The purpose of the Audit Committee (the “ Committee”) is to assist the Board of Directors (the “ Board”) of China Finance Online Co. Limited (the “ Company”) in overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company and to prepare the annual report of the Audit Committee required by applicable United States Securities and Exchange Commission (“ SEC”) disclosure rules. In doing so, it is the responsibility of the Committee to provide an open avenue of communication between the Board, management, internal audit firm (or other personnel responsible for the internal audit function) and the independent auditors. Among the matters the Committee will oversee are (a) the integrity of the Company’s financial statements, (b) the Company’s compliance with legal and regulatory requirements, (c) the independent auditors’ qualifications and independence, and (d) the performance of the Company’s internal audit, accounting and financial controls and the Company’s independent auditors.

The function of the Committee is oversight. Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements. Management and the internal auditing department are responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The Company’s independent auditors are responsible for planning and carrying out a proper audit of the Company’s annual financial statements and other procedures. In fulfilling their responsibilities hereunder, it is recognized that members of the Committee are not full-time employees of the Company and are not, and do not represent themselves to be, performing the functions of auditors or accountants. As such, it is not the duty or responsibility of the Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards.

The Company’s independent auditors are accountable to the Committee, as representatives of the shareholders. The Committee is directly responsible for the appointment, compensation and oversight of the work of the independent auditors (including resolving disagreements between management and the independent auditors regarding financial reporting). The Committee has the authority and responsibility to appoint, retain and terminate the Company’s independent auditors (subject, if applicable, to shareholder ratification). The Company’s independent auditors shall report directly to the Committee.

The Committee will consist of three or more directors of the Company’s Board, each of whom must be an “audit committee independent director” pursuant to applicable SEC rules and the requirements of Rule 4350(d)(2)(A) of the Nasdaq Marketplace Rules (the “ Nasdaq Rules”), which are set forth in Annex A attached hereto.

No Committee member shall simultaneously serve on the audit committees of more than two other public companies. The members of the Committee will be appointed by and serve at the discretion of the Board. The Chairperson of the Committee will be appointed by the Board. The Board shall also determine whether at least one member of the Committee is an “audit committee financial expert” as defined in Item 16A(b) of Form 20-F, the requirements for which are set forth in Annex B hereto. Section 13(a) of the Securities Exchange Act of 1934 , as amended (the “ Exchange Act”) , requires the Company to disclose whether or not one member of the Committee is an audit committee financial expert.

Nasdaq Marketplace Rule 4350(d)(2) also requires that each issuer must certify that it has, and will continue to have, at least one member of the audit committee who has past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities .

The Board delegates to the Committee the express responsibility and authority to:

3.1 Independent Auditors

1. Selection and Fees . Be solely and directly responsible for the appointment, compensation, retention, evaluation, and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company and, where appropriate, the termination and replacement of such firm. Such independent auditors shall report directly to and be ultimately accountable to the Committee. The Committee has the ultimate authority to approve all audit engagement fees and terms, with the costs of all engagements to be borne by the Company.

2. Audit Team . Review the experience and qualifications of the senior members of the independent auditors’ team.
3. Scope of Audit . Review, evaluate and approve the annual engagement proposal of the independent auditors (including the proposed scope and approach of the annual audit).
4. Lead Audit Partner Review, Evaluation and Rotation. Review and evaluate the lead partner of the independent auditors. Ensure that the lead audit partner having primary responsibility for the audit and the reviewing audit partner of the independent auditors are rotated at least every five years and that other audit partners (as defined by the SEC) are rotated at least every seven years.
5. Pre-Approval of Audit and Non-Audit Services. Pre-approve all auditing services and all non-audit services permitted to be performed by the independent auditors, and to consider whether the performance by the independent auditors of non-audit services is compatible with maintaining the independence of the independent auditors. Such pre-approval may be given as part of the Committee’s approval of the scope of the engagement of the independent auditors or on an engagement-by-engagement basis or pursuant to pre-established policies. In addition, the authority to pre-approve non-audit services may be delegated by the Committee to one or more of its members, but such member’s or members’ non-audit service approval decisions must be reported to the full Committee at the Committee’s next regularly scheduled meeting. The Company shall disclose in its annual reports (and periodic reports, if any) required by Section 13(a) of the Exchange Act any approval of non-audit services during the period covered by the applicable report. The independent auditors shall not be retained to perform the non-audit functions prohibited by applicable law and the rules of the SEC. A list of prohibited non-audit functions, as defined in Section 10A(g) of the Exchange Act, is set forth in Annex C hereto.

6. Statement from Independent Auditors. At least annually, obtain and review a formal written statement from the independent auditors (it being understood that the independent auditors are responsible for the accuracy and completeness of such report) describing:
   1. the independent auditors’ internal quality-control procedures;
   2. any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditors, 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 independent auditors, and any steps taken to deal with any such issues; and
   3. all relationships between the independent auditors and the Company (to assess the independent auditors’ independence), including each non-audit service provided to the Company and at least the matters set forth in Independence Standards Board Standard No. 1
7. Statement of Fees from Independent Auditors. The independent auditors shall submit to the Committee annually a formal written statement of the fees billed in each of the last two fiscal years for each of the following categories of services rendered by the independent auditors:
   1. the audit of the Company’s annual financial statements or services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements;
   2. assurances and related services, not included in clause (i) that are reasonably related to the performance of the audit or review of the Company’s financial statements, in the aggregate and by each service;
   3. tax compliance, tax advice and tax planning services, in the aggregate and by each service; and
   4. all other products and services rendered by the independent auditors, in the aggregate and by each service.
8. Hiring Policies. Set clear hiring policies for employees and former employees of the independent auditors.
9. Review Problems . Review with the independent auditors any audit problems or difficulties the independent auditors may have encountered in the course of their audit work, and management’s responses, including: (i) any restrictions on the scope of activities or access to requested information and (ii) any significant disagreements with management.
10. Material Communications. Discuss with the independent auditors any communications between the audit team and the independent auditors’ national office regarding auditing or accounting issues that the engagement presented.
11. Accounting Adjustments . Discuss with the independent auditors any accounting adjustments that were noted or proposed by the independent auditors but were passed on.
12. Internal Audit Function . Discuss with the independent auditors the responsibilities, budget and staffing of the Company’s internal audit function.
13. Management or Internal Control Letters . Discuss with the independent auditors any “management” or “internal control” letter issued, or proposed to be issued, by the independent auditor to the Company

3.2 Financial Reporting

1. Annual Financials. Review and discuss with management and the independent auditors the Company’s annual audited financial statements, (including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), any unusual or non-recurring items, the nature and substance of significant reserves, the adequacy of internal controls and other matters that the Committee deems material, prior to the public release of such information. Obtain from the independent auditors assurance that the audit was conducted in a manner consistent with Section 10A of the Exchange Act. Recommend to the Board whether the annual audited financial statements should be included in the Company’s Annual Report on Form 20-F.
2. Interim Financials. Review and discuss with management and the independent auditors the Company’s interim financial statements (including the Company disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), the results of the independent auditors’ reviews of the interim financial statements, and other matters that the Committee deems material prior to the public release of such information.
3. Accounting Principles. Review with management and the independent auditors major issues regarding accounting principles and financial statement presentations, including any material changes in the selection or application of the principles followed in prior years and any items required to be communicated by the independent auditors in accordance with AICPA Statement of Auditing Standards (“ SAS”) 61, including any of the following:
   • deficiencies noted in the audit in the design or operation of internal controls;
   • consideration of fraud in a financial statement audit;
   • detection of illegal acts;
   • the independent auditors’ responsibility under generally accepted auditing standards;
   • any restriction on audit scope;
   • significant accounting policies;
   • significant issues discussed with the national office respecting auditing or accounting issues presented by the engagement;
   • management judgments and accounting estimates;
   • any accounting adjustments arising from the audit that were noted or proposed by the auditors but were passed on (as immaterial or otherwise);
   • the responsibility of the independent auditors for other information in documents containing audited financial statements;
   • disagreements with management;
   • consultation by management with other accountants;
   • major issues discussed with management prior to retention of the independent auditors;
   • difficulties encountered with management in performing the audit;
   • the independent auditors’ judgments about the quality of the entity’s accounting principles;
   • reviews of interim financial information conducted by the independent auditors; and
   • the responsibilities, budget and staffing of the Company’s internal audit function.
4. Judgments . Review reports prepared by management or by the independent auditors relating to significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including an analysis of the effect of alternative U.S. generally accepted accounting principles (“ GAAP”) methods on the Company’s financial statements and a description of any transaction as to which management obtained an SAS 50 letter.
5. Press Releases. Discuss earnings press releases with management (including the type and presentation of information to be included in earnings press releases), as well as financial information and earnings guidance provided to analysts and rating agencies.
6. Regulatory Developments. Review with management and the independent auditors the effect on the Company’s financial statements of regulatory and accounting initiatives and any off-balance sheet structures.

3.3 Internal Audit and Risk Management.

1. Internal Audit and Controls . Review the budget, qualifications, activities, effectiveness and organizational structure of the internal audit function, the performance, appointment and replacement of the lead internal auditor, and summaries of material internal audit reports and management’s responses. Review major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of control deficiencies.
2. Risk Assessment and Risk Management. Discuss policies with respect to risk assessment and risk management periodically with the management, internal auditors, and independent auditors, and the Company’s plans or processes to monitor, control and minimize such risks and exposures.

3.4 Financial Reporting Processes; CEO and CFO Certifications.

1. Internal and External Controls . In consultation with the independent auditors and the Company’s internal auditors, the Disclosure Committee and financial and accounting personnel, review the integrity, adequacy and effectiveness of the Company’s accounting and financial controls, both internal and external, including the Company’s Internal Financial Controls, and elicit any recommendations for the improvement of such internal control procedures or particular areas where new or more detailed controls or procedures are desirable. Ensure that the Company’s independent auditors have sufficient access to and time to review such internal control procedures so that the Company may obtain from the independent auditors the Attestation of the Company’s Independent Auditor as to the Company’s internal controls and procedures in connection with the filing of the Company’s Annual Report on Form 20-F (commencing with such report for the Company’s first fiscal year ending on or after April 15, 2005 ) and otherwise in accordance with Item 308(b) of Regulation S-K and Item 15(c) of Form 20-F.

2. Consider Changes . Review major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies.
3. Reporting Systems . Establish regular and separate systems of reporting to the Committee by each of (i) management, (ii) the independent auditors and (iii) the internal auditors regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.
4. Reports from Independent Auditors . O btain from the independent auditors in connection with any audit, prior to filing the Company’s audit report with the SEC, a report relating to the Company’s annual audited financial statements including:
   1. a description of all critical accounting policies and practices to be used by the Company;
   2. 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 auditors; and
   3. all other material written communications between the independent auditors and management, including any management letter or schedule of unadjusted differences.
5. CEO and CFO Certifications. Discuss with the Chief Executive Officer and the Chief Financial Officer the processes involved in and any material required as a result of the Form 20-F certification process concerning deficiencies in design or operation of internal controls or any fraud involving management or employees with a significant role in the Company’s internal controls.

3.5 Legal and Regulatory Compliance

1. Related Party Transactions . Conduct an appropriate review of all proposed related-party transactions (which term refers to transactions that would be required to be disclosed pursuant to SEC Regulation S-K, Item 404 as described in Annex D hereto) , including proposed amendments to existing related party transactions . A list of the Company’s related party transactions, as of the date of this Audit Committee Charter, and as updated from time to time, is set forth in Annex E hereto. Management shall not cause the Company to enter into any new related party transaction unless such transaction is approved by the Committee or relates to transactions previously adopted by the Board and approved by the Committee.
2. Reports from Others .Obtain such reports from management, auditors, the general counsel, tax advisors or any regulatory agency as the Committee deems necessary regarding regulatory compliance, transactions with affiliates, and other legal matters that may have a material effect on the Company’s financial statements and the consideration of those matters in preparing the financial statements.
3. Complaints . Establish procedures for the receipt, retention and treatment of complaints received by the Company from Company employees regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters and other matters.

3.6 Annual Evaluation of Charter. Review and reassess the adequacy of this Charter at least annually and recommend any proposed changes to the Board, as appropriate, and publish this Charter as required by applicable law.

1. Reports and Recommendations . Regularly report to the Board on the Committee’s activities, and its conclusions with respect to the independent auditors, and make appropriate recommendations to the Board.
2. Executive Sessions . The Committee shall meet periodically (with such frequency as it determines) with each of the independent auditors, internal auditors (or other personnel responsible for the Company’s internal audit function) and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately.
3. Other Meetings . Other meetings will be with such frequency, and at such times, as its Chairperson, or a majority of the Committee, determines, but the Committee shall meet just prior to or immediately after each meeting of the Board. Special meetings of the Committee may be called by the Chairperson and will be called promptly upon the request of any two Committee members. The agenda of each meeting will be prepared by the Chairperson and circulated, if practicable, to each member prior to the meeting date. Unless the Committee or the Board adopts other procedures, the provisions of the Company’s Articles of Association applicable to meetings of Board committees will govern meetings of the Committee.
4. Minutes . The Committee shall ensure that minutes of each meeting are recorded and approved at the next meeting.

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special or independent counsel, accountants or other experts and advisors, as it deems necessary or appropriate, without seeking approval of the Board or management.

Except as expressly set forth in this Charter or the Company's Articles of Association or Corporate Governance Guidelines, or as otherwise provided by law or the rules of Nasdaq, the Committee shall establish its own rules and procedures.