Measures for the administration of external guarantees
(revised in March 2022)
Chapter I General Provisions
Article 1 in order to regulate the external guarantee behavior of China Jushi Co.Ltd(600176) (hereinafter referred to as “the company”) according to law, prevent financial risks and ensure the stable operation of the company, in accordance with the company law of the people’s Republic of China, the guarantee law of the people’s Republic of China, the notice of the CSRC and the CBRC on regulating the external guarantee behavior of listed companies, the stock listing rules of Shanghai Stock Exchange and other laws and regulations These measures are formulated in accordance with the relevant provisions of normative documents and China Jushi Co.Ltd(600176) articles of Association (hereinafter referred to as the “articles of association”).
Article 2 the term “external guarantee” as mentioned in these Measures refers to the guarantee, asset mortgage, pledge and other guarantees provided by the company for any other unit with its own assets or reputation. These measures are not applicable to the guarantee provided by the company for its own debts.
Article 3 the guarantee provided by the company for its subsidiaries shall be regarded as external guarantee.
Article 4 the company shall implement unified management of guarantee, and its branches shall not provide guarantee to others. Foreign guarantee provided by wholly-owned subsidiaries and holding subsidiaries shall be reported to the company for approval.
Article 5 in principle, the company’s external guarantee shall require the guaranteed to provide counter guarantee, and the provider of counter guarantee shall have the actual bearing capacity. The counter guarantee provided by the guaranteed must correspond to the amount of guarantee provided by the company. External guarantee must be approved by the board of directors, the general meeting of shareholders or its authorized institution according to the specified procedures.
Article 6 these measures are applicable to the company, wholly-owned subsidiaries and holding subsidiaries.
Chapter II object of external guarantee
Article 7 the company can provide guarantee for its wholly-owned subsidiaries and holding subsidiaries.
Article 8 the company shall not directly or indirectly provide guarantee for unincorporated units and individuals (including those whose shareholders and affiliates are natural persons).
Article 9 for wholly-owned subsidiaries, the company can provide full guarantee for them; For holding subsidiaries, in principle, the company shall provide guarantee for the guaranteed according to the shareholding ratio not higher than that.
Article 10 the company may provide full guarantee for the holding subsidiary under the following conditions:
(I) after verification by the company, the guaranteed is indeed unable to finance with its own assets or credit;
(II) other shareholders of the guaranteed shall provide sufficient counter guarantee for the guarantor or the guaranteed shall provide sufficient counter guarantee for the guarantor according to the shareholding proportion of the guaranteed.
Chapter III Examination and approval authority of external guarantee
Article 11 the following external guarantees of the company shall be submitted to the general meeting of shareholders for deliberation after being deliberated and approved by the board of directors. Other guarantees shall be examined and approved by the board of directors or its authorized authority.
(I) the amount of a single guarantee exceeds 10% of the company’s latest audited net assets;
(II) any guarantee provided after the total amount of external guarantee of the company, wholly-owned subsidiaries and holding subsidiaries exceeds 50% of the company’s latest audited net assets;
(III) any guarantee provided after the total amount of guarantee provided by the company, wholly-owned subsidiaries and holding subsidiaries exceeds 30% of the total audited assets of the company in the latest period;
(IV) according to the principle of cumulative calculation of the guarantee amount within 12 consecutive months, the guarantee exceeds 30% of the company’s latest audited total assets;
(V) the guarantee provided for the guarantee object whose asset liability ratio exceeds 70%;
(VI) guarantees provided to shareholders, actual controllers and their affiliates;
(VII) other guarantees stipulated by Shanghai Stock Exchange or the articles of association.
The above-mentioned “total external guarantee amount of the company, wholly-owned subsidiaries and holding subsidiaries” refers to the sum of the total external guarantee amount of the company including the guarantee amount of the company to wholly-owned subsidiaries and holding subsidiaries and the total external guarantee amount of wholly-owned subsidiaries and holding subsidiaries.
When the voting rights held by the shareholders in Item (IV) of the preceding paragraph are approved by the shareholders’ meeting, they shall be approved by the shareholders’ meeting in Item (III) of the preceding paragraph.
Article 12 the guarantee matters within the authority of the board of directors shall not only be approved by more than half of all directors, but also be approved by more than two-thirds of the directors attending the meeting of the board of directors.
When the board of directors deliberates the proposal to provide guarantee for the actual controller and its affiliates, the affiliated directors shall withdraw, and shall not exercise the voting right on the resolution, nor exercise the voting right on behalf of other directors. The board meeting can be held only when more than half of the unrelated directors are present. The resolutions made at the board meeting can be adopted only with the consent of more than two-thirds of the unrelated directors and more than two-thirds of all the independent directors attending the board meeting. If the number of unrelated directors attending the board of directors is less than 3, the board of directors shall not continue to consider the related matter this time, but shall submit the matter to the general meeting of shareholders for consideration.
Article 13 when the general meeting of shareholders deliberates the guarantee matters in Item (IV) of Article 11 of these measures, it shall be approved by more than two-thirds of the voting rights held by the shareholders present at the meeting.
When the general meeting of shareholders deliberates the guarantee proposal provided for the actual controller and its affiliates, the actual controller and its affiliates shall not participate in the voting, and the voting shall be approved by more than half of the voting rights held by other shareholders attending the general meeting of shareholders.
Chapter IV Examination of external guarantees
Article 14 before deciding to provide guarantee, the company shall master the credit status of the unit applying for guarantee. Focusing on the financial department of the company, investigate and evaluate the credit status of the unit applying for guarantee. After fully analyzing the benefits and risks of the guarantee, a written report shall be submitted to the board of directors for consideration. When the guaranteed project changes, it shall be reorganized for review and evaluation.
The Finance Department of the company shall require the applicant to provide the following materials for review and analysis:
(I) basic information of the guarantor (including business license, organization code certificate, tax registration certificate, articles of association, business scope, relationship with the company and other relationships);
(II) recent audited financial reports and analysis of repayment ability, asset quality, financial status, operation, industry prospect and credit status of the applicant;
(III) guarantee method, term, amount, etc;
(IV) the legality of the guarantee project applied for, the feasibility study report of the guarantee project, and copies of the contract related to the guarantee contract;
(V) materials for comprehensive evaluation of the real estate, movable property and right ownership of the counter guarantee applied for by the guarantee unit;
(VI) other necessary information.
Article 15 the board of directors shall carefully examine the financial status, industry prospect, business status, credit and reputation of the applicant for guarantee, and shall not provide guarantee to the applicant under any of the following circumstances or if the information provided is insufficient:
(I) the company provided guarantee for it for the last time, resulting in overdue repayment of debts, arrears of interest, etc;
(II) in the opinion of the board of directors, the guarantee may have other damages to the interests of the company or shareholders;
(III) other circumstances identified in the articles of association that cannot provide guarantee.
Chapter V handling department and responsibilities of external guarantee
Article 16 the handling department of external guarantee is the Department responsible for investment and financing business of the company, and legal counsel can be hired to assist in handling when necessary.
Article 17 in the process of external guarantee, the main responsibilities of the Department responsible for investment and financing business of the company are as follows: (I) handle specific external guarantee procedures;
(II) track and supervise the guaranteed enterprise in time after providing external guarantee;
(III) earnestly do a good job in the filing and management of documents related to the guaranteed enterprise;
(IV) handle other matters related to external guarantee.
Article 18 in the process of external guarantee, the main responsibilities of legal counsel are as follows:
(I) cooperate with the finance department in the qualification examination of the guaranteed enterprise and provide legal feasibility suggestions to the board of directors of the company;
(II) be responsible for drafting or legally reviewing all documents related to external guarantee;
(III) be responsible for handling legal disputes in the process of external guarantee;
(IV) after the company actually assumes the guarantee liability, it shall be responsible for handling the recovery of the guaranteed enterprise and other matters; (V) handle other legal matters related to external guarantee.
Chapter VI conclusion of guarantee contract
Article 19 for external guarantees that meet the relevant standards of these measures, after the resolution of the board of directors or the general meeting of shareholders, the chairman or his authorized representative shall sign the guarantee contract.
Article 20 a guarantee contract must comply with the provisions of relevant laws and regulations, and the contents of the contract must be specific and clear. Legal advisers or experts shall be consulted for the conclusion of guarantee business contracts.
Article 21 when concluding a standard guarantee contract, all obligatory terms shall be strictly examined in combination with the credit status of the guaranteed unit. When the mandatory terms may cause unpredictable risks to the company, it shall refuse to provide guarantee.
Article 22 a guarantee contract shall specify the following terms:
(I) creditors and debtors;
(II) the type and amount of principal creditor’s rights guaranteed;
(III) the time limit for the debtor to perform its obligations;
(IV) guarantee method;
(V) scope of guarantee;
(VI) guarantee period;
(VII) other matters that the parties consider necessary to be agreed.
Article 23 when accepting counter guarantee mortgage and counter guarantee pledge, the Finance Department of the company shall go through the mortgage or pledge registration procedures in time together with the legal adviser.
Chapter VII risk management of guarantee
Section I management before creditors claim creditor’s rights against the company
Article 24 the investment and financing business department of the company shall designate personnel to be responsible for the management, keep the relevant guaranteed property and certificate of rights in a centralized and proper manner, review the existence and value of the guaranteed property regularly, and deal with problems found in a timely manner. Establish a guarantee business record system to comprehensively record the object, amount, term of guarantee, articles, rights and other relevant matters used for mortgage and pledge. Before the debt guaranteed by the company is due, the person in charge of handling shall actively urge the guaranteed to fulfill the repayment obligation according to the agreed time.
Article 25 the person in charge of handling shall pay attention to the production and operation, changes in assets and liabilities, external guarantees and other debts, division, merger, changes in legal representative and changes in external business reputation of the guaranteed unit, especially the repayment due, analyze the possible risks, and report in time according to the actual situation and procedures. For the guarantee of continuous creditor’s rights for which the guarantee period is not agreed, if the person in charge of handling finds that there is a great risk in the continuous guarantee and it is necessary to terminate the guarantee contract, he shall report in time.
Article 26 the investment and financing business department of the company can monitor the guaranteed units and guaranteed projects in the following ways according to the actual situation:
(I) participate in the meetings, talks and meetings of the guaranteed unit related to the guaranteed project;
(II) review the implementation progress and finance of the guaranteed project;
(III) when the Company deems it necessary, it can send personnel to work in the guaranteed unit, and the guaranteed unit shall provide convenience and support.
The investment and financing business department of the company shall take effective measures according to the above situation, put forward corresponding treatment measures for possible risks, and report to the board of directors of the company. In case of abnormal conditions, the guaranteed unit shall be required to take effective measures to resolve the risks in time.
Article 27 when it is found that the guaranteed entity fails to perform its repayment obligations within 15 working days after the maturity of its debts, or the guaranteed entity goes bankrupt, liquidates, or the creditor claims that the guaranteed entity performs its guarantee obligations, the company shall timely understand the debt repayment of the guaranteed entity and disclose relevant information in a timely manner after knowing it.
Article 28 If the debt guaranteed by the company needs to be extended after maturity and the company needs to continue to provide guarantee, it shall be used as a new external guarantee and re perform the guarantee approval procedure.
Section II management when creditors claim claims against the company
Article 29 If the secured unit fails to perform its obligations and the secured creditor claims against the company, the company shall immediately start the counter guarantee recovery procedure and report to the board of directors at the same time.
Article 30 when the company is the general guarantor, it shall not assume the guarantee liability to the debtor in advance without the decision of the board of directors of the company before the dispute over the guarantee contract has not been litigated or arbitrated and the debtor’s property has been enforced according to law.
Article 31 when creditors give up or delay in claiming the guarantee of debt, they shall not decide to perform all or part of the guarantee liability without the decision of the board of directors of the company.
Article 32 after the people’s court accepts the bankruptcy case of the guaranteed unit, if the secured creditor fails to declare his creditor’s rights, the person in charge of handling shall request the company to participate in the distribution of bankruptcy property and exercise the right of recourse in advance.
Article 33 If there are more than two guarantors in a suretyship contract and it is agreed with the creditor to bear the suretyship liability according to the share, it shall refuse to bear the additional suretyship liability exceeding the share of the company.
Chapter VIII information disclosure of external guarantee
Article 34 in case of any external guarantee, the company shall disclose it to the public in a timely manner after deliberation by the board of directors.
Article 35 for the disclosed guarantee matters, the company shall also disclose them in time under any of the following circumstances:
(I) the guaranteed fails to perform the repayment obligation within 15 trading days after the maturity of the debt;
(II) bankruptcy and other circumstances seriously affecting the repayment ability of the guarantor.
Article 36 when disclosing trading matters, the company shall submit the following documents to the Shanghai Stock Exchange: (I) draft of announcement;
(II) agreement or letter of intent related to guarantee;
(III) the resolution of the board of directors, the draft of the announcement of the resolution of the board of directors and the opinions of independent directors (if applicable); (IV) approval documents of the competent authority involved in the guarantee (if applicable);
(V) professional reports issued by securities service institutions (if applicable);
