Implementation Rules of the Audit Committee of the Board of Directors of Kangmei Pharmaceutical Co., Ltd. (December 2025)
Kangmei Pharmaceutical Co., Ltd.
Implementation Rules of the Audit Committee of the Board of Directors
Chapter 1 General Provisions
Article 1 In order to strengthen and improve the decision-making function of the board of directors of Kangmei Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), ensure the effective supervision of the management and other senior managers of the company by the company's board of directors, and further improve the company's legal person governance structure, 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, the Code of Governance of Listed Companies, the Shanghai Stock Exchange Stock Listing Rules, and the Shanghai Stock Exchange Self-Discipline Supervision Guidelines for Listed Companies No. 1 - Standardized Operations In accordance with the relevant provisions of the Articles of Association of Kangmei Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association") and other laws and regulations, the company has specially established an audit committee of the board of directors and formulated these implementation rules.
Article 2 The Audit Committee of the Board of Directors is a special committee under the Board of Directors. It assists the Board of Directors in carrying out relevant work within the scope of its duties and is accountable to the Board of Directors. Members of the Audit Committee ensure sufficient time and energy to perform their duties, perform their duties diligently, effectively supervise and evaluate the company's internal and external audit work, promote the company to establish effective internal controls and provide true, accurate and complete financial reports.
Chapter 2 Composition of Committee Members
Article 3 The audit committee shall consist of three directors. The members of the audit committee shall be directors who do not serve as senior managers of the company, among which the majority shall be independent directors, and accounting professionals among the independent directors shall serve as the convener. Accounting professionals should have rich accounting professional knowledge and experience, and meet at least one of the following conditions:
(1) Having the qualification of certified public accountant;
(2) Have a senior professional title, associate professor or above, or a doctoral degree in accounting, auditing or financial management;
(3) Have a senior professional title in economic management, and have more than 5 years of full-time work experience in professional positions such as accounting, auditing or financial management.
All members of the audit committee must have professional knowledge and experience that are capable of fulfilling the responsibilities of the audit committee.
Article 4 The members and convener of the audit committee shall be nominated by the chairman of the board of directors, more than half of the independent directors, or one-third of all directors, and shall be elected by the board of directors.
Article 5 The Audit Committee shall have a convener who shall be responsible for presiding over the work of the committee. When the convener of the Audit Committee is unable or unable to perform his duties, he shall designate another member to perform his duties on his behalf; when the convener of the Audit Committee neither performs his duties nor appoints other members to perform his duties, any member may report the relevant situation to the company's board of directors, and the board of directors shall designate one member to perform the duties of the convener of the audit committee.
Article 6 The term of office of the members of the Audit Committee shall be consistent with the term of office of the members of the Board of Directors of the same session. When the term of the convener expires, he or she may be re-elected. Before the expiration of the term of a member, a member shall not be dismissed from his position without reason unless there are circumstances prohibiting him from holding office as stipulated in the Company Law, Articles of Association or these working rules. During this period, if any member no longer serves as a director of the company, he will automatically lose his membership qualifications, and the board of directors will replenish the number of members in accordance with the provisions of Articles 3 to 5 above.
Article 7 The Audit Committee directly leads the company's audit department and independently carries out internal audit work without interference from other departments or individuals. As the daily office, the company's audit department is responsible for daily work liaison and meeting organization.
Article 8 The company shall provide necessary working conditions for the audit committee of the board of directors, and assign specialized personnel or institutions to undertake the daily work of the audit committee such as work liaison, meeting organization, material preparation, and file management. When the audit committee performs its duties, the company's management and relevant departments should cooperate.
Chapter 3 Responsibilities and Authority of the Committee
Article 9 The Audit Committee is responsible for reviewing the company's financial information and its disclosure, supervising and evaluating internal and external audit work and internal control. The following matters shall be submitted to the Board of Directors for review after being approved by more than half of all members of the Audit Committee:
(1) Disclose financial information and internal control evaluation reports in financial accounting reports and periodic reports;
(2) Appoint or dismiss the accounting firm that handles the company’s audit business;
(3) Appoint or dismiss the company’s financial officer (financial director);
(4) Changes in accounting policies, accounting estimates or correction of major accounting errors due to reasons other than changes in accounting standards;
(5) Other matters stipulated in laws and regulations, relevant provisions of the Shanghai Stock Exchange and the company's articles of association. The Audit Committee shall report to the Board of Directors and make recommendations on measures that it considers must be taken or matters for improvement.
Article 10 The Audit Committee is responsible to the Board of Directors, and the committee’s proposals are submitted to the Board of Directors for review and decision.
Article 11 When a company hires or changes an external audit institution, the audit committee shall formulate a deliberation opinion and make recommendations to the board of directors before the board of directors can review relevant proposals.
Article 12 The audit committee shall review the company's financial accounting reports, provide opinions on the authenticity, accuracy and completeness of the financial accounting reports, focus on major accounting and auditing issues in the company's financial accounting reports, pay special attention to the possibility of fraud, malpractice and major misstatements related to the financial accounting reports, and supervise the rectification of issues in the financial accounting reports.
The audit committee makes recommendations to the board of directors on hiring or changing external audit institutions, and reviews the audit fees and employment terms of external audit institutions, without any undue influence from the company's major shareholders, actual controllers or directors and senior managers.
The audit committee should urge the external audit institution to be honest and diligent, strictly abide by business rules and industry self-discipline standards, strictly implement the internal control system, verify the company's financial accounting reports, perform special attention obligations, and prudently express professional opinions.
Article 13 The Audit Committee of the Board of Directors shall inspect the company's finances in accordance with the law, supervise the legality and compliance of directors and senior managers in performing their duties, exercise other powers stipulated in the company's articles of association, and safeguard the legitimate rights and interests of the company and shareholders.
If the audit committee discovers that directors or senior managers have violated laws, regulations, relevant provisions of the Exchange, or the company's articles of association, it shall notify the board of directors or report to the shareholders' meeting, and disclose the violation in a timely manner. It may also report directly to the regulatory agency.
In the process of performing its supervisory duties, the audit committee may make recommendations for removal of directors and senior managers who violate laws and regulations, these Guidelines, other provisions of the Exchange, the company's articles of association or resolutions of the shareholders' meeting.
Article 14 The audit committee of the board of directors supervises and evaluates the internal audit work and shall perform the following responsibilities:
(1) Guide and supervise the establishment and implementation of the internal audit system;
(2) Review the company’s annual internal audit work plan;
(3) Supervise the implementation of the company’s internal audit plan;
(4) Guide the effective operation of the audit department. The company's audit department shall report its work to the audit committee. Various audit reports submitted by the audit department to the management, rectification plans for audit issues, and rectification status shall be submitted to the audit committee at the same time;
(5) Report to the board of directors the progress and quality of internal audit work and major problems discovered;
(6) Coordinate the relationship between the audit department and external audit units such as accounting firms and national audit institutions.
Article 15 If the company's directors and senior managers discover that the company's financial accounting report contains false records, misleading statements or major omissions and report it to the board of directors or the audit committee, or if an intermediary agency points out to the board of directors or the audit committee that the company's financial accounting report contains false records, misleading statements or major omissions, the board of directors shall promptly report to the Shanghai Stock Exchange and disclose it.
If a company discloses relevant information in accordance with the provisions of the preceding paragraph, it shall disclose in the announcement the major problems existing in the financial accounting report, the consequences that have or may result, and the measures that have been taken or planned to be taken.
The audit committee should urge the company's relevant responsible departments to formulate rectification measures and rectification time, conduct follow-up reviews, supervise the implementation of rectification measures, and promptly disclose the completion of rectifications.
Article 16 When a company discloses its annual report, it shall disclose the annual performance of its audit committee's duties on the website of the Shanghai Stock Exchange, which mainly includes its performance of duties and the convening of audit committee meetings.
The audit committee proposes deliberation opinions to the company's board of directors on matters within its scope of responsibilities. If the board of directors fails to adopt them, the company shall disclose the matter and fully explain the reasons.
Article 17 Unless otherwise provided by laws and regulations, the Audit Committee of the Board of Directors shall supervise the Audit Department to inspect the following matters at least once every six months, issue an inspection report and submit it to the Audit Committee. If the inspection finds that the company has any violations of laws or regulations, irregular operations, etc., it shall report to the Shanghai Stock Exchange in a timely manner:
(1) The implementation of major events such as the use of funds raised by the company, provision of guarantees, related transactions, securities investments and derivatives transactions, provision of financial assistance, purchase or sale of assets, external investments, etc.;
(2) The company’s large capital transactions and capital transactions with directors, senior managers, controlling shareholders, actual controllers and their related parties.
The audit committee shall issue written evaluation opinions on the effectiveness of the company's internal controls based on the internal audit report and relevant materials submitted by the audit department, and report to the board of directors. If the board of directors or the audit committee believes that there are major flaws or major risks in the company's internal control, or if the sponsor or accounting firm points out that there are major flaws in the effectiveness of the company's internal control, the board of directors shall report to the Shanghai Stock Exchange in a timely manner and disclose it. The company shall disclose in the announcement any major deficiencies or major risks in internal control, the consequences that have occurred or may result, and the measures that have been taken or planned to be taken.
Chapter 4 Committee Decision-Making Procedure
Article 18 The company’s audit department is responsible for making preliminary preparations for the audit committee’s decision-making and providing information on the company and finance:
(1) Company-related financial reports;
(2) Work reports of internal and external audit institutions;
(3) External audit contract and related work reports;
(4) The company’s external disclosure of information;
(5) Audit the company’s internal control system;
(6) Other matters authorized by the company's board of directors.
Article 19 The audit committee meeting will evaluate the report provided by the audit department and submit relevant written resolution materials to the board of directors for discussion:
(1) Evaluation of the work of external audit institutions, hiring and replacement of external audit institutions;
(2) Whether the company’s internal audit system has been effectively implemented and whether the company’s financial reports are comprehensive and true;
(3) Whether the company’s financial reports and other information disclosed to the outside world are objective and true;
(4) Work evaluation of the company’s internal financial department, including its person in charge;
(5) Other related matters.
Chapter 5 Rules of Procedure of the Committee
Article 20 The Audit Committee shall hold at least one meeting every quarter. At the proposal of two or more members, or when the convener deems it necessary, an extraordinary meeting may be held. The meeting shall be presided over by the convener. If the convener cannot attend, he may entrust another member (should be an independent director) to preside over the meeting.
Article 21 When the audit committee convenes a meeting, the company shall notify all members and provide relevant materials and information no later than three days before the meeting. If the situation is urgent or a meeting needs to be convened as soon as possible due to special circumstances, the meeting notice shall not be subject to the time limit of the preceding paragraph, but the convener shall make an explanation at the meeting and record it in the meeting minutes.
Article 22 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 23 Audit Committee meetings can only be held when more than two-thirds of the members are present; each member has one vote, and resolutions made at the meeting must be passed by more than half of all members.
Article 24 The voting method at the Audit Committee meeting shall be a show of hands or a vote.
Article 25 The person in charge of the Finance Department may attend the meeting of the Audit Committee as a non-voting delegate, and may also invite the company’s directors and other senior managers to attend the meeting as a non-voting delegate if necessary.
Article 26 If the Audit Committee deems it necessary and can provide a true and reliable basis for the company's decision-making, the Audit Committee may hire an intermediary agency to provide professional opinions for its decision-making at the company's expense.
Article 27 The procedures for convening audit committee meetings, voting methods and the plans adopted at the meeting must comply with the provisions of relevant laws, regulations, the Articles of Association and these detailed rules.
Article 28 Audit committee meetings shall have minutes, and members attending the meeting shall sign on the minutes; meeting minutes shall be kept by the secretary of the company's board of directors.
Article 29 The resolutions and voting results passed by the audit committee meeting shall be submitted in writing to the company's board of directors.
Article 30: All members attending the meeting have the obligation to keep confidential the matters discussed at the meeting, and shall not disclose relevant company information without authorization before the information has been publicly disclosed.
Chapter 6 Supplementary Provisions
Article 31 These Implementing Rules shall take effect from the date of review and approval by the company's board of directors, and the same shall apply when revised.
Article 32 Matters not covered in these Implementing Rules shall be governed by the relevant national laws, regulations and the Articles of Association. If these Rules conflict with laws and regulations promulgated by the country in the future or the Articles of Association modified through legal procedures, the relevant national laws, regulations and the Articles of Association shall be implemented. At the same time, the company shall immediately revise these Rules and submit them to the Board of Directors for review and approval.
Article 33 The right to interpret these rules belongs to the company’s board of directors.