Yucheng Technologies Limited

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YTEC - (NASD)

Board Committees

AUDIT COMMITTEE CHARTER
OF
YUCHENG TECHONOLOGIES LIMITED

Purpose 
The Audit Committee is appointed by the Board of Directors (‘‘Board’’) of Yucheng Techologies Limited. (‘‘Company’’) to assist the Board in monitoring (1) the integrity of the annual, quarterly and other financial statements of the Company, (2) the independent auditor’s qualifications and independence, (3) the performance of the Company’s independent auditors and (4) the compliance by the Company with legal and regulatory requirements. The Audit Committee also shall review and approve all related-party transactions. 
The Audit Committee shall prepare the report required by the rules of the Securities and Exchange Commission (‘‘Commission’’) to be included in the Company’s annual proxy statement. 
Committee Membership 
The Audit Committee shall consist of no fewer than three members, absent a temporary vacancy. The members of the Audit Committee shall meet the independence and experience requirements of the The Nasdaq Stock Market, Inc., Section 10A(m)(3) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) and the rules and regulations of the Commission. 
The members of the Audit Committee shall be appointed by the Board. Audit Committee members may be replaced by the Board.
Meetings 
The Audit Committee shall meet as often as it determines, but not less than quarterly. The Audit Committee shall meet periodically with management and the independent auditor in separate executive sessions. The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Audit Committee or to meet with any members of or consultants to, the Audit Committee. 
Committee Authority and Responsibilities 
The Audit Committee shall have the sole authority to appoint or replace the independent auditor. The Audit Committee shall be directly responsible for determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Audit Committee. 
The Audit Committee shall pre-approve all auditing services and permitted non-audit services to be performed for the Company by its independent auditor, including the fees and terms thereof (subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit Committee prior to the completion of the audit). The Audit Committee may form and delegate authority to subcommittees of the Audit Committee consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting. 
The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors. The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to (i) the independent auditor for the purpose of rendering or issuing an audit report and (ii) any advisors employed by the Audit Committee. 
The Audit Committee shall make regular reports to the Board. The Audit Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Audit Committee annually shall review the Audit Committee’s own performance. 
The Audit Committee shall: 
Financial Statement and Disclosure Matters 
1.  Meet with the independent auditor prior to the audit to review the scope, planning and staffing of the audit. 
2.  Review and discuss with management and the independent auditor the annual audited financial statements, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K. 
3.  If requested by the Audit Committee, management or the independent auditors, review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditor’s review of the quarterly financial statements. 
4. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including: 
(a) any significant changes in the Company’s selection or application of accounting principles; 
(b) the Company’s critical accounting policies and practices to be used; 
(c) All alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; 
(d) any material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences; and 
(e) any major issues as to the adequacy of the Company’s internal controls and any special steps adopted in light of material control deficiencies. 
5. Discuss with management the Company’s earnings press releases generally, including the use of ‘‘pro forma’’ or ‘‘adjusted’’ non-GAAP information, and financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be general and include the types of information to be disclosed and the types to be presentations to be made. 
6. Discuss with management and the independent auditor the effect on the Company’s financial statements of (i) regulatory and accounting initiatives and (ii) off-balance sheet structures. 
7. Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
8. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management. 
9. Review disclosures made to the Audit Committee by the Company’s CEO and CFO during their certification process for the Form 10-Kand Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls. 
Oversight of the Company’s Relationship with the Independent Auditor 
10. At least annually, obtain and review a report from the independent auditor, consistent with Independence Standards Board Standard 1, regarding (a) the independent auditor’s internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues and (d) all relationships between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management. The Audit Committee shall present its conclusions with respect to the independent auditor to the Board. 
11. Verify the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis. 
12. Oversee the Company’s hiring of employees or former employees of the independent auditor who participated in any capacity in the audit of the Company. 
13. Be available to the independent auditors during the year for consultation purposes. Compliance Oversight Responsibilities 
14. Obtain from the independent auditor assurance that Section 10A(b) of the Exchange Act has not been implicated. 
15. Review and approve all related-party transactions. 
16. Inquire and discuss with management the Company’s compliance with applicable laws and regulations and with the Company’s Code of Ethics, in effect at such time, if any, and, where applicable, recommend policies and procedures for future compliance. 
17. Establish procedures (which may be incorporated in the Company’s Code of Ethics, in effect at such time, if any) for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. 
18. Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports that raise material issues regarding the Company’s financial statements or accounting policies. 
19. Discuss with the Company’s General Counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies. 
Limitation of Audit Committee’s Role 
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor.

YUCHENG TECHNOLOGIES LIMITED
Nominating Committee Charter

The Nominating Committee’s responsibilities and powers as delegated by the board of directors are set forth in this charter. Whenever the Committee takes an action, it shall exercise its independent judgment on an informed basis that the action is in the best interests of the Company and its stockholders. 
I. PURPOSE 
As set forth herein, the Committee shall, among other things, discharge the responsibilities of the board of directors relating to the appropriate size, functioning and needs of the board including, but not limited to, recruitment and retention of high quality board members and committee composition and structure. 
II. MEMBERSHIP 
The Committee shall consist of at least two members of the board of directors as determined from time to time by the board. Each member shall be ‘‘independent’’ in accordance with the listing standards of the Nasdaq Stock Market, as amended from time to time. 
The board of directors shall elect the members of this Committee at the first board meeting practicable following the annual meeting of stockholders and may make changes from time to time pursuant to the provisions below. Unless a chair is elected by the board of directors, the members of the Committee shall designate a chair by majority vote of the full Committee membership. 
A Committee member may resign by delivering his or her written resignation to the chairman of the board of directors, or may be removed by majority vote of the board of directors by delivery to such member of written notice of removal, to take effect at a date specified therein, or upon delivery of such written notice to such member if no date is specified. 
III. MEETINGS AND COMMITTEE ACTION 
The Committee shall meet at such times as it deems necessary to fulfill its responsibilities. Meetings of the Committee shall be called by the chairman of the Committee upon such notice as is provided for in the by-laws of the company with respect to meetings of the board of directors. A majority of the members shall constitute a quorum. Actions of the Committee may be taken in person at a meeting or in writing without a meeting. Actions taken at a meeting, to be valid, shall require the approval of a majority of the members present and voting. Actions taken in writing, to be valid, shall be signed by all members of the Committee. The Committee shall report its minutes from each meeting to the board of directors. 
The chairman of the Committee shall establish such rules as may from time to time be necessary or appropriate for the conduct of the business of the Committee. At each meeting, the chairman shall appoint as secretary a person who may, but need not, be a member of the Committee. A certificate of the secretary of the Committee or minutes of a meeting of the Committee executed by the secretary setting forth the names of the members of the Committee present at the meeting or actions taken by the Committee at the meeting shall be sufficient evidence at all times as to the members of the Committee who were present, or such actions taken.

IV. COMMITTEE AUTHORITY AND RESPONSIBLITIES 
. Developing the criteria and qualifications for membership on the board. 
. Recruiting, reviewing and nominating candidates for election to the board of directors or to fill vacancies on the board of directors. 
. Reviewing candidates proposed by stockholders, and conducting appropriate inquiries into the background and qualifications of any such candidates. 
. Establishing subcommittees for the purpose of evaluating special or unique matters. 
. Monitoring and making recommendations regarding committee functions, contributions and composition. 
. Evaluating, on an annual basis, the Committee’s performance. 
VI. REPORTING 
The Committee shall prepare a statement each year concerning its compliance with this charter for inclusion in the Company’s proxy statement. 
YUCHENG TECHNOLOGIES LIMTED 
Board of Director Candidate Guidelines 
The Nominating Committee of Yucheng Technologies Limited (the ‘‘Company’’) will identify, evaluate and recommend candidates to become members of the Board of Directors (‘‘Board’’) with the goal of creating a balance of knowledge and experience. Nominations to the Board may also be submitted to the Nominating Committee by the Company’s stockholders in accordance with the 
Company’s policy, a copy of which is attached hereto. Candidates will be reviewed in the context of current composition of the Board, the operating requirements of the Company and the long-term interests of the Company’s stockholders. In conducting this assessment, the Committee will consider and evaluate each director-candidate based upon its assessment of the following criteria: 
. Whether the candidate is independent pursuant to the requirements of the Nasdaq Stock Market. 
. Whether the candidate is accomplished in his or her field and has a reputation, both personal and professional, that is consistent with the image and reputation of the Company. 
. Whether the candidate has the ability to read and understand basic financial statements. The Nominating Committee also will determine if a candidate satisfies the criteria for being an “audit committee financial expert,’’ as defined by the Securities and Exchange Commission. 
. Whether the candidate has relevant experience and expertise and would be able to provide insights and practical wisdom based upon that experience and expertise. 
. Whether the candidate has knowledge of the Company and issues affecting the Company. 
. Whether the candidate is committed to enhancing stockholder value. 
. Whether the candidate fully understands, or has the capacity to fully understand, the legal responsibilities of a director and the governance processes of a public company. 
. Whether the candidate is of high moral and ethical character and would be willing to apply sound, objective and independent business judgment, and to assume broad fiduciary responsibility. 
. Whether the candidate has, and would be willing to commit, the required hours necessary to discharge the duties of Board membership. 
. Whether the candidate has any prohibitive interlocking relationships or conflicts of interest. 
. Whether the candidate is able to develop a good working relationship with other Board members and contribute to the Board’s working relationship with the senior management of the Company. 
. Whether the candidate is able to suggest business opportunities to the Company. 
Stockholder Recommendations for Directors 
Stockholders who wish to recommend to the Nominating Committee a candidate for election to the Board of Directors should send their letters to Yucheng Technologies Limited, 105 West 13th Street, Suite 7A, New York, New York 10011, Attention: Nominating Committee. The Corporate Secretary will promptly forward all such letters to the members of the Nominating Committee. Stockholders must follow certain procedures to recommend to the Nominating Committee candidates for election as directors. In general, in order to provide sufficient time to enable the Nominating Committee to evaluate candidates recommended by stockholders in connection with selecting candidates for nomination in connection with the Company’s annual meeting of stockholders, the Corporate Secretary must receive the stockholder’s recommendation no later than thirty (30) days after the end of the Company’s fiscal year. 
The recommendation must contain the following information about the candidate: 
. Name; 
. Age; 
. Current business and residence addresses and telephone numbers, as well as residence addresses for the past 20 years; 
. Principal occupation or employment and employment history (name and address of employer and job title) for the past 20 years (or such shorter period as the candidate has been in the workforce); 
. Educational background; 
. Permission for the Company to conduct a background investigation, including the right to obtain education, employment and credit information; 
. Three (3) character references and contact information; 
. The number of shares of common stock of the Company beneficially owned by the candidate; 
. The information that would be required to be disclosed by the Company about the candidate under the rules of the SEC in a Proxy Statement soliciting proxies for the election of such candidate as a director (which currently includes information required by Items 401, 404 and 405 of Regulation S-K); and 
. A signed consent of the nominee to serve as a director of the Company, if elected.