Merck. Partnership limited by shares. Darmstadt - ISIN DE Securities Identification No

Transcription

1 Merck Partnership limited by shares Darmstadt - ISIN DE Securities Identification No The shareholders of our Company are hereby invited to attend the Annual General Meeting on Friday, April 3, 2009 at 10:00 a.m. to be held at the Jahrhunderthalle Frankfurt, Pfaffenwiese, Frankfurt am Main. Agenda 1. Presentation of the annual financial statements, the management report of Merck KGaA as well as the consolidated financial statements and the management report of the Merck Group for fiscal 2008 and the Report of the Supervisory Board 2. Resolution on the adoption of the annual financial statements of Merck KGaA for fiscal 2008 The General Partners and the Supervisory Board propose that the submitted financial statements of Merck KGaA as at December 31, 2008 be adopted.

2 3. Resolution on the appropriation of the net retained profit for fiscal 2008 The General Partners and the Supervisory Board propose that the share of the net retained profit of Merck KGaA attributable to the shareholders amounting to EUR 101,535, be appropriated as follows: a) Payment of a dividend of EUR 1.50 per no par value share of the dividend-bearing share capital as of the date of this Annual General Meeting, being EUR 96,931, in total b) Carry forward the balance totaling EUR 4,603, to new account. Accordingly, pursuant to Article 31 (3) of the Articles of Association of the Company, E. Merck KG (until and including December 2008 operating under the name E. Merck OHG, hereinafter E. Merck ) must allocate an amount totaling EUR 10,882, to the profit carried forward by Merck KGaA. This obligation was already fulfilled in the reporting period by increasing the 2007 profit carried forward amounting to EUR 8,460, by EUR 2,422, to align it with the new profit carried forward. In the event that the Annual General Meeting resolves to appropriate profits in a way other than that proposed, these amounts must be adjusted accordingly and retransferred, if necessary. Article 31 (2) of the Articles of Association of the Company shall not apply to that extent. The dividend is payable on April 6, Resolution on the approval of the actions of the Executive Board for fiscal 2008 The General Partners and the Supervisory Board propose that the actions of the members of the Executive Board be approved. 5. Resolution on the approval of the actions of the Supervisory Board for fiscal 2008 The General Partners and the Supervisory Board propose that the actions of the members of the Supervisory Board be approved. 6. Appointment of the auditors for fiscal 2009 The Supervisory Board proposes the appointment of KPMG Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Berlin, as auditor of Merck KGaA for fiscal Resolutions on approval for concluding an affiliation contract As the sole partner and controlling company (parent company), on January 26, 2009 Merck KGaA concluded a control and profit and loss transfer agreement with LITEC-LLL 2

3 GmbH (hereinafter referred to as "the company"). The agreement has the following essential content: - The management of the company shall be directly accountable to Merck KGaA; - The company shall transfer its net retained profit to Merck KGaA; - Merck KGaA is required to make up for any annual shortfall of the respective company pursuant to Section 302 AktG (German Stock Corporation Act); - The company may, with the approval of Merck KGaA, use its net profit to set up revenue reserves, provided this is permitted under commercial law and economically justified in reasonable commercial evaluation; - In the absence of third-party shareholders, Merck KGaA is not obligated to make compensation payments or guarantee settlements; - The agreement applies with the exception of the right of Merck KGaA to give instruction retroactively for the period from January 1, 2009 and has an unlimited term. It cannot be terminated by either party for the first five years. Thereafter, notice may be given to terminate the agreement at the end of each fiscal year. This right to terminate without notice for good cause remains unaffected. The General Partners and the Supervisory Board propose that the entry into the control and profit and loss transfer agreement be approved. 8. Supervisory Board elections The Supervisory Board proposes the election to the Supervisory Board of Dr. Wolfgang Büchele and Dr. Hans-Jürgen Leuchs effective July 1, 2009 as shareholder representatives. The members shall be elected for the period ending with the conclusion of the Annual General Meeting resolving to approve the actions of the Supervisory Board for the third fiscal year following the beginning of their term of office. The fiscal year in which their term of office begins is not included. 3

4 Notes to Agenda Item 8: The Supervisory Board of the Company consists of 16 members. Pursuant to Sections 278 para 3, 96 para 1, 101 para 1 German Stock Corporation Act (AktG), Section 7 para 1 No. 2 of the German Co-determination Act (MitbestG) and Articles 15 (1), 6 (5) of the Articles of Association, it is composed of eight members elected by the employees, six members elected by the Annual General Meeting as well as two members appointed by the holder of the registered share. Two of the members elected by the 2008 Annual General Meeting, namely Dr. Arend Oetker and Prof. Dr. Wilhelm Simson, have resigned as members of the Supervisory Board effective June 30, 2009 as set forth in a letter received by the Company on December 9, The Annual General Meeting is not required to follow the election recommendations. It is planned to vote on the proposed candidates separately, with the elections being carried out individually. Appendix 1 provides a list of the occupation, residence and memberships of the proposed persons in other supervisory boards and comparable control bodies in Germany and abroad. Pursuant to Item of the German Corporate Governance Code, the Supervisory Board announces that it proposes the election of Prof. Dr. Dr. h.c. Rolf Krebs as Chairman of the Supervisory Board. 9. Approval of the transmission of information to shareholders via electronic data communication The General Partners and the Supervisory Board propose the following resolution: The Annual General Meeting approves the transmission of information via electronic data communication to the owners of the Company s listed shares. Notes to Agenda Item 9: Pursuant to Section 30b para 3 sentence 1a) of the German Securities Trading Act, in order to transmit information to shareholders via electronic data communication, the Company must obtain not only the consent of the relevant shareholder, but also the prior approval of the Annual General Meeting. This relates for example to the use of electronic media to distribute the invitation to the Annual General Meeting. In order for the Company to be authorized to provide shareholders with information electronically with their consent, the legally required approval of the Annual General Meeting shall also be obtained. 4

5 10. Resolution on the change in the Company s participation in the net profit/loss of E. Merck and the amendment of the Articles of Association The Company s participation in the result and assets of E. Merck as set forth in the Articles of Association shall be amended so that the expenses or income from third-party financing by E. Merck, as the recipient of such, in order to increase the equity interest of E. Merck in the Company or to finance the acquisition by E. Merck of shares or subscription rights in the Company will not be included in the authoritative net profit/loss of E. Merck for the purpose of the Company s participation in the net profit/loss. The General Partners and the Supervisory Board propose the following resolution: a) Article 10 (4) sentence 1 of the Articles of Association of the Company shall be revised as follows: (4) If E. Merck withdraws as General Partner of the Company, the Company may demand, by way of resolution of the Supervisory Board within three months of E. Merck's withdrawal, that E. Merck transfers its noncurrent assets, with the exception of - its interest in the Company - financial investments financed using capital borrowed from banks to finance an increase in the equity interest in the Company or to purchase shares or subscription rights in the company to the Company with economic effect as of the time of withdrawal and against payment of the commercial book value of these noncurrent assets at that time. b) Article 27 (1) of the Articles of Association of the Company shall be revised as follows: (1) The net income/net loss for the period reported in E. Merck's income statement (Section 275 para 2 No. 20 or Section 275 para 3 No. 19 of the German Commercial Code (HGB) - after deduction of the income reported under income from investments (Section 275 para 2 No. 9 or Section 275 para 3 No. 8 HGB) from E. Merck's interest in the Company, - after the addition of interest and similar expenses for capital borrowed from banks to finance an increase in the equity interest in the Company or to purchase shares or subscription rights in the Company (Section 275 para 2 No. 13 or Section 275 para 3 No. 12 HGB), - after the deduction of any types of income (including income from disposals) from the investment of capital borrowed from banks to finance an increase in the equity interest in the Company or to purchase shares or subscription rights in the Company (Section 275 para 2 Nos. 10, 11 or Section 275 para 3 Nos. 6, 9, 10 HGB), 5

6 - after the addition of trade earnings tax (Section 275 para 2 No. 18 or Section 275 para 3 No. 17 HGB), - after the deduction of possible losses resulting in the past when calculating the loss of E. Merck in accordance with (1) that has been carried forward for the purpose of profit/loss participation and not yet been eliminated against the net profit determined in accordance with (1) represents E. Merck s authoritative net profit/loss for the purpose of the Company s share in the net profit/loss. c) Article 35 (1) sentence 1 of the Articles of Association of the Company shall be revised as follows: (1) With regard to E. Merck's remaining interest in Merck & Cie. KG pursuant to Article 8 (2), E. Merck is obliged in the event of the liquidation of the Company to grant the Company a share of the assets calculated under (2) that E. Merck owns in addition to - its interest in the Company, - capital borrowed from banks to finance an increase in the equity interest in the Company or to purchase shares or subscription rights in the Company and - financial investments/receivables and other assets/marketable securities/cashin-hand and balances with the Bundesbank, cash in banks, and cheques acquired using capital borrowed from banks to finance an increase in the equity interest in the Company or to purchase shares or subscription rights in the Company by making a settlement payment in line with the interest calculated in accordance with (3). Notes to Agenda Item 10: Pursuant to Articles 10 (4), and 35 of its Articles of Association, the Company participates in the net profit/loss and assets of E. Merck. According to Article 27, the Company s participation in the net profit/loss relates to the calculated net profit/loss achieved by E. Merck apart from its participation in the Company. E. Merck is obliged to enable the Company to participate in this net profit/loss in accordance with the ratio of share capital to total capital of the Company. According to the current Articles, the net profit/loss of E. Merck in which the Company participates may in principle also include expenses arising from financing activities of E. Merck. In order to avoid a situation where the shareholders of the Company indirectly bear the costs of financing E. Merck s interest in the Company via their participation in the net profit/loss, to date E. Merck has refrained from increasing its 6

7 equity interest or acquiring shares or subscription rights in the Company within the scope of a capital increase through third-party loans although this possibility was not ruled out by the Articles of Association. The proposed amendment of the Articles of Association is intended, regardless of E. Merck s course of action, on the one hand to ensure that the shareholders do not indirectly bear any of the costs of financing the interest in the Company, and on the other hand to maintain E. Merck s freedom to decide how to finance its interest in the Company. According to the new version of the Articles, the expenses from E. Merck s financing activities in respect of increasing its equity interest in the Company or acquiring shares or subscription rights in the Company, for example within the scope of a capital increase, shall no longer be included in the Company s share of the net profit/loss of E. Merck. It is no longer a matter of E. Merck voluntarily dispensing with the possibility of externally financing its interest in the Company. In the event that within the scope of such external financing, any types of income, e.g. interest, investment income or gains on disposals, are generated, these are likewise not included in the share of E. Merck s net profit/loss. The proposed amendments of Article 10 (4) sentence 1 and Article 35 (1) sentence 1 provide for corresponding rules in the event of E. Merck KG s withdrawal as General Partner or of the liquidation of the Company. 11. Resolution authorizing the cancellation of the existing authorized capital, creation of new authorized capital and the amendment to the Articles of Association The General Partners and the Supervisory Board propose the following resolution: a) The authorization granted to the Executive Board pursuant to Article 5 (3) of the Articles of Association of the Company to increase, with the approval of the Supervisory Board and E. Merck, the Share Capital by EUR 29,824, until March 31, 2010 by issuing new shares against cash or contributions in kind (Authorized Capital) on one or several occasions shall be canceled. b) The Executive Board is authorized, with the approval of the Supervisory Board and of E. Merck, to increase the share capital on one or several occasions until April 3, 2014 by up to a total of EUR 56,521, (in words: fifty-six million, five hundred twenty-one thousand one hundred twenty-four euros and nineteen cents) by issuing new shares against cash or contributions in kind (Authorized Capital). The new shares may be assumed by financial institutions specified by the Executive Board with the obligation to offer these to the shareholders (indirect subscription right). c) If the Authorized Capital is utilized, the Executive Board shall be authorized, with the approval of the Supervisory Board, to exclude shareholders' subscription rights in the event of a capital increase of up to 10% of the Share Capital by way of the issue of 7

8 new shares against cash contributions if the issue price is not materially lower than the market price. The Executive Board shall also be authorized, if the Authorized Capital is utilized with the approval of the Supervisory Board, to exclude shareholders subscription rights for the following purposes: - to enable E. Merck to exercise its right pursuant to Article 32 (3) of the Articles of Association of the Company to participate in a capital increase by issuing shares or freely transferable share subscription rights; - and to enable E. Merck to exercise its right pursuant to Article 33 of the Articles of Association of the Company to convert its equity interest into share capital. The Executive Board shall report on each utilization of Authorized Capital at the Annual General Meeting. The Executive Board shall be authorized, with the approval of the Supervisory Board, to determine the further details of the capital increase and its implementation if the Authorized Capital is utilized. In the event of the Authorized Capital being utilized following the implementation of the capital increase in part or in full, the Supervisory Board shall be authorized to amend the provisions of the Articles of Association in this respect. d) Article 5 (3) of the Articles of Association will therefore be revised in its entirety and consist of the following wording: (3) 1 The Executive Board is authorized, with the approval of the Supervisory Board and of E. Merck, to increase the Share Capital on one or several occasions until April 3, 2014 by up to a total of EUR 56,521, (in words: fifty-six million, five hundred twenty-one thousand one hundred twenty-four euros and nineteen cents) by issuing new shares against cash or contributions in kind (Authorized Capital). 2 The new shares may be assumed by financial institutions specified by the Executive Board with the obligation to offer these to the shareholders (indirect subscription right). 3 The Executive Board is authorized, if the Authorized Capital is utilized with the approval of the Supervisory Board, to exclude shareholders' subscription rights in the event of a capital increase of up to 10% of the Share Capital by way of the issue of new shares against cash contributions if the issue price is not materially lower than the market price. 4 The Executive Board is also authorized, if the Authorized Capital is utilized with the approval of the Supervisory Board, to exclude shareholders subscription rights for the following purposes: to enable E. Merck to exercise its right pursuant to Article 32 (3) of the Articles of Association of the Company to participate in a capital increase by issuing shares or freely transferable share subscription rights; 8

9 and to enable E. Merck to exercise its right pursuant to Article 33 of the Articles of Association of the Company to convert its equity interest into share capital. 5 The Executive Board shall report on each utilization of Authorized Capital at the Annual General Meeting. 6 The Executive Board is authorized, with the approval of the Supervisory Board, to determine the further details of the capital increase and its implementation if the Authorized Capital is utilized. 7 In the event of the Authorized Capital being utilized following the implementation of the capital increase in part or in full, the Supervisory Board is authorized to amend the provisions of the Articles of Association in this respect. Report of the Executive Board on the authorization to exclude subscription rights in accordance with Sections 278 para 3, 203 para 2 sentence 2 German Stock Corporation Act (AktG) in conjunction with Section 186 para 4 sentence 2 AktG regarding Agenda Item 11 Under Agenda Item 11, a proposal will be made to the Annual General Meeting to create new Authorized Capital of up to EUR 56,521, (in words: fifty-six million, five hundred twenty-one thousand one hundred twenty-four euros and nineteen cents) (corresponds to approx. 10% of the total capital of the Company in accordance with Article 4 (1) of the Articles of Association of the Company or approx % of the Share Capital of the Company in according with Article 4 (2) bullet 1 of the Articles of Association of the Company) available for both capital increases against cash or contributions in kind with simultaneous cancellation of the Authorized Capital resolved upon by the Annual General Meeting on March 31, 2005 and not yet completely utilized. The authorization now proposed would permit the Executive Board to exclude the subscription rights pursuant to Sections 278 para 3, 203 para 1 sentence 1, 203 para 2, 186 para 3 sentence 1 and 4 AktG. Pursuant to Sections 278 para 3, 203 para 2 sentence 2 AktG in conjunction with Section 186 para 4 sentence 2 AktG, the Executive Board has prepared a written report on the reasons for the proposed authorizations to exclude the subscription rights. The report is available for inspection by shareholders in the offices of the Company as of the date of the invitation to the Annual General Meeting and is available at It will be provided without delay and free of charge to any shareholder upon request. The report announces the following: With the proposed rule on Authorized Capital, the Authorized Capital resolved upon by the 2005 Annual General Meeting which has not yet been completely utilized shall be canceled and new Authorized Capital shall be created, taking into consideration the statutory maximum limits. In terms of the amount, the new Authorized Capital orients toward the Share Capital stated in Article 5 (1) of the Articles of Association. When utilizing the Authorized Capital, the shareholders in principle have subscription rights to new shares (Sections 278 para 3, 203 para 1 sentence 1 in conjunction with 9

10 Section 186 para 1 AktG). However, the subscription right can be ruled out either partially or in full. 1. Exclusion of subscription rights for capital increases against cash contributions for up to 10% of the Share Capital and an issue price not materially lower than the stock market price It is permitted to exclude subscription rights particularly if the capital increase against cash contributions does not exceed 10% of the Share Capital and the issue price is not materially lower than the market price (Section 203 para 1 sentence 1 in conjunction with Section 186 para 3 sentence 4 AktG). With the approval of the Supervisory Board, the Executive Board shall be authorized, in accordance with this legal regulation, to exclude the subscription rights of shareholders. The exclusion of subscription rights is intended to enable the Company to act quickly and flexibly on the capital market. It enables the Executive Board to react at short notice to new or altered conditions in the capital market and to make use of these in the interests of the Company and shareholders to obtain capital or to cover at short notice potential capital requirements of the Company that arise. This type of capital increase makes it possible for a financial institution to place new shares with institutional investors within one to two days. By comparison, a capital increase with subscription rights requires that extensive reviews be carried out and possibly also the subsequent preparation of a prospectus. In addition, the statutory subscription period of at least two weeks must be observed. In view of the generally volatile stock market environment, the possibility of conducting a capital increase quickly and unbureaucratically represents a considerable advantage for the Company. This advantage also has considerable economic value: On the one hand, costs are saved. On the other hand, in the case of a capital increase with subscription rights, during the subscription period the capital market normally forces the issuer to add a safety discount to the original share price, which could considerably lower the Company s proceeds from the capital increase. By excluding subscription rights, this disadvantage can largely be avoided and the Company is in principle capable of achieving the best possible price on the stock market for the newly issued shares. This will lead to higher issue proceeds to the benefit of the Company. In addition, new shareholder groups can be attracted with a placement of this kind. Also when granting subscription rights, successful placement with third parties is endangered or can involve additional expense due to the uncertainty of exercise (behavior toward subscription rights). Authorizing the exclusion of subscription rights will enable the Company to ideally strengthen its own means in the interests of the Company and all shareholders. At the same time, the danger of diluting the interest of existing shareholders due to the limited scope of the authorization to exclude subscription rights is low. When creating Authorized Capital, the issue price of new shares cannot be predicted, as this would constitute forward-looking information. The authorization of 10

11 the Executive Board complies with the legal requirements so that the issue price orients toward the stock market price and in particular does not fall significantly short of it. Since the issue price of the new shares is close to the stock market price and due to the limitation of the extent of the capital increase without subscription rights, in principle every shareholder has the opportunity to acquire on the stock market under similar conditions the number of shares required to maintain his/her shareholding. It is therefore ensured that in conformity with the statutory assessment of Section 186 para 3 sentence 4 AktG, due protection of assets and voting right interests of shareholders is given when utilizing the Authorized Capital under exclusion of subscription rights while creating additional entrepreneurial scope for the Company in the interests of all shareholders. When weighing up these considerations, the described authorization of the Executive Board to exclude subscription rights is required, suitable, appropriate and advisable in the interests of both the Company and shareholders. 2. Exclusion of subscription rights to create subscription rights for E. Merck in accordance with its interest in the total capital and to grant it the right to convert its equity interest into share capital The exclusion of subscription rights secures the rights of E. Merck pursuant to Articles 32 and 33 of the Articles of Association to participate in a capital increase through the issue of new shares or freely transferable subscription rights as well as to convert the equity interest into shares. It is necessary to exclude subscription rights in order to fulfill the rights of E. Merck stated in and provided for by Articles 32 and 33 of the Articles of Association also by utilizing the Authorized Capital

12 Documents available for inspection The annual financial statements and the management report of the Company, the consolidated financial statements and the Group management report for fiscal 2008 along with the Report of the Supervisory Board, the proposal for the appropriation of the net retained profit as well as the control and profit and loss transfer agreement listed under Item 7 of this Agenda as well as the respectively required annual financial statements, management reports and the report by the Executive Board as well as the report of the Executive Board listed under Item 11 of this Agenda can be inspected at the business offices of Merck KGaA Besucherempfang Frankfurter Strasse Darmstadt as well as on the Web at Every shareholder will receive upon request immediately and free of charge a copy of the aforementioned documents, which will also be available for inspection during the Annual General Meeting. Total number of shares and voting rights As of the date of the invitation to the Annual General Meeting, the subscribed capital of the Company amounts to EUR 168,014, (in words: one hundred sixty-eight million fourteen thousand nine hundred twenty-seven euros and sixty cents), divided into 64,621,126 shares. Each share grants the holder one vote, which means as of the date of the invitation to the Annual General Meeting, 64,621,126 voting rights existed. Participating in the Annual General Meeting Pursuant to Article 22 (1) and (2) of the Articles of Association of the Company, to be eligible to participate in the Annual General Meeting and to exercise voting rights, shareholders must register with the Company at the following address and send evidence of share ownership issued by the custodial bank or financial institution to the following address: Merck KGaA c/o Deutsche Bank AG - General Meetings- Postfach Frankfurt am Main 12

13 Evidence of share ownership must relate to the start of March 13, 2009 and be received by the Company together with the registration no later than the end of March 27, 2009 at the above address. The registration and evidence must be in written form (Section 126 of the German Commercial Code (HGB)) and must be written in either German or English. Following receipt of the registration and evidence of share ownership, shareholders will be sent their admission ticket to the Annual General Meeting. In order to ensure the timely receipt of the admission tickets, we kindly ask shareholders to send their registration and evidence of share ownership to the Company as early as possible. Voting by proxy Shareholders who do not wish to attend the Annual General Meeting personally may also have their voting rights exercised by proxy, e.g. by a bank or shareholder association. If authorization is not granted to a financial institution, a shareholder association or another person or institution equivalent to these in accordance with the provisions of German stock corporation law, the authorization must be granted in writing. In addition, we continue to offer our shareholders the possibility to exercise their voting rights through a proxy appointed by our Company. For this purpose, these proxies must be given the required authorization and instructions on how the votes are to be cast. The proxies are obliged to vote in line with the instructions given to them. Prior to the Annual General Meeting, the authorizations and instructions to the proxies appointed by the Company can be granted via the Web or in writing. Authorizations and instructions may also be granted or amended via the Web even during the Annual General Meeting until the Chairman of the Executive Board has completed his speech. An admission ticket to the Annual General Meeting is also necessary in order to authorize the proxies appointed by the Company. Shareholders will receive further details on participating in the Annual General Meeting as well as on granting authorization and issuing voting instructions together with the admission ticket or can view these by visiting the aforementioned website. Broadcasting of the Annual General Meeting on the Web As authorized by the Chairman of the Meeting, all shareholders of Merck KGaA as well as interested members of the public can follow the Annual General Meeting live on the Web at on April 3, 2009 from 10 a.m. until the Chairman of the Executive Board completes his speech. The speech of the Chairman of the Executive Board and the voting results will also be published there following the Annual General Meeting. 13

14 Motions and proposals for elections in accordance with Sections 126 and 127 AktG Motions and election proposals from shareholders are to be sent exclusively to the following address: Merck KGaA - HV-Büro - Frankfurter Strasse Darmstadt Fax: 06151/ Motions or election proposals submitted by shareholders requiring publication which have been received by the Company by March 19, 2009 at the aforementioned address will be published on the website Darmstadt, February 20, 2009 Merck Kommanditgesellschaft auf Aktien Executive Board 14

15 Appendix 1 Information on the Supervisory Board candidates proposed for election under Item 8 of the Agenda Memberships of (a) other statutory supervisory boards, b) comparable German and foreign supervisory bodies of economic enterprises Dr. Wolfgang Büchele, Römerberg, Chief Executive Officer of BorsodChem Zrt., Hungary Dr. Hans-Jürgen Leuchs, Ingelheim, Graduate Chemist in retirement (a) --- (b) BorsodChem Zrt., Hungary (a) --- (b)