Shenzhen Stock Exchange, Independent Director Record Filing Procedures

Issued: May 20 2005
Effective: as of date of issue
Interpreting authority: Shenzhen Stock Exchange

Main contents: The Shenzhen Stock Exchange shall carry out examination and verification of the qualifications and independence of independent directors (Article 2). The Stock Exchange is particularly concerned with candidates for independent directors: (1) who have been frequently absent from, or frequently failed to attend in person, board meetings during their previous term as independent directors; (2) who have failed to express independent director opinions in accordance with stipulations, or whose independent opinions expressed were proved to be distinctly deviating from the truth; (3) who have been subject to administrative penalties by the China Securities Regulatory Commission within the most recent three years; (4) who have been publicly censured or criticized by a stock exchange for the most recent three years; (5) who are concurrently assuming major duties in at least five companies; (6) who are over 70 years of age, and are concurrently assuming duties in various companies, institutions or social organizations; and (7) other circumstances that affect the good faith, diligence and independence in performing duties of independent directors (Article 3). Where the Stock Exchange deems an independent director candidate to be in violation of the circumstances listed in the Establishment of Independent Director Systems by Listed Companies Guiding Opinion (Guiding Opinion) or Article 3 of the Procedures, the Stock Exchange may issue a letter of concern on the qualifications of independent directors to the listed company. The listed company shall disclose the opinions of concerns raised by the Stock Exchange five trading days prior to the shareholders' general meeting. When electing independent directors in the shareholders' general meeting, the listed company shall elaborate on whether the Stock Exchange has raised any concerns on the candidates (Article 8). Where an independent director candidate is in violation of the circumstances listed in the Guiding Opinion or Article 3 of the Procedures and the case is serious, the Stock Exchange may raise objections to candidate's qualifications. The board of directors may not submit the name of the person as a candidate for independent directors to the shareholders' general meetings for election (Article 9).
Related legislation: Establishment of Independent Director Systems by Listed Companies Guiding Opinion, Aug 16 2001, CLP 2001 No.8 p5 and Shenzhen Stock Exchange, Share Listing Rules (Amended in 2004)