DEA Co., Ltd
Management system of raised funds
(revised in December 2021)
Chapter I General Provisions
Article 1 in order to standardize the management of the raised funds of DEA Co., Ltd. (hereinafter referred to as “the company”), improve the use efficiency of the raised funds and effectively protect the rights and interests of investors, in accordance with the company law of the people’s Republic of China, the securities law of the people’s Republic of China and the Listing Rules of Shenzhen Stock Exchange on the gem This system is hereby formulated in accordance with the relevant provisions of laws, regulations, normative documents such as the guidelines for the standardized operation of companies listed on the gem of Shenzhen Stock Exchange and the articles of association of DEA Co., Ltd. (hereinafter referred to as the “articles of association”). Article 2 the term “raised funds” as mentioned in this system refers to the funds raised by a listed company for specific purposes by issuing securities to unspecified objects or to specific objects (including stocks, convertible corporate bonds, etc.), but does not include the funds raised by a listed company through the implementation of an equity incentive plan.
Article 3 the board of directors of the company is responsible for establishing and improving the management system of the company’s raised funds and ensuring the effective implementation of this system. The directors, supervisors and senior managers of the company shall be diligent and responsible, urge the company to standardize the use of the raised funds, consciously maintain the safety of the raised funds, and shall not participate in, assist or connive at the company to change the purpose of the raised funds without authorization or in a disguised form.
Article 4 if the investment project with raised funds (hereinafter referred to as “raised investment project”) is implemented through the company’s subsidiaries or other enterprises controlled by the company, the company shall ensure that the subsidiaries or other enterprises controlled by the company comply with the system.
Article 5 during the period of continuous supervision, the recommendation institution shall perform the recommendation responsibility for the management and use of the company’s raised funds and carry out continuous supervision.
Chapter II deposit of raised funds in special account
Article 6 the company shall carefully select a commercial bank and open a special account for raised funds (hereinafter referred to as “special account”), and the raised funds of the company shall be deposited in a special account approved by the board of directors for centralized management, and the special account shall not be used for non raised funds or other purposes.
If the company has two or more financing, it shall set up special accounts for raised funds respectively.
Article 7 the company shall, within one month after the raised funds are in place, enter into an agreement with a recommendation institution or an independent financial consultant (the “agreement”). The tripartite agreement shall include the following contents:
(i) The company shall centrally deposit the raised funds in a special account;
（2） The account number of the special account for raised funds, the investment projects of the raised funds involved in the special account and the deposit amount; （3） If the company withdraws more than 50 million yuan or 20% of the net raised funds from the special account in one time or within 12 months, the company and the commercial bank shall timely notify the recommendation institution or independent financial adviser;
（4） The commercial bank shall issue a bank statement to the company every month and send a copy to the recommendation institution or independent financial adviser;
（5） A recommendation institution or an independent financial consultant may inquire about the special account information at a commercial bank at any time;
（6） The supervision responsibilities of the recommendation institution or independent financial adviser, the notification and cooperation responsibilities of the commercial bank, and the supervision methods of the recommendation institution or independent financial adviser and commercial bank on the use of the company’s raised funds;
（7） Rights, obligations and liabilities for breach of contract of the company, commercial banks, recommendation institutions or independent financial advisers;
（8） The company shall actively urge the commercial bank to perform the agreement. If the commercial bank fails to issue a statement of account or notify the special account of large withdrawal in time for three times, or fails to cooperate with the recommendation institution or the independent financial consultant to inquire and investigate the special account information, the company may terminate the agreement and cancel the special account for raised funds.
After the signing of the above agreement, the company shall report to Shenzhen stock exchange for filing and announce the main contents of the agreement.
Where a company implements a raised investment project through a holding subsidiary, a tripartite supervision agreement shall be jointly signed by the company, the holding subsidiary implementing the raised investment project, commercial banks, recommendation institutions or independent financial advisers. The company and its holding subsidiary shall be regarded as a common party.
If the above agreement is terminated in advance before the expiration of the term of validity, the company shall sign a new agreement with relevant parties within one month from the date of termination of the agreement, and make an announcement after timely filing with Shenzhen Stock Exchange.
Chapter III Administration of the use of raised funds
Article 8 the company shall use the raised funds prudently, ensure that the use of the raised funds is consistent with the prospectus or the commitments in the prospectus, and shall not change the investment direction of the raised funds at will or change the purpose of the raised funds in a disguised form.
The company shall truthfully, accurately and completely disclose the actual use of the raised funds. In case of any situation that seriously affects the normal progress of the investment plan of the raised funds, the company shall make a timely announcement.
Article 9 the raised funds shall not be used for financial investments such as entrusted financial management (except cash management), entrusted loans, high-risk investments such as securities investment and derivatives investment, and shall not be directly or indirectly invested in companies whose main business is the purchase and sale of securities.
The company shall not use the raised funds for pledge or other investments that change the purpose of the raised funds in a disguised form.
Article 10 the company shall ensure the authenticity and fairness of the use of the raised funds, prevent the raised funds from being occupied or misappropriated by the controlling shareholders, actual controllers and other related parties, and take effective measures to prevent the related parties from using the raised funds to invest in projects to obtain improper interests.
Article 11 under any of the following circumstances, the company shall re demonstrate the feasibility and expected income of the project and decide whether to continue to implement the project:
(i) Major changes have taken place in the market environment involved in the investment project with raised funds;
（2） The project invested with raised funds has been shelved for more than one year;
（3） Exceeding the completion period of the latest investment plan of raised funds and the investment amount of raised funds does not reach 50% of the relevant plan amount;
（4） Other abnormal circumstances occur in the project invested by the raised funds.
The company shall disclose the progress of the project and the reasons for abnormalities in the latest periodic report. If it is necessary to adjust the raised capital investment plan, the adjusted raised capital investment plan shall be disclosed at the same time.
Article 12 when the company uses the raised funds for the following matters, it shall be deliberated and approved by the board of directors, and the independent directors, the board of supervisors, the recommendation institution or the independent financial consultant shall express their explicit consent:
(i) Replace the self raised funds that have been invested in the project with the raised funds in advance;
（2） Use the temporarily idle raised funds for cash management;
（3） Use the temporarily idle raised funds to temporarily supplement the working capital;
（4） Change the purpose of the raised funds;
（5） Change the implementation location of the project invested by the raised funds;
（6） Adjust the schedule of the project invested with raised funds;
（7） Use the savings to raise funds.
If the company changes the purpose of the raised funds and uses the surplus raised funds to meet the deliberation standards of the general meeting of shareholders, it shall also be deliberated and approved by the general meeting of shareholders.
Article 13 if the company uses the surplus raised funds (including interest income) for other purposes after the completion of a single or all raised funds investment project, and the amount is less than 5 million yuan and less than 5% of the net raised funds of the project, it may be exempted from the above procedures, and its use shall be disclosed in the annual report.
If the company’s surplus raised funds (including interest income) reach or exceed 10% of the net raised funds of the project and exceed RMB 10 million, it shall also be deliberated and approved by the general meeting of shareholders.
Article 14 Where the company replaces the self raised funds that have been invested in the investment projects with the raised funds in advance, the accounting firm shall issue an authentication report.
If the company has disclosed in the issuance application document that it intends to replace the self raised funds invested in advance with the raised funds, and the amount invested in advance is determined, it shall make an announcement before the replacement is implemented.
Article 15 the company may conduct cash management on the temporarily idle raised funds, and the term of its investment products shall not exceed 12 months, meet the requirements of high safety and good liquidity, and shall not affect the normal progress of the investment plan of the raised funds.
Investment products shall not be pledged, and the special product settlement account (if applicable) shall not deposit non raised funds or be used for other purposes. If the special product settlement account is opened or cancelled, the company shall make a timely announcement.
Article 16 the board of directors shall make a timely announcement on the use of the idle funds after the meeting of the board of directors:
(i) The basic information of the raised funds, including the arrival time of the raised funds, the amount of the raised funds, the net amount of the raised funds and the investment plan;
（2） Use of raised funds, idle conditions and reasons, whether there is any behavior of changing the purpose of raised funds in a disguised form and measures to ensure that the normal progress of raised funds projects will not be affected;
（3） Name, issuer, type, quota, term, income distribution method, investment scope, expected annualized rate of return (if any), and specific analysis and description of the safety and liquidity of the investment products by the board of directors;
（4） Opinions issued by independent directors, board of supervisors, recommendation institutions or independent financial advisers.
When the company finds that the financial situation of the issuer of investment products is deteriorating and the invested products are facing losses and other major risks, it shall timely disclose the risk prompt announcement and explain the risk control measures taken by the company to ensure the safety of funds.
Article 17 Where the idle raised funds of the company are temporarily used to supplement working capital, they shall be limited to the production and operation related to the main business, and shall meet the following conditions:
(i) It shall not change the purpose of the raised funds in a disguised form or affect the normal operation of the investment projects with the raised funds;
（2） The previously raised funds used for temporary replenishment of working capital have been returned;
（3） The time for a single replenishment of working capital shall not exceed 12 months;
（4） The idle raised funds shall not be directly or indirectly used for high-risk investments such as securities investment and derivatives trading.
Article 18 where the company uses idle raised funds to supplement working capital temporarily, it shall timely announce the following contents after the deliberation and approval of the board of directors:
(i) The basic information of the raised funds, including the arrival time of the raised funds, the amount of the raised funds, the net amount of the raised funds and the investment plan;
（2） Use of raised funds, idle conditions and reasons;
（3） The reasons for the shortage of working capital, the amount and period of idle raised funds to supplement working capital; （4） The amount expected to save financial expenses when idle raised funds supplement working funds, whether there is any behavior of changing the investment direction of raised funds in a disguised form, and measures to ensure that the normal progress of investment projects with raised funds will not be affected;
（5） Opinions issued by independent directors, board of supervisors, recommendation institutions or independent financial advisers;
（6） Other contents required by Shenzhen Stock Exchange.
Before the due date of supplementary working capital, the company shall return this part of the capital to the special account for raised capital, and make an announcement within two trading days after all the capital is returned. If the company is expected to be unable to return this part of the funds to the special account for raised funds on schedule, it shall perform the review procedures in accordance with the requirements of the preceding paragraph before the due date and make a timely announcement. The contents of the announcement shall include the whereabouts of the funds, the reasons why they cannot be returned, the reasons why they continue to be used to supplement working capital and the time limit, etc. Article 19 the company shall, according to the development plan and the actual production and operation needs, properly arrange the use plan of the part of the net amount of funds actually raised exceeding the amount of funds planned to be raised (hereinafter referred to as “over raised funds”), scientifically and prudently conduct the feasibility analysis of the project, and timely disclose it after being submitted to the board of directors for deliberation and approval. The use plan announcement shall include the following contents:
(i) Basic information of the raised funds, including the arrival time of the raised funds, the amount of the raised funds, the amount of the actual net raised funds exceeding the planned raised funds, the name and amount of the invested projects, the cumulative planned amount and the actual amount used;
（2） Introduction to the projects planned to be invested, including the basic information of each project, whether related party transactions are involved, feasibility analysis, economic benefit analysis, investment schedule, description that the project has been obtained or is yet to be approved by relevant departments and risk tips (if applicable);
（3） Independent opinions of independent directors and sponsors on the rationality, compliance and necessity of the use plan of over raised funds.
If the planned single use of over raised funds reaches 50 million yuan and more than 10% of the total amount of over raised funds, it shall also be submitted to the general meeting of shareholders for deliberation and approval.
Article 20 Where the company uses the over raised funds to repay bank loans or permanently supplement working capital, it shall be deliberated and approved by the board of directors and the general meeting of shareholders. The independent directors, the recommendation institution or the independent financial adviser shall express their explicit consent and disclosure, and shall meet the following requirements:
(i) The amount used for permanent replenishment of working capital and repayment of bank loans shall not exceed 30% of the total amount of over raised funds every 12 months;
（2） The company shall not make securities investment, derivatives trading and other high-risk investments or provide financial assistance to objects other than holding subsidiaries within 12 months after replenishing working capital. The company shall make a clear commitment in the announcement.
Chapter IV alteration of investment projects with raised funds
Article 21 the company shall be deemed to have changed the purpose of the raised funds under the following circumstances:
(i) Cancel or terminate the original fund-raising projects and implement new projects;
（2） Change the implementation subject of the project invested by raised funds (except for the change of the implementation subject between the company and its wholly-owned subsidiaries);
（3） Change the implementation method of the project invested by the raised funds;
（4） Other circumstances identified by Shenzhen Stock Exchange as the purpose of the raised funds.
Article 22 the board of directors of the company shall select new investment projects scientifically and prudently, conduct feasibility analysis on new investment projects, ensure that the investment projects have good market prospects and profitability, effectively prevent investment risks and improve the use efficiency of raised funds.
Article 23 If the company intends to change the raised investment project into a joint venture, it shall carefully consider the necessity of joint venture on the basis of fully understanding the basic situation of the joint venture party. The company shall hold shares to ensure effective control over projects invested with raised funds.
Twenty-fourth
