Daye Special Steel Limited By Share Ltd ---- Fifth Meeting Of The Third Meeting Of The Board Of Directors Resolution Announcement

Daye special steel Limited by Share Ltd

The third meeting of the Fifth Board of directors

Notice of resolution

All members of the company and its board of directors guarantee the authenticity, accuracy and completeness of the information disclosure. There is no false record, misleading statement or major omission.

The third meeting of the Fifth Board of directors of the Daye special steel Limited by Share Ltd issued a notice in writing, fax or e-mail in July 18, 2008. It was convened by way of communication in July 22, 2008. The meeting should reach 11 directors and 11 directors.

The meeting is in conformity with the relevant provisions of the company law and the articles of association.

After careful deliberation of the meeting, the board deliberated the vote and passed the "statement on rectification of corporate governance".

Notice hereby.

Daye special steel Limited by Share Ltd

Board of directors

July 22, 2008

Daye special steel Limited by Share Ltd

Statement on rectification of corporate governance

According to the spirit of Document No. [2008]27 of the China Securities Regulatory Commission and the notice of the Hubei Securities Regulatory Commission on further promoting the special activities of corporate governance, in order to further improve the governance level of listed companies and consolidate the special results of corporate governance in 2007, the company continues to push the activity forward. The company's rectification and rectification activities listed in the June 30, 2008 corporate governance rectification report are as follows:

First, the company should take the necessary measures to gradually reduce and avoid related pactions, and thoroughly solve the competition between the company and the controlling shareholders and the actual controllers.

In recent years, the company has attached great importance to the work of related party pactions, formulated the management system, implemented the rectification measures, and standardized related pactions in the contents, prices and procedures of the paction.

In 1-6 months of this year, the Ministry of Finance initially estimated that through related measures such as expanding procurement channels and reducing the supply of billets by related parties, the related party pactions could be reduced. For example, the number of pellets purchased from major shareholders decreased by more than 20% over the same period last year, and the number of billets and billets sold to major shareholders decreased by more than 40% over the same period last year.

However, due to the tremendous changes in the external environment and the requirements of the company's development, only a substantial increase in the price of bulk raw materials and an increase in the output of iron and steel rods and the purchase of main raw materials and increasing consumption of gas will increase the number of related pactions by more than 800 million yuan. These factors increase the total amount of related party pactions.

In the first half of this year, compared with the same caliber in the first half of last year, the amount of company related pactions reduced by nearly 6% compared with the first half of last year, showing a decrease trend.

The company has the same industry as the controlling shareholder and the actual controller under the iron and steel enterprise, and its main business is similar.

However, there are great differences in the variety, process and specifications of the products.

The company mainly focuses on mold, electroslag, annealed, forged, continuous casting, and so on. The controlling shareholders are mainly seamless steel tubes and medium and small size lumber. The actual controllers are mainly steel, straight bar and special materials. In the area of sale, the company is mainly in Central China, and the subordinate enterprises controlled by actual controllers are mainly in East China and North China.

In recent years, especially in recent years, the iron and steel enterprises under the controlling shareholder and the actual controllers have, in accordance with the principle of specialization, adjusted the product mix, divided the product categories and specifications, established their respective market positioning, and invested and built in accordance with the development goals, thus solving the problem of competition in the same industry.

Two, the company further improve the internal control system, give full play to the role of Specialized Committee under the board of directors, and improve the scientificity and effectiveness of board decisions.

Since the beginning of this year, new requirements for company management have been put forward according to the changes in the external environment. In order to further implement the "brand, high quality and high efficiency" work principles and themes, the company has formulated and revised 11 management systems and 2 management standards. 24 new management systems have been developed by various departments, which have enriched and perfected the company's system, adapted to the requirements of production and operation and administration, and enhanced the competitiveness and profitability of the company, and promoted the stable and sustainable development of the company in the fierce market competition.

At the same time, the auditing department of the company has strengthened the supervision and inspection of the implementation of the system. Through the audit of production and business activities, tendering and construction, capital and expenses, it found problems in time, and put forward suggestions for improvement, which provided a basis for improving the system and further strengthened internal control.

The four Specialized Committee, including the board strategy, nomination, audit, remuneration and assessment, have established the theme of the work, focusing on the compilation of the annual report of the company in 2007, the change of the board of directors and the technical renovation project in 2008.

The strategy committee of the board of directors seriously studied the implementation of the technological pformation in 2007. In view of the company's production and development, it studied the company's technical pformation plan in 2008, and provided a demonstration plan for the board's decision making.

In the general election of the board of directors, the board of directors nominated the Committee carefully studied and examined the candidates for the directors, and recommended qualified directors for the board's changing work. According to the requirements of the China Securities Regulatory Commission, the board of auditors made the annual audit procedures before making the company's annual report in 2007, and clarified the responsibilities and procedures of the annual audit work, so as to improve the quality of information disclosure.

Before compiling the annual report of the company in 2007, the audit committee negotiated with the accounting firm the time arrangement for the annual financial report audit. Before and after the annual examination of the CPA, two financial and accounting statements issued by the company or the accounting firm were examined.

Before the board of Directors examined the 2007 annual report, the Audit Committee deliberated and voted on the annual audit report.

While presenting the audit report to the board of directors, it also submitted a summing up report on the annual audit conducted by the accounting firm and a resolution to renew the accounting firm in the next year.

The board of directors remuneration and assessment committee, in the company's 2007 annual directors, supervisors, senior management of the performance of the assessment of the situation, considered the remuneration distribution, submitted to the board of directors for approval.

The conscientious and responsible work of the Specialized Committee of the board ensures the scientificity and effectiveness of the board's decisions.

Three, the company should strengthen the training of directors, supervisors and senior management personnel, enhance their awareness of standardized operation, and improve the standard operation level of the company.

According to the requirements of keeping pace with the times and scientific development, the company has intensified its efforts in studying and training directors, supervisors and senior managers, focusing on the company law, the securities law, the guidelines for listing companies, the opinions on improving the quality of listed companies, the amendment to the criminal law of the People's Republic of China (six), the supplementary provisions of the Ministry of public security of the Supreme People's Procuratorate on the standard of prosecution for economic crimes, the rules for the listing of shares in Shenzhen stock exchange, the management rules governing the shares of the directors, supervisors and senior management of listed companies, and the articles of association.

The whole study is based on self-study, supplemented by internal training and expert teaching.

The company organized internal training, mainly explaining the general knowledge of corporate governance, focusing on the contents of "three operation", "five separation", "information disclosure rules" and "executive stock ownership change rules", which made directors, supervisors and senior managers familiar with and master the basic knowledge of corporate governance, and laid the foundation for the standardized operation of the company. In the first half of this year, in response to the drastic changes in the steel market, and how to enhance the company's ability to participate in competition, the company invited Chinese steel experts to explain the situation of the steel industry and the Countermeasures for enterprise development, so that directors, supervisors, senior management and management personnel could recognize the new situation, new characteristics and new measures of the development of enterprises in the market competition, and increased their horizons and broaden their horizons. In the second half of last year, special activities for corporate governance were launched.

In order to cooperate with the learning work, the company has not only given the above learning materials to every director, supervisor or senior manager, but also issued supplementary guidance materials such as "company law, securities law, new and old articles, concise interpretation", "restricted area of financial business" and "China capital market development report", etc., which helps to learn and understand the securities laws and regulations.

Through study and training, directors, supervisors and senior managers have strengthened their sense of integrity, diligence and standardization, faithfully performed their duties and attended the board of directors, board of supervisors and shareholders' meetings on time to fulfill their duties for the company's development.

Four, strengthen and improve investor relations management, enhance investor confidence in the company and corporate image.

Establishing long-term and stable good relations between companies and investors is an important task to enhance corporate governance.

The board of directors and managers of the company attach great importance to and actively carry out investor relations work, and put forward the purpose, policy, principles, contents, methods and organizational leadership of the investor relations work, formulated and implemented the management system of the company investor relations work and the reception and promotion system, and conscientiously organized and implemented them.

The company strictly implements the information disclosure system, discloses periodic reports in accordance with the time stipulated by the Shenzhen Stock Exchange, and promptly announcements the interim announcement on major matters of the company.

In the disclosure of periodic reports, we should pay close attention to the detailed analysis of the development strategy, business situation, objective environment, risk factors and plans and measures of the new year to attract investors' attention. At the shareholders' meeting, the chairman of the company, the general manager, the chairman of the board of supervisors and the person in charge of finance seriously answer the questions raised by the shareholders. On the website of the company, the company announcements and the company's product introduction, rules and regulations, and major financial indicators are published in time, and an interactive platform is also opened, so that investors can communicate with and communicate with the company.

The company has consulted many investors through telephone consultation and "one to one" communication. Since this year, more than ten securities research institutions or fund companies have received on-site research and on-site visits. In line with the principles of openness, fairness and impartiality, investors have been treated equally, and excessive publicity has been avoided, and internal information has been kept confidential.

Through multi-modal and multi-channel exchanges and communication, investors have the right to know and other legitimate rights and interests, which helps investors to understand and identify the company and enhance the image of the company.

After the rectification of the listed company's rectification report, we have further enhanced our understanding of the standardized operation of the company and enhanced the consciousness of improving the company's quality.

Corporate governance is a long-term work.

For the problems that have been corrected, we should continuously improve, consolidate and improve the situation according to the requirements of the development of the situation. At the same time, we should continue to analyze and study and effectively solve new problems and new problems that may arise in corporate governance.

In the future, the directors, supervisors and senior managers of the company will further strengthen the study of relevant laws and regulations and constantly improve their own quality so as to meet the requirements of the continuous development and change of the special steel market and capital market, continue to improve the internal control system, strengthen the internal control system, strive to improve management efficiency and operational efficiency, standardize related party pactions, continue to reduce related party pactions, improve investor relations management, enhance corporate governance level, create more excellent results, and repay investors.

Daye special steel Limited by Share Ltd

Board of directors

July 22, 2008