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July 22, 2002, a further share repurchase program
up to a total amount of CHF 4 billion using a second trading line
on the SWX Swiss Exchange. At the Annual General Meeting on March
4, 2003 a resolution was passed to reduce the capital from CHF 1
412 075 000 to CHF 1 400 735 000 and to cancel the corresponding
number of shares repurchased under the program. The repurchase program
continued through 2003 and the Board will propose reducing Novartis
AG’s share capital by amounts corresponding to the nominal value
of repurchased shares in 2003 (24 260 000 shares in 2003) at the
forthcoming Annual General Meeting. Further information on the development
of the share capital structure of Novartis AG during the last 2
years is presented in tabular form in Note 5 to the financial statements
of Novartis AG.
Convertible Bonds and Options
Novartis had no convertible bonds outstanding
in 2003. In December 2001, Novartis sold a total of 55 million nineand
ten-year call options (Low Exercise Price Options, “LEPOs”) and
55 million nine- and ten-year put options on Novartis shares to
a third party. On June 26, 2003 Novartis redeemed these equity instruments.
Information about Novartis share options
granted for executive and employee compensation is contained in the
section on Compensation below and in Note 26 to the Group’s consolidated
financial statements.
Shareholders’ Rights
Each registered share entitles the holder
to one vote at the General Meeting. There are no preferential voting
shares. Shareholders also have the right to receive dividends, appoint
a proxy, convene a General Meeting, place items on the agenda of
a General Meeting and hold such other rights as defined in the Swiss
Code of Obligations (SCO).
One or more shareholders whose combined
shareholdings represent an aggregate nominal value of at least CHF
1 000 000 may demand that an item be included in the agenda of a General
Meeting. Such a demand must be made in writing at the latest 45 days
before the meeting
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and shall specify the items and the proposal
of such a shareholder.
Legitimization as Shareholder
Persons enrolled in the Novartis share
register may exercise the membership rights of registered shares.
Registration requires a declaration that the shareholder has acquired
the shares in his own name and for his own account.
According to the Articles of Incorporation,
no shareholder shall be registered to vote more than 2% of the issued
share capital unless the Board has upon request granted an exemption.
So far, such a request has never been denied. The Board may register
nominees with the right to vote up to 0.5% of the issued share capital,
and in excess of that limit if such nominees disclose particulars
of the beneficial owners of these shares.
Groupings formed to circumvent this limitation
are treated as one single person or nominee.
The statutory voting restrictions can be
cancelled with a two-thirds majority of the shares represented at
the General Meeting.
Resolutions and Elections at General Meetings
Shareholders registered at least 20 days
prior to the General Meeting may vote their shares at the meeting.
Resolutions of the shareholders at General
Meetings are approved with a simple majority of the shares represented
at the meeting, except in the following matters which by law (SCO,
Art. 704) and our Articles of Incorporation require the approval of
two-thirds of all represented shares:
• Alteration of the purpose of Novartis AG
• Creation of shares with increased voting powers
• Implementation or removal of restrictions regarding the transferability
of shares
• Authorized or conditional increase of the share capital
• Increase of the share capital from equity or a contribution in kind,
for the purpose of an acquisition of property and the grant of special
rights
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