Kelin Environmental Protection Equipment Inc(002499) “management system for preventing the occupation of funds by controlling shareholders and related parties”
It was deliberated and adopted at the 13th meeting of the 5th board of directors on March 14, 2022
It needs to be reviewed and approved by the company’s first extraordinary general meeting in 2022
catalogue
Chapter I General Provisions Chapter II principles and measures to prevent fund occupation Chapter III accountability and punishment 6 Chapter IV Supplementary Provisions six
Chapter I General Provisions
Article 1 in order to standardize the fund management of Kelin Environmental Protection Equipment Inc(002499) (hereinafter referred to as “the company” or “the company”), prevent the controlling shareholders and other related parties from occupying the company’s funds, and fully protect the legitimate rights and interests of shareholders, especially minority shareholders and the company, in accordance with the company law of the people’s Republic of China and the securities law of the people’s Republic of China The standards for the governance of listed companies, the accounting standards for business enterprises – related party relations and their disclosure, the Listing Rules of Shenzhen Stock Exchange (hereinafter referred to as the “Listing Rules”) The system is formulated in accordance with the articles of association of Kelin Environmental Protection Equipment Inc(002499) Corporation (hereinafter referred to as the articles of association) and the decision-making system of Kelin Environmental Protection Equipment Inc(002499) related party transactions (hereinafter referred to as the decision-making system of related party transactions).
Article 2 the term “occupation of funds” as mentioned in this system includes but is not limited to: occupation of operating funds and occupation of non operating funds.
Operating fund occupation refers to the fund occupation generated by the controlling shareholders and related parties through related party transactions in production and operation links such as procurement and sales; Occupation of non operating funds refers to the creditor’s rights formed by paying wages, welfare, insurance, advertising and other expenses in advance for the controlling shareholders and related parties, paying funds for repaying debts on behalf of the controlling shareholders and related parties, lending funds directly or indirectly to the controlling shareholders and related parties with compensation or free, and undertaking guarantee liabilities for the controlling shareholders and related parties, Other funds provided to controlling shareholders and related parties without consideration for goods and services.
Article 3 the “related parties” mentioned in this system refer to the related parties defined in the listing rules and the related party transaction decision-making system, including related legal persons and related natural persons.
Article 4 this system is applicable to all capital transactions between the company and its subsidiaries and related parties included in the scope of the company’s consolidated accounting statements.
Kelin Environmental Protection Equipment Inc(002499) “management system for preventing related parties from occupying the company’s funds”
Chapter II principles and measures to prevent fund occupation
Article 5 the controlling shareholders and actual controllers of the company shall not damage the legitimate rights and interests of the company and public shareholders through the occupation of funds.
Article 6 the directors, supervisors and senior managers of the company have legal obligations to maintain the safety of the company’s funds.
Article 7 the company shall prevent the controlling shareholders and related parties from directly or indirectly occupying the company’s funds and resources through various means. The company shall not directly or indirectly provide funds, assets and resources to the controlling shareholders and related parties by means of advance payment of wages, welfare, insurance, advertising and other period expenses, advance investment payment, or bear costs and other expenses on behalf of each other.
Article 8 the company shall not directly or indirectly provide funds to controlling shareholders and other related parties in the following ways:
(I) lend the company’s funds to the controlling shareholders and other related parties with compensation or free of charge; (II) providing entrusted loans to related parties through banks or non bank financial institutions;
(III) entrust the controlling shareholder and other related parties to carry out investment activities;
(IV) issuing commercial acceptance bills without real transaction background for controlling shareholders and other related parties;
(V) repay debts on behalf of controlling shareholders and other related parties;
(VI) other methods identified by laws, regulations, normative documents and the articles of association.
Article 9 the related party transactions between the company and its controlling shareholders and related parties must be made and implemented in strict accordance with the listing rules, the articles of association and the related party transaction decision-making system.
Article 10 the company shall strictly prevent the occupation of non operating funds by major shareholders and related parties, and do a good job in the construction of a long-term mechanism to prevent their non operating occupation of funds.
Kelin Environmental Protection Equipment Inc(002499) “management system for preventing related parties from occupying the company’s funds”
Article 11 the board of directors of the company shall review and approve the related party transactions between the company and the controlling shareholders and related parties in accordance with its authority and responsibilities. Related party transactions exceeding the approval authority of the board of directors shall be submitted to the general meeting of shareholders for deliberation.
Article 12 the board of directors of the company is responsible for preventing the occupation of funds by controlling shareholders and related parties. In case of illegal occupation of funds by related parties, the board of directors shall take effective measures to require related parties to immediately stop infringement, find out the facts, compensate for losses, and timely report to the regulatory authorities as required, so as to protect the legitimate rights and interests of the company and minority shareholders.
Article 13 in principle, the company’s funds occupied by related parties shall be paid off in cash. Under the condition of complying with the current laws and regulations, financial innovation can be explored for repayment, but it needs to be reported to the relevant departments for approval according to the legal procedures.
Article 14 when the major shareholders and related parties of the company intend to use non cash assets to pay off the Occupied Funds of the company, they shall comply with the following provisions:
(I) the assets used for compensation must belong to the same business system of the company, which is conducive to enhancing the independence and core competitiveness of the company and reducing related party transactions. They must not be assets that have not been put into use or assets without objective and clear book value;
(II) the company shall employ an intermediary institution qualified for securities and futures related business to evaluate the assets that meet the conditions of offsetting debts with assets, and take the assessed value of assets or the audited net book value as the pricing basis of offsetting debts with assets, but the final pricing shall not harm the interests of the company, and give a discount by taking full account of the present value of the Occupied Funds; The audit report and evaluation report shall be announced to the public;
(III) independent directors shall express independent opinions on the debt repayment scheme of the company’s major shareholders and related parties, or hire an intermediary qualified for securities and futures related business to issue an independent financial advisory report;
(IV) the debt repayment plan of the company’s major shareholders and related parties shall be reviewed and approved by the general meeting of shareholders, and the related party shareholders shall withdraw from voting.
Kelin Environmental Protection Equipment Inc(002499) “management system for preventing related parties from occupying the company’s funds”
Article 15 at the end of each fiscal year, the company shall hire an accounting firm responsible for the annual audit of the company to issue special instructions on the occupation of non operating funds and other related capital transactions. The company shall make a public announcement on the special instructions.
Article 16 in case of illegal occupation of funds, the company shall formulate a debt settlement plan according to law, and timely report and announce it to the securities regulatory authority and Shenzhen stock exchange according to law and requirements.
Chapter III accountability and punishment
Article 17 when the directors, supervisors and senior managers of the company assist and connive at the controlling shareholders and related parties to encroach on the company’s assets, the board of directors of the company shall punish the person directly responsible according to the seriousness of the circumstances, and propose to the general meeting of shareholders to remove the director who has great responsibility; If losses are caused to the company, the company has the right to require it to bear the liability for compensation according to law.
Article 18 If the board of directors of the company finds that the controlling shareholder or actual controller embezzles the company’s assets, it shall immediately apply for judicial freezing, that is, “freezing upon occupation”. If it cannot be paid off in cash, it shall repay the embezzled funds by realizing its equity.
Article 19 the company has the right to impose administrative and economic penalties on the relevant responsible persons if the company is occupied by non operating funds of related parties, which has an adverse impact on the company.
Article 20 if the company violates the provisions of these measures and causes losses to investors due to the non operational occupation of funds and illegal guarantee by related parties, the company shall, in addition to giving administrative and economic penalties to the relevant responsible persons, investigate the legal responsibilities of the relevant responsible persons according to law.
Chapter IV supplementary provisions
Article 21 matters not covered in this system shall be implemented in accordance with laws, regulations, normative documents, the provisions of Shenzhen Stock Exchange, the articles of association and the decision-making system for connected transactions.
Kelin Environmental Protection Equipment Inc(002499) “management system for preventing related parties from occupying the company’s funds”
Where relevant laws, regulations, normative documents and relevant provisions of Shenzhen Stock Exchange have other provisions on matters under this system, such provisions shall prevail.
Article 22 the system shall come into force and come into force from the date of deliberation and adoption by the general meeting of shareholders.
Article 23 the system shall be interpreted by the board of directors authorized by the general meeting of shareholders.
