Stock Code: 601360 stock abbreviation: 360 Security Technology Inc(601360) No.: 2022-008 360 Security Technology Inc(601360)
Reply to the inquiry letter of Shanghai Stock Exchange on matters related to the company’s foreign investment
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents. 360 Security Technology Inc(601360) (hereinafter referred to as ” 360 Security Technology Inc(601360) ” or “the company”) recently received the inquiry letter on matters related to 360 Security Technology Inc(601360) foreign investment (szgh [2021] No. 3033) (hereinafter referred to as the inquiry letter) issued by Shanghai Stock Exchange. The company has carefully checked and analyzed the issues concerned in the inquiry letter, and now replies to the relevant questions in the inquiry letter as follows:
Today, the company replied to the working letter of our department that as a limited partner of the industrial fund, the company unilaterally and continuously paid in 1 billion yuan of capital contribution, which was at the request of the general partner, but the general partner did not require other limited partners to make simultaneous capital contribution, and did not fully explain the basis and rationality. In accordance with Article 16.1 of the stock listing rules of the exchange and other relevant provisions, your company is hereby requested to verify and supplement the disclosure of the following matters.
1、 According to the announcement, there are obvious differences in the investment time of each partner of Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) gaojingjian venture capital fund (limited partnership) (hereinafter referred to as venture capital fund). The general partner unilaterally sent two payment notices to the company on January 11 and July 20, 2021, and the company has paid in the first installment of RMB 400 million and the second installment of RMB 600 million respectively on February 9 and July 30 as required; However, the limited partner Beijing Centergate Technologies (Holding) Co.Ltd(000931) development was not required to make the initial capital contribution until November 18, 2021, and Beijing Centergate Technologies (Holding) Co.Ltd(000931) development completed the initial paid in capital contribution of 480 million yuan on December 3. According to the agreement provided by the company, the general partner shall send the payment notice at the time otherwise agreed by the parties. The company is requested to make supplementary disclosure: (1) the payment arrangement otherwise agreed by the general partner and the company and other limited partners, as well as the performance of the obligation of early information disclosure; (2) The basis, decision-making body and procedure of the above differentiated payment notice arrangement of the general partner, indicating whether it complies with the agreement and whether it fairly protects the interests of all partners; (3) Combined with the above situation, explain the specific decision-making process and main considerations of the company’s acceptance of differentiated payment arrangements, and whether it damages the interests of listed companies.
(I) the payment arrangement otherwise agreed by the general partner, the company and other limited partners, and the performance of the obligation of early information disclosure
Company reply:
Before issuing the payment notice, the general partner Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital did not separately agree on the payment arrangement with qiruitiancheng, a wholly-owned partnership of the company. Qiruitiancheng made capital contribution according to the time agreed in the payment notice after receiving the payment notice in accordance with the relevant provisions of the partnership agreement.
On February 10, 2021, the company issued the announcement on participating in the establishment of venture capital fund (Announcement No.: 2021-005), which disclosed the participation of qiruitiancheng, a wholly-owned partnership of the company, in the establishment of venture capital fund, It also disclosed the main terms of the partnership agreement in accordance with the requirements of the business guidelines for information disclosure of cooperative investment matters between listed companies and private equity funds. The company judges that “the payment arrangement otherwise agreed between the general partner and the company and other limited partners” is not the main clause of the partnership agreement and does not need to be disclosed in the above announcement.
(II) the basis, decision-making body and procedure of the above differentiated payment notice arrangement of the general partner, indicating whether it complies with the agreement and fairly protects the interests of all partners
Company reply:
The decision-making body of the payment notice initiated by the general partner of venture capital fund to the limited partners is Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital. After inquiring about the general partner’s Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital, in terms of decision-making procedures, the general partner’s Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital was initiated by its business department in accordance with its internal management system, fully discussed, studied and countersigned by its risk control department and finance department, and submitted to the general manager of Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital for signature and approval, and decided to “initiate payment notice to limited partners in accordance with the partnership agreement due to business needs”. The decision-making basis of Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital is stipulated in article 1.8 “list of partners and partners” of the partnership agreement: “the partnership shall set up a list of partners (see Annex I) to record the names or addresses of all partners, the name and number of certificates, the mode of capital contribution, subscribed capital contribution and the date of paid in capital; The payment notice agreed in “Annex I” of the partnership agreement: “according to the payment notice, it is divided into two periods”; Article 3.4 “responsibilities and authorities of the general partner” of the partnership agreement stipulates: “require the limited partners to pay their subscribed capital contribution…”. The differential payment arrangement made by the general partner shall be made by the general partner in accordance with its responsibilities, authorities and business development. Such decisions do not have to be notified to all limited partners, but the limited partners who receive the payment notice must perform the obligation of paid in capital contribution in accordance with the requirements of the payment notice. After inquiring about the Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital of the general partner of venture capital fund, Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital believes that issuing the payment notice is deemed to be a separate agreement with other partners on the payment arrangement. Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital believes that when notifying Qirui Tiancheng of payment, in addition to the provisions of the above partnership agreement, it gives priority to the relevance between the proposed sub Fund (including reserve projects) and the industry field of 360 Security Technology Inc(601360) and the early establishment of 360 Security Technology Inc(601360) Hongxin venture capital partnership (limited partnership) (hereinafter referred to as ” 360 Security Technology Inc(601360) Hongxin fund”), However, due to the state-owned property of Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital, in the process of actual investment, it takes a long time to perform internal negotiation, reporting, meeting arrangement, deliberation, approval and other processes, resulting in the payment time of qiruitiancheng being significantly earlier than that of other partners. Beijing Centergate Technologies (Holding) Co.Ltd(000931) in the process of issuing the payment notice, the capital fully considered the preference to qiruitiancheng in terms of business arrangement, but ignored the differentiated payment arrangement. As a 360 Security Technology Inc(601360) wholly-owned partnership, qiruitiancheng may attract the attention of listed companies.
In addition, according to the agreement on income distribution in Chapter 7 of the partnership agreement, the income distribution is “distributed according to the proportion of paid in capital contribution of each partner at the distribution time point”, And it is clearly agreed that the threshold income of all partners (the threshold income will be distributed only after the distributable amount exceeds the principal) is “6% (simple interest) of their paid in capital contribution in the limited partnership every year (calculated according to the actual days from the next day of each partner’s paid in capital contribution to the account date to the distribution date)”, that is, for partners with early capital contribution, the starting time for calculating the threshold income will also be earlier, For the same contribution share in the venture capital fund, the partners who contribute earlier will get more threshold income. Therefore, the above commercial terms and arrangements in the partnership agreement also protect the interests of the limited partners who contributed earlier in the differentiated payment arrangement; In addition, the capital contributions of each partner are deposited in the custody bank, and the unused capital contributions have been deposited in a 7-day notice deposit to increase the fund income.
To sum up, Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital believes that fairness protects the interests of all partners.
Although the venture capital fund partnership agreement stipulates that the investment time of each partner shall be subject to the payment notice sent by the general partner, in order to ensure the orderly progress of the venture capital fund and considering that the investment of each partner should be consistent as far as possible, Beijing Centergate Technologies (Holding) Co.Ltd(000931) development Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital issued the letter of commitment on capital contribution to the venture capital fund on December 28, 2021: “the Beijing Centergate Technologies (Holding) Co.Ltd(000931) development / Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital is used as Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) high-precision venture capital fund (limited partnership) The limited partner / general partner will complete the obligation of paid in capital contribution as soon as possible in accordance with relevant agreements. Since our group / company is a state-owned enterprise, when planning to carry out major investment matters, it is necessary to first prepare the annual investment plan and submit it to the state-owned assets supervision and administration department for approval; Secondly, annual budget preparation and approval are required; At the same time, considering that the Spring Festival is an important traditional festival in China, relevant staff are unable to carry out work during the holidays. Therefore, our company promises to complete the actual payment of the remaining 720 million yuan / 4.8 million yuan subscribed capital contribution no later than March 31, 2022. ” The general partner Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital has completed the paid in capital contribution of 4.8 million yuan in the second phase on January 4, 2022, and Beijing Centergate Technologies (Holding) Co.Ltd(000931) development is performing the internal approval process of its capital contribution
Cheng, it is expected that the paid in capital contribution of the second phase of 720 million yuan will be completed before January 31, 2022. Beijing Centergate Technologies (Holding) Co.Ltd(000931) after the development completes the second phase of paid in capital contribution, the fund will be fully paid in.
(III) in combination with the above, explain the specific decision-making process and main considerations of the company’s acceptance of differentiated payment arrangements, and whether it damages the interests of listed companies
Company reply:
Qiruitiancheng’s participation in the investment and establishment of venture capital was decided and approved by the investment decision-making committee under the leadership of the general manager’s office meeting of the company. During the performance of the partnership agreement, when Qirui Tiancheng paid the first phase of subscribed capital contribution, the company paid more attention to its strategic layout needs to cover high-quality projects. When Qirui Tiancheng received the payment notice sent by the general partner, it did not know that there were differences in payment time points between partners. Therefore, the company followed the payment approval process, After checking the terms on paid in capital contribution, payment amount, payment deadline and breach of contract in the partnership agreement, make payment on time; When Qirui Tiancheng paid the second phase of subscribed capital contribution, the company preliminarily confirmed that it would give priority to seven sub funds including 360 Security Technology Inc(601360) Hongxin fund to be managed by 360 Security Technology Inc(601360) (Beijing) Private Equity Fund Management Co., Ltd. in order to speed up the investment progress of 360 Security Technology Inc(601360) Hongxin fund and combine Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital Beijing Centergate Technologies (Holding) Co.Ltd(000931) development, as a state-owned enterprise, is willing to perform the contract (contribute capital). Qirui Tiancheng will pay on time when it receives the payment notice sent by the general partner.
The main reason why qiruitiancheng makes payment on time after receiving the payment notice sent by the general partner is that according to the agreement of “payment default” in article 4.7 “limited partner default” of the partnership agreement, if the limited partner qiruitiancheng fails to fulfill the obligation of paid in capital contribution on time and in full according to the requirements of the payment notice sent by the general partner Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital, Qirui Tiancheng will face huge risks such as paying high liquidated damages (0.1% of the overdue payment per day), suspending income distribution, losing voting rights in the partnership, being forced to withdraw from the partnership and being arbitrated for claims.
In addition, according to the agreement on income distribution in Chapter 7 of the partnership agreement, the income distribution is “distributed according to the proportion of paid in capital contribution of each partner at the distribution time point”, And it is clearly agreed that the threshold income of all partners (the threshold income will be distributed only after the distributable amount exceeds the principal) is “6% (simple interest) of their paid in capital contribution in the limited partnership every year (calculated according to the actual days from the next day of each partner’s paid in capital contribution to the account date to the distribution date)”, that is, for partners with early capital contribution, the starting time for calculating the threshold income will also be earlier, For the same contribution share in the venture capital fund, the partners who contribute earlier will get more threshold income. Therefore, the above commercial terms and arrangements in the partnership agreement also protect the interests of the limited partners who contributed earlier in the differentiated payment arrangement. At the same time, considering the state-owned nature, industry status and performance willingness of the general partner, the company believes that there is no situation that damages the interests of the listed company.
Although the company’s acceptance of the differentiated payment arrangement has not caused actual losses to the listed company, when signing the partnership agreement, the company shall predict in advance that the clause of “payment arrangement otherwise agreed by the general partner, the company and other limited partners” may lead to inconsistent capital contribution time of each partner, In fact, it also causes the company to make capital contributions earlier than other partners in the actual capital contribution process. If the company subsequently participates in venture capital funds, it will carefully review the payment arrangement terms of relevant agreements in the process of capital contribution, and resolutely avoid differentiated capital contribution again.
Opinions of independent directors:
1. After consulting the partnership agreement of venture capital fund provided by the company, the payment notice issued by the general partner and relevant announcement documents, we believe that the company performs its capital contribution obligations in accordance with the relevant provisions of the partnership agreement.
2. After consulting the partnership agreement of venture capital fund provided by the company, the letter of commitment on capital contribution issued by Beijing Centergate Technologies (Holding) Co.Ltd(000931) development / Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital and the bank receipt of the paid in capital contribution of Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital phase II of 4.8 million yuan, we recognize the company’s description of the decision-making process and main considerations of differentiated payment arrangement. In view of the fact that the general partner Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital of the venture capital fund has fulfilled all the capital contribution obligations, the limited partners have issued the commitment letter of capital contribution, and at present, the paid in capital contribution of the venture capital fund is deposited in the custody commercial bank, we believe that there is no situation that damages the interests of the listed company.
2、 According to the announcement, the company unilaterally paid in the initial contribution in advance, mainly considering the implementation of project investment more in line with the company’s industry as soon as possible, but no project has been implemented since February. The company is requested to make supplementary disclosure: (1) whether the specific relationship between the unilateral paid in capital contribution and the implementation of the fit project as soon as possible conforms to the industry practice; (2) Since the initial investment, the specific implementation progress of relevant project investment and the necessity of investment in the corresponding stage; (3) Explain whether the above-mentioned related projects are invested by the company alone or jointly by all partners, and whether all partners share the profits and losses in the future. If so, please explain the rationality of the company’s unilateral paid in capital contribution in advance.
(I) whether the specific relationship between the unilateral paid in capital contribution and the implementation of the fit project as soon as possible is in line with the industry practice. The company replied:
The venture capital fund manager Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital began to investigate the sub funds and their high-quality reserve projects in the second half of 2020. It investigated and visited more than 50 market-oriented professional investment institutions, mainly including comprehensive investment funds in high-precision and cutting-edge industries and professional funds in various subdivided fields. According to the requirements of its internal management system and the annual sub fund investment plan, and in combination with the strategic layout requirements of 360 Security Technology Inc(601360) widely covering high-quality projects, Beijing Centergate Technologies (Holding) Co.Ltd(000931) capital initiated the down payment notice to qiruitiancheng. Qiruitiancheng paid the down payment of 400 million yuan on February 9, 2021.
After the partners of venture capital fund signed the partnership agreement (i.e. February 8, 2021) to July 2021, after the venture capital fund conducted preliminary adjustment and investment screening of the proposed sub fund, and communicated with relevant teams of the company for many times according to the industry field and strategic layout of the company, It has preliminarily confirmed the priority to invest in seven sub funds, including 360 Security Technology Inc(601360) Hongxin fund to be managed by 360 Security Technology Inc(601360) (Beijing) Private Fund Management Co., Ltd. The reserve projects of the seven sub funds have a total of 50 projects, all of which are head projects in their respective industry segments. The venture capital fund plans to make a total contribution of about in the above seven sub funds
