Working system of independent directors
(revised 2022)
Chapter I General Provisions
Article 1 in order to further improve the corporate governance structure, standardize the operation of the company, give full play to the role of independent directors in corporate governance and promote independent directors to perform their duties, according to the company law of the people’s Republic of China (hereinafter referred to as the “company law”) and the securities law of the people’s Republic of China This system is formulated in accordance with the provisions of laws, regulations, normative documents and the articles of association of the company, such as the standards for the governance of listed companies, the rules for the independent directors of listed companies, the stock listing rules of Shanghai Stock Exchange, the guidelines for the self discipline supervision of listed companies of Shanghai Stock Exchange No. 1 – standardized operation, etc.
Article 2 the independent directors of the company refer to the directors who do not hold other positions in the company except directors and have no relationship with the company and its main shareholders that may hinder their independent and objective judgment.
Article 3 independent directors have the obligation of good faith and diligence to the company and all shareholders. Independent directors shall faithfully perform their duties in accordance with the requirements of relevant laws, regulations, normative documents, the articles of association and this system, safeguard the overall interests of the company, and pay particular attention to the legitimate rights and interests of minority shareholders.
Article 4 the company shall establish independent directors, accounting for at least one-third of the number of the board of directors, of which at least one is an accounting professional.
Where the board of directors of the company has a special committee on remuneration, audit and nomination, the independent director shall account for more than half of the members of the remuneration, audit and Nomination Committee and act as the convener.
Chapter II independence of independent directors
Article 5 independent directors must be independent.
Independent directors shall perform their duties independently and impartially, and shall not be affected by the company’s major shareholders, actual controllers or other units or individuals having an interest in the company.
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 6 the following persons shall not serve as independent directors:
(I) persons who work in the company or its affiliated enterprises, their immediate family members and their main social relations (immediate family members refer to spouses, parents, children, etc.; main social relations refer to brothers and sisters, parents of spouses, spouses of children, 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 10 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) serving as directors, supervisors, senior managers and other staff in the actual controller of the company and its subsidiaries;
(V) personnel who provide 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 institution providing services, reviewers at all levels, personnel signing the report, partners and main principals;
(VI) serve as a director, supervisor or senior manager in a unit with 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 most recent year;
(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 CSRC and Shanghai Stock Exchange.
The “major transactions” referred to in the articles of association of the Shanghai Stock Exchange or other matters to be submitted to the Shanghai stock exchange for deliberation in accordance with the provisions of item VI of the articles of association of the Shanghai Stock Exchange.
Chapter III Conditions of appointment of independent directors
Article 7 an independent director shall have the conditions for holding a post suitable for the exercise of his functions and powers. Serving as an independent director shall meet the following basic conditions:
(I) be qualified to serve as a director of a listed company in accordance with laws, regulations, normative documents and the articles of Association;
(II) have the independence required by this system;
(III) have basic knowledge of the operation of listed companies and be familiar with relevant laws, administrative regulations, rules and rules;
(IV) more than five years of working experience in law, economics, accounting, finance, management or other necessary work experience for performing the duties of independent directors;
(V) other conditions stipulated by laws, regulations and the articles of association.
Independent directors and persons who intend to serve as independent directors shall participate in the training organized by the CSRC, Shanghai Stock Exchange and their authorized institutions in accordance with the provisions.
After serving as an independent director, in principle, he shall participate in the follow-up training recognized by the securities regulatory authorities every two years.
Article 8 the qualifications of candidates for independent directors shall meet the requirements of the following laws and regulations:
(I) provisions of the company law on the appointment of directors;
(II) provisions of the civil servant law of the people’s Republic of China on civil servants holding concurrent posts;
(III) the provisions of the notice on regulating central management cadres to resign from public office or serve as independent directors and independent supervisors of listed companies and fund management companies after retirement (retirement) issued by the Discipline Inspection Commission of the CPC Central Committee and the Organization Department of the CPC Central Committee;
(IV) provisions of the Organization Department of the CPC Central Committee on further regulating the part-time (post holding) of Party and government leading cadres in enterprises;
(V) the provisions of the opinions on strengthening the anti-corruption construction of colleges and universities issued by the CPC Central Commission for Discipline Inspection, the Ministry of education and the Ministry of supervision;
(VI) relevant provisions of the guidelines on the system of independent directors and external supervisors of joint-stock commercial banks issued by the people’s Bank of China;
(VII) relevant provisions of the measures for the supervision of the qualifications of directors, supervisors and senior managers of securities companies issued by the CSRC;
(VIII) measures for the administration of the qualifications of directors (directors) and senior managers of banking financial institutions, provisions for the administration of the qualifications of directors, supervisors and senior managers of insurance companies, measures for the administration of independent directors of insurance institutions, etc
(IX) other laws and regulations as well as the situations stipulated by the CSRC and Shanghai Stock Exchange.
Article 9 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 recognized by Shanghai Stock Exchange.
Article 10 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.
Chapter IV nomination, election and replacement of independent directors
Article 11 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 12 the nominee of an independent director shall obtain the consent of the nominee before nomination. The nominee shall fully understand the nominee’s occupation, educational background, professional title, detailed work experience and all part-time jobs, carefully verify his ability to perform his duties and whether it affects his independence, and make a statement on the verification results.
The nominees shall make a statement on whether they meet the requirements of laws, regulations and the system on the appointment conditions 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 13 the company shall, at the latest when issuing the notice and announcement of the general meeting of shareholders on the election of independent directors, submit relevant materials of independent director candidates through the business management system of Shanghai Stock Exchange, including written documents such as declaration of independent director candidates, declaration of independent director nominees, resume of independent directors of listed companies, etc. 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.
The company shall not submit the independent director candidates objected by Shanghai Stock Exchange to the general meeting of shareholders for election as independent directors, but can be used as director candidates. Article 14 when the general meeting of shareholders is held to elect independent directors, the board of directors of the company shall explain whether the candidates for independent directors are objected by Shanghai Stock Exchange.
Article 15 The term of office of independent directors is the same as that of other directors of the company. Upon expiration of the term of office, they can be re elected, but the term of re-election shall not exceed six years.
Article 16 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 17 before the expiration of the term of office of an independent director, the company may remove him through legal procedures. In case of early dismissal, the company shall disclose it as a special disclosure.
Article 18 If an independent director fails to meet the qualifications of an independent director as stipulated in this system or is not suitable for performing the duties of an independent director after taking office, he shall resign from the position of an independent director within one month from the date of such circumstances. 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.
Article 19 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.
Article 20 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, 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 21 if the number of independent directors of the company fails to meet the requirements of this system due to the fact that the independent directors do not meet the conditions for independence or are not suitable for performing the duties of independent directors, the company shall make up the number of independent directors in accordance with the regulations.
Chapter V functions and powers of independent directors
Article 22 independent directors shall actively perform their duties in the aspects of corporate governance, internal control, information disclosure and financial supervision.
Independent directors shall attend the meeting of the board of directors on time, understand the production, operation and operation of the company, and actively investigate and obtain the information and materials needed to make decisions.
Independent directors shall submit and disclose their work report to the annual general meeting of shareholders of the company. The work report shall include the following contents:
(I) ways, times and voting of attending the board of directors throughout the year, and times of attending the general meeting of shareholders as nonvoting delegates;
(II) the situation of expressing independent opinions;
(III) on site inspection;
(IV) proposed convening of the board of directors, proposed employment or dismissal of accounting firms, independent appointment of external audit institutions and consulting institutions, etc.
If an independent director fails to attend the board of directors in person for some reason, he shall entrust other independent directors to attend and exercise his rights on his behalf.
Article 23 in order to give full play to the role of independent directors, in addition to the functions and powers entrusted to directors by the company law and other relevant laws and regulations, the company shall entrust independent directors with the following special functions and powers:
(I) related party transactions that need to be submitted to the general meeting of shareholders for deliberation shall be submitted to the board of directors for deliberation after the independent directors express their prior approval opinions;
Before making a judgment, an independent director may hire an intermediary to issue an independent financial advisory report as the basis for his judgment.
(II) propose to the board of directors to employ or dismiss the accounting firm;
(III) propose to the board of directors to convene an extraordinary general meeting of shareholders;
(IV) propose to convene the board of directors;
(V) publicly solicit voting rights from shareholders before the general meeting of shareholders;
(VI) independently employ intermediary institutions to audit, verify or express professional opinions; (VII) other functions and powers specified in laws and regulations, relevant provisions of CSRC and Shanghai Stock Exchange and the articles of association.
Independent directors shall obtain the consent of more than half of all independent directors when exercising the functions and powers in items (I) to (V) of the preceding paragraph; The exercise of the functions and powers in Item (VI) of the preceding paragraph shall be subject to the consent of all independent directors.
Items (I) and (II) of paragraph 1 of this article shall be approved by more than half of the independent directors before they can be submitted to the board of directors for discussion.
If the proposals listed in the first paragraph of this article are not adopted or the above functions and powers cannot be normally exercised, the company shall disclose the relevant information.
Article 24 in addition to performing the functions and powers conferred by the system, independent directors shall also 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 and dismissing senior managers;
(III) remuneration of directors and senior managers of the company;
(IV) 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; (V) employment and dismissal of accounting firms;
(VI) changes in accounting policies, accounting estimates or correction of major accounting errors due to reasons other than changes in accounting standards;
(VII) the company’s financial and accounting reports and internal control are issued with non-standard unqualified audit opinions by accounting firms;
(VIII) internal control report;
(IX) scheme for relevant parties to change their commitments;
(x) the impact of the issuance of preferred shares on the rights and interests of various shareholders of the company;
（11） Formulate profit distribution policy
