Jinhui Shipping recognizes the importance of good corporate governance to the Company's value creation and has devoted considerable efforts to identify and formulate corporate governance practices appropriate to the Company in terms of practicality and suitability.

Jinhui Shipping has applied the principles as set out in the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board as its corporate governance structure. The company gives an annual review in the corporate governance report which covers every section for its compliance with the Norwegian Code of Practice for Corporate Governance.

The Board has the ultimate responsibility for the management and administration of the affairs of the Company and for supervising day-to-day management and activities in general; it also has the overall responsibility for the Group's good corporate governance practices, internal control and risk management.

The Board is now composed of four Executive Directors, including the Chairman and the Managing Director, and two Non-executive Directors. The Chairman is responsible for overseeing the functioning of the Board whilst the Managing Director, supported by the Executive Directors, is responsible for managing the Group's business, including the implementation of major strategies and initiatives adopted by the Board. All Non-executive Directors, who are shareholder-elected members and independent of executive personnel, material business contacts and main shareholders of the Company, serve the important function of advising the management on strategies development and ensure that the Group maintains high standards of financial and other mandatory reporting as well as providing adequate checks and balances for safeguarding the interests of shareholders and the Company as a whole.

All Directors are kept informed on a timely basis of major changes that may affect the Group's business including relevant rules and regulations. The Board meets regularly and approves the Group's overall strategies, major acquisitions and disposals, annual and quarterly results and any other significant operational and financial matters. Members of the Board are encouraged to own shares in the Company. The Directors will seek independent professional advice in performing their duties where appropriate. Executive personnel have the responsibility for implementation of the Group's strategic planning and decision made by the Board and monitoring day-to-day operation of the Company.

The Board is assisted by two Board Committees which are Audit Committee and Remuneration Committee. Their existence does not reduce the responsibility of the Board as a whole. Board Committee meetings are convened to prepare matters for consideration and final decision by the Board as a whole. Material information that comes to the attention of Board Committees are also communicated to other members of the full Board.

As a general principle, the Board Committees have an advisory role to the Board and members of such committees are restricted to members of the Board who are independent of executive personnel. They assist the Board in specific areas and make recommendations to the Board. However, only the Board has the power to make final decisions.

The Audit Committee was established on 17 March 2006, currently comprises of two Non-executive Directors, Mr. Tsui Che Yin Frank (Chairman) and Mr. William Yau.

The primary duties of the Audit Committee include the review of the Group's financial reporting, the nature and scope of audit review as well as the effectiveness of the system of internal control and compliance. The Audit Committee is also responsible for making recommendations in relation to the appointment, re-appointment and removal of the auditor, and reviewing and monitoring the auditor's independence and objectivity. In addition, the Audit Committee discusses matters raised by the auditor and regulatory bodies to ensure that appropriate recommendations are implemented.

The Audit Committee has reviewed with the management, the accounting principles and practices adopted by the Group and discussed auditing, internal controls and financial reporting matters including the review of the Company's half-yearly and annual reports before submission to the Board.

Terms of Reference

The Remuneration Committee was established on 17 March 2006, currently comprising two Non-executive Directors, Mr. Tsui Che Yin Frank (Chairman) and Mr. William Yau.

The role and function of the Remuneration Committee include the determination of the specific remuneration packages of all Executive Directors and executive personnel, including salaries, bonuses, benefits in kind, pension rights and compensation payments, and make recommendations to the Board on the fees for the Non-executive Directors. The Remuneration Committee should consider factors such as the performance of Executive Directors and executive personnel, the profitability of the Group, salaries paid by comparable companies, time commitment and responsibilities of the Executive Directors and executive personnel, employment conditions elsewhere in the Group and desirability of performance-based remuneration. The Remuneration Committee has to ensure that the Group is able to attract, retain and motivate a high-calibre team which is essential to the success of the Group.

Terms of Reference