Capital Management Clause Samples

Capital Management. The primary objective of capital management of the Company and its subsidiaries is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern. As at December 31, 2020 and 2019, the Company and subsidiaries have debt to equity ratio as summarized below: Consolidated financial statements Separate financial statements 2020 2019 2020 2019 Debt to equity ratio 0.40 0.27 0.05 0.01 31. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES Changes in the liabilities arising from financing activities for the years ended December 31, 2020 and 2019 are as follows: Consolidated financial statements 2020 Balance as at Cash flows Non-cash transaction Balance as at January 1, Increase Increase Translation on December 31, 2020 (decrease)* exchange rate 2020 Long-term loan from financial institutions 219,125 22,432 948 - 242,505 Lease liabililies 492 (931) 51,081 - 50,642 Total 219,617 21,501 52,029 - 293,147 Consolidated financial statements 2019 Balance as at Cash flows Non-cash transaction Balance as at January 1, Increase Increase Translation on December 31, 2019 (decrease)* exchange rate 2019 Short-term borrowings from related companies 40,300 (40,300) - - - Long-term borrowings from related person 9,000 (9,000) - - - Long-term loan from financial institutions 212,601 6,524 - - 219,125 Lease liabililies 555 (952) 889 - 492 Total 262,456 (43,728) 889 - 219,617 Separate financial statements 2020 Balance as at Cash flows Non-cash transaction Balance as at January 1, Increase Increase Translation on December 31, Short-term loan from related parties - 31,519 - - 31,519 Lease liabililies 492 (153) - - 339 Total 492 31,366 - - 31,858 Separate financial statements 2019 Balance as at Cash flows Non-cash transaction Balance as at January 1, Increase Increase Translation on December 31, 2019 (decrease)* exchange rate 2019 Short-term loan from related parties 58,000 (58,000) - - - Lease liabililies 555 (952) 889 - 492 Total 58,555 (58,952) 889 - 492 *Financing cash flows included net proceed and repayment cash transactions in the statement of cash flows.

Capital Management. Party B shall manage and control all funds of Party A. Party A shall open or appoint a management account for its funds (“Management Account”) and Party B shall be responsible for and have the right in deciding the inward and outward remittance of its funds. The seals affixed to such account shall be that of the person appointed and confirmed by Party B. As of the day when this Agreement comes into effect, all cashes of Party A, including but not limited to revenues from sales, existing working capitals, collecting of receivables, and all payables and operating expenses, employees’ salaries and compensations and assets acquisition, must be saved and transacted in this Management Account.

Capital Management. The Company defines capital that it manages as shareholders' equity that is expected to be realized in cash. The Company raises capital through private share offerings and related party loans and advances. Capital is managed in a manner consistent with the risk criteria and policies provided by the board of directors and followed by management. All sources of financing and major expenditures are analyzed by management and approved by the board of directors. The Company’s primary objectives when managing capital is to safeguard and maintain the Company’s financial resources for continued operations and to fund programs to further advance their hydro power technology. The Company is meeting its objective of managing capital through detailed review and the preparation of short-term and long-term cash flow analysis to maintain sufficient resources. HYDRO POWER TECHNOLOGIES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE QUARTERS ENDED DECEMBER 31, 2019 and 2018 (Expressed in Canadian dollars)

Capital Management. Capital requirements are established by the Credit Union Act (the “Act”) and Principal Regulations regulated by the Credit Union Deposit Guarantee Corporation (the “Corporation”). Under legislation, the Credit Union is required to measure capital adequacy in accordance with instructions for determining risk-adjusted capital and risk-weighted assets ("RWA") including off- balance sheet commitments. Based on the prescribed risk of each type of asset, a weighting of 0% to 150% is assigned. The ratio of capital to RWA is calculated and compared to the requirement set out in the legislation and by the Corporation. Legislative requirements stipulate that the Credit Union maintain a minimum capital of the greater of 8% of RWA and 4% of total assets. The Credit Union is also required to maintain a Supervisory Capital Buffer equal to 2.5% of its RWA. The Credit Union also maintains an internal capital buffer, in addition to the legislative and supervisory buffers, of 2% of its risk weighted assets. Tier 1 capital is defined as the Credit Union's primary capital and comprises share capital and retained earnings while tier 2 is secondary capital and falls short of meeting tier 1 requirements for permanence or freedom from mandatory charge. Tier 2 capital of the Credit Union consists of deferred income taxes payable and the collective allowance for member loans. The primary capital policies and procedures include the following: a) Adhere to legislative capital requirements as minimum benchmarks (i.e. growth, operations, enterprise risk); b) Co-ordinate strategic risk management and capital management; c) Develop financial performance targets/budgets/goals; d) Administer a patronage program that is consistent with capital requirements; e) Administer an employee incentive program that is consistent with capital requirements; f) Develop a planned growth strategy that is coordinated with capital growth; and g) Update plans that consider the strengths, weaknesses, opportunities and threats to the Credit Union.

Capital Management. For the purpose of the Company’s capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. As at 31st March, 2022, the Company has only one class of equity shares and has no long term debt. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for the re-investment into business based on its long term financial plans.

Capital Management. The primary objective of Sovello’s capital management is the sustainability of the financial flexibility necessary for the Company’s long-term growth. Sovello is still going through a phase of strong growth and development. This involves extensive investment, which the Company must finance. Sovello meets the resulting financing risks with a solid capital structure encompassing equity, the shareholders’ and bank loans and the applicable portions of the financial assistance from the government. Short-term liquidity management is based on a rolling planning horizon of twelve months. The table below shows the balance sheet total, the equity in absolute figures and in per cent of the balance sheet total, and the net financial liabilities (financial liabilities minus cash and cash equivalents): (In thousands of EUR) Dec 31, 08 Dec 31, 07 Balance sheet total 467,145 380,179 Equity 107,796 91,168 Equity in per cent of balance sheet total 23.1 24.0 Net indebtedness 247,527 161,953 Annex 1.5 / 28 The loan agreement made in 2007 with the banking syndicate led by Deutsche Bank has been revised by the supplementary agreement of September 1, 2008. The syndicated loan agreement deals primarily with the continuation of the existing financing arrangements and the extending of the syndicated financing for the investment in the Company’s third production line at Bitterfeld-Wolfen. The financing now includes an additional loan of EUR 60 million of which EUR 35 million has been drawn. The tranches of the original syndicated loan agreement continue to be available on the original terms, except that interim financing of investment grant receivables was raised from EUR 30 million to EUR 45 million and the working capital loan was reduced from EUR 22 million to EUR 20 million. Drawings on the investment-grant interim financing line amounted at the reporting date to EUR 33.5 million. There were no drawings on the working capital loan. The syndicated loan agreement requires Sovello to achieve certain financial ratios. It also provides for compulsory unscheduled repayments if certain events occur, such as certain sales transactions, or if a third party acquires more than 50% of Sovello AG’s shares without the prior approval of the banks. Refer also to Note 4.12. Subsequent events.

Capital Management. The Board of Directors’ policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding non-controlling interests and alsomonitors the level of dividends toordinary shareholders.

Capital Management. The Company is not subject to any externally imposed capital requirements and is dependent on CGML to provide necessary capital resources which are therefore managed on a group basis. The Company defines capital as total shareholders’ equity. It is the Company’s objective to reduce its risk exposure with regards to market, liquidity and credit risk to a minimum by entering into offsetting transactions with CGML to maintain a sufficient capital base to support the development of its business and to meet statutory capital requirements at all times. There were no changes to the Company’s approach to capital management during the year.

Capital Management. The Company’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern. In the management of capital, the Company monitors its adjusted capital which comprises all components of equity. The Company sets the amount of capital in proportion to risk. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue common shares through private placements. The Company is not exposed to any externally imposed capital requirements. No changes were made to capital management during the periods ended October 31, 2013 and 2012.