Sinopharm Group Co. Ltd. — Governance Information 2018

Mar 23, 2018

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[(A joint stock limited company incorporated in the People’s Republic of China with limited liability and ] carrying on business in Hong Kong as 國控股份有限公司 )

(Stock Code: 01099)

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION PROPOSED AMENDMENTS TO THE RULES OF PROCEDURE OF THE BOARD OF DIRECTORS ESTABLISHMENT OF THE LEGAL AND COMPLIANCE COMMITTEE

The Board hereby announces that on 23 March 2018, the Board resolved to propose to make certain amendments to the Articles of Association and the Rules of Procedure of the Board of Directors. The proposed amendments to the Articles of Association and the Rules of Procedure of the Board of Directors are subject to the approval by the shareholders at the general meeting of the Company.

On the same day, the Board also resolved to establish a legal and compliance committee under the Board and has elected Mr. Liu Zhengdong, Mr. Li Zhiming and Ms. Rong Yan as the committee members.

A circular of the Company containing, among others, detailed information of the above-mentioned proposed amendments to the Articles of Association and the Rules of Procedure of the Board of the Directors will be dispatched to the shareholders of the Company in due course.

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

In accordance with the requirements of relevant laws, regulations and regulatory rules, and taking into consideration of the practice of Sinopharm Group Co. Ltd. (the “ Company ”), the board of directors of the Company (the “ Board ”) resolved on 23 March 2018 to propose to make certain amendments to the articles of association of the Company (the “ Articles of Association ”). The proposed amendments to the Articles of Association will be put forward at the general meeting of the Company for shareholders’ approval as a special resolution. Details of the amendments are set out as follows:

1. Article 1

Which originally reads as:

"……

The Company was established by conversion of the former Sinopharm Holding Co., Ltd. into a joint stock

limited company with the approval document (Guo Zi Gai Ge [2008] 1071) issued by the State-owned Assets Supervision and Administration Commission (hereinafter referred to as the “SASAC”). On 6 October 2008, the Company registered with the Shanghai Administration of Industry and Commerce and obtained a business license. The business license number of the Company is 310101000307576.

……"

is proposed to be amended as follows:

"……

The Company was established by conversion of the former Sinopharm Holding Co., Ltd. into a joint stock limited company with the approval document (Guo Zi Gai Ge [2008] 1071) issued by the State-owned Assets Supervision and Administration Commission (hereinafter referred to as the “SASAC”). On 6 October 2008, the Company registered with the Shanghai Administration of Industry and Commerce and obtained a business license. The ~~business license number of the Company is 310101000307576~~ unified social credit code of the Company is 91310000746184344P.

……"

Reasons for the amendments:

In accordance with the requirements of the state's reform of the "three-license-in-one" registration system, the Company has achieved "three-license-in-one" in June 2016 and has carried out a change in business license registration.

2. Article 1 and Article 22

Article 1, which originally reads as:

"……

The promoters of the Company are China National Pharmaceutical Group Corporation and Sinopharm Industrial Investment Co., Ltd."

is proposed to be amended as follows:

"……

The promoters of the Company are China National Pharmaceutical Group ~~Corporation~~ Co., Ltd. and Sinopharm Industrial Investment Co., Ltd."

Article 22, which originally reads as:

"After its establishment, the Company initially issued 690,284,125 overseas-listed foreign invested ordinary shares. After such issuance, the Company’s registered capital was RMB2,264,568,474 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group Corporation (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 690,284,125 shares were held by holders of the overseas-listed foreign invested shares.

After the above initial issuance of the overseas-listed foreign invested ordinary shares, according to the general mandate granted at the 2009 annual general meeting and the approvals of the board of directors and relevant regulatory authorities, the Company further issued 138,056,825 overseas-listed foreign invested ordinary shares to not less than 6 but no more than 10 investors by way of placing. After completion of such

placing, the Company’s registered capital was RMB2,402,625,299 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group Corporation (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 828,340,950 shares were held by holders of the overseas-listed foreign invested shares.

After completion of the above placing of overseas-listed foreign invested ordinary shares, according to the general mandate granted at the 2011 annual general meeting and the approvals of the board of directors and relevant regulatory authorities, the Company further issued 165,668,190 overseas-listed foreign invested ordinary shares to not less than 6 but no more than 10 investors by way of placing. After completion of such further placing, the Company’s registered capital was RMB2,568,293,489 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group Corporation (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 994,009,140 shares were held by holders of the overseas-listed foreign invested shares.

After completion of the above placing of overseas-listed foreign invested ordinary shares, according to the general mandate granted at the 2013 annual general meeting and the approvals of the board of directors and relevant regulatory authorities, the Company further issued 198,801,600 overseas-listed foreign invested ordinary shares to not less than 6 but no more than 10 investors by way of placing. After completion of such further placing, the Company’s registered capital was RMB2,767,095,089 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group Corporation (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 1,192,810,740 shares were held by holders of the overseas-listed foreign invested shares."

is proposed to be amended as follows:

"After its establishment, the Company initially issued 690,284,125 overseas-listed foreign invested ordinary shares. After such issuance, the Company’s registered capital was RMB2,264,568,474 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group ~~Corporation~~ Co., Ltd. (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 690,284,125 shares were held by holders of the overseaslisted foreign invested shares.

After the above initial issuance of the overseas-listed foreign invested ordinary shares, according to the general mandate granted at the 2009 annual general meeting and the approvals of the board of directors and relevant regulatory authorities, the Company further issued 138,056,825 overseas-listed foreign invested ordinary shares to not less than 6 but no more than 10 investors by way of placing. After completion of such placing, the Company’s registered capital was RMB2,402,625,299 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group ~~Corporation~~ Co., Ltd. (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 828,340,950 shares were held by holders of the overseas-listed foreign invested shares.

After completion of the above placing of overseas-listed foreign invested ordinary shares, according to the general mandate granted at the 2011 annual general meeting and the approvals of the board of directors and relevant regulatory authorities, the Company further issued 165,668,190 overseas-listed foreign invested ordinary shares to not less than 6 but no more than 10 investors by way of placing. After completion of such further placing, the Company’s registered capital was RMB2,568,293,489 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group ~~Corporation~~ Co., Ltd. (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 994,009,140 shares were held by holders of the overseas-listed foreign invested shares.

After completion of the above placing of overseas-listed foreign invested ordinary shares, according to the general mandate granted at the 2013 annual general meeting and the approvals of the board of directors and

relevant regulatory authorities, the Company further issued 198,801,600 overseas-listed foreign invested ordinary shares to not less than 6 but no more than 10 investors by way of placing. After completion of such further placing, the Company’s registered capital was RMB2,767,095,089 with a nominal value of RMB1.00 each, of which 2,728,396 shares were held by China National Pharmaceutical Group ~~Corporation~~ Co., Ltd. (the promoter of the Company), 1,571,555,953 shares were held by Sinopharm Industrial Investment Co., Ltd. (the other promoter of the Company), and 1,192,810,740 shares were held by holders of the overseas-listed foreign invested shares."

Reasons for the amendments:

China National Pharmaceutical Group Corporation (中國醫藥集團總公司) completed the industrial and commercial registration of corporate transformation on 22 November 2017, and its name was changed to China National Pharmaceutical Group Co., Ltd. (中國醫藥集團有限公司).

3. Article 9 and Article 96

Article 9, which originally reads as:

"……

The other senior management members referred to in these Articles are deputy general manager, the secretary of the board of directors, financial executive engaged by the board of directors and other senior management members appointed by the board of directors.

……"

is proposed to be amended as follows:

"……

The other senior management members referred to in these Articles are deputy general manager, the secretary of the board of directors, financial executive, general counsel engaged by the board of directors and other senior management members appointed by the board of directors.

……"

Article 96, which originally reads as:

"The board of directors shall be accountable to the general meeting and shall assume the following functions and powers:

……

(ix) to appoint or dismiss the Company’s general manager, and according to the general manager’s nomination, to appoint or dismiss deputy general managers, chief financial officer of the Company; to appoint or dismiss the secretary of the board of directors and to decide on their remuneration;

……"

is proposed to be amended as follows:

"The board of directors shall be accountable to the general meeting and shall assume the following functions and powers:

……

(ix) to appoint or dismiss the Company’s general manager, and according to the general manager’s nomination, to appoint or dismiss deputy general managers, chief financial officer, general counsel of the Company; to appoint or dismiss the secretary of the board of directors and to decide on their remuneration;

……"

Reasons for the amendments:

The Company plans to establish the general counsel system and implement it in the Articles of Association.

4. Article 96

Which originally reads as:

"……

Notwithstanding the provision specified in Clause Two of Article 96, when the board meeting is reviewing resolutions on whether or not to accept (i) a written notice from the Company’s controlling shareholder or any subsidiary of such controlling shareholder (not including the Company and any of its subsidiaries) informing the Company of any opportunity to own, invest in, participate in, develop, operate or engage in any business or company directly or indirectly competing with the business of western medicine distribution; or (ii) whether or not to exercise the right of option or the right of preemption granted by the Company’s controlling shareholder in respect of the interests held by such controlling shareholder or any of its subsidiary (not including the Company or any of its subsidiaries) in the business of western medicine distribution operated by China National Pharmaceutical Industrial Tianjin Co., Ltd., and Guangdong Southern Pharmaceutical Foreign Trade Co., Ltd., such motions can only be considered by independent non-executive directors of the Company and be put to the vote by more than three (inclusive) independent nonexecutive directors.

……"

is proposed to be amended as follows:

"……

Notwithstanding the provision specified in Clause Two of Article 96, when the board meeting is reviewing resolutions on whether or not to accept (i) a written notice from the Company’s controlling shareholder or any subsidiary of such controlling shareholder (not including the Company and any of its subsidiaries) informing the Company of any opportunity to own, invest in, participate in, develop, operate or engage in any business or company directly or indirectly competing with the business of western medicine distribution; or (ii) whether or not to exercise the right of option or the right of preemption granted by the Company’s controlling shareholder in respect of the interests held by such controlling shareholder or any of its subsidiary (not including the Company or any of its subsidiaries) in the business of western medicine distribution operated by China National Pharmaceutical Industrial Tianjin Co., Ltd., ~~and Guangdong Southern Pharmaceutical Foreign Trade Co., Ltd.,~~ such motions can only be considered by independent non-executive directors of the Company and be put to the vote by more than three (inclusive) independent nonexecutive directors.

……"

Reasons for the amendments:

China National Accord Medicines Corporation Ltd., a subsidiary of the Company, has acquired 100% equity interest of Guangdong Southern Pharmaceutical Foreign Trade Co., Ltd. from China National Pharmaceutical Foreign Trade Corporation and natural person shareholders on 13 December 2016. As a result, there is no longer relationship of competing business.

PROPOSED AMENDMENTS TO THE RULES OF PROCEDURE OF THE BOARD OF DIRECTORS

In accordance with the requirements of relevant laws, regulations and regulatory rules, as well as the Articles of Association, and taking into consideration of the practice of the Company, the Board resolved on 23 March 2018 to propose to make certain amendments to the Rules of Procedure of the Board of Directors. The proposed amendments to the Rules of Procedure of the Board of Directors will be put forward at the general meeting of the Company for shareholders’ approval as an ordinary resolution. Details of the amendments are set out as follows:

1. Article 2.4

Which originally reads as:

"The board of directors shall be accountable to the general meeting and shall assume the following functions and powers:

……

(ix) to appoint or dismiss the Company’s general manager, and according to the general manager’s nomination, to appoint or dismiss deputy general managers, chief financial officer of the Company; to appoint or dismiss the secretary of the board of directors and to decide on their remuneration;

……"

is proposed to be amended as follows:

"The board of directors shall be accountable to the general meeting and shall assume the following functions and powers:

……

(ix) to appoint or dismiss the Company’s general manager, and according to the general manager’s nomination, to appoint or dismiss deputy general managers, chief financial officer, general counsel of the Company; to appoint or dismiss the secretary of the board of directors and to decide on their remuneration;

……

(xii) to implement the general counsel system, promote the company management and decision making in compliance with laws, and guide and supervise the planning of the Company's legal construction. If legal issues are involved in matters considered and approved by the Board of the Company, the general counsel shall attend the meeting and submit legal opinions, and the Board shall give due consideration to them;

……"

Reasons for the amendments:

The Board proposed to implement the general counsel system in the Rules of Procedure of the Board of Directors.

3. Article 15.2

Which originally reads as:

"Supervisors may attend Board meetings, managers and board secretaries shall attend Board meetings. If the host of the meeting deems it necessary, he or she may notify other relevant personnel to attend the Board meetings."

is proposed to be amended as follows:

"Supervisors may attend board meetings, managers ~~and~~ , board secretaries, non-director full-time deputy secretary of Party Committee, secretary of Discipline Committee, chief financial officer and general counsel shall attend board meetings. If the host of the meeting deems it necessary, he or she may notify other relevant personnel to attend the board meeting."

Reasons for the amendments:

The Board proposed to implement the general counsel system in the Rules of Procedure of the Board of Directors and clarify the scope of the personnel attending the Board meetings (without voting rights).

4. Article 32.2

Which originally reads as:

"These Rules of Procedure and any amendments thereto are formulated by the Board and shall come into effect from the date of approval at a shareholders’ general meeting.

This version was considered and passed at 2016 first extraordinary general meeting of the Company."

is proposed to be amended as follows:

"These Rules of Procedure and any amendments thereto are formulated by the Board and shall come into effect from the date of approval at a shareholders’ general meeting.

This version was considered and passed at ~~2016 first extraordinary~~ 2017 annual general meeting of the Company."

Reasons for the amendments:

These amendments are planned to be proposed for consideration and approval at the 2017 annual general meeting of the Company.

ESTABLISHMENT OF THE LEGAL AND COMPLIANCE COMMITTEE

The Board has resolved on 23 March 2018 to establish a legal and compliance committee under the Board (the “ Legal and Compliance Committee ”) which will be mainly responsible for promoting the rule of law of the Company and guide the Company's compliance management works. The Legal and Compliance Committee shall comprise at least three members. All members shall be elected by the Board and at least one of them shall have legal background.

The Board has elected Mr. Liu Zhengdong, Mr. Li Zhiming and Ms. Rong Yan as the members of the Legal and Compliance Committee among whom Mr. Liu Zhengdong will act as the chairman. The terms of office of the members shall coincide with their terms of office as directors of the Company.

A circular of the Company containing, among others, detailed information of the above-mentioned proposed amendments to the Articles of Association and the Rules of Procedure of the Board of Directors will be dispatched to the shareholders of the Company in due course.

By order of the Board of Sinopharm Group Co. Ltd. Li Zhiming Chairman

Shanghai, the PRC

23 March 2018

As at the date of this announcement, the executive directors of the Company are Mr. Li Zhiming and Mr. Liu Yong; the non-executive directors of the Company are Mr. Chen Qiyu, Mr. She Lulin, Mr. Wang Qunbin, Mr. Ma Ping, Mr. Deng Jindong, Mr. Wen Deyong, Ms. Rong Yan and Mr. Wu Yijian; and the independent non-executive directors of the Company are Ms. Li Ling, Mr. Yu Tze Shan Hailson, Mr. Tan Wee Seng, Mr. Liu Zhengdong and Mr. Zhuo Fumin.

• The Company is registered as a non-Hong Kong company under the Hong Kong Companies Ordinance under its Chinese name and the English name “Sinopharm Group Co. Ltd.”.