Independent director system
(revised on March 18, 2022)
Chapter I General Provisions
Article 1 in order to further improve the corporate governance structure of China Jushi Co.Ltd(600176) (hereinafter referred to as “the company”), improve the structure of the board of directors, strengthen the restraint and supervision mechanism for internal directors and managers, protect the interests of minority shareholders and creditors, and promote the standardized operation of the company, according to the rules for independent directors of listed companies and the standards for governance of listed companies issued by China Securities Regulatory Commission The independent director system of the company is hereby formulated in accordance with relevant laws, regulations, departmental rules, normative documents, self-discipline rules, such as the rules for the listing of shares on Shanghai Stock Exchange, the guidelines for the performance of duties of independent directors of listed companies, the guidelines for independent directors to promote the internal control of listed companies, and in combination with the China Jushi Co.Ltd(600176) 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 an independent director in the company and has no relationship with the company and its major shareholders that may hinder his independent and objective judgment. The members of the board of directors of the company shall have more than one-third of independent directors, including at least one accounting professional, who refers to the person with senior professional title or certified public accountant qualification.
Article 3 in principle, the independent directors appointed by the company can concurrently serve as independent directors in up to five companies, and ensure that they have enough time and energy to effectively perform the duties of independent directors.
Article 4 independent directors and persons who intend to serve as independent directors shall participate in the training organized by the CSRC and its authorized institutions in accordance with the requirements of the CSRC.
Chapter II Conditions of appointment of independent directors
Article 5 an independent director shall have the qualifications suitable for the exercise of his functions and powers, and the appointment of 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, administrative regulations and other relevant provisions; (II) have the independence required by this system;
(III) have basic knowledge of the company’s operation 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 the articles of association.
Article 6 independent directors must be independent, and the following persons shall not serve as independent directors:
(I) personnel working in the company or its affiliated enterprises and 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 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) persons who have had the situations listed in the preceding three items in the most recent year;
(V) personnel who provide financial, legal and consulting services for the company or its affiliated enterprises;
(VI) persons who have served as independent directors in more than four (including four) companies;
(VII) other personnel specified in the articles of Association;
(VIII) other personnel recognized by the CSRC.
Chapter III nomination, election and replacement of independent directors
Article 7 the nomination, election and replacement of independent directors shall be carried out in accordance with the law and standards. The procedures for the selection of independent directors are as follows:
(I) 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;
(II) the nominee of an independent director shall obtain the written consent of the nominee before nomination. The nominee shall fully understand the nominee’s occupation, education background, professional title, detailed work experience and all part-time jobs, and express his opinions on his qualification and independence as an independent director. The nominee shall make a public statement that there is no relationship between himself and the company that affects his independent objective judgment. 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;
(III) the company shall disclose the details of the candidates for independent directors before the shareholders’ meeting, so as to ensure that the shareholders have enough knowledge of the candidates when voting;
(IV) before the general meeting of shareholders for the election of independent directors is held, the company shall submit the relevant materials of all nominees to the CSRC, the dispatched office of the CSRC in the place where the company is located and 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; The above regulatory authorities shall review the qualifications and independence of independent directors. Nominees who have objections may be candidates for directors of the company, but not candidates for independent directors. 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 the regulatory authorities.
(V) 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;
(VI) 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. In addition to the loss of the independence referred to in these rules and the circumstances that an independent director is not allowed to serve as a director as stipulated in the company law in the above circumstances, an independent director shall not be removed without reason before the expiration of his term of office. In case of early dismissal, the company shall disclose it as a special disclosure matter. If the dismissed independent director believes that the company’s reason for dismissal is improper, he may make a public statement;
(VII) independent directors may resign before the expiration of their 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 resignation of an independent director causes the number of independent directors or members of the board of directors to be lower than the minimum number specified in the statutory or the articles of association, the independent director shall still perform his duties in accordance with the provisions of laws, administrative regulations and this system before the re elected independent director takes office.
Chapter IV functions and powers of independent directors
Article 8 the company shall give full play to the role of independent directors:
(I) in order to give full play to the role of independent directors, in addition to the functions and powers given to directors by the company law and other relevant laws and regulations, the company shall also give independent directors the following special functions and powers: 1. Major related party transactions (referring to related party transactions with a total amount of more than 3 million yuan or more than 5% of the company’s recently audited net asset value) should be approved by independent directors, Submit to the board of directors for discussion; Before making a judgment, independent directors can hire an intermediary to issue an independent financial consultant report as the basis for their judgment; 2. Propose to the board of directors to employ or dismiss the accounting firm;
3. To request the shareholders’ meeting to convene an interim meeting of the board of directors;
4. Propose to convene the board of directors;
5. It can solicit voting rights from shareholders in public before the general meeting of shareholders is held;
6. Independently employ external audit institutions and consulting institutions to audit and consult the specific matters of the company.
The company’s major related party transactions, employment or dismissal of accounting firms shall be submitted to the board of directors for discussion after more than half of the independent directors agree. The independent director’s proposal to convene an extraordinary general meeting of shareholders, the proposal to convene a meeting of the board of directors and the public solicitation of voting rights from shareholders before the general meeting of shareholders shall be approved by more than half of the independent directors. With the consent of all independent directors, independent directors can independently hire external audit institutions and consulting institutions to audit and consult the specific matters of the company, and the relevant expenses shall be borne by the company.
(II) if the above proposal is not adopted or the above functions and powers cannot be normally exercised, the company shall disclose the relevant information.
(III) if there are remuneration, audit, nomination and other committees under the board of directors of the company, the independent directors shall account for the majority of the members of the Committee.
Article 9 independent directors shall express independent opinions on major matters of the company:
(I) independent directors shall express independent opinions on the following matters to the board of directors or the general meeting of shareholders:
1. External guarantee;
2. Major connected transactions;
3. Nomination, appointment and removal of directors;
4. Appoint or dismiss senior managers;
5. Remuneration and equity incentive plan for directors and senior managers of the company;
6. Change the purpose of the raised funds;
7. Formulate a plan for converting capital reserve into share capital;
8. Formulate profit distribution policies, profit distribution plans and cash dividend plans;
9. Changes in accounting policies, accounting estimates or correction of major accounting errors due to reasons other than changes in accounting standards;
10. The financial and accounting reports of listed companies are issued with non-standard unqualified audit opinions by certified public accountants; 11. Employment and dismissal of accounting firms;
12. Management buyouts of listed companies;
13. Major assets reorganization of listed companies;
14. The listed company repurchases its shares by means of centralized bidding transaction;
15. Evaluation report on internal control of listed companies;
16. The commitment change plan of the listed company to the relevant parties;
17. The impact of the issuance of preferred shares of listed companies on the rights and interests of various shareholders of the company;
18. Other matters stipulated by laws, administrative regulations, departmental rules, normative documents and the articles of association or recognized by the CSRC;
19. Matters that independent directors believe may damage the rights and interests of minority shareholders.
（2） Independent directors shall express one of the following opinions on the above matters: agree; Reservations and their reasons; Objections and their reasons; Inability to express opinions and its obstacles.
（3） 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.
（4） Independent directors shall express their opinions in writing.
Chapter V obligations of independent directors
Article 10 independent directors have the obligation of integrity and diligence to the company and all shareholders. Independent directors shall conscientiously perform their duties in accordance with the requirements of relevant laws, regulations and the articles of association, including attending the meeting of the board of directors on time, understanding the production, operation and operation of the company, actively investigating and obtaining the information and materials required for making decisions, effectively safeguarding the overall interests of the company, and paying particular attention to the non infringement of the legitimate rights and interests of minority shareholders.
Independent directors shall perform their duties independently and shall not be affected by the company’s major shareholders, actual controllers or units or individuals having interests with the company and its major shareholders and actual controllers. 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 submit his resignation if necessary.
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 the annual work report of all independent directors to the annual general meeting of shareholders of the company to explain their performance of duties.
Article 11 in principle, independent directors shall work effectively for the company for no less than 15 working days every year, including attending the general meeting of shareholders, the meetings of the board of directors and various special committees, investigating the construction and implementation of the company’s production and operation status, management and internal control systems, and the implementation of the resolutions of the board of directors, discussing work with the company’s management, and discussing the company’s major investment, production Conduct field research on the construction project. Article 12 independent directors shall submit an annual work report to the general meeting of shareholders of the company to explain their performance of duties. The annual work report shall be prepared and disclosed in accordance with the requirements of relevant regulations.
Chapter VI training of independent directors
Article 13 the proposed independent director shall, in principle, attend at least one job training organized by relevant institutions recognized by the securities regulatory authorities before being employed as an independent director of a listed company for the first time. It is recommended to attend follow-up training at least once a year within two years after the first employment. Thereafter, follow-up training should be attended at least every two years.
Article 14 the training of independent directors of the company is mainly organized by Shanghai Stock Exchange or its authorized unit, and is carried out in a variety of ways, such as centralized face-to-face training, online training, discussion, experience exchange and on-site investigation of the company.
Article 15 the training contents of independent directors of the company include the information disclosure of listed companies, the basic principles of corporate governance of listed companies, the legal framework for the standardized operation of listed companies, the rights, obligations and legal responsibilities of independent directors, the performance practice and case analysis of independent directors, the financial knowledge of independent directors and the development of capital market. After the training, independent directors should be able to fully understand the basic principles of corporate governance, the legal framework for the operation of listed companies, the responsibilities and responsibilities of independent directors, the specific rules of information disclosure and related party transaction supervision of listed companies, and have the awareness of internal control and risk prevention and basic ability to read and understand financial statements.
Article 16 in addition to the training organized by Shanghai Stock Exchange, independent directors shall also participate in the training organized by the CSRC and other regulatory institutions and their authorized institutions in accordance with the requirements of other regulatory institutions.
Chapter VII the company provides necessary conditions for independent directors
Article 17 the company shall provide necessary conditions for independent directors to ensure that independent directors can effectively exercise their functions and powers.
(I) the company shall ensure that independent directors enjoy the same right to know as other directors. For matters that need to be decided by the board of directors, the company must notify the independent directors in advance according to the legal time and provide sufficient information at the same time. If the independent directors think the information is insufficient, they can ask for supplement. When more than half of the independent directors believe that the information is insufficient or the argument is unclear, they can jointly submit a written proposal to the board of directors to postpone the convening of the meeting of the board of directors or postpone the consideration of the matter, which shall be adopted by the board of directors.
The information provided by the company to the independent directors shall be kept by the company and the independent directors for at least 5 years.
(II) independent directors shall record the performance of their duties in the work record of independent directors, including the production and operation status, management and internal control of the company
