Regulatory crackdown! Fined over 24.9 million + 10-year ban! ST Bailing's four years of financial fraud finally met with heavy penalties

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Guizhou Bailin Enterprise Group Pharmaceutical Co., Ltd. Announcement Regarding the Company and Relevant Parties’ Receipt of an 《Administrative Penalty Decision》

The Company and all members of the Board of Directors guarantee that the information disclosed is true, accurate, and complete, and that there are no false statements, misleading representations, or major omissions.

Guizhou Bailin Enterprise Group Pharmaceutical Co., Ltd. (hereinafter referred to as the “Company” or “Guizhou Bailin”) received, on November 8, 2024, the 《Notice of Filing for Investigation》 issued by the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) (filing reference no. CSRC-filing 0312024002), in that the Company was suspected of violating information disclosure laws and regulations. Pursuant to the 《Securities Law of the People’s Republic of China》《Administrative Penalty Law of the People’s Republic of China》 and other relevant laws and regulations, the CSRC decided to file a case for investigation against the Company. For the details, please refer to the announcement disclosed by the Company on November 9, 2024, in the designated information disclosure media 《Securities Times》《Securities Daily》《China Securities Journal》《Shanghai Securities News》 and on the website of Cninfo (www.cninfo.com.cn): the “Announcement on the Receipt of the 《Notice of Filing for Investigation》 Issued by the China Securities Regulatory Commission” (Announcement No.: 2024-067).

On December 19, 2025, the Company and the relevant parties respectively received 《Administrative Penalty Pre-Notice》 issued by the Guizhou Office of the CSRC (hereinafter referred to as the “Guizhou CSRC Office”). For the details, please refer to the announcement disclosed by the Company on December 20, 2025, in the designated information disclosure media 《Securities Times》《Securities Daily》《China Securities Journal》《Shanghai Securities News》 and on the website of Cninfo (www.cninfo.com.cn): the “Announcement on the Company and Relevant Parties’ Receipt of the 《Administrative Penalty Pre-Notice》” (Announcement No.: 2025-053).

On March 27, 2026, the Company and the relevant parties respectively received the 《Administrative Penalty Decision》 issued by the Guizhou CSRC Office. The relevant matters are hereby announced as follows: I. Main Contents of the 《Administrative Penalty Decision》

Parties: Guizhou Bailin Enterprise Group Pharmaceutical Co., Ltd., Jiang Wei, Niu Min, Jiang Yong, Feng JiXian, Li Hongxing, Yuan Yuanzhen, Zhang Hongwu, Yang Ming, Hu Jian

Pursuant to the relevant provisions of the 《Securities Law of the People’s Republic of China》 (hereinafter referred to as the “Securities Law”), our bureau conducted a filing investigation into violations of information disclosure laws and regulations by Guizhou Bailin and, in accordance with law, informed the parties of the facts, reasons, and basis for imposing administrative penalties, as well as the rights the parties依法享有. At the request of some parties, our bureau held a hearing to hear the statements and defenses from the parties and their representatives. The case has now been investigated and processed to conclusion.

Upon investigation, it was found that Guizhou Bailin has the following illegal facts:

Guizhou Bailin failed to comply with Article 9 of the 《Accounting Standards for Enterprises — Basic Standards》, did not use the accrual basis as the accounting foundation, and did not accrue selling expenses in accordance with the revenue-expense matching principle. Guizhou Bailin in 2019 under-accrued selling expenses by RMB 35,012.49 million, overstated profit by RMB 35,012.49 million, accounting for 95.73% of the total profit (absolute value) recorded in the current-period report; in 2020 under-accrued selling expenses by RMB 24,080.95 million, overstated profit by RMB 24,080.95 million, accounting for 115.35% of the total profit (absolute value) recorded in the current-period report; in 2021 under-accrued selling expenses by RMB 6,379.16 million, overstated profit by RMB 6,379.16 million, accounting for 45.04% of the total profit (absolute value) recorded in the current-period report; in 2023 over-accrued selling expenses by RMB 45,941.10 million, understated profit by RMB 45,941.10 million, accounting for 93.17% of the total profit (absolute value) recorded in the current-period report. The aforementioned financial fraud resulted in false records in Guizhou Bailin’s annual reports for 2019, 2020, 2021, and 2023. 1. Penalty for Guizhou Bailin

The above conduct of Guizhou Bailin violates the provisions of Article 78, Paragraph 2 of the Securities Law, and constitutes an illegal situation as described in Article 197, Paragraph 2 of the Securities Law.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Guizhou Bailin and its representatives put forward the following main opinions: First, the delay in accruing selling expenses was caused by industry commonality and objective constraints, not by the Company’s intentional violation of laws and regulations. Second, the Company’s characterization of the financial fraud was incorrect; the Company had no motive to prepare a false report. Because it was unable to accurately determine the attribution period of the relevant expenses, handling it by over-accruing selling expenses in the 2023 annual report in accordance with relevant provisions falls under proactive rectification and correction of errors; the subjective fault is small, and the impact on market order is limited, so administrative penalties should not be imposed. Third, the statute of limitations for administrative penalties has passed. Fourth, the administrative penalty procedure of the Guizhou CSRC Office was unlawful. Fifth, the Company makes a large tax contribution, has many employees in service, has good development prospects, and the penalty is unfavorable for the Company’s development and for public welfare. Sixth, the penalty magnitude lacks reasonableness and far exceeds the penalty magnitude for comparable cases.

In summary, Guizhou Bailin requests that no administrative penalty be imposed.

After review and verification, our bureau holds that:

First, due to improper internal management of sales finance within Guizhou Bailin, issues arose in the accounting for selling expenses, resulting in false records in the annual report, which has no relation to industry attributes. Second, Guizhou Bailin first under-accrued selling expenses and then used over-accrued selling expenses to offset, against the prior under-accrual of selling expenses, by making a flat adjustment. This is not rectification; the characterization of the Company’s financial fraud is accurate. The Company has subjective fault, has caused a severe adverse impact on the market, and should be subject to administrative penalties in accordance with law. Third, the period between the date when Guizhou Bailin’s information disclosure violations ended and the date when our bureau discovered them is less than two years, and therefore the administrative penalties statute of limitations has not been exceeded. Fourth, our bureau依法 handled and investigated Guizhou Bailin’s information disclosure violations. The facts are clear and the evidence is sufficient, and the pre-notification procedures for administrative penalty were fulfilled. A hearing was held, during which the statements and defense opinions of Guizhou Bailin and its representatives were heard; the administrative penalty procedures were lawful. Fifth, the items claimed by Guizhou Bailin—large tax contribution, many employees in service, good development prospects, and that the penalty is unfavorable for the Company’s development and public welfare—are not statutory reasons for not imposing an administrative penalty. Sixth, our bureau comprehensively considered the facts, nature, circumstances, and degree of social harm of Guizhou Bailin’s illegal acts to determine the penalty amount. This complies with legal provisions and the penalty magnitude is appropriate.

In summary, our bureau does not adopt Guizhou Bailin’s opinions.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law, our bureau decides:

To order Guizhou Bailin Enterprise Group Pharmaceutical Co., Ltd. to make corrections, issue a warning, and impose a fine of RMB 10,000,000.

2. Penalty for Jiang Wei

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Jiang Wei, who previously served as the Company’s chairman, was comprehensively responsible for company management. He was aware that there were issues in the accounting of selling expenses, permitted the occurrence of illegal financial fraud and violations, signed the Company’s 2019, 2020, 2021, and 2023 annual reports and ensured that they were true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the person-in-charge directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Jiang Wei and his representatives, in addition to agreeing with Guizhou Bailin’s opinions, also put forward the following main opinions: First, his core responsibilities are strategy and R&D; he does not directly oversee financial and selling expense accounting and has no authority to interfere with the Company’s financial matters. There was no “permitting” of illegal conduct; he led and advanced rectification, and he has exercised diligence and care. Second, there is no factual or legal basis for imposing a fine of RMB 5,000,000 on him; therefore, he should not be penalized. The 10-year ban from the securities market and the statutory and comparable-case circumstances are inconsistent; the penalty magnitude lacks reasonableness and violates the principle of proportionality of penalties to offenses.

In summary, Jiang Wei requests the revocation of the proposed decision to impose all penalties on him, including the warning, the RMB 5,000,000 fine, and the 10-year ban from the securities market.

After review and verification, our bureau holds that:

First, as Jiang Wei was the chairman of the Company at the relevant time, he was comprehensively responsible for the Company’s management. His claim that he had no authority to interfere with the Company’s financial matters is unfounded. During the relevant period, although he knew that there were issues in the accounting of selling expenses, he still chaired the holding of board meetings to review annual reports and signed to ensure that they were true, accurate, and complete, failing to perform his duties diligently and faithfully. The Company’s over-accrual of selling expenses in the 2023 annual report to offset the earlier under-accrual constitutes financial fraud. Jiang Wei’s claim that he proactively advanced rectification is not “rectification and correction of errors.” Second, by permitting the occurrence of illegal financial fraud and violations, Jiang Wei caused false records to exist in the Company’s annual reports for many years. After comprehensively considering the nature, circumstances, degree of social harm of his illegal conduct and the extent of his subjective fault, we issue a warning, impose a fine of RMB 5,000,000, and take the 10-year ban from the securities market measures; the penalty magnitude is appropriate.

In summary, our bureau does not adopt Jiang Wei’s opinions.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law, our bureau decides:

To issue a warning to Jiang Wei and impose a fine of RMB 5,000,000.

As Jiang Wei is the Company’s chairman and comprehensively responsible for the Company’s management, he was aware of issues in the accounting of selling expenses and permitted the occurrence of illegal financial fraud and violations, resulting in false records in the Company’s annual reports for many years. The illegal circumstances are relatively serious. Pursuant to Article 221 of the Securities Law and Article 3, Paragraph 1, Item (1), Article 4, Paragraph 1, Item (1), Article 5, and Article 7, Paragraph 1 of the 《Regulations on Prohibiting Access to the Securities Market》 (CSRC Order No. 185), our bureau decides to take a 10-year ban from the securities market against Jiang Wei, effective from the date our bureau announces the decision. During the ban period, in addition to being prohibited from continuing to engage in securities business or securities service business in the original institution, or from serving as the director, supervisor, or senior management officer of the original issuer, he shall also not engage in securities business or securities service business or serve as the director, supervisor, or senior management officer of any other securities issuer in any other institution.

3. Penalty for Niu Min

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Niu Min, who previously served as the Company’s director, general manager, and secretary to the board of directors, was comprehensively responsible for the Company’s production and operation management and information disclosure. He was aware that there were issues in the accounting of selling expenses, permitted the occurrence of illegal financial fraud and violations, signed the Company’s 2019, 2020, 2021, and 2023 annual reports and ensured that they were true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the person-in-charge directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Niu Min and his representatives, in addition to agreeing with Guizhou Bailin’s opinions, also put forward the following main opinions: First, the scope of his responsibilities is clear, and he has no authority for financial decisions. Second, he took the lead throughout to drive systematic rectification; rectification measures have been implemented and achieved results; he actively cooperated with regulators; he has exercised diligence and care; there are no illegal facts; and he should not be held liable for penalties.

In summary, Niu Min requests the revocation of the proposed decision to impose all penalties on him, including the warning and the fine of RMB 3,500,000.

After review and verification, our bureau holds that:

First, as Niu Min was the director, general manager, and secretary to the board of directors of the Company at the relevant time, he was comprehensively responsible for the Company’s production and operation management and information disclosure. He has an obligation to ensure that annual reports are true, accurate, and complete, and bears the primary responsibility for the accuracy of the financial reports. His claim that he has no authority for financial decisions is unfounded. Second, his leading and promoting the relevant rectification is normal performance of duties by a company’s directors and senior executives. It is not a statutory reason for reducing, mitigating, or exempting administrative penalties. During the relevant period, he knew that there were issues in the accounting of selling expenses, yet he still reviewed the Company’s annual report and signed to ensure that they were true, accurate, and complete. The current evidence is insufficient to prove that he performed his duties diligently and faithfully. After comprehensively considering the nature, circumstances, degree of social harm of his illegal acts and the extent of his subjective fault, we impose corresponding penalties; the penalty magnitude is appropriate.

In summary, our bureau does not adopt Niu Min’s opinions.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law, our bureau decides:

To issue a warning to Niu Min and impose a fine of RMB 3,500,000.

4. Penalty for Jiang Yong

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Jiang Yong, who previously served as the Company’s director and vice general manager, was in charge of the sales department. He was aware that there were issues in the accounting of selling expenses, failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2019, 2020, 2021, and 2023 annual reports and ensured that they were true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the other person directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Jiang Yong and his representatives, in addition to agreeing with Guizhou Bailin’s opinions, also put forward the following main opinions: First, the boundaries of responsibilities are clear; he has no management authority or review responsibility over selling expense accounting. Second, he has fully performed his duties as a director and senior executive diligently and faithfully; during the period when he oversaw the sales department, he had exercised reasonable diligence. During his tenure as a director, signing the annual report complies with statutory duty performance standards. There was no subjective fault; therefore, he should not be penalized according to law.

In summary, Jiang Yong requests the revocation of the proposed decision to impose all penalties on him, including the warning and the fine of RMB 2,000,000.

After review and verification, our bureau holds that:

First, as Jiang Yong was the Company’s director and vice general manager at the relevant time, he is the elder brother of the then chairman Jiang Wei and has long been in charge of sales. He was aware that there were issues in the accounting of selling expenses. Jiang Yong signed on the Company’s annual reports for 2019, 2020, 2021, and 2023, and thus bears an obligation to ensure that the annual reports are true, accurate, and complete. His claim that he had no management authority or review responsibility over selling expense accounting is not a statutory reason to exempt him from administrative penalties. Second, the existing evidence is insufficient to prove that Jiang Yong performed his duties diligently and faithfully. After comprehensively considering the nature, circumstances, degree of social harm of his illegal and noncompliant acts and the extent of his subjective fault, we impose corresponding penalties; the penalty magnitude is appropriate.

In summary, our bureau does not adopt Jiang Yong’s opinions.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law, our bureau decides:

To issue a warning to Jiang Yong and impose a fine of RMB 2,000,000.

5. Penalty for Feng JiXian

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Feng JiXian, who previously served as the Company’s vice general manager, was in charge of the marketing center (sales department). He was aware that there were issues in the accounting of selling expenses, failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2021 and 2023 annual reports and ensured that they were true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the other person directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Feng JiXian and his representatives, in addition to agreeing with Guizhou Bailin’s opinions, also put forward the following main opinions: First, the scope of signing and confirming the annual report review opinion is limited to the sales business that he oversees and does not include matters such as financial accounting; the boundary of his responsibilities is legally separated. He has no authority over selling expense accounting. Objectively, it was impossible for him to know about problems in the Company’s financial treatment, so he lacked the objective conditions to prevent fraud. Second, he has fully fulfilled his diligence obligations and has no fault; therefore, he should not assume any penalty responsibility. The proposed penalty decision lacks factual and legal basis.

In summary, Feng JiXian requests the revocation of the proposed decision to impose all penalties on him, including the warning and the fine of RMB 1,500,000.

After review and verification, our bureau holds that:

First, as Feng JiXian was the Company’s vice general manager at the relevant time and was in charge of the Company’s marketing center (sales department), he was aware that there were issues in the accounting of selling expenses. Feng JiXian signed on the Company’s 2021 and 2023 annual reports, and thus bears an obligation to ensure that the annual reports are true, accurate, and complete. His claims, such as having no authority over selling expense accounting, are not statutory reasons to exempt administrative penalties. Second, the existing evidence is insufficient to prove that Feng JiXian performed his duties diligently and faithfully. After comprehensively considering the nature, circumstances, degree of social harm of his illegal and noncompliant acts and the extent of his subjective fault, we impose corresponding penalties; the penalty magnitude is appropriate.

In summary, our bureau does not adopt Feng JiXian’s opinions.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law, our bureau decides:

To issue a warning to Feng JiXian and impose a fine of RMB 1,500,000.

6. Penalty for Li Hongxing

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Li Hongxing, who previously served as the Company’s chief financial officer, was aware that there were issues in the accounting of selling expenses, failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2020, 2021, and 2023 annual reports and ensured that they were true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the person-in-charge directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law and Article 32 of the Administrative Penalty Law of the People’s Republic of China, our bureau decides:

To issue a warning to Li Hongxing and impose a fine of RMB 800,000.

7. Penalty for Yuan Yuanzhen

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Yuan Yuanzhen, who previously served as the Company’s executive vice general manager, was in charge of the sales settlement management center. He was aware that there were issues in the accounting of selling expenses, failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2021 and 2023 annual reports and ensured that they were true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the other person directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

In his statement of defense materials, Yuan Yuanzhen stated: First, he only assumed the position of executive vice general manager of Guizhou Bailin in January 2022. Prior to that, he did not oversee sales settlement matters and did not know the situation regarding sales expense settlement. Second, after discovering that the internal control over sales expenses may have issues, he fulfilled his duties diligently and faithfully through reminding, interviewing, reporting, and other means.

In summary, Yuan Yuanzhen requests that the penalty imposed on him be mitigated or reduced.

After review and verification, our bureau holds that:

First, regarding Yuan Yuanzhen’s time of appointment and his scope of responsibilities, our bureau has given full consideration in making the administrative penalty. Second, Yuan Yuanzhen submitted that he was diligent and faithful and provided new evidence. After verification, it is found to be true, and our bureau adopts it. However, even so, when he was aware of the issues in the accounting of selling expenses, he still signed the company annual reports and ensured that they were true, accurate, and complete, and he did not fully perform his duties diligently and faithfully.

In summary, for the part of Yuan Yuanzhen’s statements regarding diligence and faithful performance of duties, our bureau has partially adopted it, reflected in this decision letter, and correspondingly reduced the amount of the fine.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law and Article 32 of the Administrative Penalty Law, our bureau decides:

To issue a warning to Yuan Yuanzhen and impose a fine of RMB 600,000.

8. Penalty for Zhang Hongwu

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Zhang Hongwu, who previously served as an independent director of the Company and a member of the audit committee, attended the Company’s second and third audit committee meetings in 2024, where he became aware that there were issues in the accounting of selling expenses. He failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2023 annual report and ensured that it was true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the other person directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Zhang Hongwu and his representatives put forward the following main opinions: First, he has performed his duties diligently and faithfully. Throughout the process of reviewing the 2023 annual report, he had performed a complete supervisory process ranging from procedural inquiries to substantive verification, fulfilling reasonable duty of care appropriate to his professional competence. Second, imposing a warning and a fine on him is a “signing equals penalty” approach, which is inconsistent with facts and law. It violates the principle of proportionality of penalties to offenses, balances comparable cases, and the principle of combining penalties with education. Third, the time when the Company held its third audit committee meeting in 2024 was incorrect. Fourth, under-accrual and over-accrual of selling expenses are different in nature matters. As an independent director who is not an accounting professional, he cannot know that the Company’s over-accrued selling expenses in 2023 are inconsistent with enterprise accounting standards and thus resulted in false records in the annual report. The audit institution is the responsible entity.

In summary, Zhang Hongwu requests that he be exempted from penalties or that the penalty be mitigated or reduced.

After review and verification, our bureau holds that:

First, as Zhang Hongwu was an independent director and a member of the audit committee, he attended the Company’s second and third audit committee meetings in 2024, becoming aware that there were issues in the accounting of selling expenses. When reviewing the Company’s 2023 annual report, he voted in favor to ensure that it was true, accurate, and complete. The existing evidence is insufficient to prove that Zhang Hongwu performed his duties diligently and faithfully. Second, since Zhang Hongwu is an external independent director with relatively small subjective fault, his responsibility and the degree of association with the Company’s information disclosure violations have been fully considered. After comprehensively considering the nature, circumstances, and degree of social harm of his illegal and noncompliant acts, we impose the lowest amount of fine within the statutory penalty range; the penalty magnitude is appropriate. Third, regarding his claim that the time when the Company held its third audit committee meeting in 2024 was incorrect, after verification it is found to be true, and our bureau adopts it; however, it does not affect the determination of his responsibility. Fourth, the Company first under-accrued selling expenses and then over-accrued selling expenses to offset the prior under-accrual of selling expenses, which clearly constitutes financial fraud. Factors such as his non-financial professional background are not statutory reasons to exempt him from administrative penalties. The Company bears accounting responsibility, and the audit institution bears audit responsibility; the audit institution’s audit responsibility cannot replace the independent director’s responsibility.

In summary, regarding the correction part of Zhang Hongwu’s defense opinions related to the time of the Company’s third audit committee meeting in 2024, our bureau has adopted it and reflected it in this decision letter. As to Zhang Hongwu’s other opinions, our bureau does not adopt them.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law and Article 32 of the Administrative Penalty Law, our bureau decides:

To issue a warning to Zhang Hongwu and impose a fine of RMB 500,000.

9. Penalty for Yang Ming

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Yang Ming, who previously served as an independent director of the Company and a member of the audit committee, through the Company’s second and third audit committee meetings in 2024, became aware that there were issues in the accounting of selling expenses. He failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2023 annual report and ensured that it was true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the other person directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Yang Ming and his representatives put forward the following main opinions: First, the time for reviewing the 2023 annual report was limited. By attending the Company’s second and third audit committee meetings in 2024, it was recognized that he became aware of the issues in the accounting of selling expenses, which constitutes an error in the fact finding. Second, the issues in selling expense accounting were disclosed in the annual report. Making an administrative penalty decision against him pursuant to Article 197, Paragraph 2 of the Securities Law constitutes an error in the application of law. Third, before signing the Company’s annual report, he obtained commitments and guarantees, namely that the Company’s financial officer and relevant responsible persons of the audit institution committed and guaranteed that selling expenses would be handled in accordance with accounting standards. Fourth, timely disclosure of the annual report is beneficial for maintaining the overall interests of listed companies and protecting the lawful rights and interests of minority shareholders. Fifth, he served as an independent director for a short time and is not a financial professional; there is no subjective intent and no major negligence. He has performed his duties diligently and faithfully; the independent director allowance and responsibility are seriously mismatched. Sixth, the time when the Company held its third audit committee meeting in 2024 was incorrect. Seventh, under-accrual and over-accrual of selling expenses are different in nature matters. As an independent director who is not an accounting professional, he cannot know that the Company’s over-accrued selling expenses in 2023 are inconsistent with enterprise accounting standards and thus resulted in false records in the annual report. The audit institution is the responsible entity.

In summary, Yang Ming requests that he be exempted from penalties or that the penalty be mitigated or reduced.

After review and verification, our bureau holds that:

First, as Yang Ming was an independent director and a member of the audit committee at the relevant time, through the Company’s second and third audit committee meetings in 2024, he became aware that there were issues in the accounting of selling expenses. When reviewing the Company’s 2023 annual report, he voted in favor to ensure that it was true, accurate, and complete. The existing evidence is insufficient to prove that Yang Ming performed his duties diligently and faithfully. Second, the 2023 annual report disclosed by Guizhou Bailin contains false records. It was determined that Yang Ming is another person directly responsible for Guizhou Bailin’s information disclosure violations. Making an administrative penalty decision against him pursuant to Article 197, Paragraph 2 of the Securities Law is correct in law. Third, the commitments and guarantees claimed by Yang Ming—made by the Company’s financial officer and the relevant responsible persons of the audit institution—are not statutory reasons that would exempt him. Fourth, in the circumstances where Yang Ming was aware of issues in selling expense accounting, timely disclosure is not a reason to vote in favor when reviewing the annual report. Fifth, considering that Yang Ming is an external independent director, with relatively small subjective fault, and having fully considered the association between his duties and the Company’s information disclosure violations, we comprehensively consider the nature, circumstances, and degree of social harm of his illegal and noncompliant acts. We impose the lowest amount of fine within the statutory penalty range; the penalty magnitude is appropriate. His claim that independent director allowances and responsibilities are seriously mismatched is not a statutory reason to exempt administrative penalties. Sixth, regarding his claim that the time when the Company held its third audit committee meeting in 2024 was incorrect, after verification it is found to be true, and our bureau adopts it; however, it does not affect the determination of his responsibility. Seventh, the Company first under-accrued selling expenses and then over-accrued selling expenses to offset the prior under-accrual of selling expenses, which clearly constitutes financial fraud. Factors such as his non-financial professional background are not statutory reasons to exempt him from administrative penalties. The Company bears accounting responsibility, and the audit institution bears audit responsibility; the audit institution’s audit responsibility cannot replace the independent director’s responsibility.

In summary, regarding the correction part of Yang Ming’s defense opinions related to the time of the Company’s third audit committee meeting in 2024, our bureau has adopted it and reflected it in this decision letter. As to Yang Ming’s other opinions, our bureau does not adopt them.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law and Article 32 of the Administrative Penalty Law, our bureau decides:

To issue a warning to Yang Ming and impose a fine of RMB 500,000.

10. Penalty for Hu Jian

Pursuant to Article 82, Paragraph 3 of the Securities Law, the directors, supervisors, and senior management personnel of the issuer shall ensure that the information disclosed is true, accurate, and complete. Hu Jian, who previously served as an independent director of the Company and a member of the audit committee, attended the Company’s second and third audit committee meetings in 2024 and became aware that there were issues in the accounting of selling expenses. He failed to take effective measures to stop the Company’s financial fraud, signed the Company’s 2023 annual report and ensured that it was true, accurate, and complete. He failed to perform his duties diligently and faithfully, and is the other person directly responsible for Guizhou Bailin’s information disclosure violations.

The foregoing illegal facts are evidenced by company announcements, financial materials, business contracts, sales documents, meeting resolutions and records, statements of circumstances, transcripts of questioning records of relevant personnel, and other evidence, which are sufficient to establish.

During the statements, defenses, and hearing process, Hu Jian and his representatives put forward the following main opinions: First, the time for reviewing the 2023 annual report was limited. By attending the Company’s second and third audit committee meetings in 2024, it was determined that he became aware of issues in selling expense accounting, which constitutes an error in fact finding. Second, the issues in selling expense accounting were disclosed in the annual report. Making an administrative penalty decision against him pursuant to Article 197, Paragraph 2 of the Securities Law constitutes an error in the application of law. Third, before signing the Company’s annual report, he obtained commitments and guarantees, namely that the Company’s financial officer and relevant responsible persons of the audit institution committed and guaranteed that selling expenses would be handled according to accounting standards. Fourth, timely disclosure of the annual report is beneficial for maintaining the overall interests of listed companies and protecting the lawful rights and interests of minority shareholders. Fifth, his tenure as an independent director is not long, and he is not a financial professional; there is no subjective intent and no major negligence. He has performed his duties diligently and faithfully; the independent director allowance and responsibility are seriously mismatched. Sixth, the time when the Company held its third audit committee meeting in 2024 was incorrect. Seventh, under-accrual and over-accrual of selling expenses are different in nature matters. As an independent director who is not an accounting professional, he cannot know that the Company’s over-accrued selling expenses in 2023 are inconsistent with enterprise accounting standards and thus resulted in false records in the annual report. The audit institution is the responsible entity.

In summary, Hu Jian requests that he be exempted from penalties or that the penalty be mitigated or reduced.

After review and verification, our bureau holds that:

First, as Hu Jian was an independent director and a member of the audit committee at the relevant time, he attended the Company’s second and third audit committee meetings in 2024, became aware that there were issues in the accounting of selling expenses, and when reviewing the Company’s 2023 annual report, voted in favor to ensure that it was true, accurate, and complete. The existing evidence is insufficient to prove that Hu Jian performed his duties diligently and faithfully. Second, the 2023 annual report disclosed by Guizhou Bailin contains false records. It was determined that Hu Jian is another person directly responsible for Guizhou Bailin’s information disclosure violations. Making an administrative penalty decision against him pursuant to Article 197, Paragraph 2 of the Securities Law is correct in law. Third, the commitments and guarantees claimed by Hu Jian—made by the Company’s financial officer and relevant responsible persons of the audit institution—are not statutory reasons that would exempt him. Fourth, in the circumstances where Hu Jian was aware of issues in selling expense accounting, timely disclosure is not a reason for voting in favor when reviewing the annual report. Fifth, considering that Hu Jian is an external independent director, with relatively small subjective fault, we have fully considered the association between his duties and the Company’s information disclosure violations. After comprehensively considering the nature, circumstances, and degree of social harm of his illegal and noncompliant acts, within the statutory penalty range, we impose the lowest amount of fine; the penalty magnitude is appropriate. His claim that independent director allowances and responsibilities are seriously mismatched is not a statutory reason to exempt administrative penalties. Sixth, regarding his claim that the time when the Company held its third audit committee meeting in 2024 was incorrect, after verification it is found to be true, and our bureau adopts it; however, it does not affect the determination of his responsibility. Seventh, the Company first under-accrued selling expenses and then over-accrued selling expenses to offset the prior under-accrual of selling expenses, which clearly constitutes financial fraud. Factors such as his non-financial professional background are not statutory reasons to exempt him from administrative penalties. The Company bears accounting responsibility, and the audit institution bears audit responsibility; the audit institution’s audit responsibility cannot replace the independent director’s responsibility.

In summary, regarding the correction part of Hu Jian’s defense opinions related to the time of the Company’s third audit committee meeting in 2024, our bureau has adopted it and reflected it in this decision letter. As to Hu Jian’s other opinions, our bureau does not adopt them.

Based on the facts, nature, circumstances, and degree of social harm of the parties’ illegal acts, and pursuant to Article 197, Paragraph 2 of the Securities Law and Article 32 of the Administrative Penalty Law, our bureau decides:

To issue a warning to Hu Jian and impose a fine of RMB 500,000.

The above parties shall, within 15 days from the date of receipt of this administrative penalty decision letter, directly remit the fines to the national treasury. For the specific methods of payment, please refer to the instructions attached to this administrative penalty decision letter. In addition, the parties shall submit to our bureau for record the photocopies of the payment vouchers stamped with the parties’ names. If any party is dissatisfied with this administrative penalty decision, they may apply for administrative reconsideration to the China Securities Regulatory Commission within 60 days from the date of receipt of this administrative penalty decision letter (the application for administrative reconsideration may be sent to the CSRC Legal Affairs Division via postal courier), or may file an administrative lawsuit directly with the people’s court with jurisdiction within 6 months from the date of receipt of this administrative penalty decision letter. During the period of reconsideration and litigation, the above decisions do not stop being executed. II. Impact on the Company and Risk Warning

1. Based on the circumstances identified in the 《Administrative Penalty Decision》, the Company has not fallen into the circumstances of mandatory delisting for major violations as stipulated in Chapter 9, Section 5 of the 《Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange (2025 Amended)》.

2. Pursuant to the other risk warning circumstances stipulated in Article 9.8.1, Item (8) of the 《Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange (2025 Amended)》, the Company’s stock has been subject to other risk warnings. For details, please refer to the Company’s announcement disclosed on December 20, 2025, in the designated information disclosure media 《Securities Times》《Securities Daily》《China Securities Journal》《Shanghai Securities News》 and on the website of Cninfo (www.cninfo.com.cn): the “Announcement on the Implementation of Other Risk Warnings for the Company’s Stock and the Resumption of Trading After Suspension” (Announcement No.: 2025-054).

3. As of the date of disclosure of this announcement, the Company’s production and operation management and business activities are all operating normally.

The Board of Directors of the Company extends its sincere apology to investors regarding this matter. The Company and relevant personnel will earnestly draw lessons, improve internal control systems, enhance the level of corporate governance, strictly comply with relevant laws and regulations, continuously improve the quality of the Company’s information disclosure, and truthfully, accurately, completely, timely, and fairly fulfill information disclosure obligations to safeguard the Company and the interests of its shareholders.

4. The relevant information of the Company shall be subject to the announcements disclosed by the Company in the designated information disclosure media 《Securities Times》《Securities Daily》《China Securities Journal》《Shanghai Securities News》 and on the website of Cninfo (www.cninfo.com.cn). Investors are kindly requested to pay attention to the Company’s announcements and be mindful of investment risks.

Announcement is hereby issued.

Guizhou Bailin Enterprise Group Pharmaceutical Co., Ltd.

Board of Directors

March 27, 2026

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