audit-and-financial-risk-committee-charter

Audit and Financial Risk Committee Charter

Purpose:

The Audit and Financial Risk Committee (the “AFRC”) purpose is to assist the Board in meeting its responsibilities relating to financial reporting and control matters, and is dedicated to controlling that the maximum exposure to financial risk that is effectively taking place, is that defined by established policies.

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Composition:

The AFRC shall consist of three Directors. In determining the composition of the same, consideration will be made to the requirements for independence under the NYSE and the Chilean regulations.

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Meetings:

The AFRC shall meet at least four times per year. The AFRC members shall use it best efforts to attend each meeting and to schedule meetings of the AFRC on the same day as the Board Meetings. The agenda and any necessary materials for such meetings shall be distributed in advance of the meeting, allowing applicable time for review by the AFRC members. A quorum will be of two members of the AFRC.

Directors are expected to attend AFRC meetings in person or via telephone conference, in which proper means are in place, and to attend meetings fully prepared and to remain in attendance for the duration of the meeting.

The AFRC will present key findings to the entire Board after each meeting.

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Responsibilities:

The AFRC operates in accordance with article 50 bis of the Chilean Corporations Act, which provides that the same will, among other things:

  • Examine and issue an opinion regarding the external auditor’s report including financial statements prior to its final presentation for approval at the shareholders meeting;
  • Propose to the Board the external auditors and the rating agencies that will be presented for approval to the shareholders meeting;
  • Examine and elaborate a report concerning the operations covered by Title XVI of the Chilean Corporations Act, which relate to related party transactions; and
  • Examine the remuneration and compensation plans of the senior management.

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The AFRC will also be responsible for the following tasks related to financial risk management within the Company:

  • Review the Company’s policies relating to financial risk assessment and financial risk management, including a review of the Company’s key financial risks and related mitigations;
  • Control a Code of Business Conduct for Members of the Board of Director and Company Employees which i) describes the expected behavior of Company Directors and Employees, ii) describes what is understood as conflict of interest, and iii) defines the main situations that constitute conflict of interest, and describes the procedure that a Director must follow to declare and resolve a possible conflict of interest;
  • Maintain procedures for policies and controls for knowing, evaluating and defining the Company’s degree of exposure to financial risk;
  • Meet at least semi-annually with the Company’s Head of Internal Audit to ensure that the Company’s internal policies, procedures, and controls are being effectively complied with by the entire organization and learn its opinion in regard to the effectiveness, suitability or possible improvements of said policies, procedures and controls;
  • The Board shall annually inform its shareholders about the principal risks faced by the Company. These risks are published annually in the 20-F filing: Item 3.D Risk Factors.
  • Ensure that the Company has an established procedure known by everyone who performs in the Company, especially designed to denounce possible frauds, irregularities, or unlawful events, which provides guarantees in regard to confidentiality of the identity of the denouncing entity, through the Code of Business Conduct for Company Employees and through the whistleblower form, which is available on the Company website whistleblower form.
  • Meet at least semi-annually, with the external auditing firm in charge of the auditing of the financial statement in order to analyze:
    • The auditing program or annual plan.
    • Possible differences detected in the auditing in regard to accounting practices, administrative systems, and internal auditing.
    • Possible serious deficiencies that may have been detected and those irregular situations which due to their nature must be informed to the competent regulatory agencies.
    • The results of the annual auditing program.
    • The possible conflicts of interest that could exist in regard to the auditing company or its personnel, due to the provision of other services to the company or to the companies of the corporate group, and due to other situations.

In addition, these matters are studied in Board of Director meetings without the presence of managers or principal executives must be explained.

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Compensation:

The members of the AFRC shall be compensated for their duties related to the same. The compensation shall be presented to the Shareholders for their approval at the annual shareholder meeting.

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