Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

2024 Annual Report of Independent Directors

As an independent director of Shengmei Semiconductor Equipment (Shanghai) Co., Ltd. (hereinafter referred to as the "Company" or "Shengmei Shanghai"), during my tenure, I strictly followed the requirements of laws, regulations and normative documents such as the Company Law, the Securities Law, the Code of Governance for Listed Companies, and the Measures for the Administration of Independent Directors of Listed Companies, as well as the Articles of Association and the Working System for Independent Directors. The relevant meetings of the board of directors and its special committees carefully deliberated the proposals of the board of directors and its special committees, and expressed fair and objective opinions on various major matters deliberated at the relevant meetings of the company, so as to safeguard the standardized operation of the company and the overall interests of all shareholders.

The work status of 2024 is now reported as follows:

1. Basic information of independent directors

(1) Personal work history, professional background, and part-time employment

Zhang Sutong, male, born in October 1957, Chinese nationality, no right of permanent residence abroad, management (association).

Professor, Ph.D. degree. From March 1989 to April 2000, he served as Shaanxi University of Finance and Economics

Professor of the School of Finance and Accounting, Dean of the Department of Accounting, Master's Supervisor, MBA Tutor. April 2000 to 2003

In June, he was appointed as a professor, dean of the Department of Accounting, master tutor and MBA tutor of the School of Accountancy of Xi'an Jiaotong University. 2003

From June to December 2016, he served as the deputy director of the Institute of Finance, Taxation and Financial Law, School of Civil, Commercial and Economic Law, China University of Political Science and Law

Director of Forensic Accounting Research Center, China University of Political Science and Law, Professor, Master Tutor. From December 2016 to July 2021, he served as a professor in the Department of Finance and Accounting, the director of the Executive Education Center of the Business School of China University of Political Science and Law, and the director of the Forensic Accounting Research Center of China University of Political Science and Law. July 2021 to

In October 2023, he served as the director of the Forensic Accounting Research Center of China University of Political Science and Law, from May 2017 to March 2024

Monthly independent director of Baoying Fund Management Co., Ltd.; From October 2018 to October 2024, he served as Chang'an Bank

Independent director of a company limited by shares; From March 2024 to February 2025, he served as a professor at Yunnan Pu'er University. 2022

Since December, he has served as an independent director of Shenzhen Sunline Technology Co., Ltd.; Since July 2021, he has served as Shengmeishang

Independent Director of the Sea.

(2) Explanation of independence

As an independent director of the company, I do not hold any other position in the company other than an independent director, and I am a direct relative

None of the subordinates or major social relations hold positions in the company or its subsidiaries, and do not provide financial, legal, consulting and other services for the company or its subsidiaries. I have the independence required by the Measures for the Administration of Independent Directors of Listed Companies, the Self-Regulatory Guidelines for Listed Companies on the Science and Technology Innovation Board of the Shanghai Stock Exchange No. 1 - Standardized Operation, the Articles of Association and the Company's Working System for Independent Directors, and I am able to ensure objective and independent professional judgment and there is no situation that affects my independence.

2. Overview of the annual performance of duties by independent directors

(1) Attendance at meetings

In 2024, the convening of the Board of Directors and the General Meeting of Shareholders of the Company complied with legal procedures, and the relevant procedures were fulfilled for major business decision-making matters and other major matters. I should have served on the Board of Directors 8 times this year

8 times on the Board of Directors; Should attend the general meeting of shareholders 3 times, and actually attended the general meeting of shareholders 3 times. There is no continuity

Two instances of failure to attend the meeting in person. In addition, I have attended 4 meetings of the Audit Committee, 1 meeting of the Remuneration and Appraisal Committee and 1 meeting of the Independent Directors of the Company, and I have not been absent without any excuse. In my opinion, the convening of the meeting was in accordance with legal procedures, and the decision-making of relevant matters fulfilled the necessary approval procedures and disclosure obligations, in accordance with laws and regulations and the provisions of the Articles of Association.

I carefully reviewed the proposal materials of the board of directors and various special committees, and maintained communication with the company's management in a timely manner on the required background information of the proposals, made full use of my professional knowledge, put forward reasonable suggestions and opinions, and exercised voting rights in the meetings of the board of directors and various special committees with a cautious attitude, so as to safeguard the overall interests of the company and the interests of small and medium-sized shareholders. During the reporting period, I did not raise any objection to the proposals of the board of directors of the company and other matters of the company, and voted in favor of all the proposals.

(2) On-site inspections and the company's cooperation with independent directors

During the reporting period, the company actively cooperated with me to carry out the work of independent directors, the company's management attached great importance to communication with me, I took advantage of the opportunity to participate in the board of directors and various special committee meetings and other time to conduct on-site visits to the company, in-depth Lingang R&D center, to understand the company's fund-raising project implementation progress, production and operation and management and operation, and through the board of directors, shareholders' meeting and other ways to listen to the company's management on the development of the industry, new product research and development progress, market economic environment and other aspects of the report; More than 15 days of cumulative on-site work.

I participated in the operation and management decision-making of the company's major matters, actively paid attention to the company's daily operation, carefully reviewed and analyzed the information provided by the company, and built and implemented the company's management and internal control systems

Inspect the implementation of the resolutions of the board of directors; And through telephone and email, etc., maintain close contact with other directors, senior managers and relevant staff of the company, and actively provide reference and suggestions for the decision-making of the board of directors.

(3) Communication and cooperation with internal audit institutions and external audit teams

During the Reporting Period, I actively communicated with the Company's internal audit institutions and accounting firms, and effectively discussed and communicated with the accounting firms on periodic reports and financial issues, so as to play the functions and supervisory role of independent directors.

(4) Communication with small and medium-sized shareholders

During the reporting period, I actively communicated with minority shareholders by participating in shareholders' meetings, listened to the opinions and suggestions of minority shareholders, paid attention to the legitimate rights and interests of minority shareholders, and actively performed my duties as an independent director.

3. Key issues for independent directors in the performance of their duties during the year

During the year, in accordance with the Company Law, the Securities Law and other laws and regulations, as well as the requirements of the Articles of Association on the duties and powers of independent directors, we focused on the following matters of the Company, as follows:

(1) Related party transactions that should be disclosed

During the reporting period, the ninth meeting of the second session of the board of directors of the company deliberated and passed the "Proposal on Confirming the Daily Connected Transactions in 2023 and the Estimated Routine Related Party Transactions in 2024". The company's daily related party transactions follow the principles of openness, fairness and impartiality, and negotiate pricing with reference to market prices, which will not harm the interests of the company and all shareholders, especially small and medium-sized shareholders.

(2) Plans for the listed company and related parties to change or waive their commitments

During the reporting period, neither the company nor related parties changed or waived their commitments.

(3) The decisions made and measures taken by the board of directors of the acquired listed company in connection with the acquisition

During the reporting period, the company was not acquired.

(4) Disclose financial information and internal control evaluation reports in financial accounting reports and periodic reports

During the reporting period, I paid close attention to and supervised the financial information in the company's financial accounting report, and I believe that the financial information in the company's financial accounting report is true, complete and accurate, in line with the requirements of Chinese accounting standards, and there are no material false records, misleading statements or material omissions. Financial accounting for the company

The financial information in the report complies with relevant laws and regulations and the provisions of the company's system, the decision-making procedures are legal, and no major violations of laws and regulations have been found.

I have conducted a comprehensive review of the company's internal control evaluation report and believe that the company has established a sound and effective internal control system. This system can reasonably ensure the legal compliance of operation and management, asset security, and the authenticity and integrity of financial reports, and promote the high-quality development of the company. During the year, the Company's internal control was implemented in good condition, and no major deficiencies were found.

(5) Hiring or dismissing accounting firms that undertake the audit business of listed companies

During the reporting period, the review procedure for the re-appointment of the accounting firm by the Company complied with the relevant laws and regulations and the Articles of Association; Lixin Certified Public Accountants (Special General Partnership) has the qualifications to engage in securities and futures related business, and has good professional competence, investor protection ability, professionalism and integrity. In the process of serving as the company's audit institution, it strictly abides by the relevant national laws and regulations, adheres to the principle of independent auditing, objectively and fairly reflects the company's financial situation, and earnestly fulfills the responsibilities of the audit institution.

(6) Appointing or dismissing the person in charge of finance of a listed company

During the reporting period, the company did not appoint or dismiss the person in charge of finance.

(7) Changes in accounting policies, accounting estimates, or correction of material accounting errors due to reasons other than changes in accounting standards

During the reporting period, the Company did not make any changes in accounting policies or accounting estimates for reasons other than changes in accounting standards.

(8) Nominating or appointing or dismissing directors, and appointing or dismissing senior management personnel

During the reporting period, the company did not nominate or appoint or remove directors or senior management.

(9) The remuneration of directors and senior management, the formulation or change of equity incentive plans and employee stock ownership plans, the achievement of the conditions for the authorization of the incentive recipients and the exercise of rights and interests, and the arrangement of stock ownership plans by directors and senior managers in the subsidiaries to be spun off

The company held the ninth meeting of the second board of directors on February 27, 2024, and deliberated and approved the "About

Proposal on the Remuneration Plan for Directors and Supervisors in 2024 and Proposal on the Remuneration Plan for Senior Managers in 2024. I have reviewed the remuneration of the company's directors and senior management, and believe that the remuneration plan of the company's directors and senior management is based on the salary level of the company's industry and the actual operation of the company, which is conducive to strengthening the diligence of the company's directors and senior management, promoting the company's work efficiency and operating efficiency, and formulating and voting procedures are legal and effective, and there is no harm to the interests of the company and shareholders

In accordance with the relevant laws and regulations of the state and the provisions of the Articles of Association.

On February 27, 2024, the company held the ninth meeting of the second board of directors to deliberate and approve the "About

In 2019, I participated in the deliberation of the relevant proposals and expressed my agreement, believing that the company's exercise is in line with the legitimate rights and interests of the company and all shareholders, and there is no harm to the interests of the company and shareholders.

On April 25, 2024, the company held the tenth meeting of the second board of directors to deliberate and approve the "About

The proposal on the invalidation of some stock options in the 2019 stock option incentive plan", I believe that the relevant matters related to the invalidation of stock options of the departing personnel are in line with the company's "2019 Stock Option Incentive Plan" and related regulations, and the procedures are legal and compliant, and do not affect the company's continuous operation, nor do they harm the interests of the company and all shareholders.

On June 25, 2024, the company held the 11th meeting of the second board of directors to deliberate and approve the "About

Proposal on Granting Reserved Part of Restricted Shares to the Incentive Recipients of the 2023 Restricted Stock Incentive Plan", I believe that the qualifications of the reserved incentive recipients are legal and valid, and the reserved grant date determined is in accordance with the relevant regulations. During the deliberation of the matter, the related personnel recused themselves from voting, and the decision-making process was legal and compliant; There is no violation of laws and regulations and damage to the interests of the company and all shareholders, especially small and medium-sized shareholders.

On August 6, 2024, the company held the twelfth meeting of the second board of directors to deliberate and approve the "About

2019 Stock Option Incentive Plan: Proposal on the Achievement of the Exercise Conditions of the Second Exercise Period for Foreign Incentive Recipients Outside China, "Proposal on Adjusting Matters Related to the 2019 Stock Option Incentive Plan" and other proposals; According to the provisions of the company's "2019 Stock Option Incentive Plan", I believe that the above matters have been reviewed and voted on in accordance with the necessary procedures, and there is no harm to the interests of shareholders, especially the interests of small and medium-sized shareholders.

On October 29, 2024, the company held the fifteenth meeting of the second board of directors to deliberate and approve the "Guan

In the 2023 restricted stock incentive plan, the first grant of part of the first vesting period meets the vesting conditions", "the proposal on the cancellation of part of the restricted stock incentive plan in 2023 that have been granted but not yet vested", "the proposal on adjusting the grant price of the 2023 restricted stock incentive plan" and other proposals, I believe that the company's 2023 restricted stock incentive plan for the first grant of part of the first vesting period of the first vesting conditions has been achieved, The vesting arrangements and review procedures, as well as the cancellation of some of the restricted shares that have not yet been vested and the adjustment of the grant price, comply with the relevant provisions of laws, regulations and normative documents such as the Company Law, the Securities Law, the Administrative Measures for Equity Incentives of Listed Companies, the Listing Rules, the Self-Regulatory Guide for Listed Companies on the Science and Technology Innovation Board No. 4 - Disclosure of Equity Incentive Information, and the Company's 2023 Restricted Stock Incentive Plan. There is no harm to the interests of the company and shareholders.

Fourth, the overall evaluation and recommendations

As an independent director of the second board of directors of the company, I faithfully perform my duties, actively participate in the decision-making of major matters of the company, and make suggestions for the healthy development of the company. In 2025, I will continue to perform my duties prudently, conscientiously, diligently and faithfully during my term of office in strict accordance with the requirements of relevant laws and regulations and the Articles of Association for independent directors, use my professional knowledge and experience to provide more constructive suggestions for the development of the company, provide reference opinions for the scientific decision-making of the board of directors, promote the independent, impartial and efficient operation of the board of directors, and safeguard the legitimate rights and interests of all shareholders, especially small and medium-sized shareholders.

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