| | holders
will be requested at the next General Meeting to approve the retirement of the
shares bought through the 4th repurchase program. A 5th repurchase program with
a maximum value of CHF 3 billion was approved by the shareholders at the Annual
General Meeting held in 2005, but will only be started after termination of the
4th repurchase program.  Further
information on the development of the share capital structure of Novartis AG during
the last three 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 2005.
Information about Novartis share options granted as
a component of executive and employee compensation is set forth below in this
section under the heading “Compensation” and further information can be found
in Note 27 to the Group’s consolidated financial statements.
SHAREHOLDERS’ RIGHTS Each registered share entitles
the holder to one vote at the Annual General Meeting. Shareholders also have the
right to receive dividends, appoint a proxy, convene a General Meeting of the
shareholders, place items on the agenda of an Annual General Meeting and hold
such other rights as defined in the Swiss Code of Obligations. | | 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 an Annual General Meeting. Demands must be made in writing at the latest 45
days before the date of the Meeting; specify the item to be included in the agenda;
and contain the proposal for which the shareholder requests a vote.
REGISTRATION AS SHAREHOLDER There are no restrictions
regarding the transferability of Novartis shares. However, only those persons
having their shares registered in the Novartis share register may exercise their
voting rights. Pursuant to Swiss law, a person who wishes to register shares must
make a declaration to the Shareholder Registry that the shares have been acquired
in his/her own name and for his/her own account.
Each share carries one vote. However, the Articles of Incorporation provide that
no shareholder shall be registered to vote for shares comprising more than 2%
of the registered share capital unless the Board of Directors has granted, upon
request, an exemption. Exemptions are in force for the two largest shareholders
reported above (Novartis Foundation for Employee Participation and Emasan AG).
In 2005 no other exemptions were requested. The statutory
voting restrictions can be cancelled with a twothirds majority of the shares represented
at the Annual General Meeting. The voting restrictions
were imposed and have been retained to achieve a certain spread of share ownership
allowing for diversity among the shareholders and avoiding that a large minority
shareholder unduly dominates the Annual General Meeting due to traditional low
shareholder representation. Nominees may not vote
shares absent registration with the Share Registry and, with registration, may
only vote shares constituting an amount less than or equal to 0.5% of the registered
share capital. The Board of Directors may register nominees with the right to
vote in excess of that limit if the nominees disclose such particulars of the
beneficial owners of the shares as the Board shall require. Such agreements are
in force with Nortrust Nominee and JPMorgan Chase Bank. Groupings formed to circumvent
this limitation are treated as one single person or nominee. Holders
of American Depositary Shares (ADS) may vote by instructing JPMorgan Chase Bank
to exercise the voting rights | |
