Hua Hong Semiconductor Limited — Proxy Solicitation & Information Statement 2015

Aug 17, 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in Hua Hong Semiconductor Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1347)

PROPOSAL FOR ADOPTION OF SHARE OPTION SCHEME AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A notice convening the extraordinary general meeting (“ EGM ”) of Hua Hong Semiconductor Limited (the “ Company ”) to be held at 288 Halei Road, Zhangjiang Hi-Tech Park, Shanghai, PRC, 201203 on 1 September 2015 at 10:00 a.m. is set out on pages 20 to 21 of this circular. A form of proxy for use by the Shareholders at the EGM is enclosed herein. Such form of proxy is also published on the websites of the Company and of The Stock Exchange of Hong Kong Limited.

Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy for use at the EGM in accordance with the instructions printed thereon and return the same to the Company’s share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof should you so wish.

17 August 2015

CONTENTS

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX: SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE
OPTION SCHEME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . .	20

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

• “Adoption Date”

the date on which the Share Option Scheme is adopted by a resolution of the Shareholders;

• “associate(s)”

has the meaning ascribed thereto in the Listing Rules;

• “Auditors”

• the auditors of the Company;

• “Board”

• the board of directors of the Company;

• “Company”

• Hua Hong Semiconductor Limited, a company incorporated in Hong Kong with limited liability and the issued securities of which are listed on the Stock Exchange;

• “connected person” has the meaning ascribed thereto in the Listing Rules;

• “Director(s)”

• the director(s) of the Company, including executive and non-executive director(s);

• “EGM”

• the extraordinary general meeting of the Company to be held on 1 September 2015 at 10:00 a.m. for the purpose of considering and, if thought fit, approving among other things the Share Option Scheme or any adjournment thereof;

• “Exercise Price”

• the price per Share at which the Shares of the Company are to be subscribed pursuant to the exercise of Options by the Grantees;

• “Grant Date”

• the date of a grant of Options to the Participants, which must be a trading day;

• “Grant Notice”

• a notice for a grant of Options to the Participants pursuant to the Share Option Scheme;

• “Grantee(s)”

• a Participant who accepts the Options to be granted pursuant to the terms of the Share Option Scheme, or a person who inherits the Options due to the death of an initial Grantee, if permitted;

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DEFINITIONS

• “Group”

• Hua Hong Semiconductor Limited and its corresponding subsidiaries, and a Group member refers to one of these companies;

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China;

• “Independent Non-Executive Director”

• an independent non-executive director of the Company;

• “Latest Practicable Date”

• 14 August 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular;

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

• “Option(s)”

• an option to subscribe for the shares of the Company pursuant to the terms of the Share Option Scheme;

• “Option Period”

• the period during which the Grantees may exercise Options, which is determined and notified by the Board;

• “Participant(s)”

• any person who is a (1) existing executive and nonexecutive Directors of any member of the Group; or (2) senior management and key managerial and technical personnel having a direct impact on the results of operations and sustainable development of any member of the Group; who is eligible for the Share Option Scheme, subject always to any limits and restrictions specified in the Share Option Scheme, but shall not include any Independent Non-Executive Directors;

• “SFO”

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

• “Share(s)” ordinary shares of the Company;

• “Shareholder(s)” holder(s) of the Shares;

• “Share Option Scheme” the “Share Option Scheme of Hua Hong Semiconductor Limited” proposed to be adopted at the EGM and the subsequent schemes amended based on it;

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DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Substantial Shareholder”	has the meaning ascribed thereto in the Listing Rules;
“trading day(s)”	a day on which the Stock Exchange is open for trading
	equity securities; and
“$”	Hong Kong dollars.

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LETTER FROM THE BOARD

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HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1347)

Executive Directors: Wenbiao Fu (Chairman) Yu Wang (President)

Non-executive Directors:

Registered office: Room 2212 Bank of America Tower 12 Harcourt Road Central, Hong Kong

Jianbo Chen Yuchuan Ma Takayuki Morita Jun Ye

Independent Non-Executive Directors: Stephen Tso Tung Chang Kwai Huen Wong, JP Long Fei Ye

17 August 2015

To the Shareholders

Dear Sir or Madam,

PROPOSAL FOR ADOPTION OF SHARE OPTION SCHEME AND NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The purpose of this circular is to give you notice of the EGM and to provide you with information relating to the proposed adoption of the Share Option Scheme.

ADOPTION OF THE SHARE OPTION SCHEME

Currently, the Company has no share option scheme. The Directors propose to adopt the Share Option Scheme which will be put to the Shareholders for approval at the EGM. The purpose of the Share Option Scheme is to attract, retain and provide incentives to the Participants, to provide them with the opportunity to obtain Shares of the Company and to link their interests closely to the operating results and share performance of the Company with the view to increasing the value of the Company.

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LETTER FROM THE BOARD

The Share Option Scheme contains provisions relating to performance targets that need to be achieved before an Option can be exercised and a minimum period for which an Option must be held before the Option can be exercised. The Directors believe that such conditions will serve to incentivize Participants to use their best endeavors in assisting the growth and development of the Group, as well as to provide the appropriate incentives for Participants to remain as eligible Participants, thereby enabling the Group to continue to benefit from the services and contributions of the eligible Participants.

A summary of the principal terms of the Share Option Scheme is set out in the Appendix to this circular. A copy of the Share Option Scheme is available for inspection at the registered office of the Company at Room 2212, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong during normal business hours from the date hereof up to and including the date of the EGM.

As of the Latest Practicable Date, there were 1,033,871,656 Shares in issue. Assuming there is no change to the issued share capital of the Company in the period commencing from the Latest Practicable Date to the date of the EGM, the total number of Shares that may be issued under the Share Option Scheme and any other schemes of the Company will be 103,387,165 Shares, representing 10% of the issued share capital of the Company as at the date of the EGM.

The subscription price for the Shares under the Share Option Scheme shall be a price solely determined by the Board and notified to a grantee and shall be at least the higher of (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date on which an Option is granted; and (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the 5 trading days immediately preceding the date on which an Option is granted.

None of the Directors is a trustee of the Share Option Scheme nor has any direct or indirect interest in the trustees of the Share Option Scheme, if any.

The Directors consider that it is not appropriate to state the value of all Options that can be granted pursuant to the Share Option Scheme as if they had been granted at the Latest Practicable Date. The Directors believe that any statement regarding the value of the options as at the Latest Practicable Date will not be meaningful to the Shareholders, taking into account the number of variables which are crucial for the calculation of the option value which have not been determined. Such variables include the exercise period and other relevant variables such as the Options may become lapsed or cancelled prior to the normal expiry of their respective option periods on the happening of certain events as specified in the Share Option Scheme which are not predictable or controllable by the Directors.

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LETTER FROM THE BOARD

CONDITIONS OF THE ADOPTION OF THE SHARE OPTION SCHEME

The Share Option Scheme shall take effect conditional upon:

• (A) the approval of the Share Option Scheme by the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government;

• (B) the passing of an ordinary resolution to adopt the Share Option Scheme by the Shareholders; and

• (C) the Listing Committee of the Stock Exchange granting approval for the listing of and permission to deal in any Shares which may fall to be issued pursuant to the exercise of the Options in accordance with the terms of the Share Option Scheme.

APPLICATION FOR LISTING

Application will be made to the Stock Exchange for approval of the listing of, and permission to deal in, the Shares to be issued and allotted pursuant to the exercise of any Options granted under the Share Option Scheme.

EGM

A notice of the EGM which contains the resolution to approve the adoption of the Share Option Scheme is set out from pages 20 to 21 of this circular.

Whether or not you are able to attend the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible, and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof (as the case maybe). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case maybe) should you so wish.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder had a material interest in the adoption of the Share Option Scheme and accordingly, no Shareholder is required to abstain from voting at the EGM.

VOTING BY WAY OF POLL

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at a general meeting must be taken by poll except where the chairman of the general meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The chairman of the EGM shall therefore demand voting on the resolution set out in the notice of the EGM be taken by way of poll pursuant to Article 64 of the articles of association of the Company.

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LETTER FROM THE BOARD

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

RECOMMENDATION

The Directors consider that the adoption of the Share Option Scheme is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend all Shareholders to vote in favour of the resolution to be proposed at the EGM.

Yours faithfully, By Order of the Board Wenbiao Fu Chairman

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

The following is a summary of the principal terms of the Share Option Scheme proposed to be approved at the EGM:

1. PURPOSE

The purpose of the Share Option Scheme is to attract, retain and provide incentives to the Participants, to provide them with the opportunity to obtain Shares of the Company and to link their interests closely to the operating results and share performance of the Company with the view to increasing the value of the Company.

2. WHO MAY JOIN

The Participants of the Share Option Scheme include (1) existing executive and non-executive Directors of any member of the Group; and (2) senior management and key managerial and technical personnel having a direct impact on the results of operations and sustainable development of any member of the Group, subject always to any limits and restrictions specified in the Share Option Scheme, but shall not include any Independent Non-Executive Directors.

3. ACCEPTANCE OF OPTION OFFER

Any Option offer will be deemed to have been accepted and the number of Options specified in the Grant Notice will be deemed to have been granted if a Grantee gives his/her signature on such Grant Notice within the requisite 28 days period. Upon acceptance of the grant of Option, the Grantee undertakes that he/she will, at the request of the Company, pay an amount which is equivalent to the value of HK$1.00 (to be determined on the date when the grant of Option is accepted) to the Company as a consideration for acceptance of the grant of Option.

If any Participants do not accept the grant of Option within the requisite 28 days period, it will be deemed that the grant of Option has not been accepted and will be revoked.

4. GRANT AND TERMS OF OPTIONS

• (i) Notwithstanding any other provision in the Share Option Scheme, the grant of the Options under the Share Option Scheme is subject to the approval of State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government.

• (ii) Subject to paragraph 4(i) above, and subject to the terms of the Share Option Scheme, the Board shall in its absolute discretion be entitled to grant Options to any Participants at the Exercise Price at any time within 7 years after the Adoption Date. The Board may determine the Exercise Price and the number of Shares to be subscribed (which must be an integral multiple of a board lot for dealing in Shares) in accordance with the terms of the Share Option Scheme.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

• (iii) The grant and vesting of the Options shall be subject to the attainment of the annual performance targets as established by the Board for the relevant fiscal year.

• (iv) Without prejudice to the terms of the Share Options Scheme and Chapter 17 of the Listing Rules, the Board shall have the right to impose any additional conditions and restrictions as it thinks appropriate on the grant of Options.

• (v) Any terms and conditions under which the Options are granted as may be determined by the Board (subject to compliance with the requirements of the Listing Rules) shall be specified in the Grant Notice, which terms and conditions may include, amongst others, any additional requirements imposed by the Board on any individual or all Grantees of the Options. In any event, if these requirements are for individuals only and are not advantageous to any Participants, the Board may impose further restrictions on the shortest restrictive period and the requirement of performance according to its resolutions without the approval of the Shareholders.

5. EXERCISE OF OPTIONS AND EXERCISE PRICE

• (i) A Participant may accept a lesser amount of Options as specified on the Grant Notice provided that the amount accepted shall not be less than a board lot for dealing in Shares or an integral multiple thereof.

• An Option may be exercised in whole or in part (but if in part only, in respect of a board lot or any integral multiple thereof) at any time during the Option Period or in the circumstances set out in paragraphs 11 to 14 below by the Grantee giving notice in writing to the Company stating the fact that the Option will be exercised, specifying the number of Shares to be subscribed, and making payments to the Company for the subscription together with any taxes (if appropriate) and performing all other matters reasonably required by the Company. Within 28 days after receipt of the notice for exercise of the Option and the subscription monies and, where appropriate, receipt of the Auditors’ certificate in the circumstances set out in paragraph 15 below, the Company shall allot and issue the relevant Shares to the Grantee credited as fully paid and issue to the Grantee a share certificate in respect of the Shares so allotted.

• (ii) The number of Options to be exercised shall be subject to any additional conditions imposed by the Board in accordance with the requirements described in paragraph 4 above, and the Board shall have final interpretation to such conditions which shall be binding on all the Participants, unless otherwise required. The effectiveness and exercise of an Option is related to the performance of the Company and of individuals. The Board will determine performance targets concerned and set out the same in the Grant Notice.

• (iii) The holder of an Option granted under the Share Option Scheme shall have no voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, attaching to the options, except as provided otherwise pursuant to applicable laws, regulations or the articles of association of the Company in effect from time to time.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

• (iv) The Exercise Price will be determined by the Board at its absolute discretion and notified to a Grantee. The minimum Exercise Price shall not be less than the higher of:

• (A) the closing price of the Shares on the Stock Exchange on the Grant Date in respect of such Options; and

• (B) the average closing price of the Shares on the Stock Exchange for the five consecutive trading days immediately preceding the Grant Date in respect of such Options.

6. TIME OF EXERCISE OF OPTIONS

Without prejudice to the Board’s discretion to impose additional conditions on the exercise of Options set out in paragraph 4 above, the Options shall be effective after at least two years from the Grant Date or such later date as set out in the relevant Grant Notice, unless such Options take effect in advance in accordance with the provisions set out in paragraph 13 below. The proportion of the coming into effect of the Options shall be set out in the Grant Notice.

Subject to the provisions in paragraphs 11 to 14 below, an Option under the Share Option Scheme which is vested and has not lapsed may be exercised at any time during such period notified by the Board as not exceeding 7 years from the Grant Date. The exercise of Options may also be subject to any conditions imposed by the Board at the time of offer as set out in paragraph 4 above.

7. MAXIMUM NUMBER OF SHARES SUBJECT TO THE SHARE OPTION SCHEME

• (i) Subject to the limits referred to in paragraphs 7(ii), 7(iii) and 7(iv), the total number of Shares to be allotted upon exercise of the Options granted under the Share Option Scheme and other share option schemes of the Company must not in aggregate exceed 10% of the issued share capital for the time being.

• (ii) Without prejudice to the limit referred to in paragraph 7(i), the total number of Shares which may be allotted upon exercise of the Options granted under the Share Option Scheme and other schemes of the Company must not in aggregate exceed 10% of the issued share capital of the Company on the Adoption Date.

Options lapsed in accordance with the terms of the Share Option Scheme will not be counted for the purpose of calculating the 10% limit in this paragraph 7(ii).

• (iii) Without prejudice to the limit referred to in paragraph 7(i), the Company may refresh the 10% limit under paragraph 7(ii) from time to time with the approval of the Shareholders in a general meeting, but the refreshed limit shall not exceed 10% of the issued share capital as at the date of approval of the limit.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

As for the refreshed limit, the Options granted under the Share Option Scheme or other schemes (including those outstanding, cancelled or lapsed and those exercised) prior thereto shall not be counted for the purpose of calculating the new 10% limit.

• (iv) Without prejudice to the limit referred to in paragraph 7(i), the Company may convene a separate general meeting and obtain a separate approval from its Shareholders in a general meeting to permit the grant of Options which will result in the number of Shares in respect of all the Options granted exceeding the then 10% limit set out in paragraph 7(ii) above (based on the refreshed results from time to time), provided that such Options are granted only to the Participants specifically identified by the Company before Shareholders’ approval is sought.

The information required by the Listing Rules must be delivered to the Shareholders, including a circular to the Shareholders which contains a generic description of the specific Participants who may be granted such Options, the number and terms of the Options to be granted, the purposes of the grant of the Options to the specified Participants, and the explanation as to how the grant of the Options serves such purpose.

• (v) The limits referred to in this paragraph 7 and paragraph 8 below will be adjusted in accordance with the provisions set out in paragraph 15, in the event of any alteration in the capital structure of the Company whether by way of capitalization issue, rights issue, consolidation, subdivision or reduction of the share capital of the Company, provided that no such adjustment shall be made in the event of an issue of Shares as a consideration in respect of a transaction to which the Company is a party.

• (vi) The number of Options granted for the first time shall not exceed 3% of the total share capital of the Company.

8. MAXIMUM ENTITLEMENT OF EACH PARTICIPANT

If the total number of Shares allotted and which may fall to be allotted upon exercise of all the Options granted and to be granted (including exercised, cancelled and outstanding Options) to a Participant in any 12-month period in aggregate exceeds 1% of the issued share capital of the Company at the time, no further Grant of Options shall be given to such Participant.

Options may be granted to any Participant in excess of the individual limit of 1% in any 12-month period with the approval of the Shareholders in general meeting (with such Participant and his/her close associates (or his/her associates if the Participant is a connected person) abstaining from voting). For the relevant general meeting, the relevant information required by the Listing Rules must be delivered to the Shareholders, including a circular to the Shareholders which discloses the identity of the Participant, and the number and terms of the

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

Options to be granted (and Options previously granted to such Participant). The number and terms (including the exercise price) of the Options to be granted to such Participant must be fixed before Shareholders’ approval, and the date of the Board meeting for proposing such further grant should be taken as the date of grant for the purpose of calculating the Exercise Price.

No Option shall be granted to any person who holds over 5% of Shares which carry voting right on the Grant Date unless it is approved by shareholders in general meetings. The Company must send a circular to the shareholders in accordance with Chapter 17 of the Listing Rules. All connected persons of the Company must abstain from voting in favour at such general meeting.

9. RESTRICTIONS ON GRANT OF OPTIONS TO DIRECTORS, CHIEF EXECUTIVES OR SUBSTANTIAL SHAREHOLDERS ETC.

Each grant of Options to a Participant who is a Director, chief executive or Substantial Shareholder of the Company, or any of their respective associates, under the Share Option Scheme must be approved by the Independent Non-Executive Directors of the Company.

Where any grant of Options to a Substantial Shareholder of the Company, or any of their respective associates, would result in the Shares issued and to be issued upon exercise of all Options already granted and to be granted under the Share Option Scheme (including Options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

• (A) representing in aggregate over 0.1% of the Shares in issue; and

• (B) having an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5 million,

such further grant of Options by the Board must be approved by the Shareholders in general meeting (the vote on such approval to be taken on a poll). All connected persons (as defined in the Listing Rules) must abstain from voting in favour at such general meeting.

A Shareholders’ circular must be prepared by the Company explaining the proposed grant, disclosing the number and terms of the Options to be granted and containing the recommendation from the Independent Non-Executive Directors as to voting and any other information as required under the Listing Rules.

Any change in the terms of Options granted to Substantial Shareholders or any of their respective associates must be approved by the Shareholders in general meeting in the manner detailed above.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

10. NON-TRANSFERABILITY OF OPTIONS

Except for the transmission of an Option in accordance with paragraph 12 below, no Grantee has right to sell, transfer, guarantee, charge, pledge, encumber or create any interest in favor of any third party over or in relation to any Option, or enter into any agreement in respect of any of the foregoing, or procure or impair any interest of any third party in direct or indirect connection with an Option. Any breach of the foregoing by the Grantee shall automatically invalidate any Option assigned to such Grantee and further entitle the Company to cancel any other Option held by such Grantee (to the extent not already exercised).

11. RIGHTS ON CEASING EMPLOYMENT

• (i) In the event of the Grantee ceasing to be an employee of a Group member for the reason of retirement (unless the Company confirms that the Grantee will be employed by a competitor of the Group upon ceasing, where the Options granted and not exercised will forthwith lapse), the Options that have been effective shall be exercised within 6 months from the date of retirement, and after such period of 6 months, the Options that have not been exercised will lapse. The Options that have not been effective on the date of retirement will forthwith lapse automatically unless otherwise required by the Board.

• (ii) In the event of the Grantee ceasing to be an employee for the reason of the Group member (including layoffs or transfer of business or other reasons), and the Grantee is not dismissed due to any material negligence or misconduct, the Options held by the Grantee that have been effective may be exercised immediately from the date of termination, but the Options must be exercised within 3 months from the date of termination, and after such period of 3 months, the Options that have not been exercised will lapse automatically. The Options that have been granted but have not been effective on the date of termination will forthwith lapse.

• (iii) In the event of the Grantee ceasing to be an employee for the reason of any material misconduct including, without limitation, (a) being materially negligent or derelict in his/her duties; (b) any acts in breach of relevant local laws or regulations or articles of association of the Company; and (c) the Group member has sufficient evidence to prove that the holder of Options has during his/her employment accepted or asked for bribes, committed graft and embezzlement, or has disclosed operational and technical secrets of the Company, has engaged in connected transactions, which damage the interests and reputation of the Group, or has acted otherwise that would have material adverse effects on the image of the Group and result in losses to the Group, all Options not exercised (including Options that have been effective but have not yet been exercised, and the Options which have not been effective) shall lapse automatically.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

• (iv) In the event of the Grantee ceasing to be an employee for any reasons other than those set out above in this paragraph 11, all Options that are effective shall be exercised within 6 months from the date of termination of employment with the Group member by the Grantee pursuant to the Share Option Scheme, and after such period, the Options that have not been exercised will forthwith lapse automatically. Any Options that have been granted but have not yet been effective on the date of termination of employment shall forthwith lapse. The date of termination of employment shall be the last actual working day of the Grantee with the Group member, whether salary is paid or not.

12. RIGHTS ON DEATH OR LOSS OF CAPACITY

If a Grantee ceases to be a Participant by reason of his/her death or loss of capacity during his/her employment with a Group member and none of the events which would be a ground for termination of his/her employment specified in the Share Option Scheme and paragraph 11 above has occurred, the legal personal representative(s) of the Grantee may exercise any Option that has been effective within a period of 6 months from the date on which legal personal representative(s) of the Grantee is granted the authorization in the case of death of the Grantee, or from the date of loss of capacity of the Grantee. The Board shall have the discretion to decide whether any Option that has not been effective on the date of death or loss of capacity of the Grantee can be exercised by the legal personal representative(s) of such Grantee and the time period for exercise. All Options not exercised shall lapse upon the expiry of the 6-month period or such other period as the Board may determine.

13. RIGHTS ON A CHANGE OF CONTROL

• A “ Change of Control ” shall mean the occurrence of any of the following:

• (A) If any individuals, units or bodies purchase or acquire the following in excess of the proportion of general offer as required under the Codes on Takeovers and Mergers and Share Buy-backs by the Securities and Futures Commission of Hong Kong, or other laws and regulations:

• (i) issued ordinary Shares; or

• (ii) consolidated voting rights of all the issued marketable securities carrying voting rights (where appropriate).

except in the event that (i) the Company is the purchaser; or (ii) the purchase or acquisition is pursuant to an employee benefit scheme (or a related trust fund) established and monitored by the Company;

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

• (B) upon approval by a general meeting of the Company, the Company participates as a party in restructuring of, merger and acquisition with other companies; or

• (C) the Company is under liquidation and reorganization.

In the event of any Change of Control, all the Options that have been granted but have not yet been effective may become immediately effective and may start to be exercised. The valid period for the exercise is within 12 months commencing from the date on which the Change of Control occurs. All the Options that have been effective but have not yet been exercised may be exercised within 12 months commencing from the date on which the Change of Control occurs. After such period of 12 months, all Options will forthwith lapse.

14. RIGHTS ON BANKRUPTCY OR INSOLVENCY OF THE GRANTEE

Any Options not exercised (including Options that have been effective but have not yet been exercised, and the Options which have not been effective) on the date on which the Grantee becomes bankrupt, insolvent, or reaches a disposition plan or settlement with a creditor shall forthwith lapse automatically.

15. REORGANISATION OF CAPITAL STRUCTURE

In the event of any alteration in the capital structure of the Company, whether by way of capitalization, rights issue, consolidation, subdivision or reduction of the share capital of the Company in accordance with applicable laws and regulations (other than an issue of Shares as a consideration in respect of a transaction to which the Company is a party), the following adjustments (if any) in respect of the Options granted shall be made to:

• (A) the number of Shares represented by the Options (insofar as they are unexercised);

• (B) the Exercise Price;

• (C) the terms of the Options,

provided that the proportion of the issued share capital of the Company to which a Grantee is entitled after such adjustments shall remain as nearly as possible but shall not be greater than that to which he/she was entitled before such adjustments, but no such adjustments shall be made to the effect of which would be to increase the proportion of the issued share capital of the Company for which a Grantee would have been entitled to subscribe had the Grantee exercised all the Options immediately prior to such adjustments.

Save for capitalization, an independent financial advisor or the Auditors must confirm in writing to the Board whether the adjustments are fair and reasonable and whether they have satisfied the requirements hereof. The costs of the independent financial advisors and Auditors shall be borne by the Company.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

16. LAPSE OF OPTIONS

An Option will lapse and shall not be exercised (including the Options that have been effective but have not yet been exercised, and the Options which have not been effective) on the earliest of:

• (A) the last day of the Option Period; or

• (B) the last day of any of the other periods referred to in paragraphs 11, 12, 13 and 14 above; or

• (C) the date on which a Grantee ceases to be an employee by reason of the termination of his/her employment or engagement on one or more grounds of or has been accused of any crime involving his/her integrity or honesty or (if so determined by the Board) on any other grounds on which an employer would be entitled to summarily terminate his/her employment at customary laws or pursuant to any applicable laws or under the Grantee’s service contract with the Company or the relevant Group member. A resolution of the Board or the board of directors of the relevant Group member to the effect that the employment or appointment of a Grantee has or has not been terminated under the circumstances set out in this sub-paragraph shall be conclusive; or

• (D) the date on which a breach of paragraph 10 above is committed; or

• (E) the date on which the Board confirms that the Grantee has been negligent or derelict in his/her duties, in breach of laws and regulations or policies of the Company, or the Grantee has during his/her employment committed graft and embezzlement, or has disclosed operational and technical secrets of the Group member, has engaged in connected transactions, which damage the interests and reputation of the Group member, or has acted otherwise that would have material adverse effects on the image and interests of the Group member.

17. RANKING OF SHARES

The Shares to be allotted upon the exercise of an Option will be subject to the provisions of the articles of association for the time being in force and will rank pari passu with the fully paid Shares in issue on the date of allotment, including participating in dividends and other distributions paid or made on or after the date of allotment other than any dividends or other distributions declared or recommended or resolved to be paid or made prior to the date of allotment. A Share issued upon the exercise of an Option shall not carry voting rights prior to the Grantee being registered as a shareholder of the Company.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

18. CANCELLATION OF OPTIONS

With the consent of the Grantee, any cancellations of the Options granted but not exercised shall be allowed with the approval of the Board.

Where new Options (excluding the cancelled Options) may be granted to the Grantee in accordance with the Share Option Scheme, the new Options shall be subject to restrictions described in paragraph 7 above, and comply with the terms of the Share Option Scheme.

19. AMENDMENTS TO THE SHARE OPTION SCHEME AND TERMS OF OPTIONS

The Share Option Scheme may be altered by the Board by way of resolutions (subject to conformance with the Share Option Scheme and the Listing Rules), provided that:

• (A) any alterations to the advantage of Participants in relation to the provisions relating to the matters set out in Rule 17.03 of the Listing Rules; or

• (B) any alterations to the terms of the Share Option Scheme which are of a material nature or any changes to the terms of the Options granted (save where the alterations take effect automatically under the existing terms of the Share Option Scheme)

shall be subject to the approval of Shareholders in general meeting with the Grantees to whom or for whose benefit the shares will be issued under the new scheme and their associates abstaining from voting. After any alterations, the amended terms of the Share Option Scheme must comply with the relevant requirements of Chapter 17 of the Listing Rules.

Any change to the authority of the Board in relation to any amendment of the Share Option Scheme may only be made with the approval of the Shareholders in general meeting.

20. TERMINATION OF THE SHARE OPTION SCHEME

The Board may, by resolution, terminate the operation of the Share Option Scheme at any time and in such event no further Options shall be granted under the Share Option Scheme. All Options granted prior to the termination of the Share Option Scheme and in compliance with the requirements of Chapter 17 of the Listing Rules shall continue to be valid and exercisable and the provisions of the Share Option Scheme shall remain in full force and effect in relation to any such Options.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

21. TERM OF THE SHARE OPTION SCHEME

Subject to the Board exercising its right under the Share Option Scheme to terminate the Share Option Scheme, the Share Option Scheme shall be valid and effective for a period of 7 years commencing on the Adoption Date, after which period no further Options will be granted. All Options granted prior to the expiration of the Share Option Scheme and in compliance with the requirements of Chapter 17 of the Listing Rules shall continue to be valid and exercisable and the provisions of the Share Option Scheme shall remain in full force and effect in relation to any such Options.

22. CONDITIONS

The Share Option Scheme will be conditional on:

• (A) the approval of the Share Option Scheme by the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government;

• (B) the passing of an ordinary resolution to adopt the Share Option Scheme by the Shareholders; and

• (C) the Listing Committee of the Stock Exchange granting approval for the listing of and permission to deal in any Shares which may fall to be issued pursuant to the exercise of the Options in accordance with the terms of the Share Option Scheme.

23. RESTRICTIONS ON THE TIME OF GRANT OF OPTIONS

A grant of Options may not be made after inside information (as defined under the SFO) has come to the knowledge of the Company until such information has been announced in accordance with the requirements of the Listing Rules and the SFO (as the case may be). In particular, no Option may be granted during the period commencing one month immediately preceding the earlier of:

• (A) the date of the Board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of the Company’s results for any year, half year, quarterly or any other interim period (whether or not required under the Listing Rules); and

• (B) the deadline for the Company to publish an announcement of its results for any year, half year, under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules);

and ending on the date of the results announcement. The period during which no Option may be granted will cover any period of delay in the publication of a results announcement by the Company.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX

24. MANAGEMENT

The Board is responsible for the management of the Share Option Scheme, and the resolutions of the Board shall be final (unless otherwise required under the terms of the Share Option Scheme and Chapter 17 of the Listing Rules) and binding on all stakeholders of the Share Option Scheme.

Unless otherwise required, the decisions made by the Board in respect of any disputes resulting from the Share Option Scheme shall have final adjudication and shall be binding. If the circumstances stipulated in paragraph 15 above occur, the Board shall first consult the independent financial advisors or Auditors.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1347)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ Extraordinary General Meeting ”) of HUA HONG SEMICONDUCTOR LIMITED (the “ Company ”) will be held at 288 Halei Road, Zhangjiang Hi-Tech Park, Shanghai, PRC, 201203 on 1 September 2015 at 10:00 a.m. to consider and, if thought fit, pass (with or without modification) the following resolution as ordinary resolution:

ORDINARY RESOLUTION

“THAT, subject to and conditional upon the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government granting approval of the share option scheme of the Company (the “ Share Option Scheme ”) and The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting approval of the listing of, and permission to deal in, shares of the Company (the “ Shares ”) which may fall to be allotted and issued pursuant to the exercise of any options which may be granted under the Share Option Scheme, the rules of which are contained in the document marked “A” produced to the meeting and for the purposes of identification signed by the chairman of the meeting, the Share Option Scheme be and is hereby approved and adopted as at the date of passing this resolution and that the directors of the Company (the “ Directors ”) be and are hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the Share Option Scheme including but without limitation:

• (a) to manage and administer the Share Option Scheme;

• (b) to modify and/or amend the Share Option Scheme from time to time, provided that such modification and/or amendment is effected in accordance with the provisions of the Share Option Scheme relating to modification and/or amendment and the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”);

• (c) the Directors be and are hereby authorised to grant options to subscribe for Shares in accordance with the rules of the Share Option Scheme and the Listing Rules as at the date of passing of this resolution, and to allot and issue from time to time such number of Shares as may fall to be issued pursuant to the exercise of the options

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NOTICE OF EXTRAORDINARY GENERAL MEETING

under the Share Option Scheme, provided always that the total number of Shares subject to the Share Option Scheme, when aggregated with any Shares subject to any grants after the date of passing this resolution pursuant to any other share option schemes of the Company, shall not exceed 10% of the relevant class of the Shares in issue as at the date of passing this resolution, but the Company may seek approval of its shareholders in general meeting for refreshing the 10% limit under the Share Option Scheme and any other share option schemes of the Company, and the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company in issue shall not exceed 10% of the relevant class of the Shares in issue from time to time; and

• (d) to take all such steps as may be necessary, desirable or expedient to carry into effect the Share Option Scheme from the close of business of the day on which this resolution is passed.”

On behalf of the Board Wenbiao Fu Chairman

Shanghai, PRC, 17 August 2015

Registered office:

Room 2212 Bank of America Tower 12 Harcourt Road Central, Hong Kong

Notes:

1. The resolution at the Meeting will be taken by poll pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and the results of the poll will be published on the websites of Hong Kong Exchanges and Clearing Limited and the Company in accordance with the Listing Rules.

2. A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint one or more proxies to attend and on a poll vote instead of him. A proxy need not be a member of the Company.

3. In order to be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of authority, must be deposited at the Company’s Share Registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time fixed for holding the Extraordinary General Meeting or any adjourned meeting thereof or, in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll. In the event that you attend the meeting after having lodged this proxy form, this proxy form will be deemed to have been revoked.

4. In case of joint shareholdings, the vote of the senior joint shareholder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint shareholder(s) and for these purposes seniority will be determined by the order in which the names stand in the Register of Members of the Company in respect of the joint shareholding.

5. As at the date hereof, the Board comprises two executive directors, namely Mr. Wenbiao Fu and Mr. Yu Wang, four non-executive directors, namely Mr. Jianbo Chen, Mr. Yuchuan Ma, Mr. Takayuki Morita and Mr. Jun Ye, and three independent non-executive directors, namely Mr. Stephen Tso Tung Chang, Mr. Kwai Huen Wong JP and Mr. Long Fei Ye.

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