Notice from CBRC on Printing Financing Guarantee Company Internal
Control Guide

To regulatory department of financing guarantee agency in every
province, autonomous region and municipality directly under the central
government:

Financing Guarantee Company Internal Control Guide was deliberated
and approved on Jul.23, 2010 in the joint conference of financing guarantee business
department, now printing out for you, please carefully implement it and take
the actual situation into consideration.

Please forward this notice to every financing guarantee institute under
jurisdiction.

                                    

   Nov.25^th, 2010

Financing
Guarantee Company Internal Control Guide

                           Chapter
One General Rule

Article 1 This guide is formulated in accordance with Corporation
Law of the People’s Republic of China, Provisional managing measure of
Financing guarantee company etc. relative provisions, in order to establish and
improve corporation administration mechanism of financing guarantee company,
take precaution against risk of financing guarantee business and promote the
sound and stable development of financing guarantee industry.

Article 2 The supervision department hereby called in this guide
refers to department which is responsible for supervising and managing
financing guarantee company within this jurisdiction specified by the People’s
Government of province, autonomous region and municipality directly under the
central government.

Article 3 The supervision and judgement of the supervision
department to financing guarantee company’s internal control is based on this guide.
The financing guarantee company should follow this guide to establish and
improve the company internal control mechanism.

Article 4 The internal control hereby mentioned in this guide is the
dynamic mechanism and process used by financing guarantee company to achieve the
management aim through formulating and implementing a series of system,
procedure and method to prevent risk in advance, control risk in the progress,
supervise and amend afterwards.

Article 5 The aim of financing guarantee company internal control:

I.             
Ensure the execution and
implementation of law, regulation, rule and internal regulation and rule of
company.

II.           
Ensure the full implementation of
company’s developing strategy, full achievement of management arm and
efficiency.

III.          
Ensure the effectiveness of
company’s risk management system.

IV.         
Ensure the reality, accuracy,
completion and timeliness of business record, financial information and other
management information.

Article 6 Internal control of financing guarantee company should
follow below principles:

I.             
All-round principle. Internal
control should run through every business procedure and operation link, covering
all departments and posts with all personnel are participating, any decision or
operation should have record that can be referred to.

II.           
Importance principle. Internal control
pays attention to important business and high-risk items on the basis of overall
control.

III.          
Check and balance principle.
Internal control should have the governance structure, structure setting and
right and responsibility distribution, business procedure etc. mutual
restricted, mutual supervised, at the meantime consider the operation
effectiveness. The supervision and assessment department of internal control
should be independent of construction and execution department of internal
control and have channel to report to board of directors, board of supervisors
and senior management.

IV.         
Adaptability principle. Internal
principle should adapt to management scale, business scope, competing status
and risk level and adjust it timely as situation changed.

V.          
Cost and benefit principle.
Internal control should weigh the relation between cost and benefit to achieve
good benefit with proper cost.

Article 7 Financing guarantee company should adopt necessary system,
procedure and method about internal environment, risk assessment, control
activity, information and communication, internal supervision etc. to establish
scientific and effective incentive and restriction mechanism, cultivate good
internal control culture and create for all staffs the environment and
atmosphere of fully understanding internal control requirement, performing
function and power prudently, legally, diligently and loyally.

           Chapter Two Duty
of Internal Control

Article 8 Financing guarantee company must separate the duty among
board of directors, board of supervisors and senior management, among relative
departments and among superior and inferior institutions, and establish
mechanism of mutual supervision and restriction and with clear division of
duty.

Article 9 It is board of director’s duty to guarantee the
establishment and execution of full and effective internal control system, check
and assess regularly the executive situation of overall management strategy and
significant policy, make sure company operates prudently under the restriction
of law and policy, set acceptable risk degree clearly and ensure senior
management take necessary measures to identify, assess, monitor and control
risk.

Article 10 It’s board of supervisor’s duty is to supervise board
of directors, senior management and improve internal control system, supervise
board of directors, directors and senior management to perform duty of internal
control, demand director and senior management staff of correcting their conduct
of damaging company’s interest and supervise the amendment process.

Article 11 Senior management is responsible for formulating
internal control policy, monitor and assess the adequacy and effectiveness of
internal control system, keeping the decision of board of directors being
implemented, establishing and improving internal organization institute to form
effective internal incentive and restriction mechanism, establishing procedure
and measure to identify, assess, monitor and control risk, and keeping every
duty of internal control is effectively executed.

Article 12 Financing guarantee company should set special risk
management department, and it should be independent of other business
department and take charge of formulating and carrying out system, procedure
and method of identification, assessment, monitoring and control, guarantee the
achievement of aim of risk management.

In the financing guarantee company that does not set chief risk
officer, the employment and dismissal, salary and welfare of responsible person
in risk management department should be decided by general manager but it
should be approved firstly by board of directors.

Person in charge of risk management (chief risk officer,
responsible person of financing guarantee company that does not set chief
officer) holds the objective opinion on project approved by project approving
institute via voting, he should convey to general manager his opinion. If the
general manager denies the opinion of person in charge of risk management while
the risk management officer insists his own opinion, the general manager should
submit the disputes to board of directors for them to decide.

Article 13 Financing guarantee company should exercise uniform
legal person authorization system in regard to approval of project, definitely
specify the limit of power of approver and approval procedure, strictly follow
the limit of power and procedure in obtaining approval.

Article 14 Financing guarantee company should establish effective
project approval organization to make collective decision for the warrant or
project with large amount of money. Project approval organization should have
the professional personnel with rich experience. The deliberation and voting of
project approval organization should follow the principle of collective
deliberation, expressing opinion clearly and approval by majority voting, all
opinions should be kept and recorded.

Article 15 Every department and post of financing guarantee
company should have formal and written explanation about duty of post and have clear
reporting relation.

Financing guarantee company should have clear working standard and
duty-execution requirement as investigating prior to assurance, reviewing in
the process of assurance, checking after assurance.

         Chapter Three
Internal Control of Business Activity

Article 16 Financing guarantee company should take the financing guaranteebusiness
as a core, develop other business within the scope of law, regulation and rules.

Article 17 Financing guarantee company should formulate and
improve all-round, systematic and written business policy and relative
management system, clearly specify the object, scope, way, condition,
procedure, limit of assurance amount of financing assurance and assurance
prohibition etc.

Article 18 Financing guarantee company should normalize the
working procedure, operation rule and running mechanism of all business links
involving in accepting, reviewing, approving, signing contract and accepting
assurance, supervising after assurance, losing and claiming compensation.

Article 19 Financing guarantee company should formulate definite project
acceptance standard in compliance with law, regulation, rule, policy and as
required by constitution of company. Personnel in charge of project acceptance
should strictly investigate and check the legality of guarantee applicator’s
qualification, the authenticity of financing background and application
material.

Article 20 Financing guarantee company should formulate clear
deliberation standard in compliance with law, regulation, rule, policy and as
required by constitution of company. Deliberation standard should include
quantitative and qualitative standard.

Article 21 Project deliberation should make analysis and judgement
with sufficient foundation in term of quality and quantity, make all-round
investigation on project situation, estimate the legality of counter guaranty measure
drawn up, value and realizability of subject, should strictly review the
financial status of guaranteed object, carefully check various kinds of
financial statement, product inventory and business contract, checking its
authenticity, legality and value, should strictly investigate the purpose of financing
fund of the guaranteed project, make sure the fund via guaranteed financing can
be used for activity which is accordance with industrial policy of sate and can
improve people’s livelihood.

Article 22 Project review personnel can not be less than two
people. Project review personnel should make an on-the-spot investigation on
the project to be reviewed. When review is over, project review personnel
should make project review report, including basic situation of project, risk
factor, review conclusion and guarantee scheme covering countersecurity
measures drawn up etc.

Article 23 Project review organization and personnel should check all
project material submitted according to actual situation and focus on project
risk factors and safeguard measures. If necessary, project review organization
and personnel should make an on-the-spot investigation on the project.

Article 24 Contract-signing and guarantee-accepting of the financing
guarantee project should be under the condition of knowing effectiveness
condition and signing procedure of any kind of contract, follow the principle
of arranging safeguard measure firstly, then signing and accepting, transact
countersecurity mortgage registration according to law, checking creditor,
obligor’s qualification for signing the contract and limit of power and
intensify seal management.

Article 25 Financing guarantee company should ask the guaranteed
person to supply financial statement regularly according to the agreement of
the contract, and make field check after being guaranteed, should make risk clearance
on all or part of project being guaranteed according to actual situation, and
gradually making risk category for the projects being guaranteed.

Article 26 Financing guarantee company should rationally regulate
and control project concentration degree, avoiding concentration loss that is
possible to happen. When loss rate goes up in large scale, financing guarantee
company should stop transacting new guarantee project.