Beijing Hairun Tianrui law firm
About Shenzhen Cotran New Material Co.Ltd(300731)
In 2018, the third exercise period of stock option and restricted stock incentive plan / the exercise period of lifting the restrictions on sale / the conditions for lifting the restrictions on sale are not fulfilled, and some stock options are cancelled and some restricted stocks are repurchased and cancelled
Legal opinion
Beijing China
Address: floors 13 & 17, broadcasting building, No. a 14, Jianwai street, Chaoyang District zip code: 100022 Tel: (010) 65219696 Fax: (010) 88381869 April 2002
Beijing Hairun Tianrui law firm
About Shenzhen Cotran New Material Co.Ltd(300731)
In 2018, the third exercise period of stock option and restricted stock incentive plan / the exercise period of lifting the restrictions on sale / the conditions for lifting the restrictions on sale are not fulfilled, and some stock options are cancelled and some restricted stocks are repurchased and cancelled
Legal opinion
To: Shenzhen Cotran New Material Co.Ltd(300731)
Beijing Hairun Tianrui law firm (hereinafter referred to as “the firm”) has accepted the entrustment of Shenzhen Cotran New Material Co.Ltd(300731) (hereinafter referred to as “the company” or ” Shenzhen Cotran New Material Co.Ltd(300731) “) as the special legal adviser for the company to implement the 2018 stock option and restricted stock incentive plan (hereinafter referred to as “the incentive plan”), in accordance with the company law of the people’s Republic of China (hereinafter referred to as “the company law”) The securities law of the people’s Republic of China (hereinafter referred to as the Securities Law), the measures for the administration of equity incentive of listed companies (hereinafter referred to as the administrative measures) and other relevant laws, regulations and normative documents, as well as the company’s 2018 stock option and restricted stock incentive plan (Draft) (hereinafter referred to as the incentive plan (Draft)), This legal opinion is hereby issued on matters related to the failure of the third exercise period / release period of the company’s stock option and restricted stock incentive plan in 2018 and the cancellation of some stock options and the repurchase and cancellation of some restricted shares.
In order to issue this legal opinion, our lawyer hereby makes the following statement:
(I) the firm and its lawyers have performed their statutory duties in accordance with the provisions of the securities law, the measures for the administration of law firms engaging in securities legal business and the facts that have occurred or exist before the date of issuance of this legal opinion, followed the principles of diligence and good faith, and conducted corresponding verification and verification, so as to ensure that the concluding opinions issued in this legal opinion are legal and accurate, and there are no false records Misleading statements or material omissions.
(II) in the process of inspection, we have obtained the following assurance from the company, that is, the company has provided all relevant factual materials required for the issuance of this legal opinion to our lawyers, and the relevant written materials and written testimony are true and effective without any false records, misleading statements and major omissions. The copies provided are consistent with
(III) the lawyers of the firm only express legal opinions on the legality and compliance of the company’s repurchase cancellation in accordance with the explicit requirements of the laws, regulations and relevant normative documents in force on the date of issuance of this legal opinion.
(IV) the lawyer’s consent to the implementation of the stock option plan of the company shall be submitted together with the lawyer’s legal opinions of the company in 2018, and shall bear the corresponding legal responsibilities for the implementation of the stock option plan of the company.
(V) this legal opinion can only be used for the purpose of canceling some stock options and repurchasing and canceling some restricted shares if the third exercise period / lifting the restriction period of the company’s stock option and restricted stock incentive plan in 2018 is not fulfilled, and no unit or individual shall use this legal opinion or any part thereof for any other purpose unless prior written authorization is obtained from our lawyer.
Based on the above statement, we and our lawyers, in accordance with relevant laws, regulations, rules and the relevant provisions of the CSRC, and on the basis of checking and verifying the relevant documents and facts provided by the company, hereby issue the following legal opinions:
1、 The approval and authorization of the cancellation of stock options and the repurchase and cancellation of restricted shares
On December 26, 2018, the company held the fifth extraordinary general meeting of shareholders in 2018, which considered and approved the proposal on requesting the general meeting of shareholders to authorize the board of directors to handle matters related to the equity incentive plan. The general meeting of shareholders authorized the board of directors to handle the change and termination of the stock option and restricted stock incentive plan in accordance with the provisions of the company’s 2018 stock option and restricted stock incentive plan, Including but not limited to canceling the incentive object’s qualification to exercise / lift the restriction on sale, canceling the option of the incentive object that has not yet exercised, canceling the repurchase of restricted shares of the incentive object that have not yet lifted the restriction on sale, and handling the compensation and inheritance of stock options and restricted shares of the deceased incentive object that have not yet exercised / lifted the restriction on sale.
On April 8, 2022, the company held the sixth meeting of the third board of directors and the fifth meeting of the third board of supervisors respectively. The meeting deliberated and approved the proposal on the unfulfilled exercise of the third exercise period / lifting of the restriction period / lifting of the restriction conditions of the incentive plan for stock options and restricted stocks in 2018 and the proposal on canceling some stock options and repurchasing and canceling some restricted stocks. In view of the fact that the growth rate of the company’s net profit in 2021 did not meet the performance assessment requirements at the company level, the company decided to cancel a total of 891240 stock options granted to the incentive objects who did not meet the exercise conditions, and a total of 760200 restricted shares granted to the incentive objects who did not meet the conditions for lifting the restrictions were repurchased and cancelled by the company according to the grant price plus the deposit interest of the bank in the same period.
The independent directors of the company have expressed independent opinions on the cancellation of some stock options and the repurchase and cancellation of some restricted shares. They believe that the cancellation of stock options corresponding to the above personnel and the repurchase and cancellation of restricted shares corresponding to the above personnel by the company comply with the relevant provisions of the administrative measures, the procedures are legal and compliant, and will not affect the continuous operation of the company or damage the interests of the company and all shareholders. The independent directors unanimously agreed to cancel some stock options and repurchase and cancel some restricted shares, and agreed to submit the matter to the general meeting of shareholders of the company for deliberation. Our lawyers believe that the cancellation of stock options and the repurchase and cancellation of restricted shares by the company have fulfilled the necessary approval and authorization at this stage, and comply with the relevant provisions of laws, regulations, normative documents such as the administrative measures and the incentive plan (Draft).
2、 The explanation of the failure of the exercise conditions in the third exercise period / release period of the incentive plan, and the reasons and quantity for canceling some stock options and repurchasing and canceling some restricted shares, as well as the repurchase price and capital source of restricted shares
(I) explanation of the failure of the third exercise period / release period of the incentive plan to fulfill the exercise conditions / release restrictions, and the reasons and quantity for canceling some stock options and repurchasing and canceling some restricted shares
1. Description of the failure of the third exercise period / lifting of restrictions on sale
According to the relevant provisions of the company’s incentive plan (Draft), the company level vesting / unlocking performance conditions: the performance conditions of the third vesting period / lifting the restriction period shall be met: Based on the net profit in 2018, the net profit growth rate in 2021 shall not be less than 45%.
The above “net profit” index refers to the net profit attributable to the shareholders of the listed company, and the value excluding the share payment cost of this and other incentive plans is used as the calculation basis. According to the company’s 2021 annual audit report issued by notary Tianye Certified Public Accountants (special general partnership), the company’s net profit attributable to the shareholders of the listed company in 2021 was -127478 million yuan, and the net profit attributable to the shareholders of the listed company after excluding the share payment costs of this and other incentive plans was -141693 million yuan, a decrease of 131.90% compared with the net profit of 444142 million yuan after excluding the share payment expenses in 2018, In the third exercise period / release period of the incentive plan, the company level does not meet the performance conditions of exercise / release of restrictions.
2. Reasons and quantities for cancelling some stock options and repurchasing and cancelling some restricted shares
According to the relevant provisions of the company’s incentive plan (Draft) and the management measures for the implementation and assessment of equity incentive plan in 2018, if the company fails to meet the above performance assessment objectives, the stock options of all incentive objects corresponding to the exercisable rights in the assessment year shall not be exercised and shall be cancelled by the company; All restricted shares that can be lifted in the corresponding assessment year of incentive objects shall not be lifted, and the company shall repurchase and cancel them according to the grant price plus the deposit interest of the bank in the same period.
Therefore, in view of the fact that the net profit growth rate of the company in 2021 did not meet the performance assessment requirements at the company level, a total of 891240 options granted to 65 incentive objects in this incentive plan in the current period shall not be exercised and shall be cancelled by the company; A total of 760200 restricted shares granted to 55 incentive objects in the current period shall not be lifted, and the company shall repurchase and cancel them.
(II) repurchase price and capital source of restricted shares
According to the relevant provisions of the incentive plan (Draft), after the stock options and restricted shares granted to the incentive object are registered, if the company has matters affecting the total amount of the company’s share capital or the company’s share price, such as the conversion of capital reserve into share capital, the distribution of stock dividends, the division of shares, the allotment or reduction of shares, and the distribution of dividends, The company shall adjust the number and price of stock options that have not been exercised and restricted shares that have not been lifted.
Since the company completed the implementation of the annual equity distribution plans for 2018, 2019 and 2020 on July 15, 2019, June 29, 2020 and June 1, 2021, the company has adjusted the number and price of stock options granted, the number and price of restricted shares granted and the price of shares granted accordingly. According to the relevant provisions of the company’s incentive plan (Draft) and the administrative measures for the implementation and assessment of equity incentive plan in 2018, if the company fails to meet the performance assessment objectives at the company level, the restricted shares that can be lifted in the corresponding assessment year of all incentive objects shall not be lifted, and shall be repurchased and cancelled by the company. The repurchase price is the grant price plus the deposit interest of the bank in the same period.
Among them, the interest calculation time range of the funds corresponding to the shares repurchased this time is from the date of completion of registration of the grant of restricted shares (including the day) to the date when the board of directors deliberates and approves the repurchase cancellation proposal (excluding the day), less than one year is calculated according to the central bank’s time deposit interest rate for the same period of one year, and more than one year but less than two years is calculated according to the central bank’s time deposit interest rate for the same period of one year The time deposit rate of the central bank for the same period of two years but less than three years shall be applied, and the time deposit rate of the central bank for the same period of three years shall be applied for the same period of three years. According to the term of use of the funds, the term of use of the funds of the restricted shares granted but not lifted is three years. Therefore, the bank deposit interest corresponding to the restricted shares granted but not lifted is 2.75% in the same period.
The repurchase price of restricted shares granted but not lifted is:
P=P0 × （1+2.75% × D÷365）=9.95 × （1+2.75% × 1148 ÷ 365) = 10.811 yuan / share
Where: P is the repurchase price, P0 is the adjusted grant price, and D is the number of days from the date when the board of directors deliberates and approves the repurchase cancellation proposal to the date when the registration of restricted stock grant is completed.
To sum up, the total number of stock options cancelled this time is 891240; The total number of restricted shares repurchased and cancelled is 760200 shares, and the repurchase price is 10.811 yuan / share. The total repurchase amount is 821852220 yuan, and all the repurchase funds are the company’s own funds.
Our lawyers believe that the reason, quantity, repurchase price and capital source of the company’s cancellation of some stock options and repurchase and cancellation of some restricted shares this time comply with the relevant provisions of laws, regulations, normative documents such as the administrative measures and the incentive plan (Draft).
3、 Concluding observations
To sum up, our lawyers believe that the procedures performed by the company for the cancellation of stock options and the repurchase and cancellation of restricted shares comply with the provisions of the administrative measures and the incentive plan (Draft); The reason, quantity, price and repurchase fund source of the company’s cancellation of stock options and repurchase and cancellation of restricted shares are in line with relevant regulations; This repurchase still needs to perform corresponding information disclosure obligations, handle relevant repurchase cancellation procedures, and perform corresponding procedures such as reducing registered capital and share cancellation registration in accordance with the company law, the articles of association and other relevant provisions.
This legal opinion is made in duplicate.
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(there is no text on this page, which is only the signature and seal page of the legal opinion of Beijing Hairun Tianrui law firm on the third exercise period of Shenzhen Cotran New Material Co.Ltd(300731) 2018 stock option and restricted stock incentive plan / the exercise period of lifting restrictions / the unfulfilled conditions of lifting restrictions on sales and the cancellation of some stock options and the repurchase and cancellation of some restricted shares)
Beijing Hairun Tianrui law firm (seal) handling lawyer (signature):
Person in charge (signature): Zhao Jiao:
Yan kebing: Wang Jing:
specific date
