Jingda shares major related party transaction letter phi violation Chairman Li Xiao was notified of criticism

Source: China Economic Network

China Economic Network Beijing, August 17, 2019 The "Disciplinary Decision [2021] No. 96" published on the website of the Shanghai Stock Exchange shows that Tongling Jingda Special Electromagnetic Wire Co., Ltd. (hereinafter referred to as "Jingda Shares", 600577.SH) and others who are the timely chairman of the board of directors Li Xiao and others have the following violations:

It was found that Tongling Jingda Copper (Group) Co., Ltd. is a non-controlling shareholder holding more than 5% of the shares of Jingda and is a related party of the company. On March 16, 2021, the company disclosed relevant announcements such as the 2020 annual report and the non-operating capital occupation and rectification report, showing that the company and its subsidiaries and Jingda Group had non-operating capital transactions without the substance of the transaction. Among them, in 2020, the company and its subsidiaries directly released 140.70 million yuan to Jingda Group, and the subsidiaries indirectly donated 371.62 million yuan to Jingda Group, with a total fund of 512.32 million yuan, accounting for 13.03% of the company's audited net assets at the end of 2019; from January to March 2021, the company and its subsidiaries directly removed funds of 35.50 million yuan from Jingda Group, accounting for 0.90% of the company's audited net assets at the end of 2019.

The SSE determined that the Company had a large amount of capital transactions with its related party, Jingda Group, and the total amount of related party transactions accounted for 13.93% of the Company's audited net assets in the previous year, which met the deliberation standards of the shareholders' general meeting and should be disclosed in a timely manner. However, the company's above-mentioned capital transactions did not perform the deliberation procedures of the shareholders' general meeting in accordance with the related party transactions, nor were they disclosed in a timely manner, and they were not announced until the disclosure of the 2020 annual report.

The SSE believes that the company's material related party transactions have not fulfilled the deliberation procedures and information disclosure obligations of the shareholders' general meeting in a timely manner. The above conduct violates Articles 2.1, 2.3, 10.2.4 and 10.2.5 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange. Li Xiao, then chairman of the board of directors of the company, as the main person in charge of the company and the first responsible person for information disclosure, Chen Bin, then general manager, as the main personnel of the company's operation and management decision-making, Chu Zhongjing, then financial director, as the company's financial person in charge, and Hu Kongyou, then secretary of the board of directors, as the specific person in charge of the company's information disclosure affairs, failed to be diligent and responsible for the company's violations. The conduct of the above-mentioned responsible person violates the relevant provisions of Articles 2.2, 3.1.4, 3.1.5, 3.2.2 and other relevant provisions of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange and the commitments made by the directors (supervisors and senior management) in the Declaration and Undertaking.

In view of the above-mentioned facts and circumstances of the violation, after the review and approval of the Disciplinary Committee of the Shanghai Stock Exchange, in accordance with Articles 16.2, 16.3 and 16.4 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange, the Measures for the Implementation of Disciplinary Sanctions and Regulatory Measures of the Shanghai Stock Exchange and the Guidelines for the Application of The Self-Regulatory Rules for Listed Companies on the Shanghai Stock Exchange No. 2 - Standards for the Implementation of Disciplinary Sanctions, the SSE decided to impose a decision on Tongling Jingda Special Electromagnetic Wire Co., Ltd. and li Xiao, then chairman of the board. Chen Bin, then general manager, Chu Zhongjing, then chief financial officer, and Hu Kongyou, then secretary of the board of directors, informed and criticized them. For the above-mentioned disciplinary sanctions, they will be notified to the CSRC and recorded in the integrity file of the listed company.

After the Inquiry of China Economic Network reporter, it was found that Jingda Co., Ltd. was established on July 12, 2000, with a registered capital of 1.974 billion yuan, and was listed on the Shanghai Stock Exchange on September 11, 2002, as of July 20, 2021, Tehua Investment Holding Co., Ltd. was the largest shareholder, holding 250 million shares, with a shareholding ratio of 12.68%, and Tongling Jingda Copper (Group) Co., Ltd. was the fourth largest shareholder, holding 61.5191 million shares, with a shareholding ratio of 3.16%.

According to the company's 2020 annual report, Li Xiao has been the chairman of the board of directors of the company since April 23, 2019 until April 23, 2022, and Chen Bin has been a director and general manager since April 23, 2019, and has been serving as a director and general manager until April 23, 2022.

According to the Special Explanation on the Occupation of Non-Operating Funds and Other Related Funds Transactions issued by the Company on March 16, 2021, Rongcheng Certified Public Accountants (Special General Partnership) audited the consolidated and parent balance sheet of Jingda Shares as of December 31, 2020, the consolidated and parent company income statement for 2020, the consolidated and parent cash flow statement and the consolidated and parent company owners' equity change statement and the notes to the financial department statements, and issued a standard unqualified opinion audit report. Among them, Tongling Jingda Copper (Group) Co., Ltd., a shareholder holding more than 5% of the company's shares, has a cumulative amount of other receivables of non-operating transactions of 512.32 million yuan.

Article 2.1 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that listed companies and relevant information disclosure obligors shall disclose information in a timely and fair manner in accordance with laws, administrative regulations, departmental rules, other normative documents, these Rules and other provisions of the SSE, and ensure that the disclosed information is true, accurate and complete.

Article 2.2 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that the directors, supervisors and senior management of a listed company shall ensure that the company discloses information in a timely and fair manner, as well as the truthfulness, accuracy and completeness of the information disclosure, and that there are no false records, misleading statements or material omissions. Where the content of the announcement cannot be guaranteed to be true, accurate, or complete, a corresponding statement shall be made in the announcement and the reasons explained.

Article 2.3 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that listed companies and relevant information disclosure obligors shall disclose all major events that may have a greater impact on the trading prices of listed companies' stocks and their derivatives within the time limit prescribed in these Rules.

Article 3.1.4 of the Rules Governing the Listing of Shares on the Shanghai Stock Exchange stipulates that directors, supervisors and senior management shall perform the following duties and make commitments in the Declaration and Undertaking of Directors (Supervisors and Senior Management):

(1) Abide by and promote the company to comply with laws, administrative regulations, departmental rules, etc., and perform the duty of loyalty and diligence;

(2) Comply with and urge the Company to comply with these Rules and other provisions of the Firm and accept the supervision of the Firm;

(3) Comply with and promote the Company's compliance with the Articles of Association;

(4) Other duties and other commitments that the Firm deems to be performed. Supervisors shall also undertake to supervise the directors and senior management in complying with their commitments.

Senior management personnel shall also undertake to report to the board of directors in a timely manner on matters that may have a greater impact on the trading price of the company's stock and its derivatives in the company's operations or finances.

Article 3.1.5 of the Rules Governing the Listing of Shares on the Shanghai Stock Exchange stipulates that the term of office of directors shall not exceed 3 years, and they may be re-elected at the end of their term. Directors are elected and replaced by a general meeting of shareholders and may be removed from office by a general meeting of shareholders before the expiration of their term of office.

The duty of loyalty and diligence that a director should perform includes the following:

(1) In principle, they should attend the meeting of the board of directors in person, act diligently with reasonable caution, and express clear opinions on the matters discussed; if they are unable to attend the meeting of the board of directors for any reason, they shall carefully select the trustee;

(2) Carefully read the company's various business and financial accounting reports and major reports on the company in the public media, timely understand and continue to pay attention to the company's business operation and management status and the major events that have occurred or may occur in the company and their impact, timely report to the board of directors the problems existing in the company's business activities, and must not shirk responsibility on the grounds of not directly engaging in operation and management or not knowing the relevant problems and circumstances;

(3) The relevant provisions of the Securities Law, the Company Law and other duties of loyalty and diligence recognized by the society.

Article 3.2.2 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that the secretary of the board of directors shall be responsible to the listed company and the board of directors and perform the following duties:

(1) Responsible for the external disclosure of company information, coordinating the company's information disclosure affairs, organizing the formulation of the company's information disclosure affairs management system, and supervising and urging the company and relevant information disclosure obligors to comply with relevant information disclosure provisions;

(2) Responsible for investor relations management, coordinating information communication between the company and securities regulators, investors, securities service agencies, media, etc.;

(3) Organize the preparation of board meetings and shareholders' meetings, participate in shareholders' meetings, board meetings, board meetings and meetings of senior management personnel, and be responsible for the minutes of board meetings and signing;

(4) Responsible for the confidentiality of the company's information disclosure, and promptly report and disclose to the SSE when no material information is disclosed;

(5) Pay attention to media reports and take the initiative to verify the authenticity of the reports, and urge the board of directors of the company to respond to the inquiries of the firm in a timely manner;

(6) Organize the company's directors, supervisors and senior management to conduct training on relevant laws, administrative regulations, these Rules and related provisions, and assist the aforementioned personnel in understanding their respective responsibilities in information disclosure;

(7) When it is known that the directors, supervisors and senior management of the company have violated laws, administrative regulations, departmental rules, other normative documents, these rules, other provisions of the firm and the articles of association of the company, or when the company makes or may make decisions that violate relevant regulations, it shall remind the relevant personnel and immediately report to the firm;

(8) Responsible for the company's equity management affairs, keeping the company's directors, supervisors, senior management, controlling shareholders and their directors, supervisors and senior management holding information on the company's shares, and responsible for disclosing the changes in the shareholding of the company's directors, supervisors and senior management;

(9) Other duties required by the Company Law, the China Securities Regulatory Commission and the SSE.

Article 10.2.4 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that related party transactions between a listed company and an affiliated legal person with a transaction amount of more than 3 million yuan and accounting for more than 0.5% of the absolute value of the company's latest audited net assets (except for guarantees provided by the listed company) shall be disclosed in a timely manner.

Article 10.2.5 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that related party transactions between a listed company and its related parties (except for those in which the listed company provides guarantees, receives cash assets, and simply reduces or reduces the obligations of the listed company) amount to more than 30 million yuan and accounts for more than 5% of the absolute value of the listed company's latest audited net assets, in addition to being disclosed in a timely manner, shall also provide a securities service institution with the qualification to perform securities and futures-related business in accordance with the provisions of Article 9.7. An audit or appraisal report on the subject matter of the transaction and submit the transaction to the general meeting of shareholders for consideration

Article 16.2 of the Rules Governing the Listing of Shares on the Shanghai Stock Exchange stipulates that if an issuer, a listed company, the relevant information disclosure obligor and other responsible persons violate these Rules or make a commitment to the SSE, the SSE may impose the following penalties depending on the seriousness of the circumstances:

(1) Circulating criticism;

(2) Public condemnation.

Article 16.3 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange stipulates that if a director, supervisor or senior management of a listed company violates these Rules or makes a commitment to the SSE, the SSE may impose the following penalties depending on the seriousness of the circumstances:

(2) Public condemnation;

(3) Publicly determining that he or she is not suitable to serve as a director, supervisor or senior manager of a listed company for more than 3 years.

The punishments in items (2) and (3) above may be implemented together.

Article 16.4 of the Rules Governing the Listing of Shares on the Shanghai Stock Exchange stipulates that if the secretary of the board of directors of a listed company violates these Rules, the SSE may impose the following penalties depending on the seriousness of the circumstances:

(3) Publicly determining that he is unfit to serve as the secretary of the board of directors of the listed company.

The following is the original text:

Decision on the notification and criticism of Tongling Jingda Special Electromagnetic Wire Co., Ltd. and relevant responsible persons

party:

Tongling Jingda Special Electromagnetic Wire Co., Ltd., A-share securities abbreviation: Jingda shares, A-share securities code: 600577;

Li Xiao, then chairman of Tongling Jingda Special Electromagnetic Wire Co., Ltd.;

Chen Bin, then general manager of Tongling Jingda Special Electromagnetic Wire Co., Ltd.;

Chu Zhongjing, then Chief Financial Officer of Tongling Jingda Special Electromagnetic Wire Co., Ltd.;

Hu Kongyou, Tongling Jingda Special Electromagnetic Wire Co., Ltd. was the secretary of the board of directors at the time.

It was found that Tongling Jingda Copper (Group) Co., Ltd. (hereinafter referred to as Jingda Group) is a non-controlling shareholder of Tongling Jingda Special Electromagnetic Wire Co., Ltd. (hereinafter referred to as the Company) holding more than 5% of the shares, and is a related party of the Company. On March 16, 2021, the company disclosed relevant announcements such as the 2020 annual report and the non-operating capital occupation and rectification report, showing that the company and its subsidiaries and Jingda Group had non-operating capital transactions without the substance of the transaction. Among them, in 2020, the company and its subsidiaries directly disbursed funds of 140.70 million yuan to Jingda Group, and subsidiaries indirectly disbursed funds of 371.62 million yuan to Jingda Group, with a total of 512.32 million yuan, accounting for 13.03% of the company's audited net assets at the end of 2019; from January to March 2021, the company and its subsidiaries directly disbursed funds of 35.50 million yuan to Jingda Group, accounting for 0.90% of the company's audited net assets at the end of 2019.

As of December 31, 2020, the Company has received $467.32 million in spin-out funds. As of March 15, 2021, the Company has received the remaining $45 million of the funds and the new funds of $35.5 million, and received interest on all the funds of the withdrawal of $2.4606 million. All of the above-mentioned funds have been returned.

The company and the related party Jingda Group had a large amount of capital transactions, and the total amount of related party transactions accounted for 13.93% of the company's audited net assets in the previous year, which met the deliberation standards of the shareholders' general meeting and should be disclosed in a timely manner. However, the company's above-mentioned capital transactions did not perform the deliberation procedures of the shareholders' general meeting in accordance with the related party transactions, nor were they disclosed in a timely manner, and they were not announced until the disclosure of the 2020 annual report.

The company's material related party transactions failed to fulfill the deliberation procedures and information disclosure obligations of the shareholders' general meeting in a timely manner. The above conduct violates Articles 2.1, 2.3, 10.2.4 and 10.2.5 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange (hereinafter referred to as the Rules Governing the Listing of Stocks). Li Xiao, then chairman of the board of directors of the company, as the main person in charge of the company and the first responsible person for information disclosure, Chen Bin, then general manager, as the main personnel of the company's operation and management decision-making, Chu Zhongjing, then financial director, as the company's financial person in charge, and Hu Kongyou, then secretary of the board of directors, as the specific person in charge of the company's information disclosure affairs, failed to be diligent and responsible for the company's violations. The conduct of the above-mentioned responsible person violates the relevant provisions of Articles 2.2, 3.1.4, 3.1.5, 3.2.2 and other relevant provisions of the Stock Listing Rules and the commitments made in the Declaration and Undertaking of Directors (Supervisors and Senior Management). For this disciplinary action, the company and the relevant responsible persons have no objection to the reply.

In view of the above-mentioned facts and circumstances of the violation, after the review and approval of the Disciplinary Committee of the Shanghai Stock Exchange (hereinafter referred to as the Firm), in accordance with Articles 16.2, 16.3 and 16.4 of the Rules Governing the Listing of Stocks, the Measures for the Implementation of Disciplinary Sanctions and Regulatory Measures of the Shanghai Stock Exchange, and the Guidelines for the Application of The Self-Discipline Supervision Rules of Listed Companies on the Shanghai Stock Exchange No. 2 - Standards for the Implementation of Disciplinary Sanctions, etc., The firm made the following disciplinary decision: Tongling Jingda Special Electromagnetic Wire Co., Ltd. and the then chairman Li Xiao, the then general manager Chen Bin, the then financial director Chu Zhongjing, and the then secretary of the board of directors Hu Kongyou were notified and criticized. For the above disciplinary sanctions, the firm will notify the CSRC and record them in the integrity file of the listed company.

Listed companies should take this as a warning, operate in strict accordance with the provisions of laws, regulations and the Stock Listing Rules, and conscientiously perform their information disclosure obligations; directors, supervisors and senior management personnel should perform the obligations of loyalty and diligence, promote the company's standardized operation, and ensure that the company discloses all material information in a timely, fair, true, accurate and complete manner.

Shanghai Stock Exchange

August 12, 2??