HENGRUI PHARMA - Overseas Regulatory Announcement - 2026 A-Share Employee Stock Ownership Plan Management Measures
Jiangsu Hengrui Pharmaceuticals Co., Ltd.
Jiangsu Hengrui Pharmaceutical Co., Ltd.
(a joint stock limited company incorporated in the People's Republic of China)
(Stock code: 1276)
Overseas regulatory announcement
This announcement is made in accordance with Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
In accordance with the relevant laws and regulations of the People's Republic of China, Jiangsu Hengrui Pharmaceutical Co., Ltd. (the "Company") published the following announcement on the website of the Shanghai Stock Exchange (www.sse.com.cn). They are listed below for reference only.
By order of the board of directors
Jiangsu Hengrui Pharmaceutical Co., Ltd.
Chairman
Mr. Sun Piaoyang
Shanghai, China
August 19, 2026
As at the date of this announcement, the members of the Board include (i) executive directors Mr. Sun Piaoyang, Mr. Dai Hongbin, Ms. Feng Ji, Mr. Zhang Lianshan, Mr. Jiang Ningjun and Mr. Sun Jieping; (ii) non-executive director Ms. Guo Congzhao; and (iii) independent non-executive directors Mr. Lou Liguang, Mr. Zeng Qingsheng, Mr. Sun Jinyun and Mr. Zhou Ji'en.
Jiangsu Hengrui Pharmaceutical Co., Ltd.
2026 A-share Employee Stock Ownership Plan Management Measures
Chapter 1 General Provisions
Article 1 regulates Jiangsu Hengrui Pharmaceutical Co., Ltd. (hereinafter referred to as "Hengrui Pharmaceutical" or the "Company") 2026 A The implementation of the Employee Stock Ownership Plan (hereinafter referred to as the "Employee Stock Ownership Plan") shall be implemented 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 Guiding Opinions on the Pilot Implementation of Employee Stock Ownership Plans by Listed Companies (hereinafter referred to as the "Guiding Opinions"), and the Shanghai Stock Exchange Self-Regulatory Supervision Guidelines for Listed Companies No. 1 No. - Standardized Operation" (hereinafter referred to as the "Standardized Operation Guidelines") and other relevant laws, administrative regulations, rules, normative documents and the "Articles of Association of Jiangsu Hengrui Pharmaceutical Co., Ltd." (hereinafter referred to as the "Articles of Association") and the "Jiangsu Hengrui Pharmaceutical Co., Ltd. 2026 A-Share Employee Stock Ownership Plan (Draft)", the "Jiangsu Hengrui Pharmaceutical Co., Ltd. 2026 A-Share Employee Stock Ownership Plan Management Measures" (hereinafter referred to as the "Measures") are specially formulated.
Chapter 2 Formulation of Employee Stock Ownership Plan
Article 2 The purpose of the employee stock ownership plan
The company formulates its employee stock ownership plan in accordance with the relevant provisions of the Company Law, Securities Law, Guiding Opinions, Standardized Operation Guidelines and other laws, administrative regulations, rules, normative documents and the Articles of Association.
The company's implementation of this plan aims to establish and improve the benefit-sharing mechanism for the company, shareholders and employees, mobilize the enthusiasm and creativity of employees, improve employee cohesion and the company's competitiveness, and promote the company's long-term, sustainable and healthy development.
Article 3 Basic Principles of Employee Stock Ownership Plans
(1) Principles of legal compliance
The company implements the employee stock ownership plan, strictly follows the procedures stipulated in laws and administrative regulations, and discloses information in a true, accurate, complete and timely manner. No one may use this employee stock ownership plan to conduct insider trading.
Securities fraud such as trading and manipulating the securities market.
(2) Principle of voluntary participation
The company's implementation of this employee stock ownership plan follows the principle of independent decision-making by the company and voluntary participation by employees. The company does not force employees to participate in this employee stock ownership plan through apportionment, forced distribution, etc.
(3) Principle of own risk
Participants in this employee stock ownership plan are responsible for their own profits and losses, bear their own risks, and have equal rights and interests with other investors.
Article 4 Holders of the Employee Stock Ownership Plan
(1) Legal basis for determining participants
The company determines this in accordance with relevant laws, regulations, normative documents such as the Company Law, the Securities Law, the Guiding Opinions, and the Articles of Association. The company's employees participate in this employee stock ownership plan in accordance with the principles of legal compliance, voluntary participation, and self-risk.
(2) Criteria for determining participants
The participants in this employee stock ownership plan should be the company's employees. The company's employees participate in this employee stock ownership plan in accordance with the principles of legal compliance, voluntary participation, and self-risk. All participants are required to work in the company (including subsidiaries), receive remuneration and sign a labor contract or be employed by the company. Participants in this employee stock ownership plan should meet one of the following criteria:
Company directors (excluding independent directors) and senior managers;
Core management personnel and key employees of the company and its holding subsidiaries;
Other employees that the company's board of directors deems should be motivated.
Anyone who has any of the following circumstances cannot become a holder of this employee stock ownership plan:
Those who have been publicly condemned or declared unsuitable by the stock exchange in the past three years;
Administrative penalties imposed by the China Securities Regulatory Commission due to major violations of laws and regulations in the past three years;
In the past three years, violations of national laws and regulations due to leakage of state or company secrets, corruption, theft, embezzlement, bribery, bribery, dereliction of duty, or dereliction of duty, or violations of public order and good customs, professional ethics and ethics
The behavior causes serious damage to the company's interests, reputation and image;
The board of directors determines that the company cannot become a holder of the employee stock ownership plan;
Other circumstances that prevent you from becoming a holder of this employee stock ownership plan as stipulated in relevant laws, regulations or normative documents.
(3) Scope of holders of employee stock ownership plan
The total number of employees participating in this employee stock ownership plan is expected to be no more than 1,269, including no more than 8 company directors (excluding independent directors) and senior managers. The specific number of participants and final subscription status will be determined based on the actual contributions of employees.
(4) Verification of holders of employee stock ownership plans
The Remuneration and Appraisal Committee of the company's board of directors verifies the list of holders. The lawyer hired by the company will issue a legal opinion on whether the holder's qualifications and other conditions comply with relevant laws and regulations, normative documents and the Articles of Association.
Article 5 Funding Sources of Employee Stock Ownership Plans
The sources of funds for this employee stock ownership plan are funds obtained from employees’ legal remuneration, self-raised funds and other methods permitted by laws and regulations.
Article 6 Source of underlying stocks involved in employee stock ownership plan
The source of stocks for this employee stock ownership plan is the company’s A-shares that have been repurchased in the company’s special securities account for repurchase. After the establishment of this employee stock ownership plan, it is planned to receive the company's repurchase of the underlying stocks held in the special securities account through non-trading transfers and other forms.
Article 7 Employee Stock Ownership Plan Purchase Price and Stock Size
After the establishment of this employee stock ownership plan, it is planned to be transferred to the company to repurchase the underlying stocks held in the special securities account through non-trading transfers and other forms. The transfer price is 26.21 yuan/share, which is not less than the par value of the A shares, and not less than the higher of the following prices:
- 50% of the average trading price of the company’s A shares on the trading day before the draft employee stock ownership plan is announced; 2. 50% of the average trading price of the company’s A shares on the 60 trading days before the draft employee stock ownership plan is announced.
The number of A shares planned to be repurchased by the company under this employee stock ownership plan shall not exceed 12.855 million shares, accounting for approximately 0.19% of the company's total share capital on the date of the announcement of the draft employee stock ownership plan. The final number of underlying stocks held by this employee stock ownership plan shall be subject to actual implementation, and the company will promptly fulfill its information disclosure obligations in accordance with regulations.
During the period from the announcement date of the board of directors' resolution to review the draft plan to the completion date of the transfer of the subject stock of this plan, if the company occurs ex-rights and ex-dividend matters such as capitalization of capital reserves, bonus shares, dividends, etc., the number and price of the subject stock will be adjusted accordingly.
After the implementation of this employee stock ownership plan, the total number of shares held by all valid employee stock ownership plans shall not exceed 10% of the company's total share capital, and the number of underlying stocks corresponding to the employee stock ownership plan shares held by any holder shall not exceed 1% of the company's total share capital (excluding shares obtained by employees before the company's initial public offering and through major asset restructuring, shares purchased by themselves through the secondary market, and shares obtained through equity incentives).
Article 8 The duration, lock-in period and performance assessment of the employee stock ownership plan
(1) The duration of the employee stock ownership plan and the decision-making process for continued extension after the expiration of the duration
The duration of the employee stock ownership plan is 60 months, starting from the date when the company’s shareholders meeting approves the employee stock ownership plan and the company announces the transfer of the last underlying stock to the name of the employee stock ownership plan. This employee stock ownership plan will terminate automatically if it is not extended at the expiration of the duration period. It can be terminated or extended in advance with the approval of the board of directors. During the duration, all shares of the employee stock ownership plan are sold or transferred and can be terminated early.
Two months before the expiration of the duration of the employee stock ownership plan, if all the company stocks held have not been sold or transferred, the duration of the employee stock ownership plan can be extended with the consent of more than 2/3 of the effective voting rights held by the holders attending the holders' meeting and submission to the company's board of directors for review and approval.
If the underlying stocks involved cannot be sold or transferred before the expiration of the duration period due to suspension of trading of the company's stocks or a short window period, etc., the duration of the employee stock ownership plan can be extended with the consent of more than 2/3 of the effective voting rights held by the holders attending the holders' meeting and submission to the board of directors for review and approval.
(2) Lock-up period for the underlying stocks involved in the employee stock ownership plan
The underlying stocks obtained under this employee stock ownership plan will be unlocked in three phases. The unlocking time points are respectively 12 months, 24 months, and 36 months from the date when the company announced the transfer of the corresponding batch of underlying stocks to the name of this employee stock ownership plan.
month, the proportions of underlying stocks unlocked in each period are 40%, 30%, and 30% respectively, as follows:
The first batch of unlocking time points: 12 months from the date when the company announced the transfer of the corresponding batch of underlying stocks to the name of this employee stock ownership plan. The upper limit of the number of unlocked shares is 40% of the total number of underlying stocks held by this employee stock ownership plan.
The second batch of unlocking time points: 24 months from the date when the company announced the transfer of the corresponding batch of underlying stocks to the name of this employee stock ownership plan. The upper limit of the number of unlocked shares is 30% of the total number of underlying stocks held by this employee stock ownership plan.
The third batch of unlocking time points: 36 months from the date when the company announced the transfer of the corresponding batch of underlying stocks to the name of this employee stock ownership plan. The upper limit of the number of unlocked shares is 30% of the total number of underlying stocks held by this employee stock ownership plan.
The underlying stocks acquired under this employee stock ownership plan, and the shares acquired due to the distribution of stock dividends, capital reserve transfers, etc. by listed companies, should also comply with the above-mentioned share locking arrangements.
(3) Trading restrictions on underlying stocks involved in employee stock ownership plans
This employee stock ownership plan will strictly abide by market trading rules and the relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange on stock trading. Company stocks are not allowed to be bought or sold during the following periods:
(1) Within 15 days before the announcement of the company’s annual report and semi-annual report;
(2) Within 5 days before the announcement of the company’s quarterly report, performance forecast, and performance bulletin;
(3) From the date of the occurrence of a major event that may have a greater impact on the trading prices of the company's securities and its derivatives, or during the decision-making process, to the date of disclosure in accordance with the law;
(4) Other periods specified by the China Securities Regulatory Commission and the Shanghai Stock Exchange.
The transaction restrictions of the current employee stock ownership plan shall be implemented in accordance with the latest revised regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange.
(4) Performance evaluation of employee stock ownership plans
The assessment indicators of this employee stock ownership plan are divided into company performance assessment indicators and individual performance assessment indicators. Combining the results of the company's performance assessment and individual performance assessment, the final unlocked indicators of the holders in each unlocking batch are determined.
The number of stock interests.
- Company performance evaluation indicators
The performance assessment objectives of this employee stock ownership plan during the assessment year are as follows:
The company-level performance assessment indicators include three innovative drug sales revenue, the number of new molecular entity IND approvals, and the number of innovative drug applications and accepted NDA applications (including new indications). Based on the completion of the indicators, three unlocking ratios of 100%, 90%, and 0% are set. When unlocking, the company's performance is compared with the three indicators one by one, and the lowest unlocking ratio corresponding to any of the three indicators is used to determine the unlocking ratio for the current period.
①The first batch of unlocks
Unlock ratio
100% 90% 0% 2026
Revenue from innovative drugs (100 million yuan) ≥192 Not applicable <192 Number of new molecular entity IND approvals (number) ≥18 ≥16 <16 NDA applications filed and accepted for innovative drugs
≥8 ≥5 ＜5Quantity (including new indications) (pieces)
②Second batch unlocking
Unlock ratio
100% 90% 0% Cumulative from 2026 to 2027
Revenue from innovative drugs (100 million yuan) ≥432 N/A <432 Number of new molecular entity IND approvals (number) ≥37 ≥33 <33 NDA applications submitted and accepted for innovative drugs
≥13 ≥10 <10 Quantity (including new indications) (pieces)
③The third batch of unlocks
Unlock ratio
100% 90% 0% Cumulative from 2026 to 2028
Revenue from innovative drugs (100 million yuan) ≥732 Not applicable <732 Number of new molecular entity IND approvals (number) ≥57 ≥51 <51 NDA applications filed and accepted for innovative drugs
≥21 ≥17 <17 Quantity (including new indications) (pieces)
- Personal performance evaluation indicators
On the basis of the company's performance assessment indicators, the number of underlying stock rights and interests that the holder will eventually unlock in each unlocking period is determined based on the individual performance assessment results. The number of underlying stock rights and interests that an individual can unlock in the current period = target unlocking number unlocking ratio. The details are as follows:
Assessment indicators for directors, senior managers and non-marketing systems:
Performance appraisal results A+/A/B C/D
Unlock ratio 100% 0%
Marketing system assessment indicators:
performance appraisal
Result
A+/A/B C/D
Personnel category
Marketing Support Staff 100% 0%
Other personnel shall be evaluated in accordance with the performance appraisal documents signed between the company and employees.
The individual performance appraisal results are based on the performance appraisal documents signed between the company and the employees, and are ultimately determined by the management committee. The management committee has the right to decide to recover the portion that cannot be unlocked due to the personal performance appraisal results. The recovery price is calculated based on the lower of the holder's corresponding contribution amount and the sold amount. The recovery share will be allocated by the management committee to other qualified employees or other disposal methods determined by the management committee.
Article 9 Implementation Procedures for Employee Stock Ownership Plans
(1) The board of directors is responsible for formulating the draft of this employee stock ownership plan.
(2) Before the company implements the employee stock ownership plan, it should fully solicit the opinions of employees through employees’ congresses and other organizations.
(3) The remuneration and assessment committee of the board of directors shall verify the list of holders and express its opinions on whether the employee stock ownership plan is conducive to the sustainable development of the company, whether it harms the interests of the company and all shareholders, and whether employees are forced to participate in the employee stock ownership plan through apportionment, forced distribution, etc.
(4) When the board of directors considers the employee stock ownership plan, directors related to the employee stock ownership plan shall abstain from voting. The board of directors will announce the board resolution, the draft employee stock ownership plan and its summary, the opinions of the remuneration and assessment committee of the board of directors, etc. within 2 trading days after reviewing and approving the draft plan.
(5) The company hires a law firm to issue a legal opinion on the employee stock ownership plan, and announces the legal opinion before convening the shareholders' meeting to review the employee stock ownership plan.
(6) Convene a shareholders’ meeting to review the employee stock ownership plan. The shareholders' meeting will vote using a combination of on-site voting and online voting, and the votes of small and medium-sized investors will be counted separately and publicly disclosed; if the employee stock ownership plan involves relevant directors and shareholders, the relevant directors and shareholders should abstain from voting. Once approved by more than half of the valid voting rights present at the shareholders' meeting, the employee stock ownership plan can be implemented.
(7) Convene a meeting of holders of the employee stock ownership plan, elect members of the management committee, clarify specific matters for the implementation of the employee stock ownership plan, and promptly disclose the convening of the meeting and relevant resolutions.
(8) The company should promptly disclose the time, quantity, proportion, etc. of acquiring the underlying stocks within 2 trading days of transferring the underlying stocks to the name of the employee stock ownership plan.
(9) Other procedures that need to be performed as stipulated by the China Securities Regulatory Commission, the Shanghai Stock Exchange, and the Stock Exchange of Hong Kong Limited.
Chapter 3 Management of Employee Stock Ownership Plans
Article 10 Management Model of Employee Stock Ownership Plan
This employee stock ownership plan adopts a self-management model, and the highest internal management authority is the holders' meeting. The holders' meeting is composed of all holders of the employee stock ownership plan. The holders' meeting elects a management committee and authorizes the management committee to be responsible for the daily management of the employee stock ownership plan. It can exercise shareholder rights on behalf of the holders or authorize the management agency to exercise shareholder rights, safeguard the legitimate rights and interests of the holders of the employee stock ownership plan, and ensure the asset security of the employee stock ownership plan.
These Measures clearly stipulate the responsibilities of the Management Committee and adopt adequate risk prevention and isolation measures. The company's board of directors is responsible for formulating and revising the draft employee stock ownership plan, and handling other related matters of the employee stock ownership plan within the scope authorized by the shareholders' meeting. This employee stock ownership plan can hire professional institutions with relevant qualifications to provide consulting, management and other services depending on the implementation situation.
Article 11 Holder
The company's employees become holders of this plan after subscribing for shares of the employee stock ownership plan, and each share of the employee stock ownership plan has equal rights.
(1) The rights of the holder are as follows:
Enjoy the rights and interests of this employee stock ownership plan in proportion to the shares in your name;
Enjoy the dividends and/or dividends (if any) of the employee stock ownership plan from the time of purchase to the sale of stocks according to the proportion of shares in your name;
Participate in the holders’ meeting in accordance with the law and enjoy the rights stipulated in these Measures;
Other rights stipulated in laws, administrative regulations, and departmental rules.
(2) The holder’s obligations are as follows:
During the duration of the employee stock ownership plan, unless otherwise provided by the employee stock ownership plan or these Measures, the holder may not transfer his or her share of the plan, set up a guarantee with it, or use it to repay debts, nor may he separately request the distribution of the assets of the employee stock ownership plan;
Comply with the employee stock ownership plan plan, fulfill all commitments made to participate in the employee stock ownership plan, and contribute capital according to the subscribed share of the employee stock ownership plan within the agreed period;
Bear the risks of the employee stock ownership plan based on the shares subscribed to the employee stock ownership plan;
Bear the statutory stock transaction taxes and fees when the employee stock ownership plan meets the unlocking conditions, stock sales or transfers according to the share of the plan in your name, and bear the taxes stipulated by the state and other relevant laws and regulations due to participation in the employee stock ownership plan, and after the employee stock ownership plan meets the unlocking conditions, stock sales or transfers; 5. Comply with the effective resolutions of the holders' meeting or the management committee;
Other obligations stipulated in laws, administrative regulations, departmental rules and these Measures.
Article 12 Employee Stock Ownership Plan Holders Meeting
(1) The holders’ meeting is the highest internal management authority of the employee stock ownership plan. All holders have the right to participate in holders meetings. Holders may attend the holders' meeting in person and vote, or entrust a proxy to attend and vote on their behalf. The travel expenses, food and accommodation expenses, etc. incurred by the holder and his/her agent to attend the holder's meeting shall be borne by the holder himself.
(2) The following matters need to be held at a holders’ meeting for review:
Elect and remove members of the management committee;
Changes, terminations, and extensions of the duration of the employee stock ownership plan shall be submitted to the company’s board of directors for review and approval;
During the duration of the employee stock ownership plan, when the company raises funds through rights issue, additional issuance, convertible bonds, etc., the management committee shall submit the participation plan and capital solution to the holders meeting for review;
Authorize the management committee to be responsible for the daily management of the employee stock ownership plan;
Authorize the management committee to exercise shareholder rights;
Authorize the management committee to be responsible for managing the distribution of benefits of the employee stock ownership plan, and deciding on the sale, distribution, transfer and other related matters of the underlying stocks when the lock-in period of the employee stock ownership plan expires;
Authorize the management committee to be responsible for the liquidation and property distribution of the employee stock ownership plan;
Revise these regulations and submit them to the company’s board of directors for review and approval;
Other matters that the Management Committee deems necessary to convene a holders’ meeting for consideration.
(3) The first holders’ meeting shall be convened and presided over by the company’s board secretary or designated person. Subsequent holders’ meetings shall be convened by the management committee and chaired by the director of the management committee. When the chairman of the management committee is unable to perform his duties, he shall designate a member of the management committee to take charge of the chair.
(4) To convene a holders’ meeting, the management committee shall submit the meeting notice to all holders three days in advance by direct delivery, mail, fax, email or other means. The meeting notice should at least include the following content:
Time and place of meeting;
How the meeting is held;
Meeting proposals;
The convener and host of the meeting, the proposer of the extraordinary meeting and his or her written proposal;
Meeting materials necessary for voting at the meeting;
The holder shall attend the meeting in person or entrust another holder to attend the meeting on his or her behalf;
Contact person and contact information;
Date of issuance of notice.
In case of emergency, a meeting of holders can be convened by verbal notification. The oral notification should at least include the above items 1 and 2 as well as instructions on convening a holders’ meeting as soon as possible due to emergency circumstances.
(5) Voting procedures for holders’ meeting
After each proposal has been fully discussed, the host should promptly ask the holders present to vote. The host may also decide to submit all proposals to the meeting holders for a vote after all proposals have been discussed. The voting method shall be written voting.
Holders of this employee stock ownership plan have voting rights according to the shares they hold, and each plan share has one voting right.
The holder’s voting intention is divided into consent, opposition and abstention. Holders attending the meeting should choose one of the above intentions. If they fail to make a choice or choose more than two intentions at the same time, they will be deemed to have abstained. If they leave the venue midway without returning without making a choice, they will be deemed to have abstained. If the holder votes after the presiding officer of the meeting announces the voting results or after the prescribed voting time limit has expired, the voting results will not be counted.
The host of the meeting shall announce the statistical results of on-site voting on the spot. Each proposal will be deemed to be passed if it is approved by the holders who attend the holders' meeting and hold more than 50% (excluding 50%) of the effective voting rights (except where the employee stock ownership plan requires the consent of more than 2/3 of the effective voting rights), forming a valid resolution of the holders' meeting.
If the resolutions of the shareholders' meeting need to be submitted to the company's board of directors and shareholders' meeting for review, they should be submitted to the company's board of directors and shareholders' meeting for review in accordance with the provisions of the Articles of Association.
The meeting host is responsible for arranging personnel to keep records of the holders’ meeting.
(6) Holders who individually or collectively hold more than 15% of the shares of the employee stock ownership plan may submit temporary proposals to the holders' meeting. The temporary proposals must be submitted to the management committee 3 days before the holders' meeting.
(7) For holders who individually or collectively hold more than 30% of the shares of the employee stock ownership plan, more than two-thirds of the members of the management committee may propose to convene a holders' meeting.
Article 13 Employee Stock Ownership Plan Management Committee
(1) The employee stock ownership plan shall establish a management committee to conduct daily management of the employee stock ownership plan and exercise shareholder rights on behalf of the holders. Members of the management committee are elected by all shareholders at a meeting.
(2) The Management Committee shall consist of 3 members and 1 director of the Management Committee. The director of the Management Committee shall be elected by a majority of all members of the Management Committee; when there is a change in the members of the Management Committee, they shall be re-elected by a meeting of all shareholders. The term of office of the members of the Management Board shall be consistent with the duration of the Employee Stock Ownership Plan.
(3) Members of the management committee shall abide by the provisions of laws, administrative regulations and these Measures, and have the following loyalty obligations towards the employee stock ownership plan:
No one shall take advantage of their authority to accept bribes or other illegal income, and shall not misappropriate the property of the employee stock ownership plan;
No funds from employee stock ownership plans may be misappropriated;
Without the consent of the management committee, no account shall be opened to store the assets or funds of the employee stock ownership plan in his or her own name or in the name of other individuals;
Without the consent of the holders’ meeting, no employee stock ownership plan funds may be loaned to others or employee stock ownership plan properties may be used to provide guarantee for others;
They shall not use their powers to harm the interests of the employee stock ownership plan. If a member of the management committee violates his duty of loyalty and causes losses to the employee stock ownership plan, he shall bear liability for compensation;
Do not disclose business secrets related to employee stock ownership plans without authorization;
Other obligations stipulated in laws, administrative regulations, departmental rules and these Measures.
(4) The Management Committee shall perform the following duties:
Responsible for convening the holders’ meeting and executing the resolutions of the holders’ meeting;
Open and manage securities accounts, capital accounts and other related accounts of the employee stock ownership plan; 3. Conduct daily management of the employee stock ownership plan on behalf of all holders, and can hire third-party professional institutions to provide management, consulting and other services for the employee stock ownership plan;
Exercise shareholder rights on behalf of all shareholders, including but not limited to attendance, proposals, voting and other matters at shareholders' meetings of listed companies;
On behalf of all shareholders, enjoy the rights to participate in cash dividends from listed companies, redemption of bonds, bonus shares, conversion of shares, allotment of shares and allotment of bonds;
Determine the holder's participation qualifications in accordance with the provisions of the employee stock ownership plan, and decide on matters such as the recovery, transfer, additional grant, inheritance, and cashing of the shares held by the holder. The management committee shall decide on the disposal of the recovery in the manner permitted by laws and regulations;
Final determination of individual performance appraisal results. If there is any dispute over the appraisal results, the determination of the management committee shall prevail;
Manage the distribution of benefits of the employee stock ownership plan, and decide on the sale, distribution, transfer and other related matters of the underlying stock when the lock-in period of the employee stock ownership plan expires;
Formulate and implement plans for the employee stock ownership plan to participate in the company's additional issuance, allotment or issuance of convertible bonds and other refinancing matters during its duration;
Sign relevant documents on behalf of all holders;
Other duties authorized by the holders’ meeting;
Other duties that should be performed by the management committee as stipulated in this employee stock ownership plan and relevant laws and regulations.
(5) The Chairman of the Management Committee shall exercise the following powers:
Preside over holders’ meetings and convene and preside over management committee meetings;
Supervise and inspect the implementation of resolutions of the holders’ meeting and the resolutions of the management committee;
Sign relevant agreements and contracts on behalf of the employee stock ownership plan;
Be authorized by the management committee to exercise shareholder rights on behalf of all shareholders;
Other powers granted by the Management Committee.
(6) The Management Committee will hold meetings from time to time, convened by the Chairman of the Management Committee, and all members of the Management Committee will be notified one day before the meeting.
(7) Members of the Management Committee may propose to convene an extraordinary meeting of the Management Committee. The chairman of the management committee shall convene and preside over a meeting of the management committee within 3 days after receiving the proposal.
(8) Meetings of the Management Committee must be attended by more than half of the members of the Management Committee before they can be held. Resolutions made by the Management Committee must be approved by more than half of all members of the Management Committee. Voting on resolutions of the Management Committee shall be based on one person, one vote.
(9) The voting method for resolutions of the Management Committee shall be a registered vote. On the premise of ensuring that the members of the Management Committee fully express their opinions, the meeting of the Management Committee may be held and resolutions made through communication, and the resolutions shall be signed by the members of the Management Committee participating in the meeting.
(10) Management committee meetings shall be attended by members of the management committee in person. If a member of the Management Committee is unable to attend for any reason, he may entrust another member of the Management Committee in writing to attend on his behalf. The letter of authorization shall state the name of the agent, matters of agency, scope of authorization and validity period, and shall be signed or sealed by the principal. The members of the Management Committee who attend the meeting on their behalf shall exercise their rights as members of the Management Committee within the scope of authorization. If a member of the Management Committee fails to attend a meeting of the Management Committee or appoints a representative to attend, he shall be deemed to have given up his right to vote at that meeting.
(11) The Management Committee shall form minutes of its decisions on matters discussed at the meeting, and members of the Management Committee who attended the meeting shall sign on the minutes.
Article 14 Matters authorized by the shareholders’ meeting to the board of directors
The shareholders' meeting authorizes the board of directors to have full authority to handle matters related to the employee stock ownership plan within the scope of relevant laws, regulations and normative documents, including but not limited to the following matters:
(1) Authorize the board of directors to implement this employee stock ownership plan;
(2) Authorize the board of directors to handle the change and termination of the employee stock ownership plan;
(3) Authorize the board of directors to make decisions on the extension and early termination of the employee stock ownership plan;
(4) Authorize the board of directors to modify and explain the company’s 2026 A-share employee stock ownership plan (draft) and these measures;
(5) Authorize the board of directors to make decisions on the employee stock ownership plan’s participation in the company’s share allotment and other refinancing matters during its duration;
(6) Authorize the board of directors to change the criteria for determining participants in the employee stock ownership plan;
(7) Authorize the board of directors to decide and change the management methods and methods of the employee stock ownership plan;
(8) Authorize the board of directors to handle all matters related to securities and capital accounts involved in this employee stock ownership plan, as well as the locking, unlocking and distribution of transferred stocks;
(9) Authorize the board of directors to draft and sign contracts and agreement documents related to this employee stock ownership plan;
(10) After the employee stock ownership plan is reviewed and approved by the shareholders' meeting, if relevant laws, regulations, and policies change during the implementation period, the board of directors is authorized to make corresponding adjustments to the employee stock ownership plan in accordance with the new laws, regulations, and policies;
(11) Request the shareholders' meeting to authorize the board of directors to handle any announcements, circulars, etc. that need to be disclosed on the website of the Shanghai Stock Exchange (https://www.sse.com.cn) or the website of The Stock Exchange of Hong Kong Limited (https://www.hkexnews.hk), and to handle any compliance matters involving the Shanghai Stock Exchange or The Stock Exchange of Hong Kong Limited that involve this share ownership plan;
(12) Authorize the board of directors to handle other necessary matters required for this employee stock ownership plan, except for the rights clearly stipulated in relevant laws, regulations, normative documents and the "Articles of Association" that need to be exercised by the shareholders' meeting. The above authorization is valid from the date of approval by the company's shareholders' meeting to the date of completion of the implementation of this employee stock ownership plan.
Chapter 4 Asset Composition and Equity Allocation of Employee Stock Ownership Plans
Article 15 Asset composition of employee stock ownership plan
The assets of this employee stock ownership plan are independent of the company's inherent property, and the company shall not entrust the assets of the employee stock ownership plan into its inherent property. The company shall not misappropriate the assets of the employee stock ownership plan or confuse the assets of the employee stock ownership plan with the company's inherent assets in any other form. The property and income obtained from the management, operation or other circumstances of the employee stock ownership plan shall be included in the assets of the employee stock ownership plan.
The assets of this employee stock ownership plan include:
Rights and interests corresponding to the underlying stock: Holders who participate in this employee stock ownership plan enjoy the rights and interests corresponding to the company's A shares held by the stock ownership plan by subscribing for shares in the employee stock ownership plan;
Cash deposits and bank interest;
Assets formed from other investments in the employee stock ownership plan.
Article 16 Equity distribution during the duration of the employee stock ownership plan
(1) Holders of this employee stock ownership plan shall enjoy the asset income rights of the shares held by the employee stock ownership plan based on their actual capital contribution. The corresponding shares obtained by the holders through the employee stock ownership plan enjoy shareholder rights (including dividend rights, allotment rights, capitalization rights and other asset income rights).
(2) During the duration of the employee stock ownership plan, unless otherwise provided by laws, administrative regulations, departmental rules, or with the consent of the management committee, the holder's shares of the employee stock ownership plan may not be withdrawn, transferred, or used for mortgage, pledge, guarantee, debt repayment, or other similar disposals without authorization.
(3) During the lock-in period, the holder shall not request the distribution of the rights and interests of the employee stock ownership plan.
(4) During the lock-up period, when the company converts capital reserves to share capital or distributes stock dividends, the newly acquired shares of the employee stock ownership plan due to holding company shares are also locked and cannot be sold or transferred in other ways on the secondary market. The unlocking period of these stocks is the same as the corresponding stocks.
(5) After the lock-in period of the employee stock ownership plan ends and during the duration, the management committee, based on the authorization of the holders’ meeting, shall choose an opportunity to sell the corresponding underlying stocks or transfer them to the current employee stock ownership plan share holders after the unlocking date of the employee stock ownership plan during the duration.
(6) During the duration of the employee stock ownership plan, when the underlying stocks held by the employee stock ownership plan are sold to obtain cash or other distributable income, the employee stock ownership plan can be distributed every fiscal year. The management committee will distribute the shares according to the proportion of the holder's shares to the total share of the stock ownership plan after deducting relevant taxes and plan payables in accordance with the law.
(7) During the existence period, when the company pays cash dividends or pays dividends, the cash dividends obtained by the employee stock ownership plan for holding the company's shares will be included in the monetary assets of the employee stock ownership plan and will not be distributed temporarily. After the lock-in period of the employee stock ownership plan ends, the corresponding expenses will be deducted in accordance with the law and distributed according to the shares held by the holders.
(8) If other unagreed matters occur, the method of disposal of the holder’s shares of the employee stock ownership plan shall be determined by the management committee.
Chapter 5 Changes, Terminations of Employee Stock Ownership Plans and Disposal of Holders’ Interests
Article 17 Changes to the Employee Stock Ownership Plan
(1) During the duration of the employee stock ownership plan, changes to the employee stock ownership plan must be approved by more than 2/3 of the shares held by the holders attending the holders' meeting and submitted to the company's board of directors for review and approval before they can be implemented.
(2) If the actual controller of the company changes for any reason, or a merger or split occurs, the company's board of directors has the right to decide whether to change or terminate the implementation of the employee stock ownership plan.
Article 18 Termination of Employee Stock Ownership Plan
(1) If the employee stock ownership plan expires and is not effectively extended, the employee stock ownership plan will be terminated.
(2) After the expiration of the lock-in period of the employee stock ownership plan and before the expiration of the duration period, if all the company stocks held have been sold or transferred, the stock ownership plan can be terminated early with the approval of the holders' meeting.
Article 19 Disposal of holders’ rights and interests
(1) If a holder undergoes a normal job change within the company, his or her share of the employee stock ownership plan shall be carried out in full compliance with the relevant provisions of this plan.
(2) During the duration, if the holder loses the qualification to participate in this plan due to any of the following circumstances, the management committee has the right to cancel the holder's participation qualification and forcefully withdraw the holder's share of the employee stock ownership plan from the date of the occurrence of the situation. The withdrawal price is calculated based on the lower of the holder's corresponding contribution amount and the sold amount:
Those who have been deemed unsuitable candidates by the stock exchange in the past 12 months;
Those who have been deemed unsuitable candidates by the China Securities Regulatory Commission and its dispatched agencies within the last 12 months;
In the past 12 months, the company has been subject to administrative penalties or market ban measures by the China Securities Regulatory Commission and its dispatched agencies due to major violations of laws and regulations;
Those who are prohibited from serving as directors, supervisors, or senior managers of the company as stipulated in the Company Law; 5. Those who are demoted to the point where they lose the qualification to participate in this plan or are unable to perform the job, causing the company to terminate the labor relationship with the holder;
Become other persons who are not allowed to participate in the employee stock ownership plan of listed companies as stipulated by laws and regulations;
Other circumstances determined by the China Securities Regulatory Commission.
(3) If a holder no longer holds relevant positions in the company due to resignation or company layoffs, from the date of this situation, the shares of the employee stock ownership plan held by him that have not been released from sale restrictions shall not be released from sale restrictions and shall be recovered by the company. The recovery price shall be calculated based on the lower of the holder's corresponding contribution amount and the sold amount.
(4) If a holder resigns due to retirement, from the date of this situation, the shares of the employee stock ownership plan that have not been unlocked shall not be unlocked and will be recovered by the company. The recovery price shall be calculated based on the lower of the holder's corresponding contribution amount and the sold amount, unless the company decides to re-employ the holder after his retirement.
(5) If a holder resigns due to loss of working ability, the shares of the employee stock ownership plan held by him that have not been unlocked shall not be unlocked and will be recovered by the company. The recovery price shall be calculated based on the lower of the holder's corresponding contribution amount and the sold amount.
(6) If the holder dies, the shares of the employee stock ownership plan that have not been released from sale restrictions shall not be released from sale restrictions and will be recovered by the company. The recovery price shall be calculated based on the lower of the holder's corresponding contribution amount and the sold amount.
(7) If a holder seriously damages the interests or reputation of the company due to violating the law, violating professional ethics, leaking company secrets, dereliction of duty or dereliction of duty, or violates the relevant provisions of the "Non-competition Agreement" signed with the company, the Management Committee has the right to cancel the holder's participation qualifications and forcibly withdraw the un-unlocked shares of the employee stock ownership plan held by him.
(8) During the duration, the shares of the employee stock ownership plan recovered by the company can be allocated by the management committee to other qualified employees or other disposal methods determined by the management committee.
(9) During the duration of the plan, other special circumstances that have not been explicitly agreed upon in the employee stock ownership plan occur. If there are express or regulatory provisions, they shall be followed; otherwise, the management committee will further clarify them during the implementation process.
Article 20 Liquidation and distribution after the expiration of the employee stock ownership plan
(1) The employee stock ownership plan will terminate automatically upon expiration. The management committee will complete the liquidation within 30 working days from the date of expiration or termination according to the authorization of the holders’ meeting, and deduct relevant taxes and fees in accordance with the law.
Afterwards, the property is distributed in proportion to the shares held by the holders.
(2) During the duration of the employee stock ownership plan, the management committee may allocate cash in the capital account of the employee stock ownership plan to the holders based on the authorization of the holders’ meeting.
(3) During the duration of the employee stock ownership plan, when the underlying stocks held by the employee stock ownership plan are sold to obtain cash or other distributable income, the employee stock ownership plan can be distributed in each fiscal year. The management committee will distribute the shares according to the proportion of the holder's shares to the total share of the stock ownership plan after deducting relevant taxes and plan payables in accordance with the law.
Chapter 6 Supplementary Provisions
Article 221 The approval of this employee stock ownership plan by the company's board of directors and shareholders' meeting does not mean that the holder has the right to continue serving in the company or subsidiary, nor does it constitute a commitment by the company or subsidiary to the employee's employment period. The labor relationship between the company or subsidiary and the holder is still governed by the labor contract signed between the company or subsidiary and the holder.
Article 222: The company's financial, accounting, taxation and other matters when implementing the employee stock ownership plan shall be implemented in accordance with the relevant financial systems, accounting standards, and taxation systems. The relevant personal income taxes that employees need to pay due to the implementation of the employee stock ownership plan shall be borne by the employees themselves.
Article 223: The right to interpret these regulations belongs to the company's board of directors, and will come into effect after being reviewed and approved by the company's shareholders' meeting.
Board of Directors of Jiangsu Hengrui Pharmaceutical Co., Ltd.
August 19, 2026