Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317)
Management measures for employee stock ownership plan in 2022
Chapter I General Provisions
Article 1 in order to regulate the implementation of Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) (hereinafter referred to as ” Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) ” or “the company”) Employee Stock Ownership Plan (hereinafter referred to as “Employee Stock Ownership Plan”) in 2022, According to the company law of the people’s Republic of China, the securities law of the people’s Republic of China, the guiding opinions of the CSRC on the pilot implementation of employee stock ownership plan by listed companies (hereinafter referred to as the “guiding opinions”), the self regulatory guidance of listed companies of Shenzhen Stock exchange No. 1 – standardized operation of listed companies on the main board (hereinafter referred to as the “guiding opinions”)《 The measures for the administration of employee stock ownership plan in Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) 2022 (hereinafter referred to as “the measures”) is hereby formulated in accordance with the provisions of relevant laws, administrative regulations, rules, normative documents and the articles of association Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) employee stock ownership plan in 2022 (Draft).
Chapter II Formulation of employee stock ownership plan
Article 2 basic principles of employee stock ownership plan
(I) principle of legal compliance
The company implements the employee stock ownership plan, performs the procedures in strict accordance with the provisions of laws and administrative regulations, and makes information disclosure truthfully, accurately, completely and timely. No one shall use the employee stock ownership plan to engage in securities fraud such as insider trading and manipulation of the securities market.
(II) principle of voluntary participation
The implementation of the employee stock ownership plan by the company follows the independent decision of the company, and the employees participate voluntarily. The company does not force the employees to participate in the employee stock ownership plan by means of apportionment, forced distribution, etc.
(III) risk bearing principle
The participants of the employee stock ownership plan are responsible for their own profits and losses, bear their own risks, and have equal rights and interests with other investors.
Article 3 holders of employee stock ownership plans
(I) legal basis for determining participants
The company has determined the list of participants of the employee stock ownership plan in accordance with the company law, securities law, guiding opinions, self regulatory guidance No. 1 and other relevant laws, regulations, normative documents and the relevant provisions of the articles of association, and in combination with the actual situation. All participants must work in the company (including holding subsidiaries, the same below), sign labor contracts or be employed by the company.
(II) criteria for determining participants
The participants of the employee stock ownership plan are to identify with the company’s corporate culture, meet the ability standards required by the post, make outstanding achievements in the post and make significant contributions to the development of the company; The following personnel in the company approved by the board of directors:
1. Directors (excluding independent directors), supervisors and senior managers of the company;
2. Middle managers of the company;
3. Core technology and business backbone of the company.
The above qualified employees shall participate in the ESOP in accordance with the principles of legal compliance, voluntary participation and risk bearing.
(III) scope of holders of the ESOP
The total number of employees participating in the employee stock ownership plan shall not exceed 25. The final participants of the employee stock ownership plan and the specific shares held by the holders shall be determined according to the actual situation. The board of directors of the company may adjust the employee list and distribution proportion of the shareholding plan according to the changes and assessment of employees.
(IV) verification of ESOP holders
The lawyer employed by the company shall issue legal opinions on whether the ESOP and the qualifications of the holders comply with relevant laws, regulations, normative documents and the articles of association.
Article 4 capital source of employee stock ownership plan
The employee contribution funds of the employee stock ownership plan are from the legal salary of employees, self raised funds and other ways allowed by laws and regulations. The company will not provide advance, guarantee, loan and other financial assistance to the holder in any way.
The total amount of self raised funds of the employee stock ownership plan shall not exceed 31.806 million yuan. The “share” is taken as the subscription unit, and each share is 1.00 yuan. The upper limit of the number of shares of the employee stock ownership plan is 31.806 million. The initial subscription number of a single employee is 1 (i.e. the subscription amount is 1.00 yuan), and a single employee must subscribe for an integral multiple of 1 yuan.
The total number of shares of the company held by the employee stock ownership plan shall not exceed 10% of the total share capital of the company, and the total number of shares corresponding to the share equity of a single employee shall not exceed 1% of the total share capital of the company. The total number of shares held by the employee stock ownership plan does not include the shares obtained by the participating employees before the listing of the company’s initial public offering, the shares purchased by themselves through the secondary market and the shares obtained through equity incentive.
The specific amount and number of shares of the holders of the employee stock ownership plan are determined according to the actual contribution amount, and the payment time of the employee stock ownership plan is subject to the payment notice of the employee stock ownership plan.
Article 5 source of underlying stock involved in ESOP
The share source of this ESOP is Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) a ordinary shares repurchased by the company’s special account for repurchase.
The company held the 19th meeting of the sixth board of directors on October 11, 2018 and the second extraordinary general meeting of shareholders in 2018 on November 2, 2018, which deliberated and adopted the plan on repurchase of shares of the company and other relevant proposals. The second 15th meeting of the sixth board of directors was held on March 22, 2019 The first extraordinary general meeting of the company in 2019 was held on April 10, 2019, and the proposal on adjusting the repurchase of shares of the company was reviewed and approved. The company agreed to use its own funds of no less than RMB 100 million (inclusive) and no more than RMB 200 million (inclusive) to repurchase shares of the company in the form of centralized bidding transaction.
The company completed the repurchase on May 2, 2019, and has actually repurchased 11103907 shares of the company, accounting for 1.36% of the total share capital of the company. The highest transaction price of the repurchase is 10.55 yuan / share, the lowest transaction price is 7.77 yuan / share, and the total amount paid is 100009162.08 yuan (excluding transaction costs).
The 16th meeting of the seventh board of directors was held on February 11, 2022, and the proposal on adjusting the use of repurchased shares was considered and adopted. The company agreed to adjust the use of repurchased shares to be used for the implementation of equity incentive plan and employee stock ownership plan.
At the 9th meeting of the 7th board of directors held on February 7, 2021, the company reviewed and approved the plan on repurchasing the company’s shares, and agreed that the company would use its own funds not less than 50 million yuan (inclusive) and not more than 100 million yuan (inclusive) to repurchase some shares of the company by means of centralized bidding, All shares of the employee stock ownership plan shall be used for share repurchase.
As of August 6, 2021, the Company repurchased the company’s shares through centralized bidding trading through the special securities account for repurchasing. The total amount used was 51588010.63 yuan (excluding transaction costs). The cumulative number of repurchased shares was 5927093 shares, accounting for 0.73% of the company’s total share capital. The highest transaction price was 9.09 yuan / share and the lowest transaction price was 8.26 yuan / share.
Article 6 the scale of the underlying shares involved in the employee stock ownership plan
The employee stock ownership plan obtains the shares repurchased in the company’s special account for repurchase by means of laws and regulations, with a scale of no more than 5.7 million shares, accounting for 0.70% of the current total share capital of the company. During the period when the ESOP is deliberated and approved by the general meeting of shareholders, if the company has matters such as conversion of capital reserve into share capital, distribution of shares or cash dividends, stock subdivision, allotment, reduction of shares, etc., the number and price of the underlying shares shall be adjusted accordingly from the date of ex right and ex dividend of the share price.
Article 7 duration and lock-in period of employee stock ownership plan
(I) duration of employee stock ownership plan
1. The duration of the employee stock ownership plan is six years, which is calculated from the date when the draft of the employee stock ownership plan is considered and approved by the general meeting of the company and the company announces the last transfer of the company’s shares to the name of the employee stock ownership plan. If the employee stock ownership plan is not extended at the expiration of its duration, it will be terminated automatically.
2. One month before the expiration of the duration of the employee stock ownership plan, if all the company’s shares held have not been sold or transferred to the share holders of the employee stock ownership plan, the duration of the employee stock ownership plan can be extended after more than 2 / 3 (including) shares held by the holders attending the holder meeting are agreed and submitted to the board of directors for deliberation and approval.
3. If the company’s shares held by the ESOP cannot be fully realized before the expiration of the upper limit of the duration due to the suspension of trading or short window period of the company’s shares, the duration of the ESOP can be extended after more than 2 / 3 of the shares held by the holders attending the meeting are agreed and submitted to the board of directors for deliberation and approval.
4. A listed company shall disclose a suggestive announcement six months before the expiration of the duration of the employee stock ownership plan, stating the number of shares held by the expiring employee stock ownership plan and its proportion in the total share capital of the company.
(II) lock up period of employee stock ownership plan
1. The subject shares obtained by the employee stock ownership plan are unlocked in three phases. The unlocking time points are 12 months, 24 months and 36 months from the date when the company announces the last transfer of the subject shares to the name of the employee stock ownership plan. The proportion of the subject shares unlocked in each phase is 40%, 30% and 30% respectively, as follows:
The time point of the first batch of unlocking: it is 12 months from the date when the company announces the transfer of the last subject stock to the name of the employee stock ownership plan, and the number of unlocked shares is 40% of the total subject stock held by the employee stock ownership plan. The second batch of unlocking time point: it is 24 months from the date when the company announces the transfer of the last subject stock to the name of the employee stock ownership plan, and the number of unlocked shares is 30% of the total subject stock held by the employee stock ownership plan. The third batch of unlocking time point: it is 36 months from the date when the company announces the last transfer of the subject stock to the name of the employee stock ownership plan, and the number of unlocked shares is 30% of the total number of the subject stock held by the employee stock ownership plan. The shares derived from the underlying shares obtained by the employee stock ownership plan due to the distribution of stock dividends and the conversion of capital reserve by the listed company shall also comply with the above share locking arrangements.
2. Transaction restrictions of the employee stock ownership plan
The ESOP will strictly abide by the market trading rules and the relevant provisions of the CSRC and the Shenzhen Stock Exchange on stock trading. The company’s shares shall not be traded during the following periods:
(1) Within 30 days before the announcement of the company’s annual report and semi annual report, if the announcement date is delayed due to special reasons, it shall be calculated from 30 days before the original scheduled announcement date;
(2) Ten days before the announcement of the company’s quarterly report, performance forecast and performance express;
(3) From the date of major events that may have a great impact on the trading price of the company’s shares and their derivatives or the date of entering the decision-making process to the date of disclosure according to law;
(4) Other periods prescribed by the CSRC and the stock exchange.
(III) performance evaluation of employee stock ownership plan
1. Company level performance appraisal
Performance appraisal objectives in unlocking period
The first unlocking period is based on 2021, and the growth rate of operating revenue in 2022 is not less than 10% or the growth rate of net profit in 2022 is not less than 12%;
The second unlocking period is based on 2021. The growth rate of operating revenue in 2023 is not less than 21% or the growth rate of net profit in 2023 is not less than 25%;
The third unlocking period is based on 2021. The growth rate of operating revenue in 2024 is not less than 33% or the growth rate of net profit in 2024 is not less than 40%.
Note: the above “operating income” is based on the parent company Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) and its subsidiaries Guangdong Zhongsheng Pharmaceutical Trading Co., Ltd., Guangdong South China Pharmaceutical Group Co., Ltd., Guangdong Xianqiang Pharmaceutical Co., Ltd., Guangdong Yishu Pharmaceutical Co., Ltd., Yunnan Yikang Pharmaceutical Co., Ltd., Guangdong prospect ophthalmology Investment Management Co., Ltd Dongguan Zhongsheng Enterprise Management Co., Ltd. is the operating income within the scope of merger.
The above “net profit” refers to the share payment expenses incurred by the employee stock ownership plan and the restricted stock incentive plan in 2022. After deducting the share payment expenses, the parent company Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) and its subsidiaries Guangdong Zhongsheng Pharmaceutical Trading Co., Ltd., Guangdong South China Pharmaceutical Group Co., Ltd., Guangdong Xianqiang pharmaceutical Co., Ltd., Guangdong Yishu Pharmaceutical Co., Ltd., Yunnan Yikang Pharmaceutical Co., Ltd Guangdong prospect ophthalmology Investment Management Co., Ltd. and Dongguan Zhongsheng Enterprise Management Co., Ltd. are the net profits within the scope of merger.
If the company’s performance assessment of the employee stock ownership plan fails to meet the above performance assessment indicators, all holders will cancel the shares of the stock ownership plan of the corresponding batch. After the lock-in period expires, the funds obtained by selling all the underlying shares of the corresponding batch held by the employee stock ownership plan belong to the company, and the company will return the original capital contribution of the holders after deducting this part of cash dividends (if any).
2. Individual level performance appraisal
The individual performance appraisal results of the employee stock ownership plan shall be organized and implemented in accordance with the relevant provisions of the company’s current salary and appraisal system. The number of subject stock rights and interests finally unlocked by the holders corresponding to each assessment level is as follows:
Evaluation criteria (grade): s, a, B + B, C, D
Proportion of lifting restrictions at the individual level (n) 100% 90% 0%
The holder can unlock only after the company has reached the above performance assessment objectives at the company level and the performance assessment at the individual level in the previous year. The number of shares and interests actually unlocked by the holder in the current period = the number of shares and interests planned to be unlocked by the holder in the current period × Proportion corresponding to individual level performance evaluation results (n). If the number of shares actually unlocked by the holder is less than the number planned to be unlocked, the remaining excess shares will be the subject shares
