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Report on the Performance of Duties by the Company’s Independent Directors
Dear Shareholders:
In 2005, as independent directors of Dalian Refrigeration Co., Ltd. (hereinafter referred to as the “Company”), we conscientiously complied with the provisions and requirements of relevant laws and regulations, including the Company Law, the Corporate Governance Guidelines for Listed Companies, the Guiding Opinions on Establishing an Independent Director System in Listed Companies, and the Several Provisions on Strengthening the Protection of the Rights and Interests of Public Shareholders. We actively cooperated with the on-site inspection conducted by the Dalian Securities Regulatory Bureau of the China Securities Regulatory Commission, diligently investigated and gained a thorough understanding of the Company’s operations, attended Board meetings on time, attended General Meetings as observers, carefully reviewed all proposals, exercised our voting rights and expressed independent opinions with due diligence, and safeguarded the legitimate rights and interests of all shareholders, particularly those of public shareholders.
I. Attendance at the 2005 Board of Directors Meetings
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Name
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Number of Board Meetings to be Attended This Year
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Attended in person (times)
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Attendance by Proxy (times)
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Absences (times)
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Lü Zhongli
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3
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3
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0
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0
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Wang Dong
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3
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3
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0
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0
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Zhang Guile
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3
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3
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0
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0
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II. Status of Independent Opinions Issued in 2005
1. On April 6, 2005, prior approval was granted for the Company’s proposed routine related-party transactions with its affiliated enterprises, and the following opinion was expressed:
We believe that the Company’s aforementioned routine related-party transactions are normal and necessary, comply with the relevant provisions of the Stock Listing Rules and the Company’s Articles of Association, adhere to the principles of openness, fairness, and impartiality, are consistent with the Company’s actual business operations and development needs, and that the transaction prices are fair and reasonable, without harming the interests of the Company or its non-affiliated shareholders. In light of the foregoing, we agree to submit the “Report on Routine Related-Party Transactions of Dalian Refrigeration Co., Ltd.” to the Fourth Session of the Fourth Board of Directors for deliberation.
2. On April 19, 2005, the following independent opinion was issued with respect to the significant matters deliberated at the fourth session of the company’s fourth board of directors and other significant matters of the company:
(1) Opinion on the 2004 Compensation of Company Executives
The determination of the 2004 executive compensation was made after a comprehensive assessment of the company’s 2004 operating plan performance, as well as its financial condition, operating results, and cash flows, thereby ensuring both the successful fulfillment of the annual plan and the company’s sustainable development. We unanimously approve the Board of Directors’ report on the 2004 executive compensation.
(2) Opinion on the Company’s Cumulative and Current External Guarantees and on Compliance with Relevant Regulations
Upon review, the Company has not provided any guarantees for its controlling shareholder, other related parties in which the Company holds less than 50% of the equity, or any unincorporated entities or individuals. The total amount of the Company’s external guarantees represents 0% of the net assets as reported in the consolidated financial statements for the most recent fiscal year. Currently, the Company’s Articles of Association set forth the approval procedures for external guarantees and the creditworthiness criteria for guarantors. In light of the foregoing, we are of the view that the Company has duly complied with the relevant regulations.
(3) Opinion on the Company’s Routine Related-Party Transactions for the Year 2005
The aforementioned routine related-party transactions of the Company are normal and necessary, comply with the relevant provisions of the Stock Listing Rules and the Company’s Articles of Association, adhere to the principles of openness, fairness, and impartiality, are consistent with the Company’s actual business operations and development needs, and are priced on a fair and reasonable basis, thereby not harming the interests of the Company or its non-affiliated shareholders.
(4) Opinions on Changes in Directors, Supervisors, and Senior Management Personnel
During the reporting period, the Company’s Board of Directors and Supervisory Board underwent换届 elections. Ms. Li Mei, a former director, has resigned from her position as a director of the Company. Mr. Zhu Guangxi, a former supervisor, has resigned from his position as a supervisor of the Company.
During the reporting period, following the completion of the board’s election cycle, the Company’s Board of Directors reappointed its senior management team. Mr. Ding Jie, Deputy General Manager, has stepped down from his position due to a change in assignment.
All of the aforementioned individuals have been reassigned and will no longer hold their previous positions. Accordingly, we unanimously approve these personnel changes.
3. On November 17, 2005, the following independent opinion was issued on the company’s share structure reform plan:
The Company has actively responded to and supported the State’s policies on the share structure reform of listed companies, taking full account of the specific characteristics of the Company and its non-tradable shareholders as well as the legitimate demands of the broad base of tradable shareholders, thereby serving the long-term interests of the Company and all its shareholders. The reform plan adheres to the principles of openness, fairness, and impartiality and is in compliance with applicable laws, administrative regulations, normative documents, and the Company’s Articles of Association. Its implementation will further optimize the Company’s corporate governance structure and consolidate the common interest base among all shareholders. Moreover, the reform plan provides robust protection for the lawful rights and interests of relevant tradable shareholders throughout the design, voting, and implementation processes. On the foregoing basis, we approve the submission of the reform plan to the relevant shareholders’ meeting for deliberation and approval.
4. On December 6, 2005, the following independent opinion was issued on the Company’s revised share structure reform plan:
(1) Following the announcement by the Board of Directors of Daling Shares on November 28, 2005, of the “Explanation on the Share Structure Reform,” the non-tradable shareholders of Daling Shares engaged in extensive communication and exchanges with institutional and individual investors through various channels. In response to the requests of the majority of tradable shareholders, the non-tradable shareholders, after repeated deliberation, made adjustments to the share structure reform plan, which were subsequently announced by the Board of Directors. The procedures for these adjustments to the share structure reform plan are in compliance with applicable laws, regulations, and the Articles of Association of the Company.
(2) This adjustment to the share structure reform plan further protects the interests of tradable-shareholders;
(3) Approve the revisions to the Company’s “Explanation of the Share Structure Reform”;
(4) This independent opinion is expressed by the Company’s independent directors in light of adjustments made to the share structure reform plan, and does not constitute a modification of the previous opinion.
Independent Directors: Lü Zhongli, Wang Dong, Zhang Guile
Please review the above report.
May 30, 2006
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