Baheal Pharmaceutical: Related Party Transaction Decision-making System (August 2025)
Qingdao Baiyang Pharmaceutical Co., Ltd.
Related party transaction decision-making system
Chapter 1 General Provisions
Article 1 In order to regulate the related transactions of Qingdao Baiyang Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), ensure the fairness of related transactions, and effectively protect the interests of the company and all shareholders, the company has formulated this system in accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Information Disclosure Management Measures for Listed Companies, the GEM Stock Listing Rules of the Shenzhen Stock Exchange and other relevant laws, administrative regulations, normative documents and the Articles of Association of Qingdao Baiyang Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association").
Article 2 A company’s related transactions refer to the transfer of resources or obligations between the company, its controlled subsidiaries and related parties.
Article 3 The company’s related-party transactions shall follow the following basic principles:
(1) The principles of equality, voluntariness, equal value and compensation;
(2) The principles of fairness, impartiality and openness;
(3) If related parties have voting rights at the shareholders’ meeting, they should abstain from voting;
(4) Directors who have any interest in related parties should recuse themselves when the board of directors votes on the matter. If they cannot avoid it, they can participate in the voting, but they must issue a separate statement;
(5) The company's board of directors should judge whether the related transaction harms the company's interests based on objective standards, and should hire professionals to provide opinions when necessary.
Chapter 2 Related Persons and Scope of Related Transactions
Article 4 Related parties of a company include related legal persons and related natural persons.
The substantial judgment of related parties should be based on the specific ways, channels and extent of their control or influence on the company.
Article 5 A legal person or other organization that meets any of the following circumstances shall be an affiliated legal person of the company:
(1) Legal persons or other organizations that directly or indirectly control the company;
(2) Legal persons or other organizations other than the company and its holding subsidiaries that are directly or indirectly controlled by the entities mentioned in the preceding paragraph;
(3) Legal persons or other organizations other than the company and its holding subsidiaries that are directly or indirectly controlled by related natural persons of the companies listed in Article 6 of this system, or serve as directors (excluding independent directors who are both parties) or senior managers;
(4) Legal persons or other organizations holding more than 5% of the company’s shares, and persons acting in concert;
(5) Other legal persons or other organizations that have a special relationship with the company and may cause the company to tilt its interests as determined by the China Securities Regulatory Commission, the stock exchange or the company based on the principle of substance over form.
Article 6 A natural person who meets one of the following circumstances is an associated natural person of the company:
(1) A natural person who directly or indirectly holds more than 5% of the company’s shares;
(2) Directors and senior managers of the company;
(3) Directors, supervisors and senior managers of legal persons or other organizations that directly or indirectly control the company;
(4) Close family members of the persons mentioned in items (1), (2) and (3) of this article, including: spouse, children over 18 years old and their spouses, parents, spouse’s parents, brothers and sisters and their spouses, spouse’s brothers and sisters, and children’s spouse’s parents;
(5) Other natural persons who have a special relationship with the company and may cause the company to tilt its interests as determined by the China Securities Regulatory Commission, the stock exchange or the company based on the principle of substance over form.
Article 7 A legal person or natural person who meets any of the following circumstances shall be deemed to be a related person of the company:
(1) Due to signing an agreement or making an arrangement with the company or its affiliates, one of the circumstances specified in Article 5 or Article 6 of this system occurs after the agreement or arrangement takes effect or within the next twelve months;
(2) In the past twelve months, one of the circumstances specified in Article 5 or Article 6 of this system has occurred. ;
Article 8 Related transactions referred to in this system include but are not limited to the following matters:
(1) Purchase or sell assets;
(2) External investment (including entrusted financial management, investment in subsidiaries, etc., excluding the establishment or capital increase of wholly-owned subsidiaries);
(3) Provide financial assistance (including entrusted loans);
(4) Providing guarantees (referring to the guarantees provided by the company to others, including guarantees to its holding subsidiaries);
(5) Lease or lease assets;
(6) Signing management contracts (including entrusted operation, entrusted operation, etc.);
(7) Donating or receiving assets;
(8) Creditor's rights or debt restructuring;
(9) Transfer of research and development projects;
(10) Sign a license agreement;
(11) Waiver of rights (including waiving the right of first refusal, the right to first subscribe for capital contribution, etc.)
(12) Purchase raw materials, fuel, and power;
(13) Selling products and commodities;
(14) Providing or accepting labor services;
(15) Entrusted or entrusted sales;
(16) Joint investment by related parties;
(17) Other matters that may result in the transfer of resources or obligations through agreement;
(18) Other matters determined by the China Securities Regulatory Commission or the stock exchange to be related transactions.
Article 9 The company’s directors, senior managers and natural person shareholders holding more than 5% of the shares shall promptly report to the company complete and accurate information on related natural persons as stipulated in Article 6 (4) of this system, and promptly notify the company’s securities department when such information changes.
Article 10 The company's directors, senior managers and natural person shareholders holding more than 5% of the shares shall report to the company the information of the company that they and their related natural persons who comply with the provisions of Article 6 (4) of this system control, participate in, actually control, or serve as directors, supervisors or senior managers, and promptly notify the company's securities department when such information changes.
Article 11 When a related natural person of the company learns that a related party related to him or her has a related transaction with the company, he shall immediately notify the securities department of the company.
Article 12 If the company’s internal directors and senior managers fail to accurately and timely perform their reporting obligations in accordance with the requirements of Articles 9, 10, and 11 of this system, the company will give them warnings, demotions, removals, dismissals and other penalties based on the seriousness of the circumstances.
Chapter 3 Decision-making on related-party transactions
Article 13 Review of related transactions: In addition to related parties voluntarily reporting to the company's securities department, the company's relevant departments will check the transaction parties in each fiscal year to determine whether they are related parties of the company.
Article 14 Decision-making authority for related-party transactions:
(1) If the amount of the transaction between the company and its related parties (excluding the provision of guarantees) exceeds 30 million yuan and accounts for more than 5% of the absolute value of the company's most recent audited net assets, it shall be submitted to the shareholders' meeting for review. If the subject matter of the transaction is the company's equity or non-cash assets, a securities service agency that complies with the provisions of the Securities Law of the People's Republic of China shall be hired to audit or evaluate the subject matter of the transaction. Related party transactions related to daily operations and other situations related to relevant laws and regulations are exempt from audit or evaluation.
(2) If the transaction between the company and its related parties (excluding the provision of guarantees and financial assistance) meets one of the following standards, the board of directors' review procedures shall be completed with the consent of more than half of all independent directors, and the disclosure shall be made in a timely manner:
Transactions with related natural persons with a transaction amount exceeding 300,000 yuan;
The transaction amount with related legal persons exceeds 3 million yuan and accounts for more than 0.5% of the absolute value of the company's latest audited net assets.
Related transactions that do not meet the above standards must be notified to the secretary of the board of directors and executed after approval by the general manager of the company.
(3) If the company provides guarantees to related parties, regardless of the amount, it shall be disclosed in a timely manner after deliberation and approval by the board of directors, and submitted to the shareholders' meeting for review. If the company provides guarantees for its controlling shareholder, actual controller and its related parties, the controlling shareholder, actual controller and its related parties shall provide counter-guarantee.
If the company causes the guaranteed party to become a related party of the company due to a transaction, when implementing the transaction or related transaction, it shall perform corresponding review procedures and information disclosure obligations with respect to the existing related guarantee. If the board of directors or shareholders' meeting fails to review and approve the related guarantee matters specified above, the parties to the transaction shall take effective measures such as early termination of the guarantee.
If a company entrusts financial management to related parties, the amount of entrusted financial management shall be used as the calculation standard for disclosure, and shall be calculated cumulatively within twelve consecutive months according to the type of transaction, and relevant information disclosure regulations shall apply.
The company shall not provide financial assistance to related parties specified in these rules, except when it provides financial assistance to related joint-stock companies (excluding entities controlled by the company's controlling shareholder or actual controller), and other shareholders of the joint-stock company provide financial assistance under the same conditions in proportion to their capital contribution. If the company provides financial assistance to the aforementioned related-shareholding companies, it must be reviewed and approved by more than half of all non-related directors, and more than two-thirds of the non-related directors present at the board meeting, and submitted to the shareholders' meeting for review.
(4) Any contract or transaction between directors and senior managers and the company must be reviewed and approved by the shareholders’ meeting, and the principle of fairness must be strictly observed.
(5) The company's related-party transactions that meet the disclosure standards shall be submitted to the board of directors for review and disclosed in a timely manner with the approval of more than half of all independent directors. When independent directors believe that it is difficult to judge whether the conditions of a related party transaction are fair based on the information submitted to the board of directors or shareholders' meeting, they have the right to hire independent professional consultants, individually or jointly, to review the conditions of the related party transaction and provide professional reports or advisory opinions at the company's expense.
(6) The provisions of Article 14 shall apply to the following related-party transactions that occur within the company within twelve consecutive months in accordance with the principle of cumulative calculation:
Transactions with the same related party;
Transactions related to the same transaction subject matter with different related parties;
The above-mentioned same related party includes other related parties that are controlled by the same entity or have equity control relationships with the related party.
Those who have fulfilled relevant obligations in accordance with the provisions of this article will no longer be included in the relevant cumulative calculation scope.
(7) The following transactions between the company and related parties are exempt from submission to the shareholders' meeting for review in accordance with relevant regulations:
Public bidding and public auction for unspecified objects (excluding restricted methods such as invitation to bid), except where it is difficult to achieve a fair price through bidding or auction;
Transactions in which the company obtains unilateral benefits, including receiving cash assets as gifts, obtaining debt relief, etc.;
The pricing of related-party transactions is stipulated by the state;
The related party provides funds to the company, and the interest rate is not higher than the loan market quotation rate stipulated by the People's Bank of China, and the company has no corresponding guarantee;
The company provides products and services to directors and senior managers on the same transaction terms as non-related parties.
(9) The following transactions between the company and related parties can be exempted from performing relevant obligations as related transactions:
One party subscribes in cash for stocks, corporate bonds or enterprise bonds, convertible corporate bonds or other derivatives issued by the other party to unspecified objects;
One party serves as a member of the underwriting syndicate to underwrite stocks, corporate bonds or corporate bonds, convertible corporate bonds or other derivatives issued by the other party to unspecified objects;
One party receives dividends, bonuses or remuneration in accordance with the resolution of the other party’s shareholders’ meeting;
Other transactions recognized by the stock exchange.
Article 15 When the company and related parties conduct related party transactions related to daily operations, they shall perform corresponding review procedures in accordance with the following provisions:
(1) For daily related transactions that occur for the first time, the company shall enter into a written agreement with the related party and disclose it in a timely manner. The provisions of Article 14 shall be applied for review based on the transaction amount involved in the agreement; if the agreement does not have a specific transaction amount, it shall be submitted to the shareholders' meeting for review;
(2) For daily related transaction agreements that have been reviewed and approved by the company's board of directors or shareholders' meeting and are currently being implemented, if the main terms do not change significantly during the implementation process, the company shall disclose the actual performance of the relevant agreements in periodic reports as required, and explain whether it complies with the provisions of the agreement; if the agreement If the main terms of the agreement change significantly during the implementation process or the agreement needs to be renewed upon expiration, the company shall review the newly revised or renewed daily related transaction agreement based on the transaction amount involved in the agreement and apply the provisions of Article 14; if the agreement does not have a specific transaction amount, it shall be submitted to the shareholders' meeting for review;
(3) For a large number of related transactions related to daily operations that occur every year, and it is difficult to submit each agreement to the board of directors or shareholders' meeting for review in accordance with item (1) of this article due to the need to frequently enter into new daily related transaction agreements, the company may, before disclosing the previous annual report, make a reasonable estimate of the total amount of daily related transactions that will occur in the company in the current year, and review and disclose them according to the provisions of Article 14 based on the estimated amount; for daily related transactions within the estimated scope, the company shall disclose them in periodic reports. If the amount of daily related transactions exceeds the estimated total amount during actual execution, the company shall conduct a review based on the provisions of Article 14 of the excess amount.
"Related transactions related to daily operations" means:
Purchase raw materials, fuel, and power;
Selling products and commodities;
Providing or receiving labor services;
Entrusted or entrusted sales;
Other transactions related to daily operations.
Article 16 When the company's board of directors considers related party transactions, related directors shall abstain from voting and shall not exercise voting rights on behalf of other directors, and their voting rights shall not be counted in the total number of voting rights. The board meeting can be held if more than half of the non-related directors are present, and resolutions made at the board meeting must be passed by more than half of the non-related directors. If the number of non-related directors present at the board of directors is less than three, the company shall submit the transaction to the shareholders' meeting for review. The related directors mentioned in the preceding paragraph include the following directors or directors with one of the following circumstances:
(1) Counterparty;
(2) Served in the counterparty of the transaction, or in a legal person or other organization that can directly or indirectly control the counterparty, or a legal person or other organization directly or indirectly controlled by the counterparty;
(3) Having direct or indirect control over the counterparty;
(4) Close family members of the transaction counterparty or its direct or indirect controller (for specific scope, please refer to the provisions of Article 6 of this system);
(5) Close family members of the directors, supervisors and senior managers of the counterparty or its direct or indirect controller (see the provisions of Article 6 of this system for the specific scope);
(6) Persons whose independent business judgment may be affected due to other reasons as determined by the China Securities Regulatory Commission, the stock exchange or the company.
Article 17 When the company's shareholders meeting considers related party transactions, related shareholders shall abstain from voting and shall not exercise voting rights on behalf of other shareholders.
The related shareholders mentioned in the preceding paragraph include the following shareholders or shareholders with one of the following circumstances:
(1) Counterparty;
(2) Having direct or indirect control over the counterparty;
(3) Directly or indirectly controlled by the counterparty;
(4) Directly or indirectly controlled by the same legal person or natural person as the counterparty;
(5) Close family members of the transaction counterparty or its direct or indirect controller (for specific scope, please refer to the provisions of Article 6 of this system);
(6) Working for the counterparty to the transaction, or for a legal entity that can directly or indirectly control the counterparty or a legal entity directly or indirectly controlled by the counterparty (applicable to situations where the shareholder is a natural person);
(7) Its voting rights are restricted or affected due to the existence of an unfulfilled equity transfer agreement or other agreement with the counterparty or its related parties;
(8) Legal persons or natural persons determined by the China Securities Regulatory Commission or the stock exchange that may cause the listed company to tilt its interests.
Announcements of shareholders' meeting resolutions should fully disclose the voting status of non-affiliated shareholders.
Article 18 When the shareholders' meeting deliberates on matters related to related transactions, the secretary of the board of directors shall determine the scope of related shareholders in accordance with relevant laws, regulations and normative documents before the meeting, and related shareholders involved in related transactions shall abstain from voting. The voting rights held by related shareholders are not included in the total number of voting shares held by shareholders present at the meeting. If related shareholders cannot evade due to special circumstances, they may participate in the voting after the company obtains the consent of the competent department. The company should make a detailed explanation of this in the resolution of the shareholders' meeting, and at the same time make special statistics on the voting status of non-affiliated shareholders and disclose it in the resolution.
Avoidance measures for related shareholders are:
(1) Related shareholders should take the initiative to apply for avoidance, otherwise other shareholders have the right to apply to the shareholders' meeting for avoidance of related shareholders.
(2) When a dispute arises about whether the shareholder is a related shareholder, the shareholders' meeting shall conduct temporary deliberation and voting as a procedural issue to decide whether he or she should recuse himself or herself.
(3) When the shareholders' meeting votes on related transactions, the number of shares represented by the related shareholders will not be counted. Non-related shareholders attending the shareholders' meeting will vote in accordance with the provisions of the Articles of Association and the Rules of Procedure of the Shareholders' Meeting.
(4) If there are special circumstances where related shareholders cannot avoid the situation, the company may vote in accordance with normal procedures after obtaining the consent of the competent department. The company shall make a detailed explanation of this in the shareholders' meeting, and at the same time conduct special statistics on the voting status of non-related shareholders and disclose it in the resolution.
Article 19 When a shareholders' meeting votes on a related transaction, it must be passed by more than half of the voting rights held by non-related shareholders present at the meeting. However, when the related transaction involves matters that need to be passed in the form of special resolutions as stipulated in the Articles of Association, the resolution of the shareholders' meeting must be passed by more than two-thirds of the voting rights held by non-related shareholders attending the shareholders' meeting to be valid.
Article 20 For related-party transactions approved and implemented in accordance with the provisions of this Chapter, the company's related parties shall take necessary avoidance measures when the company signs an agreement involving related-party transactions:
(1) Any individual can only sign an agreement on behalf of one party;
(2) Related parties shall not interfere with the company’s decisions in any way.
Chapter 4 Supplementary Provisions
Article 21 This system is binding on the company, the board of directors, directors, general manager and other senior managers.
Article 22 The term "above" in this system includes the original number; "more than" does not include the original number.
Article 23 If matters are not covered in this system or are inconsistent with relevant laws and regulations, relevant provisions of regulatory agencies, and the Articles of Association, the relevant laws, regulations, relevant provisions of regulatory agencies, and the Articles of Association shall be followed.
Article 24 This system will take effect from the date it is reviewed and approved by the shareholders' meeting.
Article 25 The Board of Directors is responsible for interpreting this system.
Qingdao Baiyang Pharmaceutical Co., Ltd.
August 2025