The company and all members of the board guarantee that the content of this announcement is true, accurate, and complete, with no false records, misleading statements, or significant omissions.
Changjiang Runfa Health Industry Co., Ltd. (hereinafter referred to as "the Company") received the Shenzhen Stock Exchange's "Inquiry Letter Regarding the 2023 Annual Report of Changjiang Runfa Health Industry Co., Ltd." (Company Department Annual Report Inquiry Letter [2024] No. 85) on May 7, 2024. The board of directors attaches great importance to this and actively organizes relevant departments and auditing institutions to verify the issues raised in the inquiry letter one by one. The annual audit accountant has also expressed opinions on the relevant issues, and the responses are as follows:
1. Regarding Fund Occupation, Illegal Guarantees, and Follow-up Solutions
(1) Specific circumstances of fund occupation since 2023
The Company and its subsidiary Changjiang Runfa (Zhangjiagang) Machinery Co., Ltd. (hereinafter referred to as "Changjiang Runfa Machinery") and Changjiang Runfa (Zhangjiagang) Pugang Co., Ltd. (hereinafter referred to as "Changjiang Runfa Pugang") transferred funds to the controlling shareholder Changjiang Runfa Group Co., Ltd. (hereinafter referred to as "Changjiang Runfa Group") in the form of prepaid procurement funds, which were returned at the end of the period, resulting in non-operating fund occupation during the period. Funds were also transferred to Changjiang Runfa Group through commercial acceptance bills issued to suppliers, forming non-operating fund occupation. As of the date of the annual audit report, the balance of non-operating fund occupation by the Company's controlling shareholder and related parties was 3.625 billion yuan. Currently, the controlling shareholder has not reached an agreement with the Company regarding the payment of relevant interest. The Company will urge the controlling shareholder and related parties to promptly agree on interest confirmation and repayment matters.
On April 29, 2024, the Company and its controlling shareholder Changjiang Runfa Group received the "Notice of Case Filing" issued by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure laws and regulations. The CSRC decided to file a case against the Company and Changjiang Runfa Group. Currently, the Company and its controlling shareholder are actively cooperating with the CSRC's case inspection. The results of the inspection regarding the specific circumstances of the controlling shareholder's non-operating fund occupation, the decision-making process, and the responsible personnel will be strictly disclosed in accordance with relevant information disclosure systems.
(2) Internal control system for external guarantees and seal management
The Company has established an "External Guarantee Management System," which has been reviewed and approved by the shareholders' meeting. According to Article 10 of the Company's "External Guarantee Management System," "The Company shall submit guarantees provided to shareholders, actual controllers, and their related parties for review and approval by the shareholders' meeting after being approved by the board of directors." At the same time, the Company and its subsidiaries have signed a "Seal Management Responsibility Letter," and the use of seals is subject to a declaration process, requiring the completion of a "Seal Application Form" and "Contract Approval Form," which must be approved by authorized approvers before use.