Investor Relations/Corporate Governance

TERMS OF REFERENCE FOR THE CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE

Establishment

The Board of Elite Diagnostics Limited (“the Company”) hereby establishes the corporate governance and compensation committee of the Board (“the Committee”), with all the powers and duties set forth herein and subsequent resolutions of the Board.

The Committee's Purpose

The Committee’s purpose is to assist the Board in ensuring that its composition, structure, policies and processes meet all relevant legal and regulatory requirements, to strive to achieve global corporate governance best practice standards and to facilitate the Board and management’s objective of increasing the long-term value of the company. In particular to ensure that the Company complies with Rule 506 – Corporate Governance Guidelines of the Junior Market Rules of the Jamaica Stock Exchange as same may be amended from time to time.

The Committee will assist the Board in fulfilling its fiduciary responsibilities relating to the fair and competitive compensation of the non-employee directors, executives and other key employees of the Company, and in connection with the administration of the general employee welfare plans of the Company.

Committee Membership

The Corporate Governance and Compensation committee shall consist of at least three members of the Board. Members of the Committee shall be appointed by the Board. All members of the Committee shall be non-executive directors chosen for their competence and experience and the majority shall be independent directors as so defined in the PSOJ Corporate Governance Code 2016. The Chairperson of the Committee shall be appointed by the Board of directors of the Company. Members of the Committee shall be appointed by the Board for a year at a time but can be reappointed for an unlimited number of times.

Committee Authority and Responsibilities

In order to fulfil its purpose, the Committee shall have the following authorities and responsibilities:

Corporate Governance

The Committee shall:

Adopt the PSOJ’s Corporate Governance Code 2016, as revised from time to time as the Company’s Corporate Governance Code unless further amended by the Directors of the Company.
Develop for the Board’s approval and annually review the chart of authorities and delegation of authorities to management.
Consider possible conflicts of interest of directors and any related party transactions of directors and make relevant proposals to the Board in accordance with the Company’s corporate governance code.
Review any change in status (including fulfilment of independence requirements) and professional affiliation of current directors and make relevant proposals to the Board in accordance with the Company’s corporate governance code.
Oversee the development and implementation of a Board training process for new directors and a programme of continuing director development as needed.
Develop a process for evaluating Board effectiveness and co-ordinate the annual Board effectiveness evaluation.
Monitor trends and best practices in national and international corporate governance and compensation practices in order to properly discharge its duties.
Perform any other activities relevant to this charter, at the request of the Board or as required by the Company’s corporate governance code.

Compensation

The Committee shall:

Review and approve goals and objectives for the Chief Executive Officer (“CEO”) and consider the evaluations of the CEO conducted by the Board of Directors against such goals and objectives. Consider the evaluations of the other executive officers conducted by the CEO. Review and approve the annual compensation philosophy for the CEO and the other executive officers. Set the compensation programme, including salary, target bonus, short and long-term incentive awards, equity awards, deferred compensation, perquisite/fringe benefits, and other forms of compensation. In setting such compensation programmes, review the compensation practices of comparable companies, co-ordinate such programmes with the goal of ongoing effectiveness, and seek to set the appropriate financial performance measures, targets and goals for each programme. Report to the Board on the foregoing annual compensation philosophy and compensation programmes.
Review and recommend to the Board any changes to the components and amount of compensation for the Board of Directors. The Committee’s recommendations regarding director compensation shall be reviewed by the Company’s human resources department or outside consultants prior to presentation and Board approval.
Select and review a comparative list of companies to be used in the Executive and Board of Directors compensation review.
Review, approve and report to the Board when materially modifying any compensation programmes that yield payments and benefits that are not reasonably related to the employees’ performance and that have a material cost impact to the Company or, to the extent required by law, have a significant impact to employees, including: a) fringe benefit programmes and profit share, b) employee equity plans, and c) Employee Stock Purchase Plans.
Review, approve and report to the Board with input from the CEO, all newly hired executives’ offer packages and new and existing executives’ employment, severance, change-in-control and indemnity agreements.
Review and approve grants of stock options, restricted stock, and other forms of stock that are issued under all stock plans, and set grant timing and practices for approving grants.
Prepare an annual Compensation Committee report to be included in the company’s Annual Report

Reporting Tasks Of The Committee

The Committee shall review annually the corporate governance framework and submit a relevant report to the Board. On the basis of this review, it will make recommendations to the Board for amendments to the Company’s Articles of Incorporation, corporate governance code, chart of authorities and management delegation, and committee Terms of Reference and practices.
The Committee shall present to the Board a brief annual report of its own work. In this context, the Committee shall review annually the adequacy of this Terms of Reference and recommend any changes that it deems appropriate to the Board for approval.

The Functioning Of The Committee

The Committee shall meet as often as required and at least twice a year, keep minutes of its proceedings and report regularly to the Board. Meetings shall be scheduled annually in advance where possible. Minutes will be signed by the chairperson of the Committee and each member of the Committee will receive a copy before the next meeting of the Committee.
The Committee might meet by video conference or telephone conference call if its members so decides.
The quorum necessary for the transaction of business shall consist of more than half of its members being present (including its chairperson). A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities and responsibilities of the Committee. A member’s participation in a meeting by video link or audio link shall be regarded as valid for these purposes. Decisions ae taken by simple majority. In the event of equality of voting, the chairperson’s vote is decisive.
The Company Secretary, at the request of the chairperson, shall summon meetings of the Committee. Notice shall be given to each member of the venue, time and date of each meeting. The agenda of items to be considered at each meeting, together with supporting papers, will normally be furnished to each member at least five working days in advance of the meeting. Circulation of documents may be effectuated by email.
The Committee may invite to its meetings any director or such other person as it deems appropriate to assist it in performing its responsibilities. All persons have an obligation to appear before the Committee once an invitation has been issued. Any member of the Board may attend meetings of the Committee. In fulfilling its tasks, the Committee shall regularly consult with the company chairperson. The chairperson of the Committee will report to the Board after each meeting of the Committee on its findings and on any actions taken by it. Board members shall have access to all records of the Committee.
The Committee has the authority to retain independent legal or other consultants in its sole discretion and to approve related fees and retention terms in accordance with the Company’s corporate governance code. The Committee shall also receive any funding it deems necessary or appropriate for ordinary administrative expenses.
In carrying out its activities, the Committee will be supported by a committee secretary, which may be the Company Secretary or a competent person appointed by him or her.

This Terms of Reference will come into force upon its adoption by the Board of Directors, except where expressly mentioned otherwise. It can be amended at any time by a decision of the Board of Directors.

ADOPTED BY THE BOARD OF DIRECTORS ON THE DAY OF , 2018

AUDIT COMMITTEE CHARTER

Purpose

To assist the board of directors in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the company’s process for monitoring compliance with laws and regulations and the code of conduct.

Authority

The audit committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:
Appoint, compensate, and oversee the work of any registered public accounting firm employed by the organization.
Resolve any disagreements between management and the auditor regarding financial reporting.
Pre-approve all audit and non-audit services provided by the appointed auditors.
Seek any information it requires from employees-all of whom are directed to cooperate with the committee’s requests-or external parties.
Meet with company officers, external auditors, or outside counsel, as necessary.

Composition

The audit committee will consist of at least three and no more than six members of the board of directors. The board or its nominating committee will appoint committee members and the committee chair. Each committee member will be both independent and financially literate. At least one member shall be a Certified Accountant.

Meetings

The committee will meet at least two times a year, with authority to convene additional meetings, as circumstances require. All committee members are expected to attend each meeting, in person or via tele- or video-conference. The committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary.

Responsibilities

The committee will carry out the following responsibilities:

Financial Statement

Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
Review with management and the external auditors the results of the audit, including any difficulties encountered.
Review the annual financial statements, and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.
Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
Review interim financial reports with management, consider whether they are complete and consistent with the information known to committee members.
Review any other reports the company issues that relate to committee responsibilities.

External Audit & System Of Internal Control

Consider the effectiveness of the company’s internal control system, including information technology security and control.
Understand the scope of auditors’ review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management’s responses.
Review the external auditors’ proposed audit scope and approach, including coordination of audit effort with internal audit.
Review the performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors.

Compliance

Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action) of any instances of noncompliance.
Obtain regular updates from management and company legal counsel regarding compliance matters

Other Responsibilities

Regularly report to the board of directors about committee activities, issues, and related recommendations.
Confirm annually that all responsibilities outlined in this charter have been carried out.