Zhendong Pharmaceutical: Guarantee Management System (December 2025)
Shanxi Zhendong Pharmaceutical Co., Ltd.
Guarantee management system
Chapter 1 General Principles
Article 1 In order to standardize the corporate governance structure of Shanxi Zhendong Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company" or the "Company"), ensure that the company makes scientific, safe and efficient decisions, clarify the responsibilities of the company's shareholder meeting, board of directors and operating management in the company's guarantee decision-making, and control financial and operating risks, the "Shanxi Zhendong Pharmaceutical Co., Ltd. Guarantee Management System" (hereinafter referred to as the "System") is formulated in accordance with national laws, administrative regulations, departmental rules and the Articles of Association of Shanxi Zhendong Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association").
Article 2 The company’s directors and senior managers shall be loyal and diligent in performing this system in accordance with industry-recognized business standards, and their judgment on relevant matters shall be prudent and based on the principle of benefiting the company’s interests and asset safety and efficiency.
Chapter 2 The company’s decision-making authority and procedures for providing guarantees
Section 1 Approval authority for external guarantees
Article 3 The company's external guarantee must be reviewed and approved by the board of directors or shareholders' meeting. External guarantees that should be approved by the shareholders' meeting must be reviewed and approved by the board of directors before being submitted to the shareholders' meeting for approval.
Article 4 The following external guarantees provided by the company must be submitted to the shareholders’ meeting for review and approval:
(1) A single guarantee amount exceeds 10% of the company’s latest audited net assets;
(2) Any guarantee provided after the total amount of guarantees provided by the company and its holding subsidiaries exceeds 50% of the company’s latest audited net assets;
(3) Guarantees provided for guarantee objects whose asset-liability ratio exceeds 70%;
(4) The guarantee amount exceeds 50% of the company’s latest audited net assets for twelve consecutive months and the absolute amount exceeds 50 million yuan;
(5) Any guarantee provided after the total amount of guarantees provided by the company and its holding subsidiaries exceeds 30% of the company’s latest audited total assets;
(6) The guarantee amount exceeds 30% of the company’s latest audited total assets within twelve consecutive months;
(7) Guarantees provided to shareholders, actual controllers and their related parties;
(8) Other guarantee situations provided by the stock exchange or these Articles of Association.
When the board of directors considers guarantee matters, it must be reviewed and approved by more than two-thirds of the directors present at the board meeting. If the company provides guarantees to related parties, it must be reviewed and approved by more than two-thirds of the non-related directors attending the board meeting and a resolution must be made, and submitted to the shareholders' meeting for review.
When the shareholders' meeting considers the guarantee item (6) of the preceding paragraph, it must be approved by more than two-thirds of the voting rights held by shareholders attending the meeting.
When the shareholders' meeting considers the guarantee proposal provided for the shareholder, the actual controller and their related parties, the shareholder or the shareholder controlled by the actual controller shall not participate in the vote. The vote shall be passed by more than half of the voting rights held by other shareholders attending the shareholders' meeting.
If the company provides guarantees for its wholly-owned subsidiaries, or provides guarantees for its controlled subsidiaries, and other shareholders of the controlled subsidiaries provide guarantees in equal proportions according to their rights and interests, and does not harm the interests of the company, and it falls under the circumstances of items (1) to (4) above, it may be exempted from submission to the shareholders' meeting for review.
Article 5 The company provides guarantees for its controlled subsidiaries. If there are a large number of guarantees that occur every year and it is necessary to enter into guarantee agreements frequently and it is difficult to submit each agreement to the board of directors or the shareholders' meeting for review, the company can separately estimate the total amount of new guarantees in the next 12 months for the two types of subsidiaries with an asset-liability ratio of more than 70% and the asset-liability ratio below 70%, and submit it to the shareholders' meeting for review.
When the aforementioned guarantee matters actually occur, the company shall disclose it in a timely manner, and the guarantee balance at any point in time shall not exceed the guarantee limit approved by the shareholders' meeting.
Article 6 If a company's controlled subsidiary provides guarantees for legal persons or other organizations within the scope of the company's consolidated statements, the company shall promptly disclose it after the controlled subsidiary has completed the review procedures.
If a company's controlled subsidiary provides guarantees for entities other than those specified in the preceding paragraph, it shall be deemed as a listed company providing guarantees and shall comply with the relevant provisions of this section.
Article 7 The counter-guarantee provided by the company and its controlled subsidiaries shall be implemented in accordance with the relevant provisions on guarantees, and the corresponding review procedures and information disclosure obligations shall be performed based on the amount of counter-guarantee provided, except for listed companies and their controlled subsidiaries that provide counter-guarantees for guarantees based on their own debts.
Article 8 If the guaranteed debt needs to be extended after maturity and the company needs to continue to provide guarantees, it shall be regarded as a new external guarantee, and the guarantee application review and approval process must be performed in accordance with the procedures stipulated in this system. If the company's main debt contract for external guarantees changes, the company's board of directors will decide whether to continue to assume the guarantee responsibility.
Section 2 Investigation of Guaranteed Objects
Article 9 Before deciding on a guarantee, the company shall verify the credit status of the guaranteed object and conduct a full analysis of the benefits and risks of the guarantee, including but not limited to:
(1) It is an enterprise legal person established in accordance with the law and effectively existing, and there is no situation that requires termination;
(2) Its operating and financial status are good, and it has stable cash flow or good development prospects;
(3) If a guarantee has been provided, there should be no situation where the creditor requires the guaranteed party to assume joint and several guarantee liability;
(4) Possess assets that can be mortgaged (pledged) and have corresponding counter-guarantee capabilities;
(5) The financial information provided is true, complete and valid;
(6) There are no other foreseeable legal risks.
Article 10 The guarantee applicant shall provide the company with the following information:
(1) Basic information of the enterprise and analysis report on operating conditions;
(2) The latest audit report and financial statements for the current period;
(3) The main contract and materials related to the main contract;
(4) The purpose of bank borrowing and expected economic effects of this guarantee;
(5) Analysis of the bank loan repayment ability guaranteed by this item;
(6) A statement that there is no major litigation, arbitration or administrative penalty;
(7) The counter-guarantee plan and proof that the counter-guarantee provider has the actual ability to bear the responsibility (if any);
(8) Other relevant information that the company deems necessary to provide.
Article 11 The person in the company's financial department who specifically handles guarantee matters (hereinafter referred to as the "responsible person") shall conduct an investigation based on the above information provided by the guaranteed object to determine whether the information is true.
Article 12 The responsible person has the obligation to ensure the authenticity of the main contract, prevent the parties to the main contract from colluding maliciously or using other fraudulent means to defraud the company's guarantee, and bear the liability risk for the authenticity.
Article 13 The department responsible for managing guarantee matters shall investigate the solvency, operating conditions and creditworthiness of the guaranteed object through its account opening bank, business entities and other aspects. If necessary, it may hire external financial or legal and other professional institutions to provide professional opinions on external guarantee matters.
Section 3 Guarantee Approval Procedure
Article 14 After the company organizes relevant departments to review the guarantee matters, the financial department shall submit a written report and submit it to the board of directors and shareholders' meeting for review and approval in accordance with the authority and procedures stipulated in this system.
Article 15 Approvers with corresponding approval authority at all levels of the company shall decide whether to grant a guarantee or provide opinions to the higher-level approval authority on whether to grant a guarantee after analyzing the financial status, industry prospects, operating conditions and credit reputation of the guarantee applicant based on the relevant information provided by the responsible person.
Article 16 Without the approval or authorization of the company's approver with corresponding approval authority, the responsible person shall not sign a guarantee contract beyond his authority, nor may he sign or seal the main contract as a guarantor.
Article 17 If a listed company provides a guarantee to a related party, regardless of the amount, it shall be submitted to the shareholders' meeting for review after being reviewed and approved by the board of directors.
Section 4 Risk Management
Article 18 The company shall pay attention to the guaranteed party's production and operation, changes in assets and liabilities, external guarantees and other liabilities, as well as mergers, divisions, changes in legal representatives, changes in external commercial reputation, etc., and actively prevent risks.
Article 19 The company shall require the guaranteed party to regularly report to the company's department responsible for managing guarantee matters the situation regarding the acquisition, use, amount of the loan to be repaid, and the actual repayment of the loan.
Article 20 The company's department responsible for managing guarantee matters shall assign a dedicated person to monitor the guaranteed person's performance of relevant obligations in real time, and pay attention to the limitation period of the guarantee. The designated person should make detailed statistics on all guarantees of the company and update them in a timely manner. The company's department responsible for managing guarantee matters shall regularly report the implementation status of the company's guarantee to the company's general manager (president).
Article 21 After the debt guaranteed by the company matures, the responsible person shall actively urge the guaranteed party to perform its repayment obligations within fifteen working days.
Article 22 When the guaranteed party actually returns the guaranteed debt funds, it must submit relevant payment vouchers to the company's department responsible for managing guarantee matters to confirm the release of the guarantee liability.
Article 23 When the guaranteed party shows signs of being unable to repay the loan in a timely manner, the company shall organize relevant departments to analyze its operating conditions, propose corresponding measures for possible risks, and report them to the board of directors.
Article 24 During the process of capital operations such as acquisitions and external investments, the company shall carefully review the external guarantees of the intended acquiree or investee as an important basis for the relevant decision-making departments to make acquisition and investment decisions.
Article 25 For a continuous credit guarantee without an agreed guarantee period, if the relevant responsible person discovers that there is a greater risk in continuing the guarantee, he shall promptly notify the creditor in writing to terminate the guarantee contract when the risk or hidden risk is discovered.
Article 26 After the company performs its guarantee obligations to creditors, it shall take effective measures to recover compensation from the debtor and disclose the recovery situation in a timely manner.
Article 27 After the People's Court accepts the debtor's bankruptcy case, if the creditor fails to declare its claims, the relevant responsible person shall request the company to participate in the distribution of the bankruptcy property and exercise the right of recourse in advance.
Section 5 Others
Article 28 All directors of the company shall prudently treat and strictly control the risks arising from external guarantees, and bear joint and several liability for losses caused by illegal or improper external guarantees in accordance with the law.
Article 29 The unit, department or person responsible for the company's investigation, approval, review and conclusion of guarantee contracts and other related responsibilities shall be the person responsible for the guarantee matters.
Chapter 3 Supplementary Provisions
Article 30 If this system conflicts with the laws, regulations and rules currently promulgated or revised by the relevant national departments or agencies or later promulgated or revised, the laws, regulations and rules promulgated or revised by the relevant national departments or agencies shall prevail.
Article 31 The right to interpret this system belongs to the company's board of directors. This system has been approved by the company's shareholders' meeting and will be implemented from the date of approval.
Shanxi Zhendong Pharmaceutical Co., Ltd.
December 2, 2025