The surprising indemnity amount held to be jointly borne by the directors of Kangmei Pharmaceutical due to the company’s securities misrepresentation has caused widespread concerns and heated discussions in the market. In the attached Chinese memorandum, we have briefly introduced directors’ primary fiduciary duties and their risks and liabilities related to discharge of such duties under applicable PRC laws and relevant administrative and judicial cases. We have also tried to provide some practical suggestions on how to best manage the relevant risks for your general reference. (Full text in Chinese only)