Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises Article 3

The internal control system of an insurance enterprise shall be passed by its board of directors. If any director expresses reservation or dissenting opinions, those opinions and reasons therefor shall be recorded in the meeting minutes of the board of directors, which, together with the internal control system passed by the board, shall be submitted to the supervisors or the audit committee. The preceding provision applies to revisions of the internal control system.If the insurance enterprise has independent director(s), the opinions of respective independent director should be taken into consideration fully when the internal control system is submitted to the board for discussion in accordance with the preceding paragraph. The reservation or dissenting opinions of the independent director(s) and reasons therefor shall be recorded in the meeting minutes of the board of directors.If the insurance enterprise has established an audit committee, the adoption or revision of its internal control system shall be subject to the consent of at least the majority of the audit committee members and be submitted to the board of directors for a resolution.Any matter under the preceding paragraph that has not been approved with the consent of at least the majority of the audit committee members may be adopted with the consent of at least two-thirds of all directors, and the resolution adopted by the audit committee shall be recorded in the meeting minutes of the board of directors.The board of directors of the insurance enterprise shall be aware of the risks it faces in its operations, supervise its operating results and be ultimately responsible for ensuring the establishment and maintenance of a proper and effective internal control system.