Guangxi Liugong Machinery Co.Ltd(000528) independent director
Independent opinions on relevant deliberations of the second meeting of the ninth board of directors
Guangxi Liugong Machinery Co.Ltd(000528) (hereinafter referred to as “the company”) the board of directors held the second meeting of the ninth board of directors from March 28 to 29, 2022. As an independent director of the company, we made comments on the company’s “occupation of company funds and external guarantees by controlling shareholders and other related parties in 2021” and the following proposals submitted to the meeting for deliberation in accordance with relevant laws, regulations, rules and regulatory provisions:
1. Proposal on the company’s provision for asset impairment in 2021;
2. Proposal on write off of asset losses of the company in the fourth quarter of 2021;
3. Proposal on the company’s confirmation of the implementation results of daily connected transactions in 2021;
4. Proposal on the company’s profit distribution plan for 2021;
5. Proposal on the company’s 2021 executive compensation settlement and the adjustment of the target annual salary standard of the ninth executive;
6. Proposal on the company’s internal control evaluation report in 2021;
7. Proposal on the achievement of unlocking conditions in the second unlocking period of the company’s restricted stock incentive plan in 2018; 8. Proposal on repurchase and cancellation of some restricted shares by the company;
9. Proposal on the company’s adjustment of the forecast of daily connected transactions in 2022;
10. Proposal on the company’s guarantee for its subsidiaries in 2022;
11. Proposal on the guarantee credit of the company’s marketing business in 2022;
12. Proposal on the company’s financial derivatives business in 2022;
13. The proposal on the company’s reappointment of the financial and internal control audit institution in 2022 was reviewed and supervised.
We hereby express the following opinions on the above matters:
1、 Special instructions and independent opinions on the occupation of the company’s funds and the company’s external guarantees by the controlling shareholders and other related parties in 2021
In accordance with the provisions of the notice on regulating the capital exchanges between listed companies and related parties and the external guarantee of listed companies (zjf [2003] No. 56) and the notice on regulating the external guarantee behavior of listed companies (zjf [2005] No. 120) issued by the CSRC, as independent directors of the company, we, in a serious and responsible attitude, Having checked and supervised the occupation of the company’s funds and external guarantees by the company’s controlling shareholders and other related parties in 2021, we hereby express the following opinions on the above matters:
1. In 2021, the company strictly abided by relevant regulations, and there was no occupation of the company’s funds by the controlling shareholders and other related parties, except for the daily related party transactions with the controlling shareholders and their subordinate enterprises. The related party transactions of the company have fulfilled the deliberation and disclosure procedures of the board of directors and the general meeting of shareholders in accordance with the regulations.
2. It is agreed that the company will provide a maximum guarantee of RMB 11.863 billion for 23 wholly-owned subsidiaries, 1 holding subsidiary and wholly-owned and holding subsidiaries newly established or newly incorporated by the company in 2021, which has been reviewed and approved by the first extraordinary general meeting of shareholders in 2021. By the end of December 2021, the above guarantee balance was 685637 million yuan, accounting for 44.56% of the company’s audited net assets of 153856793 million yuan in 2021.
We believe that the company can regulate the company’s external guarantee behavior and control the external guarantee risk in strict accordance with the provisions of the articles of association during the reporting period of 2021. The company did not provide guarantee for the controlling shareholder and its subordinate enterprises, any unincorporated units or individuals, and there was no illegal guarantee. The company’s external guarantee has fulfilled the deliberation and disclosure procedures of the board of directors and the general meeting of shareholders as required.
2、 Proposal on the company’s provision for asset impairment in 2021
We have carefully reviewed the relevant meeting materials. The decision-making procedure for withdrawing the provision for asset impairment is legal, in line with the accounting standards for business enterprises and the relevant provisions of the company’s accounting policies and accounting estimates, can fairly reflect the company’s asset status, is in line with the interests of the company and all shareholders, and there is no damage to the interests of the company and all shareholders, especially the interests of minority shareholders.
Agree to the proposal on the company’s provision for asset impairment in 2021.
3、 Proposal on write off of asset losses of the company in the fourth quarter of 2021
We have carefully reviewed the relevant meeting materials. The company’s asset write off is fully based, has fulfilled the corresponding approval procedures, and is in line with the provisions of the accounting standards for business enterprises and the relevant accounting policies of the company. After the write off of the company’s assets, it can more fairly reflect the company’s asset status and operating results, and make the company’s accounting information about asset value more authentic, reliable and reasonable, There is no situation that damages the interests of the company and all shareholders, especially the interests of minority shareholders. Agree to the proposal on the write off of the company’s asset losses in the fourth quarter of 2021.
4、 Proposal on the company’s confirmation of the implementation results of daily connected transactions in 2021
We believe that the daily related party transactions actually occurred in 2021 are in line with the company’s operating conditions. The deliberation procedure of the proposal is legal, and the related party transactions comply with relevant regulations. The company’s absorption and merger of Liuzhou owim Machinery Co., Ltd., Guangxi Liugong Machinery Co.Ltd(000528) construction machinery Jiangsu Co., Ltd., Guangxi Guangxi Liugong Machinery Co.Ltd(000528) Agricultural Machinery Co., Ltd., Guangxi Liugong Machinery Co.Ltd(000528) (Liuzhou) Compressor Co., Ltd., Guangxi Zhongyuan Machinery Co., Ltd. and their holding subsidiaries in 2021 have a different impact on the scheduled related party transactions, There is no damage to the interests of the company and minority shareholders. Agree to confirm the daily related party transactions of the company in 2021. The directors associated with the related party Guangxi Guangxi Liugong Machinery Co.Ltd(000528) Group Co., Ltd. and its subsidiaries, and the company’s joint-stock companies Guangxi Cummins Industrial Power Co., Ltd. and Liuzhou ZF Machinery Co., Ltd. have avoided voting on the sub items of relevant proposals.
Agree to the proposal on the company’s confirmation of the implementation results of daily connected transactions in 2021 considered by the board of directors. 5、 Proposal on the company’s profit distribution plan in 2021
We believe that the profit distribution plan for 2021 proposed by the board of directors of the company is in line with the capital status of the company, the approval procedure of the plan is in line with the provisions of relevant laws, regulations, rules and articles of association, and the interests of the company and its shareholders, especially minority shareholders.
Agree to the proposal on the company’s profit distribution plan for 2021 and agree to submit the proposal to the general meeting of shareholders for deliberation.
6、 According to the proposal on the company’s 2021 annual executive compensation settlement and the adjustment of the ninth annual target salary standard for senior executives, we believe that the 2021 annual compensation settlement plan for senior executives of the company is based on the audited business performance of the company, combined with the individual post responsibilities, salary standards and performance contract evaluation results of senior executives, which can better comprehensively reflect the work performance of senior executives of the company in 2021.
The 9th annual target salary standard adjustment of senior executives is an objective and reasonable salary adjustment scheme based on the change of organization scale and division of responsibilities, combing the post responsibilities and evaluating the post value of senior executives.
Agree to the proposal on the company’s 2021 annual executive compensation settlement and the adjustment of the target annual salary standard of the ninth executive.
7、 Proposal on internal control evaluation report of the company in 2021
During the reporting period, the company’s internal control system was further improved and met the requirements of relevant national laws, regulations and regulatory authorities; The company’s internal audit department effectively carried out internal audit work. The key activities of the company’s internal control were carried out in accordance with the provisions of the company’s internal control systems. The company’s internal control over subsidiaries, related party transactions, information disclosure and preventing the occupation of funds by major shareholders was strict and effective, ensuring the normal operation and management of the company.
We believe that the internal control evaluation report of the company in 2021 truly reflects the basic situation of the company’s internal control system, introduces and explains the important activities, work and results of the company to strengthen and improve internal control, and puts forward rectification measures for existing problems. The internal control evaluation is in line with the actual situation of the company’s internal control. It is hoped that the company will continue to improve the internal control system, standardize the implementation of the internal control system, strengthen the supervision and inspection of internal control, further promote the development of various works of the company’s internal control and continuously improve the level of corporate governance.
Agree to the proposal on the company’s internal control evaluation report in 2021
8、 According to the proposal on the achievement of unlocking conditions in the second unlocking period of the company’s 2018 restricted stock incentive plan, the company’s 1397 incentive objects can actually unlock a total of 2944800 restricted shares in the second unlocking period, all of which meet the requirements for unlocking conditions in the second unlocking period in the 2018 restricted stock plan, The company’s unlocking of restricted shares complies with the provisions of the administrative measures for equity incentive of listed companies and other relevant laws and regulations. The unlocking conditions of the second unlocking period of the company’s 2018 restricted incentive stock plan have been achieved. The number of restricted shares that can be unlocked by 1397 incentive objects is consistent with their personal performance results in the assessment year. The subject qualification of 1397 incentive objects that can be unlocked is legal and effective, It is agreed that the company will handle relevant matters during the second unlocking period in accordance with the relevant provisions of the 2018 restricted stock incentive plan (Draft).
9、 Proposal on repurchase and cancellation of some restricted shares by the company
We have reviewed and supervised the repurchase and cancellation of some restricted shares, and our independent opinions are as follows: we believe that the repurchase and cancellation of some restricted shares of the company complies with the relevant provisions of laws, regulations and normative documents such as the measures for the administration of equity incentives of listed companies and the company’s 2018 restricted stock incentive plan (Draft), the procedures are legal and compliant, and the rights and interests of the company and all shareholders are not damaged, It will not have a material impact on the company’s financial situation and operating results, nor will it affect the diligence of the company’s management team.
We agree to the proposal on the repurchase and cancellation of some restricted shares by the company.
10、 Proposal on the company’s adjustment of the forecast of daily connected transactions in 2022
We have no objection to the fairness of the proposal on the company’s adjustment of the forecast of daily connected transactions in 2022 submitted to the board of directors for deliberation. The adjustment of the company’s daily related party transactions in 2022 is in line with the actual operation of the company, the deliberation procedure of the proposal is legal, the related party transactions comply with relevant regulations, and there is no damage to the interests of the company and minority shareholders. The directors associated with the related party Guangxi Guangxi Liugong Machinery Co.Ltd(000528) Group Co., Ltd. and its subsidiaries, the joint venture Guangxi Cummins Industrial Power Co., Ltd. and Liuzhou ZF Machinery Co., Ltd. have avoided voting on the sub proposal of the relevant proposal.
11、 Proposal on the company’s guarantee for its subsidiaries in 2022
We believe that the guarantee provided by the company to 25 subordinate wholly-owned subsidiaries, 4 holding subsidiaries and newly established or newly incorporated wholly-owned and holding subsidiaries in 2022 is conducive to the business development of the company, meets the needs of the overall business development of the company and the interests of the company and all shareholders. The guarantee decision-making process is legal and will not damage the interests of shareholders, especially small and medium-sized shareholders.
Agree to the proposal on the company’s provision of guarantees to its subsidiaries in 2022 and agree to submit the proposal to the 2021 annual general meeting of shareholders of the company for deliberation.
12、 Proposal on the guarantee credit of the company’s marketing business in 2022
We believe that in order to ensure the smooth development of marketing business, improve market share and ensure the cash flow of the company, the company’s high-quality customers and dealers who purchase products from the company and its wholly-owned subsidiaries and holding subsidiaries in China cooperate with banks and external financial institutions to carry out financing business related to sales business such as acceptance, accounts receivable factoring, financial leasing (direct lease + leaseback), mortgage, etc., the risk is controllable and the decision-making process is legal Comply with the relevant provisions of various laws and regulations, meet the development needs of the company, meet the interests of all shareholders of the company, and will not damage the interests of shareholders, especially minority shareholders. Agree to the proposal on guaranteed credit of the company’s marketing business in 2022 reviewed by the board of directors, and agree to submit the proposal to the company’s 2021 annual general meeting for deliberation and approval.
13、 Proposal on the company’s financial derivatives business in 2022
We believe that the company and its holding subsidiaries carry out financial derivatives business with their own funds in order to meet the needs of business development. At the same time, for the purpose of hedging, when the judgment of exchange rate trend is not clear, reduce the exchange rate and interest rate risk in international business, and avoid and prevent the adverse impact of exchange rate and interest rate fluctuations on the company’s profits. The company has established a sound organizational structure, internal control system for derivatives investment and internal control system for long-term foreign exchange settlement and sales business for the development of financial derivatives business, and implemented them in strict accordance with the system requirements. The contents and decision-making procedures of this transaction comply with the provisions of relevant laws, regulations and the articles of association, and there is no damage to the interests of the company and all shareholders, especially the interests of minority shareholders. Agree to the proposal on developing financial derivatives trading business.
14、 Proposal on the company’s reappointment of financial and internal control audit institutions in 2022
Since providing audit services for the company, Grant Thornton Certified Public Accountants (special general partnership) has scrupulously performed its duties in the work, followed the independent, objective and fair professional standards, implemented appropriate audit procedures in accordance with the requirements of the auditing standards for Chinese certified public accountants, obtained sufficient and appropriate audit evidence for expressing audit opinions, and better completed all the work entrusted by the company. We have no objection to the proposal on renewing the appointment of Zhitong Certified Public Accountants (special general partnership) as the company’s 2021 financial report and internal control audit institution.
Agree to the proposal and submit it to the 2021 annual general meeting of shareholders of the company for deliberation.
(there is no text on this page, which is the signature page of Guangxi Liugong Machinery Co.Ltd(000528) independent director’s independent opinions on relevant deliberations of the second meeting of the ninth board of directors.)
Guangxi Liugong Machinery Co.Ltd(000528) independent directors:
Li Jiaming, Chen Xueping, Deng tengjiang, Huang Zhimin
March 29, 2022
