Chapter 1 General Principles
Article 1
To adapt to the business development of Mankalon Jewelry Co., Ltd. (referred to as "Mankalon" or "the Company") and its subsidiaries, to standardize raw material hedging transactions, effectively prevent market risks arising from significant fluctuations in raw materials and products, and protect the interests of the Company and its shareholders, this system is formulated in accordance with the "Securities Law of the People's Republic of China," "Administrative Measures for Information Disclosure of Listed Companies," "Shenzhen Stock Exchange GEM Stock Listing Rules" (referred to as "Listing Rules"), "Self-Regulatory Guidelines No. 7 for Listed Companies on the Shenzhen Stock Exchange - Transactions and Related Transactions," and other relevant laws, regulations, normative documents, and the provisions of the "Articles of Association," combined with the actual situation of the Company.
Article 2
This system applies to the hedging business of the Company and its controlling subsidiaries.
Article 3
The Company's futures and derivatives hedging business mainly refers to activities aimed at managing specific risks such as foreign exchange risk, price risk, interest rate risk, and credit risk through futures and derivatives transactions that align closely with these risks. The types of futures and derivatives engaged in by the Company for hedging should be limited to products, raw materials, and foreign exchange related to the Company's production and operations, and should, in principle, control the types, scale, and duration of futures and derivatives to match the risk exposure to be managed. The futures and derivatives used for hedging must have an economic relationship of mutual risk hedging with the relevant risk exposure, such that the value of the relevant futures and derivatives and the relevant risk exposure changes in opposite directions due to facing the same risk factors. Without the approval of the board of directors or the shareholders' meeting, the Company and its controlling subsidiaries shall not engage in this business.
Article 4
The Company's futures hedging business is based on the principles of hedging and cost locking, and must have clear targets, including the gold content in inventory or the gold materials required for wholesale production orders.
Article 5
When engaging in futures and derivatives transactions, the Company must prepare a feasibility analysis report and submit it for board approval. If the futures and derivatives transactions fall under any of the following circumstances, they must be submitted to the shareholders' meeting for approval after being reviewed by the board of directors:
- The expected trading margin and premium cap (including the value of collateral provided for trading, the expected credit limit occupied by financial institutions, and the margin reserved for emergency measures, etc.) exceeds 50% of the Company's most recent audited net profit, and the absolute amount exceeds five million RMB;
- The maximum contract value held on any trading day exceeds 50% of the Company's most recent audited net assets, and the absolute amount exceeds fifty million RMB;
- The Company engages in futures and derivatives transactions not intended for hedging purposes.
Due to the frequency and timeliness requirements of transactions, if it is difficult to perform the review procedures an