10:54 SHANGHAI PECHEM<00338> - Announcement (1) The Stock Exchange of Hong Kong Limited 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. Sinopec Shanghai Petrochemical Company Limited (A joint stock limited company incorporated in the People's Republic of China) (Stock Code: 338) Announcement The Company was granted waivers from strict compliance with the relevant provisions of the Listing Rules by the Hong Kong Stock Exchange with respect to certain Continuing Connected Transactions referred to in the prospectus published at the time of the Company's initial public offer on 6 July 1993. These connected transactions included purchases of raw materials, sales of petroleum products, sales of petrochemical products, agency sales of petrochemical products and provision of services. The Hong Kong Stock Exchange subsequently confirmed in February 2000 when China Petrochemical Corporation, formerly a substantial shareholder having a direct interest in the Company, underwent a major reorganisation, that these waivers would remain valid following such reorganisation. As a result of recent changes to the Hong Kong Listing Rules, these waivers are no longer valid and the Company must comply with the relevant Hong Kong Listing Rules requirements for it to continue conducting these Continuing Connected Transactions. Under the Hong Kong Listing Rules, these Continuing Connected Transactions are subject to the approval of the Company's independent shareholders. Also as a result of recent changes to the Shanghai Listing Rules, the Company is required to make an annual estimate on such Continuing Connected Transactions. Under the current Shanghai Listing Rules, such annual estimate is subject to the approval of the Company's independent shareholders. A circular containing details of the Continuing Connected Transactions together with a notice of, and forms of proxy for, a shareholders' meeting to approve the Continuing Connected Transactions, and including the advice of the independent financial adviser, will be despatched to the H shareholders and a notice will be published for the domestic shareholders of the Company as soon as is reasonably practicable. Shareholders of the Company who are deemed to have an interest in any of the Continuing Connected Transaction shall abstain from voting at the relevant shareholders' meeting. 1. INTRODUCTION The Company was granted waivers from strict compliance with the relevant provisions of the Listing Rules by the Hong Kong Stock Exchange with respect to the Continuing Connected Transactions at the time of the Company's initial public offer on 6 July 1993. The Hong Kong Stock Exchange subsequently confirmed in February 2000 when China Petrochemical Corporation, formerly a substantial shareholder having a direct interest in the Company, underwent a major reorganisation, that these waivers would remain valid following such reorganisation. As a result of recent changes to the Hong Kong Listing Rules, these waivers are no longer valid and the Company must now comply with the relevant Hong Kong Listing Rule requirements for it to continue conducting these Continuing Connected Transactions. Under the Hong Kong Listing Rules, these Continuing Connected Transactions are subject to the approval by the Company's independent Shareholders. The Company intends to continue to conduct these connected transactions and therefore will comply with the relevant Listing Rules requirements. Also as a result of recent changes to the Shanghai Listing Rules, the Company is required to make an annual estimate on such Continuing Connected Transactions. Under the current Shanghai Listing Rules, such annual estimate is subject to the approval of the Company's independent shareholders. At the 22nd meeting of the 4th session of the Board of Directors on 28 April 2005, the Board approved each of the Continuing Connected Transactions and the execution of the Framework Agreements. An Independent Board Committee has been established to advise the independent Shareholders as to the terms of the Continuing Connected Transactions and the caps on the relevant Continuing Connected Transactions for the years ending 31 December 2005, 31 December 2006 and 31 December 2007.