Hua Hong Semiconductor (HKG:1347) said its independent shareholders approved a whitewash waiver applied for by the company's substantial shareholder Huahong Group, according to a Hong Kong bourse filing Tuesday.

Shares of the semiconductor firm fell nearly 2% in morning trade Wednesday.

The waiver is in connection with Hua Hong's purchase of a nearly 97.5% stake in Shanghai Huali Microelectronics from a group of the target's shareholders, which includes Huahong Group.

The firm is settling the 8.3 billion yuan consideration for the purchase via the issue of nearly 190.8 million shares.

The issue would bump Huahong Group's ownership in Hua Hong Semiconductor to 41.16% from 34.70% currently.

Hua Hong said Hong Kong authorities had already granted the waiver, subject to the shareholder approval, which foregoes a requirement that Huahong make a bid for the rest of the business.

Hua Hong Semiconductor's purchase of Shanghai Huali is pending regulatory approval in China.