Fu Shou Yuan International : Terms of Reference for the Compliance Committee (Adopted by the Board on August 21, 2020)

Fu Shou Yuan International Group Limited

福 壽 園 國 際 集 團 有 限 公 司

(the "Company")

(incorporated in the Cayman Islands with limited liability)

Terms of Reference for the Compliance Committee

(Adopted by the Board on August 21, 2020)

1. Functions
   The Compliance Committee (the ''Committee'') is appointed by the board (the ''Board'') of directors (the ''Directors'') of the Company to:
2. 1. assure that the Company and its subsidiaries (collectively the ''Group'') are in compliance with prevailing statutory requirements, guidelines, regulations and best practice codes of the Hong Kong Exchanges and Clearing Limited, Securities and Futures Commission and other regulators and quasi government bodies;
   2. exercise general management oversight on compliance with the Group's internal policies;
   3. develop, enhance and maintain the Group's compliance culture with regular training, policies and procedures to raise the compliance awareness of staff; and
   4. review and monitor the environmental, social and corporate governance (''ESG'') functions and duties so as to ensure a high standard of corporate governance practices and the sustainability in the Group.
3. Membership
4. 1. The Board appoints the Chairman and members of the Committee.
   2. The Committee shall have at least three members and shall consist of independent non-executive Directors only.
   3. The tenure of the members shall be two years and retired members are eligible for re-appointment.

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1. Authority
   The Committee is authorized by the Board to:
2. 1. investigate any activity within its terms of reference;
   2. seek information from any employee, member of the management, director, agent, consultant or advisor, external auditor, internal auditor and all such persons will be directed to co-operate with any request made by the Committee;
   3. consult any external legal, accounting or other independent professional body and to invite the attendance of outsiders with relevant experience and expertise at the expense of the Company;
   4. approve expenses relating to the seeking of external advice and on the establishment of compliance or ESG management system;
   5. delegate appropriate authority to the management for execution of instructions when considered appropriate; and
   6. be provided with sufficient resources to discharge its duties.
3. Responsibilities
   The main responsibilities of the Committee are to:
4. 1. formulate, review, approve and monitor the Group's policies and practices on compliance with legal and regulatory requirements and such responsibility may be delegated to the Head of Internal Control Department in collaboration with respective senior management and external consultant;
   2. supervise the implementation of the compliance management system and monitor functions of the Internal Control Department;
   3. review reports prepared by the Head of Internal Control Department, Sustainability Committee and external consultant (if any) and circulate such reports to members of the Audit Committee of the Board;
   4. review the process on handling complaint cases by the Head of Internal Control Department;
   5. develop and review the Group's policies and practices on corporate governance and make recommendations to the Board;

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1. review and monitor the training and continuous professional development of Directors, senior management and other employees in respect of compliance and ESG matters (including vocational training for improving employees' knowledge and skills for discharging duties at work and anti-corruption training);
2. develop, review and monitor the codes of conduct applicable to employees and Directors;
3. review the Company's compliance with the corporate governance code and disclosure in the corporate governance report;
4. prepare and submit a summary report every half-yearly to the Board on the overall compliance performance and corporate governance practices of the Group. A copy of the summary report will be sent to the Audit Committee of the Board for its information;
5. perform the following duties in respect of ESG-related issues:
6. 1. to regularly review the Group's ESG management approach, strategy and governance structure, and submit the results of review to the Board for approval;
   2. to approve the process used to identify, evaluate, prioritize and manage material ESG-related issues and the Group's ESG policies and regularly review their effectiveness, and to monitor the facilitation by the Sustainability Committee of the implementation of ESG policies by different departments;
   3. to formulate the ESG goals of the Group, regularly review the feasibility of the ESG goals and the corresponding implementation, planning and effectiveness of achieving the ESG goals by the Sustainability Committee, and give suggestions to the Sustainability Committee or the Board on actions required to improve the ESG-related performance;
   4. to approve the evaluation results of identification by the Sustainability Committee of the Group's key stakeholders, including shareholders/ investors, employees, customers, government and regulatory authorities, partners (including suppliers and service providers), community residents/organizations/non-governmental organizations or media, etc.;
   5. to regularly review the ESG-related issues of the Group that may have significant impact on its key stakeholders, and submit the results of review to the Board for approval;

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1. to regularly review the effectiveness of the ESG risk management (including risks to the Group's business and significant climate-related risks) and internal control systems; and
2. to examine the disclosure of sustainability reports prepared by the Sustainability Committee presented in an annual report or in a separate report of the Company in accordance with the Environmental, Social and Governance Reporting Guide (the ''Guide'') in Appendix 27 to the Listing Rules and to evaluated and confirm the accuracy of key performance indicators and the sustainability reports' compliance with the requirements of the Guide and submit to the Board for approval.

5. Meetings

1. The Committee shall meet at least two times a year and members may request a meeting whenever considered necessary.
2. At least two members of independent non-executive Directors shall constitute a quorum.
3. The Chairman shall invite, as he/she considers appropriate, other Directors, any member of staff, external auditors, external advisors or consultants or any person with the Committee's authorization to attend the meeting.
4. The Head of Internal Control Department shall attend the meeting.
5. The company secretary shall be the secretary of the meeting.
6. The company secretary shall circulate minutes of the Committee meetings to all members of the Committee, the Head of Internal Control Department and the Sustainability Committee. The minutes should also be made available upon request to other members of the Board. The company secretary shall circulate minutes of the Committee meetings to the Board on any relevant issues.
7. The company secretary shall circulate comments, recommendations and resolutions, if any, to members of the Committee and the Head of Internal Control Department and the Sustainability Committee. They should also be made available upon request to other members of the Board. A respective set of the report covering items of concern will also be addressed to the Board regarding operational and financial compliance for its implementation and follow up.

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6. Annual General Meeting

The Chairman of the Committee shall attend the annual general meeting of the Company and be prepared to respond to any shareholder's questions on the Committee's activities.

(Chinese translation is for reference only. The English text shall prevail in case of any inconsistency.)

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