Audit Committee

2. Audit Committee

2.1 Terms of reference

The Audit Committee assists the Board of Directors in its responsibility of monitoring the management of the Company and the Group as a whole, and more specifically with regard to achieving the following objectives:

The reliable nature of financial information

Compliance with relevant laws and regulations

Performing internal control processes within the Company in the most efficient manner

The assignments of the Audit Committee can vary according to the circumstances. However, the committee mainly has the following duties:

in the area of financial and accounting information,

the Audit Committee monitors the integrity of the financial information provided by the Company, in particular by reviewing the relevance and consistency of the accounting standards used by the Company and the Group, including the criteria for consolidation of the accounts of companies in the Group

more particularly the Audit Committee verifies the quality and reliability of UCB's consolidated half-yearly and yearly accounts submitted to the Board of Directors. It ensures that the documents are a true reflection of business progress, that they have been drawn up in accordance with legal requirements, and provide a response to the demands of the Belgian Banking, Finance and Insurance Commission or of any other authority to which the Company is subject as an officially listed company;

in the event of significant and unusual transactions where the accounting treatment may be open to different approaches, the management informs the Audit Committee of the methods used and their justification;

the Committee discusses significant financial reporting issues, if any, with both management and the external Auditors

in the area of auditing and internal control,

it examines that the internal audit function has the resources and skills adapted to the Company's nature, size and complexity.

it inquires as to the checking and audit methods implemented at Group level. It verifies that the means and procedures currently in place and the computer systems for collection and checking of data are suitable, and allow complete and reliable information to be produced;

in the area of auditing and external control,

upon the proposal of the Chairman of the Executive Committee and the Executive Vice President, Finance , it recommends to the Board of Directors the appointment and remuneration of external Auditors, to be submitted by the Board of Directors to the General Meeting of Shareholders on presentation of the Work Councils

it examines together with the Auditors the range and scope of the audit performed, and also the method used to carry it out through the Group. The Audit Committee examines the results of the external audit, and also the reports by the Auditors to shareholders.

it monitors the external Auditors independence, and in particular that neither the Auditors nor the companies with which they are associated carry out any activity for the UCB Group other than external audit services; it examines on a regular basis, a report from the external Auditors describing all relationships between each Auditor and the Company and the Group.

on an annual basis the Audit Committee examines the additional fees charged by the external Auditors to the Company or to the Group's affiliates in excess of the fees approved by the General Meeting of Shareholders and to be disclosed in the Company's annual report

in the area of appreciation of risk and risk management,

it examines areas where risk could significantly affect the Group's financial situation and reputation.

it verifies and revaluates on a regular basis that:

the risk management team is efficient at assessing and managing the Company's exposure to its risks areas

the procedures in place allow effectively high risks to be identified and their potential impact to be estimated, and

that preventive or risk transfer measures limit the consequences in an acceptable fashion;

it reviews the statements included in the annual report on risk management

when new regulations, legislation or directives are envisaged which could have considerable effects on the accounts of the Group, its financial situation or its income in the short or long term, the Audit Committee is informed of the implementation and impact of these, and also of implementation measures approved by management. If required, it draws up recommendations in this regard to the Board of Directors.

2.2 Composition of the Audit Committee

The Board has set up an Audit Committee composed of three non-executive Directors who are all independent from the Company's management and the majority of which is independent according to the Board independence criteria (see 2.3).

2.3 Functioning of the Audit Committee

The Audit Committee is to meet several times a year to fulfil its duties a.o. to prepare for the meetings of the Board of Directors, during which finalisation takes place of the half-yearly and yearly accounts, and whenever circumstances justify.

The Audit Committee regularly invites the Executive Vice-President Finance who is also a member of the Executive Committee, the Vice President Reporting & Consolidation and the Internal Auditor to attend its meetings. The external Auditors are regularly invited to participate to meetings of the Audit Committee.

The Audit Committee reviews its terms of reference annually and if needed recommends any changes to the Board.

Secretary functions are arranged by the Secretary of the Board.