Jiangsu Shentong Valve Co., Ltd. External Guarantee System

Jiangsu Shentong Valve Co., Ltd.
external guarantee system
(Revised at the third meeting of the sixth session of the Board of Directors)

Chapter I General Provisions
Article 1 In order to protect the legitimate rights and interests of investors, regulate the external guarantee behavior of Jiangsu Shentong Valve Co., Ltd. (hereinafter referred to as the "Company"), effectively prevent the company's external guarantee risks, and ensure the safety of the company's assets, in accordance with the "the People's Republic of China Company Law", "the People's Republic of China Securities Law", "the People's Republic of China Civil Code", "Shenzhen Stock Exchange Stock Listing Rules", "Listed Company Supervision Guidelines No. 8-Regulatory Requirements for Listed Companies' Capital Exchanges and External Guarantees" And other laws, regulations, regulatory documents and relevant provisions of the company's articles of association, combined with the actual situation of the company, this system is specially formulated.
Article 2 The term "external guarantee" as mentioned in this system refers to the guarantee provided by the company for others, including the guarantee provided by the company to the holding subsidiary.
Article 3 The company's external guarantees are subject to unified management. No one has the right to sign contracts, agreements or other similar legal documents for external guarantees in the name of the company without the approval of the company's board of directors or the general meeting of shareholders.
Article 4 The directors and senior managers of the company shall be prudent and strictly control the debt risks arising from the guarantee, and shall bear joint and several liability for the losses arising from the violation or improper external guarantee in accordance with the law.
Article 5 The external guarantee of a company's holding or actual control subsidiary shall be regarded as an act of the company, and its external guarantee shall be subject to this system. The company's holding subsidiary shall promptly notify the company of its information disclosure obligations after its board of directors or general meeting of shareholders has made a resolution.
Article 6 The company's external guarantee shall follow the principles of legality, prudence, mutual benefit and safety, and strictly control the guarantee risk.
Article 7 When a company provides guarantees for persons other than wholly-owned subsidiaries, the guaranteed object shall provide counter-guarantees, unless otherwise decided by the board of directors or the general meeting of shareholders. The provider of the counter-guarantee shall have the actual bearing capacity.
Article 8 In the annual report, the independent directors of the Company shall make a special statement on the external guarantees that have not been fulfilled at the end of the reporting period and that occurred in the current period, and the implementation of the provisions of the regulatory guidelines for listed companies, and express their independent opinions.
Chapter II Examination of Objects of External Guarantees
Article 9 A company may provide guarantee for an entity with independent legal personality and one of the following conditions:
(I) mutual insurance units required by the company's business;
(II) units with which the company has important business relations;
(III) units with which the Company has a potentially significant business relationship;
(IV) the company's holding subsidiaries and other units with control relationships.
The above units must also have strong solvency and comply with the relevant provisions of this system.
Article 10 although it does not meet the conditions listed in Article 9 of this system, if the company deems it necessary to develop its business dealings and cooperative relations with the guarantor and the risk is relatively small, it may provide guarantee for it with the consent of more than 2/3 members of the board of directors of the company or after deliberation and approval by the general meeting of shareholders.
Article 11 Before the board of directors considers the provision of guarantees, the directors shall fully understand the operation and credit status of the guaranteed party, and carefully analyze the financial status, operating status and credit status of the guaranteed party.
The directors shall make a prudent judgment as to the compliance and reasonableness of the guarantee, the ability of the guaranteed party to repay the debt and the effectiveness of the counter-guarantee measures.
When the board of directors considers the guarantee proposal for the company's holding subsidiaries and participating companies, the directors shall focus on whether the shareholders of the holding subsidiaries and participating companies provide the same guarantee or counter-guarantee and other risk control measures in proportion to their capital contributions.
Article 12 The information on the credit status of an applicant for a guarantor shall at least include the following:
(I) the basic information of the enterprise, including the business license, a copy of the articles of association, the identity certificate of the legal representative, and relevant information reflecting the relationship with the company and other relationships;
(II) guarantee application, including but not limited to the guarantee method, term, amount, etc;
(III) audited financial reports and repayment capacity analysis for the past three years;
(IV) a copy of the main contract related to the loan;
(V) the conditions and relevant materials for applying for the guarantor to provide counter-guarantee;
Proof of (VI) the absence of potential and ongoing material litigation, arbitration or administrative penalties;
(VII) other important information.
Article 13 The person in charge of the handling shall investigate and verify the operating and financial status, project status, credit status and industry prospects of the applicant for the guarantor based on the basic information provided by the applicant for the guarantor, and submit the relevant information to the company's board of directors or shareholders meeting for approval in accordance with the contract approval procedures.
Article 14 The board of directors or the general meeting of shareholders of the company shall consider and vote on the submitted materials, and record the voting results. No guarantee shall be provided for any of the following circumstances or if the information provided is insufficient.
The investment of (I) funds does not comply with national laws and regulations or national industrial policies;
The (II) has false records or provided false information in the financial and accounting documents within the last three years;
The (III) company has guaranteed it, has overdue bank loans, defaulted on interest, etc., and has not repaid or cannot implement effective treatment measures by the time of this guarantee application;
The (IV)'s operating conditions have deteriorated, its reputation is poor, and there is no sign of improvement; there is a person who has been identified as a person who has broken his promise; there is a large amount of pending litigation;
The (V) fails to implement effective property for counter-security purposes, or provides but is not sufficient or reliable;
(VI) other circumstances where the Board of Directors deems that a guarantee cannot be provided.
Article 15 The counter-guarantee or other effective risk prevention measures provided by the applicant for guarantor must correspond to the amount of the guarantee. If the property for which an applicant for a guarantor sets up a counter-guarantee is property with restricted liquidity, such as prohibited by laws and regulations from circulation or non-transferable, or if there is no reliable open market, the guarantee shall be refused.
Article 16 Where a company provides guarantees for controlling shareholders, actual controllers and their associates, it shall require the other party to provide counter-guarantees.
Article 17 If a company provides guarantee for its holding subsidiary and shareholding company, other shareholders of the holding subsidiary and shareholding company shall provide risk control measures such as equal guarantee according to the proportion of capital contribution. If the shareholder fails to provide risk control measures such as equal guarantee to the company's holding subsidiary or shareholding company according to the proportion of capital contribution, the board of directors of the company shall disclose the main reasons, And on the basis of analyzing the operation and solvency of the guarantee object, fully explain whether the guarantee risk is controllable and whether it harms the interests of the company, etc. Any guarantee that is detrimental to the interests of the company and the majority of shareholders shall be refused.
Chapter III Procedures for Examination and Approval of External Guarantees
Article 18 the highest decision-making body of the company's external guarantee shall be the general meeting of shareholders of the company, and the board of directors shall exercise the decision-making power of external guarantee in accordance with the provisions of the articles of association on the examination and approval authority of the board of directors. If the approval authority of the board of directors is exceeded as stipulated in the articles of association, the board of directors shall propose a preliminary plan and submit it to the general meeting of shareholders for approval. The board of directors shall organize the management and implementation of the external guarantee matters approved by the general meeting of shareholders.
Article 19 for the guarantee matters within the scope of authority of the board of directors, in addition to the approval of more than half of all directors, it shall also be approved by more than 2/3 directors attending the board meeting.
Article 20 External guarantees that should be approved by the general meeting of shareholders must be approved by the board of directors before they can be submitted to the general meeting of shareholders for approval. External guarantees subject to the approval of the general meeting of shareholders, including but not limited to the following circumstances:
(I) a single guarantee in excess of 10% of the Company's most recent audited consolidated statement of net assets;
(II) any guarantee provided after the total amount of external guarantees of the Company and its subsidiaries reaches or exceeds 50% of the net assets of the Company's most recent audited consolidated statements;
(III) any guarantee provided after the total amount of external guarantees of the Company and its controlling subsidiaries reaches or exceeds 30% of the total assets of the Company's latest audited consolidated statement;
The guarantee provided by the (IV) for the guarantee object whose asset-liability ratio exceeds 70%;
(V) the amount of the company's guarantee in the last twelve months exceeds 30% of the company's latest audited total assets;
Guarantees provided by the (VI) to shareholders, actual controllers and their associates;
(VII) other guarantee situations stipulated in relevant laws, regulations and regulatory documents, Shenzhen Stock Exchange or the articles of association of the company.
When the general meeting of shareholders deliberates on the (V) guarantee matters of the preceding paragraph, it shall be approved by more than 2/3 of the voting rights held by the shareholders present at the meeting. When the general meeting of shareholders considers the guarantee proposal for shareholders, actual controllers and their related parties, the shareholders or the shareholders controlled by the actual controller shall not participate in the voting, and the voting shall be held by other shareholders present at the general meeting of shareholders. More than half of the voting rights passed.
In addition to the external guarantees listed in items (I) to (VII) above, which must be approved by the general meeting of shareholders, the board of directors shall exercise the decision-making power of external guarantees in accordance with the provisions of the Articles of Association on the approval authority of the board of directors for external guarantees.
Article 21 Where a company provides a guarantee for a related person, it shall, in addition to being approved by more than half of all non-related directors, be approved by more than 2/3 of the non-related directors present at the board meeting and make a resolution, and submit it to the general meeting of shareholders for deliberation. Where the company provides guarantee for the controlling shareholder, the actual controller and their associates, the controlling shareholder, the actual controller and their associates shall provide counter-guarantee.
If the company becomes a related party of the company as a result of the transaction, it shall perform the corresponding deliberation procedures and information disclosure obligations in respect of the surviving related guarantee at the same time as the transaction or related transaction is implemented.
If the board of directors or the general meeting of shareholders fails to consider and approve the related guarantee matters stipulated in the preceding paragraph, the parties to the transaction shall take effective measures such as early termination of the guarantee.
Article 22 If a company provides guarantees to its controlling subsidiaries, if there are a large number of guarantee agreements every year and it is difficult to submit each agreement to the board of directors or the general meeting of shareholders for deliberation, the company may estimate the total amount of new guarantees in the next 12 months for the two types of subsidiaries with asset-liability ratio of more than 70% and less than 70% in the latest financial statements, and submit them to the general meeting of shareholders for deliberation.
When the aforementioned guarantee matters actually occur, the company shall disclose them in a timely manner. The balance of the guarantee at any point in time shall not exceed the amount of the guarantee approved by the general meeting of shareholders.
Article 23 If the company provides guarantee to its joint venture or joint venture and meets the following conditions at the same time, if there are a large number of guarantee agreements every year, it is difficult to submit each agreement to the board of directors or the general meeting of shareholders for deliberation, the company may reasonably predict the specific objects to be guaranteed and the corresponding new guarantee amount in the next 12 months, and submit it to the general meeting of shareholders for deliberation:
(I) the guaranteed person is not a director, supervisor, senior manager, shareholder holding more than 5% of the shares, actual controller or legal person or other organization controlled by the company;
Each shareholder of the (II) guarantor provides risk control measures such as equal guarantee or counter-guarantee to it in proportion to its capital contribution.
When the aforementioned guarantee matters actually occur, the Company shall promptly disclose that the balance of the guarantee at any point in time shall not exceed the amount of the guarantee approved by the general meeting of shareholders.
Article 24 If a company makes an estimate of the amount of guarantee to its joint venture or joint venture and meets the following conditions, it may make a transfer of the amount of guarantee between its joint venture or joint venture, but the total amount of the transfer shall not exceed 50% of the total amount of the estimated guarantee:
(I) the amount of a single transfer from the transferred party does not exceed 10% of the company's most recent audited net assets;
(II) the guarantee object whose asset-liability ratio exceeds 70% at the time of the transfer, the guarantee amount can only be obtained from the guarantee object whose asset-liability ratio exceeds 70% (when the guarantee amount is considered by the general meeting of shareholders);
(III) at the time of the transfer, the transferred party does not have overdue liabilities, etc;
The shareholders of the (IV) transfer party shall provide the same guarantee or counter-guarantee and other risk control measures according to the proportion of capital contribution.
When the aforementioned transfers actually occur, the Company shall promptly disclose them.
Article 25 The Company may, if necessary, engage an external professional body to assess the risk of implementing external guarantees as a basis for decision-making by the Board of Directors or the general meeting of shareholders.
Article 26 The independent directors of the Company shall express their independent opinions when the Board of Directors considers matters relating to external guarantees, and may, if necessary, engage an accounting firm to verify the cumulative and current external guarantees of the Company. If any abnormality is found, it shall be reported to the board of directors and regulatory authorities in a timely manner and announced.
Article 27 A company's external guarantee must conclude a written guarantee contract and a counter-guarantee contract. The guarantee contract and the counter-guarantee contract shall have the contents required by the the People's Republic of China Guarantee Law, the the People's Republic of China Contract Law and other laws and regulations.
Article 28 A guarantee contract shall at least include the following contents:
(I) the type and amount of the principal claim secured;
(II) the time limit for the debtor to perform the debt;
the manner in which the guarantee is (III);
the scope of the (IV) guarantee;
(V) guarantee period;
(VI) other matters that the parties consider necessary to be agreed.
Article 29 When a guarantee contract is concluded, the responsible person must comprehensively and carefully examine the main contract, the guarantee contract and the counter-guarantee contract and the relevant contents. The other party shall be required to amend the provisions that violate laws, regulations, the Articles of Association, the relevant resolutions of the company's board of directors or the general meeting of shareholders, and the provisions that attach unreasonable obligations or unpredictable risks to the company. If the other party refuses to amend it, the company shall refuse to provide a guarantee for it and report to the board of directors or the general meeting of shareholders of the company.
Article 30 The legal representative of the company or other legally authorized personnel shall sign the guarantee contract on behalf of the company in accordance with the resolution of the board of directors or the general meeting of shareholders of the company. No one may sign a guarantee contract on behalf of the company without the approval and authorization of the general meeting of shareholders or the resolution of the board of directors of the company. The responsible person shall not exceed his authority to sign the guarantee contract or sign or seal in the main contract as a guarantor.
Article 31 A company may sign a mutual insurance agreement with an enterprise legal person that meets the conditions stipulated in this system. The responsible person shall promptly request the other party to truthfully provide relevant financial and accounting statements and other information that can reflect its solvency. If the guarantee conditions and procedures are not met, the company shall refuse to provide a guarantee for it, even if the other party provides a counter-guarantee.
Article 32 When accepting a counter-guarantee mortgage or counter-guarantee pledge, the financial department of the Company shall, in conjunction with the President of the Company, improve the relevant legal procedures, especially the simultaneous registration of mortgages or pledges.
Article 33 If the debt guaranteed by the company needs to be extended after maturity and needs to continue to be guaranteed by it, it shall be used as a new external guarantee and re-perform the guarantee approval procedures and information disclosure obligations.
Chapter IV Administration of External Guarantees
Article 34 External guarantees shall be handled by the financial department and assisted by the company's president's office.
Article 35 The main duties of the financial department of the Company are as follows:
(I) the credit investigation and evaluation of the guaranteed entity;
(II) specific formalities of guarantee;
After the external guarantee, the (III) shall do a good job in tracking, inspecting and supervising the guaranteed units;
(IV) conscientiously do a good job in the filing and management of documents related to the sponsored enterprises;
(V) timely and truthfully provide all the company's external guarantees to the company's auditors in accordance with regulations;
(VI) handle other matters related to the guarantee.
Article 36 In the process of external guarantee, the main responsibilities of the company office are as follows:
(I) cooperate with the financial department to do a good job in the credit investigation and evaluation of the guaranteed unit;
The (II) is responsible for drafting or legally reviewing all documents relating to guarantees;
The (III) is responsible for handling legal disputes related to external guarantees;
After the (IV) company assumes the guarantee responsibility, it is responsible for handling the recovery of the guaranteed unit;
(V) handle other matters related to the guarantee.
Article 37 when handling the loan guarantee business, the company shall submit to the banking financial institution the articles of association, the original resolution of the board of directors or the resolution of the general meeting of shareholders on the guarantee matter, and the disclosure information of the guarantee matter.
Article 38 The Company shall properly manage the guarantee contract and related original information, conduct timely clean-up and inspection, and regularly check with banks and other relevant institutions to ensure the completeness, accuracy and effectiveness of the archived information, and pay attention to the limitation period of the guarantee. In the process of contract management, once any abnormal contract that has not been approved by the board of directors or the general meeting of shareholders shall be reported to the board of directors and the board of supervisors in a timely manner.
Article 39 The Company shall assign special personnel to continuously pay attention to the situation of the guarantor, collect the financial information and audit report of the guarantor for the latest period, regularly analyze its financial situation and solvency, and pay attention to its production and operation, assets and liabilities, external guarantees, as well as separation and merger, changes in legal representatives, etc. If it is found that the business conditions of the guaranteed person have seriously deteriorated or major matters such as dissolution or division of the company occur, the responsible person shall report to the board of directors in a timely manner. The board of directors is obliged to take effective measures to minimize losses.
Upon maturity of the debt for which the guarantee is provided, the company shall urge the guarantor to meet its debt service obligations within a limited time. If the guarantor fails to perform its obligations on time, the company shall take necessary remedial measures in a timely manner.
Article 40 when the company provides guarantee for others, when the guaranteed person fails to perform the repayment obligation in time after the debt is due, or the guaranteed person goes bankrupt, liquidates, or the creditor claims that the company performs the guarantee obligation, the company's handling department shall timely understand the debt repayment situation of the guaranteed person, and prepare to start the counter guarantee recovery procedure after knowing it, At the same time, the secretary of the board of directors shall immediately report to the board of the company, immediately take recovery, review, disclosure and other relevant procedures.
Article 41 When the company finds evidence that the guaranteed person has lost or may lose the ability to perform the debt, it shall promptly take necessary measures to effectively control the risk; if it is found that the creditor and the debtor maliciously colluded to harm the company's interests, it shall immediately request confirmation The guarantee contract is invalid and other measures; if economic losses are caused by the guarantor's breach of contract, it shall promptly recover from the guarantor.
Article 42 The financial department and the company's office shall take effective measures based on other risks that may arise, propose corresponding handling methods, and submit them to the company's board of directors and board of supervisors according to the situation after being reviewed and approved by the leaders in charge.
Article 43 If a company, as a guarantor, has two or more guarantors for the same debt and agrees to bear the guarantee liability according to its share, it shall refuse to bear the guarantee liability beyond the agreed share of the company.
Article 44 After the people's court accepts the debtor's bankruptcy case, if the creditor fails to declare the claim, the person responsible for the handling, the financial department and the company's office shall request the company to participate in the distribution of the bankruptcy property and exercise the right of recovery in advance.
Chapter V Disclosure of External Guarantee Information
Article 45 The company shall earnestly perform its information disclosure obligations on external guarantees in accordance with the "Shenzhen Stock Exchange Stock Listing Rules", "Articles of Association", "Information Disclosure Management System" and other relevant provisions.
Article 46 any department and responsible person involved in the company's external guarantee shall have the responsibility to inform the Secretariat of the board of directors of the company of the external guarantee in a timely manner and provide the documents and materials required for information disclosure.
Article 47 The external guarantees approved by the company's board of directors or the general meeting of shareholders must be disclosed in a timely manner in the information disclosure newspapers designated by the China Securities Regulatory Commission. The content of the disclosure includes but is not limited to the resolutions of the board of directors or the general meeting of shareholders, and the company as of the information disclosure date. The total amount of external guarantees provided by its holding subsidiaries, and the total amount of guarantees provided by the company to the holding subsidiaries.
If the guarantor fails to meet its repayment obligations within fifteen trading days after the maturity of the debt, or if the guarantor goes bankrupt, liquidated or other circumstances that seriously affect its ability to repay, the company shall disclose them in a timely manner.
Article 48 The relevant departments of the company shall take necessary measures to control the information insiders to a minimum before the guarantee information is publicly disclosed in accordance with the law. Any person who knows the company's guarantee information in accordance with the law or illegally shall have the right to confidentiality until the date of public disclosure of the information in accordance with the law, otherwise he will bear the legal liability arising therefrom.
Article 49 The board of directors of a company shall establish a regular verification system to verify the company's guarantee behavior. If the company violates the guarantee, it shall promptly disclose it, and take reasonable and effective measures to remove or correct the violation of the guarantee, reduce the company's losses, safeguard the interests of the company and its shareholders, and hold the relevant personnel accountable.
Chapter VI Responsibilities of Responsible Persons
Article 50 The guarantee provided by the company shall be strictly implemented in accordance with this system. The board of directors of the company decides to punish the person responsible for the fault according to the loss of the company, the size of the risk and the seriousness of the circumstances.
Article 51 If the directors, president or other senior management personnel of a company fail to follow the procedures stipulated in this system to sign a guarantee contract without authorization, the parties shall be held accountable.
Article 52 If the controlling shareholder, the actual controller and their associates fail to repay the debt in a timely manner, resulting in the company assuming the liability for guarantee, the board of directors of the company shall promptly take protective measures such as recovery, litigation, property preservation, and ordering to provide guarantees to avoid or reduce losses, And hold the relevant personnel accountable.
Article 53 If the personnel of the company's handling department or other responsible persons violate the law or the provisions of this system and provide guarantees without authorization in disregard of risks and cause losses, they shall be liable for compensation.
Article 54 If the personnel of the company's handling department or other responsible persons neglect to perform their duties and cause losses to the company, they shall be given economic penalties or administrative sanctions according to the seriousness of the circumstances.
Article 55 Where the law stipulates that the guarantor is not required to bear the responsibility, and the personnel of the company's handling department or other responsible persons make the company bear the responsibility without authorization and cause losses, the company shall give it administrative sanctions and bear the liability for compensation.
Chapter VII Supplementary Provisions
Article 56 The term "above" and "below" in this system includes this number, and "over" does not include this number.
Article 57 Matters not covered in this system shall be implemented in accordance with relevant national laws, regulations, regulatory documents and relevant provisions of the company's articles of association. If this system is inconsistent with the relevant laws, regulations, normative documents and the relevant provisions of the company's articles of association, the relevant laws, regulations, normative documents and the company's articles of association shall prevail.
Article 58 The Board of Directors of the Company shall be responsible for the interpretation and revision of this System.
Article 59 This system shall be formally implemented from the date of adoption by the general meeting of shareholders of the company.

Board of Directors of Jiangsu Shentong Valve Co., Ltd.
October 26, 2022