Entrusted financial management system
(reviewed and approved at the 18th meeting of the 5th board of directors on January 22, 2022)
Chapter I General Provisions
Article 1 in order to standardize the management of entrusted financial management business of Changgao Electric Group Co.Ltd(002452) (hereinafter referred to as “the company”) and its holding subsidiaries, effectively control the risks in the process of decision-making and implementation, improve investment income and safeguard the interests of the company and shareholders, according to the securities law of the people’s Republic of China and the stock listing rules of Shenzhen Stock Exchange (revised in 2022) This system is formulated in accordance with the provisions of relevant laws, regulations and normative documents such as the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions.
Article 2 the term “entrusted financial management” as mentioned in this system refers to that the company or its holding subsidiary entrusts banks, trust, securities, funds, futures, insurance asset management institutions, financial asset investment companies Private fund managers and other professional financial institutions invest and manage their property or purchase relevant financial products.
Article 3 the entrusted financial management of the company shall be carried out according to the capital demand of the company’s production and operation and the actual situation of the company’s cash flow and monetary capital holding. The project period of financial products shall match the company’s capital use plan, on the premise that it will not affect the normal operation and the development of the company’s main business.
Article 4 the funds used for entrusted financial management shall be the company’s idle funds (including idle self owned funds or raised funds), which shall not occupy the company’s normal operation and project construction funds, and shall not affect the company’s production and operation fund demand due to entrusted financial management. The use of idle raised funds (including over raised funds) for entrusted financial management shall also be implemented in accordance with relevant laws and regulations and the relevant provisions of the company’s measures for the administration of the use of raised funds.
Article 5 for entrusted financial management, the company shall select a qualified professional financial management institution with good credit status and financial status, no bad credit record and strong profitability as the entrusting party, and sign a written contract with the entrusted party to clarify the amount, term, investment variety, rights, obligations and legal liabilities of both parties.
Article 6 this system is applicable to the operation of entrusted financial management by the company and its holding subsidiaries.
Chapter II approval authority
Article 7 the company can reasonably predict the scope, amount and term of entrusted financial management in the next 12 months. If the amount of entrusted financial management accounts for more than 10% of the company’s latest audited net assets and the absolute amount exceeds RMB 10 million, it shall be deliberated and approved by the board of directors before investment and fulfill the obligation of information disclosure in time. If the amount of entrusted financial management accounts for more than 50% of the company’s latest audited net assets and the absolute amount exceeds 50 million yuan, it shall also be submitted to the general meeting of shareholders for deliberation. The use period of the limit approved by the board of directors or the general meeting of shareholders of the company shall not exceed 12 months, and the transaction amount (including the relevant amount of reinvestment of the income of the above investment) at any point in the period shall not exceed the entrusted financial management limit.
Article 8 entrusted financial management shall be calculated based on the amount incurred and accumulated within 12 consecutive months. If the accumulated calculation meets the standard of Article 7, the provisions of Article 7 shall apply. Those who have fulfilled relevant obligations in accordance with Article 7 shall not be included in the scope of relevant cumulative calculation.
Article 9 Where the company has entrusted financial management for 12 consecutive months, the maximum balance in that period shall be the transaction amount, and the provisions of Article 7 shall apply.
Article 10 Where a company conducts entrusted financial management with related parties, the amount of entrusted financial management shall also be taken as the calculation standard, and the relevant provisions of the stock listing rules on connected transactions shall apply.
Chapter III internal approval process of entrusted financial management
Article 11 the daily management department of entrusted wealth management of the company and its holding subsidiaries is the company’s financial department, and the operation process of handling entrusted wealth management business is as follows:
（1） Pre investment demonstration: the company’s financial department will investigate the company’s financial status and cash flow status, review the content of financial management business and assess the risk, analyze the feasibility of the capital source, investment scale and expected income of entrusted financial management, and assess the risk of the trustee’s credit and investment varieties.
（2） After being approved by the general manager, according to the amount and the approval authority of the board of directors and the general meeting of shareholders, enter the implementation stage or the next approval link until implementation;
（3） Qualified professional financial institutions with good credit and financial conditions, no bad credit records and strong profitability shall be selected as the trustee, and a written contract shall be signed with the trustee to clarify the amount, period, investment variety, rights, obligations and legal responsibilities of both parties;
（4） Management during entrusted financial management and Investment: implement various risk control measures and timely report to the board of directors in case of abnormalities.
（5） Post management of entrusted financial management: track the due investment funds and income, and ensure that the funds arrive in full and on time. When the entrusted financial management is completed, obtain the corresponding investment certificate or other valid vouchers in time, keep accounts in time, and file the signed contracts and agreements as important business materials in time.
Chapter IV Supervision and risk control
Article 12 the information confidentiality measures of the company’s entrusted wealth management business are as follows:
（1） The applicant, approver and operator of entrusted financial management business are independent of each other and supervised by the internal audit department; （2） The relevant staff of the company and the relevant personnel of the entrusted party of entrusted financial management business must abide by the confidentiality system and shall not disclose the company’s financial management plan, transaction, settlement, capital status and other information related to the company’s financial management business without permission.
Article 13 the financial department of the company is responsible for the timely and full arrival of the due entrusted financial management funds and income.
Article 14 the internal audit department of the company is responsible for the audit and supervision of entrusted financial management projects, including the examination and approval of financial management business, actual handling, fund use, profit and loss, accounting treatment, etc. At the end of each quarter, the internal audit department reports the entrusted financial management business to the audit committee of the board of directors. If necessary, two or more independent directors have the right to hire an independent external audit institution to conduct a special audit of the entrusted financial management funds.
Article 15 the board of supervisors shall regularly or irregularly inspect and supervise the use of entrusted financial management funds.
Article 16 the chief financial officer of the company shall timely track the progress of entrusted financial management and investment safety. In case of any abnormality, he shall immediately report to the board of directors and take effective measures to recover funds to avoid or reduce the losses of the company.
Article 17 before carrying out entrusted financial management and investment business, the company shall be aware of relevant laws, regulations and normative documents, and shall not carry out illegal transactions.
Article 18 where the company suffers losses due to violation of relevant laws and regulations, this system and other provisions of the company, failure to conduct transactions in accordance with the company’s established investment plan, or the company suffers losses or income lower than expected due to lack of due diligence, the responsibilities of relevant personnel will be investigated according to the specific circumstances.
Chapter IV information disclosure
Article 19 the company analyzes and judges the information related to the entrusted financial management of the company in accordance with the provisions of the securities law, the stock listing rules of Shenzhen Stock Exchange (revised in 2022), the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions and other laws and regulations, normative documents and the articles of association, and meets the disclosure standards, It shall be disclosed in accordance with relevant regulations.
Article 20 prior to the public disclosure of relevant information, the insiders of the entrusted financial management matters of the company shall not disclose the relevant information of the entrusted financial management matters to other individuals or organizations, unless otherwise stipulated in laws, regulations and normative documents. Article 21 the board of directors of the company shall submit the following documents to Shenzhen Stock Exchange within two trading days after making the entrusted financial management resolution:
（1） Resolutions and announcements of the board of directors;
（2） Independent directors’ independent opinions on compliance of relevant approval procedures, establishment and perfection of internal control procedures, impact on the company and other matters;
（3） The recommendation institution shall check the compliance of entrusted financial management, the impact on the company, possible risks, and whether the risk control measures taken by the company are sufficient and effective, Article 22 the company shall not evade the deliberation procedures and information disclosure obligations that should be performed for the purchase of assets or foreign investment through the name of entrusted financial management and other investment, or provide financial assistance to others in a disguised form.
Article 23 in case of any of the following circumstances, the company shall timely disclose the relevant progress and the countermeasures to be taken:
(I) financial products fail to be raised, fail to complete filing and registration, terminate in advance, and cannot be recovered upon expiration; (II) change of main terms of financial product agreement or relevant guarantee contract;
(III) major risk events occur in the operation or financial status of the trustee or fund user;
(IV) other circumstances that may damage the interests of the listed company or have important impact.
Article 24 Where the company carries out entrusted financial management business, it shall disclose the relevant matters of entrusted financial management in the regular report.
Chapter VI supplementary provisions
Article 25 in this system, “more than” includes this number, and “more than” does not include this number.
Article 26 matters not covered in these Measures shall be implemented in accordance with relevant national laws, regulations, normative documents and the articles of association.
Article 27 this system shall be interpreted by the board of directors and shall be implemented from the date of deliberation and approval by the board of directors of the company. Changgao Electric Group Co.Ltd(002452) January 22, 2022
