Rego Interactive Co., Ltd — Governance Information 2012

May 11, 2012

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1065)

IMPLEMENTATION RULES FOR THE AUDIT COMMITTEE UNDER THE BOARD

(amended on 22 MARCH 2012)

CHAPTER 1 GENERAL PROVISIONS

Article 1 In order to strengthen the decision-making function of the board (the “Board”) of Directors (“Directors”) of the Company and to accomplish audit in advance and professional audit so as to ensure effective supervision of the management by the Board, as well as to perfect the governance structure of the Company, the Board of the Company formulates these implementing rules (the “Implementation Rules”) in accordance with the Company Law of the People’s Republic of China, for the Code of Governance for Listed Companies, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) and the Articles of Association of the Company (the “Articles of Association”) and other relevant regulations.

CHAPTER 2 COMPOSITION

Article 2 The Audit Committee shall comprise of independent Directors of the Company.

Article 3 The Audit Committee shall have one chairman, who shall be responsible for presiding over the Committee’s work; the chairman shall be elected by the Audit Committee and shall be reported to the Board for approval.

Article 4 The term of office of the Audit Committee shall be in consistent with that of the Directors, and its members may be re-elected upon the expiry of the current term of office. If any member no longer maintains the position as a Director of the Company during his/her term of office, he/she shall automatically lose the qualifications as a member, and the vacancy shall be filled by the Committee in accordance with the provisions of Articles 3 to 5 above.

Article 5 The Audit Committee shall set up an audit working group as its daily office and to be responsible for such matters as the preparation of financial statements, audit report and management proposals, daily communication and organization of meetings.

Article 6 The audit working group shall comprise of the persons-in-charge of the financial department, audit department, the office of the Board secretary of the Company and external auditor. The financial department of the Company shall be responsible for the preparation of financial report and report its work to the Audit Committee; the audit department of the Company and external auditor shall provide auditing opinions and management proposals to the Audit Committee for its reference in decision-making. The office of the Board secretary shall be responsible for overall coordination and organization and report to the Board of the Company.

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CHAPTER 3 TERMS OF REFERENCE

Article 7 The major terms of reference of the Audit Committee include, but not limited, the followings:

• (I) responsible for making recommendations to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;

• (II) to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. If necessary, the Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;

• (III) to develop and implement policy in respect of an external auditor to supply non-audit services;

• (IV) to monitor integrity of the Company’s financial statements, annual report and accounts, half-year report and quarterly reports, and to review significant financial reporting judgements contained in them. In reviewing these reports before submission to the Board, the Committee should focus particularly on:

  • (1) any changes in accounting policies and practices;

  • (2) major judgmental areas;

  • (3) significant adjustments resulting from audit;

  • (4) the going concern assumptions and any qualifications;

  • (5) compliance with accounting standards;

  • (6) compliance with the Listing Rules and other legal requirements in relation to financial reporting;

• (V) in regard to (IV) above: members of the Committee should liaise with the Board and senior management, and the Committee must meet, at least twice a year, with the Company’s auditors; and the Audit Committee should consider any significant or unusual items that are, or may need to be, reflected in the reports and accounts, it should give due consideration to any matters that have been raised by the Company’s qualified accountant or external auditors;

• (VI) to review the Company’s financial controls, internal control and risk management systems;

• (VII)to discuss the internal control system with management to ensure that management has performed its duty to have an effective internal control system. The discussion shall include adequacy of the resources staff qualifications and experience training programmes and budgets of the Company’s accouting and financial reporting function;

• (VIII) to consider any major investigation findings on internal control matters as delegated by the Board or on its own initiative and management’s response to these findings;

• (IX) to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor its effectiveness;

• (X) to review the Company’s financial and accounting policies and practices;

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• (XI) to review the external auditor’s management letter, any material queries raised by the auditor to management about accounting records, financial accounts or systems of control, management recommendation report and management’s response;

• (XII)to ensure that the Board will provide a timely response to the issues raised in the external auditor’s management letter;

• (XIII) to review arrangements employees of the Company may, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters. The audit committee should ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;

• (XIV) The audit committee may establish a whistleblowing policy and system for employees and those who deal with the Company (e.g. customers and suppliers) to raise concerns, in confidence ,with the Audit Committee about possible improprieties in any matter related to the Company;

• (XV)to act as the key representative body for overseeing the Company’s relation with the external auditor;

• (XVI) to formulate and review the corporate governance policy and practice of the Company and put forward its proposal to the Board;

• (XVII) to review and monitor the training and continuing professional development of the Directors and senior management of the Company;

• (XVIII) to review and monitor the policy and practices of the Company in respect of the compliance with law and regulatory requirements;

• (XIX) to formulate, review and monitor the code of conduct of employees and Directors;

• (XX)to report to the Board of the matters set forth in this terms of reference and deal with other matters authorized by the Board;

• (XXI) to study other topics assigned by the Board;

• (XXII) to review the compliance of the Company with the Code of Corporate Governance Practices and disclose the compliance in Corporate Governance Report.

Article 8 The Audit Committee shall be accountable to the Board. The proposals of the Committee shall be submitted to the Board for consideration and decision. The Audit Committee shall work in accord with the supervisory audit activities of the Supervisory Committee.

Article 9 The Audit Committee shall perform its duties of control and regular management over connected transactions; to confirm the list of connected parties of the Company and timely report to the Board and the Supervisory Committee;

Article 10 The Audit Committee shall review the major connected transactions of the Company which needs to be approved on the general meeting, and submit its written opinions in this regard to the Board for review and approval and report to the Supervisory Committee of the Company.

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CHAPTER 4 DECISION-MAKING PROCEDURES

Article 11 The audit working group is responsible for making the preliminary preparations and providing the Audit Committee with the relevant written information for it to make decisions:

• (I) relevant financial reports of the Company;

• (II) work reports of internal and external auditors;

• (III) external audit contracts and the relevant working reports;

• (IV) public disclosure of information made by the Company;

• (V) audit reports regarding major connected transactions of the Company;

• (VI) other relevant matters.

Article 12 The reports submitted by the audit working group shall be discussed in the meetings of the Audit Committee, and its relevant written resolution shall be submitted to the Board for consideration:

• (I) work appraisal on external audit institutions, and the appointment and replacement of external audit institutions;

• (II) reports on whether the internal audit system of the Company has been effectively implemented and whether the financial reports of the Company are true in all aspects;

• (III) reports on whether information such as financial reports disclosed publicly by the Company are objective and true, and whether the major connected transactions of the Company are in compliance with the requirements of the relevant laws and regulations;

• (IV) work appraisal of the internal financial department and audit department, including its responsible person, of the Company;

• (V) other relevant matters.

CHAPTER 5 RULES OF PROCEDURES

Article 13 The meetings of the Audit Committee shall include regular meetings and interim meetings. Regular meetings shall be convened at least two times a year at least once every six months. The notice of a meeting of the Audit Committee shall be given to all members seven days before the date of the meeting. The meetings shall be presided over by the chairman. In case that the chairman is unable to attend, he/she shall authorize another member to preside over the meeting. An interim meeting shall be convened by the chairman of the Audit Committee.

Article 14 The meetings of the Audit Committee shall be not be held unless two-thirds of members are present. Each member shall be have one vote and the resolutions of the meeting must be passed by the affirmative vote of a majority of the Committee members.

Article 15 The meeting of the Audit Committee shall vote by a show of hands or, in case of a significant matter, by a poll. An interim meeting may be held by way of voting by correspondence.

Article 16 The financial department of the Company shall attend the meetings of, and report their work to, the Audit Committee. The audit department of the Company and external auditor shall attend the meetings of, and report their auditing work to, the Audit Committee.

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The Directors, supervisors and other senior management of the Company may be invited to attend such meetings if necessary.

Article 17 If necessary, the Audit Committee may engage an intermediary institution to provide professional opinion for its decision-making. The cost shall be borne by the Company.

Article 18 The convening procedure and voting method of the Audit Committee and the resolutions passed at such meetings shall comply with be the requirements of the relevant laws, regulations, Articles of Association and this Implementation Rules.

Article 19 The Audit Committee shall keep minutes of the meetings. Draft and final versions of minutes of the Committee meetings should be sent to all Committee members for their comment (in case of draft versions) and records (in case of final versions) within a reasonable time after the meeting. Members present at the meetings shall sign on the minutes which shall be kept by the secretary to the Board of the Company.

Article 20 Resolutions passed by and voting result of the meeting of, the Audit Committee shall be reported in writing to the Board of the Company.

Article 21 Members present at the meeting shall have an obligation to keep all matters discussed in such meetings confidential, and shall not disclose the relevant information without authorization.

CHAPTER 6 SUPPLEMENTARY PROVISIONS

Article 22 This Implementation Rules shall be effective from the date when it was passed on the Board meeting.

Article 23 For the matters which are not governed by the Implementation Rules, they shall be executed in accordance with the relevant laws and regulations of the PRC and the Articles of Association. In the event of any conflict between the Implementation Rules and the laws and regulations promulgated by the PRC government in future or the Articles of Association amended through valid procedure, the requirements of the relevant laws and regulations of the PRC and the Articles of Association shall prevail, and the Implementation Rules shall be revised immediately and reported to the Board for consideration and approval.

Article 24 The right of interpretation of these rules shall be vested in the Board.

# These Rules have both Chinese and English versions, the English version is for reference only. Should there be any discrepancy between the two versions, the Chinese version shall always prevail.

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