Fawer Co., Ltd. (000030): Beijing King & Wood Mallesons’ Legal Opinion on Matters Related to Fawer Automotive Parts Co., Ltd.’s Cancellation of Part of the Granted But Not Yet Exercised Stock Options – CFi.CN China Finance Network

Original title: Fawer Co., Ltd.: Beijing King & Wood Mallesons’ Legal Opinion on Matters Related to Fawer Auto Parts Co., Ltd.’s Cancellation of Part of the Granted But Not Yet Exercised Stock Options

Beijing King & Wood Mallesons Law Firm’s legal opinion on matters related to the cancellation of some of the granted but not yet exercised stock options by Fawer Automotive Parts Co., Ltd. To: Beijing King & Wood Mallesons Law Firm of Fawer Automotive Parts Co., Ltd. (hereinafter referred to as King & Wood Mallesons or our firm) accepted the entrustment of Fawer Automotive Parts Co., Ltd. (hereinafter referred to as Fawer Automotive Parts Co., Ltd. (hereinafter referred to as Fawer Co., Ltd. or the company)) as the special legal counsel for its 2021 stock option incentive plan (hereinafter referred to as this incentive plan). According to the Company Law of the People’s Republic of China (hereinafter referred to as the “Company Law”), the Securities Law of the People’s Republic of China (hereinafter referred to as the “Securities Law”), the “Measures for the Administration of Equity Incentives of Listed Companies” (hereinafter referred to as the “Management Measures”), The “Trial Measures for the Implementation of Equity Incentives by State-controlled Listed Companies (Domestic)” (hereinafter referred to as the “Trial Measures”) and other laws, administrative regulations, departmental rules and normative documents (hereinafter referred to as the laws and regulations), as well as the “Fawer Auto Parts Co., Ltd. According to the provisions of the Articles of Association of the Company (hereinafter referred to as the “Articles of Association”) and the 2021 Stock Option Incentive Plan (Draft) of Fawer Automotive Parts Co., Ltd. (hereinafter referred to as the “Incentive Plan (Draft)”), in respect of the This legal opinion is issued regarding matters related to the cancellation of the stock options exercisable by 97 incentive objects corresponding to the third exercise period (hereinafter referred to as this cancellation) because the performance appraisal conditions at the company level during the three exercise periods were not all met. In order to issue this legal opinion, King & Wood Mallesons and the handling lawyers reviewed the relevant facts and procedures involved in this cancellation in accordance with current laws, administrative regulations, departmental rules and other normative documents, and in accordance with the recognized business standards and ethics of the Chinese lawyer industry. The legal matters were checked, and the documents it considered necessary to be consulted were reviewed, including relevant records, information, and explanations provided by Fawer Co., Ltd., and the relevant facts and legal matters involved in this cancellation were checked. This legal opinion is based on facts that have occurred or existed before the date of issuance and within the territory of the People’s Republic of China (for the purpose of this legal opinion, excluding the Hong Kong Special Administrative Region of China, the Macao Special Administrative Region of China and Taiwan Region of China, hereinafter referred to as China It expresses legal opinions based on the relevant provisions of the current laws, administrative regulations, departmental rules and other normative documents within the country) and does not express legal opinions based on any laws outside China. The issuance of this legal opinion has been guaranteed by Fawer Holdings as follows:
(1) It has provided the original written materials, duplicate materials, photocopied materials, explanations, confirmation letters and certifications required by King & Wood Mallesons and the handling lawyer for the issuance of this legal opinion;
(2) All documents and materials and all statements and explanations made by it to King & Wood Mallesons are true, accurate, complete and effective, and there are no concealments, falsehoods or major omissions. If the documents and materials are copies or photocopies, their Be consistent and consistent with the original.

King & Wood Mallesons only expresses opinions on the legal issues related to the cancellation of Fawer Holdings, and does not express opinions on the accounting, financial and other non-legal professional matters involved in the cancellation. The citation of certain data and conclusions in relevant accounting reports, audit reports and asset valuation reports in this legal opinion does not mean that King & Wood Mallesons makes any express or implied guarantee as to the authenticity and accuracy of these data and conclusions. King & Wood Mallesons is not suitably qualified to verify and evaluate such data.

King & Wood Mallesons and its handling lawyers strictly performed their statutory duties in accordance with the Securities Law, the Administrative Measures for Law Firms Engaging in Securities Legal Business, and the Rules for the Practice of Securities Legal Business of Law Firms (Trial), and followed the principles of diligence, responsibility and honesty. In accordance with the principle of credibility, sufficient verification has been carried out to ensure that the facts identified in this legal opinion are true, accurate and complete, the concluding opinions expressed are legal and accurate, and there are no false records, misleading statements or major omissions, and the corresponding legal responsibility.

King & Wood Mallesons agrees that the company will regard this legal opinion as one of the necessary documents for Fawer Co., Ltd. to implement this cancellation, and submit it together with other materials to the Shenzhen Stock Exchange for announcement, and assume the corresponding legal liability for the legal opinions issued.

This legal opinion is only for the purpose of implementing this cancellation and shall not be used for any other purpose. King & Wood Mallesons agrees that Fawer Co., Ltd. may quote the relevant contents of this legal opinion in the relevant documents produced by it for the purpose of this cancellation, but the citation shall not lead to legal ambiguity or misinterpretation. King & Wood Mallesons shall have the right to modify the above-mentioned relevant documents. The corresponding content is reviewed and confirmed again.

King & Wood Mallesons has issued the following legal opinions in accordance with the business standards, ethics and diligence recognized by the legal industry:
1. Approval and authorization of this cancellation
On April 13, 2024, the company held the second meeting of 2024 of the Remuneration and Assessment Committee of the 10th Board of Directors via communication, and reviewed and approved the “Exercise conditions for the third exercise period of the company’s 2021 stock option incentive plan have not been met”. and cancellation of relevant stock options” and agreed to submit it to the 33rd meeting of the company’s tenth board of directors for review.

On April 15, 2024, the company held the first special meeting of independent directors in 2024 via communication, and reviewed and approved the “Regarding the failure to meet the exercise conditions during the third exercise period of the company’s 2021 stock option incentive plan and the cancellation of related stock options” “Proposal”, it believes that the cancellation of stock options corresponding to the third exercise period of the 2021 stock option incentive plan that has been granted but has not yet been exercised by the incentive objects complies with the “Administrative Measures” and other laws, regulations, normative documents and the ” Incentive Plan (Draft)” and “Fawer Auto Parts Co., Ltd. 2021 Stock Option Incentive Plan Implementation Assessment and Management Measures” are relevant provisions. The reasons, quantities, and procedures for canceling stock options are legal and compliant. This matter will not affect the company’s ongoing operations, nor will it harm the interests of the company and all shareholders. It is agreed that the company will cancel the stock options that do not meet the exercise conditions during the third exercise period of the 2021 stock option incentive plan.

According to the authorization of the second extraordinary general meeting of shareholders in 2021, Fawer Holdings held the 33rd meeting of the 10th board of directors on April 18, 2024, and reviewed and approved the “About the Third Action of the Company’s 2021 Stock Option Incentive Plan” “Proposal on Failure to Meet Exercise Conditions and Cancellation of Related Stock Options During the Option Period”, it was agreed to cancel 10,863,300 stock options exercisable by all 97 incentive objects corresponding to the third exercise period.

On April 18, 2024, the 20th meeting of the company’s 10th Board of Supervisors reviewed and approved the “Proposal on Failure to Meet the Exercise Conditions and Cancellation of Related Stock Options in the Third Exercise Period of the Company’s 2021 Stock Option Incentive Plan.” The Board of Supervisors agreed to this cancellation. It believed that this cancellation complied with the “Management Measures” and other laws and regulations, as well as the relevant provisions of the “Incentive Plan (Draft)”, and will not affect the company’s continued operations, nor will it harm the interests of the company and all shareholders.

In summary, King & Wood Mallesons believes that as of the date of this legal opinion, the cancellation of Fawer shares has obtained the necessary approvals and authorizations at this stage, and is in compliance with the Trial Measures, Management Measures, Incentive Plan (Draft) and Company the relevant provisions of the Articles of Association.

2. Basic situation of this cancellation
(1) Reasons for this cancellation
According to the provisions of “Chapter 8 Conditions for Entitlement and Exercise of Incentive Objects” of the “Incentive Plan (Draft)”, “II. Exercise Conditions of Stock Option” and “(3) Company-Level Performance Appraisal Requirements”, this incentive The performance assessment target for the third exercise period of the plan is “the return on net assets after deducting non-recurring gains and losses in 2023 shall not be lower than the 75th percentile value of the benchmark enterprise for the current year, and shall not be lower than 10.55%;” and it is also stipulated that “If the stock option fails the annual assessment corresponding to the assessment, the stock option shares planned to be exercised by the incentive object in that year will not be exercisable and will be canceled by the company.”

According to the “Audit Report” (XYZH/2024CCAA2B0035) issued by ShineWing Accounting Firm (Special General Partnership) on April 18, 2023 and the explanation issued by Fawer Shares, and after the remuneration and assessment of the tenth board of directors of Fawer Shares The committee reviewed and confirmed that the return on net assets of Fawer shares after deducting non-recurring gains and losses in 2023 was 6.46%, which was lower than the 10.55% stipulated in the “Incentive Plan (Draft)”, so the third line of the company’s 2021 stock option incentive plan Not all performance evaluation conditions at the company level during the option period have been met. Therefore, Fawer Shares should cancel all options in the third exercise period.

(2) The number of cancellations this time
According to the provisions of “V. Exercise Arrangements” in “Chapter 6 Time Arrangement of the Plan” in the “Incentive Plan (Draft)”, the number of exercisable options in the third exercise period of this incentive plan accounts for 20% of the number of options granted. . According to the resolution of the 35th meeting of the 9th board of directors of Fawer Co., Ltd., the announcement of the completion of relevant option grant and grant registration disclosed by Fawer Co., Ltd., and the resolution of the 33rd meeting of the tenth session of the board of directors of Fawer Co., Ltd., Fawer Co., Ltd. Shares were actually granted to 97 people, with a total of 54.3165 million shares granted, so the number of options canceled this time was 10,863,300.

In summary, King & Wood Mallesons believes that the reasons and amounts for the cancellation of Fawer shares comply with the relevant provisions of the “Trial Measures”, “Management Measures” and “Incentive Plan (Draft)”.

3. Conclusions
In summary, King & Wood Mallesons believes that, as of the date of issuance of this legal opinion, this cancellation has obtained the necessary approvals and authorizations at this stage and is in compliance with the Trial Measures, Management Measures, Incentive Plan (Draft) and Articles of Association. “Relevant provisions of “; the reason and amount of this cancellation are in compliance with the relevant provisions of the “Trial Measures”, “Management Measures” and “Incentive Plan (Draft)”.

This legal opinion is made in triplicate.

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(This page has no text, but is the signed and sealed page of “Beijing King & Wood Mallesons’ Legal Opinion on Matters Related to the Cancellation of Part of the Granted but Not Yet Exercised Stock Options by Fawer Automotive Parts Co., Ltd.”)

Lawyer in charge of Beijing King & Wood Mallesons:
Zeng Tao

Gong Mulong

The person in charge:
Wang Ling

March 2024

China Finance Network