UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

 

For the month of September 2020

 

Commission File Number: 001-34602

 

DAQO NEW ENERGY CORP.

 

Unit 29D, Huadu Mansion, 838 Zhangyang Road,

Shanghai, 200122

The People’s Republic of China

(+86-21) 5075-2918

 

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b) (1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b) (7): ¨

 

 

 

 

 

EXHIBIT INDEX

 

Number   Description of Document
     
Exhibit 10.1   English Translation of Letter of Undertaking on the Authenticity, Accuracy, and Completeness of the Prospectus, effective as of September 8, 2020, of Daqo New Energy Corp.
Exhibit 10.2   English Translation of Letter of Undertaking on Stabilizing the Company’s Stock Price, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.3   English Translation of Letter of Undertaking on the Resale Restriction and Voluntary Lock-Up of the Shares Held, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.4   English Translation of Letter of Undertaking on the Intent to Reduce Shareholding, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.5   English Translation of Letter of Undertaking on Avoiding Horizontal Competition, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.6   English Translation of Letter of Undertaking on Regulating Related Party Transactions, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.7   English Translation of Letter of Undertaking on Not Occupying Funds, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.8   English Translation of Letter of Undertaking on Protecting the Independence of the Company, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.9   English Translation of Letter of Undertaking Regarding the Restraint Measures for Failure to Fulfill the Undertakings, effective as of September 8, 2020, of Daqo New Energy Corp.
Exhibit 10.10   English Translation of Letter of Undertaking on Remedial Measures for Diluting Current Returns, effective as of September 7, 2020, of Daqo New Energy Corp.
Exhibit 10.11   English Translation of Letter of Undertaking Regarding Xinjiang Daqo New Energy Co., Ltd.’s Dividend Policy, effective as of September 7, 2020, of Xinjiang Daqo New Energy Co., Ltd.
Exhibit 99.1   Press release

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
Date: September 11, 2020  

 

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Exhibit 10.1

 

Letter of Undertaking on the Authenticity, Accuracy, and Completeness of the Prospectus

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering of shares and to be listed on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, makes the following representations and warranties:

 

There are no false statements, misleading statements, or material omissions in the Issuer’s prospectus, and the Company shall ensure that the disclosures in the prospectus are true, accurate and complete.

 

If any false statements, misleading statements, or material omissions in the Issuer’s prospectus have a significant and substantive impact on whether the Issuer meets the offering conditions prescribed by law, the Company will repurchase the original restricted shares disposed of by the Company within 30 days after the China Securities Regulatory Commission, or the relevant stock exchange, court or other competent authority has determined or issued a punishment notice on the aforementioned facts in accordance with the law. The repurchase price will be determined according to the secondary market price at that time, and not lower than the issue price plus bank deposit interest in the same period.

 

(If any ex-rights or ex-dividend matters of the Issuer’s stock occur, such as dividend distribution, stock dividend and the capitalization of capital reserve, the issue price will be adjusted accordingly). The repurchased shares include the original restricted shares and their successor shares. At the same time, as the controlling shareholder of the Issuer, the Company will urge the Issuer to repurchase all new shares and successor shares of the initial public offering in accordance with the law.

 

If any false statements, misleading statements, or material omissions in the Issuer’s prospectus cause any investors to suffer any losses in securities trading, the Company will compensate such investors for the losses in accordance with the law.

 

This letter of undertaking takes effect upon being signed by the Company.

 

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  DAQO NEW ENERGY CORP.
     
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 8, 2020

 

 

 

Exhibit 10.2

 

Letter of Undertaking on Stabilizing the Company’s Stock Price

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the SSE STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, hereby makes the following undertakings:

 

1. Within three years after the IPO, if the closing prices of the Issuer’s stock for 20 consecutive trading days are lower than the Issuer’s latest audited net assets per share (if, after the latest benchmark audit date, the Issuer’s net assets change due to dividend distribution, capitalization from capital reserve, issuance of additional shares, or rights issues, the net assets per share shall be adjusted accordingly), and the Issuer also meets the regulatory requirements for any changes in equity (such as share repurchases and increases in share capital), the Issuer and the related parties shall, in accordance with the stock price stabilization plan reviewed and approved by the Issuer’s board of directors and at a shareholders’ meeting, take one or more of the following measures to stabilize the Issuer’s stock price in the following order:

 

(1) The Issuer repurchases its stock;

(2) The controlling shareholder of the Issuer increases its shareholding in the Issuer;

(3) The Issuer’s directors (excluding independent directors and directors who do not receive remuneration from the Issuer) and senior management members increase their shareholding in the Issuer.

 

2. If the measures triggered to stabilize the Issuer’s stock price require the Issuer’s controlling shareholder to increase its shareholding in the Issuer, the Company will do so unconditionally in accordance with the Issuer’s stock price stabilization plan. If the Company fails to fulfill the obligation to increase its shareholding, within five business days from the date when the relevant undertaking is violated, the Company shall cease to receive any dividends from the Issuer and shall not dispose of its shares in the Issuer until it takes the corresponding measures to increase its shareholding in the Issuer and consummates the increase in accordance with its undertakings.

 

This letter of undertaking takes effect upon being signed by the Company.

 

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  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

 

 

Exhibit 10.3

 

 

Letter of Undertaking on the Resale Restriction and Voluntary Lock-Up of the Shares Held

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the SSE STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, pursuant to the relevant laws and regulations and the rules of China Securities Regulatory Commission, voluntarily undertakes as follows:

 

1. Within 36 months from the date of the IPO, the Company shall not transfer or entrust others to manage the Company’s directly or indirectly held shares issued before the IPO, nor propose that the Issuer repurchase these shares directly or indirectly held by the Company.

 

2. Within six months after the IPO, if the closing prices of the Issuer’s stock for 20 consecutive trading days are lower than the issue price, or at the end of the six-month period after the IPO (or, if that day is not a trading day, the first trading day after that day), the closing price is lower than the issue price, the lockup period of the shares issued by the Issuer and held by the Company before the IPO shall be automatically extended for six months.

 

3. During the period when the Company is recognized as the Issuer’s controlling shareholder, the Company will report to the Issuer the shares held by the Company and any of their changes.

 

The Company agrees to bear and compensate the Issuer for all losses, harm, and expenses caused to the Issuer due to any violation of the above undertakings.

 

This letter of undertaking takes effect upon being signed by the Company.

 

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  DAQO NEW ENERGY CORP.

 

  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

 

Exhibit 10.4 

 

Letter of Undertaking on the Intent to Reduce Shareholding

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, hereby makes the following undertakings on its intent of holding and reducing its shareholding in the Issuer:

 

After the IPO of the Issuer, the Company may reduce its shareholding in the Issuer as needed after the lock-up period expires. If the Company reduces its shareholding after the expiry of the lock-up period, the Company will comply with the relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange on shareholder reduction and information disclosure. The specific arrangements for the Company to reduce its shareholding within two years from the date of expiry of the lock-up period are as follows:

 

1. Amount of shareholding reduction: the Company intends to reduce its shareholding within two years after the expiry of the lock-up period, and the amount of shareholding reduction each year shall not exceed 10% of the Issuer’s stock held by the Company upon the IPO or immediately before the IPO (and if any ex-rights or ex-dividend matters of the Issuer’s stock occur, such as dividend distribution, allocation of bonus shares and capitalization of capital reserve, such amount of shares will be adjusted accordingly); if the Company intends to reduce its shareholding after two years after the expiry of the lock-up period, the amount of shareholding reduction will be published before the reduction;

 

2. Method of shareholding reduction: the Company shall comply with the relevant laws and regulations regarding share transfers, including using the centralized bidding trading system of the stock exchange, the block trading system, or through privately negotiated agreements; however, if the Company expects that the total amount of stock that has been released for sale in the next month exceeds 1% of the Issuer’s total stock, it will not transfer its stock through the centralized bidding trading system of the stock exchange;

 

3. Price of shareholding reduction: if the shareholding is reduced within two years after the expiry of the lockup period, the price of the shareholding reduction shall not be less than 100% of the issue price (and if any ex-rights or ex-dividends matters of the Issuer’s stocks occur, such as dividend distribution, allocation of bonus shares and capitalization of capital reserve, the issue price will be adjusted accordingly); if the shareholding is reduced two years after the expiry of the lockup period, the reduction price shall comply with relevant laws and regulations;

 

4. Time limit of shareholding reduction: the time limit for the reduction shall be six months after the announcement of the shareholding reduction plan. After the time limit for the reduction expires, if the Company continues to reduce its shareholding, a shareholding reduction announcement shall be carried out again in accordance with the above arrangement.

 

If the Company fails to fulfill the aforementioned commitments, the proceeds obtained from any violation of the above commitments belong to the Issuer.

 

This letter of undertaking takes effect upon being signed by the Company.

 

 

 

  DAQO NEW ENERGY CORP.

 

  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

   

 

Exhibit 10.5

 

Letter of Undertaking on Avoiding Horizontal Competition

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the SSE STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, to avoid horizontal competition with the Issuer, in accordance with the relevant laws and regulations, hereby makes the following undertakings:

 

1. The Company and its subsidiaries other than the Issuer (including, same as all references to the Issuer below, the Issuer’s subsidiaries), are not currently engaged in any form of business that competes or may compete, directly or indirectly, with the Issuer’s business or activity.

 

2. If the Issuer consummates the IPO, the Company will take effective measures, and urge any company controlled by the Company to take effective measures, to not:

(1) in any form, directly or indirectly, engage in any business or activities that constitute or may be directly or indirectly competitive with the business operated by the Issuer, or hold rights or interests in such business; or

(2) in any form, support others than the Issuer to engage in business or activities that compete or may compete with the Issuer’s current or future businesses.

 

3. After the IPO, where the Company and its controlled subsidiaries have any business opportunities to engage in, participate in, or invest in any business or activity that may compete with the business operated by the Issuer, the Issuer shall have priority to pursue such business opportunities.

 

4. As the controlling shareholder of the Issuer, the Company will not use the controlling shareholder status to, and will not through any subsidiary controlled by the Company, engage in any business or activity that harms or may harm the interests of the Issuer.

 

The Company agrees to bear and compensate the Issuer for all losses, harm, and expenses caused by any violation of the above undertakings, and the proceeds obtained by the Company from any violation of the above undertakings will be vested with the Issuer.

 

This letter of undertaking takes effect upon being signed by the Company, and is valid while the Company is the controlling shareholder of the Issuer.

 

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  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

 

Exhibit 10.6

 

Letter of Undertaking on Regulating Related Party Transactions

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, to regulate the related party transactions with the Issuer, hereby makes the following undertakings:

 

1. The Company will strictly follow the PRC Company Law and other laws and regulations as well as the Issuer’s articles of association to exercise shareholder rights and perform shareholder obligations, fully respect the Issuer’s independent legal person status, ensure that the Issuer operates independently and makes decisions independently, and urge the Issuer’s directors and supervisors (if any) nominated by the Company to perform their duties of loyalty and diligence in accordance with the law.

 

2. To procure that the Company and companies, enterprises, other economic organizations, and individuals that become affiliates of the Issuer due to a specific relationship with the Company (hereinafter collectively referred to as the “Related Parties of the Company”) try not to increase unnecessary related party transactions and try to ensure compliance of the related party transactions with the Issuer in the future. Regarding the necessary related party transactions, the Company and the Related Parties of the Company shall perform relevant procedures in accordance with the relevant laws and regulations, the Issuer’s articles of association and relevant policies, and in accordance with fair, equitable, and normal commercial terms, to ensure that the legitimate rights and interests of the Issuer and other shareholders will not be harmed.

 

3. To ensure that the Company and the Related Parties of the Company strictly perform various related party transaction agreements entered into with the Issuer in good faith, and that the Company and the Related Parties of the Company will not seek any interests or benefits from the Issuer beyond the provisions of such agreements.

 

4. If the Company violates the above representations and undertakings, the Issuer and other shareholders of the Issuer will have the right to, in accordance with to this letter and applicable laws, seek to enforce the above undertakings by the Company and compensation by Company to the Issuer and its other shareholders for all losses suffered. Any proceeds obtained by the Company due to any violation of the above representations and undertakings shall also be vested with the Issuer.

 

If the Company violates the aforementioned commitments, it will bear all the legal liability for any such violation.

 

This letter of undertaking takes effect upon being signed by the Company, and is valid only during the period when the Company acts as the controlling shareholder of the Issuer.

 

 

 

  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

 

Exhibit 10.7

 

Letter of Undertaking on Not Occupying Funds

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, hereby makes the following undertakings:

 

As the controlling shareholder of the Issuer, the Company will strictly abide by laws, regulations, regulatory documents, and the Issuer’s relevant policies, will not occupy or use the Issuer’s assets and resources in any way, and will not directly or indirectly take any action that harms or may harm the interests of the Issuer and its other shareholders.

 

If the interests of the Issuer or its other shareholders are harmed due to the Company’s breach of the above undertakings and warranties, the Company will bear the corresponding liability in accordance with the law.

 

This letter of undertaking takes effect upon being signed by the Company, and is valid only during the period when the Company acts as the controlling shareholder of the Issuer.

 

[The space below is intentionally left blank]

 

 

 

  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

 

Exhibit 10.8

 

Letter of Undertaking on Protecting the Independence of the Company

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), during the period of being the controlling shareholder of the Issuer, to protect the independence of the Issuer, makes the following undertakings:

 

1. While the Company is the controlling shareholder of the Issuer, the Company will ensure that the Issuer remains independent from the Company and its related parties1 in terms of business, assets, finance, personnel, and governance bodies, among others.

 

2. The Company undertakes to not make use of the controlling shareholder status of the Issuer to harm the Issuer’s legitimate interests;

 

3. While the Company is the controlling shareholder of the Issuer, the Company and other companies controlled by the Company will restrain from all illegal occupation of the Issuer’s funds and assets and will in no event require the Issuer and its controlled companies to provide any form of guarantee or financial support to the Company, except where the Issuer is the beneficiary of the guarantee;

 

4. The Company agrees that if the Company violates the above undertakings and thus causes losses to the Issuer, the Company will compensate the Issuer in full for all losses suffered in a timely manner.

 

This letter of undertaking takes effect upon being signed by the Company.

 

 

1 The term “related parties” under this letter of undertaking is defined in the “Rules of the Shanghai Stock Exchange for Listing of Stocks on the Science and Technology Innovation Board” and “Accounting Standards for Business Enterprises”.

 

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  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

 

Exhibit 10.9

 

Letter of Undertaking Regarding the Restraint Measures for Failure to Fulfill the Undertakings

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, guarantees that it will strictly fulfill the public undertakings disclosed in the Issuer’s prospectus, and if it fails to fulfill the undertakings, it will take the following actions:

 

(1) The Company will publicly explain the specific reasons for its failure to fulfill its undertakings in the newspapers designated by the Shanghai Stock Exchange and the China Securities Regulatory Commission, and apologize to the Issuer’s other shareholders and public investors.

 

(2) If the Company violates or fails to fulfill the public commitments disclosed in the Issuer’s prospectus, the Company will bear the corresponding liability in accordance with the provisions of relevant laws and regulations and the requirements of the regulatory authorities.

 

(3) If the investors suffer losses in securities transactions due to the Company’s breach or failure to perform any related undertakings, the Company will compensate them for the losses in accordance with the law. Investor losses shall be determined based on the amount determined by the Issuer and investors through negotiation, or based on the method or amount recognized by the securities regulatory authority and the relevant court. The Company will voluntarily apply for freezing the shares it holds in the Issuer in a market value corresponding to the compensation amount, so as to ensure the Company’s ability to compensate the investors for their losses in accordance with laws and regulations and the requirements of the regulatory authorities. If the Company fails to perform the aforementioned compensation obligation, the Issuer’s pre-IPO shares held by the Company shall not be transferred before the Company has performed the aforementioned compensation obligation, and during this period, the Issuer shall have the right to deduct cash dividends distributed to the Company to fulfill the aforementioned compensation.

 

This letter of undertaking takes effect upon being signed by the Company.

 

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  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 8, 2020

 

 

 

Exhibit 10.10

 

Letter of Undertaking on Remedial Measures for Diluting Current Returns

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), after the IPO, the Issuer’s total share capital and shareholders’ equity may increase significantly, and the shareholders’ current returns (such as the Issuer’s earnings per share and weighted average return on equity) may be diluted.

 

Daqo New Energy Corp. (hereinafter referred to as the “Company”), as the controlling shareholder of the Issuer, will safeguard the legitimate rights and interests of the Issuer and all shareholders, and in accordance with the relevant regulations of the China Securities Regulatory Commission, promote the implementation of the Issuer’s return-filling measures, and make the following undertaking:

 

While the Company is the controlling shareholder of the Issuer, the Company shall not, in excess of its shareholder capacity, interfere in the Issuer’s business and management activities, and shall not encroach on the Issuer’s interests.

 

This letter of undertaking takes effect upon being signed by the Company.

 

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  DAQO NEW ENERGY CORP.
   
  By: /s/ Longgen Zhang
  Name: Longgen Zhang
  Title: Director and Chief Executive Officer
  Date: September 7, 2020

 

 

Exhibit 10.11

 

Letter of Undertaking Regarding Xinjiang Daqo New Energy Co., Ltd.’s Dividend Policy

 

Whereas Xinjiang Daqo New Energy Co., Ltd (hereinafter referred to as the “Issuer”) intends to apply for an initial public offering and listing of its shares on the Shanghai Stock Exchange’s STAR Market (hereinafter referred to as the “IPO”), it hereby makes the following undertakings:

 

1.Dividend policy after the IPO

 

(1)General Principle

 

When formulating its dividend policy and specific plans, the Issuer should take into account the investors’ reasonable returns and the Issuer’s long-term interests and sustainable development, and ensure the continuity and stability of its dividend distribution policies. The Issuer will distribute cash dividends as a priority to the extent that its capital needs for normal production and business operations can be met.

 

(2)Method of dividend distribution

 

The Issuer's dividend distribution can be made in cash, stock, a combination of cash and stock, or other methods permitted by laws and regulations. When deciding the dividend distribution method, the Issuer will prioritize cash dividend over stock dividend and other distribution methods. The Issuer can distribute stock dividends in light of the Issuer’s cash flow status, business growth, net assets per share and other real and reasonable factors. The Issuer can issue preferred shares in accordance with the law.

 

(3)Specific conditions and proportions of cash dividends

 

The Issuer must distribute cash dividends when all the following conditions are satisfied: (i) the Issuer recorded consolidated net profit and the parent company recorded net profit for the year; (ii) the accumulated retained earnings of Issuer as indicated by its consolidated financial statements and the accumulated retained earnings of the parent company as indicated by its financial statements, are positive at the end of the year; (iii) the Issuer has the corresponding cash to distribute cash dividends; (iv) the Issuer’s auditor issued a standard unqualified opinion for the Issuer’s financial statements in the year; and (v) the Issuer has no major investment plans or major capital expenditure arrangements.

 

The aforementioned major investment plans or major capital expenditure arrangements refer to: the Issuer’s planned investments, construction projects, asset acquisitions, and purchases of equipment in the next 12 months which in total account for more than 30% of the Issuer’s most recently audited total assets, or the expenditures on a single investment, construction project, asset acquisition or equipment purchase which accounts for more than 20% of the Issuer’s latest audited net assets.

 

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In principle, the Issuer’s cumulative distribution of dividends in cash in the last three years shall not be less than 30% of the Issuer’s annual average distributable profits realized in the last three years.

 

(4)Specific conditions for the Issuer to issue stock dividends

 

When the Issuer operates well and the board of directors considers that the stock price of the Issuer is inconsistent with the scale of the Issuer's share capital, and the distribution of stock dividends is beneficial to the overall interests of all shareholders of the Issuer, the stock dividend distribution plan can be proposed upon satisfaction of the above-mentioned cash dividends requirement. The Issuer’s dividend distribution shall not exceed its accumulated distributable profits.

 

(5)Time interval of the Issuer’s dividend distribution

 

Upon the satisfaction of the conditions for dividend distribution, the Issuer will distribute dividends once a year in principle.

 

Upon the satisfaction of the conditions for cash dividend distribution, the Issuer will distribute cash dividends as a priority. If conditions permit, the Issuer’s board of directors may propose to the Issuer to issue interim cash dividends based on the Issuer’s actual results of operations.

 

(6)The Issuer's differentiated cash dividend policy

 

If the Issuer meets the conditions for cash dividend distributions, the Issuer must distribute cash dividends; the Issuer may distribute stock dividends while making cash dividend distributions.

 

The board of directors of the Issuer shall comprehensively consider the industry’s characteristics and the Issuer’s development stage, business model, profit level, and any major capital expenditure arrangements and other factors, before proposing the differentiated cash dividend policy according to the procedures specified in the articles of association.

 

1、If the Issuer reaches the maturity stage and does not have any major capital expenditure arrangement, the proportion of cash dividends in the dividend distribution shall be at least 80%.

 

2、If the Issuer reaches the maturity stage but has major capital expenditure arrangements, the proportion of cash dividends in the dividend distribution shall be at least 40%.

 

3、If the Company is in the growth stage and has major capital expenditure arrangements, the proportion of cash dividends in the dividend distribution shall be at least 20%.

 

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When the development stage of the Issuer is difficult to distinguish, and there are significant capital expenditure arrangements, the dividend policy can be decided in accordance with the provisions of the foregoing paragraph.

 

The Issuer will mainly distribute cash dividends; in addition to fulfilling the foregoing cash dividend distributions, the Issuer’s board of directors may propose a stock dividend distribution plan to the general meeting of shareholders for review.

 

(7)Decision-making procedures and mechanisms for the Issuer’s dividend distribution

 

1、The Issuer’s annual dividend distribution plan will be proposed and prepared by the board of directors by considering the Issuer’s articles of association, profitability, cash requirements and resources. When the board of directors deliberates the specific cash dividend plan, it will carefully study and analyze, among others, the timing, conditions, and minimum ratio of the Issuer’s cash dividends, adjustment conditions and decision-making procedures, among others. The independent directors will review the dividend distribution plan and provide independent and clear recommendations. The proposal passed by the board of directors shall be submitted to the general meeting of shareholders for deliberation.

 

Independent directors can collect the views of minority shareholders and submit dividend distribution proposals directly to the board of directors for deliberation.

 

Before any specific cash dividend plan is deliberated by the shareholders’ meeting, it shall actively communicate with shareholders, especially minority shareholders, via various ways (including but not limited to telephone, fax, and email or inviting small and medium-sized shareholders to attend the meeting), fully consider the views and demands of minority shareholders, and timely respond to their concerns.

 

2、the board of directors' resolutions on approvals and modifications of the relevant policies on dividend distribution shall be adopted by the affirmative vote of more than half of all directors before the decision can be submitted to the general meeting of shareholders for deliberation; shareholders’ resolutions on approvals and modifications of the relevant policies on dividend distribution shall be adopted by more than two-thirds affirmative vote held by the shareholders (or their representatives) present at the shareholders’ meeting.

 

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3、In the case of misappropriation of the Issuer’s funds by shareholders, the Issuer must deduct an amount from the cash dividends distributable to such shareholders to repay the misappropriated funds.

 

(8)Implementation of the Issuer’s dividend distribution plan

 

After the Issuer’s general meeting of shareholders passes a resolution on the dividend distribution plan, the Issuer’s board of directors must complete the distribution of dividends (or shares) within two months after the general meeting of shareholders.

 

(9)Adjustment of the Issuer’s dividend distribution policy

 

In the case of force majeure such as war or natural disaster, which has a significant impact on the production and operation of the Issuer, or when there is a major change in the Issuer’s operating conditions, the Issuer may adjust the dividend distribution policy; however, the amended dividend distribution policy shall not violate the relevant laws, administrative regulations, departmental rules and government policies.

 

When the Issuer adjusts its dividend distribution plan, it shall implement corresponding decision-making procedures in accordance with the provisions of paragraph (7) under Section 1.

 

(10)Disclosure of dividend distribution policy

 

The Issuer shall disclose the implementation of the dividend distribution policy in the annual report in detail.

 

It is required to elaborate the following in the annual report, among others: whether it meets the requirements of the Issuer’s articles of association or the requirements of the shareholders’ meeting resolutions; whether the cash dividend standard and ratio are definite and clear; whether the relevant decision-making procedures and mechanisms are complete; whether independent directors have performed their duties and played their due role; whether small and medium-sized shareholders have had the opportunities to fully express opinions and demands; whether the legitimate rights and interests of minority shareholders are fully protected. If any adjustment or change in the dividend distribution policy, it shall also be explained in details whether the conditions and procedures for the adjustment or change are compliant and transparent.

 

The Issuer will strictly implement the dividend distribution policy after listing, including the general principle, methods of distribution, specific conditions and proportions of cash dividends, specific conditions to issue stock dividends, time interval of dividend distribution, decision-making procedures and mechanisms for dividend distribution, adjustment of dividend distribution, and implementation of dividend distribution plans.

 

4

 

2.Issuer’s distribution arrangement of accumulated undistributed profits before the IPO

 

The accumulated undistributed profits before the IPO shall be shared by the new and old shareholders according to the proportion of shares held by each of them after listing.

 

This letter of undertaking takes effect upon being affixed with corporate seals of the Issuer.

 

[The space below is intentionally left blank]

 

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(Signature Page of Letter of Undertaking

Regarding Issuer’s Dividend Distribution Policy)

 

 

Xinjiang Daqo New Energy Co., Ltd (Seal)

   
  Date: September 7, 2020

 

 

Exhibit 99.1

 

Daqo New Energy’s Subsidiary Xinjiang Daqo Submits Application Documents for Initial Public Offering on China’s STAR Market

 

Shihezi, China—September 11, 2020—Daqo New Energy Corp. (NYSE: DQ) ("Daqo New Energy", the "Company" or “we”), a leading manufacturer of high-purity polysilicon for the global solar PV industry, today announced that the application documents regarding a potential initial public offering and listing of the shares of Xinjiang Daqo New Energy Co., Ltd. (“Xinjiang Daqo”), a principal operating subsidiary of Daqo New Energy, had been submitted to and received by the Shanghai Stock Exchange.

 

In June 2020, Daqo New Energy announced its intention to list the shares of Xinjiang Daqo on the Shanghai Stock Exchange’s Sci-Tech innovation board (the “STAR Market”), a stock exchange intended to support innovative companies in China.

 

According to Xinjiang Daqo’s relevant initial public offering documents, it plans to issue at least 286,764,706 shares, accounting for approximately 15.00% of its total share capital after the offering. Currently, the Company owns approximately 95.60% of Xinjiang Daqo’s shares. Following this initial public offering, the Company would hold approximately 81.26% of Xinjiang Daqo’s shares.

 

The proceeds of the offering, which are subject to the actual size and pricing of the offering, will be used for capital expenditures for the following two polysilicon manufacturing projects and additional working capital for Xinjiang Daqo.

 

1)Phase 4B ultra-high-purity polysilicon project for mono-crystalline solar PV wafer applications with an annual production capacity of 35,000 MT, which will significantly increase our capacity to better address the fast-growing demand for mono-grade polysilicon and further solidify our leadership in the industry. The total capital expenditure for this project is expected to be approximately US$514 million.

 

 

 

 

2)A semi-grade ultra-high-purity polysilicon project for semiconductor wafer applications with an annual capacity of 1,000 MT, which will best leverage our expertise in advanced technology and quality control, diversify our product portfolio and fill the gap of domestic supply of semi-grade polysilicon. The total capital expenditure for this project is expected to be approximately US$62 million.

 

3)Additional working capital of approximately US$156 million to optimize debt structure, enhance R&D and fund business development projects.

 

The completion of the proposed initial public offering of Xinjiang Daqo is subject to the review process by the Shanghai Stock Exchange and the registration process by the China Securities Regulatory Commission. The Company cannot predict its ability to successfully complete the listing of Xinjiang Daqo’s shares, the related timeline or the actual size and pricing of the offering.

 

About Daqo New Energy Corp.

 

Daqo New Energy Corp. (NYSE: DQ) (“Daqo” or the “Company”) is a leading manufacturer of high-purity polysilicon for the global solar PV industry. Founded in 2008, the Company is one of the world’s lowest cost producers of high-purity polysilicon. Daqo’s highly-efficient and technically advanced manufacturing facility in Xinjiang, China currently has a nameplate annual polysilicon production capacity of 70,000 metric tons.

 

For further information, please contact:

 

Daqo New Energy Corp.

Investor Relations Department

Phone: +86-187-1658-5553

Email: dqir@daqo.com

 

Christensen

 

Mr. Rene Vanguestaine

Phone: +86 178 1749 0483

Email:rvanguestaine@christensenir.com

 

In the U.S.
Mr. Tip Fleming
Phone: +1-917-412-3333
Email: tfleming@Christensenir.com 

 

For more information, please visit www.dqsolar.com

 

 

 

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Forward-looking statements in this announcement include, among other things, Daqo New Energy’s strategic and operational plans, the proposed listing of Xinjiang Daqo shares on the STAR Market and its timing. The Company may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s ability to successfully complete the proposed STAR Market listing of Xinjiang Daqo’s shares; the impact of the proposed STAR Market listing on the Company’s business and results of operations, the use of proceeds of the proposed initial purchase offering of Xinjiang Daqo’s shares, and perceptions of the initial public offering and STAR Market listing of Xinjiang Daqo’s shares by the Company’s customers and other business partners and investors; the demand for photovoltaic products and the development of photovoltaic technologies; global supply and demand for polysilicon; alternative technologies in cell manufacturing; the Company’s ability to significantly expand its polysilicon production capacity and output; the reduction in or elimination of government subsidies and economic incentives for solar energy applications; and the Company’s ability to lower its production costs; and the duration of COVID-19 outbreaks in China and many other countries and the impact of the outbreaks and the quarantines and travel restrictions instituted by relevant governments on economic and market conditions, including potentially weaker global demand for solar PV installations that could adversely affect the Company’s business and financial performance. Further information regarding these and other risks is included in the reports or documents that the Company has filed with, or furnished to, the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.