Management System for Preventing the Occupation of Funds by Controlling Shareholders and Related Parties

Chapter 1 General Principles

Article 1

To establish a long-term mechanism to prevent controlling shareholders, actual controllers, and other related parties from occupying the funds of Zhejiang Bofei Electric Co., Ltd. (hereinafter referred to as "the Company"), and to eliminate such behaviors, this system is formulated in accordance with the "Company Law of the People's Republic of China," "Securities Law of the People's Republic of China," "Regulatory Requirements for Fund Transactions and External Guarantees of Listed Companies," "Shenzhen Stock Exchange Listing Rules," "Self-Regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange," and the Company's Articles of Association, as well as relevant national laws, regulations, and normative documents.

Article 2

Occupying funds includes operational and non-operational fund occupation. Operational fund occupation refers to funds occupied through related transactions in procurement, sales, and other production and operational activities by controlling shareholders, actual controllers, and other related parties. Non-operational fund occupation refers to funds advanced for wages, benefits, insurance, advertising, and other expenses for controlling shareholders, actual controllers, and other related parties, as well as funds lent directly or indirectly to them, and other funds used without the provision of goods and services.

Chapter 2 Principles for Preventing Fund Occupation by Controlling Shareholders and Related Parties

Article 3

Controlling shareholders and actual controllers must ensure the financial independence of the Company and must not influence it through the occupation of Company funds. No funds may be occupied in operational transactions between the Company and controlling shareholders, actual controllers, and other related parties.

Article 4

The Company shall not provide funds directly or indirectly to controlling shareholders, actual controllers, and other related parties in the following ways:

1. Advancing wages, benefits, insurance, advertising costs, and other expenses for controlling shareholders, actual controllers, and other related parties;

2. Lending Company funds (including entrusted loans) to controlling shareholders, actual controllers, and other related parties, except when other shareholders of the Company’s subsidiaries provide funds proportionately;

3. Entrusting controlling shareholders, actual controllers, and other related parties to conduct investment activities;

4. Issuing commercial acceptance bills without a genuine transaction background to controlling shareholders, actual controllers, and other related parties, or providing funds in ways that lack commercial logic;

5. Repaying debts on behalf of controlling shareholders, actual controllers, and other related parties;

6. Other methods recognized by the China Securities Regulatory Commission.