Related party transaction management system (revised in August 2025)
Zhejiang Shouxiangu Pharmaceutical Co., Ltd. Related Transaction Management System
August 2025 (revised)
Directory
Chapter 1 General Provisions................................................................................................1
Chapter 2 Related Persons and Related Relationships...................................................................... 1
Chapter 3 Related Transactions................................................................................................2
Chapter 4 Determination and Management of Related Party Transaction Prices......................................3
Chapter 5 Decision-making Procedures and Information Disclosure of Related Party Transactions........................................5
Chapter 6 Supplementary Provisions................................................................................................10
Chapter 1 General Provisions
Article 1 In order to further strengthen the management of related transactions of Zhejiang Shouxiangu Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company" or the "Company"), clarify management responsibilities and division of labor, safeguard the legitimate interests of the company's shareholders and creditors, especially the legitimate interests of small and medium-sized investors, and ensure that the related transaction contracts entered into between the company and related parties comply with the principles of fairness, justice and openness, in accordance with the "Company Law of the People's Republic of China", the "Securities Law of the People's Republic of China", the "Stock Listing Rules of the Shanghai Stock Exchange" (hereinafter referred to as the "Listing Rules"), This system is specially formulated in accordance with the relevant provisions of national laws, regulations, normative documents such as "Shanghai Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 5 - Transactions and Related Transactions" and the "Articles of Association of Zhejiang Shouxiangu Pharmaceutical Co., Ltd." (hereinafter referred to as the "Articles of Association").
Article 2 Related party transactions of a company refer to the transfer of resources or obligations that occur between the company, its subsidiaries and other entities controlled by the company and its related parties.
Article 3 Related transactions that occur by the company's subsidiaries are deemed to be corporate actions. Related transactions that occur with the company's shareholding companies shall be governed by the relevant provisions of these Measures based on the amount of the transaction object multiplied by the shareholding ratio or the agreed dividend ratio.
Chapter 2 Related Persons and Related Relationships
Article 4 Related parties of a company include related legal persons and related natural persons.
Article 5 A legal person or other organization that has one of the following circumstances is an affiliated legal person 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, 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 the company, subsidiaries and other controlled entities that are directly or indirectly controlled by natural persons related to the company, 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.
If the company and the legal person (or other organization) listed in item (2) of this article are controlled by the same state-owned asset management institution and the situation mentioned in item (2) of this article occurs, no related relationship will be formed, except that its legal representative, chairman, general manager or more than half of the directors concurrently serve as directors or senior managers of the listed company.
Article 6 A natural person who meets 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) Directors and senior managers of the company;
(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) to (2) of this article, including spouse, parents, children over 18 years old and their spouses, brothers and sisters and their spouses, spouse’s parents, brothers and sisters, and children’s spouse’s parents.
Article 7 A legal person or natural person who meets any of the following circumstances shall be deemed to be a related person of the company:
(1) Legal persons (or other organizations) or natural persons who have one of the situations mentioned in Articles 5 and 6 in the past 12 months or within 12 months after the relevant agreement or arrangement comes into effect.
(2) The China Securities Regulatory Commission, the Shanghai Stock Exchange or the company may, based on 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 tilt its interests.
Article 8 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 explanations of related relationships, and the office of the board of directors shall do a good job of registration and management.
Chapter 3 Related Transactions
Article 9 The company’s related transactions include but are not limited to the following matters:
(1) Purchase raw materials, fuel, and power;
(2) Selling products and commodities;
(3) Providing or accepting labor services;
(4) Entrusted or entrusted sales;
(5) Deposits and loans in related party financial companies;
(6) Joint investment with related parties;
(7) Purchase or sell assets;
(8) External investment (including entrusted financial management, investment in subsidiaries, etc.);
(9) Provide financial assistance (including interest or interest-free loans, entrusted loans, etc.);
(10) Provide guarantees (including guarantees for subsidiaries, etc.);
(11) Lease or lease assets;
(12) Entrust or entrust management of assets and business;
(13) Donating or receiving donated assets;
(14) Creditor's rights and debt restructuring;
(15) Sign a license agreement;
(16) Transfer or transfer of research and development projects;
(17) Waiver of rights (including waiving the right of preemptive purchase, the right of preemptive subscription of capital contribution, etc.);
(18) Other matters determined by the China Securities Regulatory Commission, the stock exchange or the company based on the principle of substance over form that may lead to the transfer of resources or obligations through agreement, including providing financial assistance and guarantees to companies that jointly invest with related parties that are greater than their equity ratio or investment ratio, and giving up the same proportion of capital increase or preferential transfer rights to companies that jointly invest with related parties.
Article 10 The company’s related-party transactions shall follow the following basic principles:
(1) Comply with the principle of good faith;
(2) Comply with the principles of fairness, openness and impartiality;
(3) The principle of not harming the legitimate rights and interests of the company and non-affiliated shareholders;
(4) If a related party has the right to vote at the shareholders’ meeting, he or she shall abstain from voting;
(5) Directors who have any interest in related parties shall recuse themselves when the board of directors votes on the matter;
(6) The company's board of directors should judge whether the related transaction is beneficial to the company based on objective standards, and should hire a professional appraiser or independent financial consultant when necessary.
Chapter 4 Determination and Management of Related Party Transaction Prices
Article 11 When a company conducts related transactions, it shall sign a written agreement to clarify the pricing policy of 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 12 The pricing of the company’s related-party transactions shall be fair and shall be implemented in accordance with 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 related matters, the transaction pricing can be determined by referring to the price of non-related transactions between the related party and a third party independent of the related party;
(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 13 Pricing methods for related-party transactions:
(1) The cost-plus method is based on the reasonable costs of related transactions plus the gross profit of comparable non-related transactions. Applicable to related transactions such as procurement, sales, transfer and use of tangible assets, provision of labor services, financing, etc.;
(2) The resale price method takes the price at which the goods purchased by related parties are resold to non-related parties minus the gross profit from comparable non-related transactions as the fair transaction price of the goods purchased by related parties. Applicable to simple processing or pure purchase and sale business where the reseller does not perform substantial value-added processing such as changing the appearance, performance, structure or changing the trademark of the goods;
(3) The comparable uncontrolled price method is based on the prices charged by unrelated parties for the same or similar business activities as related transactions. Applicable to all types of related party transactions;
(4) Transaction net profit method, which determines the net profit of related transactions based on the profit level indicators of comparable non-related transactions. Applicable to related transactions such as procurement, sales, transfer and use of tangible assets, provision of labor services, etc.;
(5) Profit split method, which calculates the amount of profit that each company and its related parties should distribute based on their contribution to the combined profits of related transactions. It is suitable for situations where the related-party transactions of each participant are highly integrated and it is difficult to independently evaluate the transaction results of each party.
Article 14 If a related party transaction cannot be priced according to the above principles and methods, the principles and methods for determining the price of the related party transaction shall be disclosed, and the fairness of the pricing shall be explained.
Article 15 Management of related transaction prices:
(1) Both parties to the transaction shall calculate the transaction price based on the price agreed in the related transaction agreement and the actual transaction quantity, and pay according to the payment method and time agreed in the related transaction agreement.
(2) The company's finance department should track changes in market prices and costs of the company's related transactions, and report the changes to the board of directors for record.
Chapter 5 Decision-making Procedures and Information Disclosure of Related Party Transactions
Article 16 Except for related guarantees, if the transaction between the company and related parties meets one of the following standards, the board of directors' review procedures shall be completed with the consent of more than half of all independent directors, and the disclosure shall be made in a timely manner:
(1) The transaction amount (including debts and expenses borne) with a related natural person exceeds 300,000 yuan;
(2) The transaction amount (including debts and expenses assumed) with a related legal person (or other organization) is more than 3 million yuan, and accounts for more than 0.5% of the absolute value of the listed company's latest audited net assets.
Article 17 In addition to related guarantees, if the transaction amount (including debts and expenses assumed) between the company and related parties exceeds 30 million yuan and accounts for more than 5% of the absolute value of the latest audited net assets of the listed company, the audit report or evaluation report shall be disclosed in accordance with regulations, and the transaction shall be submitted to the shareholders' meeting for review.
If the subject matter of the above related-party transactions is the company's equity, the financial accounting report for the most recent year and period audited by an accounting firm for the subject assets shall be disclosed. The audit opinions issued by the accounting firm shall be standard unqualified opinions, and the audit deadline shall not exceed 6 months from the date of the shareholders' meeting to review relevant transactions.
If the subject matter of the above related-party transactions is assets other than the company's equity, the valuation report issued by the asset valuation agency for the subject assets shall be disclosed. The evaluation base date shall not be more than one year from the date of the shareholders' meeting to review relevant transactions.
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 and the Shanghai Stock Exchange require it in accordance with the principle of prudence, or the company voluntarily submits it to the shareholders' meeting for review in accordance with the Articles of Association or other regulations, it shall perform the review procedures and disclosure obligations in accordance with the provisions of paragraph 1, and apply relevant audit or evaluation requirements.
Article 18 When the company and related parties have daily related transactions listed in items (1) to (5) of Article 9 of this system, the company shall perform review procedures and disclose them in accordance with the following provisions:
(1) 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 If the main terms of the agreement change significantly during the execution 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;
(2) 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;
(3) The company can reasonably estimate the amount of daily related transactions for the current year by category, perform 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;
(4) The company’s annual report and semi-annual report shall classify and summarize the actual performance of daily related transactions;
(5) 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 the system.
Article 19 If the company provides a guarantee to a related party, regardless of the amount, it must be reviewed and approved by more than half of all non-related directors, and 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 party of the company due to a transaction or 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 20 The company shall not provide financial assistance to related parties, except when it provides financial assistance to a related joint-stock company that is 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 an affiliated company specified in the preceding paragraph, it must be reviewed and approved by more than half of all non-associated directors, and more than two-thirds of the non-associated directors present at the board meeting, and submitted to the shareholders' meeting for review.
Article 21 To jointly establish a company with related parties, the company’s capital contribution shall be used as the transaction amount, and corresponding review procedures and information disclosure obligations shall be fulfilled.
Article 22 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 corresponding review procedures and information disclosure obligations shall be fulfilled.
Article 23 For the following related-party transactions that occur within 12 consecutive months, the company shall perform corresponding review procedures and information disclosure obligations in accordance with the principle of cumulative calculation:
(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.
Article 24 When the company's transactions are subject to the cumulative calculation principle of 12 consecutive months in accordance with the provisions of this system, and if the disclosure standards stipulated in this system are met, only the current transaction may be disclosed in accordance with the relevant requirements of the Shanghai Stock Exchange, and the cumulative transactions in the previous period that have not reached the disclosure standards shall be stated in the announcement; if the transactions that meet the standards of the system and must be submitted to the shareholders' meeting for review, only the current transaction may be submitted to the shareholders' meeting for review, and the transactions that have not fulfilled the shareholders' meeting review procedures in the previous period may be explained in the announcement.
If the company has fulfilled relevant obligations in accordance with the provisions of Articles 16 and 17, 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 25 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. Their voting rights shall not be counted in the total number of voting rights. 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 non-related directors attending the board meeting is less than 3 or less than half, the company shall submit the transaction to the shareholders' meeting for review.
The related directors mentioned in the preceding paragraph include the following directors or directors with 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 or senior managers who are the counterparty to the transaction or its direct or indirect controller;
(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 26 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 related shareholders mentioned in the preceding paragraph 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 determined by the China Securities Regulatory Commission or the Shanghai Stock Exchange that may cause the interests of the listed company to be tilted towards it.
Article 27 The procedures for avoidance and voting of related directors are:
(1) Related directors should take the initiative to apply for recusal, otherwise other directors have the right to request their recusal;
(2) When a dispute arises as to whether the director is a related director, more than half of the board of directors shall pass a resolution at an extraordinary meeting to determine whether the director is a related director and decide whether to recuse himself or herself;
(3) Related directors are not allowed to participate in deliberation and attend meetings to discuss related related transaction matters;
(4) When the board of directors votes on matters related to related transactions, after deducting the voting rights represented by related directors, the non-related directors present at the board of directors shall vote in accordance with the provisions of the Articles of Association.
Article 28 The avoidance and voting procedures for related shareholders are:
(1) Related shareholders should take the initiative to apply for avoidance, otherwise other shareholders have the right to apply to the shareholders’ meeting for avoidance of related shareholders;
(2) When a dispute arises about whether the shareholder is a related shareholder, half of the board of directors shall pass a resolution at an extraordinary meeting to decide whether the shareholder is a related shareholder and whether to recuse himself or herself. This resolution shall be the final decision;
(3) When the shareholders' meeting votes on related-party transactions, after deducting the number of voting shares represented by the related shareholders, the non-related shareholders attending the shareholders' meeting will vote in accordance with the provisions of the Articles of Association and the Rules of Procedure of the Shareholders' Meeting.
Article 29 When a company's related parties sign an agreement involving related transactions with the company, they must also take necessary avoidance measures:
(1) Any individual can only sign an agreement on behalf of one party;
(2) Related parties shall not interfere with the company’s decisions in any way.
Article 30 Related transactions that do not need to be submitted to the board of directors or shareholders' meeting for review in accordance with laws, regulations, normative documents and this system shall be implemented after approval by the general manager of the company.
Article 31 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) The related party provides funds to the company, the interest rate is not higher than the loan market quotation rate, and the company does not need to provide guarantee;
(3) One party subscribes in cash for stocks, convertible corporate bonds or other derivatives, and publicly issued corporate bonds (including enterprise bonds) issued by the other party to unspecified objects;
(4) One party, as a member of the underwriting syndicate, underwrites stocks, convertible corporate bonds or other derivatives, and publicly issued corporate bonds (including enterprise bonds) issued by the other party to unspecified objects;
(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) The company provides products and services to related natural persons other than shareholders who directly or indirectly hold more than 5% of the company's shares on the same transaction terms as non-related persons;
(8) The pricing of related-party transactions shall be stipulated by the state;
(9) Other transactions recognized by the Shanghai Stock Exchange.
Article 32 The secretary of the board of directors and the office of the board of directors must be notified in advance of any related party transactions that are to be disclosed and the secretary of the board of directors shall perform the information disclosure obligation within two working days from the date of occurrence of the fact.
Article 33 If the related party transactions that the company intends to disclose are state secrets, business secrets or other situations recognized by the stock exchange that are suspended or exempted from information disclosure, and disclosure or performance of relevant obligations under this system may cause it to violate national laws and regulations on confidentiality or seriously damage the interests of the company, the company may apply to the stock exchange for suspension or exemption from disclosure under this system or performance of relevant obligations.
Chapter 6 Supplementary Provisions
Article 34 The term “timely” in this system refers to within two trading days of the disclosure time point in this system.
Article 35 The term "subsidiary" as mentioned in this system refers to a company in which the company holds more than 50% of the shares, or can determine the composition of more than half of the members of its board of directors, or can actually control it through agreements or other arrangements, including wholly-owned subsidiaries and holding subsidiaries.
Article 36 The terms “above” and “exceed” in this system include the original number; “less than” does not include the original number.
Article 37 If any provision of this system conflicts with the then-effective laws, regulations, normative documents, and the provisions of the Articles of Association, the provisions of the then-effective laws, regulations, normative documents, and the Articles of Association shall prevail.
Article 38 The company’s board of directors is responsible for interpreting this system.
Article 39 This system shall be approved by the company's shareholders' meeting and shall be implemented from the date of approval, even if it is modified.