In general, all shareholders have rights to receive dividends, participate in major decisions and choose management in accordance with the law. For example, unless otherwise prescribed in the articles of association of a company with respect to voting ratio, according to Article 66 of the Company Law of the People's Republic of China (effective on July 1, 2024, hereinafter referred to as the “2024 Company Law”), a resolution made by the shareholders' meeting shall be adopted by the shareholders representing more than half of the voting rights. A resolution made by the shareholders' meeting on modifying the articles of association, increasing or decreasing the registered capital, as well as merger, division and dissolution shall be adopted by the shareholders representing more than two thirds of the voting rights. Therefore, shareholders holding more than two thirds of the company's equities are usually called controlling shareholders. Compared to controlling shareholders, minority shareholders in a joint venture have limited control and voice in the actual operation of the company.

In general, there are three ways of transferring shares of listed companies: call auction, block trading and negotiated transfer, each of which has its own features. The procedures of negotiated transfer are relatively more complicated. According to the regulations of China Securities Regulatory Commission (“CSRC”), Shanghai Stock Exchange and Shenzhen Stock Exchange, when a major shareholder or particular shareholder reduces shareholding, the total number of shares reduced by way of call auction within three months shall not exceed 1% of the total number of shares of the company, whilst by way of block trading shall not exceed 2%. On the contrary, “when a major shareholder or particular shareholder reduces shares by way of negotiated transfer, the number of shares transferred to a single transferee shall not be less than 5% of the total number of shares of the company.” Therefore, if a shareholder intends to transfer a small amount of shares, call auction or block trading will be a more suitable way, while negotiated transfer will be more efficient when a major shareholder intends to transfer a large amount of shares.

1 Overview According to the new Company Law (2024), a company can choose its corporate governance model through its articles of association, which can be classified into a "Unitary System" (Single-Tier System) and a "Dual System" (Two-Tier System). The details are as follows: • Dual System (Two-Tier System) Corporate Governance Model: (1) Shareholders' Meeting (2) Board of Directors: Business execution functions (3) Board of Supervisors: Supervisory functions If certain conditions are met, companies with a smaller scale or fewer shareholders can further simplify the corporate organizational structure by amending the articles of association: • No Board of Directors, only one (Executive) Director who exercises the powers of the Board of Directors. This Director can concurrently serve as the manager. • No Board of Supervisors, only one Supervisor who exercises the powers of the Board of Supervisors.