Major investment and operating decision-making system of Zhejiang Chengyi Pharmaceutical Co., Ltd. (revised in August 2025)
Zhejiang Chengyi Pharmaceutical Co., Ltd.
Major investment and operating decision-making system
Chapter 1 General Provisions
Article 1 In order to protect the safety and integrity of the operations and investments of Zhejiang Chengyi Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), maximize the use of company resources, implement corporate financial systems and accounting standards, and urge the company to strengthen investment management and establish a scientific investment decision-making mechanism, this investment decision-making system is formulated 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 (hereinafter referred to as the "Securities Law") and the "Articles of Association of Zhejiang Chengyi Pharmaceutical Co., Ltd." and based on the specific circumstances of the company.
Article 2 The term investment in this system includes external investment and inward investment. External investment refers to various forms of external investment activities in which a company invests a certain amount of monetary funds, equity, and evaluated physical or intangible assets in order to obtain future income. Inward investment refers to all other investments except external investment, which refers to the investment of funds within the enterprise to form various current assets, fixed assets, intangible assets and other assets.
The term "operation" in this system refers to the company's production and operation activities that occur regularly in daily life.
Article 3 This system applies to the company’s relevant departments, branches, and holding subsidiaries, and its shareholding subsidiaries shall follow suit.
Chapter 2 Approval Authority
Article 4 The following transactions of the company (including external investments, acquisition and sale of assets, asset mortgages, entrusted financial management, etc., except for transactions that do not involve payment of consideration and are not accompanied by any obligations, such as providing guarantees, financial assistance, receiving cash assets, obtaining debt relief, etc.) shall be submitted to the shareholders' meeting for review after being reviewed and approved by the board of directors:
(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 object (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 audited net profit of the listed company in the most recent fiscal year, and the absolute amount exceeds 5 million yuan.
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If the data involved in the above indicators are negative, the absolute value is used for calculation.
If a financial assistance matter falls under any of the following circumstances, it shall be submitted to the shareholders' meeting for review after being reviewed and approved by the company's board of directors:
The amount of a single financial assistance exceeds 10% of the company’s latest audited net assets;
The latest financial statement data of the funded object shows that the asset-liability ratio exceeds 70%;
The cumulative amount of financial assistance in the last 12 months exceeds 10% of the company’s latest audited net assets;
Other circumstances stipulated by the Shanghai Stock Exchange or the company's articles of association.
The board of directors reviews and approves the following matters of the company: The following 1 to 6 transaction matters are reviewed by the board of directors (including external investment, acquisition and sale of assets, asset mortgage, entrusted financial management, etc.):
The total assets involved in the transaction (if there are both book value and appraisal value, whichever is higher) account for more than 30% of the company's latest audited total assets;
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 30% of the company's latest audited net assets, and the absolute amount exceeds 30 million yuan;
The transaction amount (including debts and expenses assumed) accounts for more than 30% of the company's latest audited net assets, and the absolute amount exceeds 30 million yuan;
The profit generated from the transaction accounts for more than 30% of the company's audited net profit in the most recent fiscal year, and the absolute amount exceeds 3 million yuan;
The operating income related to the transaction target (such as equity) in the most recent fiscal year accounts for more than 30% of the company's audited operating income in the most recent fiscal year, and the absolute amount exceeds 30 million yuan;
The net profit related to the transaction object (such as equity) in the most recent fiscal year accounts for more than 30% of the company's audited net profit in the most recent fiscal year, and the absolute amount exceeds 3 million yuan.
(7) External guarantees: Except for the external guarantees that must be made by the shareholders' meeting as stipulated in Article 5 of this system, other external guarantees are made by the board of directors. And also need to comply with the following rules:
For external guarantees within the scope of the board of directors' authority, in addition to being approved by a majority of all directors, it must also obtain the consent of more than two-thirds of the directors attending the board of directors meeting. If independent directors are established, the approval of more than two-thirds of all independent directors must be obtained.
If the board of directors exceeds the above authority and makes a resolution on the company's external guarantees and causes losses to the company, the company may seek compensation from the board members who made the resolution in favor.
(8) Related transactions: Related transactions with an amount of more than 300,000 yuan between the company and related natural persons (except for guarantees provided by the company) shall be submitted to the board of directors for review. Related transactions between the company and related legal persons that amount to more than 3 million yuan and account for more than 0.5% of the absolute value of the company's latest audited net assets (except for guarantees provided by the company) shall be submitted to the board of directors for review.
When the company's board of directors considers related party transactions, related directors shall abstain from voting. The board meeting can be held if more than half of the unrelated directors are present, and resolutions made at the board meeting must be passed by more than half of the unrelated directors. If the number of unrelated directors present at the board of directors is less than 3, the matter shall be submitted to the shareholders' meeting for review.
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(9) Financial assistance: Except for financial assistance matters that must be reviewed by the shareholders’ meeting in accordance with the provisions of this system, other financial assistance matters shall be reviewed by the board of directors. When the board of directors considers financial assistance matters, in addition to being reviewed and approved by more than half of all directors, it must also be reviewed and approved by more than two-thirds of the directors attending the board meeting.
If the funding object is a holding subsidiary within the scope of the company's consolidated statements, and the other shareholders of the holding subsidiary do not include the controlling shareholders, actual controllers and their affiliates of the listed company, they may be exempted from submission to the board of directors and shareholders' meeting for review.
(10) External donations: External donations made by the company and its subsidiaries within each full accounting year, including cash donations and physical assets (their value is calculated based on the net book value), shall comply with the following regulations:
Every external donation after the cumulative donation exceeds 3 million yuan in a fiscal year, or meets the standards required by other laws and regulations for review by the board of directors, shall be reviewed and approved by the board of directors;
Every external donation after the cumulative donation exceeds 20 million yuan in a fiscal year, or meets the standards required by other laws and regulations for review by the shareholders' meeting, shall be reviewed and approved by the shareholders' meeting;
External donations that do not meet the approval standards of the board of directors shall be reviewed and approved by the chairman of the board of directors and reported to the board of directors for record.
(11) If the above-mentioned transaction amount is less than the lower limit of the board of directors' deliberation authority, the chairman of the board shall be authorized to review and approve. However, the company's external guarantees and financial assistance matters shall not be authorized to the chairman of the board for review and approval.
If the data involved in the above indicators in this article are negative, the absolute value is used for calculation.
Article 5 When a company provides external guarantees, it shall be submitted to the board of directors for review. Except for the following situations that need to be submitted to the shareholders' meeting for approval, the remaining situations can be submitted to the board of directors for review and approval:
(1) Any guarantee provided after the total external guarantees of the company and its holding subsidiaries exceed 50% of the company’s latest audited net assets;
(2) Any guarantee provided after the total external guarantee of the company and its holding subsidiaries exceeds 30% of the company’s latest audited total assets;
(3) Guarantees provided for guarantee objects whose asset-liability ratio exceeds 70%;
(4) A single guarantee amount exceeds 10% of the latest audited net assets;
(5) Guarantees that exceed 30% of the company’s latest audited total assets based on the cumulative calculation principle of the guarantee amount within 12 consecutive months;
(6) Guarantees provided to shareholders, actual controllers and their related parties;
(7) Other guarantee situations stipulated in the company's articles of association.
When the board of directors considers guarantee matters, it must obtain the consent of more than two-thirds of the directors present at the board of directors. When the shareholders' meeting considers the guarantee item (5), it must be approved by more than two-thirds of the voting rights held by shareholders attending the meeting. When the shareholders' meeting considers the guarantee proposal provided for the shareholder, the actual controller and its related parties, the shareholder and the shareholders controlled by the controller are not allowed to participate in the vote. The vote must be passed by more than half of the voting rights held by other shareholders attending the shareholders' meeting.
Article 6 If the following companies have related transactions (except transactions with wholly-owned subsidiaries), they shall be submitted to the shareholders’ meeting:
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Approval:
The total amount of transactions between the company and related parties (including the same subject matter or the cumulative amount of transactions reached with the same related party within 12 months, excluding the company's provision of guarantees, receipt of cash assets, and simple reduction of company debt) is more than 30 million yuan and accounts for more than 5% of the absolute value of the company's latest audited net asset value, which shall be reviewed and approved by the company's shareholders' meeting;
Guarantees provided to shareholders, actual controllers and their related parties shall be reviewed and approved by the company's shareholders' meeting.
Article 7 When a disclosed related transaction is approved by more than half of all independent directors of the company, it shall be submitted to the board of directors for review.
Article 8 When the board of directors is not in session, the above-mentioned transactions (excluding external guarantees and financial assistance matters) are subject to the approval authority of the shareholders' meeting and the board of directors, and the chairman of the board is authorized to approve them. The chairman of the board of directors can authorize management to approve within the scope of approval authority.
Article 9 If any of the above matters involves related transactions, the provisions of this system on related transactions shall also apply. Among them, Article 4 of this system requires the approval of more than half of all directors regarding the board of directors' approval authority. If the data involved in the above indicators are negative, the absolute value is used for calculation.
Article 10 Investments and related transactions beyond the approval authority of the board of directors shall be decided by the company’s shareholders’ meeting in accordance with the Articles of Association.
Chapter 3 Decision-making System
Article 11 The company’s internal control over investment adheres to the following principles:
(1) Key point control principle: In view of the key control points in the business processing process, internal control is implemented in all aspects of decision-making, execution, supervision, feedback, etc.;
(2) Comply with relevant national laws and regulations and the actual situation of the company, all employees must comply with them, and no department or individual may have power beyond internal control;
(3) Ensure the reasonable setup and division of labor within the company's internal organizations, positions, and responsibilities and authorities, insist on the separation of incompatible positions, and ensure clear powers and responsibilities, mutual constraints, and mutual supervision between different agencies and positions;
(4) Cost-benefit principle: When setting up each control point, the company should reasonably consider the basic requirement that the benefits obtained should be greater than the control costs. If the benefits brought by the control points cannot be confirmed, it should consider minimizing the control costs under the established control premise.
Article 12 The company's investment proposals shall be submitted in writing by the company's shareholders, directors, senior managers, relevant functional departments and subordinate companies.
Article 13 The Office of the Board of Directors shall conduct preliminary analysis and evaluation of each investment proposal or opportunity from the following aspects:
(1) Analyze the growth and market prospects of the industry in which the investment project is located;
(2) Analyze the amount of working capital required for the company’s normal operations and planned expansion of operations, and check the company’s capital stock;
(3) Prepare and adjust capital budget according to the business plan;
(4) Understand and analyze the operating policies and financial status of more profitable companies in this industry or other industries;
(5) Understand whether relevant policies and regulations have existing or potential restrictions on the project;
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(6) Analyze and evaluate whether the investment project is consistent with the company’s long-term strategy;
(7) Other situations considered to require analysis and understanding.
If the board of directors office deems the investment proposal or opportunity feasible, it will organize the preparation of a project proposal and submit it to the general manager.
Article 14 The general manager shall organize the review and research of the project proposal. If deemed feasible, he shall organize the preparation of a feasibility study report of the project and submit it to the Strategy Committee of the Board of Directors for review.
Article 15 After deliberation and approval by the Strategy Committee of the Board of Directors, a proposal will be formed and submitted to the Board of Directors for review.
Article 16 When the board of directors, the strategy committee of the board of directors and the general manager deem it necessary, they should hire external institutions and experts to consult and demonstrate the "Project Feasibility Study Report". If the investment target is the company's equity, the company shall hire an accounting firm that complies with the provisions of the Securities Law to audit the most recent financial accounting statements of the equity; if it is an investment in other assets other than equity, the company shall hire an asset appraisal firm that complies with the provisions of the Securities Law to conduct the evaluation.
Article 17 Investment projects that need to be reviewed and approved by the shareholders' meeting shall be submitted to the shareholders' meeting for review after the board of directors' resolution is passed (if approval from government departments is required, relevant approvals must also be obtained at the same time).
Chapter 4 Management System
Article 18 For legal investment business, there should be a clear division of labor in terms of business authorization, business execution, business accounting records, and custody of investment assets. One person shall not be responsible for any two of the above tasks at the same time. The division of responsibilities should achieve:
(1) The preparer of the investment plan cannot also have the power to approve the plan;
(2) The staff responsible for the purchase and sale of securities cannot be responsible for accounting record-keeping work at that time;
(3) The custodian of securities must be separated in duties from the staff responsible for accounting for investment transactions;
(4) Employees involved in investment and trading activities cannot be responsible for the inventory of securities at the same time.
Article 19 The Company's investment behavior must strictly abide by national laws and regulations, and shall not invest in other units with property that is not allowed to be used for investment according to national regulations.
All investment decisions must be approved and confirmed before they can be formally implemented. Written documents related to investment decisions should be filed with consecutive numbers to facilitate future inquiries.
Article 20 There are generally two ways for companies to keep investment assets: one is to keep them by independent specialized institutions. For example, if the company has large investment assets, it entrusts banks, securities companies, trust investment companies and other institutions to keep them. Another way is for the company to keep it on its own. In this way, a strict joint control system must be established, that is, it must be jointly controlled by at least two people, and no one person can contact it alone.
Article 21 Whether the company's investment assets are kept by itself or by others, complete accounting records must be kept, and relevant accounting calculations must be made for increases and decreases and investment income. Specifically, a detailed ledger should be set up for each stock or bond, and its name, face value, certificate number, quantity, date of acquisition, name of the broker (securities firm), purchase cost, dividends or interest received, etc. should be recorded in detail. For other investments in the joint venture investment category, it should also be recorded Detailed ledgers should be set up to account for the investment of other investments and their investment returns and investment recovery, and make detailed records of the form of investment (such as current assets, fixed assets, intangible assets, etc.), investment direction (i.e., the unit receiving investment), investment valuation, and investment returns.
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Article 22 Except for bearer securities, when a company purchases stocks or bonds, it shall be registered in the name of the company as soon as possible on the day of purchase. It cannot be signed and registered in the name of any individual in the company. This is to accurately reflect the various investment securities owned by the company and prevent anyone from using his or her own name to impersonate, transfer or sell the company's securities, or illegally obtain interest or dividends due to the company without the approval and authorization of the manager or the board of directors.
Article 23 For the investment assets owned by the company, internal auditors or other personnel not involved in the investment business should conduct regular inventory to check whether they are indeed owned by the company, and check the inventory records with the book records to confirm the consistency of the accounts.
The physical securities kept by the company itself should be regularly inventoried by staff not related to the investment business to check their existence. The company conducts inventory of investment assets regularly and irregularly every year. The inventory work is carried out in accordance with the company's relevant internal control systems. If a company entrusts a bank or other institution to keep securities on its behalf, the staff responsible for securities inventory should regularly check the securities deposit list sent by the bank and other institutions with the securities registration book and investment detailed account to check whether they are consistent. If any inconsistencies are found, they should be investigated promptly.
Article 24 The company will hold those who violate the investment internal control system and affect the implementation of the investment internal control system accountable.
Chapter 5 Inspection and Supervision
Article 25 After the investment project stipulated in this system is approved and during its implementation, if the general manager discovers that there are major omissions in the plan, major changes in the external environment for project implementation, or the impact of force majeure, which may lead to investment failure, he shall propose to convene an extraordinary meeting of the board of directors to modify, change or terminate the investment plan. For investment projects approved by the shareholders' meeting, the modification, change or termination of the investment plan requires a shareholders' meeting to be held for review.
Article 26 After the investment project is completed, the general manager shall organize relevant departments and personnel to conduct inspections and report to the board of directors and shareholders' meeting based on the actual situation.
Article 27 Independent directors have the right to inspect the company’s investment behavior.
Article 28 The company’s audit committee has the right to supervise the company’s investment behavior.
Chapter 6 Supplementary Provisions
Article 29 This system shall be interpreted by the board of directors and shall come into effect on the date of approval by the shareholders' meeting.
Article 30 The terms "above", "below" and "within" used in this system include the original number; "over", "below", "more than" and "not more than" do not include the original number.
Article 31 Matters not covered by this system shall be implemented in accordance with the relevant provisions of relevant national laws and regulations. If this system is inconsistent with the relevant provisions of relevant laws and regulations, the provisions of the relevant laws and regulations shall prevail.
Board of Directors of Zhejiang Chengyi Pharmaceutical Co., Ltd. August 25, 2025
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