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11: Annual Report on the Performance of Duties by the Company’s Independent Directors for 2015
| 11: Annual Report on the Performance of Duties by the Company’s Independent Directors for 2015 | ||||||||||||||||||||
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Document No. 11 of the 2015 Annual General Meeting
Annual Report on the Performance of Duties by the Company’s Independent Directors for 2015
Dear Shareholders:
In 2015, 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 Code 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 conducted regular on-site visits and carried out thorough investigations and research into the Company’s operations, closely monitored its development trends, rigorously reviewed proposals on major matters, and exercised our voting rights and expressed our independent opinions with due diligence.
I. Attendance at the 2015 Board of Directors Meetings
II. Status of Independent Opinions Issued in 2015
1. On March 4, 2015, the following independent opinion was issued regarding the matter of granting restricted shares to the incentive recipients as deliberated at the 15th meeting of the Company’s Sixth Board of Directors:
The grant date for the restricted shares under this award is March 4, 2015. This grant date complies with the relevant provisions on grant dates set forth in the Provisional Measures for Equity Incentive Management of Listed Companies, Memoranda No. 1–3 on Equity Incentive Matters, and the Company’s Restricted Stock Incentive Plan. Furthermore, this grant also satisfies the eligibility requirements for recipients to be granted restricted shares as stipulated in the Company’s Restricted Stock Incentive Plan.
Accordingly, we unanimously agree that the grant date for the Company’s current Restricted Stock Incentive Plan shall be March 4, 2015, and that 10.15 million restricted shares shall be granted to the 41 eligible recipients.
2. On April 10, 2015, the Company hereby grants prior approval for the matters to be considered at the Sixteenth Meeting of the Sixth Board of Directors and agrees to submit them for deliberation at such meeting.
3. On April 22, 2015, the following independent opinion was expressed on the significant matters deliberated at the 16th Meeting of the 6th Board of Directors of the Company, 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 set forth the approval procedures for external guarantees and the creditworthiness criteria for guarantors.
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 2014 and the Estimated Routine Related-Party Transactions for the Year 2015
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 Compensation of Company Executives for the Year 2014
The determination of the 2014 executive compensation was made after a comprehensive review of the Company’s 2014 operating plan performance, as well as its financial condition, operating results, and cash flows. We unanimously agree with the determination of the 2014 executive compensation.
(4) Opinions on the Company’s 2014 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 the production and business operations; and that the Company’s 2014 Internal Control Evaluation Report accurately reflects the aforementioned facts.
In summary, we concur with the Company’s 2014 Internal Control Evaluation Report.
(5) Opinions on the Company’s 2014 Corporate Social Responsibility Report
We believe that the Company’s 2014 Corporate Social Responsibility Report accurately reflects the Company’s commitment to pursuing economic benefits and safeguarding shareholder rights, while also demonstrating its dedication to employee development, ethical conduct toward suppliers and customers, proactive protection of creditors’ legitimate rights and interests, and active engagement in environmental protection—all in line with relevant requirements and the Company’s actual circumstances.
In summary, we approve the Company’s 2014 Corporate Social Responsibility Report.
(6) Opinions on the Company’s Cash Dividends
The 2014 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 reasonable returns to its shareholders. We unanimously approve this profit distribution proposal.
(7) Opinions on the Write-Off of Bad Debts
The company proposes to write off the bad debt, with sufficient supporting evidence and in compliance with lawful voting procedures; approval is hereby granted for the write-off.
(8) Opinions on the Candidates for Independent Directors
Ms. Wang Yan, the nominee for independent director on the Company’s Sixth Board of Directors, meets the qualifications required by applicable laws, regulations, and the Company’s Articles of Association. The Board’s nomination procedure for her as an independent director candidate is in full compliance with relevant national laws, regulations, and the Company’s Articles of Association, and the voting procedure adopted by the Board is lawful. We unanimously approve Ms. Wang Yan’s nomination as an independent director candidate for the Company’s Sixth Board of Directors.
4. On May 27, 2015, the Company granted prior approval for the related-party transaction involving the proposed acquisition of equity in Dalian Sanyo High-Efficiency Refrigeration Systems Co., Ltd., which was to be considered at the 17th Meeting of the 6th Board of Directors, and agreed to submit the matter for deliberation at said meeting.
5. On June 4, 2015, the independent opinions on the material matters discussed at the company's 17th meeting of the sixth Board of Directors on June 4, 2015 were expressed as follows:
(1) Regarding the company's non-public offering of A shares
The company's non-public share issuance plan is practical and feasible. The funds raised will be used for the company's relocation and renovation project, which will help the company further adjust its product structure, increase product output and quality, and significantly expand production capacity; by adopting new technologies, new processes and new equipment, it will comprehensively enhance the company's design R&D, process technology and equipment levels; enable the overall level of the new plant construction to reach international first-class and domestic leading standards; achieve industrial, management and quality upgrades, comprehensively improve the company's overall level, promote sustainable development, strengthen the company's ongoing profitability and core competitiveness, and protect the common interests of the company and all shareholders.
In summary, we agree with the company's non-public offering plan.
(2) Regarding the company's shareholder return plan for the next three years (2015–2017)
The content of the "Dalian Refrigeration Machine Co., Ltd. Shareholder Return Plan for the Next Three Years (2015–2017)" complies with relevant laws, regulations and the Company Articles of Association, fully considers the requirements of the company's sustainable development and shareholders' desire to obtain reasonable investment returns. The dividend policy is continuous, stable, objective and reasonable, which is conducive to better protecting investors' interests and achieving a win-win between investors' interests and the company's interests. We agree with the board of directors' formulation of the shareholder return plan for the next three years (2015–2017).
(3) Regarding the acquisition of equity in Dalian Sanyo High-Efficiency Refrigeration Systems Co., Ltd.
This related-party transaction is fair, did not harm the rights and interests of the company and minority shareholders, and is conducive to the company's internal resource integration and the expansion of the heat exchanger business; the voting procedure for this related-party transaction was legal, and the related directors effectively abstained. We unanimously agree to this equity acquisition.
6. On June 15, 2015, we gave prior approval to the company's proposal to submit to the 18th meeting of the sixth Board of Directors for review the related-party transactions concerning the acquisition of equity in Wuhan New World Refrigeration Industrial Co., Ltd. and the house leasing, and agreed to submit these matters to the company's 18th meeting of the sixth Board for review.
7. On June 24, 2015, the independent opinions on the matters discussed at the company's 18th meeting of the sixth Board of Directors on June 24, 2015 were expressed as follows:
(1) Regarding the acquisition of equity in Wuhan New World Refrigeration Industrial Co., Ltd.
This related-party transaction is fair, did not harm the rights and interests of the company and minority shareholders, and is conducive to the company's internal resource integration; the voting procedure for this related-party transaction was legal, and the related directors effectively abstained. We unanimously agree to this equity acquisition.
(2) Regarding the house lease
This related-party transaction is fair, did not harm the rights and interests of the company and minority shareholders, and is conducive to the effective use of the company's resources; the voting procedure for this related-party transaction was legal, and the related directors effectively abstained. We unanimously agree to this house lease.
8. On August 6, 2015, we gave prior approval to the related-party transaction concerning the acquisition of equity in Bingshan Technical Services (Dalian) Co., Ltd. proposed to be reviewed at the 20th meeting of the sixth Board, and agreed to submit this matter to the company's 20th meeting of the sixth Board of Directors for review.
9. On August 19, 2015, the independent opinions on the matters discussed at the company's 20th meeting of the sixth Board of Directors on August 19, 2015 were expressed as follows:
(1) Regarding the acquisition of equity in Bingshan Technical Services (Dalian) Co., Ltd.
This related-party transaction is fair, did not harm the rights and interests of the company and minority shareholders, and is conducive to the company's business transformation and the business expansion of Bingshan Technical Services (Dalian) Co., Ltd.; the voting procedure for this related-party transaction was legal, and the related directors effectively abstained. We unanimously agree to this equity acquisition.
10. On October 15, 2015, we gave prior approval to the related-party transaction concerning the controlling shareholder's provision of financial assistance to the company's subsidiary proposed to be reviewed at the 21st meeting of the sixth Board, and agreed to submit this matter to the company's 21st meeting of the sixth Board of Directors for review.
11. On October 20, 2015, the independent opinions on the material matters discussed at the company's 21st meeting of the sixth Board of Directors held on October 20, 2015 were expressed as follows:
(1) Report on the appointment of the company's deputy general manager
After reviewing the personal resume and related materials of the newly appointed deputy general manager, Mr. Fan Yuekun, we believe he meets the qualification requirements stipulated by relevant laws, regulations and the Company's Articles of Association, and his qualifications for the position are lawful. Based on our understanding, his educational background, work experience and health condition enable him to fulfill the duties of the position. The board's nomination process and voting results comply with relevant laws, regulations and the Company's Articles of Association. We unanimously agree to the board's decision to appoint Mr. Fan Yuekun as deputy general manager.
(2) Report on the controlling shareholder's provision of financial assistance to the company's subsidiary
This related-party transaction is fair, did not harm the rights and interests of the company and minority shareholders, and can alleviate the funding pressure for the construction of the company's subsidiary Wuxin Refrigeration; the voting procedure for this related-party transaction was legal, and the related directors effectively abstained. We unanimously agree to this financial assistance.
III. Work of the company's specialized committees under the Board of Directors
1. Work of the Audit Committee of the Board of Directors
As members of the Audit Committee under the company's Board of Directors, we perform our duties in accordance with the company's "Implementation Rules for the Board Audit Committee" and the "Annual Report Working Procedures of the Audit Committee", supervise the company's internal audit system and its implementation, review the company's financial information and its disclosure, and evaluate the work of external audit firms.
During the company's appointment of the 2015 audit firm, we paid active attention through the Audit Committee, agreed to reappoint Dahua Certified Public Accountants (Special General Partnership) as the company's 2015 audit firm, and agreed to submit this to the company's 3rd meeting of the seventh Board of Directors for review.
In the construction and evaluation of the company's internal control standard system, we actively performed organizational, leadership and supervisory duties through the Audit Committee. We believe that the current status of the company's internal control system meets relevant requirements, is consistent with the company's actual situation, and has been well implemented. The company's 2015 internal control evaluation report truthfully reflects the above facts.
During the Company’s 2015 audit, we maintained active communication and coordination with the auditing firm, Dahuah Accounting Firm, through the Audit Committee. Prior to the firm’s on-site engagement, we discussed and reached consensus with the project leader of the auditing firm on the audit plan, schedule, 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 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, reviewing the annual compensation of the Company’s directors, supervisors, and senior management. The compensation decision-making procedures for the aforementioned individuals are in compliance with applicable laws and regulations, and the compensation payment standards adhere to the Company’s internal policies.
Independent Directors: Dai Dashuang, Liu Jiwei, Wang Yan
April 21, 2016
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Dalian Bingshan Group Co., Ltd.
Address: No. 106, Liaohe East Road, Dalian Economic & Technological Development Zone
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