Jiangsu Shentong Valve Co., Ltd. Related Transaction Decision-making System

Jiangsu Shentong Valve Co., Ltd.
decision-making system of related party transaction
(Revised at the third meeting of the sixth session of the Board of Directors)

Chapter I General Provisions
Article 1 In order to regulate the related party transactions of Jiangsu Shentong Valve Co., Ltd. (hereinafter referred to as "the Company"), protect the legitimate rights and interests of the Company, shareholders and creditors, and ensure the fairness of the Company's decision-making on related party transactions, according to the Company Law of the the People's Republic of China, the the People's Republic of China Securities Law and the Measures for the Administration of Information Disclosure of Listed Companies and other laws and regulations, departmental rules and normative documents, as well as the "Shenzhen Stock Exchange Stock Listing Rules" (hereinafter referred to as the "Listing Rules"), "Shenzhen Stock Exchange Listed Companies Self-Regulatory Guidelines No. 1-Standardized Operation of Listed Companies on the Main Board", "Shenzhen Stock Exchange Listed Companies Self-Regulatory Guidelines No. 7-Transactions and Related Party Transactions" and the relevant provisions of the national securities authority and the company's articles of association, formulate this system.
Chapter II Related Parties and Related Transactions
Article 2 Definition of related transactions: Related transactions refer to the transfer of resources or obligations between the Company or the Company's controlling subsidiaries and related persons (as defined in Article 3 below), including:
(I) purchase of assets;
(II) sale of assets;
(III) foreign investment (including entrusted financial management, investment in subsidiaries, etc.);
(IV) to provide financial assistance (including entrusted loans, etc.);
(V) to provide guarantees (including guarantees for controlling subsidiaries, etc.);
(VI) assets leased in or leased out;
The (VII) entrusts or is entrusted with the management of assets and businesses;
(VIII) of donated or donated assets;
(IX) claims or debt restructuring;
(X) transfer or transfer of research and development projects;
(11) signing a license agreement;
(xii) Waiver of rights (including waiver of the right of first refusal, right of first refusal to subscribe for capital contributions, etc.);
(13) Purchase of raw materials, fuel and power;
(14) selling products and commodities;
(15) Providing or accepting labor services;
(16) Entrusted or entrusted sales;
(17) Deposit and loan business;
(18) joint investment with related persons;
(19) Other matters that may result in the transfer of resources or obligations through agreement;
(20) Other matters that the CSRC and the stock exchange consider to be related transactions.
Article 3 Related persons include related legal persons (or other organizations) and related natural persons.
Article 4 A legal person under any of the following circumstances shall be regarded as an associated legal person of the Company:
(I) legal person or other organization that directly or indirectly controls the Company;
(II) a legal person or other organization directly or indirectly controlled by the legal person or other organization mentioned in the preceding paragraph, other than the Company and the Company's holding subsidiaries;
Legal persons or other organizations that are directly or indirectly controlled by the affiliated natural persons listed in Article 5 of the (III), or serve as directors (excluding independent directors of both parties) and senior management personnel, except for the company and the company's holding subsidiaries;
(IV) legal persons or other organizations holding more than 5% of the Company's shares and persons acting in concert with them;
(V) the China Securities Regulatory Commission, Shenzhen Stock Exchange or other legal persons or other organizations that the Company has a special relationship with the Company based on the principle of substance over form and may or have caused the Company to favor its interests.
Article 5 A person under any of the following circumstances shall be an associated natural person of the Company:
(I) individual shareholders who directly or indirectly hold more than 5% of the Company's shares;
(II) the directors, supervisors and senior management of the Company;
(III) the directors, supervisors and senior management of a legal person who directly or indirectly controls the Company;
(IV) close family members of the persons listed in paragraphs (I) and (II) of this article, including spouses, parents and parents of spouses, siblings and their spouses, children who have reached the age of 18 and their spouses, siblings of spouses and parents of children's spouses;
(V) the China Securities Regulatory Commission, Shenzhen Stock Exchange or other natural persons that the company has a special relationship with the company based on the principle of substance over form, which may cause the company to favor its interests.
Article 6 A legal person or a natural person under any of the following circumstances shall be regarded as an affiliate of the Company:
The (I) has one of the circumstances specified in Article 4 or Article 5 of this system after the agreement or arrangement takes effect or within the next 12 months due to the signing of an agreement or arrangement with the company or its affiliates;
(II) has been in one of the circumstances specified in Article 4 or Article 5 of this system in the past 12 months.
Article 7 The company's directors, supervisors, senior managers, shareholders with more than 5% shares and their concerted actions, and actual controllers shall promptly submit to the company's board of directors a list of the company's related persons and explanations of related relationships, and the company shall do a good job in registration Management work. The company shall fill in or update the list of related persons and related relationship information through the business management system of the website of the Shenzhen Stock Exchange in a timely manner.
Chapter III General Provisions on Related Transactions
Article 8 Any connected transaction of the Company shall comply with the following provisions:
A written agreement shall be signed for the (I) of connected transactions, and the signing of the agreement shall follow the principles of good faith, equality and voluntariness, and compensation for equal value. The content of the agreement shall be clear and specific, and the company shall disclose the conclusion, modification, termination and performance of the related transaction agreement in accordance with the relevant provisions of the CSRC;
(II) companies shall take effective measures to prevent related parties from monopolizing the company's procurement and sales business channels through related transactions, interfering with the company's operations, and harming the company's interests;
(III) related transaction activities should follow commercial principles, the price of related transactions should not deviate from the market independent third party prices or fees in principle, the company should fully disclose the pricing basis of related transactions;
If a related person of the (IV) enjoys the right to vote at the general meeting of shareholders, he shall, except in special circumstances, abstain from voting when voting on the related transaction at the general meeting of shareholders, and a director who has any interest in the related person shall abstain from voting when the board of directors votes on the related transaction;
(V) connected transactions that need to be submitted to the general meeting of shareholders for consideration shall be submitted to the board of directors for discussion after being approved by more than 1/2 of all independent directors, and before the independent directors vote, they may request the board of directors of the company to engage an intermediary to issue an independent financial adviser's report as the basis for their judgment;
The Board of Directors of a (VI) company may determine, based on objective criteria, whether the connected transaction is beneficial to the company and detrimental to the interests of the company and small and medium-sized shareholders, or at the request of an independent director, whether it is necessary to engage an intermediary to issue an independent financial advisor's report on the connected transaction;
When the board of directors of the (VII) considers major transactions, the directors shall understand the reasons for the transactions in detail, carefully assess the impact of the transactions on the company's financial status and long-term development, and pay special attention to whether there are non-related methods to cover up the essence of related transactions and damage The legitimate rights and interests of the company and small and medium shareholders;
(VIII) when the board of directors is deliberating related party transactions, the directors shall make clear judgments on the necessity, fairness, true intention and impact on the company of the related party transactions, pay special attention to the pricing policy and pricing basis of the transactions, including the fairness of the appraised value, the relationship between the transaction price of the subject matter of the transaction and the book value or appraised value, etc., and strictly abide by the related director avoidance system, preventing the use of connected transactions to regulate profits, convey benefits to connected persons and harm the legitimate rights and interests of the Company and minority shareholders;
If the transaction matters submitted by the (IX) to the general meeting of shareholders for consideration involve a large increase or decrease in the appraised value of the subject matter of the transaction or a large difference from the historical price, the company shall disclose in detail the reasons for the increase or decrease in value and the process of calculating the appraisal results. The Board of Directors of the Company shall express a clear opinion on the selection and appointment of the appraisal body, the independence of the appraisal body, and the reasonableness of the appraisal assumptions and conclusions. The independent directors shall express a clear opinion on the procedures for selecting the appraisal body, the competence of the appraisal body, the independence of the appraisal body, and the reasonableness of the appraisal assumptions and conclusions.
Article 9 When any related party has or knows that it will have an associated transaction with the company, it shall make a written report to the general meeting of shareholders or the board of directors, and shall directly submit it to the chairman of the company or be forwarded by the secretary of the board of directors. The report shall contain the following information:
(I) the fact, nature and extent of the related relationship or the draft related transaction agreement;
The (II) indicates that it will recuse itself from participating in any discussions and voting on the related transaction.
Article 10 When the Company signs a related transaction agreement with a related person, it shall comply with the following provisions:
(I) any individual may only sign an agreement on behalf of one party;
(II) affiliate shall not interfere in any way with the Company's commercial decisions regarding related transaction agreements.
Chapter IV Avoidance System
Article 11 When the Board of Directors of the Company considers matters relating to connected transactions, the connected directors shall abstain from voting and shall not exercise their voting rights on behalf of other directors. Such meeting of the Board of Directors may be held in the presence of a majority of the non-affiliated directors, and resolutions made at the meeting of the Board of Directors shall be approved by a majority of the non-affiliated directors. If the number of non-affiliated directors present on the board of directors is less than three, the company shall submit the transaction to the general meeting of shareholders for consideration.
The term "affiliated directors" as mentioned in the preceding paragraph includes the following directors or directors in any of the following circumstances:
(I) counterparties;
(II) work in the counterparty, 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;
The (III) has direct or indirect control of the counterparty;
Close family members of the (IV) counterparty or its direct or indirect controller (see the provisions of Article 5, paragraph (IV), of this system for specific scope);
Close family members of directors, supervisors and senior management of the (V) counterparty or its direct or indirect controller (for details, please refer to the provisions of Article 5, paragraph (IV), of this system);
(VI) persons whose independent business judgment may be affected for other reasons as determined by the CSRC, the Shenzhen Stock Exchange or the Company.
Article 12 When matters relating to connected transactions are considered at a general meeting of shareholders, the following shareholders shall abstain from voting and shall not exercise their voting rights on behalf of other shareholders:
(I) counterparties;
The (II) has direct or indirect control of the counterparty;
(III) directly or indirectly controlled by the counterparty;
The (IV) and the counterparty are directly or indirectly controlled by the same legal person (or other organization) or natural person;
(V) in the counterparty, or in the legal entity (or other organization) that can directly or indirectly control the counterparty, or in the legal entity (or other organization) directly or indirectly controlled by the counterparty;
Close family members of the (VI) counterparty and its direct and indirect controllers;
The voting rights of the (VII) are restricted or affected due to the existence of an unfulfilled equity transfer agreement or other agreement with the counterparty or its affiliates;
(VIII) legal or natural persons identified by the China Securities Regulatory Commission or the Shenzhen Stock Exchange that may cause the Company to favor its interests.
Chapter V Decision-making authority for related transactions.
Article 13 Where a transaction between a company and a related person meets one of the following criteria, the board of directors shall make a resolution and disclose it in a timely manner:
(I) transactions with related natural persons with a transaction amount of more than 300000 yuan;
(II) transactions with affiliated legal persons (or other organizations) with a transaction amount of more than 3 million yuan and accounting for more than 0.5 percent of the absolute value of the company's most recently audited net assets.
Article 14 Transactions with related natural persons with a transaction amount of less than 300000 yuan, transactions with related legal persons (or other organizations) with a transaction amount of less than 3 million yuan or accounting for less than 0.5 percent of the absolute value of the company's recently audited net assets shall be decided by the president of the company (except for those related transactions that are related to himself and his relatives).
Article 15 Transactions between the company and related parties with a transaction amount of more than 30 million yuan and accounting for more than 5% of the absolute value of the company's most recently audited net assets shall, in addition to timely disclosure, be subject to the provisions of the Shenzhen Stock Exchange Stock Listing Rules to hire an intermediary agency to evaluate or audit the subject matter of the transaction, and submit the transaction to the general meeting of shareholders for deliberation. For related transactions that need to be submitted to the general meeting of shareholders for approval, the company shall specifically state in the announcement: this transaction still needs to be approved by the general meeting of shareholders, and the related party who has an interest in the related transaction will give up the right to vote on the proposal at the general meeting of shareholders.
The company is exempt from audit or evaluation when it has any of the following transactions with related persons:
(I) the daily connected transactions stipulated in Article 21 of this System;
All parties, such as the (II) and related persons, make capital contributions in cash, and the proportion of each party's interest in the invested entity is determined in accordance with the proportion of capital contributions;
(III) other circumstances as prescribed by the Shenzhen Stock Exchange.
Article 16 The following transactions between the company and related parties shall perform the information disclosure obligations of related transactions and perform the review procedures in accordance with the regulations, and may apply to the Shenzhen Stock Exchange for exemption from submitting to the general meeting of shareholders for review in accordance with the provisions of Article 15 of this system:
(I) public bidding, public auction or listing for unspecified objects (excluding restricted methods such as invitation to bid), except where it is difficult to form a fair price for bidding, auction, etc;
(II) transactions in which the Company unilaterally receives benefits without payment of consideration or obligation, including gifts of cash assets, debt relief, etc;
The pricing of (III) connected transactions shall be stipulated by the State;
(IV) affiliates provide funds to the Company at an interest rate not higher than the quoted market rate for the loan, and the Company has no corresponding guarantee.
Article 17 The following transactions between the company and related parties may be exempted from performing relevant obligations, but the relevant obligations shall still be performed if the disclosure obligations and review procedures shall be performed for major transactions as stipulated in the Shenzhen Stock Exchange Stock Listing Rules:
(I) one party subscribes in cash for the other party's publicly issued shares and their derivatives, corporate bonds or corporate bonds, except that the objects of issuance determined in advance include related persons;
(II) party, as a member of the underwriting syndicate, underwrites the shares and their derivatives, corporate bonds or corporate bonds publicly issued by the other party;
(III) party receives dividends, bonuses or remuneration in accordance with the resolution of the general meeting of shareholders of the other party;
(IV) companies provide products and services to the associated natural persons specified in items (II) to (IV) of Article 5 of the System on the same trading conditions as those of unrelated persons;
(V) other circumstances recognized by the Shenzhen Stock Exchange.
Article 18 The company shall not provide financial assistance to related parties, but provide financial assistance to related participating companies (excluding entities controlled by the company's controlling shareholders and actual controllers), and other shareholders of the participating company shall provide financial assistance in proportion to their capital contributions. Except in the case of equal conditions.
Where the company provides financial assistance to the affiliated shareholding company specified in the previous paragraph, it shall, in addition to being approved by more than half of all non-affiliated directors, be approved by more than 2/3 of the non-affiliated directors present at the board meeting and submitted to the general meeting of shareholders for deliberation.
The term "affiliated shareholding company" as mentioned in this article refers to the affiliated legal person (or other organization) of the company in which the company participates and belongs to the company as stipulated in Article 4 of this system.
Article 19 Where the Company provides guarantees for related persons, it shall, in addition to being approved by a majority of all non-related directors, be approved by more than 2/3 of the non-related directors present at the meeting of the board of directors and make a resolution, which shall be submitted to the general meeting of shareholders for consideration. 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 20 If it is difficult to perform the review procedures and disclosure obligations for each investment transaction due to the transaction frequency and limitation requirements for entrusted financial management between the company and its related parties, the investment scope, investment amount and time limit may be reasonably estimated, and the amount shall be used as the calculation standard, and the provisions of Articles 13, 14 and 15 of this system shall apply.
The term of use of the relevant amount shall not exceed twelve months, and the amount of the transaction (including the relevant amount of reinvestment of the proceeds of the aforementioned investments) at any point in the term shall not exceed the investment amount.
Article 21 Where a company and its related parties have related transactions related to daily operations listed in items (11) to (15) of Article 2 of this system, they shall apply the following standards. The provisions of Articles 13, 14 and 15 of this system shall be disclosed and the review procedures shall be performed in a timely manner:
For the first daily connected transactions of the (I), the Company shall, in accordance with the transaction amount involved in the agreement, perform the review procedures and disclose them in a timely manner; if the agreement does not have a specific transaction amount, it shall be submitted to the general meeting of shareholders for consideration;
If the main terms of the agreement change significantly during the actual execution of the (II) or the agreement needs to be renewed at the end of the agreement, the consideration procedures shall be performed and timely disclosure shall be made in accordance with the transaction amount involved in the newly revised or renewed agreement;
(III) For a large number of daily related party transactions that occur each year, if it is difficult to submit each agreement to the board of directors or the general meeting of shareholders for review due to the need to frequently enter into new daily related party transaction agreements, the company may reasonably estimate the annual amount of daily related party transactions by category, perform review procedures and disclose in a timely manner; if the actual implementation exceeds the estimated amount, the excess amount shall prevail and timely perform review procedures and disclose;
If the term of the daily related transaction agreement signed between the (IV) company and the related party exceeds three years, the relevant review procedures shall be re-performed and disclosed every three years.
The company shall disclose the actual performance of daily related transactions in the annual report and semi-annual report.
Article 22 The provisions of Articles 13, 14 and 15 of this system shall be applied to the following related transactions of the company within twelve consecutive months in accordance with the principle of cumulative calculation:
(I) transactions with the same related person;
(II) transactions with different related persons with the same subject matter.
The same related person mentioned above includes other related persons who are controlled by the same entity or have an equity control relationship with each other.
Transactions or related transactions that the Company has disclosed but has not fulfilled the procedures for consideration at the general meeting of shareholders shall still be included in the cumulative calculation to determine the procedures to be fulfilled. If a company transaction or related transaction matters meet the disclosure standard due to the application of the cumulative calculation principle for twelve consecutive months, only the transaction or related transaction matters may be disclosed in accordance with the relevant requirements, and a brief description of the transactions or related transaction matters that have not met the disclosure standard in the previous period shall be made in the announcement. If the company's transaction or related transaction matters should be submitted to the general meeting of shareholders for deliberation due to the application of the principle of cumulative calculation for twelve consecutive months, only the transaction or related transaction matters may be submitted to the general meeting of shareholders for deliberation, and the announcement shall briefly explain the transactions or related transaction matters that have not fulfilled the deliberation procedures of the general meeting of shareholders in the previous period.
Article 23 The company shall disclose the relevant contents of related transactions according to the types of related transactions, including the counterparty, the subject matter of the transaction, the description of the related relationship of the parties to the transaction and the basic information of the related parties, the main contents of the transaction agreement, the pricing and basis of the transaction, the approval documents of relevant departments (if any), and the opinions of intermediary agencies (if applicable).
Chapter VI Supplementary Provisions
Article 24 The term "above" in this system includes the number; "above", "below" and "over" do not include the number.
Article 25 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 26 The Board of Directors of the Company shall be responsible for the interpretation and revision of this system.
Article 27 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