Shanghai Lily&Beauty Cosmetics Co.Ltd(605136)
Working system of independent directors
Chapter I General Provisions
Article 1 in order to further improve the construction of the corporate governance structure of Shanghai Lily&Beauty Cosmetics Co.Ltd(605136) (hereinafter referred to as “the company”), create a good working environment for independent directors and promote the standardized operation of the company, in accordance with the company law of the people’s Republic of China (hereinafter referred to as “the company law”), the securities law of the people’s Republic of China and the governance standards of listed companies This system is formulated by laws, administrative regulations, rules and normative documents such as the Listing Rules of Shanghai Stock Exchange, the rules for independent directors of listed companies, the self regulatory guidelines for listed companies of Shanghai Stock Exchange No. 1 – standardized operation, and the relevant provisions of Shanghai Lily&Beauty Cosmetics Co.Ltd(605136) articles of Association (hereinafter referred to as the “articles of association”).
Article 2 an independent director refers to a director who does not hold any position other than a director in the company and has no relationship with the company and its major shareholders that may hinder his independent and objective judgment.
Article 3 independent directors have the obligation of good faith and diligence to the company and all shareholders. Independent directors must earnestly perform their duties in accordance with relevant laws and regulations, regulatory provisions and the requirements of the articles of association, safeguard the overall interests of the company and the interests of all shareholders, and pay particular attention to the legitimate rights and interests of minority shareholders.
Article 4 independent directors shall perform their duties independently and shall not be influenced by the company’s major shareholders, actual controllers or other units or individuals with an interest in the company. If it is found that the matters under consideration affect its independence, it shall declare to the company and withdraw. In case of any situation that obviously affects the independence during his term of office, he shall notify the company in time and put forward solutions. If necessary, he shall resign.
Article 5 the members of the board of directors of the company shall include not less than one-third of the independent directors, including at least one accounting professional.
A candidate nominated as an independent director as an accounting professional shall have rich accounting professional knowledge and experience and meet at least one of the following conditions:
(I) have the qualification of certified public accountant;
(II) having a senior professional title, associate professor or above or a doctor’s degree in accounting, auditing or financial management;
(III) have senior professional titles in economic management, and have more than 5 years of full-time working experience in professional posts such as accounting, audit or financial management.
Article 6 in principle, independent directors can concurrently serve as independent directors in up to five listed companies, and ensure that they have enough time and energy to effectively perform their duties.
Article 7 an independent director shall resign from his post within one month from the date of occurrence of any situation that does not meet the conditions for independence or is not suitable for performing the duties of an independent director, except that he shall immediately stop performing his duties in accordance with relevant laws and regulations and the provisions of Shanghai Stock exchange (hereinafter referred to as “Shanghai Stock Exchange”). If he fails to resign as required, the board of directors of the company shall start the decision-making procedure within 2 days after the expiration of the time limit and remove his position as an independent director.
If the proportion of independent directors in all members of the board of directors is less than one-third due to the resignation of independent directors of the company, the independent directors who propose to resign shall continue to perform their duties until the date of the emergence of new independent directors. The original nominee of the independent director or the board of directors of the company shall nominate new independent director candidates within three months from the date of resignation of the independent director.
Article 8 independent directors and persons who intend to serve as independent directors shall participate in the training organized by the China Securities Regulatory Commission (hereinafter referred to as “CSRC”) and its authorized institutions in accordance with the regulations.
Chapter II Conditions of appointment of independent directors
Article 9 the independent directors of the company shall meet the following basic conditions for holding the post corresponding to the exercise of their functions and powers:
(I) be qualified to serve as a director of the company in accordance with laws, administrative regulations, the articles of association and other relevant provisions;
(II) have the independence required by laws, regulations and this system;
(III) have basic knowledge of the operation of listed companies and be familiar with relevant laws, administrative regulations, rules and rules;
(IV) have more than five years of working experience in law, economics or other work necessary to perform the duties of independent directors;
(V) other conditions stipulated in laws and regulations and the articles of association.
Chapter III independence of independent directors
Article 10 the independent directors of the company must be independent. The following persons who do not meet the independence requirements shall not serve as independent directors of the company.
(I) personnel who work in the company or its affiliated enterprises and their immediate family members and main social relations (immediate family members refer to spouses, parents, children, etc.; main social relations refer to brothers and sisters, parents in law, daughter-in-law and son-in-law, spouses of brothers and sisters, brothers and sisters of spouses, etc.);
(II) natural person shareholders and their immediate family members who directly or indirectly hold more than 1% of the issued shares of the company or are among the top ten shareholders of the company;
(III) persons who work in shareholder units that directly or indirectly hold more than 5% of the issued shares of the company or in the top five shareholder units of the company and their immediate family members; (IV) personnel who work in the actual controller of the company and its subsidiaries;
(V) personnel providing financial, legal and consulting services for the company and its controlling shareholders or their respective subsidiaries, including all personnel of the project team of the intermediary providing services, reviewers at all levels, personnel signing the report, partners and main principals;
(VI) serve as a director, supervisor and senior manager in a unit that has significant business dealings with the company and its controlling shareholders or their respective subsidiaries, or serve as a director, supervisor and senior manager in the controlling shareholder unit of the business dealings unit;
(VII) persons who have had the situations listed in the preceding six items in the last 12 months;
(VIII) other personnel stipulated by laws, administrative regulations and departmental rules;
(IX) other personnel specified in the articles of Association;
(x) other personnel recognized by the CSRC.
The affiliated enterprises of the controlling shareholders and actual controllers of the company in items (IV), (V) and (VI) of the preceding paragraph do not include the affiliated enterprises that do not form an affiliated relationship with the company according to article 6.3.4 of the stock listing rules of Shanghai Stock Exchange; “Major business transactions” refer to the matters that need to be submitted to the general meeting of shareholders for deliberation in accordance with the Listing Rules of Shanghai Stock Exchange or the articles of association, or other major matters recognized by Shanghai Stock Exchange; “Holding office” refers to serving as a director, supervisor, senior manager and other staff.
Article 11 candidates for independent directors shall have no following bad records:
(I) he has been subject to administrative punishment by the CSRC in the last 36 months;
(II) during the period when the stock exchange publicly determines that it is not suitable to serve as a director of a listed company;
(III) having been publicly condemned by the stock exchange or criticized twice or more in the last 36 months;
(IV) during the period of serving as an independent director, he did not attend the meetings of the board of directors for two consecutive times or did not attend the meetings of the board of directors in person, accounting for more than one-third of the meetings of the board of directors in that year;
(V) the independent opinions expressed during the period of serving as an independent director are obviously inconsistent with the facts;
(VI) other circumstances identified by Shanghai Stock Exchange.
Chapter IV nomination, election and replacement of independent directors
Article 12 the board of directors, the board of supervisors and shareholders who individually or jointly hold more than 1% of the issued shares of the company may propose candidates for independent directors, which shall be elected and decided by the general meeting of shareholders.
Article 13 the nominee of an independent director shall obtain the consent of the nominee before nomination. The nominees shall fully understand the nominees’ occupation, educational background, professional title, detailed work experience and all part-time jobs, and express their opinions on their qualifications and independence as independent directors. The nominees of independent directors shall carefully verify the ability of independent director candidates to perform their duties and whether there are circumstances affecting their independence, and make a statement on the verification results. The nominee shall make a statement on whether he meets the requirements of laws, regulations and relevant provisions of the Shanghai Stock Exchange on the terms of office and independence of independent directors. Before the shareholders’ meeting for the election of independent directors is held, the board of directors of the company shall publish the above contents in accordance with the provisions.
Article 14 before the shareholders’ meeting for the election of independent directors is held, the company shall submit the relevant materials of all nominees to the Shanghai Stock Exchange at the same time. If the board of directors of the company has any objection to the relevant information of the nominee, it shall submit the written opinions of the board of directors at the same time.
When the company holds a general meeting of shareholders to elect independent directors, the board of directors of the company shall explain whether the candidates for independent directors are objected by the Shanghai Stock Exchange. The company shall not submit the independent director candidates objected by the Shanghai Stock Exchange to the general meeting of shareholders for election as independent directors, and shall postpone or cancel the general meeting of shareholders or cancel the relevant proposals of the general meeting of shareholders in accordance with the articles of association and the rules for the general meeting of shareholders of listed companies of CSRC.
Article the term of office of an independent director shall be the same as that of the other independent directors, but the term of office shall not exceed 15 years.
Article 16 independent directors shall attend the meeting of the board of directors on time, understand the production, operation and operation of the company, and take the initiative to investigate and obtain the information and materials needed to make decisions.
Article 17 independent directors shall not entrust non independent directors to attend the board meeting on their behalf. If an independent director fails to attend the meeting of the board of directors in person for three consecutive times, the board of directors shall request the general meeting of shareholders to replace him.
Article 18 an independent director may resign before the expiration of his term of office. When an independent director resigns, he shall submit a written resignation report to the board of directors to explain any situation related to his resignation or deemed necessary to attract the attention of shareholders and creditors of the company.
If the proportion of independent directors in the board of directors of the company is lower than the minimum requirement due to the resignation of independent directors, the resignation report of the independent director shall take effect after the next independent director fills the vacancy.
Chapter V responsibilities of independent directors
Article 19 in addition to the functions and powers conferred by the company law and other laws and regulations, independent directors also have the following functions and powers:
(I) propose to the board of directors to convene an extraordinary general meeting of shareholders. If the board of directors refuses to convene, it may propose to the board of supervisors to convene an extraordinary general meeting of shareholders;
(II) propose to convene the board of directors;
(III) review the remuneration plan, incentive plan and other matters of the company’s directors and senior managers; (IV) propose to the board of directors to employ or dismiss the accounting firm;
(V) give prior approval to major connected transactions; Before making a judgment, independent directors can hire an intermediary to issue an independent financial consultant report as the basis for their judgment;
(VI) publicly solicit voting rights from shareholders before the general meeting of shareholders;
(VII) based on the needs of performing their duties, independently hire audit institutions or consulting institutions to audit and consult the specific matters of the company.
Independent directors shall obtain the consent of more than half of all independent directors when exercising the functions and powers in items (I) to (VI) above, and the consent of all independent directors when exercising the functions and powers in Item (VII) above.
Items (IV) and (V) can be submitted to the board of directors for discussion only after more than half of the independent directors agree.
If the above proposal is not adopted or the listed functions and powers cannot be exercised normally, the company shall disclose the relevant information.
Where laws, administrative regulations and the CSRC provide otherwise, such provisions shall prevail.
Article 20 in the audit committee, nomination committee and remuneration and assessment committee under the board of directors of the company, independent directors shall account for more than half of the members of the committee, and independent directors shall act as the convener. Article 21 independent directors shall express independent opinions to the board of directors or the general meeting of shareholders on the following matters: (I) nomination, appointment and removal of directors;
(II) appointing or dismissing senior managers;
(III) remuneration of directors and senior managers of the company;
(IV) employment and dismissal of accounting firms;
(V) changes in accounting policies, accounting estimates or corrections of major accounting errors due to reasons other than changes in accounting standards;
(VI) the company’s financial and accounting reports and internal control are issued with non-standard unqualified audit opinions by accounting firms;
(VII) internal control evaluation report;
(VIII) scheme for the relevant parties to change their commitments;
(IX) the impact of the issuance of preferred shares on the rights and interests of various shareholders of the company;
(x) formulate profit distribution policies, profit distribution plans and cash dividend plans;
（11） Related party transactions to be disclosed, provision of guarantees (excluding guarantees for subsidiaries within the scope of consolidated statements), entrusted financial management, provision of financial assistance, use of raised funds, investment in stocks and their derivatives and other major matters;
（12） Major asset restructuring plan, management acquisition, equity incentive plan, employee stock ownership plan, share repurchase plan and debt repayment plan of related persons of listed companies;
（13） The company’s shareholders, actual controllers and their affiliated enterprises’ existing or new loans or other capital transactions with a total amount of more than 3 million yuan or more than 5% of the company’s recently audited net asset value, and whether the company has taken effective measures to recover the arrears;
（14） The company intends to decide that its shares will no longer be traded on the Shanghai Stock Exchange;
（15） Matters that independent directors believe may damage the rights and interests of minority shareholders;
（16） Other matters stipulated by laws, administrative regulations, relevant provisions of CSRC and Shanghai Stock Exchange and the articles of association.
Article 22 independent directors shall express one of the following opinions on the matters mentioned in Article 21: (I) agree;
(II) reservations and their reasons;
(III) objections and their reasons;
(IV) inability to express opinions and its obstacles.
Article 21 if the relevant matters need to be disclosed, the company shall announce the opinions of the independent directors. If the independent directors have different opinions and can not reach an agreement, the board of directors shall disclose the opinions of each independent director separately.
Article 23 the independent opinions issued by independent directors on major matters shall at least include the following contents:
(I) basic information of major events;
(II) the basis for expressing opinions, including the procedures performed, verification documents, contents of on-site inspection, etc;
(III) legality and compliance of major matters;
(IV) the impact on the rights and interests of the company and minority shareholders, possible risks and whether the measures taken by the company are effective;
(V) concluding observations. In case of reservations, objections or inability to express opinions on major matters, the relevant independent directors shall clearly state the reasons and obstacles to express their opinions.
Independent directors shall be independent
