Shanghai Fudan Microelectronics : CONNECTED TRANSACTION IN RELATION TO SHARE ALLOTMENTS OF A NON WHOLLY-OWNED SUBSIDIARY DEEMED AS A DISPOSAL OF INTEREST

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

上海復旦微電子集團股份有限公司

(a joint stock limited company incorporated in the People's Republic of China)

(Stock Code: 1385)

An extraordinary general meeting of the Sino IC, a non wholly-owned subsidiary of the Company, was held on 16 April 2014 and the resolution of increase in share capital was duy passed. The registered capital of Sino IC will be increased from RMB31,000,000 to RMB42,0000,000 by the creation of 11,000,000 new ordinary shares of RMB1 each. New shares will be allotted at a consideration of RMB5 per share in cash and the total proceeds of fund raising will be RMB55,000,000.
On 16 April 2014 (after trading hours of the Stock Exchange), Sino IC entered into subscription agreements with the Subscribers, pursuant to which, Sino IC agreed to issue and the Subscribers agreed to subscribe ordinary shares. Subscribers comprise 46 existing shareholders of Sino IC and including the Company, 31 existing directors, supervisors, senior management and key staff of Sino IC and 4 new institutional investors.
Upon completion of the Capital Raising, Sino IC will not have any change in its board of directors and continue to be a subsidiary of the Company.
An institutional investor namely Shanghai Shikong has subscribed 3,000,000 shares, which is being held as to 24.2% equity interest directly by SCI, a substantial shareholder of the Company, and 8.6% equity interest is being held by SCI through its 51%-owned subsidiary. As SCI can exercise or control the exercise of 30% or more of the voting power at general meetings of Shanghai Shikong, pursuant to Chapter 14A and Chapter

19A of the Listing Rules, Shanghai Shikong is a connected person of the Company.

As all of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the deemed disposal are less than 5%, the transaction contemplated under Capital Raising exempt from shareholders' approval, reporting and announcement requirements under Chapter 14 of the Listing Rules.
Under Chapter 14A of the Listing Rules, the transaction contemplated under the Capital Raising constitutes a connected transaction of the Company. As all of the applicable percentage ratios (other than the profits ratio) are more than 0.1% but less than 5%, the connected transaction exempt from shareholders' approval requirement but subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules.
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The board of directors (the ''Board'') of Shanghai Fudan Microelectronics Group Company Limited (the ''Company'') hereby announces an extraordinary general meeting of the Sino IC Technology Co., Ltd. ("Sino IC"), a non wholly-owned subsidiary of the Company, was held on 16 April 2014 and the resolution of increase in share capital was duy passed. The registered capital of Sino IC will be increased from RMB31,000,000 to RMB42,0000,000 by the creation of 11,000,000 new ordinary shares of RMB1 each. New shares will be allotted at a consideration of RMB5 per share in cash and the total proceeds of fund raising will be RMB55,000,000 ("Capital Raising").
In accordance with the arrangement under the Capital Raising, new shares will be allotted to the following 3 types of subscribers (the "Subscribers"):
(a) The 46 existing shareholders of Sino IC, including the Company, have a preferential right to subscribe a total of 1,550,000 shares. Shareholders who are on the register of member can subscribe shares at the same ratio in accordance with their shareholdings.
(b) 31 existing directors, supervisors, senior management and key staff of Sino IC are entitled to subscribe a total of 2,650,000 shares.
(c) 4 new institutional investors are entitled to subscribe a total of 6,800,000 shares.

On 16 April 2014 (after trading hours of the Stock Exchange), Sino IC entered into subscription agreements with the Subscribers, pursuant to which, Sino IC agreed to issue and the Subscribers agreed to subscribe ordinary shares. Details of the subscription agreements are as follows:

Date: 16 April 2014
Issuer: Sino IC
Subscribers: As set out in the section headed "Introduction" above
Shares subscribed: 11,000,000 ordinary shares of RMB1 each
Consideration: RMB5 per share payable in one lump sum in cash (RMB55,000,000 in total)

The Company

The principal activities of the Company consist of designing, developing and selling products of application specific integrated circuits.
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Sino IC

Sino IC is a non wholly-owned subsidiary with a 64.9% equity interest being held by the Company. The principal activities are the provision of testing services for IC products; designing, developing and selling of IC testing software and products; production of probe cards; as well as provision of research and consultancy services of IC technology.
The table set out below is the financial information of Sino IC prepared in accordance with the Hong Kong Financial Reporting Standards for the years ended 31 December 2012 and
2013:
For the year ended 31 December

(a) The 46 existing shareholders of Sino IC, including the Company, have subscribed a total of 1,550,000 shares. At the date of this announcement, as one of the existing shareholders of Sino IC, the Company holds 20,117,527 shares and according to the ratio of shareholdings of a 64.9% interest, the Company has subscribed for 1,005,876 new shares for a consideration of RMB5,029,380. Besides, the Company's supervisor, Mr. Li Wei who holds 40,000 shares at present, has subscribed for 5,640 new shares for a consideration of RMB28,200. None of the other existing shareholders holds more than
10% equity interest in the issued share capital of Sino IC.
(b) The 31 existing directors, supervisors, senior management and key staff of Sino IC have subscribed a total of 2,650,000 shares.
(c) The 4 new institutional investors have subscribed a total of 6,800,000 new shares. Out of which, an institutional investor namely Shanghai Shikong Wuxing Venture Capital Partnership Enterprise ("Shanghai Shikong") has subscribed 3,000,000 new shares, which is being held as to 24.2% equity interest directly by Shanghai Commerce Invest (Group) Corporation ("SCI"), a substantial shareholder of the Company, and 8.6% equity interest is being held by SCI through its 51%-owned subsidiary. As SCI can exercise or control the exercise of 30% or more of the voting power at general meetings of Shanghai Shikong, pursuant to Chapter 14A and Chapter 19A of the Listing Rules, Shanghai Shikong is a connected person of the Company.
Another institutional investor is an enterprise which is held as to 16.6% equity interest by

SCI. The remaining 2 institutional investors are independent third parties.

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Pursuant to the Capital Raising, Sino IC will issue a total of 11,000,000 ordinary shares of RMB1 each, representing approximately 35.48% of the existing issued share capital of Sino IC of RMB31,000,000 and 26.19% of the issued share capital of Sino IC as enlarged by the issuance of new shares.
The table set out below illustrates the shareholding structure of Sino IC (i) as at the date of this announcement; and (ii) immediately upon completion of the Capital Raising, assuming that there will be no change in the issued share capital of Sino IC from the date of this announcement and the parties to the subscription agreements will fulfill the terms for completion.

Number of

shares of

Sino IC Approx. %

Number of

shares of

Sino IC Approx. %

The Company 20,117,527 64.90 21,123,403 50.29

Existing 45 non-controlling

interests 10,881,000 35.10 11,426,597 27.21

Existing directors, supervisors, senior management and key

staff of Sino IC - - 2,650,000 6.31

Shanghai Shikong (institutional

investor) - - 3,000,000 7.14

3 new institutional investors - - 3,800,000 9.05

31,000,000 100.00 42,000,000 100.00

Sino IC has been an important support to the Group's products in respect of IC testing services. In order to satisfy the Group's need for improved IC testing services and the business development of Sino IC to cope with increasing service demand in the IC testing industry, it was decided that an increase in share capital of Sino IC would enable the company to expand its capacity and profits can be retained within the Group instead of outsourcing for other IC testing services. Moreover, the Group is able to obtain additional finance resources without losing control on its business management as well as equity interest in Sino IC.

The Capital Raising will increase the assets, non-controlling interests and cash inflows of the Group. It is estimated that the total proceeds from the Capital Raising of Sino IC will be RMB55,000,000 and the total expenses incurred will be approximately RMB600,000. Sino IC intends to apply the net proceeds from the Capital Raising for the expansion of its business, including the establishment of an IC testing foundation in Zhengjiang Hi-Tech Park of Shanghai City and nearby districts with the remaining proceeds as general working capital.
As the decrease in interests of the Company in Sino IC caused by the Capital Raising will not result in the Company's losing in its control over Sino IC, therefore, the Company will not record any gain or loss from this deemed disposal transaction under the Hong Kong Financial Reporting Standards.
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Upon completion of the Capital Raising, Sino IC will not have any change in its board of directors and continue to be a subsidiary of the Company.

As all of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the deemed disposal are less than 5%, the transaction contemplated under Capital Raising exempt from shareholders' approval, reporting and announcement requirements under Chapter 14 of the Listing Rules.
As Shanghai Shikong is a connected person of the Company and under Chapter 14A of the Listing Rules, the transaction contemplated under the Capital Raising constitutes a connected transaction of the Company. As all of the applicable percentage ratios (other than the profits ratio) are more than 0.1% but less than 5%, the connected transaction exempt from shareholders' approval requirement but subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules.
To the best of the Directors' knowledge, information and belief after having made all reasonable enquiries, save for the disclosures above-mentioned, as at the date of this announcement, neither the Subscribers nor any of their respective associates have relationship with any Directors, chief executive or substantial shareholders of the Company.
None of the Directors has a material interest in the transactions contemplated under the Capital Raising and therefore none of them is required to abstain from voting on the relevant board resolution approving the same. Nevertheless, Mr. Shi Lei is the chairman and Mr. Wang Su is a director of SCI, respectively had voluntarily abstained from voting on the relevant board resolution.
The Directors (including the independent non-executive Directors) consider that the transaction contemplated under the Capital Raising is (i) entered in the ordinary and usual course of the Group's business; (ii) on normal commercial terms; and (iii) fair and reasonable and in the best interests of the Company and shareholders as a whole,
By order of the Board

Chairman

Shanghai, the PRC, 16 April 2014
As at the date of this announcement, the Company's executive directors are Mr. Jiang Guoxing, Mr. Shi Lei, Mr. Yu Jun, Ms. Cheng Junxia and Mr. Wang Su; non-executive directors are Ms. Zhang Qianling, Mr. He Lixing and Mr. Shen Xiaozu and independent non-executive directors are Mr. Cheung Wing Keung, Mr. Guo Li, Mr. Chen Baoying and Mr. Lin Fujiang.

* For identification only

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