Renhe Pharmaceutical: Raised Funds Management System (October 2025)
Renhe Pharmaceutical Co., Ltd.
Raised funds management system
(October 2025)
Chapter 1 General Provisions
Article 1 In order to standardize the management of funds raised by Renhe Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), improve the efficiency of the use of raised funds, and protect the rights and interests of shareholders, this system is formulated in accordance with the provisions of the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Supervision Rules for Funds Raised by Listed Companies, the Stock Listing Rules of the Shenzhen Stock Exchange (hereinafter referred to as the "Listing Rules") and other laws and regulations, normative documents, and the Articles of Association of Renhe Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association").
Article 2 The term “raised funds” as mentioned in this system refers to the funds raised by a company from investors through the issuance of stocks or other equity securities and used for specific purposes, but does not include funds raised by the company for the implementation of equity incentive plans and employee stock ownership plans.
Article 3 This system is the company’s basic code of conduct for the use and management of raised funds. The company shall establish and improve the internal control system for the storage, management, use, change of use, supervision and accountability of raised funds, clarify the hierarchical approval authority, decision-making procedures, risk control measures and information disclosure requirements for the use of raised funds, and standardize the use of raised funds.
Article 4 The directors and senior managers of a company shall be diligent and responsible to ensure the safety of the funds raised by the company, and shall not control the company to change the use of raised funds without authorization or in disguised form.
Article 5 The controlling shareholder, actual controller and other related parties of the company shall not directly or indirectly occupy or misappropriate the funds raised by the company, and shall not use the funds raised by the company and investment projects with raised funds (hereinafter referred to as "raised investment projects") to obtain improper benefits.
Article 6 If the investment project is implemented through a company's subsidiary or other enterprises controlled by the company, the company shall take appropriate measures to ensure that the subsidiary or other controlled enterprises comply with the provisions of this system.
Chapter 2 Storage of Raised Funds
Article 7 The funds raised by the company shall be deposited in a special account approved by the board of directors (hereinafter referred to as the "special account") for centralized management and use. The special account for raised funds shall not store non-raised funds or be used for other purposes. If a company has raised funds twice or more, it shall set up separate raised fund accounts. If the company's actual net raised funds exceed the amount of planned raised funds (hereinafter referred to as "over-raised funds"), the excess raised funds shall also be deposited in a special account for raised funds management.
Article 8 The company shall sign a three-party supervision agreement (hereinafter referred to as the agreement) for the special account storage of raised funds with the sponsor institution or independent financial consultant and the commercial bank (hereinafter referred to as the commercial bank) where the raised funds are deposited (hereinafter referred to as the commercial bank) within one month after the raised funds are received. After the relevant agreement is signed, the company can use the raised funds. The agreement should at least include the following:
(1) The company shall centrally deposit the raised funds in a special account;
(2) The account number of the special account for raised funds, the items of raised funds involved in the special account, and the deposit amount;
(3) If the company’s cumulative withdrawals from the special account at one time or within twelve months exceed RMB 50 million and reach 20% of the net amount of the total raised funds after deducting issuance expenses (hereinafter referred to as the net amount of raised funds), the company shall promptly notify the sponsor or independent financial advisor;
(4) The commercial bank shall issue bank statements to the company every month and send a copy to the sponsor or independent financial consultant;
(5) The sponsor institution or independent financial consultant can go to the commercial bank to inquire about the special account information at any time;
(6) The supervision responsibilities of the sponsor institution or independent financial adviser, the notification and cooperation responsibilities of the commercial bank, and the supervision methods of the sponsor institution or independent financial adviser and the commercial bank on the use of funds raised by the company;
(7) The rights, obligations and liability for breach of contract of the company, commercial bank, sponsor institution or independent financial consultant;
(8) If the commercial bank fails to issue statements or notify the special account of large withdrawals to the sponsor or independent financial consultant in a timely manner three times, or fails to cooperate with the sponsor or independent financial consultant in inquiring and investigating the special account information, the company may terminate the agreement and cancel the special account for raised funds.
The company should promptly announce the main contents of the agreement after all agreements are signed.
If a company implements an investment project with raised funds through a holding subsidiary, an agreement shall be jointly signed by the company, the holding subsidiary that implements the investment project with raised funds, a commercial bank, and a sponsor or independent financial advisor. The company and its holding subsidiary shall be regarded as a common party.
Article 9 If the above-mentioned agreement is terminated early before the expiration of the validity period, the company shall sign a new agreement with the relevant parties within one month from the date of termination of the agreement and make a timely announcement.
Chapter 3 Use of Raised Funds
Article 10 In principle, funds raised by a company should be used for its main business. The use of raised funds shall not include the following behaviors:
(1) Except for financial enterprises, raised funds may not be used for high-risk investments such as securities investment and derivatives trading or to provide financial assistance to others, nor may they be directly or indirectly invested in companies whose main business is the purchase and sale of securities;
(2) Investments that change the use of raised funds in disguised form through pledges, entrusted loans or other means;
(3) Providing the raised funds directly or indirectly to controlling shareholders, actual controllers and other related parties to facilitate related parties’ use of raised investment projects to obtain improper benefits;
(4) Other behaviors that violate regulations on the management of raised funds.
Article 11 The company's board of directors shall comprehensively check the progress of the raised investment projects every half year and prepare a "Special Report on the Deposit, Management and Actual Use of the Company's Raised Funds" (hereinafter referred to as the "Special Report on Raised Funds").
If there is a discrepancy between the actual investment progress of a raised investment project and the investment plan, the company shall explain the specific reasons in the "Special Report on Raised Funds". If the actual annual use of raised funds for a raised investment project differs by more than 30% from the estimated use amount of the most recently disclosed raised funds investment plan, the company shall adjust the raised funds investment plan and disclose the most recent raised funds annual investment plan, current actual investment progress, adjusted annual investment plan, and reasons for changes in the investment plan in special reports and periodic reports on raised funds. The company shall cooperate with the continuous supervision work of the sponsor institution or independent financial consultant and the audit work of the accounting firm, and promptly provide or apply to the bank for the necessary information related to the storage, management and use of raised funds.
The "Special Report on Raised Funds" shall be reviewed and approved by the Board of Directors and the Audit Committee, and shall be announced in a timely manner after being submitted to the Board of Directors for review.
During the annual audit, the company should hire an accounting firm to issue an assurance report on the storage, management and use of raised funds, and disclose it on the Shenzhen Stock Exchange website when disclosing the annual report.
If the assurance conclusion is a "reserved conclusion", "negative conclusion" or "unable to reach a conclusion", the company's board of directors shall analyze the reasons for the conclusion raised by the accountant in the assurance report, propose corrective measures and disclose them in the annual report.
Article 12 If any of the following circumstances occurs in an investment project with raised funds, the company shall promptly re-evaluate the feasibility, expected income, etc. of the project and decide whether to continue to implement the project:
(1) There are major changes in the market environment involved in the investment project with raised funds;
(2) After the raised funds are received, the investment project with raised funds is put on hold for more than one year;
(3) The completion period of the investment plan of raised funds is exceeded and the investment amount of raised funds does not reach 50% of the relevant plan amount;
(4) Other abnormal situations occur in investment projects with raised funds.
The company shall disclose the progress of the project, the reasons for abnormalities, and the specific circumstances of re-evaluation during the reporting period in the latest periodic report. If it is necessary to adjust the investment plan of raised funds, the company shall disclose the adjusted investment plan of raised funds at the same time.
Article 13 If a company uses raised funds to replace self-raised funds that have been invested in investment projects with raised funds in advance, it shall be reviewed and approved by the company's board of directors, and the sponsor shall issue a clear opinion. The company shall disclose relevant information in a timely manner. The time of replacement shall not exceed 6 months from the time when the raised funds are received.
During the implementation of investment projects with raised funds, in principle, payment should be made directly with raised funds. If it is really difficult to pay directly with raised funds in matters such as paying personnel salaries, purchasing overseas products and equipment, etc., replacement can be implemented within six months after payment with self-raised funds.
If the company has disclosed in the issuance application documents that it intends to use raised funds to replace pre-invested self-raised funds and the pre-invested amount is determined, it shall make an announcement before the replacement is implemented.
Article 14 If a company uses idle raised funds to temporarily supplement working capital, it shall do so through a special account for raised funds and shall be limited to production and operating activities related to its main business. It shall be reviewed and approved by the board of directors, and the sponsor shall issue clear opinions and disclose them, and shall meet the following conditions:
(1) Shall not change the use of raised funds in any disguised manner or affect the normal progress of the investment plan of raised funds;
(2) Do not use idle raised funds to directly or indirectly conduct high-risk investments such as securities investments and derivatives transactions;
(3) The period of a single temporary replenishment of working capital shall not exceed twelve months;
(4) The last raised funds used to temporarily supplement working capital have been returned.
Article 15 If a company uses idle raised funds to temporarily replenish working capital, it shall promptly announce the following after review and approval by the company's board of directors:
(1) Basic information on the funds raised this time, including the time when the funds are received, the amount of funds raised, the net amount of funds raised and the investment plan, etc.;
(2) Usage of raised funds;
(3) The amount and period of idle raised funds to replenish working capital;
(4) The amount of financial cost savings expected by using idle raised funds to replenish working capital, the reasons for insufficient working capital, whether there is any disguised change in the use of raised funds, and measures to ensure that the normal progress of investment projects with raised funds will not be affected;
(5) Opinions issued by the sponsor or independent financial consultant;
(6) Other contents required by the stock exchange.
Before the expiration date of the supplementary working capital, the company shall return this part of the funds to the special account for raised funds and make a timely announcement after all the funds have been returned. If the company expects to be unable to return this part of the funds to the special account for raised funds on time, it shall perform the review procedures in accordance with the requirements of the preceding paragraph before the expiration date and make a timely announcement. The announcement shall include the whereabouts of the funds, the reasons why they cannot be returned, the reasons and deadlines for continued use to supplement working capital, etc.
Article 16 The company shall properly arrange the use plan of excess raised funds based on the company’s development plan and actual production and operation needs. The excess raised funds should be used for projects under construction and new projects, repurchasing the company's shares and canceling them in accordance with the law. The company shall clarify the specific use plan of the excess raised funds at the latest when the entire raised investment project of the same batch is completed, and put it into use according to the plan.
When a company uses super-raised funds to invest in projects under construction and new projects, it should fully disclose information such as the construction plan, investment necessity and rationality, investment cycle and rate of return of the relevant projects. If the project involves related transactions, asset purchases, external investments, etc., it should also perform review procedures and information disclosure obligations in accordance with Chapter 6 of the Shenzhen Stock Exchange's "Listing Rules" and other provisions.
If it is indeed necessary to use temporarily idle over-raised funds for cash management or temporary supplement of working capital, the necessity and rationality should be explained. If a company uses temporarily idle over-raised funds for cash management or temporary supplement of working capital, the amount, time limit and other matters shall be reviewed and approved by the board of directors, the sponsor shall issue a clear opinion, and the company shall disclose relevant information in a timely manner.
The company shall explain the use of excess raised funds and the use plan for the next year in a special report on the deposit, management and use of the company's raised funds.
Article 17 A company may conduct cash management of temporarily idle raised funds, and cash management shall be implemented through a special account for raised funds or a publicly disclosed special settlement account for products. If cash management is implemented through a product-specific settlement account, the account shall not store non-raised funds or be used for other purposes. The implementation of cash management shall not affect the normal progress of the investment plan of raised funds. When opening or canceling a product-specific settlement account, the company shall make a timely announcement.
The products it invests in must meet the following conditions:
(1) Products with high security such as structured deposits and certificates of deposit must not be non-principal guaranteed;
(2) The liquidity is good, and the product term shall not exceed twelve months;
(3) Cash management products are not allowed to be pledged.
Article 18 If a company uses temporarily idle raised funds for cash management, it shall promptly announce the following content after review and approval by the company's board of directors:
(1) Basic information on the funds raised this time, including the time of raising, amount of funds raised, net amount of funds raised and investment plan, etc.;
(2) The use of raised funds and the reasons why raised funds are idle;
(3) The amount and period of cash management, whether there is any disguised change in the use of raised funds, and measures to ensure that the normal progress of the raised funds project will not be affected;
(5) Cash management income distribution methods, investment scope, security analysis provided by product issuers, risk control measures taken by the company to ensure fund security, etc.;
(6) Opinions issued by the sponsor or independent financial consultant.
When a company faces major risk situations such as the deterioration of the financial status of the product issuer or the loss of the invested products, it shall timely disclose risk warning announcements to the outside world and explain the risk control measures taken by the company to ensure the safety of funds.
Chapter 4 Change of Use of Raised Funds
Article 19 If a company has any of the following circumstances, it is deemed to have changed the purpose of raised funds:
(1) Cancel or terminate the original investment project with raised funds, implement new projects or permanently replenish working capital;
(2) Change the implementation entity of the investment project with raised funds (except when the implementation entity changes from a company to a wholly-owned subsidiary or a wholly-owned subsidiary to a company);
(3) Change the implementation method of investment projects with raised funds;
(4) Other circumstances determined by the China Securities Regulatory Commission and the Shenzhen Stock Exchange as changes in the use of raised funds.
Article 20 A company shall not change the use of raised funds until it has convened a board of directors and shareholders meeting to review and approve a proposal to change the use of raised funds.
If the entity implementing the investment project with raised funds changes between the company and its wholly-owned subsidiary, or if it involves changing the implementation location of the raised investment project, it will not be regarded as a change in the purpose of the raised funds. Relevant changes should be resolved by the board of directors without going through the shareholders' meeting review process. The sponsor or independent financial advisor should issue clear opinions, and the company should disclose relevant information in a timely manner.
Article 21 The company's board of directors shall scientifically and prudently select new investment projects with raised funds, conduct feasibility analysis on the new investment projects, and be convinced that the investment projects have good market prospects and profitability, can effectively prevent investment risks, and improve the efficiency of the use of raised funds.
Article 22 If a company plans to change the investment project with raised funds to a joint venture, it shall carefully consider the necessity of the joint venture on the basis of fully understanding the basic situation of the joint venture parties, and the company shall hold the controlling shareholding to ensure effective control of the investment project with raised funds.
Article 23 If a company changes the purpose of raised funds to acquire the assets (including equity) of the controlling shareholder or actual controller, it shall ensure that it can effectively avoid horizontal competition and reduce related transactions after the acquisition. The company shall disclose the reasons for transactions with the controlling shareholder or actual controller, the pricing policy and pricing basis of related transactions, the impact of related transactions on the company, and solutions to related problems.
Article 24 If a company changes the implementation location of an investment project with raised funds, it shall make a timely announcement after deliberation and approval by the board of directors, explaining the change, reasons, impact on the implementation of the investment project with raised funds, and the opinions issued by the sponsor or independent financial consultant.
Article 25 When a company uses raised funds for the following matters, it shall be reviewed and approved by the board of directors, and shall be disclosed in a timely manner after the sponsor or independent financial advisor issues a clear opinion:
(1) Use raised funds to replace self-owned funds that have been invested in investment projects with raised funds in advance;
(2) Use temporarily idle raised funds for cash management;
(3) Use temporarily idle raised funds to temporarily supplement working capital;
(4) Change the use of raised funds;
(5) Change the implementation location of investment projects with raised funds;
(6) Use surplus funds to raise funds;
(7) The excess raised funds will be used for projects under construction and new projects, to repurchase the company's shares and cancel them in accordance with the law. If a company changes the purpose of raised funds, uses excess raised funds, or uses surplus raised funds to meet the standards for review by the shareholders' meeting, it must also be reviewed and approved by the shareholders' meeting.
If the relevant matters involve related transactions, asset purchases, external investments, etc., the review procedures and information disclosure obligations shall also be performed in accordance with Chapter 6 of the Shenzhen Stock Exchange’s Listing Rules.
Article 26 After the completion of a single or all investment projects with raised funds, if the remaining funds (including interest income) are less than 10% of the net raised funds of the project, the company shall perform corresponding procedures in accordance with the first paragraph of Article 24 when using the remaining funds.
If the surplus funds (including interest income) reach or exceed 10% of the net funds raised for the project, the company's use of the surplus funds must also be reviewed and approved by the shareholders' meeting.
If the remaining funds (including interest income) are less than 5 million yuan or less than 1% of the net raised funds of the project, they may be exempted from the aforementioned procedures, and their use shall be disclosed in the annual report.
Chapter 5 Management and Supervision of Raised Funds
Article 27 The company's accounting department shall set up a ledger for the use of raised funds and record in detail the expenditure of raised funds and the investment in raised funds projects.
The company's internal audit department should inspect the storage, management and use of raised funds at least once every quarter, and report the inspection results to the audit committee in a timely manner.
If the company's audit committee believes that there are irregularities or major risks in the company's management of raised funds or that the internal audit institution has failed to submit an inspection result report in accordance with the provisions of the preceding paragraph, it shall report to the board of directors in a timely manner. The board of directors shall promptly report to the Shenzhen Stock Exchange and make an announcement after receiving the report.
Article 28 Independent directors should pay attention to whether there are major differences between the actual use of raised funds and the company's information disclosure. With the consent of more than half of the independent directors, the independent directors may hire an accounting firm to issue an assurance report on the storage and use of raised funds. The company should actively cooperate and bear the necessary expenses.
Chapter 6 Supplementary Provisions
Article 29 In this system, “above” includes the original number, and “less than” does not include the original number.
Article 30 This system will come into effect after being reviewed and approved by the shareholders' meeting. This system is interpreted and revised by the company's board of directors.
Article 31 Matters not covered in this system shall be implemented in accordance with relevant laws, regulations, rules, normative documents and the relevant provisions of the Articles of Association. If it conflicts with the provisions of relevant laws, regulations, rules or normative documents and the Articles of Association, the provisions of the relevant laws, regulations, rules or normative documents and the Articles of Association shall prevail.