ADAMA Ltd.
Related-Party Transactions Management Rules
Chapter I General Provisions
Article 1 These Management Rules of Related-Party Transactions (hereinafter
referred to as “the Rules”) are enacted pursuant to relevant provisions of the
Company Law of the People’s Republic of China, the Securities Law of the People’s
Republic of China, the Rules Governing the Listing of Shares of Shenzhen Stock
Exchange, the Self-regulatory Supervision Guidelines of Shenzhen Stock Exchange
for Listed Companies No. 1 – Standardized Operation of Main Board Listed
Companies and other applicable laws, administrative regulations, and the Articles of
Association of ADAMA Ltd. (hereinafter referred to as the “Articles of Association”),
with a view to standardizing the related-party transactions by ADAMA Ltd.
(hereinafter referred to as the “Company”), and fully safeguarding the legal interests
and rights of the Company and non-related shareholders, especially the minority
shareholders.
Article 2 All related-party transactions shall be conducted following the principles of
honesty, good faith, equality, voluntariness, justice, openness, and fairness, and shall
not harm the interests of the Company and non-related shareholders. The related
directors and shareholders, if applicable, should abstain from voting.
Article 3 The Company's department of securities and legal affairs shall make timely
information disclosure once it receives the relevant statistics and estimations of the
amount on the related-party transactions from the relevant department. The
Company's audit department is responsible for the post-event audit of the
implementation of related-party transactions.
Article 4 The Company shall refer to the Rules Governing the Listing of Shares of
Shenzhen Stock Exchange and other applicable regulations to form the list of its
related parties and update it in a timely manner. When the Company and its holding
subsidiaries are involved in trading activities, the relevant responsible persons should
be prudent in deciding whether it constitutes a related-party transaction. If it does, the
approval and reporting obligations shall be fulfilled within their respective duties.
Article 5 A written contract or agreement should be signed for related-party
transactions between the Company and related parties, specifying the rights,
obligations and legal responsibilities of both parties to the transaction.
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Article 6 The related-party transactions described in Chapter II of these Rules that
occur in the Company's holding subsidiary are deemed to be related-party transactions
that occur in the Company, and the provisions of these Rules shall apply.
Chapter II Definition of Related Parties and Related-party transactions
Article 7 Related parties of the Company refers to any related natural person and
related legal person (or other organizations).
Article 8 Any legal person (or other organizations) that satisfies one of the following
circumstances is recognized as a related legal person (or other organizations) of the
Company:
(1) any legal person (or other organizations) which directly or indirectly controls the
Company;
(2) any legal person (or other organizations) other than the Company and its holding
subsidiaries directly or indirectly controlled by the aforementioned legal person;
(3) any legal person (or other organizations) or any party acting in concert, which
directly or indirectly holds five percent (5%) or more of the shares of the Company;
(4) any legal person (or other organizations) other than the Company and its holding
subsidiaries which is controlled directly or indirectly by a related natural person of the
Company, or the related natural person holds the positions of the director of the board
(excluding independent directors of both parties) and senior executive.
Article 9 The Company and the legal person (or other organizations) listed in
Article 8 (2) which are controlled by the same state-owned asset management entity
and form the situation described in Article 8 (2) do not constitute related parties,
unless the legal representative, the chairman of the board, the general manager or
more than half of the board directors of the legal person (or other organizations) are
also directors, supervisors or senior management of the Company.
Article 10 Any natural person that satisfies one of the following circumstances is
recognized as a related natural person of the Company:
(1) Any natural person who holds five percent or more of the shares of the
Company;
(2) Any director of the board, supervisor and senior executive;
(3) Any director of the board, supervisor and senior executive of any legal
person(or other organizations) which directly or indirectly controls the
Company;
(4) close family members of each of the related persons as listed in the item (1)
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and (2) of this Article.
Article 11 A legal person(or other organizations) or natural person that falls under
any of the circumstances set out in the Articles 9 or 10 within twelve months before
the date of a transaction or within the next twelve months under arrangements of
relevant agreements, shall be deemed as a related party of the Company.
The CSRC, Shenzhen Stock Exchange or the Company, based on the principle of
substance over form, recognizes other natural or legal persons (or other organizations)
who have a special relationship with the listed company, or who may cause or have
caused the listed company to favor its interests as related persons of the listed
company.
Article 12 The Company’s directors, supervisors, senior executives, shareholders
holding five percent or more of the shares, persons acting in concert and actual
controllers shall promptly inform the list of related persons of the Company and the
elaboration of the related relationship to enable the Company to keep proper
management of the records.
Article 13 Related-party transactions referred to in these Rules refer to matters that
may result in the transfer of resources or obligations between the Company or its
subsidiaries and the Company's related parties, including:
(1) Purchase or sale of assets;
(2) Investment (including entrusted financial management and investment in
subsidiaries, etc.);
(3) Provide financial assistance(including entrusted loans, etc.);
(4) Provide guarantees;
(5) Lease in or lease out assets;
(6) Entrusting or entrusted with the management of assets and business;
(7) Donate or receive assets;
(8) Creditor's rights or debt restructuring;
(9) Transferring or assigned research and development projects;
(10) Sign license agreements;
(11) Waiver of rights (including waiver of right of first refusal, prioritized subscription
right of capital contribution, etc.)
(12) Purchase of raw materials, fuels and power;
(13) Selling products and commodities;
(14) Providing or accepting labor services;
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(15) Entrusting or being entrusted sales;
(16) Deposits and loans;
(17) Joint investment with related parties;
(18) Other matters that may result in the transfer of resources or obligations.
Chapter III Decision-making and Disclosure Procedures
of Related-party transactions
Article 14 The relevant departments of the Company and its subsidiaries should
carefully review the related parties at least every quarter, update the list of related
parties, and prudently decide whether a transaction constitutes a related-party
transaction. The approval and reporting obligations shall be fulfilled within the
respective departments’ duties. When the Company and its related parties conduct
related-party transactions listed in Article 17 of these Rules that need to be reviewed
by the board of directors or the general meeting of shareholders, the board of directors
shall, in accordance with the Rules Governing the Listing of Shares of Shenzhen Stock
Exchange, submit an interim report to the Shenzhen Stock Exchange for timely
disclosure after the relevant resolution is made by the board of directors or the general
meeting of shareholders.
Article 15 The Company’s disclosed contents in the announcement on the
related-party transaction shall be compliant with the Rules Governing the Listing of
Shares of Shenzhen Stock Exchange.
Article 16 When reviewing related-party transactions, the Company shall
investigate and understand in details the true status of the transaction target and the
counterparty’s integrity records, credit status, contract performance capabilities, etc.,
and prudently evaluate the necessity and rationality of the relevant transaction, the
adequacy of the pricing basis, the fairness of the transaction price and the impact on
the Company. The special attention should be paid to whether there are problems such
as unclear ownership of the transaction object, performance of the counterparty and
transaction price, etc.
Article 17 Decision-making authority of the Company’s related-party transactions are
as follows:
(1) A related-party transaction exceeding RMB 300,000 between the Company and
related natural person shall be reviewed and approved by the board of directors of the
Company and shall be disclosed in a timely manner.
(2) A related-party transaction exceeding RMB 3 million yuan and accounting for
more than 0.5% of the latest audited absolute value of the Company's net assets
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between the Company and related legal person (or other organizations) shall be
reviewed and approved by the board of directors of the Company, and shall be
disclosed in a timely manner.
(3) A related-party transaction (except for guarantees provided by the Company)
exceeding RMB 30 million yuan accounting for more than 5% of the latest audited
absolute value of the Company's net assets between the Company and related party
shall be reviewed and approved by the general meeting of shareholders of the
Company, which shall be disclosed in time.
Article 18 Significant related-party transactions [referring to the related transaction
exceeding RMB 3 million yuan and accounting for more than 0.5% of the latest
audited absolute value of the Company's net assets between the Company and related
legal person (or other organizations), a related transaction exceeding RMB 300,000
yuan between the Company and related natural person, and the related transaction of
providing guarantees for related parties by the Company] shall be approved by the
independent directors and submitted to the board of directors for discussion, and the
independent directors shall issue independent opinions.
Article 19 If the subject matter of any related-party transactions between the
Company and related parties (except for the provision of guarantees) with an amount
of more than 30 million yuan and accounting for more than 5% of the absolute value
of the Company's latest audited net assets, is equity, the Company should disclose an
audited financial and accounting report on the target asset for the latest year and the
latest period with an unqualified opinion issued by the accounting firm, and the audit
base date shall not be more than six months from the date of the shareholders' meeting
to review the transaction; if the transaction subject is other assets other than equity,
the Company shall disclose an evaluation report on the target asset issued by the asset
appraiser with the evaluation base date no more than one year from the date of the
shareholders' meeting to review the transaction.
When the Company has any of the following transactions with its related party, it can
be exempted from auditing or evaluation:
(1) The related-party transactions are related to the Company’s daily operations;
(2) All parties including the related parties contribute capital in cash, and the
proportion of each party's equity in the invested entity is determined according to the
proportion of their capital contribution;
(3) Other circumstances stipulated by the Shenzhen Stock Exchange.
Article 20 The guarantee provided by the Company to related parties shall not only
be reviewed and approved by more than half of all non-related directors of the board,
but also be reviewed and approved by more than two-thirds of the non-related
directors present at the board meeting, and a resolution shall be made and submitted
to the general meeting of shareholders for deliberation. Where the Company provides
guarantees for the controlling shareholder, actual controller and its affiliates, the
controlling shareholder, actual controller and its affiliates shall provide
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counter-guarantee. The guarantee provided by the Company for shareholders holding
less than 5% of its shares shall be executed with reference to the provisions of the
preceding paragraph, and the relevant shareholders shall abstain from voting at the
general meeting of shareholders.
Article 21 When the board of directors of the Company reviews the related-party
transactions, the related directors shall abstain from voting and shall not exercise
voting rights on behalf of other directors. The meeting of the board of directors shall
be held in the presence of more than half of the non-affiliated directors, and the
resolutions made at the meeting of the board of directors shall be approved by more
than half of the non-affiliated directors. The Company shall submit the transaction to
the general meeting of shareholders for deliberation if the number of non-affiliated
directors attending the board of directors is less than three.
The affiliated directors mentioned in the preceding paragraph shall include the
directors with any of the following circumstances:
(1) The counterparty;
(2) Holding a post in the counterparty, or in the legal person or organization that can
directly or indirectly control the counterparty, or in the legal person or organization
that is directly or indirectly controlled by the counterparty;
(3) Having the right of direct or indirect control over the counterparty;
(4) Close family members of the counterparty or its direct or indirect controller;
(5) Close family members of directors, supervisors and officers of the counterparty or
its direct or indirect controller;
(6) Directors of the board whose independent business judgment may be affected for
other reasons as determined by the CSRC, the Shenzhen Stock Exchange or the
Company.
Article 22 When the Company's general meeting of shareholders considers related
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 those who are
in any of the following situations:
(1) The counterparty;
(2) The direct or indirect controller of the counterparty;
(3) Directly or indirectly controlled by the counterparty;
(4) Under the direct or indirect common control of the same legal person(or other
organizations) or natural person;
(5) Holding a post in the counterparty, or in a legal person (or other organization) that
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can directly or indirectly control the counterparty, or in a legal person (or other
organization) directly or indirectly controlled by the counterparty;
(6) Close family members of the counterparty and its direct and indirect controllers;
(7) Shareholders whose voting rights are restricted or affected due to the existence of
any outstanding equity transfer agreement or other agreements with the counterparty
or its related person;
(8) Shareholders deemed by the CSRC or the Shenzhen Stock Exchange as those
who may cause the Company to act in favor of its interests.
Article 23 The related-party transactions related to daily operations listed in the
items 12 to 16 of Article 13 between the Company and related parties shall be
disclosed and reviewed in a timely manner and in accordance with the following
provisions:
(1) For the routine related-party transactions that occur for the first time, the Company
shall perform deliberation procedures according to the transaction amount involved in
the agreement and disclose it in a timely manner; if there is no specific transaction
amount in the agreement, it shall be submitted to the general meeting of shareholders
for deliberation.
(2) For routine related-party transactions that occur many times each year, the
Company may reasonably estimate the annual amount for those transactions by
categories, perform the deliberation procedure and disclose it in a timely manner; if
the actual amount exceeds the estimated number during the implementation process,
the deliberation procedure shall be performed and disclosed in a timely manner based
on the excess amount.
(3) If there is any major change to the main terms of the agreement during the actual
implementation or the agreement needs to be renewed upon expiration, the amount of
transactions involved in the newly revised or renewed agreement shall prevail, and the
deliberation procedures shall be performed and disclosed in a timely manner;
(4) If the term of the routine related-party transaction agreement signed by the
Company and the related party exceeds three years, the Company shall perform the
review procedures and disclosure obligations every three years.
The Company shall disclose the actual performance of routine related-party
transactions in its annual report and interim report in a classified summary.
Article 24 If the related-party transactions of the Company involve the "Provision
of Financial Assistance" and "Entrusted Financial Management" and other matters
specified in Article 13, the amount incurred shall be taken as the calculation standard,
and the cumulative calculation shall be made within 12 consecutive months according
to the type of transactions.
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Article 25 The principle of cumulative calculation shall be followed in the case of the
following related-party transactions related to the subject matter of transactions
occurred within 12 consecutive months in the Company.
(1) Transactions with the same related party;
(2) Transactions related to the same target with different related parties.
The above-mentioned 'same related party' shall also include other related parties that
are under the common control of an ultimate controller, or have a shareholding
relationship with the related party.
Chapter IV Pricing of Related-party transactions
Article 26 The pricing of the related-party transactions of the Company shall be fair
by reference to the following principles:
(1) where the transaction is subject to a price set by the government, such price shall
apply;
(2) where there is a government guidance price for such a transaction, the transaction
price may be reasonably set within the indicative range of the government guidance
price;
(3) except the transaction of which there is a price set by the government or a
government guidance price, if there is market price or charge standard of a
comparable independent third party for the transaction, the transaction price may be
set by first reference to such price or standard;
(4) where there is no market price of a comparable independent third party for the
related transaction, the transaction price may be set by reference to the transacting
price of a non-related transaction between the related party and a third party
independent of the related party;
(5) where there is neither a market price of an independent third party nor a price of
non-related transaction for reference, the price may be set based on an appropriate
composite price comprised of reasonable cost and expenses and reasonable profit.
Chapter V Exemptions from Disclosure and Decision-making Procedure of
Related-party transactions
Article 27 For the following transactions between the Company and its related
parties, it shall perform the obligation of information disclosure of related party
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transactions in accordance with these Rules and the review procedures of the
Exchange’s regulations on major transactions, and may apply to the Exchange for
exemption from submitting it to the general meeting of shareholders for deliberation
according to the review procedures for related-party transactions:
(1) Public bidding, public auction or listed sale to unspecified objects (excluding
restricted methods such as bid via invitation), except the cases in which it is difficult
to form a fair price through bidding or auction;
(2) Transactions in which the Company unilaterally obtains benefits without paying
any consideration or attaching any obligations, including donated cash assets, debt
relief, etc.;
(3) The pricing of related-party transactions is stipulated by the national authority;
(4) The related party provides funds to the Company with the interest rate no higher
than Loan Prime Rate, and the Company has no corresponding guarantee.
Article 28 The following transactions between the Company and its affiliates may be
exempted from fulfilling the relevant obligations in accordance with these Rules, but
the relevant obligations should still be fulfilled if the disclosure obligations and
review procedures for other major transactions as stipulated by the Exchange are
required:
(1) One party subscribes in cash the stocks and their derivatives, corporate bonds or
enterprise bonds publicly issued by the other party, except for those whose issue
objects are determined in advance including related parties;
(2) One party, as a member of the underwriter syndicate, underwrites the publicly
issued stocks and derivatives, corporate bonds or enterprise bonds of the other party;
(3) One party receives dividends, bonuses or remuneration in accordance with the
resolution of the other party's general meeting of shareholders;
(4) The Company provides products and services to the related natural persons
specified in Items (2) to (4) of Article 10 under the same transaction conditions as
non-related persons;
(5) Other circumstances determined by the Shenzhen Stock Exchange
Article 29 The related-party transaction information that the Company intends to
disclose is recognized as national secrets in accordance with the law, or the timely
disclosure and performance of relevant obligations that may endanger national
security, damage the Company’s interests, or lead to violations of laws and
regulations, may be exempted from disclosure or performance of relevant obligations
in accordance with these Rules.
The disclosure or performance of relevant obligations in accordance with these Rules
for related-party transaction information that the Company intends to disclose belongs
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to trade secrets, etc., or the timely disclosure or performance of relevant obligations
that may lead to unfair competition, damage to the Company's interests, or violation
of laws and regulations, may be suspended or exempted.
Chapter VI Supervision and Accountability
Article 30 The audit department of the Company shall, in accordance with relevant
audit regulations, conduct audits in a timely manner after the occurrence of material
related-party transactions.
Article 31 The audit department of the Company shall conduct an audit on the
implementation of related-party transactions that have occurred during the reporting
period at least once a year, and report the review to the audit committee.
Article 32 If the Company's audit committee has doubts about related-party
transactions, it may conduct in-depth investigations into related matters, and the
Company and relevant departments shall cooperate. If an abnormal related-party
transaction is found after investigation, the audit committee shall immediately report
to the board of directors.
Article 33 The board of supervisors of the Company may check the audit report of the
audit department on related-party transactions, and if it finds abnormalities, it may
request the audit department or relevant business departments to explain.
Article 34 The directors, supervisors and senior managers of the Company are
obliged to pay attention to whether the Company's interests are jeopardized by related
parties. The independent directors and supervisors of the Company should regularly
check the capital exchanges between the Company and related parties to understand
whether the Company is improperly used by major shareholders and their related
parties or transfer the Company's funds, assets and other resources. If abnormalities
are found, they should be submitted in a timely manner to the Company's board of
directors which shall take corresponding measures.
Article 35 In case of losses or possible losses caused to the Company due to the
improperly usage or transfer of the Company's funds, assets or other resources by the
related parties, the board of directors of the Company shall timely take protective
measures such as litigation and property preservation to avoid or reduce the losses.
Chapter VII Miscellaneous
Article 36 Terms such as “exceed(s)”and “lower than” used in these Rules shall not
include the given figures.
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Article 37 “Timely” as used in these Rules means within two trading days from the
starting date or the time of disclosure.
Article 38 Matters not covered by these Rules shall be implemented in accordance
with relevant national securities laws and regulations, the " the Rules Governing the
Listing of Shares of Shenzhen Stock Exchange " and the "Articles of Association".
Article 39 The board of directors of the Company is responsible for the interpretation
of these Rules.
Article 40 These Rules will take effect after being reviewed and approved by the
Company's general meeting of shareholders.
Board of Directors of ADAMA Ltd.
March 29, 2022
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