Jiayi Shares: Cash Dividend Management System
Zhejiang Jiayi Thermal Insulation Technology Co., Ltd.
Cash dividend management system
Chapter 1 General Provisions
Article 1 In order to further regulate the dividend distribution behavior of Zhejiang Jiayi Thermal Insulation Technology Co., Ltd. (hereinafter referred to as the "Company"), promote the company to establish a scientific, sustainable and stable dividend distribution mechanism, and protect the legitimate rights and interests of small and medium-sized investors, in accordance with the Company Law of the People's Republic of China (hereinafter referred to as the "Company Law"), the Securities Law of the People's Republic of China, the Listed Company Supervision Guidelines No. 3 - Cash Dividends of Listed Companies, the Shenzhen Stock Exchange GEM Stock Listing Rules, and the Shenzhen Stock Exchange Self-Regulatory Supervision Guidelines for Listed Companies No. No. 2 - Standardized Operation of GEM Listed Companies" and other laws, regulations, departmental rules, normative documents and the "Articles of Association of Zhejiang Jiayi Thermal Insulation Technology Co., Ltd." (hereinafter referred to as the "Articles of Association"), and combined with the actual situation of the company, this system is specially formulated.
Chapter 2 Company Cash Dividend Policy
Article 2 The company's profit distribution should pay attention to reasonable investment returns for investors, and should firmly establish the awareness of returning shareholders.
Article 3 The company implements a sustained and stable dividend distribution policy. The company's dividend distribution should pay attention to reasonable investment returns for investors and take into account the company's sustainable development. In order to meet the company's capital needs for normal production and operation, if there are no major investment plans or major cash expenditures, the company will actively distribute dividends in cash, stocks, etc.
Article 4 The company may distribute dividends in the form of cash, stocks or a combination of the two, with priority given to distributing dividends in cash.
If stock dividends are used for profit distribution, there should be real and reasonable factors such as the company's growth potential and the dilution of net assets per share.
Article 5 The company will, within the scope of distributable profits, fully consider the needs of investors, and in accordance with relevant laws, regulations and the Articles of Association, distribute the profits after income tax paid by the company in the following order: (1) When the company distributes after-tax profits for the year, it shall withdraw 10% of the profits and include them in the company's statutory public reserve fund. If the cumulative amount of the company's statutory reserve fund is more than 50% of the company's registered capital, no further withdrawals can be made.
(2) If the company's statutory reserve fund is insufficient to make up for previous years' losses, it shall first make up for it with the current year's net profit before withdrawing the statutory reserve fund in accordance with the provisions of the preceding paragraph.
(3) After the company withdraws the statutory public reserve fund from the after-tax profits, it can withdraw any discretionary public reserve fund from the after-tax profits upon resolution of the shareholders' meeting.
(4) The remaining after-tax profits after the company has made up for its losses and withdrawn the provident fund shall be distributed according to the proportion of shares held by shareholders, unless the company's articles of association stipulate that distribution is not based on the proportion of shareholdings.
Article 6 If the conditions for profit distribution are met, the company shall distribute dividends at least once a year. The company's board of directors may propose that the company make mid-term profit distributions in the form of cash, stocks, or a combination of cash and stocks based on the company's capital needs.
Article 7 On the premise that profits and cash flow meet the requirements of sustainable operations and long-term development, the company's profits distributed in cash every year shall not be less than 10% of the distributable profits realized in that year, and the cumulative profits distributed by the company in cash for three consecutive years shall not be less than 30% of the average annual distributable profits realized in those three years.
The specific conditions for the company to issue cash dividends are as follows:
(1) The company’s distributable profits for the year (i.e., the remaining after-tax profits after the company makes up for its losses and withdraws its provident fund) are positive and have sufficient cash flow. The implementation of cash dividends will not affect the company’s subsequent ongoing operations;
(2) The audit institution issues a standard unqualified audit report on the company's financial report for that year; (3) The company has no major investment plans or major cash expenditures (except for raised funds projects). Major investment plans or major cash expenditures refer to one of the following situations: the company's cumulative expenditures on external investments, asset purchases and other transactions planned in the next twelve months reach or exceed 50% of the company's most recent audited net assets, and exceed RMB 30 million.
Article 8 The board of directors shall comprehensively consider factors such as the characteristics of the company's industry, development stage, its own business model, profitability level, and whether there are major capital expenditure arrangements, distinguish the following situations, and propose differentiated cash dividend policies in accordance with the procedures stipulated in the Articles of Association:
(1) If the company is in a mature development stage and has no major capital expenditure arrangements, when distributing profits, the proportion of cash dividends in this profit distribution should be at least 80%;
(2) If the company is in a mature stage of development and has major capital expenditure arrangements, when distributing profits, the proportion of cash dividends in this profit distribution should be at least 40%;
(3) If the company is in the growth stage and has major capital expenditure arrangements, when distributing profits, the proportion of cash dividends in the profit distribution should be at least 20%;
(4) If the company's development stage is difficult to distinguish but there are major capital expenditure arrangements, when distributing profits, the proportion of cash dividends in this distribution shall not be less than 20%.
The proportion of cash dividends in this profit distribution is cash dividends divided by the sum of cash dividends and stock dividends.
Article 9 On the premise that the company's profits and cash flow meet the company's normal operations and long-term development, the company shall distribute dividends in cash; if the board of directors believes that the company's future growth is good, the net assets per share are relatively high, the company's stock price does not match the company's share capital, and issuing stock dividends is beneficial to the overall interests of all shareholders of the company, it may formulate a stock dividend distribution plan on the premise of complying with the company's cash dividend policy.
Article 10 If a company plans to issue securities, it shall formulate a reasonable plan for shareholder returns. It must reasonably balance the use of operating profits for its own development and return to shareholders. It must pay attention to increasing the level of cash dividends and enhancing returns to shareholders.
The company should disclose in the prospectus or issuance plan the profit distribution policy, especially the formulation and implementation of the cash dividend policy, the amount and proportion of cash dividends in the past three years, and the arrangements for the use of undistributed profits, and make a "significant matter reminder" to remind investors to pay attention to the above situation.
Article 11 If a proposed issuance of securities, major asset reorganization, merger or division, or acquisition leads to a change in the company's control, the company's cash dividend policy and corresponding arrangements after the issuance, reorganization, or change in control, as well as the board of directors' explanation of the above situations and other information shall be disclosed in detail in the prospectus or issuance plan, major asset reorganization report, equity change report, or acquisition report.
Chapter 3 Cash Dividend Decision-making Procedure
Article 12 The company’s profit distribution should focus on reasonable investment returns for investors, and the profit distribution policy should maintain continuity and stability as much as possible. The company’s decision-making procedures and mechanisms for profit distribution are as follows:
(1) When a company distributes dividends, the company's board of directors shall first formulate a distribution plan and then submit it to the company's shareholders' meeting for review.
(2) When formulating proposals related to the profit distribution plan, the board of directors should fully listen to the opinions of the management and independent directors. Before the company's board of directors adopts the profit distribution plan, the audit committee shall review the proposed profit distribution plan and submit it to the board of directors for review after it is approved by more than half of the audit committee's votes. The profit distribution plan adopted by the company's board of directors must be approved by a majority vote of all directors. If independent directors believe that the specific cash dividend plan may damage the rights and interests of the company or small and medium-sized shareholders, they have the right to express independent opinions. If the board of directors fails to adopt the opinions of independent directors or does not fully adopt them, it shall record the opinions of independent directors and the specific reasons for not adopting them in the board resolution and disclose them.
(3) After the board of directors has reviewed and approved the profit distribution plan, it shall be submitted to the shareholders' meeting for review and approval. Before the shareholders' meeting reviews the profit distribution plan, the company should proactively communicate with shareholders, especially small and medium-sized shareholders, through multiple channels, fully listen to the opinions and demands of small and medium-sized shareholders, and respond to issues of concern to small and medium-sized shareholders in a timely manner.
(4) If the company is unable to determine the profit distribution plan for the current year in accordance with the established cash dividend policy or minimum cash dividend ratio under special circumstances, the board of directors shall provide a special explanation for the specific reasons. The adjusted profit distribution policy shall not violate laws, administrative regulations, departmental rules and relevant provisions of the China Securities Regulatory Commission and the Shenzhen Stock Exchange. Proposals related to adjusting the profit distribution policy shall be submitted to the shareholders' meeting for review after the opinions of the independent directors and the audit committee and the deliberation of the board of directors, and shall be approved by more than 2/3 of the voting rights held by shareholders attending the shareholders' meeting. The company should disclose the specific reasons and the clear opinions of independent directors in the annual report. Under the above circumstances, the company should provide an online voting platform when convening the shareholders' meeting.
(5) If a shareholder illegally appropriates company funds, the company shall deduct the cash dividend distributed by the shareholder to repay the funds occupied.
Article 13 When the company convenes the annual shareholders' meeting to review the annual profit distribution plan, it may review and approve the conditions, upper limit of proportion, upper limit of amount, etc. for the next year's interim cash dividend. The upper limit of interim dividends for the next year reviewed by the annual shareholders' meeting shall not exceed the net profit attributable to the company's shareholders during the corresponding period. The board of directors formulates a specific interim dividend plan based on the resolution of the shareholders' meeting and subject to the conditions for profit distribution.
The company shall strictly implement the cash dividend policy stipulated in the company's articles of association and the cash dividend plan reviewed and approved by the shareholders' meeting. If it is really necessary to adjust or change the cash dividend policy specified in the company's articles of association, the conditions stipulated in the company's articles of association shall be met, and the corresponding decision-making procedures shall be implemented after detailed demonstration, and shall be approved by more than 2/3 of the voting rights held by shareholders attending the shareholders' meeting.
Article 14 The company shall take effective measures to encourage small and medium-sized investors and institutional investors to actively participate in the company's decision-making on profit distribution matters. Give full play to the professional guidance role of intermediaries.
Article 15 After the company's profit distribution plan is reviewed and approved by the shareholders' meeting, or after the board of directors formulates a specific plan based on the interim dividend conditions and upper limit reviewed and approved by the annual shareholders' meeting, it shall make timely arrangements for funds to ensure the smooth implementation of the cash dividend plan.
Article 16 After the company's shareholders' meeting makes a resolution on the profit distribution plan, the company's board of directors must complete the distribution of dividends (or shares) within 2 months after the shareholders' meeting.
Chapter 4 Dividend Supervision and Constraint Mechanism and Information Disclosure
Article 17 When the board of directors makes decisions and forms a dividend plan, it must record in detail management suggestions, key points of speeches of participating directors, opinions of independent directors, voting results of the board of directors, etc., and form written records and properly preserve them as company files.
Article 18 The audit committee shall pay attention to the board of directors' implementation of the cash dividend policy and shareholder return plan, as well as whether it has implemented corresponding decision-making procedures and information disclosure. If the audit committee finds that the board of directors fails to strictly implement the cash dividend policy and shareholder return plan, fails to strictly implement the corresponding decision-making procedures, or fails to disclose the corresponding information truthfully, accurately, and completely, it should urge it to make timely corrections.
Article 19 The company shall disclose in detail the formulation and implementation of the cash dividend policy in its annual report, and provide special explanations on the following matters:
(1) Whether it complies with the provisions of the Articles of Association or the requirements of the shareholders’ meeting resolution;
(2) Whether the dividend standards and proportions are clear and clear;
(3) Whether the relevant decision-making procedures and mechanisms are complete;
(4) If the company fails to distribute cash dividends, it should disclose the specific reasons and the next steps it plans to take to enhance investor returns;
(5) Whether small and medium-sized shareholders have the opportunity to fully express their opinions and demands, and whether the legitimate rights and interests of small and medium-sized shareholders are fully protected, etc.
If the cash dividend policy is adjusted or changed, a detailed explanation of whether the conditions and procedures for adjustment or change are compliant and transparent shall be provided.
Article 20 When a company discloses its profit distribution plan, the announcement shall include the following content:
(1) In accordance with the provisions of the Company Law and the Articles of Association, the situation of making up for losses (if any), withdrawing statutory provident funds and discretionary provident funds, as well as the base number of share capital, distribution ratio, total distribution amount and their sources;
(2) The basic situation of profit distribution and cash dividends for the current period; if cash dividends are distributed at the same time as stock dividends, the proportion of cash dividends in this profit distribution and its rationality should be explained based on factors such as the company's development stage, growth potential, dilution of net assets per share, and major capital expenditure arrangements. If the amount of share repurchases implemented in the current year is regarded as the amount of cash dividends, the amount and proportion included in the cash dividends in this way shall be explained;
(3) Whether the profit distribution plan complies with the profit distribution policy stipulated in the Articles of Association and the company's disclosed shareholder return plan, etc.
Article 21 If the amount of cash dividends in the company's profit distribution plan reaches or exceeds 100% of the net profit for the current period, and reaches or exceeds 50% of the undistributed profits at the end of the current period, the company shall also disclose whether it affects its solvency, whether it has used raised funds to supplement working capital in the past twelve months, and whether it plans to use raised funds to supplement working capital in the next twelve months.
Article 22 If the undistributed profits at the end of the year in the company's consolidated balance sheet and parent company's balance sheet are both positive and profitable during the reporting period, and no cash dividends are distributed or the total amount of cash dividends in the past three years is less than 30% of the average annual net profit in the past three years, the company shall disclose the following content while disclosing the profit distribution plan:
(1) An explanation of the reasons for not distributing cash dividends or having a low level of cash dividends based on the characteristics of the industry, development stage, own business model, profitability level, debt repayment ability, capital needs and other factors;
(2) The expected use of retained undistributed profits and the income situation;
(3) Whether the company has provided convenience for small and medium-sized shareholders to participate in cash dividend decision-making in accordance with the relevant regulations of the China Securities Regulatory Commission during the corresponding period;
(4) Measures the company plans to take to enhance investor returns.
If the undistributed profits in the balance sheet of the company's parent company are negative but the undistributed profits in the consolidated balance sheet are positive, the company shall disclose in the announcement related to profit distribution the profit distribution of the company's controlled subsidiaries to the parent company, as well as the measures the company plans to take to enhance the level of investor returns.
Article 23 If the shareholders' meeting distributes profits to shareholders in violation of the Company Law, the shareholders shall return the profits distributed in violation of the regulations to the company; if losses are caused to the company, the shareholders and the responsible directors and senior managers shall bear the liability for compensation.
Chapter 5 Supplementary Provisions
Article 24 The term "above" in this system includes the original number; "more than", "less than" and "less than" do not include the original number.
Article 25 Matters not covered by this system shall be implemented in accordance with the relevant provisions of national laws, regulations, normative documents and the Articles of Association. If this system conflicts with laws, regulations, normative documents promulgated by the state in the future and the provisions of the Articles of Association after being modified through legal procedures, the provisions of the relevant laws, regulations, normative documents and the Articles of Association shall prevail. The company should revise this system.
Article 26 This system is formulated by the board of directors and shall be effective and implemented from the date of review and approval by the shareholders' meeting. The same applies to modifications.
Article 27 The company’s board of directors is responsible for interpreting this system.
Zhejiang Jiayi Thermal Insulation Technology Co., Ltd.
August 27, 2026