Aoxiang Pharmaceutical Independent Director Working System (revised in October 2025)
Zhejiang Aoxiang Pharmaceutical Co., Ltd.
Independent director work system
Chapter 1 General Provisions
Article 1 In order to further improve the governance structure of Zhejiang Aoxiang Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), effectively protect the interests of small and medium-sized shareholders and stakeholders, and promote the company's standardized operations, this system is formulated in accordance with the provisions of the Company Law of the People's Republic of China (hereinafter referred to as the "Company Law"), the "Administrative Measures for Independent Directors of Listed Companies", the Shanghai Stock Exchange Stock Listing Rules and other relevant laws and regulations, and the "Articles of Association of Zhejiang Aoxiang Pharmaceutical Co., Ltd." (hereinafter referred to as the "Articles of Association").
Article 2 Independent directors refer to directors who do not hold any other positions in the company except as independent directors, and who have no relationship with the company where they are employed and its major shareholders that may hinder their independent and objective judgment.
Article 3 Independent directors shall perform their duties independently and impartially, without being influenced by the listed company's major shareholders, actual controllers or other units and individuals with an interest in the company.
If it is found that there are circumstances affecting the independence of the matters under review, they should declare it to the company and withdraw from it. If any situation that obviously affects independence occurs during the term of office, the company should be notified in a timely manner, solutions should be proposed, and resignation should be offered if necessary.
Chapter 2 Conditions for serving as independent directors
Article 4 To serve as an independent director, one 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 Chapter 3 of this system;
(3) Have basic knowledge of company operations and be familiar with relevant laws, administrative regulations, rules and rules;
(4) Have more than five years of legal, accounting, economic or other 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.
Chapter 3 Independence of Independent Directors
Article 5 The following persons are not allowed to serve as independent directors:
(1) Persons working in the company or its affiliated enterprises and their immediate relatives and major social relations (immediate relatives refer to spouses, parents, and children; major 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 immediate family members 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 immediate family members;
(4) Personnel working in affiliated enterprises of the company’s controlling shareholder or actual controller and their immediate family members;
(5) Personnel who have major business dealings with the company, its controlling shareholder, actual controller or their respective subsidiaries, or persons who hold positions in units that have 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, China Securities Regulatory Commission, stock exchange business rules and the Articles of Association.
The subsidiaries of the company's controlling shareholders and actual controllers in items 4 to 6 of the preceding paragraph do not include enterprises controlled by the same state-owned asset management institution as the company and which are not affiliated with the company in accordance with relevant regulations.
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.
Article 6 Candidates for independent directors shall have good personal moral character, shall not have any circumstances that prohibit being nominated as directors of the company as stipulated in the Articles of Association, and shall not have the following bad records:
(1) Subject to administrative penalties from the China Securities Regulatory Commission or criminal penalties from judicial authorities due to securities and futures violations in the past 36 months;
(2) Being investigated by the China Securities Regulatory Commission or judicial authorities for suspected securities and futures crimes, but no clear conclusion has been reached;
(3) Having been publicly condemned by the stock exchange or criticized in three or more notifications in the past thirty-six months;
(4) Bad records such as major breach of trust;
(5) During the previous period of serving as an independent director, the board of directors requested the shareholders' meeting to remove him from office due to failure to attend in person or to entrust other independent directors to attend board meetings twice in a row, and the period was less than 12 months;
(6) Other circumstances determined by the China Securities Regulatory Commission or the stock exchange.
Chapter 4 Nomination, Election and Replacement of Independent Directors
Article 7 The company's board of directors and shareholders who individually or collectively hold 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 above nominators shall not nominate persons who have an interest in them or persons who have other close relations that may affect their 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.
If the 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 8 Nominators of independent directors shall obtain the consent of the nominee before nomination. The nominator should fully understand the nominee's occupation, academic qualifications, professional titles, detailed work experience, all part-time jobs, and whether there are any bad records such as major breach of trust, etc., and express opinions on his qualifications and independence to serve as an independent director. The nominee should make a public statement that there is no relationship between himself and the company that affects his independent and objective judgment. The Nomination Committee shall review the nominee's qualifications and formulate clear review opinions. Before the shareholders' meeting to elect independent directors is convened, the company's board of directors shall announce the above information in accordance with regulations.
Article 9 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 accounting professionals mentioned in the preceding paragraph refer to persons who meet at least one of the following conditions:
(1) Possess 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 five years of full-time work experience in professional positions such as accounting, auditing or financial management.
Article 10 Before the shareholders' meeting to elect independent directors is convened, the company shall disclose the information in accordance with the "Administrative Measures for Independent Directors of Listed Companies" and the requirements of this system and submit relevant materials of the nominees to the securities regulatory authorities at the same time. If the company's board of directors has objections to the relevant circumstances of the nominee, it shall also submit a written opinion to the board of directors.
The company shall not submit independent director candidates for election at the shareholders' meeting if the stock exchange raises objections.
Article 11 The company shall disclose the detailed information of independent director candidates before the shareholders' meeting to ensure that shareholders have sufficient understanding of the candidates when voting.
Article 12 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 13 If an independent director fails to attend two consecutive board meetings in person or entrusts another independent director to attend on his behalf, the board of directors shall propose to the shareholders' meeting to remove the independent director from his duties. Before the expiration of the term of an independent director, the company may remove him or her from office 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 comply with Article 5 of these Rules and the provisions of laws and regulations, 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.
Article 14 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 proportion of independent directors on the company's board of directors is lower than the statutory number or the number stipulated in the Articles of Association due to the resignation of an independent director, before the re-elected independent director takes office, or 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 new independent director's appointment. The company shall complete the by-election within 60 days from the date of resignation of the independent director.
Article 15 If an independent director resigns or is dismissed due to the circumstances specified in Article 12, resulting in the proportion of independent directors on the board of directors or its special committees not complying with the provisions of these Measures or the Articles of Association, or if 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 16 Independent directors and those who intend to serve as independent directors shall, in accordance with the requirements of the China Securities Regulatory Commission, participate in training organized by the China Securities Regulatory Commission and its authorized agencies.
Chapter 5 Responsibilities and Performance Methods of Independent Directors
Article 17 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 potential major conflicts of interest between the company and its controlling shareholders, actual controllers, directors, and senior managers listed in the "Measures for the Administration of Independent Directors of Listed Companies", urge the board of directors to make decisions 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 18 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, the company should also grant independent directors 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 will promptly disclose it. If the above powers cannot be exercised normally, the company will disclose the specific circumstances and reasons.
Article 19 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 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 20 The company's board of directors shall have an audit committee, a nomination committee, a remuneration and assessment committee, and a strategy committee. Independent directors shall serve on each committee, and independent directors shall account for more than half of the members of the audit committee, the nomination committee, and the remuneration and assessment committee and serve as the convener. The convener of the audit committee shall be an accounting professional.
Article 21 The independent opinions issued by independent directors on major matters shall at least include the following contents:
(1) Basic information on major matters;
(2) The basis for expressing opinions, including the procedures performed, documents verified, contents of on-site inspections, etc.;
(3) Legality and compliance of major matters;
(4) The impact on the rights and interests of the company and small and medium-sized shareholders, possible risks, and whether the measures taken by the company are effective;
(5) Concluding opinions issued. If they express reservations, objections or are unable to express an opinion on a major matter, the relevant independent directors shall clearly state the reasons and obstacles that prevent them from expressing an opinion.
Independent directors should sign and confirm the independent opinions issued, report the above opinions to the board of directors in a timely manner, and disclose them at the same time as the company's relevant announcements.
Article 22 Independent directors shall express one of the following types of opinions on the above-mentioned matters: agreement; reserved opinion and its reasons; objection and its reasons; inability to express an opinion and its obstacles.
Article 23 If the relevant matters are matters that need to be disclosed, the company shall announce the opinions of the independent directors. If the independent directors have differences of opinion and cannot reach an agreement, the board of directors shall separately disclose the opinions of each independent director.
Chapter 6 Obligations of Independent Directors
Article 24 Independent directors have the obligation of integrity and diligence towards the company and all shareholders. Independent directors should conscientiously perform their duties in accordance with the requirements of relevant laws, regulations and the Articles of Association, safeguard the overall interests of the company, and pay special attention to protecting the legitimate rights and interests of small and medium-sized shareholders from infringement. Independent directors shall perform their duties independently and shall not be influenced by the company's major shareholders, actual controllers, or other units or individuals with an interest in the company.
Article 25 In principle, independent directors can serve as independent directors in up to three domestic listed companies and ensure that they have sufficient time and energy to effectively perform their duties as independent directors.
Article 26 Independent directors shall attend board meetings on time, understand the company's production and operation, and proactively investigate and obtain information and information needed to make decisions. Independent directors shall submit an annual work report to the company's shareholders' meeting, explaining the performance of their duties.
The company shall regularly or irregularly hold meetings attended by all independent directors (hereinafter referred to as "special meetings of independent directors"). The matters listed in items 1 to 3 of paragraph 1 of Article 17 and Article 18 of these Measures shall be reviewed by 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.
Minutes of special meetings of independent directors shall be made in accordance with regulations, and the opinions of independent directors shall be stated in the minutes. Independent directors should sign and confirm the meeting minutes.
The company provides convenience and support for the convening of special meetings of independent directors.
Independent directors shall perform their duties in special committees of the company's board of directors in accordance with laws, administrative regulations, regulations of the China Securities Regulatory Commission, stock exchange rules 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 during the performance of their duties, they can promptly submit them to the special committee for discussion and review in accordance with the procedures.
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 independent directors' special meetings 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.
Chapter 7 Rights of Independent Directors and Obligations of the Company
Article 27 The company shall ensure that independent directors have the same right to know as other directors. For matters that require decision-making by the board of directors, the company must notify independent directors in advance within the statutory time and provide sufficient information. If the independent directors believe that the information is insufficient, they may request supplementary information. When two or more independent directors believe that the information is insufficient or the argument is unclear, they may jointly submit a written request to the board of directors to postpone the meeting of the board of directors or to postpone the consideration of the matter, and the board of directors shall adopt it.
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, provisions of the China Securities Regulatory Commission or the 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.
Article 28 The company shall provide the working conditions necessary for independent directors to perform their duties. The secretary of the company's board of directors should actively provide assistance to independent directors in performing their duties, such as introducing situations, providing materials, etc.
Article 29 When independent directors exercise their powers, relevant personnel of the company shall actively cooperate and shall not refuse, obstruct or conceal their duties, or interfere with their independent exercise of powers.
Article 30 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 31 The company shall provide appropriate allowances to independent directors. The standard of allowances should 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 32 The company may establish the necessary independent director liability insurance system to reduce the risks that may arise from the normal performance of duties by independent directors.
Chapter 8 Supplementary Provisions
Article 33 Matters not covered by this system shall be implemented in accordance with the relevant national laws, regulations, normative documents and the Articles of Association.
Article 34 This system will be implemented after approval by the company’s shareholders’ meeting. When this system is revised, the board of directors shall propose a revision plan and submit it to the shareholders' meeting for review and approval. It will not take effect until approved by the shareholders' meeting.
If this system conflicts with laws, regulations, normative documents promulgated by the country in the future or the Articles of Association after legal procedures, the provisions of the relevant national laws, regulations, normative documents and the Articles of Association shall be followed, and this system shall be revised in a timely manner.
Article 35 The Board of Directors is responsible for interpreting this system.
Zhejiang Aoxiang Pharmaceutical Co., Ltd.
October 30, 2025