Shenzhen Senior Technology Material Co., Ltd. (SENIOR MATERIAL, 06067) has released the “Terms of Reference of the Remuneration and Appraisal Committee of the Board of Directors,” outlining a comprehensive governance framework that will take effect upon the company’s H-share issuance and listing on The Stock Exchange of Hong Kong Limited.

Key Provisions

1. Establishment and Mandate • The Remuneration and Appraisal Committee, created under the Board of Directors, will oversee performance assessments and remuneration policies for directors and senior management. • The committee reports directly to the Board and operates in accordance with the PRC Company Law, the China Securities Regulatory Commission’s regulations, the Hong Kong Listing Rules, and the company’s Articles of Association.

2. Composition and Tenure • The committee will consist of three directors, with independent directors forming the majority (two out of three). • A committee chairman—required to be an independent director—will lead the body. • Members serve concurrent terms with the Board and may be re-elected. Any vacancy must be filled promptly to maintain compliance with regulatory requirements.

3. Core Responsibilities • Formulate and apply appraisal standards for directors and senior executives. • Review and approve management remuneration proposals, factoring in market benchmarks, time commitments, and intra-group employment conditions. • Develop and monitor remuneration policies, including claw-back mechanisms, equity incentive schemes, and employee share ownership plans. • Approve compensation for loss or termination of office and dismissal for misconduct, ensuring alignment with contractual terms and fairness to the company. • Safeguard against conflicts of interest by barring directors or their associates from deciding their own remuneration. • Provide recommendations to the Board on overall remuneration structures and share-based incentives, including arrangements for executives involved in subsidiary spin-offs.

4. Decision-Making and Procedures • Meetings require at least two-thirds attendance; each member holds one vote, with resolutions passing by a simple majority. • Independent directors must attend in person; if unavailable, they may delegate another independent director in writing. • The committee may convene on-site or via video/teleconference and can engage external advisors at the company’s expense. • Minutes will be archived for ten years, and resolutions will be reported to the Board in writing.

5. Implementation and Oversight • Director remuneration plans endorsed by the committee must be approved by the Board and then by shareholders. Senior management remuneration requires Board approval only. • The Board retains veto power over any remuneration proposal deemed detrimental to shareholder interests. • All members are bound by confidentiality regarding committee discussions.

6. Effective Date and Amendments • These terms become operative upon SENIOR MATERIAL’s H-share issuance and listing in Hong Kong. • Future adjustments will align with evolving PRC laws, Hong Kong Listing Rules, or amendments to the company’s Articles of Association.

By institutionalizing clear governance mechanisms for remuneration and performance evaluation, SENIOR MATERIAL aims to enhance transparency and align management incentives with shareholder interests ahead of its planned H-share debut.