| Time: August 6, 2024 20:15:57  CentralFinancialNet |
Original title: Huamao Co., Ltd.: Legal Opinion Letter from Anhui Tianhe Law Firm Regarding the Acquisition Report of Anhui Huamao Textile Co., Ltd.
Anhui Tianhe Law Firm
Regarding
The Acquisition Report of Anhui Huamao Textile Co., Ltd.
Legal Opinion Letter
Address: 34, 35/F, Zhi Di Plaza, 288 Huaining Road, Shushan District, Hefei City, China
Phone: (0551) 62642792 Fax: (0551) 62620450
Anhui Tianhe Law Firm
Legal Opinion Letter Regarding the Acquisition Report of Anhui Huamao Textile Co., Ltd.
Tianlvyi 2024 No. 01887
To: Anqing Tongqing Industrial Investment Co., Ltd.
Anhui Tianhe Law Firm (hereinafter referred to as “this firm”) is a law firm registered in the People’s Republic of China, approved by the Anhui Provincial Bureau of Justice to practice, and qualified to engage in legal business. Anqing Tongqing Industrial Investment Co., Ltd. has prepared the “Acquisition Report of Anhui Huamao Textile Co., Ltd.” in relation to the acquisition of 31% equity held by Anqing Urban Construction Investment Development (Group) Co., Ltd. by means of non-compensatory transfer, and to acquire all voting rights corresponding to 14.95% equity held by Anqing Huaying Co., Ltd. by accepting voting rights entrusted, thus indirectly controlling 46.40% of the shares of Anhui Huamao Textile Co., Ltd. This firm issues this legal opinion letter regarding matters related to the “Acquisition Report” in accordance with relevant provisions of laws, administrative regulations, rules, and normative documents such as the Securities Law, Company Law, Management Measures for the Acquisition of Listed Companies, the Guidelines No. 16 on Company Information Disclosure Content and Format for Publicly Issued Securities — Acquisition Report of Listed Companies, Management Measures for Law Firms Engaging in Securities Legal Affairs, and Practice Rules for Securities Legal Affairs (Trial).
In order to issue this legal opinion letter, the lawyers of this firm have verified the relevant facts and legal matters concerning the acquirer in accordance with the requirements of laws, regulations, and normative documents and the client’s entrustment, reviewed the documents and materials that the lawyers of this firm deemed necessary for the issuance of this legal opinion letter, as well as relevant laws, regulations, and normative documents, and inquired and discussed relevant matters with the relevant personnel, verifying the relevant issues.
This firm makes the following statements regarding the issuance of this legal opinion letter:
1. This legal opinion letter is based on facts that have occurred or existed prior to the issuance of this legal opinion letter and officially promulgated and implemented laws, regulations, and normative documents, and is made by this firm based on its understanding of relevant facts and understanding of relevant laws. For facts that are crucial to the issuance of this legal opinion letter and cannot be supported by independent evidence, this firm relies on proof documents and oral confirmations issued by relevant government departments, the acquirer, or other relevant units;
2. This firm requires the acquirer to provide the original written materials, copies, or oral testimonies deemed necessary and true for the issuance of this legal opinion letter. The documents and materials provided by the acquirer shall be complete, true, and valid, with no concealment, falsehood, or material omissions; if the documents and materials are copies or reproductions, they shall be consistent and conform with the originals;
3. This firm only expresses opinions on legal issues related to this acquisition and does not express opinions on non-legal professional matters such as accounting, auditing, and asset valuation; references made by this firm in this legal opinion letter to certain data and conclusions in financial statements, audit reports, and asset appraisal reports do not imply any express or implied guarantee of the authenticity and accuracy of these data and conclusions, and this firm does not have the appropriate qualifications to verify and evaluate the content of such documents;
4. This firm and its lawyers have strictly fulfilled their legal responsibilities, adhered to the principles of diligence and good faith, and conducted sufficient verification in accordance with the relevant provisions of the Securities Law, Management Measures for Law Firms Engaging in Securities Legal Affairs, and Practice Rules for Securities Legal Affairs (Trial), ensuring that the facts determined in this legal opinion letter are true, accurate, and complete, that the conclusive opinions expressed are legal and accurate, and that there are no false records, misleading statements or material omissions, and shall bear corresponding legal liabilities;
5. This firm agrees that this legal opinion letter shall be submitted as a necessary legal document for this acquisition along with other submission materials and shall bear corresponding legal liabilities; this firm agrees that the acquirer may self-cite or quote all or part of the content of this legal opinion letter in the “Acquisition Report,” but the acquirer shall not cause legal ambiguities or misinterpretations due to such citations;
6. This legal opinion letter is provided solely for the purpose of the acquisition and shall not be used by any other party or for any other purpose.
Based on the above, the lawyers of this firm, in accordance with the accepted business standards, ethical norms, and diligent responsibilities of the legal profession, hereby issue the following legal opinion:
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According to the acquirer’s currently valid business license and articles of association, and as verified by this firm’s lawyers through the National Enterprise Credit Information Publicity System, as of the date of this legal opinion letter, the acquirer is a legally established and effectively existing limited liability company, and there are no circumstances that require termination or dissolution according to relevant laws, regulations, normative documents, and articles of association.
(2) Controlling shareholder and actual controller of the acquirer
According to the “Acquisition Report,” and as verified by this firm’s lawyers through the National Enterprise Credit Information Publicity System, as of the date of this legal opinion letter, Tong’an Holdings Limited Liability Company holds 100% of the equity of the acquirer and is the controlling shareholder of the acquirer, while the actual controller of the acquirer is the Anqing Municipal Bureau of Finance.
(3) Main business of the acquirer
| Company Name | Registered Capital (in ten thousand yuan) | Shareholding Ratio |
| Anqing Water Group Co., Ltd. | 11,000.00 | 100% |
| Anqing Gas Company | 7,869.35 | 100% |
| Anqing Tong’an Asset Operation Co., Ltd. | 1,000.00 | 100% |
| Anqing Tongqing Security Services Co., Ltd. | 5,000.00 | 100% |
| Anhui Anqing Development Investment (Group) Co., Ltd. | 46,245.32 | 100% |
| Anqing Tongqing Smart Parking Co., Ltd. | 5,000.00 | 60% |
| Anhui Tongqing Dream Supply Chain Management Co., Ltd. | 20,000.00 | 80% |
| Anqing Big Data Asset Operation Co., Ltd. | 2,000.00 | 51% |
(4) Litigation, arbitration, and administrative penalty situation of the acquirer in the past five years
According to the “Acquisition Report” and the acquirer’s confirmation, and verified by this firm’s lawyers through public channels such as the National Enterprise Credit Information Publicity System, China Judgments Online, the China Supreme Court’s Executed Persons Information Inquiry Website, China Execution Information Disclosure Network, the CSRC’s Securities and Futures Market Dishonesty Record Inquiry Platform, and “Credit China” website, as of the date of this legal opinion letter, the acquirer has not received any administrative penalties (except for those obviously unrelated to the securities market) or criminal penalties in the past five years, nor has it been involved in any major civil litigations or arbitrations related to economic disputes.
(5) Directors, supervisors, and senior management personnel of the acquirer
| Name | Position | Gender | Nationality | Permanent Residence |
| Zhang Chao | Chairman | Male | China | Anhui Province, Anqing City |
| Han Song | Director and General Manager | Male | China | Anhui Province, Anqing City |
| Zhu Wangjie | Director | Male | China | Anhui Province, Anqing City |
| Zha Jianxin | Supervisor | Male | China | Anhui Province, Anqing City |
| Wang Tao | Deputy General Manager | Male | China | Anhui Province, Anqing City |
| Xiao Rong | Deputy General Manager | Male | China | Anhui Province, Anqing City |
According to the “Acquisition Report” and the acquirer’s confirmation, and verified by this firm’s lawyers through public channels such as the National Enterprise Credit Information Publicity System, China Judgments Online, the China Supreme Court’s Executed Persons Information Inquiry Website, China Execution Information Disclosure Network, the CSRC’s Securities and Futures Market Dishonesty Record Inquiry Platform, and “Credit China” website, as of the date of this legal opinion letter, the directors, supervisors, and senior management personnel of the acquirer have not received any administrative penalties (except for those obviously unrelated to the securities market), criminal penalties, or been involved in any major civil litigations or arbitrations related to economic disputes in the past five years.
(6) The acquirer does not hold more than 5% shares in other listed companies
According to the “Acquisition Report” and the acquirer’s confirmation, and verified by this firm’s lawyers through the National Enterprise Credit Information Publicity System, as of the date of this legal opinion letter, the acquirer does not hold more than 5% shares in listed companies inside or outside of China.
(7) The acquirer does not hold more than 5% shares in banks, trust companies, securities companies, insurance companies, and other financial institutions
According to the “Acquisition Report” and the acquirer’s confirmation, as of the date of this legal opinion letter, the acquirer does not hold more than 5% shares in banks, trust companies, securities companies, insurance companies, and other financial institutions.
(8) The acquirer does not have circumstances that prevent them from acquiring a listed company
According to the “Acquisition Report” and the acquirer’s confirmation, and verified by this firm’s lawyers through public channels such as the National Enterprise Credit Information Publicity System, China Judgments Online, the China Supreme Court’s Executed Persons Information Inquiry Website, China Execution Information Disclosure Network, the CSRC’s Securities and Futures Market Dishonesty Record Inquiry Platform, and “Credit China” website, as of the date of this legal opinion letter, the acquirer does not have any of the following circumstances prohibited from acquiring listed companies as specified in Article 6 of the Acquisition Management Measures:
(1) Being in substantial debt and failing to repay it at maturity, and such status is ongoing;
(2) Having significant illegal acts or suspected significant illegal acts in the past three years;
(3) Having serious dishonesty in the securities market in the past three years;
(4) Other circumstances that are provided for by laws, administrative regulations, and recognized by the CSRC that prohibit acquisition of listed companies.
In summary, this firm’s lawyers believe that the acquirer is a legally established and effectively existing limited liability company, and there are no circumstances requiring termination according to relevant laws, administrative regulations, or its articles of association; in the past five years, the acquirer and its directors, supervisors, and senior management personnel have not received any administrative penalties (except for those obviously unrelated to the securities market), criminal penalties, or been involved in any major civil litigations or arbitrations related to economic disputes; and the acquirer does not possess any circumstances specified in Article 6 of the Acquisition Management Measures that would prevent them from acquiring a listed company, making them legally qualified for this acquisition.
II. Purpose and decision-making procedure of the acquisition
(1) Purpose of the acquisition
According to the “Acquisition Report,” the purpose of this acquisition is to promote the deepening of state-owned enterprise reform, enhance resource allocation efficiency, and strengthen the industrial investment platform. The corporate investment company will acquire 31% equity held by the urban investment company in Huamao Group through non-compensatory transfer. At the same time, the acquirer has signed the “Voting Rights Entrustment Agreement” with the shareholders of Huamao Group, Anqing Huaying Co., Ltd., whereby Anqing Huaying Co., Ltd. voluntarily entrusts its voting rights corresponding to the 14.95% equity it holds in Huamao Group to the corporate investment company for exercise, thus allowing the acquirer to control 45.95% of the voting rights in Huamao Group. The acquirer will be able to effectively control the actions of Huamao Group through its relatively advantageous voting rights and majority decision-making power on the board of directors. Upon completion of this acquisition, the acquirer will indirectly control and distribute 437,860,568 shares (representing 46.40% of the total share capital of the listed company).
(2) Procedure of the acquisition
(1) On May 14, 2024, this acquisition received approval from the “Notice from the Anqing Municipal People’s Government State-owned Assets Supervision and Administration Commission on the Non-compensatory Transfer of 31% Equity in Huamao Group from the Municipal Urban Investment Company to the Municipal Corporate Investment Company” (Yiguozi [2024] No. 25).
(2) On July 31, 2024, the corporate investment company and the urban investment company signed the “Equity Non-compensatory Transfer Agreement.”
(3) On July 31, 2024, the corporate investment company and Anqing Huaying Co., Ltd. signed the “Voting Rights Entrustment Agreement.”
(4) On August 2, 2024, the holder of the 31% equity in Huamao Group was registered as the corporate investment company instead of the urban investment company.
(3) Acquirer’s plans for the next 12 months
According to the “Acquisition Report,” as of the date of this legal opinion letter, the acquirer does not plan to further increase its shareholding in the listed company or dispose of its currently owned equity shares within the next 12 months. If the acquirer’s obligations under laws and regulations result in an increase or disposal of equity shares in the listed company, the acquirer will strictly adhere to relevant legal and regulatory requirements and fulfill the necessary procedures and disclosure obligations.
In summary, this firm’s lawyers believe that as of the date of this legal opinion letter, the necessary approval procedures for this acquisition have been complied with.
III. Acquisition method and transaction agreement
(1) Method of the acquisition
According to the “Acquisition Report,” this acquisition is carried out by the corporate investment company acquiring 31% equity of Huamao Group held by the urban investment company without compensation. At the same time, the acquirer has signed the “Voting Rights Entrustment Agreement” with the shareholder of Huamao Group, Anqing Huaying Co., Ltd., whereby Anqing Huaying Co., Ltd. voluntarily entrusts the voting rights corresponding to the 14.95% equity it holds in Huamao Group to the corporate investment company for exercise.
According to Article 265 of the Company Law: “…(2) A controlling shareholder is a shareholder whose contributions exceed fifty percent of the total capital of a limited liability company or whose shares accounted for more than fifty percent of the total share capital of a joint-stock company; a shareholder whose contribution or shareholding ratio is less than fifty percent but whose voting rights gained from their contributions or shareholding are adequate to significantly affect the resolutions of the shareholders’ meeting. (3) An actual controller is a person who can actually direct the actions of the company through investment relationships, agreements, or other arrangements.” Article 84 of the Acquisition Management Measures states: “An investor will be deemed to have control over a listed company if one of the following conditions is met: (1) They are the controlling shareholder of the listed company holding over 50% of the shares; (2) They can actually control the voting rights of the shares over 30% of the listed company; (3) They can decide the selection of more than half of the board members of the listed company through actual control over voting rights; (4) They can significantly influence the resolutions of the shareholders’ meeting of the company with the voting rights they can actually control; (5) Other circumstances recognized by the CSRC.”
After this acquisition, the corporate investment company will control 45.95% of the voting rights in Huamao Group. Additionally, according to Article 23 of Huamao Group’s Articles of Association: “The company must establish a board of directors according to the law. The board comprises 9 members, of which Anqing Tongqing Industrial Investment Co., Ltd. recommends 5…”, the corporate investment company can determine more than half of the board members of Huamao Group, thus having a significant influence over the board’s decisions, allowing it to actually control Huamao Group.
Due to Huamao Group holding 46.40% of the shares in Huamao Co., Ltd., based on Article 84 of the Acquisition Management Measures, the corporate investment company can actually control over 30% of the voting rights in the listed company, thus forming control over the listed company. The corporate investment company meets the requirements for controlling the listed company and the actual controller.
(2) Changes in ownership of the acquirer in the listed company before and after the acquisition
Prior to this non-compensatory transfer, the urban investment company held 31% equity in Huamao Group, and the urban investment company signed the “Voting Rights Entrustment Agreement” with the shareholder of Huamao Group, Anqing Huaying Co., Ltd., allowing Anqing Huaying Co., Ltd. to voluntarily entrust its voting rights corresponding to 14.95% equity in Huamao Group to the urban investment company, thereby enabling the urban investment company to control 45.95% of the voting rights. The urban investment company, through its relatively advantageous voting rights and majority decision-making authority in the board, can effectively manage the actions of Huamao Group, thus indirectly controlling a total of 437,860,568 shares in the listed company (representing 46.40% of the total share capital of the listed company). The equity control relationship of the listed company before this non-compensatory transfer is illustrated below:
In this acquisition, the acquirer acquires the 31% equity of Huamao Group held by the urban investment company through the non-compensatory transfer of state-owned shares. At the same time, the “Voting Rights Entrustment Agreement” between the urban investment company and Anqing Huaying Co., Ltd. is terminated, and the acquirer signs a new “Voting Rights Entrustment Agreement” with Anqing Huaying Co., Ltd., allowing the latter to voluntarily entrust its voting rights corresponding to the 14.95% equity in Huamao Group to the corporate investment company for exercise, allowing the acquirer to control 45.95% of the voting rights in Huamao Group. The acquirer can manage the actions of Huamao Group through its relatively advantageous voting rights and majority decision-making power in the board of directors. Upon completion of this acquisition, the acquirer will indirectly control and distribute 437,860,568 shares in the listed company (representing 46.40% of the total share capital of the listed company). Following the completion of the above non-compensatory transfer, the controlling shareholder of the company remains unchanged, still represented by Huamao Group. The actual controller of the listed company remains unchanged, still represented by Anqing Municipal Bureau of Finance.
The illustration is as follows:
| Anqing Municipal Bureau of Finance |
| Tong’an Holdings Limited Liability Company |
| Anqing Huaying Co., Ltd. | ||
46.40%
(3) Key contents of the acquisition-related agreements
1. “Equity Non-Compensatory Transfer Agreement” signed between the acquirer and the urban investment company
On July 31, 2024, the urban investment company (Party A) and the corporate investment company (Party B) signed the “Equity Non-Compensatory Transfer Agreement.” The main content of the agreement is as follows:
(1) Party A will non-compensatorily transfer its 31% equity in Huamao Group (paid-in capital: 35,008,300 yuan) to Party B.
Party A agrees to transfer its 31% equity in Huamao Group (hereinafter referred to as “Target Equity”) to Party B without any payment. Party B agrees to accept the Target Equity held by Party A according to this agreement.
(2) Both parties agree that the reference date for this non-compensatory transfer is April 1, 2024.
(3) This property transfer does not involve employee placement matters of Huamao Group.
(4) The transfer of property rights does not involve the transfer of debts; the debts and contingent liabilities originally belonged to Huamao Group will still be enjoyed or undertaken by Huamao Group after the property transfer.
(5) The agreement takes effect from the date of signing and stamping by both parties.
2. “Voting Rights Entrustment Agreement” signed between the acquirer and Anqing Huaying Co., Ltd.
On July 31, 2024, Anqing Huaying Co., Ltd. (Party A) and the acquirer (Party B) signed the “Voting Rights Entrustment Agreement.” The main content of the agreement is as follows:
(1) Party A voluntarily entrusts the voting rights corresponding to the 14.95% equity corresponding to its paid-in capital of 16,883,000 yuan in Anhui Huamao Group Co., Ltd., as well as future equity corresponding to Huamao Group, to Party B for exercise.
(2) The entrustment period is long-term.
IV. Source of funds for the acquisition
According to the “Acquisition Report,” this acquisition involves the corporate investment company obtaining the 31% equity of Huamao Group through the non-compensatory transfer of state-owned equity and acquiring all of the voting rights corresponding to the 14.95% equity held by Anqing Huaying Co., Ltd. through accepting the entrustment of voting rights. Therefore, this acquisition does not involve the issue of source of funds.
V. Follow-up plans
According to the “Acquisition Report,” the follow-up plans for the acquirer after the completion of this acquisition are as follows:
(1) Plans to change or adjust the main business of the listed company within the next 12 months
As of the date of this legal opinion letter, the acquirer does not have any plans to alter the main business of Huamao Co. or make any major adjustments to it within 12 months after the completion of this acquisition. Should future operational needs for itself or Huamao Co. necessitate changes or adjustments to the main business, the acquirer will strictly follow relevant legal and regulatory requirements to fulfill the necessary procedures and information disclosure obligations.
(2) Significant asset disposals or restructurings of the listed company and its subsidiaries within 12 months after the acquisition
As of the date of this legal opinion letter, the acquirer has no plans to sell, merge, establish joint ventures, or cooperate regarding the assets and businesses of Huamao Co. or its subsidiaries within 12 months after the acquisition is completed, nor does it have any restructuring plans related to the purchase or exchange of assets. If in the future the acquirer formulates and implements a significant disposal or restructuring plan for the assets or businesses of Huamao Co. or its subsidiaries according to its operational needs, the acquirer will strictly adhere to relevant legal and regulatory requirements for fulfilling the necessary procedures and information disclosure obligations.
(3) Plans or suggestions for adjusting the board of directors and senior management of the listed company
As of the date of this legal opinion letter, the acquirer has no plans or suggestions to change the current board of directors or senior management of Huamao Co., and there are no contracts or understanding between the acquirer and other shareholders of Huamao Co. regarding the appointment or removal of directors and senior management; should the acquirer suggest adjustments to the board of directors and senior management of Huamao Co. in the future according to its development needs, the acquirer will strictly adhere to relevant legal and regulatory requirements to fulfill the necessary procedures and information disclosure obligations.
(4) Plans to amend the articles of association of the listed company
As of the date of this legal opinion letter, the acquirer does not plan to amend the articles of association of the listed company. If there are plans to amend the articles of association in the future based on the development needs of the listed company, the acquirer will strictly follow relevant legal and regulatory requirements to fulfill the necessary approval processes and information disclosure obligations.
(5) Significant changes to employee hiring plans
As of the date of this legal opinion letter, the acquirer has no significant changes planned for the existing employee hiring plans of the listed company. If there are plans to make significant adjustments to the existing employee hiring of the listed company due to the development needs of the company, the acquirer will strictly adhere to relevant legal and regulatory requirements to fulfill the necessary approval processes and information disclosure obligations.
(6) Significant changes to the listed company’s dividend policy
As of the date of this legal opinion letter, the acquirer has no plans for significant adjustments to the listed company’s dividend policy. If there are plans to adjust the current dividend policy of the listed company in the future based on its development needs, the acquirer will strictly adhere to relevant legal and regulatory requirements to fulfill the necessary approval processes and information disclosure obligations.
(7) Other plans that have a significant impact on the business and organizational structure of the listed company
As of the date of this legal opinion letter, the acquirer does not have any other plans that would significantly affect the business and organizational structure of the listed company. If in the future the acquirer plans to make significant changes to the business and organizational structure of the listed company, the acquirer will strictly adhere to relevant legal and regulatory requirements and fulfill the necessary approval processes and information disclosure obligations.
VI. Impact of this acquisition on the listed company
According to the “Acquisition Report,” this acquisition will have the following impacts on the listed company:
(1) Impact on the independence of the listed company
This acquisition does not involve any changes in the direct controlling shareholders of the listed company, and after the completion of this acquisition, the independence of personnel, assets, finance, institutions, and business of the listed company will not change due to this acquisition. This acquisition will not affect the independent operational capabilities of the listed company, which will continue to maintain independence in procurement, production, sales, intellectual property, etc. from its controlling shareholders.
To ensure the independence of the listed company in terms of assets, personnel, finance, business, and institutions, the acquirer has issued a “Commitment Letter on Maintaining the Independence of the Listed Company,” the main contents of which are as follows:
“(1) Ensure independence of listed company personnel
1. Ensure that the senior managers of the listed company are all full-time and receive remuneration from the listed company, without holding any positions other than directors or supervisors in this company or other companies controlled by this company.
2. Ensure complete independence of management of labor, personnel, and wages between the listed company and this company as well as other companies controlled by it.
3. The recommendations for directors, supervisors, or senior managerial candidates to the listed company from this company will be carried out through legitimate processes, and this company will not intervene in the decisions of the board of directors or general meetings of the listed company on personnel appointments or removals.
(2) Ensure complete independence and integrity of listed company assets
1. Ensure that the listed company has independent and complete assets.
2. Ensure that this company and other companies controlled by it do not occupy the assets, funds, or other resources of the listed company unlawfully.
3. Ensure that the listed company is not required to unlawfully provide guarantees for this company and other companies controlled by it.
(3) Ensure financial independence of the listed company
1. Ensure that the listed company establishes independent financial departments, accounting systems, and financial management regulations.
2. Ensure that the listed company has standard and independent financial accounting systems.
3. Ensure that the listed company opens its own bank accounts and does not share accounts with this company or other companies controlled by it.
4. Ensure that the financial personnel of the listed company do not hold part-time jobs in this company or other companies controlled by it.
5. Ensure that the listed company pays taxes independently according to the law.
6. Ensure that the listed company makes independent financial decisions and that this company does not intervene in the use of funds by the listed company.
(4) Ensure organizational independence of the listed company
1. Ensure that the listed company establishes a sound corporate governance structure as a joint-stock company and has independent and complete organizational structures.
2. Ensure that the shareholders’ meetings, boards of directors, independent directors, supervisory committees, general managers, etc. of the listed company exercise their powers independently in accordance with laws, regulations, and the company’s articles of association.
(5) Ensure the independence of the listed company’s business
1. Ensure that the listed company has assets, personnel, qualifications, and capabilities to independently conduct business, and is capable of sustainably operating independently in the market.
2. Ensure that this company, except for exercising its rights as a shareholder, does not interfere in the business activities of the listed company.
3. Ensure that this company and other companies controlled by it do not engage in businesses that competitively overlap with those of the listed company.
4. This company will strive to minimize transactions or business dealings between itself and other companies under its actual control or influence with the listed company. In unavoidable related transactions, this company will conduct them on an equal and voluntary basis, adhering to the principles of fairness and just compensation.
The above commitments will remain valid while this company has control over the listed company.”
(2) Impact on competition in the same industry with the listed company
Prior to this acquisition, the corporate investment company did not hold shares in the listed company, and there was no competitive situation. Post-acquisition, the corporate investment company indirectly controls 46.40% of the shares in Huamao Co. through Huamao Group.
The main operations of the listed company include: pure and blended yarns and fabrics made from cotton, wool, hemp, silk, and synthetic fibers, knitted goods, clothing, and dye processing; sale of textile equipment and accessories, and household textiles; investment management.
The main business of the corporate investment company includes: industrial investment and related derivative businesses; participation in forming and managing relevant investment funds and investment management institutions (not engaged in national finance, securities, futures, and fiscal credit business); management services for venture enterprises; asset operation; commercial operation management; and financial consulting.
In summary, there is no competitive conflict between the corporate investment company and the listed company.
To ensure the protection of the interests of the listed company and all its shareholders, especially minority shareholders, and to avoid any potential competition between the acquirer and other enterprises controlled by the acquirer with the listed company, the acquirer has issued a “Commitment Letter on Avoiding Same-line Competition,” the main content of which is as follows:
“The company currently does not, and in the future (during its period as an indirect controlling shareholder) will not, directly or indirectly engage in similar businesses or activities that would constitute competition with the current and future businesses of the listed company;
The companies or enterprises where the company holds shares or has controlling interests will not, under any means (including but not limited to self-operation, joint ventures, or partnerships), participate or engage in business activities that compete with the main business of the listed company; should this company and its subsidiaries (or affiliated companies) identify any business opportunity to engage, participate, or invest in any activities that might form competitive relations with the production and operation of the listed company and its controlling subsidiaries, this company will strive to provide such business opportunities to the listed company.
This company affirms that each commitment within the commitment letter is actionable and independent. Any commitment deemed invalid or terminated shall not affect the validity of other commitments.”
The above commitments will remain valid while this company has control over the listed company.”
(3) Impact on related transactions with the listed company
After the completion of this acquisition, there will be no new related transactions between the acquirer and the listed company and its controlled subsidiaries due to this acquisition.
To standardize related transactions and protect the legal rights and interests of the listed company and its minority shareholders, the acquirer has issued a “Commitment Letter on Standardizing and Reducing Related Transactions” to commit to minimizing related transactions with the listed company, as follows:
“This company will minimize or avoid related transactions with the listed company and its subsidiaries to the extent possible. In situations where necessary related transactions are unavoidable, we will strictly adhere to market rules and conduct them in a fair and reasonable manner on the basis of mutual benefit and just compensation, and follow the relevant laws and regulations as well as normative documents regarding transaction procedures and information disclosure obligations.
This company will strictly comply with the provisions on the avoidance of related transactions in the articles of association of the listed company. All related transactions involved will follow the decision-making procedures established for related transactions, and timely disclose related transaction information.
This company will not utilize related transactions to harm the rights and interests of the listed company and will refrain from leveraging its influence over the decisions of the listed company’s operations to derive benefits for itself.
This company confirms that the commitment letter aims to safeguard the rights and interests of all shareholders of the listed company; and each commitment in the commitment letter is actionable and independent. Any commitment deemed invalid or terminated shall not affect the validity of other commitments.”
VII. Major transactions with the listed company
According to the “Acquisition Report” and the acquirer’s confirmation, the major transaction situations between the acquirer and its directors, supervisors, and senior management personnel with the listed company are as follows:
(1) Major transactions between the listed company and its subsidiaries
As of 24 months prior to the date of this legal opinion letter, there have been no transactions between the acquirer and its key personnel with the listed company and its subsidiaries that collectively exceed 30 million yuan or are over 5% of the last audited net asset value of the listed company.
(2) Major transactions between directors, supervisors, senior management personnel of the listed company
As of 24 months prior to the date of this legal opinion letter, there have been no transactions exceeding 50,000 yuan between the acquirer and its key personnel with the directors, supervisors, and senior management of the listed company.
(3) Compensation or similar arrangements for the directors, supervisors, and senior management personnel of the listed company to be replaced As of 24 months prior to the date of this legal opinion letter, there are no plans for the acquirer to provide compensation for the directors, supervisors, and senior management personnel of the listed company to be replaced, nor any other similar arrangements.
(4) Contracts, understandings, or arrangements that significantly influence the listed company
As of 24 months prior to the date of this legal opinion letter, other than what has been disclosed in this legal opinion letter, there are no other contracts, understandings, or arrangements that would significantly influence the listed company between the acquirer and its key personnel that are in the process of being signed or negotiated.
VIII. Trading of the listed company’s stock in the past six months
(1) Trading situation of the acquirer in the listed company’s shares
According to the written explanation provided by the acquirer, in the six months prior to this acquisition, the acquirer has not engaged in the trading of the listed company’s shares through the securities exchange.
(2) The major responsible personnel of the acquirer and their immediate family members’ trading of the listed company’s shares
According to the written explanation provided by the acquirer, in the six months prior to this acquisition, the major responsible personnel of the acquirer and their immediate family members have not engaged in trading the listed company’s shares.
IX. Format and content of the “Acquisition Report”
According to the “Acquisition Report” and verification by this firm’s lawyers, the “Acquisition Report” prepared by the acquirer for this acquisition includes interpretations, introduction of the acquirer, acquisition decision and purpose, acquisition method, source of funds, exemption from issuing offers, follow-up plans, impact analysis on the listed company, major transactions with the listed company, trading of listed company’s shares in the past six months, financial information of the acquirer, and other material matters, totaling thirteen parts and has made the necessary declarations on the title page; in terms of format and content, it complies with the provisions of the Acquisition Management Measures and Guidelines No. 16 and other laws, regulations, and normative documents.
In summary, this firm’s lawyers believe that the format and content of the “Acquisition Report” prepared by the acquirer for this acquisition meet the regulations of the Acquisition Management Measures, Guidelines No. 16, and other laws, regulations, and normative documents.
X. Conclusion
In summary, this firm’s lawyers believe that the content of the “Acquisition Report” prepared by the acquirer for this acquisition is true, accurate, and complete, with no false records, misleading statements, or material omissions.
(No text below)
(This page is blank, it is the signing page of “Anhui Tianhe Law Firm’s Legal Opinion Letter”)
This legal opinion letter has been signed and sealed in Hefei City on the __ day of __ month, __ year.
This legal opinion letter is made in __ copies, all being originals.
Person in charge of Anhui Tianhe Law Firm: Lu Xianrong
Attending lawyers: Wu Liu
XU Dandan
Central Financial Network
