Zhongyin Babi Food Co.Ltd(605338)
Related party transaction management system
Chapter I General Provisions
Article 1 in order to regulate the related party transactions of Zhongyin Babi Food Co.Ltd(605338) (hereinafter referred to as “the company”), ensure the fairness and rationality of related party transactions and safeguard the interests of the company and shareholders, 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 Shanghai Stock Exchange (hereinafter referred to as “the stock listing rules”) and the governance standards of listed companies This system is formulated in accordance with the provisions of laws, regulations and normative documents such as the guidelines for self discipline supervision of listed companies of Shanghai Stock Exchange No. 5 – transactions and related party transactions and the Zhongyin Babi Food Co.Ltd(605338) articles of Association (hereinafter referred to as the “articles of association”).
Article 2 related party transactions refer to the transfer of resources or obligations between the company and its holding subsidiaries and related parties, whether or not the price is received. This system is not applicable to related party transactions between the company and its holding subsidiaries.
Article 3 the related party transactions of the company shall follow the following basic principles:
（1） A written agreement shall be signed between the company and related parties for related party transactions, and the signing of the agreement shall follow the principles of equality, voluntariness, equivalence and compensation;
（2） The principles of justice, fairness and openness. In principle, the prices or charges of related party transactions shall not deviate from the standards of independent third parties in the market. For related party transactions that are difficult to compare market prices or whose pricing is limited, the standards related to costs and profits shall be clarified through the contract;
（3） Related shareholders shall avoid voting at the general meeting of shareholders to consider related transactions;
（4） Directors who have any interest with related parties shall withdraw when the board of directors votes on the matter;
（5） The board of directors of the company shall judge whether the related party transaction is beneficial to the company according to objective criteria. If necessary, professional appraisers or independent financial advisers shall be employed to give opinions.
Article 4 the audit committee of the board of directors shall perform the duties of the company’s related party transaction control and daily management, and report to the board of directors
Report work and be responsible to the board of directors. The financial department is responsible for formulating the pricing principles of related party transactions, accounting the amount of related party transactions, and assisting the Secretary of the board of directors in disclosing related party transactions. The Secretary of the board of directors is responsible for the disclosure of related party transaction information.
Chapter II related persons and related relationships
Article 5 affiliated persons of the company include affiliated legal persons and affiliated natural persons.
Article 6 a legal person under any of the following circumstances shall be an affiliated legal person of the company:
（1） Legal persons or other organizations that directly or indirectly control the company;
（2） Legal persons or other organizations other than the company and its holding subsidiaries directly or indirectly controlled by the legal persons or other organizations mentioned in the preceding paragraph;
（3） Legal persons or other organizations other than the company and its holding subsidiaries directly or indirectly controlled by the affiliated natural persons listed in Article 7 of the system, or serving as directors (excluding independent directors of both parties) and senior managers;
（4） Legal persons or other organizations holding more than 5% of the shares of the company and their persons acting in concert;
（5） The China Securities Regulatory Commission (hereinafter referred to as “CSRC”), the stock exchange where the company is listed, or other legal persons or other organizations identified by the company as having a special relationship with the company according to the principle of substance over form, which may cause the company to favor its interests.
If the company and the entities listed in Item (2) are controlled by the same state-owned assets management institution, it does not form a related relationship, except that the legal representative, general manager or more than half of the directors of these entities belong to the circumstances listed in Item (3).
Article 7 a person under any of the following circumstances shall be an affiliated natural person of the company:
（1） Natural persons who directly or indirectly hold more than 5% of the shares of the company;
（2） Directors, supervisors and senior managers of the company;
（3） Directors, supervisors and senior managers of legal persons listed in Item (1) of Article 6 of the system; （4） Close family members of the persons mentioned in items (1) and (2) of this article, including spouses, parents and parents of spouses, brothers and sisters and their spouses, children over the age of 18 and their spouses, brothers and sisters of spouses and parents of children’s spouses;
（5） The CSRC, the stock exchange on which the company is listed, or other special relations with the company identified by the company according to the principle of substance over form may cause the company to tilt its interests
Natural person.
Article 8 a legal person or other organizer or natural person under any of the following circumstances shall be deemed to be an affiliate of the company: (1) due to signing an agreement or making an arrangement with the company or its affiliates, after the agreement or arrangement takes effect, or within the next 12 months, it has one of the circumstances specified in Article 6 or Article 7 of the system;
（2） In the past 12 months, it has been under one of the circumstances specified in Article 6 or Article 7 of this system.
Article 9 the directors, supervisors, senior managers, shareholders holding more than 5% of the shares of the company and their persons acting in concert and actual controllers of the listed company shall timely submit the list of related persons of the listed company and the description of related relations to the board of directors of the listed company, and the company shall do a good job in registration management.
Chapter III related party transactions
Article 10 related party transactions of the company include but are not limited to the following matters:
（1） Purchase or sale of assets;
（2） Providing or receiving labor services;
（3） Purchase of raw materials, fuel and power;
（4） Selling products and commodities;
（5） Entrusted or entrusted sales;
（6） Foreign investment (including entrusted financial management, investment in subsidiaries, etc.);
（7） Provide financial assistance (including interest bearing or interest free loans, entrusted loans, etc.);
（8） Provide guarantee (including guarantee for holding subsidiaries);
（9） Leased in or leased out assets;
（10） Entrusted or entrusted management of assets or businesses;
（11） Donated or donated assets;
（12） Reorganization of creditor’s rights or debts;
（13） Transfer or transfer of research and development projects;
（14） Sign the license agreement;
（15） Waiver of rights (including waiver of preemptive right, preemptive subscription right, etc.);
（16） Joint investment with related parties;
（17） Deposit and loan business;
（18） Other matters that may cause the transfer of resources or obligations through agreement;
（19） Other transactions recognized by the stock exchange where the company is listed.
Article 11 the company’s connected transactions shall follow the following pricing principles and methods:
（1） If the transaction is priced by the government, the price can be directly applied;
（2） If the transaction is subject to the government guided price, the transaction price can be reasonably determined within the scope of the government guided price;
（3） The price of the transaction can be determined by the government or compared with the price standard of the third party, except that the price of the transaction can be determined by the government or the price of the transaction can be determined by the market;
（4） If there is no comparable independent third party market price for related matters, the transaction pricing can be determined by referring to the price of non related transactions between related parties and third parties independent of related parties;
（5） If there is neither the market price of an independent third party nor the price of independent unrelated transactions for reference, the reasonable price can be used as the basis for pricing, and the price is reasonable cost plus reasonable profit.
Article 12 when determining the price of related party transactions in accordance with item (3), (4) or (5) of Article 11, the company may adopt the following pricing methods according to different related party transactions:
（1） The cost plus method is based on the reasonable cost of related party transactions plus the gross profit of comparable non related party transactions. Applicable to related party transactions such as procurement, sales, transfer and use of tangible assets, provision of labor services, financing and so on;
（2） In the resale price method, the fair transaction price of goods purchased by related parties is the price of goods purchased by related parties and resold to non related parties minus the gross profit of comparable non related transactions. It is applicable to simple processing or simple purchase and sales business in which the reseller does not change the appearance, performance, structure or change the trademark of the goods;
（3） The comparable uncontrolled price method is based on the price charged by non related parties for the same or similar business activities as related party transactions. Applicable to all types of connected transactions;
（4） The transaction net profit method determines the net profit of connected transactions based on the profit level index of comparable non connected transactions. Applicable to related party transactions such as procurement, sales, transfer and use of tangible assets and provision of labor services;
（5） The profit split method calculates the amount of profits that should be distributed according to the contribution of the company and its related parties to the consolidated profits of related party transactions. It is applicable to the situation that the related party transactions of all participants are highly integrated and it is difficult to evaluate the transaction results of all parties separately.
Article 13 if the company’s connected transactions cannot be priced according to the above principles and methods, it shall disclose the principles and methods for determining the price of the connected transactions, and explain the fairness of the pricing.
Chapter IV decision making of related party transactions
Article 14 when the board of directors of the company deliberates on related party transactions, related directors shall avoid voting and shall not exercise voting rights on behalf of other directors. The meeting of the board of directors can be held only when more than half of the non affiliated directors are present, and the resolutions made at the meeting of the board of directors must be adopted by more than half of the non affiliated directors. If the number of non affiliated directors attending the board of directors is less than three, the matter shall be submitted to the general meeting of shareholders for deliberation.
The affiliated directors mentioned in the preceding paragraph include the following directors or directors under any of the following circumstances:
（1） Is the counterparty;
（2） Working in the counterparty, or in the legal person or other organization that can directly or indirectly control the counterparty, or the legal person or other organization directly or indirectly controlled by the counterparty;
（3） Having direct or indirect control over the counterparty;
（4） Close family members of the counterparty or its direct or indirect controller (see item (4) of Article 7 of the system for the specific scope);
（5） Close family members of the directors, supervisors and senior managers of the counterparty or its direct or indirect controllers (see item (4) of Article 7 of the system for the specific scope);
