ST Xiangxue: Working system of independent directors
Guangzhou Xiangxue Pharmaceutical Co., Ltd.
Independent director work system
Chapter 1 General Provisions
Article 1 In order to promote the standardized operation of Guangzhou Xiangxue Pharmaceutical Co., Ltd. (hereinafter referred to as 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 harm, in accordance with the Company Law of the People's Republic of China (hereinafter referred to as the "Company Law") and the Securities Law of the People's Republic of China (hereinafter referred to as the "Securities Law") "Code of Governance of Listed Companies" (hereinafter referred to as the "Code of Governance") "Opinions of the General Office of the State Council on the Reform of the Independent Director System of Listed Companies" (hereinafter referred to as the "Reform Opinions") "Measures for the Management of Independent Directors of Listed Companies" (hereinafter referred to as the "Opinions of the General Office of the State Council") This system is formulated in accordance with relevant laws and regulations such as the "Measures for Independent Directors"), the Stock Listing Rules of the Shenzhen Stock Exchange (hereinafter referred to as the "Listing Rules") and the Articles of Association of Guangzhou Xiangxue Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association").
Article 2 Independent directors refer to directors who do not hold other positions in the company other than directors and have no direct or indirect interest relationship with the company, major shareholders or actual controllers, or other relationships that may affect their independent and objective judgment.
Independent directors shall perform their duties independently and shall not be influenced by the company, its major shareholders, actual controllers and other units or individuals.
Article 3 Independent directors have the duty of loyalty and diligence to the company and all shareholders. They should conscientiously perform their duties in accordance with laws, administrative regulations, China Securities Regulatory Commission (hereinafter referred to as the "China Securities Regulatory Commission") regulations, stock exchange business rules and the Articles of Association, play a role in decision-making, supervision and balance, and professional consulting in the board of directors, safeguard the overall interests of the company, and protect the legitimate rights and interests of small and medium-sized shareholders.
Article 4 In principle, independent directors can serve as independent directors in up to three domestic listed companies, and should ensure that they have sufficient time and energy to effectively perform their duties as independent directors.
Article 5 The proportion of independent directors of a company shall not be less than one-third of the board of directors, and shall include at least one accounting professional.
The company should set up an audit committee in the board of directors. The members of the audit committee shall be directors who do not serve as senior managers of the company, among whom the majority shall be independent directors, and the accounting professionals among the independent directors shall serve as the convener.
The company can set up special committees such as nomination, remuneration and assessment, and strategy in the board of directors as needed. Independent directors should constitute the majority of the nomination committee and the remuneration and assessment committee and serve as the convener.
Article 6 Independent directors and those who intend to serve as independent directors shall continue to strengthen their study of securities laws, regulations and rules, and continuously improve their ability to perform their duties. Participate in training organized by the China Securities Regulatory Commission, stock exchanges and relevant authorized agencies.
Chapter 2 Conditions and procedures for independent directors
Article 7 Independent directors shall have the qualifications suitable for the exercise of their powers. Serving as an independent director must meet the following basic conditions:
(1) Qualified to serve as a director of the company in accordance with laws, administrative regulations and other relevant provisions;
(2) Have the independence required by Chinese laws, regulations, the China Securities Regulatory Commission and the Articles of Association;
(3) Have basic knowledge of the operation of listed companies, and be familiar with relevant laws, administrative regulations, rules and rules;
(4) Have more than five years of legal, accounting or economic work experience necessary to perform the duties of an independent director;
(5) Have good personal moral character and have no bad records such as major breach of trust;
(6) Other conditions stipulated in laws, administrative regulations, regulations of the China Securities Regulatory Commission, business rules of stock exchanges and the Articles of Association.
Article 8 Independent directors must maintain their independence. The following persons are not allowed to serve as independent directors:
(1) Persons working in the company or its affiliated enterprises and their spouses, parents, children, and main social relations (main social relations refer to brothers and sisters, parents-in-law, daughters-in-law and sons-in-law, spouses of brothers and sisters, brothers and sisters of spouses, etc.);
(2) Directly or indirectly hold more than 1% of the company's issued shares or are natural person shareholders and their spouses, parents, and children among the top ten shareholders of the company;
(3) Shareholders who directly or indirectly hold more than 5% of the company’s issued shares or persons who hold positions among the top five shareholders of the company and their spouses, parents, and children;
(4) Personnel working in affiliated enterprises of the company’s controlling shareholder or actual controller and their spouses, parents, and children;
(5) Persons who have major business dealings with the company, its controlling shareholders, actual controllers or their respective subsidiaries, or persons who work in units with major business dealings and their controlling shareholders or actual controllers;
(6) Personnel who provide financial, legal, consulting, sponsorship and other services to the company and its controlling shareholders, actual controllers or their respective affiliated enterprises, including but not limited to all members of the project team of the intermediary agency providing services, reviewers at all levels, persons who signed the report, partners, directors, senior managers and principal persons in charge;
(7) Persons who have had the circumstances listed in items 1 to 6 in the past twelve months;
(8) Other personnel who are not independent as stipulated in laws, administrative regulations, regulations of the China Securities Regulatory Commission, business rules of stock exchanges and the Articles of Association.
Independent directors should conduct self-examinations on their independence every year and submit the self-examination results to the board of directors. The board of directors should evaluate the independence of serving independent directors every year and issue special opinions, which should be disclosed at the same time as the annual report.
Chapter 3 Nomination, Election and Replacement of Independent Directors
Article 9 The company's board of directors and shareholders individually or jointly holding more than 1% of the company's issued shares may propose candidates for independent directors, which shall be elected and decided by the shareholders' meeting. The nominator shall not nominate persons with whom he or she has an interest or other closely related persons who may affect the independent performance of duties as independent director candidates. Investor protection institutions established in accordance with the law may publicly request shareholders to entrust them to exercise the right to nominate independent directors on their behalf.
The nominator specified in paragraph 1 of this article shall not nominate as an independent director candidate any person with whom he or she has an interest or other closely related persons who may affect the independent performance of his duties.
Article 10 The nominee of an independent director shall obtain the consent of the nominee before nomination. The nominator should fully understand the nominee's occupation, education, professional title, detailed work experience, all part-time jobs, and whether he has any bad records such as major breach of trust, etc., and express his opinion on his/her independence and other conditions for serving as an independent director. The nominee shall make a public statement regarding his/her independence and other conditions for serving as an independent director.
If a company sets up a nomination committee in the board of directors, the nomination committee shall review the qualifications of the nominees and formulate clear review opinions.
Before the shareholders' meeting to elect independent directors, the company shall disclose the above information in accordance with regulations and submit relevant materials of all independent director candidates to the stock exchange. The relevant submitted materials shall be true, accurate and complete. The stock exchange shall review relevant materials of independent director candidates in accordance with regulations, prudently determine whether independent director candidates meet the qualifications and have the right to raise objections. If the stock exchange raises objections, the company shall not submit to the shareholders' meeting for election.
Article 11 The term of each independent director is the same as that of other directors of the company. When the term expires, he or she may be re-elected, but the term of re-election shall not exceed six years.
Article 12 When a company's shareholders' meeting elects two or more independent directors, a cumulative voting system shall be implemented. The voting results of small and medium-sized shareholders shall be counted separately and disclosed.
Article 13 Independent directors shall attend board meetings in person. If he is unable to attend the meeting in person for some reason, the independent director shall review the meeting materials in advance, form a clear opinion, and authorize other independent directors in writing to attend on his behalf.
If an independent director fails to attend the board of directors' meeting in person for two consecutive times and does not entrust another independent director to attend on his behalf, the board of directors shall propose to convene a shareholders' meeting to remove the independent director from his duties within 30 days from the date of occurrence of this fact.
Article 14 Before the expiration of the term of independent directors, the company may remove them from their posts in accordance with legal procedures. If an independent director is dismissed from his position in advance, the company shall disclose the specific reasons and basis in a timely manner. If an independent director has any objection, the company shall disclose it in a timely manner.
If an independent director fails to meet the requirements for director qualifications or independence under this system, he shall immediately stop performing his duties and resign. If a person fails to resign, the board of directors shall immediately terminate his/her duties in accordance with regulations after becoming aware or should be aware of the fact.
If an independent director resigns or is dismissed due to the circumstances specified in the preceding paragraph, resulting in the proportion of independent directors on the board of directors or special committees not complying with the provisions of this system or the Articles of Association, or there is a lack of accounting professionals among independent directors, the company shall complete the by-election within 60 days from the date of the occurrence of the aforementioned facts.
Article 15 Independent directors may resign before the expiration of their term of office. An independent director who resigns shall submit a written resignation report to the board of directors, describing any circumstances related to his resignation or that he deems necessary to attract the attention of the company's shareholders and creditors. The company should disclose the reasons for the resignation of independent directors and matters of concern. If the resignation of an independent director will result in the proportion of independent directors on the board of directors or its special committee not complying with the provisions of this system or the Articles of Association, or if there is a lack of accounting professionals among the independent directors, the independent director who intends to resign shall continue to perform his duties until the date of the appointment of the new independent director. The company shall complete the by-election within 60 days from the date of resignation of the independent director.
Chapter 4 Responsibilities of Independent Directors
Article 16 Independent directors shall perform the following duties:
(1) Participate in the decision-making of the board of directors and express clear opinions on the matters discussed;
(2) Supervise the potential major conflicts of interest between the company and its controlling shareholders, actual controllers, directors, and senior managers listed in the special meeting of independent directors, the audit committee, the nomination committee, and the remuneration and appraisal committee in this system, so as to promote the board of directors to make decisions that are in line with the overall interests of the company and protect the legitimate rights and interests of small and medium-sized shareholders;
(3) Provide professional and objective suggestions on the company’s business development and promote the improvement of the board’s decision-making level;
(4) Other duties stipulated in laws, administrative regulations, provisions of the China Securities Regulatory Commission and the Articles of Association.
Article 17 In order to give full play to the role of independent directors, in addition to the powers granted to directors by the Company Law and other relevant laws and regulations, independent directors also have the following special powers:
(1) Independently hire intermediaries to audit, consult or verify specific matters of the company;
(2) Propose to the board of directors to convene an extraordinary shareholders’ meeting;
(3) Proposing to convene a board meeting;
(4) Publicly solicit shareholder rights from shareholders in accordance with the law;
(5) Express independent opinions on matters that may damage the rights and interests of the company or small and medium-sized shareholders;
(6) Other powers stipulated in laws, administrative regulations, provisions of the China Securities Regulatory Commission and the Articles of Association. The exercise of the powers listed in items 1 to 3 of the preceding paragraph by independent directors shall be subject to the consent of more than half of all independent directors.
If an independent director exercises the powers listed in paragraph 1, the company shall disclose it in a timely manner.
If the above powers cannot be exercised normally, the company shall disclose the specific circumstances and reasons.
Article 18 Before a board meeting, independent directors may communicate with the secretary of the board of directors to inquire about matters to be considered, request supplementary materials, provide opinions and suggestions, etc. The board of directors and relevant personnel should carefully study the issues, requirements and opinions raised by the independent directors, and provide timely feedback to the independent directors on the implementation status of amendments to the proposals.
Article 19 If an independent director votes against or abstains from voting on a board of directors proposal, he shall explain the specific reasons and basis, the legality and compliance of the matters involved in the proposal, possible risks, and the impact on the rights and interests of the company and small and medium-sized shareholders. When a company discloses board resolutions, it shall also disclose the dissenting opinions of independent directors and state them in the board resolutions and meeting minutes.
Article 20 The following matters shall be submitted to the board of directors for review after being approved by more than half of all independent directors of the company:
(1) Related transactions that should be disclosed;
(2) Plans for the company and relevant parties to change or waive their commitments;
(3) The decisions made and measures taken by the board of directors of the acquired listed company regarding the acquisition;
(4) Other matters stipulated in laws, administrative regulations, provisions of the China Securities Regulatory Commission and the Articles of Association.
Article 21 The company shall hold special meetings of independent directors on a regular or irregular basis. In this system, matters listed in hiring intermediaries, proposing to convene extraordinary shareholders' meetings, proposing to convene special powers of the board of directors, and special meetings of independent directors shall be reviewed by the special meetings of independent directors.
Special meetings of independent directors can study and discuss other matters of the company as needed.
Special meetings of independent directors shall be convened and chaired by an independent director jointly elected by more than half of the independent directors; if the convener fails or is unable to perform his duties, two or more independent directors may convene and elect a representative to preside.
The company shall provide convenience and support for the convening of special meetings of independent directors.
Article 22 Independent directors shall perform their duties in the special committee of the company's board of directors in accordance with laws, administrative regulations, regulations of the China Securities Regulatory Commission, business rules of the stock exchange and the Articles of Association. Independent directors shall attend the meeting of the special committee in person. If they are unable to attend the meeting in person for any reason, they shall review the meeting materials in advance, form clear opinions, and entrust other independent directors in writing to attend on their behalf. When independent directors pay attention to major company matters within the scope of the special committee's responsibilities while performing their duties, they can promptly submit them to the special committee for discussion and review in accordance with the procedures.
The company shall formulate working procedures for special committees in accordance with this system, clarifying the personnel composition, term of office, scope of responsibilities, rules of procedure, file preservation and other relevant matters of the special committee. If the relevant competent departments of the State Council have other provisions on the convener of the special committee, such provisions shall prevail.
Article 23 Independent directors shall work on-site at the company for no less than fifteen days each year. In addition to attending shareholders' meetings, the board of directors and its special committees, and special meetings of independent directors as required, independent directors can perform their duties by regularly obtaining information on the company's operations and other information, listening to management reports, communicating with the person in charge of the internal audit agency and the accounting firm that handles the company's audit business and other intermediaries, conducting on-site inspections, and communicating with small and medium-sized shareholders.
Article 24 The company's board of directors, its special committees, and special meetings of independent directors shall prepare meeting minutes in accordance with regulations, and the opinions of independent directors shall be stated in the meeting minutes. Independent directors should sign and confirm the meeting minutes.
Independent directors should make work records and record in detail the performance of their duties. Information obtained by independent directors during the performance of their duties, relevant meeting minutes, communication records with company and intermediary agency staff, etc., form an integral part of the work records. For important contents in work records, independent directors may require the secretary of the board of directors and other relevant personnel to sign for confirmation, and the company and relevant personnel shall cooperate.
The work records of independent directors and the information provided by the company to independent directors must be kept for at least ten years.
Article 25 Independent directors can promptly verify with the company the issues raised by investors based on the communication mechanism established by the company with small and medium-sized shareholders.
Article 26 Independent directors shall submit an annual work report to the company's annual shareholders' meeting, explaining the performance of their duties. The annual work report should include the following contents:
(1) Number of attendances at the board of directors, methods and voting conditions, and number of attendances at shareholders’ meetings;
(2) Participation in the work of special committees of the board of directors and special meetings of independent directors;
(3) Review of the duties and responsibilities of independent directors under this system and the exercise of special powers by independent directors under this system;
(4) Major matters, methods and results of communication with the internal audit institution and the accounting firm that undertakes the company’s audit business regarding the company’s financial and business conditions;
(5) Communication status with small and medium-sized shareholders;
(6) The time, content, etc. of working on-site at the company;
(7) Other circumstances in the performance of duties.
The annual performance report of independent directors shall be disclosed at the latest when the company issues notice of the annual shareholders' meeting.
Article 27 The company shall provide necessary working conditions and personnel support for independent directors to perform their duties, and designate specialized departments and personnel to assist independent directors in performing their duties.
The secretary of the board of directors shall ensure smooth flow of information between independent directors and other directors, senior managers and other relevant personnel, and ensure that independent directors have access to sufficient resources and necessary professional advice when performing their duties.
Article 28 The company shall ensure that independent directors have the same right to know as other directors. In order to ensure that independent directors effectively exercise their powers, the company should regularly inform independent directors of the company's operations, provide information, and organize or cooperate with independent directors to conduct on-site inspections and other work.
Before the board of directors considers major and complex matters, the company can organize independent directors to participate in research and demonstration and other aspects, fully listen to the opinions of independent directors, and provide timely feedback to independent directors on the adoption of opinions.
Article 29 The company shall promptly issue board meeting notices to independent directors, provide relevant meeting materials no later than the notice period for board meetings stipulated in laws, administrative regulations, the provisions of the China Securities Regulatory Commission or the company's articles of association, and provide effective communication channels for independent directors; if a special committee of the board of directors convenes a meeting, the company shall in principle provide relevant materials and information no later than three days before the special committee meeting. The company shall keep the above meeting materials for at least ten years.
If two or more independent directors believe that the meeting materials are incomplete, insufficiently demonstrated or not provided in a timely manner, they may submit a written proposal to the board of directors to postpone the meeting or postpone the consideration of the matter, and the board of directors shall adopt it. In principle, meetings of the Board of Directors and special committees shall be held on site. On the premise of ensuring that all participating directors can fully communicate and express their opinions, the meeting may be held by video, telephone or other means in accordance with procedures when necessary.
Article 30 When independent directors exercise their powers, the company's directors, senior managers and other relevant personnel shall cooperate and shall not refuse, obstruct or conceal relevant information, or interfere with their independent exercise of powers. If independent directors encounter obstacles in exercising their powers in accordance with the law, they may explain the situation to the board of directors, require directors, senior managers and other relevant personnel to cooperate, and record the specific circumstances and resolution of the obstacles in their work records.
If the independent directors' performance of duties involves information that should be disclosed, the company shall handle the disclosure matters in a timely manner.
Article 31 The cost of hiring an intermediary agency and other expenses required for independent directors to exercise their powers shall be borne by the company.
Article 32 The company shall provide appropriate allowances to independent directors. The standard of allowances shall be formulated by the board of directors, reviewed and approved by the shareholders' meeting, and disclosed in the company's annual report. In addition to the above-mentioned allowances, independent directors shall not obtain additional, undisclosed other benefits from the company, its major shareholders or interested institutions and personnel.
Article 33 The company’s board of directors or the remuneration and assessment committee under the board of directors is responsible for performance evaluation of independent directors. The performance evaluation of independent directors should adopt a combination of self-evaluation and mutual evaluation.
Chapter 5 Supplementary Provisions
Article 34 Matters not covered by this system shall be implemented in accordance with the Company Law, the Articles of Association and other relevant national laws and regulations. If this system conflicts with laws, regulations or the Articles of Association, the relevant national laws, regulations and the Articles of Association shall be implemented.
Article 35 If any of the following circumstances occurs, the company shall modify this system:
(1) After the relevant laws and administrative regulations are revised, the matters stipulated in this system conflict with the revised laws and regulations;
(2) The company's situation changes and is inconsistent with the matters recorded in this system;
(3) The shareholders' meeting decides to amend this system.
Article 36 The Board of Directors is responsible for interpreting this system.
Article 37 This system will be implemented after being reviewed and approved by the board of directors and approved by the shareholders' meeting.
Guangzhou Xiangxue Pharmaceutical Co., Ltd.
November 2025