THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of Pharmaron Beijing Co., Ltd. (康龍化成(北京)新藥技術股份有限公司). If you are in any doubt* as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Pharmaron Beijing Co., Ltd.* (康龍化成(北京)新藥技術股份有限公司), you should at once hand this circular and the accompanying form(s) of proxy and Independent Director’s Proxy Form(s) to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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**Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司**

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 3759)

(1) PROPOSED ADOPTION OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME;

(2) PROPOSED ADOPTION OF THE ASSESSMENT MANAGEMENT MEASURES FOR THE IMPLEMENTATION AND ASSESSMENT OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME; (3) PROPOSED ISSUE AND GRANT OF THE NEW A SHARES UNDER THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME PURSUANT TO SPECIFIC MANDATE;

(4) PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME;

(5) PROPOSED ADOPTION OF THE FIRST H SHARE AWARD AND TRUST SCHEME;

(6) PROPOSED AUTHORIZATION TO THE BOARD AND/OR THE DELEGATEE TO HANDLE MATTERS PERTAINING TO THE FIRST H SHARE AWARD AND TRUST SCHEME;

(7) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; (8) PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE
MATTERS PERTAINING TO THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND THE PROCEDURES FOR FILING THE
ARTICLES OF ASSOCIATION WITH THE MARKET SUPERVISION AND MANAGEMENT DEPARTMENT;
(9) PROPOSED CHANGE OF SUPERVISOR;
(10) NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020; AND
(11) NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2020

A letter from the Board is set out on pages 9 to 60 of this circular. Notices convening the EGM on Friday, December 11, 2020 at 2:30p.m., and after the conclusion of the EGM, the H Shares Class Meeting of the Company to be held at 6 Tai-He Road, Economic Technological Development Area, Beijing, the PRC, the form(s) of proxy and the Independent Director’s Proxy Form(s) will be despatched by the Company on November 25, 2020 and published and be available for downloading on the websites of The Stock Exchange of Hong Kong Limited (http://www.hkexnews.hk) and of the Company (www.pharmaron.com). Whether or not you are able to attend the EGM and the H Shares Class Meeting, you are reminded to complete, sign and return the corresponding reply slip(s), the the form(s) of proxy and the Independent Director’s Proxy Form(s) in accordance with the instructions printed thereon and return it to the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 24 hours before the time fixed for holding the EGM or any adjournment thereof. Completion and return of the form(s) of proxy and the Independent Director’s Proxy Form(s) will not preclude you from attending and voting in person at the EGM and the H Share Class Meeting or any adjournment thereof (as the case may be) if you so wish.

Reference to times and dates in this circular are to Hong Kong local times and dates.

For identification purposes only

November 25, 2020

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			9
Appendix I	–	Rules of the 2020 Restricted A Share Incentive
		Scheme (draft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Assessment Management Measures. . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	Rules of the First H Share Award and Trust
		Scheme (draft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	Proposed Amendments to the Articles of Association. . . . . .	IV-1
Appendix V	–	Proposed Change of Supervisor . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of the Third		Extraordinary General Meeting of 2020 . . . . . . . . . . . . . . . .	EGM-1
Notice of the Second H Shares Class Meeting of 2020 . . . . . . . . . . . . . . . . . . . . .			HCM-1

– i –

DEFINITIONS

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“A Share(s)”
ordinary share(s) in the share capital of the Company, with a nominal value of RMB1.00 each, which are traded in Renminbi and are listed on the Shenzhen Stock Exchange
“A Share Scheme”
The 2020 Restricted A Share Incentive Scheme of the Company
“A Share Scheme Rules”
the rules governing the operation of the A Share Scheme as well as the implementation procedure (as amended from time to time)
“A Shareholder(s)”
holder(s) of A Shares
“Actual Selling Price”

the actual price at which the Awards Shares are sold (net of brokerage, Stock Exchange trading fee, SFC transaction levy and any other applicable costs) on vesting of an Award pursuant to the H Share Scheme or in the case of a vesting when there is an event of change in control or privatization of the Company pursuant to the H Share Scheme Rules, the consideration receivable under the related scheme or offer

“Adjustment”

Adjustment to the number of Restricted Shares and/or the Grant Price upon occurrence of certain corporate actions of the Company according to the A Share Scheme. Further details of the Adjustment are summarized in the paragraph headed “II. Proposed Adoption of the 2020 Restricted A Share Incentive Scheme and the Assessment Management Measures – ix. Method and Procedures for Adjustment” in this circular

“Articles of Association”

the articles of association of the Company currently in force (as amended from time to time)

– 1 –

DEFINITIONS

“Assessment Management Measures”
“Award”
“Award Letter”
“Award Period”
“Award Shares”
“Board”
“Business Day”
“Class Meeting of A Shareholders” or “A Shares Class Meeting”
“Class Meeting of H Shareholders” or “H Shares Class Meeting”

the Assessment Management Measures for the Implementation and Assessment of the 2020 Restricted A Share Incentive Scheme of Pharmaron Beijing Co., Ltd. 《康龍化成(北京)新藥技術股份有限公司2020年A股限制性股票激勵計劃實施考核管理辦法》

award granted by the Management Committee to a Selected Participant, pursuant to the H Share Scheme, which may vest in the form of Award Shares or the Actual Selling Price of the Award Shares in cash, as the Management Committee may determine in accordance with the terms of the H Share Scheme Rules
A letter issued by the Company to each Selected Participant in such form as the Board or the Delegatee may from time to time determine, specifying the Grant Date, the manner of acceptance of the Award, the value of the Award and/or number of Award Shares underlying the Award (with the basis on which the number of Award Shares underlying the Award is arrived at), the vesting criteria and conditions, and the Vesting Date and such other details, terms and conditions as they may consider necessary and in compliance H Share Scheme
the period commencing on the Adoption Date, and ending on the Business Day immediately prior to the 10th anniversary of the date on which the Shareholders approve the H Share Scheme
the H Shares granted to a Selected Participant in an Award
the board of directors of the Company, from time to time
any day on which the Stock Exchange is open for the business of dealing in securities
the 2020 second class meeting of A Shareholders to be held on Friday, December 11, 2020
the 2020 second class meeting of H Shareholders to be held after the conclusion of the EGM on Friday, December 11, 2020

– 2 –

DEFINITIONS

“Class Meetings”

the Class Meeting of A Shareholders and the Class Meeting of H Shareholders

“Company”

Pharmaron Beijing Co., Ltd.* (康龍化成(北京)新藥技術股份有限公司)

“CSDC”

China Securities Depository and Clearing Co., Ltd.

“CSRC”

China Securities Regulatory Commission

“Delegatee(s)”
the Management Committee, person(s) or board committee(s) to which the Board has delegated its authority
“Director(s)” the director(s) of the Company, from time to time
“EGM”
the 2020 third extraordinary general meeting of the Company to be held on Friday, December 11, 2020 at 2:30 p.m.

“Eligible Employee(s)”

includes Plan A Eligible Employee for the purpose of the Employee Share Award Plan, and Plan B Eligible Employee for the purpose of the Share Bonus Plan; however, no individual who is resident in a place where the grant, acceptance or vesting of an Award pursuant to the H Share Scheme is not permitted under the laws and regulations of such place or where, in the view of the Board or the Delegatee, compliance with applicable laws and regulations in such place makes it necessary or expedient to exclude such individual, shall be entitled to participate in the H Share Scheme and such individual shall therefore be excluded from the term Eligible Employee

“First Plan A Awards”
the first ever grant of Awards under the Employee Share Award Plan
“Form of Proxy”

The form of proxy of the Company in respect of the resolutions set out in the Notice of EGM

– 3 –

DEFINITIONS

“Grant Date” the date on which the grant of an Award is made to a Selected Participant for the purposes of the H Share Scheme, being the date of an Award Letter, or the date on which the Restricted Shares are granted to a Participant as determined by the Board for the purposes of the A Share Scheme
“Grant Price” the price of each Restricted Share to be granted to the Participants (subject to Adjustment)
“Group” the Company and its subsidiaries from time to time, and the expression member of the Group shall be construed accordingly
“H Share(s)” the overseas listed foreign shares with a nominal value of RMB1.00 each in the share capital of the Company, which are listed on the Stock Exchange
“H Share Scheme”
The First H Share Award and Trust Scheme proposed to be adopted by the Company in accordance with the H Share Scheme Rules, which is made up of two plans, namely (i) the Employee Share Award Plan and (ii) the Share Bonus Plan
“H Share Scheme Limit”
Means the maximum size of the H Share Scheme, being the maximum number of H Shares that will be acquired by the Trustee through on-market transactions from time to time at the prevailing market price, and in any case being 7,940,000 H Shares
“H Share Scheme Rules”
the rules governing the operation of the H Share Scheme as well as the implementation procedure (as amended from time to time)
“H Shareholder(s)”
holder(s) of H Shares
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Director(s)”
the independent non-executive Directors of the Company

– 4 –

DEFINITIONS

“Independent Director’s Proxy Form”
“Last Practicable Date”
“Listing Rules”
“Management Committee”
“Management Measures”
“Notice of Class Meeting of H Shareholders” or “Notice of the Second H Shares Class Meeting of 2020”
“Notice of EGM”
“on-market”
“Participants”
“Plan A” or “Employee Share Award Plan”
the proxy form for the solicitation of votes by independent non-executive directors sent out by Ms. Chen Guoqin, an independent non-executive Director, to solicit votes from the Shareholders on the resolutions regarding the A Share Scheme and the related matters at the EGM
November 23, 2020, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
the management committee of the H Share Scheme, consisting of the Manager’s Committee, which includes the Chief Executive Officer, Chief Operating Officer, Executive Vice President, Chief Scientific Officer, the person-in-charge of the financials of the Company, and Board Secretary of the Company, to which the Board has delegated its authority to administer the H Share Scheme
the Management Measures for Share Incentives of Listed Companies (《上市公司股權激勵管理辦法》)
the notice of the Class Meeting of H Shareholders dated November 25, 2020, a copy of which is set out on pages HCM-1 to HCM-3 of this circular
the notice of the EGM dated November 25, 2020, a copy of which is set out on pages EGM-1 to EGM-4 of this circular
The acquisition of H Shares of the Company through one or more transactions through the facilities of the Stock Exchange in accordance with the Listing Rules and any other applicable laws and regulations
the participants of the A Share Scheme
one of the two plans which collectively make up the H Share Scheme

– 5 –

DEFINITIONS

“Plan A Eligible Employee”
any individual, being a Director, senior management, key operating team member, employee, or consultant, who is a full-time PRC or non-PRC employee of any members of the Group who is eligible to participate in the Employee Share Award Plan
“Plan B” or “Share Bonus Plan” one of the two plans which collectively make up the H Share Scheme
“Plan B Eligible Employee”
include any individual, being a Director, senior management, or key operating team member, who is a full-time PRC or non-PRC employee of any members of the Group who is eligible to participate in the Share Bonus Plan
“PRC” the People’s Republic of China
“PRC Company Law” the Company Law of the PRC
“PRC Securities Law” the Securities Law of the PRC
“Remuneration and Appraisal the Remuneration and Appraisal Committee of the Committee” Company
“Restricted Shares”
A Share(s) to be granted to the Participants by the Company on such conditions and at the Grant Price stipulated under the A Share Scheme, which are subject to the attribution conditions stipulated under the A Share Scheme and can only be attributed and transferred after satisfaction of the attribution conditions
“Returned Shares”
such Award Shares that are not vested and/or are forfeited in accordance with the terms of the H Share Scheme, or such H Shares being deemed to be Returned Shares under the H Share Scheme Rules

“RMB”

Renminbi, the lawful currency of the PRC

“Rules of Procedure for Board Meetings”
the rules of procedure for board meetings of the Company

– 6 –

DEFINITIONS

“Selected Participant(s)” any Eligible Employee who, in accordance with H Share Scheme Rules, is approved for participation in the Employee Share Award Plan or the Share Bonus Plan, and has been granted any Award under the respective plans
“SFC” the Securities and Futures Commission of Hong Kong “SFO” the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
“Share(s)” Ordinary share(s) in the share capital of the Company with a nominal value of RMB1.00 each, comprising H Shares and A Shares
“Shareholder(s)” the shareholder(s) of the Company “Shenzhen Listing Rules” the listing rules of the Shenzhen Stock Exchange “Shenzhen Stock Exchange” The Shenzhen Stock Exchange “Specific Mandate” the specific mandate to be sought from the Shareholders at the EGM and the Class Meetings to issue and allot not more than 844,000 A Shares (subject to Adjustment) as Restricted Shares under the A Share Scheme
“Supervisor(s)” Supervisor(s) of the Company “Supervisory Committee” the supervisory committee of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Codes on Takeovers and Mergers and Share Buybacks issued by the SFC from time to time
“Target Revenue Ratio Increase” the target revenue ratio increase as set out in the H Share Scheme Rules
“Trust” the trust constituted by the Trust Deed to service the H Share Scheme
“Trust Deed” the trust deed to be entered into between the Company and the Trustee (as may be restated, supplemented and amended from time to time)

– 7 –

DEFINITIONS

“Trustee”

the trustee appointed by the Company for the purpose of the Trust, and initially, Computershare Hong Kong Trustees Limited, a company incorporated in Hong Kong and having its registered office at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

“Vesting Date” the date or dates, as determined from time to time by the Board or the Delegatee on which the Award (or part thereof) is to vest in the relevant Selected Participant as set out in the relevant Award Letter
“Vesting Notice” the vesting notice to be sent to the relevant Selected Participant within a reasonable time period as agreed between the Trustee and the Board from time to time prior to any Vesting Date
“Vesting Period” The vesting period(s) of the Awards granted under the H Share Scheme
“%” percent

– 8 –

LETTER FROM THE BOARD

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**Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司**

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 3759)

Executive Directors: Dr. Lou Boliang Mr. Lou Xiaoqiang Ms. Zheng Bei

Non-executive Directors: Mr. Chen Pingjin Mr. Hu Baifeng Mr. Li Jiaqing Mr. Zhou Hongbin

Independent Non-executive Directors: Mr. Dai Lixin Ms. Chen Guoqin Mr. Tsang Kwan Hung Benson Mr. Yu Jian

Registered address, headquarters and principal place of business in the PRC: 8th Floor, Block 1 6 Tai-He Road Beijing Economic Technological Development Area Beijing PRC

Principal place of business in Hong Kong: 40th Floor, Sunlight Tower No. 248 Queen’s Road East Wanchai Hong Kong

November 25, 2020

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED ADOPTION OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME;

(4) PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME;

(5) PROPOSED ADOPTION OF THE FIRST H SHARE AWARD AND TRUST SCHEME;

(6) PROPOSED AUTHORIZATION TO THE BOARD AND/OR THE DELEGATEE TO HANDLE MATTERS PERTAINING TO THE FIRST H SHARE AWARD AND TRUST SCHEME;

(7) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; (8) PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND THE PROCEDURES FOR FILING THE ARTICLES OF ASSOCIATION WITH THE MARKET SUPERVISION AND MANAGEMENT DEPARTMENT;

(9) PROPOSED CHANGE OF SUPERVISOR;

(10) NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020; AND

(11) NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2020

– 9 –

LETTER FROM THE BOARD

I. INTRODUCTION

References are made to (i) the announcement of the Company dated November 6, 2020 in relation to, among other things, (a) the proposed adoption of the draft A Share Scheme and its summary; (b) the proposed adoption of the Assessment Management Measures; (c) the proposed issue and grant of the Restricted Shares pursuant to Specific Mandate; (d) the proposed authorization to the Board to handle matters pertaining to the A Share Scheme; (e) the proposed adoption of the draft H Share Scheme; and (f) the proposed authorization to the Board and/or the Delegatee to handle matters pertaining to the H Share Scheme; (ii) the announcement of the Company dated November 6, 2020 in relation to the proposed amendments to the Articles of Association; (iii) the proposed authorization to the Board to handle matters pertaining to the amendments to the Articles of Association and the procedures for filing the Articles of Association with the market supervision and management department; (iv) the announcement of the Company dated November 6, 2020 in relation to the proposed change of Supervisor; (v) the Notice of EGM; and (vi) the Notice of the Class Meeting of H Shareholders.

The purpose of this circular is to provide the Shareholders with information in respect of the resolutions to be proposed at the EGM and the Class Meetings to be held on Friday, December 11, 2020 to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the EGM and the Class Meetings. For the details of the proposed resolutions at the EGM and Class Meeting of H Shareholders, please also refer to the Notice of EGM and the Notice of the Class Meeting of H Shareholders.

II. PROPOSED ADOPTION OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME AND THE ASSESSMENT MANAGEMENT MEASURES

Reference is made to the Company’s announcement dated November 6, 2020 in relation to the proposed adoption of the A Share Scheme and the proposed grant of the Specific Mandate to issue Restricted Shares.

To achieve and realize the purpose of the A Share Scheme as set out in the paragraph “i. Purpose of the A Share Scheme” below, the Board passed the resolution on November 6, 2020 on the proposed adoption of the A Share Scheme. A special resolution will be proposed at the EGM and the Class Meetings to consider and approve the adoption of the draft A Share Scheme and its summary.

The full text of the A Share Scheme (draft) is set out in Appendix I to this circular. The A Share Scheme was prepared in the Chinese language. In the event of any discrepancy between the English translation and the Chinese version of the A Share Scheme, the Chinese version shall prevail.

– 10 –

LETTER FROM THE BOARD

The principal terms of the proposed A Share Scheme are summarized as follows:

(i) Purpose of the A Share Scheme

(ii) Form and Source of the Restricted Shares to be Granted

The form of incentive adopted under the A Share Scheme is Restricted Shares (Type II Restricted Shares).

The source of all Restricted Shares under the A Share Scheme will be new ordinary A Shares to be issued by the Company to the Participants.

(iii) Number of Restricted Shares to be Granted

The total number of Restricted Shares to be granted under the A Share Scheme will be not more than 844,000 A Shares, representing approximately 0.1062% of the total issued share capital of the Company as at the Latest Practicable Date (subject to Adjustment).

The cumulative total number of underlying Shares involved under the fully effective share incentive schemes of the Company shall not exceed 20% of the total share capital of the Company as at the date the A Share Scheme is submitted for approval at the EGM and the Class Meetings. The total number of Shares to be granted to any participants under all the fully effective share incentive schemes of the Company shall not exceed 1% of the total share capital of the Company.

– 11 –

LETTER FROM THE BOARD

(iv) Participants of the A Share Scheme

(A) Basis for determining the Participants

The source of all Restricted Shares under the A Share Scheme will be new ordinary A Shares to be issued by the Company to the Participants.

(i) Legal basis for determining the Participants

The Participants are determined after taking into account the actual circumstances of the Company and in accordance with the PRC Company law, the PRC Securities Law, the Management Measures, the Hong Kong Listing Rules, the Shenzhen Listing Rules, Guide No. 5 to Handling Business of Listed Companies – Equity Incentives (《創業板上市公司業務辦理指南第5號 — 股權激勵》) and other relevant laws, regulations and regulatory documents as well as the Articles of Association.

(ii) Positions held by Participants in the Company

The Participants include high-level management, mid-level management, core technical personnel, basic-level management and technical personnel considered by the Board to be required to be incentivized of the Group. The list of Participants will be prepared by the Remuneration and Appraisal Committee and verified by the Supervisory Committee.

(B) Scope of the Participants

The total number of the Participants for the grant proposed under the A Share Scheme shall be 209.

None of the Participants are Independent Director, Supervisor, non-PRC employee, shareholders who individually or collectively hold more than 5% of the Shares of the Company, de facto controllers, or the spouses, parents or children of such de facto controllers of the Company. All Participants must have an employment or labour relationship with the Company or its subsidiaries when a grant under the A Share Scheme is made and during the assessment period of the A Share Scheme.

(C) Persons who are prohibited to participate in the A Share Scheme

The person has been determined as an inappropriate candidate by the Shenzhen Stock Exchange within the past 12 months;
The person has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;

– 12 –

LETTER FROM THE BOARD

The person has been subject to administrative punishment or market ban measures by CSRC and its delegated institutions due to major illegal acts in the past 12 months;
The person has the circumstances stipulated in the PRC Company Law that he/she shall not act as a director or senior manager of any company;
Laws and regulations stipulate that the person shall not participate in the equity incentives of listed companies;
Other circumstances as determined by the CSRC.

During the implementation process of the A Share Scheme, if any of the above circumstances in relation to a Participant arises, the Company shall terminate his/her right to participate in the A Share Scheme, and any granted Restricted Shares which have not yet been attributed shall not be attributed and shall be forfeited.

(D) Allocation of Restricted Shares to be granted

The allocation of the Restricted Shares to be granted under the A Share Scheme is set out in the table below:

Rank of Participants (number of such Participants) High-level management (2) Mid-level management and core technical personnel (60) Management and technical personnel (147) Total Notes:	Number of Restricted Shares to be Granted 125,000 448,000 271,000 844,000	Percentage to the total number of Restricted Shares 14.81% 53.08% 32.11% 100%	Percentage to the total share capital of the Company as at the Latest Practicable Date 0.0157% 0.0564% 0.0341%
			0.1062%

(1) Any discrepancies in this table between the total shown and the sum of the amounts listed are due to rounding.
(2) The number of the Restricted Shares is subject to Adjustment.

If a Participant, due to personal reasons, voluntarily waives the Restricted Shares which have been granted to him/her, the Board of Directors shall adjust the number of granted Restricted Shares accordingly.

– 13 –

LETTER FROM THE BOARD

(v) Grant Price and Basis of Determination of the Grant Price

(A) Grant Price of the Restricted Shares

The Grant Price of the Restrictive Shares shall be RMB55.78 per A Share (subject to Adjustment). A Participant who has satisfied the conditions for grant and attribution may purchase new A Shares issued by the Company at such Grant Price (subject to Adjustment).

(B) Basis of determination of the Grant Price

Pursuant to the Shenzhen Listing Rules and the Management Measures, the Grant Price shall not be lower than the nominal value of each Share of the Company and in principle should not be lower than the higher of the following prices:

50% of the average trading price of the Company’s shares on the trading day immediately preceding the date of the announcement on the proposed adoption of the A Share Scheme amongst other things (i.e. November 6, 2020), being RMB55.78 per A Share; and
50% of any one of the average trading price of the Company’s shares for the 120 trading days immediately preceding the date of the announcement on the proposed adoption of the A Share Scheme amongst other things (i.e. November 6, 2020), being RMB49.47 per A Share.

The Grant Price is at a substantial discount of the prevailing trading price of the A Shares. The Grant Price was determined in accordance with the price references abovementioned. This was also determined with a view to stabilize talents and effectively incentivize employees under different cycles and business environments which may allow the Company to gain advantage in the competitive industry that it operates in. The Board has also taken into consideration the level of difficulty of the performance targets which Participants must achieve for the Restricted Share(s) to be attributed, and considers that this is in balance with the substantial discount in the Grant Price.

The Grant Price of RMB55.78 represents:

(i) a discount of approximately 47.25% to the closing price of HKD122.60 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 51.50% to the closing price of RMB115.00 per A Share as quoted on the Shenzhen Stock Exchange on the trading day immediately preceding November 6, 2020 (being the date on which the Board approved the A Share Scheme);

– 14 –

LETTER FROM THE BOARD

(ii) a discount of approximately 43.57% to the average closing price of HKD114.6 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 51.19% to the average closing price of RMB114.29 per A Share as quoted on the Shenzhen Stock Exchange on the 5 consecutive trading days immediately preceding November 6, 2020;
(iii) a discount of approximately 39.59% to the average closing price of HKD107.04 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 50.18% to the average closing price of RMB111.97 per A Share as quoted on the Shenzhen Stock Exchange on the 20 consecutive trading days immediately preceding November 6, 2020;
(iv) a discount of approximately 38.59% to the closing price of HKD105.30 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 43.66% to the closing price of RMB99 per A Share as quoted on the Shenzhen Stock Exchange as at the Latest Practicable Date; and
(v) a premium of approximately 439.98% to the net asset value per share of the Company, being approximately RMB10.33 (calculated based on the consolidated net asset value of the Company as at 30 June 2020 of approximately RMB8,208,936,000 and the number of issued Shares as at the Latest Practicable Date, being 794,387,462 Shares).

In the event of any capitalization issue, bonus issue, dividend distribution, share split or share consolidation or rights issue of the Company during the period from the date of the announcement of the A Share Scheme to the date of completion of attribution registration of the Restricted Shares by Participants, the Grant Price and the number of Restricted Shares shall be adjusted in accordance with the terms of the A Share Scheme as summarized in the paragraph “ix. Method and Procedures for Adjustment” below.

(vi) Validity Period, Grant Date, Attribution Arrangements and Black-Out Periods

(A) Validity period of the A Share Scheme

The A Share Scheme will become effective upon the Grant Date of the Restricted Shares under the A Share Scheme, and shall be valid until the date on which all Restricted Shares have been attributed or forfeited, such period shall not exceed 63 months.

(B) Grant Date of the Restricted Shares

The Company will convene a Board meeting to determine whether the conditions of the grant under the A Share Scheme have been met and the Grant Date after the A Share Scheme having been adopted and approved at the EGM and the Class Meetings. The Company shall grant the Restricted Shares to the Participants and complete the relevant procedures including making relevant announcement(s), within 60 days after the A Share

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LETTER FROM THE BOARD

Scheme having been adopted and approved at the EGM and the Class Meetings and the conditions for the grant having been satisfied. If the Company is unable to complete the procedures within the 60-day period, the Company will make a timely announcement to disclose the reason for being unable to complete the procedures and declare the termination of the A Share Scheme.

The Grant Date must be a trading day. If the Grant Date falls on a non-trading day, then it shall be the next trading day immediately after such non-trading day.

(C) Attribution arrangements under A Share Scheme

Subject to the attribution conditions having been fulfilled, the Restricted Shares may be attributed to the Participants in four tranches. An attribution date must be a trading day within the validity period of the A Share Scheme, and shall not fall within any of the following periods:

60 days prior to the publication of the annual results announcement (inclusive of the date of publication of the annual report), or the period between the end of the relevant financial year and the publication of the annual report, whichever is shorter;
30 days prior to the publication of the half-year report or quarterly report (inclusive of the date of publication of such half-year or quarterly report), or the period between the end of the half-year or the quarter and the publication of the relevant report, whichever is shorter;
10 days prior to the disclosure of results preview or preliminary financial results;
during the period from the date of occurrence of a material event which may have considerable impact on the trading price of the shares and their derivatives of the Company, or the date of entering the decision-making process, up to 2 trading days after relevant disclosure has been made in accordance with the laws; or
any other period stipulated by the CSRC and the Shenzhen Stock Exchange.

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LETTER FROM THE BOARD

Attribution arrangements under the A Share Scheme are as follows:

		Attribution
Tranche	Attribution Period	Percentage
First tranche	From the first trading day after the	25%
	expiry of 15 months following the
	Grant Date until the last trading day
	within the 27 months following the
	Grant Date
Second tranche	From the first trading day after the	25%
	expiry of 27 months following the
	Grant Date until the last trading day
	within the 39 months following the
	Grant Date
Third tranche	From the first trading day after the	25%
	expiry of 39 months following the
	Grant Date until the last trading day
	within the 51 months following the
	Grant Date
Fourth tranche	From the first trading day after the	25%
	expiry of 51 months following the
	Grant Date until the last trading day
	within the 63 months following the
	Grant Date

Those Restricted Shares which have not been attributed during the period of their respective tranches as a result of failure to fulfil the attribution conditions are not allowed to be attributed or deferred to be attributed in the next attribution period(s) and shall be forfeited.

Upon attribution, the Restricted Shares will be registered with the CSDC under the Participant’s name.

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LETTER FROM THE BOARD

(D) Black-out periods

The requirements of black-out for the Restricted Shares under the A Share Scheme are implemented in accordance with relevant laws, regulations and regulatory documents including the PRC Company Law and the PRC Securities Law, and the Articles of Association as follows:

Any Restricted Share attributed in the respective tranche shall not be transferable for 6 months from the date of satisfying the vesting conditions considered and approved by the Board for the Restricted Shares in each tranche;
Where the Participant is a director or a member of the senior management of the Company, the number of Shares which may be transferred each year during his/her term of office shall not exceed 25% of the total number of Shares held by him/her. No Shares held by him/her may be transferred within six months after his/her termination of office;
For Participants who are directors or members of the senior management of the Company and their spouses, parents or children, if they have sold the Shares held by them within 6 months after purchasing such Shares, or if they have purchased the Shares within 6 months after selling their Shares, the gains obtained therefrom shall be attributed to the Company and the Board shall forfeit the gains; and
During the validity period of the A Share Scheme, if the relevant requirements under the relevant laws, administrative regulations, regulatory documents such as the PRC Company Law and the PRC Securities Law and the Articles of Association regarding the transfer of shares held by the directors and members of the senior management of the Company are changed, the transfer of the Shares held by the Participants shall comply with the relevant laws, regulations and regulatory documents including the PRC Company Law and the PRC Securities Law and the Articles of Association as amended at the time of transfer.

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LETTER FROM THE BOARD

(vii) Conditions for Grant and Attribution of Restricted Shares

(A) Conditions for grant of the Restricted Shares

The Company shall grant the Restricted Shares to the Participants upon satisfaction of all of the following granting conditions; or conversely, if any of the following granting conditions has not been satisfied, no Restricted Shares shall be granted to the Participants:

1. None of the following has occurred on the part of the Company:

(a) An audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(b) An audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(c) In the past 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public commitments;
(d) Laws and regulations stipulate that equity incentives shall not be implemented; or
(e) Other circumstances as determined by the CSRC.

2. None of the following has occurred on the part of the Participants:

(a) The Participant has been determined as an inappropriate candidate by the Shenzhen Stock Exchange within the past 12 months;
(b) The Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
(c) The Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the past 12 months;
(d) The Participant has the circumstances stipulated in the PRC Company Law that he/she shall not act as a director or member of the senior management of any company;
(e) Laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies; or
(f) Other circumstances as determined by the CSRC.

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LETTER FROM THE BOARD

(B) Conditions for attribution of the Restricted Shares

For the Restricted Shares to be attributed to the Participants, among others, all of the following conditions need to be satisfied within the attribution period:

1. None of the following has occurred on the part of the Company:

(a) An audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(b) An audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(c) In the past 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public commitments;
(d) Laws and regulations stipulate that equity incentives shall not be implemented; or
(e) Other circumstances as determined by the CSRC.

In the event that any one of the circumstances specified above arises, the Restricted Shares that have been granted but have not yet been attributed to the Participant under the A Share Scheme shall not be attributed and shall be forfeited.

2. None of the following has occurred on the part of the Participants:

(a) The Participant has been determined as an inappropriate candidate by the Shenzhen Stock Exchange within the past 12 months;
(b) The Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
(c) The Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the past 12 months;
(d) The Participant has the circumstances stipulated in the PRC Company Law that he/she shall not act as a director or member of the senior management of any company;
(e) Laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies; or

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LETTER FROM THE BOARD

(f) Other circumstances as determined by the CSRC.

In the event that any one of the circumstances specified above arises in relation to a certain Participant, the Company will terminate such Participant’s right to participate in the A Share Scheme and the Restricted Shares that have been granted but have not yet been attributed to such Participant under the A Share Scheme shall not be attributed and shall be forfeited.

3. Requirements of length of employment of the Participants

The Participant must be employed by the Group for more than 12 months before each tranche of attribution of Restricted Shares.

4. Performance assessment requirements at the Company level

Under the A Share Scheme, the Company’s performance will be evaluated on an annual basis for the financial years of 2021 to 2024, and the achievement of performance assessment target will be one of the attribution conditions for the Participants for the current year.

The performance assessment targets under the A Share Scheme are set out below:

Attribution Period

Performance Assessment Target

First Attribution Period

30%

(Company’s revenue increase for the year ended December 31, 2021 as compared to the year ended December 31, 2019)

Second Attribution Period

45%
(Company’s revenue increase for the year ended December 31, 2022 as compared to the year ended December 31, 2019)

Third Attribution Period

60%
(Company’s revenue increase for the year ended December 31, 2023 as compared to the year ended December 31, 2019)

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LETTER FROM THE BOARD

Attribution Period	Performance Assessment Target
Fourth Attribution Period	75%
	(Company’s revenue increase for the year
	ended December 31, 2024 as compared
	to the year ended December 31, 2019)

Note: Revenue refers to the audited revenue of the Company.

During the attribution period, the Company will handle the registration of the attributed Restricted Shares for the Participants who have satisfied the attribution conditions. In the event that the above performance assessment requirements at the Company level have not been reached within the respective attribution tranche, the Restricted Shares that have been granted but are yet to be vested to the Participants in such tranche shall not be attributed and shall be forfeited.

5. Performance assessment requirements at the Participant’s individual level

The individual assessment of Participants is carried out according to the internal performance assessment system of the Company. The results of the individual assessment of Participants are divided into two levels – “pass” and “fail”, and the corresponding attribution percentage is as follows:

Assessment Results	Pass	Fail
Attribution Percentage	100%	0%

Subject to the Company achieving the aforementioned performance assessment target in the respective attribution period, the Restricted Shares that have been granted but are yet to be attributed to the Participant in such tranche shall be attributed to such Participant if he/she achieves assessment result of “pass” in the year immediately preceding. If the assessment result achieved by such Participant is “fail”, the Restricted Shares that have been granted but are yet to be attributed to the Participants in such tranche shall not be attributed and shall be forfeited.

The content of the assessment under the A Share Scheme is implemented in accordance with the Assessment Management Measures.

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LETTER FROM THE BOARD

6. Explanation on reasonableness of the performance appraisal indicators of the Restricted Shares

Since its establishment, the Company has been focusing on small molecule drug R&D services, and continues to build and improve a fully-integrated and international pharmaceutical R&D service platform. The Company has set out a drug R&D service framework in compliance with general global R&D standards to provide customers with complete solutions for drug research, development and production around the world. Currently, the Company’s customer portfolio comprises the top 20 multinational pharmaceutical companies worldwide.

In order to realize the strategy of the Company and maintain its competitiveness, the Company intends to motivate the high-level management, mid-level management, core technical personnel, basic-level management and technical personnel of the Company through the implementation of the A Share Scheme. After reasonable prediction and taking into account the incentive effects of the A Share Scheme, the revenue of the Company is adopted as the company-level performance evaluation indicator under the A Share Scheme, which can directly reflect the Company’s principal business operations and indirectly reflect the market share of the Company in the industry.

The performance targets under the A Share Scheme are formulated with reference to the prevailing situation and future strategic planning of the Company as well as industry trends and other factors. The satisfaction of the performance targets presents a certain degree of challenge, which helps to continuously improve the profitability of the Company and proactiveness of the staff, ensure the successful implementation of future development strategy and business objectives, and bring better and lasting returns to the shareholders.

In addition to the performance indicators at the Company level, the Company has also set up a strict performance appraisal system at the Participant’s individual level, which allows a more accurate, comprehensive evaluation of the work performance of the Participants. The Company will determine whether the Participants meet the attribution conditions based on the annual performance evaluation results of the Participants.

In summary, the Company’s appraisal system under the A Share Scheme is integrated, comprehensive and operable. Such appraisal system can incentivize the enthusiasm and creativity of the Participants, promote the construction of a core team of the Company, and restrain the Participants, thereby serving as a solid guarantee for the Company’s future business strategies and objectives.

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LETTER FROM THE BOARD

(viii) Implementation, Grant and Attribution Procedures

(A) Procedures for the implementation of the A Share Scheme

1. The Remuneration and Appraisal Committee is responsible for formulating the A Share Scheme and the Assessment Management Measures of the Company.

2. The Board shall resolve on the A Share Scheme and the Assessment Management Measures of the Company formulated by the Remuneration and Appraisal Committee. When the Board resolves on the A Share Scheme, connected Directors who have an interest in the resolution shall abstain from voting.

3. The Independent Directors and the Supervisory Committee will express opinions on whether the A Share Scheme is conducive to the sustainable development of the Company, whether there are any circumstances apparently harmful to the interests of the Company and all Shareholders.

4. The Company will engage an independent financial consultant to give professional opinions on the feasibility of the A Share Scheme, the reasonableness of the Grant Price, whether the A Share Scheme is conducive to the sustainable development of the Company, whether there are any circumstances apparently harmful to the interests of the Company and all Shareholders. The Company will engage a legal advisor to issue a legal opinion on the A Share Scheme.

5. Within two trading days after the Board having reviewed and approved the A Share Scheme, the Company will make an announcement of Board resolutions, the draft and summary of the A Share Scheme, the opinions of Independent Directors, and the opinions of the Supervisory Committee.

6. The Company shall carry out self-investigation on the dealing of Shares by insiders during the 6 months’ period prior to the announcement of the A Share Scheme to examine whether any insider dealing exists.

7. Before convening the EGM and the Class Meetings, the Company shall announce the name and position of the Participants internally via the Company website or other channels for 10 days. The Supervisory Committee shall review the list of the Participants and take sufficient consideration of the public response. The Company shall disclose the information regarding the review by the Supervisory Committee regarding the list of Participants and the publication responses 3 to 5 days prior to the consideration of the A Share Scheme at the EGM and the Class Meetings.

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LETTER FROM THE BOARD

8. When the EGM and the Class Meetings are convened to consider and, if thought fit, approve the A Share Scheme, the Independent Directors shall solicit proxy voting rights from all Shareholders regarding the resolutions related to the A Share Scheme. The A Share Scheme and relevant resolutions shall be considered and, if thought fit, approved by the Shareholders by way of special resolution at the EGM and the Class Meetings. Connected Shareholders who have an interest in the resolution shall abstain from voting.

9. The Company will make an announcement of the Shareholders’ resolutions, the A Share Scheme as approved at the EGM and the Class Meetings, as well as the self-investigation report and legal opinion of the insiders trading of the Shares. Where connected persons or other situations required by the listing rules of the place where the Company’s securities are listed are involved, the Company shall comply with such local laws and regulations and meet the relevant requirements (including, if necessary, obtaining prior approval from the independent Shareholders).

10. The Board will grant the Restricted Shares to the Participants and make announcements and complete other relevant procedures pursuant to the authorization granted by the Shareholders within 60 days after the A Share Scheme having been adopted and approved at a general meeting and the Class Meetings. The Board shall handle specific matters such as the attribution and registration of Restricted Shares in accordance with the authorization at the EGM and the Class Meetings.

(B) Procedures for the grant of the Restricted Shares

1. The Board shall convene a meeting to grant the Restricted Shares to the Participants within 60 days after the A Share Scheme having been adopted and approved at the EGM and the Class Meetings.

2. Before granting the Restricted Shares to the Participants, the Board shall convene a meeting to consider whether the Participants have satisfied the conditions for grant prescribed in the A Share Scheme and make an announcement thereafter. The Independent Directors and the Supervisory Committee shall also issue their explicit opinions at the same time. The legal advisor shall issue legal opinions as to whether the Participants have satisfied the conditions of the grant. The Supervisory Committee shall verify the Grant Date and the list of Participants and issue an opinion. When there is discrepancy between the Company’s grant of the Restricted Shares to the Participants and the arrangement stipulated under the A Share Scheme, the Independent Directors, the Supervisory Committee (when the Participants change), legal advisor and independent financial consultants shall simultaneously express clear opinions.

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LETTER FROM THE BOARD

3. The Company shall enter into an “Agreement on the Granting of Restricted Shares” with the Participants setting out their respective rights and obligations.

4. The Company shall keep a register for management of the Restricted Shares with reference to the “Agreement on the Granting of Restricted Shares” signed by the Participants and the subscription situation, and such register shall record the names of the Participants, the number of Restricted Shares granted, the Grant Date and the serial number of the relevant agreement on granting of the Restricted Shares.

5. The Company shall grant the Restricted Shares to the Participants and make an announcement within 60 days after the A Share Scheme is considered and approved at the EGM and the Class Meetings. If the Company fails to make an announcement in respect of the grant of the Restricted Shares within the 60-day period, the A Share Scheme shall be terminated, and the Board shall promptly disclose the reasons for the failure to implement the A Share Scheme and is prohibited from approving a share incentive scheme again within 3 months thereafter.

6. Where connected persons or other situations required by the listing rules of the place where the Company’s securities are listed are involved, the Company shall comply with such local laws and regulations and meet the relevant requirements (including, if necessary, any prior approval from the independent Shareholders).

(C) Procedures for the attribution of the Restricted Shares

1. Prior to attribution, the Company shall confirm whether the Participants have satisfied the attribution conditions. The Board shall consider whether the attribution conditions under the A Share Scheme have been satisfied and the Independent Directors and Supervisory Committee shall issue their explicit opinions at the same time. The Company’s legal advisor shall issue legal opinions as to whether the conditions for attribution of the Restricted Shares have been satisfied. A Board meeting to consider the satisfaction of attribution conditions under the A Share Scheme shall be convened within 6 months after each attribution period begins.

2. Each Participant shall set up a cash securities account before the first attribution period begins. The Participants who have fulfilled the attribution conditions shall within 3 months after the meeting of the Board to consider the satisfaction of attribution conditions (specific payment time shall be subject to payment notice confirmation to be issued by the Company at the time), pay the Grant Price for the subscription of the Restricted Shares into the account designated by the Company, which will be verified and confirmed by a certified public accountant. Participants who have not paid the Grant Price

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within the requisite period shall be deemed to have waived his/her right to subscribe for the Restricted Shares. The Company shall apply to the Shenzhen Stock Exchange for the attribution of the Restricted Shares to Participants, and apply to the CSDC for the attribution matters after confirmation by the Shenzhen Stock Exchange. The Restricted Shares of the Participants who have not fulfilled the attribution conditions in the relevant tranche shall not be attributed and shall be forfeited. The Company shall make timely disclosure in respect of the implementation of the A Share Scheme.

3. Subject to the black-out period aforementioned, participants may transfer their attributed Restricted Shares, however, the transfer of the Restricted Shares held by the Directors and members of the senior management of the Company should comply with the requirements of the relevant laws, regulations and regulatory documents.

In each of the above Board meetings, Directors who have an interest in the relevant resolution shall abstain from voting.

(ix) Method and Procedures for Adjustment

(A) Adjustment method of the number of the Restricted Shares

In the event of any capitalization issue, bonus issue, sub-division, rights issue or share consolidation of the Company during the period from the date of announcement of the A Share Scheme to the completion of attribution registration of Restricted Shares by the Participants, the number of Restricted Shares shall be adjusted accordingly. Adjustment will be made according to the following manners, and in certain event, the aggregate number of Restricted Shares (as adjusted) may exceed 844,000 A Shares. The adjustment method is as follows:

1. Capital reserve converted into share capital, bonus stock distribution, stock split

Q = Q0 × (1 + n)

Where: Q0 represents the number of Restricted Shares before the adjustment; n represents the ratio of increase per share resulting from the issue of shares by conversion of capital reserve, bonus issue or sub-division of shares (i.e. the number of shares increased per share upon issue of shares by conversion of capital reserve, bonus issue or sub-division of shares); Q represents the number of Restricted Shares after the adjustment.

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2. Rights issue

==> picture [193 x 11] intentionally omitted <==

Where: Q0 represents the number of Restricted Shares before the adjustment; P1 represents the closing price as at the record date; P2 represents the price of the rights issue; n represents the ratio of the rights issue (i.e. the ratio of the number of shares to be issued under the rights issue to the total share capital of the Company before the rights issue); Q represents the number of Restricted Shares after the adjustment.

3. Share consolidation

==> picture [74 x 10] intentionally omitted <==

Where: Q0 represents the number of Restricted Shares before the adjustment; n represents the ratio of consolidation of shares (i.e. one Share of the Company shall be consolidated into n Shares); Q represents the number of Restricted Shares after the adjustment.

4. New issue of shares

In the event of new issue of Shares by the Company, no adjustment shall be made to the number of Restricted Shares.

(B) Adjustment method of the Grant Price of the Restricted Shares

1. Capital reserve converted into share capital, bonus stock distribution, stock split

==> picture [97 x 10] intentionally omitted <==

Where: P0 represents the Grant Price before the adjustment; n represents the ratio of increase per share resulting from the issue of shares by conversion of capital reserve, bonus issue or sub-division of shares to each Share; P represents the Grant Price after the adjustment.

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LETTER FROM THE BOARD

2. Rights issue

==> picture [194 x 11] intentionally omitted <==

Where: P0 represents the Grant Price before the adjustment; P1 represents the closing price as at the record date; P2 represents the price of the rights issue; n represents the ratio of the rights issue (i.e. the ratio of the number of shares to be issued under the rights issue to the total share capital of the Company before the rights issue); P represents the Grant Price after the adjustment.

3. Share consolidation

==> picture [70 x 10] intentionally omitted <==

Where: P0 represents the Grant Price before the adjustment; n represents the ratio of consolidation of shares; P represents the Grant Price after the adjustment.

4. Dividend distribution

==> picture [73 x 10] intentionally omitted <==

Where: P0 represents the Grant Price before the adjustment; V represents the dividend per share; P represents the Grant Price after the adjustment. P shall be greater than 1 after the dividend distribution.

5. New issue of shares

In the event of new issue of Shares by the Company, no adjustment shall be made to the Grant Price of the Restricted Shares.

(C) Adjustment procedures

The Grant Price adjusted according to the terms of the A Share Scheme should also comply with the Shenzhen Listing Rules and the Management Measures. The Board is required to make such adjustments based on the principles, methods and procedures of the A Share Scheme. The Company’s counsel as to PRC laws will issue an opinion as to whether the above adjustment is in compliance with the Management Measures, the Articles of Association and the A Share Scheme and whether the relevant adjustment procedures have been complied with.

The Company’s general meeting authorizes the Board to adjust the number of Restricted Shares and the Grant Price based on the reasons set forth in the A Share Scheme. After the Board adjusts the number of Restricted Shares and the Grant Price in accordance with the above provisions, it shall promptly announce and notify the

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LETTER FROM THE BOARD

Participants. The Company shall employ lawyers to provide professional opinions to the Board on whether the above adjustments comply with the requirements under the Management Measures, the Articles of Association and the A Share Scheme.

If the number of the Restricted Shares and the Grant Price need to be adjusted due to matters other than the above circumstances, in addition to the Board’s approval of the relevant proposals, such adjustments must be submitted to the general meeting of the Company for approval.

(x) Other Rights and Obligations of the Company and the Participants and Dispute Mechanism

(A) Rights and obligations of the Company

1. The Company has the right to interpret and implement the A Share Scheme, to conduct performance appraisal on the Participants, and to supervise and examine whether the Participants are eligible for attribution. If the Participants fail to meet the attribution conditions as determined under the A Share Scheme, upon approval by the Board, the Restricted Shares that have been granted to the Participants but have not yet been attributed shall not be attributed and shall be forfeited.

2. The Company has the right to require the Participants to work for the Company according to the requirements of the positions at which he/she is employed. If the Participant is not qualified for the positions or fails the assessment, or if the Participant violates the law, violates professional ethics, divulges company secrets, violates the Company’s rules and regulations, neglects his/her duty or malfeasance or has other acts that seriously damage the Company’s interests or reputation, upon approval by the Board, the Restricted Shares that have been granted to the Participants but have not yet been attributed shall not be attributed and shall be forfeited.

3. The Company shall withhold and pay the personal income tax and other taxes and fees payable by the Participants according to the relevant provisions of the national tax laws and regulations.

4. The Company undertakes not to provide loans and any other forms of financial assistance, including providing guarantee for their loans, to the Participants to obtain relevant Restricted Shares according to the A Share Scheme.

5. The Company shall timely, truly, accurately and completely disclose the information disclosure documents related to the A Share Scheme in accordance with the relevant laws, regulations and regulatory documents, ensure that there are no false records, misleading statements or material omissions, and timely fulfill the relevant reporting obligations of the A Share Scheme.

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6. In accordance with the A Share Scheme and the relevant requirements of the CSRC, the Shenzhen Stock Exchange and registration and clearing companies, the Company shall handle the registration of the attribution of Restricted Shares for the Participants that meet the attribution conditions. However, the Company shall not be held liable if the Participants fails to complete the registration matters of the attribution of Restricted Shares and causes losses to the Participants due to the reasons on the part of the CSRC, the Shenzhen Stock Exchange and the registration and clearing companies.

7. Other relevant rights and obligations stipulated in laws, administrative regulations and regulatory documents.

(B) Rights and obligations of the Participants

1. The Participants shall be diligent and responsible, abide by professional ethics, and make due contributions to the development of the Company in accordance with the requirements of the positions at which he/she is employed by the Company.

2. The Participants have the right to receive the attributed Restricted Shares granted in accordance with the A Share Scheme, and should follow the black-out obligations aforementioned and deal with his/her Restricted Shares in accordance with relevant provisions.

3. The source of funds for the Participants is their own financing.

4. Prior to the attribution, the Restricted Shares granted to the Participants under the A Share Scheme shall not be transferred, used to guarantee or repay debts.

5. Prior to the attribution, the Restricted Shares granted to the Participants under the A Share Scheme do not carry any voting rights or right to participate in the distribution of bonus shares or share dividends.

6. The income received by the Participants as a result of the A Share Scheme shall be subject to personal income tax and other taxes and fees in accordance with national tax regulations.

7. The Participants undertake that if there are false records, misleading statements or material omissions in the Company’s information disclosure documents, resulting in non-compliance with the arrangement for granting rights and interests, the Participants shall fulfill their undertakings and return all the benefits obtained from the A Share Scheme to the Company after confirming the existence of false records, misleading statements or major omissions in the relevant information disclosure documents.

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8. If the Participant is no longer eligible to be a Participant under the A Share Scheme as stipulated in Article 8 of the Management Measures during the implementation of the A Share Scheme, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.

9. If the Participant ceases to be employed by the Company after attribution of the Restricted Shares, such Participant shall not engage in business related or similar to that of the Company for two years following the end of such Participant’s employment with the Company. If the Participant who ceases to be employed by the Company after attribution of the Restricted Shares, engages in business related or similar to that of the Company within the two years following the end of such Participant’s employment with the Company, such Participant shall return to the Company all interests in the Restricted Shares granted, and be liable for damages for breach in the same amount. Such Participant shall also be liable for damages should he/she cause loss to the Company.

10. Other relevant rights and obligations stipulated in laws, administrative regulations, regulatory documents and the A Share Scheme.

(C) Dispute settlement mechanism between the Company and the Participants

Any dispute between the Company and the Participants shall be resolved in accordance with the provisions of the A Share Scheme and the “Agreement on the Granting of Restricted Shares”. In event of any dispute that is not clearly covered by such provisions, the Company and the Participants shall negotiate and resolve their disputes in accordance with national laws and the principles of fairness and reasonableness. Where any dispute cannot be settled by negotiation, it shall be resolved through litigation by submitting to the People’s Court with jurisdiction over the Company’s place of business.

(xi) Amendment and Termination of the A Share Scheme

(A) Procedure for the amendment and termination of the A Share Scheme

1. Procedure for the amendment of the A Share Scheme

(a) If the Company intends to make amendments to the A Share Scheme before it is considered and approved by the Shareholders at the EGM and the Class Meetings, the amendments shall be considered and approved by the Board. If the Company intends to make amendments to the A Share Scheme that has been adopted by Shareholders at the EGM and the Class Meetings, such amendments shall be submitted to the general meeting and class meetings of A Shareholders and H Shareholders for its approval and shall not include circumstances that would result in the acceleration of attribution or reduction of the Grant Price.

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(b) The Company shall timely disclose the reasons and contents of the amendments. The Independent Directors and the Supervisory Committee shall make clear opinions on whether the amended plan is conducive to the sustainable development of the Company and whether there are any situations that clearly harm the interests of the Company and all shareholders. The legal advisor shall express its professional opinions on whether the amended plan conforms to the provisions of the Management Measures and relevant laws and regulations, and whether there are any circumstances that clearly harm the interests of the Company and all the Shareholders.

2. Procedure for the termination of the A Share Scheme

(a) If the Company intends to terminate the A Share Scheme before it is considered and approved at the EGM and the Class Meetings, the Board shall consider and approve and disclose such intended termination of the A Share Scheme. If the Company intends to terminate the implementation of the A Share Scheme after it is considered and approved at the EGM and the Class Meetings, it shall be submitted to the Board and the general meeting and class meetings of A Shareholders and H Shareholders for approval and be disclosed.
(b) The Company shall timely disclose the announcement of resolutions of the general meeting or the Board. The legal advisor shall express its professional opinions on whether the termination of A Share Scheme conforms to the provisions of the Management Measures and relevant laws and regulations, and whether there are any circumstances that clearly harm the interests of the Company and all the Shareholders.

(B) In the event of any changes occurred at the Company level

1. In the event that any of the circumstances below occurs, the A Share Scheme shall be terminated, and the Restricted Shares that have been granted to the Participants under the A Share Scheme but have not yet been attributed shall not be attributed and shall be forfeited:

(a) An audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(b) An audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;

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(c) In the most recent 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public commitments;
(d) Laws and regulations stipulate that equity incentives shall not be implemented; or
(e) Other circumstances as determined by the CSRC.

2. Merger or division of the Company, etc.

In case of merger or division of the Company, the Board shall decide whether to terminate the A Share Scheme within five trading days from the date of merger or division.

3. Change of control of the Company

In the event of a change of control of the Company by way of a merger, privatization of the Company by way of a scheme or by way of an offer, change of actual control of the Company involving reorganization of major assets, or resolution of the general meeting of the Shareholders to replace half of all members of the Board before the expiry of the term of office of the Board, the Board shall decide whether to terminate the A Share Scheme within five trading days from the date of the change of the control.

4. If the Company fails to meet the conditions for granting or attribution of the Restricted Shares due to false records, misleading statements or material omissions in the information disclosure documents, the Restricted Shares that have not yet been attributed shall not be attributed and shall be forfeited.

If the Restricted Shares that have been granted to the Participants have already been attributed, all the Participants shall return the granted rights and interests. If a Participant who is not responsible for the above matters suffers from losses due to the return of rights and interests, such Participant can recover such losses from the Company or the responsible targets in accordance with the relevant arrangements under the A Share Scheme. The Board shall recover the proceeds from the Participants in accordance with the preceding paragraph and the relevant arrangements under the A Share Scheme.

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(C) In the event of any changes in the personal circumstances of the Participants

1. Change in position of the Participants

(a) If the position of a Participant changes but he/she still works in the Company or its subsidiaries, the Restricted Shares granted to him/her shall still be attributed in accordance with the procedures stipulated in the A Share Scheme.
(b) If a Participant becomes a Supervisor or an Independent Director, or changes to a position not allowed to hold the Restricted Shares of the Company, the Restricted Shares that have been attributed shall not be affected. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.
(c) If a Participant violates the law, violates professional ethics, divulges confidential information of the Company, causes damage to the interests or reputation of the Company due to failure to discharge his duties or willful misconduct, and resulting in a change of position, or causes the Company to terminate the employment or labor relationship with such Participant due to the above-mentioned reasons, such Participants shall return to the Company all interests in the Restricted Shares already attributed. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited. At the same time, in the event of serious circumstances, the Company may also claim for the damages suffered by the Company from such Participant in accordance with relevant laws and regulations.

2. Resignation of the Participants

(a) If the employment contract of a Participant expires and is not renewed, or if such Participant resigns voluntarily, the Restricted Shares that have been attributed shall not be affected. In such case, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.
(b) If a Participant leaves the Company involuntarily due to reasons such as layoffs by the Company, and there are no behaviors such as failure to pass performance evaluation, negligence or violation of laws and disciplines by such Participant, the Restricted Shares that have been attributed shall not be affected. In such case, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.

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3. Retirement of the Participants

(a) If a Participant enters into re-employment arrangements with the Company after retirement, the Restricted Shares that have been granted to him/her will be carried out in accordance with the procedures stipulated in the A Share Scheme in effect before the retirement. If such Participant rejects the Company’s request for his/her re-employment, or if such Participant retires and leaves the Company, the Restricted Shares that have been granted but not yet attributed shall not be attributed, and shall be forfeited.

4. Incapacity of the Participants

(a) If a Participant becomes incapacitated due to work injury and leaves the Company, the Remuneration and Appraisal Committee shall decide whether the Restricted Shares granted to such Participant shall be carried out in accordance with the procedures stipulated in the A Share Scheme in effect before the occurrence thereof, and the personal performance evaluation results will no longer be included in the attribution conditions; or the Company shall cancel his/her Restricted Shares that have been granted but not yet been attributed.
(b) If a Participant leaves the Company due to incapacity not resulting from work injury, the Restricted Shares that have been granted to the Participant shall not be affected. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.

5. Death of the Participants

(a) In the event of death of a Participant due to the carrying out of his/her duty, the Remuneration and Appraisal Committee shall decide whether the Restricted Shares granted to him/her shall be held by the designated beneficiary to his/her estate or such beneficiary as stipulated by applicable law, and shall be carried out in accordance with the procedures stipulated in the A Share Scheme in effect before his/her death, and the results of his/her personal performance evaluation shall not be included in the attribution conditions; or the Restricted Shares that have been attributed shall not be affected and the Company shall cancel his/her Restricted Shares that have been granted but has not been attributed.
(b) In the event of death of a Participant not due to the carrying out of his/her duty, the Restricted Shares that have been attributed to the Participants shall not be affected. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.

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6. Change of control of the subsidiary where the Participants work

If a Participant works in a subsidiary of the Company, and if the Company loses control over such subsidiary while the Participant not works there, the Restricted Shares that have been attributed shall not be affected. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited.

7. Change in eligibility of the Participants

If a Participant no longer meets the eligibility requirements to participate in the A Share Scheme due to any one of the following circumstances, the Restricted Shares that have been attributed shall not be affected, and the Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall be forfeited:

(a) The Participant has been determined as an inappropriate candidate by the Shenzhen Stock Exchange within the most recent 12 months;
(b) The Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the most recent 12 months;
(c) The Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the most recent 12 months;
(d) The Participant has the circumstances stipulated in the PRC Company Law that he/she shall not act as a director or member of the senior management of any company;
(e) Laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies; or
(f) Other circumstances as determined by the CSRC.

8. Others

Circumstances not expressly stipulated in the A Share Scheme and the method of handling such circumstances shall be determined by the Remuneration and Appraisal Committee.

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(xii) Accounting Treatment and Impact on the Operating Performance

(A) Accounting treatment

In accordance with the rules of the A Share Scheme, any Restricted Shares attributed in the respective tranche shall not be assignable or transferable for 6 months from the date of satisfying the attribution conditions considered and approved by the Board for the Restricted Shares in each tranche (the “Restrictive Factor”). Such condition is a non-attribution condition, and based on the Enterprise Accounting Standard, when determining the fair value of an equity instrument on the Grant Date, the enterprise shall consider the impact of such non-attribution condition. The fair value of Restricted Shares represents the fair value of outstanding Shares after deducting the discounted costs arising from the Restrictive Factor, and the fair value of each Restricted Share is equal to the closing price of each Share on the Grant Date after deducting the discounted costs arising from the Restrictive Factor. Accordingly, the share-based payment of each Restricted Share is equal to the closing price on the Grant Date after deducting the discounted costs arising from the Restrictive Factor less the Grant Price.

The Company used such B-S Model to estimate the fair value of the Restricted Shares as of the date of the announcement on the proposed adoption of the A Share Scheme amongst other things (i.e. November 6, 2020). The specific figures for such estimation are as follows:

(a) Underlying share price: RMB111.86 (November 6, 2020 as closing date)
(b) Valid period: 0.5 year (The black-out period after each attribution date)
(c) Historical volatility 51.12% (Annualized volatility of the Company in the past year)
(d) Risk-free interest rate: 1.30% (the benchmark deposit rate for financial institutions established by the The People’s Bank of China)

(B) Estimated impact on the operating performance in each accounting period due to the implementation of the Restricted Shares

The Company will grant 844,000 Restricted Shares (subject to Adjustment) to the Participants. The fair value of the Restricted Shares was estimated based on the closing data in relation to the A Shares on the Shenzhen Stock Exchange of the trading day prior to the publication of the draft A Share Scheme, and the total equity expense of the grant under the A Share Scheme was estimated to be RMB34.1389 million. The total amount of the above expenses as the incentive cost of the A Share Scheme will be recognized over the course of the A Share Scheme in proportion in installments and will be charged to operating profit or loss. In accordance with accounting standards, the amount shall be

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based on the fair value of the Shares calculated on the “actual grant date”, assuming the Grant Date to be in December 2020, and the amortization of cost of the Restricted Shares from the years 2021 to 2024 shall be as follows:

Unit: RMB0’000

Amortization cost of
the Restricted Shares	Year 2021	Year 2022	Year 2023	Year 2024
3,413.89	1,778.07	924.60	497.86	213.37

Notes:

The above costs are projected costs, and actual costs are related to the Grant Price, the Grant Date, the closing price of the A Shares on the Grant Date, the number of Restricted Shares granted and the best estimate of the number of attributable equity instrument.
Shareholders’ attention is drawn to the possible dilutive effect of the share-based payment described above.
The final influence of the above projected amortization expenses on the Company’s operating results is subject to the audit report issued by the accountants.

The cost of the A Share Scheme will be charged to cost expenses. Without considering the positive effect of the A Share Scheme on the Company’s performance, the Company estimates, based on current information, that the amortization of cost expenses of the A Share Scheme will have an impact on net profit of each year within the validity period, but the impact is not significant. Considering the positive effect of the A Share Scheme on the Company’s operation and development, which will stimulate the enthusiasm of the management and business team, improve operating efficiency and reduce operating costs, the A Share Scheme will play a positive role in the Company’s long-term performance.

(xiii) Proposed grant of Restricted Shares and Issue of new A Shares under the A Share Scheme pursuant to Specific Mandate

Subject to the approval of the Shareholders at the EGM and the Class Meetings, the Board has resolved to grant not more a total of 844,000 Restricted Shares (subject to Adjustment), all of which will be granted to not more than 209 Participants under the A Share Scheme, representing approximately 0.1062% of the total issued share capital of the Company as at the Latest Practicable Date. The Restricted Shares to be granted will be issued and allotted pursuant to the Specific Mandate which may be granted at the EGM and the Class Meetings.

No Restricted Shares will be granted to connected persons of the Company.

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LETTER FROM THE BOARD

In addition to the principal terms of the proposed A Share Scheme summarized in the section headed “A. The Proposed 2020 Restricted A Share Incentive Scheme” above, further information in relation to the issue and allotment of the Restricted Shares under the A Share Scheme are set out below:

The total funds to be raised and the proposed use of proceeds: Not more than RMB47.0783 million, being the aggregate Grant Price of RMB55.78 per A Share (subject to Adjustment), will be paid by the Participants to subscribe for not more than 844,000 Restricted Shares (subject to Adjustment) under the A Share Scheme. The proceeds obtained by the Company from the A Share Scheme shall be applied towards the replenishment of the Group’s liquidity.

Grant Price: The Grant Price of the Restricted Shares under the A Share Scheme shall be RMB55.78 per A Share (subject to Adjustment) which was determined with reference to the basis set out in the section headed “v. Grant Price and Basis of Determination of the Grant Price” above. A Participant who has satisfied the conditions for grant and attribution may purchase new A Shares issued by the Company at such Grant Price.

Aggregate nominal value: The nominal value of the A Shares of the Company is RMB1.00 per A Share. The aggregate nominal value of the Restricted Shares to be granted under the A Share Scheme is not more than RMB844,000.

(xiv) Reasons for and Benefits of the Adoption of the Proposed A Share Scheme

The Directors are of the view that the adoption of the H Share Scheme and the A Share Scheme will realize the aforesaid goals, and that the terms and conditions of the two schemes are on normal commercial terms, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Company is of the view that the adoption and implementation of the proposed A Share Scheme is beneficial to the Company and the Shareholders as a whole. The Board is also of the view that the terms and conditions of the A Share Scheme are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Given the nature of the business and the competitive industry in which it operates, it is extremely important for the Company to recruit and retain talents, and the Company’s long-term development plan and future business strategies will very much depend on the loyalty and contribution of the Participants. The proposed A Share Scheme is considered to effectively align the employee’s achievements at the individual level with the Company’s overall performance.

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LETTER FROM THE BOARD

(xv) Other Information

(A) Fund raising activities in the past 12 months

Save for the global offering of the H Shares of the Company from which the Company raised net proceeds of approximately RMB4,522.7 million for uses as disclosed under the section headed “USE OF PROCEEDS FROM THE GLOBAL OFFERING” in the annual report of the Company for the year ended December 31, 2019, company has not conducted any fund raising activities involving the issuance of share capital within 12 months immediately preceding the date of this announcement.

(B) Information of the Company and the Participants

The Company is a joint stock limited liability company established in the PRC, whose H Shares are listed on the Hong Kong Stock Exchange (stock code: 3759) and A Shares are listed on the Shenzhen Stock Exchange (stock code: 300759).

The Group is a leading fully-integrated pharmaceutical research and development service platform with global operations to accelerate drug innovation for its customers.

(C) Implications of the Hong Kong Listing Rules

The A Share Scheme is a discretionary scheme of the Company and does not constitute a share option scheme under Chapter 17 of the Hong Kong Listing Rules.

The resolutions in relation to the adoption of the proposed A Share Scheme and the Assessment Management Measures, the issue and grant of the Restricted Shares to the Participants under the A Share Scheme were considered and approved at the meeting of the Board held on November 6, 2020.

The Company will seek a Specific Mandate from the Shareholders at the EGM and Class Meetings for the issue and allotment of Restricted Shares under the A Share Scheme.

III. PROPOSED ADOPTION OF THE ASSESSMENT MANAGEMENT MEASURES

To ensure the smooth implementation of the A Share Scheme, the Assessment Management Measures have been formulated according to the PRC Company Law, the PRC Securities Law, the Management Measures and other relevant laws, administrative regulations, normative documents, the relevant requirements of the Articles of Association as well as the actual situation of the Company.

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The full text of the Assessment Management Measures for implementation of the A Share Scheme is set out in Appendix II to this circular. The Assessment Management Measures were prepared in Chinese language. In the event of any discrepancy between the English translation and the Chinese version of the Assessment Management Measures, the Chinese version shall prevail.

A special resolution will be proposed at the EGM and the Class Meetings to consider and, if thought fit, approve the adoption of the Assessment Management Measures for implementation of the A Share.

IV. PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE A SHARE SCHEME

To ensure the successful implementation of the A Share Scheme, a special resolution will be proposed at the EGM and the Class Meetings that the Board be authorized to handle matters pertaining to the A Share Scheme, including but not limited to the following:

To authorize the Board to determine the eligibility requirements and conditions of the Participants under the A Share Scheme, and determine the Grant Date of the Restricted Shares;
To authorize the Board to adjust the number of the Restricted Shares and the number of underlying shares involved according to the method stipulated in the A Share Scheme in the event of capitalization of capital reserves, bonus issue, share split or consolidation, and rights issue of the Company;
To authorize the Board to adjust the Grant Price of the Restricted Shares according to the method stipulated in the A Share Scheme in the event of capitalization of capital reserves, bonus issue, share split or consolidation, rights issue and dividend distribution of the Company;
To authorize the Board to grant the Restricted Shares to a Participant upon his/her fulfillment of the conditions of grant, and to handle all necessary matters in connection with the grant of the Restricted Shares, including but not limited to the submission of application to the Shenzhen Stock Exchange in respect of the grant, applying to CSDC for registration and clearing services, amending the Articles of Association, and registering the change in registered capital of the Company, etc.;
To authorize the Board to review and confirm the attribution eligibility of the Participants and the conditions for attributing the Restricted Shares, and to authorize the Board to delegate such rights to the Remuneration and Appraisal Committee;
To authorize the Board to determine whether the Restricted Shares may be attributed to a Participant;

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LETTER FROM THE BOARD

To authorize the Board to handle all matters necessary in connection with the attribution of the Restricted Shares to the Participants, including but not limited to the submission of application to the Shenzhen Stock Exchange in respect of the attribution of the Restricted Shares, applying to CSDC for registration and clearing services, amending the Articles of Association, and registering the change in registered capital of the Company;
To authorize the Board to handle matters in connection with the attribution of the Restricted Shares which have not been attributed;
To authorize the Board to manage and adjust the A Share Scheme of the Company, including but not limited to the implementation of the A Share Scheme;
To authorize the Board to sign, execute, amend or terminate any agreement in connection with the A Share Scheme and other relevant agreements;
To authorize the Board to manage and adjust the A Share Scheme Incentive Scheme of the Company, and from time to time formulate or amend the management and implementation rules of the A Share Scheme, subject to compliance with the terms of the A Share Scheme. However, if such amendments are subject to approval at the general meeting or/and by relevant regulatory authorities under the requirements of laws, regulations or relevant regulatory authorities, such amendments by the Board shall be subject to such approvals;
To authorize the Board to implement all other necessary matters in connection with the A Share Scheme, except such rights as expressly required under the relevant documents to be exercised by the Shareholders at a general meeting.

A special resolution will be proposed at the EGM and the Class Meetings to consider and, if thought fit, approve the authorizations to be granted to the Board to deal with matters relating to the A Share Scheme.

V. PROPOSED ADOPTION OF THE FIRST H SHARE AWARD AND TRUST SCHEME

As disclosed in the announcement of the Company dated November 6, 2020, the Board has proposed to adopt the H Share Scheme and a special resolution will be proposed at the EGM to consider and approve the proposed adoption of the draft H Share Scheme. The H Share Scheme shall be effective upon the approval by the Shareholders at the EGM.

The full text of the H Share Scheme Rules is set out in Appendix III to this circular.

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LETTER FROM THE BOARD

(i) Purpose of the H Share Scheme

The H Share Scheme is comprised of two parts, namely (i) the Employee Share Award Plan and (ii) the Share Bonus Plan.

The purposes of the Employee Share Award Plan are:

(i) to attract, motivate and retain skilled and experienced personnel to strive for the future development and expansion of the Group by providing them with the opportunity to own equity interests in the Company;
(ii) to deepen the reform on the Company’s remuneration system and to develop and constantly improve the interests balance mechanism among the Shareholders, the operational and executive management; and
(iii) to (a) recognize the contributions of the leadership of the Company including the Directors and long standing employees of the Company; (b) encourage, motivate and retain the leadership of the Company and long standing employees whose contributions are beneficial to the continual operation, development and long-term growth of the Group; and (c) provide additional incentive for the leadership of the Company and long standing employee by aligning the interests of the leadership of the Company to that of the Shareholders and the Group as a whole.

The purposes of the Share Bonus Plan are:

(i) to reward and motivate key employees responsible for increments in the Company’s performance;
(ii) to strengthen employees’ initiative in striving for the enhancement of the Company’s performance; and
(iii) to align the interests of employees with that of the Shareholders.

The Directors are of the view that the performance indicators as conditions for the vesting of the Awards, and the prerequisite for the implementation of the Share Bonus Plan, will serve to achieve the purposes stated above.

(ii) Duration of the H Share Scheme

Subject to any early termination of the H Share Scheme pursuant to the H Share Scheme Rules, the H Share Scheme shall be valid and effective for ten years commencing from the date on which the H Share Scheme is approved by the Shareholders at the EGM (after which no Awards shall be granted), and thereafter for so long as there are non-vested Award Shares granted under the H Share Scheme prior to the expiration of the H Share Scheme, in order to give effect to the vesting of such Award Shares.

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(iii) Source of Funds

The source of funds for funding the Scheme is the internal funds of the Company.

(iv) Source of Award Shares and acquisition of H Shares by the Trustee

The source of the Award Shares under the H Share Scheme shall be H Shares to be acquired by the Trustee through on-market transactions at the prevailing market price in accordance with the instructions of the Company and the relevant provisions of the H Share Scheme Rules.

The Company shall as soon as reasonably practicable, for the purposes of satisfying the grant of Awards, transfer to the Trust the necessary funds and instruct the Trustee to acquire H Shares through on-market transactions at the prevailing market price. The Trustee shall as soon as reasonably practicable thereafter proceed to acquire such number of H Shares as instructed by the Company on-market at the prevailing market price.

The Company shall instruct the Trustee whether or not to apply any Returned Shares to satisfy any grant of Awards made, and if the Returned Shares, as specified by the Company, are not sufficient to satisfy the Awards granted, the Company shall, as soon as reasonably practicable, for purposes of satisfying the Awards granted, transfer to the Trust the necessary funds and instruct the Trustee to acquire further H Shares through on-market transactions at the prevailing market price

(v) H Share Scheme Limit

Subject to the H Share Scheme Rules, the H Share Scheme Limit shall be the maximum number of H Shares that will be acquired by the Trustee through on-market transactions from time to time at the prevailing market price, and in any case being 7,940,000 H Shares. The Company proposed to set the H Share Scheme Limit in terms of the number of H Shares in order to (i) regulate the costs of the Company in setting up the H Share Scheme; and (ii) provide Shareholders with clarity on the financial outlay on the H Share Scheme.

The maximum number of H Shares that can be purchased accounts for approximately 6% of the Company’s total number of issued H Shares and approximately 0.99% of the Company’s total share capital as at the date of this circular. The ultimate number of H Shares underlying the H Share Scheme is uncertain as it depends on the actual implementation of the acquisition of H Shares by the Trustee.

The Company shall not make any further grant of Award which will result in the aggregate number of H Shares underlying all grants made pursuant to the H Share Scheme (excluding Award Shares that have been forfeited in accordance with the H Share Scheme) to exceed the H Share Scheme Limit without Shareholders’ approval. The H Share Scheme Limit shall not

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be subject to any refreshment. The total number of non-vested Award Shares granted to Selected Participants under the H Share Scheme shall not exceed one per cent of the total number of issued Shares of the Company from time to time.

(vi) Administration of the Scheme

The H Share Scheme shall be subject to the administration of the following administrative bodies:

(a) the general meeting of the Shareholders, as the institution vested with the supreme authority of the Company, is responsible for the consideration and approval of the adoption of the H Share Scheme. The general meeting of the Shareholders may authorize the Board to deal with all matters related to the H Share Scheme to the extent of its authority;
(b) the Board is the institution in charge of the administration of the H Share Scheme in accordance with the H Share Scheme Rules and where applicable, the Trust Deed. A decision of the Board or the Delegatee shall be final and binding on all persons affected. The responsibilities of the Board and the Delegatee specific to the Share Bonus Plan are further set out in Appendix B. The Remuneration and Appraisal Committee shall be responsible for drafting and revising the H Share Scheme and submitting the same to the Board for consideration. Upon consideration and approval of the H Share Scheme, the Board will submit the H Share Scheme to the general meeting of the Shareholders for consideration. The Board or the Delegatee may handle all matters related to the H Share Scheme within the authorization by the general meeting of the Shareholders;
(c) the independent non-executive Directors are the supervisory institution of the H Share Scheme and shall express their views on whether the H Share Scheme facilitates the sustainable development of the Company and whether the H Share Scheme impairs the interests of the Company and the Shareholders as a whole. The independent non-executive Directors supervise whether the implementation of the H Share Scheme complies with relevant laws, regulations, regulatory documents and the Listing Rules, and is responsible for reviewing the list of Selected Participants; and
(d) the Trust will be constituted to service the H Share Scheme whereby the Trustee shall, subject to the relevant provisions of the Trust Deed and upon the instruction of the Company, acquire not more than 7,940,000 H Shares through on-market transactions with funds to be transferred by the Company to the Trust.

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Pursuant to the H Share Scheme Rules, the authority to administer the H Share Scheme may be delegated by the Board to the Delegatee as deemed appropriate at the sole discretion of the Board. Upon the approval and adoption of the H Share Scheme by the Shareholders at the EGM, the Board will delegate to the Management Committee the authority to administer the H Share Scheme, including the power to grant an Award under the H Share Scheme.

(vii) Selected Participants of the H Share Scheme

Eligible Employee who may participant in the H Share Scheme include Plan A Eligible Employee for the Employee Share Award Plan, and Plan B Eligible Employee for the Share Bonus Plan.

Plan A Eligible Employee include any individual, being a Director, senior management, key operating team member, employee, or consultant, who is a full-time PRC or non-PRC employee of any members of the Group.

Plan B Eligible Employee include any individual, being a Director, senior management, or key operating team member, who is a full-time PRC or non-PRC employee of any members of the Group.

The Board or the Delegatee may, from time to time, select any Plan A Eligible Employee or Plan B Eligible Employee to be a Selected Participant of the respective plans in accordance with the H Share Scheme Rules.

The Selected Participants are determined in accordance with the Company Law of the PRC, the Securities Law of the PRC and other applicable laws, regulations and regulatory documents and the relevant provisions of the Articles of Association, together with the Company’s actual circumstances and matters including the present and expected contribution of the relevant Selected Participant to the Group.

No one should be considered as a Selected Participant of the H Share Scheme if he:

(a) has been publicly reprimanded or deemed as an inappropriate candidate for similar award schemes or share incentive plans of a listed company by any securities regulatory bodies with authority in the last 12 months;
(b) has been imposed with penalties or is banned from trading securities by securities regulatory bodies due to material non-compliance with laws or regulations in the last 12 months;
(c) is in breach of relevant national laws and regulations or the Articles of Association; or

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(d) has caused losses to the Company during his term of service due to soliciting bribes, corruption and theft, disclosure of the operation and technology secrets of the Company, infringement of company interest through connected transactions and any acts which cause damage to the reputation and image of the Company, which can be proven with sufficient evidence by the Company.

The Selected Participants shall undertake that if any of the above provisions occur during implementation of the H Share Scheme which would prevent him from being considered as a Selected Participant, he shall give up his rights to participate in the H Share Scheme and shall not be given any compensation.

(viii) Grant of Awards

The Board or the Delegatee may grant Awards under the Share Bonus Plan to Selected Participants during the Award Period conditional upon fulfilment of terms and conditions of the Awards and performance targets as the Board or the Delegatee determines from time to time.

Particularly, the Share Bonus Plan shall only be implemented when the growth rate of the Company’s net profit attributable to the owners of the parent for the year exceeds 25% of the Company’s net profit attributable to the owners of the parent for the year immediately preceding.

Each grant of an Award to any connected person of the Group shall be subject to the Listing Rules and any applicable laws and regulations.

No grant of any Award Shares to any Selected Participant may be made and no directions or recommendations shall be given to the Trustee with respect to a grant of an Award under certain circumstances including:

i. where the requisite approval from any applicable regulatory authorities or Shareholders has not been granted;
ii. where any member of the Group will be required under applicable securities laws, rules or regulations to issue a prospectus or other offer documents in respect of such Award or the H Share Scheme;
iii. where such Award would result in a breach by any member of the Group or its directors of any applicable securities laws, rules or regulations in any jurisdiction;
iv. where such grant of Award would result in a breach of the H Share Scheme Limit;
v. after the expiry of the Award Period or after the earlier termination of the H Share Scheme;

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LETTER FROM THE BOARD

vi. where any Director is in possession of unpublished inside information (as defined under the SFO) in relation to the Company or where any Director reasonably believes there is inside information which must be disclosed pursuant to Rule 13.09(2)(a) of the Listing Rules and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the SFO or where dealings by Directors are prohibited under any code or requirement of the Listing Rules or any applicable laws, rules or regulations;
vii. during the period of 60 days immediately preceding the publication date of the annual results of the Group or, if shorter, the period from the end of the relevant financial year up to the publication date of such results; and
viii. during the period of 30 days immediately preceding the publication date of the quarterly or half-year results of the Group or, if shorter, the period from the end of the relevant quarterly or half-year period up to the publication date of such results.

(ix) Vesting of the Awards

The Board or the Delegatee may determine the vesting criteria and conditions or periods for the Awards to be vested.

(A) Vesting Schedule

Unless otherwise specified in the Award Letter approved by the Board or the Delegatee, and subject to the vesting conditions set out in the H Share Scheme Rules, all Awards under the Employee Share Award Plan shall be vested in four equal tranches (i.e., 25%, 25%, 25% and 25%), and all Awards under the Share Bonus Plan shall be vested in two equal tranches (i.e., 50% and 50%).

The Vesting Periods of the Awards granted under the H Share Scheme or the Awards to be satisfied by the application of any Returned Shares shall be determined by the Board or the Delegatee in its sole and absolute discretion, and shall in any event not extend beyond the then remaining term of the Award Period at the time of grant.

(B) Vesting Conditions

1. Employee Share Award Plan

Vesting of the Award granted under the Employee Share Award Plan is subject to the conditions of the performance indicators of the Company and any other applicable vesting conditions as set out in the Award Letter.

The performance indicators of the Company consists of company performance indicator and individual performance indicator, the details of which shall be determined by the Board or the Delegatee and set out in the Award Letter.

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LETTER FROM THE BOARD

Subject to the above, the company performance indicator is as follows:

If at the end of each Vesting Period, the ratio increase in the Company’s revenue for that financial year as compared to the financial year immediately preceding reaches or exceeds the Target Revenue Ratio Increase for the respective Vesting Period, the company performance indicator for that Vesting Period shall be considered as met.

The Target Revenue Ratio Increase for the First Plan A Awards are set out below, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion:

Vesting Period for First Plan A Awards

Target Revenue Ratio Increase

First Vesting Period

30%

(Company’s revenue increase for the year ended December 31, 2021 as compared to the year ended December 31, 2019)

Second Vesting Period

45%
(Company’s revenue increase for the year ended December 31, 2022 as compared to the year ended December 31, 2019)

Third Vesting Period

60%
(Company’s revenue increase for the year ended December 31, 2023 as compared to the year ended December 31, 2019)
Fourth Vesting Period 75%
(Company’s revenue increase for the year ended December 31, 2024 as compared to the year ended December 31, 2019)

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LETTER FROM THE BOARD

2. Share Bonus Plan

Vesting of the Award granted under the Share Bonus Plan is subject to the conditions of the individual performance indicator and any other applicable vesting conditions as determined by the Board or the Delegatee and set out in the Award Letter.

If the Selected Participant of the H Share Scheme fails to fulfill the vesting conditions applicable to the plan under which the Award is granted, all the Award Shares underlying the relevant Awards which may otherwise be vested during the respective Vesting Periods shall not be vested and shall be held by the Trustee as Returned Shares.

(x) Transfer or sale of Award Shares

For the purpose of vesting of the Award, the Board or the Delegatee may either:

(a) direct and procure the Trustee to release from the Trust the Award Shares to the Selected Participants by transferring the number of Award Shares to the Selected Participants in such manner as determined by them from time to time; or
(b) to the extent that, at the determination of the Board or the Delegatee, it is not practicable for the Selected Participant to receive the Award in H Shares solely due to legal or regulatory restrictions with respect to the Selected Participant’s ability to receive the Award in H Shares or the Trustee’s ability to give effect to any such transfer to the Selected Participant, the Board or the Delegatee will direct and procure the Trustee to sell, on-market at the prevailing market price, the number of Award Shares so vested in respect of the Selected Participant and pay the Selected Participant the proceeds in cash arising from such sale based on the Actual Selling Price of such Award Shares as set out in the Vesting Notice.

In accordance with the Scheme Rules, barring any unforeseen circumstances, within a reasonable time period as agreed between the Trustee and the Board from time to time prior to any Vesting Date, the Board or the Delegatee shall send to the relevant Selected Participant the Vesting Notice. The Board or the Delegatee shall forward a copy of the Vesting Notice to the Trustee and instruct the Trustee the extent to which the Award Shares held in the Trust shall be transferred and released from the Trust to the Selected Participant in the manner as determined by the Board or the Delegatee, or be sold as soon as practicable from the Vesting Date.

Subject to the receipt of the Vesting Notice and the instructions from the Board or the Delegatee, the Trustee shall transfer and release the relevant Award Shares to the relevant Selected Participant in the manner as determined by the Board or the Delegatee or sell the relevant Award Shares as soon as practicable from the Vesting Date and pay the Actual Selling Price to the Selected Participant within a reasonable time period in satisfaction of the Award.

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LETTER FROM THE BOARD

(xi) Interest in the Award Shares

Any Award granted hereunder but not yet vested shall be personal to the Selected Participant to whom it is made and shall not be assignable or transferable and no Selected Participant shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any other person over or in relation to any Award, or enter any agreement to do so.

Neither the Selected Participant nor the Trustee may exercise any voting rights attached to any H Shares held by the Trustee under the Trust (including any Award Shares that have not yet vested).

Any dividend underlying the non-vested Award Shares shall be retained by the Trustee, and transferred to the Selected Participant together with the Award Shares upon vesting. In the event that the Award Shares are to be forfeited, such underlying dividend shall be transferred back to the Company.

(xii) Occurrence of certain events pertaining to the Company

(A) Change in control and privatization

If there is an event of change in control (as defined under the Takeovers Code) of the Company by way of a merger, privatization of the Company by way of a scheme or by way of an offer, change of actual control of the Company involving reorganization of major assets, the Company no longer exists after merger with another company, division of the Company, or resolution of the general meeting of the Shareholders to replace half of all members of the Board before the expiry of the term of office of the Board, the Board shall in its sole and absolute discretion determine whether this Scheme shall be terminated within 5 trading days upon the change in control of the Company.

Pursuant to the H Share Scheme Rules, (i) no instructions may be given by a Selected Participant to the Trustee in respect of the Award or any other property of the Trust and the Trustee shall not follow instructions given by a Selected Participant to the Trustee in respect of the Award or any other property of the Trust; and (ii) neither the Selected Participant nor the Trustee may exercise any voting rights attached to any H Shares held by the Trustee under the Trust (including any Award Shares that have not yet vested). As such, neither the Selected Participant nor the Trustee has a right to accept or decline any offer in connection with a privatization of the Company and in turn has no entitlement to the consideration of such offer.

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LETTER FROM THE BOARD

(B) Open offer and rights issue

In the event the Company undertakes an open offer of new securities, the Trustee shall not subscribe for any new H Shares. In the event of a rights issue, the Trustee shall seek instruction from the Company on the steps or actions to be taken in relation to the nil-paid rights allotted to it.

(C) Consolidation or sub-division of shares

In the event the Company undertakes a capitalization issue, rights issue, subdivision, consolidation or reduction of the H Shares, corresponding changes will be made to the number of outstanding Award Shares that have been granted provided that the adjustments shall be made in such manner as the Board determines to be fair and reasonable in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Scheme for the Selected Participants. All fractional shares (if any) arising out of such consolidation or sub-division in respect of the Award Shares of a Selected Participant shall be deemed as Returned Shares and shall not be transferred to the relevant Selected Participant on the relevant Vesting Date.

(xiii) Alteration or Termination of the Scheme

(A) Alteration of the Scheme

The Scheme may be altered or supplemented in any respect by a resolution of the Board.

(B) Termination of the Scheme

The Scheme shall terminate on the earlier of (i) the end of the Award Period except in respect of any non-vested Award Shares granted hereunder prior to the expiration of the Scheme, for the purpose of giving effect to the vesting of such Award Shares or otherwise as may be required in accordance with the provisions of the Scheme; or (ii) such date of early termination as determined by the Board.

(xiv) Reasons for and benefits of the adoption of the H Share Scheme

Please refer to the section headed “V. Proposed Adoption of the First H Share Award and Trust Scheme – i. Purpose of the H Share Scheme” in this circular. The Directors are of the view that the adoption of the H Share Scheme will realize the aforesaid goals, and that the terms and conditions of the H Share Scheme are normal commercial terms, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

(xv) Implication under the Listing Rules

The H Share Scheme involves no issue of new shares or granting of option for any new securities of the Company. Thus it does not constitute a share option scheme as defined and regulated under Chapter 17 of the Listing Rules.

VI. PROPOSED AUTHORIZATION TO THE BOARD AND/OR THE DELEGATEE TO HANDLE MATTERS PERTAINING TO THE FIRST H SHARE AWARD AND TRUST SCHEME

In order to ensure the successful implementation of the H Share Scheme, a special resolution will be proposed at the EGM that the Shareholders also grant an authorization to the Board and/or the Delegatee to deal with matters in relation to the H Share Scheme with full authority, including but not limited to:

to authorize the Board to consider, appoint and establish the Management Committee for the purpose of the H Share Scheme, consisting of the Manager’s Committee which includes the Chief Executive Officer, Chief Operating Officer, Executive Vice President, Chief Scientific Officer, the person-in-charge of the financials of the Company, and Board Secretary of the Company;
to authorize any member of the Management Committee to enter into the Trust Deed on behalf of the Company with the Trustee and to affix the Company seal onto such Trust Deed, pursuant to which the Trustee will provide trust services for the H Share Scheme;
to authorize the Board to consider and approve the plan management agreement and to authorize any member of the Management Committee to enter into the plan management agreement with Computershare Hong Kong Investor Services Limited on behalf of the Company, pursuant to which Computershare Hong Kong Investor Services Limited will provide plan management services in respect of the H Share Scheme;
to authorize the Board to set up a cash securities account under the name of the Company so as to facilitate the provision of trading services and trading platform for the Selected Participants of the H Share Scheme by Computershare Hong Kong Investor Services Limited;

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LETTER FROM THE BOARD

to authorize the Board to consider and authorize the Management Committee to handle matters pertaining to the First H Share Award and Trust Scheme with full authority during the validity period of the First H Share Award and Trust Scheme, including but not limited to:
(a) to determine the terms and conditions of the grant of Awards, approve the form and content of the Award Letter, select Eligible Employees to become Selected Participants, and grant Awards to Selected Participants from time to time;
(b) to determine the Grant Date and Vesting Date of Award Shares;
(c) to administer, amend and adjust the H Share Scheme, including but not limited to adjusting the H Share Scheme Limit, adjusting the number of outstanding Award Shares or accelerate the Vesting Dates of any Awards, (if such amendments require the approval of the Shareholders’ meeting and/or relevant regulatory authorities pursuant to the relevant laws, regulations or requirements of the relevant regulatory authorities, the Board or the Delegatee shall obtain the corresponding authorization for such amendments);
(d) to decide on the selection, engagement and change of bank(s), accountant(s), lawyer(s), consultant(s) and other professional parties for the purpose of the H Share Scheme;
(e) to sign, execute, and terminate all agreements and other relevant documents in connection with the H Share Scheme, fulfill all relevant procedures in relation to the H Share Scheme, and adopt other methods to implement the terms of the H Share Scheme;
(f) to determine and adjust the standards and conditions of the vesting of the Awards as well as the Vesting Periods, evaluate and manage the performance indicators, and to determine whether Awards granted to the Selected Participants can be vested;
(g) to determine the execution, amendment and termination of the H Share Scheme, including the forfeiture of Awards and continued vesting of Award Shares upon the changes in circumstances pertaining to the Selected Participants;
(h) to construe and interpret the H Share Scheme Rules and to resolve any issues and disputes arising from or in connection with the H Share Scheme;
(i) to exercise any other authorizations in relation to matters necessary to the implementation of the H Share Scheme granted by the Shareholders’ meeting from time to time;

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LETTER FROM THE BOARD

(j) on behalf of the Company, execute all documents in relation to the operations of and other matters of the H Share Scheme, or providing instructions to the Trustee in relation to its operations, the execution of relevant documents in relation to the setting up of the accounts, operations of the accounts, and the setting up and operations of the cash securities account with Computershare Hong Kong Investor Services Limited under the name of the Company, the release of Award Shares for the purpose of the vesting of the Awards, or the sale of Award Shares on-market at the prevailing market price and pay the proceeds arising from such sale to Selected Participants, or directing and procuring the Trustee to release the Award Shares to the Selected Participants by transferring the Award Shares to the Selected Participants as determined by them from time to time, and confirming, allowing and approving all matters precedent arising from or in relation to the Trust Deed and the plan management agreement; and
(k) on behalf of the Company, approve, execute, refine, deliver, negotiate, agree on and agree to all such agreements, contracts, documents, regulations, matters and things (as the case may be) as it deems reasonable, necessary, desirable, appropriate or expedient, in order to implement and/or implement all transactions conducted accordingly, and make any reasonable alterations, amendments, changes, modifications and/or supplements as it deems necessary, desirable, appropriate or expedient. If there is a requirement to affix a company seal on any such agreement, contract or document, it has the right to sign the agreement, contract or document and affix the company seal in accordance with the Articles of Association in that case.

The aforementioned authorization to the Board and/or the Delegatee shall be valid for the Award Period.

VII. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

As disclosed in the announcement of the Company dated November 6, 2020 in relation to the amendments to the Articles of Association, the Board proposed to make relevant amendments to the Articles of Association in accordance with requirements under the relevant laws, administrative regulations, regulatory documents such as the PRC Company Law and the PRC Securities Law.

A special resolution is being proposed at the EGM to consider and approve the proposed amendments to the Articles of Association.

Full text of the proposed amendments to the Articles of Association is set out in Appendix IV to this circular and were prepared in Chinese language. In the event of any discrepancy between the English translation and the Chinese version the proposed amendments to the Articles of Association, the Chinese version shall prevail. The amended Articles of Association will take effect upon the resolution being passed by the Shareholders at the EGM.

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LETTER FROM THE BOARD

Except for the proposed amendments as set out in set out in Appendix IV to this circular, other provisions of the Articles of Association remain unchanged.

VIII. PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND THE PROCEDURES FOR FILING THE ARTICLES OF ASSOCIATION WITH THE MARKET SUPERVISION AND MANAGEMENT DEPARTMENT

In light of the special resolution to consider and approve the amendment to the Articles of Association of the Company in paragraph “VII. Proposed amendments to the Articles of Association” above, an ordinary resolution will be proposed at the EGM to consider and authorize the Board to handle matters pertaining to the amendments to the Articles of Association and the procedures for filing the Articles of Association with the market supervision and management department.

IX. PROPOSED CHANGE OF SUPERVISOR

As disclosed in the announcement of the Company dated November 6, 2020 in relation to the change of Supervisor, Mr. Liu Jun has tendered his resignation due to other work commitments and will resign as the Supervisor of the Company. Ms. Feng Shu (馮書) (“ Ms. Feng ”) has been nominated as a candidate for appointment as Supervisor subject to the approval by the Shareholders at the EGM.

An ordinary resolution is being proposed at the EGM to consider and approve the proposed appointment of Ms. Feng as a Supervisor.

The particulars of the Ms. Feng is set out in Appendix V to this circular.

X. EGM, CLASS MEETING OF H SHAREHOLDERS, REPLY SLIPS AND PROXY ARRANGEMENT

Notices convening the EGM on Friday, December 11, 2020 at 2:30p.m., and after the conclusion of the EGM, the H Shares Class Meeting to be held at 6 Tai-He Road, Beijing Economic Technological Development Area, Beijing, the PRC and two reply slips and forms of proxy and the Independent Director’s Proxy Forms for use at the EGM and the H Shares Class Meeting will be despatched by the Company on November 25, 2020 and published and available for downloading on the websites of Hong Kong Stock Exchange at http://hkexnews.hk and of the Company at www.pharmaron.com. To be valid, the form of proxy and the Independent Director’s Proxy Forms must be completed and signed in accordance with the instructions printed thereon an deposited, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority at the Company’s H Shares Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible but in any event not less than 24 hours before the time appointed for the EGM and the H Shares Class Meeting (i.e., not later than 2:30p.m. on

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Thursday, December 10, 2020 (Hong Kong time)) or the adjourned meeting (as the case may be). Completion and delivery of the forms of proxy will not preclude you from attending and voting at the EGM and the H Shares Class Meeting if you so wish.

Please note that Ms. Chen Guoqin, an independent non-executive Director, has sent out the Independent Director’s Proxy Forms in accordance with the relevant regulations of the PRC to solicit votes from the Shareholders on the resolutions regarding the A Share Scheme and the related matters at the EGM and the H Shares Class Meeting. Should you wish to appoint Ms. Chen Guoqin as your proxy to vote for you and on your behalf at the EGM and the H Shares Class Meeting on the resolutions regarding the A Share Scheme and the related matters, please complete the Independent Director’s Proxy Forms. Alternatively, if you wish to appoint any person other than Ms. Chen Guoqin as your proxy to vote for you and on your behalf at the EGM and the H Shares Class Meeting on the resolutions regarding the A Share Scheme and the related matters, you may simply disregard the Independent Director’s Proxy Form and complete and return the form of proxys for the EGM and the H Shares Class Meeting. The Report on the Solicitation of Voting Rights by the Independent Non-executive Directors prepared by Ms. Chen Guoqin has also been published on the websites of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (www.pharmaron.com) by an announcement of the Company dated November 25, 2020.

The form of proxys and the Independent Director’s Proxy Forms are enclosed with this circular and are also published on the websites of Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (www.pharmaron.com). Whether or not you are able to attend the EGM and the H Shares Class Meeting, please complete and return the enclosed form of proxy for the EGM and the H Shares Class Meeting and the Independent Director’s Proxy Form in accordance with the instructions printed thereon and to lodge the same with the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable and in any event not less than 24 hours before the time appointed for holding the EGM and the H Shares Class Meeting. Completion and return of the forms of proxy or the Independent Director’s Proxy Forms will not preclude you from attending and voting at the EGM and the H Shares Class Meeting or any adjournment thereof (as the case may be) should you so wish.

For the purpose of determining the H Shareholders entitled to attend and vote at the EGM and the H Shares Class Meeting, the register of members of the H Shares of the Company has been scheduled to close from Wednesday, November 11, 2020 to Friday, December 11, 2020 (both days inclusive), during which no transfer of H Shares will be registered. H Shareholders whose names appear on the register of members of the Company on Wednesday, November 11, 2020 shall be entitled to attend and vote at the EGM and the H Shares Class Meeting.

In order to be eligible to attend and vote at the EGM and the Class Meeting of H Shareholders, holders of H Shares whose transfer documents have not been registered are required to deposit all properly completed share transfer forms together with the relevant share

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certificates to the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for holders of H shares) for registration no later than 4:30p.m. on Tuesday, November 10, 2020.

Pursuant to the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll except where the chairman decides to allow a resolution relating to a procedural or administrative matter to be voted on by a show of hands. An announcement on the poll results will be published by the Company after the EGM and the H Shares Class Meeting in the manner prescribed under the Listing Rules.

XI. GENERAL

To the best of the Director’s knowledge, information and belief, and according to applicable PRC law, regulations and regulatory requirements, none of the Shareholders are required to abstain from voting at the EGM and the Class Meetings.

XII. RECOMMENDATION

The Board (including the independent non-executive Directors) considers that (i) the proposed adoption of the H Share Scheme; (ii) the proposed authorization to the Board and/or the Delegatee to handle matters pertaining to the H Share Scheme; (iii) the proposed adoption of the A Share Scheme (including the Specific Mandate for issue and allotment of the Restricted Shares under the A Share Scheme and the issue and grant of the Restricted Shares) and the Assessment Management Measures; (iv) the proposed authorization to the Board to handle all matters relating to the A Share Scheme; (v) the proposed change of Supervisor; and (vi) the proposed amendments to the Articles of Association, are on normal commercial terms and are fair and reasonable, and in the interests of the Company and the Shareholder as a whole, although the Specific Mandate for the issue and allotment of the Restricted Shares under the A Share Scheme it is not in the usual and ordinary course of business of the Company due to the nature of such transaction. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolutions in relation to the above matters to be proposed at the EGM and the Class Meetings.

The Board also considers that all other resolutions set out in the Notice of EGM and the Notices of the Class Meetings are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends that the Shareholders vote in favour of the resolutions set out in the Notice of EGM and the Notices of the Class Meetings.

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XIII. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

By order of the Board Pharmaron Beijing Co., Ltd.* 康龍化成(北京)新藥技術股份有限公司 Dr. Lou Boliang Chairman

For identification purposes only

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RULES OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

**THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME OF PHARMARON BEIJING CO., LTD.* (DRAFT)**

November 2020

STATEMENT

The Company and all of its Directors and Supervisors undertake that there are no false records, misleading statements or material omissions in the Incentive Scheme and its summary, and assume individual and joint legal responsibility for its truthfulness, accuracy and completeness.

SPECIAL NOTE

I. The 2020 Restricted A Share Incentive Scheme of Pharmaron Beijing Co., Ltd. (Draft) (the “Incentive Scheme”) is formulated by Pharmaron Beijing Co., Ltd. (“Pharmaron” or the “Company”) in accordance with the Company Law of the People’s Republic of China (《中華人民共和國公司法》), the Securities Law of the People’s Republic of China (《中華人民共和國證券法》), the Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange (《深圳證券交易所創業板股票上市規則》), the Management Measures for Share Incentive Scheme Adopted by Listed Companies (《上市公司股權激勵管理辦法》), Guide No. 5 to Handling Business of Listed Companies – Equity Incentives (《創業板上市公司業務辦理指南第5號 — 股權激勵》) and other relevant laws, administrative regulations, regulatory documents and the relevant requirements of the Articles of Association.
II. The form of incentive adopted by the Incentive Scheme is Restricted Shares (Type II Restricted Shares). The source of the shares shall be the Company’s RMB ordinary A shares issued by the Company to the Participants.

Participants that meet the conditions for the grant under the Incentive Scheme, after fulfilling the corresponding attribution conditions and attribution arrangement, shall obtain the Company’s ordinary A shares at the grant price during the attribution period. Such shares will be registered at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. Prior to the attribution, the Restricted Shares granted to the Participants do not carry any rights of the shareholders of the Company, and such Restricted Shares shall not be transferred, used to guarantee or repay debts.

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RULES OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

III. The Restricted Shares proposed to be granted to the Participants under the Incentive Scheme shall be 844,000 shares, representing 0.1062% of the total share capital of the Company of 794,387,462 shares as at the date of the announcement of the draft Incentive Scheme. This grant is made on one-off basis and without reserved interests.
The 2019 Restricted Share and Share Option Incentive Plan considered and approved at the second extraordinary general meeting of the Company for the year 2019 is being implemented. As of the date of the announcement of the draft Incentive Scheme, the cumulative total number of underlying shares involved under all share incentive schemes of the Company which are within their validity period shall not exceed 20.00% of the Company’s total share capital as at the date on which the Incentive Scheme is submitted for approval at a general meeting. The total number of shares to be granted to any Participant under all share incentive schemes of the Company which are within their validity period shall not exceed 1.00% of the total share capital of the Company.
IV. The number of the Participants under the Incentive Scheme shall be 209 persons in total, including high-level management, mid-level management, core technical personnel, basic-level management and technical personnel working at the Company (including its subsidiaries, the same applies below) at the time of the Company’s announcement of the Incentive Scheme, but excluding the independent Directors, Supervisors, non-PRC employee, shareholders who individually or collectively hold more than 5% of the shares of the Company, de facto controllers, or the spouses, parents or children of such de facto controllers of the Company.
V. The grant price of the Restricted Shares to be granted to the Participants under the Incentive Scheme shall be RMB55.78 per share. In the event of any capitalization issue, bonus issue, dividend distribution, share split or share consolidation or rights issue of the Company during the period from the date of announcement of the Incentive Scheme to the date of completion of the attribution registration by the Participants, the grant price of the Restricted Shares and the number of Restricted Shares shall be adjusted in accordance with the Incentive Scheme accordingly.
VI. The validity period of the Incentive Scheme commences from the grant date of the Restricted Shares until the date on which all Restricted Shares granted to the Participants have been attributed or lapsed. The validity period shall not exceed 63 months.
VII. The Restricted Shares under the grant of the Incentive Scheme shall be attributed in four tranches after the expiry of 15 months following the grant date, with the proportion of attribution in each tranche being 25%, 25%, 25% and 25%, respectively.

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RULES OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

The performance assessment targets in relation to the Restricted Shares to be granted are shown in the following table:

Attribution Arrangement

Performance Assessment Target

First Attribution Tranche

Based on 2019 revenue, the revenue growth in 2021 is set to be not less than 30%.
Second Attribution Tranche Based on 2019 revenue, the revenue growth in 2022 is set to be not less than 45%.
Third Attribution Tranche Based on 2019 revenue, the revenue growth in 2023 is set to be not less than 60%.

Fourth Attribution Tranche Based on 2019 revenue, the revenue growth in 2024 is set to be not less than 75%.

Note: The above “revenue” refers to the audited revenue of the Listed Company.

VIII. None of the following circumstances under which the implementation of the equity incentives shall not be carried out as stipulated in the Management Measures for Share Incentives of Listed Companies has occurred to the Company:
(i) an audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(ii) an audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
(iii) in the past 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public undertakings;
(iv) laws and regulations stipulate that equity incentives shall not be implemented;
(v) other circumstances as determined by the CSRC.

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RULES OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

IX. None of the following circumstances under which one shall not be a Participant as stipulated in the Management Measures for Share Incentive Scheme Adopted by Listed Companies has occurred to a Participant under the Incentive Scheme:
(i) the Participant has been determined as an inappropriate candidate by the Stock Exchange within the past 12 months;
(ii) the Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
(iii) the Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the past 12 months;
(iv) the Participant has the circumstances stipulated in the Company Law that he/she shall not act as a director or member of the senior management of a company;
(v) laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies;
(vi) other circumstances as determined by the CSRC.
X. Pharmaron undertakes not to provide loans and any other forms of financial assistance, including providing guarantee for their loans, to the Participants to obtain their Restricted Shares through the Incentive Scheme under the Restricted A Share Incentive Scheme.
XI. Pharmaron undertakes that there are no false records, misleading statements or material omissions in the relevant information disclosure documents of the Incentive Scheme.
XII. The Participants under the Incentive Scheme undertake if there are false records, misleading statements or material omissions in the Company’s information disclosure documents, resulting in non-compliance with the arrangement for granting or attributing rights and interests, the Participants shall return all the benefits obtained from the Incentive Scheme to the Company after confirming the existence of false records, misleading statements or major omissions in the relevant information disclosure documents.
XIII. The Incentive Scheme shall be implemented after being considered and approved at the general meeting of the Company by way of special resolution.
XIV. The Company shall convene a meeting of the Board in accordance with the relevant requirements to grant the Restricted Shares to the Participants and complete the announcement and other relevant procedures within 60 days after the Incentive Scheme is considered and approved at a general meeting. If the Company fails to complete the

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APPENDIX I

above procedures within the 60-day period, it shall promptly disclose the reasons for the failure to complete such procedures and declare the termination of the Incentive Scheme. The period during which no interests shall be granted pursuant to the Management Measures for Share Incentives of Listed Companies and Guide No. 5 to Handling Business of Listed Companies – Equity Incentives is excluded from the calculation of the 60-day period.

XV. The implementation of the Incentive Scheme shall not result in the shareholding structure of the Company to fail to meet the listing requirements.
For identification purpose only

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APPENDIX I

Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Special Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Chapter I Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-7
Chapter II Purpose of the Incentive Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-9
Chapter III Administrative Bodies of the Incentive Scheme . . . . . . . . . . . . . . . . .	I-9
Chapter IV Basis for Determining the Participants and Scope of Participants . .	I-10
Chapter V Restricted Shares to be Granted under the Incentive Scheme. . . . . . .	I-12
Chapter VI List of Participants and Allocation of Restricted Shares to
Be Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-13
Chapter VII Validity Period, Grant Date, Attribution Arrangement and
Black-out Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-13
Chapter VIII Grant Price and Basis of Determination of the Grant Price of
Restricted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-16
Chapter IX Grant and Attribution Conditions of the Restricted Shares . . . . . . .	I-17
Chapter X Methods and Procedures for Adjustment under the Incentive
Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-22
Chapter XI Accounting Treatment on the Restricted Shares. . . . . . . . . . . . . . . . .	I-24
Chapter XII Procedures for Implementation, Grant, Attribution of and
Amendments to, and Termination of the Incentive Scheme . . . . . . . . . . . . . . . .	I-26
Chapter XIII Other Rights and Obligations of the Company/Participants. . . . . .	I-30
Chapter XIV Arrangements for the Incentive Scheme in the Event of Change at
the level of Company/Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-33
Chapter XV Supplementary Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-37

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APPENDIX I

CHAPTER I DEFINITIONS

Unless otherwise requires, the following expressions herein shall have the following meanings:

Term

Meaning

Pharmaron, Company, : Pharmaron Beijing Co., Ltd.* (康龍化成(北京)新藥技術股份 Listed Company 有限公司)
Restricted Share : the 2020 Restricted A Share Incentive Scheme of Pharmaron Incentive Scheme, Beijing Co., Ltd.* (《康龍化成(北京)新藥技術股份有限公司 Incentive Scheme, 2020年A股限制性股票激勵計劃》) Scheme
Restricted Shares, Type II : the shares of the Company to be obtained in tranches and Restricted Shares registered by the Participants who meet the conditions for grant under the Incentive Scheme after meeting the corresponding attribution conditions
Participant(s)
: the high-level management, mid-level management, core technical personnel, basic-level management and technical personnel of the Company (including its subsidiaries), who shall be granted the Restricted Shares pursuant to the Incentive Scheme
grant date
: the date on which the Company grants the Restricted Shares to the Participants, which must be a trading day
grant price
: the price at which a Participant obtains the Company’s shares, as determined at the time of grant of Restricted Shares to the Participant by the Company
attribution : the act of registering the Restricted Shares by the Listed Company to the account of a Participant after the attribution conditions having been satisfied by the Participant
attribution date : the date on which the registration of the granted Restricted Shares is completed after the attribution conditions having been satisfied by a Participant, which must be a trading day

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APPENDIX I

attribution conditions : the attribution conditions as stipulated under the Restricted Share Incentive Scheme which must be satisfied by a Participant in order to obtain the incentive shares validity period : the period commencing on the grant date of the Restricted Shares and ending on the date on which all Restricted Shares granted to the Participants have been attributed or lapsed Remuneration Committee : the remuneration and appraisal committee of the Board of the Company CSRC : the China Securities Regulatory Commission Stock Exchange : Shenzhen Stock Exchange CSDC : the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited Company Law : the Company Law of the People’s Republic of China (《中華人民共和國公司法》) Securities Law : the Securities Law of the People’s Republic of China《中華人民共和國證券法》 Listing Rules : the Rules Governing the Listing of Stocks on the ChiNext Market of Shenzhen Stock Exchange (《深圳證券交易所創業板股票上市規則》) Management Measures : the Management Measures for Share Incentives of Listed Companies (《上市公司股權激勵管理辦法》) Guide to Handling : Guide No. 5 to Handling Business of Listed Companies – Business Equity Incentives (《創業板上市公司業務辦理指南第5號–股權激勵》) Articles of Association : the Articles of Association of Pharmaron Beijing Co., Ltd. (《康龍化成(北京)新藥技術股份有限公司章程》) Company’s Assessment : the Management Measures for Assessment for the Management Measures Implementation of the 2020 Restricted A Share Incentive Scheme of Pharmaron Beijing Co., Ltd. (《康龍化成(北京) 新藥技術股份有限公司2020年A股限制性股票激勵計劃實施考核管理辦法》 RMB/RMB’0,000/ : RMB/RMB’0,000/RMB’00,000,000, the unit of the lawful RMB’00,000,000 currency of the People’s Republic of China

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APPENDIX I

CHAPTER II PURPOSE OF THE INCENTIVE SCHEME

To further perfect the Company’s corporate governance structure, establish and improve the Company’s long-term incentive mechanism, attract and retain the Company’s high-level managemant, mid-level management, core technical personnel, basic-level management and technical personnel, fully mobilize their enthusiasm and creativity, effectively strengthen the cohesion of the core team and the competitiveness of the Company, align the interests of the shareholders, the Company and the core staff members, bring their attention to the long-term development of the Company and ensure that the Company’s development strategy and business goals, and under the premise of fully safeguarding the interests of shareholders, the Incentive Scheme is formulated following the principle of income equivalent to contribution in accordance with the relevant laws, regulations and regulatory documents including the Company Law, the Securities Law, the Management Measures, the Listing Rules and the Guide to Handling Business, as well as the Articles of Association.

CHAPTER III ADMINISTRATIVE BODIES OF THE INCENTIVE SCHEME

I. The general meeting, as the ultimate authority of the Company, shall be responsible for considering and approving the implementation, amendment and termination of the Incentive Scheme. The general meeting may, within its powers and authority, authorize the Board to handle certain matters relating to the Incentive Scheme.
II. The Board shall act as the executive and administrative body for the Incentive Scheme and be responsible for the implementation of the Incentive Scheme. The Remuneration Committee under the Board shall be responsible for drafting and revising the Incentive Scheme, and submitting the Incentive Scheme to the Board of the Company for review and approval. Upon approval by the Board, the Incentive Scheme shall be further submitted to the general meeting of the Company for review and approval, and the Board may handle matters relating to the Incentive Scheme within its scope of authority as delegated by the general meeting.
III. The Supervisory Committee and the independent Directors shall act as the supervisory authority for the Incentive Scheme, and shall express opinions as to whether the Incentive Scheme is conducive to the sustainable development of the Company, and whether there are any situations that clearly harm the interests of the Company and all shareholders. The Supervisory Committee shall verify the list of the Participants under the Incentive Scheme, and shall supervise the implementation of the Incentive Scheme as to whether it is in compliance with the relevant laws, administrative regulations, regulatory documents and operational rules of the Stock Exchange. The independent Directors shall solicit voting rights by proxy from all shareholders in respect of the Incentive Scheme.

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APPENDIX I

IV. Where amendments are being made to the Incentive Scheme before or after the Incentive Scheme is approved at the general meeting, the independent Directors and the Supervisory Committee shall express opinions as to whether the amended Incentive Scheme will be conducive to the sustainable development of the Company or whether there are any situations that clearly harm the interests of the Company and all shareholders.

Before the Restricted Shares are granted to a Participant, the independent Directors and the Supervisory Committee shall express clear opinions on the conditions stipulated for the Participant to receive such Restricted Shares as set out in the Incentive Scheme. In the event of any discrepancy between the Restricted Shares to be granted to a Participant and the arrangement under the Incentive Scheme, the independent Directors and the Supervisory Committee (where there are changes occurred to the Participants) shall express their clear opinions thereon at the same time.

Before the granted Restricted Shares are attributed to a Participant, the independent Directors and the Supervisory Committee shall express clear opinions as to whether the attribution conditions stipulated under the Incentive Scheme for the Participant have been fulfilled.

CHAPTER IV BASIS FOR DETERMINING THE PARTICIPANTS AND SCOPE OF PARTICIPANTS

I. BASIS FOR DETERMINING THE PARTICIPANTS

(i) Legal Basis for Determining the Participants

The Participants under the Incentive Scheme are determined after taking into account the actual circumstances of the Company and in accordance with the Company Law, the Securities Law, the Management Measures, the Listing Rules and the Guide to Handling Business and other relevant laws, regulations and regulatory documents as well as the Articles of Association.

(ii) Basis for determining the Participants

The Participants under the Incentive Scheme include high-level management, mid-level management, core technical personnel, basic-level management and technical personnel (including subsidiaries, the same applies below), in accordance with the purposes of implementing the Share Incentive Scheme. The list of persons who fall within the scope of Participants under the Incentive Scheme shall be drawn up by the Remuneration Committee, and verified by the Supervisory Committee of the Company.

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APPENDIX I

II. SCOPE OF THE PARTICIPANTS

The total number of the Participants under the Incentive Scheme shall be 209, including:

High-level management;
Mid-level management and core technical personnel;
Basic-level management and technical personnel

None of the Participants are independent Directors, Supervisors, non-PRC employee, shareholders who individually or collectively hold more than 5% of the Shares of Pharmaron or de facto controllers and their spouses, parents or children of such de facto controllers. All Participants must have entered into a labour or employment contract with the Company or its subsidiaries during the assessment period of the Incentive Scheme.

III. CIRCUMSTANCES IN WHICH A PERSON IS PROHIBITED FROM BEING A PARTICIPANT UNDER THE INCENTIVE SCHEME

(i) The person has been determined as an inappropriate candidate by the Stock Exchange within the past 12 months;
(ii) The person has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
(iii) The person has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major illegal acts in the past 12 months;
(iv) The person has the circumstances stipulated in the Company Law that he/she shall not act as a director or senior manager of any company;
(v) Laws and regulations stipulate that the person shall not participate in the equity incentives of listed companies;
(vi) Other circumstances as determined by the CSRC.

During the implementation process of the Incentive Scheme, if any of the above circumstances in relation to a Participant arises, the Company shall terminate his/her right to participate in the Incentive Scheme, and any granted Restricted Shares which have not yet been attributed shall not be attributed and shall lapse.

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APPENDIX I

IV. VERIFICATION OF PARTICIPANTS

(i) After the Board of the Company has reviewed and approved the Incentive Scheme, the Company shall publish the names and positions of the Participants internally via the Company’s website or other channels for no less than 10 days.
(ii) The Supervisory Committee of the Company shall review the list of the Participants and take sufficient consideration of the public response. The Company shall disclose the information regarding the review by the Supervisory Committee regarding the list of Participants and the publication situation 3 to 5 days prior to the Incentive Scheme being considered at the general meeting. Any adjustments to the list of the Participants made by the Board of the Company shall also be reviewed by the Supervisory Committee of the Company.

CHAPTER V RESTRICTED SHARES TO BE GRANTED UNDER THE INCENTIVE SCHEME

I. FORM OF ENTITLEMENTS TO BE GRANTED BY THE INCENTIVE SCHEME

The form of incentive to be adopted under the Incentive Scheme is the Type II Restricted Shares.

II. SOURCE AND TYPE OF UNDERLYING SHARES INVOLVED IN RESTRICTED SHARES TO BE GRANTED UNDER THE INCENTIVE SCHEME

The Company will issue RMB ordinary A shares of the Company to Participants as the source of shares under the Incentive Scheme.

III. THE NUMBER OF RESTRICTED SHARES TO BE GRANTED UNDER THE INCENTIVE SCHEME AND ITS PROPORTION TO THE TOTAL SHARES OF THE COMPANY

The total number of the Restricted Shares proposed to be granted to the Participants under the Incentive Scheme shall be 844,000 shares, representing 0.1062% of the total share capital of the Company of 794,387,462 shares as at the date of the announcement of the draft Incentive Scheme. This grant shall be on a one-off basis and without reserved interests.

The 2019 Restricted Shares and Share Options Incentive Scheme considered and approved at the 2019 second EGM of the Company is still under implementation. As of the date of the announcement of the draft Incentive Scheme, the cumulative total number of underlying shares involved under all share incentive schemes of the Company which are within their validity period shall not exceed 20.00% of the Company’s total share capital as at the date on which the Incentive Scheme is submitted for approval at a general meeting. The cumulative total number of the shares to be granted to any Participant in the Incentive Scheme under all share incentive schemes of the Company which are within their validity period shall not exceed 1.00% of the total share capital of the Company.

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APPENDIX I

CHAPTER VI LIST OF PARTICIPANTS AND ALLOCATION OF RESTRICTED SHARES TO BE GRANTED

I. LIST OF PARTICIPANTS AND ALLOCATION OF RESTRICTED SHARES TO BE GRANTED

Position High-level management (2 persons in total) Mid-level management and core technical personnel (60 persons in total) Basic-level management and technical personnel (147 persons in total) Total	Number of Restricted Shares to be granted (’0,000 shares) 12.50 44.80 27.10 84.40	Percentage to the total number of Restricted Shares to be granted 14.81% 53.08% 32.11% 100.00%	Percentage to the current total share capital 0.0157% 0.0564% 0.0341%
			0.1062%

Note: Any discrepancies in this table between the total shown and the sum of the amounts listed in the Incentive Scheme are due to rounding (the same applies below).

II. EXPLANATORY NOTES

The total number of the shares to be granted to any Participant under all share incentive schemes of the Company which are within their validity period do not exceed 1.00% of the total share capital of the Company. The cumulative total number of underlying shares involved under all share incentive schemes of the Company which are within their validity period do not exceed 20.00% of the Company’s total share capital as at the date on which the Incentive Scheme is submitted for approval at the general meeting. If a Participant, due to personal reasons, voluntarily waives the Restricted Shares which have been granted to him/her, the Board shall adjust the number of granted Restricted Shares accordingly.

CHAPTER VII VALIDITY PERIOD, GRANT DATE, ATTRIBUTION ARRANGEMENT AND BLACK-OUT PERIOD

I. VALIDITY PERIOD OF THE INCENTIVE SCHEME

The validity period of the Incentive Scheme commences on the grant date of the Restricted Shares and ends on the date on which all Restricted Shares granted to the Participants have been attributed or forfeited, such period shall not exceed 63 months.

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APPENDIX I

II. GRANT DATE OF THE INCENTIVE SCHEME

The Company will convene a Board meeting to grant the Restricted Shares to the Participants and complete the relevant procedures including making relevant announcement(s) according to the relevant regulations, within 60 days after the Incentive Scheme having been adopted and approved at a general meeting of the Company. If the Company is unable to complete the above procedures within the 60-day period, the Company shall make a timely announcement to disclose the reason for being unable to complete the procedures and declare the termination of the Incentive Scheme. The period during which no Restricted Shares shall be granted pursuant to the Management Measures and the Guide to Handling Business is excluded from the calculation of the 60-day period.

The grant date shall be determined by the Board of the Company after the Incentive Scheme has been considered and approved at a general meeting of the Company. The grant date must be a trading day. If the date determined pursuant to the above principles falls on a non-trading day, the grant date will be postponed to the next trading day immediately after such non-trading day.

III. ATTRIBUTION ARRANGEMENT UNDER THE INCENTIVE SCHEME

The Restricted Shares granted under the Incentive Scheme may be attributed in tranches as per the agreed proportions after the expiry of 15 months following the grant date and upon the Participants satisfying the corresponding attribution conditions. The attribution date must be a trading day within the validity period of the Incentive Scheme, and shall not fall within any of the following periods:

(i) 60 days prior to the disclosure of the annual results (inclusive of the date of the disclosure of the annual results), or the period between the end of the relevant financial year and the publication of the annual report, whichever is shorter;
(ii) 30 days prior to the publication of the half-year report or quarterly report (inclusive of the date of publication of such half-year or quarterly report), or the period between the end of the quarter or the half-year and the publication of the relevant report, whichever is shorter;
(iii) 10 days prior to the disclosure of results preview or preliminary financial results of the Company;
(iv) during the period from the date of occurrence of a material event which may have considerable impact on the trading price of the shares and their derivatives of the Company, or the date of entering the decision-making process, up to 2 trading days after relevant disclosure has been made in accordance with the laws;
(v) any other period stipulated by the CSRC and the Stock Exchange.

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APPENDIX I

The attribution arrangements for the grant of the Restricted Shares are shown in the table below:

		Attribution
Tranche	Attribution period	percentage
First tranche	From the first trading day after the expiry of 15	25%
	months following the grant date until the last
	trading day within the 27 months following
	the grant date
Second tranche	From the first trading day after the expiry of 27	25%
	months following the grant date until the last
	trading day within the 39 months following
	the grant date
Third tranche	From the first trading day after the expiry of 39	25%
	months following the grant date until the last
	trading day within the 51 months following
	the grant date
Fourth tranche	From the first trading day after the expiry of 51	25%
	months following the grant date until the last
	trading day within the 63 months following
	the grant date

After the attribution conditions of the Restricted Shares are met, the Company shall handle the matters in relation to the attribution of the Restricted Shares which have met the conditions.

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APPENDIX I

IV. BLACK-OUT PERIODS UNDER THE INCENTIVE SCHEME

The requirements of black-out for the Restricted Shares granted to the Participants under the Incentive Scheme are implemented in accordance with relevant laws, administrative regulations and regulatory documents including the Company Law and the Securities Law, and the Articles of Association as follows:

(i) Any Restricted Shares attributed in the respective tranche shall not be transferable for 6 months from the date of satisfying the attribution conditions considered and approved by the Board for the Restricted Shares in each tranche;
(ii) Where the Participant is a director or a member of the senior management of the Company, the number of shares which may be transferred each year during his/her term of office shall not exceed 25% of the total number of shares held by him/her. No shares held by him/her may be transferred within half a year after his/her termination of office;
(iii) For Participants who are directors or members of the senior management of the Company and their spouses, parents or children, if they have sold the Company’s shares held by them within 6 months after purchasing such shares, or if they have purchased the shares within 6 months after selling their shares, the gains obtained therefrom shall be attributed to the Company and the Board shall forfeit the gains;
(iv) During the validity period of the Incentive Scheme, if the relevant requirements under the relevant laws, administrative regulations, regulatory documents such as the Company Law and the Securities Law and the Articles of Association regarding the transfer of shares held by the directors and members of the senior management of the Company are changed, the transfer of the shares held by the Participants shall comply with the relevant laws, regulations and regulatory documents including the Company Law and the Securities Law and the Articles of Association as amended at the time of transfer.

CHAPTER VIII GRANT PRICE AND BASIS OF DETERMINATION OF THE GRANT PRICE OF RESTRICTED SHARES

I. GRANT PRICE OF RESTRICTED SHARES

The grant price of the Restricted Shares shall be RMB55.78 per share. A Participant who has satisfied the conditions for grant and attribution may purchase the Company’s shares at the price of RMB55.78 per share.

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APPENDIX I

II. BASIS OF DETERMINATION OF THE GRANT PRICE OF RESTRICTED SHARES

The Grant Price of the Restricted Shares under the Incentive Scheme shall not be lower than the nominal value of the shares and should not be lower than the higher of the following prices:

(1) 50% of the average trading price of the Company’s shares on the trading day prior to the announcement of the draft Incentive Scheme, being RMB55.78 per share;
(2) 50% of the average trading price of the Company’s shares for the 120 trading days prior to the announcement of the draft Incentive Scheme, being RMB49.47 per share.

CHAPTER IX GRANT AND ATTRIBUTION CONDITIONS OF THE RESTRICTED SHARES

I. CONDITIONS FOR GRANT OF THE RESTRICTED SHARES

(i) None of the following has occurred on the part of the Company:
An audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
An audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
In the past 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public commitments;
Laws and regulations stipulate that equity incentives shall not be implemented;
Other circumstances as determined by the CSRC.
(ii) None of the following has occurred on the part of the Participants:

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APPENDIX I

The Participant has been determined as an inappropriate candidate by the Stock Exchange within the past 12 months;
The Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
The Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the past 12 months;
The Participant has the circumstances stipulated in the Company Law that he/she shall not act as a director or member of the senior management of a company;
Laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies;
Other circumstances as determined by the CSRC.

II. CONDITIONS FOR ATTRIBUTION OF THE RESTRICTED SHARES

For the Restricted Shares to be attributed to the Participant, all of the following conditions need to be satisfied within the attribution period:

(i) None of the following has occurred on the part of the Company:
An audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
An audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
In the past 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public commitments;
Laws and regulations stipulate that equity incentives shall not be implemented;
Other circumstances as determined by the CSRC.

In the event that any one of the circumstances specified in the above subparagraph (i) arises, the Restricted Shares that have been granted but have not yet been attributed to the Participant under the Incentive Scheme shall not be attributed and shall lapse.

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APPENDIX I

(ii) None of the following has occurred on the part of the Participants:
The Participant has been determined as an inappropriate candidate by the Stock Exchange within the past 12 months;
The Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
The Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the past 12 months;
The Participant has the circumstances stipulated in the PRC Company Law that he/she shall not act as a director or member of the senior management of a company;
Laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies;
Other circumstances as determined by the CSRC.

In the event that any one of the circumstances specified in the above subparagraph (ii) arises in relation to a certain Participant, the Company shall terminate such Participant’s right to participate in the Incentive Scheme, and the Restricted Shares that have been granted but have not yet been attributed to such Participant under the Incentive Scheme shall not be attributed and shall lapse.

(iii) Requirements on length of employment of the Participants for attribution of Restricted Shares:

Before each tranche of Restricted Shares granted to the Participants is attributed, the length of employment of the Participant must be more than 12 months.

(iv) Performance assessment requirements at the Company level:

Under the Incentive Scheme, the Company’s performance indicators will be evaluated on an annual basis for the financial years of 2021 to 2024, and the achievement of performance assessment target will be one of the attribution conditions for the Participants for the current year. The performance assessment objectives under the Incentive Scheme are set out below:

Attribution Period Performance Assessment Objectives First Attribution Period Based on the figure in 2019, the growth rate of operating income in 2021 shall not be less than 30%

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APPENDIX I

Attribution Period	Performance Assessment Objectives
Second Attribution Period	Based on the figure in 2019, the growth rate
	of operating income in 2022 shall not be
	less than 45%
Third Attribution Period	Based on the figure in 2019, the growth rate
	of operating income in 2023 shall not be
	less than 60%
Fourth Attribution Period	Based on the figure in 2019, the growth rate
	of operating income in 2024 shall not be
	less than 75%

Note: The above “operating income” refers to the audited operating income of the Listed Company.

During the attribution period, the Company will handle the registration of the attributed Restricted Shares for the Participants who have satisfied the attribution conditions. In the event that the above performance assessment requirements at the Company level have not been reached within the respective attribution tranche, all the Restricted Shares that have been granted and are to be attributed to the Participants in such tranche shall not be attributed and shall be forfeited.

(v) Performance assessment requirements at the Participant’s individual level

Assessment results	Pass	Fail
Attribution percentage	100%	0%

Subject to the Company achieving its performance target, if the Participant’s personal performance assessment result in the previous year is pass, all the Restricted Shares of the Participant corresponding to the assessment year can be attributed; if the Participant’s personal performance assessment result in the previous year is fail, then the Restricted Shares of the Participant corresponding to the assessment year shall not be attributed and shall lapse.

The content of the assessment under the Incentive Scheme is implemented in accordance with the “Assessment Management Measures of the Company”.

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III. EXPLANATION ON THE SCIENTIFICALNESS AND REASONABLENESS OF THE PERFORMANCE APPRAISAL INDICATORS OF THE COMPANY

In order to realize the strategy of the Company and maintain its competitiveness, the Company intends to motivate the high-level management, mid-level management, core technical personnel, basic-level management and technical personnel of the Company through the implementation of the Incentive Scheme. After reasonable prediction and taking into account the incentive effects of the Incentive Scheme, the revenue of the Company is adopted as the company-level performance appraisal indicator under the Incentive Scheme, which can directly reflect the Company’s principal business operations and indirectly reflect the market share of the Company in the industry.

According to the performance indicators with operating income of 2019 as the basis, the growth rate of the Company’s operating income for 2021 to 2024 shall not be less than 30%, 45%, 60% and 75% respectively. The performance indicators are formulated with reference to the prevailing situation and future strategic planning of the Company as well as industry trends and other factors. The satisfaction of the performance indicators presents a certain degree of challenge, which helps to continuously improve the profitability of the Company and proactiveness of the staff, ensure the successful implementation of future development strategy and business objectives, and bring better and lasting returns to the shareholders.

In addition to the performance assessment at the Company level, the Company has also set up a strict performance appraisal system at individual level, which allows a more accurate and comprehensive evaluation of the work performance of the Participants. The Company will determine whether the Participants meet the attribution conditions based on the previous annual performance evaluation results of the Participants.

In summary, the Company’s appraisal system under the Incentive Scheme is integrated, comprehensive and operable. Not only is it conducive to fully mobilize the enthusiasm and creativity of the Participants, it can also promote the construction of the Company’s core team, and play a good role in restraining the Participants, providing solid guarantee for realization of the Company’s future business strategies and objectives.

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APPENDIX I

CHAPTER X METHODS AND PROCEDURES FOR ADJUSTMENT UNDER THE INCENTIVE SCHEME

I. ADJUSTMENT METHOD OF THE NUMBER OF RESTRICTED SHARES

In the event of any capitalization issue, bonus issue, sub-division, rights issue or share consolidation of the Company during the period from the date of announcement of the Incentive Scheme to the completion of attribution registration of Restricted Shares by the Participants, the number of Restricted Shares shall be adjusted accordingly. The adjustment method is as follows:

(i) Capital reserve converted into share capital, bonus stock distribution, stock split

Q = Q0 × (1 + n)

(ii) Rights issue

Q = Q0 × P1 × (1 + n)/(P1 + P2 × n)

(iii) Share consolidation

Q = Q0 × n

Where: Q0 represents the number of Restricted Shares before the adjustment; n represents the ratio of consolidation of shares (i.e. one share of the Company to be consolidated into n share); Q represents the number of Restricted Shares after the adjustment.

(iv) New issue of shares

In the event of new issue of Shares by the Company, no adjustment shall be made to the number of Restricted Shares.

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II. ADJUSTMENT METHOD OF THE GRANT PRICE OF THE RESTRICTED SHARES

In the event of any dividend distribution, capitalization issue, bonus issue, sub-division, rights issue or share consolidation of the Company during the period from the date of the announcement of the Incentive Scheme to the completion of attribution registration of Restricted Shares by the Participants, the grant price of the Restricted Shares shall be adjusted accordingly. The adjustment method is as follows:

(i) Capital reserve converted into share capital, bonus stock distribution, stock split

P = P0 ÷ (1 + n)

Where: P0 represents the grant price before the adjustment; n represents the ratio of increase per share resulting from the issue of shares by conversion of capital reserve, bonus issue or sub-division of shares to each Share; P represents the grant price after the adjustment.

(ii) Rights issue

P = P0 × (P1 + P2 × n)/[P1 × (1 + n)]

Where: P0 represents the grant price before the adjustment; P1 represents the closing price as at the record date; P2 represents the price of the rights issue; n represents the ratio of the rights issue (i.e. the ratio of the number of shares to be issued under the rights issue to the total share capital of the Company before the rights issue); P represents the grant price after the adjustment.

(iii) Share consolidation

P = P0 ÷ n

Where: P0 represents the grant price before the adjustment; n represents the ratio of consolidation of shares per share; P represents the grant price after the adjustment.

(iv) Dividend distribution

P = P0 – V

Where: P0 represents the grant price before the adjustment; V represents the dividend per share; P represents the grant price after the adjustment. P shall be greater than 1 after the dividend distribution.

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(v) New issue of shares

In the event of new issue of shares by the Company, no adjustment shall be made to the grant price of the Restricted Shares.

III. ADJUSTMENT PROCEDURES FOR THE INCENTIVE SCHEME

The Company’s general meeting authorizes the Board to adjust the number of Restricted Shares and the grant price based on the reasons set forth in the Incentive Scheme. After the Board adjusts the number of Restricted Shares and the grant price in accordance with the above provisions, it shall promptly announce and notify the Participants. The Company shall employ lawyers to provide professional opinions to the Board on whether the above adjustments comply with the requirements under the Management Measures, the Articles of Association and the Incentive Scheme.

If the number of Restricted Shares and the grant price need to be adjusted due to matters other than the above circumstances, in addition to the approval of the relevant proposals from the Board, such adjustments must be submitted to the general meeting of the Company for approval.

CHAPTER XI ACCOUNTING TREATMENT ON THE RESTRICTED SHARES

In accordance with relevant requirements of the Accounting Standards for Business Enterprises No. 11 – Share-Based Payments and the Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments published by the Ministry of Finance, at each balance sheet date within the Black-out Period, the Company shall revise the number of Restricted Shares which are expected to be attributed according to the changes in the latest available number of persons eligible to be attributed the Restricted Shares, fulfilment of the performance targets and other subsequent information, and recognize the services acquired during such period in relevant costs or expenses and capital reserve at the fair value of the Restricted Shares on the grant date.

I. FAIR VALUE OF THE RESTRICTED SHARES AND THE DETERMINATION METHOD

Based on the commitment of the Participants under the Incentive Scheme, any Restricted Shares attributed in the respective tranche shall not be transferable for 6 months from the date of satisfying the attribution conditions considered and approved by the Board for the Restricted Shares in each tranche (the “Restrictive Factor”). Such condition is a non-attribution condition, and based on the Enterprise Accounting Standard, when determining the fair value of an equity instrument on the Grant Date, the enterprise shall consider the impact of such non-attribution condition. The fair value of Restricted Shares represents the fair value of outstanding Shares after deducting the discounted costs arising from the Restrictive Factor, and the fair value of each Restricted Share is equal to the closing price of each Share on the Grant Date after deducting the discounted costs arising from the Restrictive Factor. Accordingly, the sharebased payment of each Restricted Share is equal to the closing price on the Grant Date after deducting the discounted costs arising from the Restrictive Factor less the Grant Price.

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APPENDIX I

According to the relevant requirements of the Accounting Standards for Business Enterprises No. 11-Share Payments and Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments, the Company adopts the BlackScholes model (B-S model) as the pricing model to determine the fair value of the Restricted Shares after deducting the cost caused by Restrictive Factors. The Company uses such model to estimate the fair value of the Restricted Shares granted by using November 6, 2020 as the record date (formal estimation at the time of grant) for calculation. Specific parameters selected are as follows:

a. Underlying share price: RMB111.86 (closing price as at November 6, 2020)
b. Validity period: 0.5 year (additional lock-up period after each attribution date)
c. Historical volatility: 51.12% (annualized volatility of Pharmaron in the past year)
d. Risk-free interest rate: 1.30% (using the semi-annual deposit benchmark interest rate of financial institutions set by the People’s Bank of China)
II. THE ESTIMATED IMPACT ON THE OPERATING PERFORMANCE IN EACH ACCOUNTING PERIOD DUE TO OF THE IMPLEMENTATION OF THE RESTRICTED SHARES

The Company will grant 844,000 Restricted Shares to the Participants. The fair value of the Restricted Shares was estimated based on the closing data on the trading day prior to the publication of the draft Incentive Scheme, and the total equity expense of the grant was estimated to be RMB34.1389 million. The total amount of the above expenses as the incentive cost of the Company’s Incentive Scheme will be recognized over the course of the Incentive Scheme in proportion in installments and will be charged to operating profit or loss. In accordance with accounting standards, the actual amount shall be based on the fair value of the Shares calculated on the “actual grant date”, assuming the grant date to be in December 2020, and the amortization of cost of the Restricted Shares from the years 2021 to 2024 shall be as follows:

Unit: RMB0’000

Amortization cost of the
Restricted Shares	Year 2021	Year 2022	Year 2023	Year 2024
3,413.89	1,778.07	924.60	497.86	213.37

Notes:

The above costs are projected costs, and actual costs are related to the actual grant price, the grant date, the closing price on the grant date, the number of Restricted Shares granted and the best estimate of the number of attributable equity instrument;

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APPENDIX I

Shareholders’ attention is drawn to the possible dilutive effect of the share-based payment described above;
The final influence of the above projected amortization expenses on the Company’s operating results is subject to the audit report issued by the accountants.

The cost of the Incentive Scheme will be charged to cost expenses. Without considering the positive effect of the Incentive Scheme on the Company’s performance, the Company estimates, based on current information, that the amortization of cost expenses of the Incentive Scheme will have an impact on net profit of each year within the validity period. Considering the positive effect of the Incentive Scheme on the Company’s operation and development, which will stimulate the enthusiasm of the management and business team, improve operating efficiency and reduce operating costs, the Incentive Scheme will play a positive role in the Company’s long-term performance.

CHAPTER XII PROCEDURES FOR IMPLEMENTATION, GRANT, ATTRIBUTION OF AND AMENDMENTS TO, AND TERMINATION OF THE INCENTIVE SCHEME

I. PROCEDURES FOR IMPLEMENTATION OF THE INCENTIVE SCHEME

(i) The Remuneration Committee is responsible for formulating the draft Incentive Scheme and the Company’s Assessment Management Measures.
(ii) The Board shall resolve on the draft Incentive Scheme and the Company’s Assessment Management Measures formulated by the Remuneration Committee. When the Board resolves on the Incentive Scheme, related directors shall abstain from voting.
(iii) The independent Directors and the Supervisory Committee should express opinions as to whether the Incentive Scheme is conducive to the sustainable development of the Company and whether there are any circumstances apparently harmful to the interests of the Company and all Shareholders.
(iv) The Company will engage an independent financial adviser to give professional opinions on the feasibility of the Incentive Scheme, the reasonableness of the determination of the grant price, whether the Incentive Scheme is conducive to the sustainable development of the Company and whether there are any circumstances apparently harmful to the interests of the Company and all Shareholders. The legal adviser engaged by the Company will issue a legal opinion on the Incentive Scheme.
(v) Within two trading days after the Board having reviewed and approved the draft Incentive Scheme, the Company will make an announcement of the board resolutions, the draft and summary of the Incentive Scheme, the opinions of independent Directors, and the opinions of the Supervisory Committee.

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(vi) The Company shall carry out self-investigation on the trading of shares of the Company by individuals in possession of inside information within 6 months prior to the announcement of the Incentive Scheme.
(vii) Before convening a general meeting, the Company shall announce the names and positions of the Participants internally via the Company’s website or other channels for no less than 10 days. The Supervisory Committee shall review the list of Participants and take sufficient consideration of the public response. The Company shall disclose the information regarding the review by the Supervisory Committee regarding the list of Participants and the publication responses 3 to 5 days prior to the consideration of the Incentive Scheme at the general meeting.
(viii) During voting on the Incentive Scheme and related resolutions at the general meeting of the Company, the independent Directors shall solicit proxy voting rights from all shareholders regarding the Incentive Scheme and related resolutions. When the Incentive Scheme and related resolutions are considered by way of special resolution at the general meeting, the related shareholders shall abstain from voting.
(ix) The Company will make an announcement of the resolutions of the general meeting, the Incentive Scheme as considered and approved at the general meeting, the self-investigation report on the trading of shares of the Company by individuals in possession of inside information and the legal opinions.
(x) After the Incentive Scheme has been considered and approved by the general meeting of the Company, the Board will grant the Restricted Shares to the Participants and complete the announcements and other relevant procedures pursuant to the authorization granted by the shareholders within 60 days after the Incentive Scheme having been adopted and approved at a general meeting. The Board shall handle matters including the attribution and registration of Restricted Shares in accordance with the authorization at a general meeting.

II. PROCEDURES FOR GRANT OF THE RESTRICTED SHARES

(i) The Company shall convene a meeting of the Board to grant the Restricted Shares to the Participants within 60 days from the date on which the Incentive Scheme has been adopted and approved at a general meeting.
(ii) Before granting the Restricted Shares to the Participants, the Board shall consider whether the Participants have satisfied the conditions for grant prescribed in the Incentive Scheme and make an announcement thereafter. The independent Directors and the Supervisory Committee shall also issue their express opinions at the same

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APPENDIX I

time. The legal advisor shall issue a legal opinion on whether the Participants have satisfied the conditions of the grant. The Supervisory Committee of the Company shall verify the list of the Participants on the grant date of the Restricted Shares and issue its opinion.

When there is any discrepancy between the Company’s grant of the Restricted Shares to the Participants and the arrangement stipulated under the Incentive Scheme, the independent Directors, the Supervisory Committee (when there are changes to the Participants), legal advisor and the independent financial adviser shall issue their clear opinions simultaneously.

(iii) The Company shall enter into the Agreement on the Granting of Restricted Shares with the Participants setting out their respective rights and obligations.
(iv) The Company shall keep a register for management of the Restricted Shares with reference to the Agreement on the Granting of Restricted Shares signed by the Participants and the subscription situation, and such register shall record the names of the Participants, the number of Restricted Shares granted, the grant date and the serial number of the relevant Agreement on the Granting of Restricted Shares.
(v) Upon the general meeting’s consideration and approval of the Share Incentive Scheme, the Company shall grant the Restricted Shares to the Participants and make an announcement within 60 days. If the Company fails to publish an announcement in respect of the grant of the Restricted Shares within the 60-day period, the Incentive Scheme shall be terminated, and the Board shall promptly disclose the reasons for the failure to complete and is prohibited from approving a share incentive scheme again within 3 months thereafter.
(vi) Where connected persons or other situations required by the listing rules of the place where the Company’s securities are listed are involved, the Company shall comply with such local laws and regulations and meet the relevant requirements (including, if necessary, any prior approval from the independent shareholders).

III. PROCEDURES FOR THE ATTRIBUTION OF THE RESTRICTED SHARES

(i) Prior to attribution, the Company shall confirm whether the Participants have satisfied the attribution conditions. The Board shall consider whether the attribution conditions under the Incentive Scheme have been satisfied, and the independent Directors and the Supervisory Committee shall express clear opinions at the same time. The legal advisor shall issue a legal opinion on whether the conditions for attributing the Restricted Shares have been satisfied. The board’s meeting of reviewing satisfaction of the attribution conditions shall be held within 6 months after each attribution period commences.

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APPENDIX I

(ii) The Participants shall open securities account before the first attribution period commences. The Participants who have fulfilled the attribution conditions shall pay the funds for the subscription of the Restricted Shares into the account designated by the Company according to the Company’s requirements within 3 months after the fulfillment of the attribution conditions reviewed and confirmed by the board of the company (the exact date and time of payment will be confirmed according to demand note issued then by the company), which will be verified and confirmed by a certified public accountant. Participants who have not paid the funds within the requisite period shall be deemed to have waived his/her right to subscribe for the Restricted Shares. The Company shall in a unified manner make an application to the Stock Exchange, and after confirmation by the Stock Exchange, the CSDC will handle the matters for the attribution of the Restricted Shares. The Restricted Shares of the Participants who have not fulfilled the attribution conditions in the relevant tranche shall not be attributed and shall lapse. The Company shall make timely disclosure in respect of the implementation of the Incentive Scheme.
(iii) Participants may transfer their attributed Restricted Shares, however, the transfer of the Restricted Shares held by the directors and members of the senior management of the Company should comply with the requirements of the relevant laws, administrative regulations and regulatory documents.
IV. PROCEDURES FOR AMENDMENT AND TERMINATION OF THE INCENTIVE SCHEME

(i) Procedures for the Amendment of the Incentive Scheme

If the Company intends to make amendments to the Incentive Scheme before it is considered and approved at the general meeting, the amendments shall be considered and approved by the Board. If the Company intends to make amendments to the Incentive Scheme that has been adopted at the general meeting, such amendments shall be submitted to the general meeting for its approval and shall not include circumstances that would result in the acceleration of attribution or reduction of the grant price.
The Company shall timely disclose the reasons for and the content of the amendments. The independent Directors and the Supervisory Committee of the Company shall give clear opinions as to whether the amendments to the Incentive Scheme is conducive to the sustainable development of the Company and whether there are any situations that clearly harm the interests of the Company and all shareholders. The legal advisor shall express its professional opinions as to whether the amended proposal is in compliance with the requirements of the Management Measures and relevant laws and regulations, and whether there are any circumstances that clearly harm the interests of the Company and all shareholders.

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(ii) Procedures of termination of the Incentive Scheme

If the Company intends to terminate the Incentive Scheme before it is considered and approved at the general meeting, the Board shall consider and approve and make an announcement. If the Company intends to terminate the implementation of the Incentive Scheme after it is considered and approved at the general meeting, such termination shall be submitted to the Board and the general meetings for approval and be disclosed.
The Company shall timely disclose the resolutions of the general meetings or the resolutions of the Board. The legal advisor shall express its professional opinions as to whether the Company’s termination of the implementation of the Incentive Scheme is in compliance with the requirements of the Management Measures and relevant laws and regulations and whether there are any circumstances that clearly harm the interests of the Company and all shareholders.

CHAPTER XIII OTHER RIGHTS AND OBLIGATIONS OF THE COMPANY/PARTICIPANTS

I. RIGHTS AND OBLIGATIONS OF THE COMPANY

(i) The Company has the right to interpret and implement the Incentive Scheme, to conduct performance assessment of the Participants, and to supervise and examine whether the Participants are eligible for attribution. If a Participant fails to fulfill the attribution conditions as determined under the Incentive Scheme, upon the approval of the Board of the Company, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.
(ii) The Company has the right to require the Participants to work for the Company according to the requirements of the positions at which he/she is employed. If the Participant is not qualified for the positions or fails the assessment, or if the Participant violates the laws and professional ethics, divulges company secrets, violates the rules and regulations of the Company, and neglects his/her duty or malfeasance or has other acts that seriously damage the Company’s interests or reputation, upon the approval of the Board, the Restricted Shares that have been granted to the Participant but have not yet been attributed shall be attributed and shall lapse.
(iii) The Company shall withhold and pay the personal income tax and other taxes and fees payable by the Participants in accordance with relevant national tax laws and regulations.
(iv) The Company undertakes not to provide loans and any other forms of financial assistance, including providing guarantee for their loans, to the Participants to obtain relevant Restricted Shares according to the Incentive Scheme.

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(v) The Company shall timely, truthfully, accurately and completely disclose the information disclosure documents related to the Incentive Scheme in accordance with relevant laws, regulations and regulatory documents, ensure that there are no false records, misleading statements or material omission and fulfil relevant reporting obligations under the Incentive Scheme in a timely manner.
(vi) In accordance with the Incentive Scheme and relevant requirements of the CSRC, the Stock Exchange and registration and clearing companies, the Company shall handle the registration of the attribution of Restricted Shares for the Participants that meet the attribution conditions. However, the Company shall not be held liable if the Participants fails to complete the registration of the attribution of Restricted Shares and causes losses to the Participants due to the reasons on the part of the CSRC, the Stock Exchange and the registration and clearing companies.
(vii) Other relevant rights and obligations as stipulated under the laws, administrative regulations and regulatory documents.

II. RIGHTS AND OBLIGATIONS OF THE PARTICIPANTS

(i) The Participants shall be diligent and responsible, abide by professional ethics, and make due contributions to the development of the Company in accordance with the requirements of the positions at which he/she is employed by the Company.
(ii) The Participants have the right to receive the attributed Restricted Shares granted in accordance with the provisions of the Incentive Scheme, and should lock-up and deal with his/her Restricted Shares in accordance with relevant provisions.
(iii) Source of funds for the Participants shall be their own financing.
(iv) Prior to the attribution, the Restricted Shares granted to the Participants under the Incentive Scheme shall not be transferred, used to guarantee or repay debts.
(v) Prior to the attribution, the Restricted Shares granted to the Participants under the Incentive Scheme do not carry any voting rights or right to participate in the distribution of bonus shares or share dividends.
(vi) The income received by the Participants as a result of the Incentive Scheme shall be subject to personal income tax and other taxes and fees in accordance with national tax regulations.

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(vii) The Participants undertake that, if there are false records, misleading statements or material omissions in the Company’s information disclosure documents, resulting in non-compliance with the arrangement for granting rights and interests, the Participants shall fulfill their undertakings and return all the benefits obtained from the Incentive Scheme to the Company after confirming the existence of false records, misleading statements or major omissions in relevant information disclosure documents.
(viii) If the Participant is no longer eligible to be a Participant under the Incentive Scheme as stipulated in Article 8 of the Management Measures during the implementation of the Incentive Scheme, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed, and shall lapse.
(ix) If the Participant ceases to be employed by the Company after attribution of the Restricted Shares, such Participant shall not engage in business related or similar to that of the Company for two years following the end of such Participant’s employment with the Company. If the Participant who ceases to be employed by the Company after attribution of the Restricted Shares, engages in business related or similar to that of the Company within the two years following the end of such Participant’s employment with the Company, such Participant shall return to the Company all interests obtained from the Incentive Scheme, and be liable for damages for breach in the same amount. Such Participant shall also be liable for damages should he/she cause loss to the Company.
(x) Other relevant rights and obligations as stipulated by laws, administrative regulations, regulatory documents and the Incentive Scheme.

III. OTHER EXPLANATORY NOTES

The Company shall enter into the Agreement on the Granting of Restricted Shares with each Participant after the Incentive Scheme having been considered and approved at the general meeting, setting out the parties’ respective rights and obligations under the Incentive Scheme and other relevant matters.

Any dispute between the Company and the Participants shall be resolved in accordance with the provisions of the Incentive Scheme and the Agreement on the Granting of Restricted Shares. In event of any dispute that is not clearly covered by such provisions, both parties shall negotiate and resolve their disputes in accordance with national laws and the principles of fairness and reasonableness. Where any dispute cannot be settled by negotiation, it shall be resolved through litigation by submitting to the People’s Court with jurisdiction over the Company’s place of business.

The Company’s determination of a Participant under the Incentive Scheme does not constitute an undertaking with regards to the employment period of any employee. The employment relationship between the Company and the Participants shall be determined in accordance with the labor contract or employment contract signed.

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CHAPTER XIV ARRANGEMENTS FOR THE INCENTIVE SCHEME IN THE EVENT OF CHANGE AT THE LEVEL OF COMPANY/PARTICIPANTS

I. IN THE EVENT OF ANY CHANGES OCCURRED AT THE COMPANY LEVEL

(i) In the event that any of the circumstances below occurs in respect of the Company, the Incentive Scheme shall be terminated and the Restricted Shares that have been granted to the Participants under the Incentive Scheme but have not yet been attributed shall not be attributed and shall lapse:
an audit report on the financial and accounting report for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
an audit report on internal control over financial reporting for the most recent financial year in which a certified public accountant issued an adverse opinion or was unable to express an opinion;
in the past 36 months upon listing, there have been cases of failure to distribute profits according to laws and regulations, the Articles of Association and public undertakings;
laws and regulations stipulate that equity incentives shall not be implemented;
other circumstances where the Incentive Scheme should be terminated as determined by the CSRC.
(ii) Merger or division of the Company, etc.;

In case of merger or division of the Company, the Board of the Company shall decide whether to terminate the Incentive Scheme within five trading days from the date of merger or division.

(iii) Change of Control of the Company

In the event of a change of control of the Company due to mergers, debt consolidation plans or privatization offers, or significant asset restructuring, the Company shall replace half of all members of the Board before the expiration of the term of office of the Board and the Board of the Company shall decide whether to terminate the Incentive Scheme within five trading days from the date of the change of the control.

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(iv) If the Company fails to meet the conditions for granting or attributing the Restricted Shares due to false records, misleading statements or major omissions in the information disclosure documents, the Restricted Shares that have been granted to the Participants but have not yet been attributed shall not be attributed and shall lapse.

If the Restricted Shares that have been granted to the Participants have already been attributed, all the Participants shall return the granted rights and interests. If a Participant who is not responsible for the above matters suffers from losses due to the return of rights and interests, such Participant can recover such losses from the Company or the responsible targets in accordance with relevant arrangements under the Incentive Scheme. The Board shall recover the proceeds from the Participants in accordance with the requirements under the preceding paragraph and relevant arrangements under the Incentive Scheme.

II. IN THE EVENT OF CHANGES IN THE PERSONAL CIRCUMSTANCES OF THE PARTICIPANTS

(i) Change in Position of the Participants
If the position of the Participant changes but he/she still works in the Company or its subsidiaries, the Restricted Shares granted to him/her shall still be carried out in accordance with the procedures stipulated in the Incentive Scheme.
If the Participant is a supervisor or an independent director of the Company or other person who cannot hold the Restricted Shares of the Company, the Restricted Shares that have been attributed shall not be handled. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.
If the Participant violates the law, violates professional ethics, divulges company secrets, damages the interests or reputation of the Company due to dereliction of duty or malfeasance, or causes the Company to terminate the labor relationship with the Participant due to the above reasons, the Participants shall return all gains obtained from the attribution of the Restricted Shares. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse. At the same time, in the event of serious circumstances, the Company may also recover the losses suffered by the Company in accordance with relevant laws and regulations.

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(ii) Resignation of the Participants
If the contract of the Participant expires and he/she no longer renews the contract or resigns voluntarily, the Restricted Shares that have been attributed shall not be handled. In such case, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.
If the Participant leaves the Company passively due to layoffs and other reasons and there are no behaviors such as failure to pass performance evaluation, negligence or violation of laws and disciplines, the Restricted Shares that have been attributed shall not be handled. In such case, the Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.

(iii) Retirement of the Participants

If the Participants that have retired are re-hired, the Restricted Shares that have been granted to them will be carried out in accordance with the procedures stipulated in the Incentive Scheme which took effect before the retirement. If the Participants reject the Company’s request for continued employment, or if the Participants retire and leave the Company, the Restricted Shares that have been attributed shall not be handled and the Restricted Shares granted but not yet attributed shall not be attributed and shall lapse.

(iv) Incapacity of the Participants

If the Participants are incapacitated and leave the Company due to work injury, the Remuneration Committee shall decide that the Restricted Shares granted to the Participants shall be carried out in accordance with the procedures stipulated in the Incentive Scheme which takes effect before the occurrence thereof, and the personal performance assessment results will no longer be included in the attribution conditions; or the Company shall cancel the Restricted Shares that have been granted but have not yet been attributed.
If the Participants leave the Company, which is not due to the incapability arising from work injury, the Restricted Shares that have been attributed shall not be handled. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.

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(v) Death of the Participants
If the Participants die due to their duty, the Remuneration Committee of the Board shall decide that the Restricted Shares granted to them shall be held by the designated property heir or legal heir on their behalf, and shall be carried out in accordance with the procedures stipulated in the Incentive Scheme which takes effect before their death, and the results of their personal performance evaluation shall not be included in the attribution conditions; or the Company shall cancel his/her Restricted Shares that have been granted but have not yet been attributed.
If the Participants die for other reasons, the Restricted Shares that have been attributed for the Participants shall not be handled. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.
(vi) Change of Control of the Subsidiary where the Participants Work

If the Participants work in a subsidiary controlled by the Company, and if the Company loses control of the subsidiary and the Participants no longer work in the Company or subsidiaries controlled by the Company, the Restricted Shares that have been attributed shall not be handled. The Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse.

(vii) Changes in Eligibility of Participants

If the Participant no longer meets the eligibility of the Participant due to any one of the following circumstances, the Restricted Shares that have been attributed shall not be handled; and the Restricted Shares that have been granted but have not yet been attributed shall not be attributed and shall lapse:

the Participant has been determined as an inappropriate candidate by the Stock Exchange within the past 12 months;
the Participant has been identified as an inappropriate candidate by the CSRC and its delegated institutions within the past 12 months;
the Participant has been subject to administrative punishment or market ban measures by the CSRC and its delegated institutions due to major breach of laws and regulations in the past 12 months;

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RULES OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

the Participant has the circumstances stipulated in the Company Law that he/she shall not act as a director or member of the senior management of a company;
laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies;
other circumstances as determined by the CSRC.

III. OTHERS

The Remuneration Committee shall be responsible for making decisions on other unspecified situations and the methods of handling them.

CHAPTER XV SUPPLEMENTARY PROVISIONS

I. The Incentive Scheme shall become effective after being considered and approved at the general meeting of the Company;
II. The Board of the Company shall be responsible for the interpretation of the Incentive Scheme.

The Board of Pharmaron Beijing Co., Ltd.[*] 康龍化成(北京)新藥技術股份有限公司

6 November 2020

For identification purposes only

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ASSESSMENT MANAGEMENT MEASURES

APPENDIX II

The following is the full text of the proposed Assessment Management Measures for the purpose of incorporation in this circular. In case of any discrepancies between the Chinese and English versions of this plan, the Chinese version shall prevail. PHARMARON BEIJING CO., LTD.* 康龍化成 (北京 )新藥技術股份有限公司

ASSESSMENT MANAGEMENT MEASURES FOR THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME

To further perfect the corporate governance structure of Pharmaron Beijing Co., Ltd. (the “Company”), establish and improve the Company’s long-term incentive and restraint mechanism, attract and retain the Company’s professional high-level management, mid-level management, core technical personnel, basic-level management and technical personnel, fully mobilize their enthusiasm and creativity, effectively strengthen the cohesion of the core team and core competitiveness of the enterprise, align the interests of shareholders, the Company and core teams effectively, bring their attention to the long-term development of the Company and ensure the achievement of the Company’s development strategies and business goals. Under the premise of fully safeguarding the interests of shareholders, the Company has formulated the 2020 Restricted A Share Incentive Scheme (Draft) of Pharmaron Beijing Co., Ltd. (the “Share Incentive Scheme” or the “Incentive Scheme”).

To ensure the smooth implementation of the Share Incentive Scheme of the Company, these measures are specially formulated according to the Company Law of the People’s Republic of China (《中華人民共和國公司法》), the Securities Law of the People’s Republic of China (《中華人民共和國證券法》), the Management Measures for Share Incentives of Listed Companies (《上市公司股權激勵管理辦法》) and other relevant laws, administrative regulations, regulatory documents, relevant articles of the Articles of Association as well as the actual situation of the Company.

ARTICLE 1 PURPOSE OF ASSESSMENT

The purposes of these measures are to strengthen the planned implementation of the Company’s Share Incentive Scheme, quantify the specific objectives set by the Company’s Share Incentive Scheme, promote the scientific, standardized and institutionalized assessment management of Participants, and ensure the realization of the various performance indicators under the Company’s Share Incentive Scheme; at the same time, these measures are to guide the Participants to improve work performance and competence and evaluate employees’ performance and contribution in an objective and fair manner, to provide an objective and comprehensive evaluation basis for the implementation of the Incentive Scheme.

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ASSESSMENT MANAGEMENT MEASURES

APPENDIX II

ARTICLE 2 PRINCIPLES OF ASSESSMENT

(i) Assessment and evaluation of the Participants shall be conducted in strict accordance with these measures following the principles of fairness, justice, and openness;
(ii) The assessment indicators shall be combined with the Company’s medium and long-term development strategies and annual business objectives; as well as the work performance, work competence and work attitude of the Participants.

ARTICLE 3 SCOPE OF ASSESSMENT

These measures apply to all Participants identified in the Incentive Scheme, including high-level management, mid-level management, core technical personnel, basic-level management and technical personnel of the Company (including its subsidiaries) but excluding the Independent Director, Supervisor, non-PRC employee, shareholders who individually or collectively hold more than 5% of the Shares of the Company, de facto controllers, or the spouses, parents or children of such de facto controllers. All Participants must be employed in the Company or its subsidiaries during the assessment period of the Incentive Scheme and have signed labour contracts or employment contracts with the Company or its subsidiaries.

ARTICLE 4 ASSESSMENT BODY AND IMPLEMENTATION BODY

(i) The Remuneration and Appraisal Committee of the board of directors is responsible for leading and reviewing the assessment of the Participants;
(ii) The human resources department, finance department, internal audit department and other relevant departments of the Company are responsible for the specific assessment work and reporting to the Remuneration and Appraisal Committee;
(iii) The human resources department, finance department, internal audit department and other relevant departments of the Company are responsible for the collection and provision of relevant assessment data, as well as the authenticity and reliability of the data;
(iv) The board of directors of the Company is responsible for reviewing the assessment results.

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ASSESSMENT MANAGEMENT MEASURES

APPENDIX II

ARTICLE 5 PERFORMANCE ASSESSMENT INDICATORS AND STANDARDS

The attribution of the Restricted Shares that have been granted to the Participants will depend on the assessment results at both the Company level and at the level of the Participants.

(i) Performance assessment requirements at the Company level

Under the Incentive Scheme, in the accounting years of 2021 to 2024, the Company’s performance indicators will be evaluated on an annual basis and the achievement of the performance assessment targets will be one of the attribution conditions for the Participants for the current year. The performance assessment targets, attribution percentage and attribution arrangement of the Incentive Scheme are shown in the following table:

Attribution Arrangement

Performance Assessment Target

First attribution period The Company’s revenue shall increase by no less than 30% in 2021 as compared to that of 2019 Second attribution period The Company’s revenue shall increase by no less than 45% in 2022 as compared to that of 2019 Third attribution period The Company’s revenue shall increase by no less than 60% in 2023 as compared to that of 2019 Fourth attribution period The Company’s revenue shall increase by no less than 75% in 2024 as compared to that of 2019

Note: The above revenue refers to the audited revenue of the Company.

During the attribution period, the Company will handle the registration of attributed Restricted Shares for Participants who have satisfied the attribution conditions. In the event that the performance assessment requirements at the Company level have not been reached within the respective attribution tranche, all Restricted Shares that have been granted and attributable to the Participants for the current assessment year shall not be attributed and shall lapse.

(ii) Performance assessment requirements at the individual level of Participants:

Assessment Results	Pass	Fail
Attribution Percentage	100%	0%

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ASSESSMENT MANAGEMENT MEASURES

APPENDIX II

Subject to the Company achieving the performance target, the Restricted Shares that have been granted but are yet to be attributed to the Participant in the year of the assessment shall be attributed to such Participant if he/she achieves assessment result of “pass” in the year immediately preceding. If the assessment result achieved by such Participant in the year immediately preceding is “fail”, the Restricted Shares that have been granted but are yet to be attributed to the Participant in the year of the assessment shall not be attributed and shall be forfeited.

ARTICLE 6 ASSESSMENT PROCEDURES

The human resources department, finance department, internal audit department and other relevant departments of the Company is responsible for the specific assessment work under the guidance of the Remuneration and Appraisal Committee and retaining the assessment results. On this basis, a performance assessment report shall be prepared and submitted to the Remuneration and Appraisal Committee, and the board of directors of the Company is responsible for reviewing the assessment results.

ARTICLE 7 PERIOD AND TIMES OF ASSESSMENT

(i) Assessment Period

The accounting year prior to attribution of each tranche of Restricted Shares of the Participants.

(ii) Number of times of assessment

The assessment years of the Incentive Scheme are the four accounting years of 2021-2024, and the assessment shall be conducted once a year.

ARTICLE 8 MANAGEMENT OF ASSESSMENT RESULTS

(i) Feedback and application of assessment results

The assessment targets are entitled to know their own assessment results. The direct supervisor of the employees shall inform the assessment targets of the assessment results within 5 working days after the completion of the assessment.
If the assessment targets have objections against the assessment results, they can communicate with the human resources department, finance department, internal audit department and other relevant departments to resolve. If the objections cannot be resolved through communication, the assessment objects may appeal to the Remuneration and Appraisal Committee which shall review and determine the final assessment result or level within 10 working days.
The assessment results shall be the basis for the attribution of Restricted Shares.

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ASSESSMENT MANAGEMENT MEASURES

APPENDIX II

(ii) Filing of assessment records

After the completion of assessment, the human resources department, finance department, internal audit department and other relevant departments shall retain all the records of the performance assessment. The assessment results shall be kept as confidential information.
In order to ensure the validity of the performance records, the performance records are not allowed to be altered. If the records are to be revised or re-recorded, it must be signed by the assessment recorder.
The performance assessment records shall be kept for 5 years. Documents and records that exceed the storage period shall be uniformly destroyed by the Remuneration and Appraisal Committee of the board of directors of the Company.

ARTICLE 9 SUPPLEMENTARY PROVISIONS

(i) The board of directors is responsible for the formulation, interpretation and revision of these measures.
(ii) If the relevant provisions of these measures conflict with the relevant national laws, administrative regulations, regulatory documents, and the draft of the Share Incentive Scheme, the relevant national laws, administrative regulations, regulatory documents, and the draft of the Share Incentive Scheme shall prevail. If there are no clear provisions in these measures, the relevant national laws, administrative regulations, regulatory documents, and the Share Incentive Scheme shall be implemented.
(iii) These measures shall be subject to consideration and approval at the general meeting and become effective upon the Share Incentive Scheme becoming effective.

– II-5 –

RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

The following is the full text of the draft H Share Scheme Rules for the purpose of incorporation in this circular. In case of any discrepancies between the Chinese and English versions of this plan, the English version shall prevail.

1. DEFINITIONS AND INTERPRETATION

1.1 In these Scheme Rules, unless the context otherwise requires, each of the following words and expressions shall have the meaning respectively shown opposite to it:

“Actual Selling Price” is the actual price at which the Awards Shares are sold (net of brokerage, Stock Exchange trading fee, SFC transaction levy and any other applicable costs) on vesting of an Award pursuant to the Scheme or in the case of a vesting when there is an event of change in control or privatisation of the Company pursuant to Rule 15.1, the consideration receivable under the related scheme or offer;

“Adoption Date” is the date on which the Shareholders and the Board approve this Scheme;

“Articles” is the articles of association of the Company as amended from time to time;

“Award” is an award granted by the Management Committee to a Selected Participant pursuant to the Scheme, which may vest in the form of Award Shares or the Actual Selling Price of the Award Shares in cash, as the Management Committee may determine in accordance with the terms of the Scheme Rules;

“Award Letter” shall have the meaning as set out in Rule 7.1;

“Award Period” is the period commencing on the Adoption Date, and ending on the Business Day immediately prior to the 10th anniversary of the Adoption Date;

“Award Shares” is the H Shares granted to a Selected Participant in an Award;

“Board” is the board of directors of the Company (please also refer to Rule 1.2(i)), from time to time;

“Share Bonus Fund” is the fund for the purpose of the Share Bonus Plan, the source and amount of which shall be determined in accordance with Appendix B;

“Business Day” is any day on which the Stock Exchange is open for the business of dealing in securities;

“Company” or “our Company” is Pharmaron Beijing Co., Ltd.;

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

“connected person” shall have the meaning as set out in the Listing Rules;

“Delegatee” is the Management Committee, person(s) or board committee(s) to which the Board has delegated its authority;

“Director(s)” is the director(s) of the Company, from time to time;

“Eligible Employee” includes Plan A Eligible Employee for the purpose of the Employee Share Award Plan, and Plan B Eligible Employee for the purpose of the Share Bonus Plan; however, no individual who is resident in a place where the grant, acceptance or vesting of an Award pursuant to the Scheme is not permitted under the laws and regulations of such place or where, in the view of the Board or the Delegatee, compliance with applicable laws and regulations in such place makes it necessary or expedient to exclude such individual, shall be entitled to participate in the Scheme and such individual shall therefore be excluded from the term Eligible Employee;

“First Plan A Awards” is the first ever grant of Awards under the Employee Share Award Plan;

“Grant Date” is the date on which the grant of an Award is made to a Selected Participant, being the date of an Award Letter;

“Group” or “our Group” is the Company and its subsidiaries from time to time, and the expression member of the Group shall be construed accordingly;

“H Shares” is the overseas listed foreign shares with a nominal value of RMB1.00 each in the share capital of the Company, which are listed on the Stock Exchange;

“HK$” is Hong Kong dollars, the lawful currency of Hong Kong;

“Hong Kong” is the Hong Kong Special Administrative Region of the People’s Republic of China;

“Listing Rules” is the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

“Management Committee” is the management committee of the Scheme to which the Board has delegated its authority to administer the Scheme;

“on-market” is the acquisition of H Shares of the Company through one or more transactions through the facilities of the Stock Exchange in accordance with the Listing Rules and any other applicable laws and regulations;

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

“Plan A” or “Employee Share Award Plan” is one of the two plans which collectively make up this Scheme, details of which are more specifically set out in Appendix A;

“Plan A Eligible Employee” shall have the meaning as set out in Rule 1 of Appendix A;

“Plan B” or “Share Bonus Plan” is one of the two plans which collectively make up this Scheme, details of which are more specifically set out in Appendix B;

“Plan B Eligible Employee” shall have the meaning as set out in Rule 1 of Appendix B;

“PRC” is the People’s Republic of China;

“Remuneration and Appraisal Committee” is the remuneration and appraisal committee of the Board;

“Returned Shares” is such Award Shares that are not vested and/or are forfeited in accordance with the terms of the Scheme, or such H Shares being deemed to be Returned Shares under the Scheme Rules;

“Scheme” or “this Scheme” is the First H Share Award and Trust Scheme adopted by the Company in accordance with these Scheme Rules on the Adoption Date, and is made up of two plans, namely (i) the Employee Share Award Plan and (ii) the Share Bonus Plan;

“Scheme Limit” shall have the meaning as set out in Rule 16.1;

“Scheme Rules” is the rules set out herein relating to the Scheme as amended from time to time;

“Selected Participant” is any Eligible Employee who, in accordance with Rule 6, is approved for participation in the Employee Share Award Plan or the Share Bonus Plan, and has been granted any Award under the respective plans;

“SFC” is the Securities and Futures Commission of Hong Kong;

“SFO” is the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong);

“Shareholder(s)” is the shareholder(s) of the Company;

“Stock Exchange” is The Stock Exchange of Hong Kong Limited;

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

“Subsidiary” or “Subsidiaries” is any subsidiary (as the term is defined in the Listing Rules) of the Company;

“Target Revenue Ratio Increase” is the target ratio increase in the Company’s revenue as set out in Rule 10.5;

“Taxes” shall have the meaning as set out in Rule 10.16;

“Trust” is the trust constituted by the Trust Deed to service the Scheme;

“Trust Deed” is the trust deed to be entered into between the Company and the Trustee (as may be restated, supplemented and amended from time to time);

“Trustee” is the trustee appointed by the Company for the purpose of the Trust, and initially, Computershare Hong Kong Trustees Limited, a company incorporated in Hong Kong and having its registered office at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong;

“Vesting Date” is the date or dates, as determined from time to time by the Board or the Delegatee on which the Award (or part thereof) is to vest in the relevant Selected Participant as set out in the relevant Award Letter pursuant to Rule 7.1;

“Vesting Notice” shall have the meaning as set out in Rule 10.12;

“Vesting Period” shall have the meaning as set out in Rule 10.2;

1.2 In these Scheme Rules, except where the context otherwise requires:
(a) references to Rules are to the rules of the Scheme Rules;
(b) references to times of the day are to Hong Kong time;
(c) references to any statutory body shall include the successor thereof and any body established to replace or assume the function of the same;
(d) if a period of time is specified as from a given day, or from the day of an act or event, it shall be calculated exclusive of that day;
(e) a reference to “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation”;
(f) a reference to “dollars” or to “$” shall be construed as a reference to the lawful currency for the time being of Hong Kong;

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

(g) a reference, express or implied, to statutes, statutory provisions or the Listing Rules shall be construed as references to those statutes, provisions or rules as respectively amended or re-enacted or as their application is modified from time to time by other provisions (whether before or after the date hereof) and shall include any statutes, provisions of rules of which are re-enacted (whether with or without modification) and shall include any orders, regulations, instruments, subsidiary legislation, other subordinate legislation or practice notes under the relevant statute, provision or rule;
(h) words importing the singular include the plural and vice versa, and words importing a gender include every gender;
(i) unless otherwise indicated, the Board can make determinations in its sole and absolute discretion and if the Board delegates its authority to administer the Scheme to the Delegatee, such Delegatee shall enjoy the same role and absolute discretion;

2. GENERAL INTRODUCTION AND PURPOSE OF THE SCHEME

2.1 The Scheme is a share award of H Shares and trust scheme established by the Company to award employees, and consists of two plans, namely (i) the Employee Share Award Plan, and (ii) the Share Bonus Plan.
2.2 The Employee Share Award Plan is established to award Plan A Eligible Employees. Rules specific to the Employee Share Award Plan, including the object and purpose of the plan, are set out in Appendix A.
2.3 The Share Bonus Plan is established to award Plan B Eligible Employees. Rules specific to the Share Bonus Plan, including the object and purpose of the plan, are set out in Appendix B.
2.4 A Trust Deed will be entered into between the Company and the Trustee, being Computershare Hong Kong Trustees Limited initially. Pursuant to the Trust Deed, the Trust will be constituted to service the Scheme whereby the Trustee shall assist with the administration of the Scheme and shall, subject to the relevant provisions of the Trust Deed and upon the instruction of the Company, acquire such underlying H Shares of the Scheme through on-market transactions with funds to be transferred by the Company to the Trust in accordance with Rule 8. Such underlying H Shares of the Scheme shall not exceed 7,940,000 shares in any event. Awards granted to the Selected Participants shall be held by the Trustee on trust for the benefit of the Selected Participants, and the Trustee shall, for the purposes of vesting of the Award and upon the instruction of the Board or the Delegatee, release from the Trust the Award Shares to the Selected Participants or sell the number of Award Shares so vested on-market at the prevailing market price and pay the Selected Participants the proceeds in cash arising from such sale in accordance with Rule 10 and relevant provisions under the Trust Deed.

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

3. CONDITIONS

3.1 The Scheme is conditional upon the passing of a resolution by (i) the Shareholders and (ii) the Board, to approve the adoption of the Scheme and to authorize the Management Committee to grant Awards under the Scheme and to procure the transfer of and otherwise deal with the Award Shares in connection with the Scheme.

4. DURATION

4.1 Subject to Rules 10.10 and 21, the Scheme shall be valid and effective for the Award Period (after which no further Awards will be granted), and thereafter for so long as there are any non-vested Award Shares granted hereunder prior to the expiration of the Scheme, in order to give effect to the vesting of such Award Shares or otherwise as may be required in accordance with the provisions of the Scheme Rules.

5. ADMINISTRATION

5.1 The Scheme shall be subject to the administration of the following administrative bodies:
(a) the general meeting of the Shareholders, as the institution vested with the supreme authority of the Company, is responsible for the consideration and approval of the adoption of the Scheme. The general meeting of the Shareholders may authorize the Board to deal with all matters related to the Scheme to the extent of its authority;
(b) the Board is the institution in charge of the administration of the Scheme in accordance with the Scheme Rules and where applicable, the Trust Deed. A decision of the Board or the Delegatee shall be final and binding on all persons affected. The responsibilities of the Board and the Delegatee specific to the Share Bonus Plan are further set out in Appendix B. The Remuneration and Appraisal Committee shall be responsible for drafting and revising the Scheme and submitting the same to the Board for consideration. Upon consideration and approval of the Scheme, the Board will submit the Scheme to the general meeting of the Shareholders for consideration. The Board or the Delegatee may handle all matters related to the Scheme within the authorization by the general meeting of the Shareholders;
(c) the independent non-executive Directors are the supervisory institution of the Scheme and shall express their views on whether the Scheme facilitates the sustainable development of the Company and whether the Scheme impairs the interests of the Company and the Shareholders as a whole. The independent non-executive Directors supervise whether the implementation of the Scheme complies with relevant laws, regulations, regulatory documents and the Listing Rules, and is responsible for reviewing the list of Selected Participants; and

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

(d) the Trust will be constituted to service the Scheme whereby the Trustee shall, subject to the relevant provisions of the Trust Deed and upon the instruction of the Company, acquire not more than 7,940,000 H Shares through on-market transactions with funds to be transferred by the Company to the Trust.
5.2 The authority to administer the Scheme may be delegated by the Board to the Delegatee as deemed appropriate in the sole and absolute discretion of the Board, provided that nothing in this Rule 5.2 shall prejudice the Board’s power to revoke such delegation at any time or derogate from the discretion rested with the Board as contemplated in Rule 5.1(b).
5.3 Subject to any restrictions in the Scheme Rules, it is noted that as at the Adoption Date the Board has delegated to the Management Committee the authority to administer the Scheme, including the power to grant an Award under the Scheme.
5.4 Without prejudice to the Board’s general power of administration, the Board or the Delegatee may from time to time appoint one or more administrators, who may be independent third-party contractors, to assist in the administration of the Scheme, to whom they, in their sole and absolute discretion, may delegate such functions relating to the administration of the Scheme as they may think fit. The duration of office, terms of reference and remuneration (if any) of such administrator(s) shall be determined by the Board in its sole and absolute discretion from time to time.
5.5 Without prejudice to the Board’s general power of administration, to the extent not prohibited by applicable laws and regulations, the Board or the Delegatee may also from time to time appoint one or more Trustees in respect of granting, administration or vesting of any Award Shares.
5.6 Subject to the Scheme Rules, the Listing Rules and any applicable laws and regulations, the Board or the Delegatee shall have the power from time to time to:
(a) construe and interpret the Scheme Rules and the terms of the Awards granted under the Scheme;
(b) make or vary such arrangements, guidelines, procedures and/or regulations for the administration, interpretation, implementation and operation of the Scheme, provided that they are not inconsistent with the Scheme Rules;
(c) decide how the vesting of the Award Shares will be settled pursuant to Rule 10;
(d) determine the basis of eligibility of any Eligible Employee for the grant of Awards from time to time on the basis of their contribution to the development and growth of the Group or such other factors deemed appropriate;

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

(e) grant Awards to those Eligible Employees whom it shall select from time to time;
(f) determine the terms and conditions of the Awards;
(g) establish, assess and administer performance targets in respect of the Scheme;
(h) approve the form and content of an Award Letter;
(i) adjust the number of outstanding Award Shares or accelerate the Vesting Dates of any Awards pursuant to Rule 15;
(j) exercise any authority as may be granted by the Shareholders from time to time;
(k) engage bank(s), accountant(s), lawyer(s), consultant(s) and other professional parties for the purpose of the Scheme; and
(l) sign, execute, amend and terminate all documents relating to the Scheme, undertake all procedures relevant to the Scheme and take such other steps or actions to give effect to the terms and intent of the Scheme Rules.
5.7 None of the Directors or any Delegatee shall be personally liable by reason of any contract or other instrument executed by him, or on his behalf or for any mistake of judgment made in good faith, for the purposes of the Scheme, and the Company shall indemnify and hold harmless each member of the Board and any Delegatee in relation to the administration or interpretation of the Scheme, against any cost or expense (including legal fees) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Scheme unless arising out of such person’s own wilful default, fraud or bad faith.
5.8 In respect of the administration of the Scheme, the Company shall comply with all applicable disclosure regulations including those imposed by the Listing Rules and all applicable PRC laws, regulations and rules.

6. SELECTION OF SELECTED PARTICIPANT

6.1 Subject to Appendix A and Appendix B, the Board or the Delegatee may, from time to time, select any Plan A Eligible Employee or Plan B Eligible Employee to be a Selected Participant of the respective plans and, subject to Rule 6.4, grant an Award to such Selected Participant during the Award Period conditional upon fulfilment of terms and conditions of the Awards and performance targets as the Board or the Delegatee determines from time to time.

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

6.2 The Selected Participants are determined in accordance with the Company Law of the PRC, the Securities Law of the PRC and other applicable laws, regulations and regulatory documents and the relevant provisions of the Articles, together with the Company’s actual circumstances and matters including the present and expected contribution of the relevant Selected Participant to the Group.

No one should be considered as a Selected Participant of the Scheme if he:

(a) has been publicly reprimanded or deemed as an inappropriate candidate for similar award schemes or share incentive plans of a listed company by any securities regulatory bodies with authority in the last 12 months;
(b) has been imposed with penalties or is banned from trading securities by securities regulatory bodies due to material non-compliance with laws or regulations in the last 12 months;
(c) is in breach of relevant national laws and regulations or the Articles; or
(d) has caused losses to the Company during his term of service due to soliciting bribes, corruption and theft, disclosure of the operation and technology secrets of the Company, infringement of company interest through connected transactions and any acts which cause damage to the reputation and image of the Company, which can be proven with sufficient evidence by the Company.

The Selected Participants shall undertake: if any of the above provisions occur during implementation of the Scheme which would prevent him from being considered as a Selected Participant, he shall give up his rights to participate in the Scheme and shall not be given any compensation.

6.3 Each grant of an Award to any connected person of the Group shall be subject to the Listing Rules and any applicable laws and regulations.
6.4 Notwithstanding the provisions in Rule 6.1, Rule 6.2 and Rule 6.3, no grant of any Award Shares to any Selected Participant may be made and no directions or recommendations shall be given to the Trustee with respect to a grant of an Award under the circumstances below, and any such grant so made or any such direction or recommendation so given shall be null and void to the extent (and only to the extent) that it falls within the circumstances below:
(a) in any circumstances where the requisite approval from any applicable regulatory authorities or Shareholders has not been granted;
(b) in any circumstances that any member of the Group will be required under applicable securities laws, rules or regulations to issue a prospectus or other offer documents in respect of such Award or the Scheme, unless the Board determines otherwise;

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

(c) where such Award would result in a breach by any member of the Group or its directors of any applicable securities laws, rules or regulations in any jurisdiction;
(d) where such grant of Award would result in a breach of the Scheme Limit;
(e) after the expiry of the Award Period or after the earlier termination of this Scheme in accordance with Rule 21;
(f) where any Director is in possession of unpublished inside information (as defined under the SFO) in relation to the Company or where any Director reasonably believes there is inside information which must be disclosed pursuant to Rule 13.09(2)(a) of the Listing Rules and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the SFO or where dealings by Directors are prohibited under any code or requirement of the Listing Rules or any applicable laws, rules or regulations;
(g) during the period of 60 days immediately preceding the publication date of the annual results of the Group or, if shorter, the period from the end of the relevant financial year up to the publication date of such results; and
(h) during the period of 30 days immediately preceding the publication date of the quarterly or half-year results of the Group or, if shorter, the period from the end of the relevant quarterly or half-year period up to the publication date of such results.

7. AWARD LETTER AND NOTIFICATION OF GRANT OF AWARDS

7.1 The Company shall issue a letter to each Selected Participant in such form as the Board or the Delegatee may from time to time determine, specifying the Grant Date, the manner of acceptance of the Award, the value of the Award and/or number of Award Shares underlying the Award (with the basis on which the number of Award Shares underlying the Award is arrived at), the vesting criteria and conditions, and the Vesting Date and such other details, terms and conditions as they may consider necessary and in compliance with this Scheme (an “ Award Letter ”).
7.2 As soon as practicable after the grant of any Award to a Selected Participant, the Company shall provide a fully executed copy of the Award Letter to the Trustee.

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RULES OF THE FIRST H SHARE AWARD AND TRUST SCHEME (DRAFT)

APPENDIX III

8. ACQUISITION OF H SHARES BY THE TRUSTEE

8.1 Subject to Rule 8.4, the Company shall as soon as reasonably practicable, and if applicable, once the relevant requirements for the grant of Awards to any connected person under Rule 6.3 have been met, for the purposes of satisfying the grant of Awards, transfer to the Trust the necessary funds and instruct the Trustee to acquire H Shares through on-market transactions at the prevailing market price. Subject to Rule 15, the Company shall instruct the Trustee whether or not to apply any Returned Shares to satisfy any grant of Awards made, and if the Returned Shares, as specified by the Company, are not sufficient to satisfy the Awards granted, the Company shall, subject to Rule 8.3 as soon as reasonably practicable, for purposes of satisfying the Awards granted, transfer to the Trust the necessary funds and instruct the Trustee to acquire further H Shares through on-market transactions at the prevailing market price.
8.2 Where the Trustee has received instructions from the Company to acquire H Shares through on-market transactions, the Trustee shall acquire such number of H Shares as instructed by the Company on-market at the prevailing market price as soon as reasonably practicable after receiving the necessary funds from the Company.
8.3 The Trustee shall only be obliged to transfer Award Shares to Selected Participants on vesting to the extent that Award Shares are comprised in the Trust.
8.4 The Company shall not instruct the Trustee to acquire H Shares through on-market transactions at the prevailing market price, where (i) such action (as applicable) is prohibited under the Listing Rules, other applicable PRC laws, regulations and rules, the SFO or any other applicable laws from time to time; or (ii) during such periods as stated in Rules 6.4(g) and (h). Where such a prohibition causes the prescribed timing imposed by the Scheme Rules or the Trust Deed to be missed, such prescribed timing shall be treated as extended until as soon as reasonably practicable after the first Business Day on which the prohibition no longer prevents the relevant action.

9. DETERMINATION OF THE SOURCE AND AMOUNT OF THE SHARE BONUS FUND

9.1 The Share Bonus Plan shall only be implemented when the growth rate of the Company’s net profit attributable to the owners of the parent for the year exceeds 25% of the Company’s net profit attributable to the owners of the parent for the year immediately preceding.
9.2 The withdrawal amount of the Share Bonus Fund is determined by using the net increase amount in the net profit attributable to the owners of the parent for the year as against the year immediately preceding as base figure, then applying a withdrawal percentage of 20%, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.

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9.3 The Share Bonus Fund amount calculated and withdrawn shall not exceed 5% of the net profit attributable to the owners of the parent of that year.
9.4 A relevant amount of the Share Bonus Fund shall be withdrawn within 180 days from the announcement date of the relevant resolutions of the annual general meeting.

10. VESTING OF AWARD

10.1 The Board or the Delegatee may from time to time while the Scheme is in force and subject to all applicable laws, rules and regulations, determine such vesting criteria and conditions or periods for the Award to be vested hereunder.
10.2 Unless otherwise specified in the Award Letter approved by the Board or the Delegatee and subject to the vesting conditions as described in Rules 10.3 to 10.7 below, all Awards under the Employee Share Award Plan shall be vested in four equal tranches (i.e., 25%, 25%, 25% and 25%), and all Awards under the Share Bonus Plan shall be vested in two equal tranches (i.e., 50% and 50%) (each a “ Vesting Period ”). The specific commencement and duration of each Vesting Period and the actual vesting amount of the Award granted to a Selected Participant for the respective Vesting Periods shall be specified in the Award Letter approved by the Board or the Delegatee.
10.3 Vesting of the Award granted under the Employee Share Award Plan is subject to the conditions of the performance indicators of the Company and any other applicable vesting conditions as set out in the Award Letter.
10.4 The performance indicators of the Company consists of company performance indicator and individual performance indicator, the details of which shall be determined by the Board or the Delegatee from time to time with reference to the business performance and financial condition of the Company and the then market conditions and set out in the Award Letter.
10.5 Subject to Rule 10.4, the company performance indicator is as follows:

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APPENDIX III

The Target Revenue Ratio Increase for the First Plan A Awards are set out below, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion:

Vesting Period for First Plan A Awards Target Revenue Ratio Increase

First Vesting Period

30%

(Company’s revenue increase for the year ended December 31, 2021 as compared to the year ended December 31, 2019)

Second Vesting Period

45%
(Company’s revenue increase for the year ended December 31, 2022 as compared to the year ended December 31, 2019)
Third Vesting Period
60%
(Company’s revenue increase for the year ended December 31, 2023 as compared to the year ended December 31, 2019)

Fourth Vesting Period

75%
(Company’s revenue increase for the year ended December 31, 2024 as compared to the year ended December 31, 2019)
10.6 Vesting of the Award granted under the Share Bonus Plan is subject to the conditions of the individual performance indicator and any other applicable vesting conditions as set out in the Award Letter. Details of the individual performance indicator shall be determined by the Board or the Delegatee and set out in the Award Letter.
10.7 If the Selected Participant fails to fulfill the vesting conditions applicable to the plan under which the Award is granted, all the Award Shares underlying the relevant Awards which may otherwise be vested during the respective Vesting Periods shall not be vested and shall be held by the Trustee as Returned Shares.
10.8 Any dividend underlying the non-vested Award Shares shall be retained by the Trustee, and transferred to the Selected Participant together with the Award Shares upon vesting. In the event that the Award Shares are to be forfeited, such underlying dividend shall be transferred back to the Company.
10.9 If the Vesting Date is not a Business Day, the Vesting Date shall, subject to any trading halt or suspension in the H Shares, be the Business Day immediately thereafter.

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APPENDIX III

10.10 For the avoidance of doubt, the Vesting Periods of the Awards granted under the Scheme or the Awards to be satisfied by the application of any Returned Shares shall be determined by the Board or the Delegatee in its sole and absolute discretion, and shall in any event not extend beyond the then remaining term of the Award Period at the time of grant.
10.11 For the purpose of vesting of the Award, the Board or the Delegatee may either:
(a) direct and procure the Trustee to release from the Trust the Award Shares to the Selected Participants by transferring the number of Award Shares to the Selected Participants in such manner as determined by them from time to time; or
(b) to the extent that, at the determination of the Board or the Delegatee, it is not practicable for the Selected Participant to receive the Award in H Shares solely due to legal or regulatory restrictions with respect to the Selected Participant’s ability to receive the Award in H Shares or the Trustee’s ability to give effect to any such transfer to the Selected Participant, the Board or the Delegatee will direct and procure the Trustee to sell, on-market at the prevailing market price, the number of Award Shares so vested in respect of the Selected Participant and pay the Selected Participant the proceeds in cash arising from such sale based on the Actual Selling Price of such Award Shares as set out in the Vesting Notice.
10.12 Except in the circumstances set out in Rule 10.16, barring any unforeseen circumstances, within a reasonable time period as agreed between the Trustee and the Board from time to time prior to any Vesting Date, the Board or the Delegatee shall send to the relevant Selected Participant a vesting notice (the “ Vesting Notice ”). The Board or the Delegatee shall forward a copy of the Vesting Notice to the Trustee and instruct the Trustee the extent to which the Award Shares held in the Trust shall be transferred and released from the Trust to the Selected Participant in the manner as determined by the Board to the Delegatee, or be sold as soon as practicable from the Vesting Date.
10.13 Except in circumstances as set out in Rule 10.16, subject to the receipt of the Vesting Notice and the instructions from the Board or the Delegatee, the Trustee shall transfer and release the relevant Award Shares to the relevant Selected Participant in the manner as determined by the Board or the Delegatee or sell the relevant Award Shares within any time stipulated in Rule 10.12 above and pay the Actual Selling Price to the Selected Participant within a reasonable time period in satisfaction of the Award.
10.14 Any stamp duty or other direct costs and expenses arising on vesting and transfer of the Award Shares to or for the benefit of the Selected Participants shall be borne by the Company. Any duty or other direct costs and expenses arising on the sale of the Award Shares due to the vesting shall be borne by the Selected Participant.

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APPENDIX III

10.15 All costs and expenses in relation to all dealings with the Award Shares after vesting and transfer of the Award Shares to the Selected Participant (as the case may be) shall be borne by the Selected Participant and neither the Company nor the Trustee shall be liable for any such costs and expenses thereafter.
10.16 Other than the stamp duty to be borne by the Company in accordance with Rule 10.14, all other taxes (including personal income taxes, professional taxes, salary taxes and similar taxes, as applicable), duties, social security contributions, impositions, charges and other levies arising out of or in connection with the Selected Participant’s participation in the Scheme or in relation to the Award Shares or cash amount of equivalent value of the Award Shares (the “ Taxes ”) shall be borne by the Selected Participant and neither the Company nor the Trustee shall be liable for any Taxes. The Selected Participant will indemnify the Trustee and all members of the Group against any liability each of them may have to pay or account for such Taxes, including any withholding liability in connection with any Taxes. To give effect to this, the Trustee or any member of the Group may, notwithstanding anything else in these Scheme Rules (but subject to applicable law):
(a) reduce or withhold the number of Selected Participant’s Award Shares underlying the Award (the number of Award Shares underlying the Award that may be reduced or withheld shall be limited to the number of Award Shares that have a fair market value on the date of withholding that, in the reasonable opinion of the Company is sufficient to cover any such liability);
(b) sell, on the Selected Participant’s behalf, such number of H Shares to which the Selected Participant becomes entitled under the Scheme and retain the proceeds and/or pay them to the relevant authorities or government agency;
(c) deduct or withhold, without notice to the Selected Participant, the amount of any such liability from any payment to the Selected Participant made under the Scheme or from any payments due from a member of the Group to the Selected Participant, including from the salary payable to the Selected Participant by any member of the Group; and/or
(d) require the Selected Participant to remit to any member of the Group, in the form of cash or a certified or bank cashier’s check, an amount sufficient to satisfy any Taxes or other amounts required by any governmental authority to be withheld and paid over to such authority by any member of the Group on account of the Selected Participant or to otherwise make alternative arrangements satisfactory to the Company for the payment of such amounts.

The Trustee shall not be obliged to transfer any Award Shares (or pay the Actual Selling Price of such Award Shares in cash) to a Selected Participant unless and until the Selected Participant satisfies the Trustee and the Company that such Selected Participant’s obligations under this Rule has been met.

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APPENDIX III

11. CHANGES OF CIRCUMSTANCES PERTAINING TO THE SELECTED PARTICIPANTS

11.1 If a Selected Participant ceases to be an Eligible Employee by reason of a change in job position in the Group (激勵對象發生職務變更，但仍在公司任職), or reemployment after retirement by the Company upon the execution of a reemployment agreement (退休返聘), the outstanding Award Shares not yet vested shall continue to vest in accordance with the Vesting Dates set out in the Award Letter, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion. However, if a Selected Participant has a change in job position due to any of the following reasons:
(a) violation of laws, professional ethics or the leakage of confidential information of the Company (觸犯法律、違反職業道德、洩露公司機密);
(b) causing damage to the interests of reputation of the Company due to failure to discharge his duties or a willful misconduct (因失職或瀆職等行為損害公司利益或聲譽); or
(c) termination of his employment contract by the Company for any of the above reason (公司因上述任何原因終止與員工的勞動合同).

the Selected Participant shall return to the Company all interests in the Award Shares already vested, and in the event of serious violation or damage, the Company reserves the right to bring a claim against the Selected Participant for the damages suffered as a result of the reasons above stated, any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.

11.2 If a Selected Participant ceases to be an Eligible Employee by reason of disqualification from participating in the Scheme due to any of the reasons set forth in Rule 6.2 under which no one should be considered as a Selected Participant, any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.
11.3 If a Selected Participant ceases to be an Eligible Employee by reason of leaving the Company due to resignation (辭職), expiration (合同到期) or termination of labor contract, employment or contractual engagement by the Company for reason such as redundancy (公司裁員等原因被動離職), any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.

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APPENDIX III

11.4 If a Selected Participant ceases to be an Eligible Employee by reason of retirement (退休) upon reaching retirement age stipulated by law, subject to the provisions in Rule 11.1 above, any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.
11.5 If a Selected Participant ceases to be an Eligible Employee by reason of being in a rank or position that does not allow him to hold H Shares Awards of the Company, or being transferred to such a rank or position as a result of reorganization within the Group (擔任或因組織調動不能持有公司股權激勵職務), any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.
11.6 If a Selected Participant ceases to be an Eligible Employee by reason of termination of the Selected Participant’s labor contract, employment or contractual engagement with the Group or resignation due to incapacity resulting from work injury (因工受傷喪失勞動能力), any outstanding Award Shares not yet vested shall continue to vest in accordance with the Vesting Dates set out in the Award Letter, or alternative vesting procedures as determined by the Management Committee, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.
11.7 If a Selected Participant ceases to be an Eligible Employee by reason of termination of the Selected Participant’s labor contract, employment or contractual engagement with the Group or resignation due to incapacity not resulting from work injury (非因工受傷喪失勞動能力), any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.
11.8 If a Selected Participant ceases to be an Eligible Employee by reason of death of the Selected Participant due to work injury (因執行職務而身故), any outstanding Award Shares not yet vested shall continue to vest in accordance with the Vesting Dates set out in the Award Letter, or alternative vesting procedures as determined by the Management Committee, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion. The individual performance indicator of such Selected Participant will no longer be included as vesting conditions.
11.9 If a Selected Participant ceases to be an Eligible Employee by reason of death of the Selected Participant not due to work injury (因其他原因而身故), on the date of the occurrence of such event, any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.

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APPENDIX III

11.10 If a Selected Participant ceases to be an Eligible Employee for reasons other than those set out in Rules 11.1 to 11.9, any outstanding Award Shares not yet vested shall be immediately forfeited, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.
11.11 A Selected Participant shall be taken to have retired on the date that he retires upon or after reaching the age of retirement stipulated by law or specified in his service agreement or pursuant to any retirement policy of the Company applicable to him from time to time or, in case there is no such terms of retirement applicable to the Selected Participant, with the approval of the Board.
11.12 The Company shall, from time to time, inform the Trustee in writing, the date on which such Selected Participant ceases to be an Eligible Employee and any amendments to the terms and conditions of the Award with respect to such Selected Participant (including the number of Award Shares entitled).

12. TRANSFERABILITY AND OTHER RIGHTS TO AWARD SHARES

12.1 Any Award vested shall not be assignable or transferable for 6 months beginning the Vesting Date of that part of the Award.
12.2 Any Award granted hereunder but not yet vested shall be personal to the Selected Participant to whom it is made and shall not be assignable or transferable and no Selected Participant shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any other person over or in relation to any Award, or enter any agreement to do so.
12.3 Any actual or purported breach of Rule 12.1 and 12.2 shall entitle the Company to cancel any outstanding Award or part thereof granted to such Selected Participant. For this purpose, a determination from such person(s) delegated with this function by the Board, to the effect that the Selected Participant has or has not breached any of the foregoing shall be final and conclusive as to such Selected Participant.

13. INTEREST IN THE ASSETS OF THE TRUST

13.1 For the avoidance of doubt:
(a) a Selected Participant shall have only a contingent interest in the Award subject to the vesting of such Award in accordance with Rules 10 and 15;
(b) no instructions may be given by a Selected Participant to the Trustee in respect of the Award or any other property of the Trust and the Trustee shall not follow instructions given by a Selected Participant to the Trustee in respect of the Award or any other property of the Trust;

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APPENDIX III

(c) neither the Selected Participant nor the Trustee may exercise any voting rights attached to any H Shares held by the Trustee under the Trust (including any Award Shares that have not yet vested);
(d) a Selected Participant shall have no rights in the balance of the fractional shares arising out of consolidation of H Shares (if any) and such H Shares shall be deemed as Returned Shares for the purposes of the Scheme; and
(e) in the event a Selected Participant ceases to be an Eligible Employee on or prior to the relevant Vesting Date and the Award in respect of the relevant Vesting Date shall lapse or be forfeited pursuant to the Scheme, such Award shall not vest on the relevant Vesting Date and the Selected Participant shall have no claims against the Company or the Trustee, unless the Board or the Delegatee determines otherwise in its sole and absolute discretion.

14. RESTRICTIVE COVENANTS

14.1 By accepting any Award granted pursuant to the Scheme, a Selected Participant shall be deemed to have made the restrictive covenants set forth in this Rule 14 to and for the benefit of the Group.
14.2 The Selected Participant hereby undertakes to the Group that he will not at any time whilst an employee, director, shareholder or otherwise interested in the Group (save in so far as is reasonably necessary to fulfill his duties to the Group) or at any time thereafter, directly or indirectly use or disclose or communicate to any person any information concerning the affairs, business methods, processes, systems, inventions, plans or research and development of the Group or those of its customers, clients or suppliers and which may be reasonably regarded as being confidential to the Group or to such persons (other than information which he is required disclose by law or which is for the relevant time being in the public domain other than by reason of wrongful disclosure of the same by him) and will use his best endeavours to prevent the publication or disclosure of any such information by any third party.
14.3 The Selected Participant undertakes to the Group that he will not, except with the prior written approval of the Company, be directly or indirectly concerned with or engaged or interested in any other business which is in any respect in competition with or similar to the business of the Group during his employment with the Group.

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APPENDIX III

14.4 The Selected Participant undertakes to the Group that for so long as he is employed by the Company or any other member within the Group he will devote his full time and attention to the business of the Group and will use his best endeavours to develop the business and interests of the Group and will not be concerned with any other (competitive or other) business.
14.5 The Selected Participant undertakes to the Group that he shall strictly comply with his post-employment obligations as set out in his employment agreement and Proprietary Information and Inventions Agreement entered into with the Company.

15. TAKEOVER, RIGHTS ISSUE, OPEN OFFER, SCRIP DIVIDEND SCHEME, ETC.

Change in control

15.1 If there is an event of change in control of the Company by way of a merger, privatization of the Company by way of a scheme or by way of an offer, change of actual control of the Company involving reorganization of major assets, the Company no longer exists after merger with another company, division of the Company, or resolution of the general meeting of the Shareholders to replace half of all members of the Board before the expiry of the term of office of the Board, the Board shall in its sole and absolute discretion determine whether this Scheme shall be terminated within 5 trading days upon the change in control of the Company.

For the purpose of Rule 15.1, “control” shall have the meaning as specified in The Codes on Takeovers and Mergers and Share Buy-backs issued by the SFC from time to time.

Open offer and rights issue

15.2 In the event the Company undertakes an open offer of new securities, the Trustee shall not subscribe for any new H Shares. In the event of a rights issue, the Trustee shall seek instruction from the Company on the steps or actions to be taken in relation to the nil-paid rights allotted to it.

Bonus warrants

15.3 In the event the Company issues bonus warrants in respect of any H Shares which are held by the Trustee, the Trustee shall not, unless otherwise instructed by the Company, subscribe for any new H Shares by exercising any of the subscription rights attached to the bonus warrants, and shall sell the bonus warrants created and granted to it, and the net proceeds of sale of such bonus warrants shall be held as funds of the Trust.

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APPENDIX III

Script dividend

15.4 In the event the Company undertakes a scrip dividend scheme, the Trustee shall elect to receive the script Shares and such H Shares will be held as Returned Shares.

Capitalization issue, rights issue, consolidation, sub-division, Share Bonus issue and other distribution

15.5 In the event the Company undertakes a capitalization issue, rights issue, subdivision, consolidation or reduction of the H Shares, corresponding changes will be made to the number of outstanding Award Shares that have been granted provided that the adjustments shall be made in such manner as the Board determines to be fair and reasonable in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Scheme for the Selected Participants. All fractional shares (if any) arising out of such consolidation or sub-division in respect of the Award Shares of a Selected Participant shall be deemed as Returned Shares and shall not be transferred to the relevant Selected Participant on the relevant Vesting Date.
15.6 In the event of an issue of H Shares by the Company credited as fully paid to the holders of the H Shares by way of capitalization of profits or reserves (including share premium account), the H Shares attributable to any Award Shares held by the Trustee shall be deemed to be an accretion to such Award Shares and shall be held by the Trustee as if they were Award Shares purchased by the Trustee hereunder and all the provisions hereof in relation to the original Award Shares shall apply to such additional Shares.
15.7 In the event of any non-cash distribution or other events not referred to above by reason of which the Board considers an adjustment to an outstanding Award to be fair and reasonable, an adjustment shall be made to the number of outstanding Award Shares of each Selected Participant as the Board shall consider to be fair and reasonable in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Scheme for the Selected Participants. The Company shall provide such funds, or such directions on application of the Returned Shares or other funds in the Trust, as may be required to enable the Trustee to purchase H Shares on-market at the prevailing market price to satisfy the additional Award.
15.8 In the event of other non-cash and non-scrip distributions made by the Company not otherwise referred to in the Scheme Rules in respect of the H Shares held upon Trust, the Trustee shall sell such distribution and the net sale proceeds thereof shall be deemed as cash income of an H Share held upon the Trust.

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APPENDIX III

Voluntary winding-up

15.9 If an effective resolution is passed during the Award Period for the voluntary winding-up of the Company (other than for the purposes of a reconstruction, amalgamation or scheme of arrangement), the Board or the Delegatee shall in its sole and absolute discretion determine whether the Vesting Dates of any Awards will be accelerated and whether the Selected Participant will be entitled to receive out of the assets available in liquidation on an equal basis with the Shareholders such sum as they would have received in respect of the Awards.

Compromise or arrangement

15.10 If a compromise or arrangement between the Company and its Shareholders or creditors is proposed in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies and a notice is given by the Company to its Shareholders to convene a general meeting to consider and if thought fit approve such compromise or arrangement and such shareholders’ approval is obtained, the Board or the Delegatee shall in its sole and absolute discretion determine whether the Vesting Dates or any Awards will be accelerated.

16. SCHEME LIMIT

16.1 The maximum size of the Scheme shall be the maximum number of H Shares that will be acquired by the Trustee through on-market transactions from time to time at the prevailing market price pursuant to Rule 8.1, and in any case being 7,940,000 H Shares (the “ Scheme Limit ”). The Company shall not make any further grant of Award which will result in the aggregate number of H Shares underlying all grants made pursuant to the Scheme (excluding Award Shares that have been forfeited in accordance with the Scheme) to exceed the Scheme Limit without Shareholders’ approval.
16.2 The total number of non-vested Award Shares granted to a Selected Participant under the Scheme shall not exceed 1 per cent of the total number of issued shares of the Company from time to time.

17. RETURNED SHARES

17.1 The Trustee shall hold Returned Shares to be applied towards future Awards in accordance with the provisions hereof for the purpose of the Scheme. When H Shares have been deemed to be Returned Shares under the Scheme Rules, the Trustee shall notify the Company accordingly.

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APPENDIX III

18. INTERPRETATION

18.1 Any decision to be made under the Scheme, including matters of interpretation with respect to the Scheme Rules, shall be made by the Board or the Delegatee. The decision by the Board shall be final and binding.

19. ALTERATION OF THE SCHEME

19.1 Subject to the Scheme Limit, the Scheme may be altered or supplemented in any respect by resolution of the Board.
19.2 Where the Board alters the Scheme, the independent non-executive Directors shall express their independent opinion on whether the altered Scheme facilitates the sustainable development of the Company and whether the altered Scheme impairs the interests of the Company and the Shareholders as a whole.

20. CANCELLATION OF AWARDS

20.1 The Board or the Delegatee may in its sole and absolute discretion cancel any Award that has not vested or been forfeited.

21. TERMINATION

21.1 Subject to Rule 4, the Scheme shall terminate on the earlier of:
(a) the end of the Award Period except in respect of any non-vested Award Shares granted hereunder prior to the expiration of the Scheme, for the purpose of giving effect to the vesting of such Award Shares or otherwise as may be required in accordance with the provisions of the Scheme; or
(b) such date of early termination as determined by the Board.
21.2 On the Business Day following the settlement, lapse, forfeiture or cancellation (as the case may be) of the last outstanding Award made under the Scheme, the Trustee shall sell all the H Shares remaining in the Trust within a reasonable time period as agreed between the Trustee and the Company upon receiving notice of the settlement, lapse, forfeiture or cancellation (as the case may be) of such last outstanding Award (or such longer period as the Company may otherwise determine), and remit all cash and net proceeds of such sale referred to in this Rule 21.2 and other funds remaining in the Trust (after making appropriate deductions in respect of all disposal costs, expenses and other existing and future liabilities in accordance with the Trust Deed) to the Company. For the avoidance of doubt, the Trustee shall not transfer any H Shares to the Company nor may the Company otherwise hold any H Shares whatsoever (other than the proceeds in the sale of such H Shares pursuant to this Rule 21.2).

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APPENDIX III

22. MISCELLANEOUS

22.1 The Appendices attached to the Scheme Rules form an integral part of this Scheme, and are incorporated herein by reference.
22.2 The Scheme shall not form part of any contract of employment between the Company or any Subsidiary and any Eligible Employee, and the rights and obligations of any Eligible Employee under the terms of his office or employment shall not be affected by his participation in the Scheme or any right which he may have to participate in it and the Scheme shall afford such Eligible Employee no additional rights to compensation or damages in consequence of the termination of such office or employment for any reason.
22.3 The Company shall bear the costs of establishing and administering the Scheme, including, for the avoidance of doubt, costs arising from communication as referred to in Rule 22.4, expenses incurred in the purchase of H Shares by the Trustee and stamp duty and normal registration fee (i.e. not being fee chargeable by the share registrar of any express service of registration) in respect of the transfer of H Shares to Selected Participants on the relevant Vesting Date. For the avoidance of doubt, the Company shall not be liable for any Tax or expenses of such other nature payable on the part of any Eligible Employee in respect of any sale, purchase, vesting or transfer of H Shares (or cash amount of equivalent value being paid), other than for any withholding tax liability of the Company or any member of the Group under applicable laws.
22.4 Any notice or other communication between the Company and any Eligible Employee may be given by sending the same by prepaid post or by personal delivery to, in the case of the Company, its registered office in Hong Kong or the PRC or such other address as notified to the Eligible Employee from time to time and in the case of an Eligible Employee, his/her address as notified to the Company from time to time or by hand delivery. In addition, any notice (including the Vesting Notice) or other communication from the Company to any Eligible Employee or Selected Participant may be given by any electronic means through the Trustee, as the Board considers appropriate.
22.5 Any notice or other communication served by post shall be deemed to have been served 24 hours after the same was put in the post. Any notice or other communication served by electronic means shall be deemed to have been received on the day following that on which it was sent.
22.6 The Company shall not be responsible for any failure by any Eligible Employee to obtain any consent or approval required for such Eligible Employee to participate in the Scheme as a Selected Participant or for any Tax, expenses, fees or any other liability to which an Eligible Employee may become subject as a result of participation in the Scheme.

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APPENDIX III

22.7 Each and every provision hereof shall be treated as a separate provision and shall be severally enforceable as such in the event of any provision or provisions being or becoming unenforceable in whole or in part. To the extent that any provision or provisions are unenforceable they shall be deemed to be deleted from these Scheme Rules, and any such deletion shall not affect the enforceability of the Scheme Rules as remain not so deleted.
22.8 The Scheme is not subject to the provisions of Chapter 17 of the Listing Rules.
22.9 Save as specifically provided herein, the Scheme shall not confer on any person any legal or equitable rights (other than those constituting and attaching to the Award Shares themselves) against the Group directly or indirectly or give rise to any cause of action at law or in equity against the Group. No person shall, under any circumstances, hold the Board or the Delegatee and/or the Company liable for any costs, losses, expenses and/or damages whatsoever arising from or in connection with the Scheme or the administration thereof.
22.10 In the event that an Award lapses in accordance with the Scheme Rules, no Selected Participants shall be entitled to any compensation for any loss or any right or benefit or prospective right or benefit under the Scheme which he or she might otherwise have enjoyed.
22.11 The Scheme shall operate subject to the Articles and to any restrictions under any applicable laws, rules and regulations.
22.12 By participating in the Scheme, the Selected Participant consents to the holding, processing, storage and use of personal data or information concerning him or her by any member of the Group, the Trustee or other third party service provider, in Hong Kong or elsewhere, for the purpose of the administration, management or operation of the Scheme. Such consent permits, but is not limited to, the following:
(a) the administration and maintenance of records of the Selected Participant;
(b) the provision of data or information to members of the Group, the Trustee, registrars, brokers or third party administrators or managers of the Scheme, in Hong Kong or elsewhere;
(c) the provision of data or information to future purchasers or merger partners of the Company, the Selected Participant’s employing company, or the business in which the Selected Participant works;
(d) the transfer of data or information about the Selected Participant to a country or territory outside the Selected Participant’s home country which may not provide the same statutory protection for the information as his home country; and

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APPENDIX III

(e) in the case where an announcement is required to be made or a circular is required to be despatched pursuant to the Listing Rules or other applicable laws, rules and regulations for the purposes of granting an Award, the disclosure of the identity of such Selected Participant, the number of Award Shares and the terms of the Award granted and/or to be granted and all other information as required under the Listing Rules or other applicable laws, rules and regulations.

The Selected Participant is entitled, on payment of a reasonable fee, to a copy of the personal data held about him or her, and if such personal data is inaccurate, the Selected Participant has the right to have it corrected.

23. DISPUTE RESOLUTION

23.1 The Board shall determine any question of interpretation and settle any dispute arising under or in connection with this Scheme. In such matters, the Board’s decision shall be final.

24. GOVERNING LAW

24.1 The Scheme shall be governed by and construed in accordance with the laws of Hong Kong Special Administrative Region of the PRC.

25. TRANSLATION

25.1 In case of any discrepancies between the Chinese and English versions of this Scheme, the English version shall prevail.

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APPENDIX III

APPENDIX A – EMPLOYEE SHARE AWARD PLAN

1. PLAN A ELIGIBLE EMPLOYEES

1.1 For the purposes of the Employee Share Award Plan, Plan A Eligible Employee is any full-time PRC or non-PRC employee of any members of the Group, who is a:
(a) Director;
(b) Senior Management;
(c) Key operating team member;
(d) Employee; or
(e) Consultant.

2. PURPOSE OF THE EMPLOYEE SHARE AWARD PLAN

2.1 The purposes of the Employee Share Award Plan are:
(a) to attract, motivate and retain skilled and experienced personnel to strive for the future development and expansion of the Group by providing them with the opportunity to own equity interests in the Company;
(b) to deepen the reform on the Company’s remuneration system and to develop and constantly improve the interests balance mechanism among the Shareholders, the operational and executive management; and
(c) to (a) recognize the contributions of the leadership of the Company including the Directors and long standing employees of the Company; (b) encourage, motivate and retain the leadership of the Company and long standing employees whose contributions are beneficial to the continual operation, development and long-term growth of the Group; and (c) provide additional incentive for the leadership of the Company and long standing employee by aligning the interests of the leadership of the Company to that of the Shareholders and the Group as a whole.

3. ASSESSMENT, ALLOCATION AND DISTRIBUTION OF AWARD

3.1 Allocation proposal and amount for Selected Participants shall be determined based on the rank and job duty of the Selected Participant. Such allocation proposal and amount and shall be determined by the Management Committee from time to time.

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APPENDIX III

APPENDIX B – SHARE BONUS PLAN

1. PLAN A ELIGIBLE EMPLOYEES

1.1 For the purposes of the Share Bonus Plan, Plan B Eligible Employee is any full-time PRC or non-PRC employee of any members of the Group, who is a:
(a) Director;
(b) Senior Management; or
(c) Key operating team member.

2. PURPOSE OF THE SHARE BONUS PLAN

2.1 The purposes of the Share Bonus Plan are:
(a) to reward and motivate key employees responsible for increments in the Company’s performance;
(b) to strengthen employees’ initiative in striving for the enhancement of the Company’s performance; and
(c) to align the interests of employees with that of the Shareholders.

3. ADMINISTRATION

3.1 Further to Rule 5 of the Scheme Rules, the responsibilities of the Board and the Delegatee in relation to the Share Bonus Plan shall include, but shall not be limited to, determining whether standards of the Share Bonus Plan have been reached; determining the withdrawal ratio of the Share Bonus Fund; selecting the implementation proposal of the Share Bonus Fund; and submitting the name list of the Selected Participants of the Share Bonus Plan and the proposal of allocation to the Trustee.

4. SELECTION OF SELECTED PARTICIPANTS

4.1 In selecting Plan B Eligible Employees, the Board or the Delegatee shall consider the Company’s performance as well as the individual’s performance.

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APPENDIX III

5. ASSESSMENT, ALLOCATION AND DISTRIBUTION OF AWARD

5.1 Subject to Rule 9.1 of the Scheme Rules, the Share Bonus Plan shall be implemented annually throughout the Award Period.
5.2 Subject to this Rule 5, the remuneration level of the Selected Participants of the Share Bonus Plan shall be determined by comprehensive factors: performance evaluation by the human resources department and according to the remuneration regulatory measures, and shall make reference to local and overseas market range of same rank and the average income level of the staff of the Company.
5.3 The Board or the Delegatee shall have the authority to determine all allocation proposals for Selected Participants.
5.4 The Company shall disclose the distribution status of the Share Bonus Fund amount and/or the Award Shares or the Actual Selling Price of such Award Shares granted to the Selected Participants of the Share Bonus Plan in its regular reports.

– III-29 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Table of comparison of the Proposed Amendments to the Articles

Before amendment After amendment Articles of Association are Article 1 These Articles of Association are accordance with the Company formulated in accordance with the Company 中華 Law of the People’s Republic of China (中華 ) (the “Company Law”), 人民共和國公司法) (the “Company Law”), of the People’s Republic of Securities Law of the People’s Republic of 中華人民共和國證券法)) (the China (中華人民共和國證券法) (the Law”), Special Provisions of the “Securities Law”), Special Provisions of the on the Overseas Offering and State Council on the Overseas Offering and by the Joint Stock Limited Listing of Shares by the Joint Stock Limited 國務院關於股份有限公司境外募 Companies (國務院關於股份有限公司境外募 ) (the “Special 集股份及上市的特別規定) (the “Special Mandatory Provisions for Provisions”), Mandatory Provisions for Association of Companies to be Articles of Association of Companies to be (到境外上市公司章程必備到境外上市公司章程必備 Listed Overseas (到境外上市公司章程必備 “Mandatory Provisions”), the 條款) (the “Mandatory Provisions”), the Opinions on Supplements and Letter of Opinions on Supplements and to the Articles of Association Amendments to the Articles of Association Listed in Hong Kong (關於到關於到 of Companies Listed in Hong Kong (關於到香港上市對公司章程作補充修改的意見的 “Letter of Opinions on 函) (the “Letter of Opinions on Amendments”), the Reply of the State on The Stock Exchange of Council on the Adjustment of the Limited (the “Hong Kong Notice Period of the General Meeting and and other relevant Other Matters Applicable to the Overseas Listed Companies (Guo Han [2019] No. of Pharmaron Beijing Co., Ltd. 97) (國務院關於調整適用在境外上市公司召 its shareholders and 開股東大會通知期限等事項規定的批覆(國 to regulate the organization 函[2019]97號)) , Rules Governing the of the Company. Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”) and other relevant provisions, to safeguard the legitimate rights and interests of Pharmaron Beijing Co., Ltd. (the “Company”), its shareholders and creditors, and to regulate the organization and activities of the Company.

Article 1 These Articles of Association are formulated in accordance with the Company Law of the People’s Republic of China (中華人民共和國公司法) (the “Company Law”), Securities Law of the People’s Republic of China (中華人民共和國證券法)) (the “Securities Law”), Special Provisions of the State Council on the Overseas Offering and Listing of Shares by the Joint Stock Limited Companies (國務院關於股份有限公司境外募集股份及上市的特別規定) (the “Special Provisions”), Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (到境外上市公司章程必備到境外上市公司章程必備條款) (the “Mandatory Provisions”), the Letter of Opinions on Supplements and Amendments to the Articles of Association of Companies Listed in Hong Kong (關於到關於到香港上市對公司章程作補充修改的意見的函) (the “Letter of Opinions on Amendments”), Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”) and other relevant provisions, to safeguard the legitimate rights and interests of Pharmaron Beijing Co., Ltd. (the “Company”), its shareholders and creditors, and to regulate the organization and activities of the Company.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment After amendment Article 3 As approved by the China Article 3 As approved by the China Securities Regulatory Commission on Securities Regulatory Commission ( the December 24, 2018, the Company publicly “CSRC” ) on December 24, 2018, the issued an initial 65,630,000 RMBCompany publicly issued an initial denominated ordinary shares and was listed 65,630,000 RMB-denominated ordinary on the Shenzhen Stock Exchange on January shares and was listed on the Shenzhen Stock 28, 2019. Exchange on January 28, 2019. Article 10 The Articles of Association were Article 10 The Articles of Association ~~were~~ considered and passed at the shareholders’ ~~considered and passed at the~~ general meeting and will come into force ~~shareholders’ general meeting and will~~ from the date of the overseas-listed foreign ~~come into force from the date of the~~ shares of the Company being listed and ~~overseas-listed foreign shares of the~~ traded on the Hong Kong Stock Exchange. ~~Company being listed and traded on the~~ The original Articles of Association of the ~~Hong Kong Stock Exchange~~ shall come Company shall automatically expire upon into force from the date on which they the effective date of the Articles of were considered and passed at the Association. shareholders’ general meeting of the Company. The original Articles of Association of the Company shall automatically expire upon the effective date of the Articles of Association. Article 21 Upon approval by the examining Article 21 The shareholding structure of and approving authorities authorized by the the Company is: 794,387,462 ordinary State Council, the total number of ordinary shares, including 660,370,962 shares held shares that may be issued by the Company by holders of domestic-listed domestic shall be 794,387,462, in which 660,370,962 shares, and 134,016,500 shares held by shares are domestic listed domestic shares, holders of H shares. representing 83.13% of the total number of ordinary shares issued by the Company, and 134,016,500 shares are H Shares, representing 16.87% of the total number of ordinary shares issued by the Company.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment

Article 37 Where any director, supervisor, senior management of the Company and shareholder holding 5% or more of the Company’s shares in issue sells his/her shares within a period of six months after the acquisition of the same, or repurchase shares of the Company within six months after sales of the same, any proceed arising therefrom shall belong to the Company, and the board of directors of the Company shall demand such gains for the benefit of the Company. However, the six-month restriction shall not apply for a securities company that holds 5% or more of the Company’s shares as a result of its underwriting of the untaken shares in an offer.

If the board of directors of the Company fails to comply with the requirements under the aforesaid paragraph, a shareholder shall have the rights to request the board of directors to do so within 30 days. In failure of the board of directors to comply with the same within the aforesaid period, such shareholder shall have the rights to institute a legal proceeding directly with the people’s court in its own name for the benefit of the Company.

If the board of directors of the Company fails to comply with the requirements under the first paragraph, the director(s) liable shall assume joint and several responsibilities pursuant to laws.

After amendment Article 37 Where any director, supervisor, senior management of the Company and shareholder holding 5% or more of the Company’s shares in issue sells his/her shares or other securities with an equity nature within a period of six months after the acquisition of the same, or repurchase shares of the Company or other securities with an equity nature within six months after sales of the same, any proceed arising therefrom shall belong to the Company, and the board of directors of the Company shall demand such gains for the benefit of the Company. However, the six-month restriction shall not apply for a securities company that holds 5% or more of the Company’s shares as a result of its underwriting of the untaken shares in an offer.

The shares or other securities with an equity nature held by directors, supervisors, senior management and natural person shareholders referred to in the preceding paragraph shall include the shares or other securities with an equity nature held by their spouses, parents and children, and those held through others’ accounts.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment	After amendment
	If the board of directors of the Company
	fails to comply with the requirements under
	the first paragraph, the director(s) liable
	shall assume joint and several
	responsibilities pursuant to laws.
Article 48 Within thirty (30) days prior to	Article 48 Where relevant laws,
convening shareholders’ general meeting or	administrative regulations, departmental
within five (5) days prior to the record date	rules and regulations, normative
of the Company’s decision for dividend	documents and listing rules of stock
distribution, no change of registration in the	exchange in the place where the shares of
shareholder register shall be carried out due	the Company are listed have provisions on
to transfer of shares. Where the securities	occasions when no change of registration
regulatory authority in the place where the	in the shareholder register shall be
shares of the Company are listed has	carried out before convention of a
provided otherwise, such provisions shall be	shareholders’ general meeting or before
followed.	the record date of dividend distribution
	decided by the Company, such provisions
	shall be followed.

– IV-4 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

– IV-5 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment After amendment
(XIII) To consider matters relating to the (XIII) To consider matters relating to the purchases and disposals of material purchases and disposals of material assets, which are more than 30% of the assets (the amount shall be calculated latest audited total assets of the based on the higher of the total assets Company, within one (1) year; and the transaction amount) , which are more than 30% of the latest audited
(XIV) To consider and approve matters total assets of the Company, within one relating to changes in the use of year; proceeds; (XIV) To consider and approve matters
(XV) To consider share incentive plans; relating to changes in the use of proceeds;
(XVI) To consider the proposals raised by the shareholders who, individually or (XV) To consider share incentive plans; jointly, hold 3% or more of the voting shares of the Company; (XVI) To consider the proposals raised by the
(XVI) To consider the proposals raised by the shareholders who, individually or jointly, hold 3% or more of the voting shares of the Company;

(XVII) To consider other matters required to jointly, hold 3% or more of the voting be resolved by the shareholders’ shares of the Company; general meeting pursuant to laws, administrative regulations, (XVII) The annual shareholders’ general departmental rules and regulations, the meeting of the Company is entitled to listing rules of the place where the authorize the board of directors to Company’s shares are listed or the decide the issuance of shares with a Articles of Association. total financing amount of no more than RMB300 million and no more The aforesaid functions and powers of than 20% of the net assets as at the general meetings shall not be delegated end of the latest year to specific through authorization to the board of subscriber(s), and such directors or any other institution or authorization will expire on the individual. convention date of the annual shareholders’ general meeting for the next year. For the avoidance of doubt, any issuance of shares by the Company shall be subject to and conducted in compliance with the listing rules of the place where the Company’s shares are listed; (XVIII) To consider other matters required to be resolved by the shareholders’ general meeting pursuant to laws, administrative regulations, departmental rules and regulations, the listing rules of the place where the Company’s shares are listed or the Articles of Association. Save for item (XVII) of this Article, the aforesaid functions and powers of general meetings shall not be delegated through authorization to the board of directors or any other institution or individual.

– IV-6 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment		After amendment
Article 67 The external investment,	purchase	Article 67 The external investment, purchase
and disposal of assets, asset mortgage,		and disposal of assets, ~~asset mortgage,~~
external guarantee, consigned	financial	external guarantee, consigned financial
management, connected transactions to be		management, connected transactions and
submitted to the shareholders’	general	others to be submitted to the shareholders’
meeting for consideration	after	general meeting for consideration after
consideration and approval by the	board of	consideration and approval by the board of
directors are as follows:		directors are as follows:

(I) When a transaction of the Company (except for cash assets received by the Company) meets one of the following criteria, it shall be submitted to the general meeting for consideration and approval:
(I) When a transaction of the Company (except for provision of guarantees and financial assistance ) meets one of the following criteria, it shall be submitted to the general meeting for consideration and approval:
The total assets involved in the transaction account for more than 50% of the Company’s latest audited total assets. Where the total assets involved in the transaction have both book value and appraised value whatever is higher shall be taken for calculation;
The total assets involved in the transaction account for more than 50% of the Company’s latest audited total assets. Where the total assets involved in the transaction have both book value and appraised value whatever is higher shall be taken for calculation;
the operating revenue related to the subject of the transaction (for instance, equity interest) for the latest accounting year accounts for more than 50% of the Company’s audited operating revenue for the latest accounting year, with an absolute amount exceeding RMB30 million;
the operating revenue related to the subject of the transaction (for instance, equity interest) for the latest accounting year accounts for more than 50% of the Company’s audited operating revenue for the latest accounting year, with an absolute amount exceeding RMB50 million ;
the net profit related to the 3. the net profit related to the subject of the transaction (for subject of the transaction (for instance, equity interest) for the instance, equity interest) for the latest accounting year accounts latest accounting year accounts for more than 50% of the for more than 50% of the Company’s audited net profit for Company’s audited net profit for the latest accounting year, with an the latest accounting year, with an absolute amount exceeding absolute amount exceeding RMB3 million; RMB5 million ;

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment After amendment
1. the transaction amount of the 4. the transaction amount of the transaction (including the debt transaction (including the debt and expenses) accounts for more and expenses) accounts for more than 50% of the Company’s latest than 50% of the Company’s latest audited net assets, with an audited net assets, with an absolute amount exceeding absolute amount exceeding RMB30 million; RMB50 million ;
1. the profit derived from the 5. the profit derived from the transaction accounts for more transaction accounts for more than 50% of the Company’s than 50% of the Company’s audited net profit for the latest audited net profit for the latest accounting year, with an absolute accounting year, with an absolute amount exceeding RMB3 million. amount exceeding RMB5 million .

In case the figure involved in the above index calculation is negative, the absolute value thereof shall be taken for calculation.

For transactions in which the Company receives unilateral benefits, including gifts of assets in cash and debt reduction or relief, etc., the Company may be exempted from fulfilling the review and approval procedures at the shareholders’ general meeting.

When a transaction of the Company only meets the standards as set out in the item 3 or item 5 above, and the absolute value of the earnings per share in the latest financial year of the Company is less than RMB0.05, the Company may be exempted from fulfilling the review and approval procedures at the shareholders’ general meeting.

(II) The following guarantees of the (II) The following guarantees of the Company shall be considered and Company (including the guarantee passed at the shareholders’ general provided to controlling subsidiaries) meeting: shall be considered and passed at the shareholders’ general meeting:
A single guarantee for amount in excess of 10% of the Company’s latest audited net assets;
Any guarantee provided after the total amount of guarantee to third parties provided by the Company and its controlling subsidiary has exceeded 50% of the Company’s latest audited net assets;
A single guarantee for amount in excess of 10% of the Company’s latest audited net assets;
Any guarantee provided after the total amount of guarantee to third parties provided by the Company and its controlling subsidiary has exceeded 50% of the Company’s latest audited net assets;

– IV-8 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment After amendment
1. A guarantee to be provided to a 3. A guarantee to be provided to a party which has an asset-liability party which has an asset-liability ratio in excess of 70%; ratio in excess of 70%;
1. Guarantee where the amount of 4. Guarantee where the amount of guarantee provided in 12 guarantee provided in 12 consecutive months exceeds 30% consecutive months exceeds 30% of the Company’s latest audited of the Company’s latest audited total assets; total assets;
1. Guarantee where the amount of 5. Guarantee where the amount of guarantee provided in 12 guarantee provided in 12 consecutive months exceeds 50% consecutive months exceeds 50% of the Company’s latest audited of the Company’s latest audited net assets and the absolute net assets and the absolute amount exceeds RMB30 million; amount exceeds RMB50 million ;
Guarantee to be provided to shareholders, actual controller and connected parties thereof;
Other guarantees as prescribed by stock exchanges or the Articles of Association.
Guarantee to be provided to shareholders, actual controller and connected parties thereof;
Other guarantees as prescribed by stock exchanges or the Articles of Association.

When the board of directors consider the above guarantees at the board meeting, such guarantees are required to be passed by more than two-thirds of directors attending the board meeting. When the guarantee specified in item 4 above is considered at the shareholders’ general meeting, it shall be passed by more than two-thirds of voting rights held by the shareholders attending the shareholders’ general meeting.

When considering the resolution of providing guarantee to shareholders, actual controller and connected parties thereof at the shareholders’ general meeting, such shareholders or shareholders controlled by such actual controller shall not vote on such resolution. Such resolution requires a simple majority of the voting rights of other shareholders attending the shareholders’ general meeting to be passed.

– IV-9 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment
(III) If a connected transaction of the Company meets any of the following conditions, it shall be considered and approved by the shareholders’ general meeting:
Connected transactions incurred between the Company and its directors, supervisors and senior management and their respective spouses.
If the connected transaction incurred by the Company and its connected persons (except the Company accepting donation of any assets in cash or providing guarantee) with an amount of more than RMB10 million and representing more than 5% of the latest audited net asset absolute value of the Company;
Guarantee provided for the connected persons by the Company.

After amendment When considering the resolution of providing guarantee to shareholders, actual controller and connected parties thereof at the shareholders’ general meeting, such shareholders or shareholders controlled by such actual controller shall not vote on such resolution. Such resolution requires a simple majority of the voting rights of other shareholders attending the shareholders’ general meeting to be passed.

Where a guarantee is provided by the Company to the connected parties, it shall be disclosed in a timely manner after being considered and approved by the board of directors and submitted to the shareholders’ general meeting for consideration. Where a guarantee is provided by the Company to the controlling shareholder, actual controller and its connected parties, such controlling shareholder, actual controller and connected parties shall provide counter guarantee.

Where a guarantee is provided by the Company to a wholly-owned subsidiary or a guarantee is provided to a controlling subsidiary and other shareholders of such controlling subsidiary provided guarantees in proportion to their rights and interests, and such guarantees fall within the scope of items 1, 2, 3 and 5 of this Article, they may be exempted from being submitted to the shareholders’ general meeting for consideration.

– IV-10 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before	amendment	amendment		After amendment
			(III)	~~If a connected transaction of the~~
				~~Company meets any of the following~~
				~~conditions, it shall be considered and~~
				~~approved~~ ~~by~~ ~~the~~ ~~shareholders’~~
				~~general meeting:~~
				~~1.~~ ~~Connected~~ ~~transactions~~
				~~incurred between the Company~~
				~~and its directors, supervisors~~
				~~and~~ ~~senior~~ ~~management~~ ~~and~~
				~~their respective spouses.~~
				~~2.~~ ~~If~~ ~~the~~ ~~connected~~ ~~transaction~~
				~~incurred by the Company and~~
				~~its connected persons (except~~
				~~the~~ ~~Company~~ ~~accepting~~
				~~donation of any assets in cash or~~
				~~providing guarantee) with an~~
				~~amount of more than RMB10~~
				~~million and representing more~~
				~~than 5% of the latest audited~~
				~~net asset absolute value of the~~
				~~Company;~~
				~~3.~~ ~~Guarantee~~ ~~provided~~ ~~for~~ ~~the~~
				~~connected~~ ~~persons~~ ~~by~~ ~~the~~
				~~Company.~~
				If the transaction is entered into
				between the Company and the
				connected parties as stipulated in the
				Rules Governing the Listing of
				Shares on the ChiNext Market of
				Shenzhen Stock Exchange (except
				for provision of guarantees) with an
				amount of more than RMB30 million
				and representing more than 5% of
				the latest audited net asset absolute
				value of the Company, an
				intermediary that complies with
				relevant regulations of the CSRC
				and the stock exchange where the
				Company’s shares are listed shall be
				engaged to assess or audit the subject
				of the transaction, and the
				transaction shall be submitted to the
				shareholders’ general meeting for
				consideration. Connected
				transactions related to the ordinary
				course of business of the Company
				may be exempted from audit or
				assessment.

– IV-11 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before	amendment	amendment	After amendment
			When the shareholders’ general
			meeting considers a connected
			transaction, the connected
			shareholders shall abstain from
			voting and shall not exercise the
			voting right on behalf of other
			shareholders. The following
			connected transactions of the
			Company that take place within 12
			consecutive months shall be subject
			to the aforesaid provisions in
			accordance with the principle of
			cumulative calculation:
			1. Transactions entered into with
			the same connected parties;
			2. Transactions entered into with
			different connected parties with
			respect to a certain type of
			subject.
			The same aforesaid connected
			parties shall include other connected
			parties controlled by the same entity
			or having a mutual equity control
			relationship with the connected
			parties. Connected transactions
			whose relevant obligations have been
			fulfilled in accordance with the first
			clause of this Article, shall no longer
			be included in the relevant
			cumulative calculation scope.
			The following transactions entered
			into between the Company and
			connected parties may be exempted
			from submission to the shareholders’
			general meeting for consideration:
			1. The Company’s participation in
			public tenders and public
			auctions for unspecified targets
			(excluding restricted methods
			such as invitations to bid);

– IV-12 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

			After amendment
	2.		Transactions in which the
			Company receives unilateral
			benefits, including gifts of
			assets in cash, debt reduction or
			relief, guarantees and
			financing;
	3.		The pricing of connected
			transactions is set by the
			country;
	4.		A connected party provides
			funds to the Company at an
			interest rate no higher than the
			standard interest rate for loans
			of the same period stipulated by
			the People’s Bank of China;
	5.		Where the Company provides
			products and services to
			directors, supervisors and
			senior management on the same
			trading terms as non-connected
			parties.
(IV)	The		transactions entered into
	between the Company and the
	connected persons as stipulated in
	the Hong Kong Listing Rules and the
	transactions that are not exempt
	from		shareholders’ approval under
	Chapter 14A of the Hong Kong
	Listing Rules.
	For		transactions applied to both
	clauses (III) and (IV) of this Article,
	the	review and approval procedures
	of	shareholders’ general meeting
	shall		be performed in stricter
	standards by the Company.

– IV-13 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before	amendment	amendment		After amendment
			(V)	The financial assistance provided by
				the Company shall be considered and
				approved by shareholders’ general
				meeting if it falls under any of the
				following circumstances:
				1. The latest audited asset-liability
				ratio of the target of financial
				assistance exceeds 70%;
				2. The amount of a single financial
				assistance or the aggregated
				amount of financial assistance
				provided in 12 consecutive
				months exceed 10% of the
				Company’s latest audited net
				assets;
				3. Other circumstances as
				provided by stock exchange of
				the place where the Company’s
				shares are listed or the Articles
				of Association.
				The target of financial assistance is a
				controlling subsidiary included in
				the consolidated financial statements
				of the Company and owned as to
				over 50% by the Company, thereby
				such financial assistance shall be
				exempted from the provisions
				mentioned above. The Company
				shall not provide financial assistance
				such as funds to its connected parties
				including directors, supervisors,
				senior management, controlling
				shareholders, actual controllers and
				their controlling subsidiaries.
				The definitions of “transactions”,
				“connected parties” and “connected
				persons” in Article 67 of the Articles
				of Association are the same as those
				defined in the relevant listing rules of
				stock exchange of the place where the
				Company’s shares are listed, among
				which, relevant transactions of
				“connected parties” and “connected
				persons” shall be entered into
				respectively in accordance with
				listing rules of the relevant stock
				exchanges.

– IV-14 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment

Article 75 Where the supervisory committee or shareholders decide(s) to convene the shareholders’ general meeting by itself/themselves, it/they shall send out a written notice to the board of directors, and shall file with the dispatched office of CSRC at the locality of the Company and the stock exchange of the place where shares of the Company are listed.

The shareholding of the convening shareholders shall not be lower than 10% prior to the announcement of the resolutions of the general meeting.

The convening shareholder shall submit relevant evidence to the dispatched office of CSRC at the locality of the Company and the stock exchange of the place where shares of the Company are listed upon the issuance of the notice of general meeting and the announcement of the resolutions of the general meeting.

Article 76 The board of directors and the secretary to the board of directors shall provide cooperation with respect to matters relating to a general meeting convened by the supervisory committee or shareholders on its/their own. The board of directors shall provide the register of shareholders as of the date of record date. Where the board of directors does not provide the register of shareholders, the convener may apply for the same to the securities registration and settlement institution of the place where shares of the Company are listed by holding the relevant announcement of notice for convening the shareholders’ meeting. The register of shareholders obtained by the convener shall not be used for purposes other than the convening of a shareholders’ general meeting.

After amendment Article 75 Where the supervisory committee or shareholders decide(s) to convene the shareholders’ general meeting by itself/themselves, it/they shall send out a written notice to the board of directors, and shall file with the dispatched office of CSRC at the locality of the Company and the stock exchange of the place where shares of the Company are listed.

The shareholding of the convening shareholders shall not be lower than 10% during the period from the date of announcing the notice of general meeting to the conclusion of the general meeting.

Article 76 The board of directors and the secretary to the board of directors shall provide cooperation, provide requisite support and perform their information disclosure obligations in a timely manner with respect to matters relating to a general meeting convened by the supervisory committee or shareholders on its/their own. The board of directors shall provide the register of shareholders as of the date of record date. Where the board of directors does not provide the register of shareholders, the convener may apply for the same to the securities registration and settlement institution of the place where shares of the Company are listed by holding the relevant announcement of notice for convening the shareholders’ meeting. The register of shareholders obtained by the convener shall not be used for purposes other than the convening of a shareholders’ general meeting.

– IV-15 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

	Before amendment	After amendment
Article 80 The convener shall inform each		Article 80 The convener shall inform each
shareholder the annual shareholders’ general		shareholder the annual shareholders’ general
meeting in written form 20 days before the		meeting by way of announcement 20 days
meeting, and shall inform each shareholder		before the meeting, and shall inform each
the	extraordinary shareholders’ general	shareholder the extraordinary shareholders’
meeting in written form 15 days before the		general meeting by way of announcement
meeting. In determining the commencement		15 days before the meeting. In determining
date	and the period, the Company shall not	the commencement date and the period, the
include the date on which the meeting is		Company shall not include the date on which
held,	but shall include the date on which the	the meeting is held, but shall include the
notice is given.		date on which the notice is given.
Article 82 A notice of shareholders’ general		Article 82 A notice of shareholders’ general
meeting shall:		meeting shall:
(I)	be provided in writing;	(I) be provided in writing;
(II)	specify the place, date and time of the	(II) specify the place, date and time of the
	meeting;	meeting;
(III)	state the matters to be considered at the	(III) state the matters to be considered at the
	meeting;	meeting;
(IV)	provide shareholders the detailed	(IV) provide shareholders the detailed
	information and explanations	information and explanations
	necessary for the shareholders to make	necessary for the shareholders to make
	sound decisions about the matters to be	sound decisions about the matters to be
	discussed. This principle includes (but	discussed. This principle includes (but
	not limited to) the provision of the	not limited to) the provision of the
	specific terms and contract(s), if any,	specific terms and contract(s), if any,
	of the proposed transaction(s) and	of the proposed transaction(s) and
	serious explanations about the causes	serious explanations about the causes
	and effects when the Company	and effects when the Company
	proposes mergers, repurchase of	proposes mergers, repurchase of
	shares, restructuring of share capital or	shares, restructuring of share capital or
	other restructuring;	other restructuring;

– IV-16 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Any notice and supplementary notice of Any notice and supplementary notice of general meetings shall sufficiently and general meetings shall sufficiently and completely disclose all the details of all completely disclose all the details of all proposals. If any matter to be discussed proposals. If any matter to be discussed requires opinions of the independent requires opinions of the non-executive directors, the opinions and independent non-executive directors, the reasons of the independent non-executive opinions and reasons of the independent directors shall be disclosed together with the non-executive directors shall be disclosed issuance of such notice. together with the issuance of such notice.

– IV-17 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment

After amendment

If a general meeting is held online or If a general meeting is held online or otherwise, the designated time and otherwise, the designated time and procedure for voting online or through other procedure for voting online or through other means shall be expressly stated in the notice means shall be expressly stated in the notice of such meetings. The starting time for of such meetings. The starting time for voting online or by other means shall not be voting through the online voting system at earlier than 3:00 pm on the day immediately a general meeting is 9:15 am on the day preceding the date on which the general the general meeting is held, and the voting meeting is to be held or later than 9:30 am shall conclude at 3:00 pm on the day on on the day the general meeting is held and which the on-site general meeting held is shall not conclude earlier than 3:00 pm on adjourned. The time for online voting the day on which the general meeting held is through the trading system of Shenzhen adjourned. Stock Exchange shall be the trading hours on the day the general meeting is The interval between the shareholding convened. If there are any special record date of a shareholders’ general requirements under listing rules of stock meeting and the date of the meeting shall not exchange in the place where the shares of be more than 7 business days. The the Company are listed, such shareholding record date shall not be requirements shall prevail.

The interval between the shareholding record date of a shareholders’ general meeting and the date of the meeting shall not be more than 7 business days. The shareholding record date shall not be changed once confirmed.

The interval between the shareholding record date of a shareholders’ general meeting and the date of the meeting shall be no less than 2 business days and no more than 7 business days. The shareholding record date shall not be changed once confirmed. Article 85 After issuance of the notice for shareholders’ general meeting, the shareholders’ general meeting shall not be postponed or cancelled without proper reasons and the proposals specified in the notice shall not be withdrawn. In case of delay or cancellation, the convener shall give a notice stating reasons at least two (2) working days before the date when the meeting is convened. If the convention of the shareholders’ general meeting is postponed, the date for the postponed meeting shall be announced in the notice.

Article 85 After issuance of the notice for shareholders’ general meeting, the shareholders’ general meeting shall not be postponed or cancelled without proper reasons and the proposals specified in the notice shall not be withdrawn. In case of delay or cancellation, the convener shall give a notice stating reasons at least two (2) working days before the date when the meeting is convened.

– IV-18 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment

Article 107 When shareholders (including their proxies) vote at the shareholders’ general meeting, they shall exercise their voting rights according to the number of voting shares they represent. Each share shall carry one voting right.

When the shareholders’ general meeting considers matters that could materially affect the interest of medium and small investors, the votes by medium and small investors shall be counted separately, and the results of such separate vote counting shall be disclosed promptly in accordance with the relevant laws and regulations and the rules of the stock exchange of the place where the shares of the Company are listed.

The aforesaid medium and small investors are shareholders other than the Company’s directors, supervisors, senior management officers and shareholder(s) severally or jointly holding more than 5% (inclusive) shares of the Company.

After amendment Article 107 When shareholders (including their proxies) vote at the shareholders’ general meeting, they shall exercise their voting rights according to the number of voting shares they represent. Each share shall carry one voting right. When the shareholders’ general meeting considers matters that could materially affect the interest of medium and small investors, the votes by medium and small investors shall be counted separately, and the results of such separate vote counting shall be disclosed promptly in accordance with the relevant laws and regulations and the rules of the stock exchange of the place where the shares of the Company are listed. The aforesaid medium and small investors are shareholders other than the Company’s directors, supervisors, senior management officers and shareholder(s) severally or jointly holding more than 5% (inclusive) shares of the Company.

Shares held by the Company do not carry Shares held by the Company do not carry voting rights, and shall not be counted in the voting rights, and shall not be counted in the total number of voting shares represented by total number of voting shares represented by shareholders present at a shareholders’ shareholders present at a shareholders’ general meeting. general meeting.

– IV-19 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment

The Company’s Board, independent non-executive directors, and shareholders who meet the relevant requirements may collect voting rights from other shareholders publicly. Information including the specific voting intention shall be fully disclosed to the shareholders from whom voting rights are being collected.

Consideration or de facto consideration for collecting shareholders’ voting rights is prohibited. The Company shall not impose any minimum shareholding limitation for collecting voting rights.

After amendment

The Company’s Board, independent non-executive directors, and holders of domestic-listed domestic shares holding more than 1% of the voting shares may act as proxy solicitors and, by themselves or through their appointed securities companies or securities service institutions, publicly invite the shareholders to entrust it to attend the shareholders’ general meetings and exercise the rights of shareholders, such as to propose and vote on resolutions, on their behalf. If there are any special requirements under listing rules of stock exchange in the place where the shares of the Company are listed, such requirements shall prevail.

If the rights of shareholders are solicited in accordance with the preceding paragraph, the proxy solicitors shall disclose the solicitation documents and the Company shall cooperate.

Consideration or de facto consideration for collecting shareholders’ voting rights is prohibited. The Company shall not impose any minimum shareholding limitation for collecting voting rights.

– IV-20 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment

Article 112 The list of candidates for director and supervisor shall be proposed to the shareholders’ general meeting for voting.

Candidates for directors of the first session of the board of directors and candidates for the non-employee representative supervisors of the first session of the supervisory committee of the Company are nominated by promoters. The ways and procedures for nominating directors and supervisors for other sessions are:

(I) When a re-election of the board of directors or an additional or replacement of director made by the board of directors takes place, incumbent board of directors, supervisory committee and shareholders individually or collectively holding over 3% of the Company’s shares may nominate candidates, without exceeding the number of persons to be elected, for the position of director for the next session of the board of directors or additional candidates for the position of director who are not staff representatives;
(II) When a re-election of the supervisory committee or an additional or replacement of supervisor made by the supervisory committee takes place, incumbent supervisory committee, the board of directors and shareholders individually or collectively holding over 3% of the Company’s shares may nominate candidates, without exceeding the number of persons to be elected, for the position of supervisor for the next session of the supervisory committee or additional candidates for the position of supervisor who are not staff representatives;

After amendment

Article 112 The list of candidates for director and supervisor shall be proposed to the shareholders’ general meeting for voting. Candidates for directors of the first session of the board of directors and candidates for the non-employee representative supervisors of the first session of the supervisory committee of the Company are nominated by promoters. The ways and procedures for nominating directors and supervisors for other sessions are:

(I) When a re-election of the board of directors or an additional or replacement of director made by the board of directors takes place, incumbent board of directors ~~,~~ ~~supervisory committee~~ and shareholders individually or collectively holding over 3% of the Company’s shares may nominate candidates, without exceeding the number of persons to be elected, for the position of director for the next session of the board of directors or additional candidates for the position of director who are not staff representatives;
(II) When a re-election of the supervisory committee or an additional or replacement of supervisor made by the supervisory committee takes place, incumbent supervisory committee ~~,~~ ~~the board of directors~~ and shareholders individually or collectively holding over 3% of the Company’s shares may nominate candidates, without exceeding the number of persons to be elected, for the position of supervisor for the next session of the supervisory committee or additional candidates for the position of supervisor who are not staff representatives;

– IV-21 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment After amendment
(III) The shareholders shall provide the (III) The shareholders shall provide the board of directors and the supervisory board of directors and the supervisory committee with the resumes and basic committee with the resumes and basic particulars of the nominated candidates particulars of the nominated candidates for the position of director or for the position of director or supervisor. The incumbent board of supervisor. The incumbent board of directors and supervisory committee directors and supervisory committee shall conduct a review on shall conduct a review on qualifications. The qualified directors qualifications. The qualified directors or supervisors shall be submitted to the or supervisors shall be submitted to the shareholders’ general meeting for shareholders’ general meeting for election; election;
(IV) At request of the Company, the (IV) At request of the Company, the candidates for the position of director candidates for the position of director or supervisor shall undertake to the or supervisor shall undertake to the Company in written form the Company in written form the followings, including but not limited followings, including but not limited to, agreeing to accept the nomination, to, agreeing to accept the nomination, undertaking that the information undertaking that the information submitted about themselves are true submitted about themselves are true and complete, and warranting that they and complete, and warranting that they will duly perform the duties upon will duly perform the duties upon successful election. successful election.
(IV) At request of the Company, the candidates for the position of director or supervisor shall undertake to the Company in written form the followings, including but not limited to, agreeing to accept the nomination, undertaking that the information submitted about themselves are true and complete, and warranting that they will duly perform the duties upon successful election.

The “cumulative voting system” referred to in the preceding paragraph means each share shall have the same voting right as the number of directors or supervisors to be elected, when election of directors or supervisors is voted at the shareholders’ general meeting. The voting right held by shareholders may be used collectively. The board of directors shall state the resumes and basic particulars of the candidates for directors and supervisors to the shareholders.

When election of the directors and supervisors is voted at the shareholders’ general meeting, the cumulative voting system can be applied in accordance with the provisions of the Articles of Association or the resolution of the shareholders’ general meeting. The “cumulative voting system” referred to in the preceding paragraph means each share shall have the same voting right as the number of directors or supervisors to be elected, when election of directors or supervisors is voted at the shareholders’ general meeting. The voting right held by shareholders may be used collectively. The board of directors shall state the resumes and basic particulars of the candidates for directors and supervisors to the shareholders.

– IV-22 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment Article 153 External investments, acquisitions or disposal of assets, mortgage of assets, external guarantee, entrusted wealth management and connected transactions that are subject to consideration and approval by the board of directors are as follows:

(I) Except for the major transactions subject to consideration and approval at the general meetings required by the Articles of Association, transactions of the Company meeting any of the following standards shall be submitted to the board of directors for consideration and approval:
the total assets involved in the transaction account for more than 10% of the Company’s latest audited total assets. Where the total assets involved in the transaction have both book value and appraised value whatever is higher shall be taken for calculation;
the operating revenue related to the subject of the transaction (for instance, equity interest) for the latest accounting year accounts for more than 10% of the Company’s audited operating revenue for the latest accounting year, with an absolute amount exceeding RMB5 million;
After amendment
Article 153 External investments, acquisitions or disposal of assets, ~~mortgage of assets,~~ external guarantee, entrusted wealth management, connected transactions and others that are subject to consideration and approval by the board of directors are as follows: (I) Except for the major transactions (other than provisions of guarantee and financial assistance) subject to consideration and approval at the general meetings required by the Articles of Association, transactions of the Company meeting any of the following standards shall be submitted to the board of directors for consideration and approval:
the total assets involved in the transaction account for more than 10% of the Company’s latest audited total assets. Where the total assets involved in the transaction have both book value and appraised value whatever is higher shall be taken for calculation;
the operating revenue related to the subject of the transaction (for instance, equity interest) for the latest accounting year accounts for more than 10% of the Company’s audited operating revenue for the latest accounting year, with an absolute amount exceeding RMB10 million;

– IV-23 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

	Before amendment			After amendment
3.	the net profit related to	the	3.	the net profit related to	the
	subject of the transaction	(for		subject of the transaction	(for
	instance, equity interest) for	the		instance, equity interest) for	the
	latest accounting year accounts			latest accounting year accounts
	for more than 10% of	the		for more than 10% of	the
	Company’s audited net profit	for		Company’s audited net profit	for
	the latest accounting year, with an			the latest accounting year, with an
	absolute amount exceeding			absolute amount exceeding
	RMB1 million;			RMB1 million;

the transaction amount of the transaction (including the debt and expenses) accounts for more than 10% of the Company’s latest audited net assets, with an absolute amount exceeding RMB5 million;
the transaction amount of the transaction (including the debt and expenses) accounts for more than 10% of the Company’s latest audited net assets, with an absolute amount exceeding RMB10 million;
the profit derived from the transaction accounts for more than 10% of the Company’s audited net profit for the latest accounting year, with an absolute amount exceeding RMB1 million.
the profit derived from the transaction accounts for more than 10% of the Company’s audited net profit for the latest accounting year, with an absolute amount exceeding RMB1 million.

In case the figure involved in the above index calculation is negative, the absolute value thereof shall be taken for calculation.

(II) Except for the provision of guarantee (II) Except for the provision of guarantee that needs to be considered and that needs to be considered and approved at the general meeting as approved at the general meeting as provided in the Articles of Association, provided in the Articles of Association, any guarantee to be provided by the any guarantee to be provided by the Company shall be submitted to the Company shall be submitted to the board of directors for consideration. board of directors for consideration. The guarantee within the authority of The guarantee within the authority of the board of directors requires the the board of directors requires the approval of more than two-thirds of the approval of more than two-thirds of the directors attending the board meeting; directors attending the board meeting.

– IV-24 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

	Before amendment	Before amendment	After amendment
(III)	In addition to the	related party	(III) In addition to the related party
	transactions that shall	be considered	transactions that shall be considered
	and approved by the general meeting as		and approved by the general meeting as
	stipulated in Article 67	of the Articles	stipulated in Article 67 of the Articles
	of Association, the following related		of Association, the following related
	transactions of the	Company are	transactions (other than provisions of
	determined:		guarantee and financial assistance)
			of the Company are determined:

Any related party transaction between the Company and its related legal person with an amount of over RMB1 million and representing more than 0.5% of the Company’s latest audited net assets value;
Any related party transaction between the Company and its related natural person with an amount of over RMB300,000;

For the foregoing matters, the board of directors shall formulate a strict approval and decision making procedure; material investment projects shall be reviewed by relevant experts and professionals. Matters beyond its limits of authority shall be proposed to the general meeting for approval.

Any related party transaction between the Company and its related legal person with a transaction amount of over RMB3 million and representing more than 0.5% of the Company’s latest audited net assets value;
Any related party transaction between the Company and its related natural person with a transaction amount of over RMB300,000;

Such matters that fall into the authority of the board of directors in the above paragraph, shall be submitted to the general meeting for consideration and approval if required by laws, regulations and normative documents. For the foregoing matters, the board of directors shall formulate a strict approval and decision making procedure; material investment projects shall be reviewed by relevant experts and professionals. Matters beyond its limits of authority shall be proposed to the general meeting for approval.

– IV-25 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

Before amendment After amendment (IV) In addition to the financial assistance that shall be submitted to the general meetings for consideration and approval required by the Articles of Association, other financial assistance matters are considered and approved by the board of directors. When the board of directors considers the financial assistance matters, such financial assistance matters are required to be approved and resolved by more than two-thirds of the directors attending the board meeting, and the board of directors shall perform its information disclosure obligations in a timely manner. Article 244 The Company shall engage an Article 244 The Company shall engage an accounting firm “qualified for securities accounting firm that complies with the business” to audit its financial statements, requirements of the Securities Law to conduct verification of net assets and other audit its financial statements, conduct relevant consultation services. The verification of net assets and other relevant accounting firm shall hold office for one consultation services. The accounting firm year, commencing from the conclusion of shall hold office for one year, commencing this annual general meeting until the from the conclusion of this annual general conclusion of the next annual general meeting until the conclusion of the next meeting. The appointment may be renewed. annual general meeting. The appointment may be renewed. Article 261 The Company shall designate Article 261 The Company shall designate the Securities Times and other newspapers the Securities Times and other newspapers designated by the CSRC to publish the that complies with the requirements of the Company’s announcements and other CSRC to publish the Company’s information that need to be disclosed, and announcements and other information that designate the website of the Shenzhen Stock need to be disclosed, and designate the Exchange to publish the Company’s websites of the Shenzhen Stock Exchange announcements and other information that and CNINFO to publish the Company’s need to be disclosed. announcements and other information that need to be disclosed.

Article 261 The Company shall designate the Securities Times and other newspapers designated by the CSRC to publish the Company’s announcements and other information that need to be disclosed, and designate the website of the Shenzhen Stock Exchange to publish the Company’s announcements and other information that need to be disclosed.

– IV-26 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX IV

	Before amendment	Before amendment	Before amendment	Before amendment			After amendment
Article	295	Where	the	Articles		of	Article 295 Where the Articles of
Association conflicts			with	the	laws	and	Association conflicts with the laws,
administrative		regulations,		the	laws	and	administrative regulations, departmental
administrative		regulations shall prevail.					rules, normative documents and listing
							rules of stock exchange in the place where
							the shares of the Company are listed, the
							laws, administrative regulations,
							departmental rules, normative documents
							and listing rules of stock exchange in the
							place where the shares of the Company
							are listed shall prevail. Any matters
							unspecified in the Articles of Association
							shall be executed in accordance with the
							relevant provisions of the laws,
							administrative regulations, departmental
							rules, normative documents and listing
							rules of stock exchange in the place where
							the shares of the Company are listed.
Article	296	Upon	consideration			and	Article 296 The Articles of Association shall
approval	by the general		meeting, the Articles				be implemented after the consideration
of Association shall take effect from the						date	and approval of the Company’s general
of listing	of the shares		of the Company on				meeting and becoming effective.
the Hong	Kong Stock Exchange.

– IV-27 –

PROPOSED CHANGE OF SUPERVISOR

APPENDIX V

PARTICULARS OF THE SUPERVISOR CANDIDATE

Shenzhen Xinzhong Kangcheng Investment Partnership (Limited Partnership) 深圳市信中康成投資合夥企業(有限合夥), being a 3% or more shareholder of the Company has nominated Ms. Feng as candidate to replace Mr. Liu as a non-employee representative Supervisor of the second session of the supervisory committee of the Company (the “ Supervisory Committee* ”), subject to and effective upon the approval by the Shareholders at the EGM. Her biographical details are as follows:

Ms. Feng Shu (馮書女士)

Ms. Feng Shu, born in April 1985, Chinese, has a bachelor’s degree from Zhejiang University (浙江大學) and a master’s degree from Baylor University in the United States. From February 2016 to May 2017, she served as Vice President and Senior Vice President of CITIC M&A Fund Management Co., Ltd. (中信併購基金管理有限公司) (“ CITIC M&A Fund ”), which is a substantial shareholder of the Company. Since May 2017, she has worked at Goldstone Investment Co., Ltd. (金石投資有限公司) (“ Goldstone Investment ”), the sole shareholder of CITIC M&A Fund, and currently serves as the Director at Goldstone Investment; since August 2019, she has served as the Director, the Head of Strategy and Business Development, the Director of Real Estate of CLSA Capital Partners (HK) Limited and a Member of the Investment Committee of CLSA Capital Partners (HK) Limited.

The relevant proposal will be put forward to the EGM for the Shareholders’ consideration and approval. If approved by the Shareholders at the EGM, Ms. Feng will form part of the second session of the Supervisory Committee.

The Company will enter into a service contract with Ms. Feng for a term until the end of the second session of the Supervisory Committee. Ms. Feng shall not receive any remuneration for his role as Supervisor. The Company will reimburse Ms. Feng all necessary and actual expenses in relation to the participation of Board meetings, the Board committee meetings, the meetings of the Supervisors and the general meetings of Shareholders.

Saved as disclosed above, as at the date of this circular, Ms. Feng does not hold any other directorships in other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years or other major appointments and professional qualifications and (i) she is not related to any Directors, Supervisors, senior management or substantial Shareholders; (ii) she is not interested in any shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Cap 571 of the laws of Hong Kong); or (iii) she does not hold any other position with the Company or other members of the Group.

Saved as disclosed above, as at the date of this circular, Ms. Feng has confirmed that there are no matters that need to be brought to the attention of the Shareholders and there is no other information in relation to her proposed appointment that is required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules.

– V-1 –

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

==> picture [81 x 33] intentionally omitted <==

**Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司**

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 3759)

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020

NOTICE IS HEREBY GIVEN THAT the third Extraordinary General Meeting of 2020 (the “ EGM ”) of Pharmaron Beijing Co., Ltd. (康龍化成(北京)新藥技術股份有限公司) (the “ Company* ”) will be held at 6 Tai-He Road, Economic Technological Development Area, Beijing, the PRC on Friday, December 11, 2020 at 2:30 p.m. for the following purposes:

SPECIAL RESOLUTIONS

2020 Restricted A Share Incentive Scheme (Draft) and its summary[(9)] .
Assessment Management Measures for the Implementation and Assessment of the 2020 Restricted A Share Incentive Scheme.
Authorization to the Board to handle matters pertaining to the A Share Incentive Scheme.
The First H Share Award and Trust Scheme (Draft).
Authorization to the Board and/or the Delegatee to handle matters pertaining to the First H Share Award and Trust Scheme.
Amendments to the Articles of Association.

* For identification purposes only

– EGM-1 –

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020

ORDINARY RESOLUTIONS

Authorization to the Board of the Company to handle matters pertaining to the amendments to the Articles of Association and the procedures for filing the Articles of Association with the market supervision and management department.
Change of Supervisor.

Proxy Form for the Solicitation of Voting Rights by Independent Non-executive Directors (‘‘Independent Director’s Proxy Form’’)

Pursuant to the Management Measures for Share Incentives of Listed Companies (《上市公司股權激勵管理辦法》) (“ Management Measures ”), the independent non-executive directors of a listed company shall solicit voting rights from all shareholders of the company in the event of the proposed adoption of a share option scheme by such company. The solicitation is intended to provide shareholders of such listed company with an alternative approach to participation in general meetings, so as to encourage them to vote on the resolution in respect of the adoption of a share option scheme. Pursuant to the Management Measures and the authorisation of other independent non-executive Directors, Ms. Chen Guoqin, an independent non-executive Director, has sent out an Independent Director’s Proxy Form to solicit voting rights from the Shareholders. For further details of the Independent Director’s Proxy Form, please refer to the Report on the Solicitation of Voting Rights by the Independent Non-executive Directors included in the announcement of the Company dated November 25, 2020.

Should you wish to appoint Ms. Chen Guoqin as your proxy to vote for you and on your behalf at the EGM on the resolutions regarding the A Share Scheme and the related matters, please complete and return the Independent Director’s Proxy Form to Computershare Hong Kong Investor Services Limited, the H share registrar of the Company, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, by hand or by post, no later than 24 hours before the time appointed for holding the EGM or any adjournment thereof.

You may appoint Ms. Chen Guoqin as your proxy to vote for you and on your behalf solely on resolutions regarding the A Share Scheme and the related matters. If you wish to appoint persons other than Ms. Chen Guoqin as your proxy to vote for you and on your behalf on all resolutions at the EGM, you may complete and return the form of proxy only and disregard the Independent Director’s Proxy Form.

Please note that if you have completed and returned both the form of proxy and the Independent Director’s Proxy Form, but have given inconsistent voting instructions on the resolutions concerned between the form of proxy and the Independent Director’s Proxy Form, your voting instructions given in the Independent Director’s Proxy Form will be counted as your vote for or against the resolutions or abstain from voting on the resolutions regarding the A Share Scheme and the related matters.

– EGM-2 –

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020

CLOSURE OF REGISTER OF MEMBERS

As stated in the announcement dated Tuesday, October 27, 2020 issued by the Company, H Shareholders who intend to attend the EGM are required to deposit the share certificates accompanied by relevant transfer documents at the Company’s H Shares Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, November 10, 2020. H Shareholders whose names appear on the register of members of the Company on Wednesday, November 11, 2020 shall be entitled to attend and vote at the EGM. The register of members of the Company will be closed from Wednesday, November 11,2020 to Friday, December 11, 2020 (both days inclusive), during which period no transfer of Shares will be registered.

By order of the Board

Pharmaron Beijing Co., Ltd.* 康龍化成 (北京 )新藥技術股份有限公司 Dr. Lou Boliang Chairman

Beijing, the PRC November 25, 2020

As at the date of this announcement, the Board of Directors comprises Dr. Lou Boliang, Mr. Lou Xiaoqiang and Ms. Zheng Bei as executive Directors; Mr. Chen Pingjin, Mr. Hu Baifeng, Mr. Li Jiaqing and Mr. Zhou Hongbin as non-executive Directors; Mr. Dai Lixin, Ms. Chen Guoqin, Mr. Tsang Kwan Hung Benson and Mr. Yu Jian as independent non-executive Directors.

For identification purposes only

– EGM-3 –

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2020

Notes:

(1) All votes of resolutions at the EGM will be taken by poll pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and the results of the poll will be published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company (www.pharmaron.com) in accordance with the Listing Rules.
(2) Any shareholders entitled to attend and vote at the EGM can appoint one or more proxies to attend and vote at the EGM on his/her behalf. A proxy need not be a shareholder of the Company. If more than one proxy is so appointed, the appointment shall specify the number and type of shares in respect of which each proxy is so appointed.
(3) Shareholders shall appoint their proxies in writing. The form of proxy shall be signed by the shareholder or his/her/its attorney who has been authorized in writing. If the shareholder is a corporation, the form of proxy shall be affixed with the corporation’s seal or signed by its director, or its attorney duly authorized in writing. If the form of proxy is signed by the attorney of the shareholder, the power of attorney or other authorization document shall be notarized. For H Shareholders, the aforementioned documents must be lodged with the H Shares Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time appointed for holding the EGM (i.e. 2:30 p.m. on Thursday, December 10, 2020 (Hong Kong time)) or any adjournment thereof in order for such documents to be valid. Completion and delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
(4) Shareholders who intend to attend the EGM (in person or by proxy) shall complete and deliver the reply slip of EGM to the H Shares Registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by hand or by post on or before Monday, December 7, 2020.
(5) Shareholders shall produce their identification documents when attending the EGM.
(6) If a proxy attends the EGM on behalf of a shareholder, he/she should produce his/her identification document and the power of attorney or other documents signed by the appointer or his/her attorney, which specifies the date of its issuance. If a representative of a corporate shareholder attends the EGM, such representative shall produce his/her identification document and the notarized copy of the resolution passed by the board of directors or other authority or other notarized copy of any authorization documents issued by such corporate shareholder.
(7) EGM is expected to last for half a day. Shareholders who attend the EGM (in person or by proxy) shall bear their own traveling, accommodation and other expenses.
(8) The contact of the Company:

Address: 6 Tai-He Road, Economic Technological Development Area, Beijing, the PRC Pharmaron Beijing Co., Ltd.* (康龍化成(北京)新藥技術股份有限公司) Postal Code: 100176 Tel: 86 010-57330087 Contact Person: LI Shing Chung Gilbert Fax: 86 010-57330087

(9) Further details of the resolutions are set out in the announcement of the Company dated November 6, 2020 in relation to, among others the proposed adoption of the 2020 Restricted A Share Incentive Scheme (Draft) and its summary.

– EGM-4 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2020

==> picture [81 x 33] intentionally omitted <==

**Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司**

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 3759)

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2020

NOTICE IS HEREBY GIVEN THAT the second H Shares Class Meeting of 2020 (the “ H Share Class Meeting ”) of Pharmaron Beijing Co., Ltd. (康龍化成(北京)新藥技術股份有限公司) (the “ Company* ”) will be held at 6 Tai-He Road, Economic Technological Development Area, Beijing, the PRC after the conclusion of the Third Extraordinary General Meeting of 2020 to be held on Friday, December 11, 2020 at 2:30 p.m. for the following purposes:

SPECIAL RESOLUTIONS

2020 Restricted A Share Incentive Scheme (Draft) and its summary[(9)] .
Assessment Management Measures for the Implementation and Assessment of the 2020 Restricted A Share Incentive Scheme.
Authorization to the Board to handle matters pertaining to the A Share Incentive Scheme.

PROXY FORM FOR THE SOLICITATION OF VOTING RIGHTS BY INDEPENDENT NON-EXECUTIVE DIRECTORS (“INDEPENDENT DIRECTOR’S PROXY FORM”)

For identification purposes only

– HCM-1 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2020

solicit voting rights from the Shareholders. For further details of the Independent Director’s Proxy Form, please refer to the Report on the Solicitation of Voting Rights by the Independent Non-executive Directors included in the announcement of the Company dated November 25, 2020.

Should you wish to appoint Ms. Chen Guoqin as your proxy to vote for you and on your behalf at the H Shares Class Meeting on the resolutions regarding the A Share Scheme and the related matters, please complete and return the Independent Director’s Proxy Form to Computershare Hong Kong Investor Services Limited, the H share registrar of the Company, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, by hand or by post, no later than 24 hours before the time appointed for holding the H Shares Class Meeting or any adjournment thereof.

You may appoint Ms. Chen Guoqin as your proxy to vote for you and on your behalf solely on resolutions regarding the A Share Scheme and the related matters. If you wish to appoint persons other than Ms. Chen Guoqin as your proxy to vote for you and on your behalf on all resolutions at the H Shares Class Meeting, you may complete and return the form of proxy only and disregard the Independent Director’s Proxy Form.

CLOSURE OF REGISTER OF MEMBERS

As stated in the announcement dated Tuesday, October 27, 2020 issued by the Company, H Shareholders who intend to attend the H Shares Class Meeting are required to deposit the share certificates accompanied by relevant transfer documents at the Company’s H Shares Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, November 10, 2020. H Shareholders whose names appear on the register of members of the Company on Wednesday, November 11, 2020 shall be entitled to attend and vote at the H Shares Class Meeting. The register of members of the Company will be closed from Wednesday, November 11, 2020 to Friday, December 11, 2020 (both days inclusive), during which period no transfer of Shares will be registered.

By order of the Board Pharmaron Beijing Co., Ltd.* 康龍化成 (北京 )新藥技術股份有限公司 Dr. Lou Boliang Chairman

Beijing, the PRC November 25, 2020

– HCM-2 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2020

Notes:

(1) All votes of resolutions at the H Shares Class Meeting will be taken by poll pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and the results of the poll will be published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company (www.pharmaron.com) in accordance with the Listing Rules.
(2) Any shareholders entitled to attend and vote at the H Shares Class Meeting can appoint one or more proxies to attend and vote at the H Shares Class Meeting on his/her behalf. A proxy need not be a shareholder of the Company. If more than one proxy is so appointed, the appointment shall specify the number and type of shares in respect of which each proxy is so appointed.
(3) Shareholders shall appoint their proxies in writing. The form of proxy shall be signed by the shareholder or his/her/its attorney who has been authorized in writing. If the shareholder is a corporation, the form of proxy shall be affixed with the corporation’s seal or signed by its director, or its attorney duly authorized in writing. If the form of proxy is signed by the attorney of the shareholder, the power of attorney or other authorization document shall be notarized. For H Shareholders, the aforementioned documents must be lodged with the H Shares Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time appointed for holding the H Shares Class Meeting (i.e. 2:30 p.m. on Thursday, December 10, 2020 (Hong Kong time)) or any adjournment thereof in order for such documents to be valid. Completion and delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
(4) Shareholders who intend to attend the H Shares Class Meeting (in person or by proxy) shall complete and deliver the reply slip of H Shares Class Meeting to the H Shares Registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by hand or by post on or before Monday, December 7, 2020.
(5) Shareholders shall produce their identification documents when attending the H Shares Class Meeting.
(6) If a proxy attends the H Shares Class Meeting on behalf of a shareholder, he/she should produce his/her identification document and the power of attorney or other documents signed by the appointer or his/her attorney, which specifies the date of its issuance. If a representative of a corporate shareholder attends the H Shares Class Meeting, such representative shall produce his/her identification document and the notarized copy of the resolution passed by the board of directors or other authority or other notarized copy of any authorization documents issued by such corporate shareholder.
(7) The H Shares Class Meeting is expected to last for half a day. Shareholders who attend the H Shares Class Meeting (in person or by proxy) shall bear their own traveling, accommodation and other expenses.
(8) The contact of the Company:

(9) Further details of the resolutions are set out in the announcement of the Company dated November 6, 2020 in relation to, among others the proposed adoption of the 2020 Restricted A Share Incentive Scheme (Draft) and its summary.

– HCM-3 –

	Before amendment		After amendment
Article 66 The shareholders’ general		Article 66 The shareholders’ general
meeting is the body exercising the authority		meeting is the body exercising the authority
of the Company and shall exercise the		of the Company and shall exercise the
following duties and powers in accordance		following duties and powers in accordance
with the law:		with the law:
(I)	To determine the business policies and	(I)	To determine the business policies and
	investment plans of the Company;		investment plans of the Company;
(II)	To elect and replace directors and	(II)	To elect and replace directors and
	supervisors who are not staff		supervisors who are not staff
	representatives, and to determine		representatives, and to determine
	matters relating to the remuneration of		matters relating to the remuneration of
	the relevant directors and supervisors;		the relevant directors and supervisors;
(III)	To consider and approve the reports of	(III)	To consider and approve the reports of
	the board of directors;		the board of directors;
(IV)	To consider and approve the reports of	(IV)	To consider and approve the reports of
	the supervisory committee;		the supervisory committee;
(V)	To consider and approve the proposed	(V)	To consider and approve the proposed
	annual preliminary financial budgets,		annual preliminary financial budgets,
	final account proposals and annual		final account proposals and annual
	reports of the Company;		reports of the Company;
(VI)	To consider and approve the profit	(VI)	To consider and approve the profit
	distribution plans and plans for loss		distribution plans and plans for loss
	recovery of the Company;		recovery of the Company;
(VII)	To determine increases or reductions in	(VII)	To determine increases or reductions in
	the registered capital of the Company;		the registered capital of the Company;
(VIII)	To determine the issuance of corporate	(VIII)	To determine the issuance of corporate
	bonds by the Company;		bonds by the Company;
(IX)	To determine matters such as merger,	(IX)	To determine matters such as merger,
	division, dissolution and liquidation of		division, dissolution and liquidation of
	the Company or alteration of corporate		the Company or alteration of corporate
	form;		form;
(X)	To amend the Articles of Association;	(X)	To amend the Articles of Association;
(XI)	To determine the appointment,	(XI)	To determine the appointment,
	dismissal or non-renewal of accounting		dismissal or non-renewal of accounting
	firms by the Company;		firms by the Company;
(XII)	To consider and approve the guarantee	(XII)	To consider and approve the guarantee
	issues as prescribed in Article 67 of the		issues as prescribed in Article 67 of the
	Articles of Association;		Articles of Association;

	Before amendment		After amendment
(V)	in the event that any of the directors,	(V)	in the event that any of the directors,
	supervisors, president (general		supervisors, president (general
	manager) and other senior management		manager) and other senior management
	has material interests at stake in		has material interests at stake in
	matters to be discussed, the nature and		matters to be discussed, the nature and
	extent of the interests at stake shall be		extent of the interests at stake shall be
	disclosed. If the matters to be discussed		disclosed. If the matters to be discussed
	affect any director, supervisor,		affect any director, supervisor,
	president (general manager) and other		president (general manager) and other
	senior management as a shareholder in		senior management as a shareholder in
	a manner different from how they		a manner different from how they
	affect the same class of other		affect the same class of other
	shareholders, the difference shall be		shareholders, the difference shall be
	explained;		explained;
(VI)	include the full text of any special	(VI)	include the full text of any special
	resolution to be proposed for approval		resolution to be proposed for approval
	at the meeting;		at the meeting;
(VII)	contain a conspicuous statement that a	(VII)	contain a conspicuous statement that a
	shareholder who is entitled to attend		shareholder who is entitled to attend
	and vote at the meeting may appoint		and vote at the meeting may appoint
	one or more proxies to attend and vote		one or more proxies to attend and vote
	at the meeting on his/her behalf and		at the meeting on his/her behalf and
	such proxy needs not be a shareholder;		such proxy needs not be a shareholder;
(VIII)	state the time and place for delivering	(VIII)	state the time and place for delivering
	the proxy form authorizing the proxy to		the proxy form authorizing the proxy to
	vote at the relevant meeting;		vote at the relevant meeting;
(IX)	specify the record date of	(IX)	specify the record date of
	shareholdings of shareholders entitled		shareholdings of shareholders entitled
	to attend the shareholders’ general		to attend the shareholders’ general
	meeting;		meeting;
(X)	state the names and telephone numbers	(X)	state the names and telephone numbers
	of the contact persons for the general		of the contact persons for the general
	meeting.		meeting.

AI assistant

Pharmaron Beijing Co., Ltd — Proxy Solicitation & Information Statement 2020

50881_rns_2020-11-25_6cf0c8b7-0d6c-485f-ad59-c019e60e5681.pdf

Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司

(Stock Code: 3759)

(1) PROPOSED ADOPTION OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME;

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

“RMB”

DEFINITIONS

DEFINITIONS

Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司

(Stock Code: 3759)

To the Shareholders

I. INTRODUCTION

II. PROPOSED ADOPTION OF THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME AND THE ASSESSMENT MANAGEMENT MEASURES

(i) Purpose of the A Share Scheme

(ii) Form and Source of the Restricted Shares to be Granted

(iii) Number of Restricted Shares to be Granted

(iv) Participants of the A Share Scheme

(A) Basis for determining the Participants

(B) Scope of the Participants

(C) Persons who are prohibited to participate in the A Share Scheme

(D) Allocation of Restricted Shares to be granted

(v) Grant Price and Basis of Determination of the Grant Price

(A) Grant Price of the Restricted Shares

(B) Basis of determination of the Grant Price

The Grant Price of RMB55.78 represents:

(vi) Validity Period, Grant Date, Attribution Arrangements and Black-Out Periods

(A) Validity period of the A Share Scheme

(B) Grant Date of the Restricted Shares

(C) Attribution arrangements under A Share Scheme

(D) Black-out periods

(vii) Conditions for Grant and Attribution of Restricted Shares

(A) Conditions for grant of the Restricted Shares

(B) Conditions for attribution of the Restricted Shares

3. Requirements of length of employment of the Participants

4. Performance assessment requirements at the Company level

Attribution Period

Performance Assessment Target

(viii) Implementation, Grant and Attribution Procedures

(A) Procedures for the implementation of the A Share Scheme

LETTER FROM THE BOARD

(B) Procedures for the grant of the Restricted Shares

(C) Procedures for the attribution of the Restricted Shares

(ix) Method and Procedures for Adjustment

(A) Adjustment method of the number of the Restricted Shares

2. Rights issue

(B) Adjustment method of the Grant Price of the Restricted Shares

2. Rights issue

3. Share consolidation

4. Dividend distribution

(C) Adjustment procedures

(A) Rights and obligations of the Company

LETTER FROM THE BOARD

(B) Rights and obligations of the Participants

(C) Dispute settlement mechanism between the Company and the Participants

(xi) Amendment and Termination of the A Share Scheme

(A) Procedure for the amendment and termination of the A Share Scheme

LETTER FROM THE BOARD

(B) In the event of any changes occurred at the Company level

(C) In the event of any changes in the personal circumstances of the Participants

7. Change in eligibility of the Participants

(xii) Accounting Treatment and Impact on the Operating Performance

(A) Accounting treatment

(B) Estimated impact on the operating performance in each accounting period due to the implementation of the Restricted Shares

(xiii) Proposed grant of Restricted Shares and Issue of new A Shares under the A Share Scheme pursuant to Specific Mandate

(xiv) Reasons for and Benefits of the Adoption of the Proposed A Share Scheme

(xv) Other Information

(A) Fund raising activities in the past 12 months

(B) Information of the Company and the Participants

(C) Implications of the Hong Kong Listing Rules

III. PROPOSED ADOPTION OF THE ASSESSMENT MANAGEMENT MEASURES

IV. PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE A SHARE SCHEME

V. PROPOSED ADOPTION OF THE FIRST H SHARE AWARD AND TRUST SCHEME

Pharmaron Beijing Co., Ltd Proxy Solicitation & Information Statement 2020

**Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司**

**Pharmaron Beijing Co., Ltd.[*] 康龍化成 (北京 )新藥技術股份有限公司**

**THE 2020 RESTRICTED A SHARE INCENTIVE SCHEME OF PHARMARON BEIJING CO., LTD.* (DRAFT)**