Lihexing (301013): Beijing King & Wood Mallesons (Guangzhou) Law Firm’s legal opinion on matters related to the invalidation of part of the restricted shares of Lihexing 2023 Restricted Stock Incentive Plan – CFi.CN China Finance Network

Original title: Lihexing: Beijing King & Wood Mallesons (Guangzhou) Law Firm’s legal opinion on matters related to the invalidation of some restricted stocks in the Lihexing 2023 Restricted Stock Incentive Plan

Beijing King & Wood Mallesons (Guangzhou) Law Firm’s legal opinion on matters related to the invalidation of some restricted stocks in the 2023 restricted stock incentive plan of Shenzhen Lihexing Co., Ltd. is addressed to: Shenzhen Lihexing Co., Ltd. Beijing King & Wood Mallesons ( Guangzhou) Law Firm (hereinafter referred to as the firm or King & Wood Mallesons) accepted the entrustment of Shenzhen Lihexing Co., Ltd. (hereinafter referred to as the company, the listed company or Lihexing) as the company’s 2023 restricted stock incentive plan (hereinafter referred to as the plan) , this incentive plan or this incentive plan), in accordance with 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”), China Securities The Supervision and Administration Commission (hereinafter referred to as the China Securities Regulatory Commission) “Equity Incentive Management Measures for Listed Companies” (hereinafter referred to as the “Management Measures”), Shenzhen Stock Exchange (hereinafter referred to as the Shenzhen Stock Exchange) “Shenzhen Stock Exchange GEM Stock Listing Rules (2023) “Revised in August)” (hereinafter referred to as the “Listing Rules”), “Self-regulatory Guidelines for Companies Listed on the Growth Enterprise Market of the Shenzhen Stock Exchange No. 1 – Business Handling (Revised in December 2023)” (hereinafter referred to as the “Self-regulatory Guidelines”) and other laws, administrative regulations, departmental rules and other normative documents and the “Shenzhen Lihexing Co., Ltd. 2023 Restricted Stock Incentive Plan” (hereinafter referred to as the “Incentive Plan”), “Shenzhen Lihexing Co., Ltd. Articles of Association” ( (hereinafter referred to as the “Articles of Association”)), this legal opinion is issued on the relevant matters involved in the invalidation of the restricted stocks that have been granted and have not vested in the company’s incentive plan (hereinafter referred to as the invalidation). In order to issue this legal opinion, King & Wood Mallesons collected relevant evidence and materials in accordance with the “Administrative Measures for Law Firms Engaging in Securities Legal Business” and the “Rules for Law Firms Engaging in Securities Legal Business (Trial)” and other relevant regulations, and reviewed the legal documents required by the regulations. documents to be reviewed and other documents that King & Wood Mallesons considers necessary to review. The company guarantees that it has provided the original written materials, duplicate materials, copied materials, confirmation letters or certificates required by King & Wood Mallesons to issue this legal opinion, and that the documents and materials provided to King & Wood Mallesons are true, accurate, complete and valid. , there are no concealments, falsehoods or major omissions, and if the documents are copies or photocopies, on the basis that they are consistent and consistent with the originals, King & Wood Mallesons has reasonably and fully used procedures including but not limited to written review and online verification. The relevant facts were verified and confirmed through inspection, review and other methods.

King & Wood Mallesons and its handling lawyers comply with the provisions of the Securities Law, the Administrative Measures for Law Firms Engaging in Securities Legal Business, the Rules for the Practice of Securities Legal Business of Law Firms (Trial), and other provisions that have occurred or existed before the date of issuance of this legal opinion. facts, strictly performed legal duties, followed the principles of diligence and good faith, and conducted sufficient verification and verification to ensure that the facts identified in this legal opinion are true, accurate, and complete, and the concluding opinions expressed are legal and accurate. There are no false records, misleading statements or major omissions, and corresponding legal liability shall be borne.

King & Wood Mallesons only expresses opinions on legal issues related to the company’s incentive plan, and only based on the opinions within the territory of the People’s Republic of China (hereinafter referred to as the territory of China, for the purpose of this legal opinion, excluding the Hong Kong Special Administrative Region of China, the Macau Special Administrative Region of China and the People’s Republic of China). It expresses legal opinions based on the current laws and regulations of Taiwan Region) and does not express legal opinions based on any laws outside China. King & Wood Mallesons does not express any opinion on the rationality of issues such as the value of Lihexing stock, assessment standards, or non-legal professional matters such as accounting and finance involved in the company’s incentive plan. When quoting relevant financial data or conclusions in this legal opinion, King & Wood Mallesons has performed the necessary duties of care, but such citations should not be regarded as any express representation by King & Wood Mallesons of the authenticity and accuracy of these data and conclusions. or implied warranties.

For facts that are crucial to the issuance of this legal opinion but cannot be supported by independent evidence, King & Wood Mallesons relies on explanations or supporting documents issued by relevant government departments, Li Hexing or other relevant units and individuals to issue legal opinions.

King & Wood Mallesons agrees that the company will regard this legal opinion as one of the necessary documents for its invalidation, submit it to the Shenzhen Stock Exchange together with other materials for announcement, and bear corresponding legal liability for the legal opinions issued in accordance with the law.

This legal opinion is only used by the company for the purpose of implementing this invalidation and may not be used for any other purpose. King & Wood Mallesons agrees that the company can quote the relevant content of this legal opinion in the relevant documents it produces for this invalidation, but when the company makes the above quotations, the quotation shall not cause legal ambiguity or misinterpretation. King & Wood Mallesons has the right to review and confirm the corresponding content of the above-mentioned relevant documents again.

In accordance with the requirements of the Company Law, Securities Law and other relevant laws and regulations, as well as the relevant provisions of the China Securities Regulatory Commission, and in accordance with the business standards, ethics and diligence and diligence recognized by the lawyer industry, King & Wood Mallesons hereby issues the following legal opinions: 1. This time Main implementation details of the incentive plan
(1) On April 14, 2023, the Remuneration and Assessment Committee of the company’s board of directors formulated and reviewed the “Proposal on the 2023 Restricted Stock Incentive Plan (Draft) of Shenzhen Lihexing Co., Ltd.” and its summary and the “Proposal on < Proposal on the Implementation Assessment and Management Measures for the 2023 Restricted Stock Incentive Plan of Shenzhen Lihexing Co., Ltd. and submitted it to the 24th meeting of the company’s third board of directors for review.

(2) On April 26, 2023, the 24th meeting of the company’s third board of directors reviewed and approved the “Proposal on the 2023 Restricted Stock Incentive Plan (Draft) of Shenzhen Lihexing Co., Ltd.” and its summary “Proposal on the Implementation Assessment and Management Measures for the 2023 Restricted Stock Incentive Plan of Shenzhen Lihexing Co., Ltd.” “Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters Related to the Company’s 2023 Restricted Stock Incentive Plan”, etc., related Directors Lin Yipan, Huang Yueming and Pan Hongquan abstained from voting on these proposals.

(3) On April 26, 2023, the company’s independent directors reviewed the “Proposal on the 2023 Restricted Stock Incentive Plan (Draft) of Shenzhen Lihexing Co., Ltd.” and its summary and the “Proposal on Shenzhen Lihexing Co., Ltd. The company issued an independent opinion on the “Proposal on the Implementation Assessment and Management Measures for the Company’s 2023 Restricted Stock Incentive Plan”.

(4) On April 26, 2023, the 15th meeting of the company’s third board of supervisors reviewed and approved the “Proposal on the 2023 Restricted Stock Incentive Plan (Draft) of Shenzhen Lihexing Co., Ltd.” and its summary. “Proposal on the Measures for the Implementation Assessment and Management of the 2023 Restricted Stock Incentive Plan of Shenzhen Lihexing Co., Ltd.” “Proposal on Verifying the Company’s “List of Initial Granted Incentive Objects of the 2023 Restricted Stock Incentive Plan”.

(5) On April 27, 2023, the company disclosed the “Notice of Shenzhen Lihexing Co., Ltd. on convening the 2022 Annual General Meeting of Shareholders” on the Shenzhen Stock Exchange website. On the same day, the company announced the “Report on Public Solicitation of Proxy Voting Rights for Independent Directors of Shenzhen Lihexing Co., Ltd.” on the website of the Shenzhen Stock Exchange. Mr. Liang Qingli, the company’s independent director, solicited votes from all shareholders of the company on the relevant proposals to be considered at the 2022 Annual General Meeting of Shareholders.

(6) On April 28, 2023, the company announced the “List of Incentive Objects First Granted to the 2023 Restricted Stock Incentive Plan of Shenzhen Lihexing Co., Ltd.” through an internal list. The names and positions of the above incentive objects are in the company. An internal publicity was carried out, and the list publicity period is 13 days, from April 28, 2023 to May 10, 2023. According to the company’s announcement documents disclosed on the Shenzhen Stock Exchange website, as of the expiration of the publicity period, the company’s board of supervisors has not received any objections to the proposed incentives.

(7) On May 11, 2023, the company disclosed the “Explanation on the Verification Opinions and Publicity of the Supervisory Board of Shenzhen Lihexing Co., Ltd. on the List of First Granted Incentive Objects of the Company’s 2023 Restricted Stock Incentive Plan” on the Shenzhen Stock Exchange website. The company The Board of Supervisors believes that “the first-time incentive objects granted under this incentive plan all comply with the conditions stipulated in relevant laws, regulations and normative documents, and meet the scope of incentive objects stipulated in this incentive plan. They are the subject qualifications for the first-time award of incentive objects under this incentive plan.” Legal and valid.”
(8) The company has conducted a self-examination on the insider information of the incentive plan regarding the purchase and sale of the company’s stocks and their derivatives within 6 months before the announcement of the “Incentive Plan (Draft)”. The company inquired from China Securities Depository and Clearing Co., Ltd. Shenzhen Branch (hereinafter referred to as CSDC) about the insider information of this incentive plan (including the first incentive recipients) within six months before the public disclosure of the draft of this incentive plan (i.e. The situation of buying and selling company stocks from October 26, 2022 to April 26, 2023 (hereinafter referred to as the “self-examination period”). According to the “Inquiry Certificate of Shareholdings and Share Changes of Information Disclosure Obligors” issued by China Securities Regulatory Commission on April 28, 2023, “Self-examination Report on Shareholding Changes and Insider Information on the Trading of Company Stocks” (hereinafter referred to as “Self-examination”) Report”), during the self-examination period, 13 incentive targets traded the company’s stocks during the self-examination period. The specific circumstances are: (1) 3 incentive targets made the company’s first public disclosure after registering as insiders. There was trading of company stocks before this incentive plan. The “Self-examination Report” disclosed: “The company has communicated with the above three incentive recipients and confirmed that when buying and selling the company’s stocks, they made independent investment decisions based on the stock secondary market conditions, market public information and personal judgment. There is no subjective intention to use the inside information of this incentive plan for stock trading to make profits. There is no situation of using the specific plan elements of this incentive plan and other insider information to conduct insider trading in the relevant stock transactions. During the self-examination period, it did not disclose any information to any person. According to the principle of prudence, the company has decided to disqualify the above three incentive targets from participating in the first grant of this incentive plan and reduce the incentives that the company intends to provide to the three persons involved. 150,000 restricted shares granted by the target.”
(2) There are also other 10 cases where the company’s stock trading records were recorded during the self-examination period. “Self-examination Report Disclosure”: “He Meihua (financial director, incentive recipient), Hou Weifeng (chairman of the board of supervisors), Wu Yongchao (supervisor), and Fang Na (supervisor) all reduced their holdings of the company’s stocks through centralized bidding. For details, see The “Announcement on the Implementation of the Reduction of Shareholdings by Supervisors and Senior Management Personnel” disclosed by the company on the cninfo.com (http://www.cninfo.com.cn) on December 7, 2022 (announcement number: 2022-081), The “Announcement on the Implementation of Supervisors’ Share Reduction” disclosed on December 30, 2022/January 5, 2023/March 20, 2023 (Announcement No.: 2022-084/2023-002/2023-012), the The shareholding reductions of the four company supervisors or senior managers have fulfilled the necessary information disclosure obligations and are consistent with their previously disclosed shareholding reduction plans.

After the company communicated with the above 10 verification subjects, it was confirmed that when buying and selling the company’s stocks, they made independent investment decisions based on the company’s stock secondary market conditions, market public information and personal judgment, and they bought and sold the company during the self-examination period. At the time of issuing the shares, the company had not yet planned the matters related to this incentive plan or it had not learned the inside information of the company’s planning of this incentive plan, nor had any insider disclosed the inside information of this incentive plan to it. There was no use of inside information. Information is traded. ”
(9) On May 17, 2023, the company held the 2022 Annual General Meeting of Shareholders. The meeting reviewed and approved the “Proposal on the 2023 Restricted Stock Incentive Plan (Draft) of Shenzhen Lihexing Co., Ltd.” and its summary. Regarding the “Proposal on the Implementation Assessment and Management Measures for the 2023 Restricted Stock Incentive Plan of Shenzhen Lihexing Co., Ltd.” and the “Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters Related to the Company’s 2023 Restricted Stock Incentive Plan”, related shareholders avoided vote.

(10) On May 17, 2023, the company held the 25th meeting of the third board of directors, and reviewed and approved the “Proposal on Adjusting the List of Incentive Objects and the Number of Rights Granted for the First Time in the 2023 Restricted Stock Incentive Plan” and “About “Proposal to Grant Restricted Stocks to the Incentive Objects of the 2023 Restricted Stock Incentive Plan for the First Time”, related directors Lin Yipan, Huang Yueming, and Pan Hongquan avoided voting on these proposals. On the same day, the company’s independent directors issued a “See You in Shenzhen”, agreeing to the company’s implementation of the adjustment of this incentive plan and the first grant of the 2023 restricted stock incentive plan.

(11) On May 17, 2023, the 16th meeting of the company’s third board of supervisors reviewed and approved the “Proposal on Adjusting the List of Incentive Objects and the Number of Rights Granted for the First Time in the 2023 Restricted Stock Incentive Plan” and “On the Adjustment to the 2023 Restricted Stock Incentive Plan” “Proposal on the First Grant of Restricted Stocks to Incentive Objects of the Restricted Stock Incentive Plan of 2020”, which held that: the grant conditions stipulated in the company’s incentive plan have been met. The Board of Supervisors agreed that the first grant date of the company’s incentive plan will be May 17, 2023, and agreed to grant 4.24 million Class II restricted shares to 162 incentive targets who meet the grant conditions.

2. Approval and authorization of this cancellation
(1) Approvals and authorizations that have been fulfilled
1. On April 12, 2024, the first meeting of the Remuneration and Assessment Committee of the fourth session of the Board of Directors of the company reviewed and approved the “Proposal on Voiding Part of the Restricted Stocks that have been granted but have not yet vested”. Related committee member Huang Yueming has abstained from voting on the motion.

2. According to the authorization of the company’s 2022 annual general meeting of shareholders, on April 23, 2024, the company held the seventh meeting of the fourth board of directors, and reviewed and approved the “Proposal on the Voiding of the Partially Granted Restricted Stocks that have not yet vested”. The board of directors It is believed that: In view of the fact that some of the incentive objects initially awarded under the company’s 2023 restricted stock incentive plan lost their incentive qualifications due to resignation or serving as company supervisors, and the company’s performance level in 2023 did not meet the performance appraisal target conditions, the board of directors agreed to invalidate the company’s 2023 The first portion of the annual restricted stock incentive plan granted to the incentive objects has been granted 1.538 million shares of restricted stock that have not yet vested. Related directors Lin Yipan, Huang Yueming and Zou Gao have abstained from voting on the motion.

3. On April 23, 2024, the company held the sixth meeting of the fourth board of supervisors and reviewed the “Proposal on Voiding Part of the Restricted Stocks that have been granted but have not vested”. The Supervisory Board believed that the company will cancel the 2023 restricted stocks this time. The restricted shares that have been granted but not vested in the incentive plan are in compliance with the provisions of the “Equity Incentive Management Measures for Listed Companies” and the “Company’s 2023 Restricted Stock Incentive Plan (Draft)”, etc., and there is no harm to the interests of the company and shareholders, especially small and medium-sized shareholders. The situation, the content of the proposal and the approval process are legal and compliant. Since related supervisors Lai Chuankun and Wang Liujie abstained from voting on the proposal, the number of non-related supervisors is less than half of the total number of supervisors, and the proposal will be directly submitted to the company’s 2023 annual shareholders’ meeting for review.

(2) Approvals and authorizations that still need to be fulfilled
According to the relevant provisions of the “Administrative Measures”, “Articles of Association” and “Rules of Procedure of the Supervisory Board of Shenzhen Lihexing Co., Ltd.”, when the Board of Supervisors deliberated on the “Proposal on the Voiding of the Partially Granted Restricted Stocks that have not vested”, the number of non-related supervisors was insufficient. Half of the total number of members of the Supervisory Board, the Supervisory Board is unable to form a resolution, and the proposal still needs to be submitted to the company’s 2023 Annual General Meeting of Shareholders for review.

In summary, our firm believes that, as of the date of issuance of this legal opinion, the company has fulfilled the necessary approvals and authorizations at this stage for this invalidation, in compliance with the relevant provisions of the “Administration Measures” and the “Incentive Plan”, and the company still needs to fulfill The proposal reviewed by the Board of Supervisors, “The Proposal on the Voiding of the Partially Granted Restricted Stocks that Have Not Been Vested” mentioned in “(2) Approvals and Authorizations Remaining to Be Fulfilled” in “II. Approvals and Authorizations for This Voiding” of this legal opinion requires Submit it to the company’s general meeting of shareholders for review.

3. Basic content about this invalidation
(1) Part of the restricted stocks will be invalidated due to the resignation of the incentive recipients
According to the provisions of the “Incentive Plan”: “Incentive objects’ resignation includes voluntary resignation, resignation due to company layoffs, expiration of the labor contract/employment agreement without renewal, dismissal by the company due to personal fault, negotiation to terminate the labor contract or employment agreement , company dismissal, etc., the restricted stocks that have been granted to the incentive target but have not yet vested since the date of resignation shall not be vested and will become invalid.”
According to the resolutions provided by the company at the first meeting of the Remuneration and Assessment Committee of the fourth board of directors, the seventh meeting of the fourth board of directors, the sixth meeting of the fourth board of supervisors, the relevant employees’ resignation certificates, resignation application documents, and separation agreements and a written explanation issued by the company. Among the incentive objects granted for the first time under this incentive plan, 16 incentive objects are no longer eligible for incentives due to resignation. The total of 322,000 restricted stocks that have been granted but have not yet vested by these 16 incentive objects shall not be used. vested and invalidated.

(2) Some restricted stocks are invalidated because the incentive target serves as a supervisor of the company
According to the provisions of the “Incentive Plan”: “If the incentive target serves as the company’s supervisor, independent director or other position that cannot continue to participate in the company’s equity incentive plan, the restricted stock that has been granted and vested will not be processed; the restricted stock that has been granted but has not yet been The vested restricted stock shall not vest and shall become invalid.”
According to the resolutions of the first meeting of the Remuneration and Assessment Committee of the fourth session of the Board of Directors, the resolutions of the seventh meeting of the fourth session of the Board of Directors, the resolutions of the sixth meeting of the fourth session of the Supervisory Board, and the resolutions of the eighteenth meeting of the third session of the Supervisory Board provided by the company, 2023 According to the resolution of the first extraordinary general meeting of shareholders, the information disclosure document for the appointment of relevant supervisors and the written explanation issued by the company, 2 of the incentive objects granted for the first time by this incentive plan no longer have the incentive qualifications because they serve as supervisors of the company. A total of 58,000 restricted stocks that have been granted to incentive targets but have not yet vested shall not be vested and will become invalid.

(3) Some restricted stocks were invalidated due to the failure to achieve the company-level performance assessment targets in the first vesting period. According to the provisions of the “Incentive Plan”: “If the company’s current performance level does not meet the performance assessment target conditions, all incentive objects will be subject to the corresponding assessment year The restricted stocks planned to be vested shall not be vested and shall be treated as invalid.” According to the “Audit Report of Shenzhen Lihexing Co., Ltd.” issued by Daxin Accounting Firm (Special General Partnership) on April 23, 2024 (Daxin). Review the characters[2024]No. 5-00027), the resolution of the first meeting of the Remuneration and Assessment Committee of the fourth session of the Board of Directors, the resolution of the seventh meeting of the Company’s fourth session of the Board of Directors, the resolution of the sixth meeting of the Company’s fourth session of the Supervisory Board and the written explanation issued by the company, The company’s operating income in 2023 is 469.834 million yuan, which does not meet the first vesting period of the first-time granted restricted stock stipulated in the “Incentive Plan” corresponding to the annual performance assessment target of “2023 operating income of not less than 550 million yuan”. requirements, therefore, the initial grant of 1.158 million shares of restricted stock in the first vesting period was cancelled (corresponding to the 1.272 million shares of restricted stock in the first vesting period after deducting the aforementioned losses due to the resignation of 16 incentive targets and the appointment of 2 incentive targets as supervisors). The number of restricted stocks in the first vesting period corresponding to the loss of incentive qualifications shall be invalidated (114,000 shares). Together with the aforementioned 322,000 shares that were invalidated due to the resignation of the incentive target and the 58,000 restricted shares that were invalidated because the incentive target served as a supervisor, a total of 1.538 million restricted shares were invalidated this time.

In summary, the Exchange believes that the reasons and quantities for this cancellation are in compliance with the relevant provisions of the “Administrative Measures” and the “Incentive Plan”.

4. Conclusions
To sum up, we believe that as of the date of issuance of this legal opinion, the company has fulfilled the necessary approvals and authorizations at this stage for this invalidation, which is in compliance with the relevant provisions of the “Management Measures” and the “Incentive Plan”. The company still needs to To implement the resolution reviewed by the Board of Supervisors as described in “(2) Approvals and Authorizations Remaining to Be Fulfilled” in “II. Approvals and Authorizations for This Voiding” of this legal opinion, “Proposal on the Voiding of the Partially Granted Restricted Stocks that Have Not Been Vested” It needs to be submitted to the company’s shareholders’ meeting for review; the reason and quantity for this cancellation comply with the relevant provisions of the “Management Measures” and the “Incentive Plan”.

This legal opinion is made in triplicate.

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