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Þjónustuver HS Orku er opið alla virka daga frá 09-16

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Rules of Procedure for HS Orka´s Audit Committee

These Rules of Procedure are based on Act no. 3/2006 on Annual Accounts, Act no. 94/2019 on Auditors and Auditing and on the Corporate Governance Guidelines issued by the Icelandic Chamber of Commerce, SA Business Iceland and Nasdaq OMX Iceland hf.

1. The Committee´s role and responsibilities

1.1. The objective of the Audit Committee (“AC”) is seeking to ensure the quality of financial statements and other financial information and the independence of auditors.

1.2. HS Orka hf.’s (“Company”) AC is a sub-committee to the Company‘s Board of Directors and is appointed by and operates under the authority of the Board. The establishment of an AC does not reduce the responsibilities of the Board or relieve it of any liability. Every Board Member must have an overview over the matters addressed by the Committee.

1.3. The AC´s function is surveillance. It is not responsible for the accounting or the auditing of the financial statements. The management of the Company is responsible for accounting and the implementation of internal procedures and the auditors are responsible for auditing the financial statements of the Company. The AC´s inspection of the financial statements is not of the same nature as an audit, conducted by an auditor.

1.4. The Committee reports and makes recommendations to the Board, which has the deciding power in all matters, unless a special mandate has been given to the Committee.

1.5. The Audit Committee shall operate in accordance with Icelandic law and regulations andcorporate governance principles.

1.6. The committee shall operate in accordance with Icelandic law and regulations and corporate governance principles.


2. Composition and Appointment of the Audit Committee

2.1. Committee members shall be appointed by the Board of Directors, no later than one month after an Annual General Meeting, for a term of one year.

2.2. The committee shall be made up of at least 3 members.

2.3. The Committee members shall be independent of the Company´s auditors. The majority shall also be independent of the company and the company’s management. Furthermore, one member, who is independent of the management and the Company, shall also be independent of major shareholders, i.e. holding more than 10% of shares. A committee
member is not considered independent of the Company if:

a) she / he is the CEO or another employee of the Company or its subsidiaries,

b) she / he receives or has received substantial payments (a large percentage of her/his gross income) from the Company, apart from a Director´s fee,

c) she / he has in the past year been in significant business with the Company or closely related companies, e.g. as a customer, supplier or partner, whether personally or through another company, d) if she/he is one of the day-to-day managers of another company in which one of the Directors is a day-to-day manager,

d) she/he has close family ties with any of the Company´s day-to-day managers or any other
persons mentioned above.

2.4. Committee members must have knowledge and experience in accordance with the work of the Committee and at least one member must have good knowledge and experience in the field of accounting or auditing.

2.5. The AC shall, at its first meeting after the AGM, elect a Chairman. The Chairman directs the Committee’s meetings and speaks on behalf of the Committee, unless the Committee decides otherwise. The AC shall also elect a secretary.

2.6. New committee members shall receive guidance and information on the committee’s
operations and procedures and shall sign the Rules of Procedures.

2.7. The Committee´s remuneration shall be decided by the AGM.


3. The Committee´s key activities and tasks

3.1. The AC is responsible for reviewing and assessing the quality of the financial information from the management and auditors. The Committee shall ensure that the information given to the Board on operations, status and future prospects of the Company are reliable and give the clearest possible perspective of the Company´s position at any time.

3.2. The AC shall have the following functions, irrespective of the responsibility of the Board of
Directors, Managers or others;

Towards the Management:

a) monitoring of working processes in the preparation of financial statements,

b) review the post-audit management letter together with the management´s response
and follow up on mitigating actions with the management,

c) assessing management reports on the Company´s finances,

d) monitoring the arrangement and efficiency of the Company´s internal controls, internal
auditing, if applicable, and risk management, including responses to risks and following
up on remedies to shortcomings identified during internal controls,

Towards the internal, if applicable, and external auditors:

e) monitoring the auditing of the annual financial statements and consolidated financial
statements of the Company, including reviewing and challenging where necessary:

i. the consistency of, and any changes to, accounting policies both on a year on year
basis and across the company / group,

ii. the methods used to account for significant or unusual transactions where
different approaches are possible

iii. whether the company has followed appropriate accounting standards and made
appropriate estimates and judgements, taking into account the views of the
external auditor,

iv. the clarity of disclosure in the Company´s financial reports and the context in which
statements are made; and

v. all material information presented with the financialstatements,such asthe Board
of Directors report (insofar as it relates to the audit and risk management).

f) assessing and managing the work of both internal, if applicable, and external auditors of the Company. I.e.;

i. assess the need for and handling the recruitment of an internal auditor,

ii. consider and make recommendations to the board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the company’s external auditor,

iii. oversee the selection process for new auditors and if an auditor resigns the
committee shall investigate the issues leading to this and decide whether any
action is required,

iv. oversee the relationship with the external auditor including (but not limited to):

1) approval of their remuneration, whether fees for audit or non-audit services and that the level of fees is appropriate to enable an adequate audit to be conducted,

2) approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit, including materiality, locations to be visited, audit reports required, areas of audit risk, special examination, timetable and deadlines

3) assessing annually their independence and objectivity and satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the company (other than in the ordinary course of business), cf. Article 29 of Act no. 94/2019.

v. review the findings of the audit with the external auditor, i.e. the audit report. This
shall include but not be limited to, the following:

1) A discussion of any major issues which arose during the audit,

2) Any accounting and audit judgements,

3) Levels of errors identified during the audit.

vi. review which non-audit service the external auditor has provided, taking into account relevant regulation on that matter.

Towards the Board of Directors

vii. review the corporate governance statement and monitor the process used to
compile the statement,

viii. review the non-financial information and monitor the process used to compile the

ix. assessing the quality of the financial statements in accordance with the
above mentioned points and making a recommendation for or against approving
the annual financial statements.

3.3. The Board of Directors may send the AC any matter for further study or follow-up with
regards to auditing, accounting, internal control and risk-management. The AC may also
initiate further inspection or follow-up on these matters, if it considers it necessary.

3.4. At least once a year, the AC shall review its own performance, composition and rules of
procedure to ensure it is operating at maximum effectiveness and recommend any changes
it considers necessary to the Board for approval.

3.5. The AC shall annually submit a written report to the Board of Directors, regarding its
activities. The report shall especially highlight the deficiencies found in relation to auditing,
accounting, risk-management and internal controls and what has been done to mitigate.
Interim reports may also be provided, if necessary.


4. Meetings and legitimacy of decisions

4.1. The AC shall at least meet in relation to reviewed and audited accounts, i.e. minimum twice per year, whether in person or electronically. At the Committee´s first meeting, the AC shall establish a meeting schedule for the year. Electronic meeting invites shall be sent out by the Chairman or the CFO, on her/his behalf, in accordance with the meeting schedule.

4.2. The Chairman of the Committee shall call extra meetings at her /his own initiative or at the request of another committee member, orthe CFO orthe Secretary to the Committee on her / his behalf.

4.3. Committee members may also communicate electronically. Committee members shall communicate as often as necessary to be able to perform their tasks and dutiesin an efficient manner.

4.4. The CFO or the Committee Secretary shall co-ordinate the work of the committee and its
meetings with the auditors and employees, on behalf of the Chairman.

4.5. The consent of the majority of committee members (two) is required to decide on a relevant subject matter. Proposals fail if the votes fall even.

4.6. Notwithstanding clause 4.2. the AC can also decide on matters between meetings via email, if the matter has been sufficiently discussed. Such decisions shall be noted in the minutes at the next meeting.

4.7. The AC shall host the following meetings:

a) annually initiate a joint meeting of the Board, the Committee and the auditors, without the presence of executive management, to discuss pertinent matters, including the quality of accounting personnel,

b) annually meet with the Board prior to the signing of the Annual Accounts. Additional
meetings shall be held if the Committee or the Board deems it necessary,

c) meet with the CEO, the CFO, the IT manager or other employees the AC considers
necessary to meet with,

d) meet with the auditors in relation to auditing of the annual accounts and interim
accounts, if they are audited or reviewed, and for a presentation of their impartiality,
auditing plan, audit findings and other matters.

4.8. Meeting materialshall be accessible to Committee Members two days before meetings.

4.9. The committee shall keep a record of minutes and the minutes shall be accessible to
members of the Board of Directors, unless a conflict of interest exists.

4.10. The AC shall arrange that at least one committee member is present at shareholder´s
meetings, if requested by the shareholders.


5. Authorizations and communication

5.1. The AC is authorized to seek professional and independent consulting as it deems necessary to carry out its role. Such consultants shall be independent of the Company, its executives and the Board of Directors who are not independent. The committee is responsible for examining the consultant’s independence. Purchasing of external consultancy shall be reported to the Chairman of the Board of Directors in a formal manner.

5.2. The AC´s communication shall be directed towards the CFO and /or another employee which has been appointed the secretary for the Committee. All committee members shall be CC´d in inquiries and in the replies, which are not merely regarding the organization of the AC, unless the Committee has decided otherwise.

5.3. Clause 5.2. does not undermine the AC´s right to contact any other employee in relation to the AC´s surveillance role.

5.4. The AC shall have unlimited access to information which is necessary for the AC to fulfil itsfunctions.


6. Confidentiality

6.1. Members of the AC are bound by a duty of confidentiality regarding the Company’s matters and other aspects that they become aware of in their roles as committee members pursuant to the Company’s articles of association, applicable law and/or general principles, unless the Company’s Board of Directors decides to make such issue public or it is required by statutory provision or the Company’s articles of association. This duty shall continue following the members’ tenure at the committee ceasing.

6.2. A member of the AC shall preserve all data which he / she receives in his or her operations, in a safe and secure manner. Members of the AC shall hand over to the Company all data they may have received in relation to their role in the AC, if the chairman of the committee deems necessary. Members of the AC shall not comment on subject mattersin respect of the Company to the media or otherwise to the public.


7. Miscellaneous

7.1. Amendments to these rules of procedures do not enter into force until the Company’s Board of Directors has approved such amendments. These rules of procedures shall apply to the members of the Company’s AC and the Company’s Board of Directors as applicable.

7.2. The original of these rules shall be maintained in the Company’s Book of Minutes and a copy shall be accessible to Committee and Board Members.

Thus, approved in a meeting of the Company’s Board of Directors on 23 August 2022.