REYNOLDS AMERICAN INC.

Mission Statement

Pursuant to Section 10A(m)(4) of the Securities Exchange Act of 1934 (the “Exchange Act”), as added by Section 301 of the Sarbanes-Oxley Act of 2002, the Audit Committee of the Board of Directors of Reynolds American Inc. (the “Company”) must establish procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Company or its subsidiaries of concerns regarding questionable accounting or auditing matters.

The Audit Committee is establishing the following procedures to ensure its compliance with the letter and spirit of Section 10A(m)(4) of the Exchange Act.

Reporting Mechanism

Employees of the Company and its subsidiaries who are aware of suspected misconduct, illegal activities, fraud or abuse relating to the Company’s accounting, internal accounting controls or auditing matters are encouraged to report such matters to management, a Human Resources representative, the Vice President and General Auditor of the Company or the General Counsel of the Company (or his or her designee) (each such instance, a “Report”). An employee also may report such matters directly to the Chair of the Audit Committee.

In addition, the Company shall maintain a hotline, staffed by trained professionals, whereby employees of the Company and its subsidiaries may make Reports anonymously.

There will be no retribution against any employee for making a Report in good faith, and the Company will take reasonable steps to protect the confidentiality of the Report and the identity of the reporting person, consistent with the need to conduct an adequate review and to prepare an adequate response.

Investigations

Upon receipt of a Report, the General Counsel of the Company (or his or her designee), the Chief Human Resources Officer of the Company (or his or her designee) and the Vice President and General Auditor of the Company (collectively, the “Investigation Team”) shall meet to review the Report and determine the proposed method of investigating the matters raised in the Report. The Investigation Team will make recommendations to Company management about whether any immediate actions are necessary to strengthen the control environment. The General Counsel shall serve as the leader of the Investigation Team.

The substance of the allegations of each Report, as well as the proposed method of conducting the investigation, shall be provided to the Chair of the Audit Committee and the external auditor; however, in instances where the Investigation Team finds that a Report does not appear to be credible or of a serious nature, the Investigation Team or their designees will oversee the investigation, and the Vice President and General Auditor will report the findings to the Audit Committee at its next regularly scheduled meeting.

Roles and Responsibilities

In determining whether the Investigation Team or the Audit Committee should conduct an inquiry or investigation into a Report, the Audit Committee will consider in addition to the Investigation Team’s recommendation, among any other factors that are appropriate under the circumstances, the following:

1. Who is the alleged wrongdoer? If an executive officer, senior financial or accounting officer or other high management official is alleged to have engaged in wrongdoing, that factor may militate in favor of the Audit Committee conducting the inquiry or investigation.
2. How serious is the alleged wrongdoing? If the alleged wrongdoing would constitute a crime involving the integrity of the financial statements of the Company, that factor may militate in favor of the Audit Committee conducting the inquiry or investigation.
3. What is the nature of the allegation of wrongdoing? The Audit Committee should consider all facts surrounding the allegation, including but not limited to whether similar allegations have been made by regulatory authorities, the press or by analysts.

If an external investigator is retained, the General Counsel shall serve as the liaison between the external investigator and the Company.

Responses

After any investigation conducted by the Investigation Team, the General Counsel shall determine whether any misconduct, illegal activities, fraud or abuse relating to the Company’s accounting, internal accounting controls or auditing matters have in fact occurred, are on-going or are about to occur. The General Counsel shall report any such determination to the Audit Committee and to the external auditor for their review and concurrence with the determination. At the Audit Committee’s direction, the Company shall take all appropriate measures to remedy any such past or existing activities and to prevent the occurrence of such activities in the future.

Retention of Records

The Secretary of the Company shall retain a copy of any complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and any other records related thereto, for a period of at least three years.

Periodic Reports

The Audit Committee shall periodically obtain reports from the General Counsel of the Company (or his or her designee) and the Vice President and General Auditor of the Company, concerning any Reports received by the Company and all actions taken by the Company in response to such Reports. All Reports shall also be shared with the external auditor on a timely basis.