Elite Color Environmental Resources Science&Technology Co.Ltd(002998)
Working system of independent directors
Chapter I General Provisions
Article 1 in order to improve the governance structure of Elite Color Environmental Resources Science&Technology Co.Ltd(002998) (hereinafter referred to as “the company”), strengthen the restraint and supervision mechanism for the management of the company, better safeguard the interests of minority shareholders and promote the standardized operation of the company, in accordance with the securities law of the people’s Republic of China and the rules for independent directors of listed companies (2022) (hereinafter referred to as “the rules”) This system is formulated in accordance with relevant national laws, regulations and normative documents such as the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board (revised in January 2022) (hereinafter referred to as the guidelines for standardized operation).
Article 2 the board of directors of the company shall have three independent directors, and the number of independent directors shall account for more than one-third of all members of the board of directors of the company. The board of directors of the company sets up special committees for remuneration and assessment, audit and nomination. Independent directors account for the majority of the members of the audit committee, nomination committee and remuneration and assessment committee, and act as the convener.
Article 3 an independent director refers to a director who does not hold any position other than a director in the company and has no relationship with the company and its major shareholders that may hinder his independent and objective judgment.
Article 4 independent directors have the obligation of good faith and diligence to the company and all shareholders. Independent directors shall earnestly perform their duties in accordance with the requirements of relevant laws, administrative regulations and the articles of association, safeguard the overall interests of the company, and pay particular attention to 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 other units or individuals having an interest in the company. There are five independent directors in the company, and they have enough time and energy to perform their duties effectively.
Article 5 independent directors shall take the initiative to obtain the information needed in the process of performing their duties through various channels, including on-site investigation, questioning relevant personnel, external evidence collection, etc; Independent directors should take the initiative to strengthen communication and contact with the board of supervisors.
Chapter II qualifications of independent directors
Article 6 the company’s independent directors and candidates for independent directors shall have the basic knowledge of the operation of listed companies, be familiar with relevant laws, administrative regulations, departmental rules and other normative documents, and have more than five years of legal, economic, financial, management or other work experience necessary to perform the duties of independent directors, It has obtained the qualification certificate of independent director in accordance with the guidelines for the training of senior managers of listed companies and relevant regulations of the CSRC. If the independent director candidate fails to obtain the independent director qualification certificate at the time of nomination, he shall make a written commitment to participate in the latest independent director qualification training and obtain the independent director qualification certificate.
Article 7 an independent director of the company shall have the qualifications appropriate to the exercise of his / her functions and powers:
(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 the rules, standardized operation guidelines and this system;
(III) have basic knowledge of the operation of listed companies, and be familiar with relevant laws, administrative regulations, departmental rules, normative documents and business rules of Shenzhen Stock Exchange;
(IV) have more than five years of working experience in law, economics or other work necessary to perform the duties of independent directors;
(V) obtain the qualification certificate of independent directors recognized by the CSRC and the stock exchange;
(VI) other conditions stipulated by laws, regulations and the articles of association.
Article 8 candidates for independent directors shall be independent and shall not fall under the following circumstances:
(I) persons who work in the company or its affiliated enterprises, their immediate family members and their main social relations; (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) five or more direct or indirect shareholders of the company or their direct relatives who have held more than 5% of the shares of the company;
(IV) persons who hold posts in the company’s controlling shareholders, actual controllers and their affiliated enterprises and their immediate family members; (V) personnel providing financial, legal and consulting services for the company, its controlling shareholders, actual controllers or their respective subsidiaries, including but not limited to all personnel of the project team of the intermediary providing services, reviewers at all levels, personnel signing the report, partners and main principals;
(VI) personnel working in units with significant business dealings with the company and its controlling shareholders, actual controllers or their respective subsidiaries, or personnel working in units with controlling shareholders with significant business dealings;
(VII) personnel who have been in any of the situations listed in the preceding six items within the last 12 months;
(VIII) other personnel who are determined by the CSRC and Shenzhen Stock Exchange to have no independence.
The subsidiaries of the controlling shareholder and actual controller of the company in items (4), (5) and (6) of the preceding paragraph do not include the subsidiaries that do not form an affiliated relationship with the company in accordance with article 6.3.4 of the stock listing rules of Shenzhen Stock Exchange.
In the first paragraph, “immediate relatives” refer to spouses, parents and children; “Major social relations” means brothers and sisters, parents of spouses, spouses of children, spouses of brothers and sisters, brothers and sisters of spouses; “Major business transactions” refer to the matters that need to be submitted to the general meeting of shareholders for deliberation in accordance with the Listing Rules of Shenzhen Stock Exchange and other relevant provisions or the articles of association, or other major matters recognized by Shenzhen Stock Exchange; “Holding office” refers to serving as a director, supervisor, senior manager and other staff.
Article 9 candidates for independent directors shall have no following bad records:
（1） Those who have been subject to administrative punishment by the CSRC or criminal punishment by judicial organs due to securities and futures violations and crimes within the last 36 months;
（2） Being put on file for investigation by the CSRC or by the judicial organ due to suspected illegal and criminal acts of securities and futures, and there is no clear conclusion;
（3） Being publicly condemned or criticized by the stock exchange for more than three times in the last 36 months; （4） As the object of punishment for dishonesty, he is identified and restricted by the national development and Reform Commission and other ministries and commissions to hold the position of director of a listed company;
（5） In the past, the board of directors requested the general meeting of shareholders to replace the independent director who failed to attend the meeting of the board of directors in person for three consecutive times or failed to attend the meeting of the board of directors for two consecutive times and did not entrust other directors to attend the meeting of the board of directors, and less than 12 months have passed;
（6） Other circumstances recognized by Shenzhen Stock Exchange.
When nominating candidates for independent directors, the nominees of independent directors shall also focus on whether the candidates for independent directors have the following circumstances:
（1） Failing to attend the board meeting in person for two consecutive times or more than half of the total number of board meetings in 12 consecutive months during the previous period of serving as an independent director; （2） Failing to express the opinions of independent directors as required or the independent opinions expressed are proved to be obviously inconsistent with the facts during the past period of serving as independent directors;
（3） Serving as a director, supervisor or senior manager in more than five companies at the same time;
（4） The former independent director was removed by the listed company before the expiration of his term of office;
（5） Being punished by other relevant departments other than the CSRC within the last 36 months;
（6） Other circumstances that may affect the integrity, diligence and independent performance of duties of independent directors.
In case of any of the above circumstances, the nominee of the independent director candidate shall disclose the specific circumstances, the reasons for still nominating the candidate, whether it has an impact on the standardized operation and corporate governance of the company and the countermeasures.
Article 10 candidates for independent directors can serve as independent directors in up to five domestic and foreign listed companies (including the company), and ensure to effectively perform the duties of independent directors in sufficient time and energy.
Article 11 the independent directors appointed by the company shall include at least one accounting professional.
The independent director candidate nominated as an accounting professional shall have rich accounting professional knowledge and experience and meet at least one of the following conditions:
(I) have the professional qualification of certified public accountant;
(II) having a senior professional title, associate professor or above, or a doctor’s degree in accounting, auditing or financial management;
(III) have senior professional titles in economic management, and have more than 5 years of full-time working experience in professional posts such as accounting, audit or financial management.
Chapter III nomination, filing, election and replacement of independent directors
Article 12 the board of directors, the board of supervisors and shareholders who individually or jointly hold more than 1% of the company’s shares may nominate candidates for independent directors, which shall be elected and decided by the general meeting of shareholders.
Article 13 the nominee of an independent director shall obtain the consent of the nominee before nomination.
Article 14 candidates for independent directors shall make a statement on whether they meet the requirements of relevant laws, administrative regulations, departmental rules, normative documents and the business rules of Shenzhen Stock Exchange on the qualification and independence of independent directors.
The nominee of independent directors shall carefully verify the qualifications of independent director candidates and whether there are circumstances affecting their independence, and make a statement on the verification results.
Article 15 the company shall submit the declaration of independent director nominees, the declaration of independent director candidates and the resume of independent director candidates to Shenzhen Stock Exchange at the latest when issuing the notice of the general meeting of shareholders on the election of independent directors, and disclose the relevant announcements.
Article 16 after being nominated, candidates for independent directors shall conduct self-examination on whether they are qualified for the post, and timely provide the company with a written description of whether they are qualified for the post and relevant qualification certificates.
Article 17 the board of directors of the company shall, at the latest when issuing the notice of the general meeting of shareholders on the election of independent directors, submit the detailed information such as the occupation, educational background, professional qualification, detailed work experience and all part-time jobs of the candidates for independent directors to the website of Shenzhen stock exchange for publicity. The publicity period is three trading days. Independent director candidates and nominees shall check all relevant information disclosed or publicized by the company. If there are errors or omissions in the disclosed or publicized contents, they shall timely inform the company to make corrections. Article 18 during the publicity period, if any unit or individual has any objection to the qualification and independence of independent director candidates, they can feed back their opinions to Shenzhen Stock Exchange on the qualification of independent director candidates and the situation that may affect their independence through the channels provided by the website of Shenzhen Stock Exchange.
Article 19 If the candidate for independent director does not meet the requirements for the holding of the post or independence of independent director, if Shenzhen Stock Exchange raises an objection to the holding of the post and independence of the candidate for independent director, the company shall disclose the contents of the objection letter in time.
When the general meeting of shareholders is held to elect independent directors, the board of directors shall explain whether the candidates for independent directors are objected by Shenzhen Stock Exchange. The company shall not submit the independent director candidates who raise objections from Shenzhen Stock Exchange to the general meeting of shareholders for election as independent directors. If the proposal has been submitted to the general meeting of shareholders for deliberation, the proposal shall be cancelled.
Article 20 if Shenzhen stock exchange is concerned about other situations of independent director candidates, the company shall disclose the contents of the letter of concern in a timely manner, and the nominees of independent directors shall disclose the reply to the letter of concern no later than two trading days before the date of the general meeting of shareholders, stating the specific circumstances of the matters of concern, whether the candidate is still recommended, and if it continues to be recommended, the specific reasons Whether it has an impact on the company’s standardized operation and corporate governance and countermeasures.
When the company holds a general meeting of shareholders to elect independent directors, it shall explain whether the relevant information of independent director candidates is concerned by Shenzhen Stock Exchange and its specific circumstances.
Article 21 after the shareholders’ meeting deliberates and approves the proposal for the election of independent directors, the independent directors shall submit the written and electronic documents of the director’s statement and commitment to Shenzhen Stock Exchange within one month. If the appointment of an independent director needs to be approved by the relevant state departments in advance, he shall perform the obligations in the preceding paragraph from the date of approval.
Article 22 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.
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.
Article 23 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 propose to the general meeting of shareholders for replacement.
Unless there is a situation that an independent director is not allowed to serve as a director or independent director according to the working system and relevant laws, regulations and normative documents, the independent director shall not be removed without reason before the expiration of his term of office. In case of early removal, the company shall explain the removal of the independent director. If the removed independent director believes that the reason for the removal of the company is improper, he may make a public statement.
Article 24 If an independent director of the company fails to meet the qualifications of an independent director as stipulated in the working system after taking office, he shall resign from the position of an independent director within 30 days from the date of such circumstances. If he fails to resign as required, the board of directors of the company shall start the decision-making process within 2 days and remove him from the post of independent director.
Article 25 If the proportion of independent directors in all members of the board of directors is less than one-third due to the resignation of independent directors, or there are no accounting professionals among independent directors, the independent directors who propose to resign shall continue to perform their duties until the date of the emergence of new independent directors. The company shall complete the by election of independent directors within 2 months from the date of resignation of independent directors.
Article 26 during the term of office, independent directors shall participate in the follow-up training of independent directors recognized by Shenzhen Stock Exchange in accordance with relevant regulations.
Chapter IV duties and special powers of independent directors
Article 27 the independent directors of the company shall submit an annual work report to the annual general meeting of shareholders of the company to explain their performance of duties. The work report shall include the following contents:
(I) ways, times and voting of attending the board of directors throughout the year, and times of attending the general meeting of shareholders as nonvoting delegates;
(II) the situation of expressing independent opinions;
(III) on site inspection;
(IV) proposing to convene the board of directors, proposing to hire or dismiss accounting firms, and independently hiring external audit institutions and consulting institutions;
(V) other work done to protect the legitimate rights and interests of minority shareholders.
Article 28 independent directors have the following special functions and powers:
(I) related party transactions that need to be submitted to the general meeting of shareholders for deliberation shall be approved by independent directors
