Watson Biologics has received three regulatory measures in the past five years, and the 2025 compensation issues are under rectification for violations.

Yunnan Watson Biotechnology Co., Ltd. (Stock Code: 300142, Stock Name: Watson Biotech) announced on March 18 that it disclosed regulatory measures or penalties imposed by securities regulatory authorities and stock exchanges over the past five years. The announcement shows that the company has not been penalized by securities regulators or stock exchanges in the past five years, but has received three regulatory measures. In 2025, due to the failure of directors and senior management to follow statutory review procedures for compensation matters, regulatory measures were taken by the Yunnan Securities Regulatory Bureau and the Shenzhen Stock Exchange Growth Enterprise Market Department. The related rectification is still ongoing.

The announcement states that, given the company’s plan to issue shares to specific targets, a self-inspection was conducted regarding relevant situations over the past five years. The self-inspection results show that there have been no penalties from securities regulators or stock exchanges in the past five years.

Regarding regulatory measures, the company received a total of two administrative regulatory measures from the Yunnan Securities Regulatory Bureau and one regulatory letter from the Shenzhen Stock Exchange Growth Enterprise Market Department in the past five years. The details are as follows:

On July 1, 2021, the Yunnan Securities Regulatory Bureau issued the “[2021] No. 3” Decision on Corrective Measures to Yunnan Watson Biotechnology Co., Ltd., pointing out issues in the company’s investment decision-making and post-investment management of Zhuhai Hengqin Watson Investment Fund Partnership (Limited Partnership), including inadequate investment decision procedures and insufficient post-investment tracking. The bureau decided to impose corrective supervision measures and record the matter in the securities and futures market integrity archive. The company subsequently established a special rectification team, formulated a rectification plan, and submitted a report on the completion of rectification to the Yunnan Securities Regulatory Bureau on October 28, 2021.

On December 18, 2025, the Yunnan Securities Regulatory Bureau issued the “[2025] No. 015” Decision on Corrective Measures to Yunnan Watson Biotechnology Co., Ltd., regarding the company’s failure to submit director compensation matters for 2023 and 2024 for shareholder approval, and senior management compensation for 2023 and 2024 for board approval, in violation of regulations. The company was subjected to administrative regulatory measures for corrective action, recorded in the securities and futures market integrity archive. The next day, the Shenzhen Stock Exchange Growth Enterprise Market Department also issued a regulatory letter “[2025] No. 165” regarding the same matter.

In response to the 2025 regulatory measures, the company has established a special rectification team, formulated measures including revising compensation management systems, submitting the 2025 and 2026 director and senior management compensation matters separately for shareholder and board approval, strengthening compliance education, and holding relevant personnel accountable. As of the date of this announcement, the rectification has not been fully completed. The company will complete all rectifications within a specified period and report accordingly.

The announcement also states that, aside from the above matters, there have been no other regulatory measures imposed on the company by securities regulators or stock exchanges in the past five years.

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