Shanxi Huayang New Materialco.Ltd(600281)
Working system of independent directors
(revised in April 2022)
Chapter I General Provisions
Article 1 in order to further improve the governance structure of Shanxi Huayang New Materialco.Ltd(600281) (hereinafter referred to as “the company”), promote the standardized operation of the company, safeguard the overall interests of the company and protect the legitimate rights and interests of all shareholders, especially small and medium-sized shareholders, from damage, according to the company law of the people’s Republic of China (hereinafter referred to as “the company law”) and the rules for independent directors of listed companies This system is formulated in accordance with the guidelines for self discipline supervision of listed companies of Shanghai Stock Exchange No. 1 – standardized operation and Shanxi Huayang New Materialco.Ltd(600281) articles of Association (hereinafter referred to as the “articles of association”).
Article 2 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 3 independent directors have the obligation of good faith and diligence to the company and all shareholders. Independent directors shall conscientiously perform their duties and safeguard the overall interests of the company in accordance with relevant laws and regulations, the rules for independent directors of listed companies and the articles of association, 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.
Article 4 in principle, the independent directors appointed by the company can concurrently serve as independent directors in up to five listed companies, and ensure that they have enough time and energy to effectively perform the duties of independent directors.
Article 5 the company has three independent directors, including at least one accounting professional.
The accounting professionals mentioned in the preceding paragraph shall have rich accounting professional knowledge and experience and meet at least one of the following conditions:
(I) have the 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.
Article 6 if the number of independent directors of the company fails to meet the conditions for independence or other circumstances unsuitable for performing the duties of independent directors, resulting in the number of independent directors not reaching the number specified in the articles of association, the company shall make up for the number of independent directors in accordance with the provisions.
Article 7 independent directors and persons who intend to serve as independent directors shall participate in the training organized by the CSRC and its authorized institutions in accordance with the requirements of the CSRC.
Chapter II qualifications of independent directors
Article 8 an independent director of the company shall meet the following basic conditions:
(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 guiding opinions.
(III) have basic knowledge of the operation of listed companies and be familiar with relevant laws, administrative regulations, rules and rules. (IV) have more than five years of working experience in law, economics or other work necessary to perform the duties of independent directors. (V) other conditions stipulated in the articles of association.
Chapter III independence of independent directors
Article 9 the following persons shall not serve as independent directors of the company:
(I) the personnel working in the company or its affiliated enterprises and their immediate family members and main social relations (immediate family members refer to spouses, parents, children, etc.; main social relations refer to brothers and sisters, parents in law, daughter-in-law and son-in-law, spouses of brothers and sisters, brothers and sisters of spouses, etc.);
(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) persons who work in shareholder units that directly or indirectly hold more than 5% of the issued shares of the company or in the top five shareholder units of the company and their immediate family members;
(IV) persons who have had the situations listed in the preceding three items in the most recent year;
(V) personnel who provide financial, legal and consulting services for the company and its affiliates;
(VI) other personnel specified in the articles of Association;
(VII) other personnel recognized by CSRC and Shanghai Stock Exchange.
If any of the above circumstances occurs to an independent director during his term of office, the company shall dismiss him in time.
Chapter IV nomination, election and replacement of independent directors
Article 10 the board of directors, the board of supervisors and shareholders who individually or jointly hold more than 1% of the issued shares of the company may propose candidates for independent directors, which shall be elected and approved by the general meeting of shareholders.
Article 11 the nominee of an independent director shall obtain the consent of the nominee before nomination.
Article 12 the nominee shall fully understand the nominee’s occupation, educational background, professional title, detailed work experience and all part-time jobs, and express his opinions on his qualification and independence as an independent director. The nominee shall make a public statement that there is no relationship between himself and the company that affects his independent and objective judgment.
Before the shareholders’ meeting for the election of independent directors is held, the board of directors of the company shall disclose the above contents in accordance with the provisions. Article 13 before disclosing the notice of the general meeting of shareholders on the election of independent directors, the company shall submit the relevant materials of all nominees (including but not limited to the statement of nominees, the statement of candidates and the resume of independent directors) to the CSRC, the dispatched office of the CSRC where the company is located and the Shanghai Stock Exchange at the same time. If the board of directors of the company has any objection to the relevant information of the nominee, it shall submit the written opinions of the board of directors at the same time.
Nominees who disagree with the CSRC can be candidates for directors of the company, but should not be candidates for independent directors.
Article 14 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 6 years.
Article 15 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 request the general meeting of shareholders to replace him.
Before the expiration of the term of office of an independent director, the company may remove him through legal procedures. In case of early dismissal, the company shall disclose it as a special disclosure.
Article 16 an independent director may resign before the expiration of his 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.
If the number or proportion of independent directors in the board of directors of the company is lower than the minimum requirements specified in the articles of association due to the resignation of independent directors, the resignation report of the independent director shall take effect after the next director fills his vacancy. Article 17 when an independent director ceases to perform his duties immediately during his term of office and is dismissed by the company in accordance with the corresponding provisions:
(1) Circumstances under which the company law stipulates that he shall not serve as a director;
(2) The market entry prohibition measures taken by the CSRC not to serve as directors of listed companies have not expired; (3) Independent directors do not meet the conditions for independence.
If an independent director is not allowed to serve as a director according to other laws and regulations or the provisions of Shanghai stock exchange during his term of office, the company shall remove him from his post within one month from the date of such fact. If the relevant independent director should be dismissed but still not removed, and participates in the meeting of the board of directors and votes, the voting result is invalid and not included in the number of participants.
Article 18 If an independent director is not suitable for performing the duties of an independent director after taking office, he shall resign from the position of an independent director within one month 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 procedure within 2 days after the expiration of the time limit and remove his position as an independent director.
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, the independent directors who propose to resign shall continue to perform their duties until the date of the emergence of new independent directors. The original nominee of the independent director or the board of directors of the company shall nominate new independent director candidates within three months from the date of resignation of the independent director
Article 19 independent directors shall actively perform their duties in the governance, internal control, information disclosure, financial supervision and other aspects of listed companies.
If an independent director finds that the matters under consideration affect his independence, he shall declare to the company and withdraw. In case of any situation that obviously affects the independence during his term of office, he shall notify the company in time and put forward solutions. If necessary, he shall resign.
Chapter V powers and duties of independent directors
Article 20 in addition to the functions and powers conferred on directors by laws, regulations, normative documents and the articles of association, independent directors also have the following special functions and powers:
(I) major related party transactions (referring to related party transactions with a total amount of more than 3 million yuan or more than 5% of the company’s recently audited net asset value) shall be submitted to the board of directors for discussion after being approved in advance by independent directors; Before making a judgment, independent directors can hire an intermediary to issue an independent financial consultant report as the basis for their judgment; (II) propose to the board of directors to employ or dismiss the accounting firm;
(III) propose to the board of directors to convene an extraordinary general meeting of shareholders;
(IV) propose to convene the board of directors;
(V) solicit voting rights from shareholders before the general meeting of shareholders.
(VI) independently employ external audit institutions and consulting institutions to audit and consult the specific matters of the company;
(VII) other functions and powers specified in laws and regulations, relevant provisions of CSRC and Shanghai Stock Exchange and the articles of association.
When exercising the functions and powers in items (I) to (V) of the preceding paragraph, independent directors shall obtain the consent of more than half of all independent directors; The exercise of the functions and powers in Item (VI) of the preceding paragraph shall be subject to the consent of all independent directors.
Items (I) (II) can be submitted to the board of directors for discussion only after more than half of the independent directors agree. If the proposals listed in the first paragraph of this article are not adopted or the above functions and powers cannot be normally exercised, the company shall disclose the relevant information.
Article 21 the board of directors of the company shall establish a financial audit committee, a technology and development strategy committee, a human resources Nomination Committee and a remuneration and assessment committee. The members of the special committee are all composed of directors, in which independent directors account for the majority of the audit committee, human resources Nomination Committee and remuneration and assessment committee, and act as the convener. The convener of the audit committee is an accounting professional. The board of directors is responsible for formulating the working procedures of the special committee and standardizing the operation of the special committee.
Article 22 If an independent director finds that the company has any of the following circumstances, he shall actively perform the obligation of due diligence and report to the Shanghai Stock Exchange in time. If necessary, he shall hire an intermediary to conduct special verification:
(I) important matters fail to perform the review procedures as required;
(II) failure to fulfill the obligation of information disclosure in time
(III) there are false records, misleading statements or major omissions in the information disclosure;
(IV) other situations suspected of violating laws and regulations or damaging the legitimate rights and interests of minority shareholders.
Article 23 in addition to attending the meeting of the board of directors, the independent directors shall ensure to arrange a reasonable time to conduct on-site inspection on the company’s production and operation status, the construction and implementation of management and internal control systems, and the implementation of the resolutions of the board of directors. If any abnormality is found in the on-site inspection, it shall be reported to the board of directors of the company and Shanghai Stock Exchange in time. Article 24 in case of any of the following circumstances, the independent director shall report to the Shanghai Stock Exchange in time: (I) being dismissed by the company, I think the reason for dismissal is improper;
(II) the independent director resigns due to the company’s situation that hinders the independent director from exercising his functions and powers according to law; (III) when the meeting materials of the board of directors are insufficient, the proposal of two or more independent directors in writing to postpone the meeting of the board of directors or postpone the consideration of relevant matters is not adopted;
(IV) the board of directors failed to take effective measures after reporting the suspected illegal acts of the company or its directors, supervisors and senior managers to the board of directors;
(V) other circumstances that seriously hinder independent directors from performing their duties.
Article 25 independent directors shall submit and disclose their work report to the annual general meeting of shareholders of the company. The work report shall include the following contents:
(I) the way, number and voting of attending the board of directors in the previous year, and the number of attending the general meeting of shareholders as nonvoting delegates;
(II) the situation of expressing independent opinions;
(III) on site inspection;
(IV) proposed convening of the board of directors, proposed employment or dismissal of accounting firms, independent employment of external audit institutions and consulting institutions, etc;
(V) other work done to protect the legitimate rights and interests of minority shareholders.
Chapter VI independent opinions of independent directors
Article 26 in addition to performing the above duties, independent directors shall also express independent opinions to the board of directors or the general meeting of shareholders on the following major matters:
(I) nomination, appointment and removal of directors;
(II) appointing or dismissing senior managers;
(III) remuneration of directors and senior managers of the company;
(IV) employment and dismissal of accounting firms;
(V) changes in accounting policies, accounting estimates or corrections of major accounting errors due to reasons other than changes in accounting standards;
(VI) the company’s financial and accounting reports and internal control are issued with non-standard unqualified audit opinions by accounting firms;
(VII) internal control evaluation report;
(VIII) scheme for the relevant parties to change their commitments;
(IX) the impact of the issuance of preferred shares on the rights and interests of various shareholders of the company;
(x) formulate profit distribution policies, profit distribution plans and cash dividend plans;
（11） Related party transactions to be disclosed, provision of guarantees (excluding guarantees for subsidiaries within the scope of consolidated statements), entrusted financial management, provision of financial assistance, use of raised funds, investment in stocks and their derivatives and other major matters; （12） Major asset restructuring plan, management acquisition, equity incentive plan, employee stock ownership plan, share repurchase plan and debt repayment plan of related persons of listed companies;
（13） The company intends to decide that its shares will no longer be traded on the exchange;
（14） Matters that independent directors believe may damage the legitimate rights and interests of minority shareholders;
（15） Required by laws and regulations and relevant provisions of the exchange
