Measures for the administration of venture capital
Chapter I General Provisions
Article 1 in order to regulate the venture capital behavior of Anhui Huilong Agricultural Means Of Production .Co.Ltd(002556) (hereinafter referred to as “the company”), strengthen risk control, prevent investment risks, and protect the rights and interests of investors and the company, in accordance with 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 and other laws and regulations These measures are formulated in accordance with the relevant provisions of normative documents and Anhui Huilong Agricultural Means Of Production .Co.Ltd(002556) articles of Association (hereinafter referred to as the “articles of association”) and in combination with the actual situation of the company.
Article 2 the term “venture capital” as mentioned in these Measures refers to securities investment and its derivatives investment, fund investment, futures investment, entrusted financial management and other investment activities recognized by Shenzhen Stock Exchange.
The following situations do not belong to the “venture capital” in this system:
(I) fixed income investment or commitment to capital preservation;
(II) participating in the allotment of shares or exercising the preemptive right of other listed companies;
(III) for the purpose of strategic investment, purchase more than 10% of the total share capital of other listed companies and plan to hold securities investment for more than 3 years;
(IV) investments made before the company’s initial public offering and listing;
(V) investment behavior aimed at expanding the production scale of main business or extending the industrial chain.
Article 3 principles of venture capital:
(I) the company’s venture capital shall comply with relevant provisions of national laws, regulations, normative documents and so on; (II) the company’s venture capital should be cautious, strengthen risk control and reasonably evaluate benefits;
(III) the venture capital of the company must adapt to the asset structure, be of appropriate scale and act according to its ability, and cannot affect the normal operation of its main business.
Article 4 the capital source of the company’s venture capital is the company’s own capital. The company shall strictly control the capital scale of venture capital, shall not affect the normal operation of the company, and shall not use the raised funds for venture capital.
Article 5 the company shall not make venture capital during the following periods:
(I) temporary replenishment of working capital with idle raised funds;
(II) within 12 months after changing the investment direction of the raised funds to permanently supplement the working capital;
(III) within 12 months after the over raised funds are permanently used to supplement working capital or repay bank loans.
Chapter II decision making authority
Article 6 the approval authority of the company for venture capital is as follows:
If the amount of a single investment or the cumulative amount for 12 consecutive months is less than 50 million yuan, it shall be approved by the board of directors. If the amount of a single investment or the cumulative amount for 12 consecutive months is more than 50 million yuan, it shall be approved by the general meeting of shareholders.
Article 7 when the company is engaged in derivatives trading, the management shall issue a feasibility analysis report on derivatives trading and submit it to the board of directors, which can be implemented only after it is reviewed and approved by the board of directors and disclosed in time. Independent directors shall express special opinions. If the company engages in derivative transactions beyond the authority of the board of directors and not for the purpose of hedging, it shall be implemented only after the board of directors has deliberated and approved, the independent directors have issued special opinions, and submitted to the general meeting of shareholders for deliberation and approval.
If the company intends to engage in derivatives trading, it shall issue a special analysis report on the necessity and risk management measures before the shareholders’ meeting.
Article 8 derivatives related party transactions between the company and related parties shall be submitted to the general meeting of shareholders for deliberation and announced after deliberation.
Article 9 when the company conducts securities investment and derivatives transactions, if it is difficult to perform the review procedures and disclosure obligations for each investment transaction due to the transaction frequency and timeliness requirements, it can reasonably predict the investment scope, investment amount and period of the above matters, and the relevant provisions of the review procedures and information disclosure obligations shall apply based on the amount of the amount.
The service life of the relevant limit shall not exceed 12 months, and the trading amount of securities investment and derivatives (including the relevant amount of reinvestment of the income of the above investment) at any point in the period shall not exceed the investment limit. Article 10 the company shall set appropriate stop loss limits for various derivatives or different counterparties, clarify the business process of stop loss processing, and strictly implement the stop loss provisions.
The company shall track the changes in the open market price or fair value of derivatives, timely assess the changes in the risk exposure of traded derivatives, and submit a risk analysis report to the management and the board of directors, including the implementation of derivatives trading authorization, the position of derivatives trading, the results of risk assessment, the profit and loss of derivatives trading in the current period, the implementation of stop loss limit, etc.
Article 11 for entrusted financial management, the company shall select a qualified professional financial management institution with good credit status and financial status, no bad credit record and strong profitability as the trustee, and sign a written contract with the trustee to clarify the amount, term, investment variety, rights, obligations and legal liabilities of both parties. Article 12 the company shall not evade the deliberation procedures and information disclosure obligations that should be performed for the acquisition of major assets or major foreign investment through the name of entrusted financial management and other investment, or provide financial assistance to others in a disguised form. Where the company can control or significantly influence the investment direction of financial products, it shall fully disclose the final investment direction of funds, the details of the involved counterparties or the underlying assets, and fully disclose the investment risks and the company’s countermeasures.
Article 13 Where a listed company engaged in entrusted financial management is under any of the following circumstances, it shall timely disclose the relevant progress and the countermeasures to be taken:
(I) financial products fail to be raised, fail to complete filing and registration, terminate in advance, and cannot be recovered upon expiration; (II) change of main terms of financial product agreement or relevant guarantee contract;
(III) major risk events occur in the operation or financial status of the trustee or fund user;
(IV) other situations that may damage the interests of the company or have important impact.
Chapter III Management Organization
Article 14 the approval power of venture capital belongs to the company, and the subordinate companies of the company have no right to approve venture capital projects. If the following affiliated companies intend to make venture capital, they shall first report the scheme and relevant materials to the company, and the subordinate companies can implement it only after the company performs relevant procedures and obtains approval. Where the company’s venture capital investment in a joint-stock company has a great impact on the company’s performance, the company shall perform the corresponding information disclosure obligations with reference to the provisions of these measures.
Article 15 the personnel participating in the formulation and implementation of venture capital projects must have solid venture capital theory and relevant experience. When necessary, external institutions and experts can be hired to consult and demonstrate the investment projects, so as to improve the scientificity of investment decision-making and the level of investment management.
Article 16 the Securities Investment Department of the company is specifically responsible for the investigation, analysis and preliminary evaluation of venture capital projects, providing analysis and demonstration materials and investment suggestions, as well as the daily management of venture capital projects.
Article 17 the Finance Department of the company is responsible for the capital and financial management of venture capital projects. The finance department shall conduct accounting treatment in a timely manner according to the obtained delivery order and other valid vouchers, timely archive the relevant transaction data as important business data, and establish and improve the venture capital management standing book and Sub Ledger.
Article 18 the Audit Department of the company is responsible for auditing and supervising the use and development of funds involved in venture capital, conducting comprehensive inspection or spot check on the approval, actual operation, fund use and profit and loss of venture capital matters regularly or irregularly, issuing corresponding opinions on whether the variety, time limit, amount and authorized approval procedures of venture capital meet the regulations, and reporting to the audit committee of the board of directors.
Article 19 the Secretary of the board of directors of the company is responsible for handling the information disclosure of venture capital in accordance with the provisions of laws, regulations, normative documents and company systems related to venture capital.
Article 20 a listed company shall disclose the securities investment and derivatives transactions that have been carried out during the reporting period in its regular reports.
Chapter IV Risk Control
Article 21 when making venture capital, the company must implement the principle of strict risk control. Venture capital operators and fund managers are separated, restricted and supervised by each other. The company’s fund allocation for venture capital must perform the corresponding approval process in accordance with the company’s internal control system of fund expenditure.
Article 22 the venture capital of the company shall be conducted in accordance with the principle of separation of management and account. The trading account shall be managed by the investment department of the company, and the capital account shall be managed by the financial department of the company. The funds used for venture capital shall be transferred into the trading account by the financial department of the company according to the amount approved by the board of directors and the general meeting of shareholders.
Article 23 the board of supervisors of the company has the right to inspect the venture capital of the company, review the venture capital matters submitted to the board of directors for deliberation and express independent opinions.
Article 24 the independent directors of the company have the right to inspect the development of venture capital matters, review the venture capital matters submitted to the board of directors for deliberation and express independent opinions.
Article 25 the board of directors of the company shall regularly understand the implementation progress and investment benefits of major investment projects. After the completion of the investment project, the chairman shall organize relevant departments and personnel to evaluate the venture capital project, calculate the investment income or loss, as well as the problems in the process of project implementation, and make a written report to the board of directors.
Article 26 before making venture capital decisions and operations, the relevant departments of the company shall be aware of the provisions of relevant laws, regulations and normative documents on venture capital, and shall not conduct illegal transactions. Where the company suffers losses due to violation of relevant laws and regulations, this system and other provisions of the company and failure to conduct transactions in accordance with the company’s established investment plan, the relevant responsible personnel shall bear corresponding responsibilities according to the specific circumstances.
Chapter V Information Disclosure
Article 27 when making venture capital, the company shall perform the obligation of information disclosure in time in strict accordance with the requirements of Shenzhen Stock Exchange.
Article 28 the board of directors of the company shall submit the following documents to Shenzhen Stock Exchange within two trading days after making the venture capital decision:
(I) resolutions and announcements of the board of directors;
(II) independent opinions of independent directors on compliance of relevant approval procedures, establishment and perfection of internal control procedures, impact on the company and other matters;
(III) the recommendation institution or independent financial consultant shall check the compliance of the venture capital, its impact on the company, possible risks, and whether the risk control measures taken by the company are sufficient and effective, and issue opinions with clear consent (if any);
(IV) securities accounts and capital accounts opened in the name of the company (applicable to stock and its derivatives investment, fund investment and futures investment).
Article 29 when investing in stocks and their derivatives, funds and futures, the company shall at least disclose the following contents:
(I) investment overview, including investment purpose, investment amount, investment mode, investment period, capital source, etc;
The investment quota mentioned above includes the amount of reinvestment of securities investment income, that is, the amount of securities investment at any point in time shall not exceed the investment quota.
(II) internal control system of investment, including investment process, fund management, responsible departments and responsible persons; (III) risk analysis of investment and risk control measures to be taken by the company;
(IV) impact of investment on the company;
(V) opinions of independent directors;
(VI) opinions of recommendation institution or independent financial consultant (if any);
(VII) other contents required by Shenzhen Stock Exchange.
Article 30 when the company investigates, negotiates and evaluates venture capital projects, insiders of inside information shall be obliged to keep confidential the undisclosed information they have learned, and shall not disclose it to the public in any form without authorization. In case of serious impact or loss to the company due to dereliction of duty or violation of the regulations of this system, the company will give the responsible person corresponding criticism, warning, or even terminate the labor contract according to the situation; If the circumstances are serious, the China Securities Regulatory Commission will impose administrative and economic penalties; Those suspected of committing a crime shall be transferred to the judicial organ for handling.
Chapter VI supplementary provisions
Article 31 the terms “above”, “within” and “below” in these measures include this number; “Less than”, “other than”, “less than” and “more than” do not include this number.
Article 32 matters not covered in these Measures shall be implemented in accordance with relevant laws, regulations, normative documents, articles of association and other relevant provisions.
Article 33 the board of directors of the company shall be responsible for the interpretation of these measures.
Article 34 these Measures shall come into force as of the date of deliberation and adoption by the general meeting of shareholders of the company, and the same shall apply when amending.
Board of directors
March 2022
