Midea Group Co.Ltd(000333) related party fund transaction management system
April 2022
catalogue
Chapter I General Provisions- 1 – Chapter II principles for preventing fund occupation- 2 – Chapter III measures and specific provisions to prevent fund occupation- 2 – Chapter IV payment procedures for fund transactions between related parties of the company- 4 – Chapter V filing management- 4 – Chapter VI accountability and punishment- 4 –
Fund transaction management system of related parties
Chapter I General Provisions
In accordance with the provisions of the people’s Republic of China and the securities law of the people’s Republic of China, we will further protect the legitimate rights and interests of the company’s shareholders and other related parties, and prevent the occupation of funds and other related parties in accordance with the provisions of the company’s articles of Association and the securities law of the people’s Republic of China.
Article 2 this system is applicable to the fund management between the controlling shareholders and related parties of the company and the company. This system is applicable to subsidiaries included in the scope of the company’s consolidated accounting statements.
In addition to the provisions of this article, the company mentioned in this system refers to the company and its subsidiaries included in the scope of the company’s consolidated accounting statements.
The “related parties” mentioned in this system refer to the related parties defined in accordance with the accounting standards for business enterprises, the stock listing rules of Shenzhen Stock Exchange and the company’s related party transaction management system issued by the Ministry of finance.
Article 3 the term “occupation of funds” as mentioned in this system includes two situations: occupation of operating funds and occupation of non operating funds.
Operational fund occupation refers to the fund occupation of the company by its related parties through related transactions in production and operation links such as procurement and sales.
Occupation of non operating funds refers to the company’s payment of wages, welfare, insurance, advertising and other expenses for the company’s related parties, the payment of funds for the repayment of debts on behalf of the company’s related parties, the loan of funds to the company’s related parties with compensation or free, directly or indirectly, the creditor’s rights formed by assuming the guarantee liability for the company’s related parties, and other funds used by the company’s related parties without the provision of goods and services.
Article 4 the controlling shareholders of the company shall exercise the rights of investors in strict accordance with the law, bear the obligation of good faith to the company and other shareholders of the company, and shall not damage the interests of the company and the legitimate rights and interests of other shareholders by means of capital occupation.
Chapter II principles for preventing fund occupation
Article 5 when the company has business capital transactions with controlling shareholders and related parties, it shall strictly prevent the company’s funds from being occupied. 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.
Article 6 the company shall not directly or indirectly provide funds to controlling shareholders, actual controllers and related parties in the following ways:
(I) lend the company’s funds 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 company participating in the company in the same proportion;
(II) advance wages, welfare, insurance, advertising and other expenses, bear costs and other expenses for the controlling shareholders, actual controllers and other related parties;
(III) providing entrusted loans to related parties through banks or non bank financial institutions;
(IV) entrust controlling shareholders, actual controllers and other related parties to carry out investment activities;
(V) 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, advance payment, etc. in the absence of commodity and labor consideration or obviously contrary to commercial logic;
(VI) repay debts on behalf of controlling shareholders, actual controllers and other related parties;
(VII) other methods recognized by relevant laws and regulations or regulatory authorities.
Article 7 related party transactions between the company and its controlling shareholders and related parties must be made and implemented in strict accordance with the articles of association and the company’s related party transaction management system, and information disclosure shall be made.
Chapter III measures and specific provisions to prevent the occupation of funds
Article 8 the Finance Department of the company shall actively do a good job in the daily prevention, self inspection and rectification of the occupation of funds by related parties, and shall report to the financial director and the chairman of the board on the day when the occupation of funds by related parties is found.
Article 9 the Audit Department of the company shall conduct regular special verification or irregular random inspection on the occupation of funds by related parties, and make a written report to the audit committee of the board of directors. The president, financial director and financial department of the company shall cooperate.
Article 10 the board of directors of the company shall review and approve the related party transactions between the company and related parties according to its authority and responsibilities. Related party transactions exceeding the approval authority of the board of directors shall be submitted to the general meeting of shareholders for deliberation.
Article 11 the Finance Department of the company shall regularly inspect the company and its subsidiaries, report the review of non operating capital transactions with related parties to the chairman, and eliminate the non operating occupation of funds by related parties.
Article 12 the board of directors of the company is responsible for the management of preventing the occupation of funds by controlling shareholders and related parties.
The directors, supervisors and senior managers of the company have legal obligations to maintain the safety of the company’s funds and shall earnestly perform their duties to prevent the controlling shareholders and related parties from occupying the company’s funds in accordance with the company law, the articles of association and other relevant provisions.
Article 13 the audit committee of the board of directors is specifically responsible for preventing the occupation of funds by controlling shareholders and related parties:
(I) be responsible for formulating relevant management systems and modification plans to prevent the occupation of funds by controlling shareholders and related parties, and report them to the board of directors of the company for approval before implementation;
(II) guide and inspect the internal control system and major measures established by the company’s management to prevent the occupation of funds by controlling shareholders and related parties;
(III) review the relevant materials and information on the occupation of funds by controlling shareholders and related parties submitted to the regulatory authorities for public disclosure on a regular basis;
(IV) be responsible for other matters that need to be studied and decided.
Article 14 the board of directors of the company and the personnel responsible for the business and capital exchanges between the company and the controlling shareholders and related parties are the responsible persons of the company to prevent the occupation of funds by the controlling shareholders and related parties (hereinafter referred to as “relevant responsible persons”).
The company shall standardize and reduce related party transactions as much as possible. In case of business and capital transactions with controlling shareholders and related parties, the company shall strictly monitor the flow of funds to prevent funds from being occupied. The relevant responsible person shall prohibit the controlling shareholders and related parties from occupying the company’s funds for non operational purposes.
Article 15 during the audit of the company’s annual financial and accounting report, the external audit institution shall issue a special description of the company’s occupation of funds by controlling shareholders and related parties, and the company shall make an announcement on the special description in accordance with relevant regulations.
Chapter IV payment procedures for capital transactions between related parties of the company
In addition to the provisions of the articles of association and the payment procedures of the affiliated company, the financial department shall also review whether the payment and other related matters of the affiliated company meet the requirements of the contract and the relevant payment procedures of the affiliated company.
Article 17 before payment, the Finance Department of the company shall submit the payment basis to the financial director of the company. After the approval of the financial director and the approval of the chairman, the Finance Department of the company can handle the specific payment matters.
Article 18 The Finance Department of the company shall strictly abide by the company’s rules and regulations and financial discipline when handling payment matters with related parties of the company.
Chapter V filing management
Article 19 the Finance Department of the company shall carefully calculate and count the capital transactions between the company and its related parties, and establish special financial files.
Chapter VI accountability and punishment
Article 20 if the controlling shareholder or actual controller of the company violates the provisions of this system, uses the affiliated relationship to occupy the company’s funds, damages the interests of the company and causes losses, he shall be liable for compensation, and the relevant responsible persons shall bear corresponding responsibilities.
Article 21 the board of directors of the company has the obligation to protect the company’s funds from being occupied by the controlling shareholders. If the directors and senior managers of the company assist and connive at the controlling shareholders’ embezzlement of the company’s assets, the board of directors of the company shall punish the responsible person according to the seriousness of the situation, and start the procedure of removing the persons who are seriously responsible until they are investigated for legal responsibility.
Article 22 in case of fund occupation, the company shall strictly control the implementation conditions of “paying debts with shares” or “paying debts with assets”, strengthen supervision, and prevent shoddy goods, repudiation with shares and other acts that damage the rights and interests of the company and other small and medium-sized shareholders.
Article 23 the occupation of funds by controlling shareholders or related parties approved and operated by the directors and senior managers of the company without authorization shall be regarded as serious violations, and the board of directors will investigate the responsibilities of relevant personnel and deal with them seriously. If the amount involved is huge, the board of directors will convene the general meeting of shareholders, inform all shareholders of the relevant situation, and seriously deal with the relevant responsible persons in accordance with relevant regulations.
Article 24 If the company’s holding subsidiaries violate this system and the company’s related parties occupy funds for non-profit purposes, violate guarantees and other phenomena, resulting in losses to investors, the company shall investigate the legal responsibilities of the relevant responsible persons in addition to giving administrative and economic penalties to the relevant responsible persons.
Article 25 If the company’s related parties occupy the company’s funds in violation of relevant laws, administrative regulations, departmental rules and other normative documents, the company shall timely issue a reminder notice and claim their rights according to law; If losses are caused to the company, the company shall claim compensation in time, and claim through legal channels such as litigation when necessary.
Chapter VII supplementary provisions
Article 26 matters not covered in this system shall be implemented in accordance with relevant laws, regulations, normative documents, articles of association and other relevant provisions; In case of any conflict between this system and the laws, regulations, normative documents issued in the future or the articles of association modified by legal procedures, the provisions of relevant laws, regulations, normative documents and the articles of association shall prevail.
Article 27 the system shall come into force after being reviewed and approved by the board of directors of the company, and the same shall apply to its amendment. The same applies to modification.
Article 28 the board of directors of the company shall be responsible for the interpretation of this system.
Midea Group Co.Ltd(000333) April 30, 2022
