Pharmaron Beijing Co., Ltd - Proxy Solicitation & Information Statement 2021

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.

==> picture [81 x 34] 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)

(1) PROPOSED ADOPTION OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME; (2) PROPOSED ADOPTION OF THE ASSESSMENT MANAGEMENT MEASURES FOR THE IMPLEMENTATION OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME; (3) PROPOSED ISSUE AND GRANT OF THE NEW A SHARES UNDER THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME PURSUANT TO SPECIFIC MANDATE; (4) PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME;

(5) REPURCHASE AND CANCELLATION OF PART OF RESTRICTED A SHARES GRANTED UNDER THE A SHARE INCENTIVE SCHEME;

(6) PROPOSED REDUCTION OF REGISTERED CAPITAL;

(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) NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING OF 2021; AND

(10) NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

A letter from the Board is set out on pages 5 to 43 of this circular. Notices convening the EGM on Monday, July 12, 2021 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 June 24, 2021 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 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

June 24, 2021

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I – Rules of the 2021 Restricted A Share Incentive Scheme
(draft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – Assessment Management Measures. . . . . . . . . . . . . . . . . . .	II-1
Notice of the First Extraordinary General Meeting of 2021 . . . . . . . . . . . . . . . . .	EGM-1
Notice of the Second H Shares Class Meeting of 2021. . . . . . . . . . . . . . . . . . . . . .	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 2021 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
“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 2021 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)
“Assessment Management Measures”
the Assessment Management Measures for the Implementation and Assessment of the 2021 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2021年A股限制性股票激勵計劃實施考核管理辦法》)
“Board”
the board of directors of the Company, from time to time
“Business Day”

any day on which the Stock Exchange is open for the business of dealing in securities

– 1 –

DEFINITIONS

“Class Meeting of the 2021 second class meeting of A Shareholders to be A Shareholders” or held on Monday, July 12, 2021 “A Shares Class Meeting”
“Class Meeting of the 2021 second class meeting of H Shareholders to be H Shareholders” held after the conclusion of the EGM on Monday, July or “H Shares Class Meeting” 12, 2021
“Class Meetings” the Class Meeting of A Shareholders and the Class Meeting of H Shareholders
“the Company” or Pharmaron Beijing Co., Ltd.* (康龍化成(北京)新藥技術 “our Company” 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 2021 first extraordinary general meeting of the Company to be held on Monday, July 12, 2021 at 2:30 p.m.
“Form of Proxy” the form of proxy of the Company in respect of the resolutions set out in the Notice of EGM
“Grant Date” 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)
“the Group” or “our 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

– 2 –

DEFINITIONS

“H Shareholder(s)”
“HK$”
“Hong Kong”
“Independent Director(s)”
“Independent Director’s Proxy Form”
“Latest Practicable Date”
“Listing Rules”
“Management Measures”
“Notice of Class Meeting of H Shareholders” or “Notice of the Second H Shares Class Meeting of 2021”
“Notice of EGM”
“Participants”
“PRC”
“PRC Company Law”
“PRC Securities Law”

holder(s) of H Shares

Hong Kong dollars, the lawful currency of Hong Kong
the Hong Kong Special Administrative Region of the People’s Republic of China
the independent non-executive Directors of the Company
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
June 21, 2021, 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 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 June 24, 2021, a copy of which is set out on pages HCM-1 to HCM-4 of this circular
the notice of the EGM dated June 24, 2021, a copy of which is set out on pages EGM-1 to EGM-4 of this circular
the participants of the A Share Scheme
the People’s Republic of China
the Company Law of the PRC

the Securities Law of the PRC

– 3 –

DEFINITIONS

“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
“RMB”	Renminbi, the lawful currency of the PRC
“Rules of Procedure for Board	the rules of procedure for board meetings of the Company
Meetings”
“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 774,200 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 Buy-
	backs issued by the SFC from time to time
“USD”	United State Dollar, the lawful currency of the United
	States
“%”	Percent

– 4 –

LETTER FROM THE BOARD

==> 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)

Executive Directors: Registered address, headquarters and principal Dr. Lou Boliang place of business in the PRC: Mr. Lou Xiaoqiang 8th Floor, Block 1 Ms. Zheng Bei 6 Tai-He Road Beijing Economic Technological Development Area Non-executive Directors: Beijing, PRC

Non-executive Directors: Beijing, PRC Mr. Chen Pingjin Mr. Hu Baifeng Principal place of business Mr. Li Jiaqing in Hong Kong: Mr. Zhou Hongbin 40th Floor, Dah Sing Financial Centre No. 248 Queen’s Road East Independent Non-executive Directors: Wanchai, Mr. Dai Lixin Hong Kong

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

Mr. Yu Jian

June 24, 2021

To the Shareholders

Dear Sir or Madam,

(3) PROPOSED ISSUE AND GRANT OF THE NEW A SHARES UNDER THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME PURSUANT TO SPECIFIC MANDATE; (4) PROPOSED AUTHORIZATION TO THE BOARD TO HANDLE MATTERS PERTAINING TO THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME;

(5) REPURCHASE AND CANCELLATION OF PART OF RESTRICTED A SHARES GRANTED UNDER THE A SHARE INCENTIVE SCHEME;

(6) PROPOSED REDUCTION OF REGISTERED CAPITAL;

(7) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION;

(9) NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING OF 2021; AND

(10) NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

– 5 –

LETTER FROM THE BOARD

I. INTRODUCTION

References are made to (i) the announcement of the Company dated June 9, 2021 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; and (d) the proposed authorization to the Board to handle matters pertaining to the A Share Scheme; (ii) the announcement of the Company dated June 9, 2021 in relation to the proposed reduction of registered capital and 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 Notice of EGM; and (v) 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 Monday, July 12, 2021 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 2021 RESTRICTED A SHARE INCENTIVE SCHEME AND THE ASSESSMENT MANAGEMENT MEASURES

Reference is made to the Company’s announcement dated June 9, 2021 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 June 9, 2021 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 resolution (original Scheme) on proposed adoption of the 2020 A Share Scheme approved by the Company’s Board on November 6, 2020 failed to obtain approval from the second 2020 H Shares Class Meeting. The Company, investors and professional advisory bodies subsequently conducted a comprehensive communication and discussion regarding the improvement and perfection of the original Scheme, and modified the original Scheme and revised as proposed adoption of the 2021 A Share Scheme on the basis of listening to the views and suggestions of all parties, without any change about the relevant Participates (other than separated employees), the relevant assessment criteria and vesting arrangements have been improved in accordance with the 2020 indicators.

– 6 –

LETTER FROM THE BOARD

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.

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 774,200 A Shares, representing approximately 0.0975% 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.

(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.

– 7 –

LETTER FROM THE BOARD

(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 core 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 204.

None of the Participants are the Company’s Directors, Independent Director, Supervisor, Senior Management, 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;
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;

– 8 –

LETTER FROM THE BOARD

Laws and regulations stipulate that the person shall not participate in the equity incentives of listed companies; and
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) Core management (1) Mid-level management and core technical personnel (59) Basic-level management and technical personnel (144) Total	Number of Restricted Shares to be Granted 75,000 434,200 265,000 774,200	Percentage to the total number of Restricted Shares 9.69% 56.08% 34.23% 100%	Percentage to the total share capital of the Company as at the Latest Practicable Date 0.0094% 0.0547% 0.0333%
			0.0975%

Notes:

(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.

– 9 –

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 RMB70.47 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 pricing method for the restricted shares under the Incentive Scheme is independent pricing, and the share price is the 50% of average trading price of the Company’s shares for 120 trading days prior to the date of the announcement on the Incentive Scheme (draft), which is RMB70.47 per share:

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. June 9, 2021), being RMB92.57 per A Share;
50% of the average trading price of the Company’s shares for the 20 trading days immediately preceding the date of the announcement on the proposed adoption of the A Share Scheme amongst other things (i.e. June 9, 2021), being RMB89.86 per A Share;
50% of the average trading price of the Company’s shares for the 60 trading days immediately preceding the date of the announcement on the proposed adoption of the A Share Scheme amongst other things (i.e. June 9, 2021), being RMB77.47 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. June 9, 2021), being RMB70.47 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.

– 10 –

LETTER FROM THE BOARD

The Grant Price of RMB70.47 represents:

(i) a discount of approximately 51.83% to the closing price of HK$177.50 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 61.44% to the closing price of RMB182.74 per A Share as quoted on the Shenzhen Stock Exchange on the trading day immediately preceding June 9, 2021 (being the date on which the Board approved the A Share Scheme);
(ii) a discount of approximately 52.60% to the average closing price of HK$180.38 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 61.52% to the average closing price of RMB183.15 per A Share as quoted on the Shenzhen Stock Exchange on the 5 consecutive trading days immediately preceding June 9, 2021; and
(iii) a discount of approximately 52.17% to the average closing price of HK$178.74 per H Share as quoted on the Hong Kong Stock Exchange and a discount of approximately 60.83% to the average closing price of RMB179.93 per A Share as quoted on the Shenzhen Stock Exchange on the 20 consecutive trading days immediately preceding June 9, 2021.

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 Lock-up Period

(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 60 months.

– 11 –

LETTER FROM THE BOARD

(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 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.

– 12 –

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 expiry of 12	25%
	months following the Grant Date until the last
	trading day within the 24 months following the
	Grant Date
Second tranche	From the first trading day after the expiry of 24	25%
	months following the Grant Date until the last
	trading day within the 36 months following the
	Grant Date
Third tranche	From the first trading day after the expiry of 36	25%
	months following the Grant Date until the last
	trading day within the 48 months following the
	Grant Date
Fourth tranche	From the first trading day after the expiry of 48	25%
	months following the Grant Date until the last
	trading day within the 60 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.

(D) Lock-up Period

The requirements of lock-up for the Restricted Shares under the A Share Scheme are implemented in accordance with relevant laws, administrative 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;

– 13 –

LETTER FROM THE BOARD

The Lock-up arrangement granted by the Incentive Scheme to the Participants shall be implemented in accordance with the requirements of the Company Law, the Securities Law and the relevant laws, administrative regulations, regulatory documents and the Articles of Association; 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 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.

(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;

– 14 –

LETTER FROM THE BOARD

(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.

(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.

– 15 –

LETTER FROM THE BOARD

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.

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.

– 16 –

LETTER FROM THE BOARD

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

Attribution Period Performance Assessment Target First Attribution Period 15%

(Company’s revenue increase for the year ended December 31, 2021 as compared to the year ended December 31, 2020)

Second Attribution Period 30%

(Company’s revenue increase for the year ended December 31, 2022 as compared to the year ended December 31, 2020)

Third Attribution Period 45%

(Company’s revenue increase for the year ended December 31, 2023 as compared to the year ended December 31, 2020)

Fourth Attribution Period 60%

(Company’s revenue increase for the year ended December 31, 2024 as compared to the year ended December 31, 2020)

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%

– 17 –

LETTER FROM THE BOARD

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 assessment under the A Share Scheme at individual level is reviewed by the Remuneration and Appraisal Committee, and its specific content is implemented in accordance with the Assessment Management Measures. The Scheme Participants are not the members under the Remuneration and Appraisal Committee, who won’t be involved in the performance assessment at individual level.

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 core 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.

Under the performance indicators and based on the operating revenue for 2020, the operating revenue’s growth rates of the Company from 2021 to 2024 were no less than 15%, 30%, 45% and 60%, respectively. The performance indicators for the A Share Scheme were formulated by the Company based on the Company’s actual conditions, future strategic planning, industry development and various potential risks (which refer to the risk factors out of the control of the Directors, such as the risk of international policy changes and currency exchange rates). The satisfaction of the performance targets presents a certain degree of challenge, which helps to

– 18 –

LETTER FROM THE BOARD

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.

(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, 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.

– 19 –

LETTER FROM THE BOARD

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.

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.

– 20 –

LETTER FROM THE BOARD

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.

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

– 21 –

LETTER FROM THE BOARD

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 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 Lock-up 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 774,200 A Shares. The adjustment method is as follows:

– 22 –

LETTER FROM THE BOARD

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.

2. Rights issue

Q=Q0 ×P1 × (1+n)/(P1+P2×n)

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

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 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

– 23 –

LETTER FROM THE BOARD

1. 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.

2. 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.

3. Share consolidation

P=P0÷n

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

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.

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.

– 24 –

LETTER FROM THE BOARD

(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 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.

– 25 –

LETTER FROM THE BOARD

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.

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 Lock-up 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 vesting and registration, the Restricted Shares granted to the Participants under the A Share Scheme shall not be transferred, used to guarantee or repay debts.

– 26 –

LETTER FROM THE BOARD

5. Prior to the vesting and registration, 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.

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. The Participant agreed to authorize the Company to register the share-related matters under the Incentive Scheme.

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

– 27 –

LETTER FROM THE BOARD

(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.

(D) Other descriptions

The Participant won’t be involved in the procedure for examination and approval of the Incentive Scheme and the follow-up performance appraisal works at individual level.

(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.
(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.

– 28 –

LETTER FROM THE BOARD

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

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;
(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.

– 29 –

LETTER FROM THE BOARD

2. Merger or division of the Company

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.

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.

(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.

– 30 –

LETTER FROM THE BOARD

(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.

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.

– 31 –

LETTER FROM THE BOARD

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.

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.

– 32 –

LETTER FROM THE BOARD

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.

(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 this second class of Restricted Shares represents the fair value (including the option’s intrinsic value and time value) by adopting the Option Pricing Model after deducting the discounted costs arising from the Restrictive Factor.

– 33 –

LETTER FROM THE BOARD

The Company used the Black-Scholes model (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. June 9, 2021). The specific figures for such estimation are as follows:

(a) Underlying share price: RMB186.33 (June 9, 2021 as closing date)
(b) Valid period of call option: 1 year, 2 years, 3 years and 4 years (from grant date to the first vesting date of each period), valid period of put option: 0.5 year (restricted factors, i.e. the additional Lock-up Period after each vesting date)
(c) Historical volatility: annualized volatility of the Shenzhen Composite Index for respective period
(d) Risk-free interest rate: the benchmark deposit rate for financial institutions formulated by the People’s Bank of China for respective period)
(B) Estimated impact on the operating performance in each accounting period due to the implementation of the Restricted Shares

The Company will grant 774,200 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 RMB84,336,500. 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 based on the fair value of the Shares calculated on the “actual grant date”, assuming the Grant Date to be in June 2021, and the amortization of cost of the Restricted Shares from the years 2021 to 2025 shall be as follows:

Unit: RMB0’000

Amortization cost of

the Restricted Shares Year 2021 Year 2022 Year 2023 Year 2024 Year 2025

8,433.65 2,174.45 3,320.52 1,770.95 896.31 271.43

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.

– 34 –

LETTER FROM THE BOARD

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 774,200 Restricted Shares (subject to Adjustment), all of which will be granted to not more than 204 Participants under the A Share Scheme, representing approximately 0.0975% 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.

In addition to the principal terms of the proposed A Share Scheme summarized in the section headed “II. The Proposed 2021 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 RMB84,336,500, being the aggregate Grant Price, will be paid by the Participants to subscribe for not more than 774,200 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 RMB70.47 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 RMB774,200.

– 35 –

LETTER FROM THE BOARD

(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 A Share Scheme will realize the aforesaid goals, and that the terms and conditions of the scheme 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.

(xv) Other Information

(A) Fund raising activities in the past 12 months

Save as disclosed below, the Company had not conducted any other fund raising activities in the past 12 months immediately preceding the Latest Practicable Date:

Date of
announcement	Fund raising activity	Net proceeds	Intended use of proceeds
June 8, 2021 and	Proposed issue of USD	Approximate	For, among others: (i) expanding
June 9, 2021	denominated	USD587.5	capacities and capabilities of the
	convertible bonds and	million	Company’s pharmaceutical process
	RMB denominated		development and manufacturing
	USD settled		facilities for small molecule drugs,
	convertible bonds		(ii) expanding the Company’s R&D
			and manufacturing service platform
			for biologics, (iii) expanding
			capabilities of the Company’s
			laboratory services, (iv) expanding
			capacities and capabilities of the
			Company’s laboratory and
			manufacturing facilities in the United
			Kingdom, and (v) supplementing
			working capital and general corporate
			purposes

– 36 –

LETTER FROM THE BOARD

(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 June 9, 2021.

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.

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.

– 37 –

LETTER FROM THE BOARD

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;
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;

– 38 –

LETTER FROM THE BOARD

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 of the Company, and from time to time formulate or amend the management and implementation rules of the Scheme, subject to compliance with the terms of the Incentive 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; and
To authorize the Board to implement all other necessary matters in connection with the Restricted Share Incentive 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. REPURCHASE AND CANCELLATION OF PART OF RESTRICTED A SHARES GRANTED UNDER THE A SHARE INCENTIVE SCHEME

A special resolution will be proposed at the EGM and H Shares Class Meeting to consider and approve the proposed repurchase and cancellation of part of the Restricted A Shares granted under the A Share Incentive Scheme.

The principal terms of the A Share Incentive Scheme are summarized in the paragraph headed “Appendix VII – Statutory and General Information – 2. Further Information about our Business – B. Share Incentive Schemes” in the prospectus of the Company dated November 14, 2019.

Pursuant to the relevant provisions of the A Share Incentive Scheme and the proposal on repurchase and cancellation of part of the Restricted A Shares granted under the A Share Incentive Scheme, due to the resignation of three Participants (as defined in the A Share Incentive Scheme), the Company intends to repurchase a total of 17,340 Restricted A Shares issued to such Participants at the repurchase price (as the grant price) of RMB17.85 per Share. The 17,340 Restricted A Shares have been granted to these Participants but are still in the lock-up period pursuant to the provisions of the A Share Incentive Scheme. None of these Participants are connected persons of the Company as defined under the Listing Rules.

– 39 –

LETTER FROM THE BOARD

Upon the completion of the repurchase and cancellation of the 17,340 Restricted A Shares, the number of total issued Shares of the Company will drop from 794,194,438 Shares to 794,177,098 Shares, amongst which the number of domestic-listed domestic shares will drop from 660,177,938 Shares to 660,160,598 Shares whilst the number of H Shares will remain unchanged at 134,016,500 Shares.

The repurchase and cancellation of part of Restricted A Shares will not have a substantive impact on the Company’s financial conditions or operating results. The 2020 Profit Distribution Plan and the amount of Dividends are not affected by the repurchase and cancellation of the 17,340 Restricted Shares to be repurchased and cancelled.

VI. PROPOSED REDUCTION OF REGISTERED CAPITAL

In light of the proposed repurchase and cancel part of the Restricted A Shares granted under the A Shares Incentive Scheme as detailed under “(5) Repurchase and Cancellation of Part of Restricted A Shares Granted under the A Share Incentive Scheme” above, the Board proposes to decrease the registered capital of the Company.

A special resolution will be proposed at the EGM and the H Shares Class Meeting to consider and approve the decrease of the number of issued shares of the Company from 794,194,438 Shares to 794,177,098 Shares, and the decrease of the Company’s registered capital from RMB794,194,438 to RMB794,177,098.

VII. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

As disclosed in the announcement of the Company dated June 9, 2021 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 Company Law of the People’s Republic of China and the Securities Law of the People’s Republic of China.

A special resolution is being proposed at the EGM to consider and approve the proposed amendments to the Articles of Association. The details are as follows:

Before amendment

After amendment

Article 6 The registered capital of the Company is RMB794,194,438.

Article 6 The registered capital of the Company is RMB 794,177,098 .

Article 21 The shareholding structure of the Company is: 794,194,438 ordinary shares, including 660,177,938 shares held by holders of domestic-listed domestic shares, and 134,016,500 shares held by holders of H shares.

Article 21 The shareholding structure of the Company is: 794,177,098 ordinary shares, including 660,160,598 shares held by holders of domestic-listed domestic shares, and 134,016,500 shares held by holders of H shares.

Except for the proposed amendments mentioned above, other provisions of the Articles of Association remain unchanged.

– 40 –

LETTER FROM THE BOARD

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

Notices convening the EGM on Monday, July 12, 2021 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 June 24, 2021 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 Sunday, July 11, 2021 (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 forms of proxy 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 June 24, 2021.

– 41 –

LETTER FROM THE BOARD

The forms of proxy 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 forms 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 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, July 7, 2021 to Monday, July 12, 2021 (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, July 7, 2021 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 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, July 6, 2021.

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.

X. 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.

– 42 –

LETTER FROM THE BOARD

XI. RECOMMENDATION

The Board (including the independent non-executive Directors) considers that (i) 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; (ii) the proposed authorization to the Board to handle all matters relating to the A Share Scheme; and (iii) 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 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.

XII. 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

– 43 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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

Rules of the 2021 Restricted A Share Incentive Scheme (Draft)

June 2021

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 2021 Restricted A Share Incentive Scheme of Pharmaron Beijing Co., Ltd. (Draft) (the “ Incentive Scheme ”) is formulated by Pharmaron Beijing Co., Ltd. (“ Pharmaron ”, “ Company ”, or “ our 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.

III. The Restricted Shares proposed to be granted to the Participants under the Incentive Scheme shall be 774,200 shares, representing 0.0975% 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.

– I-1 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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 204 persons in total, including core 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 Directors, independent Directors, Supervisors, senior management, non-PRC employees, 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 RMB70.47 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 60 months.
VII. The Restricted Shares under the grant of the Incentive Scheme shall be attributed in four tranches after the expiry of 12 months following the grant date, with the proportion of attribution in each tranche being 25%, 25%, 25% and 25%, respectively.

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 2020 revenue, the revenue growth in 2021 is set to be not less than 15%.

– I-2 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

Attribution Arrangement Performance Assessment Target

Second Attribution Tranche Based on 2020 revenue, the revenue growth in 2022 is set to be not less than 30%. Third Attribution Tranche Based on 2020 revenue, the revenue growth in 2023 is set to be not less than 45%.

Fourth Attribution Tranche Based on 2020 revenue, the revenue growth in 2024 is set to be not less than 60%.

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.
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;

– I-3 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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 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

– I-4 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Special Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Chapter I Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-6
Chapter II Purpose of the Incentive Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-8
Chapter III Administrative Bodies of the Incentive Scheme . . . . . . . . . . . . . . . . .	I-8
Chapter IV Basis for Determining the Participants and Scope of Participants . .	I-9
Chapter V Restricted Shares to be Granted under the Incentive Scheme. . . . . . .	I-11
Chapter VI List of Participants and Allocation of Restricted Shares to
be Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-12
Chapter VII Validity Period, Grant Date, Attribution Arrangement and
Lock-up Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-12
Chapter VIII Grant Price and Basis of Determination of the Grant Price of
Restricted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-15
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

– I-5 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

CHAPTER I DEFINITIONS

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

Term Meaning Pharmaron, Our : Pharmaron Beijing Co., Ltd.* (康龍化成(北京)新藥技術股份 Company, Company, 有限公司) Listed Company
Restricted Share : the 2021 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, 2021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 core management, mid-level management, core technical personnel, basic-level management and technical personnel of the Company (including its subsidiaries), but excluding the Directors, independent Directors, Supervisors, senior management, non-PRC employees, shareholders who individually or collectively hold more than 5% of the shares of the Company, de facto controllers, or their respective spouses, parents or children, 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

– I-6 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 2021 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2021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

– I-7 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 core 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 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.

– I-8 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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.
V. The Participants don’t engage in approval process, and will not participant in follow-up management in the Incentive Scheme in future, thus not existing conflict of interest herein.

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) Duty Basis for determining the Participants

The Participants under the Incentive Scheme include core 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.

– I-9 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

II. SCOPE OF THE PARTICIPANTS

The total number of the Participants under the Incentive Scheme shall be 204, including:

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

None of the Participants are Directors, independent Directors, Supervisors, senior management, 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.

– I-10 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 774,200 shares, representing 0.0975% 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.

– I-11 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 Core management (1 persons in total) Mid-level management and core technical personnel (59 persons in total) Basic-level management and technical personnel (144 persons in total) Total	Number of Restricted Shares to be granted (’0,000 shares) 7.50 43.42 26.50 77.42	Percentage to the total number of Restricted Shares to be granted 9.69% 56.08% 34.23% 100.00%	Percentage to the current total share capital 0.0094% 0.0547% 0.0333%
			0.0975%

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 LOCK-UP 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 60 months.

– I-12 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 considered 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 12 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.

– I-13 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 12	25%
	months following the grant date until the last
	trading day within the 24 months following
	the grant date
Second tranche	From the first trading day after the expiry of 24	25%
	months following the grant date until the last
	trading day within the 36 months following
	the grant date
Third tranche	From the first trading day after the expiry of 36	25%
	months following the grant date until the last
	trading day within the 48 months following
	the grant date
Fourth tranche	From the first trading day after the expiry of 48	25%
	months following the grant date until the last
	trading day within the 60 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.

– I-14 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

IV. LOCK-UP PERIOD UNDER THE INCENTIVE SCHEME

(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) The Lock-up arrangement granted by the Incentive Scheme to the Participants shall be implemented in accordance with the requirements of the Company Law, the Securities Law and the relevant laws, administrative regulations, regulatory documents and the Articles of Association.
(iii) 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 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 RMB70.47 per share. A Participant who has satisfied the conditions for grant and attribution may purchase the Company’s shares at the price of RMB70.47 per share.

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

(i) Pricing Method

The Grant Price of the Restricted Shares under the Incentive Scheme is determined by independent pricing modal, 50% of the average trading price of the Company’s shares for the 120 trading days prior to the announcement of the Incentive Scheme (draft), being RMB70.47 per share.

(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 RMB92.57 per share;
(2) 50% of the average trading price of the Company’s shares for the 20 trading days prior to the announcement of the draft Incentive Scheme, being RMB89.86 per share;

– I-15 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(3) 50% of the average trading price of the Company’s shares for the 60 trading days prior to the announcement of the draft Incentive Scheme, being RMB77.47 per share;
(4) 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 RMB70.47 per share.

(ii) Basis of Pricing

The Grant Price of the Restricted Shares is determined by independent pricing model, the purpose of which is to promote the development of the Company, maintain the shareholders’ equity and provide mechanism as well as attract talents for the stable development of the Company in the long run.

The Company is Talent technology-oriented, and fully ensuring the effectiveness of equity incentive because it is an important way to retain core talents. Amid the business environment, the Company is facing many challenges, including industry cycle, technological innovation, talent competition, capital market fluctuations, etc. The Grant Price under the Incentive Scheme is conducive to the talent incentives in different periods and business environment of the Company and to help gain an advantage in the industry competition.

In addition, according to the principle of equal incentive and constraint, the Company set a challenging performance goal under the Incentive Scheme, which could stimulate motivation and creativity of the Participants by using the independent pricing model. On this basis, the Incentive Scheme will create a positive impact on the Company’s sustainable development in future and to shareholders’ equity, and further to ensure the achievement of the goal.

To sum up, on the basis of compliance with relevant laws and regulations and regulative documents, the Company decided to determine the Grant Price of the Restricted Shares as RMB70.47 per share. The implementation of the Incentive Scheme will stabilize the core team and create a deep binding tie between the interest of employees and shareholders.

The Company will engage an independent financial adviser to give professional opinions on the feasibility of the Incentive Scheme, the reasonableness of the basis of the determination and the pricing method of the Grant Price, whether the Incentive Scheme is conducive to the sustainable development of the Company and whether there are any circumstances harmful to all Shareholders.

– I-16 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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; or
Other circumstances as determined by the CSRC.
(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 Company Law that he/she shall not act as a director or member of the senior management of a company;

– I-17 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

Laws and regulations stipulate that the Participant shall not participate in the equity incentives of listed companies; or
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; or
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.

(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;

– I-18 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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; or
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 2020, the growth rate of operating income in 2021 shall not be less than 15% Second Attribution Period Based on the figure in 2020, the growth rate of operating income in 2022 shall not be less than 30%

– I-19 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

Attribution Period	Performance Assessment Objectives
Third Attribution Period	Based on the figure in 2020, the growth rate
	of operating income in 2023 shall not be
	less than 45%
Fourth Attribution Period	Based on the figure in 2020, the growth rate
	of operating income in 2024 shall not be
	less than 60%

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 performance at individual level shall be assessed by the Remuneration Committee under the Incentive Scheme. The content of the assessment is implemented in accordance with the “Assessment Management Measures of the Company”. None of the Participants belong to the Remuneration Committee and will not involve in performance assessment at the Participant’s individual level.

– I-20 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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 core 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 2020 as the basis, the growth rate of the Company’s operating income for 2021 to 2024 shall not be less than 15%, 30%, 45% and 60% 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 various potential risks (refers to the risk factors beyond the control of the Directors, such as the risk of international policy changes, exchange rate risk, etc.). 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.

– I-21 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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.

– I-22 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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 and 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.

– I-23 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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 Lock-up 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 SECOND CLASS OF 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 this second class of Restricted Shares represents the fair value (including the option’s inherent value and time value) by adopting the Option Pricing Model after deducting the discounted costs arising from the Restrictive Factor.

– I-24 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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 second class of Restricted Shares. The Company uses such model to estimate the fair value of the Restricted Shares using June 9, 2021 as the record date (formal estimation at the time of grant) for calculation. Specific parameters selected are as follows:

a. Underlying share price: RMB186.33 (closing price as at June 9, 2021);
b. Valid period of call option: 1 year, 2 years, 3 years and 4 years (from grant date to the first vesting date of each period), valid period of put option: 0.5 year (restricted factors, i.e. the additional Lock-up Period after each vesting date);
c. Historical volatility: annualized volatility of the Shenzhen Composite Index for respective period;
d. Risk-free interest rate: the benchmark deposit rate for financial institutions formulated by the People’s Bank of China for respective period.
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 774,200 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 RMB84,336,500. 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 June 2021, and the amortization of cost of the Restricted Shares from the years 2021 to 2025 shall be as follows:

Unit: RMB0’000

Amortization cost of the Restricted Shares Year 2021 Year 2022 Year 2023 Year 2024 Year 2025 8,433.65 2,174.45 3,320.52 1,770.95 896.31 271.43

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;

– I-25 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

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, 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.

– I-26 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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 disclose 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 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.

– I-27 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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 considering 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 to the Participants 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.
(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

– I-28 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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.

– I-29 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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 not 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.

– I-30 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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.
(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 due to the reasons on the part of the CSRC, the Stock Exchange and the registration and clearing companies, which causes losses to the Participants.
(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 vesting and registration, 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 vesting and registration, 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.

– I-31 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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) The Participant agreed to authorize the Company to register the share-related matters under the Incentive Scheme.
(xi) 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.
The Participants don’t engage in approval processes, and will not participant in follow-up performance assessment at individual level under the Incentive Scheme.

– I-32 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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.

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.

– I-33 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

(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.

(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.

– I-34 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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 resulting in a change in position, 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.
(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.

– I-35 –

RULES OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME (DRAFT)

APPENDIX I

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.
(v) Death of the Participants
If the Participants die due to their duty, the Remuneration Committee 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;

– I-36 –

RULES OF THE 2021 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

June 2021

For identification purposes only

– I-37 –

ASSESSMENT MANAGEMENT MEASURES

APPENDIX II

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 2021 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 core 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 2021 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.

– II-1 –

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 core management, mid-level management, core technical personnel, basic-level management and technical personnel of the Company (including its subsidiaries) but excluding the Director, Independent Director, Supervisor, senior management, 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.

– II-2 –

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 15% in 2021 as compared to that of 2020 Second attribution period The Company’s revenue shall increase by no less than 30% in 2022 as compared to that of 2020 Third attribution period The Company’s revenue shall increase by no less than 45% in 2023 as compared to that of 2020 Fourth attribution period The Company’s revenue shall increase by no less than 60% in 2024 as compared to that of 2020

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%

– II-3 –

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.

– II-4 –

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.

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

June 2021

– II-5 –

NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING OF 2021

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 FIRST EXTRAORDINARY GENERAL MEETING OF 2021

NOTICE IS HEREBY GIVEN THAT the first Extraordinary General Meeting of 2021 (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 Monday, July 12, 2021 at 2:30 p.m. for the following purposes:

SPECIAL RESOLUTIONS

2021 Restricted A Share Incentive Scheme (Draft) and its summary[(9)] .
Assessment Management Measures for the Implementation of the 2021 Restricted A Share Incentive Scheme.
Authorization to the Board to handle matters pertaining to the 2021 Restricted A Share Incentive Scheme.
Repurchase and Cancellation of Part of the Restricted A Shares granted under the A Share Incentive Scheme.
Reduction of Registered Capital.
Amendments to the Articles of Association.

ORDINARY RESOLUTION

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.

* For identification purposes only

– EGM-1 –

NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING OF 2021

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 June 24, 2021.

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. In addition, 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 FIRST EXTRAORDINARY GENERAL MEETING OF 2021

CLOSURE OF REGISTER OF MEMBERS

As stated in the announcement dated June 21, 2021 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, July 6, 2021. H Shareholders whose names appear on the register of members of the Company on Wednesday, July 7, 2021 shall be entitled to attend and vote at the EGM. The register of members of the Company will be closed from Wednesday, July 7, 2021 to Monday, July 12, 2021 (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 June 24, 2021

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 FIRST EXTRAORDINARY GENERAL MEETING OF 2021

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 Sunday, July 11, 2021 (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 Tuesday, July 6, 2021.
(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 June 9, 2021 in relation to, among others the proposed adoption of the 2021 Restricted A Share Incentive Scheme (Draft) and its summary.

– EGM-4 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

==> 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 2021

NOTICE IS HEREBY GIVEN THAT the second H Shares Class Meeting of 2021 (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 first Extraordinary General Meeting of 2021 to be held on Monday, July 12, 2021 at 2:30 p.m. for the following purposes:

SPECIAL RESOLUTIONS

2021 Restricted A Share Incentive Scheme (Draft) and its summary[(9)] .
Assessment Management Measures for the Implementation of the 2021 Restricted A Share Incentive Scheme.
Authorization to the Board to handle matters pertaining to the 2021 Restricted A Share Incentive Scheme.
Repurchase and Cancellation of Part of the Restricted A Shares granted under the A Share Incentive Scheme.
Reduction of Registered Capital.

* For identification purposes only

– HCM-1 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

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

Should you wish to appoint Ms. Chen Guoqin as your proxy to vote for you and on your behalf at the H Share 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 Share 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. In addition, 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 Share Class Meeting, you may complete and return the form of proxy only and disregard the Independent Director’s Proxy Form.

– HCM-2 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

CLOSURE OF REGISTER OF MEMBERS

As stated in the announcement dated June 21, 2021 issued by the Company, H Shareholders who intend to attend the H Share 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, July 6, 2021. H Shareholders whose names appear on the register of members of the Company on Wednesday, July 7, 2021 shall be entitled to attend and vote at the H Share Class Meeting. The register of members of the Company will be closed from Wednesday, July 7, 2021 to Monday, July 12, 2021 (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 June 24, 2021

* For identification purposes only

– HCM-3 –

NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

Notes:

(1) All votes of resolutions at the H Share 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 Share Class Meeting can appoint one or more proxies to attend and vote at the H Share 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 Share Class Meeting (i.e. 2:30 p.m. on Sunday, July 11, 2021 (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 Share Class Meeting (in person or by proxy) shall complete and deliver the reply slip for the H Share 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 Tuesday, July 6, 2021.
(5) Shareholders shall produce their identification documents when attending the H Share Class Meeting.
(6) If a proxy attends the H Share 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 Share 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 Share Class Meeting is expected to last for half a day. Shareholders who attend the H Share 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 June 9, 2021 in relation to, among others the proposed adoption of the 2021 Restricted A Share Incentive Scheme (Draft) and its summary.

– HCM-4 –

AI assistant

Pharmaron Beijing Co., Ltd — Proxy Solicitation & Information Statement 2021

50881_rns_2021-06-24_05fc7701-892a-486a-a705-f4a147e6e452.pdf

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

(Stock Code: 3759)

(10) NOTICE OF THE SECOND H SHARES CLASS MEETING OF 2021

CONTENTS

DEFINITIONS

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)

I. INTRODUCTION

II. PROPOSED ADOPTION OF THE 2021 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

(i) Legal basis for determining the Participants

(ii) Positions held by Participants in the Company

(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

(vi) Validity Period, Grant Date, Attribution Arrangements and Lock-up Period

(A) Validity period of the A Share Scheme

(B) Grant Date of the Restricted Shares

(C) Attribution arrangements under A Share Scheme

(D) Lock-up Period

(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

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

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

(viii) Implementation, Grant and Attribution Procedures

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

(B) Procedures for the grant of the Restricted Shares

LETTER FROM THE BOARD

(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

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

(C) Adjustment procedures

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

(A) Rights and obligations of the Company

(B) Rights and obligations of the Participants

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

(D) Other descriptions

(xi) Amendment and Termination of the A Share Scheme

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

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

3. Change of control of the Company

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

LETTER FROM THE BOARD

(xii) Accounting Treatment and Impact on the Operating Performance

(A) Accounting treatment

Amortization cost of

LETTER FROM THE BOARD

(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. REPURCHASE AND CANCELLATION OF PART OF RESTRICTED A SHARES GRANTED UNDER THE A SHARE INCENTIVE SCHEME

VI. PROPOSED REDUCTION OF REGISTERED CAPITAL

VII. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Before amendment

After amendment

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

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

LETTER FROM THE BOARD

X. GENERAL

XI. RECOMMENDATION

XII. ADDITIONAL INFORMATION

Pharmaron Beijing Co., Ltd Proxy Solicitation & Information Statement 2021

**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**

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