Audit Committee Charter

Last Amended: November 2003

The Audit Committee (the “Committee”) of Elan Corporation, plc (the “Company”) is appointed by the Board of Directors of the Company (the “Board”) to assist the Board in its oversight of (1) the integrity of the financial statements of the Company, (2) the compliance by the Company with legal and regulatory requirements, (3) the qualifications and independence of the Company’s independent auditor (the “Independent Auditor”) and (4) the performance of the Company’s internal audit function and independent auditors.

Terms of Reference

The Committee will:

Financial Statements and Related Disclosure

1. Review and discuss with management and the Independent Auditor the Company’s annual audited financial statements and quarterly financial statements prior to public disclosure thereof, including disclosures made under “operating and financial review and prospects” in the Company’s annual report filed on Form 20-F (the “Form 20-F”).
2. Review and discuss the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.
3. Review major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls that could significantly affect the Company’s financial statements and any special audit steps adopted in light of material control deficiencies.
4. Review analyses prepared by management and/or the Independent Auditor of significant financial reporting issues and the judgments made in connection with the preparation of the Company’s financial statements, including the selection, application and disclosure of critical accounting policies and analyses of the effect of alternative assumptions, estimates or methods on the Company’s financial statements.
5. Review with management and the Independent Auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements.
6. Review the reports of the Independent Auditor addressing:
   (a) all critical accounting policies and practices to be used by the Company in preparing its financial statements;
   (b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of these alternative disclosures and treatments, and the treatment preferred by the Independent Auditor; and
   (c) other material communications between the Independent Auditor and management, such as management letters or schedules of unadjusted differences.
7. Review with the Independent Auditor any problems or difficulties that the Independent Auditor may have encountered and any management letter provided by the Independent Auditor to the Company and the Company’s response thereto. Such review should include:
   (a) any difficulties encountered in the course of the audit work, including any restrictions of the scope of activities or access to required information, and any disagreements with management;
   (b) any changes required in the planned scope of the internal audit; and
   (c) the responsibilities, budget and staffing of the Company’s internal auditor or other personnel responsible for the internal audit function (the “Internal Auditor”).
8. Review with management the Company’s major financial risk exposures and policies with respect to risk assessment and management, including the steps management has taken to monitor and control such exposures.
9. Meet separately with management, the Internal Auditor and the Independent Auditor on a periodic basis.
10. Review with management, including the Chief Executive Officer of the Company (the “Chief Executive Officer”) and the Chief Financial Officer of the Company (the “Chief Financial Officer”) and any outside professionals as the Committee considers appropriate, the effectiveness of the design and operation of the Company’s disclosure controls and procedures.
11. Discuss with the Independent Auditor the matters required to be discussed by Statement on Auditing Standards (“SAS”) No. 61, as modified or supplemented, relating to the conduct of the audit. SAS No. 61 requires a company’s independent auditor to ensure that the audit committee receives additional information regarding the scope and results of the audit that may assist the audit committee in overseeing the financial reporting and disclosure process for which management is responsible.
12. Review with the Internal Auditor and Independent Auditor the annual report filed with the U.S. Securities and Exchange Commission on Form 20-F (the “Form 20-F”), regarding, among other things, the Company’s accounting controls and any material changes to such controls.
13. Prepare an audit committee report to be included in the Form 20-F.
    
    Independent Auditor’s Qualifications and Independence
    
14. Be directly responsible for and have ultimate authority with respect to the appointment, compensation, retention, evaluation, termination and oversight of the work of the Independent Auditor (including resolution of disagreements between management and the auditor regarding financial reporting). The Independent Auditor will report directly to the Committee and will be ultimately accountable to the Committee and the Board.
15. Pre-approve all audit engagement fees and terms, as well as any non-audit services to be provided by the Independent Auditor and review with the lead audit partner whether any audit team member receives any discretionary compensation from the audit firm with respect to non-audit services performed by the Independent Auditor.
16. At least annually, obtain and review a report by the Independent Auditor describing the Independent Auditor’s independence (each of which reports will include a written statement delineating all relationships between the Independent Auditor and the Company), discuss such reports with the Independent Auditor, consider whether any of the disclosed relationships or the provision of any non-audit service is compatible with maintaining the Independent Auditor’s objectivity and independence, and, if so determined by the Committee, recommend that the Board take appropriate action to satisfy itself of the independence of the Independent Auditor.
17. At least annually, obtain and review a report by the Independent Auditor describing the Independent Auditor’s internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the Independent Auditor, and any steps taken to deal with any such issues.
18. Meet with the Independent Auditor prior to the audit to review the proposed scope, plans and staffing of the audit.
19. Review and evaluate the qualifications, performance and independence of the Independent Auditor, including key partners and managers of the Independent Auditor, on an annual basis.
20. Assure the regular rotation of the lead audit partner.
21. Set clear hiring policies for employees or former employees of the present or former Independent Auditor.
22. Discuss with the Independent Auditor any issues on which the Company’s audit team consulted with the Independent Auditor’s home office or professional practice or standards group on matters of audit quality and consistency.
    
    Performance of Internal Auditor
    
23. Meet with the Internal Auditor prior to the audit to review the proposed scope, plans and staffing of the audit.
24. Review the significant reports to management prepared by the Internal Auditor and management’s responses and any significant issues raised by the Internal Auditor.
25. Consider any problems identified by the Internal Auditor.
    
    Compliance with Legal and Regulatory Requirements
    
26. Obtain reports from management, the Internal Auditor and the Independent Auditor confirming that the Company and the Company’s wholly owned subsidiaries and controlled affiliates are in conformity with the Company’s Securities Trading Policy (the “Securities Trading Policy”) and the portions of the Company’s Code of Conduct (the “Code of Conduct”) and other laws and regulations relating to, or that may have an impact on, the Company’s financial reporting.
27. Review on a periodic basis whether the Code of Conduct and the Securities Trading Policy have been communicated to all key employees of the Company and its subsidiaries.
28. Advise the Board with respect to the Company’s policies and procedures regarding compliance with the Securities Trading Policy and the portions of the Code of Conduct and other laws and regulations relating to, or that may have an impact on, the Company’s financial reporting.
29. Administer the Securities Trading Policy on behalf of the Board and appoint a trading compliance officer to whom all applications to trade should be sent.
30. Review with management and the Independent Auditor any correspondence with regulators or governmental agencies, and any employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting policies.
31. Review with the Company’s General Counsel or senior legal officer legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquiries received from regulators or governmental agencies.
32. Establish procedures for (a) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. A copy of such procedures is attached at Appendix A.
33. Obtain from the Independent Auditor assurance that Section 10A of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) has not been implicated. Section 10A requires, among other things, that each audit required under the Exchange Act include procedures regarding detection of illegal acts and the reporting of such illegal acts to the appropriate level of management.
    
    Reporting Obligations
    
34. Meet at least quarterly with the Chief Financial Officer, the senior internal auditing executive and the Independent Auditor in separate executive sessions.
35. Report regularly to the Board on its activities.
36. Report the decisions made at Committee meetings to the Board and distribute to the Board minutes reflecting such decisions.
    
    Assessment of Charter; Evaluation
    
37. Review and reassess the adequacy of this Charter on an annual basis and recommend any proposed changes to the Board for approval.
38. Establish guidelines for the performance evaluation of the Committee and annually assess the performance of the Committee in light of those guidelines.

Rules of Procedure

1. The Committee will comprise not fewer than three directors, each of whom will be independent, as such term is defined in the Company’s Corporate Governance Guidelines (the “Guidelines”), and each member of the Committee will meet all appropriate independence, financial literacy and other requirements of law and The New York Stock Exchange (as amended from time to time). The Chair of the Committee (the “Chair”) will have accounting or related financial management expertise.
2. The members and the Chair will be appointed to the Committee in accordance with the procedures set forth in the Guidelines. The Board will have the authority to remove any Committee member at any time without cause.
3. The Chair will develop and set the Committee’s agenda, in consultation with the other members of the Committee.
4. Each member, including the Chair, will be appointed to the Committee for a three-year term, subject to a maximum of two terms of continuous service. The membership will automatically end at such time as a member ceases to be a Board member.
5. The Lead Independent Director will be given notice of and an opportunity to attend meetings between the Committee and the Independent Auditor.
6. The Company Secretary will act as secretary of Committee meetings. In his or her absence, or if the Committee deems it appropriate, the Committee may appoint a secretary for the meeting.
7. Quorum for Committee meetings will be a majority of Committee members.
8. The Committee will meet at least quarterly. It will also meet on these occasions in the event of a specific request from the Board, from the Independent Auditor or from at least two members of the Committee. Information that is important to the Committee's understanding of the business of the Company, including, without limitation, the draft quarterly and annual financial statements, will be distributed sufficiently in advance of Committee meetings to permit Committee members the opportunity for review.
9. The minutes of the Committee will be circulated to the Board and to the Independent Auditor, and the Committee will report its findings and recommendations directly to the Board.
10. Any member of the Committee may participate in a meeting thereof conducted wholly or in part by telephonic means whereby all persons participating in the meeting can hear each other speak (and participation in a meeting in this manner will be deemed to constitute presence in person at such meeting).
11. No resolution proposed at any Committee meeting will be deemed adopted unless a majority of the Committee present and voting at such meeting will have voted in favour of such resolution.
12. A resolution in writing signed by all members of the Committee will be valid as if it had been passed at a meeting thereof duly convened and held and may consist of several documents in like form each signed by one or more members of the Committee including facsimile or telex messages in like form signed in the name of such members.
13. Reasonable notice will be required to be given of any meeting of the Committee.
14. The Committee will have the authority to retain legal, accounting or other advisors to advise it. Generally, such independent advice should be sought with the knowledge of the Chief Executive Officer. The Committee may request any officer or employee of the Company or the Company’s outside counsel to attend any of its meetings or to meet with any of its members or consultants. The Committee will receive appropriate funding, as determined by the Committee, from the Company for payment of compensation to outside legal, accounting or other advisors employed by the Committee.
15. The Committee will retain the internal audit reports from the Internal Auditor to the Committee and the Board for six years.

While the Committee has the responsibilities and powers set forth in this Charter and imposed upon them by law, it is not the duty of the Committee to plan or conduct audits. These are the responsibilities of management and the Independent Auditor.

Appendix A

PROCEDURES FOR THE RECEIPT, RETENTION AND TREATMENT OF COMPLAINTS