Chapter 1 General Principles
Article 1
To strengthen the capital control and management of Huapengfei Co., Ltd. (hereinafter referred to as "the Company"), improve the internal control system, establish a unified capital regulation management system, enhance the efficiency of capital use, control financial risks, and protect the legal rights and interests of the Company and all investors, this system is formulated based on the actual situation of the Company and in accordance with relevant laws and regulations such as the Accounting Law of the People's Republic of China, the Negotiable Instruments Law of the People's Republic of China, and the Enterprise Accounting Standards, as well as the provisions of the Articles of Association of Huapengfei Co., Ltd. (hereinafter referred to as "the Articles of Association").
Article 2
The capital management of the Company shall follow the following principles:
- Principle of centralized and unified management of funds;
- Principle of budget management for capital income and expenditure;
- Principle of "two lines" for capital income and expenditure;
- Principle of spending within means and capabilities.
Article 3
The term "capital" in this system refers to cash, bank deposits, financial bills, securities, and other monetary assets owned or available for use by the Company. The scope of capital management includes investment funds, financing funds, and operating funds. Investment funds refer to expenditures for external risk and non-risk investments, construction projects, fixed asset investments, etc.; financing funds refer to funds borrowed from financial institutions or other legally permitted entities to cover operational funding gaps or provide external guarantees; operating funds refer to the balance of current assets minus current liabilities, focusing on the management of procurement funds related to main business, accounts receivable and payable management, and other transaction management. Daily expense expenditures shall be executed according to the Company's relevant financial systems.
Article 4
This system applies to the Company and its wholly-owned, holding subsidiaries, and second-level subsidiaries (hereinafter referred to as "subsidiaries").
Chapter 2 Capital Budget Management
Article 5
The Company implements budget management for capital to achieve centralized and unified management of funds for each subsidiary. Each business department and subsidiary must prepare an annual capital budget according to regulations, which shall be initially reviewed by the financial department, re-reviewed by the financial responsible person, and then summarized and reported to the Company for approval before execution.
Article 6
To implement the overall development plan of the Company and improve operational efficiency, each subsidiary shall not only prepare an annual capital budget but also submit a monthly capital budget report to the Company, which will coordinate the arrangement and implementation of the capital usage plan. The Company will allocate funds to each subsidiary based on the monthly budget. Any funds exceeding the budget on the subsidiary's books shall be uniformly returned to the Company.
Article 7
Expenditures within the budget may be approved for use by relevant responsible persons within the authorized scope; expenditures exceeding the budget shall be proposed by the business department or subsidiary for additional budget plans, which must be approved according to the budget approval procedures before execution.
Article 8
Investments and financing, after review and approval, shall be included in budget management.