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Q&A Regarding Related Parties (2)

Answer
Q:
In the case of indirect shareholding, how to calculate the percentage of shareholding?
A:
If one party indirectly holds shares in the other party through the intermediary party, so long as its shareholding in the intermediary party reaches more than 25%, its shareholding in the other party shall be calculated as the percentage of the shares owned by intermediary party in the other party. For example, if enterprise A does not directly hold shares in enterprise C, but enterprise A directly holds 30% of the shares in enterprise B and enterprise B directly holds 40% of the shares in enterprise C, then A is regarded as indirectly holding 40% of the shares in enterprise C.

Q:
In the case of relatives holding shares jointly, how to calculate the percentage of shareholding?
A:
Two or more natural persons with husband and wife, direct biological relatives, brothers and sisters and other raising and supporting relations jointly hold shares in the same enterprise, the shareholding percentage shall be calculated when determining the correlation relationship. For example, if the husband holds 25% of the shares in enterprise A, enterprise A holds 10% of the shares in enterprise B, and the wife holds 15% of the shares in enterprise B, then the husband and wife jointly hold 25% of the shares in enterprise B, and both husband and wife are associated with enterprise B.

Q:
How to determine the financing correlation?
A:
Where there is a shareholding relationship between the two parties or they are both held by a third party, although the shareholding does not meet the criteria for the identification of the shareholding relationship, the total amount of funds borrowed between the two parties accounts for more than 50% of the paid-in capital of either party, or more than 10% of the total amount of funds borrowed by one party is guaranteed by the other party (except for loans or guarantees with independent financial institutions), Constitute financing correlation.

Q:
How to determine the relationship between production and operation franchise control?
A: Where there is a shareholding relationship between the two parties or they are both held by a third party, although the shareholding does not meet the criteria for the identification of the shareholding relationship, the production and operation activities of one party must be carried out normally by the other party providing patent rights, non-patented technologies, trademark rights, copyrights, and other franchise rights, forming a related relationship.

Q:
How to determine the relationship between purchase, sales, and labor control?
A: If both parties have a shareholding relationship or both are held by a third party, although the shareholding percentage does not meet the requirements for determining the holding relationship, one party's business activities such as purchasing, selling, receiving labor services, and providing labor services are controlled by the other party, forming a related relationship. Of which, control refers to one party has the right to determine the financial and operational policies of the other party and to obtain benefits from the other party's business activities based on the control it has over the other party.

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