TITLE_EN:制度 for Preventing the Occupation of Funds by Major Shareholders and Related Parties SUMMARY_EN:This system establishes a long-term mechanism to prevent major shareholders and related parties from occupying the company's funds. It outlines prohibited actions, including various forms of fund lending and guarantees, and details the responsibilities of the board of directors and senior management in safeguarding company assets. Penalties are stipulated for violations, aiming to protect the company and public shareholders' interests. BODY_EN:## Chapter 1 General Provisions Article 1 To establish a long-term mechanism to prevent major shareholders and related parties from occupying the funds of Zhejiang Youfu High-Tech Fiber Co., Ltd. (hereinafter referred to as the "Company"), and to eliminate the occurrence of fund occupation by major shareholders and related parties, this system is formulated in accordance with the "Company Law of the People's Republic of China" (hereinafter referred to as the "Company Law"), other laws, regulations, and normative documents, as well as the "Articles of Association of Zhejiang Youfu High-Tech Fiber Co., Ltd." (hereinafter referred to as the "Articles of Association"). Article 2 The Company's directors and senior management have a legal obligation to maintain the safety of the Company's funds. Article 3 Fund occupation as referred to in this system includes, but is not limited to, the following methods: (1) Occupying funds for operational purposes, which refers to fund occupation generated by related party transactions in procurement, sales, and other production and operation activities by major shareholders and related parties; (2) Occupying funds for non-operational purposes, which refers to the Company advancing wages, benefits, insurance, advertising, and other expenses for major shareholders and related parties, or lending funds to major shareholders and related parties on a paid or unpaid basis, directly or indirectly, or acting as guarantor for debts, or providing funds for the use of major shareholders and their affiliated enterprises without consideration of goods and services.
Chapter 2 Control Provisions
Article 4 In the process of fund transactions with major shareholders and related parties, the Company shall strictly restrict the occupation of company funds by major shareholders and related parties. In the process of fund transactions such as advance payments for procurement, the payment amount shall not be higher than the industry practice of other companies in the same industry. Article 5 The Company shall prevent major shareholders and related parties from occupying the Company's funds and resources in any way, directly or indirectly. The Company shall not advance wages, benefits, insurance, advertising, or other period expenses for major shareholders and related parties, nor shall it bear costs and other expenses. Article 6 In addition to the provisions of Article 5 of this chapter, the Company shall not provide funds directly or indirectly to major shareholders and related parties in the following ways: (1) Lending company funds to major shareholders and related parties on a paid or unpaid basis; (2) Providing entrusted loans to related parties through banks or non-bank financial institutions; (3) Entrusting major shareholders and other related parties to conduct investment activities; (4) Issuing commercial acceptance bills to major shareholders and other related parties without genuine transaction background; (5) Repaying debts for major shareholders and other related parties; (6) Other methods identified by the China Securities Regulatory Commission. Article 7 When the Company engages in related party transactions with major shareholders and related parties in procurement, sales, and other production and operation activities, it shall comply with the relevant provisions of the Articles of Association and the "Rules for Related Party Transactions" regarding related party transactions. Article 8 Guarantees provided by the Company to shareholders, actual controllers, and their related parties shall be submitted to the shareholders' meeting for deliberation and approval. Article 9 The Company shall strictly prevent the occupation of non-operational funds by major shareholders and their affiliated enterprises, and shall continuously establish a long-term mechanism to prevent the occupation of non-operational funds by major shareholders. The Company's finance department and audit department shall regularly inspect the non-operational fund transactions between the Company and its subsidiaries and major shareholders and their affiliated enterprises, and prevent the occurrence of non-operational fund occupation by major shareholders and their affiliated enterprises. At the end of each quarter, the finance department shall report to the management and the board of directors on the fund occupation by major shareholders and related parties and the Company's external guarantees. In daily operations, the finance department shall pay close attention to fund transactions between major shareholders and their actual controllers, related parties, and the Company, and report any abnormalities in a timely manner.