[Temporary Announcement] Kezhou Drug: Internal Audit Management System (Applicable after listing on Beijing Stock Exchange)
Announcement number: 2025-106 Securities code: 874790 Securities abbreviation: Kezhou Pharmaceuticals Sponsoring broker: CITIC Construction Investment
Internal audit management system of Shanghai Kezhou Pharmaceutical Co., Ltd.
(Applicable after listing on Beijing Stock Exchange)
The company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete, and that there are no false records, misleading statements or major omissions, and bear individual and joint legal liability for the authenticity, accuracy and completeness of the contents.
1. Review and voting status
On November 7, 2025, the 10th meeting of the company's first board of directors reviewed and approved the "Proposal on Formulating Several Internal Governance Systems Applicable to the Company after it publicly issues shares to unspecified qualified investors and is listed on the Beijing Stock Exchange." This system does not need to be submitted to the company's shareholders' meeting for review.
2. List the main contents of the system in chapters
Shanghai Kezhou Pharmaceutical Co., Ltd.
Internal audit management system
(Applicable after listing on Beijing Stock Exchange)
Chapter 1 General Provisions
Article 1 In order to establish and improve the internal audit system of Shanghai Kezhou Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), strengthen the company's internal management and control, promote the legality and compliance of the actions of each management within the company, and provide reliable information and basis for the management to make correct decisions, this system is formulated in accordance with the Company Law of the People's Republic of China, the Audit Law of the People's Republic of China, the National Audit Office's Regulations on Internal Audit Work and the Articles of Association of Shanghai Kezhou Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association"), and in combination with the company's specific circumstances.
Article 2 The term “internal audit” as mentioned in this system refers to the audit department and internal auditors established within the company.
Announcement No.: 2025-106 is an evaluation activity carried out by members through independent and objective supervision on the effectiveness of the company's internal control and risk management, the authenticity and completeness of financial information, and the efficiency and effectiveness of operating activities to ensure the realization of the company's business objectives.
Article 3 The term "internal control" as used in this system refers to the process by which the company's board of directors, senior managers and other relevant personnel provide reasonable guarantees for achieving the following goals:
(1) Comply with national laws, regulations, rules and other relevant provisions;
(2) Improve the efficiency and effectiveness of the company’s operations;
(3) Ensure the safety of the company’s assets;
(4) Ensure that the company’s information disclosure is true, accurate, complete and fair.
The company's board of directors is responsible for the establishment, improvement and effective implementation of the internal control system. Important internal control systems should be reviewed and approved by the board of directors.
Article 4 The company’s board of directors and all its members ensure that the information disclosed regarding internal control is true, accurate and complete.
Article 5 When the company implements internal audit, it shall comply with the requirements of this system. This system applies to the company's directors, senior managers, all departments of the company, wholly-owned and holding subsidiaries, and branches.
Chapter 2 Internal Audit Institutions and Auditors
Article 6 The company shall establish an audit department to inspect and supervise the authenticity and completeness of the company's financial information, the establishment and implementation of the internal control system, etc. The Audit Department is responsible to the Audit Committee and reports its work to the Audit Committee.
Article 7 The company's audit department is a functional department within the company, equipped with full-time auditors to engage in internal audit work. The auditors should have the following theoretical knowledge and professional abilities:
(1) Possess relevant professional theoretical knowledge in auditing, accounting, financial management, economics, tax regulations, etc.;
(2) Be familiar with corresponding laws, regulations and company rules;
(3) Master the company’s internal audit standards and internal audit procedures;
(4) Be familiar with the company’s internal audit content and internal audit operation techniques;
(5) Familiar with the company’s production operations and economic business knowledge.
Announcement number: 2025-106
Article 8 The person in charge of the audit department shall be a full-time person who shall be nominated by the audit committee and appointed or removed by the board of directors.
Article 9 Auditors shall maintain independence when conducting internal audit work and adhere to the principles of objectivity, fairness, seeking truth from facts, integrity and confidentiality, and confidentiality.
Auditors who have an interest in the audited unit or audit matters should recuse themselves. Auditors should be free from control and interference during the formulation and implementation of the audit plan and the presentation of the audit report to maintain the independence, objectivity and impartiality of the internal audit work.
Article 10 When conducting an audit, auditors shall, on the basis of in-depth investigation, adopt audit methods such as inspection, sampling and analytical review to obtain sufficient and reliable audit evidence to support the audit conclusions and audit recommendations.
Article 11 The company's internal agencies, wholly-owned and controlled subsidiaries, and joint-stock companies with significant influence should support and cooperate with the audit department in performing its duties in accordance with the law, provide necessary working conditions, and voluntarily accept audits, and must not hinder the work of the audit department and auditors.
Chapter 3 Responsibilities and Authority of Audit Institutions
Article 12 The Audit Committee shall mainly perform the following responsibilities when guiding and supervising the work of the Audit Department:
(1) Guide and supervise the establishment and implementation of the internal audit system;
(2) Convene a meeting at least once every quarter to review the work plans and reports submitted by the audit department;
(3) Report to the board of directors at least once every quarter, including but not limited to the progress and quality of internal audit work and major issues discovered;
(4) Coordinate the relationship between the audit department and external audit units such as accounting firms and national audit institutions.
Article 13 The Audit Department mainly performs the following responsibilities:
(1) Inspect and evaluate the integrity, rationality and effectiveness of the internal control systems of the company’s internal agencies, wholly-owned and controlled subsidiaries, and joint-stock companies with significant influence;
(2) Audit the accounting information and other relevant economic information of the company's internal organizations, all wholly-owned and controlled subsidiaries, and joint-stock companies with significant influence, as well as the legality, compliance, authenticity and completeness of the reflected financial revenues and expenditures and related economic activities, including but not limited to financial reports, performance bulletins, voluntary disclosure of predictive financial information, etc.;
Announcement number: 2025-106
(3) Assist in establishing and improving the anti-fraud mechanism, determine the key areas, key links and main contents of anti-fraud, and pay reasonable attention to and inspect possible fraud during the internal audit process;
(4) Report to the Audit Committee at least once every quarter, including but not limited to the implementation of the internal audit plan and problems discovered during the internal audit work.
Article 14 The Audit Department shall submit an annual internal audit work plan to the Audit Committee within two months before the end of each fiscal year, and submit an annual internal audit work report to the Audit Committee within two months after the end of each fiscal year.
The audit department shall make the audit of important matters such as external investment, purchase and sale of assets, external guarantees, related transactions, use of raised funds and information disclosure matters a necessary part of the annual work plan.
Article 15 The audit department shall carry out audit work based on business links, and evaluate the rationality of the design and implementation effectiveness of internal controls related to financial reporting and information disclosure matters based on the actual situation.
Article 16 Internal audit should usually cover all business aspects related to financial reporting and information disclosure matters in the company's operating activities, including but not limited to: sales and collections, procurement and payment, inventory management, fixed asset management, fund management, investment and financing management, human resources management, information system management and information disclosure management, etc.
The audit department can make adjustments to the above business links based on the actual situation of the company.
Article 17 The audit evidence obtained by auditors shall be sufficient, relevant and reliable. Auditors should clearly and completely record the name, source, content, time and other information of obtaining audit evidence in their working papers. Internal audit working papers should be prepared and reviewed in a timely manner, and classified and archived.
Article 18 Internal audit work authority:
(1) Based on the needs of internal audit work, require the audited unit to submit production, operations, financial revenue and expenditure plans, budget implementation, final accounts, accounting statements and other relevant documents and materials on time;
(2) Review relevant statements, vouchers, account books, budgets, final accounts, contracts, agreements, etc., and inspect the information, documents and on-site inspection materials related to the production, operation and financial activities of the audited unit;
(3) Check relevant computer systems and their electronic data and information;
(4) Participate in relevant meetings and convene meetings related to audit matters according to the needs of internal audit work;
Announcement number: 2025-106
(5) Participate in the research and formulation of relevant rules and regulations, propose internal audit rules and regulations, and issue them for implementation after approval by the company's corresponding authority with the authority to approve them;
(6) Investigate issues related to audit matters from relevant units and individuals and obtain supporting materials;
(7) Make a temporary stop decision for ongoing serious violations of laws and regulations, serious losses and waste;
(8) Make suggestions for the company to improve its operation and management and increase economic benefits;
(9) Suggestions on correcting and dealing with violations of financial laws and regulations.
Chapter 4 Specific Audit Implementation Measures
Article 19 The audit department shall implement appropriate review procedures in accordance with relevant regulations, evaluate the effectiveness of the company's internal controls, and submit an internal control evaluation report to the audit committee at least once a year. The evaluation report shall state the purpose, scope, review conclusions and suggestions for improving internal control.
Article 20 The scope of internal control review and evaluation shall include the establishment and implementation of internal control systems related to financial reporting and information disclosure matters.
The audit department shall focus on inspection and evaluation of the integrity, rationality and effectiveness of the internal control systems related to external investment, purchase and sale of assets, external guarantees, related transactions, use of raised funds, information disclosure and other matters.
Article 21 The audit department shall urge the relevant responsible departments to formulate rectification measures and rectification time for internal control deficiencies discovered during the review process, conduct follow-up reviews of internal controls, and supervise the implementation of rectification measures.
The person in charge of the audit department shall promptly arrange the follow-up review of internal controls and incorporate it into the annual internal audit work plan.
Article 22 If the audit department discovers major deficiencies or major risks in internal control during the review process, it shall report to the audit committee in a timely manner.
Article 23 The Audit Department shall conduct timely audits after the occurrence of important external investment matters. When auditing external investment matters, you should focus on the following:
(1) Whether the review and approval procedures for foreign investment are carried out in accordance with relevant regulations;
Announcement number: 2025-106
(2) Whether the contract was concluded in accordance with the approved content and whether the contract was performed normally;
(3) Whether to assign special personnel or establish a special agency to study and evaluate the feasibility, investment risks and investment returns of major investment projects, and track and supervise the progress of major investment projects;
(4) For matters involving entrusted financial management, pay attention to whether the company has delegated the authority to approve entrusted financial management to individual directors or operating management of the company, whether the trustee's integrity record, operating conditions and financial status are good, and whether a dedicated person has been assigned to track and supervise the progress of entrusted financial management;
Article 24 The audit department shall conduct timely audits after important asset purchases and sales occur. When auditing the purchase and sale of assets, you should focus on the following:
(1) Whether the purchase and sale of assets are subject to approval procedures in accordance with relevant regulations;
(2) Whether the contract was concluded in accordance with the approved content and whether the contract was performed normally;
(3) Whether the operating conditions of the purchased assets are consistent with expectations;
(4) Whether there are guarantees, mortgages, pledges and other restrictions on transfer of the purchased assets, and whether they involve litigation, arbitration and other major disputes.
Article 25 The audit department shall conduct timely audits after the occurrence of important external guarantee matters. When auditing external guarantee matters, focus should be placed on the following:
(1) Whether the approval procedures for external guarantees are carried out in accordance with relevant regulations;
(2) Whether the guarantee risk exceeds the company's bearable range, and whether the guaranteed party's integrity record, operating conditions and financial status are good;
(3) Whether the secured party provides a counter-guarantee and whether the counter-guarantee is enforceable;
(4) Whether independent directors and supervisory securities firms express opinions (if applicable);
(5) Whether a special person is assigned to continuously pay attention to the operating status and financial status of the guaranteed party.
Article 26 The audit department shall promptly conduct audits after the occurrence of important related party transactions. When auditing related party transactions, you should focus on the following:
(1) Whether the list of related parties has been determined and updated in a timely manner;
(2) Whether related transactions have been reviewed and approved in accordance with relevant regulations, and whether related shareholders or directors have abstained from voting when reviewing related transactions;
Announcement number: 2025-106
(3) Whether the independent directors convene a special meeting of independent directors and obtain the consent of more than half of all independent directors, and whether the sponsor expresses its opinion;
(4) Whether a written agreement has been signed for related-party transactions, and whether the rights, obligations and legal responsibilities of both parties to the transaction are clear;
(5) Whether the subject matter of the transaction has any guarantees, mortgages, pledges or other restrictions on transfer, and whether it involves litigation, arbitration and other major disputes;
(6) Whether the counterparty’s integrity record, operating conditions and financial status are good;
(7) Whether the pricing of related-party transactions is fair, whether the subject matter of the transaction has been audited or evaluated in accordance with relevant regulations, and whether the related-party transactions will encroach on the company's interests.
Article 27 The Audit Department shall audit the storage and use of raised funds at least once every quarter, and express opinions on the authenticity and compliance of the use of raised funds. When auditing the use of raised funds, focus should be placed on the following:
(1) Whether the raised funds are deposited in a special account decided by the board of directors for centralized management, and whether the company has signed a three-party supervision agreement with the commercial bank and sponsor where the raised funds are deposited;
(2) Whether the raised funds are used in accordance with the raised funds investment plan promised in the issuance application documents, whether the investment progress of the raised funds projects is in line with the planned progress, and whether the investment returns are consistent with expectations;
(3) Whether the raised funds are used for pledges, entrusted loans or other investments that change the purpose of the raised funds in a disguised manner, and whether the raised funds have been occupied or misappropriated;
(4) When matters such as using raised funds to replace self-owned funds that have been invested in raised funds projects, using idle raised funds to temporarily supplement working capital, changing the investment direction of raised funds, etc., whether the approval procedures and information disclosure obligations are performed in accordance with relevant regulations, and whether the independent directors, audit committee and sponsor structure express opinions in accordance with relevant regulations.
Article 28 The audit department shall audit the performance report before it is disclosed to the public. When auditing performance reports, you should focus on the following:
(1) Whether it complies with the Accounting Standards for Business Enterprises and related regulations;
(2) Whether the accounting policies and accounting estimates are reasonable and whether they have changed;
(3) Whether there are any major abnormal events;
Announcement number: 2025-106
(4) Whether the going concern assumption is met;
(5) Whether there are major deficiencies or major risks in the internal control related to financial reporting.
Article 29 When reviewing and evaluating the establishment and implementation of the information disclosure management system, the audit department shall focus on the following:
(1) Whether the company has formulated information disclosure management systems and related systems in accordance with relevant regulations, including information disclosure management and reporting systems for internal agencies, holding subsidiaries, and joint-stock companies with significant influence;
(2) Whether the scope and content of major information are clearly defined, as well as the process for the transmission, review and disclosure of major information;
(3) Whether confidentiality measures have been formulated for undisclosed major information, and the scope and confidentiality responsibilities of insiders of inside information have been clarified;
(4) Whether the rights and obligations of the company and its directors, senior managers, shareholders, actual controllers and other relevant information disclosure obligors in information disclosure matters are clearly stipulated;
(5) If the company, controlling shareholders and actual controllers have public commitments, whether the company has designated a dedicated person to track the performance of the commitments;
(6) Whether the information disclosure management system and related systems are effectively implemented.
Chapter 5 Audit File Management
Article 30 The audit department shall establish a working paper confidentiality system and establish a corresponding file management system in accordance with relevant laws and regulations. The scope of audit file management is:
(1) Audit notice and audit plan;
(2) Audit report and its attachments;
(3) Audit records, audit working papers and audit evidence;
(4) Written documents reflecting the business activities of the audited unit and individuals;
(5) Audit processing decisions and implementation reports;
(6) Materials for review and follow-up audit;
(7) Other information that should be saved.
Announcement number: 2025-106
Article 31 Audit files are divided into two categories: permanent files and current files. Permanent files refer to files whose content is relatively stable, has long-term use value, and has an important impact and direct effect on future audit work, and should be kept permanently. This type of files refers to financial audit reports and construction project audit reports. Current period files refer to audit files whose record contents change frequently and are only for current period use and next period audit reference. They are mainly business and comprehensive working papers. The retention period of current archives is 15 years from the date the audit conclusion is issued or the date the audit report is issued. This type of files refers to various special audits and other information arranged by the company.
Article 32 The specific measures for archives management shall be implemented with reference to the company’s archives management system and confidentiality management system.
Chapter 6 Information Disclosure
Article 33 The Audit Committee shall issue an annual internal control self-evaluation report on the establishment and implementation of the internal control system related to financial reporting and information disclosure based on the evaluation report and relevant materials issued by the Audit Department. The board of directors shall formulate a resolution on the company's internal control evaluation report while reviewing the annual report and other matters.
Article 34 A company shall disclose an annual internal control evaluation report and an internal control audit report issued by an accounting firm when disclosing its annual report.
Article 35 If an accounting firm issues an assurance report with a non-unqualified conclusion on the effectiveness of the company’s internal control, the company’s board of directors and audit committee shall make a special explanation of the matters involved in the authentication conclusion. The special explanation shall at least include the following:
(1) Basic information on the matters involved in the assurance conclusion;
(2) The degree of impact of the matter on the effectiveness of the company’s internal control;
(3) The opinions of the company’s board of directors and audit committee on this matter;
(4) Specific measures to eliminate the matter and its impact.
Chapter 7 Supervision, Management and Violation Handling
Article 36 The company shall establish an incentive and restraint mechanism for the audit department to supervise and assess the work of internal auditors to evaluate their work performance.
Article 37 Internal auditors who conscientiously perform their duties, are loyal to their duties, adhere to principles, and make outstanding achievements shall be given moral or material rewards by the company; internal auditors who abuse their powers, practice favoritism, neglect their duties, or leak secrets shall be dealt with by the company in accordance with relevant regulations; if a crime is constituted, they shall be transferred to the judiciary.
Announcement number: 2025-106
The agency pursues criminal liability.
Article 38 If the audit department or auditors violate this system when carrying out internal audit work, the board of directors shall order them to make corrections within a time limit and, depending on the severity of the case, impose administrative sanctions or financial penalties.
Article 39 If relevant personnel of the audited unit fail to cooperate with relevant audits, refuse audits, or fail to provide information, provide false information, fail to implement internal audit opinions in a timely manner, refuse to implement audit conclusions, cause losses and waste to the company, or retaliate or frame internal auditors, the company will hold the relevant personnel accountable in accordance with relevant regulations.
Chapter 8 Supplementary Provisions
Article 40 The terms "above", "below" and "within" used in this system all include the original number; "more than", "less than" and "over" do not include the original number.
Article 41 This system shall be approved by the board of directors and shall come into effect on the date when the company publicly issues shares to unspecified qualified investors and is listed on the Beijing Stock Exchange.
Article 42 Matters not covered by this system shall be implemented in accordance with relevant national laws, administrative regulations, normative documents and the company's articles of association. If this system is inconsistent with relevant laws, administrative regulations, normative documents and the company's articles of association, the relevant provisions of the relevant laws, administrative regulations, normative documents and the company's articles of association shall prevail.
Article 43 The company’s board of directors is responsible for the interpretation and modification of this system.
Board of Directors of Shanghai Kezhou Pharmaceutical Co., Ltd.
November 7, 2025