We have implemented a series of measures in an effort to enhance the effectiveness of our corporate governance:

Internal control

The Board has the responsibility to maintain and review the Company’s internal control system to ensure the Company’s assets and shareholders’ interests are safeguarded. The Board also reviews the internal control and risk management systems to ensure their effectiveness.

The Company has set up an internal audit department, which is an important part of its internal control system. In 2009, the internal audit department edited “SOHO China Internal Control Manual” and filed for internal procedure, and these ensured a sound and effective internal control system. The internal audit department did special audit on the process and budgeting of important operation units. It also worked on the monitoring of financial monitoring, operation monitoring, and compliance monitoring and risk management. In 2009, the Company also appointed Deloitte Touche Tohmatsu as its internal control consultant to re-check on specified procedure of the Company’s internal control system. The Board is responsible for the internal control system of the Company and conducts regular reviews on the effectiveness of the system through the internal audit department. The Board considers that, in 2009, the existing internal control system has been operating in a healthy and effective manner in the financial, operational, compliance and risk management aspects

Compliance Committee

The compliance committee currently comprises two independent non-executive Directors, one executive Director and one senior manager, namely Mr. Yi Xiqun, Dr. Ramin Khadem, Mrs. Pan Zhang Xin Marita and Ms. Lai Chor Shan. The committee is chaired by Mr. Yi Xiqun.

Management reporting system

We are formulating a policy to require the head of each department to provide a management reporting package for the Board to review on a quarterly basis. The management reporting package will include management analysis on financial information, budget variance analysis, internal audit issues summary and risk assessment analysis.

Risk management committee

We have established a risk management committee consisting of senior management of the Company and an in-house lawyer. The committee will be responsible for coordinating and overseeing the risk management process of the Company. External PRC legal advisers will also be invited to attend the meetings.

Ongoing PRC legal advisers

We will continue to retain Zhonglun as our ongoing PRC legal advisers and will continue to communicate with them on various PRC compliance issues. Zhonglun will review and approve contracts of significant value and advise on compliance with legal, regulatory and other requirements.

Internal legal support

We appointed Ms Lai Cho Shan as the Company’s Legal Counsel with effect from 26th May 2008. Other key members include Mr. Xia Guorong and Ms. Wang Nan. Mr. Xia is a qualified PRC lawyer and has over 12 years' legal experience in property-related areas. He was working in the legal department of China Grand Enterprises before joining us in June 2000. Ms. Wang has been a qualified PRC lawyer since 2005 and has a master's degree in law. She joined the team in April 2006. Before joining us, Ms. Wang worked at Beijing T&C Law Firm.

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