Zhongyin Babi Food Co.Ltd(605338)
Prevention of capital occupation by controlling shareholders and related parties
Chapter I General Provisions
Article 1 in order to establish a long-term mechanism to prevent the controlling shareholders and related parties from occupying Zhongyin Babi Food Co.Ltd(605338) (hereinafter referred to as the “company”) funds and prevent the controlling shareholders and related parties from occupying the company’s 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”) This system is formulated in accordance with the relevant provisions of the Listing Rules of Shanghai Stock Exchange (hereinafter referred to as the “Listing Rules”), the guidelines for the supervision of listed companies No. 8 – regulatory requirements for capital exchanges and external guarantees of listed companies, and the articles of association.
Article 2 the directors, supervisors and senior managers of the company have the obligation to maintain the safety of the company’s funds. Article 3 the term “occupation of funds” in this system includes but is not limited to the following ways:
（1） Occupation of operating funds: the occupation of funds generated by the shareholders and other related parties through related party transactions in production and operation links such as procurement, sales and mutual provision of labor services. （2） Occupation of non operating funds: refers to the payment of wages and benefits, insurance, advertising and other period expenses for controlling shareholders and other related parties; Directly or indirectly borrow funds for controlling shareholders and other related parties in a paid or unpaid manner; Compensatory debts and other funds provided to controlling shareholders and other related parties without consideration for goods and services; Bear costs and other expenses on behalf of each other with the controlling shareholders and other related parties.
Chapter II Prevention of capital occupation by controlling shareholders and related parties
Article 4 the company shall prevent the controlling shareholders and other related parties from directly or indirectly occupying the company’s funds, assets and resources through various means.
Article 5 in accordance with the listing rules, the articles of association and the relevant internal control system of the company, the company implements the procurement, sales and mutual provision of labor services between the company and its controlling shareholders and other related parties
Related party transactions arising from production and operation. After the occurrence of related party transactions, they shall be settled in time and shall not form abnormal occupation of operating funds.
Article 6 the company, its holding subsidiaries and affiliated branches shall not directly or indirectly provide funds to the controlling shareholders and other related parties in the following ways:
（1） Advance wages, welfare, insurance, advertising and other expenses, and bear costs and other expenses for the controlling shareholders, actual controllers and other related parties;
（2） The company’s funds (including entrusted loans) are lent to the controlling shareholders, actual controllers and other related parties with compensation or free of charge, except for the funds provided by other shareholders of the listed company in the same proportion. The aforementioned “joint stock company” does not include companies controlled by controlling shareholders and actual controllers;
（3） Entrust controlling shareholders, actual controllers and other related parties to carry out investment activities; （4） Issue commercial acceptance bills without real transaction background for controlling shareholders, actual controllers and other related parties, and provide funds in the form of purchase payment, asset transfer payment and advance payment in the absence of commodity and labor consideration or obviously contrary to business logic;
（5） Repay debts on behalf of controlling shareholders, actual controllers and other related parties;
（6） Other methods recognized by China Securities Regulatory Commission.
Article 7 the company strictly prohibits the occupation of non operating funds by controlling shareholders and other related parties. The controlling shareholders and other related parties shall not require the company to advance wages, benefits, insurance, advertising and other expenses, nor shall they bear costs and other expenses on behalf of each other.
The financial department and Audit Department of the company shall regularly check the non operating capital transactions between the headquarters and subsidiaries of the company and the controlling shareholders and other related parties, so as to eliminate the occupation of non operating capital by the controlling shareholders and other related parties.
Article 8 the company, its holding subsidiaries and affiliated branches shall regularly prepare a summary of the capital occupation of controlling shareholders and other related parties and a summary of related party transactions, so as to eliminate the occurrence of occupation.
Chapter III responsibilities of the board of directors, the board of supervisors and senior executives of the company
Article 9 the directors, supervisors and senior managers of the company have legal obligations and responsibilities for maintaining the safety of the company’s funds. They should be diligent and dutiful in accordance with the company law, the articles of association and other relevant provisions, and earnestly perform their duties to prevent the controlling shareholders and other related parties from occupying the company’s funds.
Article 10 the chairman of the company is the first responsible person for preventing the occupation of funds and clearing the debts. 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 its controlling shareholders and other related parties through production and operation links such as procurement, sales and mutual provision of labor services.
Article 12 when the controlling shareholders and other related parties encroach on the company’s assets and damage the interests of the company and the public shareholders, the board of directors of the company shall take effective measures to require the controlling shareholders and other related parties to stop the infringement and compensate for the losses.
When the controlling shareholder and other related parties refuse to correct, the board of directors of the company shall timely bring legal proceedings against the controlling shareholder and other related parties to protect the legitimate rights and interests of the company and public shareholders.
Article 13 the funds occupied by the controlling shareholders, actual controllers and other related parties of the company shall be paid off in cash in principle. Strictly control the controlling shareholders, actual controllers and other related parties to use non cash assets to pay off the occupied company funds.
The controlling shareholders, actual controllers and other related parties who intend to use non cash assets to pay off the company’s funds occupied shall comply with the following provisions:
（1） The assets used for compensation must belong to the same business system of the company and be conducive to enhancing the independence and core competitiveness of the listed company and reducing related party transactions. They must not be assets that have not been put into use or assets without an objective and clear book value.
（2） The company shall employ an intermediary institution in line with the provisions of the securities law to evaluate the assets that meet the conditions for offsetting debts with assets, and take the assessed value of assets or the audited net book value as the pricing basis for offsetting debts with assets, but the final pricing shall not harm the interests of the company, and give a discount in full consideration of the present value of the occupied funds. The audit report and evaluation report shall be announced to the public.
（3） The independent director shall express independent opinions on the debt repayment scheme of the company’s related parties, or
The applicant employs an intermediary institution that meets the provisions of the securities law to issue an independent financial advisory report.
（4） The debt repayment scheme of the company’s related parties shall be reviewed and approved by the general meeting of shareholders, and the related party shareholders shall withdraw from voting.
Article 14 when the board of directors fails to perform the duties mentioned in the preceding article, more than half of the independent directors, the board of supervisors and shareholders who individually or jointly hold more than 10% of the total voting shares of the company have the right to request an extraordinary general meeting of shareholders to make resolutions on relevant matters in accordance with the provisions of the articles of association.
During the deliberation of relevant matters at the extraordinary general meeting of shareholders, the affiliated shareholders of the company shall withdraw from voting according to law, and the total number of voting shares held by them shall not be included in the total number of effective voting shares at the general meeting of shareholders.
Article 15 Where the company is occupied by shareholders and other related parties, the company shall formulate a debt settlement plan according to law.
Article 16 the chairman of the board, the chief financial officer and the Secretary of the board of directors of the company shall sign and confirm the summary of the capital occupation of the controlling shareholders and other related parties and the summary of related party transactions submitted.
Chapter IV accountability and punishment
Article 17 when the directors and senior managers of the company assist and connive at the controlling shareholders and other related parties to occupy 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 is seriously responsible.
Article 18 where the company provides guarantee for the controlling shareholder, actual controller and their related parties, the controlling shareholder, actual controller and their related parties shall provide counter guarantee. All directors of the company shall prudently treat and strictly control the debt risks arising from the guarantee of absolute controlling shareholders and related parties, and bear joint and several liabilities for the losses arising from illegal or improper external guarantee according to law.
Article 19 If the company or its holding subsidiaries occupy non operating funds with the controlling shareholders and other related parties, resulting in adverse effects on the company, the company will punish the relevant responsible persons. If losses are caused to the company, the relevant responsible persons shall bear joint and several liability for compensation.
Article 20 if the controlling shareholders and other related parties occupy funds for non operating purposes, illegally guarantee and other phenomena that occur due to the violation of the system by the company or its holding subsidiaries, resulting in losses to investors, the company shall not only punish the relevant responsible persons, but also investigate the legal responsibilities of the relevant responsible persons according to law.
Chapter V supplementary provisions
Article 21 Where there are no provisions in this system, the provisions of relevant laws, regulations and the articles of association shall apply. Article 22 these Measures shall come into force and be formally implemented after being deliberated and approved by the general meeting of shareholders of the company. Article 23 the right to interpret this system belongs to the board of directors of the company.
