Shanxi Lu’An Environmental Energydev.Co.Ltd(601699)
Working system of independent directors
Chapter I General principles
Article 1 in order to further improve the corporate governance structure of Shanxi Lu’An Environmental Energydev.Co.Ltd(601699) (hereinafter referred to as the “company”), promote the standardized and effective operation of the company and protect the interests of minority shareholders and stakeholders, 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”) and the rules for independent directors of listed companies The company has established a working system for independent directors in accordance with the relevant provisions of the Listing Rules of Shanghai Stock Exchange, the self regulatory guidelines for listed companies of Shanghai Stock Exchange No. 1 – standardized operation and 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 the company has three independent directors. The independent directors shall include at least one accounting professional (accounting professional refers to the person who has the qualification of certified public accountant, or has the senior title, associate professor or above title or doctoral degree in accounting, audit and financial management, or has the senior title in economic management, and has more than 5 years of full-time working experience in accounting, audit or financial management).
Article 4 independent directors have the obligation of integrity and diligence to the company and all shareholders, earnestly and faithfully perform their duties, safeguard the overall interests of the company, and pay special attention to the legitimate rights and interests of public shareholders.
Independent directors shall perform their duties independently and shall not be affected by the company’s major shareholders, actual controllers or units or individuals having interests with the company and its major shareholders and actual controllers.
Chapter II Conditions for appointment of independent directors
Article 5 serving as an independent director of the company shall meet the following basic conditions:
（1） Be qualified to serve as a director of a listed company in accordance with laws, administrative regulations and other relevant provisions;
（2） Have the independence required by laws, administrative regulations, CSRC, Shanghai Stock Exchange, etc;
（3） Have the basic knowledge of the operation of listed companies, and be familiar with relevant laws, administrative regulations, rules and rules;
（4） At least five years of working experience in law, economics or other necessary to perform the duties of independent directors;
（5） Other conditions stipulated by laws, regulations and the articles of association.
Article 6 candidates for independent directors shall meet the requirements of the following laws and regulations:
（1） Provisions of the company law on the appointment of directors;
（2） Provisions of the civil servant law of the people’s Republic of China on civil servants holding concurrent posts (if applicable);
（3） Relevant provisions of the rules for independent directors of listed companies issued by the CSRC;
（4） Regulations of the CPC Central Commission for Discipline Inspection and the Organization Department of the CPC Central Committee on standardizing the notice of central management cadres who resign from public office or serve as independent directors and independent supervisors of listed companies and fund management companies after retirement;
（5） Provisions of the Organization Department of the CPC Central Committee on further standardizing the opinions of Party and government leading cadres on part-time (post holding) in enterprises;
（6） The provisions of the opinions on strengthening the construction of anti-corruption in Colleges and universities issued by the CPC Central Commission for Discipline Inspection, the Ministry of education and the Ministry of supervision;
（7） Relevant provisions of the guidelines on the system of independent directors and external supervisors of joint-stock commercial banks issued by the people’s Bank of China;
（8） Relevant provisions of the measures for the supervision of the qualifications of directors, supervisors and senior managers of securities companies issued by the CSRC;
（9） Relevant provisions of the China Banking and Insurance Regulatory Commission, such as the measures for the administration of the qualifications of directors (directors) and senior managers of banking financial institutions, the provisions on the administration of the qualifications of directors, supervisors and senior managers of insurance companies, and the measures for the administration of independent directors of insurance institutions; （10） Other circumstances stipulated by laws and regulations and Shanghai Stock Exchange.
Article 7 candidates for independent directors shall be independent, and the following persons shall not serve as independent directors of the company:
（1） Persons who work in the company or its affiliated enterprises and their immediate family members and major social relations;
（2） Directly or indirectly holding more than 1% of the issued shares of the company or natural person shareholders and their immediate family members among the top 10 shareholders of the company;
（3） Persons working 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;
（4） Personnel working in the actual controller of the company and its subsidiaries;
（5） Personnel who provide financial, legal and consulting services for the company and its controlling shareholders or their respective subsidiaries, including all personnel of the project team of the intermediary providing services, reviewers at all levels, personnel signing the report, partners and main principals; （6） Serve as a director, supervisor and senior manager in a unit with significant business dealings with the company and its controlling shareholders or their respective subsidiaries, or serve as a director, supervisor and senior manager in the controlling shareholder unit of the business dealings unit;
（7） Persons who have had the situations listed in the preceding six items in the last 12 months;
（8） Other circumstances that Shanghai Stock Exchange deems not to have independence.
The affiliated enterprises of the controlling shareholders and actual controllers of the company in items (4), (5) and (6) of the preceding paragraph do not include the affiliated enterprises that do not form an affiliated relationship with the company according to the stock listing rules of Shanghai Stock Exchange.
“Immediate family members” mentioned in the preceding paragraph refer to spouses, parents and children; “Major 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; “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 Shanghai Stock Exchange or the articles of association, or other major matters recognized by Shanghai Stock Exchange; “Holding office” refers to serving as a director, supervisor, senior manager and other staff.
Article 8 candidates for independent directors shall have no following bad records:
（1） He has been administratively punished by the CSRC in the last 36 months;
（2） During the period when the stock exchange publicly determines that it is not suitable to serve as a director of a listed company;
（3） In the past 36 months, he has been publicly condemned by the stock exchange or criticized in more than 2 circulars;
（4） During the period of serving as an independent director, he did not attend the board meeting for two consecutive times or did not attend the board meeting in person, accounting for more than 1 / 3 of the board meeting in that year;
（5） During the period of serving as an independent director, the independent opinions expressed are obviously inconsistent with the facts;
（6） Other circumstances recognized by Shanghai Stock Exchange.
Chapter III nomination, election and replacement of independent directors
Article 9 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 decided by the general meeting of shareholders.
Article 10 the nominee of an independent director shall obtain the consent of the nominee before nomination. The nominee shall fully understand the nominee’s occupation, education 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 objective judgment.
The board of directors of the company shall publish the above contents in accordance with the provisions at the latest when issuing the notice of the general meeting of shareholders on the election of independent directors, and submit the relevant materials of all nominees to Shanghai Stock Exchange. 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.
Article 11 The term of office of an independent director is the same as that of other directors of the company. Upon expiration of his term of office, he can be re elected, but the term of re-election shall not exceed 6 years.
Article 12 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.
Article 13 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 14 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 resignation of an independent director causes the number of independent directors or members of the board of directors to be lower than the minimum number specified in the statutory or the articles of association, or there are no accounting professionals among the independent directors, the independent director shall still perform his duties in accordance with laws, administrative regulations and the articles of association before the re elected independent director takes office, and the resignation report of the independent director shall take effect after the next independent director fills his vacancy. The original nominee of the independent director or the board of directors of the company shall nominate new independent director candidates within 3 months from the date of resignation of the independent director.
Chapter IV functions and powers of independent directors
Article 15 the independent directors of the company enjoy the general functions and powers conferred on the directors by the company law and other laws, administrative regulations, departmental rules, normative documents, self-discipline rules and the articles of association.
Article 16 in addition to the functions and powers conferred on directors by the company law and other relevant laws and regulations, independent directors also have the following special functions and powers;
（1） Related party transactions that need to be submitted to the board of directors for deliberation shall be submitted to the board of directors for deliberation after the independent directors express their prior approval opinions;
（2） Propose to the board of directors to employ or dismiss the accounting firm;
（3） Propose to the board of directors to convene an extraordinary general meeting of shareholders;
（4） Propose to convene the board of directors;
（5） Publicly solicit voting rights from shareholders before the general meeting of shareholders;
（6） Independently employ intermediary institutions to audit, verify or express professional opinions; Independent directors shall obtain the consent of more than 1 / 2 of all independent directors when exercising the functions and powers in items (1) to (5) of the preceding paragraph. Where an independent director is employed, the judgment in Item 1 of the preceding paragraph may be used as the basis for the issuance of the special judgment report. The exercise of the functions and powers in Item (6) of the preceding paragraph by independent directors shall be subject to the consent of all independent directors.
Items (1) and (2) of paragraph 1 of this article shall be submitted to the board of directors for discussion after more than 1 / 2 of the independent directors agree.
Chapter V obligations of independent directors
Article 17 independent directors shall actively perform their duties in corporate governance, internal control, information disclosure, financial supervision and other aspects.
Independent directors shall perform their duties independently and impartially, and shall not be affected by the company’s major shareholders, actual controllers or other units and individuals with an interest in the company. The company shall declare the existence of matters that affect the independence of the company, and report to the company if any. 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.
Article 18 in principle, independent directors can concurrently serve as independent directors in up to five domestic and foreign listed companies, and ensure that they have enough time and energy to effectively perform their duties. Article 19 independent directors shall attend the meeting of the board of directors on time, understand the production, operation and operation of the company, and take the initiative to investigate and obtain the information and materials needed to make decisions.
Article 20 independent directors shall express independent opinions on the following matters to the board of directors or the general meeting of shareholders:
（1） Nomination, appointment and removal of directors;
（2） Appoint and dismiss senior managers;
（3） Remuneration of directors and senior managers;
（4） Employ and dismiss accounting firms;
（5） Changes in accounting policies, accounting estimates or correction of major accounting errors due to reasons other than changes in accounting standards;
（6） The company’s financial and accounting reports and internal control are issued with non-standard unqualified audit opinions by accounting firms;
（7） Internal control evaluation report;
（8） The scheme for the relevant parties to change their commitments;
（9） Formulate profit distribution policies, profit distribution plans and cash dividend plans;
（10） 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;
（11） Major asset restructuring plan, management acquisition, equity incentive plan, employee stock ownership plan, share repurchase plan and debt repayment plan of related parties of the company;
（12） The company intends to decide that its shares will no longer be traded on the Shanghai Stock Exchange;
（13） Matters that independent directors believe may damage the legitimate rights and interests of minority shareholders; （14） Other matters required by laws and regulations and relevant provisions of Shanghai Stock Exchange.
Independent directors shall express one of the following opinions on the matters mentioned in the preceding paragraph: agree; Reservations and their reasons; Objections and their reasons; Inability to express opinions and its obstacles. If the matters mentioned in the first paragraph of this article are matters that need to be disclosed, the company shall announce the opinions of the independent directors. If the independent directors have different opinions and cannot reach an agreement, the board of directors shall disclose the opinions of each independent director separately.
Article 21 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 institution for special verification:
（1） Failure to perform the review procedures for important matters as required;
（2） Failing to fulfill the obligation of information disclosure in time;
（3） There are false records, misleading statements or major omissions in information disclosure;
（4） Other situations suspected of violating laws and regulations or damaging the legitimate rights and interests of minority shareholders. Article 22 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 23
