Washington, D.C. 20549
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or 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):
☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): n/a
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.
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Semiconductor Manufacturing International Corporation
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|
|
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|
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|
Date: July 17, 2018
|
|
By:
|
/s/ Dr. Gao Yonggang
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Name:
|
Dr. Gao Yonggang
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|
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|
Title:
|
Executive Director, Chief Financial Officer and Joint Company Secretary
|
2
Hong Kong
Exchanges
and
Clearing Limited
and The Stock
Exchange
of
Hong
Kong
Limited
take
no
responsibility
for
the
contents
of
this
announcement,
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
announcement.
Semiconductor Manufacturing International
Corporation
中 芯 國 際 集 成 電 路 製 造 有 限 公 司
*
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 981)
CENTRALISED FUND MANAGEMENT AGREEMENT AND FRAMEWORK AGREEMENT WITH SEMICONDUCTOR MANUFACTURING SOUTH CHINA CORPORATION
|
|
|
References
are made
to
the
announcement
dated
30
January
2018, the
circular
dated
6
March 2018 and
the
poll
results announcement
dated
27
March 2018
of the
Company
in
relation
to
the
proposed capital contribution
and deemed
disposal
of
equity interest
in
SMSC,
a
joint
venture
and
a subsidiary
of the
Company
under the Joint
Venture Agreement. According
to
the terms
of the
Joint
Venture Agreement,
China
IC
Fund
shall
complete
the
Contribution
prior
to 30
June 2018.
On 29
June 2018,
the Contribution
was
completed
and China
IC
Fund now holds
approximately 24.71% of equity interest
in
SMSC.
CENTRALISED FUND MANAGEMENT AGREEMENT
The
Company announces
that
on
1 June 2017, the
Company
and its
subsidiaries, SMIC Beijing
and SMSC
entered
into the
Centralised
Fund
Management Agreement, pursuant
to
which:
(i) the
Company
will
procure
its
wholly-owned subsidiary SMIC Beijing
to
carry out
centralised management
of
the
Company’s
RMB fund and
foreign exchange
in
accordance
with the
relevant
PRC laws and
regulations;
and (ii)
SMSC
and its
Controlling Subsidiaries
will
participate
in
the
Company’s centralised fund management system,
which will
be
managed
by
SMIC
Beijing
in
accordance
with
the
relevant
PRC laws and
regulations.
The
Centralised
Fund
Management Agreement
is
with
a
term
commenced
on
1
June
2017
and
ending
on
31
December
2020.
|
|
|
*
|
For
identification purposes
only
|
3
|
|
|
|
|
F
RAMEWORK AGREEMENT
The
Company announces
that
on 11
June 2018, the
Company
and its
subsidiaries,
SMSC
entered
into
the
Framework Agreement
in
relation
to
the
supply
of
goods, rendering
of or
receiving services, leasing
of
assets, transfer
of
assets, provision
of
technical authorisation
or
licensing
and
provision
of
guarantee.
The
Framework Agreement
is
with a term
commenced
on 26
April 2018 and
ending
on 31
December 2019.
LISTING RULES IMPLICATIONS
The
Centralised
Fund
Management Agreement
and the
Framework Agreement were entered
into
by
the
parties
at
a time when SMSC was not a
connected person.
Due
to
the
completion
of
the
Contribution
by
China
IC
Fund
(which indirectly holds approximately
14.82% equity
interest
in
the
Company
and
is
therefore
a
connected person
of
the
Company
at
the issuer
level)
in
approximately 24.71% equity interest
in
SMSC
as
disclosed
in
the
Company’s announcement
dated
30
January
2018, SMSC
has therefore become
a
connected subsidiary
of
the
Company
as
defined
under
Rule 14A.16
of
the
Listing Rules,
and
is
thus a
connected person
of
the
Company. The Centralised
Fund
Management Agreement,
the
Framework Agreement
and
the transactions contemplated thereunder constitute continuing transactions
which
have subsequently become continuing connected transactions
upon the
completion
of
the Contribution
by
China
IC
Fund.
This
announcement
is
made
pursuant
to
Rule
14A.60
of
the
Listing Rules, which requires
the
Company
to
comply
with the
annual
review and
disclosure requirements
and
re-comply
with all
applicable connected transaction requirements
upon
renewal
or
variation
of
the
Centralised
Fund
Management Agreement
or the
Framework Agreement
(as
the case
maybe).
|
References
are made
to
the
announcement
dated
30
January
2018, the
circular
dated
6
March 2018 and the poll
results announcement
dated
27
March 2018
of
the
Company in relation
to
the
proposed capital contribution
and
deemed disposal
of
equity interest in
SMSC,
a joint venture
and
a subsidiary
of
the
Company
under the Joint
Venture Agreement. According
to the
terms
of
the Joint
Venture Agreement,
China
IC
Fund shall
complete
the
Contribution
prior
to 30
June 2018.
On 29
June 2018, the
Contribution was completed
and
China
IC
Fund now holds
approximately
24.71%
of
equity interest in SMSC.
4
CENTRALISED FUND MANAGEMENT AGREEMENT
The
Company announces
that
on
1 June 2017, the
Company
and its
subsidiaries, SMIC Beijing
and SMSC
entered
into
the
Centralised
Fund
Management Agreement, pursuant
to
which:
(i) the
Company
will
procure
its
wholly-owned subsidiary
SMIC
Beijing
to
carry out
centralised management
of
the
Company’s
RMB fund and
foreign exchange in accordance
with
the
relevant
PRC
laws and
regulations;
and
(ii) SMSC
and
its Controlling Subsidiaries
will
participate
in
the
Company’s centralised
fund
management system,
which will
be
managed
by
SMIC
Beijing
in
accordance
with the
relevant PRC
laws and
regulations.
|
Summary of Principal Terms of the Centralised Fund Management Agreement
|
|
|
|
Execution
Date:
|
1
June
2017
|
|
|
|
Effective
Period:
|
Effective
from
1
June 2017
or
the date when
all
the
necessary approvals required
under
the
applicable
law, the
articles
of
association
of the
parties
and the
requirements
of the
Stock Exchange
and
the
New
York
Stock
Exchange,
Inc.
are obtained,
whichever
is
later,
and
ending
on
31
December
2020.
|
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|
Parties
|
(i)
the
Company;
|
|
|
|
|
(ii)
SMIC
Beijing,
a
wholly-owned subsidiary
of
the Company;
and
|
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|
(iii)
SMSC,
a
subsidiary
of
the
Company.
|
Centralised Fund Management Agreement CCT
The Centralised Fund Management Agreement CCT will include the following:
|
|
1.
|
Internal
Deposit
Services
(the
‘‘Internal
Deposit
Services’’)
|
|
SMIC Beijing provides deposit services and pays interest to SMSC.
|
|
2.
|
Collection
and
Payment Services
and
Foreign Exchange Services
(the ‘‘Collection
and Payment Services
and
Foreign Exchange
Services’’)
|
|
SMIC Beijing serves as the platform for centralised collection and payment activities and foreign exchange activities of the Group. SMSC may carry out such activities by itself or through SMIC Beijing.
|
|
3.
|
Internal
Loan
Services
(the
‘‘Internal
Loan
Services’’)
|
|
SMIC Beijing provides internal loan services to SMSC in accordance with PRC laws, regulations and policies.
|
|
4.
|
Provision
of
Letter
of
Credit
Services
(the
‘‘Provision
of
Letter
of
Credit
Services’’)
|
|
The
Company utilizes
its
overseas credit
lines
to
provide letter
of
credit
on
behalf
of
SMSC for
importing equipment
in
accordance
with PRC laws,
regulations and policies.
|
|
5.
|
Other
Financial
Services
(the
‘‘Other
Financial
Services’’)
|
|
SMIC
Beijing provides
other
financial services
to
SMSC
in
accordance
with
PRC
laws,
regulations
and
policies.
5
Pricing
The price
of
the
services provided
by
SMIC
Beijing
to
SMSC
contemplated
under
the Centralised
Fund
Management Agreement
will
be
fair
in
the
context
of
connected transactions
and
determined according
to
the
market principle
on an
arm’s
length basis,
and will
be
subject
to
compliance
with
regulatory requirements
of
the Stock
Exchange
and
relevant requirements
for
connected
transactions
that are
applicable
to the
parties.
|
|
1.
|
Internal Deposit
Services
|
|
The terms
in
respect
of the
Internal Deposit Services provided
by
SMIC
Beijing
to
SMSC will
be on
normal commercial
terms
or
better,
in
the
ordinary
and
usual course
of
business
of the
Group
and in
the
interests
of
the
Company
and
the Shareholders
as
a
whole, subject
to
the
relevant provisions
of
PRC laws
and regulations.
|
|
2.
|
Collection
and
Payment
Services
and
Foreign
Exchange
Services
|
|
The terms
in
respect
of the
Collection
and
Payment Services
and
Foreign Exchange Services provided
by
SMIC
Beijing
to
SMSC will
be on
normal commercial
terms
or better,
in
the
ordinary
and usual course
of
business
of
the Group and
in
the
interests
of
the
Company
and the
Shareholders
as
a whole,
subject
to
the
relevant provisions
of
PRC laws and
regulations.
|
|
3.
|
Internal
Loan
Services
|
|
The terms
in
respect
of
the
Internal
Loan
Services provided
by
SMIC
Beijing
to
SMSC will
be on
normal commercial
terms
or
better,
in
the
ordinary
and
usual course
of
business
of the
Group
and in
the
interests
of
the
Company
and
the Shareholders
as
a
whole, subject
to
the
relevant provisions
of
PRC laws
and regulations.
|
|
4.
|
Provision
of
Letter
of
Credit Services
|
|
The terms
in
respect
of
the
Letters
of
Credit
Services provided
by
the
Company to
SMSC will
be on
normal commercial
terms
or
better,
in
the
ordinary
and
usual course
of
business
of the
Group
and in
the
interests
of
the
Company
and
the Shareholders
as
a
whole, subject
to
the
relevant provisions
of
PRC laws
and regulations.
|
|
5.
|
Other
Financial
Services
|
|
The terms
in
respect
of
the Other
Financial Services provided
by
SMIC
Beijing
to
SMSC will
be on
normal commercial
terms
or
better,
in
the
ordinary
and
usual course
of
business
of the
Group
and in
the
interests
of
the
Company
and
the Shareholders
as
a
whole, subject
to
the
relevant provisions
of
PRC laws
and regulations.
6
Payment
The
consideration
for
the
transactions contemplated
under
the
Centralised Fund Management Agreement
will
be
paid
in
accordance
with
the
separate agreements entered
into
between
SMIC
Beijing
and SMSC, the terms
of
which will
be on
normal commercial
terms
or
better.
Termination
SMSC may
terminate
the
Centralised
Fund
Management Agreement
by
three
months’
prior
written notice
to
the
Company.
Two
months before
the
expiry
date
of
the Centralised
Fund
Management Agreement,
the
parties
will
negotiate whether
to
renew
or
terminate
the
Centralised
Fund
Management
Agreement.
Other Terms
The terms
of
the
Centralised
Fund
Management Agreement
are
subject
to
applicable laws
and
regulations including
the
requirements
of
any
regulatory authorities (including but
not
limited
to
the
Stock
Exchange
and
the
New
York
Stock
Exchange,
Inc.).
SMSC’s participation
in
the
centralised
fund
management system
of
the
Company does
not alter
its
existing rights
to
its own
funds.
The
rights
to
own, use,
approve
and
benefit
from
SMSC’s
funds
remains
with
SMSC.
FRAMEWORK AGREEMENT
The
Company announces
that
on 11
June 2018, the
Company
and
its
subsidiaries, SMSC entered
into the
Framework Agreement
in
relation
to
the
supply
of
goods, rendering of
or
receiving services, leasing
of
assets, transfer
of
assets, provision
of
technical authorisation
or
licensing
and
provision
of
guarantee.
The
Framework Agreement is
with
a
term
commenced
on
26
April
2018
and
ending
on
31
December
2019.
|
Summary of Principal Terms of the Framework Agreement
|
|
|
|
Execution
date:
|
11
June
2018
|
|
|
|
Effective
period:
|
Commenced
on 26
April 2018 and ending
on 31
December
2019. Two
months before
the
expiry
date
of
the
Framework Agreement,
the
parties
will
consider whether
to
renew
the Framework
Agreement.
|
|
|
|
Parties:
|
(i) the
Company
on
behalf
of
itself
and its
subsidiaries (other
than
SMSC);
and
|
|
|
|
|
(ii) SMSC
|
7
Framework Agreement CCT
The Framework Agreement CCT will include the following:
|
|
1.
|
Purchase
and
sale
of
spare
parts,
raw
materials,
photomasks
and
finished
products;
|
|
|
|
2.
|
Rendering
of or
receiving services, including, without limitation,
(a)
processing and testing service;
(b) sales
service;
(c)
overseas market promotion
and
customer
service;
(d) procurement service; (e) research, development and experiment support service; (f) comprehensive administration, logistics, production management, IT and other service; and (g) water, electricity, gas and heat provision service;
|
|
|
|
3.
|
Leasing
of
assets,
such
as
plant, office premises
and
equipment;
|
|
|
|
5.
|
Provision
of
technical authorisation
or
licensing
as
well
as
the
sharing
of
research
and
development
costs;
and
|
|
|
|
6.
|
Provision
of
guarantee
by
Group
A
for
SMSC’s
financing
activities.
|
|
Pricing
The price of the Framework Agreement CCT will be determined in accordance with the following general principles (in ascending order):
|
|
(1)
|
the
price
prescribed
or
approved
by
state
or
local price
control department
(if
any);
|
|
|
|
(2)
|
a
reasonable
price
in
accordance
with
the
industry
guided
price;
|
|
|
|
(3)
|
the
comparable
local
market
price, which shall
be
determined
after arm’s
length negotiation between
both
parties
with
reference
to
(a) the
market
price
charged
by
independent
third
parties
for
comparable product
or
services
at
the same time and
in
the same
region;
and (b) the lowest
quotation
that the
purchaser
can
obtain
by
way
of
public
tender;
|
|
|
|
(4)
|
where there
is
no
comparable local market
price, the price based
on the
principle
of
cost plus
a
fair and
reasonable profit
rate, being the
aggregate
sum
of (a)
the
actual reasonable
cost;
and
(b)
a
fair
and
reasonable
profit
rate;
|
|
|
|
(5)
|
where none
of
the
above
general
pricing principles
are
applicable,
the
price determined
by
other
reasonable
means
as
agreed
upon
by
both
parties
on
the condition
that the
relevant
costs are
identifiable
and are
allocated
to
each
party involved
on
a
fair
and
equitable
basis.
|
|
Where general pricing principles (2) to (5) apply, to the extent possible, each of Group A and SMSC will obtain at least two quotations or tenders from independent third parties before agreeing upon the applicable price.
8
Based
on
the above
general principles
and the
actual circumstances
when
entering into
the
Framework Agreement,
the
parties further
agree
to
the
following specific
pricing
policies
for
the
Framework Agreement
CCT.
If
any
particular Framework Agreement
CCT
is
not
covered
by
the
following policies,
or
any
of
the
following policies
is no
longer applicable,
the
parties
will use the above
general principles
to
determine
the
price for
the relevant
transaction.
|
|
|
|
|
Types
of
Framework
Agreement
CCT
|
|
Pricing
policy
|
|
|
|
|
|
I.
Purchase
and
sale
of
goods
(‘‘Type
I
CCT’’)
|
|
|
|
|
|
1.
Purchase
and sale
of
spare
parts between
Group
A
and
SMSC
|
|
The market price of spare parts, with the relevant transportation fees borne by the purchaser, with reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
2.
Purchase
and sale
of
raw
materials between
Group
A
and
SMSC
|
|
The market price of raw materials, with the relevant transportation fees borne by the purchaser, with reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
3.
Purchase
of
photomasks
by
SMSC
from Group
A
|
|
With reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
4.
Sales
of
finished products
by
SMSC
to
Group
A,
which will
resell such finished products
to
third-party customers
|
|
With reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
II. Rendering
of or
receiving services
(‘‘Type II
CCT’’)
|
|
|
|
|
|
1. Mutual rendering
of
processing and testing service
due
to
Group
A and SMSC’s
production
capacity
limits
of certain
types
of
products
|
|
With reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
2. Provision
of
sales
service
by
Group
A
to
SMSC
|
|
Cost plus a fair and
reasonable
profit rate
in
line with
the
industry
(see
general
pricing
principle
(4)
above)
based
on
allocation
of
the sales
expenses according
to
the
revenue
from the sales plus a
subsequent profit rate
of
8%
|
|
|
|
|
|
3. Rendering
of
overseas market promotion
and
customer service
by
Group
A
to
SMSC
|
|
Cost plus a fair and
reasonable
profit rate
in
line with
the
industry
(see
general
pricing
principle
(4)
above),
based
on
allocation of
the sales
expenses according
to
the
revenue
from the sales plus a
subsequent profit rate
of
8%
|
9
|
|
|
|
|
Types
of
Framework
Agreement
CCT
|
|
Pricing
policy
|
|
|
|
|
|
4. Rendering
of
procurement service by
Group
A
to
SMSC
|
|
Cost plus a fair and
reasonable
profit rate
in
line with
the
industry
(see
general
pricing
principle
(4)
above),
based
on
allocation of labour
cost
and
relevant
resources consumption according
to
working hours
or
workload
plus a
subsequent profit
rate
of
5%,
or
with
reference
to
market price provided
by
independent
third
parties
|
|
|
|
|
|
5. Provision
of
research, development
and
experiment support service by
Group
A
to
SMSC
|
|
With reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
6. Rendering
of
comprehensive administration, logistics, production management
and
IT
service
by
Group A
to
SMSC
|
|
Cost plus a fair and
reasonable
profit rate
in
line with
the
industry
(see
general
pricing
principle
(4)
above),
based
on
allocation of labour
cost
and
relevant
resources consumption according
to
the
proportion
of
working
hours
or
workload
plus
a
subsequent profit
rate
of
5%,
or
with reference
to
market
price
provided by independent
third
parties
|
|
|
|
|
|
7. Provision
of
water, electricity, gas
and
heat
by
Group
A
to
SMSC
|
|
The price prescribed or approved by state or local price control department (see general pricing principle (1) above) or with reference to market price (see general pricing principle (3) above)
|
|
|
|
|
|
III. Leasing
of
assets
(‘‘Type
III
CCT’’)
|
|
|
|
|
|
1. Leasing
of
plant and
office
by
Group A
to
SMSC
|
|
With
reference
to
market
price
(see
general pricing principle (3) or principle (4) above)
|
|
|
|
|
|
2. Mutual leasing
of
equipment
|
|
With
reference
to
market
price (see
general
pricing principle (3) above)
|
|
|
|
|
|
IV. Transfer
of
assets
(‘‘Type IV
CCT’’)
|
|
|
|
|
|
1. Mutual
transfer
of
equipment
|
|
With
reference
to
market
price (see
general
pricing principle (3) above)
|
|
|
|
|
|
V. Provision
of
technical authorisation
or
licensing
(‘‘Type
V
CCT’’)
|
|
|
|
|
|
1. Provision
of
technical authorisation
or
licensing
by
the
Company to SMSC
|
|
With reference to market price (see general pricing principle (3) or principle (5) above)
|
10
|
|
|
|
|
Types
of
Framework
Agreement
CCT
|
|
Pricing
policy
|
|
|
|
|
|
2. Sharing
of
research
and
development costs
|
|
The price determined by other reasonable means as agreed upon by both parties (see general pricing principle (5) above)
|
|
|
|
|
|
VI. Provision
of
guarantee
for
financing activities
(‘‘Type VI
CCT’’)
|
|
|
|
|
|
1. Provision
of
guarantee
by
Group
A
for SMSC’s
financing
activities
|
|
With reference to market price (see general pricing principle (3) above)
|
Payment
The
consideration
of
the
transactions contemplated
under the
Framework Agreement
will
be
paid
in
accordance
with
the
relevant implementation agreement
to be
entered into
for each
transaction
and will
be
funded
by the
relevant parties’ internal resources. The Company
will
monitor closely
as an
ongoing process
the
relevant transactions
to
ensure
the
annual
caps
for
each
type
of
the
Framework
Agreement
CCT
are
not
exceeded.
Other Terms
The terms
of
the
Framework Agreement
are
subject
to
compliance
with
applicable laws
and
regulations including
the
requirements
of
any
regulatory authorities (including but
not
limited
to
the
Stock
Exchange
and
the
New
York
Stock
Exchange,
Inc.).
THE ANNUAL CAPS AND BASIS OF DETERMINATION
Centralised Fund Management Agreement Historical Transaction Amounts
The
historical transaction amounts between
the
Company,
SMIC
Beijing
and SMSC
for
the
transactions contemplated
under the
Centralized
Fund
Management Agreement
in
2017 are
as
follows:
|
Nature of Centralised Fund Management Agreement CCT
|
Transactions For
the Year Ended
31 December
2017
(1)(2)
(US$ million)
|
|
|
|
|
Internal
Deposit
Services
|
53
|
|
Collection
and
Payment Services
and
Foreign
Exchange
Services
|
—
|
|
Internal
Loan
Services
|
0
(3)
|
|
Provision
of
Letter
of
Credit
Services
|
—
|
|
Other
Financial
Services
|
—
|
Notes:
|
|
(1)
|
Representing
the
amounts
of
all
transactions between
the
Company,
SMIC
Beijing
and SMSC for
the
year
ended
31
December
2017.
|
|
|
|
(3)
|
The
transaction amount
was
RMB400.02.
|
11
Annual Caps
|
Nature of Centralised Fund
|
|
|
|
|
|
|
Management
Agreement
CCT
|
For the year
ending
31
December
|
|
|
2018
|
|
2019
|
|
2020
|
|
|
(US$
million)
(or other
currencies
in equivalent amount
)
|
|
(US$
million)
(or other
currencies
in equivalent amount)
|
|
(US$
million)
(or other
currencies
in equivalent amount)
|
|
|
|
|
|
|
|
|
Internal Deposit Services (representing the maximum daily outstanding balance, including accrued interests placed by SMSC with SMIC Beijing)
|
2,000
|
|
2,000
|
|
2,000
|
|
|
|
|
|
|
|
|
Collection
and
Payment Services and Foreign Exchange Services (representing
the
maximum daily
transaction amount
for
collection
and
payment services and foreign exchange services provided by
SMIC
Beijing
to
SMSC)
|
2,000
|
|
2,000
|
|
2,000
|
|
Internal Loan Services (representing the maximum balance of internal loans provided by SMSC Beijing to~SMSC per calendar year)
|
2,000
|
|
2,000
|
|
2,000
|
|
|
|
|
|
|
|
|
Provision
of
Letter
of
Credit Services (representing
the
maximum total amount
of
the
letter(s)
of
credit issued
on
SMSC’s
behalf
per
calendar
year)
|
2,000
|
|
2,000
|
|
2,000
|
|
Other Financial Services (representing the maximum fees charged by SMIC Beijing for providing the Other Financial Services to SMSC per calendar year)
|
50
|
|
50
|
|
50
|
The
aforementioned annual
caps are
determined
based
on
factors
such
as
the
expected increase
of
total
assets
over the
effective period
of
the
Centralised
Fund
Management Agreement;
the
operating
cash flow and the
financial
and
practical
needs
in
respect
of
future business expansion
and the future
development
plan
of
each
of
SMSC and
the Group.
12
FRAMEWORK AGREEMENT
Historical Transaction Amounts
The historical transaction amounts between Group A and SMSC for the transactions contemplated under the Framework Agreement in 2017 are as follows:
|
Nature of Framework Agreement CCT
|
Transactions For
the Year Ended
31 December
2017
(1)(2)
(US$ million)
|
|
Type
I
CCT
|
—
|
|
Type
II
CCT
|
5.88
|
|
Type
III
CCT
|
—
|
|
Type
IV
CCT
|
—
|
|
Type
V
CCT
|
—
|
|
Type
VI
CCT
|
—
|
Notes:
|
|
(1)
|
Representing
the
amounts
of
all
transactions between Group
A
and SMSC for the year
ended
31
December
2017.
|
|
Annual Caps
The
annual
caps
for
the
Framework Agreement
CCT
between
the
parties
are set
out below:
|
|
For the year ending 31 December
|
|
Nature of Framework Agreement CCT
|
2018
(US$ million)
|
2019
(US$ million)
|
|
Type I CCT
|
1
|
61
|
|
Type II CCT
|
11
|
31
|
|
Type III CCT
|
7
|
65
|
|
Type IV CCT
|
—
|
316
|
|
Type V CCT
|
100
|
300
|
|
Type VI CCT
|
500
|
500
|
13
With
regards
to
Type
VI
CCT,
the
annual
caps for each year ending
31
December 2018
and 2019
is
US$500 million.
Such
annual
caps are split into (i)
US$495 million
for
the maximum amount
of
the
financial liabilities
of
SMSC
in
respect
of
which
guarantee can
be
provided
by
the
Company
or
its
subsidiaries
(the
‘‘Balance Cap’’);
and (ii) US$5
million
for
the fee
payable
by
SMSC
in
consideration
for such
guarantee
(the ‘‘Guarantee
Fee
Cap’’):
|
|
a)
|
the
Balance
Cap
of
US$495 million
is
primarily determined
based
on
the
historical amounts
of
guarantee provided
by
Company
to
SMSC and the
financing
needs
of
SMSC
for
the
years
ending
31
December
2018
and
2019.
|
|
|
|
b)
|
the
Guarantee
Fee Cap
of
US5
million
for each year
during
the
three years
ending 31 December
2018 and 2019
is
determined
based
on
the
Balance
Cap
of
US$495 million
and
a
guarantee
fee
charge
rate
up to
1.0%. Such
charge
rate was
determined based
on
the
fee
quotes
provided
by
commercial
banks
who
are
independent
third
parties.
|
|
In
arriving
at
the annual caps, the
Company
has
considered reasonable factors
such
as
the
historical transaction amount,
the
expected occurrences
of
the
Framework Agreement
CCT
in
light
of
current market conditions
of
the
semiconductor industry
and the
technological capability
of
the
Company
as
well
as
the
Company’s historical revenues.
INTERNAL CONTROL MEASURES FOR THE CONTINUING CONNECTED TRANSACTIONS
The Continuing Connected Transactions will be settled in accordance with the relevant agreement for each transaction. The Company has in place a series of internal control measures to ensure that the terms of the Centralised Fund Management Agreement and the Framework Agreement are fair and reasonable and that the Continuing Connected Transactions will be conducted on normal commercial terms. As the Continuing Connected Transactions also constitute related party transactions for the Company, they will be subject to the related party transaction policy of the Group, which is further explained below.
|
|
1.
|
SMSC has
established
a
related
and
connected
party
transaction review committee
(the
‘‘Review
Committee’’), which
is
set
up
under the board
of
directors
of
SMSC.
The
Review Committee
shall report
to
the board
of
directors
of
SMSC and shall
be
accountable
to
the board
of
directors
of
SMSC. The
Review Committee comprised
of
three
members
of
which one
of
them was
appointed
by
SMIC
Holdings Corporation
and
Semiconductor Manufacturing International (Shanghai) Corporation
(‘‘SMIC Shanghai’’)
and
the other two were
appointed
by
each
of
Shanghai Integrated Circuit Industry Investment
Fund
Management
Co., Ltd (‘‘Shanghai
IC Fund’’) and
China
IC
Fund. Poll
system
is
adopted
for the
voting
of
the
Review Committee and resolutions
of
the
committee should
be
passed
by
votes
of
more than half
of
the members
of the
committee.
The
Review Committee
is
responsible
for
reviewing and approving
the
framework agreement
and
pricing policy
of
related
and
connected
transactions entered into by SMSC and the Group. The Review Committee shall monitor and review related and connected party transactions between SMSC and the Group;
|
|
14
|
|
2.
|
The
Company’s compliance office
will
perform quarterly
check
on
transactions entered
under the
Centralised
Fund
Management Agreement
and the
Framework Agreement
to
ensure compliance
with
pricing policies
and
annual
caps are
not exceeded;
|
|
|
|
3.
|
The
Company’s external auditors
will
conduct
an
annual review
of
the
transactions entered
into under the
Centralised
Fund
Management Agreement
and
the Framework Agreements
to
ensure
the
transaction amounts
are
within
the
annual
caps and the
transactions
are
in
accordance
with the terms set out
in
the
Centralised
Fund
Management
Agreement
and
the
Framework
Agreements;
and
|
|
|
|
4.
|
Specific
to
the
Framework Agreement
CCT, Group
A
and SMSC each
employs and maintains separate business, operation
and
accounting personnel
of
its own. There
is
clear
segregation
of
approval authority
and duty
between
the two
entities.
In
general,
for each type
of
the
Framework Agreement
CCT under
the
Framework Agreement, either
the
Company
or
SMSC would
propose
the
transaction
price after
the
review
and
approval
by
the
relevant department(s),
such
as
the
manufacturing department, business administration department,
the
finance
and
accounting department, depending
on
the type
of
the
transaction.
The
counter
party
of the
relevant department(s)
will then, also
review
and
approve the
pricing
of
the
transaction before acceptance.
As
the
Company
and SMSC
maintains separate business units
and
separate personnel,
the
relevant department(s)
that
proposes
the
transaction
price
and
the
relevant department(s)
of
the
counter
party
that
accepts such transaction
price
would
be
different persons
and
under
different departmental management;
|
|
In
accordance
with the
Listing
Rules, the
independent non-executive Directors
and
the auditors
of
the
Company
will also
perform
an
annual review
of the
terms
of
the Continuing Connected Transactions
to
ensure
that the
pricing policy
and
the
annual caps remain
fair and
reasonable
and that
appropriate internal control procedures
are
in
place,
and
will
confirm
so
each
year
in
the
annual
report
published
by
the
Company.
Considering
the
general principles
and
the
detailed pricing policies,
the
Directors (including
the
independent non-executive Directors)
are
of
the view that the
methods and procedures
are
sufficient
to
ensure
that the
Continuing Connected Transactions
will
be conducted
on
normal commercial
terms
or
better and not
prejudicial
to
the
interests
of
the
Company
and
its
minority Shareholders.
REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS
The
Company considers
that
the
entry into
of
the
Centralised
Fund
Management Agreement
and
the
transactions contemplated thereunder
will
have
the
following benefits:
|
|
1.
|
Open
up
the
domestic
and
foreign
funding
channels
of
the
Group;
|
|
|
2.
|
Reduce
the
Group’s overall
debt
levels
and
increase efficient
fund
usage;
|
|
|
3.
|
Reduce
the
Group’s
interest
expense;
and
|
|
|
4.
|
Obtain
favorable
exchange
rate
for
the
Group.
|
15
The
Company considers
that the entry
into
the
Framework Agreement
and
the transactions contemplated thereunder
will
bring
the
Company
an
effective and complete
wafer
production
needs.
SMSC operates a 12-inch wafer fab with advanced process capability. As the market demand for advanced process continues to surge, the Company will allocate some of its advanced node manufacturing to SMSC to ensure future wafer production needs of the Company are met.
The
business partnership between
the
Company
and SMSC will help
to
eliminate some duplicated efforts
in
introducing
and
manufacturing advanced
nodes for
IC
design houses, thereby reducing
the time
to
market
and some
overhead expenses
for
both parties.
With the
expansion
of
its
capacity
and
continuous innovation,
the
Company believes
that
it
will
be
able
to
enhance
its
position
in the
industry
and
benefit
from
the increase
in its
economies
of
scale.
The
Directors (including
the
independent non-executive Directors)
are
of the
view that
it
is in
the best
interests
of
the
Company
and
the
Shareholders
as
a whole
to
enter into
the Centralised
Fund
Management Agreement,
the
Framework Agreement
and
the transactions contemplated thereunder,
the terms
of
the
Centralised
Fund
Management Agreement
and the
Framework Agreement including
the
proposed annual
caps are
fair
and
reasonable,
and the
entering
into
of
the
Centralised
Fund
Management Agreement,
the
Framework Agreement
and
the
transactions contemplated thereunder
are
on
normal
commercial
terms
or
better,
in
the
ordinary
and usual
course
of
business
of
the
Group
and
in
the
interests
of
the
Company
and
the
Shareholders
as
a
whole.
No
Director
is
considered
to
have
a
material interest
in
the
Centralised Fund Management Agreement
or
the
Framework Agreement
which would have
required the Director
to
abstain
from
voting
at
the board
meeting authorising
the
Centralised Fund Management
Agreement
and
the
Framework
Agreement.
IMPLICATIONS UNDER THE LISTING RULES
The
Centralised
Fund
Management Agreement
and the
Framework Agreement were entered
into
by the
parties
at
a time when SMSC was not a
connected person.
Due
to
the completion
of
the
Contribution
by
China
IC
Fund
(which indirectly
holds
approximately 14.82% equity interest
in
the
Company
and
is
therefore
a
connected person
of
the Company
at
the issuer level)
in
approximately 24.71% equity interest
in
SMSC
as disclosed
in
the
Company’s announcement
dated
30
January
2018, SMSC has
therefore become
a
connected subsidiary
of
the
Company
as
defined
under Rule
14A.16
of
the Listing Rules,
and
is
thus a
connected person
of
the
Company.
The
Centralised Fund Management Agreement,
the
Framework Agreement
and
the
transactions contemplated thereunder constitute continuing transactions
which have
subsequently become continuing connected transactions
upon the
completion
of
the
Contribution
by
China
IC
Fund.
This
announcement
is
made
pursuant
to
Rule
14A.60
of
the
Listing Rules,
which
requires
the
Company
to
comply
with the
annual
review
and
disclosure requirements
and
re- comply
with all
applicable connected transaction requirements
upon
renewal
or
variation
of
the
Centralised
Fund
Management Agreement
or
the
Framework Agreement
(as
the
case
maybe).
16
INFORMATION
ABOUT THE
PARTIES
Information on the Company and SMIC Beijing
The
Company
is
one
of the
leading foundries
in
the
world,
is
Mainland China’s largest foundry
in
scale, broadest
in
technology coverage,
and
most
comprehensive
in
semiconductor manufacturing services.
SMIC
provides integrated circuit
(IC)
foundry
and
technology services
on
process nodes
from
0.35
micron
to 28
nanometer. Headquartered
in
Shanghai, China,
SMIC
has an
international manufacturing and service
base.
In
China,
SMIC has a 300mm
wafer fabrication facility
(fab)
and
a
200mm
fab
in
Shanghai;
a 300mm fab and a
majority-owned
300mm fab for
advanced
nodes
in
Beijing;
200mm fabs
in
Tianjin
and
Shenzhen;
and a
majority-owned joint-venture
300mm
bumping facility
in
Jiangyin; additionally,
in
Italy SMIC has a
majority-owned
200mm fab. SMIC also has
marketing
and
customer service offices
in
the U.S.,
Europe, Japan,
and
Taiwan,
and a
representative office
in
Hong Kong. SMIC
Beijing
is
a
wholly foreign-owned enterprise established
in
the PRC and a
wholly-owned subsidiary
of
the Company.
Information on SMSC
SMSC
is
a
Chinese foreign
joint
venture established
by
SMIC
Holdings Corporation*
(‘‘SMIC
Holdings’’) and SMIC
Shanghai.
On 30
January
2018, SMIC
Holdings, SMIC Shanghai, Shanghai
IC
Fund and China
IC
Fund
entered
into
the
joint
venture agreement
in
relation
to
the
establishment
of
SMSC,
pursuant
to
which SMIC
Holdings,
SMIC
Shanghai,
China
IC
Fund and
Shanghai
IC
Fund
contributed
the
increase
in
the registered capital
of
SMSC
of
US$3.29 billion.
Upon the
completion
of
the
Contribution
by
China
IC
Fund
on 29
June 2018, SMSC
becomes
a
Chinese foreign
joint
venture.
SMSC
is
developing
and
establishing
a
300mm
fab
for
advance
nodes.
DEFINITIONS
In
this
announcement
the
following
words have the
following meanings unless the
context
requires
otherwise:
|
‘‘Board’’
|
|
the board of Directors;
|
|
|
|
|
|
‘‘Centralised Fund Management Agreement’’
|
|
the centralised fund management agreement dated 1 June 2017 entered into among the Company, SMIC Beijing and SMSC in relation to the Centralised Fund Management Agreement CCT; ‘‘
|
|
|
|
|
|
“Centralised Fund Management Agreement CCT’’
|
|
the continuing connected transactions contemplated under the Centralised Fund Management Agreement;
|
|
|
|
|
|
‘‘China IC Fund’’
|
|
國家集成電路產業投資基金股份有限公司 (China Integrated Circuit Industry Investment Fund Co., Ltd.*), a company established under the laws of the PRC;
|
17
|
|
|
|
|
‘‘Company’’
|
|
Semiconductor Manufacturing International Corporation (中芯國際集成電路製造有限公司*), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange and the American depositary shares of which are listed on the New York Stock Exchange, Inc.;
|
|
|
|
|
|
‘‘Continuing Connected Transactions’’
|
|
Framework Agreement CCT and Centralised Fund Management Agreement CCT;
|
|
|
|
|
|
‘‘Contribution’’
|
|
30% of its outstanding contributions in SMSC according to the terms of the Joint Venture Agreement;
|
|
|
|
|
|
‘‘Controlling Subsidiaries’’
|
|
companies where SMSC has an equity interest of above 50%;
|
|
‘‘Director(s)’’
|
|
the director(s) of the Company;
|
|
|
|
|
|
‘‘Framework Agreement’’
|
|
the framework agreement entered into between the Company and SMSC on 11 June 2018 in relation to the Framework Agreement CCT;
|
|
|
|
|
|
‘‘Framework Agreement CCT’’
|
|
the continuing connected transactions contemplated under the Framework Agreement;
|
|
|
|
|
|
‘‘Group’’
|
|
the Company and its subsidiaries;
|
|
|
|
|
|
‘‘Group A’’
|
|
the Company and/or its subsidiaries (other than SMSC and its subsidiaries);
|
|
|
|
|
|
‘‘Hong Kong’’
|
|
the Hong Kong Special Administrative Region of the PRC;
|
|
|
|
|
|
‘‘Joint Venture Agreement’’
|
|
the joint venture agreement dated 30 January 2018, the details of which can be found under the announcement of the Company dated 30 January 2018;
|
|
|
|
|
|
‘‘Listing Rules’’
|
|
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
|
|
|
|
|
|
‘‘PRC’’
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the People’s Republic of China (for the purposes of this announcement excluding Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan);
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‘‘RMB’’
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Renminbi, the lawful currency of the PRC;
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‘‘Shareholder(s)’’
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the holder(s) of the Share(s);
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‘‘Shares’’
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ordinary shares of par value US$0.004 each in the capital of the Company listed on the Stock Exchange;
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‘‘SMIC Beijing’’
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Semiconductor Manufacturing International (Beijing) Corporation* (中芯國際集成電路製造（北京）有限公司), a wholly foreign-owned enterprise established in the PRC and a wholly-owned subsidiary of the Company;
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‘‘SMSC’’
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中芯南方集成電路製造有限公司(Semiconductor Manufacturing South China Corporation*), a Chinese-foreign joint venture
established under the laws of the PRC;
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‘‘Stock Exchange’’
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The Stock Exchange of Hong Kong Limited;
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‘‘U.S.’’ or ‘‘United States’’
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the United States of America;
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‘‘US$’’
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United States dollar, the lawful currency of the United States; and
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‘‘%’’
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per cent.
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By order of the Board
Semiconductor Manufacturing International Corporation
Gao Yonggang
Executive Director, Chief Financial Officer and Joint Company Secretary
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Shanghai, PRC, 13 July 2018
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As at the date of this announcement, the directors of the Company are:
Executive Directors
ZHOU Zixue
(Chairman)
ZHAO Haijun
(Co-Chief Executive Officer)
LIANG Mong Song
(Co-Chief Executive Officer)
GAO Yonggang
(Chief Financial Officer
and Joint Company
Secretary)
Non-executive Directors
CHEN Shanzhi
ZHOU Jie
REN Kai
LU Jun
TONG Guohua
Independent Non-executive Directors
William Tudor BROWN
CHIANG Shang-Yi
CONG Jingsheng Jason
LAU Lawrence Juen-Yee
FAN Ren Da Anthony
* For identification purposes only
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