The Shanghai Stock Exchange (SSE) recently revised and released seven self-regulatory rules, including the Rules for Listing of Stocks and Guidelines for Standardized Operation for the main board and the STAR Market. This revision aims to effectively implement the fundamental principles outlined in Opinions on the Reform of the Independent Director System (hereinafter referred to as the Opinions), issued by the General Office of the State Council, and align with the relevant requirements of the China Securities Regulatory Commission (CSRC)'s Measures for the Management of Independent Directors of Listed Companies (hereinafter referred to as the Measures), in order to ensure the smooth implementation of various reform measures and promote the formation of a more scientific and reasonable independent director system. Throughout the process of revising the rules, the SSE adhered closely to the requirements of the reform, conducting thorough research and planning, while also actively seeking input from stakeholders. Simultaneously, preparations were made across various aspects of the business and technology to ensure smooth progress of the reform.

I. Revising and improving supporting business rules. The Opinions and Measures made adjustments and reconstructions to the independent director system in terms of role positioning, performance methods, duty appointment management, appointment systems, performance support, supervision and management, responsibility constraint mechanism, internal and external supervision systems, etc., and the Exchange rules need to be updated accordingly. The SSE's revision of the self-regulatory rules integrated basic business rules, business guidelines, and business guides, reflecting the latest requirements for independent director reform and aligning with higher-level rules. Furthermore, based on the practice of corporate governance and information disclosure of listed companies, additional clarification on requirements such as independence and qualifications, nomination avoidance, and the manner in which independent directors perform their duties was provided to facilitate compliance for listed companies.

II. Making preparations for the independent director qualification review. This reform requires the Exchange to effectively fulfill the responsibility of reviewing independent director qualifications. To this end, the SSE has improved the review arrangements from multiple perspectives. In terms of mechanisms, the primary responsibility for the appointment and management of independent directors by listed companies and relevant parties was emphasized throughout the entire chain, including nominations, elections, and dismissals. In terms of procedures, processes were streamlined and internal systems were improved, and restriction and supervision was enhanced to ensure a prudent and compliant review process. In terms of technology, the companies' business management system was optimized, and the independent director qualification review module was updated and launched online to ensure traceability in the review process and achieve information sharing with the China Association for Public Companies.

III. Helping listed companies and independent director community accurately grasp reform requirements. In accordance with the requirements of the supervision transformation of listed companies, efforts will be made in promoting a "three open-door" policy and continuously carrying forward the spirit of "shopkeeper". In terms of training preparation, the SSE has done all preparatory work in detail to effectively promote the spirit of the reform and provide training to help independent directors adapt quickly to the reform changes. Currently, relevant courses are ready and will be launched successively in the coming days. In terms of communication channels, a hotline and email service for independent director consultation has been established, continuously facilitating communication and contact between independent directors and the Exchange, as well as providing convenience for policy inquiries and feedback.

IV. Effectively fulfilling self-regulatory responsibilities. This reform imposes higher requirements on the Exchange's performance of duty. Therefore, the SSE will strengthen daily supervision from the following four aspects. First, the Exchange will implement strict supervision of independent directors' performance of duty. High attention will be paid to the performance of independent directors to ensure compliance with behavior norms, such as the number of concurrent positions, working hours, work records, and regular reporting. Second, ongoing efforts will be made to ensure the support from listed companies. Listed companies will be urged to provide necessary conditions for independent directors, avoiding situations where the listed company and related entities hinder or obstruct the performance of duty by independent directors. Third, establishing a scientific and rigorous disciplinary system for independent directors. Based on the performance of independent directors, reasonable distinctions will be made to ensure fair penalties and accurate accountability. Last, collaboration with the CSRC's regional offices will be strengthened to ensure that the independent directors fulfill their responsibilities.

Moving forward, the SSE will strengthen daily supervision and provide support services in accordance with the unified deployment of the CSRC, thereby promoting the proper functioning of independent directors and ensuring the effectiveness of the reform.

Notice on Issuing Rules of Shanghai Stock Exchange for Listing of Stocks (Revised in August 2023)

Notice on Issuing Rules of Shanghai Stock Exchange for Stock Listing on the STAR Market (Revised in August 2023)

Notice on Issuing Guidelines No. 1 of the Shanghai Stock Exchange for Self-regulation of Listed Companies — Standardized Operation (Revised in August 2023)

Notice on Issuing Guidelines No. 1 of the STAR Market of Shanghai Stock Exchange for Self-regulation of Listed Companies — Standardized Operation (Revised in August 2023)