Haitian Water Group Co.Ltd(603759)
Management system of raised funds
Chapter I General Provisions
Article 1 in order to regulate the use and management of the funds raised by Haitian Water Group Co.Ltd(603759) (hereinafter referred to as the “company”), improve the efficiency of the use of the funds raised and protect the legitimate rights and interests of investors, in accordance with 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”) Listing Rules of Shanghai Stock Exchange (hereinafter referred to as “Listing Rules”) This system is hereby formulated in accordance with the relevant provisions of the measures for the administration of initial public offering and listing, the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds by listed companies, the guidelines for the self discipline supervision of listed companies on Shanghai Stock Exchange No. 1 – standardized operation, and the Haitian Water Group Co.Ltd(603759) articles of Association (hereinafter referred to as the “articles of association”).
Article 2 the funds raised in this system refer to the funds raised from investors and used for specific purposes by the company through the issuance of shares and their derivatives, but do not include the funds raised by the company through the implementation of the equity incentive plan. The part of the net amount of funds actually raised by the company exceeding the amount of funds planned to be raised is the over raised funds.
Article 3 this system is the company’s basic code of conduct for the use and management of raised funds.
Article 4 the raised funds can only be used for the projects to which the raised funds are invested (hereinafter referred to as “raised investment projects”) announced by the company. The board of directors of the company shall formulate a detailed plan for the use of funds, make the use of funds standardized, open and transparent, and timely disclose the use of raised funds in accordance with the provisions of the company law, the securities law, the listing rules and other relevant laws and regulations.
Article 5 the purpose of the raised funds announced by the company shall not be changed without a resolution made by the general meeting of shareholders according to law.
Article 6 the directors, supervisors and senior managers of the company shall be diligent and responsible, urge the company to standardize the use of the raised funds, consciously maintain the safety of the raised funds, and shall not participate in, assist or connive at the company to change the purpose of the raised funds without authorization or in a disguised form.
Article 7 the controlling shareholders and actual controllers of the company shall not directly or indirectly occupy or misappropriate the company’s raised funds, and shall not use the company’s raised funds and raised investment projects to obtain illegitimate interests.
Chapter II deposit of raised funds in special account
Article 8 the company’s management of the raised funds shall follow the principles of special account deposit, special use, strict management and truthful disclosure.
Article 9 after the raised funds are in place, the company shall timely go through the capital verification procedures, which shall be verified by an accounting firm with securities practice qualification and issue a capital verification report.
Article 10 the company shall carefully select commercial banks to raise funds and open special accounts for raised funds (hereinafter referred to as “special accounts for raised funds”) for centralized management. The special account for raised funds shall not deposit non raised funds or be used for other purposes.
If the company has raised funds for more than two times, it shall set up special accounts for raised funds respectively. The over raised funds shall also be deposited in the special account for the management of the raised funds.
Article 11 the number of special accounts for raised funds shall not exceed the number of projects invested with raised funds (hereinafter referred to as “projects invested with raised funds”). If the company believes that the amount of raised funds is large and it is necessary to open a special account in more than one bank in combination with the credit arrangement of the investment project, it can open a special account in more than one bank with the approval of the board of directors under the principle of centralized deposit and easy supervision. Article 12 the company shall cooperate with the recommendation institution or independent financial institution within one month after the receipt of the raised funds
The consultant and the commercial bank depositing the raised funds (hereinafter referred to as “commercial bank”) sign a tripartite supervision agreement on the storage of the special account for raised funds. The agreement shall at least include the following contents:
(I) the company shall centrally deposit the raised funds in the special account for raised funds;
(II) the account number of the special account for raised funds, the items of raised funds involved in the special account and the deposit amount; (III) the commercial bank shall provide the company with the bank statement of the special account for raised funds every month and send a copy to the recommendation institution or independent financial adviser;
(IV) if the company withdraws more than 50 million yuan from the special account for raised funds in one time or within 12 months and reaches 20% of the net amount of the total amount of raised funds after deducting the issuance expenses (hereinafter referred to as the “net amount of raised funds”), the company shall timely notify the recommendation institution or independent financial adviser; (V) the recommendation institution or the independent financial consultant may inquire the information of the special account for raised funds at the commercial bank at any time;
(VI) the supervision responsibilities of the recommendation institution or independent financial adviser, the notification and cooperation responsibilities of the commercial bank, and the supervision methods of the recommendation institution or independent financial adviser and commercial bank on the use of the company’s raised funds;
(VII) liability for breach of contract of the company, commercial bank, recommendation institution or independent financial consultant. (VIII) if a commercial bank fails to issue a statement of account to the recommendation institution or the independent financial consultant in time for three times, or fails to cooperate with the recommendation institution or the independent financial consultant in querying and investigating the information of the special account, the company may terminate the agreement and cancel the special account for raised funds.
The company shall make a timely announcement after the signing of the above agreement.
If the above-mentioned agreement is terminated in advance due to changes in the recommendation institution or commercial bank before the expiration of the term of validity, the company shall sign a new agreement with relevant parties within two weeks from the date of termination of the agreement, and make a timely announcement after the signing of the new agreement.
Chapter III use of raised funds
Article 13 the company shall comply with the following requirements when using the raised funds:
(I) the company shall use the raised funds in accordance with the use plan of the raised funds promised in the issuance application documents; The use of raised funds within the scope of the plan shall be applied by the user department or unit and approved in accordance with the company’s fund management procedures;
(II) the company shall perform the obligation of information disclosure on the use of raised funds in strict accordance with relevant regulations; In case of any situation that seriously affects the normal progress of the use plan of the raised funds, the company shall timely report to the Shanghai Stock Exchange and make an announcement;
(III) in case of any of the following circumstances in the raised investment project, the company shall re demonstrate the feasibility and expected income of the raised investment project, decide whether to continue to implement the project, and disclose the progress of the project, the reasons for the abnormalities and the adjusted raised investment project (if any): 1. There are significant changes in the market environment involved in the raised investment project;
2. The raised investment project has been put on hold for more than 1 year;
3. Exceeding the completion period of the latest investment plan of raised funds and the investment amount of raised funds does not reach 50% of the relevant plan amount;
4. There are other abnormalities in the raised investment project.
Article 14 when the company invests in a project, the capital expenditure must be approved in strict accordance with the company’s capital management system.
Article 15 in principle, the funds raised by the company shall be used for its main business. The company shall not commit any of the following acts when using the raised funds:
(I) raised investment projects are financial investments such as holding trading financial assets and financial assets available for sale, lending to others and entrusted financial management, which are directly or indirectly invested in companies whose main business is the trading of securities;
(II) changing the purpose of the raised funds in a disguised form through pledge, entrusted loan or other means;
(III) provide the raised funds directly or indirectly to the controlling shareholder, actual controller and other related persons for use, so as to facilitate the related persons to obtain illegitimate interests by using the raised investment project;
(IV) other acts in violation of the provisions on the management of raised funds.
Article 16 when the company uses the raised funds for the following matters, it shall be deliberated and approved by the board of directors, and the independent directors, the board of supervisors, the recommendation institution or the independent financial consultant shall give clear consent: (I) replace the self raised funds that have been invested in the investment projects of the raised funds in advance with the raised funds;
(II) use the temporarily idle raised funds for cash management;
(III) temporarily replenish working capital with temporarily idle raised funds;
(IV) change the purpose of the raised funds;
(V) over raised funds are used for projects under construction and new projects.
The change of the purpose of the raised funds of the company shall also be examined and approved by the general meeting of shareholders.
Where relevant matters involve related party transactions, asset purchases, foreign investment, etc., the deliberation procedures and information disclosure obligations shall also be performed in accordance with the rules such as the stock listing rules and the relevant provisions of the articles of association.
Article 17 Where a company invests its self raised funds into a project invested by raising funds in advance, it may replace the self raised funds with the raised funds within six months after the receipt of the raised funds. The accounting firm shall issue a verification report, and the independent directors, the board of supervisors and the recommendation institution shall express their explicit consent. The company shall make a timely announcement after the meeting of the board of directors.
Article 18 the company may conduct cash management of the temporarily idle raised funds, and its investment products must meet the following conditions:
(I) principal guaranteed products with high security such as structured deposits and certificates of deposit;
(II) good liquidity shall not affect the normal progress of the investment plan of the raised funds.
The term of investment products shall not be longer than the use term authorized by internal resolutions, and shall not exceed 12 months. After the due funds of the above investment products are returned to the special account for raised funds on schedule and announced, the company can carry out cash management again within the authorized period and amount.
Investment products shall not be pledged, and the special product settlement account (if applicable) shall not deposit non raised funds or be used for other purposes. If the special product settlement account is opened or cancelled, the company shall make a timely announcement.
Article 19 where idle raised funds are used to invest in products, the following contents shall be announced in time after deliberation by the board of directors of the company:
(I) basic information of the funds raised this time, including the time of raising, the amount of funds raised, the net amount of funds raised and the investment plan;
(II) use of raised funds;
(III) the amount and term of idle raised funds investment products, whether there is any behavior of changing the purpose of raised funds in a disguised form and measures to ensure that the normal progress of raised funds projects will not be affected;
(IV) income distribution mode, investment scope and safety of investment products;
(V) opinions issued by independent directors, board of supervisors and recommendation institutions.
The company shall, in case of major risks such as the deterioration of the financial situation of the product issuer and the loss of the invested products, timely disclose the risk prompt announcement and explain the risk control measures taken by the company to ensure the safety of funds.
Article 20 if the company uses idle raised funds to supplement working capital temporarily, it shall meet the following requirements:
(I) the purpose of the raised funds shall not be changed in disguise, and the normal progress of the investment plan of the raised funds shall not be affected;
(II) it is limited to the production and operation related to the main business, and shall not be directly or indirectly arranged for the placement and purchase of new shares, or for the trading of stocks and their derivatives, convertible corporate bonds, etc;
(III) the time for a single replenishment of working capital shall not exceed 12 months;
(IV) the funds previously raised for temporary replenishment of working capital that have been returned and have expired (if applicable).
Before the due date of replenishing working capital, the company shall return this part of funds to the special account for raised funds and make a timely announcement after all funds are returned. Article 21 the over raised funds can be used for permanent replenishment of working capital or repayment of bank loans, but the cumulative amount used within each 12 months shall not exceed 30% of the total amount of over raised funds, and shall promise not to make high-risk investment or provide financial assistance to objects other than holding subsidiaries within 12 months after replenishing working capital. Article 22 Where the over raised funds are used for permanent replenishment of working capital or repayment of bank loans, they shall be deliberated and approved by the board of directors and the general meeting of shareholders of the company, and the online voting method shall be provided for shareholders, and the independent directors, the board of supervisors, the recommendation institution or the independent financial adviser shall express their explicit consent. The company shall timely announce the following contents after the meeting of the board of directors:
(I) basic information of the funds raised this time, including the time of raising, amount of funds raised, net amount of funds raised, over raised amount and investment plan;
(II) use of raised funds;
(III) the necessity and detailed plan for permanently replenishing working capital or repaying bank loans with over raised funds;
(IV) commitment not to make high-risk investment and provide financial assistance to others within 12 months after replenishing working capital;
(V) the impact of permanently replenishing working capital or repaying bank loans with over raised funds on the company;
(VI) opinions issued by independent directors, board of supervisors, recommendation institutions or independent financial advisers. Article 23 If the company uses the over raised funds to invest in the establishment of subsidiaries or increase capital to subsidiaries, and the subsidiaries intend to use the over raised funds to repay bank loans or supplement working capital temporarily or permanently, they shall abide by the provisions of the preceding paragraph.
Article 24 when using over raised funds, the company shall, according to the actual production and operation needs of the enterprise, give priority to replenishing the fund gap of raised investment projects, using them for projects under construction and new projects (including the acquisition of assets), or repaying bank loans.
Article 25 If the company uses the over raised funds for projects under construction and new projects (including the acquisition of assets, etc.), it shall invest in the main business, apply the relevant provisions of this system on the change of raised funds, scientifically and prudently analyze the feasibility of investment projects, and timely fulfill the obligation of information disclosure. Article 26 after the completion of a single raised investment project, if the company uses the surplus raised funds (including interest income) of the project for other raised investment projects, it shall be reviewed and approved by the board of directors and can be used only after the independent directors, the recommendation institution and the board of supervisors Express their explicit consent. The company shall make a timely announcement after the meeting of the board of directors.
If the surplus raised funds (including interest income) are less than 1 million or less than 5% of the committed investment amount of the raised funds of the project, they may be exempted from the procedures in the preceding paragraph, and their use shall be disclosed in the annual report.
If the surplus raised funds (including interest income) of a single raised investment project of the company are used for non raised investment projects (including supplementary working capital), the corresponding procedures and disclosure obligations shall be performed with reference to the change of raised investment projects. Article 27 after all the projects invested by raising funds are completed, if the surplus raised funds (including interest income) are more than 10% of the net raised funds, the company can use the surplus raised funds only after the deliberation and approval of the board of directors and the general meeting of shareholders and the express consent of the independent directors, the recommendation institution and the board of supervisors. The company shall make a timely announcement after the meeting of the board of directors.
If the surplus raised capital (including interest income) is less than 10% of the net raised capital, it shall be considered and approved by the board of directors and can be used only after the independent directors, the recommendation institution and the board of supervisors express their explicit consent. The company shall make a timely announcement after the meeting of the board of directors.
If the surplus raised funds (including interest income) are less than 5 million or less than 5% of the net raised funds, they may be exempted from the procedures in the preceding paragraph, and their use shall be disclosed in the latest periodic report
