Guangdong Jiangxi Wannianqing Cement Co.Ltd(000789) Pharmaceutical Co., Ltd
Related party transaction management system
Chapter I General Provisions
Article 1 in order to regulate the related party transactions of Guangdong Jiangxi Wannianqing Cement Co.Ltd(000789) Pharmaceutical Co., Ltd. (hereinafter referred to as “the company”), improve the standard operation level of the company and protect the legitimate rights and interests of the company and all shareholders, This system is formulated in accordance with the company law of the people’s Republic of China, the securities law of the people’s Republic of China, the Listing Rules of GEM stocks of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions and other laws, regulations and normative documents, as well as the relevant provisions of the articles of association of Guangdong Jiangxi Wannianqing Cement Co.Ltd(000789) Pharmaceutical Co., Ltd. (hereinafter referred to as the “articles of association”).
Article 2 the company’s connected transactions shall be priced fairly and the decision-making procedures shall be in compliance.
Article 3 the board of directors of the company shall stipulate that the audit committee under it shall perform the duties of controlling and daily managing the related party transactions of the company.
Chapter II identification of related parties and related transactions
Article 4 the affiliated persons of the company include affiliated legal persons and affiliated natural persons.
Article 5 a legal person or other organization 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 entities listed in Item (1) above;
（3） Legal persons or other organizations other than the company and its holding subsidiaries that are directly or indirectly controlled by the affiliated natural persons of the company listed in Article 6 of the system, or where the affiliated natural persons act as directors (except independent directors) and senior managers;
（4） Legal persons or other organizations or persons acting in concert holding more than 5% of the shares of the company;
（5） Other legal persons or other organizations that have special relationship with the company according to the principle of substance over form, which may lead to the preference of the company’s interests.
Article 6 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 affiliated legal persons listed in Item (1) of Article 5 of the system;
（4） Close family members of the persons mentioned in items (1) to (3) of this article, including spouses, parents, 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） Other natural persons identified according to the principle of substance over form and having special relationship with the company, which may lead to the preference of the interests of the company.
Article 7 a legal person, other organization or natural person under any of the following circumstances shall be deemed to be an affiliate of the company: (1) according to the agreement or arrangement signed with the company or its affiliates, after the agreement or arrangement takes effect or within the next 12 months, it will have one of the circumstances specified in Article 5 or Article 6 of this system;
（2） In the past 12 months, it has been under one of the circumstances specified in Article 5 or Article 6 of this system.
Article 8 related party transactions of the company refer to matters that may lead to the transfer of resources or obligations between the company or its holding subsidiaries and its related parties, including:
（1） Purchase or sale of assets;
（2） Foreign investment (including entrusted financial management and investment in subsidiaries, except for the establishment or capital increase of wholly-owned subsidiaries); （3） Provide financial assistance (including entrusted loans);
（4） Providing guarantee (refers to the guarantee provided by the company for others, including the guarantee for holding subsidiaries);
（5） Lease in or lease out assets;
（6） Sign management contracts (including entrusted operation, entrusted operation, etc.);
（7） Donated or donated assets;
（8） Reorganization of creditor’s rights or debts;
（9） Transfer of research and development projects;
（10） Sign the license agreement;
（11） Waiver of rights (including waiver of preemptive right, preemptive right to subscribe capital contribution, 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） Joint investment by related parties;
（17） Other matters that may lead to the transfer of resources or obligations through agreement.
Chapter III Reporting of related parties
Article 9 the directors, supervisors, senior managers, shareholders holding more than 5% of the shares, actual controllers and persons acting in concert of the company shall timely inform the company of their relationship with the company.
Article 10 the audit committee of the company shall confirm the list of related persons of the company and report to the board of directors and the board of supervisors in a timely manner. Article 11 the information declared by the company’s affiliated natural persons includes:
（1） Name, ID number;
（2） Description of the association relationship with the company, etc.
The information declared by the company’s affiliated legal person includes:
（1） Name of legal person, organization code of legal person;
（2） Description of the association relationship with the company, etc.
Chapter IV decision making procedures for related party transactions
Article 12 related party transactions (except for providing guarantee and financial assistance) of the company that meet one of the following standards shall be disclosed in time:
（1） Related party transactions with a transaction amount of more than 300000 yuan between the company and related natural persons;
（2） The amount of transactions between the company and related legal persons exceeds 3 million yuan and accounts for more than 0.5% of the absolute value of the company’s latest audited net assets;
Article 13 if the connected transaction between the company and its connected persons meets one of the following standards, it shall be submitted to the board of directors and the general meeting of shareholders for deliberation:
（1） Major related party transactions (except for providing guarantee) with an amount of more than 30 million yuan and accounting for more than 5% of the absolute value of the company’s latest audited net assets. Where the company intends to have a major connected transaction, the company shall hire a securities service institution that meets the provisions of the securities law to issue an audit report or evaluation report on the subject matter of the transaction. Related party transactions related to daily operations may be exempted from audit or disclosure;
（2） The guarantor is an affiliate;
（3） The company has related party transactions with its directors, supervisors, senior managers and their spouses.
Article 14 Where a company and its affiliates jointly contribute to the establishment of a company, the amount of capital contribution of the company shall be taken as the transaction amount, and the provisions of Article 12 and item (1) of Article 13 shall apply.
If the company intends to partially or completely waive the right to increase capital in the same proportion or the right of priority assignment of the company jointly invested with related parties, the sum of the actual amount of capital increase or assignment of the company and the amount involved in the waiver of the right to increase capital in the same proportion or the right of priority assignment shall be the transaction amount of related party transactions, and the corresponding deliberation procedures shall be performed.
Article 15 Where the company conducts “entrusted financial management”, it shall take the amount incurred as the transaction amount and calculate it cumulatively according to the transaction type within 12 consecutive months. The provisions of Article 12 and item (1) of Article 13 shall apply. If the relevant obligations have been performed in accordance with Article 12 or item (1) of Article 13, it will not be included in the relevant cumulative calculation scope.
The company shall not directly or through its subsidiaries provide financial assistance such as funds to directors, supervisors, senior managers, controlling shareholders, actual controllers and their controlling subsidiaries. The company shall prudently provide financial assistance or entrusted financial management to related parties. Article 16 Where the company conducts the following connected transactions, the amount of connected transactions shall be calculated in accordance with the principle of cumulative calculation within 12 consecutive months, and the provisions of Article 12 and item (1) of Article 13 shall apply respectively:
（1） Transactions with the same related party;
（2） Transactions related to the same transaction object with different related parties.
The above-mentioned same related person includes other related persons who have equity control relationship with the related person by the same legal person or other organization or natural person.
Those who have fulfilled relevant obligations in accordance with Article 12 and item (1) of Article 13 shall not be included in the relevant cumulative calculation scope.
Article 17 If the company intends to conclude a connected transaction with connected persons with a total amount of more than 3 million yuan or more than 5% of the company’s recently audited net asset value, it shall be submitted to the board of directors for deliberation after the independent directors express their prior approval opinions. Before making a judgment, independent directors may hire an independent financial consultant to issue a report as the basis for their judgment.
The audit committee of the company shall review the related party transactions at the same time, form written opinions, submit them to the board of directors for deliberation and report to the board of supervisors. The audit committee may employ an independent financial consultant to issue a report as the basis for its judgment. Article 18 when the board of directors of the company considers 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 19 when the company’s 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 20 the board of supervisors of the company shall supervise the deliberation, voting and performance of related party transactions and express its opinions in the annual report.
Article 21 when considering related party transactions, the company shall:
（1） Understand the real situation of the transaction object in detail, including the operation status, profitability, whether there are rights defects such as mortgage and freezing, and legal disputes such as litigation and arbitration;
（2） Understand the integrity record, credit status and performance ability of the counterparty in detail, and select the counterparty carefully;
（3） Determine the transaction price according to sufficient pricing basis;
（4） With reference to the relevant requirements of the Shenzhen Stock Exchange GEM Listing Rules or when the Company deems it necessary, it shall hire an intermediary to audit or evaluate the transaction object.
Article 22 the company shall not consider and make decisions on related party transactions under any of the following circumstances: (1) the status of the subject matter of the transaction is unclear;
（2） The transaction price has not been determined;
（3） The situation of the counterparty is uncertain;
（4） This transaction has caused or may cause the company to be occupied by non operating funds of controlling shareholders, actual controllers and their subsidiaries;
（5） This transaction has caused or may cause the company to provide guarantees for related parties in violation of regulations;
（6） Other circumstances that cause or may cause the company to be occupied by related parties due to this transaction.
Article 23 Where the company’s purchase of assets from related parties needs to be submitted to the general meeting of shareholders for deliberation according to regulations, and there are any of the following circumstances, in principle, the counterparty shall provide the profit guarantee or compensation commitment of the underlying assets or the repurchase commitment of the underlying assets within a certain period of time:
（1） Purchasing assets at a high premium;
（2） The latest return on net assets of the purchased assets is negative or lower than the return on net assets of the company itself.
Chapter V pricing of related party transactions
Article 24 the company shall sign a written agreement to clarify the pricing policy of related party transactions. In case of major changes in the transaction price and other main terms in the agreement during the execution of related party transactions, the company shall re perform the corresponding approval procedures according to the changed transaction amount.
Article 25 the pricing of the company’s connected transactions shall be fair and implemented with reference to the following principles:
（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） In addition to the government fixed price or government guided price, if there is a comparable market price or charging standard of an independent third party for the transaction, the transaction price can be determined with priority by referring to the price or standard;
（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 26 when determining the price of related party transactions in accordance with item (3), (4) or (5) of the preceding article, 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 27 If the company’s connected transactions cannot be priced according to the above principles and methods, the fairness of the pricing shall be explained in the annual work report of the board of directors.
Chapter VI Special Provisions on decision-making procedures for daily connected transactions
Article 28 when the company conducts daily connected transactions with connected persons, it shall disclose and perform the deliberation procedures in accordance with the following provisions:
（1） The company can reasonably estimate the annual amount of daily connected transactions by category, perform the review procedures and disclose; If the actual implementation exceeds the expected amount, relevant review procedures and disclosure obligations shall be performed again according to the excess amount;
（2） The company’s annual report and semi annual report shall disclose daily connected transactions by classification, summary and disclosure;
（3） If the term of the daily connected transaction agreement signed between the company and the connected person exceeds three years, it shall be performed again every three years
