Board of directors of Xinjiang Xinjiang Xuefeng Sci-Tech (Group) Co.Ltd(603227) (Group) Co., Ltd
Explanation on the conformity of this reorganization with the provisions of Articles 11 and 43 of the measures for the administration of major asset reorganization of listed companies
Xinjiang Xinjiang Xuefeng Sci-Tech (Group) Co.Ltd(603227) (Group) Co., Ltd. (hereinafter referred to as the “company” and “listed company”) plans to purchase Xinjiang agriculture and animal husbandry investment (Group) Co., Ltd., Sichuan Jinxiang Sairui Chemical Co., Ltd., Hefei Wufeng Investment Co., Ltd., Chengdu Guoheng No. 1 investment partnership (Limited partnership) by issuing shares and paying cash Aksu investment and Construction Group Co., Ltd., shayariyang investment limited partnership, Meishan Jinye enterprise management planning center (limited partnership), Aksu Xinfa Mining Co., Ltd., alar Tongzhong state owned Assets Management Co., Ltd., Shaoxing Sanye Foreign Trade Co., Ltd., Ding Ling, Xinjiang Shaya Urban Construction Investment Co., Ltd Xinjiang Jinding Heavy Industry Co., Ltd., Ren Hu, Zhu Xueqian and Zhou Jun jointly hold 100% equity of Xinjiang Yuxiang Populus euphratica Chemical Co., Ltd. (hereinafter referred to as the “target company”) and raise supporting funds (hereinafter referred to as “this transaction” and “this reorganization”).
After careful comparison with the relevant provisions of the measures for the administration of major asset restructuring of listed companies and through prudent judgment, the board of directors of the company believes that the restructuring is in line with the provisions of Articles 11 and 43 of the measures for the administration of major asset restructuring of listed companies. The specific circumstances are as follows:
1、 This transaction complies with Article 11 of the measures for the administration of major asset restructuring of listed companies
(I) this transaction complies with the national industrial policies and the provisions of relevant environmental protection, land management, antitrust and other laws and administrative regulations
1. This transaction complies with the national industrial policy
In this reorganization, the main business of the target company is the production and sales of melamine, nitro compound fertilizer, ammonium nitrate, synthetic ammonia, urea and other products. The main equipment and production process of the target company comply with the provisions of the Guiding Catalogue for industrial structure adjustment, and there are no eliminated and restricted production process equipment, which meets the requirements of relevant national industrial policies.
2. This transaction complies with the provisions of laws and administrative regulations related to environmental protection
During the reporting period, the subject company was not subject to major administrative penalties due to violation of laws, regulations and normative documents on environmental protection. This transaction complies with the provisions of laws and administrative regulations related to environmental protection.
3. This transaction complies with the provisions of laws and administrative regulations related to land management
During the reporting period, the subject company was not subject to major administrative penalties for violating laws, regulations and normative documents on land management, and this transaction was in line with the provisions of laws and administrative regulations related to land management.
4. This transaction complies with the provisions of anti-monopoly laws and administrative regulations
The audit and evaluation related to this transaction have not been completed, the estimated value of the underlying assets and the transaction price have not been determined, and the final financial data of the underlying company will be determined after the formal audit report is issued by the audit institution in accordance with the securities law of the people’s Republic of China, The final evaluation result of the subject company will be determined after the formal evaluation report is issued by the evaluation institution in accordance with the securities law of the people’s Republic of China and filed with the state-owned assets. At that time, it will judge whether this transaction needs to pass the anti-monopoly review on business concentration by the state market supervision and administration according to the above audit and evaluation results. If necessary, the company will earnestly perform the relevant procedures in accordance with the provisions of relevant national anti-monopoly laws and administrative regulations.
(II) this transaction will not cause the company to fail to meet the listing conditions
After the completion of this restructuring, the shareholding ratio of the company’s public shareholders is expected to be no less than 25%, which is in line with the provisions of the stock listing rules of Shanghai Stock Exchange on the conditions for stock listing and trading. Therefore, this restructuring is not expected to cause the company to fail to meet the conditions for stock listing.
(III) the asset pricing involved in this transaction is fair, and there is no situation that damages the legitimate rights and interests of the company and shareholders
The restructuring is carried out in accordance with the provisions of relevant laws and regulations. The transaction price of the underlying assets is based on the evaluation results of the evaluation report issued by the asset evaluation institution and determined by the parties to the transaction through negotiation. The asset pricing involved in this restructuring is based on fair and there is no case that damages the legitimate rights and interests of listed companies and shareholders.
(IV) the ownership of assets involved in this exchange is clear, there are no legal obstacles to asset transfer or transfer, and the treatment of relevant creditor’s rights and debts is legal
The ownership of assets involved in this reorganization is clear. The underlying assets held by Sichuan Jinxiang Sairui Chemical Co., Ltd. are currently pledged. It has promised to release all equity pledge before the shareholders’ meeting of the listed company to issue shares and pay cash to purchase assets, and promised that before the delivery of the underlying assets held by Sichuan Jinxiang Sairui Chemical Co., Ltd, It will not set any other restrictive rights on the underlying assets it holds. Except for the above equity pledge, the subject assets held by it are not subject to freezing, seizure, property preservation or other rights restrictions. The reorganization plan has made risk tips for these matters.
Other counterparties have legal and complete rights to the equity of the target company to be sold, and there are no other circumstances that restrict or prohibit asset transfer or transfer such as pledge, seizure and freezing. There are no legal obstacles to asset transfer or transfer. This transaction is equity transfer and does not involve the transfer of creditor’s rights and debts.
(V) this transaction is conducive to enhancing the company’s sustainable operation ability, and there is no situation that may lead to the main assets of the listed company being cash or no specific business after the reorganization
The target company has good development prospects. After the completion of this transaction, the target company will become a wholly-owned subsidiary of the company, and the business layout of the company will be further improved and optimized. Therefore, this transaction is conducive to the enhancement of the company’s sustainable operation ability, and there is no situation that may cause the main assets of the listed company to be cash or no specific business after reorganization.
(VI) this transaction is conducive to the company’s independence from the actual controller and its affiliates in terms of business, assets, finance, personnel and institutions, and complies with the relevant provisions of the CSRC on the independence of listed companies. Before this transaction, the company remained independent from the controlling shareholders, actual controllers and their affiliates in terms of business, assets, finance, personnel and institutions, The information disclosure was timely and standardized, and was not punished by China Securities Regulatory Commission and its dispatched offices or Shanghai stock exchange for violating the principle of independence. After the completion of this transaction, the company will continue to maintain independence from the actual controller and its affiliates in terms of business, assets, finance, personnel and institutions.
(VII) this transaction is conducive to the formation or maintenance of a sound and effective corporate governance structure
Before this transaction, the company has established a relatively perfect corporate governance structure. After this transaction, the company will still maintain a sound and effective corporate governance structure. 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 Shanghai Stock Exchange and other laws and regulations, the company will continue to implement relevant rules of procedure or working rules and maintain a sound and effective corporate governance structure.
In conclusion, this transaction complies with the provisions of Article 11 of the measures for the administration of major asset restructuring of listed companies.
2、 This transaction complies with the provisions of Article 43 of the measures for the administration of major asset restructuring of listed companies (I). This transaction is conducive to improving the quality of the company’s assets, improving its financial situation, enhancing its sustainable profitability, reducing related party transactions, avoiding horizontal competition and strengthening its independence.
This transaction helps to improve the asset quality, profitability and comprehensive competitiveness of the listed company. Before this transaction, there was no horizontal competition between the controlling shareholders of the listed company and other enterprises held by them and the business of the listed company. This transaction will not lead to new horizontal competition between the listed company and its controlling shareholders, actual controllers and other enterprises held by them. Before and after this transaction, the company has been independent of the controlling shareholder, actual controller and its related parties in terms of business, assets, finance, personnel and institutions. Through this restructuring, the listed company has effectively reduced the related party transactions such as the purchase of ammonium nitrate with the controlling shareholder, which helps to further enhance the independence of the listed company. Therefore, this transaction will help the company reduce related party transactions, avoid horizontal competition and enhance its independence.
(II) the company does not have any circumstances in which the certified public accountants have issued qualified opinions, negative opinions or audit reports that cannot express opinions in the financial and accounting reports of the most recent year and the first period.
(III) the company and its current directors and senior managers are not under investigation by judicial authorities for suspected crimes or by CSRC for suspected violations of laws and regulations.
(IV) the underlying assets of this transaction are operating assets with clear ownership and can complete the ownership transfer procedures within the agreed period.
(V) there is no violation of other conditions stipulated by the CSRC in this transaction.
In conclusion, this transaction complies with the provisions of Article 43 of the measures for the administration of major asset restructuring of listed companies.
Accordingly, the board of directors of the company believes that this transaction complies with the provisions of Articles 11 and 43 of the measures for the administration of major asset restructuring of listed companies.
It is hereby explained.
Board of directors of Xinjiang Xinjiang Xuefeng Sci-Tech (Group) Co.Ltd(603227) (Group) Co., Ltd. January 17, 2022
