Terms of reference of the Audit Committee of TK Development A/S

In accordance with the EU Directive on statutory audits of financial statements and consolidated financial statements (Eighth Company Law Directive), the Danish Act on Approved Auditors and Audit Firms (section 31) and the applicable Danish Recommendations on Corporate Governance, the Board of Directors has set up an Audit Committee.

The overall objective of the Audit Committee is to monitor the Group’s fanancial reporting process, including accounting and audit issues, internal controls and risk management systems.

The Audit Committee has no independent decision-making powers, and is merely to prepare proposals to be considered and decided by the Board of Directors. Thus, the Board of Directors is fully responsible for decisions made on the Committee’s recommendations.

Members

The Audit Committee is composed of three members appointed by the Board of Directors from among its own members. Members are appointed immediately after the Company’s Annual General Meeting for terms of one year.

The majority of members must be independent, and at least one member must have accounting or audit skills as defined by statutory provisions and as determined by the Board of Directors.

Together, the members of the Committee must have updated insight into and experience of financial, accounting and audit matters in listed companies and skills related to the real estate industry.

The Committee must be composed so as to ensure that the special skills related to audit and accounting matters and the skills related to the real estate industry work together to ensure high quality in the Committee's performance of its functions. 

The Chairman of the Audit Committee is appointed by the Board of Directors. The Chairman of the Company’s Board of Directors cannot chair the Audit Committee.

Meetings

The Audit Committee meets four times a year as a general rule. To the extent possible, the Committee will meet immediately before the board meetings at which the entire Board of Directors approves the Company’s annual and interim reports.

The Chairman of the Audit Committee determines the agenda for committee meetings in accordance with the annual plan prepared for the Audit Committee, convenes the meetings and ensures that all relevant material is submitted to the other members. Members are invited to ubmit proposals for items they would like included on the agenda.

The external auditors attend the Committee’s meetings as and when required, but at least once a year without the presence of the Executive Board.

As decided by the Chairman, the Committee may invite other board members, executives, employees or external consultants to attend its meetings.

The Secretary to the Board of Directors will act as Secretary to the Committee and attend its meetings as directed by the Chairman. 

Duties

The Audit Committee has the following duties:

  • Monitoring the financial reporting process, including accounting policies in important areas, significant accounting estimates, and uncertainties and risks, including in relation to guidance for the current year, and, if required, making recommendations or proposals aimed at ensuring integrity.

  • Overseeing that the Company has established effective internal controls and risk management systems in relation to the Company’s financial reporting, including assessing the statutory description of TK Development’s risk management processes and internal controls in relation to the financial reportin process, in accordance with section 107b of the Danish Financial Statements Act.

  • Monitoring the statutory audit of the Company’s Annual Report and Consolidated Financial Statements, etc. and considering the results of the most recent quality control check of the audit firm.

  • Informing the Board of Directors of the results of the statutory audit, including the financial reporting process.

  • Annually assessing the need for an internal audit.

  • Monitoring related party transactions.

  • Monitoring and controlling the independence of the auditors and the audit firm in relation to scope and services, including as concerns non-audit engagements.

  • Assuming responsibility for the procedure for selecting and recommending the appointment of auditors at the General Meeting in accordance with applicable rules.

For the purpose of specifying functions of the Audit Committee, an annual plan to be approved by the entire Board of Directors is drawn up.

The Audit Committee may perform other functions considered relevant by the Board of Directors or the Audit Committee and which fall naturally within the Committee’s sphere of competence.

Authority and resources

Within its terms of reference, the Audit Committee is authorised to:

  • Obtain legal, accounting and other assistance from external experts to the extent it is considered necessary by the Committee for the performance of its tasks.

  • Obtain information from relevant employees of the Group and ask them to attend Audit Committee meetings.

  • Obtain information from the Company’s external auditors and ask them to attend the Audit Committee meetings.

  • Obtain unrestricted access to information considered relevant for the performance of the Committee’s tasks.

  • Review and approve a policy for services provided by the external auditors, including both audit services and non-audit services.

  • Prepare guidelines for the performance of tax and valuation services permitted under the Danish Act on Approved Auditors and Audit Firms.

  • Make proposals to the Board of Directors on the appointment of external auditors and their remuneration.

Reporting

At each board meeting, the Chairman of the Audit Committee will report on the work performed since the last board meeting.

The minutes of the Committee's meetings are approved by its members and subsequently submitted to the entire Board of Directors. The minutes must reflect the discussions conducted at Committee meetings and provide the Board of Directors with an adequate and qualified basis for making its decisions.

Information about the Committee’s tasks and activities in the course of the year, including the number of meetings held and the attendance of each individual member, is disclosed in connection with the presentation of TK Development’s Annual Report.

Remuneration

Members of the Audit Committee are paid an annual fee of DKK 50,000, and the Chairman is paid an annual fee of DKK 100,000.

Evaluation

The Audit Committee’s terms of reference are reviewed once a year, and any amendments are to be approved by the Board of Directors with the majority specified by its rules of procedure.

Approved by the Board of Directors on 12 June 2018.