Sdic Power. Regulatory News (SDIC)

SDIC Power Holdings CO., LTD.  

(GDR under the symbol: "SDIC")

NOTICE OF THE 2021 EIGHTH EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2021 Eighth Extraordinary General Meeting of SDIC Power Holdings CO., LTD. will be held at Room 207, No.147 Xizhimen Nanxiao Street, Xicheng District, Beijing, the PRC, on Friday 24 December 2021 at 14:00 p.m., for the purpose of considering, and if thought fit, passing the following resolution.

ORDINARY RESOLUTION

1. To consider and approve the Proposal on Change of Accounting Firm

SPECIAL RESOLUTION

2. To consider and approve the Proposal on Shareholders' Returns Planning in the Next Three Years (2021 -2023)

ORDINARY RESOLUTION

3. To consider and approve the Proposal to Amend the Administrative Measures for the Remuneration and Evaluation of Directors, Supervisors and Senior Executives

The Board of Directors of SDIC Power Holdings CO., LTD.

December 3, 2021

The resolutions hereunder contain the English translation of the Chinese version of "Meeting materials for the 2021 Eighth Extraordinary General Meeting" as published on the website of the Shanghai Stock Exchange, and are provided for your reference only. In case of discrepancy between the Chinese version and the English version, the Chinese version shall prevail.

Proposal I

Proposal on Change of Accounting Firm

Dear shareholders and shareholder representatives:

SDIC Power Holding Co., Ltd. plans to hire ShineWing Certified Public Accountants LLP (hereinafter referred to as ShineWing) as the Company's audit authority in 2021. The period of appointment shall be one year, which will take effect from the date of deliberation and approval by the general meeting of shareholders of the Company. Details are as follows:

I. Basic information of the accounting firm to be appointed

(I) Organization information

1. Basic information

(1) Organization name: ShineWing Certified Public Accountants LLP (Special General Partnership)

(2) Date of establishment: March 2, 2012

(3) Organization form: Special general partnership

(4) Registered address: Floor 8, Building A, Fuhua Mansion, No. 8, Chaoyangmen North Avenue, Dongcheng District, Beijing

(5) Chief partner: Mr. Tan Xiaoqing

(6) As of December 31, 2020, there were 229 partners (shareholders) and 1,750 certified public accountants. More than 600 certified public accountants have signed audit reports on securities services.

(7) The audited business income of ShineWing in 2020 was RMB 3.174 billion, including the audit business income of RMB 2.267 billion and the securities business income of RMB 724 million.

(8) In 2020, ShineWing audited annual reports of 346 listed companies, earning RMB 383 million, involving manufacturing, information transmission, software and information technology services, electric power, heat, gas and water production and supply, transportation, warehousing and postal services, finance, wholesale and retail, real estate, and mining industries. Sixteen listed companies in the same industry have been audited.

2. Investor protection ability

The occupational insurance purchased by ShineWing complies with relevant regulations and covers the civil liability for providing audit services according to the laws. The accumulated compensation limit of the occupational insurance insured in 2020 is RMB 150 million.

In the past three years, there has been no relevant civil litigation in the practice to assume civil liability.

3. Credit record

In the past three years (from 2018 to 2020), ShineWing has received 0 criminal punishment, 0 administrative punishment, 8 supervision and management measures, 0 self-regulatory measures and 0 disciplinary actions. In the past three years, 17 employees have received 0 criminal punishment, 0 administrative punishment, 19 supervision and management measures and 0 self-regulatory measures.

(II) Project information

1. Basic information

Proposed signed partner of the project: Mr. Ma Chuanjun, who obtained the qualification of Chinese Certified Public Accountant in 2001, started to audit listed companies in 2007, and started to work in ShineWing in 2001, and has signed and reviewed over 5 listed companies in the past three years.

Proposed reviewer of project quality control: Mr. Zhan Jun, who obtained the qualification of Chinese Certified Public Accountant in 1995, started to audit listed companies in 1995, and started to work in ShineWing in 2000, and has signed and reviewed over 12 listed companies in the past three years.

Proposed signed Certified Public Accountant: Mr. Qiu Xin, who obtained the qualification of Chinese Certified Public Accountant in 2014, started to audit listed companies in 2011, and started to work in ShineWing in 2014, and has signed one listed company in the past three years.

2. Credit record

In the past three years, the partner of the project, signed certified public accountant and reviewer of project quality control, have not received criminal punishment, administrative punishment and supervision and management measures by the CSRC and its dispatched offices and industry authorities, and self-regulatory measures and disciplinary actions by self-regulatory organizations such as securities trading places and industry associations for their practice.

3. Independence

ShineWing Certified Public Accountants LLP, a partner of the project, signed certified public accountant, reviewer of project quality control, and other employees have not violated the independence requirements of the Code of Professional Ethics for Chinese Certified Public Accountants.

4. Audit fees

The audit fee of this annual report is RMB 3.7 million, and the audit fee of internal control is RMB 780,000, which are determined according to the professional skills, the nature of work and the workload undertaken by the accounting firm to provide audit services, the number of required employees, the number of required days and the daily charge standard for each employee.

II. Description of change of accounting firm

(I) Situation of the former accounting firm and audit opinions of the previous year

The original audit authority BDO China Shu Lun Pan CPAs LLP has provided audit services for the Company for 9 consecutive years. During this period, BDO China Shu Lun Pan CPAs LLP adhered to the principle of independent audit, diligently, fairly and independently issued audit opinions, objectively, fairly and accurately reflected the financial statements and internal control of the Company, earnestly fulfilled the responsibilities of the financial audit authority, and safeguarded the legitimate rights and interests of the Company and shareholders from a professional perspective. In 2020, BDO China Shu Lun Pan CPAs LLP issued a standard unqualified audit report to the Company. BDO China Shu Lun Pan CPAs LLP was not dismissed by the Company after part of the audit work had been performed.

(II) Reasons for the proposed change of accounting firm

According to the relevant regulations of the State-owned Assets Supervision and Administration Commission (SASAC) on the rotation of accounting firms, in order to ensure the independence and objectivity of the Company's audit work, and considering the needs of the Company's business development and audit work, the Company plans to hire ShineWing to undertake the audit of the Company's financial final accounts and internal control for 2021.

(III) Communication between the listed company and the two accounting firms

The Company has fully communicated with the two accounting firms on this matter, and all parties have been clearly aware of this matter and confirmed that there is no objection. The two accounting firms will do a good job of communication and cooperation in accordance with the requirements of Auditing Standards for Chinese Certified Public Accountants No.1153 - Communication between the Former Certified Public Accountants and the Later Certified Public Accountants.

III. Procedures performed to renew/change the accounting firm

(I) Performance of responsibilities of the Audit Committee

The Audit Committee of the Board of Directors has fully understood the practice, professional qualifications and integrity of ShineWing, and reviewed its independence, professional competence, investor protection ability and the appropriateness of the reasons for the Company's change of accounting firm. It is considered that ShineWing has rich experience in auditing listed companies, and the ability and qualification to provide professional services for the Company's financial audit services, and can meet the audit requirements of the Company for 2021. It is agreed to submit the proposal to the Board of Directors on the appointment of ShineWing as the Company's audit authority for finance and internal control for 2021.

(II) Prior approval of independent directors and independent opinions

1. Prior approval opinions

After the careful examination of the practice, independence, integrity, investor protection ability and professional competence of ShineWing, the independent directors believe that ShineWing has the experience and ability to provide financial and internal control audit services for listed companies, and can provide true and fair audit services for the Company, meeting the requirements of the Company's annual financial and internal control audit. There is no harm to the interests of the Company and all shareholders in the proposed change of accounting firm, and the independent directors agree to submit the relevant proposal to the Board of Directors of the Company for deliberation.

2. Independent opinions

Independent directors think that the Company's proposed change of the audit service organization for 2021 does not violate the laws, regulations and relevant provisions of the securities regulatory authorities, and will not affect the audit quality of the Company's financial and internal control. ShineWing has the corresponding business ability and audit qualification, and can meet the requirements of the Company's financial and internal control audit work. This decision-making procedure for change of accounting firm complies with the relevant provisions of laws and regulations and the Articles of Association, and there is no harm to the interests of the Company and all shareholders. Independent directors unanimously agree that the Company should change the financial and internal control audit authority for 2021, and agree to submit the proposal to the general meeting of shareholders of the Company for deliberation. The deliberation procedure of the Board of Directors complies with the relevant provisions of relevant laws and regulations, and there is no harm to the interests of the Company and other shareholders, especially the interests of minority shareholders.

The above proposal was deliberated and approved at the 35th meeting of the 11th Board of Directors on October 28, 2021, and is hereby submitted to this extraordinary general meeting of shareholders for deliberation and approval.

Please deliberate on the above proposal.

Proposal II

Proposal on Shareholders' Returns Planning in the Next Three Years (2021 -2023)

Dear shareholders and shareholder representatives:

In order to further establish and improve a scientific, sustained and stable dividend decision-making and supervision mechanism, actively return investors, and guide investors to establish long-term investment and rational investment concepts, SDIC Power Holding Co., Ltd. (hereinafter referred to as the Company) integrates factors such as profitability, business development planning, shareholders' returns, social capital costs and external financing environment. According to the Company Law of the People's Republic of China (hereinafter referred to as the Company Law), Securities Law of the People's Republic of China, Notice on Further Implementing Matters Related to Cash Dividends of Listed Companies (ZJF [2012] No.37), Guidelines for Supervision of Listed Companies No.3 - Cash Dividends of Listed Companies and other relevant provisions of laws, regulation and the Articles of Association, Shareholders' Returns Planning of SDIC Power Holding Co., Ltd. in the Next Three Years (2021-2023) (hereinafter referred to as the Planning) is formulated. Details are as follows:

I. The Company's profit distribution policy

According to the Articles of Association, the Company's profit distribution policy is as follows:

10.1.8 The Company's profit distribution policy is:

(I) Profit distribution principle

The Company's profit distribution should pay attention to the reasonable returns on investment to the public shareholders, aiming at sustainable development and safeguarding shareholders' rights and interests, and the Company should maintain the continuity and stability of the profit distribution policy.

The Company's profit distribution shall not exceed the range of accumulated distributable profits, and shall not damage the Company's ability of sustainable operation.

(II) Profit distribution form

The Company distributes profits by cash, stock, combination of cash and stock or other reasonable means in line with laws and administrative regulations.

The Company gives priority to the profit distribution method of cash dividends.

When distributing profits in cash, the Company should fully consider the capital needs of daily production and operation activities and investment activities in the future as well as the cost and efficiency of financing from banks and securities markets in the future, so as to ensure that the distribution plan does not affect the Company's sustainable operation and development.

When distributing profits by means of stocks, the Company should fully consider real and reasonable factors such as the Company's growth and the dilution of net assets per share and compatibility of total shares after profit distribution with the Company's scale of operation, so as to ensure that the distribution scheme is in line with the overall interests of shareholders of the Company.

(III) Specific conditions and proportions for cash dividends

Under the condition that the Company is profitable in the current year and has no unrecovered losses, if there are no major investment plans or major cash expenditures, the Company shall distribute dividends in cash.

Major investment plans or major cash expenditures refer to that the Company plans to invest abroad, acquire assets or purchase equipment in the next 12 months (except for the items of raised funds), and the accumulated expenditure reaches or exceeds 30% of the latest audited net assets of the Company or a single cash expenditure item exceeds RMB 500 million.

The profits accumulatively distributed in cash by the Company in recent three years are no less than thirty percent of the average annual profits available for distribution in recent three years.

(IV) Specific conditions for issuing stock dividends

On the basis of giving priority to cash dividends, when the Company is in good operating condition, and the scale of share capital is reasonable, and the Board of Directors of the Company thinks that issuing stock dividends is beneficial to the growth of the Company and the interests of all shareholders, a stock dividend distribution plan can be put forward.

(V) Interval between profit distribution periods

The Company shall put forward a profit distribution scheme at the annual meeting of the Board of Directors and implement it after being approved by the general meeting of shareholders.

Under the condition of meeting the aforesaid cash dividend, the Company shall make a cash dividend once a year. According to the Company's profitability and capital demand, and upon the proposal of the Company's Board of Directors and the approval of the general meeting of shareholders, medium-term cash dividends may also be distributed.

(VI) The Board of Directors of the Company shall distinguish the following cases and put forward differentiated cash dividends policies according to the procedures specified in these Articles of Association by considering its industrial characteristics, development stage, business model, profitability, and major capital expenditure arrangement:

1. If the Company is at a mature development stage, without major capital expenditure arrangement, cash dividends shall account for at least 80% of the distributed profits;

2. If the Company is at a mature development stage, with major capital expenditure arrangement, cash dividends shall account for at least 40% of the distributed profits;

3. If the Company is at a growth development stage, with major capital expenditure arrangement, cash dividends shall account for at least 20% of the distributed profits;

The development stage where the Company is at during the dividend distribution shall be determined by the Board of Directors based on the specific situation. If the actual development stage of the Company cannot be identified, and the Company has a major capital expenditure arrangement, it is still allowed to make decisions based on the provisions of (III).

(VII) If the profit distribution policy is adjusted due to the needs of the Company's production and operation and long-term development, the interests of shareholders shall be first protected. The adjusted profit distribution policy shall not violate the relevant laws, regulations, normative documents and the relevant provisions of the Articles of Association. The adjustment scheme of the profit distribution policy shall seek the opinions of independent directors and supervisors in advance, and be submitted to the general meeting of shareholders for deliberation after being reviewed and approved by the Board of Directors. Independent directors shall express their independent opinions, which shall be approved by more than two-thirds of the voting rights held by shareholders attending the general meeting of shareholders.

II. Factors to be considered in formulating this plan

The Company formulates this plan by focusing on long-term and sustainable development, comprehensively considering the actual situation and development goals of the Company, shareholders' requirements and wishes, social capital costs, external financing environment and other factors, and fully considering and listening to the requirements and wishes of shareholders, especially minority shareholders, to establish a sustainable, stable and scientific returns planning and mechanism for investors, thus making institutional arrangements for dividend distribution to ensure the continuity and stability of dividend distribution policies.

III. The Company's shareholders' returns planning from 2021 to 2023

(I) Profit distribution principle

The Company's profit distribution policy maintains continuity and stability while considering the Company's long-term interests, the overall interests of all shareholders and the Company's sustainable development; In order to ensure the long-term basic returns of investors, the Company insists on paying dividends at least once a year on the basis of careful consideration of dividend levels over the years, capital expenditure plan of the current year, return on net assets, the average stock price level of the current period and other factors.

(II) Profit distribution form

The dividends may be distributed by the Company by way of cash, stocks or a combination of both. If conditions permit, the Company can make medium-term profit distribution.

(III) Proportion of cash dividends

The accumulated profit distributed by the Company in cash in the last three years shall not be less than 30% of the average annual distributable profit realized in the last three years, and the profit to be distributed by the Company in cash in 2021-2023 shall not be less than 50% of the distributable profit realized in consolidated statements in that year in principle.

(IV) Specific conditions for issuing stock dividends

When the Company is operating well, and the Board of Directors believes that the price of the Company's stock does not match the size of the Company's share capital, and the distribution of stock dividends is beneficial to the overall interests of all shareholders of the Company, a stock dividend distribution scheme may be put forward under the condition of meeting the above cash dividends.

(V) Implementation of the Company's profit distribution scheme

After a resolution with respect to profit distribution scheme is passed at the general meeting of shareholders of the Company, the Board of Directors shall complete such distribution of dividends (or shares) within 2 months upon adoption of such resolution.

IV. Decision-making mechanism of shareholders' returns planning in the next three years

1. When the Company distributes profits, the Board of Directors of the Company shall first formulate the distribution scheme, and then submit it to the general meeting of shareholders of the Company for deliberation. When making decisions and profit distribution schemes, the Board of Directors shall record the management's suggestions, key points of statements of attending directors, opinions of independent directors and voting results of the Board of Directors in detail and in writing and maintain them as the Company's files;

2. When deliberating on the specific cash dividend scheme, the Board of Directors shall carefully study and demonstrate the opportunity, conditions, minimum proportion, conditions of adjustment and other decision-making procedure requirements of cash dividend, and the independent directors shall clearly give their own opinions;

3. When deliberating on the specific cash dividend scheme, the general meeting of shareholders shall take the initiative to communicate with shareholders through various channels, especially minority shareholders, and fully listen to the opinions and demands of minority shareholders;

4. If the Company's annual profit and the accumulated undistributed profit are positive and the Board of Directors has not put forward a cash dividend plan, the Board of Directors shall give a special explanation on the specific reasons for not distributing cash dividends, and the exact use and use plan of the Company's retained earnings, and then submit the explanation to the general meeting of shareholders for deliberation after the independent directors express their opinions, and disclose them in time;

5. The Company shall disclose the formulation and implementation of the cash dividend policy in detail in the periodic report;

6. The Company shall strictly implement the cash dividend policy determined according to the Articles of Association and the specific cash dividend scheme reviewed and approved by the general meeting of shareholders. In case of force majeure events or the change of external operating environment seriously influencing the Company's production and management, or major change of the Company's operation state, the Company may adjust the profit distribution policy. For adjustment of the Company's profit distribution policy, the Board of Directors shall make special discussion, demonstrate the reasons for adjustment in detail, and form a report in writing, which will be reviewed by the independent directors and submitted to the general meeting of shareholders for a special resolution.

V. The Planning is valid once approved by the Company's general meeting of shareholders.

The above proposal was deliberated and approved at the 35th meeting of the 11th Board of Directors on October 28, 2021, and is hereby submitted to this extraordinary general meeting of shareholders for deliberation and approval.

Please deliberate on the above proposal (as special resolution).

Proposal III

Proposal to Amend the Administrative Measures for the Remuneration and Evaluation of Directors, Supervisors and Senior Executives

Dear shareholders and shareholder representatives:

The existing Administrative Measures for the Remuneration and Evaluation of Directors, Supervisors and Senior Executives (hereinafter referred to as the "Remuneration Measures") is hereby amended mainly as follows in accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Code of Corporate Governance for Listed Companies in China and other relevant laws, regulations, business rules and the relevant provisions of the Articles of Association of the Company so as to meet the needs of the Company's work and to take into account the actual situation of the Company:

Firstly, the Company has prepared the Administrative Measures for the Remuneration of Senior Executives, limiting the scope of application of Article 2 of the Remuneration Measures to all directors and supervisors of the Company.

Secondly, the Company has prepared the Administrative Measures for the Performance Evaluation of Senior Executives, eliminating the relevant content of the remuneration measures regarding performance evaluation and changing the name of the system to Administrative Measures for the Remuneration of Directors and Supervisors.

Thirdly, Article 3 of the Remuneration Measures specifies that independent directors may while other directors and supervisors may not receive fixed director's allowances. The structure and standard of the remuneration of the full-time chairman of the Board of Directors are managed in reference to the remuneration administrative measures of the senior executives of the Company.

Fourthly, the remuneration standard for an independent director is adjusted from RMB 80,000/year before tax to RMB 120,000/year before tax.

Please refer to the full text of the amended system for the specifics of the content amended. For details, please refer to the Annex I Administrative Measures for the Remuneration of Directors and Supervisors of SDIC Power Holdings Co., Ltd..

The above proposal was deliberated and approved at the 36th meeting of the 11th Board of Directors on December 3, 2021, and is hereby submitted to this extraordinary general meeting of shareholders for deliberation and approval.

Please deliberate on the above proposal.

Annex I

Administrative Measures for the Remuneration of Directors and Supervisors of SDIC Power Holdings Co., Ltd.

Chapter I General Provisions

Article 1 These Measures have been prepared in accordance with the relevant laws and regulations and the Articles of Association of SDIC Power Holdings Co., Ltd. (hereinafter referred to as the "Company") and with consideration to the specific situation of the Company in order to further improve the governance structure of the Company, standardize the remuneration administration of directors and supervisors of the Company, establish a sound and effective incentive and restraint mechanism, and promote the sustainable and healthy development of the Company.

Article 2 These Measures shall be applicable to all directors and supervisors of the Company.

Chapter II Remuneration Management

Article 3 The remuneration standards for directors and supervisors are as follows:

(I) Independent Directors

An independent director is a director independent of the shareholders of the Company, who does not serve within the Company, has no significant business ties or professional affiliations with the Company or the management of the Company, and makes independent judgments about the affairs of the Company. Independent directors are entitled to a fixed director's allowance, the standards of which are detailed in the annex, without any other compensation or benefits from the Company.

(II) Outside Directors and Outside Supervisors

Outside directors and outside supervisors are directors and supervisors who are nominated and appointed by the shareholders of the Company, do not serve within the Company, and are mandated to express the views of shareholders. Outside directors and outside supervisors do not receive any remuneration or allowance from the Company, nor are they granted any other compensation, social security or welfare benefits, etc.

(III) Inside Directors and Inside Supervisors

Inside directors and inside supervisors are directors and supervisors who hold positions in the Company other than their positions as a director or a supervisor without receiving a separate fixed allowance, and the standards for their remunerations and performance evaluations shall be subject to the administrative measures for the remuneration and evaluation of the other positions they hold.

(IV) Full-time Chairman of the Board

The structure and standard of the remuneration of the full-time chairman of the Board of Directors are implemented in reference to the remuneration administrative measures of the senior executives of the Company.

Article 4 The fixed director's allowance paid by the Company to the independent directors shall be accounted to the expenses of the Board of Directors of the Company. The individual income tax incurred in the fixed director's allowance acquired by independent directors will be withheld and paid by the Company in accordance with the law.

Article 5 Any expenses incurred by directors and members of the Board of Supervisors in performing their duties in accordance with national laws and regulations and the Articles of Association of the Company shall be borne by the Company, the payment of which shall not be seen as the granting of their remunerations or allowances, provided that such expenses are in line with relevant regulations.

Chapter III Supplementary Provisions

Article 6 Any matters not covered hereunder in these Measures shall be in accordance with the relevant national laws, administrative regulations, regulatory documents and the relevant provisions of the Articles of Association of the Company. In the case of any inconsistency hereunder with the relevant laws, administrative regulations, regulatory documents and the relevant provisions of the Articles of Association of the Company, such laws, administrative regulations, regulatory documents and provisions of the Articles of Association shall prevail.

Article 7 These Measures have been prepared by the Remuneration and Evaluation Committee of the Board of Directors and shall come into effect and be implemented upon the approval by the Board of Directors and the General Meeting of Shareholders of the Company, while the existing Administrative Measures for the Remuneration and Evaluation of Directors, Supervisors and Senior Executives of SDIC Power Holdings Co., Ltd. shall be canceled.

Annex of Administrative Measures for the Remuneration and Evaluation of Directors, Supervisors and Senior Executives

Standards for the Allowances of Independent Directors