REQUISITION OF MEETINGS5.1 The AC shall meet at least four times per year or more frequently ascircumstances require.5.2 The AC may meet together for the despatch of business, adjourn and otherwiseregulate their meetings as they think fit. At any time, any member may summona meeting of the members by issuing at least 7 days’ notice in writing (exclusiveboth of the day on which notice is served or deemed to be served and theday for which the notice is given) to each and every member. The expression“in writing” include those in the form sent out by mail, telefax, telex, cable,electronic mail or telegram by any such member.5.3 The members may however, by unanimous consent, waive the aforesaid andallow for a shorter period of notice.6. CONDUCT OF MEETING6.1 The Chairman shall preside at each meeting. If the Chairman is not presentwithin five (5) minutes after the time appointed for holding the meeting, themembers present may choose one of their members to be chairman of themeeting so long as the appointed chairman is an independent director.6.2 Questions arising from any meeting shall be determined by a majority of votesof the members present, and in case of an equality of votes, the chairman of themeeting shall have a second or casting vote.6.3 The AC shall have explicit authority to investigate any matter within its termsof reference, full access to and co-operation by Management and full discretionto invite any director or executive officer to attend meetings, and reasonableresources to enable it to discharge its functions properly.6.4 All recommendations of the AC shall be referred to the Board for approval.– 4 –

7. PARTICIPATION VIA COMMUNICATION EQUIPMENTThe members may participate in a meeting via telephone conference orsuch other similar communication equipment by means of which all personsparticipating in the meeting can hear each other, without a member being inthe physical presence of another member or members, and participation in ameeting pursuant to this provision shall constitute presence in person at suchmeeting.8. RESOLUTIONS IN WRITINGA resolution in writing signed by all the members shall be as effective as aresolution duly passed at an AC meeting and may consist of several documentsin the like form, each signed by one or more members. The expression “inwriting” and “signed” include approval by telefax, telex, cable, electronic mailor telegram by any such member.9. DEBARRED FROM VOTINGA member shall not vote in respect of any matters or proposal whatsoever inwhich he has any interest, directly or indirectly. A member shall not be countedin the quorum at a meeting in relation to any resolution on which he is debarredfrom voting.10. ROLE AND RESPONSIBILITIESAC is responsible to perform functions including but not limited to:10.1 review the annual consolidated financial statements and the external auditors’report on those financial statements, and discuss any significant adjustments,major risk areas, major judgmental areas, the going concern assumptions andany qualifications, changes in accounting policies and practices, compliancewith the applicable Financial Reporting Standards, compliance with theapplicable rules and legal requirements in relation to the financial reporting,concerns and issues arising from their audit including any matters whichthe auditors may wish to discuss in the absence of the Management, wherenecessary, before submission to the Board for approval;– 5 –

10.2 review the periodic consolidated financial statements comprising the profit andloss statements and the balance sheets and such other information required bythe Listing Manual and the Listing Rules, before submission to the Board forapproval;10.3.1 review together with external auditors, their audit plan (including the natureand scope of the audit and reporting obligations) before the audit commences,the effectiveness of the audit process in accordance with applicable standards,audit report, any material queries raised by the auditor to the Management,management letter and the responses which the external auditors have receivedfrom the Management or difficulties which they have encountered with theManagement in the course of their audit. Ensure that the Board will provide atimely response to the issues raised in the external auditor’s management letter;10.3.2 consider any significant or unusual items that are, or may need to be, reflectedin the financial report and accounts, and give due consideration to any mattersthat have been raised by the staff of the Company responsible for the accountingand financial reporting function, compliance officer or auditors;10.4.1 review with external and internal auditors the adequacy and effectiveness of theGroup’s financial controls, internal control and risk management systems;10.4.2 discuss the internal control system with the Management to ensure that theManagement has performed its duty to have an effective internal control system.This discussion should include the adequacy of resources, staff qualificationsand experience, training programmes and budget of the Group’s accounting andfinancial reporting function;10.4.3 review the Group’s financial and accounting policies and practices;10.5 review the effectiveness of the Company’s internal audit function and the scopeand results of the external audits as well as the independence and objectivity ofthe external auditors;10.6 ensure co-ordination between the internal and external auditors, and that theinternal audit function is adequately resourced and has appropriate standingwithin the Group, and review and monitor its effectiveness;10.7 review with internal auditors, the programme, scope and results of the internalaudit and the Management’s response to their findings to ensure that appropriatefollow-up measures are taken;– 6 –

10.8 review with external auditors the impact of any new or proposed changes inaccounting principles or regulatory requirements on the financial statements ofthe Group;10.9 review interested person transactions for potential conflicts of interest as wellas all conflicts of interests to ensure that proper measures to mitigate suchconflicts of interests have been put in place;10.10 review the potential conflicts of interests (if any). In particular, the AC willreview and assess from time to time whether additional processes are requiredto be put in place to manage any material conflicts of interest betweenthe Group and the directors, Chief Executive Officer (“CEO”), controllingshareholders and/or their respective associates and propose, where appropriate,the relevant measures for the management of such conflicts;10.10.1 review the co-operation given by the Management to the external auditors;10.10.2 act as the key representative body for overseeing the Company’s relations withthe external auditor;10.11 undertake such other reviews and projects as may be requested by the Board,and report to the Board its findings from time to time on matters arising andrequiring the attention of the AC;10.12.1 assess the suitability and independence of an accounting firm as externalauditors and recommend to the Board on the appointment, re-appointment and/or removal of such external auditors for the coming year, and approve the termsof engagement and their compensation as negotiated by the Management andto review and approve their discharge, and any questions of its resignation ordismissal. Where the external auditor also supplies a substantial volume ofnon-audit services to the Company, the AC should keep the nature and extent ofsuch services under review, seeking to maintain objectivity;10.12.2 develop and implement policy on engaging an external auditor to supplynon-audit services. The AC should report to the Board, identifying and makingrecommendations on any matters where action or improvement is needed;10.13 meet with the external and internal auditors without the presence of theManagement at least once a year;– 7 –

10.14 review filings and announcements with the SGX-ST, the SEHK or otherregulatory bodies which contain the Group’s financial statements and ensureproper disclosure;10.15 commission and review the findings of internal investigations into matterswhere there is any suspected fraud or irregularity or failure of internal controlsor infringement of any law, rule and regulation which has or is likely to have amaterial impact on the Group’s operating results and/or financial position;10.16 review the internal controls audit until such time the AC is satisfied that theCompany’s internal controls are robust and effective enough to mitigate theCompany’s internal control weaknesses, and prior to the decommissioningof the annual audit to report to the SGX-ST on how the key internal controlweaknesses have been rectified, and the basis for the decision to decommissionthe annual internal controls audit;10.17 propose and establish a “Whistle Blowing System” (see Appendix for theCompany’s policy on whistleblowing); monitor the system’s operations, followup actions for any complaint received and report the complaints and thefollow-up actions to the Board;10.18 review the performance of Financial Controller (“FC”) on an annual basis toensure satisfactory performance;10.19 report to the Board of the work performed by the AC in carrying out itsfunctions;10.20 discuss matters which may involve any suspected fraud or irregularity, orsuspected infringement of any law, rule or regulation which has or is likelyto have a material impact on the operating results or financial position withexternal auditors and report such matters to the Board at an appropriate time;and10.21 undertake generally such other functions and duties as may be required bythe Listing Manual, the CG Code or any other applicable laws, rules andregulations, and by such amendments made thereto from time to time; andconsider other topics, as defined by the Board.– 8 –

11. REPORTINGEach meeting of the AC shall be properly minuted and upon confirmation ofsuch minutes by the chairman of the meeting, a copy of the confirmed minutesshall then be duly circulated to all members. Full minutes should be kept by aduly appointed secretary of the meeting.12. DISCLOSURE IN ANNUAL REPORT IN COMPLIANCE WITHCCG AND CG CODEThe following are to be disclosed in the Annual Report:–12.1 The composition of the AC (including their names and capacity and identifyingthe Chairman), key terms of reference of the AC and explanation of its role andthe authority delegated to the AC by the Board.12.2 The number of meetings held by the AC during the year to discuss matters andthe record of attendance of members, by name, at meetings held during theyear.12.3 A summary of the work performed by the AC during the year, including a reporton how the AC met its responsibilities in its review of the quarterly, half-yearlyand annual results and internal control system, and its other duties under theCCG and the CG Code; and details of non-compliance with establishment/composition of AC under the applicable laws and regulations and an explanationof the remedial steps taken by the Company to address the non-compliance.12.4 The independence of the external auditors and (a) aggregate amount of feespaid to the external auditors for that financial year; and (b) a breakdown of thefees paid in total for audit and non-audit services respectively, or an appropriatenegative statement.12.5 The existence of a whistle-blowing policy and the procedures for raising suchconcerns.12.6 A summary of all the AC’s activities and measures taken by the AC members tokeep abreast of changes to accounting standards and issues which have a directimpact on financial statements.12.7 Whether the external facilitator (if appointed) has any other connection with theCompany or any of its directors.– 9 –

12.8 Comments on the adequacy and effectiveness of the internal controls, includingfinancial, operational, compliance and information technology controls, and riskmanagement systems, as well as any other information needed by shareholdersto make an informed assessment of the Company’s internal control and riskmanagement systems.12.9 Comment on whether the Board has received assurance from the CEO and ChiefFinancial Officer/FC:(a)(b)that the financial records have been properly maintained and thefinancial statements give a true and fair view of the Company’soperations and finances; andregarding the effectiveness of the Company’s risk management andinternal control systems.13. PROCEDURES RELATING TO CHANGES OR AMENDMENTS INTHE AUDIT COMMITTEE’S TERMS OF REFERENCE13.1 The AC shall initiate amendments to its Terms of Reference when the needarises due to changes in legislation governing corporate governance. Anydirector may give instructions for such amendments to the AC’s Terms ofReference, as he deems fit, by reason of changes in the Company’s structure,organisation and/or operations which affect the matters set out in the Terms ofReference.13.2 Amendment to the AC’s Terms of Reference shall be submitted to the AC forconsideration and tabled at a Board meeting for approval.– 10 –

(c)If the employees wish, they can submit the Complaints by sending an emailto the AC Chairman directly at joshuaong@tfwlcl.com.2. Investigation(a) Chief Executive Officer, Chairman of the Board or AC Chairman shallinform the AC, in summary form or otherwise, of all Complaints received,with an initial assessment as to the appropriate treatment of each Complaint.Assessment, investigation, and evaluation of Complaints shall be conductedby, or at the discretion of the AC. If the AC deems it appropriate, it mayengage at the Company’s expense, independent advisers, external counsel oraccountants unaffiliated with the Company’s auditors.(b) The employee who reports the Complaints may be asked to provide moreinformation during the course of the investigation.(c) Following investigation and evaluation of a Complaint, the AC Chairmanshall report to the AC on recommended disciplinary or remedial action if any.The action determined by the AC to be appropriate shall then be brought tothe Board or to appropriate members of senior management for authorizationand implementation respectively. If the action taken to resolve a Complaintis deemed by the AC to be material or otherwise appropriate for inclusion inthe minutes of meetings of the AC, it shall be so noted in the minutes.(d) Where the report on the Complaints discloses a possible criminal offence,the Company, after consulting the legal advisers, will decide if the mattershould be referred to the relevant authorities such as the Singapore/HongKong Police Force, Hong Kong Independent Commission Against Corruptionand Securities and Futures Commission, Singapore Corrupt PracticesInvestigation Bureau etc., as appropriate for further action. Once the matteris referred to the authorities, the Company will not be able to take furtheraction on the matter, including advising the employee of the referral.(e)Any effort to retaliate against any person making a Complaint in good faithis strictly prohibited and shall be reported immediately to the AC Chairman.– 2 –

3. Retention of Records of Complaints(a) Records pertaining to the Complaint and the investigation if any, shallbe the property of the Company and shall be retained by the Company incompliance with applicable laws and the document retention policies of theCompany.(b)The records shall be subject to safeguards to ensure their confidentiality andwhen applicable, to protect the identity of the complainant.– 3 –