Meihua Holdings Group Co.Ltd(600873)
2021 annual report of independent directors
In accordance with the company law, the securities law, the guiding opinions on the establishment of independent director system in listed companies, the articles of association, the working system of independent directors and other laws and regulations, as independent directors of Meihua Holdings Group Co.Ltd(600873) (hereinafter referred to as "the company"), we are scrupulous, diligent and conscientious, and actively play an independent role as independent directors. In 2021, we attended the board of directors and shareholders' meeting of the company, participated in major decisions of the company, expressed independent opinions on relevant matters, made suggestions for the board of directors, and effectively safeguarded the overall interests of the company and the legitimate rights and interests of all shareholders, especially minority shareholders. The performance of duties in 2021 is reported as follows:
1、 Basic information of independent directors
The ninth board of directors of the company consists of five directors, including two independent directors, Luo Qinghua and Guo Chunming.
（1） Personal resume, professional background and part-time work
Luo Qinghua, male, born in 1972, Chinese nationality, bachelor degree, graduated from Renmin University of China. Since January 1999, he has been the founding partner of Zuo you management consulting company. He has been a director of Beijing Qiyue Environmental Protection Technology Co., Ltd. since February 13, 2017; Since December 27, 2019, he has served as an independent director of the ninth board of directors, chairman of the nomination committee and chairman of the remuneration and assessment committee.
Guo Chunming, male, born in 1975, Chinese nationality, Han nationality, Party member of the Communist Party of China, associate professor of accounting, doctor of management, EMBA of Guanghua School of management, Peking University, is currently the vice president of Wuxi Peking University Boya Holding Group Co., Ltd. He has been an independent director of the ninth board of directors and chairman of the audit committee of the company since December 27, 2019.
During the reporting period, we participated in the follow-up training course for independent directors organized by Shanghai Stock Exchange, learned about the latest changes in regulatory policies, and obtained the completion certificate. (II) whether there are conditions affecting independence
We have not held any position in the company other than independent directors, nor have we held any position in the company's major shareholders or enterprises controlled by major shareholders, so there is no situation that affects our independent and objective judgment.
2、 Performance of duties in 2021
(I) attendance at the meeting
In 2021, the company held three general meetings of shareholders. Among them, Guo Chunming did not attend the on-site meeting once on business trip, and Luo Qinghua did not attend the on-site meeting twice on business trip or epidemic prevention requirements, but both attended the meeting through telephone access. In 2021, the company held 15 meetings of the board of directors, all of which were attended by independent directors in person, carefully reviewed the proposals of the meeting and voted carefully. We voted in favor of the relevant proposals considered by the board of directors in 2021. During the reporting period, the company's operations were legal and compliant, and the proposals of the board of directors met the company's development needs.
The details of our attendance at the meeting in 2021 are as follows:
Participation in the board of directors and the general meeting of shareholders
Name should attend the on-site meeting this year. Whether to attend the meeting as entrusted by the corresponding party? Whether to attend the shareholders' meeting plus the number of meetings of the board of directors continuously? The number of times of attendance and the number of times of absence. The number of times of two unaccompanied meetings is from the number of meetings
12 Qinghua 15 0 Luo
Guo Chunming 15 3 1200 No 2
(II) site investigation
In 2021, we paid close attention to the company's production and operation, and deeply understood the company's production and operation status, financial status and development strategy by communicating with the company's management and participating in relevant meetings. We have understood and inquired about key projects and problems, which has promoted the reasonable and stable operation of the company.
(III) cooperation of the company with independent directors
In 2021, the company can timely inform us of the time of relevant meetings and timely deliver relevant meeting materials. It can actively cooperate and arrange with our questions and reply in time, which provides good support for us to fully and accurately exercise the rights of independent directors.
(IV) performance of duties in the preparation of annual report
Before the 2021 annual report audit, the company convened an audit committee to report on the relevant arrangements for the annual report audit. We communicated with the audit director of Dahua accounting firm (special general partnership) hired by the company and put forward key audit suggestions. Before the 2021 annual report was submitted to the board of directors for deliberation, we consulted the relevant contents of the external guarantee, related party transactions and audit report (first draft), listened to the report of the management on the company's operation, and urged the company to disclose the company's financial status and operating results in a timely, objective, accurate and complete manner.
(V) other situations
We continue to pay attention to the company's information disclosure and the opinions and suggestions of investors, urge the company to earnestly fulfill its obligation of information disclosure and protect investors' right to know. As independent directors, we also timely feed back the relevant information we know to the company to remind the company to pay attention. At the same time, during the reporting period, we actively studied relevant laws and regulations, rules and regulations and relevant professional knowledge to enhance the ability of independent judgment and the ideological awareness of protecting the rights of public shareholders.
3、 Key issues in annual performance
In 2021, we focused on the following matters:
(I) related party transactions
On April 8, 2021, the 15th meeting of the ninth board of directors of the company deliberated and approved the proposal on the expected daily related party transactions in 2021. The company and its holding subsidiaries plan to sell adenosine and purchase raw materials to the joint-stock company Tongliao Desheng Biotechnology Co., Ltd. (hereinafter referred to as "Tongliao Desheng"), and the transaction period is from January 2021 to December 2021, The estimated transaction amount is about 150 million yuan. As of December 31, 2021, the total amount of related party transactions between the company and Tongliao Desheng was 62.76 million yuan. The amount of the above related party transactions did not exceed the amount considered by the board of directors, and the transaction procedures were complete and implemented in strict accordance with the market pricing. However, the amount was significantly different from that expected at the beginning of the year. On the one hand, Tongliao Desheng reduced the orders of adenine customers and reduced the purchase of raw material adenosine due to the impact of overseas epidemic, On the other hand, the double control of local energy consumption and limited production also affected the output of Tongliao Desheng.
After the demand of Tongliao Desheng changed, the company actively sought new customers to ensure the production and sales of adenosine.
(II) external guarantee and fund occupation
We reviewed the external guarantees of the company in 2021. During the reporting period, all the external guarantees of the company were guarantees to subsidiaries, and the necessary internal audit procedures were performed. There was no illegal guarantee.
In 2022, all external guarantees were guarantees for subsidiaries. We reviewed the relevant guarantee proposal and expressed our consent. The proposal still needs to be submitted to the 2021 annual general meeting of shareholders of the company for deliberation.
During the reporting period, the company did not have any non operating occupation of funds by the controlling shareholders and their related parties. Dahua Certified Public Accountants (special general partnership) issued special instructions according to the summary of non operating capital occupation and other related capital transactions in 2021 prepared by the company.
(III) use of raised funds
In 2021, the company had no unused raised funds.
(IV) nomination and remuneration of senior managers
There was no change in senior management in 2021.
According to the review of the company's 2020 annual general meeting of shareholders, the directors, supervisors and senior managers who receive salary and actually assume management responsibilities in the company implement the annual salary system combining post salary scale salary and performance appraisal. According to the company's performance appraisal management regulations, the total salary consists of monthly basic salary, monthly performance appraisal and annual performance appraisal, The proportion and items of each part in the annual salary vary according to the salary level of the post. The remuneration and assessment committee reviewed the details of executive remuneration in 2021 provided by the human resources department. We believe that the remuneration paid by the company to directors, supervisors and senior managers is fair and reasonable and in line with the company's management regulations.
(V) performance forecast and performance express
In 2021, the company did not publish the performance forecast and performance express.
On January 19, 2022, in accordance with the relevant regulatory requirements of Shanghai Stock Exchange, the company issued the forecast of annual performance increase in 2021, which met the relevant provisions.
(VI) appointment or replacement of accounting firms
During the reporting period, the company continued to employ Dahua Certified Public Accountants (special general partnership) as the auditor of the company's annual financial report and the auditor of internal control, and the appointment procedures were legal and compliant.
(VII) cash dividends and other investor returns
Upon deliberation and approval of the company's 2020 annual general meeting of shareholders, the company issued the announcement on the implementation of 2020 annual equity distribution on July 20, 2021. Based on the total share capital of the company on the registration date of equity distribution (deducting the number of shares in the special account for share repurchase), the company distributed cash dividends of 3.0 yuan (including tax) for every 10 shares, with a total of 9258861375 yuan (including tax). On July 26, 2021, the above profit distribution plan has been implemented.
The profit distribution plan (plan) for 2021 proposed by the company is to distribute cash dividends of 4 yuan (including tax) to all shareholders for every 10 shares based on the total share capital on the date of equity distribution and equity registration. The proposal still needs to be submitted to the general meeting of shareholders for deliberation.
The implementation of the above profit distribution plan and the formulation of profit distribution plan (plan) comply with the provisions of the articles of association.
(VIII) performance of commitments of the company and shareholders
Through the verification of the performance of the commitments of the company, its shareholders and related parties, we have not found that the company and its shareholders have not fulfilled their commitments beyond the time limit, nor have they violated their commitments.
(IX) implementation of restricted stock incentive plan
The third restricted sale period of the company's 2018 restricted stock incentive plan expires on July 16, 2021. Due to the fact that the company has not fulfilled the annual performance appraisal of 1.92 million restricted shares, individual performance appraisal objects have not fulfilled the above-mentioned performance appraisal conditions, and individual performance appraisal objects have not been cancelled. The remaining 72 people completed their personal performance in 2020 and met the conditions for lifting the restrictions. 11616200 restricted shares lifted in the third phase have been listed and traded.
We have reviewed the approval procedures and relevant materials of the above matters and issued a consent opinion.
(x) share repurchase
The company held the 9th meeting of the 9th board of directors on October 12, 2020, which deliberated and adopted the proposal on repurchase of shares of the company by centralized bidding transaction. As of September 28, 2021, the company has completed the repurchase. The actual implementation of the repurchase plan, including the number of shares repurchased, the repurchase price, the total amount of funds used, etc., are in line with the repurchase plan disclosed by the company.
The company held the 26th meeting of the 9th board of directors on November 8, 2021. The meeting deliberated and adopted the proposal on repurchase of shares of the company by means of centralized bidding transaction. The company will use its own funds at a price not exceeding 9 yuan per share, The company's shares shall be repurchased from the secondary market by means of centralized bidding transaction as treasury shares for subsequent equity incentive or employee stock ownership plan. The total amount of repurchased funds shall not be less than 200 million yuan (inclusive) and not more than 300 million yuan (inclusive), and the number of repurchased shares shall not exceed 10% of the total issued shares of the company, No more than 12 months from the date of approval of the share repurchase by the shareholders' meeting. We believe that the company's share repurchase plan complies with the provisions of laws and regulations such as the repurchase rules, and this repurchase is in line with the interests of the company and all shareholders. By the end of December 2021, the company had repurchased 14.869 million shares, accounting for 0.48% of the total share capital of the company. The total amount paid was RMB 99.988 million. The above repurchases met the requirements of the company's repurchase plan.
（11） Changes in accounting policies
On December 7, 2018, the Ministry of Finance issued and revised the accounting standards for Business Enterprises No. 21 - leasing (CK [2018] No. 35) (hereinafter referred to as the "new leasing standards"), requiring enterprises listed at home and abroad and enterprises listed abroad and preparing financial reports using international financial reporting standards or accounting standards for business enterprises to take effect from January 1, 2019; Other enterprises that implement the accounting standards for business enterprises shall be implemented as of January 1, 2021. According to the requirements of the standards, the company will implement the new leasing standards from January 1, 2021. The change of the company's accounting policy is a reasonable change according to the requirements of relevant documents of the Ministry of finance, in line with relevant regulations and the actual situation of the company, and the decision-making procedures comply with relevant laws, regulations and the articles of association, which will not damage the interests of minority shareholders. We agree to the change of the company's accounting policy.
（12） Implementation of information disclosure
In 2021, the company completed the preparation and disclosure of the 2020 annual report, the first quarter, semi annual and third quarter reports of 2021; 73 batches of various temporary announcements have been completed. We believe that the company's information disclosure strictly complies with the relevant provisions of the Listing Rules of Shanghai Stock Exchange, the administrative measures for information disclosure of listed companies and the articles of association, and we have not found any false records, misleading statements or major omissions in the company's information disclosure.
（13） Implementation of internal control
During the reporting period, the company continuously improved the corporate governance structure, improved the internal control system, standardized the company's operation and ensured the efficient operation of the company in strict accordance with the requirements of relevant laws, regulations and normative documents such as the company law, the securities law and the stock listing rules of Shanghai Stock exchange.
During the reporting period, the audit department took the lead in establishing an internal control inspection team for comprehensive ability, drawing lessons from the introduction of four major affairs
