Guohao law firm (Hangzhou)
About
Zhejiang Cfmoto Power Co.Ltd(603129)
Of differentiated dividends
Legal opinion
Address: Guohao lawyer building, No. 2 and No. 15, Baita Park, laofuxing Road, Shangcheng District, Hangzhou zip code: 310008
Grandall building, No.2 & No.15, block B, Baita Park, old Fuxing Road, Hangzhou, Zhejiang 310008, China Tel: (+ 86) (571) 85775888 fax / Fax: (+ 86) (571) 85775643
Email / mail: [email protected].
Website: http://www.grandall.com.cn.
May, 2002
Guohao law firm (Hangzhou)
About
Zhejiang Cfmoto Power Co.Ltd(603129)
Of differentiated dividends
Legal opinion
To: Zhejiang Cfmoto Power Co.Ltd(603129)
Guohao law firm (Hangzhou) (hereinafter referred to as “the firm”) has accepted the entrustment of Zhejiang Cfmoto Power Co.Ltd(603129) (hereinafter referred to as ” Zhejiang Cfmoto Power Co.Ltd(603129) ” or “the company”) in accordance with the company law of the people’s Republic of China (hereinafter referred to as “the company law”), the securities law of the people’s Republic of China (hereinafter referred to as “the securities law”) and the share repurchase rules of listed companies (hereinafter referred to as “the repurchase rules”) The provisions of relevant laws, regulations and normative documents such as the self regulatory guidelines for listed companies of Shanghai Stock Exchange No. 7 – repurchase of shares (hereinafter referred to as the “regulatory guidelines No. 7”), the stock listing rules of Shanghai Stock Exchange (hereinafter referred to as the “Listing Rules”) and the Zhejiang Cfmoto Power Co.Ltd(603129) articles of Association (hereinafter referred to as the “articles of association”), This legal opinion is issued on matters related to the special ex right and ex dividend treatment of differentiated dividends involved in the company’s annual profit distribution (hereinafter referred to as “this differentiated dividend”).
introduction
The qualification, understanding and applicability of the laws and regulations issued by the law firm are the laws and regulations of China.
The lawyers of our firm, in accordance with the recognized business standards, ethics and the spirit of diligence in the lawyer industry, give legal opinions based on the facts that have occurred or existed before the issuance date of this legal opinion, and declare as follows:
1. Our lawyers have strictly performed their statutory duties, followed the principles of diligence and good faith, reviewed and judged all documents and testimony related to the issuance of this legal opinion, and fully verified the legality, regularity, authenticity and effectiveness of the company’s differentiated dividend, so as to ensure that there are no false records, misleading statements and major omissions in this legal opinion.
2. The company has guaranteed that it has provided the lawyers of the firm with authentic, complete and effective original written materials, copies or oral testimony necessary for the issuance of this legal opinion, and that the relevant written materials and testimony are true and effective without any major omissions and misleading statements, and the copies provided are consistent with the original.
3. For the fact that this legal opinion is very important and cannot be supported by independent evidence, our lawyers rely on the supporting documents issued by relevant government departments, companies or other relevant units.
4. Our lawyers only express their opinions on the legality of the company’s differentiated dividend and relevant Chinese legal issues. When issuing this legal opinion, our lawyers have performed the special duty of care of legal professionals for legal related business matters and the general duty of care of ordinary people for other business matters. There are no false records, misleading statements or major omissions in the documents produced and issued.
5. Our lawyers agree that the company shall quote and disclose the contents of this legal opinion in accordance with the review requirements of China Securities Regulatory Commission and Shanghai Stock Exchange. However, when the company makes the above quotation and disclosure, it shall not cause legal ambiguity or misinterpretation due to quotation and disclosure, and it shall be reviewed and confirmed by our lawyers.
6. This legal opinion is only used for the purpose of this differentiated dividend. No unit or individual may use this legal opinion or any part thereof for any other purpose unless prior written authorization is obtained from our lawyer.
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1、 Reasons for this differentiated dividend application
On December 20, 2018, the company held the second extraordinary general meeting of shareholders in 2018, which deliberated and approved the plan on share repurchase by centralized bidding transaction. The company plans to repurchase part of the company’s shares by centralized bidding transaction with its own funds and deposit them in the company’s special repurchase account for the implementation of the equity incentive plan. As of the issuance date of this legal opinion, 245411 shares had been deposited in the special account for repurchase.
According to relevant laws, administrative regulations, departmental rules, other normative documents such as the company law, the securities law, the regulatory guidelines No. 7 and the articles of association, listed companies do not enjoy the rights of voting at the general meeting of shareholders, profit distribution, conversion of provident fund into share capital, subscription of new shares and conversion of corporate bonds when repurchasing shares in the special account. Therefore, the shares held in the repurchasing account of the company will not participate in this dividend. Based on the above circumstances, there is a difference between the total share capital on the equity registration date and the total number of shares actually participating in the distribution when the equity distribution of the company is implemented, so it is necessary to transfer differentiated dividends to special ex right and ex interest treatment.
2、 This differentiated dividend scheme
According to the proposal of Zhejiang Cfmoto Power Co.Ltd(603129) on profit distribution in 2021 and other proposals deliberated and approved by the 2021 annual general meeting of shareholders held on May 6, 2022, the company’s profit distribution plan in 2021 is: the company plans to distribute a cash dividend of 8.3 yuan (including tax) for every 10 shares based on the total share capital on the date of equity distribution registration minus the number of shares in the company’s special repurchase account, The total amount of the company’s final actual cash dividend is determined according to the total share capital on the equity registration date when the company implements the profit distribution plan (deducting the treasury shares in the company’s special securities account for repurchase).
According to the total share capital (150077374 shares) as of the announcement date and 245411 treasury shares in the repurchase special securities account, the company plans to distribute a total cash dividend of 12436052929 yuan (including tax) in 2021. No bonus shares will be given this year, nor will the capital reserve be converted into share capital. All the remaining undistributed profits will be carried forward and distributed in future years.
3、 The impact of this differentiated equity distribution on the ex right (interest) reference price
As of the closing on May 6, 2022, the total share capital of the company was 150077374 shares. 245411 shares held in the company’s repurchase special securities account did not participate in this distribution, and the total number of shares actually participating in this distribution was 149831963 shares.
The profit distribution plan approved by the 2021 annual general meeting of shareholders of the company only carries out cash dividend distribution, without share distribution and conversion to value-added distribution. The change proportion of circulating shares of the company before and after equity distribution is 0.
Taking the closing price of the company’s shares of 126.49 yuan per share on May 6, 2022 as an example, the impact of this differentiated equity distribution on the ex right (interest) reference price is calculated, and the results are as follows:
The cash dividend per share actually distributed by the company = the cash dividend per share actually received by the shareholders participating in the distribution of the company = 0.83 yuan / share (including tax, the same below).
Ex right (interest) reference price calculated according to actual distribution = (previous closing price – cash dividend per share actually distributed) ÷ (1 + change proportion of circulating shares) = (126.49-0.83) ÷ (1 + 0) = 125.66 (yuan / share)
Cash dividend per share virtually distributed by the company = (total share capital participating in distribution) × Cash dividend per share actually distributed) ÷ total share capital = (149831963) × 0.83) ÷ 150077374 ≈ 0.8286 (yuan / share)
Virtual ex right (interest) reference price calculated according to virtual distribution = (previous closing price – cash dividend per share of virtual distribution) ÷ (1 + change proportion of circulating shares) = (126.49-0.8286) ÷ (1 + 0) = 1256614 (yuan / share)
Impact of this differentiated dividend on ex right (interest) reference price = | ex right (interest) reference price calculated according to actual distribution – ex right (interest) reference price calculated according to virtual distribution | ÷ ex right (interest) reference price calculated according to actual distribution = | 125.66-1256614 | ÷ 125.66 ≈ 0.0011%
Therefore, the impact of the company’s differentiated equity branch on the ex right (interest) reference price of the company’s shares is less than 1%.
4、 Concluding observations
To sum up, after verification, our lawyers believe that the differentiated dividend of the company complies with the provisions of the company law, the securities law, the repurchase rules, the regulatory guidelines No. 7 and other relevant laws, regulations, normative documents and the articles of association, has little impact on the ex right (interest) reference price of the company’s shares, and does not damage the interests of the listed company and all its shareholders.
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