Effective September 26, 2012, the board of directors of Duoyuan Global Water Inc. appointed Mr. Lianjun CAI as a director. The board of directors has determined that Mr. CAI is independent. Mr. CAI will serve as the chairman of the audit committee and as the chairman of the special investigation committee. Mr. CAI replaces Mr. David Shing Yim CHAU, who resigned from those positions on May 4, 2012. The board has designated Mr. CAI as the audit committee financial expert. Lianjun CAI. Mr. CAI has been an independent director of Duoyuan Printing Inc. since April 2007. From July 1975 to March 1979, Mr. CAI was the accountant of Hongxing (Red Star) Crop Management Agency. From April 1979 to May 1988, he was assigned to the Food Bureau of Daxing District as Chief Accountant to supervise the accounting matters of over 130 separate units in this Bureau.

The U.S. District Court of Appeal for the Southern District of New York denied in relevant part a motion to dismiss securities fraud class action claims brought by shareholders against Duoyuan Global Water Inc. arising from alleged misrepresentations contained in the firm's filings submitted to the SEC. Shareholders in the company sued the firm and certain of its officers alleging violation of §§11 and 15 of the Securities Act of 1933, and §§10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleged that the defendants misled investors by misstating financial figures and overstating the number of the firm's distributors and employees. The plaintiffs alleged that the firm's stock price was artificially inflated as a result of the misrepresentations, and that when corrective disclosures were made to the market, the firm's stock price dropped, to the plaintiffs' material detriment. The defendants moved to dismiss. The complaint also named Grant Thornton International Ltd.- company's outside auditor-as a defendant. The district court noted that the complaint alleged that the company defendants made two markedly different representations of the financial position of two of the firm's Chinese subsidiaries in State Administration of Industry and Commerce (SAIC) reports submitted in China, and in SEC filings. The court found comparison of the two filings to be substantively appropriate, and separately held that the extreme discrepancies between the two filings, coupled with the logical inference that could be made regarding these figures, was sufficient to support a finding that the SEC filings were false. The court separately noted that the complaint asserted that the company's CEO and CFO knew or should have known that the U.S. reported revenues, operating income, and net income were much greater than those reported in the SAIC filings. The court found that the resignation of the firm's CFO, within the same time frame as the period when corrective disclosures were made to the market, added to the inference of scienter. The court held that these and additional allegations were sufficient to support a finding of scienter as against the firm's CEO and CFO. After separately concluding that the complaint did not adequately support its claims against Grant Thornton, the court granted the auditor's motion to dismiss, and denied the motion to dismiss the action as against the company and the officer defendants.

NYSE Regulation, Inc. announced the final determination to remove the American Depositary Shares of Duoyuan Global Water Inc. from listing on the New York Stock Exchange LLC (NYSE) and that it will file with the Securities and Exchange Commission (SEC) a Form 25 Delisting Application to remove the American Depositary Shares from listing on the NYSE. NYSE Regulation originally announced on January 25, 2012 its staff determination to delist the American Depositary Shares and trading was suspended on the NYSE on January 25, 2012. As permitted under the rules of the NYSE, Duoyuan Global Water Inc. appealed this decision to a Committee of the Board of Directors of NYSE Regulation, Inc. (the Committee). The appeal was conducted on May 17, 2012 and NYSE Regulation's staff delisting determination was upheld by the Committee on May 31, 2012. The delisting will become effective ten days after the Form 25 is filed unless postponed by the Commission.