Bank Of China (000982): Legal Opinion On Employee Stock Ownership Plan

Xing Ye Shu Zi (2021) no.283

To: Ningxia Zhongyin cashmere Co., Ltd

Ningxia Xingye law firm (hereinafter referred to as "the firm") has accepted the entrustment of Ningxia Zhongyin Cashmere Industry Co., Ltd. (hereinafter referred to as "BOC cashmere industry" or "the company") to appoint lawyers Liu Qingguo and Liu Ning as the special legal adviser for the implementation of the 2021 ESOP of Bank of China (hereinafter referred to as "the ESOP").

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), the guiding opinions on the pilot implementation of ESOP by listed companies issued by China Securities Regulatory Commission (hereinafter referred to as the Guiding Opinions), and Shenzhen Stock Exchange Guidelines for information disclosure of listed companies No. 4 - Employee Stock Ownership Plan (hereinafter referred to as "guidance No. 4") and other relevant laws and normative documents, and the articles of association of Ningxia Zhongyin cashmere Co., Ltd. (hereinafter referred to as the "articles of association") This legal opinion is hereby issued after verifying and verifying the relevant documents provided by BOC cashmere in accordance with the recognized professional standards, ethics and the spirit of diligence and due diligence.

With respect to the documents, materials and statements provided by the company, we and our lawyers have obtained the following assurance from the company: all signatures and seals on the documents are true; All original documents provided to us and our lawyers are true; Copies of all documents provided to us and our lawyers are consistent with their original copies; The facts stated in these documents are true, accurate and complete without omission and / or misleading.

In order to issue this legal opinion, our lawyer hereby makes the following statement:

(1) this legal opinion is issued in accordance with applicable Chinese laws, regulations and normative documents based on the facts that have occurred or existed before the date of issue of this legal opinion.

(2) our firm and our lawyers' understanding of the relevant facts involved in this legal opinion ultimately relies on the documents, information and statements provided by the company to us and our lawyers, and the company has guaranteed the authenticity, completeness and accuracy of the documents, information and statements provided by the company to us and our lawyers.

(3) we and our lawyers are satisfied that there are no false records, misleading statements and material omissions in this legal opinion.

(4) we and our lawyers agree to take the legal opinion as a necessary legal document for the company to implement the ESOP, and report it together with other materials, and are willing to bear corresponding legal liabilities for this legal opinion.

(5) our firm and our lawyers agree that the company shall quote the relevant contents of this legal opinion in the relevant documents prepared by the company for the implementation of the ESOP. However, the company shall not cause legal ambiguity or misinterpretation due to the above quotation. The ownership shall review and confirm the corresponding contents of the above-mentioned relevant documents again.

(6) this legal opinion is only for the company's implementation of the ESOP, and shall not be used for any other purpose without the written consent of the firm and our lawyers.

(7) the company has carefully read this legal opinion and confirmed that the factual parts quoted or quoted in this legal opinion are true, accurate and complete, and there is no false or misleading statement or conclusion.

The contents of this legal opinion are as follows:

I. the subject qualification of BOC cashmere to implement the ESOP

1. Bank of China cashmere industry was once known as Ningxia shengxuerong Co., Ltd. Ningxia shengxuerong Co., Ltd. is a joint stock limited company established by Ningxia shengxuerong International Group Co., Ltd. as the main sponsor on September 15, 1998. It was listed on the Shenzhen Stock Exchange in July 2000 with the stock code of 000982.

2. In October 2007, Ningxia shengxuerong Co., Ltd. passed the major assets reorganization. The controlling shareholder of the company was changed from the original "Ningxia shengxuerong International Group Co., Ltd." to "Ningxia Zhongyin cashmere International Group Co., Ltd." and the company name was changed to "Ningxia Zhongyin Cashmere Industry Co., Ltd." according to law.

3. On July 9, 2019, Yinchuan intermediate people's Court issued (2018) ning 01 Po Shen No. 29 civil ruling, ruling to accept the reorganization case of Ningxia Zhongyin cashmere Co., Ltd.

On November 13, 2019, Yinchuan intermediate people's Court issued (2019) ning01 Po 6-2 civil ruling, ruling to approve the reorganization plan of Ningxia Zhongyin cashmere Co., Ltd.

On December 26, 2019, Yinchuan intermediate people's Court issued (2019) ning01 Po No. 6-5 civil ruling according to law, ruling to confirm the implementation of the reorganization plan of Ningxia Zhongyin cashmere Co., Ltd.

Due to the implementation of the reorganization plan and the investor's equity adjustment plan, the registered capital of the company was changed from RMB 1805043279 to RMB 4261877053, and the controlling shareholder of the company was changed to Hengtian Jinshi Investment Management Co., Ltd. from December 24, 2019.

4. As of the date of issuance of this legal opinion, BOC has the business license issued by Ningxia Hui autonomous region market supervision and Administration Bureau on August 6, 2020. The basic information recorded is as follows:

Company name: Ningxia Zhongyin cashmere Co., Ltd

Unified social credit Code: 91640000227683862f

Type: joint stock limited company (listed)

Address: Lingwu ecological textile park (east of Jinger Road, north of south 2nd Ring Road, Lingwu City)

Legal representative: Li Xiangchun

Registered capital: 4261877053 yuan

Date of establishment: September 15, 1998

The business term is from September 15, 1998 to September 15, 2058

Business scope: development, design, production and sales of cashmere and its products, wool textiles, cotton textiles, blended fabrics of various fibers and other textiles; Sales of light industrial products and native animal products; Self supporting and acting as an agent for the import and export of other commodities and technologies except for 16 kinds of export commodities jointly operated by the state and 14 kinds of import commodities operated by the state approved companies; Operation of feed processing and "three to one compensation" business; Foreign trade and entrepot trade; Domestic trade (special examination and approval documents and licenses must be provided for the goods exclusively controlled by the state), warehousing business; Industrial investment (except for the projects that need permission and record according to law; it is not allowed to absorb public deposits and illegally raise funds); Investment consultation; Enterprise management consulting and service. (for projects that need to be approved according to law, business activities can only be carried out after being approved by relevant departments)

After verification, the company's office address is 15 / F, Longji building, Taikang street, Jinfeng District, Yinchuan City, Ningxia.

To sum up, our lawyers believe that as of the date of issuing this legal opinion, Bank of China cashmere is a listed company listed on the main board of Shenzhen Stock Exchange, and has survived effectively in accordance with the law. There is no need to terminate the situation stipulated by laws, regulations, normative documents and its articles of association, and has the subject qualification to implement the ESOP.

II. Legality and compliance of the ESOP

On September 8, 2021, Bank of China cashmere held the fifth meeting of the eighth board of directors, deliberated and passed the 2021 ESOP of Ningxia Zhongyin cashmere Co., Ltd

The "Employee Stock Ownership Plan (Draft)" of Ningxia Zhongyin cashmere Co., Ltd. in 2021 (Draft) (hereinafter referred to as "ESOP (Draft)" has been deliberated and approved by the board of directors of the company, and the contents of the ESOP (Draft) conform to the relevant provisions of the "guiding opinions", which are as follows:

1. According to the announcement documents disclosed by the company, as of the date of issuance of this legal opinion, the Bank of China cashmere industry has carried out the procedures in strict accordance with the provisions of laws and administrative regulations in the implementation of the ESOP, and has disclosed the information truthfully, accurately, completely and timely, and there is no insider trading, insider trading or insider trading by using the ESOP Securities fraud such as manipulation of the securities market is in line with the provisions of "compliance principle according to law" in part I (1) of the guiding opinions.

2. According to the employee stock ownership plan (Draft) and verified by our lawyer, the ESOP follows the principle of the company's independent decision and employees' voluntary participation, and there is no case of forcing employees to participate in the ESOP by means of apportionment and forced distribution, which is in line with the "principle of voluntary participation" in part I (II) of the guiding opinions.

3. According to the employee stock ownership plan (Draft), the holders of the ESOP are responsible for their own profits and losses, bear their own risks, and have equal rights and interests with other investors, which is in line with the "risk bearing principle" in Section 1 (3) of the guiding opinions.

4. According to the employee stock ownership plan (Draft), all the participants of the ESOP work in the company (or its wholly-owned and controlled subsidiary / sub subsidiary company), receive remuneration, sign labor contracts or be employed by the company. The total number of employees to participate in the ESOP subscription is not more than 35, and the specific number of participants is determined according to the actual situation, which is in line with the second part of the guiding opinions （4） Section 2.

5. According to the "Employee Stock Ownership Plan (Draft)", the funds of the ESOP come from the legitimate salary of employees and self raised funds obtained by other means permitted by laws and administrative regulations, which is in line with the provisions on the source of funds of the employee stock holding plan (item 1) in part II (5) of the guiding opinions.

6. According to the employee stock ownership plan (Draft), the stock of this ESOP comes from the shares repurchased by the company according to law, which is in line with the provisions on the stock source of ESOP in Item 2 (5) of Part II of the guiding opinions.

7. According to the ESOP (Draft), the duration of the ESOP is 36 months. The lock-in period of BOC cashmere shares obtained by the ESOP will be released after 12 months from the date of transfer to the ESOP, which is in line with the provisions on the ESOP period specified in Item 1, Section 2 (6) of the guidance.

8. According to the employee stock ownership plan (Draft) and verified by our lawyers, the total number of shares held by the ESOP does not exceed 27.6 million shares, which does not exceed 10% of the total share capital of BOC cashmere. The total number of shares corresponding to individual employee's equity does not exceed 1% of the total equity of BOC cashmere, which is in line with part II (6) of the guidance Item 2 of the article on the scale of ESOP.

9. After being approved by the general meeting of shareholders, the ESOP shall be managed by the company itself. The management committee is authorized by the shareholders' meeting to be responsible for the specific management of ESOP, which is in accordance with the provisions of item 2 (7) of Part II of the guiding opinions.

10. According to the employee stock ownership plan (Draft), the employee stock ownership plan has specified the following matters:

(1) participants and determination criteria of ESOP;

(2) the capital source, stock source and scale of ESOP;

(3) the duration and lock-in period of ESOP;

(4) the participation mode of ESOP in company financing;

(5) how to deal with the shares held by employees after the expiration of ESOP;

(6) the change and termination of ESOP in the current period and the disposal of shareholders' rights and interests;

(7) the management mode of ESOP;

(8) procedures for the implementation of ESOP;

(9) other important matters.

To sum up, our lawyers believe that the ESOP is in line with the relevant provisions of item 1, paragraph (9) of Part III of the guiding opinions.

III. legal procedures of the ESOP

1. The legal procedures of the ESOP

According to the information disclosure documents announced by the Bank of China, as of the date of this legal opinion, the Bank of China cashmere has carried out the following procedures in order to implement the ESOP:

(1) on September 6, 2021, the company held a staff congress to fully solicit employees' opinions on the implementation of the ESOP, which is in line with the provisions of section (8) of Part III of the guiding opinions.

(2) on September 7, 2021, the company held the fifth meeting of the eighth board of directors, deliberated and passed the proposal on the 2021 employee stock ownership plan (Draft) and its summary of Ningxia Zhongyin cashmere Co., Ltd., and the related directors have performed the avoidance voting procedure in accordance with the law when the company convened the board of directors to review the relevant motions of the ESOP, which is in line with the third part of the guiding opinions （11） Section 2.

(3) on September 7, 2021, the independent directors of the company expressed their independent opinions on the ESOP, believing that the contents of the ESOP of the company comply with the guiding opinions and other relevant laws and regulations, and there is no damage to the interests of the company and all shareholders. The implementation of the ESOP is conducive to improve the corporate governance structure, improve the incentive mechanism, fully mobilize the enthusiasm of employees, and realize the sustainable, healthy and long-term development of the company. The implementation of the ESOP is based on the principle of compliance with the law, voluntary participation and risk-taking. There is no case of forcing employees to participate in the ESOP by means of apportionment and forced distribution. In accordance with the provisions of part I (2) and part III (10) of the guidance.

(4) on September 7, 2021, the company held the third meeting of the eighth board of supervisors. It was considered that the content of the ESOP of the company was in accordance with the provisions of relevant laws, regulations and normative documents such as the company law, the securities law, the guiding opinions, and there was no damage to the interests of the company and all shareholders. The participants proposed in the ESOP meet the requirements of the guidance and other laws, regulations and normative documents, and meet the criteria for determining the participants specified in the ESOP. As the subject qualification of the ESOP holders of the company, it is legal and effective. The ESOP is conducive to improve the corporate governance structure, improve the incentive mechanism of the company, improve the cohesion of employees and the competitiveness of the company, and realize the sustainable, healthy and long-term development of the company; The ESOP is participated by employees in accordance with the law, voluntary participation and risk-taking principle, and there is no case of forcing employees to participate in ESOP by means of apportionment and forced distribution. In line with the provisions of section 10 of Part III of the guiding opinions.

(5) the company has engaged the exchange to issue legal opinions on the ESOP, which is in line with the provisions of section (11) of Part III of the guiding opinions.

To sum up, our lawyers believe that as of the date of this legal opinion, Bank of China has fulfilled the necessary legal procedures for the implementation of the ESOP so far.

2. Legal procedures to be performed in the ESOP

Bank of China cashmere shall hold a general meeting of shareholders to deliberate on the ESOP, and announce the legal opinion before the general meeting.

After consulting the announcement documents disclosed by our lawyer, as of the date of issuing this legal opinion, the board of directors of the company has announced the notice of holding the second extraordinary general meeting of shareholders in 2021, and deliberated the 2021 employee stock ownership plan (Draft) and its summary of Ningxia Zhongyin cashmere Co., Ltd.

IV. information disclosure of the ESOP

On September 8, 2021, the company announced the resolutions of the board of directors, 2021 ESOP (Draft) of Ningxia Zhongyin cashmere Co., Ltd., abstract of 2021 ESOP of Ningxia Zhongyin cashmere Co., Ltd., opinions of independent directors, resolution of the board of supervisors and other documents related to the ESOP, which are in line with the guiding opinions Part III (10) and Article 8 (2) of the guidance No.4.

Our lawyers believe that as of the date of this legal opinion, BOC has fulfilled the necessary information disclosure obligations in respect of the ESOP in accordance with part III of the guidance. According to the guidance, with the promotion of the ESOP, the company still needs to fulfill the obligation of information disclosure in accordance with relevant laws, regulations and normative documents.

5、 Conclusion

To sum up, our lawyers believe that as of the date of this legal opinion, BOC has the main qualification to implement the ESOP, and the content of the ESOP (Draft) conforms to the relevant provisions of the guidance; Bank of China has fulfilled the necessary legal procedures for the implementation of the ESOP, and the related directors have performed the avoidance voting procedure in accordance with the law when the company holds a board meeting to review the relevant proposals of the ESOP, which is in line with the relevant provisions of the guiding opinions; The ESOP can only be implemented after being examined and approved by the general meeting of shareholders; Bank of China cashmere has fulfilled the corresponding information disclosure obligations on the implementation of the ESOP. With the advancement of the ESOP, BOC cashmere needs to continue to fulfill the information disclosure obligations in accordance with the relevant laws, regulations and normative documents.

This legal opinion is in duplicate.

Ningxia Xingye law firm

Person in charge Liu Xiangyang

Lawyer Liu Qingguo

Liu Ning

September 9, 2001