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Annual Report on the Performance of Duties by the Company’s Independent Directors for 2014
Document No. 12 of the 2014 Annual General Meeting
Annual Report on the Performance of Duties by the Company’s Independent Directors for 2014
Dear Shareholders:
Now, on behalf of myself and the former independent directors Wang Huiquan and Xing Tiancai, I will present the 2014 Annual Report on the Performance of Duties by the Company’s Independent Directors. The former independent directors Wang Huiquan and Xing Tiancai submitted their letters of resignation on November 3, 2014, and officially stepped down on February 12, 2015.
In 2014, as independent directors of Dalian Refrigeration Co., Ltd. (hereinafter referred to as the “Company”), we attended the Company’s board meetings and shareholder general meetings on schedule in accordance with the Company Law, the Corporate Governance Guidelines for Listed Companies, the Guiding Opinions on Establishing an Independent Director System in Listed Companies, the Several Provisions on Strengthening the Protection of the Rights and Interests of Public Shareholders, and other relevant requirements. With a focus on safeguarding the legitimate rights and interests of all shareholders, particularly public shareholders, we placed great emphasis on conducting routine visits to the Company and undertaking investigative research, closely monitoring the Company’s development trends, rigorously reviewing proposals on major matters, and exercising our voting rights and expressing independent opinions with due diligence.
I. Attendance at the 2014 Board of Directors Meetings
|
Name
|
Should participate this year
Number of Board Meetings
|
Attend in person
(occasion)
|
Attendance by Proxy
(occasion)
|
Absence
(occasion)
|
|
Wang Huiquan
|
6
|
6
|
0
|
0
|
|
Xing Tiancai
|
6
|
6
|
0
|
0
|
|
Liu Caiping
|
6
|
6
|
0
|
0
|
II. Status of Independent Opinions Issued in 2014
1. On March 10, 2014, the following independent opinion was expressed regarding the matters concerning the candidates for directors of the Company’s Sixth Board of Directors as deliberated at the Eighth Meeting of the Sixth Session of the Board:
Four seats on the Company’s Sixth Board of Directors have become vacant due to the resignation of directors, necessitating by-elections.
The candidates for director on the Company’s Sixth Board of Directors—Ji Zhijian, Xu Junrao, Kobayashi Noriaki, and Kijima Tadatoshi—meet the qualifications for office as prescribed by applicable laws and regulations and the Company’s Articles of Association. The Board’s nomination procedures for these candidates are in full compliance with relevant national laws and regulations as well as the Company’s Articles of Association, and the voting procedure adopted by the Board was lawful. We unanimously approve Ji Zhijian, Xu Junrao, Kobayashi Noriaki, and Kijima Tadatoshi as candidates for director on the Company’s Sixth Board of Directors.
2. On March 27, 2014, the following independent opinion was issued regarding the significant matter of the by-election of directors as deliberated at the Company’s First Extraordinary General Meeting of 2014:
The Company has conducted a by-election to appoint Ji Zhijian, Xu Junrao, Kobayashi Noriaki, and Kijima Tadatoshi as directors of the Sixth Board of Directors. These individuals possess the qualifications required under applicable laws, regulations, and the Company’s Articles of Association, and the procedures for the Board’s nomination of them as director candidates are in full compliance with relevant national laws, regulations, and the Company’s Articles of Association. Furthermore, the voting procedures adopted by both the Board and the Shareholders’ Meeting were lawful. We unanimously approve the appointment of Ji Zhijian, Xu Junrao, Kobayashi Noriaki, and Kijima Tadatoshi as directors of the Company’s Sixth Board of Directors.
3. On April 10, 2014, prior approval was granted for the matters to be considered at the Tenth Meeting of the Sixth Board of Directors, and it was agreed to submit such matters for deliberation at the Tenth Meeting of the Sixth Board of Directors.
4. On April 22, 2014, the following independent opinion was expressed on the significant matters deliberated at the tenth meeting of the sixth session of the Company’s Board of Directors, as well as other significant matters concerning the Company:
(1) Opinion on the Company’s Cumulative External Guarantees, Current External Guarantees, and 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 is zero. The Company’s Articles of Association have stipulated the approval procedures for external guarantees and the creditworthiness criteria for guaranteed parties.
In summary, we believe the company has adequately complied with the relevant regulations.
(2) Opinion on the Company’s Routine Related-Party Transactions for the Year 2013 and the Estimated Routine Related-Party Transactions for the Year 2014
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, involve reasonable transaction prices, and do not prejudice the interests of the Company or its non-affiliated shareholders.
(3) Opinion on the 2013 Compensation of the Company’s Management Personnel
The determination of the 2013 executive compensation was made after a comprehensive assessment of the Company’s performance in achieving its 2013 business plan, as well as its financial condition, operating results, and cash flows. We unanimously approve the Board of Directors’ report on the 2013 executive compensation.
(4) Opinions on the Company’s 2013 Internal Control Evaluation Report
We believe that the current state of the company’s internal control system complies with applicable requirements and is consistent with the company’s actual circumstances; that the internal controls established by the company have been effectively implemented throughout its production and business operations; and that the Company’s 2013 Internal Control Evaluation Report accurately reflects the aforementioned facts.
In summary, we approve the Company’s 2013 Internal Control Evaluation Report.
(5) Opinions on the Company’s 2013 Corporate Social Responsibility Report
We believe that the Company’s 2013 Corporate Social Responsibility Report accurately reflects the Company’s commitment to pursuing economic benefits and safeguarding shareholder rights, while also demonstrating its dedication to fostering employee development, conducting business with integrity toward suppliers and customers, actively protecting the legitimate rights and interests of creditors, and proactively engaging in environmental protection—activities that are consistent with relevant requirements and aligned with the Company’s actual operations.
In summary, we approve the Company’s 2013 Corporate Social Responsibility Report.
(6) Opinions on the Company’s Cash Dividends
The 2013 profit distribution proposal submitted by the Company’s Board of Directors is in compliance with the relevant provisions of the Company’s Articles of Association and takes into account both the Company’s long-term development needs and the need to provide shareholders with a reasonable return. We unanimously approve this profit distribution proposal.
(7) Regarding Write-Off of Bad Debts
The Company proposes to write off bad debts totaling RMB 3,063,426.02 that are deemed uncollectible or highly unlikely to be collected. An allowance for doubtful accounts of RMB 2,422,502.92 has already been provided for the aforementioned write-off amount, resulting in an impact of RMB 640,923.10 on the Company’s 2014 profit or loss.
It is agreed that the Company’s subsidiary, Dalian Bingshan Lingshi Frozen Equipment Co., Ltd., shall write off long-outstanding accounts receivable in the amount of RMB 103,650.00. The aforementioned write-off amount has already been provided for as an allowance for doubtful accounts in the amount of RMB 88,640.00, resulting in an impact on the Company’s 2013 profit or loss of RMB 15,010.00.
Approve the write-off of RMB 330,915.38 in long-outstanding accounts receivable by the Company’s subsidiary, Dalian Bingshan Metal Processing Co., Ltd. The aforementioned write-off amount has already been provided for as an allowance for doubtful accounts in the amount of RMB 328,430.77, resulting in an impact on the Company’s 2013 profit or loss of RMB 2,484.61.
The aforementioned write-off of bad debts is supported by sufficient evidence and was approved in accordance with lawful voting procedures.
5. On August 7, 2014, prior approval was granted for the related-party transaction involving the Company’s proposed acquisition of a 10% equity interest in Dalian Bingshan Group Sales Co., Ltd. held by Dalian Bingshan Group Co., Ltd., and it was agreed to submit the matter for consideration at the 11th Meeting of the 6th Session of the Board of Directors.
6. On August 19, 2014, the Company’s Board of Directors, at its 11th meeting of the 6th session, deliberated and approved a related-party transaction involving the acquisition of a 10% equity interest in Dalian Bingshan Group Sales Co., Ltd. held by Dalian Bingshan Group Co., Ltd. The independent opinion on this matter is as follows:
This related-party transaction is fair and does not prejudice the interests of the Company or its minority shareholders, and it is conducive to the Company’s business expansion and internal resource integration. The voting procedures for this related-party transaction were lawful, and the affiliated directors duly recused themselves. We unanimously approve this equity transfer.
7. On August 19, 2014, an in-depth review was conducted on the Company’s external guarantees for the first half of 2014 and on the misappropriation of the Company’s funds by the controlling shareholder and other related parties, resulting in the issuance of the following special statement and independent opinion:
Upon review, during the reporting period the Company did not provide 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 Company also had no external guarantees. The Company’s Articles of Association set forth the approval procedures for external guarantees and the creditworthiness criteria for guarantors.
Upon review, the Company found no instances during the reporting period of the controlling shareholder or other related parties misappropriating the Company’s funds.
In summary, we believe the company has adequately complied with the relevant regulations.
8. On October 15, 2014, prior approval was granted for the related-party transaction involving the Company’s proposed capital contribution to establish Bingshan Technical Services (Dalian) Co., Ltd., and it was agreed to submit the matter for consideration at the 12th Meeting of the 6th Board of Directors.
9. On October 21, 2014, the Company issued the following independent opinion on the related-party transaction concerning the capital contribution for the establishment of Bingshan Technical Services (Dalian) Co., Ltd., as deliberated at the 12th Meeting of the 6th Board of Directors:
This related-party transaction is fair and does not prejudice the interests of the Company or its minority shareholders, and it is conducive to the Company’s business expansion and innovation in its business model. The voting procedure for this related-party transaction was lawful, and the affiliated directors duly recused themselves. We unanimously approve this capital contribution.
10. On December 9, 2014, the following independent opinion was issued with respect to the “Draft Restricted Stock Incentive Plan of Dalian Refrigeration Co., Ltd.” and other related matters:
(1) No circumstances have been identified that would prohibit the Company from implementing an equity incentive plan under the Measures for the Administration of Equity Incentives for Listed Companies (Trial) (hereinafter referred to as the “Measures”) and other applicable laws and regulations; therefore, the Company is qualified as a proper entity to implement such an equity incentive plan.
(2) All the recipients of the restricted stock incentive plan hereby established by the Company comply with the relevant provisions on eligibility for office set forth in the Company Law of the People’s Republic of China and other applicable laws and regulations, as well as the Company Charter; furthermore, none of the recipients falls under any of the circumstances prohibited from being granted restricted shares as stipulated in the Administrative Measures. Therefore, the eligibility of the recipients is lawful and valid. In connection with the deliberation of this incentive plan, all related directors have recused themselves from voting.
(3) The contents of the Company’s Draft Restricted Stock Incentive Plan comply with the Measures for the Administration and other relevant laws and regulations. The arrangements for the grant and vesting of restricted shares to each incentive recipient—including the grant amount, grant date, grant price, lock-up period, vesting period, and vesting conditions—do not violate any applicable laws or regulations and do not infringe upon the interests of the Company or all of its shareholders.
(4) The Company has no plans or arrangements to provide loans, loan guarantees, or any other financial assistance to the incentive recipients.
(5) The implementation of a restricted stock incentive plan by the company can strengthen its incentive and accountability mechanisms, enhance its capacity for sustainable development, align the interests of management and shareholders, improve managerial efficiency as well as the motivation, creativity, and sense of responsibility of managers, and ultimately boost the company’s performance.
In summary, we unanimously agree that the Company shall implement this Restricted Stock Incentive Plan.
III. Work of the Company’s Board Committees
1. Status of Work on the Company’s Board of Directors Audit Committee
As members of the Audit Committee established under the Company’s Board of Directors, we discharge our duties in accordance with the Company’s Implementing Rules for the Board Audit Committee and the Audit Committee Annual Report Work Procedures, overseeing the Company’s internal audit system and its implementation, reviewing the Company’s financial information and disclosures, and evaluating the work of external auditing firms.
During the process of appointing the 2014 audit firm, the Audit Committee closely monitored the matter and approved the reappointment of Dahuа Certified Public Accountants (Special General Partnership) as the Company’s auditor for 2014, with the recommendation that the proposal be submitted for consideration at the Tenth Meeting of the Sixth Session of the Board of Directors.
In the development and evaluation of the company’s internal control framework, the Audit Committee has actively exercised its organizational, leadership, and oversight functions. We believe that the current state of the company’s internal control system is in compliance with applicable requirements, aligns with the company’s actual operations, and has been effectively implemented. The Company’s 2014 Internal Control Evaluation Report accurately reflects these facts.
During the Company’s 2014 audit engagement, we maintained active communication and coordination with the auditing firm, Dahuа Certified Public Accountants, through the Audit Committee. Prior to the auditors’ on-site engagement, we discussed and reached consensus with the engagement partner of the auditing firm on the audit plan, timeline, and other matters relevant to the audit period. Throughout the audit process, we kept abreast of progress and urged the auditing firm to carry out the audit work in a timely manner while ensuring both quality and quantity. Upon completion of the audit, we conducted a thorough review of the Company’s annual financial statements and annual report.
2. Work performed on the Company’s Board of Directors’ Compensation and Assessment Committee
As members of the Compensation and Assessment Committee established under the Company’s Board of Directors, we have fulfilled our duties in accordance with the Company’s Implementing Rules for the Board of Directors’ Compensation and Assessment Committee. We reviewed the annual compensation of the Company’s directors, supervisors, and senior management, and determined that the decision-making procedures for such compensation comply with applicable laws and regulations, and that the compensation payment standards are consistent with the Company’s internal policies.
Independent Directors: Wang Huiquan, Xing Tiancai, Liu Caiping
May 20, 2015
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Dalian Bingshan Group Co., Ltd.
Address: No. 106, Liaohe East Road, Dalian Economic & Technological Development Zone
Phone:
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