Hubei Yihua Chemical Industry Co.Ltd(000422) independent directors’ special instructions and independent opinions on relevant matters of the fourth meeting of the 10th board of directors of the company
Hubei Yihua Chemical Industry Co.Ltd(000422) (hereinafter referred to as “the company”) the fourth meeting of the 10th board of directors was held on April 7, 2022. As an independent director of the company in accordance with the company law, the standards for the governance of listed companies, the rules for independent directors of listed companies, the Listing Rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board and other laws and regulations, the self regulatory rules and the relevant provisions of the articles of Association Hubei Yihua Chemical Industry Co.Ltd(000422) independent director working system, In the spirit of seeking truth from facts and being responsible to the company and all shareholders, we have carefully reviewed the relevant materials provided by the company and expressed the following independent opinions on relevant matters:
1、 Special instructions and independent opinions on the occupation of the company’s funds by the controlling shareholders and other related parties, daily related party transactions in 2021 and the company’s external guarantees (I) instructions and independent opinions on the occupation of the company’s funds by the controlling shareholders and other related parties and the company’s daily related party transactions in 2021:
We have read the audit report on the occupation of funds by controlling shareholders and other related parties issued by Daxin Certified Public Accountants (special general partnership), investigated and verified the occupation of funds by controlling shareholders and other related parties of the company and the related party transactions of the company during the reporting period, and fully communicated with the audit institution. Now we express the relevant explanations and independent opinions as follows:
1. During the reporting period, the capital transactions between the company and its controlling shareholders and other related parties can strictly comply with the relevant provisions of the guidelines for the supervision of listed companies No. 8 – regulatory requirements for capital transactions and external guarantees of listed companies.
During the reporting period, the wholly-owned subsidiary of the company transferred 100% of the equity of Hunan Yihua Chemical Co., Ltd. (hereinafter referred to as “Hunan Yihua”) to the controlling shareholder Hubei Yihua Chemical Industry Co.Ltd(000422) Group Co., Ltd. (hereinafter referred to as “Yihua group”). At the end of the reporting period, the company receivable 28884732622 yuan from Hunan Yihua, which was fully recovered on March 21, 2022.
Guizhou Xinyi mining (Group) Co., Ltd. (hereinafter referred to as “Xinyi mining”) was a holding subsidiary of the company. In November 2019, the company transferred 60% of the equity of Xinyi mining to Zhejiang Energy Development Co., Ltd. in April 2020, the controlling shareholder Yihua group of the company obtained another 40% of the equity of Xinyi mining. Before the transfer of the controlling equity of Xinyi mining, the creditor’s rights formed by the company’s accumulated loans from Xinyi mining over the years were 51053160761 yuan. For the above claims, Yihua group provided the company with an irrevocable joint and several liability guarantee in April 2021. As of the end of the reporting period, the balance of the above claims is 42553760761 yuan, and the maturity date is November 30, 2022.
2. The actual total amount of the company’s daily related party transactions in 2021 is controlled within the expected range. Although the transaction amount of some single businesses with related parties is slightly higher than the expected transaction amount, it is caused by the rise in the price of products purchased and sold by the company from related parties, which is in line with the objective situation. The total amount of related party transactions in 2021 does not exceed the original expected total amount and will not have a significant impact on the company’s operation, It does not harm the interests of the company and minority shareholders.
(II) special description and independent opinions on the external guarantee of the company
In accordance with the guidelines for the supervision of listed companies No. 8 – regulatory requirements for capital transactions and external guarantees of listed companies and the requirements of the company’s external guarantee management system, the independent directors carefully checked the external guarantees of the company. Through verification, we believe that the external guarantees occurred during the reporting period and continued into the reporting period of the company do not violate the provisions of relevant laws and regulations, the above guarantees have fulfilled the legal approval procedures, and the decision-making procedures of external guarantees are legal and compliant. The company’s external guarantee belongs to the needs of the company’s production, operation and development, has been approved by the board of directors and the general meeting of shareholders, and has been disclosed according to law. During the reporting period, other shareholders of the joint-stock company are required to provide corresponding guarantees according to their shareholding ratio. At the same time, the company also strengthened the monitoring of the guaranteed company and reduced the guarantee risk. The above guarantee does not damage the rights and interests of the company’s shareholders, especially the minority shareholders.
2、 Independent opinions of independent directors on the self evaluation report on internal control in 2021
In accordance with the basic norms of enterprise internal control issued by Shenzhen Stock Exchange, the supporting guidelines for enterprise internal control, and the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 21 – General Provisions on the annual internal control evaluation report issued by the CSRC As an independent director of the company, we reviewed the company’s self-evaluation report on internal control in 2021 and issued the following independent opinions:
The company has established a relatively perfect internal control system and can be effectively implemented. The self-evaluation report of the company’s internal control truly and objectively reflects the construction and operation of the company’s internal control system.
3、 Independent opinions of independent directors on the risk assessment report of Hubei Yihua Chemical Industry Co.Ltd(000422) Group Finance Co., Ltd
In accordance with the company law, the Listing Rules of Shenzhen Stock Exchange and other laws and regulations, self regulatory rules, the articles of association and other relevant provisions, as an independent director of the company, we reviewed the risk assessment report of Hubei Yihua Chemical Industry Co.Ltd(000422) Group Finance Co., Ltd. and issued the following independent opinions:
(I) Hubei Yihua Chemical Industry Co.Ltd(000422) Group Finance Co., Ltd., as a normative non bank financial institution approved by Bank Of China Limited(601988) Industry Regulatory Commission, provides financial services for the company and its subsidiaries within its business scope, which complies with the provisions of relevant national laws and regulations;
(II) during the performance of the financial services agreement signed between the company and Hubei Yihua Chemical Industry Co.Ltd(000422) Group Finance Co., Ltd., both parties follow the principle of equality and voluntariness, and the pricing principle is fair, without damaging the interests of the company and minority shareholders;
(III) the risk assessment report on Hubei Yihua Chemical Industry Co.Ltd(000422) Group Finance Co., Ltd. fully assesses the business qualification, business and risk status of the finance company. As a non banking financial institution, its business scope, business content and process, internal risk control system and other measures are strictly supervised by the CBRC. Under the above risk control conditions, it is agreed that Hubei Yihua Chemical Industry Co.Ltd(000422) Group Finance Co., Ltd. provides relevant financial services to the company and its subsidiaries.
4、 Independent opinions of independent directors on the plan for profit distribution and conversion of capital reserve into share capital in 2021
Audited by Daxin Certified Public Accountants (special general partnership), the company’s undistributed profit at the end of 2021 is negative. Therefore, the company’s profit distribution plan for 2021 is: no profit distribution will be carried out in 2021, and no capital reserve will be converted into share capital.
The company’s plan for profit distribution and conversion of capital reserve into share capital in 2021 complies with the relevant provisions of the company law, the stock listing rules of Shenzhen Stock Exchange (revised in 2022) and the articles of association, and conforms to the actual situation of the company. As an independent director of the company, we express our independent opinion of “consent” to the proposal and agree to submit the proposal to the general meeting of shareholders of the company for deliberation.
5、 Independent opinions of independent directors on the proposal on the prediction of daily connected transactions in 2022
In accordance with the requirements of the company law, the Listing Rules of Shenzhen Stock Exchange and other relevant laws and regulations, the articles of association, the company’s decision-making system for connected transactions and other relevant provisions, as an independent director, we have reviewed the proposal on the prediction of daily connected transactions in 2022 and issued the following independent opinions:
1. The connected transactions reviewed by the company this time belong to the normal business of the company, meet the requirements of relevant national laws and regulations, and do not violate the provisions of relevant national laws and regulations and the articles of association of the company.
2. We have reviewed the execution of such transactions over the years and the audit opinions of Certified Public Accountants on such transactions, carefully reviewed the relevant materials, listened to the reports of relevant personnel, and believed that the company’s daily related party transactions in 2022 are expected to be objective and fair, the transaction conditions are fair and reasonable, all follow the fair and reasonable pricing principle, take the market price as the basis, and both parties sign the transaction framework agreement according to the principles of voluntariness, equality and mutual benefit, And ensure that the price of products and services provided by each other does not deviate from the price of the third party, the pricing basis is reasonable and meets the needs of the company’s production and operation.
The expected related party transaction has brought economic benefits to both parties of the transaction. The transaction is fair and reasonable without damaging the interests of the company and minority shareholders. It is necessary and reasonable to continue the transaction. 6、 Independent opinions of independent directors on the proposal on the proposed renewal of accounting firm
The company renewed the appointment of Daxin Certified Public Accountants (special general partnership) as the audit institution in 2022. The relevant review procedures comply with the relevant laws and regulations such as the company law, the stock listing rules of Shenzhen Stock Exchange and the relevant provisions of the articles of association, are in line with the interests of the company, are conducive to ensuring the quality of the company’s financial and internal control audit, and there is no damage to the interests of the company and minority shareholders. Our independent opinions on the proposal on the proposed renewal of the accounting firm are as follows:
We agree to renew the appointment of Daxin Certified Public Accountants (special general partnership) as the company’s audit institution in 2022 for one year. And agreed to submit the proposal to the general meeting of shareholders of the company for deliberation.
7、 Independent opinions of independent directors on the proposal on external guarantee
As an independent director of the company, we have carefully reviewed the relevant materials provided by the company and considered the following external guarantees considered by the board of directors based on the principle of independent and objective judgment in accordance with the company law, the guidelines for the governance of listed companies, the rules for independent directors of listed companies and other laws and regulations, the self-discipline supervision rules, the articles of association, the Hubei Yihua Chemical Industry Co.Ltd(000422) independent director working system and other relevant provisions:
1. For the loan of 189.5 million yuan applied by Xinjiang Yihua to Industrial Bank Co.Ltd(601166) Urumqi branch, guarantee 37.72 million yuan according to the shareholding ratio of the company in Xinjiang Yihua;
2. For the 137 million yuan loan applied by Xinjiang Yihua to Bank Of China Limited(601988) Three Gorges Branch, guarantee 27.27 million yuan according to the shareholding ratio of the company in Xinjiang Yihua; 3. Provide a guarantee of 19.9 million yuan of the 100 million yuan loan applied by Xinjiang Yihua from the Three Gorges Yiting sub branch of Industrial And Commercial Bank Of China Limited(601398) Co., Ltd. according to the shareholding ratio of the company in Xinjiang Yihua;
4. Provide guarantee for the loan of RMB 250.03 million applied by Xinjiang Yihua to Urumqi high tech Zone Branch of Tianshan agricultural and Commercial Bank Co., Ltd. according to the shareholding ratio of the company in Xinjiang Yihua;
5. For the 600 million yuan loan applied by Xinjiang Yihua to Hubei Branch of Export Import Bank of China, guarantee the 119.4 million yuan loan according to the company’s shareholding ratio in Xinjiang Yihua. After careful review of the above proposals and based on our independent judgment, we express our “agreed” independent opinions as follows:
The above external guarantees are provided by the shareholders of Xinjiang Yihua according to the equity ratio, that is, the company provides guarantees for Xinjiang Yihua according to the shareholding ratio of 19.9%, and the other shareholder Yichang Xinfa Industry Investment Co., Ltd. provides guarantees for Xinjiang Yihua according to the shareholding ratio of 80.1%. Xinjiang Yihua provides counter guarantee for the company’s guarantee of this bank loan.
This guarantee meets the requirements of relevant national laws and regulations and the actual situation of the enterprise’s production and operation activities. The guarantee measures of the shareholders of Xinjiang Yihua in the same proportion are fair and equal. The production and operation of the guaranteed enterprise Xinjiang Yihua is normal and the guarantee risk is controllable. This guarantee is in line with the overall interests of the company and does not damage the interests of the listed company or the interests of the company’s shareholders, especially the minority shareholders. Agree to the above guarantee and submit the proposal to the general meeting of shareholders of the company for deliberation.
8、 Independent opinions of independent directors on the proposal on the remuneration scheme of directors, supervisors and senior managers in 2022
In accordance with the relevant provisions of the rules for independent directors of listed companies and the articles of association of the CSRC, as independent directors of the company, we have carefully reviewed the relevant materials provided by the company, reviewed the proposal on the remuneration scheme for directors, supervisors and senior managers in 2022 based on the principle of independent and objective judgment, and issued the following independent opinions with “consent”: The remuneration plan for supervisors and senior managers is formulated according to the scale of the company, the remuneration level of the industry and the actual operation of the company. It complies with the relevant provisions of the articles of association and does not harm the interests of the company and all shareholders, especially small and medium-sized shareholders. It is agreed to submit the proposal to the general meeting of shareholders of the company for deliberation.
(there is no text on this page, which is the signature page of independent directors’ special instructions and independent opinions on matters related to the fourth meeting of the 10th board of directors of the company)
independent director:
Wu Weirong, Li Qiang, Zhao Yang, Li Qifang
Yang Jilin, Zheng Chunmei, Liu Xinguang, Fu Ming
April 7, 2022
