Policy for Independent Directors of ADAMA Ltd.
Chapter I General Provisions
Article 1 This Policy is formulated for the purpose of improving the governancestructure of ADAMA Ltd. (hereinafter referred to as the “Company”) and promotingthe standardized operation of the Company in accordance with “Measures for theAdministration of Independent Directors of Listed Companies” of China SecuritiesRegulatory Commission (CSRC), the “Code of Governance for Listed Companies”, the“Shenzhen Stock Exchange's Self-disciplinary Supervision Guideline for ListedCompanies No. 1 - Standardized Operation of Listed Companies on the Main Board”,the “Articles of Association of the Company”, as well as other laws, regulations andnormative documents.
Article 2 An independent director is a director who does not hold any position otherthan that of a director in the Company and does not have any direct or indirect interestin the Company, its major shareholders or the actual controller that may affect his/herindependent and objective judgement.
Article 3 The independent directors shall be obliged to act in good faith and diligentlytowards the Company and all shareholders, and should conscientiously perform theirduties and play the roles of participating in decision-making, supervising and balancing,and professional consulting in the Board of Directors, so as to safeguard the interestsof the Company as a whole, and to protect the lawful rights and interests of the minorityshareholders.
Article 4 The independent directors should ensure that they have sufficient time andenergy to effectively perform their duties as independent directors.
Chapter II Qualifications for Independent DirectorsArticle 5 Independent directors should meet the following basic conditions:
(i) Qualified to serve as a director of a listed company in accordance with laws,administrative regulations and other relevant provisions;(ii) Meeting requirements on independency set out in Article 6 of this Policy;
(iii) Having basic knowledge of the operation of listed companies and being familiarwith relevant laws, administrative regulations and rules;(iv) Having five and more years of legal, economic, accounting or other workingexperience necessary for performing the duties of an independent director;(v) Good personal integrity, no material breach of trust and other adverse records;(vi) Other conditions stipulated by laws, administrative regulations, CSRC regulations,business rules of the Shenzhen Stock Exchange and the Articles of Association of theCompany.
Article 6 Independent directors must be independent, and the following persons shallnot serve as independent directors,(i) Persons serving in the Company or the Company's subsidiaries and their immediatefamily members and major social relations;(ii) Natural person shareholders who directly or indirectly hold 1% and above of theCompany's outstanding shares or who are among the top ten shareholders of theCompany, and their immediate family members;(iii) Persons who work for shareholders which directly or indirectly hold 5% and aboveof the Company's outstanding shares or for the top five shareholders of the Companyand their immediate family members;(iv) Persons serving in the subsidiaries of the Company's controlling shareholders oractual controllers and their immediate family members;(v) Persons having material business exchanges with the Company and its controllingshareholders, actual controllers or their respective subsidiaries, or persons serving inunits that have material business dealings with the Company, its controllingshareholders or actual controllers;(vi) Persons providing financial, legal, consulting and insurance services to theCompany, its controlling shareholders, actual controllers or their respective subsidiaries,including, but not limited to, all the personnel of a certain project team of any agencyproviding the services, reviewers at all levels, persons signing the reports, partners,directors, senior management and executives;(vii) Persons who have been involved in any of the circumstances listed in the precedingsix items within the last one year;(viii) Other persons who do not possess independence as stipulated in the laws,administrative regulations, CSRC regulations, business rules of the Shenzhen Stock
Exchange and the Articles of Association of the Company.The subsidiaries of the Company's controlling shareholders and its actual controllers inItem iv to vi of the preceding paragraph do not include enterprises controlled by thesame state-owned asset management institution as the Company and which do notconstitute a connected-party relationship with the Company in accordance with therelevant provisions.The independent directors should conduct annual self-examination of the independencestatus and submit the self-examination results to the Board of Directors. The Board ofDirectors should annually assess the status and issue a special opinion, which shouldbe disclosed at the same time as the annual reports.
Article 7 Candidates for independent directors should not be in the followingcircumstances:
(i) Those who have been subject to administrative penalties by CSRC or criminalpenalties by the judicial authorities for securities and futures violations and crimeswithin the recent thirty-six months;(ii) Being investigated by CSRC or the judicial authorities for suspected securities andfutures offences, with no clear conclusive opinion yet;(iii) Being publicly reprimanded or being notified of criticism for three times and aboveby the stock exchange within the recent thirty-six months;(iv) Material breach of trust and other adverse records;(v) Having been dismissed by the Board of Directors at a general meeting ofshareholders within last twelve months for failing to attend in person or to delegateother independent directors to attend two consecutive meetings of the Board ofDirectors during the previous period of service as an independent director;(vi) Other circumstances prescribed by laws, regulations and the Shenzhen StockExchange.
Chapter III Nomination, Election and AppointmentArticle 8 The Board of Directors, the Supervisory Board and shareholders whoindividually or collectively hold 1% and above of the issued shares of the Companymay propose candidates for independent directors for election by the general meetingof shareholders.An investor protection agency established by law may publicly request shareholders to
entrust itself to exercise the right to nominate independent directors on their behalf.A nominator as provided for in Paragraph 1 shall not nominate as a candidate forindependent director a person in whom it has an interest or a closely related person whohas other circumstances that may affect the independent performance of his or herduties.
Article 9 The nominator of an independent director should obtain the consent of thenominee before making the nomination. The nominator should fully understand thenominee's occupation, academic qualifications, job title, detailed working experience,all part-time jobs, any record of material breach of trust etc., and express an opinion onwhether he or she meets the independence requirements as well as other conditions forserving as an independent director, and the nominee should make a public statement onwhether he or she meets the independence requirements and other conditions forserving as an independent director.
Article 10 The Nomination Committee of the Company should examine thequalifications of the nominee for the position and form a clear examination conclusion.Prior to the convening of the general meeting of shareholders for the election ofindependent directors, the Company should disclose the relevant contents in accordancewith the provisions of Article 9 and the preceding paragraph and submit relevantdocuments of all nominees to the Shenzhen Stock Exchange, which will examine thequalifications and independence of the candidates. The Company should not submit thenominees to the general meeting of shareholders for election if the Shenzhen StockExchange holds any objection to them.
Article 11 The Board of Directors of the Company should, when convening the generalmeeting of shareholders for the election of independent directors, explain whether thecandidates for independent directors have been objected to by the Shenzhen StockExchange.
Article 12 When the general meeting of shareholders votes for two or more independentdirectors, a cumulative voting mechanism should be implemented. The votes ofminority shareholders should be counted and disclosed separately.
Article 13 The term of office of an independent director is same as other directors ofthe Company, and upon expiry of the term of office, he/she may be re-elected for thenext consecutive term, but the consecutive terms of office shall not exceed six years.
Article 14 If an independent director fails to meet the conditions of independence orother qualifications for the position after taking office, he or she should immediatelycease to perform the duties and resign from the position. If he or she fails to resign, theBoard of Directors should immediately remove him or her in accordance with theprovisions of the law after it knows or should have known of the occurrence of suchfact.If an independent director fails to attend two consecutive meetings of the Board ofDirectors in person and does not appoint another independent director to attend onhis/her behalf, the Board of Directors should, within thirty days from the date ofoccurrence, propose to convene a general meeting of shareholders to remove suchindependent director from the position.If the dismissal of an independent director results in the proportion of independentdirectors on the Board of Directors or its specialized committees failing to comply withthe provisions of laws and regulations or the Company's Articles of Association, or ifthere is a shortage of accounting professionals among the independent directors, theCompany should complete the by-election of such independent directors within sixtydays from the date of the occurrence of the aforesaid fact.Where the Company dismisses an independent director in advance, it should timelydisclose the specific reasons and justifications. The removed independent director maysubmit objections and reasons if he or she believes that the Company's reasons forremoval are improper, and the Company should disclose them in a timely manner.
Article 15 An independent director may resign before the expiry of his term of office.An independent director who resigns should submit a written resignation letter to theBoard of Directors, explaining any circumstances related to his resignation or which heconsiders necessary to draw the attention of the shareholders and creditors of theCompany. If the number of independent directors on the Board of Directors of theCompany is less than the prescribed number due to the resignation of an independentdirector, the resignation letter of the independent director should take effect after thenext independent director fills the vacancy.
Chapter IV - Responsibilities and Duty PerformanceArticle 16 Independent directors perform the following duties:
(i) To participate in the decision-making of the Board of Directors and express clearopinions on the matters deliberated.(ii) To supervise the potential material conflicts of interest between the Company andits controlling shareholders, actual controllers, directors and senior management as setout in Article 21 of this Policy, the Implementing Rules of the Audit Committee of theBoard of Directors, the Implementing Rules of the Nomination Committee of the Boardof Directors and the Implementing Rules of the Remuneration and AssessmentCommittee of the Board of Directors and to promote the decision-making of the Boardof Directors to be in line with the interests of the Company as a whole, and to protectthe legitimate rights and interests of minority shareholders.(iii) To provide professional and objective advice on the Company's operation anddevelopment and enhance the Board of Directors' decision-making level.(d) Other duties as stipulated by laws, administrative regulations, CSRC regulationsand the Articles of Association of the Company.
Article 17 The independent directors exercise the following special rights,(i) To independently engage agencies to audit, consult or verify specific companymatters.(ii) To propose to the Board of Directors to convene an extraordinary general meetingof shareholders.(iii) To propose to convene meetings of the Board of Directors.(iv) To publicly solicit shareholders' rights from shareholders in accordance with thelaw.(v) To express independent opinions on matters that may prejudice the interests of theCompany or minority shareholders.(vi) Other duties and rights prescribed by laws, administrative regulations, the CSRCand the Articles of Association of the Company.Independent directors should obtain the consent of one-half and above of allindependent directors to exercise the rights listed in the first to third items of thepreceding paragraph. The Company should disclose in a timely manner if theindependent directors exercise the rights listed in the first paragraph. If the above rights
cannot be exercised normally, the Company should disclose the relevant circumstancesand reasons.
Article 18 The independent directors should attend the meetings of the Board ofDirectors in person. If he/she is unable to attend the meetings in person for any reason,he/she should review the materials of the meeting in advance, form a clear opinion andentrust other independent directors in writing to attend the meeting on his/her behalf.
Article 19 If an independent director casts an opposing vote or abstains from voting ona Board of Directors' proposal, he/she should state the specific reasons and grounds, thelegality and compliance of the matter involved in the proposal, the possible risks andthe impact on the interests of the Company and the small and medium-sizedshareholders, etc. The Company should disclose the dissenting opinions of theindependent directors when disclosing the resolutions of the Board of Directors and setout the same in the resolutions of the Board of Directors and the minutes of the meeting.
Article 20 The independent directors should pay continuous attention to theimplementation of the resolutions of the Board of Directors relating to the duties andauthorities set out in Article 21 of this Policy, the Implementing Rules of the AuditCommittee of the Board of Directors, the Implementing Rules of the NominationCommittee of the Board of Directors and the Implementing Rules of the Remunerationand Assessment Committee of the Board of Directors. If any violation of the provisionsof laws, administrative regulations, CSRC rules, business rules of the Shenzhen StockExchange and the Articles of Association of the Company is found, or any violation ofthe resolutions of the general meeting of shareholders and the Board of Directors isfound, the independent directors should report to the Board of Directors in a timelymanner and may request the Company to make a written explanation. Where disclosurematters are involved, the Company should make timely disclosure.If the Company fails to make an explanation or timely disclosure in accordance withthe provisions of the preceding paragraph, the independent directors may report to theCSRC and the Shenzhen Stock Exchange.
Article 21 The following matters should be submitted to the Board of Directors forconsideration after being approved by a majority of all independent directors of the
Company:
(i) Related-party transactions that should be disclosed;(ii) Programmes for the Company and related parties to change or waive theircommitments;(iii) Decisions made and measures taken by the board of directors of the acquired listedcompany in respect of the acquisition;(iv) Other matters as provided by laws, administrative regulations, CSRC regulationsand the Articles of Association.
Article 22 The Company should hold meetings attended by all independent directorsalone (hereinafter referred to as the “Specialized Meeting of Independent Directors")on a regular or irregular basis. Matters listed in the first paragraph (i) to (iii) of Article17 and Article 21 of this Policy should be considered by the Specialized Meeting ofIndependent Directors.The Specialized Meeting of Independent Directors may study and discuss other mattersof the Company as needed.The Specialized Meeting of Independent Directors should be convened and chaired byan independent director jointly elected by a simple majority of the independent directors;if the convenor is not performing his duties or is unable to perform his duties, two ormore independent directors may convene and elect a representative to preside over themeeting.The Company should provide facilities and support for the convening of the SpecializedMeeting of Independent Directors.
Article 23 When independent directors express independent opinions, the types ofopinions include: approval, reservation and reasons thereof; dissenting opinion andreasons thereof; and inability to express an opinion and obstacles thereto. Wherereservations, objections or inability to express an opinion are made, the independentdirectors concerned should clearly state the reasons and justifications. The opinionsexpressed should be clear and unambiguous. In the event that the independent directorsare unable to reach a consensus, the Board of Directors should disclose the opinions ofeach independent director separately.
Article 24 Independent directors should perform their duties in the specialized
committees of the Board of Directors of the Company in accordance with the laws,administrative regulations, the provisions of the CSRC, the business rules of theShenzhen Stock Exchange and the Articles of Association of the Company. Independentdirectors should attend the meetings of the specialized committees in person, and if theyare unable to attend the meetings in person for any reason, they should review thematerials of the meetings in advance, form a clear opinion and entrust other independentdirectors in writing to attend the meetings on their behalf. If the independent directorsare concerned about material matters of the Company within the scope of the duties ofthe special committee in the performance of their duties, they may, in accordance withthe procedures, timely submit them to the specialized committees for discussion anddeliberation.
Article 25 The independent directors should spend no less than fifteen days per yearworking on-site at the Company.In addition to attending the general meeting of shareholders, meetings of the Board ofDirectors and its specialized committees, and Specialized Meetings of IndependentDirectors as required, the independent directors may perform their duties by obtaininginformation on the operation of the Company on a regular basis, listening to reportsfrom the management, communicating with the head of the internal audit departmentand the accounting firm undertaking the Company's auditing business and otherintermediaries, conducting on-site inspections, and communicating with the small andmedium-sized shareholders, and in various other ways.
Article 26 The Board of Directors of the Company, its specialized committees andSpecialized Meetings of Independent Directors should produce minutes of the meetingsin accordance with the regulations, and the opinions of independent directors should beset out in the minutes. The independent directors should sign to confirm the minutes.The independent directors should make working records, recording in detail theperformance of their duties. Information obtained by independent directors in thecourse of performing their duties, minutes of relevant meetings, records ofcommunications with staff of the Company and intermediaries, etc., form an integralpart of the work records. For important contents in the work records, the independentdirectors may request the Secretary of the Board and other relevant personnel to sign toconfirm, and the Company and relevant personnel should cooperate.
The work records of the independent directors and the information provided by theCompany to the independent directors should be kept for at least ten years.
Article 27 The Company should enhance the communication mechanism betweenindependent directors and small and medium-sized shareholders, and independentdirectors may timely verify with the Company on issues raised by investors.
Article 28 The independent directors should submit annual working report to the annualgeneral meeting of shareholders of the Company to explain the performance of theirduties. The annual working report should include the following contents:
(i) The number of times, methods and votes attended at the Board of Directors and thenumber of times attended at the general meeting of shareholders.(ii) Participation in the work of specialized committees of the Board of Directors andSpecialized Meetings of Independent Directors.(iii) Consideration of matters relating to the responsibilities and authorities set out inArticle 21 of this Policy, the Implementing Rules of the Audit Committee of the Boardof Directors, the Implementing Rules of the Nomination Committee of the Board ofDirectors and the Implementing Rules of the Remuneration and Assessment Committeeof the Board of Directors, as well as the exercise of the special powers of theIndependent Directors as set out in the first paragraph of Article 17 of this Policy.(iv) Communication with the internal audit department and the accounting firmundertaking the Company's auditing business in respect of the Company's financial andbusiness status on material matters, the manner and results thereof.(v) Communication with small and medium shareholders.(vi) The time and content of on-site work at the Company, etc.(vii) Other circumstances of the performance of duties.The annual working report of the independent directors should be disclosed no laterthan the announcement of the notice of the annual general meeting of shareholders bythe Company.
Article 29 The independent directors should continuously strengthen the study ofsecurities laws, regulations and rules, and continuously improve their ability to performtheir duties.
Chapter V Guarantees to Perform DutiesArticle 30 The Company should provide the necessary working conditions and teamsupport for the independent directors to exercise their duties, and designate theDepartment of Securities and Legal Affairs, the Secretary of the Board and otherspecialized departments and personnel to assist the independent directors to performtheir duties.The Secretary of the Board should ensure the smooth communication of informationamong the independent directors and other directors, senior management and otherrelevant personnel, and ensure that the independent directors are able to obtainsufficient resources and necessary professional advice in the performance of their duties.
Article 31 The Company should guarantee that independent directors enjoy the sameright to information as other directors. In order to ensure the effective exercise of theindependent directors' right, the Company should inform them of its operation on aregular basis, provide information, and organize or cooperate with them to carry out on-site inspections and other work.
Article 32 The Company should send the independent directors notices of boardmeetings and provide sufficient information in a timely manner in accordance with thetime stipulated by laws and the Articles of Association. The independent directors mayrequest for supplementation of the information if they consider that the information isinsufficient. When two independent directors consider that the meeting materials areincomplete, insufficiently argued or not provided in a timely manner, they may jointlypropose in writing to postpone the convening of the Board of Directors or postpone theconsideration of part of the matters discussed by the Board of Directors, and the Boardof Directors should adopt such proposal. The Company should keep the aforementionedmeeting materials for at least ten years.
Article 33 When an independent director exercises one’s duties and rights, the relevantpersonnel of the Company should actively co-operate and shall neither refuse, hinderor conceal nor interfere with the independent exercise.If an independent director encounters obstruction in the exercise of one’s duties andrights in accordance with the law, he or she may explain the situation to the Board ofDirectors, request the directors, senior management and other relevant personnel to co-
operate, and record the specific circumstances of the obstruction and the resolution ofthe situation in the work records; if he or she still fails to eliminate the obstruction, theindependent director may report to CSRC and the Shenzhen Stock Exchange.If the performance of duties by an independent director involves matters that should beannounced, the Company should make an announcement in a timely manner. If theCompany refuses to disclose, the independent directors may directly apply fordisclosure or report to the CSRC and the Shenzhen Stock Exchange.
Article 34 The expenses incurred by an independent director in engaging an agency andother expenses required for the exercise of his/her duties should be borne by theCompany.
Article 35 The Company should grant appropriate allowances to independent directors,and the criteria for such allowances should be formulated by the Board of Directors,considered and approved by the shareholders' general meeting, and disclosed in theannual report of the Company.In addition to the aforesaid allowances, the independent directors should not obtainadditional benefits from the Company and its major shareholders, actual controllers orinterested organizations and persons.
Chapter VI Supplementary ProvisionsArticle 36 This Policy should be interpreted by the Board of Directors of the Company.
Article 37 In the event that any matter not covered in this Policy or there is any conflictbetween this Policy and the relevant laws, administrative regulations, regulatorydocuments, the Articles of Association of the Company and other relevant provisions,provisions of the laws, administrative regulations, regulatory documents and theArticles of Association of the Company shall prevail.
Article 38 This Policy should be implemented from the date of consideration andadoption by the shareholders' general meeting of the Company. The former IndependentDirectors' Policy considered and adopted at the Third Extraordinary General Meetingof Shareholders in 2017 should be repealed at the same time.