IntelGenx Corp.

Investors

Audit Committee Charter

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF INTELGENX TECHNOLOGIES CORP.

I. Purpose

The primary function of the Audit Committee is to assist the Board of Directors (the “Board”) of IntelGenx Technologies Corp. (the “Corporation”) in fulfilling its oversight responsibilities by reviewing (i) the financial disclosure of the Corporation, including the Corporation’s financial statements provided to shareholders and the public, (ii) the Corporation’s systems of internal controls regarding finance, accounting, legal compliance and ethical behavior, and (iii) the Corporation’s auditing, accounting and financial reporting processes generally.  Consistent with this function, the Audit Committee will encourage continuous improvement of, and foster adherence to, the Corporation’s policies, procedures and practices at all levels.

II. Composition and Quorum

  1. The Audit Committee must be constituted as required under Multilateral Instrument 52-110 – Audit Committees, as it may be amended from time to time (“MI 52-110”) and as required by the rules of any U.S. stock exchange on which any securities of the Corporation are listed.
  2. All members of the Audit Committee must (except to the extent permitted by MI 52-110) be financially literate (which is defined as the ability to read and understand a set of financial statements that present a breadth and level of complexity of the issues that can reasonably be expected to be raised by the Corporation's financial statements); and at least one member of the Audit Committee shall be an “audit committee financial expert” as such term is defined in Item 407(5)(ii) of Regulation S-K, as adopted by the U.S. Securities and Exchange Commission.
  3. The members of the Audit Committee shall be elected by the Board on an annual basis or until their successors shall be duly appointed. Unless a Chair is elected by the full Board, the members of the Audit Committee may designate a Chair by majority vote of the full Audit Committee membership.
  4. Any member of the Audit Committee may be removed or replaced at any time by the Board and shall cease to be a member of the Audit Committee on ceasing to be a Director. The Board may fill vacancies on the Audit Committee by election from among the Board.  If and whenever a vacancy shall exist on the Audit Committee, the remaining members may exercise all of its powers so long as a quorum remains.
  5. Quorum for the transaction of business at any meeting of the Audit Committee shall be a majority of the number of members of the Audit Committee or such greater number as the Audit Committee shall determine by resolution.

III. Responsibilities

The responsibilities of the Audit Committee include the following:

Overseeing financial reporting

  1. Review with financial management and the Corporation’s outside auditors all financial statements and related disclosure documents, and obtain explanations from management on all significant variances with comparative periods, before recommending their approval by the Board and their release.
  2. Reviewing with management and the external auditors the quality, and not just the acceptability, of the Corporation’s accounting policies and any changes that are proposed to be made thereto, including (i) all critical accounting policies and practices used, (ii) any alternative treatments of financial information that have been discussed with management, the ramification of their use and the external auditors’ preferred treatment, and (iii) any other material communications with management with respect thereto, and reviewing the disclosure and impact of contingencies and the reasonableness of the provisions, reserves and estimates that may have a material impact on financial reporting.
  3. Reviewing with the external auditors any audit problems or difficulties and management’s response thereto and resolving any disagreement between management and the external auditors regarding financial reporting.
  4. Based on the review of the financial statements and its discussions with management and the external auditors, recommend to the board of directors whether the audited financial statements be included in the Corporation's annual report on Form 10-K filed with the U.S. Securities and Exchange Commission.

Monitoring risk management and internal controls

  1. Monitoring the quality and integrity of the Corporation’s internal control and management information systems, through discussions with management and the auditors.
  2. Overseeing management’s reporting on internal control.
  3. Reviewing on a regular basis and monitoring the Corporation’s risk assessment and management policies.
  4. At least annually, reviewing a report of the external auditors describing the Corporation’s internal quality-control procedures, any material issues raised by the most recent reviews of internal controls and management information systems or by any inquiry or investigation by governmental or professional authorities and any recommendations made and steps take to deal with any such issues.
  5. Assisting the Board with the oversight of the Corporation’s compliance with applicable legal and regulatory requirements.
  6. Establishing procedures for the receipt, retention and treatment of complaints or concerns received by the Corporation regarding accounting, internal accounting controls, or auditing matters, including the anonymous submission by employees of concerns respecting accounting or auditing matters.

Monitoring external auditors

  1. Reviewing the annual written statement of the external auditors regarding all their relationships with the Corporation and discussing any relationships or services that may impact on their objectivity or independence, including the written disclosures and the letter from the external auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the external auditor's communications with the audit committee concerning independence.
  2. Discussing with the independent auditors the matters required to be discussed under Statement on Auditing Standards (SAS) No. 61, as amended.
  3. Approving the appointment and, if appropriate, the termination (both subject to shareholder approval) of the external auditors and monitoring their qualifications, performance and independence.
  4. Approving any use of that external auditor engaged by the Corporation to examine the financial statements to provide non-audit services prior to its engagement. It is the Committee’s practice to restrict the non-audit services that may be provided by the external auditor in order to eliminate relationships that could appear to impair the objectivity of the external auditor and to eliminate the auditors’ provision of non-audit services that are incompatible with the auditors’ independence.
  5. Approving the basis and amount of the external auditor’s fees for both audit and authorized non-audit services.
  6. Reviewing the audit plan with the external auditors and management and approving the scope, extent and schedule of such audit plan.
  7. Reviewing the Corporation’s hiring policies for employees or former employees of the external auditors.
  8. Ensuring that the external auditors are always accountable to the Audit Committee and the Board and that the Audit Committee has proper and regular access to the external auditors.
  9. Making arrangements for sufficient funds to be available to effect payment of the fees of the external auditors and of any advisors or experts retained by the Audit Committee.

IV. Method of operation

  1. Meetings of the Audit Committee are held on a regular basis, and as required.
  2. The Chair of the Audit Committee develops the agenda for each meeting of the committee in consultation with the Chief Financial Officer. The agenda and the appropriate material are provided to members of the Audit Committee on a timely basis prior to any meeting of the Audit Committee.
  3. The Chair of the Audit Committee reports regularly to the Board on the business of the Committee.
  4. The Audit Committee has at all times a direct line of communication with the external auditors.
  5. The Audit Committee meets on a regular basis without management or the external auditors.
  6. The Audit Committee meets separately with management, the internal and external auditors at least annually, and more frequently as required.
  7. The Audit Committee may, in appropriate circumstances, engage external advisors, subject to advising the Chairman of the Board thereof, and the Audit Committee has the authority to set up and pay the compensation for any advisors engaged by the Audit Committee.
  8. The Audit Committee annually reviews its mandate and reports to the Board on its adequacy and publication requirements.

Nothing contained in this mandate is intended to expand applicable standards of conduct under statutory or regulatory requirements for the directors of the Corporation or the members of the Audit Committee. Members of the Audit Committee are entitled to rely, absent knowledge to the contrary, on (i) the integrity of the persons and organizations from whom they receive information, (ii) the accuracy and completeness of the information provided, and (iii) representations made by management as to the non-audit services provided to the Corporation by the external auditor. The Audit Committee’s oversight responsibilities are not established to provide an independent basis to determine that (i) management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures, or (ii) the Corporation’s financial statements have been prepared and, if applicable, audited in accordance with generally accepted accounting principles.

While the Audit Committee has the responsibilities and authority set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Corporation’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles.  This is the responsibility of management and the independent auditors. Nor is it the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any, between management and the external auditor or to assure compliance with laws and regulations.