Zhejiang Huahai Pharmaceutical Co., Ltd. Transaction and Related Party Transaction System
Zhejiang Huahai Pharmaceutical Co., Ltd. Related transaction system Zhejiang Huahai Pharmaceutical Co., Ltd.
Transaction and Related Transaction System
April 2026
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
Directory
Chapter 1 General Provisions................................................................ 1
Chapter 2 Major Transactions........................................ 1
Section 1 General Provisions........................................ 1
Section 2 Review and Disclosure Requirements for Securities Investments...................... 7
Section 3 Review and Disclosure Requirements for Entrusted Financial Management........................ 7
Section 4 Review and Disclosure Requirements for Co-Investment and Cooperation with Professional Investment Institutions............. 8
Section 5 Review and Disclosure Requirements for Futures and Derivatives Transactions........................ 10
Chapter 3 Daily Transactions........................................ 12
Chapter 4 Related Transactions........................................ 13
Section 1 Related Transactions and Related Parties........................ 13
Section 2 General provisions on decision-making authority and review procedures for related-party transactions...................... 15
Section 3 Special Requirements for Review and Disclosure of Related Party Co-Investments........................ 19
Section 4 Special Requirements for Review and Disclosure of Routine Related Transactions...................... 19
Section 5 Special Requirements for Review and Disclosure of Related Party Purchases and Sales of Assets...................... 20
Section 6 Pricing of Related Party Transactions........................ 20
Chapter 5 Supplementary Provisions...................................................... 21Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
Chapter 1 General Provisions
Article 1 In order to further regulate the transactions and related-party transactions of Zhejiang Huahai Pharmaceutical Co., Ltd. (hereinafter referred to as "Huahai Pharmaceutical" or the "Company"), improve the company's standard operation level, ensure the legality, necessity, rationality and fairness of the company's transactions and related-party transactions, and fully protect the legitimate rights and interests of the company and all shareholders, in accordance with the "Company Law of the People's Republic of China" (hereinafter referred to as the "Company Law"), This system is formulated based on the relevant provisions of the "Securities Law of the People's Republic of China" (hereinafter referred to as the "Securities Law"), the "Stock Listing Rules of the Shanghai Stock Exchange" (hereinafter referred to as the "Stock Listing Rules") and relevant laws, administrative regulations, departmental rules and other normative documents, and the "Articles of Association of Zhejiang Huahai Pharmaceutical Co., Ltd." (hereinafter referred to as the "Articles of Association"), based on the actual situation of the company.
Article 2 Transactions and related transactions occurring in the company's controlled subsidiaries shall be deemed as the company's actions, and the provisions of this system shall apply.
Article 3 Corporate transactions and related-party transactions must be legal and compliant, with fair pricing, compliance with review procedures, and standardized information disclosure.
Article 4 When reviewing transactions and related-party transactions, the company shall have a detailed understanding of the true status of the transaction object and the integrity record, credit status, performance ability, etc. of the counterparty, prudently assess the necessity, rationality and impact of the relevant transactions on the company, and determine the transaction price based on sufficient pricing basis. Focus on whether there are issues such as unclear ownership of the transaction object, unclear ability of the counterparty to perform the contract, unfair transaction price, etc., and hire an intermediary agency to audit or evaluate the transaction object in accordance with the requirements of the Stock Listing Rules.
The counterparty shall cooperate with the company in performing corresponding review procedures and information disclosure obligations.
Article 5 Shareholders, directors, and senior managers of the company shall not use related relationships to harm the interests of the company. Anyone who violates regulations and causes losses to the company shall be liable for compensation.
Chapter 2 Major Transactions
Section 1 General Provisions
Article 6 “Major transactions” as mentioned in this system include the following types of matters that occur outside the company’s daily operating activities:
(1) Purchase or sell assets;
(2) External investment (including entrusted financial management, investment in external subsidiaries, etc.);
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
(3) Provide financial assistance (including interest or interest-free loans, entrusted loans, etc.);
(4) Providing guarantees (including guarantees for holding subsidiaries, etc.);
(5) Lease or lease assets;
(6) Entrust or entrust management of assets and business;
(7) Donating or receiving donated assets;
(8) Creditor's rights and debt restructuring;
(9) Sign a license agreement;
(10) Transfer or transfer of research and development projects;
(11) Waiver of rights (including waiver of preemptive right, preemptive subscription right of capital contribution, etc.);
(12) Other transactions recognized by the Shanghai Stock Exchange.
Article 7 Except for financial assistance and guarantee matters, if the company's transactions meet one of the following standards, they shall be submitted to the company's board of directors for review:
(1) The total assets involved in the transaction (if there are both book value and appraisal value, whichever is higher) account for more than 10% of the company’s latest audited total assets;
(2) The net assets involved in the transaction target (such as equity) (if there are both book value and appraisal value, whichever is higher) account for more than 10% of the company's latest audited net assets, and the absolute amount exceeds 10 million yuan;
(3) The transaction amount (including debts and expenses assumed) accounts for more than 10% of the company's latest audited net assets, and the absolute amount exceeds 10 million yuan;
(4) The profit generated from the transaction accounts for more than 10% of the company's audited net profit in the most recent fiscal year, and the absolute amount exceeds 1 million yuan;
(5) The operating income related to the transaction target (such as equity) in the most recent fiscal year accounts for more than 10% of the company’s audited operating income in the most recent fiscal year, and the absolute amount exceeds 10 million yuan;
(6) The net profit related to the transaction object (such as equity) in the most recent fiscal year accounts for more than 10% of the company's audited net profit in the most recent fiscal year, and the absolute amount exceeds 1 million yuan.
If the data involved in the above indicators is negative, its absolute value is used for calculation.
Article 8 In addition to financial assistance and guarantee matters, if the company's transactions meet one of the following standards, they shall also be submitted to the company's shareholders' meeting for review:
(1) The total assets involved in the transaction (if there are both book value and appraisal value, whichever is higher) account for more than 50% of the company’s latest audited total assets;
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
(2) The net assets involved in the transaction target (such as equity) (if there are both book value and appraisal value, whichever is higher) account for more than 50% of the listed company's latest audited net assets, and the absolute amount exceeds 50 million yuan;
(3) The transaction amount (including debts and expenses assumed) accounts for more than 50% of the company’s latest audited net assets, and the absolute amount exceeds 50 million yuan;
(4) The profit generated from the transaction accounts for more than 50% of the company's audited net profit in the most recent fiscal year, and the absolute amount exceeds 5 million yuan;
(5) The operating income related to the transaction target (such as equity) in the most recent fiscal year accounts for more than 50% of the company’s audited operating income in the most recent fiscal year, and the absolute amount exceeds 50 million yuan;
(6) The net profit related to the transaction object (such as equity) in the most recent fiscal year accounts for more than 50% of the company's audited net profit in the most recent fiscal year, and the absolute amount exceeds 5 million yuan.
If the data involved in the above indicators are negative, the absolute value is used for calculation.
If the appraisal value of the transaction object involved in the transaction submitted for consideration at the shareholders' meeting is larger than the book value, the company shall disclose in detail the reasons for the increase or decrease and the calculation process of the appraisal results.
Article 9 If a company commits any transaction under any of the following circumstances, it may be exempted from submitting it to the shareholders' meeting for review in accordance with Article 6.1.3 of the Stock Listing Rules and Article 8 of this System, but it shall still perform its information disclosure obligations in accordance with regulations:
(1) The company receives cash assets as gifts, obtains debt relief and other transactions that do not involve payment of consideration or any obligations;
(2) The transactions of the company only meet the standards of item (4) or (6) of paragraph 1 of Article 8 of this system, and the absolute value of the company’s earnings per share in the most recent fiscal year is less than 0.05 yuan.
Article 10 When a company purchases or sells equity, the relevant financial indicators shall be calculated based on the proportion of changes in the equity of the target company held by the company, and the provisions of Articles 7 and 8 of this system shall apply.
If the transaction will result in a change in the scope of the company's consolidated statements, the relevant financial indicators of the target company corresponding to the equity shall be subject to the provisions of Articles 7 and 8 of this system.
If the scope of the company's consolidated statements changes due to leasing or leasing assets, entrusting or entrusting management of assets and businesses, etc., the provisions of the preceding paragraph shall apply.
Article 11 If a company's transactions meet the standards stipulated in Article 8 of this system, and the subject matter of the transaction is the company's equity, it shall disclose the financial accounting report of the target assets audited by an accounting firm for the most recent year. Meeting the related transaction system of Zhejiang Huahai Pharmaceutical Co., Ltd.
The audit opinion issued by the accounting firm shall be a standard unqualified opinion, and the audit deadline shall not exceed 6 months from the date of the shareholders' meeting to review relevant transactions.
If a company's transactions meet the standards stipulated in Article 8 of this system, and the subject matter of the transaction is assets other than the company's equity, it shall disclose the evaluation report of the target assets issued by an asset appraisal agency that complies with the provisions of the Securities Law (hereinafter referred to as the "assessment agency"). The evaluation base date shall not be more than one year from the date of the shareholders' meeting to review relevant transactions.
The China Securities Regulatory Commission and the Shanghai Stock Exchange require, in accordance with the principle of prudence, that the provisions of the preceding two paragraphs shall apply to transaction matters that the company voluntarily submits to the shareholders' meeting for review in accordance with the Articles of Association or other laws and regulations.
Article 12 If a company's transactions meet the standards stipulated in Article 7 of this system, and the counterparty uses non-cash assets as transaction consideration or to offset the company's debts, the company shall disclose the audit report or evaluation report involving the assets with reference to the provisions of Article 11 of this system.
Article 13 If a company purchases or sells a minority stake in the transaction target, and due to objective reasons such as the company's inability to control, jointly control or have significant influence on the transaction target before and after the transaction, it is indeed impossible to audit the financial accounting report of the transaction target for the most recent year, it may be exempted from disclosing the audit report in accordance with the provisions of Article 6.1.6 of the Stock Listing Rules and Article 11 of this system after disclosing the relevant information, unless otherwise provided by the China Securities Regulatory Commission or the Shanghai Stock Exchange.
Article 14 Any “financial assistance” transaction that occurs in a company shall, in addition to being reviewed and approved by a majority of all directors, also be reviewed and approved by more than two-thirds of the directors present at the board meeting, and disclosed in a timely manner.
If a financial assistance matter falls under any of the following circumstances, it shall also be submitted to the shareholders' meeting for review after being reviewed and approved by the board of directors:
(1) The amount of a single financial aid exceeds 10% of the company’s latest audited net assets;
(2) The latest financial statement data of the funded object shows that the asset-liability ratio exceeds 70%;
(3) The cumulative amount of financial assistance in the last 12 months exceeds 10% of the company’s latest audited net assets;
(4) Other circumstances stipulated by the Shanghai Stock Exchange or the company's articles of association.
If the funding object is a controlled subsidiary within the scope of the company's consolidated statements, and the other shareholders of the controlled subsidiary do not include the company's controlling shareholder, actual controller and their related persons, the provisions of the first three paragraphs may be exempted from application.
Article 15 Any "guarantee provision" transaction that occurs in a company shall, in addition to being reviewed and approved by more than half of all directors, also be reviewed and approved by more than two-thirds of the directors present at the board meeting, and disclosed in a timely manner. Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
If a guarantee falls under any of the following circumstances, it shall also be submitted to the shareholders' meeting for review after being reviewed and approved by the board of directors:
(1) A single guarantee amount exceeds 10% of the company’s latest audited net assets;
(2) Any external guarantee provided by the company and its holding subsidiaries after it exceeds 50% of the company’s latest audited net assets;
(3) Any guarantee provided after the total amount of external guarantees provided by the company and its holding subsidiaries exceeds 30% of the company’s latest audited total assets;
(4) Guarantees exceeding 30% of the company’s latest audited total assets based on the cumulative calculation principle of the guarantee amount within 12 consecutive months;
(5) Guarantees provided for guarantee objects whose asset-liability ratio exceeds 70%;
(6) Guarantees provided to shareholders, actual controllers and their related parties;
(7) Other guarantees stipulated by the Shanghai Stock Exchange or the company's articles of association.
The company's shareholders' meeting to consider the guarantee in item (4) of the preceding paragraph shall be approved by more than two-thirds of the voting rights held by shareholders present at the meeting.
Article 16 For guarantees that meet the disclosure standards, if the guaranteed party fails to perform its repayment obligations within 15 trading days after the debt matures, or the guaranteed party becomes bankrupt, liquidated, or has other circumstances that seriously affect its repayment ability, the company shall disclose it in a timely manner.
Article 17 If a company conducts entrusted financial management and it is difficult to perform the review procedures and disclosure obligations for each investment transaction due to the frequency of transactions, timeliness requirements, etc., it can make reasonable estimates of the investment scope, amount, and duration, etc., and calculate the proportion of net assets based on the amount. The provisions of Articles 7 and 8 of this system shall apply.
The usage period of the relevant quota should not exceed 12 months, and the transaction amount at any time during the period (including the relevant amount reinvested in the income from the aforementioned investment) should not exceed the investment quota.
Article 18 If a company rents or leases out assets, the provisions of Articles 7 and 8 of this system shall apply to the entire agreed lease fee or lease income.
Article 19 If a company directly or indirectly gives up its right to preemptively purchase or subscribe for capital contributions to its holding subsidiaries or other entities it controls, resulting in a change in the scope of consolidated statements, the provisions of Articles 7 and 8 of this system shall apply based on the amount given up and the relevant financial indicators of the entity.
If the company's relinquishment of rights does not result in a change in the scope of the company's consolidated statements, but the proportion of the equity owned by the entity decreases compared with the amount that has not been relinquished, the provisions of Articles 7 and 8 of this system shall apply based on the amount of relinquishment and the relevant financial indicators calculated based on the proportion of changes in equity.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
If the company partially gives up its rights, the amount and quota specified in the previous two paragraphs and the actual transfer or capital contribution amount shall also apply, and the provisions of Articles 7 and 8 of this system shall apply.
Article 20 When a company conducts transactions other than "providing guarantees", "providing financial assistance", "entrusting financial management", etc., it shall apply the provisions of Articles 7 and 8 respectively to all relevant transactions under the same transaction category based on the principle of cumulative calculation within 12 consecutive months. Those who have fulfilled relevant obligations in accordance with Articles 7 and 8 will no longer be included in the relevant cumulative calculation scope.
In addition to the provisions of the preceding paragraph, if a company engages in a "purchase or sale of assets" transaction, regardless of whether the subject matter of the transaction is related, if the total assets or transaction amount involved exceed 30% of the company's most recent audited total assets on a cumulative basis within 12 consecutive months, in addition to being disclosed and audited or evaluated with reference to Article 11, it must also be submitted to the shareholders' meeting for review, and approved by more than two-thirds of the voting rights held by shareholders attending the meeting.
Article 21 Transactions conducted by the company shall be subject to continuous 12-year period in accordance with the provisions of this system. According to the monthly cumulative calculation principle, if the disclosure standards stipulated in this chapter are met, only this transaction may be disclosed in accordance with the "Stock Listing Rules" and the relevant requirements of this system, and the cumulative transactions in the previous period that have not met the disclosure standards shall be stated in the announcement; if the standards for submission to the shareholders' meeting for review under the "Stock Listing Rules" and this chapter are met, only this transaction may be submitted to the shareholders' meeting for review, and the transaction that did not comply with the shareholders' meeting review procedures in the previous period shall be explained in the announcement.
If the company has fulfilled relevant obligations in accordance with Articles 7 and 8 of this system, it will no longer be included in the corresponding cumulative calculation scope. Transactions that have been disclosed by the company but have not undergone the review procedures of the shareholders' meeting shall still be included in the corresponding cumulative calculation range to determine the review procedures that should be performed.
Article 22 If a company has a transaction and the relevant arrangement involves a conditionally determined amount such as consideration that may be paid or received in the future, the highest amount that may be paid or received shall be used as the transaction amount, and this system shall apply
The provisions of Articles 7 and 8.
Article 23 If a company implements transactions specified in Article 6 of this system in installments, the provisions of Articles 7 and 8 of this system shall be applied based on the entire amount agreed in the agreement.
Article 24 When a company and the same transaction party simultaneously engage in two related transactions in opposite directions other than items (2) to (4) of Article 6 of this system, the provisions of Articles 7 and 8 of this system shall apply to the higher of the indicators involved in the transactions in a single direction.
Article 25 If a company engages in a transaction and renews or extends the contract with the original counterparty after the expiration of the term, it shall re-perform the review procedures and disclosure obligations in accordance with the provisions of this system.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
Article 26 The company shall disclose the relevant information of the transaction according to the transaction type and in accordance with relevant regulations, including the counterparty, transaction subject, main contents of the transaction agreement, transaction pricing and basis, relevant department approval documents (if any), intermediary agency opinions (if applicable), etc.
Article 27 Transactions between the company and its controlled subsidiaries and other entities controlled within the scope of its consolidated statements, or between the above-mentioned controlled subsidiaries and other entities controlled, are exempt from disclosure and corresponding procedures in accordance with the provisions of this system, unless otherwise stipulated by the China Securities Regulatory Commission or the Shanghai Stock Exchange.
Section 2 Review and Disclosure Requirements for Securities Investments
Article 28 The company shall reasonably arrange and use funds and strive to develop the company's main business, and shall not use raised funds to engage in securities investment.
Article 29 Companies engaging in securities investment shall follow the principles of legality, prudence, safety and effectiveness, establish and improve internal control systems, and control investment risks.
Companies should analyze the feasibility and necessity of engaging in securities investment, formulate strict decision-making procedures, reporting systems, risk monitoring and response measures, clarify specific requirements such as scope of authorization, operational points and information disclosure, and determine the investment scale and term based on the company's risk tolerance.
The company's board of directors shall continue to track the progress of securities investment and investment risk status. If abnormal situations such as large losses occur, it shall take immediate measures and perform disclosure obligations in accordance with regulations.
Article 30 If a company is unable to perform review procedures and disclosure obligations for each securities transaction due to transaction frequency, timeliness requirements, etc., it may make reasonable estimates of the scope, amount, and duration of securities transactions in the next 12 months. If the amount of securities investment exceeds the scope of the board of directors' authority, it shall also be submitted to the shareholders' meeting for review. The usage period of the relevant quota should not exceed 12 months, and the transaction amount at any point in the period (including the relevant amount reinvested in the income from the aforementioned investment) should not exceed the reviewed securities investment quota.
Section 3 Review and Disclosure Requirements for Entrusted Financial Management
Article 31 The company shall select as the trustee a qualified professional financial institution with good credit and financial status, no bad credit records, and strong profitability, and sign a written contract with the trustee to specify the amount, period, investment types, rights, obligations, and legal responsibilities of the entrusted financial management, etc.
Article 32 A company shall not circumvent the review procedures and information disclosure obligations required to purchase assets or make external investments in the name of entrusted financial management and other investments, or provide financial assistance to others in disguised form.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
If a company can control or significantly influence the investment direction of financial products, it shall fully disclose the final investment direction of the funds, the details of the counterparties or underlying assets involved, and fully disclose the investment risks and the company's response measures.
Article 33 If a company conducts entrusted financial management and it is difficult to fulfill the review procedures and disclosure obligations for each investment transaction due to the frequency of transactions, timeliness requirements, etc., it may reasonably estimate the scope, amount, and duration of the investment, and use the estimated entrusted financial management amount to calculate the proportion of net assets. The relevant provisions of the Stock Listing Rules and this system shall apply.
The usage period of the relevant quota should not exceed 12 months, and the transaction amount at any point in the period (including the amount related to the reinvestment of the entrusted financial management proceeds from the aforementioned entrusted financial management) should not exceed the entrusted financial management limit.
Article 34 When a company conducts entrusted financial management and any of the following circumstances occurs, it shall promptly disclose the relevant progress and planned response measures:
(1) The financing of financial products fails, fails to complete the filing and registration, is terminated early, and cannot be recovered upon expiration;
(2) Changes in the main terms of the financial product agreement or relevant guarantee contract;
(3) Major risk events occur in the operation or financial status of the trustee or fund user;
(4) Other situations that may harm the interests of the listed company or have a significant impact.
Section 4 Review and disclosure requirements for joint investment and cooperation with professional investment institutions
Article 35 The provisions of this section shall apply when a company jointly establishes an investment fund such as a merger fund or an industrial fund (hereinafter referred to as an investment fund, and the organizational form includes but is not limited to a company, a general partnership, a limited partnership, etc.) with a professional investment institution, subscribes for investment fund shares initiated and established by a professional investment institution, conducts subsequent asset transactions with the above-mentioned investment funds, and the company signs a cooperation agreement on strategic cooperation, market value management, financial consulting, business consulting, etc. (hereinafter referred to as a cooperation agreement) with a professional investment institution (hereinafter referred to as the cooperation agreement).
If the company's controlling shareholders, actual controllers, shareholders holding more than 5% of the shares, directors, and senior managers cooperate with professional investment institutions and involve the purchase or transfer of assets from the company and other related arrangements, the provisions of this section shall be followed.
Companies and their controlled subsidiaries are exempt from the application of the provisions of this section if they sign financial consulting, business consulting and other cooperation agreements with intermediaries in accordance with relevant regulations for the implementation of securities issuance, equity changes, equity incentives and other matters.
The term "professional investment institutions" as mentioned in this section refers to private equity funds, private equity fund managers, fund management companies, securities companies, futures companies, asset management companies and securities investment consulting institutions, etc. that are specialized in investment business activities. Zhejiang Huahai Pharmaceutical Co., Ltd. Related Party Transaction System
of institutions.
Article 36 When a company invests jointly with a professional investment institution, it shall disclose the amount in a timely manner regardless of the amount of participation, and perform corresponding review procedures based on the maximum loss amount it bears with reference to the company's relevant regulations on external investment. If it constitutes a related transaction, it shall also perform related transaction review procedures.
The "maximum loss amount" referred to in the preceding paragraph shall be based on the higher of the total investment amount that the company may lose due to this investment, the share equity, or the amount of losses that may result from assuming other liabilities.
Article 37 When a company invests jointly with a professional investment institution, it shall promptly disclose relevant announcements and file relevant agreements with the Shanghai Stock Exchange. The content of the announcement shall include the basic information of the professional investment institution, description of affiliated relationships or other interests, the specific situation of the investment fund, management model, investment model and interest distribution method, the main terms of the investment agreement, and explain the impact on the company and existing risks, whether it may lead to horizontal competition or related transactions, etc.
If the company's controlling shareholders, actual controllers, shareholders holding more than 5% of the shares, directors, and senior managers participate in the subscription of investment fund shares or hold positions in relevant professional investment institutions or investment funds, the specific circumstances must also be stated in the announcement.
Article 38 Within 12 months after the company uses the excess raised funds to permanently replenish working capital, it shall not invest jointly with professional investment institutions.
The provisions of the preceding paragraph do not apply when companies and professional investment institutions jointly invest in investment funds related to their main business, or investment funds such as market-oriented industrial investment funds for poor areas and poverty alleviation public welfare funds.
Article 39 When a company invests jointly with a professional investment institution and the following circumstances occur, it shall promptly disclose the relevant progress:
(1) The investment fund that intends to participate in the establishment or subscription of shares has completed its fundraising or failed to raise funds;
(2) The investment fund has completed the filing and registration (if involved);
(3) Investment funds make investments or asset acquisitions that have a significant impact on the company;
(4) Major changes in investment funds or major risk events in investment operations may have a greater impact on the company.
Article 40 When a company signs a cooperation agreement with a professional investment institution, it shall disclose the basic information of the professional investment institution, the affiliated relationship or other interest relationship with the company, the main terms of the cooperation agreement, the content of services provided by the professional investment institution, etc., and fully disclose the risks that may exist in the cooperation agreement.
Article 41 The company signs a cooperation agreement with a professional investment institution. When the following circumstances occur, the company shall notify Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
Disclose relevant progress:
(1) Complete all major obligations or planned arrangements stipulated in the cooperation agreement;
(2) Plan matters that have a significant impact on the company in accordance with the cooperation agreement;
(3) The cooperation agreement undergoes major changes or is terminated early.
Article 42 If a company has the aforementioned joint investment and cooperation matters with a professional investment institution, and purchases a transaction target that it directly or indirectly holds or recommends, in addition to disclosing information in accordance with laws, administrative regulations, departmental rules, normative documents, the Shanghai Stock Exchange's "Stock Listing Rules" and other relevant provisions, it must also disclose the shares or investment shares held in the transaction target by the professional investment institution and other entities controlled by it and all funds, trusts, asset management plans and other products managed by the professional investment institution and the last 6 years. The purchase and sale of company stocks within the month, related relationships and other interest relationships with the company and transaction targets, etc.
Article 43 During the planning and implementation of joint investment and cooperation matters between companies and professional investment institutions, they shall establish an effective mechanism to prevent the transfer of interests and conflicts of interests, improve the information isolation system, and shall not engage in illegal activities such as insider trading, market manipulation, false statements, etc.
Article 44 The company shall disclose the progress of joint investment and cooperation matters with professional investment institutions in its annual report.
Section 5 Review and Disclosure Requirements for Futures and Derivatives Transactions
Article 45 The futures trading mentioned in this section refers to trading activities with futures contracts or standardized options contracts as the subject matter of transactions. Derivatives trading mentioned in this section refers to trading activities other than futures trading, with swap contracts, forward contracts, non-standardized option contracts and their combinations as the trading objects. The underlying assets of futures and derivatives can be securities, indices, interest rates, exchange rates, currencies, commodities, etc., or a combination of the above.
Article 46 Companies participating in futures and derivatives transactions shall follow the principles of legality, prudence, safety and effectiveness.
Companies are not allowed to use raised funds to engage in futures and derivatives transactions.
Article 47 The company's hedging business refers to the activities of managing futures and derivatives transactions that are basically consistent with the above risks in order to manage specific risks such as foreign exchange risk, price risk, interest rate risk, and credit risk. The types of futures and derivatives that the company engages in hedging business should be limited to products, raw materials, foreign exchange, etc. related to the company's production and operations, and in principle, the types, scales and terms of futures and derivatives should be controlled Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
The upper limit matches the risk exposure to be managed. Futures and derivatives used for hedging and related risk exposures to be managed should have an economic relationship of mutual risk hedging, so that the values of futures and derivatives and related risk exposures will change in opposite directions due to facing the same risk factors.
Article 48 Companies engaging in futures and derivatives transactions shall establish and improve internal control systems, reasonably allocate investment decision-making, business operations, risk control and other professionals, formulate strict decision-making procedures, reporting systems and risk monitoring measures, clarify the scope of authorization, operational points, accounting and information disclosure and other specific requirements, and determine the types, scale and duration of transactions based on the company's risk tolerance.
Companies should formulate practical emergency response plans to promptly respond to major emergencies that may occur during the transaction process. Companies should set appropriate stop-loss limits (or loss warning lines) for various types of futures and derivatives or different counterparties, clarify the stop-loss processing business process, and strictly implement it.
Article 49 If a company plans to carry out futures and derivatives transactions overseas, it shall carefully evaluate the necessity of the transaction and the political, economic and legal risks of conducting transactions in relevant countries and regions, and fully consider factors such as settlement convenience, transaction liquidity, exchange rate volatility and other factors. Those who intend to carry out OTC derivatives transactions shall assess the necessity of the transaction, the complexity of the product structure, liquidity risk and counterparty credit risk.
Article 50 When a company engages in futures and derivatives trading, it shall prepare a feasibility analysis report and submit it to the board of directors for review.
If futures and derivatives transactions fall into any of the following circumstances, they shall be submitted to the shareholders' meeting for review after being reviewed and approved by the board of directors:
(1) The upper limit of the transaction margin and royalties expected to be used (including the value of the collateral provided for the transaction, the expected credit line of the financial institution, the margin reserved for emergency measures, etc., the same below) accounts for more than 50% of the company's latest audited net profit, and the absolute amount exceeds RMB 5 million;
(2) The highest contract value held on any trading day is expected to account for more than 50% of the company's latest audited net assets, and the absolute amount exceeds RMB 50 million;
(3) The company engages in futures and derivatives transactions not for the purpose of hedging.
Article 51 If a company is unable to perform review procedures and disclosure obligations for each futures and derivatives transaction due to transaction frequency and timeliness requirements, it may reasonably estimate and review the scope, amount, and duration of futures and derivatives transactions in the next 12 months. The usage period of the relevant quota should not exceed 12 months, and the amount at any time during the period (including the relevant amount of transactions using the proceeds of the aforementioned transactions) should not exceed the reviewed quota.
Article 52 If a company intends to carry out futures and derivatives transactions, it shall disclose the purpose of the transaction and the traded products Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
species, trading tools, trading venues, expected trading margin and upper limit of premiums, expected maximum contract value held on any trading day, professional staffing, etc., and provide adequate risk warnings.
Article 53 Relevant departments of the company shall track changes in open market prices or fair values of futures and derivatives, promptly assess changes in risk exposures of traded futures and derivatives, and report to the management and the board of directors the implementation of futures and derivatives trading authorization, trading positions, risk assessment results, profit and loss status, implementation of stop-loss regulations, etc.
Companies that carry out futures and derivatives transactions for the purpose of hedging should promptly track changes in the net exposure value of futures and derivatives after hedging identified risk exposures, and conduct continuous evaluation of the hedging effect.
Article 54 If the company's confirmed profits, losses and floating losses from futures and derivatives transactions reach 10% of the company's audited net profit attributable to shareholders of the company in the most recent year and the absolute amount exceeds RMB 10 million, it shall be disclosed in a timely manner. If a company carries out hedging business, the aforementioned provisions may apply after adding up the changes in the value of the hedging instrument and the hedged project.
When a company engages in hedging business and encounters losses specified in the preceding paragraph, it shall also re-evaluate the effectiveness of the hedging relationship, disclose the reasons why the fair value of the hedging instrument and the hedged project or the changes in cash flow are not offset as expected, and separately disclose the changes in the value of the hedging tool and the hedged project, etc.
Chapter 3 Daily Transactions
Article 55 The term “daily transactions” as mentioned in this chapter refers to the following types of transactions related to the company’s daily operations:
(1) Purchase raw materials, fuel and power, etc.;
(2) Accepting labor services, etc.;
(3) Selling products, commodities, etc.;
(4) Providing labor services, etc.;
(5) Project contracting, etc.;
(6) Other transactions related to daily operations.
If the asset swap involves the transaction in the preceding paragraph, the provisions of Chapter 2 of this system shall apply.
Article 56 If a company signs a contract related to daily transactions and meets one of the following standards, it shall disclose it in a timely manner:
(1) If matters involving items (1) and (2) of paragraph 1 of Article 55 are involved, the contract amount accounts for more than 50% of the company’s most recent audited total assets, and the absolute amount exceeds RMB 500 million;
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
(2) If matters involving items (3) to (5) of paragraph 1 of Article 55 are involved, the contract amount accounts for more than 50% of the company's audited main business income in the most recent fiscal year, and the absolute amount exceeds RMB 500 million;
(3) Other contracts that the company or the exchange believes may have a significant impact on the company's financial status and operating results.
If the data involved in the above indicators are negative, the absolute value is used for calculation.
Article 57 When a company jointly undertakes a construction project with others, if the company serves as the general contractor, the provisions of Article 56 of this system shall apply to the entire contract amount of the project undertaken; if the company serves as a non-general contractor, the provisions of Article 56 of this system shall apply to the contract amount actually undertaken by the company.
Article 58 When a company participates in bidding for projects such as project contracting and commodity procurement, and the contract amount or the income or profit expected to be generated from the performance of the contract reaches the standards stipulated in Article 56 of this system, when it has entered the publicity period but has not yet obtained the bid winning notice or relevant certification documents, it shall issue a prompt announcement in a timely manner and disclose the main content of the bid winning publicity in accordance with the relevant regulations of the Shanghai Stock Exchange.
If the company obtains the bid winning notice after the publicity period, the company shall promptly disclose the relevant information on the project winning bid in accordance with the regulations of the Shanghai Stock Exchange. If it is expected that it will not be able to obtain a bid winning notice, the company shall disclose the progress in a timely manner and fully indicate the risks.
Article 59 The company shall disclose relevant information on daily transactions, including the parties to the transaction, the main contents of the contract, the impact of contract performance on the company, the contract review process, relevant department approval documents (if any), risk warnings, etc.
Chapter 4 Related Transactions
Section 1 Related Transactions and Related Parties
Article 60 The company's related transactions refer to the transfer of resources or obligations that occur between the company, its controlled subsidiaries and other entities controlled by the company and the company's related parties, including:
(1) Purchase or sell assets;
(2) External investment (including entrusted financial management, investment in subsidiaries, etc.);
(3) Provide financial assistance (including interest or interest-free loans, entrusted loans, etc.);
(4) Providing guarantees (including guarantees for holding subsidiaries, etc.);
(5) Lease or lease assets;
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
(6) Entrust or entrust management of assets and business;
(7) Donating or receiving assets;
(8) Creditor's rights and debt restructuring;
(9) Sign a license agreement;
(10) Transfer or transfer of research and development projects;
(11) Waiver of rights (including waiver of preemptive right, preemptive subscription right of 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) Deposit and loan business;
(17) Joint investment with related parties;
(18) Other matters that may result in the transfer of resources or obligations through agreement.
Article 61 Related parties of the company include related legal persons (or other organizations) and related natural persons. A legal person (or other organization) that meets one of the following circumstances is an affiliated legal person (or other organization) of the company:
(1) Legal persons (or other organizations) that directly or indirectly control the company;
(2) Legal persons (or other organizations) other than companies, holding subsidiaries and other controlled entities that are directly or indirectly controlled by the legal persons (or other organizations) mentioned in the preceding paragraph;
(3) Legal persons (or other organizations) other than companies, holding subsidiaries and other controlled entities that are directly or indirectly controlled by related natural persons as referred to in 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 their persons acting in concert. A person who has one of the following circumstances is an associated natural person of the company:
(1) Natural persons who directly or indirectly hold more than 5% of the company’s shares;
(2) The company’s directors and senior managers;
(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) and (2) of this paragraph, including spouses, parents, brothers and sisters and their spouses, children over 18 years old and their spouses, spouse’s parents, Zhejiang Huahai Pharmaceutical Co., Ltd. Related Party Transaction System
Brothers, sisters, children, spouses, parents.
Article 62: In the past 12 months or within 12 months after the relevant agreement or arrangement comes into effect, any legal person (or other organization) or natural person who has one of the circumstances mentioned in Article 61 of this system is a related person of the company.
The China Securities Regulatory Commission, Shanghai Stock Exchange or the company shall, in accordance with the principle of substance over form, identify other legal persons (or other organizations) or natural persons who have a special relationship with the company and may or have caused the company to favor its interests as related persons of the company.
Article 63 The company's directors, senior managers, shareholders holding more than 5% of the company's shares, and persons acting in concert and actual controllers shall promptly submit to the company's board of directors a list of related persons and an explanation of their relationship with the company, and the company shall do a good job in registration management.
Section 2 General Provisions on Decision-making Authority and Review Procedures for Related Party Transactions
Article 64 The decision-making authority and review procedures of the company’s shareholders’ meeting regarding related transactions:
(1) If the transaction amount (including debts and expenses assumed) between the company and its related parties exceeds RMB 30 million and accounts for more than 5% of the absolute value of the company's latest audited net assets, the audit report or evaluation report shall be disclosed in accordance with the relevant regulations such as the Stock Listing Rules, and the transaction shall be submitted to the company's shareholders' meeting for review.
The daily related transactions specified in Item (5) of Article 63 of this system do not need to be audited or evaluated.
If a company and its related parties jointly contribute capital to establish a company, and the company's capital contribution reaches the standard specified in paragraph 1 of this article, if all investors contribute capital in cash, and the proportion of each party's equity in the established company is determined in accordance with the proportion of capital contribution, the requirement to submit it to the shareholders' meeting for review may be exempted.
If the company's related-party transactions do not meet the standards stipulated in paragraph 1 of this article, but the China Securities Regulatory Commission or the Shanghai Stock Exchange requires it in accordance with the principle of prudence, or the company voluntarily submits it to the shareholders' meeting for review in accordance with the company's articles of association or other regulations, it shall perform the review procedures and disclosure obligations in accordance with the provisions of the preceding paragraph, and shall apply relevant audit or evaluation requirements.
(2) The company shall not provide financial assistance to related parties listed in Article 61 of this system, except when it provides financial assistance to related joint-stock companies that are not 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 related-joint-stock companies specified in the preceding paragraph, it shall be approved by all non-related directors. Related Transaction System of Zhejiang Huahai Pharmaceutical Co., Ltd.
In addition to being approved by more than half of the votes, it must also be reviewed and approved by more than two-thirds of the non-affiliated directors attending the board meeting, and submitted to the shareholders' meeting for review.
(3) If the company provides guarantees to related parties, in addition to the deliberation and approval of more than half of all non-related directors, it must also 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. If the company provides guarantees for the controlling shareholder, actual controller and their related persons, the controlling shareholder, actual controller and their related persons shall provide counter-guarantee.
If the company causes the guaranteed party to become a related person of the company due to a related 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 in the preceding paragraph, the parties to the transaction shall take effective measures such as early termination of the guarantee.
Article 65 The decision-making authority and review procedures of the company’s board of directors regarding related transactions:
(1) The amount of transactions between the company and related natural persons (including debts and expenses assumed) is more than RMB 300,000 but less than the amount that must be submitted to the shareholders’ meeting for review;
(2) The amount of transactions between the company and related legal persons (or other organizations) (including debts and expenses assumed) is more than RMB 3 million and accounts for more than 0.5% of the absolute value of the company's latest audited net assets, but the amount must be submitted to the shareholders' meeting for review but is less than the amount of related transactions.
Article 66 Related transactions that should be disclosed must be reviewed and approved by a special meeting of independent directors before being submitted to the board of directors for review.
Article 67 If the amount of related transactions is below the approval authority of the board of directors, it shall be reviewed and approved by the president of the company.
Article 68 The following related-party transactions that occur within a company within twelve consecutive months shall be based on the principle of cumulative calculation and the provisions of Articles 64, 65, and 67 of this system shall apply respectively:
(1) Transactions with the same related party;
(2) Related transactions under the same transaction category with different related parties.
The above-mentioned same related party includes other related parties that are controlled by the same entity as the related party, or have equity control relationships with each other.
According to the provisions of this article, if the cumulative calculation for twelve consecutive months reaches the prescribed disclosure standards or shareholders' meeting review standards, the provisions of Article 21 of this system shall apply by reference.
Article 69 Calculation and determination of the amount of special related-party transactions
(1) When a company and a related party jointly contribute capital to establish a company, the company's capital contribution shall be used as the transaction amount, and the provisions of Articles 64, 65, and 67 of this system shall apply.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
(2) If the company abandons its rights and causes related transactions with its related parties, the provisions of Articles 64, 65 and 67 of this System shall be applied in accordance with the standards of Article 19 of this System.
(3) If the relevant arrangements for transactions between the company and related parties involve conditionally determined amounts such as consideration that may be paid or received in the future, the estimated maximum amount shall be the transaction amount, and the provisions of Articles 64, 65, and 67 of this system shall apply.
(4) For entrusted financial management between a company and a related party, if it is difficult to fulfill the review procedures and disclosure obligations for each investment transaction due to the frequency of transactions, timeliness requirements, etc., the investment scope, investment amount and period can be reasonably estimated, and the amount will be used as the calculation standard. The provisions of Articles 64, 65, and 67 of this system shall apply.
The usage period of the relevant quota should not exceed 12 months, and the transaction amount at any point in the period (including the relevant amount reinvested in the income from the aforementioned investment) should not exceed the investment quota.
(5) When the company and related parties have daily related transactions listed in items (12) to (16) of Article 60 of this system, the company shall perform review procedures and disclose them in accordance with the following provisions:
For daily related transaction agreements that have been reviewed and approved by the shareholders' meeting or the board of directors 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 each agreement in the annual report and semi-annual report 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 submit the newly revised or renewed daily related transaction agreement to the board of directors or shareholders' meeting for review based on the total transaction amount involved in the agreement. If the agreement does not have a specific total transaction amount, it shall be submitted to the shareholders' meeting for review;
For daily related transactions that occur for the first time, the company shall perform review procedures and disclose them in a timely manner based on the total transaction amount involved in the agreement; if the agreement does not have a specific total transaction amount, it shall be submitted to the shareholders' meeting for review; if the main terms of the agreement change significantly during the implementation process or the agreement needs to be renewed upon expiration, it shall be handled in accordance with the foregoing provisions of this paragraph;
The company can reasonably estimate the amount of daily related transactions for the current year by category, perform the review procedures and disclose them; if the actual execution exceeds the estimated amount, it should re-perform the review procedures and disclose according to the excess amount;
The company's annual report and semi-annual report should classify and summarize the actual performance of daily related transactions;
If the term of the daily related transaction agreement signed between the company and its related parties exceeds 3 years, the relevant review procedures and disclosure obligations shall be re-performed every 3 years in accordance with the provisions of this chapter.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
Article 70 The following transactions between a company and related parties are exempt from review and disclosure as related transactions:
(1) Transactions in which the company unilaterally obtains benefits without paying consideration or attaching any obligations, including receiving cash assets as gifts, obtaining debt relief, accepting guarantees and financial assistance for free, etc.;
(2) Related parties provide funds to the company, the interest rate is no higher than the loan market quotation rate, and the listed company does not need to provide guarantees;
(3) One party subscribes in cash for the other party’s publicly issued stocks, corporate bonds or enterprise bonds, convertible corporate bonds or other derivatives;
(4) One party serves as a member of the underwriting syndicate to underwrite the other party’s publicly issued stocks, corporate bonds or enterprise bonds, convertible corporate bonds or other derivatives;
(5) One party receives dividends, bonuses or remuneration in accordance with the resolution of the other party’s shareholders’ meeting;
(6) One party participates in the other party’s public bidding, auction, etc., except where it is difficult to achieve a fair price through bidding or auction;
(7) Listed companies shall apply to Article 61, paragraph 3, of this system under the same transaction conditions as non-related parties.
Related natural persons provided in items (2) to (4) provide products and services;
(8) The pricing of related-party transactions shall be stipulated by the state;
(9) Other transactions recognized by the Shanghai Stock Exchange.
Article 71 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 number of shares with voting rights represented by affiliated shareholders shall not be included in the total number of shares with valid voting rights; resolutions of shareholders’ meetings shall fully disclose the voting status of non-affiliated shareholders.
The avoidance and voting procedures for related shareholders are:
(1) The board of directors or other conveners should make a judgment on whether the relevant matters to be submitted to the shareholders’ meeting for review constitute related transactions in accordance with relevant laws, regulations and the company’s relevant systems;
(2) If the board of directors or other convener determines that the relevant matters to be submitted to the shareholders' meeting for consideration constitute a related transaction, the board of directors or other convener shall notify the related shareholders in writing;
(3) The board of directors or other conveners should complete the above-mentioned work before issuing the notice of shareholders’ meeting;
(4) When the shareholders' meeting votes on matters related to related transactions, after deducting the number of voting shares represented by the related shareholders, the non-related shareholders attending the shareholders' meeting shall exercise their voting rights according to the number of voting shares they represent.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
If there are special circumstances where related shareholders cannot avoid the matter, the company, after obtaining the consent of the audit committee, may vote according to normal procedures and provide detailed explanations in the shareholders' meeting resolution announcement.
Article 72 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. 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 unrelated directors present at the board meeting is less than three, the company shall submit the transaction to the shareholders' meeting for review.
Section 3 Special Requirements for Review and Disclosure of Related Party Co-Investments
Article 73 When a company jointly invests with a related party and increases or decreases capital in a jointly invested enterprise, the company's investment, capital increase, or capital decrease amount shall be used as the calculation standard, and the relevant provisions of the Stock Listing Rules and this system shall apply.
Article 74 If a company's affiliates unilaterally increase or reduce capital in an enterprise that the company controls or has a stake in, and it involves a waiver of rights, the relevant provisions on waiver of rights shall apply. If it does not involve a waiver of rights, but may have a significant impact on the company's financial status and operating results or cause a change in the company's associated relationship with the entity, the company shall disclose it in a timely manner.
Article 75 If a company and its affiliates increase capital in cash to an affiliated joint investment enterprise controlled by the company with equal consideration and proportion, and meet the standards that should be submitted to the shareholders' meeting for review, they may be exempted from audit or evaluation in accordance with the relevant provisions of the Stock Listing Rules and this system.
Section 4 Special Requirements for Review and Disclosure of Daily Related Transactions
Article 76 When a company makes estimates for daily related transactions in accordance with relevant regulations, it shall make separate estimates based on the counterparty, transaction type, etc.
If there are a large number of related parties and it is difficult for the company to disclose all related party information, the disclosure can be simplified after fully explaining the reasons. If the expected transaction amount with a single legal entity reaches the disclosure standard prescribed by regulations, the related person information and estimated transaction amount should be separately listed. Other legal entities can present the above information in a consolidated manner based on the same control.
Article 77 When the company estimates daily related transactions, when the provisions on actual execution exceeding the estimated amount apply, the total amount of various related transactions actually occurring between related persons under the same control and the company shall be compared with the corresponding estimated total amount. The amounts of related-party transactions between different related parties not under the same control and the company are not consolidated.
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
Article 78 If a company entrusts a related party to sell various products and commodities produced or operated by the company, or is entrusted by a related party to sell various products or commodities produced or operated by the related party, except for the case of adopting a buyout entrustment method, the relevant provisions of the Stock Listing Rules and this system may be applied based on the agency fees that should be paid or collected during the contract period.
Section 5 Special Requirements for Review and Disclosure of Related Party Purchases and Sales of Assets
Article 79: If a company purchases or sells assets to a related party and meets the prescribed disclosure standards, and the subject of the related transaction is the company's equity, the company shall disclose the basic information of the subject company and the main financial indicators for the most recent year and period.
If the target company has conducted asset appraisal, capital increase, capital reduction or restructuring within the last 12 months, it shall disclose the basic information of the relevant appraisal, capital increase, capital reduction or restructuring.
Article 80 When a company purchases assets from a related party, it must be submitted to the shareholders' meeting for review according to regulations and if the transaction price is more than 100% higher than the book value of the transaction target, if the counterparty does not provide a profit guarantee, a compensation commitment, or a repurchase commitment for the transaction target within a certain period, the company shall explain the specific reasons, whether it has adopted relevant safeguard measures, and whether it is conducive to protecting the company's interests and the legitimate rights and interests of small and medium-sized shareholders.
Article 81 If the company's purchase or sale of assets may cause the company's controlling shareholders, actual controllers and other related parties to occupy the company's non-operating funds after the completion of the transaction, a reasonable solution shall be specified in the announcement and resolved before the completion of the relevant transaction.
Section 6 Pricing of Related Party Transactions
Article 82 When a company conducts related transactions, it shall sign a written agreement to clarify the pricing policy for related transactions. During the execution of a related-party transaction, if the transaction price and other major terms in the agreement change significantly, the company shall re-perform the corresponding approval procedures based on the changed transaction amount.
Article 83 The pricing of the company’s related transactions shall be fair and shall be implemented with reference to the following principles:
(1) If the transaction is subject to government pricing, the price can be directly applied;
(2) If the transaction items are subject to government-guided prices, the transaction price can be reasonably determined within the scope of the government-guided prices;
(3) In addition to government pricing or government-guided prices, if there is a comparable independent third-party market price or charging standard for the transaction, priority may be given to determining the transaction price by referring to that price or standard;
(4) If there is no comparable independent third-party market price for the transaction, the transaction pricing may refer to the related party transaction system of Zhejiang Huahai Pharmaceutical Co., Ltd.
Price determination for non-related transactions with third parties independent of related parties;
(5) If there is neither an independent third-party market price nor an independent non-related transaction price for reference, a reasonable constituted price can be used as the basis for pricing. The constituted price is reasonable cost plus reasonable profit.
Article 84 If the company's related-party transactions cannot be priced according to the above principles, the company shall disclose the principles for determining the price of the related-party transactions and explain the fairness of the pricing.
Chapter 5 Supplementary Provisions
Article 85 Related shareholders as mentioned in this system include the following shareholders or shareholders with one of the following circumstances:
(1) Be the 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 other organization or natural person as the counterparty;
(5) 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;
(6) Close family members who are the counterparty to the transaction or its direct or indirect controller;
(7) Shareholders whose voting rights are restricted and affected due to the existence of unfulfilled equity transfer agreements or other agreements with the counterparty or its related parties;
(8) Shareholders identified by the China Securities Regulatory Commission and the Shanghai Stock Exchange that may cause the company's interests to be tilted towards them.
Article 86 Related directors as mentioned in this system include the following directors or directors who have one of the following circumstances:
(1) Be the counterparty;
(2) Having direct or indirect control over the counterparty;
(3) 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;
(4) Close family members who are the counterparty to the transaction or its direct or indirect controller;
(5) Close family members of directors, supervisors or senior managers who are the counterparty to the transaction or its direct or indirect controller;
Zhejiang Huahai Pharmaceutical Co., Ltd. Related Transaction System
(6) Directors whose independent business judgment may be affected as determined by the China Securities Regulatory Commission, Shanghai Stock Exchange or the company based on the principle of substance over form.
Article 87 In this system, “above” includes the original number, and “more than, less than, less than, and below” does not include the original number.
Article 88 If there is any conflict with this system due to modifications to relevant laws, regulations, departmental rules and the Articles of Association, the aforementioned provisions shall apply.
Article 89 This system shall take effect after being approved by the company's board of directors and submitted to the shareholders' meeting for approval, and the same shall apply when it is modified. The original "Zhejiang Huahai Pharmaceutical Co., Ltd. Transaction and Related Party Transaction System" was simultaneously abolished.
Article 90 The company’s board of directors is responsible for interpreting this system.
Zhejiang Huahai Pharmaceutical Co., Ltd.
April 29, 2026