Legal Opinion Supplement (9) on the Initial Public Offering and Listing of Ciming Health Checkup Management Group Co., Ltd.
Beijing Tianda Law Firm (hereinafter referred to as "this firm") has been entrusted by Ciming Health Checkup Management Group Co., Ltd. (hereinafter referred to as "the company" or "the issuer") to act as the special legal advisor for the company's initial public offering of ordinary shares and listing (hereinafter referred to as "this issuance" or "this issuance and listing"). This firm now issues the following supplementary legal opinions based on the requirements of the China Securities Regulatory Commission (hereinafter referred to as "CSRC") and in reference to the "Guidelines for Information Disclosure for Initial Public Offerings and Listings of Catering and Other Life Service Companies (Trial)".
Part One: Response to Issues
Issue 9: Verification and Supplementary Disclosure by the Sponsor and Issuer's Lawyers Regarding Related Party Leasing Pricing Mechanisms and Property Rights Defects
- Related Party Leasing Situation The issuer leases properties from the actual controller Han Xiaohong for health checkup services based on market principles. The specific situation is as follows:
| Lessor | Lease | Lease Term | Area (㎡) | Annual Rent (10,000 RMB) |
|---|---|---|---|---|
| Han Xiaohong | Guoheng Jiyie Building A 201 | 2008.8.1-2014.7.31 | 549.10 | 59.30 |
| Han Xiaohong | Guoheng Jiyie Building B 201 | 2008.8.1-2014.7.31 | 210.41 | 22.72 |
| Total | 82.02 |
On July 21, 2008, the issuer signed two lease contracts with Han Xiaohong, leasing properties located at Guoheng Jiyie Building A 201 and B 201 in Chaoyang District, Beijing, with rents set at market prices of 49,400 RMB/month and 18,900 RMB/month, respectively, for a lease term of three years from August 1, 2008, to July 31, 2011. On July 28, 2011, the issuer renewed the lease contracts for the same properties, agreeing to continue at the same rental prices for another three years, from August 1, 2011, to July 31, 2014. This related party leasing has followed the issuer's related party transaction management system, with necessary approval procedures completed, and independent directors have expressed independent opinions, deeming the pricing fair and not detrimental to other shareholders or the issuer's interests.
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Pricing and Adjustment of Related Party Leasing The issuer's related party leasing prices are based on market prices, referencing rental prices of similar properties in the same building and surrounding areas. The average annual leasing cost during the reporting period was 820,200 RMB/year for a three-year lease term. Following approval from the issuer's first board of directors, the issuer and Han Xiaohong signed two supplementary lease agreements stipulating that the issuer's administrative department would annually survey rental prices of similar properties in the area. If the survey indicates a deviation of over 10% from the contractually agreed rental prices, the issuer will submit the leasing price for board review. If the board finds the current rental standard deviates from market prices, the issuer has the right to request Han Xiaohong to adjust the rent according to the board's determined market price, which must be negotiated within one month.
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Causes of Property Rights Defects and Subsequent Arrangements As of the date of this supplementary opinion, five leased properties used by three of the issuer's clinics have not obtained property ownership certificates, including properties leased by the issuer at Beijing Yuetan Building and two properties at Guoheng Jiyie Building (A 201 and B 201), as well as two properties at No. 323 Central Road, Gulou District, Nanjing, leased by Nanjing Ciming. The causes of property rights defects and subsequent arrangements are as follows: