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Governance Framework

The Company strictly abides by the Cayman Islands Companies Act, the Company Law of the People’s Republic of China, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant laws and regulations, and has formulated the Memorandum and Articles of Association of Chaoju Eye Care Holdings Limited (hereinafter referred to as the Articles of Association), the Terms of Reference of the Nomination Committee of the Board of Directors of Chaoju Eye Care Holdings Limited, the Terms of Reference of the Remuneration Committee of the Board of Directors of Chaoju Eye Care Holdings limited and the Terms of Reference of the Audit Committee of the Board of Directors of Chaoju Eye Care Holdings Limited, and other management systems. Besides, the Company has also established a corporate governance framework composed of the shareholders’ meeting, the Board of Directors and its special committees and management. The operation norms were effectively upheld, and all special committees have fulfilled their responsibilities.

Corporate Governance Framework

The Board of Directors consists of 11 members, including 4 executive directors, 3 non-executive directors and 4 independent non-executive directors, with a total of 3 female directors. The directors also have degrees in various fields including clinical medicine, public healthcare, business management, financial management, finance, economics, accounting and law.

Risk Management System

The Group has established a comprehensive risk management framework, instituting an Audit Committee at the level of the Board of Directors and establishing a subordinate Audit and Supervision Department. The Board of Directors, the Audit Committee, the management, the executives and all employees can work together in the risk management to accurately identify, carefully assess, dynamically monitor and timely respond to risks such as liquidity risk, market risk and reputation risk in operation.

Risk Management Framework

The Group has established a sound risk management procedure, requiring all relevant departments to accurately identify, carefully assess, dynamically monitor and timely respond to risks within the scope of their duties, and perform their responsibility of risk control.

Risk Management Procedure

Internal Control

The Group adheres to a risk management-oriented approach, strictly complying with the Corporate Governance Code and other regulatory requirements. The Group has developed the Management System for Decision-making on Major Matters and the Audit Rectification Management Measures, which clearly define the responsibilities and duties of the audit rectification personnel, rectification procedures, methods, assessment, accountability, and penalties, establishing an internal control system to regulate the Group’s business and investment activities and enhance overall risk prevention capabilities.

Each year, the Group evaluates its internal control through self-inspections, checks, tests, verifications, interviews, and discussions. Combined with internal audits of subsidiaries and optical centers, the Group evaluates its business management and control and confirms whether there are any internal control deficiencies within the evaluation scope. No significant internal control deficiencies were identified.

The Group carried out 16 special audits, departure, and operational audits. The audit covered areas such as medical income and costs, procurement and payments, financial management, capital, human resources, and comprehensive administration. All issues identified during the audits have been rectified.

Business Ethics Management System

The Group strictly complies with the Criminal Law of the People’s Republic of China, Anti-Unfair Competition Law of the People’s Republic of China, Anti-Money Laundering Law of the People’s Republic of China, and the Nine Principles of Honest Practice of Medical Institution Staff. The Group is committed to a zero-tolerance policy towards corruption, bribery, money laundering, unfair competition, fraud, conflicts of interest, and other violations of business ethics. We always take strict measures to prevent the above-mentioned activities.

The Group has formulated the Measures for the Administration of Anti-Fraud Work and established a comprehensive anti-corruption management system to clearly define the division of responsibilities for managing business ethics and to regulate the professional conduct of all employees, particularly middle and senior management personnel, and urge all employees to strictly abide by professional ethics, laws and regulations as well as company rules and regulations to prevent behaviors that damage the interests of the Group, shareholders, patients and all stakeholders.

Business Ethics Management Framework