Audit & Risk Committee Charter

Purpose & Scope

Welcome to Nairtime Nigeria’s Audit & Risk Committee Charter.

The Nairtime Group has elected to establish a committee to be known as the Audit & Risk Committee (the “Committee”) to assist the Board of Directors (the “Board”) in discharging its duties relating to the safeguarding of assets, mitigation of risk, the operation of adequate systems, control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal and regulatory requirements, and accounting standards.

The Committee should not perform any management functions or assume any management responsibilities. It provides a forum for discussing risk, control issues, financial reporting and for developing relevant recommendations for consideration by the Board.

This charter applies to Nairtime and each of its subsidiaries. Accordingly, this charter will refer to Nairtime Group and its subsidiaries as “Nairtime”, the “Group” or the “Company” interchangeably.

The Committee should mainly make recommendations to the Board for its approval or final decision. The membership, resources, responsibilities and authority (composition, functions and operation) of the Committee to perform its role effectively, are stipulated in this charter which may be amended by the Board as and when required.

1.1. Amendments

The Committee shall review and assess the adequacy of this charter annually and recommend any proposed changes to the Board of Directors for approval.

Any amendment of these processes and procedures may be made only by Board of Directors. Any such waiver shall be disclosed to the extent and in the manner required by applicable international governance standards.

1.2.Disclaimer

While the Committee has oversight responsibilities and powers set forth in this charter, the Committee is not providing any expert or special assurance as to the Company’s financial statements, internal controls, or any professional certification as to the external auditors’ work, and it is not the duty of the Committee to plan or conduct audits.

2. Composition & Structure

2.1.Members

The Committee shall have three Non-Executive Directors and will be appointed by the Board. The Committee Chairman – who will be an Independent Non-Executive Director – shall, similarly, be appointed by the Board. When a Committee Member leaves office, the Board will appoint a new member to the Committee.

A Board Adviser who sits on the Board should not be a member of the Committee but can be a permanent invitee to the Committee meetings.

At least one member of the Committee will be an expert in financial and accounting affairs (i.e. a qualified accountant or other finance professional with experience in financial and accounting matters).

Any former partner of the external audit firm charged with the audit of the Company’s financial statements may not be a member of the Committee for a period of one year from the expiry date of their partnership capacity or any financial interest in the audit firm, whichever is later. Employees of the Company’s Internal Audit function may not be members of the Committee.

Committee Members will serve for a three-year term, unless they resign or are removed by the Board earlier. Members may be re-elected upon the expiry of their terms. In the event of any vacancy within the Committee, the Board will fill the vacancy in no later than 3 months from the date of such vacancy.

The Company Secretary will be the Secretary of the Committee.

The Company’s Chief Executive Officer, Chief Financial Officer, other members of Management, external auditors or its internal auditors may be called to attend (but not vote at) Committee meetings based on invitation by the Chairman or Secretary. Additionally, the Company’s Chief Executive Officer, Chief Financial Officer, other members of Management, external auditors or its internal auditors shall not be members of the Committee.

2.2.Meetings

The Committee will meet as frequently as circumstances require but will meet at least on a quarterly basis. Meetings may be called by any Committee Member or the Chairman of the Committee.

Notice of meetings will be distributed to all Committee Members by the Secretary.

Notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, along with supporting papers shall be forwarded to each Committee member at least 5 working days prior to the scheduled meeting.

The Committee will regulate the conduct of its business and meetings as it sees fit. Without prejudice to the foregoing a resolution in writing signed by all Committee Members will be as valid and effectual as if it had been passed at a Committee Meeting duly convened and held.

The quorum for Committee Meetings will be a simple majority of its Members. Any Member attending by proxy will count towards the quorum.

Committee Members may, in writing (whether by letter, facsimile or otherwise), authorise another Member to attend a Committee Meeting in their place and to vote on their behalf in that meeting provided that no Member may present another Member by proxy at that Meeting.

Committee Meetings may be held in person (anywhere in the world) or through telephonic and other electronic means, or any combination of these formats. Members taking part through such electronic means will be entitled to vote and be counted in the quorum accordingly.

Proceedings at Committee Meetings will be conducted in English.

Minutes of each Committee Meeting will be taken by the Committee Secretary and will be signed as correct by the Members present at that meeting. In case a member refuses to sign, his/ her objection, together with the causes of objection, if revealed, will be reflected in the meeting minutes. The minutes will be in English and the Committee Secretary will arrange for them to be circulated to all Committee Members once approved. The Committee Secretary will keep copies of all approved minutes in the Company’s minutes book.

2.3.Professional Advice

The Committee is authorised by the Board to obtain outside legal or other independent professional advice, at the Company’s expense, if it considers it necessary, and to secure the attendance at its meetings of outside persons with relevant experience or expertise, if it considers it necessary. Such persons will not be Members of the Committee.

The Committee will inform the Chief Financial Officer of any expense incurred as soon as it is appropriate in the particular circumstances for it to do so.

2.4.Voting Rights

Each member of the Committee will have one vote.

All decisions of the Committee will require a majority of the Members attending (whether in person or by proxy), including the vote of the Committee Chairman, at a meeting of the Committee voting in favour.

If the majority required is not obtained the decision in question may be referred by the Committee Chairman to the Board for consideration and, if thought fit, approval.

3. Duties & Authorities

In carrying out its functions, the Committee must consider the implications of any guidance or regulations issued by the Central Bank of Nigeria (“CBN”) and any other regulator with jurisdiction over the Company’s activities.

The Committee will, and without further recourse to the Board, have full power and authority of the Board to:

3.1.External Audit

Develop and apply the policy for contracting with external auditors (including its policy for rotating its audit firm or the partner of the audit firm in charge of its audit) and consider any questions relating to the resignation or removal of such auditors. The Committee will make a report to the Board setting forth their recommendations and any necessary steps required for such appointment, resignation or removal;
Follow up and oversee the qualifications, independence and performance of the external auditor (including by reviewing the extent of non-audit services provided by the external auditor to the Company) and hold discussions with the external auditor on the nature, scope and efficiency of auditing pursuant to approved auditing standards;
Make suggestions as to problem areas that the audit should address, including potential accounting treatment, significant unusual transactions, or accounting judgements, that could be contentious;
Review the external auditors’ proposed audit timing, scope, approach and reporting, including coordination of audit effort with internal audit. Agreeing the terms of engagement of the external auditor and fees payable;
Review the mission and action plan of the external auditor and any material enquiries raised by the external auditor to Management in respect of accounting records, financial statements, or control systems, respond thereto and approve the same;
Ensure that the Board responds on a timely basis to enquiries and material issues raised in the external auditor’s mission; and
Meet with the external auditors at least once a year, without the Management Team (“MT”) present, to discuss the auditors remit and any issues arising from the engagement.

3.2.Internal Audit

Oversee the appointment, qualifications, independence and performance of the Company’s Internal Audit and Compliance staff, and approve the annual audit plan prepared by the Internal Auditors;
Review the Internal Audit function’s performance relative to its plan;
Review the Internal Audit reports and issues identified, and ensure action is taken to remedy such issues;
Reviewing the adequacy of corrective action taken in response to significant Internal Audit findings;
Assessing the adequacy of resources assigned to the Internal Audit function, compliance with the mandate provided to the Internal Audit function, the performance and independence of the Internal Audit function;
Considering the performance and/or the appointment, dismissal or re-assignment of the head of the Internal Audit function; and
Meet with the Internal Auditors at least once a year, without the MT present to discuss the auditors remit and any issues arising from the engagement.

3.3.Financial Statements

Review the Company’s financial and accounting policies and procedures;
Oversee the integrity of and review the Company’s financial statements and annual and quarterly reports (prior to approval of the Board) in the course of its operations during the year and will, in particular, focus on:

any changes in systems, accounting policies and practices;
highlighting matters that are subject to the judgment of the MT;
significant adjustments emerging out of the audit;
the Company’s going concern assumption;
compliance with accounting standards including those set by relevant local regulatory authorities; and
compliance with financial conditions of loan covenants, listing and disclosure rules as well as any other financial reporting legal requirements;

Consider any outstanding unconventional issues that are or have to be reflected in the Company’s financial statements and reports and pay necessary attention to any issues raised by the Company’s Chief Financial Officer, Chief Compliance Officer, internal or external or auditors;
Review the accounts and financial statements taken as a whole to ensure they present a balanced and understandable assessment of the financial position and performance of the Company;
Review the external and internal auditor’s management letters, opinions, reports and recommendations, and the response thereto of the MT. On the basis of such letters, reports and recommendations, and the MT’s response, the Committee will agree a list of action points and oversee their implementation;
Discuss problems and reservations arising from the preparation, audit or review of the Company’s financial statements, and any other matters which the auditors may wish to discuss (in the absence of the MT where necessary); and
Review with the MT and external auditors all matters required to be communicated to the Committee under generally accepted auditing standards.

3.4.Internal Control

Reviewing and approving the Internal Audit charter and Internal Audit plans and Internal Audit’s conclusions with regard to internal control;
Consider the effectiveness of the Company’s internal control system in identifying and addressing significant risk areas, 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 the MT’s responses;
Consider the findings of any investigations into internal control issues commissioned by the Board (either at its own initiative, or at the initiative of the Committee upon approval by the Board); and
Directing and supervising investigations into matters within its scope, for example, evaluations of the effectiveness of the company’s internal control, cases of employee fraud, misconduct or conflict of interest.

3.5.Risk Management & Insurance

Overall responsibility for the integrity, reliability and efficacy of the Company’s risk management strategy, risk management strategy policy and insurance portfolio;
Review the activities relating to control over significant risks and the implementation of risk management strategies and policies, which will include but not be limited to addressing;
- Reviewing MT’s assessment of risk in the widest sense which includes market risk, country risk, credit risk, liquidity risk, currency risk, operational risk (e.g. disaster recovery risk, technology risk etc.) and commercial risk (e.g. product risk, concentration risk, competitor risk etc.), which together cover detailed combined risks, including the magnitude and probability of such risks, potential triggers for such risks and the status of management’s plans to mitigate them.
Review of any legal matters that could have a significant impact on the Company’s business;
Review of Company compliance of customary environmental, social and governance undertakings consistent with the IFC Performance Standards;
Ensure compliance with risk management policies implemented throughout the Company; and
Review the adequacy of insurance coverage.

3.6.Compliance, Fraud and Whistleblowing

Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of the MT’s investigation and follow-up (including disciplinary action) of any instances of non-compliance;
Review any matters relating to the Company which come to the attention of the Committee in which any of the Directors, MT or Shareholders have a personal interest. The Committee will in relation to such matters make such recommendations to the Board as the Committee deems necessary or desirable;
Develop rules that enable Company employees to secretly report any unethical practices, potential violations in financial reports, internal control or other issues and conduct independent and fair investigations into these violations;
Review and, if necessary, investigate any allegations of fraud or theft which are brought to the Committee’s attention, which are made by or against Company employees or Directors and make such recommendations to the Board as the Committee deems necessary or desirable;
Oversee the scope of the Company’s compliance with its Code of Conduct and its various legal and regulatory obligations; and
Review the process for communicating the Code of Conduct to company personnel, and for monitoring compliance therewith.

3.7.Other Responsibilities

Ensure application of rules of operation in connection with their duties and powers under this charter;
Consider such other matters as the Board may, from time to time, refer to the Committee; and
Exercise all of the powers set out in this charter for all companies which the Company controls.

4. Board Oversight

4.1.Co-operation from Company Officers & Employees

The Committee is authorised by the Board to seek any information it requires from any Company officer or employee. All Company officers and employees are hereby directed to co-operate fully with any request made by the Committee wherein the request is within the Committee’s mandate.

4.2.Reporting to the Board

At each Board meeting, the Committee Chairman or Committee Secretary or any other Committee Member (if the Committee Chairman and Committee Secretary are not available) will report to the Board upon:

the activities of the Committee since the last Board meeting; and
the exercise by the Committee Members o of their powers and recommendations to the Board.

The Committee Chairman (or, in his/her absence, an alternate member) shall (if required and applicable) attend the annual general meeting to answer questions concerning matters falling within the ambit of the Committee.

4.3.Remuneration

The remuneration of the Committee Members and the right of the Committee Chairman, Secretary and Members to reclaim expenses incurred in the business of the Committee will be determined by the Board through the Nomination & Remuneration Committee.

5. Evaluation of the Committee’s Performance

The Committee will, on an annual basis, evaluate its workings under this charter.

In conducting this review, the Committee will evaluate this charter appropriately to address the matters that are or should be within its scope. The Committee will address all matters that the Committee considers relevant to its performance, including the following:

The adequacy, appropriateness and quality of information received by the Committee and presented by the Committee to the Board; and
The adequacy of the Committee’s deliberations regarding the matters reported to and acted upon by the Committee.

Following such review, the Committee may recommend to the Board amendments to this charter or its working procedures in order to improve the Committee’s performance, and/or its relationship with the Board.