Role
The Audit Committee (the "Committee") of the Board of Directors (the "Board") of Eat Well Investment Group Inc. (the "Company") assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and reporting practices of the Company, and such other duties as directed by the Board. The Committee's purpose is to oversee the accounting and financial reporting processes of the Company, the audits of the Company's consolidated financial statements, the qualifications of the public accounting firm engaged as the Company's independent auditor to prepare or issue an audit report on the financial statements of the Company, and the performance of the independent auditor. The Committee reviews and assesses the qualitative aspects of financial reporting to shareholders, the Company's processes to manage business and financial risk, and compliance with significant applicable legal, ethical and regulatory requirements. The Committee is directly responsible for the recommendation of the appointment (subject to shareholder ratification), compensation, retention and oversight of the independent auditor.
Membership
The membership of the Committee consists of at least three directors. The Board appoints the members of the Committee and the Chair. The Board may remove any member from the Committee at any time with or without cause.
The Committee is composed in accordance with the venture issuer composition requirements set out in section 6.1.1 of National Instrument 52-110 – Audit Committees ("NI 52-110"), namely: (a) at least three members; and (b) the majority of the members are not executive officers, employees or control persons of the Company or any of its affiliates. Each member shall, in the judgment of the Board, have the ability to read and understand fundamental financial statements (i.e., be financially literate within the meaning of section 1.6 of NI 52-110).
As of the date of adoption of this Charter, the members of the Committee are:
- Nick Grafton (Chair) — independent; financially literate
- Desmond Balakrishnan — independent; financially literate
- Pat Dunn — not independent (executive officer); financially literate
Operations
The Committee meets at least twice a year, and more frequently as the Committee or its Chair deems advisable. The Committee will cause to be kept adequate minutes of its proceedings and will report on its actions and activities at the next quarterly meeting of the Board. Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent. The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized and empowered to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Articles of the Company, or (c) the Business Corporations Act (British Columbia) (the "BCBCA").
Communications
The independent auditor reports directly to the Committee. The Committee is expected to maintain free and open communication with the independent auditor and management. This communication will include periodic private executive sessions with each of these parties.
Education
The Company is responsible for providing new Committee members with appropriate orientation briefings and educational opportunities, and the full Committee with educational resources related to accounting principles and procedures, current accounting topics pertinent to the Company and other matters as may be requested by the Committee. The Company will assist the Committee in maintaining appropriate financial literacy.
Authority
The Committee will have the resources and authority necessary to discharge its duties and responsibilities, subject to Board budget approval. The Committee has sole authority to retain and terminate outside counsel or other experts or consultants, as it deems appropriate, including sole authority to approve the firms' fees and other retention terms, for the payment of compensation to the Company's independent auditor, outside counsel and other advisors as it deems appropriate, and the administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention. The Committee will have access to the Company's books, records, facilities and personnel. Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company, and the Committee will take all necessary steps to preserve the privileged nature of those communications. The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee.
Responsibilities
The Committee's specific responsibilities in carrying out its oversight role include the following:
- recommending to the Board the independent auditor to be nominated for appointment by shareholders and the compensation of the independent auditor;
- overseeing the work of the independent auditor engaged for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the independent auditor regarding financial reporting;
- pre-approving all audit and non-audit services to be provided to the Company or its subsidiaries by the independent auditor (subject to the de minimis exception in section 2.4 of NI 52-110);
- reviewing and recommending for approval by the Board the Company's annual audited financial statements, the related management's discussion and analysis and any annual earnings news release, before disclosure to the public;
- reviewing and recommending for approval by the Board the Company's interim financial statements and related management's discussion and analysis and any related news releases, before disclosure to the public;
- reviewing and discussing with management and the independent auditor the integrity of the Company's financial reporting processes, both internal and external, and the adequacy and effectiveness of the Company's internal controls and procedures for financial reporting;
- reviewing and discussing with management significant accounting policies, judgments, estimates and unusual or complex transactions, and related-party transactions;
- establishing procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;
- reviewing the adequacy of the Company's insider trading policy, code of conduct (if any) and risk management policies; and
- reviewing this Charter at least annually and recommending changes to the Board as appropriate.
Management of the Company is responsible for determining that the Company's financial statements are complete, accurate and in accordance with applicable accounting principles (IFRS), and for establishing satisfactory internal control over financial reporting. The independent auditor is responsible for auditing the Company's consolidated financial statements. It is not the duty of the Committee to plan or conduct audits, to determine that the financial statements are complete and accurate and in accordance with applicable accounting principles, to conduct investigations, or to assure compliance with laws and regulations or the Company's standards of business conduct, codes of ethics, internal policies, procedures and controls.
Review
The Committee will review the continued adequacy of this Charter on a periodic basis and recommend any changes to the Board.