Jiangsu Shentong Valve Co., Ltd. Independent Director System

Jiangsu Shentong Valve Co., Ltd.
independent director system
(Revised at the 11th Meeting of the 6th Board of Directors)

Chapter I General Provisions

Article 1 In order to further improve the governance structure of Jiangsu Shentong Valve Co., Ltd. (hereinafter referred to as the "Company") and promote the standardized operation of the Company, refer to the China Securities Regulatory Commission (hereinafter referred to as the "China Securities Regulatory Commission") "Administrative Measures for Independent Directors of Listed Companies" (hereinafter referred to as the "Independent Directors Measures"), "Shenzhen Stock Exchange Listed Companies Self-Regulatory Guidelines No. 1-Main Board" Standardized Operation of Listed Companies "and other laws, regulations, regulatory documents, and" Articles of Association of Jiangsu Shentong Valve Co., Ltd. "(hereinafter referred to as" Articles of Association "), etc. provisions, develop this system.

Article 2 An independent director is a director who does not hold any position other than a director of the Company and does not have a direct or indirect interest in the Company, its major shareholders or actual controllers, or other directors who may affect their independent and objective judgment.

Article 3 The board of directors of a company shall include at least 1/3 independent directors.

The company has an audit committee on the board of directors. The members of the audit committee shall be directors who are not senior managers of the company, of which more than half shall be independent directors, and accounting professionals among the independent directors shall be the convener.
The company has special committees on nomination, compensation and appraisal, and strategy in the board of directors. The Nomination Committee,
A majority of the independent directors of the Remuneration and Appraisal Committee shall serve as convenors.

Article 4 Independent directors shall have the duty of loyalty and diligence to the Company and all shareholders.

Independent directors shall conscientiously perform their duties in accordance with laws, administrative regulations, the provisions of the China Securities Regulatory Commission, the business rules of the stock exchange and the articles of association of the company, and play a role in participating in decision-making, supervision and checks and balances, and professional consulting in the board of directors, safeguard the overall interests of listed companies, and protect the legitimate rights and interests of small and medium shareholders.
Independent directors shall perform their duties independently and shall not be affected by the company's major shareholders, actual controllers or other units or individuals that have an interest in the company. Independent directors shall perform their duties as directors in accordance with the law, fully understand the operation of the company and the contents of the issues of the board of directors, safeguard the interests of the company and all shareholders, and pay special attention to the protection of the legitimate rights and interests of small and medium shareholders. In the event of conflicts between shareholders or directors of the company, which have a significant impact on the company's operation and management, independent directors shall actively perform their duties and safeguard the overall interests of the company.
In principle, independent directors can serve as independent directors in up to three domestic listed companies (including the company), and ensure that they have sufficient time and energy to effectively perform the duties of independent directors.

Article 5 Independent directors shall work for the company for no less than 15 working days each year, and ensure that they have sufficient time and energy to effectively perform the duties of independent directors.

Article 6 The Company shall have three independent directors, including one accounting professional.

The accounting professionals referred to in the preceding paragraph shall have rich professional knowledge and experience in accounting and meet at least one of the following conditions:
The (I) is qualified as a certified public accountant;
(II) senior professional title, associate professor or above, doctor's degree in accounting, auditing or financial management;
(III) has a senior title in economic management and has more than 5 years of full-time work experience in accounting, auditing or financial management.

Article 7 If an independent director does not meet the conditions for independence or other circumstances that are not suitable for performing the duties of an independent director, resulting in the company's independent directors failing to reach the number specified in the Articles of Association, the company shall supplement the number of independent directors in accordance with the regulations.

Article 8 Independent directors and persons who intend to serve as independent directors shall participate in the training organized by the China Securities Regulatory Commission and its authorized agencies in accordance with the requirements of the "Measures for Independent Directors.

Chapter II Independence Requirements and Qualifications of Independent Directors

Article 9 An independent director shall meet the following basic conditions:

(I) are qualified to serve as directors of listed companies in accordance with laws, administrative regulations and other relevant provisions;

(II) have the independence required by the Measures for Independent Directors;

(III) have the basic knowledge of the operation of listed companies, familiar with the relevant laws, administrative regulations, rules and regulations;

(IV) have more than 5 years of legal, accounting or economic work experience necessary to perform the duties of an independent director;

The (V) has good personal morality, there is no situation that the relevant laws and regulations shall not be nominated as a director of a listed company, and shall not have the following bad records:

1. Those who have been subject to administrative penalties by the CSRC or criminal penalties by judicial authorities for securities and futures violations within the last 36 months;
2. For suspected securities and futures crimes, the China Securities Regulatory Commission has filed a case for investigation or the judicial organ has filed a case for investigation, and has not yet reached a clear conclusion;
3. Those who have been publicly denounced by the stock exchange or criticized in a circular for more than three times in the last 36 months;
4. Bad records such as major breach of trust;
5. During the past period of serving as an independent director, the board of directors has been asked by the board of directors to be dismissed by the general meeting of shareholders for failing to attend or entrust other independent directors to attend the board meeting for two consecutive times;
6. Other circumstances recognized by the Shenzhen Stock Exchange;

(VI) other conditions stipulated by laws, administrative regulations, the provisions of the China Securities Regulatory Commission, the business rules of the stock exchange and the articles of association of the company.

Article 10 Independent directors must be independent, and the following persons shall not serve as independent directors:

1. Personnel working in the company or affiliated enterprises of the company and their immediate family members and major social relations (immediate family members refer to spouses, parents, children, etc.; major social relations refer to brothers and sisters, parents-in-law, daughter-in-law and son-in-law, spouses of brothers and sisters, brothers and sisters of spouses, etc.);
2. Directly or indirectly hold more than 1% of the issued shares of the company or the natural person shareholders among the top 10 shareholders of the company and their spouses, parents and children;
3. Persons and their spouses, parents and children who hold positions in shareholder units that directly or indirectly hold more than 5% of the company's issued shares or in the company's top 5 shareholder units;
4. Persons working in the subsidiary enterprises of the controlling shareholder and the actual controller of the company and their spouses, parents and children;
5. Persons who have significant business dealings with the company and its controlling shareholders, actual controllers or their respective subsidiaries, or persons who hold positions in units with significant business dealings and their controlling shareholders or actual controllers;
6. Personnel who provide financial, legal, consulting, recommendation and other services for the company and its controlling shareholders, actual controllers or their respective affiliated enterprises, including but not limited to all the project team members of the intermediary institutions providing services, reviewers at all levels, personnel who sign on the report, partners, directors, senior managers and key persons in charge;
7. Persons who have had the circumstances listed in Items 1 to 6 in the last 12 months;
8. Other personnel who do not have independence as stipulated by laws, administrative regulations, the provisions of the China Securities Regulatory Commission, the business rules of the stock exchange and the articles of association of the company.

(1) The subsidiary enterprises of the controlling shareholder and actual controller of the company in items 4 to 6 of the preceding paragraph do not include enterprises that are controlled by the same state-owned assets management institution as the company and do not form an associated relationship with the company in accordance with relevant regulations.

(2) The independent directors shall conduct an annual self-examination of their independence and submit the self-examination to the Board of Directors. The Board of Directors shall evaluate the independence of the incumbent independent directors annually and issue a special opinion, which shall be disclosed at the same time as the annual report.

Chapter III Procedures for the Nomination, Election and Replacement of Independent Directors

The nomination, election and replacement of independent directors shall be carried out in accordance with the law and in a standardized manner.

The company's board of directors, board of supervisors, and shareholders who individually or collectively hold more than 1% of the company's issued shares (hereinafter referred to as "nominators") may propose candidates for independent directors and be elected by the general meeting of shareholders. The nominators specified in the preceding paragraph shall not nominate persons with whom they have an interest or other persons closely related to the independent performance of their duties as candidates for independent directors.

Before being nominated, an independent director shall obtain an independent director qualification certificate recognized by the CSRC. If it has not yet been obtained, it shall undertake in writing to participate in the latest independent director training and obtain the independent director qualification certificate recognized by the Shenzhen Stock Exchange.

The nominee of an independent director shall obtain the consent of the nominee prior to nomination. The nominator shall fully understand the nominee's occupation, educational background, professional title, detailed work experience, all part-time jobs, etc., and express opinions on his qualifications and independence as an independent director. The nominee shall make a public statement that there is no relationship between himself and the company that affects his independent and objective judgment. Before the general meeting of shareholders for the election of independent directors, the board of directors of the company shall disclose the above contents in accordance with the provisions.

For the candidates of independent directors raised by the stock exchange, the company shall not submit them to the general meeting of shareholders for election as independent directors. If it has been submitted to the general meeting of shareholders for consideration, the proposal shall be canceled.

The term of office of independent directors is the same as that of other directors of the company, and the term of office expires. They can be re-elected, but the re-election period shall not exceed six years. If an independent director of the same listed company has served continuously for six years, he shall not be nominated as a candidate for independent director of the company within 36 months from the date of the occurrence of the fact. Independent directors who have served prior to the IPO are counted continuously.

The nomination committee of the company shall examine the qualifications of the nominees and form clear examination opinions.

Before the general meeting of shareholders for the election of independent directors is held, the board of directors of the company shall publish the relevant contents in accordance with the provisions of Article 13 and the preceding paragraph of these rules, and submit all the relevant materials of the nominees to the stock exchange. If the stock exchange raises an objection, the company shall not submit it to the general meeting of shareholders for election.

Before the expiration of the term of office of an independent director, the company may remove him from office through legal procedures. In the case of early dismissal, the company shall promptly disclose the specific reasons and basis. If the independent directors disagree, the company shall disclose it in a timely manner.

If an independent director does not comply with the provisions of paragraph 1 or 2 of Article 9 of this system, he shall immediately stop performing his duties and resign from his post. If he fails to resign, the board of directors shall immediately remove him from office in accordance with the provisions after he knows or should know 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 in the board of directors or its special committees not conforming to the provisions of these rules or the articles of association, or there is a lack of accounting professionals among the independent directors, the company shall complete the by-election within 60 days from the date of occurrence of the aforementioned facts.
Independent directors should attend the board meeting in person. If they are unable to attend the meeting in person for some reason, the independent directors shall review the meeting materials in advance, form a clear opinion, and entrust other independent directors to attend on their behalf in writing.
If an independent director fails to attend the board meeting in person for two consecutive times and does not entrust other independent directors to attend on his behalf, the board of directors shall propose to convene a general meeting of shareholders to remove the independent director within 30 days from the date of the occurrence of the fact.

The board of directors of the company shall, at the latest, submit the occupation, educational background, professional qualifications, detailed work experience, all part-time jobs and other detailed information of the candidates for independent directors to the website of Shenzhen Stock Exchange for publicity, with a publicity period of three trading days.

The board of directors and the board of supervisors shall have the right to request the general meeting of shareholders to remove or replace an independent director in the following circumstances:

The (I) does not meet the qualifications for independent director, and I have not tendered my resignation;
(II) failing to attend the meetings of the board of directors in person for three consecutive times;
Other circumstances that are not suitable for continuing to serve as independent directors as stipulated in (III) laws, administrative regulations and regulatory documents.

An independent director may resign before the expiration of his term of office. The resignation of an independent director shall submit a written resignation report to the board of directors, explaining any circumstances related to his resignation or deemed necessary to attract the attention of the company's shareholders and creditors. The company shall disclose the reasons and concerns of the independent director's resignation.

If the proportion of independent directors in the company's board of directors or its special committees does not comply with the provisions of the Articles of Association and the Measures for Independent Directors due to the resignation of independent directors, or if there is a lack of accounting professionals among the independent directors, the independent directors who intend to resign shall Continue to perform duties until the date when the new independent director is elected.

Chapter IV Functions and Powes of Independent Directors

Independent directors perform the following duties:

Participate in the decision-making of the board of directors and express clear opinions on the matters under discussion;

Supervise the potential major conflicts of interest between listed companies and their controlling shareholders, actual controllers, directors and senior managers listed in Article 23, Article 26, Article 27 and Article 28 of the measures for independent directors, so as to promote the decision-making of the board of directors to conform to the overall interests of the listed company and protect the legitimate rights and interests of small and medium-sized shareholders;

Provide professional and objective suggestions for the company's business development, and promote the improvement of the decision-making level of the board of directors;

Other duties prescribed by laws, administrative regulations, the CSRC and the Articles of Association.

Independent directors shall attend board meetings on time to understand the production, operation and operation of the company, and take the initiative to investigate and obtain the information and materials needed to make decisions. Independent directors shall attend the meeting of the board of directors in person, and if they are indeed unable to attend in person, the independent directors shall entrust other independent directors to attend on their behalf.

Independent directors shall submit an annual report on their work to the general meeting of shareholders of the company, explaining the performance of their duties.

In order to give full play to the role of independent directors, in addition to the powers conferred on directors by the Company Law and other relevant laws and regulations, the Company shall also confer the following special powers on independent directors:

(I) major related party transactions (referring to related party transactions with a total amount of more than 3 million yuan or more than 5% of the company's latest audited net asset value, or related party transactions that must be submitted to the company's general meeting of shareholders for deliberation in accordance with laws and regulations and the articles of association) shall be approved by independent directors in advance. Before independent directors make a judgment, they may employ an intermediary to issue an independent financial consultant's report as the basis for their judgment;
(II) express independent opinions on matters that may harm the rights and interests of listed companies or minority shareholders;
(III) propose to the board of directors to convene an extraordinary general meeting;
(IV) soliciting opinions from minority shareholders, proposing profit distribution proposals and submitting them directly to the Board of Directors for consideration;
The (V) proposes to convene a board of directors;
(VI) publicly soliciting voting rights from shareholders before the general meeting of shareholders;
The (VII) independently engages external auditors and consultants to audit and consult on specific matters of the Company.
The exercise of the above (I) to (VI) functions and powers by independent directors shall be approved by more than 1/2 independent directors, and the exercise of the (VII) functions and powers shall be approved by all independent directors. The expenses of the independent directors for hiring intermediaries and other expenses required for the exercise of their powers shall be borne by the listed company.
If an independent director exercises the functions and powers listed in the first paragraph of this article, the company shall disclose it in a timely manner. If the proposal listed in the first paragraph of this article is not adopted or the above-mentioned functions and powers cannot be exercised normally, the company shall disclose the relevant information.
Where laws, administrative regulations and the CSRC provide otherwise, such provisions shall prevail.

In addition to performing the above duties, independent directors shall also express independent opinions to the board of directors or the general meeting of shareholders on the following matters:

Nomination, appointment and removal of directors;

Appointing and dismissing senior management personnel;

Remuneration of directors and senior management personnel;

hiring and dismissing accounting firms;

Changes in accounting policies, changes in accounting estimates or corrections of material accounting errors for reasons other than changes in accounting standards;

The company's financial accounting report, internal control by the accounting firm issued a non-standard unqualified audit opinion;

Internal control evaluation report;

The scheme of change commitment of relevant parties;

The impact of the preferred stock issue on the equity of various types of shareholders of the company;

The formulation, adjustment, decision-making procedures, implementation and information disclosure of the Company's cash dividend policy, as well as whether the profit distribution policy harms the legitimate rights and interests of small and medium-sized investors;

(xi) Significant matters requiring disclosure of connected transactions, provision of guarantees (except for guarantees for subsidiaries within the scope of the consolidated financial statements), entrusted financial management, provision of financial assistance, matters relating to the use of proceeds, independent changes in the Company's accounting policies, and investments in equities and their derivatives;
(xii) Major asset restructuring plans, management buyouts, equity incentive plans, employee stock ownership plans, share repurchase plans, and debt-to-equity schemes for related parties of listed companies;
(xiii) The company intends to decide that its shares are no longer traded on the stock exchange;
(xiv) Matters that the independent directors consider to be likely to harm the legitimate rights and interests of minority shareholders;
(15) Other matters stipulated in relevant laws and regulations, relevant provisions of the stock exchange and the articles of association of the company.
Independent directors should express one of the following types of opinions on the above matters: consent; reservations and their reasons; objections and their reasons; inability to express an opinion and its obstacles, and the opinions expressed should be clear and clear.
If the independent directors disagree and cannot reach an agreement, the board of directors shall record the opinions of each independent director separately in the minutes of the meeting.
If the matters related to the first paragraph of this article 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 disclose the opinions of each independent director separately.
If an independent director votes against or abstained from voting on a motion of the board of directors, he shall state the specific reasons and basis, the legal compliance of the matters involved in the motion, the possible risks and the impact on the rights and interests of the company and minority shareholders. When disclosing the resolution of the board of directors, the company shall also disclose the dissenting opinions of the independent directors, which shall be stated in the resolution of the board of directors and the minutes of the meeting.

Where an independent director makes an independent opinion, the opinion shall be clear and clear and shall at least include the following:

Basic information on major issues;

The basis for expressing opinions, including the procedures performed, the verification documents, the contents of on-site inspection, etc;

Legal compliance with major matters;

The impact on the rights and interests of the Company and minority shareholders, the possible risks and the effectiveness of the measures taken by the Company;

Concluding observations issued, including concurrence, reservations and their reasons, objections and their reasons, inability to express an opinion and its obstacles.

The independent directors shall sign and confirm the independent opinions issued, and report the above opinions to the board of directors in a timely manner and disclose them at the same time as the relevant announcements of the company.

Independent directors shall work at the company's site for not less than 15 days each year.

In addition to attending the general meeting of shareholders, the board of directors and its special committees, and the special meetings of independent directors as required, independent directors can regularly obtain information on the company's operations, listen to management reports, and communicate with the person in charge of the internal audit institution and the accounting firm that undertakes the audit business of listed companies. The firm and other intermediary agencies perform their duties in various ways, such as on-site inspections, and communication with small and medium shareholders.

The board of directors of the company and its special committees and the special meetings of independent directors shall make minutes of the meetings in accordance with the regulations, and the opinions of the independent directors shall be stated in the minutes of the meetings. The independent directors shall sign and confirm the minutes of the meeting.

Independent directors shall make work records and record in detail the performance of their duties. The information obtained by independent directors in the course of performing their duties, the minutes of relevant meetings, and the records of communications with the staff of the company and intermediary agencies, etc., constitute an integral part of the work record. For the important contents of the work record, the independent director 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 shall be kept for at least ten years.

In order to ensure that independent directors effectively exercise their powers, the company shall provide the working conditions necessary for independent directors to perform their duties. The secretary of the board of directors of the company shall actively provide assistance to the independent directors in performing their duties, such as introducing information and providing materials, regularly reporting the operation of the company, and organizing on-site visits by independent directors when necessary. If the independent opinions, proposals and written explanations issued by the independent directors should be announced, the company shall promptly assist in handling the announcement.

Independent directors shall submit an annual report to the company's annual general meeting of shareholders, explaining the performance of their duties. The annual debriefing report shall include the following contents:

The number of times, manner and voting of the board of directors, the number of times to attend the general meeting of shareholders;

Participation in the work of special committees of the Board of Directors and special meetings of independent directors;

Deliberating on the matters listed in Article 23, Article 26, Article 27 and Article 28 of the Measures for Independent Directors and exercising the special functions and powers of independent directors listed in the first paragraph of Article 18 of the Measures for Independent Directors;

Significant matters, methods and results of communication with the internal audit institution and the accounting firm undertaking the company's audit business on the company's financial and business conditions;

Communication with small and medium shareholders;

Time and content of working on site;

Other circumstances in the performance of duties.

The annual report of independent directors shall be disclosed at the latest when the company issues the notice of the annual general meeting of shareholders.

Chapter V The guarantee of the performance of independent directors.

The company shall ensure that independent directors have the same right to know as other directors. For matters that must be decided by the board of directors, the company must notify the independent directors in advance according to the statutory time and provide sufficient information at the same time. If the independent directors consider that the information is insufficient, they may request supplement. When 2 or more independent directors believe that the information is insufficient or the argument is unclear, they may jointly propose in writing to the board of directors to postpone the convening of the board meeting or postpone the consideration of the matter, and the board of directors shall adopt it.

When an independent director exercises his powers, the relevant personnel of the company shall actively cooperate and shall not refuse, hinder or conceal, or interfere with his or her independent exercise of his or her powers. If an independent director encounters obstacles in the exercise of his powers in accordance with the law, he 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 solutions of the obstacles in the work record; if the obstacles still cannot be eliminated, he may report to the China Securities Regulatory Commission and the stock exchange.

The costs of the independent directors engaging intermediaries and other expenses required for the exercise of their powers shall be borne by the Company.

The company shall give appropriate allowances to independent directors. The standard of allowance shall be formulated by the board of directors, approved by the general meeting of shareholders, and disclosed in the annual report of the company. In addition to the aforementioned allowances, independent directors should not obtain additional, undisclosed other benefits from the company and its major shareholders or interested institutions and personnel.

The Company may establish the necessary liability insurance system for independent directors to reduce the risks that may arise from the normal performance of their duties by independent directors.

If an independent director discovers that the company has one of the following circumstances, he shall actively perform his due diligence obligations and report to the Shenzhen Stock Exchange in a timely manner, and if necessary, he shall hire an intermediary agency to conduct a special investigation:

Important matters are not submitted to the board of directors or the general meeting of shareholders for deliberation as required;

Failure to fulfill the obligation of information disclosure in a timely manner;

There are false records, misleading statements or material omissions in the disclosure of information;

Other suspected violations of laws and regulations or damage to the legitimate rights and interests of minority shareholders.

Chapter VI Supplementary Provisions

Matters not covered in this system shall be implemented in accordance with relevant laws, regulations, regulatory documents and the company's articles of association; if they conflict with laws, regulations, regulatory documents or the company's articles of association promulgated in the future, the laws, regulations, regulatory documents and The provisions of the company's articles of association shall prevail.

The Board of Directors of the Company is responsible for the interpretation and revision of this system.

This system shall be formally implemented from the date of adoption of the general meeting of shareholders of the company.

Board of Directors of Jiangsu Shentong Valve Co., Ltd.

10 December 2023