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About Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513)
Relevant adjustments to the restricted stock incentive plan in 2019 and legal opinions on repurchase and cancellation of some restricted stocks
To: Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513)
Beijing Jingtian Gongcheng law firm Shanghai Branch (hereinafter referred to as “the office”) is entrusted by Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) (hereinafter referred to as “the company” or ” Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) “) to act as the special legal adviser for the company’s implementation of the 2019 restricted stock incentive plan (hereinafter referred to as “the equity incentive plan”, “the incentive plan” or “the restricted stock incentive plan”). Now, the lawyers of the firm, 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 measures for the administration of equity incentive of listed companies (hereinafter referred to as the “administrative measures”), have Relevant laws, regulations and normative documents such as the Trial Measures for the implementation of equity incentive by state-controlled listed companies (domestic) (hereinafter referred to as the “Trial Measures”), the notice on issues related to regulating the implementation of equity incentive system by state-controlled listed companies (hereinafter referred to as the “notice”), As well as the provisions of the Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) articles of Association (hereinafter referred to as the “articles of association”) and the Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 restricted stock incentive plan (Draft) (hereinafter referred to as the “incentive plan (Draft)), this legal opinion is issued on the adjustment of the company’s equity incentive plan and the repurchase and cancellation of some restricted shares.
In order to issue this legal opinion, our lawyer hereby makes the following statement:
1. In accordance with the securities law, the measures for the administration of securities legal business of law firms and the rules for the practice of securities legal business of law firms (for Trial Implementation), our lawyers have strictly performed their statutory duties and followed the principles of diligence and good faith, The company has fully verified and verified the relevant adjustments of the equity incentive plan and the matters related to the repurchase and cancellation of some restricted shares, including the completed approval procedures, to ensure that the facts identified in this legal opinion are true, accurate and complete, the concluding opinions issued are legal and accurate, and there are no false records, misleading statements or major omissions, And bear corresponding legal liabilities;
2. The exchange will not make any evaluation on non legal issues such as accounting, auditing and other professional matters and the rationality of stock value, assessment standards and other aspects involved in this incentive plan; The quotation of some data and conclusions in the relevant accounting statements, audit reports and this equity incentive plan in this legal opinion does not mean that our lawyers make any express or implied guarantee for the authenticity and accuracy of such data and conclusions;
3. The company guarantees that it has provided authentic original written materials, copies or other oral materials that the lawyers of the firm consider necessary for the issuance of this legal opinion; The company further guarantees that the above documents are true, accurate and complete; All signatures and seals on the documents are authentic; The copy is consistent with the original;
4. This legal opinion is only used for the purpose of relevant adjustments to the equity incentive plan and matters related to the repurchase and cancellation of some restricted shares, and shall not be used for any other purpose;
5. The exchange agrees that the company will submit this legal opinion to Shanghai stock exchange for public disclosure together with other application materials as one of the necessary legal documents related to the adjustment of the equity incentive plan and the repurchase and cancellation of some restricted shares, and is willing to bear corresponding legal liabilities.
1、 Approval and authorization of this incentive plan
After verification, as of the issuance date of this legal opinion, Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) has obtained the following approval and authorization for this incentive plan:
(I) on April 29, 2019, the second extraordinary meeting of the seventh board of directors and the first extraordinary meeting of the seventh board of supervisors respectively deliberated and adopted the proposal on Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 restricted stock incentive plan (Draft) and its summary and other relevant proposals. The independent directors of the company have expressed independent opinions on matters related to the equity incentive plan of the company.
(II) from April 30, 2019 to May 9, 2019, the company publicized the names and positions of the list of incentive objects on the company’s bulletin board. During the publicity period, the board of supervisors of the company did not receive any objection related to the proposed incentive objects of the incentive plan. On May 15, 2019, the company announced the verification opinions and publicity statement of the board of supervisors on the list of incentive objects of the company’s restricted stock incentive plan in 2019 issued by the board of supervisors.
(III) on May 17, 2019, the company disclosed the reply on agreeing to Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) implement the 2019 restricted stock incentive plan (YGZ [2019] No. 55) received by Jiangsu Jinmao Chemical Pharmaceutical Group Co., Ltd. by the state owned assets supervision and Administration Commission of Yangzhou Municipal People’s Government (hereinafter referred to as “Yangzhou SASAC”), Yangzhou SASAC agrees in principle to Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) implement the 2019 restricted stock incentive plan.
(IV) on June 5, 2019, the first extraordinary general meeting of shareholders in Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 deliberated and adopted the proposal on and its summary Proposal on the management measures for the implementation and assessment of restricted stock incentive plan in Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 and proposal on submitting to the general meeting of shareholders of the company to authorize the board of directors to handle matters related to equity incentive. (V) on June 24, 2019, the fourth extraordinary meeting of the seventh board of directors and the second extraordinary meeting of the seventh board of supervisors respectively deliberated and adopted the proposal on adjusting the grant price of the company’s restricted stock incentive plan in 2019 and the proposal on granting restricted shares to incentive objects. The independent directors of the company expressed their agreed independent opinions on relevant matters, and the board of supervisors of the company issued verification opinions.
(VI) on July 18, 2019, the company completed the registration procedures of restricted shares granted by the incentive plan in Shanghai Branch of China Securities Depository and Clearing Co., Ltd.
(VII) on December 27, 2019, the company held the eighth interim meeting of the seventh board of directors and the third interim meeting of the seventh board of supervisors, deliberated and approved the proposal on repurchase and cancellation of some restricted shares, and agreed to repurchase and cancel 115000 shares of restricted shares that have been granted and have not been unlocked, with a repurchase price of RMB 4172 / share. On the same day, the independent directors gave their independent opinions and the board of supervisors gave their verification opinions.
(VIII) on January 13, 2020, the company held the first extraordinary general meeting of shareholders in 2020 to consider and approve the proposal on repurchase and cancellation of some restricted shares.
(IX) on March 11, 2020, the company completed the repurchase and cancellation of some restricted shares.
(x) on January 21, 2022, the second extraordinary meeting of the eighth board of directors and the second extraordinary meeting of the eighth board of supervisors deliberated and adopted the proposal on adjusting the target enterprises of the company’s 2019 restricted stock incentive plan and the proposal on adjusting the repurchase price of restricted shares The proposal on the unfulfilled conditions for lifting the restrictions during the first lifting period of the company’s restricted stock incentive plan in 2019 and the repurchase and cancellation of some restricted shares The proposal on Revising the and its summary and the proposal on Revising the measures for the implementation and assessment of < Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 restricted stock incentive plan agree to buy back and cancel 844696 restricted shares of 14 incentive objects that do not meet the conditions for lifting the restrictions in the first lifting period, and the repurchase price is 3.98 yuan / share, It is agreed to revise and review some contents of Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 restricted stock incentive plan (Draft) and Jiangsu Lianhuan Pharmaceutical Co.Ltd(600513) 2019 restricted stock incentive plan implementation assessment management measures. The independent directors of the company expressed independent opinions on relevant matters.
In conclusion, our lawyers believe that as of the date of issuance of this legal opinion, the company’s adjustment of restricted stock repurchase price, repurchase and cancellation of some restricted stocks and the adjustment of 2019 restricted stock incentive plan have obtained the necessary approval and authorization at this stage, which is in line with the administrative measures and trial measures Relevant provisions of the notice and incentive plan (Draft), etc.
2、 Details of the adjustment of repurchase price, repurchase and cancellation of some restricted shares in this incentive plan
(I) details of the adjustment of repurchase price in this incentive plan
1. Reasons for repurchase price adjustment
According to the announcement on the grant results of the restricted stock incentive plan in 2019 (Announcement No.: 2019-030), the company granted the restricted stock to the incentive object on June 24, 2019, with the grant price of 4.172 yuan / share. According to the company’s announcement on the implementation of 2019 annual equity distribution (Announcement No.: 2020-034), and approved by the company’s 2019 annual general meeting on May 22, 2020, the company distributed a cash dividend of RMB 0.084 (including tax) per share based on the company’s total share capital of 287990370 shares before the implementation of the scheme, totaling RMB 24191191.08, The registration date of equity distribution is June 22, 2020, and the ex right (interest) date is June 23, 2020.
According to the company’s announcement on the implementation of 2020 annual equity distribution (Announcement No.: 2021-020), and approved by the company’s 2020 annual general meeting of shareholders on April 26, 2021, the company distributed cash dividends of RMB 0.108 (including tax) per share based on the total share capital of the company before the implementation of the scheme, totaling RMB 31102959.96, The registration date of equity distribution is June 17, 2021, and the ex right (interest) date is June 18, 2021.
According to the provisions of the company’s incentive plan (Draft), after the 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 price of the company’s share notes, such as the conversion of capital reserve into share capital, the distribution of share dividends, the splitting of shares, the allotment or reduction of shares, and the distribution of dividends, The company shall adjust the repurchase price of restricted shares that have not been lifted.
2. Adjustment method of repurchase price
According to the provisions of the company’s incentive plan (Draft), the adjustment method is as follows:
P＝P0-V
Where: P0 is the repurchase price of restricted shares per share before adjustment; V is the dividend per share; P is the adjusted repurchase price of restricted shares per share. After dividend adjustment, P must still be greater than 1.
On January 21, 2022, the second extraordinary meeting of the eighth board of directors of the company deliberated and approved the proposal on adjusting the repurchase price of restricted shares, and agreed to adjust the repurchase price of restricted shares. The adjusted repurchase price of restricted shares is 3.98 yuan / share.
(II) details of the cancellation of some restricted shares in this repurchase
1. Reasons for repurchase cancellation
According to the documents of the second interim meeting of the eighth board of directors of the company, in view of the performance assessment target of the first lifting of the restriction period of the company’s restricted stock incentive plan in 2019, the net profit growth rate in 2020 is lower than the 75th percentile of the benchmark enterprise in 2018, and the conditions for lifting the restriction in the first lifting period of the restricted stock incentive plan in 2019 are not met, according to the incentive plan (Draft) According to the management measures for the implementation of the company’s restricted stock incentive plan in 2019, the company decided to buy back and cancel 844696 restricted shares of 14 incentive objects that did not meet the conditions for lifting the restrictions in the first lifting period.
2. Quantity and price of repurchase cancellation
According to the documents of the second interim meeting of the eighth board of directors of the company, the shares repurchased and cancelled this time are the company’s A-share common shares granted to the incentive objects by the company according to the incentive plan (Draft), the number of shares repurchased and cancelled is 844696, and the repurchase price is 3.98 yuan / share.
3. Sources of repurchase funds
According to the documents of the second interim meeting of the eighth board of directors of the company, the company will repurchase and cancel the restricted shares granted to 14 incentive objects with its own funds, and the total amount of repurchase funds paid is 3361890.08 yuan.
4. Estimated changes in the company’s total share capital after repurchase cancellation
According to the documents of the second interim meeting of the eighth board of directors, after the repurchase and cancellation of restricted shares, the total share capital of the company will be reduced from 287990370 shares to 287145674 shares.
5. Impact of this repurchase cancellation on the company’s performance
According to the documents of the second interim meeting of the eighth board of directors of the company, the repurchase and cancellation of some restricted shares will not have a significant impact on the financial status and operating performance of the company.
Based on the above, the exchange believes that as of the date of issuance of this legal opinion, the adjustment of repurchase price and repurchase and cancellation of some restricted shares in this incentive plan have obtained the necessary approval and authorization at this stage, and comply with the relevant provisions of the administrative measures, trial measures, notice and incentive plan (Draft), After the company still needs to submit the above matters to the general meeting of shareholders for deliberation, the company shall perform the corresponding information disclosure obligations and go through the procedures of reducing the registered capital and canceling the registration of shares in accordance with the provisions of relevant laws, regulations and normative documents.
3、 Adjustment of this incentive plan
(I) reasons and contents of this incentive plan adjustment
1. Adjust the performance evaluation year, validity period and release period of the company’s restricted stock incentive plan in 2019. According to the documents of the second interim meeting of the eighth board of directors of the company, in view of the planned repurchase and injection of restricted stocks during the first release period of the company’s restricted stock incentive plan in 2019, the company has analyzed in combination with the changes of the current external objective environment and the actual situation of the company in recent two years, The pharmaceutical industry is greatly affected by the epidemic. In order to fully mobilize the enthusiasm of operation and management personnel, establish and improve the company’s long-term incentive mechanism, adjust the second and third assessment years of lifting the sales restriction period of the company’s restricted stock incentive plan in 2019. The specific adjustment scheme is as follows:
Before revision:
Lifting the sales restriction period
