Corporate Governance

1. Overview

1.1 Preamble

The board (the "Board") of directors (the "Directors") of Hans Energy Company Limited (the "Company") has established an Audit Committee (the "Committee"). The terms of reference of the Committee (the "Terms of Reference") have been adopted by the Committee to govern its operations.

1.2 Membership

(i) Rule 3.10(2) of the Rules Governing the Listing of Securities (the "Listing Rules") of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") requires that the Committee be appointed by the Board from among the Company's non-executive Directors, and comprise at least three members, at least one of whom must be an independent non-executive Director (an "Independent Non-executive Director") of the Company with appropriate professional qualifications, or appropriate accounting or related financial management expertise. The majority of the Committee members must be Independent Non-executive Directors.

(ii) The chairman of the Committee shall be appointed by the Board and shall be an Independent Non-executive Director.

(iii) A former partner of the audit firm currently responsible for auditing the Company's accounts shall not act as a member of the Committee within two years of: (a) the date on which he ceased to be a partner of that audit firm; or (b) the date on which he ceased to have any financial interest in that audit firm, whichever is later.

(iv) Each member of the Committee shall disclose to the Committee: (a) any personal financial interest (other than as a shareholder of the Company) in any matter to be decided by the Committee; or (b) any potential conflict of interest arising from cross-directorships. Any such Committee member shall be entitled to participate in the discussion of a resolution of the Committee relating to such interest, subject to the voting on that resolution.

(v) Unless otherwise appointed by the Committee, the secretary of the Committee shall be the company secretary of the Company (the "Company Secretary"), who shall keep full minutes of Committee meetings. In the absence of the Company Secretary, any member of the Committee or any other person nominated by the Company Secretary from time to time may act as secretary of the Committee, subject to the Committee's approval.

(vi) The appointment of a Committee member may be revoked, or additional members may be appointed to the Committee by separate resolution of the Board; for the avoidance of doubt, the Board may, at its sole discretion, remove a member from the Committee.

(vii) The composition of the Committee shall comply with the requirements of the Listing Rules, as amended from time to time.

2. Meetings

2.1 Unless otherwise agreed by all Committee members, meetings shall be convened on at least seven days' notice. A Committee meeting convened on shorter notice may be deemed to have been duly convened if a majority of the Committee members so agree. A Committee member attending such a meeting shall be deemed to have consented to the shorter notice.

2.2 Notice of a meeting may be given verbally or in writing, by telephone, fax or other electronic means.

2.3 Unless otherwise agreed, notice of a meeting shall specify the place, time and date of the meeting, and shall be sent to Committee members together with the agenda of matters to be discussed and other documents for consideration; such agenda and other documents shall be sent to Committee members no later than three business days before the date of the meeting.

2.4 The quorum for a meeting shall be two members of the Committee, at least one of whom must be an Independent Non-executive Director of the Company.

2.5 The chairman (or, in the chairman's absence, a member designated by the chairman) shall preside over all meetings of the Committee. The chairman shall be responsible for leading the Committee, including arranging meetings, preparing agendas and reporting regularly to the Board.

2.6 The Committee may invite any executive Director, external adviser or other person to attend a meeting, but such executive Director, adviser or person shall have no right to vote at the meeting.

2.7 Resolutions of the Committee at any meeting shall be passed by a majority of votes.

2.8 The Committee shall meet multiple times, at least twice a year, and the external auditor must attend meetings at least twice a year, or as otherwise required from time to time under the Listing Rules or other applicable regulatory requirements of the Company.

2.9 Meetings may be held in person, by telephone or by video conference.

2.10 The Committee shall meet with the external auditor at least once a year in the absence of the executive Directors.

2.11 A Committee meeting shall be convened by the Committee, its chairman, or the Committee secretary, at the request of any member.

2.12 The external auditor may request a meeting to be convened if considered necessary.

2.13 The Committee shall report to the Board on its work.