Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) : report of Dongguan Securities Co., Ltd. on the on-site inspection of the company’s continuous supervision in 2021

About Dongguan Securities Co., Ltd

Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705)

On site inspection report of continuous supervision in 2021

Name of Sponsor: Dongguan Securities Co., Ltd. abbreviation of the sponsored company: Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705)

Name of sponsor representative: Yuan Wei Tel: 0769-22119285

Name of sponsor representative: Gao Zemin Tel: 0769-22118996

Name of on-site inspector: Yuan Wei and song Siyuan. Corresponding period of on-site inspection: January 2021 to December 2021. On site inspection time: December 29, 2021 to December 30, 2021, January 3, 2022 to January 6, 2022

1、 On site inspection items and opinions

(I) is corporate governance not applicable

On site inspection means: ① consult the articles of association and various corporate governance systems; ② Consult the documents of the third meeting of the company, including meeting notice, proposal, meeting minutes, resolution, etc; ③ Consult the company’s information disclosure documents.

1. Whether the articles of association and corporate governance system are complete and compliant √

2. Whether the articles of association and the rules of the third board of directors have been effectively implemented √

3. Whether the minutes of the third meeting are complete, whether the time, place, attendees, meeting content and other elements √ are complete, and whether the meeting materials are kept completely

4. Is the resolution of the third meeting signed and confirmed by relevant personnel attending the meeting √

5. Whether the directors, supervisors and senior management of the company perform their duties in accordance with relevant laws, administrative regulations, departmental rules, normative documents √ and relevant business rules of the exchange 6 If the directors, supervisors and senior management of the company have changed significantly, have they fulfilled the corresponding procedures and information disclosure obligations

7. If the controlling shareholder or actual controller of the company changes, has it fulfilled the corresponding procedures and √ information disclosure obligations

8. Whether the company’s personnel, assets, finance, organization and business are independent √

9. Whether there is no horizontal competition between the company and its controlling shareholders and actual controllers √

(II) on site inspection means of internal control: ① consult the company’s internal audit system, internal audit work plan and work report; ② Consult the meeting materials of the company’s audit committee.

1. Whether the internal audit system and internal audit department are established in accordance with relevant regulations √

(if applicable)

2. Whether the internal audit system and √ internal audit department are established within 6 months after the listing of shares (if applicable)

3. Whether the personnel composition of the internal audit department and the audit committee is compliant (if applicable) √

4. Whether the audit committee holds a meeting at least once a quarter to review the work plan and report submitted by the internal audit department (if applicable) 5 Whether the audit committee reports the progress, quality and major problems found in the internal audit to the board of directors at least once a quarter (if applicable) 6 Does the internal audit department report to the audit committee at least quarterly

Implementation of the plan and problems found in the internal audit √

(if applicable) 7 Whether the internal audit department conducts √ audit on the storage and use of raised funds at least quarterly (if applicable) 8 Whether the internal audit department submits the internal audit work plan for the next year to the audit committee within two months before the end of each fiscal year (if applicable) 9 Whether the internal audit department submits the annual internal audit report (if applicable) to the audit committee within two months after the end of each fiscal year 10 Whether the internal audit department submits the internal control evaluation report to the audit committee at least once a year (if applicable) 11 Whether a complete and √ compliant internal control system has been established for matters such as venture capital, entrusted financial management and hedging business (III) on-site inspection means of information disclosure: ① consult the company’s management system related to information disclosure; ② Consult the company’s information disclosure documents and relevant supporting documents; ③ Refer to the record of investor relations activities of the company.

1. Whether the announcement disclosed by the company is consistent with the actual situation √

2. Whether the contents disclosed by the company are complete √

3. Whether the disclosed matters of the company have not changed significantly or made important progress √

4. Whether there are no major events that should be disclosed but not disclosed √

5. Whether the transmission, disclosure process and confidentiality of major information comply with the relevant provisions of the company’s information disclosure management system

6. Whether the investor relations activity record form is published on the interactive website of the exchange in time √

(IV) the establishment and implementation of the long-term mechanism to protect the interests of the company from infringement. On site inspection means: ① consult the articles of association, management measures for connected transactions, management system for external guarantee and other relevant system documents of the company; ② Consult the company’s review procedure documents and information disclosure documents related to related party transactions; 1. Has a system been established to prevent controlling shareholders, actual controllers and their affiliates from directly or indirectly √ occupying the funds or other resources of the listed company

2. Whether the controlling shareholders, actual controllers and their affiliates do not directly or indirectly occupy √ the funds or other resources of the listed company

3. Whether the review procedures of related party transactions are compliant and fulfill the corresponding information disclosure obligations √

4. Whether the price of related party transactions is fair √

5. Whether there is no related party transaction that is not related √

6. Whether the external guarantee review procedure is compliant and fulfills the corresponding information disclosure obligations √

7. Whether the guaranteed party is free from deterioration of financial status and failure to pay off the guaranteed debt at maturity √ 8 If the guaranteed debt continues to provide guarantee after maturity, whether the corresponding approval procedures and disclosure obligations have been fulfilled again (V) on-site inspection methods for the use of raised funds: ① refer to the company’s raised funds management system; ② Check the tripartite supervision agreement of the company’s raised funds; ③ Consult the company’s announcements, bank statements, contracts and other materials related to the use of raised funds.

1. Whether the tripartite supervision agreement is signed within one month after the raised funds are in place √

2. Whether the tripartite supervision agreement on raised funds is effectively implemented √

3. Whether the raised funds are not occupied by a third party or entrusted financial management in violation of regulations √

4. Whether there are no situations such as changing the purpose of raised funds without fulfilling the review procedures, temporarily replenishing √ mobile funds, replacing pre investment, changing the implementation location, etc. 5 Use idle raised funds to temporarily supplement working capital and change the investment direction of raised funds to permanent investment

If the company replenishes working capital for a long time or uses over raised funds to replenish working capital or repay √ bank loans, whether the company has not made venture capital investment during the commitment period 6 Whether the use of raised funds is consistent with the disclosed situation, and whether the project progress and investment benefits are consistent with √ prospectus, etc

7. Whether there are no major risks during the implementation of the project with raised funds √

(VI) on site inspection means of performance: ① check the performance of the company’s regular reports; ② Check the announcement documents and performance of Companies in the same industry.

1. Whether there are significant fluctuations in performance √

2. Is there a reasonable explanation for the large fluctuation of performance √

3. Compared with comparable companies in the same industry, is there no obvious abnormality in the company’s performance √

(VII) on site inspection means for the performance of the company’s and shareholders’ commitments: ① check the commitment letters made by the company, shareholders and other relevant personnel; ② Consult the company’s regular reports, interim reports and other information disclosure documents; ③ Check the performance of relevant commitments of the company.

1. Whether the company has fully fulfilled relevant commitments √

2. Whether the shareholders of the company have fully fulfilled relevant commitments √

(VIII) on site inspection means for other important matters: ① consult the articles of association and dividend planning; ② Check vouchers, contracts and other materials of large capital transactions; ③ View the company’s production and operation environment.

1. Whether the cash dividend system has been fully implemented and truthfully disclosed √

2. Whether the external financial assistance is legal and compliant, and truthfully disclosed √

3. Whether large capital transactions have real transaction background and reasonable reasons √

4. Whether there are no significant changes or risks in the process of major investment or performance of major contracts √

5. Whether there is no significant change or risk in the company’s production and operation environment √

6. Whether the existing problems of the company found by the early-stage regulators and sponsors have been rectified according to the relevant requirements. 2. The problems found in the on-site inspection and the description are none.

(no text below)

(there is no text on this page, which is the signature page of Dongguan Securities Co., Ltd. on Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) 2021 continuous supervision on-site inspection report.) Sponsor representative:

Yuan Wei, Gao Zemin

Dongguan Securities Co., Ltd. January 18, 2022

- Advertisment -