2025 Independent Director Work Report of Hangzhou Tianmushan Pharmaceutical Co., Ltd. (Sheng Xiaofang)
Hangzhou Tianmushan Pharmaceutical Co., Ltd.
2025 Independent Directors’ Work Report
As an independent director of Hangzhou Tianmushan Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), I strictly follow 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 "Administrative Measures for Independent Directors of Listed Companies", "Shanghai Stock Exchange Self-Regulation Guidelines for Listed Companies No. 1 - Standardized Operation" and other laws and regulations, normative documents, as well as the "Company Articles", "Independent Director System" and other relevant regulations. During the annual term of office, he performed his duties independently, objectively, diligently and responsibly, took the initiative to understand the company's production operations and business development, actively attended relevant meetings, carefully reviewed various proposals, expressed independent opinions on major company matters, gave full play to the role of independent directors, and effectively safeguarded the interests of the company and shareholders, especially the legitimate rights and interests of small and medium-sized shareholders. I would like to report on my performance of duties in 2025 as follows:
1. Basic information of independent directors:
(1) Basic situation
I am Sheng Xiaofan, born in 1970, Chinese nationality, no permanent residence abroad, and a bachelor’s degree. He has successively served as project manager of Shandong Huide Accounting Firm, senior project manager of Qingdao Huabang United Accounting Firm, partner of Qingdao Goldman Sachs Accounting Firm (general partnership), and independent director of the 11th Board of Directors of the company. He is currently the vice president and financial director of Jiezheng Investment Group Co., Ltd., an independent director of the 12th board of directors of the company, and serves as the chairman of the audit committee, a member of the strategy committee, and a member of the remuneration and assessment committee of the board of directors.
(2) Description of independence
During the reporting period, my appointment complied with the independence requirements stipulated in Article 6 of the "Administrative Measures for Independent Directors of Listed Companies", and there were no circumstances that affected my independence.
2. Annual performance overview of independent directors
(1) Attendance at the 2025 Board of Directors and Shareholders’ Meetings
During the reporting period, I attended a total of 8 board meetings and 5 shareholders’ meetings of the company, without being absent or failing to attend the meetings in person twice in a row.
independent participation
Participation in the board of directors
Directors and shareholders’ meetings
Should this year be for two consecutive years?
Attend Delegate Absent Attend
Participating directors did not attend in person
Number of times Number of seats Number of shareholders’ meetings Number of meetings Add meetings
Sheng Xiaofang 8 8 0 0 No 5
As an independent director, I have attended and carefully reviewed various meeting materials provided by the company in a diligent and responsible manner, actively participated in the discussion of various proposals, used my knowledge and background to put forward reasonable opinions and suggestions, played an active role in making correct decisions for the board of directors, and strived to safeguard the legitimate rights and interests of the company and shareholders, especially small and medium-sized shareholders. At the same time, I exercised my voting rights independently and objectively, and voted in favor of all the proposals reviewed by the board of directors in 2025, without any objection or abstention.
(2) Participation in special committees of the board of directors
During the reporting period, I also served as the chairman of the 12th Audit Committee, a member of the Strategy Committee, and a member of the Remuneration and Appraisal Committee. In 2025, I participated in a total of 7 relevant meetings of the company's audit committee, 1 meeting of the strategy committee and 2 meetings of the remuneration and assessment committee. I attended the meetings on time in accordance with relevant regulations, carefully reviewed the relevant motion materials, and reviewed the company's 2024 annual report and summary, 2025 first quarter report, 2025 semi-annual report, 2025 Conduct prior review of the third quarter report of the year, the appointment of the financial director, the appointment of the annual audit accounting firm, daily related transaction estimates, capital increase of subsidiaries and other proposals, and make rational suggestions to the company based on their own professional knowledge and issue relevant written opinions.
As the chairman of the Audit Committee of the Board of Directors, I give full play to my advantages in accounting expertise, work diligently and responsibly, pay close attention to matters such as related transactions, accounting confirmation of important matters, and preparation of financial accounting reports in the company's daily operations, and understand, communicate, confirm and review them in a timely manner. I also pay close attention to the selection of the company's audit institution and maintain good communication with the accounting firm, which plays a positive role in strengthening internal supervision and improving the decision-making efficiency of the board of directors.
(3) Communication with internal audit institutions and accounting firms
During the reporting period, regarding the company's financial report audit and annual report preparation work, I actively used communication and other channels to conduct in-depth discussions and exchanges with the company's management, internal auditors and annual audit accountants on the overall strategy, key audit matters, and audit plans for the annual audit. I also supervised the progress of the audit work throughout the process and strictly performed the supervisory duties of independent directors.
(4) On-site work and the company’s cooperation with independent directors
During the reporting period, I always adhered to the principles of independence, objectivity and prudence, and actively and effectively performed various duties as an independent director. I made full use of my participation in shareholders’ meetings, the board of directors and special committees of the board of directors and other working time, and maintained close communication and contact with other directors, senior managers and other relevant staff of the company through various methods such as on-site inspections and meetings at the company, so as to gain a timely and comprehensive understanding of the company’s production and operation status, financial status, compliance operations, and the effectiveness and implementation of internal controls. In response to the problems encountered in the actual operation of the company, I promptly put forward constructive opinions and suggestions, giving full play to the guidance, supervision and checks and balances role of independent directors in corporate governance. The company's management attaches great importance to and actively cooperates with the work of independent directors. They proactively report to the independent directors the progress of the company's production operations, major investments, strategic planning and other related major matters, and solicit professional opinions from independent directors on key issues. Before convening the meeting of the Board of Directors and relevant special committees, the company carefully organized and prepared detailed, accurate and complete meeting materials in advance, and ensured the timely transmission of the materials, fully guaranteed the independent directors’ right to know, participate and make decisions, and provided the necessary working conditions and strong support for the independent directors to better perform their duties.
3. Matters of focus in annual performance of duties by independent directors
During the reporting period, in accordance with the relevant laws, administrative regulations and company rules and regulations regarding the responsibilities of independent directors, I relied on my professional knowledge and on the premise of understanding the relevant laws, regulations and the company's operating conditions to focus on and review various matters of the company. I actively made suggestions to the board of directors and special committees, and played a positive role in enhancing the standardization of the board of directors' operations and the effectiveness of decision-making. The specific situation is as follows:
(1) Related transactions that should be disclosed
The company held the 11th meeting of the 12th board of directors on March 30, 2025 to review and approve the "Confirmation of Daily Related Transaction Limits for 2024 and 2025 "Proposal on the Estimation of Annual Daily Related Transactions", before the meeting, I conducted a pre-review of the above proposal and believed that the company and its holding subsidiaries carry out daily related transactions with related parties, and the transaction amounts are reasonably estimated, which meets the company's normal operation and business development needs, and should not affect the independence of the listed company. The transaction pricing basis is objective and fair, and no damage to the interests of the company and shareholders has been found.
The company held the 16th meeting of the 12th Board of Directors on October 27, 2025 to review and approve the "Proposal on the Controlling Subsidiary's Plan to Terminate the Lease Contract and Related Transactions with Related Parties" and the "Proposal on the Subsidiary's Plan to Lease Real Estate from Related Parties and Related Transactions". Before the meeting, I reviewed the above proposals. According to the preliminary review, it is believed that the above-mentioned related-party transactions are necessary for the development of the company's business activities, were negotiated and determined by both parties in accordance with fair market prices, complied with the provisions of laws, administrative regulations, departmental rules and other normative documents, were in the interests of the company and all shareholders, and did not harm the interests of the company and shareholders, especially small and medium-sized shareholders. Related directors are required to abstain from voting on the above proposals. Therefore, I agree to submit this matter to the company's board of directors for consideration.
(2) Matters related to the company’s regular reporting
In my opinion: the company has prepared and disclosed the company's "2024 Annual Report", "2025 First Quarter Report", "2025 Semi-Annual Report", "2025 Third Quarter Report" and "2024 Annual Report" on time in strict accordance with the requirements of the "Company Law", "Securities Law", "Measures for the Administration of Information Disclosure of Listed Companies", "Shanghai Stock Exchange Stock Listing Rules" and other relevant laws, regulations, departmental regulations and normative documents as well as the "Articles of Association". "Annual Internal Control Evaluation Report", the content of the report accurately discloses the financial status, operating results and other matters during the corresponding reporting period, allowing investors to fully understand the company's operating conditions and important matters.
(3) External guarantees and capital occupation
External guarantees: During the reporting period, the company strictly abided by relevant laws and regulations and the relevant provisions on external guarantees in the Articles of Association, and conscientiously performed the corresponding review procedures. The external guarantee incurred by the company is to ensure the normal production and operation of the wholly-owned (holding) subsidiary. The company is able to strictly control external guarantee risks and does not provide any guarantees to controlling shareholders, actual controllers and other related parties, fully protecting the legitimate rights and interests of the company and all shareholders.
Occupation of funds: During the reporting period, the company and its controlled subsidiaries did not have funds occupied by the controlling shareholder and its related parties for non-operating purposes. For details, please refer to the company's related party fund transactions statement disclosed in 2025.
(4) Disclosure of financial information in financial accounting reports and periodic reports, and internal control evaluation reports
I believe that the financial information in the financial accounting reports and periodic reports disclosed by the company is true, accurate and complete, and there are no false records, misleading statements or major omissions. I have reviewed the company's "Internal Control Self-Evaluation Report" and believe that it objectively reflects the actual situation of the company's internal control system construction and implementation this year.
In 2025, I did not propose to convene the board of directors; I did not propose to dismiss the accounting firm, nor did I propose to hire an intermediary agency to audit, consult or verify specific matters of the company; I did not propose to the board of directors to convene an extraordinary shareholders' meeting.
(5) Appointment of accounting firm
I believe that the company's re-appointment of Unitai Zhenqing Accounting Firm (Special General Partnership) as the company's 2025 audit agency and internal control audit agency is to ensure the continuity and stability of the financial audit work, and the audit fees are based on market prices and determined through negotiation in accordance with the principle of fairness and reasonableness. In providing audit services to the company, the firm followed the independent, objective and impartial practice standards and completed various audit work this year with due diligence.
(6) By-election of directors and appointment of senior managers
On April 10, 2025, the company held the 12th meeting of the 12th board of directors, and reviewed and approved the "Proposal on the Appointment of the Company's Deputy General Manager and Chief Financial Officer". After the nomination committee's qualification review, the board of directors agreed to appoint Mr. Leng Liang as the company's deputy general manager and Ms. Wang Yihui as the company's financial director. The term will be from the date of review and approval by the board of directors to the expiration date of the term of the 12th board of directors.
On April 28, 2025, the company held the second extraordinary shareholders' meeting in 2025 and by-elected Ms. Wang Yihui as a non-independent director of the 12th board of directors of the company. The term of office shall commence from the date of review and approval by this shareholders' meeting and shall end on the date of expiration of the term of the 12th Board of Directors.
On September 1, 2025, the company held the 15th meeting of the 12th Board of Directors, which reviewed and approved the "Proposal on the Appointment of the Company's Deputy General Manager" and the "Proposal on the Appointment of the Company's Financial Director". It was agreed to appoint Mr. Han Tongmin as the company's deputy general manager and Mr. Dang Guojun as the company's financial director. The terms are from the date of review and approval by the board of directors to the expiration of the term of the 12th board of directors.
The above nomination, election, and appointment processes comply with the requirements of the "Shanghai Stock Exchange Stock Listing Rules" and the "Articles of Association". It has not been found that he is not prohibited from holding relevant positions under the "Company Law" and other relevant laws and regulations and the "Articles of Association". There is also no situation in which he has been banned from the securities market by the China Securities Regulatory Commission and is still in the ban period.
(7) Implementation of information disclosure
The company's information disclosure adheres to the principle of "truth, accuracy and completeness". The company's relevant information disclosure personnel strictly follow the requirements of laws and regulations to perform information disclosure work. The company's major events have fulfilled their information disclosure obligations in a timely manner. During the reporting period, the company disclosed 124 announcements of various types throughout the year, including 4 regular reports, 120 temporary announcements and related normative documents, fully protecting investors' right to know. The information disclosed by the company is true, accurate and complete, and there are no false records, misleading statements or major omissions.
(8) Investor returns
During the reporting period, in accordance with the provisions of the Company Law and the Company's Articles of Association, and upon the recommendation of the management team and discussions with the Board of Directors, and in order to fully consider the needs of the company's normal operations and sustainable development, the company proposed the following profit distribution plan: The company will not distribute profits in 2025, will not issue shares, and will not convert public reserve funds into share capital. I believe that: the company's profit distribution plan complies with relevant laws, regulations and the provisions of the Articles of Association; the company has fully considered various factors such as the needs of normal operations and sustainable development, and formulated a profit distribution plan that is in line with the company's current operating status and development, and does not harm the interests of small and medium-sized shareholders.
4. Overall evaluation and suggestions
As an independent director of the company in 2025, I strictly followed the "Measures for the Administration of Independent Directors of Listed Companies" and other laws and regulations and the relevant provisions of the "Articles of Association", actively and effectively performed the duties of an independent director, exercised my voting rights independently, prudently and objectively, expressed fair and objective independent opinions on major matters reviewed by the company's board of directors, and effectively safeguarded the legitimate rights and interests of the company and all shareholders.
In 2026, I will continue to be diligent and conscientious, strive to increase on-site working hours, conduct on-site investigations in various aspects, and gain a deeper understanding of the company's production, operations and development, provide decision-making reference suggestions to the company's board of directors, improve the company's board of directors' scientific decision-making capabilities, better safeguard the legitimate rights and interests of the company and all shareholders, and play an active role in the company's sustainable, stable and healthy development.
This is reported.
Independent Director of Hangzhou Tianmushan Pharmaceutical Co., Ltd.: Sheng Xiaofang
April 17, 2026