Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) measures for preventing the occupation of funds by controlling shareholders and related parties (revised in April 2022)
Chapter I General Provisions
Article 1 in order to establish a long-term mechanism to prevent the controlling shareholders and related parties from occupying Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) (hereinafter referred to as the “company”) funds and prevent the controlling shareholders and related parties from occupying funds, according to the company law of the people’s Republic of China (hereinafter referred to as the company law) and the securities law of the people’s Republic of China (hereinafter referred to as the Securities Law) These measures are formulated in accordance with the guidelines for the supervision of listed companies No. 8 – regulatory requirements for capital transactions and external guarantees of listed companies, the rules for the listing of shares of Shanghai Stock Exchange and other laws, regulations and normative documents, as well as the relevant provisions of the Lanzhou Lishang Guochao Industrial Group Co.Ltd(600738) articles of Association (hereinafter referred to as the articles of association).
Article 2 fund occupation includes operating fund occupation and non operating fund occupation. 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 the wages, welfare, insurance, advertising and other expenses advanced for the controlling shareholders and related parties, the funds paid to repay the debts on behalf of the controlling shareholders and related parties, the funds lent directly or indirectly to the controlling shareholders and related parties for compensation or free, and the guarantee liability for the controlling shareholders and related parties, Other funds used by controlling shareholders and related parties without the provision of goods and services. Chapter II principles for preventing the occupation of funds by controlling shareholders and related parties Article 3 the occupation of funds of the company shall be strictly limited in the business capital transactions between the company and controlling shareholders and related parties. The company shall not provide funds, assets and resources directly or indirectly to the controlling shareholders and their related parties by means of advance payment of wages, welfare, insurance, advertising and other period expenses, payment of management fees, advance investment payments, etc., nor bear costs and other expenses on behalf of each other.
Article 4 the company shall not directly or indirectly provide funds to controlling shareholders and related parties in the following ways:
(I) lend the company’s funds to the controlling shareholders and related parties with compensation or free of charge; (II) providing entrusted loans to related parties through banks or non bank financial institutions;
(III) entrust controlling shareholders and related parties to carry out investment activities;
(IV) issuing commercial acceptance bills for controlling shareholders and related parties without real transaction background;
(V) repay debts on behalf of controlling shareholders and related parties;
(VI) other methods recognized by the CSRC.
Article 5 related party transactions between the company and its controlling shareholders and related parties must be made and implemented in strict accordance with national laws, regulations, normative documents, the articles of association and the company’s related party transaction decision-making system.
Article 6 the guarantee provided by the company to the controlling shareholders and related parties shall be deliberated and approved by the general meeting of shareholders.
Chapter III responsibilities and measures
Article 7 the company strictly prevents the controlling shareholders and related parties from occupying non operating funds, and does a good job in the construction of a long-term mechanism to prevent the controlling shareholders from occupying non operating funds. Article 8 the directors, supervisors, senior managers of the company and the chairman and general manager of each subsidiary shall perform their duties diligently in accordance with the articles of association, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors and the working system of the general manager, so as to maintain the safety of the company’s funds and property.
Article 9 the chairman of the company is the first responsible person for preventing the occupation of funds and clearing the debts.
Article 10 the company sets up a leading group to prevent the controlling shareholders and related parties from occupying the company’s funds, with the chairman as the group leader and the chief financial officer as the Deputy group leader, and the members are composed of relevant personnel from the financial department and the audit department. The group is the daily supervision organization to prevent the controlling shareholders and related parties from occupying the company’s funds.
Article 11 the board of directors of the company shall, in accordance with its authority and responsibilities, consider and approve the related party transactions between the company and the controlling shareholders and related parties through production and operation links such as procurement and sales.
Article 12 when the company conducts related party transactions with controlling shareholders and related parties, the capital approval and payment process must strictly implement the related party transaction agreement and relevant provisions on capital management.
Article 13 when a subsidiary of the company conducts business related party transactions such as procurement and sales with the controlling shareholders and related parties of the company, it must sign an economic contract with real transaction background. If the signed contract cannot be executed on schedule due to market reasons, the actual situation of the failure to perform the contract shall be explained in detail, and the contract shall be terminated after negotiation between the two parties as the basis for the return of the advance payment.
Article 14 the financial department of the company shall regularly inspect the company and its subsidiaries, report the review of non operating capital transactions with the controlling shareholders and related parties, and eliminate the non operating occupation of funds by the controlling shareholders and related parties.
Article 15 the directors, supervisors and senior managers of the company shall always pay attention to whether the company has misappropriated funds by the controlling shareholders and their related parties and encroached on the interests of the company. The independent directors and supervisors of the company shall check the capital transactions between the company and related parties at least once a quarter to understand whether the company is occupied or transferred by the controlling shareholders and their related parties. In case of any abnormality, they shall timely request the board of directors of the company to take corresponding measures.
Article 16 as the audit and supervision organization of the board of directors of the company, the audit department shall be responsible for the supervision and inspection of business activities and the implementation of internal control, evaluate the inspection objects and contents, put forward improvement and handling opinions, and ensure the implementation of internal control in accordance with the principle conducive to prior, in-process and post supervision.
Article 17 in case of illegal occupation of funds by controlling shareholders and their related parties, the company shall formulate a debt settlement plan according to law and timely report and announce it to the securities regulatory authority and Shanghai stock exchange according to law, so as to protect the legitimate rights and interests of the company and public shareholders.
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 the controlling shareholders and their related parties, the board of directors of the company shall timely take protective measures such as litigation, property preservation and equity freezing to avoid or reduce the loss. If the controlling shareholder or actual controller takes advantage of his / her control position to cause damage to the rights and interests of the company and other shareholders, the board of directors shall make a claim for compensation and investigate his / her responsibility according to law. The board of directors of the company shall “freeze upon occupation” of the shares held by major shareholders, that is, if it is found that the controlling shareholder embezzles assets, it shall immediately apply for judicial freezing. If it cannot be repaid in cash, it shall repay the embezzled assets by realizing its equity.
Chapter IV accountability and punishment
Article 19 when the directors and senior managers of the company assist and connive at the controlling shareholders and related parties to misappropriate the assets of the company, the board of directors of the company shall punish the person directly responsible according to the seriousness of the case, and propose to the general meeting of shareholders to remove the director who has great responsibility.
Article 20 all directors of the company shall prudently treat and strictly control the debt risks arising from the guarantee to the controlling shareholders and related parties, and bear joint and several liabilities for the losses arising from the illegal or improper external guarantee according to law.
Article 21 if the company or its subsidiaries occupy non operating funds with controlling shareholders and related parties, which has an adverse impact on the company, the company will give administrative and economic sanctions to the relevant responsible persons.
Article 22 If the company or its subsidiaries violate these measures and the controlling shareholders and related parties occupy funds for non-profit, violate the rules and guarantee and cause losses to investors, the company will not only give administrative and economic sanctions to the relevant responsible persons, but also investigate the legal responsibilities of the relevant responsible persons.
Chapter V supplementary provisions
Article 23 Where there are no provisions in these measures, the provisions of relevant laws, regulations and the articles of association shall apply.
Article 24 These Measures shall be formulated, revised and interpreted by the board of directors of the company and shall come into force from the date of deliberation and approval by the general meeting of shareholders of the company.
