Hengdian Group Dmegc Magnetics Co.Ltd(002056) related party transaction decision-making system
Chapter I General Provisions
Article 1 in order to regulate the related party transactions of Hengdian Group Dmegc Magnetics Co.Ltd(002056) (hereinafter referred to as “the company”), ensure the legality, fairness and rationality of the related party transactions between the company and related parties, and ensure that the related party transactions of the company do not damage the legitimate rights and interests of the company and minority shareholders, According to the company law of the people’s Republic of China (hereinafter referred to as the company law), the securities law of the people’s Republic of China (hereinafter referred to as the Securities Law), the accounting standards for Business Enterprises No. 36 – disclosure of related parties, and the stock listing rules of Shenzhen Stock exchange (hereinafter referred to as the Listing Rules) This system is formulated in accordance with relevant laws, administrative regulations, normative documents and relevant provisions of the articles of association, such as the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions.
Article 2 in addition to the provisions of relevant laws, administrative regulations, normative documents and the articles of association, the related party transactions between the company and related parties shall also comply with the relevant provisions of this system.
Chapter II related parties, related relationships and related transactions
Article 3 the affiliated persons of the company include affiliated legal persons (or other organizations) and affiliated natural persons.
A legal person (or other organization) under any of the following circumstances shall be an affiliated legal person (or other organization) of the company:
(I) legal person (or other organization) that directly or indirectly controls the company;
(II) legal persons (or other organizations) other than the company and its holding subsidiaries directly or indirectly controlled by the legal persons (or other organizations) mentioned in the preceding paragraph;
(III) legal persons (or other organizations) other than the company and its holding subsidiaries that are directly or indirectly controlled by the company’s affiliated natural persons, or serve as directors (excluding independent directors of both parties) and senior managers;
(IV) legal persons (or other organizations) holding more than 5% of the shares of the company and their persons acting in concert; (V) China Securities Regulatory Commission (hereinafter referred to as “CSRC”), Shenzhen Stock Exchange (hereinafter referred to as “Shenzhen Stock Exchange”) or other legal persons (or other organizations) identified by the company according to the principle of substance over form that have a special relationship with the company and may or have caused the company to favor its interests.
A natural person under any of the following circumstances shall be an affiliated natural person of the company:
(I) natural persons who directly or indirectly hold more than 5% of the shares of the company;
(II) directors, supervisors and senior managers of the company;
(III) directors, supervisors and senior managers of legal persons (or other organizations) who directly or indirectly control the company;
(IV) close family members of the persons mentioned in items (I) and (II) of this article, including spouses, parents, children over the age of 18 and their spouses, brothers and sisters and their spouses, parents of spouses, brothers and sisters of spouses and parents of children’s spouses;
Legal persons (or other organizations) and natural persons who have any of the situations mentioned in paragraphs 2 and 3 in the past 12 months or in the next 12 months according to relevant agreements are affiliated persons of the listed company. (V) other natural persons identified by the CSRC, Shenzhen Stock Exchange or the company as having special relationship with the company according to the principle of substance over form, which may cause or have caused the company to favor its interests.
Article 4 related relationships mainly refer to the ways or means that have the ability to directly or indirectly control or exert significant influence on the company in financial and business decisions, including but not limited to the equity relationship, personnel relationship, management relationship and commercial interest relationship between related parties and the company. The related relationship shall be substantially judged from the specific way, way and degree of the related person’s control or influence on the company.
Article 5 the company shall, in accordance with the listing rules and other relevant provisions of the Shenzhen Stock Exchange, determine the list of related parties of the company and update it in time to ensure that the list of related parties is true, accurate and complete. The company’s directors, supervisors, senior managers, shareholders holding more than 5% of the shares and their persons acting in concert and actual controllers shall timely submit the list of the company’s connected persons and the description of the connected relationship to the company’s board of directors.
When the company and its subordinate holding subsidiaries have transaction activities, the relevant responsible person shall carefully consult the list of related parties and carefully judge whether it constitutes related party transactions. If it constitutes a connected transaction, it shall perform the obligations of examination and approval and reporting within its respective authority.
Article 6 related party transactions refer to the transfer of resources or obligations between the company or its holding subsidiaries and related parties of the company, including but not limited to:
(I) purchase or sale of assets;
(II) foreign investment (including entrusted financial management, investment in subsidiaries, etc.);
(III) providing financial assistance;
(IV) provide guarantee (including guarantee for holding subsidiaries);
(V) lease in or lease out assets;
(VI) entrusted or entrusted management of assets and businesses;
(VII) donated or donated assets;
(VIII) reorganization of creditor’s rights or debts;
(IX) transfer or transfer of R & D projects;
(x) sign the license agreement;
（11） Waiver of preemptive rights (including preemptive rights)
（12） Purchase products, raw materials, fuel and power;
（13） Selling products and commodities;
（14） Providing or receiving labor services;
（15） Entrusted or entrusted sales;
（16） Deposit and loan business;
（17） Joint investment with related parties;
（18） Other matters that may cause the transfer of resources or obligations through agreement;
（19） Other matters identified by the CSRC and the Shenzhen Stock Exchange as related party transactions.
Article 7 the company’s connected transactions shall follow the following basic principles:
(I) conform to the principle of good faith;
(II) the principle of not damaging the legitimate rights and interests of the company and non affiliated shareholders;
(III) if the affiliated person enjoys the voting right of the general meeting of shareholders of the company, he shall withdraw from voting;
(IV) any interested director shall withdraw when the board of directors votes on the matter; (V) the board of directors of the company shall judge whether the related party transaction is beneficial to the company according to objective standards, and shall employ professional appraisers or independent financial advisers when necessary;
(VI) independent directors need to express independent opinions on major connected transactions.
Article 8 the company shall take effective measures to prevent related parties from interfering in the operation of the company by monopolizing procurement and sales business channels and damaging the interests of the company and non related shareholders. The price or charging principle of connected transactions shall not deviate from the price or charging standard of independent third parties in the market. The company shall fully disclose the pricing basis of related party transactions.
Article 9 related party transactions between the company and related parties shall be subject to written contracts or agreements, and follow the principles of equality, voluntariness and compensation for equal value. The contents of the contracts or agreements shall be clear and specific.
Article 10 the company shall take effective measures to prevent shareholders and their related parties from occupying or transferring the company’s funds, assets and other resources in various forms.
Chapter III decision making procedures for connected transactions
Article 11 at the beginning of each year, the management department, business department, subsidiaries and factories with operation right under the jurisdiction of the company shall submit an annual application for daily connected transaction prediction to the Finance Department of the company according to their business needs. The application contents include but are not limited to:
(I) name and domicile of related parties;
(II) specific types of related party transactions, actual transaction amount of the previous year, estimated transaction amount of the current year, and reasons for differences;
(III) determine the principles and pricing basis of related party transactions;
(IV) other matters to be specified;
(V) the application report shall be signed by the head of the Department, the chief of the finance section and the handler.
During the operation and management of the management department, business division, subsidiaries and factories with operation right under the company, if the annual amount of daily connected transactions may exceed the expected amount at the beginning of the year, or encounter the situation that should be determined as accidental connected transactions between the company and connected persons according to the regulations of this system, Relevant departments shall timely report the application for related party transactions to the Finance Department of the company before the occurrence of excess or occasional related party transactions, and implement it only after being approved by the person or institution authorized by the company.
The management department, business units, subsidiaries and factories with operation rights shall review and control the necessity, rationality and fairness of pricing of related party transactions.
Article 12 after receiving the related party transaction application report from the management department, business division, subsidiaries and factories with the right to operate, the Finance Department of the company shall timely verify with relevant departments, and report the verified related party transaction application to the Secretary Office of the board of directors, who shall have the authority specified in this related transaction decision-making system, Submit the specific contents and written reports of related party transactions to the chairman, the board of directors or the general meeting of shareholders for approval.
Article 13 the board of directors of the company shall inform the independent directors of the related party transactions in advance and obtain the prior written approval of the independent directors before issuing the notice of convening the interim board meeting to all directors.
Article 14 when the board of Directors considers related party transactions, the directors shall make a clear judgment on the necessity, fairness, true intention and impact on the listed company of the related party transactions, and pay special attention to the pricing policy and basis of the transactions, including the fairness of the assessed value, the relationship between the transaction price of the transaction object and the book value or the assessed value, etc, Strictly abide by the avoidance system of connected directors, and prevent the use of connected transactions to regulate profits, transfer interests to connected persons and damage the legitimate rights and interests of the company and minority shareholders.
Article 15 when considering the relationship transaction, the directors shall know the real situation of the transaction object and the integrity record, credit status and performance ability of the counterparty in detail, determine the transaction price according to sufficient pricing basis, and focus on whether there are problems such as unclear situation of the transaction object, uncertain situation of the counterparty and uncertain transaction price.
Article 16 if the matters considered by the board of directors are related to a director, the director shall disclose his related relationship to the board of directors of the company before the meeting of the board of directors. If necessary, he shall answer the related transactions at the board of directors according to the questions of the directors.
When the board of directors of the company considers related party transactions, related directors shall avoid voting and shall not exercise voting rights on behalf of other directors. The meeting of the board of directors can be held only when more than half of the non affiliated directors are present, and the resolutions made at the meeting of the board of directors must be adopted by more than half of the non affiliated directors. If the number of non affiliated directors attending the board of directors is less than three, the listed company shall submit the transaction to the general meeting of shareholders for deliberation.
The affiliated directors mentioned in the preceding paragraph include the following directors or directors under any of the following circumstances:
(I) counterparty;
(II) working in the counterparty, or in the legal person (or other organization) that can directly or indirectly control the counterparty, or the legal person (or other organization) that is directly or indirectly controlled by the counterparty;
(III) having direct or indirect control over the counterparty;
(IV) close family members of the counterparty or its direct or indirect controller;
(V) close family members of the directors, supervisors and senior managers of the counterparty or its direct or indirect controllers;
(VI) directors whose independent business judgment may be affected due to other reasons identified by the CSRC, Shenzhen Stock Exchange or the company.
Article 17 when the general meeting of shareholders deliberates on related party transactions, related shareholders shall avoid voting and shall not exercise voting rights on behalf of other shareholders.
The affiliated shareholders mentioned in the preceding paragraph include shareholders under any of the following circumstances:
(I) counterparty;
(II) having direct or indirect control over the counterparty;
(III) directly or indirectly controlled by the counterparty;
(IV) directly or indirectly controlled by the same legal person (or other organization) or natural person as the counterparty; (V) work in the counterparty, or in the legal person (or other organization) that can directly or indirectly control the counterparty, or the legal person (or other organization) that is directly or indirectly controlled by the counterparty; (VI) close family members of the counterparty and its direct and indirect controllers;
(VII) the voting rights are restricted or affected due to the existence of outstanding equity transfer agreements or other agreements with the counterparty or its affiliates;
(VIII) shareholders identified by China Securities Regulatory Commission or Shenzhen stock exchange that may cause the company to tilt its interests.
Article 18 when the general meeting of shareholders deliberates on related party transactions, related shareholders shall not participate in voting, and the number of voting shares they represent shall not be included in the total number of voting shares. The announcement of the resolution of the general meeting of shareholders shall fully disclose the voting of non affiliated shareholders.
When considering related transactions at the general meeting of shareholders, related shareholders shall take the initiative to explain the situation to the general meeting of shareholders and make it clear that they will not participate in the voting. If the affiliated shareholders do not take the initiative to explain the affiliated relationship, other shareholders may require them to explain the situation and avoid voting. If a related shareholder fails to explain the situation or abstains from voting, the number of shares held by the related party transaction shall not be included in the total number of effective voting shares.
The related shareholders who should be avoided may participate in the review of related party transactions involving themselves. If necessary, they shall explain and explain to the general meeting of shareholders whether the related party transactions are fair, legal and the reasons for their occurrence.
If the related shareholders explicitly indicate their withdrawal, other shareholders attending the general meeting of shareholders shall deliberate and vote on the related transaction matters, which shall be approved by more than half of the voting rights held by the non related shareholders (including shareholders’ agents) attending the general meeting of shareholders.
After the general meeting of shareholders, if other shareholders find that related shareholders participate in the voting of related party transactions, they have the right to sue the people’s court for relevant resolutions in accordance with the provisions of the articles of association.
Article 19 in addition to the provisions of article 6.3.13 of the listing rules, if the transaction between the company and related parties meets one of the following standards, it shall be submitted to the board of directors for deliberation and disclosed in time.
(I) transactions with related natural persons with a transaction amount of more than 300000 yuan;
(II) transactions with affiliated legal persons (or other organizations) with a transaction amount of more than 3 million yuan and accounting for more than 0.5% of the absolute value of the latest audited net assets of the listed company.
The company shall not provide loans to directors, supervisors and senior managers directly or through subsidiaries.
Article 20 in addition to the provisions of article 6.3.13 of the listing rules, if the transaction between the company and related parties meets one of the following standards, it shall be submitted to the general meeting of shareholders for deliberation and disclosed in time
