Corporate Governance

Corporate Governance

According to laws and regulations and the requirements of state-ownedasset and security supervision, the Company builds and makes constantimprovements to a corporate governance mechanism characterized bystatutory and transparent powers and responsibilities, coordinatedoperation, and effective checks and balances.

Governance structure

The general meeting is the organ of power of the Company and theimportant means for investors to exercise the rights of shareholders.Pursuant to the requirements of security supervision, the Board of Director.of the Company announces the notices, proposals and resolutions to thegeneral meeting comprehensively, promptly and accurately, and reportsthem to the regulatory authorities for the record. Lawyers witness theproposal, convening, voting, and resolution of the general meeting of theCompany on the spot and put forward legal and compliant opinions.During the reporting period, the Company held 2 general meetings andconsidered and adopted 23 proposals relating to periodic reportsdistribution of profits, etc.

The Board of Directors is the Company's decision-making body and isresponsible for the general meeting. As of the end of the reporting period.the Board of Directors consists of 7 directors, including 3 executivedirectors, namely Chen Yun, Chairman, executive director and PartySecretary, Chen Wenjian, executive director, deputy Party Secretary andPresident and Wang Shiqi, executive director, deputy Party Secretary andChairperson of the Labour Union, and 4 non-executive directors, namelyWen Limin, Chung Shui Ming, Zhang Cheng, Xiu Long. There are 5 specialcommittees of strategy and investment, audit and risk managementremuneration and assessment, nomination as well as safety, health andenvironment under the Board of Directors, among which the majority ofmembers of the strategy and investment committee, the nominationcommittee and the safety, health and environment committee are externadirectors, and all the members of the audit and risk managementcommittee and the remuneration and assessment committee are externaldirectors. During the reporting period, centering on the functions of"developing strategies, making decisions, and forestalling risks" the Boardof Directors held 10 Board meetings, considered and adopted 130proposals and reports, and made 100 resolutions. The special committeesprovide intellectual support and decision-making counsel to the Board ofDirectors through deliberations on professional issues. The Strategy andInvestment Committee of the Board of Directors held 4 meetings andconsidered 16 proposals, and provided suggestions and opinions thereon.especially playing an active role in preparing 8 special businessdevelopment sections of the 14th Five-Year Plan, such as engineeringconstruction, design consulting, equipment manufacturing, financiabusiness, and real estate business, The Audit and Risk ManagementCommittee of the Board of Directors held 6 meetings and considered 34proposals, and provided suggestions and opinions thereon to play itssupervisory role, especially the suggestions and opinions on issues relatedto infrastructure investment risk, real estate business risk, decrease in gross profit margin, burden of interest-bearing debts, pressure of accountsreceivable and inventory control, exerting an active role in strengtheningthe Company's finance and risk management. The Remuneration andAssessment Committee of the Board of Directors held 8 meetings andconsidered 13 proposals, and provided suggestions and opinions thereonespecially the suggestions and opinions on executive performanceevaluation plan, and implementation of restricted stock incentives, playingan active role in strengthening the Company's compensation managementand performance evaluation. The Nomination Committee of the Board ofDirectors held 2 meetings and considered 2 proposals, and providedsuggestions and opinions thereon, playing an active role in the Company'scompliance with laws and procedures for the selection and appointment ofdirectors and senior management. The safety. health and environmentcommittee of the Board of Directors held 3 meetings and considered 4proposals, and provided suggestions and opinions thereon, playing anactive role in strengthening the Company's performance in safety, qualityoccupationalhealth and environmentalprotection.

 The Supervisory Committee is the Company's supervisory body, and in aresponsible manner to shareholders, carefully monitors the Company'sfinance and the legal compliance of the Company's directors and seniormanagement in performing their duties. As of the end of the reportingperiod, the Company's Supervisory Committee is composed of 5 supervisors.including 1 shareholder representative supervisor, namely Jia Huiping.Chairman of the Supervisory Committee, and 4 employees' representativesupervisors, including Yuan Baoyin, Li Xiaosheng, Wang Xinhua, and WanMinq. During the reporting period, within the scope of the responsibilitiesconferred by the Company Law(《公司法》,the Securities Law(《证券法》)Work Guidelines for Supervisory Committees of Listed Companies (《 二市司监事会工作指)andthe Articles of Association, the Supervisory Committeediligently fulfilled its duties, held 8 meetings, and considered and adopted 57proposals relating to periodic reports, internal control, profit distribution, etc

As the Company's executive body, the Management organizes the dailywork of production and operation, implements the resolutions of the Boardof Directors, exercises the decision-making power authorized by the Boardof Directors, reqularly reports the production and operation to the Board ofDirectors, and feeds back the implementation of resolutions. As of the endof the reporting period, the Company has 1 president, 5 vice presidents, 1general accountant,1 chief engineer (concurrently serving as theCompany's vice president), 1 chief economist, and 1 assistant to generamanager. During the reporting period, focusing on "seeking to operate.ensuring implementation and strenathening management" the Companv'sManagement promoted high-quality development of operation with a bigpicture in mind, addressed challenges and seized opportunities, promotedreform and innovation in depth,continuously strengthened riskprevention and pushed hiqh-quality development of the enterprise to anew level.

The Company always pays attention to the diversity of Board members toimprove Board decision-making efficiency and corporate governance.According to the listing rules and regulatory requirements of Shanghaiand Hong Kong, the Company has formulated and implemented a“BoardDiversity Policy".The Company's Board of Directors currently has 7directors, of which 3 executive directors have extensive experience in theconstruction industry and management, and 4 non-executive directorshave extensive experience in practice and management in financeconstruction engineering, design, and other fields. The establishment andcomposition of Board members meet the requirements of the BoardDiversity Policy as well as the needs for corporate development. Underthe backaround of the diversification of Board members, the Company'sBoard of Directors actively builds a democratic deliberative atmospherestrictly implements the voting system, and fully utilizes the advantages ofthe diversified Board members' structure. This aims to ensure that eachdirector can actively make use of his or her rich professional knowledqeand management experience to participate in corporate governance, andexpress opinions and make decisions on major issues independently. Thediversification of Board members plays an important role in improvingthe level of corporate governance, enhancing the scientific and effectivedecision-making of the Board of Directors, and safequarding the overallnterests of the Company, the legitimate rights and interests ofshareholders as a whole and particularly protecting the interests ofminority shareholders.

Decision-making process

All corporate governance organs of the Company conscientiously abide bylaws and diligently fulfill their duties Constant improvements have been madto the corporate governance mechanism characterized by division offunctionsand duties, coordinated operation, and effective checks and balances, whichenables the Company to be awarded as a model enterprise of corporategovernance for state-owned enterprises by the SASAC of the State Council andthe Board to be awarded as Excellent Board of Central Enterprises by theSASAC for two consecutive years.In order to ensure the effectiveimplementation of the decision-making procedures of various governanceentities in accordance with laws and regulations, the Company, while givingfull play to the fundamental role of the Articles of Association in corporategovernance, has formulated the Rules of Procedure for Shareholders' GeneralMeetings(《股东大会议事规则》) Rules of Procedure for the Board ofDirectors(《董事会议事规则》), Rules of Procedure for the Strategy andInvestment Committee of the Board(《董事会战略与投资委员会议事规》), Rules of Procedure for the Audit and Risk Management Committee ofthe Board(《董事会审计与风险管理委员会议事规则》),Rules ofProcedure for the Remuneration and Assessment Committee of the Board(《董事会薪酬与考核委员会议事规则》), Rules of Procedure for theNomination Committee of the Board(《董事会提名委员会议事规则》)Rules of Procedure for the Safety, Health and Environment Committee of theBoard(《董事会安全健康环保委员会议事规则》)Rules of Procedure forthe Supervisory Committee(《监事会议事规则》),Rules of Procedure forParty Committee(《党委会议事规则》)and Rules for President OfficeMeetings(《总裁办公会议规则》)These rules provide an effectiveinstitutional basis for clarifying power and responsibilities of general meetingsthe Board of Directors, the Supervisory Committee, and senior managementand ensure scientific decision-making of the corporate governance organs.TheCompany always attaches importance to the seriousness of decision-makingprocedures, and regulates meeting arrangements, proposal collectionproposal formats, prepositive procedures, deliberation and voting proceduresand confidentiality and disclosure of information. This aims to ensure that algovernance organs discuss the major issues that should be discussed and thatthe decision-making process is standardized and orderly.

During the reporting period, the Company made the 16th amendment to theArticles of Association in accordance with laws and regulations, regulatoryrequirements, and based on the actual situation of the Company, incorporatingthe latest requirements for the supervision of state-owned assets and securitiesand key contents of the three-year action plan for state-owned enterprisereform; revised 8 policies such as the rules for procedures of the Board ofDirectors and related governance organs to ensure that the meetingconsideration procedures are in compliance with relevant laws and requlationsand the decision-making process is scientific and standardized; revised the Listof Authority and Responsibility for Decision-Making on Major lssues(《重大事项决策权责清单》)and the List of Authority Delegated by the Board ofDirectors to the Management(《董事会向经理层授权权限清单》)tofurther clarify the boundary of power and responsibilities of the PartyCommittee, the Board of Directors and the management, and to enhance theefficiency of decision-making.

Effective evaluation

The Company has formulated the Measures for Follow-up Inspection andEvaluation of the lmplementation of Resolutions of the Board Meeting(《董事会决议执行跟踪检查与评价办法》)clarifying the organizationalstructure and responsibilities, information feedback, inspection, evaluation.and application of results of the follow-up inspection and evaluation of theimplementation of the Board of Directors' resolutions. Meanwhile, theCompany has established a mechanism of reporting on theimplementation of resolutions of Board meetings, which provides animportant quarantee for the Board of Directors to fully understand theimplementation of the resolutions and discover the important and difficultpoints of decision-making in time.