Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd
internal control system
March, 2002
catalogue
Chapter I General Provisions 2 Chapter II Basic requirements 3 control activities focused in Chapter 3 Chapter IV information and communication Chapter V internal supervision 10 Chapter VI Supplementary Provisions eleven
Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd
internal control system
Chapter I General Provisions
Article 1 in order to effectively implement the risk management and process control of Avary Holding (Shenzhen) Co.Limited(002938) (Shenzhen) Co., Ltd. (hereinafter referred to as "the company"), ensure the safety of the company's operation and management, prevent and resolve all kinds of risks, improve operation efficiency and efficiency, and protect the legitimate rights and interests of investors. This system is formulated in accordance with the company law of the people's Republic of China, the securities law of the people's Republic of China, the stock listing rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board, the basic norms of internal control and other laws and regulations, and in combination with the actual situation of the company.
Article 2 the internal control mentioned in this system refers to the process in which the board of directors, the board of supervisors, senior managers and all employees of the company provide reasonable assurance to achieve the following objectives:
(I) ensure the implementation of relevant national laws, regulations and the company's internal rules and regulations;
(II) improve the operating efficiency and efficiency of the company;
(III) ensure the safety and integrity of the company's assets;
(IV) ensure that the company's information disclosure is true, accurate, complete and fair.
Article 3 the internal control system of the company shall follow the following principles:
(I) principle of comprehensiveness. Internal control shall run through the whole process of decision-making, implementation and supervision, covering various businesses and matters of the company and its subordinate enterprises.
(II) principle of importance. Internal control should pay attention to important business matters and high-risk areas on the basis of comprehensive control.
(III) principle of checks and balances. Internal control shall form mutual restriction and supervision in the aspects of governance structure, institutional setting, distribution of rights and responsibilities, business process, etc., and take into account the operation efficiency.
(IV) principle of adaptability. Internal control shall be adapted to the business scale, business scope, competition and risk level of the enterprise, and shall be adjusted in time with the changes of the situation.
(V) cost benefit principle. Internal control should weigh the implementation cost and expected benefits to achieve effective control at an appropriate cost.
Article 4 the board of directors is responsible for the establishment, improvement and effective implementation of internal control. The board of supervisors shall supervise the establishment and implementation of internal control by the board of directors. The operation management is responsible for organizing and leading the daily operation of the enterprise's internal control. Article 5 this system is applicable to the company and its wholly-owned or holding subsidiaries within the scope of consolidated statements (hereinafter referred to as "subsidiaries").
Chapter II Basic requirements
Article 6 the following elements shall be fully considered in the company's internal control:
(I) internal environment: the internal environment is the basis for the company to implement internal control, which generally includes governance structure, institutional setting and distribution of rights and responsibilities, internal audit, human resources policy, corporate culture, etc;
(II) risk assessment. Risk assessment is to timely identify and systematically analyze the risks related to the realization of internal control objectives in business activities, and reasonably determine the risk response strategy.
(III) control activities. The control activity is that the company adopts corresponding control measures according to the risk assessment results to control the risk within the tolerable degree.
(IV) information and communication. Information and communication refers to the company's timely and accurate collection and transmission of information related to internal control to ensure effective communication within the company and between the company and the outside.
(V) internal supervision. Internal supervision refers to the company's supervision and inspection of the establishment and implementation of internal control, evaluation of the effectiveness of internal control, and timely improvement of internal control defects found.
Article 7 the company formulates the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors, the detailed rules for the work of the CEO and other systems to improve the corporate governance structure and ensure the legal operation and scientific decision-making of the general meeting of shareholders, the board of directors and the board of supervisors; Establish an effective incentive and restraint mechanism, establish the awareness of risk prevention, cultivate a good corporate spirit and internal control culture, and create an environment for all employees to fully understand and perform their duties.
Article 8 the company shall clearly define the objectives, responsibilities and authorities of all departments, units and posts, and establish corresponding authorization, inspection and level by level accountability systems to ensure that they perform their functions within the scope of authorization; Establish a sound control structure and formulate control procedures at all levels to ensure that the resolutions of the board of directors and the instructions issued by senior managers can be strictly implemented.
Article 9 the internal control system of a listed company shall cover all business links related to financial reports and information disclosure in the company's business activities, including sales and collection, procurement and payment, inventory management and information disclosure management.
Article 10 the company shall focus on strengthening the management and control of subsidiaries, strengthen the control of important activities such as related party transactions, external guarantees, major investments and information disclosure, and establish corresponding control systems and procedures.
Article 11 the company shall establish a complete risk assessment system, continuously monitor the business risk, financial risk, market risk, policy and regulation risk and moral hazard, timely find and assess various risks faced by the company, and take necessary control measures.
Article 12 the company shall formulate management policies for internal and external information to ensure the accurate transmission of information, ensure that the board of directors, the board of supervisors, senior managers and the internal audit department timely understand the operation and risk status of the company, and ensure that all kinds of potential risks and internal control defects are properly handled.
Chapter III key control activities
Section 1 internal control of related party transactions
Article 13 the principle of fairness and credibility shall not be followed, and the related party transactions that are not open or voluntary shall not be concealed, and the related party transactions shall not damage the interests of the company.
Article 14 the general meeting of shareholders and the board of directors of the company shall, in accordance with the relevant provisions of the Listing Rules of Shenzhen Stock Exchange, the articles of association, the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors and the management system of related party transactions, exercise the authority to examine and approve related party transactions, and implement the deliberation procedures and voting avoidance requirements of related party transactions.
Article 15 the company shall refer to the Listing Rules of Shenzhen Stock Exchange and other relevant provisions to 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.
When the company and its subsidiaries conduct transactions, relevant responsible persons 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 their respective authorities. Article 16 when the company convenes the board of directors to consider related party transactions, the chairman of the meeting shall remind the related directors to avoid voting before the meeting voting. If the affiliated director fails to take the initiative to declare and withdraw, the director who knows the situation shall require the affiliated director to withdraw. When the company's general meeting of shareholders deliberates on related party transactions, the host of the meeting and the witness lawyer shall remind the related shareholders to avoid voting before the shareholders vote.
Article 17 when considering related party transactions, the company shall:
(I) understand the real situation of the transaction object in detail, including the operation status, profitability, whether there are rights defects such as mortgage and freezing, and legal disputes such as litigation and arbitration;
(II) learn more about the integrity record, credit status and performance ability of the counterparty, and carefully select the counterparty;
(III) determine the transaction price according to sufficient pricing basis;
(IV) in accordance with the requirements of the Listing Rules of Shenzhen Stock Exchange and when the Company deems it necessary, it shall hire an intermediary to audit or evaluate the transaction object.
Article 18 in case of any loss or possible loss to the company due to the occupation or transfer of the company's funds, assets or other resources by related persons, the board of directors of the company shall timely take protective measures such as litigation and property preservation to avoid or reduce the loss, and investigate the responsibilities of relevant personnel.
Section II internal control of external guarantee
Article 19 the internal control of the company's external guarantee shall follow the principles of legality, prudence, mutual benefit and safety, and strictly control the guarantee risk.
The general meeting of shareholders and the board of directors of the company shall exercise the approval authority in accordance with the explicit provisions on external guarantees in the articles of association and the external guarantee management system. When determining the approval authority, the company shall implement the relevant provisions on the cumulative calculation of external guarantees in the stock listing rules of Shenzhen Stock Exchange, and the company shall check all guarantees every year.
Article 20 the board of directors of the company shall fully investigate the operation and credit status of the guaranteed before considering the external guarantee proposal, carefully consider and analyze the financial status, operation status, industry prospect and credit status of the guaranteed, and make a prudent decision according to law. The company may, when necessary, hire an external professional institution to assess the guarantee risk as the basis for the decision-making of the board of directors or the general meeting of shareholders.
Article 21 the independent directors of the company shall express their independent opinions on the legality, compliance, impact on the company and existing risks when the board of Directors considers the external guarantee matters (except the guarantee provided to the subsidiaries within the scope of merger), and may hire an accounting firm to check the accumulated and current external guarantee of the company when necessary. If any abnormality is found, it shall be reported to the board of directors and regulatory authorities in time and announced.
Article 22 the company shall properly manage the guarantee contract and relevant original materials, timely clean up and inspect them, and regularly check with banks and other relevant institutions to ensure that the archived materials are complete, accurate and effective, and pay attention to the timeliness and duration of the guarantee. If the company finds any abnormal guarantee contract that has not been deliberated and approved by the board of directors or the general meeting of shareholders in the process of contract management, it shall timely report to the board of directors and the board of supervisors and make an announcement.
Article 23 the company assigns special personnel to continuously pay attention to the situation of the guaranteed, collect the latest financial information and audit report of the guaranteed, regularly analyze its financial situation and solvency, pay attention to its production and operation, assets and liabilities, external guarantee, division and merger, change of legal representative, etc., establish relevant financial files and report to the board of directors regularly. If it is found that the business condition of the guaranteed is seriously deteriorated or major events such as dissolution and division of the company occur, the relevant responsible person shall report to the board of directors in time. The board of directors shall take effective measures to minimize the loss.
Article 24 the company shall urge the guaranteed party to fulfill the debt repayment obligations within a limited time after the external guaranteed debts are due. If the guaranteed fails to perform its obligations on time, the company shall take necessary remedial measures in time. Article 25 If the debt guaranteed by the company needs to be extended after maturity and needs to continue to be guaranteed by it, it shall be used as a new external guarantee and re perform the guarantee approval procedures and information disclosure obligations.
Article 26 the external guarantee of the company's subsidiaries shall be subject to the above provisions mutatis mutandis.
Section III internal control over the use of raised funds
Article 27 the company shall do a good job in the storage, approval, use, change, supervision and accountability of the raised funds in strict accordance with the requirements of relevant laws and regulations and the company's measures for the management of raised funds. Article 28 the company shall prudently select a commercial bank and open a special account for raised funds (hereinafter referred to as "special account"), and the raised funds shall be deposited in the special account determined by the board of directors for centralized management, and the special account shall not be used for non raised funds or other purposes. The company shall, within one month after the receipt of the raised funds, sign a tripartite supervision agreement with the recommendation institution and the commercial bank storing the raised funds.
Article 29 the company shall formulate strict approval procedures and management procedures for the use of raised funds to ensure that the raised funds are used in accordance with the purposes of funds listed in the issuance application documents.
Article 30 the company shall track the progress of the project and the use of the raised funds to ensure that the investment project is implemented according to the company's commitment plan. Relevant departments shall detail the specific work progress, ensure that all work can be carried out as planned, and regularly report the specific work progress to the board of directors and the company's financial department. If the project cannot be carried out normally according to the investment plan due to unforeseen objective factors, the company shall timely perform the reporting and announcement obligations according to relevant regulations.
Article 31 the company shall follow up and supervise the use of the raised funds by the internal audit department and report to the company regularly
Report of the board of directors.
The independent directors and the board of supervisors shall supervise the use of the raised funds and regularly inspect the use of the raised funds. Independent directors may, in accordance with the provisions of the articles of association, hire an accounting firm to conduct a special audit on the use of the raised funds.
Article 32 the company actively cooperates with the supervision of the sponsor, actively informs the sponsor of the use of its raised funds, and authorizes the sponsor representative to inquire about the withdrawal of raised funds at relevant banks and provide other necessary cooperation and materials.
Article 33 If the company really needs to change the purpose of the raised funds or the investment mode of the project due to changes in the market, it must be reviewed by the board of directors, notified to the recommendation institution and the recommendation representative, and submitted to the general meeting of shareholders for approval according to law.
Article 34 If the company really needs to change the purpose of the raised funds or the investment mode of the project due to changes in the market, it must be reviewed by the board of directors, notified to the recommendation institution and the recommendation representative, and submitted to the general meeting of shareholders for approval according to law.
Article 35 If the company decides to terminate the original investment project with raised funds, it shall select a new investment project as soon as possible. The board of directors of the company shall carefully analyze the feasibility, necessity and investment benefits of the investment projects with newly raised funds.
Article 36 the company shall comprehensively check the progress of the investment projects with raised funds after the end of each fiscal year, and make corresponding disclosure in the periodic report.
Section IV internal control of major investment
Article 37 the company shall pay attention to
