Chapter 1 General Principles
Article 1
To strengthen the management of subsidiaries of Zhejiang Kaineng Special Materials Co., Ltd. (hereinafter referred to as "the Company" or "the Listed Company"), ensure that subsidiaries operate in a standardized, efficient, and orderly manner, promote their healthy development, improve the overall asset operation quality of the Company, and protect the legitimate rights and interests of the Company and its investors, this system is formulated in accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, and other laws and regulations, normative documents, and the relevant provisions of the Articles of Association of Zhejiang Kaineng Special Materials Co., Ltd. (hereinafter referred to as "the Articles of Association"), combined with the actual situation of the Company.
Article 2
The term "subsidiary" as used in this regulation refers to "holding subsidiaries" and "investee companies." A "holding subsidiary" is defined as a company in which the Company holds more than 50% of the shares, or although holding less than 50% of the shares, can determine the composition of more than half of its board of directors, or can actually control the company through agreements or other arrangements. An "investee company" refers to a company in which the Company holds shares but does not have actual control, excluding the aforementioned "holding subsidiaries."
Article 3
The Company mainly exercises shareholder rights over holding subsidiaries through two avenues: appointing executive directors, directors, and senior management personnel (hereinafter referred to as "delegated personnel") and daily supervision. The Company is obligated to guide, supervise, and provide relevant services to holding subsidiaries. The Company may exercise shareholder rights over investee companies by appointing or recommending directors (hereinafter referred to as "delegated personnel"). The Board Secretary's Office shall designate a specific person to liaise with delegated personnel and handle matters related to holding and investee companies. Holding subsidiaries shall designate a specific person to liaise with the Board Secretary's Office, responsible for applying for and reporting matters related to subsidiaries.
Article 4
Each functional department of the Company shall guide, manage, and supervise the organization, finance, operations, investment decisions, major decision-making, internal audit, administration, personnel, and performance evaluation of holding subsidiaries in accordance with the Company's internal control system:
- The Company's finance department is primarily responsible for planning and supervising the financial work of holding subsidiaries and collecting and integrating financial information from subsidiaries.
- The Board Secretary's Office is mainly responsible for the information disclosure of major matters of holding subsidiaries and supervising their governance. For investee companies, the Board Secretary's Office and delegated personnel are jointly responsible for daily communication and compliance advice.
- Other functional departments of the Company may strengthen vertical guidance over holding subsidiaries within their scope of responsibilities.
Article 5
Holding subsidiaries shall comply with the provisions of this system and, in conjunction with other internal control systems of the Company, formulate specific implementation rules based on their operational characteristics and environmental conditions to ensure the implementation and execution of this system. Relevant functional departments of the Company shall manage, guide, and supervise holding subsidiaries in a timely and effective manner in accordance with this system and relevant internal control systems. Investee companies shall cooperate with the Company and delegated personnel in accordance with relevant laws and regulations and the provisions of this system to protect shareholder rights.
Chapter 2 Organizational Management
Article 6
The personnel delegated or recommended by the Company to holding subsidiaries and investee companies shall be decided by the Company's general manager's office meeting.