Internal control system of the holding subsidiaries of Zhongyuan Xiehe Cell Gene Engineering Co., Ltd.
Zhongyuan Xiehe Cell Gene Engineering Co., Ltd.
Internal control system of holding subsidiaries
Chapter 1 General Provisions
Article 1 In order to strengthen the support, guidance and management of the holding subsidiaries of Zhongyuan Xiehe Cell Gene Engineering Co., Ltd. (hereinafter referred to as the company), effectively control operating risks, and protect the legitimate rights and interests of 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 Shanghai Stock Exchange Stock Listing Rules (hereinafter referred to as the "Listing Rules"), the "Shanghai Stock Exchange Self-Discipline Supervision Guidelines for Listed Companies No. 1 - Standardized Operation" (hereinafter referred to as the "Standardized Operation") and other laws, regulations, rules, This system is formulated based on the relevant provisions of the "Articles of Association of Zhongyuan Xiehe Cell Gene Engineering Co., Ltd." (hereinafter referred to as the "Articles of Association") and the company's various internal control systems, combined with the actual situation of the company.
Article 2 The term "controlled subsidiary" as used in this system refers to a company in which the company holds more than 50% of its shares, or can determine the election of more than half of its board of directors, or can actually control it through an agreement or other arrangement.
Article 3 This system applies to the company and its holding subsidiaries.
Article 4 The company shall, in accordance with the requirements for asset control of its holding subsidiaries and the standardized operation of listed companies, exercise shareholder rights through the standardized operations of the shareholders' meeting, board of directors and board of supervisors (if any, the same below) of the holding subsidiaries, appoint or recommend directors, supervisors and senior managers to the holding subsidiaries, and bear the obligation to guide, supervise and serve the holding subsidiaries, and realize the governance monitoring of the holding subsidiaries.
Article 5 Controlled subsidiaries shall formulate their own internal control systems in accordance with national laws, regulations, normative documents and the relevant provisions of the company's internal control system, based on their own operating characteristics and environmental conditions. If a company's holding subsidiaries control other companies, they should establish a management and control system for their holding subsidiaries layer by layer with reference to the requirements of this system and accept the supervision of the company.
Article 6 The company shall focus on strengthening the management and control of its holding subsidiaries, mainly including:
(1) Establish a control system for each holding subsidiary, and clarify the selection methods, responsibilities and authority of directors, supervisors and important senior managers assigned to the holding subsidiary;
(2) According to the company's strategic plan, coordinate the business strategies and risk management strategies of the holding subsidiaries, and urge the holding subsidiaries to formulate relevant business operations plans, risk management procedures and internal control systems accordingly;
(3) Develop performance appraisal and incentive and restraint systems for holding subsidiaries;
(4) Develop an internal reporting system for major matters of its holding subsidiaries, promptly report to the company major business events, major financial events and other information that may have a greater impact on the trading prices of listed companies' stocks and their derivatives, and report major events to the company's board of directors or shareholders' meeting for review in strict accordance with the authorization regulations;
(5) Require controlled subsidiaries to promptly submit important documents such as board resolutions and shareholders’ meeting resolutions to the company’s board secretary;
(6) Regularly obtain and analyze the quarterly or monthly reports of each holding subsidiary, including operating reports, production and sales reports, balance sheets, income statements, cash flow statements, funds provided to others and external guarantee statements, etc., and entrust an accounting firm to audit the financial reports of the holding subsidiaries in accordance with relevant regulations;
(7) Evaluate the implementation of the internal control system of the holding subsidiaries and its inspection and supervision work. If the company has multiple levels of subordinate enterprises, it shall establish and improve the management and control system for the subordinate enterprises at all levels accordingly.
The company's internal control system for branches and joint-stock companies with significant influence should be arranged in accordance with the above requirements.
Article 7 The goals to be achieved by the internal control of holding subsidiaries are as follows:
(1) Ensure that the development strategies and plans of the holding subsidiaries are subject to the company’s overall development strategies and plans, and implement the company’s various institutional regulations for the holding subsidiaries;
(2) Ensure the rationality and effectiveness of the operations of the holding subsidiaries, and ensure that the financial status of the holding subsidiaries is directly monitored by the company;
(3) Ensure that the company participates in the major operating and financial decision-making processes of its holding subsidiaries and can disclose them in a timely manner.
Chapter 2 Governance Structure Management
Article 8 The company shall formulate the articles of association of the holding subsidiary by exercising the rights of shareholders, determine the main provisions of the articles of association of the holding subsidiary, and establish the control structure of the holding subsidiary in accordance with the law.
Article 9 A company's controlled subsidiaries shall not acquire shares issued by the company. If it is true that shares are held for special reasons, the situation should be eliminated within one year. Before the above situation is eliminated, the relevant subsidiaries shall not exercise the voting rights corresponding to the shares held.
Article 10 A controlled subsidiary shall, in accordance with the provisions of the Company Law and other relevant laws and regulations, normative documents and its articles of association, improve its own corporate governance structure, establish a shareholder meeting, a board of directors (or a director) or a board of supervisors (or supervisors) in accordance with the law, standardize operations, and establish and improve an internal management system.
Article 11 The shareholders' meeting is the authority of the controlling subsidiary. When a holding subsidiary holds a shareholders' meeting, the company shall authorize designated persons (not limited to directors, supervisors and senior managers appointed by the company) to attend the meeting as shareholder representatives. After the meeting, the shareholder representatives shall report the relevant circumstances of the meeting to the general manager of the company. Wholly-owned subsidiaries do not have shareholders' meetings.
Article 12 A holding subsidiary shall have a board of directors (or one director) whose number of members shall be determined by its articles of association. The directors of a holding subsidiary are appointed or recommended by the shareholders of the company, and are elected or replaced by the shareholders' meeting of the holding subsidiary. The board of directors of a holding subsidiary shall have one chairman, who shall be a director recommended by the company. In principle, holding subsidiaries do not set up independent directors. If necessary, industry experts can be hired to serve.
Article 13 A controlled subsidiary may set up a board of supervisors (if any, the same below) or supervisors, and the number of its members shall be determined by its articles of association. A controlled subsidiary may set up an audit committee composed of directors on the board of directors in accordance with the provisions of the company's articles of association to exercise the powers of the board of supervisors stipulated in the Company Law without having a board of supervisors or supervisors. Directors and senior managers of controlled subsidiaries may not concurrently serve as supervisors.
Article 14 A holding subsidiary shall have a general manager who shall be appointed or recommended by the company and appointed or dismissed by the board of directors of the holding subsidiary. The general manager is responsible to the board of directors and exercises his powers in accordance with the Company Law and the articles of association of the holding subsidiary.
According to actual needs, holding subsidiaries may have deputy general managers and financial directors. The deputy general manager is nominated by the general manager of the holding subsidiary, and the financial person in charge is appointed or recommended by the company, and is appointed or dismissed through the review process of the board of directors of the holding subsidiary.
Article 15 If the holding subsidiary is a limited liability company, the shareholders' meeting, the board of directors and the board of supervisors shall be held once a year. If the controlled subsidiary is a joint-stock company, it shall hold at least one shareholders' meeting, two board meetings and one supervisory board meeting every year, and the meetings shall have minutes.
Article 16 When a controlled subsidiary holds a shareholder meeting, board of directors, general manager office meeting or other major meeting, its convening method and rules of procedure must comply with the provisions of the Company Law and other relevant laws and regulations, normative documents and its articles of association. Meeting notice and topics must be reported to the company's board secretary or the board of directors office five days before the meeting. The secretary of the board of directors will review whether it needs to be reviewed and approved by the company's general manager office meeting, board of directors or shareholders' meeting, and the secretary of the board of directors will judge whether it is information that should be disclosed.
Article 17 Controlled subsidiaries shall strengthen self-discipline management and consciously accept the work inspection and supervision of the parent company. They shall truthfully report the situation and explain the reasons for inquiries raised by the parent company's board of directors and operating management.
Chapter 3 Personnel Management
Article 18 The company shall appoint directors, supervisors or recommend directors, supervisors and senior managers to its controlled subsidiaries in accordance with the provisions of the articles of association, and make appropriate adjustments to the candidates of directors, supervisors and senior managers appointed or recommended during the term of office as necessary.
Article 19 The number of directors and supervisors dispatched by the company should account for more than half of the members of the board of directors and supervisory committee of the holding subsidiary.
Article 20 The company appoints or recommends directors, supervisors, general managers, and financial controllers, who are nominated by the company’s general manager or co-president in charge of business, submitted to the chairman for approval, and elected or appointed by the shareholders’ meeting, board of directors or general manager’s office meeting of the controlled subsidiary.
The financial person in charge of the holding subsidiary accepts the unified guidance and supervision of the Group's Financial Management Department in terms of business and is responsible for the company's financial management and accounting work.
Article 21 Directors appointed or recommended by the company shall perform the following duties in accordance with the provisions of the Company Law and other laws and regulations and the articles of association of the holding subsidiary:
(1) The rights granted by the company should be exercised prudently, conscientiously and diligently, and the controlled subsidiaries should be managed well;
(2) Attend the board meetings of the holding subsidiaries, participate in the board's decision-making, and promote the board of directors to implement the company's decisions, and at the same time:
After receiving notice of a shareholders’ meeting, board of directors meeting or other major meeting of a controlled subsidiary, timely submit the meeting agenda to the company’s general manager, board secretary or board of directors office;
During the proceedings of the shareholders’ meeting, board of directors or other major meetings of the controlled subsidiary, vote in accordance with the company’s opinions and fully express the company’s opinions;
Report the meeting status to the general manager of the company, secretary of the board of directors or the office of the board of directors within 5 working days after the meeting. If it involves significant information that may affect the company's stock price, it should be reported immediately after the meeting.
Article 22 The supervisors appointed or recommended by the company shall perform the following duties in accordance with the provisions of the Company Law and other laws and regulations and the articles of association of the holding subsidiary:
(1) Check the financial affairs of the holding subsidiaries and report to the company in a timely manner.
(2) Supervise the violations of laws, regulations or the articles of association of directors and senior managers when performing their duties in a controlled subsidiary.
(3) Attend the meetings of the supervisory board of the holding subsidiary, and attend the board meetings and shareholders’ meetings of the holding subsidiary.
(4) The articles of association of the holding subsidiary and other responsibilities specified by the company.
Article 23 The senior managers appointed or recommended by the company are responsible for the specific implementation of the company's business plan in its holding subsidiaries. At the same time, they should provide timely feedback to the company on the operating, financial and other relevant situations of the holding subsidiaries.
Article 24 Other corporate managers appointed or recommended by the company shall safeguard the interests of the company and implement various resolutions and decisions made by the company on its controlled subsidiaries. Corporate managers perform their duties according to the specific positions of their holding subsidiaries. Corporate managers should actively accept the supervision of the company's functional departments and report their work to the company's leaders on a regular basis.
Article 25 If directors, supervisors, or senior managers appointed or recommended by the company have major problems in operation and management, causing heavy losses to the company, the company shall impose corresponding penalties; if they violate laws, administrative regulations, or the articles of association of the holding subsidiary when performing official duties, causing losses to the company, the company shall hold them responsible for legal liability and economic compensation.
Article 26 For directors, supervisors and senior managers of a holding subsidiary who are not appointed by the company, the holding subsidiary shall report them to the company for filing within seven working days after their appointment.
Article 27 The company's human resources management department shall be responsible for organizing regular or irregular business training for dispatched personnel based on the needs of business management and with the cooperation of other functional departments.
Article 28 Holding subsidiaries should strictly implement the national Labor Law and relevant laws and regulations, and standardize employment practices based on the principles of "legality and efficiency".
Article 29 A holding subsidiary shall formulate a salary management system based on the economic benefits of the enterprise and with reference to the market salary level in the industry, and report it to the company for filing.
Chapter 4 Financial Management
Article 30 Controlled subsidiaries shall establish various financial management systems in accordance with the provisions of relevant national laws, regulations and normative documents such as the "Accounting Law", "Accounting Standards for Business Enterprises", "General Principles of Enterprise Finance" and combined with the actual situation of the company, and submit them to the company for approval for implementation.
Article 31 A holding subsidiary shall submit accounting statements, financial analysis reports and provide accounting information in a timely manner in accordance with the company's requirements for preparing consolidated accounting statements and disclosing accounting information to the outside world. The accounting statements submitted by subsidiaries must be signed and stamped by the person in charge of accounting work of the company to ensure that they are complete, accurate and meet the reporting requirements. The accounting statements of holding subsidiaries are also audited by certified public accountants entrusted by the company.
Article 32 A holding subsidiary shall submit financial statements in accordance with the regulations and requirements for the submission of financial statements of the group company:
(1) Submit financial statements within 5 days after the end of each month (delayed in case of public holidays, the same below);
(2) Submit the semi-annual financial statements within 5 days after the end of the half-year, and submit the notes to the financial statements within 10 days;
(3) Submit unaudited annual financial statements within 8 days after the end of the year;
(4) Other financial statements or information required to be submitted by the Financial Management Department.
Article 33 The company's financial management department shall regularly review the internal transactions and current accounting accounts between the holding subsidiaries included in the scope of consolidation to ensure that internal transactions and current business have been accurately and completely accounted for and reconciled.
Article 34 A holding subsidiary shall arrange the use of funds in accordance with its articles of association and financial management system. When a holding subsidiary makes illegal external investments, borrows money, uses public funds for private use, or signs and approves expenses beyond its authority, the financial personnel of the holding subsidiary have the right to stop and refuse payment. If the stop is ineffective, they can report it directly to the company.
Article 35 A holding subsidiary shall not conceal its income and profits during its business activities, nor shall it set up off-book accounts or small treasury.
Article 36 If an investment project with raised funds is implemented through a subsidiary of the company or other enterprises controlled by the company, the listed company shall ensure that the subsidiary or other controlled enterprises comply with the provisions of the "Standardized Operations".
Article 37 If a holding subsidiary violates relevant national laws, regulations and normative documents, or violates the financial system of the company and its holding subsidiary, the company has the right to hold the relevant parties accountable.
Chapter 5 Operation and Investment Decision Management
Article 38 All business activities of a holding subsidiary must comply with various national laws, regulations, rules and policies, and should formulate its own business management objectives and business plans based on the company's overall development plan and business plan.
Article 39 Before the end of each year, the general manager of a holding subsidiary shall organize the preparation of the current year's work report and the next year's business plan and submit them to the board of directors of the holding subsidiary. The business plan will be implemented after being approved by the board of directors of the holding subsidiary.
Article 40 The company may require its holding subsidiaries to make temporary reports on the formulation and implementation of business plans, industry and market conditions, etc. based on the actual needs of operation and management or the regulations of the competent authorities and regulatory authorities, and the holding subsidiaries shall comply with the implementation.
Article 41 Holding subsidiaries should improve the decision-making procedures and management systems of investment projects, strengthen the management and risk control of investment projects, and investment decisions must be institutionalized and programmed.
Article 42 The foreign investment of a holding subsidiary shall be subject to the guidance and supervision of the company.
Article 43 Major transactions of a holding subsidiary (purchasing or selling assets, investing externally, leasing or leasing assets, entrusting or entrusting the management of assets and business, donating or receiving assets, reorganizing claims and debts, signing licensing agreements, transferring or receiving research and development projects, giving up rights (including giving up the right of first refusal, the right to subscribe for capital contributions, etc.), the same below) shall comply with the relevant provisions of the company's articles of association or internal governance system, and be decided by the board of directors, shareholders' meeting or other authorized decision-making body of the holding subsidiary.
Before convening the board of directors and shareholders' meeting of the holding subsidiary, the company shall report to the company in a timely manner. The board of directors and shareholders' meeting shall be convened only after the company has fulfilled the decision-making procedures in accordance with the regulations. When attending the board of directors and shareholders' meeting of the holding subsidiary, the personnel appointed by the company shall express opinions and exercise voting rights in accordance with the company's decisions or instructions.
Article 44 Related transactions that occur in a controlled subsidiary shall be implemented in accordance with the Listing Rules and shall be subject to review by the company's board of directors or shareholders' meeting. Before convening the board of directors or shareholders' meeting, the controlled subsidiary shall first submit the matter to the company's board of directors or shareholders' meeting for review and approval.
Article 45 If a company's controlled subsidiary provides a guarantee for a legal person or other organization within the scope of the company's consolidated statements, the company shall promptly disclose it after the controlled subsidiary has completed the review procedures, except for guarantee matters that should be submitted to the company's shareholders' meeting for review in accordance with the "Listing Rules" of the Shanghai Stock Exchange.
If a company's holding subsidiary provides guarantees for entities other than those specified in the preceding paragraph, it shall comply with the relevant provisions on external guarantees in its articles of association, the Articles of Association and the company's management system, and shall be reviewed by the board of directors or shareholders' meeting of the holding subsidiary, and shall be reviewed by the company's board of directors or shareholders' meeting. Before convening a shareholders' meeting, a controlled subsidiary should submit the guarantee proposal to the company's board of directors or shareholders' meeting for consideration.
Article 46 If the company or its holding subsidiaries suffer losses due to acts beyond their authority during business and investment activities, the company or its holding subsidiaries shall criticize, warn, or terminate the principal responsible persons, and may require them to bear compensation liability.
Chapter 6 Report on Major Events
Article 47 Controlled subsidiaries shall follow the company's "Internal Reporting System for Major Matters" and report to the company in a timely manner major operating matters that are expected to occur or have occurred, major financial matters, and other information that may have a significant impact on the trading prices of the company's stocks and their derivatives. The aforementioned major events include but are not limited to development plans and budgets, major investments, acquisition and sale of assets, provision of financial assistance, provision of guarantees for others, investment in securities and financial derivatives, signing of major contracts, and foreign exchange risk management of overseas holding subsidiaries. For details, the company's "Internal Reporting System for Major Matters", "Listing Rules" and "Standardized Operations" shall prevail.
Before deliberation on major matters, a holding subsidiary must report to the general manager of the company in a timely manner and notify the secretary of the board of directors in a timely manner. If the decision needs to be approved by the company first, it must be approved by the company before it can be submitted to the board of directors or shareholders' meeting of the controlling subsidiary for review. Controlled subsidiaries are not allowed to decide matters that require approval from the company before they can be implemented. If information disclosure matters are involved, the internal report approval procedures shall be performed in strict accordance with the requirements of the regulatory authorities for listed companies and the relevant provisions of the company's "Information Disclosure Management System", and the company's board secretary shall make unified disclosures to the outside world.
Article 48 A holding subsidiary shall designate a designated person as the reporter for major matters to ensure that major matters are reported to the secretary of the board of directors in a timely and complete manner.
Article 49 Any relevant major events stipulated in the Listing Rules that occur to the company's controlled subsidiaries and other entities controlled by the company shall be deemed to be major events that occurred to the company, and the Listing Rules shall apply.
Chapter 7 Internal Audit Supervision and Inspection System
Article 50 The company regularly or irregularly implements audit supervision of its holding subsidiaries, and the company's risk control and audit department is responsible for carrying out internal audit work in accordance with the company's internal audit work system.
Article 51 The contents of internal audit mainly include: financial audit, audit of major contracts, audit of the formulation and implementation of internal control systems, etc.
Article 52 After receiving the audit notice, a holding subsidiary shall be prepared to be audited and actively cooperate during the audit process.
Article 53 After the audit opinions and audit decisions approved by the company are delivered to the holding subsidiary, the holding subsidiary must implement them conscientiously.
Article 54 Senior management personnel such as the chairman, general manager and financial director of a holding subsidiary must cooperate with the corresponding audit work and fully provide the information required for the audit, and must not be perfunctory or obstructive.
Article 55 The company shall implement an inspection system for the operation and management of its holding subsidiaries.
Article 56 The company’s inspection methods for its holding subsidiaries are divided into routine inspections and special inspections:
(1) Routine inspections mainly examine the standardization and independence of the governance structure of the holding subsidiaries, and the compliance of the financial management and accounting systems.
(2) Special inspections are carried out to investigate and verify problems existing in controlled subsidiaries, mainly to check the status of major asset restructuring, the performance of the articles of association, the establishment of the internal organizational structure, minutes and relevant documents of the shareholders’ meeting, the board of directors, and the board of supervisors, debt situations and major guarantees, and whether there are false records in the accounting statements, etc.
Chapter 8 Performance Appraisal and Incentive and Constraint System
Article 57 In order to better implement the company's development strategy, gradually improve the incentive and restraint mechanism of the holding subsidiaries, effectively mobilize the enthusiasm of the senior managers of the holding subsidiaries, and promote the company's sustainable development, the company implements performance appraisal and incentive and restraint work for each holding subsidiary.
Article 58 The holding subsidiaries shall formulate business target plans in terms of sales revenue, net profit, sales volume, etc. based on the business plan every year. After being reviewed and approved by the board of directors and shareholders' meeting, they shall be reported to the company for filing. The company implements rewards and punishments for the main persons in charge of its holding subsidiaries based on the scale of assets occupied by the holding subsidiaries and the economic benefits achieved, combined with the business objectives and the provisions of this system.
Article 59 Holding subsidiaries should establish an indicator assessment system to conduct comprehensive assessments of senior managers, and implement rewards and punishments based on the completion of target profits and individual assessment scores.
Article 60 The assessment, reward and punishment plan for middle-level and below-level employees of a holding subsidiary shall be formulated by the management of the holding subsidiary and reported to the relevant departments of the company for filing.
Chapter 9 File Management
Article 61 A controlled subsidiary shall submit copies of its relevant documents and materials to the company's board of directors office, including but not limited to: legal person business license, investment agreement, accounting firm capital verification report, qualification certificate, relevant industry operation approval documents, company articles of association, all company systems, and other documents and materials that should be submitted in accordance with laws, regulations and this system.
After a holding subsidiary changes its legal person business license, amends its articles of association or other internal control systems, it should promptly submit the revised documents and materials to the company's board of directors' office to ensure that the relevant information in the board of directors' office is updated in a timely manner.
Article 62 When a controlled subsidiary convenes a shareholder meeting, board of directors, board of supervisors and general manager office meeting, it shall timely submit the resolutions and minutes of the meeting to the office of the company's board of directors or the secretary of the board of directors after the meeting, and notify the company of matters that may have a significant impact on the trading prices of the company's stocks and their derivatives.
Article 63 Relevant agreements and documents signed by a holding subsidiary for major business matters such as external investment shall be submitted to the company's board of directors office for record.
Chapter 10 Supplementary Provisions
Article 64 If there are any matters not covered in this system, they shall be implemented in accordance with relevant national laws, regulations, normative documents and the relevant provisions of the Articles of Association. If this system is inconsistent with the relevant provisions of laws, regulations, normative documents and the Articles of Association, the provisions of the relevant laws, regulations, normative documents and the Articles of Association shall prevail.
Article 65 This system applies to joint-stock companies that have significant influence on the company.
Article 66 The company’s board of directors is responsible for interpreting this system.
Article 67 This system shall take effect and be implemented upon review and approval by the board of directors, and the same shall apply when it is revised.