Hengdi Pharmaceutical: 12-Cumulative Voting System Implementation Rules
Cumulative voting system implementation details
September 2025 Hubei Hengdi Pharmaceutical Co., Ltd. Implementation Rules of Cumulative Voting System Hubei Hengdi Pharmaceutical Co., Ltd.
Cumulative voting system implementation details
(September 2025)
Chapter 1 General Provisions
Article 1 In order to further improve the legal person governance system of Hubei Hengdi Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), standardize the election of the company's directors, and protect the interests of the company's small and medium-sized shareholders, these implementation rules are formulated in accordance with the relevant provisions of the "Company Law of the People's Republic of China", the Articles of Association of Hubei Hengdi Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association") and other laws, regulations, normative documents and corporate governance documents.
Article 2 The cumulative voting system referred to in these Implementation Rules refers to a voting method adopted by the company’s shareholders’ meeting when electing two or more directors. That is, when a company's shareholders' meeting elects directors, each valid voting share held by a shareholder has voting rights equal to the total number of directors to be elected at the shareholders' meeting, and the voting rights owned by a shareholder are equal to the product of the number of shares held by the shareholder and the total number of directors to be elected. Shareholders can either use all their voting rights to collectively vote for one candidate director, or they can disperse their voting rights and vote for several candidate directors.
Article 3 The number and structure of directors elected by the shareholders’ meeting shall comply with the provisions of the Articles of Association.
Article 4 Before the shareholders' meeting votes on director candidates, the host of the meeting should clearly inform the shareholders attending the meeting that cumulative voting will be implemented for candidate directors, and the board of directors must prepare ballots suitable for cumulative voting. The secretary of the board of directors shall explain and explain the cumulative voting method and the method of filling out the ballot.
Article 5 The “directors” mentioned in these implementation rules include independent directors and non-independent directors. Directors who are employee representatives shall be democratically elected or replaced by the company's employees, and the relevant provisions of these Implementation Rules shall not apply.
Chapter 2 Nomination of Director Candidates
Article 6 Within the number of people specified in the company's articles of association and based on the number of people to be elected, the nomination committee of the board of directors will review the qualifications of the director candidates and form a written resolution, and then submit a recommended list of director candidates to the board of directors. After the resolution of the board of directors is passed, the board of directors will propose director candidates to the shareholders' meeting and submit them to the shareholders' meeting for election.
Article 7 Candidates for non-employee representative directors are nominated by the board of directors. Shareholders who individually or jointly hold more than 3% of the total number of voting shares of the company's outstanding Hubei Hengdi Pharmaceutical Co., Ltd. Cumulative Voting System Implementation Rules can also nominate in writing, but the number of director candidates nominated by each individual or jointly nominating shareholder cannot exceed the number of candidates to be elected.
Article 8 Independent directors are nominated by the company's board of directors and shareholders who individually or jointly hold more than 1% of the company's outstanding voting shares. 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.
Article 9 The nominator shall obtain the consent of the nominee before making a nomination. Director candidates should make a written commitment before the shareholders' meeting, agreeing to accept nomination and disclose their detailed information, promise that the information disclosed publicly by the director candidates is true and complete, and ensure that they will effectively perform their duties as directors after being elected. Candidates for independent directors should also make a statement that there is no relationship between themselves and the company that would affect their independent and objective judgment.
Article 10 The nominee shall submit detailed personal information to the company's board of directors, including but not limited to: name, gender, age, nationality, educational background, work experience, part-time job status, relationship with the nominee, whether there are any circumstances that make him or her unsuitable to serve as a director, etc. Candidates for independent directors should also explain whether they have the qualifications and independence to serve as independent directors.
Article 11 After receiving the information of the nominee, the company's board of directors shall carefully review the nominee's qualifications in accordance with the provisions of the Company Law. The nominee who meets the qualifications after review shall become a director candidate and submit a separate proposal to the shareholders' meeting for review. Proposals that do not meet the regulations shall not be submitted to the shareholders' meeting for review, but explanations and explanations shall be provided at the shareholders' meeting.
Article 12 When the sum of the number of director candidates proposed by all proposals exceeds the number of candidates stipulated in the Articles of Association, a differential election shall be conducted.
Chapter 3 Voting for Director Election
Article 13 The convener of the shareholders' meeting must prepare a ballot suitable for cumulative voting. The ballot should indicate: the name of the meeting, the name of the director candidate, the name of the shareholder, the name of the agent, the number of shares held, the number of votes cast in cumulative voting, the voting time, and a description and explanation of the cumulative voting method, ballot filling method, and vote counting method in a prominent position on the ballot.
Article 14 Separate voting methods shall be adopted for the election of independent directors and non-independent directors:
(1) When electing independent directors, the number of voting rights that each shareholder is entitled to obtain is equal to the product of the shares held by him multiplied by the number of independent directors to be elected. This number of votes can only be cast for independent director candidates;
(2) When electing non-independent directors, the number of voting rights that each shareholder is entitled to obtain is equal to the product of the number of shares held by the shareholder multiplied by the number of non-independent directors to be elected, and this number of votes can only be cast for non-independent director candidates;
Article 15 The number of votes in the cumulative voting system is determined as follows:
(1) The product of the number of voting shares held by each shareholder multiplied by the number of directors elected at this shareholders’ meeting shall be the cumulative number of votes cast by that shareholder;
(2) When the shareholders' meeting conducts multiple rounds of elections, the cumulative votes of shareholders shall be recalculated based on the number of directors to be elected in each round of elections;
(3) The secretary of the company's board of directors shall announce the cumulative number of votes cast by shareholders before each round of cumulative voting. If any shareholder, independent director of the company, scrutineer of the shareholders' meeting or witnessing lawyer has any objection to the announced results, they shall immediately verify the results.
Article 16 When shareholders vote, they shall follow the following voting methods:
(1) When shareholders vote, the cumulative number of votes cast for each director candidate shall be indicated in the voting column of each director candidate they elect. Votes are for yes only, no objections and abstentions;
(2) All shareholders have the right to vote the accumulated votes individually or collectively for any director candidate according to their own wishes (the agent should comply with the instructions of the principal's authorization letter);
(3) When the total number of votes cast by a shareholder for a certain director candidate or candidates in a concentrated or dispersed manner is greater than the cumulative number of votes cast, the shareholder's vote will be invalid and shall be deemed to have given up the vote;
(4) When the total number of votes cast by a shareholder for a certain director candidate or candidates in a concentrated or dispersed manner is equal to or less than the cumulative number of votes cast, the shareholder's vote is valid, and the difference between the cumulative votes and the actual number of votes shall be deemed to have been abandoned.
Chapter 4 Election of Directors
Article 17 After the voting is completed, the on-site shareholders' meeting supervisor will count the votes, and the vote counter will upload the on-site voting results to the online voting service system for combined statistics. After obtaining the combined on-site and online voting statistical results, the combined on-site voting and online voting results of each director candidate will be announced in the form of a shareholders' meeting resolution.
Article 18 The number and structure of directors elected by the shareholders' meeting shall comply with the provisions of the company's articles of association. Director candidates are ranked in descending order by their total number of votes. Hubei Hengdi Pharmaceutical Co., Ltd. Cumulative Voting System Implementation Rules Candidates who are ranked higher than the number of directors to be elected this time (inclusive) are elected. The number of votes received by each elected director must exceed one-half of the valid voting shares held by shareholders attending the shareholders' meeting (based on the number of unaccumulated shares).
Article 19 If the number of votes obtained by each director candidate exceeds one-half of the valid voting shares held by shareholders attending the shareholders' meeting (based on the number of unaccumulated shares), and the number of director candidates does not exceed the number of candidates for election, each director candidate will be elected. If the number of director candidates elected at the shareholders' meeting exceeds the number of candidates to be elected, the total number of votes received by the candidates will be arranged from high to low, and the director candidate ranked before (including this number) the number of directors to be elected this time will be elected. If the number of elected directors is less than the number of directors to be elected, but the number of elected directors is equal to or exceeds more than two-thirds of the number of board members specified in the company's articles of association, the vacancy will be filled by election at the next shareholders' meeting. If the number of elected directors is less than the number of directors to be elected and less than two-thirds of the number of board members specified in the company's articles of association, a second round of elections for unelected director candidates shall be held. If the above requirements are still not met after the second round of elections, another shareholders' meeting shall be held within two months after the end of this shareholders' meeting to elect the vacant directors.
Article 20 If two or more candidates have the same number of votes and the total number of votes is the smallest among the candidates to be elected and the candidate cannot be decided, a second round election will be held for those candidates. If the candidate cannot be determined in the second round of elections, another election shall be held at the next shareholders' meeting. If as a result, the number of board members falls short of more than two-thirds as stipulated in the company's articles of association, another shareholders' meeting shall be held within two months after the conclusion of the shareholders' meeting to elect the vacant directors.
Chapter 5 Supplementary Provisions
Article 21 These Implementing Rules will come into effect after being reviewed and approved by the company’s shareholders’ meeting.
Article 22 The Board of Directors is responsible for interpreting and revising these implementation rules.
Article 23 Matters not covered in these Implementing Rules shall be governed by the provisions of relevant laws, regulations and the Company's Articles of Association; if these Implementing Rules conflict with laws, administrative regulations, rules, normative documents or the Company's Articles of Association, the provisions of the laws, administrative regulations, rules, normative documents or the Company's Articles of Association shall prevail.
Hubei Hengdi Pharmaceutical Co., Ltd. Board of Directors
September 2025