Beijing Kangchen Pharmaceutical Co., Ltd. Foreign Investment Management System
December 2025
Directory
Chapter 1 General Provisions................................................................................................................................................ 1
Chapter 2 Approval Authority for Overseas Investment .................................................................................................. 2
Chapter 3 Organizational Structure of Foreign Investment Management .................................................................................. 4
Chapter 4 Foreign Investment Management................................................................................................................................ 4
Chapter 5 Transfer and Recovery of Foreign Investment .................................................................................................. 5
Chapter 6 Personnel Management of Foreign Investment ............................................................................................. 6
Chapter 7 Financial Management and Auditing of Foreign Investment .................................................................................. 7
Chapter 8 Major Event Reporting and Information Disclosure .................................................................................. 7
Chapter 9 Supplementary Provisions................................................................................................................................................ 7
Beijing Kangchen Pharmaceutical Co., Ltd.
Foreign investment management system
Chapter 1 General Provisions
Article 1 In order to regulate the external investment behavior of Beijing Kangchen Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), strengthen the company's external investment management, prevent external investment risks, ensure the safety of external investment, improve the efficiency of external investment, safeguard the company's image and the interests of investors, in accordance with the "Companies of the People's Republic of China" Law (hereinafter referred to as the "Company Law"), the "Stock Listing Rules of the Shanghai Stock Exchange" and other laws, regulations, normative documents, and the relevant provisions of the "Articles of Association of Beijing Kangchen Pharmaceutical Co., Ltd." (hereinafter referred to as the "Articles of Association"), combined with the actual situation of the company, this system is formulated.
Article 2 The term "overseas investment" as mentioned in this system refers to the company's investment in a certain amount of monetary funds, equity, and evaluated physical or intangible assets in order to obtain future income, and conduct various forms of external investment activities, including but not limited to entrusted financial management, investment in subsidiaries, etc.
Article 3 According to the length of the investment period, the company’s external investment is divided into short-term investment and long-term investment.
Short-term investments mainly refer to investments purchased by the company that can be converted into cash at any time and held for no more than one year (including one year), including various stocks, bonds, funds, dividend insurance, etc.
Long-term investment mainly refers to various investments with an investment period of more than one year that cannot be liquidated at any time or are not prepared to be liquidated, including bond investment, equity investment and other investments. Including but not limited to the following types:
(1) An enterprise independently established by the company or an independently funded business project;
(2) The company invests in establishing joint ventures, cooperative companies or development projects with other domestic (foreign) independent legal entities and natural persons;
(3) Participating in other domestic (overseas) independent legal entities;
(4) Leasing operating assets, entrusting operations or jointly operating with others.
Article 4 All external investment activities of the company must comply with relevant national laws and regulations and industrial policies, be consistent with the company’s long-term development plan and development strategy, be conducive to expanding the main business, expand reproduction, be conducive to the company’s sustainable development, have expected investment returns, and be conducive to improving the company’s overall economic interests.
Article 5 This system applies to all external investment activities of the company and its wholly-owned and controlled subsidiaries (hereinafter referred to as "controlled subsidiaries"). When the company's controlled subsidiaries invest externally, the company's dispatched directors and supervisors shall conscientiously supervise, manage and implement the investment with reference to the relevant provisions of this management system.
Chapter 2 Approval Authority for Foreign Investment
Article 6 The company implements professional management and a level-by-level examination and approval system for its external investments.
Article 7 The company's approval of external investments shall be carried out in strict accordance with the authority specified in the Company Law and other relevant laws and regulations, the Articles of Association, the Rules of Procedure for the Company's Shareholders' Meeting, and the Rules of Procedure for the Company's Board of Directors.
Article 8 If the company’s external investment meets one of the following standards, the board of directors shall review, approve and disclose it in a timely manner:
(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 listed 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 object (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 are negative, the absolute value is used for calculation.
External investments between a company and its controlled subsidiaries or other entities controlled within the scope of its consolidated statements, or between the above-mentioned controlled subsidiaries or other entities controlled, may be exempted from submission to the board of directors for review and disclosure in accordance with the provisions of this article, unless otherwise stipulated by the China Securities Regulatory Commission or the Shanghai Stock Exchange.
Article 9 If a company’s external investment reaches one of the following standards, in addition to timely disclosure, it must also be submitted to the 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;
(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 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 is negative, its absolute value is used for calculation.
If the company's transactions only meet the standards in item (4) or (6) above, and the absolute value of the company's earnings per share in the most recent fiscal year is less than 0.05 yuan, it may be exempted from submission to the shareholders' meeting for review.
External investments between the company and its controlled subsidiaries or other entities controlled within the scope of its consolidated statements, or between the above-mentioned controlled subsidiaries or other entities controlled, may be exempted from submission to the shareholders' meeting for review and disclosure in accordance with the provisions of this article, unless otherwise provided by the China Securities Regulatory Commission or the Shanghai Stock Exchange.
Article 10 If the amount of the company’s external investment does not reach the standards stipulated in Articles 8 and 9, it shall be reviewed and approved by the company’s management in accordance with the company’s relevant systems. If the investment amount of the company's subsidiaries does not reach the standards stipulated in Articles 8 and 9, the subsidiary shall perform its own internal decision-making procedures and then report to the company's management for approval in accordance with the company's relevant systems.
Article 11 The calculation method of the transaction amount involved in this chapter shall be calculated with reference to relevant laws and regulations.
Article 12 If the company’s external investment constitutes a related party transaction, it shall be handled in accordance with the approval procedures for related party transactions. If the company's external investment involves the use of raised funds, it should follow the approval procedures for the use of raised funds.
Chapter 3 Organizational Structure of Foreign Investment Management
Article 13 The company’s shareholders’ meeting and board of directors are the decision-making bodies for the company’s external investment. They each make decisions on the company’s external investment within the scope of their authority.
Article 14 The company has a project investment decision-making committee, which is responsible for researching new investment projects, reviewing and evaluating project investment plans or investment analysis reports, and making conclusions or resolutions. Major investment projects must be approved by the board of directors or shareholders for implementation.
Article 15 The departments responsible for investment and financial functions of the company are the specific implementation and daily financial management departments of external investment. After the company's external investment project is determined, the financial department will be responsible for raising funds, tax registration, and bank account opening, and the coordination department will be responsible for handling investment procedures, industrial and commercial registration and other related procedures, and implement strict borrowing, approval and payment procedures.
Article 16 For highly professional or large-scale investment projects, the preliminary work should be completed by forming a special project feasibility research team.
Article 17 The company's internal auditors shall supervise the entire process of investment projects in accordance with their duties, be responsible for auditing the ex-ante benefits of the projects, and conduct regular audits of investment projects.
Chapter 4 Foreign Investment Management
Article 18 The company shall establish a strict securities custody system, which shall be jointly controlled by at least two or more persons, and securities investment operators shall be separated from capital and financial management personnel and shall restrict each other. No one person shall have access to investment assets alone. Any deposit or withdrawal of investment assets shall be jointly signed by two persons who restrict each other.
Article 19 Short-term securities purchased by a company must be recorded in the name of the company on the day of purchase.
Article 20 The company's financial department is responsible for regularly checking the use and balance of securities investment funds. Interest and dividends received should be recorded in time.
Article 21 The company's external long-term investments are divided into new projects and capital increases for existing projects according to the nature of the investment projects:
(1) New projects refer to investment projects that are invested according to the approved investment amount after approval.
(2) Capital increase for existing projects refers to activities in which original investment projects require additional investment based on the original approved investment amount based on operational needs.
Article 22 Once an external long-term investment project is approved, no additional investment shall be made at will. If an increase in investment is truly necessary, the letter of intent for investment and the feasibility study report of the investment project must be resubmitted.
Article 23 The company's financial department is responsible for cooperating with authorized departments and personnel to invest cash, physical objects or intangible assets in accordance with the long-term investment contract or agreement. The input of physical objects must go through the physical handover procedures and be approved by the department using the physical objects and the management department.
Article 24 For major investment projects, experts or intermediaries may be hired to conduct review and feasibility analysis and demonstration.
Article 25 For investment projects that meet the standards for submission to the shareholders' meeting for review as stipulated in Article 9, if the transaction target is equity, the company shall hire an accounting firm qualified to engage in securities and futures-related businesses to audit the financial accounting report of the transaction target for the most recent year. The audit opinion issued by the accounting firm shall be standard and unqualified. See, the audit deadline must not be more than six months from the date of the shareholders' meeting to review the relevant transactions; if the transaction target is assets other than equity, the company should hire an asset appraisal agency with qualifications to engage in securities and futures-related businesses to conduct the assessment, and the assessment base date must not be more than one year from the date of the shareholders' meeting to review the relevant transactions.
Article 26 The company's financial department shall supervise investment projects in accordance with its duties, provide timely corrective opinions on violations, submit special reports on major issues, and submit them to the project investment approval agency for discussion and handling.
Chapter 5 Transfer and Recovery of Foreign Investment
Article 27 The company may withdraw its external investment when one of the following circumstances occurs or occurs:
(1) According to the company’s articles of association, the investment project (enterprise) has expired;
(2) Due to poor management of the investment project (enterprise), the investment project (enterprise) is unable to repay its due debts and is subject to bankruptcy in accordance with the law;
(3) The project (enterprise) is unable to continue operating due to force majeure;
(4) When other circumstances stipulating the termination of investment appear or occur in the contract.
(5) Other circumstances deemed necessary by the company.
Article 28 A company may transfer its external investment when one of the following circumstances occurs or occurs:
(1) The investment project is obviously contrary to the company’s business direction;
(2) The investment project has suffered continuous losses and there is no hope of turning the losses around and there is no market prospect;
(3) When there is an urgent need to supplement funds due to insufficient operating funds;
(4) Other circumstances deemed necessary by the company.
Article 29 Investment transfers shall be handled strictly in accordance with the provisions of the Company Law and other laws regarding the transfer of investments. The disposal of foreign investments must comply with relevant national laws and regulations.
Article 30 The financial department is responsible for asset evaluation of investment recovery and transfer to prevent the loss of company assets.
Chapter 6 Personnel Management of Foreign Investment
Article 31 When a company invests externally to establish a cooperative or joint venture company, the company shall determine based on the actual situation and dispatch directors or supervisors elected through legal procedures to participate in and supervise the operational decisions of the newly-established company.
Article 32 For a holding subsidiary established through external investment, the company shall dispatch a chairman of the board of directors elected through legal procedures and corresponding management personnel, who shall play an important role in the operation and decision-making of the holding subsidiary.
Article 33: Candidates for overseas investment personnel shall be given preliminary opinions by the professional functional departments, reviewed by the human resources department, and decided by the company's management in accordance with the company's relevant systems.
Article 34 The dispatched personnel shall effectively perform their duties in accordance with the provisions of the "Company Law" and the "Articles of Association" of the invested company, safeguard the company's interests in the operation and management activities of the newly-established company, and achieve the preservation and appreciation of the company's investment. Relevant personnel appointed by the company to serve as investment units should obtain more information about the investment units by participating in actual business management activities, board of directors meetings, etc., and report the investment status to the company in a timely manner according to the authority granted by their job responsibilities.
Chapter 7 Financial Management and Auditing of Foreign Investments
Article 35 The company's financial department should keep comprehensive and complete financial records of the company's external investment activities, conduct detailed accounting, establish detailed account books for each investment project, and record relevant information in detail. Accounting policies, accounting estimates, changes, etc. used in accounting and financial management should comply with the enterprise's financial accounting system and its relevant regulations.
Article 36 The financial management of long-term external investments shall be the responsibility of the company's financial department. The financial department shall obtain the financial report of the invested unit based on the needs of analysis and management in order to analyze the financial status of the invested unit, safeguard the company's rights and interests, and ensure that the company's interests are not harmed.
Article 37 All investment assets of the company should be regularly inventoried by internal auditors or other personnel not involved in the investment business or checked with the entrusted custodian institution to check whether they are owned by the company, and the inventory records and book records should be checked against each other to confirm the consistency of the accounts.
Chapter 8 Major Event Reporting and Information Disclosure
Article 38 The company's external investments shall strictly comply with the information disclosure obligations in accordance with relevant national laws, regulations, normative documents, and the company's "Information Disclosure Management System", "Internal Reporting System on Major Matters" and other provisions.
Article 39 The company's subsidiaries must comply with the company's information disclosure management system. The information provided by the company's subsidiaries on major matters must be true, accurate, complete and reported to the company as soon as possible so that the secretary of the board of directors can disclose it to the outside world in a timely manner.
Chapter 9 Supplementary Provisions
Article 40 Matters not covered by this system shall be implemented in accordance with the relevant national laws and regulations, normative documents and the Articles of Association. If this system conflicts with laws, regulations, normative documents or the Articles of Association after legal procedures, the provisions of the relevant national laws, regulations, normative documents and the Articles of Association shall be followed.
Article 41 Revisions to this system shall be proposed by the board of directors and submitted to the shareholders' meeting for review and approval.
Article 42 In this system, “above” includes the original number; “exceeds” and “lower than” do not include the original number.
Article 43 This system shall come into effect upon passing the resolution of the shareholders' meeting; modifications to this system shall take effect upon approval by the shareholders' meeting.
Article 44 The board of directors is responsible for interpreting this system.