China Avionics Systems Co.Ltd(600372) independent director’s 2021 Report
As China Avionics Systems Co.Ltd(600372) independent directors, the seventh directors Yang Youhong, Zhang Jinchang, Wei fajie, Jing Xu and Xiong Huagang earnestly performed the rights conferred by the law in 2021 in strict accordance with the provisions of the company law, the guidelines for the governance of listed companies, the guiding opinions on the establishment of independent director system in listed companies and other relevant laws and regulations, as well as the requirements of the articles of association and the independent director system of the company; Pay close attention to the company’s production and operation and refinancing, timely understand the company’s information, pay comprehensive attention to the company’s development, and actively attend relevant meetings held by the company in 2021. The board of directors gave full play to the independent opinions and professional knowledge of the board of directors in the process of deliberation and decision-making of the company’s small and medium-sized shareholders, and gave full play to its own background and professional knowledge, especially in the process of independent decision-making of the company’s small and medium-sized shareholders. Next, on behalf of all independent directors, I will make the following report on the work of 2021.
1、 Basic information of independent directors
There are 4 independent directors in the 7th board of directors of the company, and the number of independent directors exceeds 1 / 3 of the total number of directors, which is in line with the provisions of relevant laws and regulations and the articles of association.
On April 26, 2021, Mr. Xiong Huagang, an independent director of the company, proposed to resign as an independent director of the company due to job changes. In accordance with relevant laws and regulations and the articles of association, upon the recommendation of the board of directors and the review of the nomination committee of the board of directors, Mr. Jing Xu was nominated as a candidate for independent director of the seventh board of directors of the company. This matter was deliberated and approved by the 2020 annual general meeting of shareholders.
The personal work experience and professional background of the company’s independent directors in 2021 are described below:
1. Mr. Yang Youhong: Professor of accounting, doctoral supervisor, famous teaching teacher of colleges and universities in Beijing, Beijing Great Wall scholar, winner of the accounting master project of the Ministry of finance, deputy director of the internal control professional committee of the Chinese accounting society, Chinese certified public accountant, and host of the National Excellent Courses intermediate financial accounting and advanced financial accounting. He once served as Dean of the school of accounting of Beijing University of technology and industry, Dean of the school of business of Beijing University of technology and industry, and director of the science and Technology Department of Beijing University of technology and industry.
2. Mr. Zhang Jinchang: successively served as the project manager of the planning department of Shougang Corporation, the founder and chief scientist of Beijing zhizehua Software Co., Ltd. He is currently a researcher and doctoral supervisor of the Institute of industrial economics, Chinese Academy of social sciences.
3. Mr. Wei fajie: Professor and doctoral supervisor of School of economics and management, Beijing University of Aeronautics and Astronautics. He once served as vice president of the school of economics and management of Beijing University of Aeronautics and Astronautics and technician of Baoding 550 factory in Hebei Province. Social part-time jobs include experts from the Advisory Committee of China International Engineering Consulting Corporation, project audit experts from the military project audit center of the State Administration of science, technology and industry for national defense, evaluation experts from the technology and economy center of the State Administration of science, technology and industry, experts from the Investment Research Institute of central enterprises, members of the China Project Management Research Association, members of the professional committee of engine soft science of the Chinese aeronautics society, directors of the China Institute of preferred methodology and economic mathematics, and editorial members of the magazine project management technology.
4. Mr. Jing Xu: Master of law from Kent law school in Chicago, USA, master of business administration from Cheung Kong business school. He has successively served as the legal adviser of China Yuanda Group and the lawyer of Beijing wansiheng law firm. He is now the founding partner of Beijing Jundu law firm.
5. Mr. Xiong Huagang: Professor and doctoral supervisor of School of electronic information engineering, Beijing University of Aeronautics and Astronautics. The research direction of ultra wideband is the theory and research direction of ultra wideband communication and electronic network. Social part-time jobs include member of China avionics process management standardization committee, member of avionics and air traffic control branch of China Aeronautical Society, editorial board of Journal of Beijing University of Aeronautics and Astronautics and Journal of space science. Mr. Xiong Huagang will no longer serve as an independent director of the company since June 28, 2021.
The independent directors of the company do not hold executive positions in the company and its subsidiaries, nor do they hold positions in units with significant business dealings with the company and its controlling shareholders or their respective subsidiaries, nor do they hold positions in the controlling shareholder units of such business dealings. In addition to the allowance for independent directors, it has not obtained additional and undisclosed interests from the company, its major shareholders or interested institutions and personnel; The independence of performing duties has been effectively guaranteed and meets the regulatory requirements.
2、 Attendance at company meetings
In 2021, the company held 7 meetings of the board of directors by means of on-site and communication. The independent directors of the company attended the above meetings in person, and there was no absence without reason.
This year, the independent directors of the company earnestly performed their duties, paid attention to the operation of the company, attended the relevant meetings of the general meeting of shareholders, the board of directors and the special committee held by them on time, and considered various proposals. The management of the company attaches great importance to the communication with independent directors and regularly reports the production and operation of the company and the progress of major events, which provides complete conditions and support for independent directors to perform their duties. Before holding relevant meetings, the independent directors took the initiative to understand and obtain the information and materials needed to make decisions, and reviewed the meeting documents and relevant materials in detail. During the meeting, the independent directors carefully considered each topic, actively participated in the discussion, fully communicated with the company’s management, made reasonable suggestions and opinions on the board’s meeting plan by making use of their professional knowledge, and played a positive role in the scientific decision-making of the company’s board of directors, During the reporting period, independent directors did not raise objections to various proposals of the board of directors and other matters of the company.
The attendance of the board of directors is as follows:
Should attend the actual meeting and entrust to attend the absent meeting in this year
Name of independent director
Plus number of meetings
Yang Youhong 7 700
Zhang Jinchang 7 7 0 0
Wei fajie 7 7 0 0
Jing Xu 3 3 0 0
Xiong Huagang 4 400
3、 Independent opinions on relevant matters of the company in 2021
(I) related party transactions of the company
1. Daily related party transactions of the company in 2021
Prior approval: before the meeting of the board of directors, I learned about the relevant matters of the company’s daily related party transaction proposal in 2021 and believed that the above behaviors did not violate relevant regulations and did not harm the interests of the company and shareholders.
Independent opinion: the mutual supply of products, provision and acceptance of labor services, equipment leasing and financial services between the company and subordinate units of the aviation industry are conducive to the complementary advantages of both parties, reduce the company’s operating costs, and collect custody fees from the trustee, which is in line with the interests of the company and shareholders. No behavior damaging the interests of the company and shareholders is found in the above related party transactions, and the proposal of the company’s daily related party transactions in 2021 is agreed.
2. Capital increase and share expansion of subsidiaries and related party transactions
Prior approval: the capital increase and share expansion of the subsidiary and related party transactions did not harm the interests of the company and the interests of minority shareholders. We agree that the related party transaction proposal submitted to the company should be avoided from voting.
Independent opinion: (1) Kaitian electronics, the holding subsidiary of the company, plans to carry out mixed ownership reform. The mixed ownership reform is carried out by combining the shareholding of core employees, the introduction of strategic investors, the capital increase of original shareholders and the conversion of state-owned exclusive capital reserve (hereinafter referred to as this transaction or this capital increase). Through this transaction, Kaitian electronic’s business ability is expected to be strengthened and its overall strength will be expanded; (2) The capital increase plan complies with the provisions of the company law of the people’s Republic of China, the securities law of the people’s Republic of China and other relevant laws, regulations and normative documents. The plan is reasonable and feasible and does not harm the interests of the company and minority shareholders; (3) The transaction price of this capital increase is based on the asset appraisal value recorded by AVIC with December 31, 2020 as the appraisal base date, and is determined through public listing in the property right trading institution recognized by the state owned assets supervision and Administration Commission of the State Council. The pricing method of this capital increase complies with the provisions of relevant laws and regulations, and there is no situation damaging the interests of the company and other shareholders; (4) The capital increase and share expansion of Kaitian Electronics will not affect the company’s holding position in Kaitian electronics and will not have a great impact on the overall operation pattern of listed companies, which is in line with the overall interests of the company and shareholders; (5) This capital increase belongs to related party transactions. When the board of Directors considers the above related party transactions, the related directors withdraw from voting according to regulations. The convening, convening and voting procedures of the board of directors of the company comply with the provisions of relevant laws, regulations, normative documents and the articles of association, and the relevant resolutions of the board of directors on the capital and share increase of the subsidiary are legal and effective. In conclusion, we agree to the proposal on capital and share increase and related party transactions of subsidiaries.
(II) deposit and use of the company’s raised funds
The deposit and actual use of the company’s raised funds in 2020 comply with the relevant provisions of the CSRC’s guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds by listed companies, the measures for the management of raised funds by listed companies of Shanghai Stock Exchange (revised in 2013), and there is no change in the purpose of raised funds and damage to the interests of shareholders, There are no irregularities in the deposit and use of raised funds.
The special report of China Avionics Systems Co.Ltd(600372) on the deposit and use of raised funds in 2020 prepared by the company truly reflects the deposit and actual use of raised funds in 2020. The content is true, accurate and complete, and there are no false records, misleading statements or major omissions.
(III) internal control evaluation report of the company
The company’s corporate governance, production and operation, information disclosure and major events are carried out in strict accordance with the provisions of laws and regulations and various internal control systems of the company, and the possible internal and external risks in all links of the activities have been reasonably controlled, and the predetermined objectives of various activities of the company have been basically realized. During the reporting period, the company operated in strict accordance with various systems and regulations, and there was no violation of the guidelines on internal control of listed companies of Shanghai Stock Exchange;
The company’s self-evaluation report on internal control truly and objectively reflects the actual situation of the company’s internal control system construction, internal control implementation and supervision and management. The implementation of the company’s internal control system ensures the normal operation and management of the company and is conducive to improving the company’s risk prevention ability. The company should further strengthen the implementation of internal control and continue to improve the internal control system, so as to provide a strong guarantee for the long-term, stable, standardized and healthy development of the company.
The internal control evaluation report of the company in 2020 objectively and completely reflects the actual situation of the company’s internal control.
(IV) fund occupation and external guarantee of related parties of the company
During the reporting period, the company has no controlling shareholders and their related parties occupying the company’s funds; The company was able to strictly control external guarantees, and did not provide guarantees for the debts of the company’s shareholders, shareholders’ holding subsidiaries, shareholders’ subsidiaries, other related parties with less than 50% of the company’s shares, any unincorporated units or individuals, and there was no external guarantee in any form during the reporting period.
(V) change of accounting firm of the company
Prior approval: the review procedure of the company’s change of accounting firm complies with relevant laws and regulations and the relevant provisions of the articles of association, and will not damage the legitimate rights and interests of all shareholders and investors; The change of accounting firm will not violate relevant laws and regulations, nor will it affect the audit quality of the company’s financial statements. The board of directors communicated with us before considering the proposal. We agreed to submit the matter to the board of directors for deliberation and agreed to change the accounting firm.
Independent opinion: according to the relevant qualification and other supporting materials of Dahua Certified Public Accountants (special general partnership), it has corresponding professional competence and investor protection ability. The main members of the project team are in good faith, and their independence meets the relevant regulations, which can meet the requirements of the company’s annual audit. The change of the accounting firm of the company is based on the fact that ShineWing Certified Public Accountants (special general partnership) has provided audit services for the company for four consecutive years. In view of the expiration of the audit service contract between ShineWing and the company, in order to better adapt to the future business development of the company and ensure the quality of financial audit, the audit institution is rotated according to relevant regulations and the recommendations of the audit committee of the board of directors of the company, with sufficient and appropriate reasons, Change reasonable compliance. The relevant decision-making procedures for the company’s appointment of audit institutions in 2021 comply with the provisions of laws, administrative regulations, departmental rules and other normative documents and China Avionics Systems Co.Ltd(600372) articles of association, and do not harm the interests of the company and shareholders. We agree to appoint Dahua Certified Public Accountants (special general partnership) as the auditor of the company’s financial report and internal control in 2021. Agree to submit the proposal to the general meeting of shareholders for deliberation.
(VI) the board of directors of the company shall add candidates for non independent directors and independent directors
Mr. Wang Xiaoming, the candidate for non independent directors, and Mr. Jing Xu, the candidate for independent directors, have previous work experience and ability, and are qualified for the proposed positions. They agree to submit them to the general meeting of shareholders of the company for deliberation. 4、 Profit distribution of the company
At the 2020 annual general meeting held on June 28, 2021, the company reviewed and approved the profit distribution plan for 2020. The company distributed cash dividend of 0.10 yuan (tax included) per share based on the total share capital of 1928214265 shares before the implementation of the plan and the remaining 1917798835 shares after deducting 10415430 shares repurchased by the company through centralized bidding transaction, A total cash dividend of 19177988350 yuan (including tax) was distributed. The distribution plan has been implemented on August 23, 2021.
The company’s profit distribution plan is based on the company’s long-term and stable profitability and confidence in the company’s future development. It is not only conducive to ensuring the normal operation and long-term development of the company, but also conducive to maintaining the continuity and stability of the company’s profit distribution policy, which is in line with the actual situation of the company, relevant laws and regulations and the provisions of the articles of association. Agree to the company’s profit distribution plan for 2020.
5、 Relevant performance of the audit committee
There are 3 independent directors in the audit committee, accounting for more than 1 / 2 of the total number of members of the audit committee. During the audit of the company’s 2021 annual report, we listened to the opinions of the company’s senior executives and relevant personnel on the company’s production
