Haitian Water Group Co.Ltd(603759)
Related party transaction management system
Chapter I General Provisions
Article 1 in order to fully protect the interests of minority shareholders, ensure the fairness of the related party transactions of Haitian Water Group Co.Ltd(603759) (hereinafter referred to as “the company”), ensure that the related party transactions of the company do not harm the interests of the company and all shareholders, and make the related party transactions of the company comply with the principles of fairness, impartiality and openness, according to the company law of the people’s Republic of China and other relevant laws and regulations This system is formulated in accordance with the relevant provisions of normative documents and Haitian Water Group Co.Ltd(603759) articles of Association (hereinafter referred to as the “articles of association”), with reference to the provisions of relevant listed companies and in combination with the actual situation of the company.
Article 2 related parties
Affiliated persons of the company include affiliated legal persons (or other organizations) and affiliated natural persons.
（1） A legal person (or other organization) under any of the following circumstances is an affiliated legal person (or other organization) of the company:
1. Legal person (or other organization) that directly or indirectly controls the company;
2. Legal persons (or other organizations) other than the company, its holding subsidiaries and other entities controlled by the legal persons (or other organizations) mentioned in the preceding paragraph directly or indirectly; 3. Legal persons (or other organizations) other than the company and its holding subsidiaries and other entities controlled by the company, which are directly or indirectly controlled by an associated natural person, or where an associated natural person acts as a director (excluding independent directors and senior managers of both parties);
4. Legal persons (or other organizations) holding more than 5% of the shares of the company and their persons acting in concert; 5. Other legal persons or other organizations identified by the company according to the principle of substance over form, which have a special relationship with the company and may lead to the preference of the company’s interests.
（2） A natural 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 (or other organizations) who directly or indirectly control the listed company;
4. Close family members of the persons mentioned in Items 1 and 2 above;
5. Other natural persons identified by the company as having special relationship with the company according to the principle of substance over form, which may lead to the preference of the company’s interests.
（3） A legal person (or other organization) or natural person under any of the following circumstances shall be deemed to be an affiliate of the company:
1. Within 12 months after the relevant agreement or arrangement takes effect, it will have one of the circumstances specified in paragraph (I) or (II) of this article;
2. In the past 12 months, it has been under one of the circumstances specified in paragraph (I) or (II) of this article.
Article 3 related party transactions
Related party transactions of the company refer to the transfer of resources or obligations between the company or its holding subsidiaries and related parties of the company, including:
（1） Purchase or sale of assets;
（2） Foreign investment (including entrusted financial management, investment in subsidiaries, etc.);
（3） Provide financial assistance (including interest bearing or interest free loans, entrusted loans, etc.);
（4） Provide guarantee (including guarantee for holding subsidiaries);
（5） Leased in or leased out assets;
（6） Entrusted or entrusted management of assets and businesses;
（7） Donated or donated assets;
（8） Reorganization of creditor’s rights and debts;
（9） Sign the license agreement;
（10） Transfer or transfer of research and development projects;
（11） Waiver of rights (including waiver of preemptive right, preemptive subscription right, etc.); （12） Purchase of raw materials, fuel and power;
（13） Selling products and commodities;
（14） Providing or receiving labor services;
（15） Entrusted or entrusted sales;
（16） Deposit and loan business;
（17） Joint investment with related parties;
（18） Other matters identified according to the principle of substance over form that may lead to the transfer of resources or obligations through agreement, including providing financial assistance and guarantee greater than its equity proportion or investment proportion to the company jointly invested with related parties, and waiving the same proportion of capital increase or priority assignment to the company jointly invested with related parties.
Article 4 related party transactions of the company shall follow the following basic principles:
（1） The principle of good faith;
（2） The principles of equality, voluntariness, equivalence and compensation;
（3） The principles of justice, fairness and openness;
（4） In principle, the price of related party transactions shall not deviate from the price or charging standard of independent third parties in the market. For related party transactions that are difficult to compare the market price or whose pricing is limited, the standards related to cost and profit shall be clarified through the contract;
（5） The directors, shareholders and parties who have any interest with related parties shall adopt the principle of withdrawal when voting on the matter.
Article 5 related party transactions between the company and related parties shall be subject to a written agreement, and the contents of the agreement shall be clear and specific.
Chapter II decision making of related party transactions
Article 6 the related party transactions to be carried out by the company shall be proposed by the functional department of the company. The proposal shall specify the specific matters, pricing basis and impact on the interests of the company and shareholders.
Article 7 decision making authority of connected transactions
General meeting of shareholders: for major related party transactions between the company and related parties with a transaction amount (including debts and expenses) of more than 30 million yuan and accounting for more than 5% of the absolute value of the company’s latest audited net assets, the board of directors shall submit the transaction to the general meeting of shareholders for deliberation after making a resolution. Board of directors: the amount of connected transactions (excluding guarantees provided by the company) that the company intends to have with connected legal persons (or other organizations) is more than 3 million yuan (including debts and expenses undertaken) and accounts for more than 0.5% of the absolute value of the company’s latest audited net assets; If the amount of related party transactions (excluding guarantees provided by the company) that the company intends to conclude with related natural persons is more than 300000 yuan, the board of directors of the company shall make a resolution for approval.
Chairman: if the amount of related party transactions (excluding the guarantee provided by the company) that the company intends to conclude with related legal persons (or other organizations) is less than 3 million yuan or less than 0.5% of the absolute value of the company’s latest audited net assets, and the amount of related party transactions (excluding the guarantee provided by the company) that the company intends to conclude with related natural persons (including the debts and expenses undertaken) is less than 300000 yuan, The board of directors shall authorize the chairman of the company to review and approve.
Where the company provides guarantee for related parties, in addition to being deliberated and approved by more than half of all non related directors, it shall also be deliberated and approved by more than two-thirds of the non related directors attending the meeting of the board of directors and make a resolution, which shall be submitted to the general meeting of shareholders for deliberation.
Where the company provides guarantee for the controlling shareholder, actual controller and their affiliates, the controlling shareholder, actual controller and their affiliates shall provide counter guarantee.
If the guaranteed party becomes an affiliate of the company due to a transaction or connected transaction, while implementing the transaction or connected transaction, the company shall perform corresponding review procedures and information disclosure obligations on the existing connected guarantee.
If the board of directors or the general meeting of shareholders fails to consider and approve the related guarantee matters specified in the preceding paragraph, all parties to the transaction shall take effective measures such as early termination of the guarantee.
Article 8 when the company and its affiliates jointly contribute to the establishment of the company and increase or decrease the capital of the jointly invested enterprise, the amount of the company’s investment, increase or decrease shall be taken as the calculation standard, and the provisions of Article 7 shall apply.
Article 9 when the company conducts “providing financial assistance” and other related party transactions, it shall take the amount as the calculation standard of disclosure, and calculate it cumulatively according to the transaction type within 12 consecutive months, and determine the approval authority according to the accumulated amount in accordance with the provisions of Article 7.
Article 10 in case of entrusted financial management between the company and related parties, if it is difficult to perform the review procedures and disclosure obligations for each investment transaction due to transaction frequency and timeliness requirements, the investment scope, investment amount and period can be reasonably predicted, and the amount shall be used as the calculation standard, which is applicable to Article 7.
The service life of the relevant limit shall not exceed 12 months, and the transaction amount (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 11 when the company conducts other connected transactions other than those mentioned in the preceding paragraph, the approval authority shall be determined in accordance with the principle of cumulative calculation and the provisions of Article 7 for the transactions with the same connected person and the transactions related to the subscript of the same transaction category with different connected persons within 12 consecutive months.
The same related person mentioned above includes other related persons who are controlled by the same subject with the related person or have equity control relationship with each other.
If the aforesaid decision-making procedures have been performed in accordance with the cumulative calculation principle, they will not be included in the relevant cumulative calculation scope.
Article 12 when the company and its connected persons conduct the connected transactions related to daily operation listed in items (12) to (16) of paragraph 1 of Article 3 for the first time, they shall perform the corresponding review procedures in accordance with the following provisions:
（1） For the daily connected transactions that occur for the first time, the company shall conclude a written agreement with the connected persons and perform the approval procedures according to the transaction amount involved in the agreement; If there is no specific transaction amount in the agreement, it shall be submitted to the general meeting of shareholders for deliberation.
（2） The company can reasonably estimate the amount of daily connected transactions in the current year according to the category, perform the review procedures and disclose; If the actual implementation exceeds the expected total amount, the review procedure shall be performed again according to the excess amount.
（3） In case of major changes in the main terms of the daily related party transaction agreement during the execution process or renewal of the agreement upon expiration, the company shall perform the approval procedures for the newly revised or renewed daily related party transaction agreement according to the total transaction amount involved in the agreement. If there is no specific total transaction amount in the agreement, it shall be submitted to the general meeting of shareholders for deliberation.
（4） If the term of the daily connected transaction agreement signed between the company and the connected person exceeds 3 years, the company shall re perform the relevant review procedures and disclosure obligations every 3 years in accordance with the provisions of this system.
Article 13 the following transactions concluded between the company and related parties may be exempted from consideration in the form of related party transactions:
（1） One party subscribes in cash for shares, corporate bonds or corporate bonds, convertible corporate bonds or other derivatives publicly issued by the other party;
（2） One party, as a member of the underwriting syndicate, underwrites shares, corporate bonds or corporate bonds, convertible corporate bonds or other derivatives publicly issued by the other party;
（3） One party receives dividends, bonuses or remuneration in accordance with the resolution of the general meeting of shareholders of the other party; （4） One party participates in public bidding, auction, etc. of the other party, except that it is difficult to form a fair price;
（5） The pricing of related party transactions is stipulated by the state;
（6） Transactions in which the company unilaterally obtains benefits without paying consideration and without any obligations, including receiving cash assets, obtaining debt relief, accepting guarantees and financial assistance free of charge, etc; （7） The related parties provide funds to the company, the interest rate level is not higher than the quoted interest rate in the loan market, and the listed company does not need to provide guarantee;
（8） The company provides products and services to directors, supervisors and senior managers of the company, directors, supervisors and senior managers of legal persons (or other organizations) that directly or indirectly control the listed company, and close family members of the above-mentioned persons under the same trading conditions as non related persons.
Article 14 when the board of directors of the company reviews 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 meeting is less than three, the company shall submit the transaction to the general meeting of shareholders for deliberation.
Article 15 when the general meeting of shareholders deliberates on related party transactions, related shareholders shall avoid voting and shall not exercise voting rights on behalf of other shareholders.
Article 16 Where the company intends to have a major connected transaction with a connected person, it shall submit it to the board of directors and the general meeting of shareholders for deliberation after the independent director has issued a prior approval opinion.
Chapter III supplementary provisions
Article 17 the close family members referred to in this system include: spouses, children over the age of 18 and their spouses, parents and their spouses’ parents, brothers and sisters and their spouses, brothers and sisters of spouses, and parents of children’s spouses.
Article 18 The Affiliated directors referred to in this system refer to the directors of the company under any of the following circumstances:
（1） Is the counterparty;
（2） Having direct or indirect control over the counterparty;
（3） Work 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;
（4） A close family member of the counterparty or its direct or indirect controller;
（5） Close family members of directors, supervisors or senior managers of the counterparty or its direct or indirect controllers;
（6） Other directors who have conflicts of interest with the company and may affect the company’s independent business judgment.
Article 19 The Affiliated shareholders referred to in this system refer to the shareholders of the company under any of the following circumstances:
（1） Is the counterparty;
（2） Having direct or indirect control over the counterparty;
（3） Directly or indirectly controlled by the counterparty;
（4） Directly or indirectly controlled by the same legal person or other organization or natural person as the counterparty;
（5） Work 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;
（6） A close family member of the counterparty or its direct or indirect controller;
（7） Shareholders whose voting rights are restricted and affected due to outstanding equity transfer agreements or other agreements with the counterparty or its affiliates;
（8） Other shareholders who may cause the interests of the company to be inclined to them.
Article 20 matters not covered in this system shall be implemented in accordance with relevant national laws, regulations, normative documents and the relevant provisions of the articles of association.
If the system is inconsistent with relevant laws, regulations, normative documents and the articles of association, the relevant laws, regulations, normative documents and the articles of association shall prevail.
Article 21 the system shall come into force after being deliberated and approved by the general meeting of shareholders, and the same shall apply to the modification.
The system mentioned in Article 22 above.
Article 23 the board of directors is responsible for the interpretation of this system.
