Shenzhen SDMC Technology Co., Ltd. (SDMC) released the full Terms of Reference for its Board-level Remuneration and Appraisal Committee, approved at the 14th meeting of the sixth Board session on 30 April 2025 and slated to take effect upon the company’s H-share listing on The Stock Exchange of Hong Kong Limited (HKEX).

Key highlights

1. Committee structure • The committee will comprise three directors, with independent non-executive directors forming the majority. • A committee chairman, who must be an independent non-executive director, will preside over meetings. • Members serve concurrent terms with the Board and may be re-elected.

2. Principal responsibilities • Formulate and review remuneration policies, performance-evaluation standards and incentive plans for directors and senior management, covering monetary and non-monetary components, pension rights and exit compensation. • Recommend individual remuneration packages for executive directors, non-executive directors and senior management, taking into account market benchmarks, role responsibilities and internal pay conditions. • Conduct annual performance appraisals for directors (excluding independent non-executive directors) and senior executives, and propose reward or penalty measures. • Review and approve compensation for loss or termination of office and oversee arrangements related to dismissal for misconduct. • Ensure no director or associate participates in decisions on his or her own remuneration. • Supervise the implementation of remuneration rules and review related policies periodically. • Examine and/or approve share-based incentive schemes in accordance with Chapter 17 of the HKEX Listing Rules.

3. Decision-making and meeting protocol • Regular meetings will be held at least once a year; extraordinary meetings require three-day notice. • A quorum requires two-thirds of committee members, and resolutions pass with a simple majority. Members with conflicts of interest must abstain. • The committee may engage external advisers at the company’s expense for professional opinions. • Detailed minutes must be kept for at least 10 years and key resolutions reported to the Board no later than the day after adoption.

4. Implementation and oversight • Remuneration plans for directors require Board approval and subsequent shareholder endorsement at a general meeting; senior management pay plans require Board approval. • The Board retains veto power over proposals that may prejudice shareholder interests. • The committee chair will attend the company’s annual general meeting to address shareholder queries related to remuneration governance.

The charter is aligned with the Company Law of the People’s Republic of China, the Trial Administrative Measures for Overseas Securities Offering and Listing by Domestic Companies, HKEX Listing Rules and SDMC’s Articles of Association. Its activation is contingent upon regulatory approval and the commencement of trading of SDMC’s H-shares in Hong Kong.