Merck. Corporation with general partners. Darmstadt - ISIN DE Securities Identification No

Transcription

1 Merck Corporation with general partners Darmstadt - ISIN DE Securities Identification No The shareholders of our company are hereby invited to attend the on Friday, April 20, 2012 at 10:00 a.m. to be held at the Jahrhunderthalle Frankfurt, Pfaffenwiese 301, Frankfurt am Main. Annual General Meeting

2 Agenda 1. Presentation of the annual financial statements and the management report of Merck KGaA (including the explanatory report on the information in accordance with Section 289 (4) of the German Commercial Code) as well as the consolidated financial statements and the management report of the Merck Group (including the explanatory report on the information in accordance with Section 315 (4) of the German Commercial Code) for fiscal 2011 and the Report of the Supervisory Board There will be no resolution on agenda item 1 since this only comprises the presentation of the annual financial statements and additional documents. 2. Resolution on the adoption of the annual financial statements for fiscal 2011 The General Partners and the Supervisory Board propose that the submitted financial statements of Merck KGaA as at December 31, 2011 be adopted. 3. Resolution on the appropriation of the net retained profit for fiscal 2011 The General Partners and the Supervisory Board propose to utilize the portion of net retained profit of Merck KGaA accruing to the shareholders in the amount of 309,493, as follows: a) Payment of a dividend of 1.50 per no par value share of the dividend-bearing share capital as of the date of this Annual General Meeting, being 96,931, in total. b) Carry forward the balance totaling 212,561, to new account. Accordingly, pursuant to Article 31 (3) of the Articles of Association of the company, E. Merck KG (hereinafter E. Merck ) must allocate an amount totaling 502,506, to the profit carried forward by Merck KGaA. (This obligation was already fulfilled in the reporting period by increasing the 2010 profit carried forward amounting to 289,349, by 213,157, 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. The dividend is payable on April 23, Resolution on the approval of the actions of the Executive Board for fiscal 2011 The General Partners and the Supervisory Board propose that the actions of the members of the Executive Board be approved for fiscal

3 5. Resolution on the approval of the actions of the Supervisory Board for fiscal 2011 The General Partners and the Supervisory Board propose that the actions of the members of the Supervisory Board be approved for fiscal Resolution on the election of the auditors for fiscal 2011 as well as the auditors for the audit review of the abbreviated financial statements and half-year management report of the Group as of June 30, 2012 The Supervisory Board proposes the appointment of KPMG Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Berlin, Germany for fiscal 2012 to audit the year-end financial statements and the Group year-end financial statements as well as to conduct the audit of the abbreviated financial statements and the half-year management report contained in the half-year report as of June 30, Resolution on the compensation system for the Executive Board members of Merck KGaA For stock corporations, according to Section 120 (4) of the German Stock Corporation Act, it is possible for the General Meeting to approve the compensation system applicable to the management board of the company. Many of the rules applicable to German stock corporations do not apply to Merck KGaA, which is a corporation with general partners. This also includes Section 120 (4) of the German Stock Corporation Act, since at Merck KGaA in contrast to the situation at stock corporations it is not the Supervisory Board that decides on the compensation of the Executive Board members. Instead, personnel authority at Merck KGaA lies with the Board of Partners of E. Merck KG, upon which the General Meeting of Merck KGaA has no influence. The Board of Partners has assigned the authority to set the compensation system of Executive Board members to its Personnel Committee. At its meeting on February 7, 2012, the Personnel Committee decided to supplement the variable compensation components for the members of the Executive Board by adding a long-term variable compensation component with effect from January 1, The objective of this addition is to make the compensation system even more sustainable and to align it not only with target achievement based on key figures, but also to a lasting performance of the Merck share price. Although there is no legal obligation to do so, Merck KGaA would like to give its shareholders the possibility to express its opinion of the amended compensation system that applies to the Executive Board, in other words by deciding on a corresponding resolution. 3

4 Both the previous and the amended compensation systems for the members of the Executive Board members are presented in the compensation report, which has been published in the Annual Report for 2011 as part of the Statement on Corporate Governance within the Corporate Governance Report. The General Partners and the Supervisory Board propose that Executive Board compensation system in the version applicable as of January 1, 2012 be approved. 8. Resolution on the approval of a control and profit and loss transfer agreement As the sole partner and controlling company (hereinafter referred to as parent company ), on January Merck KGaA entered into a control and profit and loss transfer agreement with heipha Dr. Müller GmbH (hereinafter referred to as "subsidiary"). The agreement has the following essential content: The subsidiary subordinates its management to the parent company. Accordingly, the parent company is entitled to issue instructions to the subsidiary as regards the management of the company. The subsidiary shall transfer all of its profits to the parent company during the term of the agreement. Subject to the setting up of reserves under the provisions of the agreement, the subsidiary shall transfer the net income arising without profit transfer less any losses carried forward from the previous year and the amount protected from distributions according to Section 268 (8) of the German Commercial Code plus any other amounts taken out of the revenue reserves under the provisions of the agreement. However, the profit transfer may not exceed the amount stated in Section 301 of the German Stock Corporation Act, the respectively valid version of which shall be applied. The transfer of profits stemming from the release of capital reserves (Section 272 (2) No. 4 of the German Commercial Code) or net retained earnings reported prior to the agreement (Section 272 (3) of the German Commercial Code) or from profit carried forward prior to the agreement, shall be ruled out. With the approval of the parent company, the subsidiary may transfer amounts from net income to retained earnings provided this is permitted under commercial law and it is considered economically justifiable using reasonable commercial judgment. Other retained earnings set up during the term of this agreement are to be released if demanded by the parent company and to be used to offset an annual loss or to be transferred as profit. The entitlement to profit transfers shall arise at the end of the subsidiary s fiscal year and is effective and due as of this date. In accordance with all provisions of the currently valid version of Section 302 of the German Stock Corporation Act, the parent company shall offset any other 4

5 annual losses during the term of the agreement provided that these are not offset by using other retained earnings for offsetting an annual loss during the term of this agreement. The amount of the loss to be assumed will not be lowered by releasing capital reserves or retained earnings reported prior to the agreement and by profit carried forward prior to the agreement. The entitlement to offset any losses shall arise at the end of the subsidiary s fiscal year and is effective and due as of this date. The parent company has the right to demand advance payments in the course of the fiscal year with respect to expected profit transfers by the subsidiary provided that the liquidity of the subsidiary permits the payment of such advance payments. No interest will be paid on the profit transfer account. This agreement requires the approval of the Annual General Meeting and the shareholders meeting of the companies entering the agreement. The agreement shall take effect when it is entered in the Commercial Register of the court located at the registered office of the subsidiary. With the exception of the parent company's right to issue instructions, it shall apply retroactively as of the start of the subsidiary s fiscal year in which the agreement becomes effective. The provision concerning the parent company s right to issue instructions shall take effect only once the agreement has been entered in the Commercial Register of the court at the registered office of the subsidiary. The agreement has been concluded indefinitely. It may not be terminated before a period of five calendar years, as of the start of the subsidiary s fiscal year in which the agreement took effect (minimum term). Subject to the adherence to the minimum term, the agreement may be terminated in writing at the end of each fiscal year by giving three months notice. This does not affect the right to terminate the agreement without notice for good cause. Good cause includes in particular the merger, split or liquidation of one of the two companies entering the agreement. Moreover, the parent company is entitled to terminate the agreement for good cause if it no longer holds the majority of the voting rights in the subsidiary. The General Partners and the Supervisory Board propose that the control and profit and loss transfer agreement between Merck KGaA and heipha Dr. Müller GmbH dated January 30, 2012 be approved

6 Requirements for participating in the Annual General Meeting and exercising voting rights 1. Registration and evidence of share ownership In accordance with 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 under the following address and submit evidence of share ownership issued by the custodial bank or financial institute to the following address: Merck KGaA c/o Deutsche Bank AG Securites Production General Meetings Postfach Frankfurt am Main Fax: / WP.HV@Xchanging.com Evidence of share ownership must relate to the start of March 30, 2012 (0:00, the so-called record date ) and must be received by the company along with the registration no later than April 13, 2012, (24:00 hours), at the aforementioned address. Registration and evidence of share ownership must be in text form (Section 126b of the German Civil Code) in either German or English. Following receipt of registration and evidence of share ownership, the admission ticket to the Annual Meeting will be sent to the shareholder or his/her proxy. In order to ensure the timely receipt of the admission tickets, we kindly request shareholders to be sure to send their registration and evidence of share ownership to the company in a timely manner. 2. Significance of the record date The record date is the date that determines the extent and exercise of participation and voting rights at the Annual General Meeting. In relation to the company, individuals who wish to participate in the Annual General Meeting or to exercise voting rights must be deemed to be shareholders by having submitted evidence of share ownership by the record date. Eligibility to participate or the extent of voting rights is determined exclusively by share ownership on the record date. Changes in share ownership after the record date have no significance here. The record date does not involve a suspension of the ability to sell the shares held. Also in the event of the complete or partial sale of the shares owned after the record date, share ownership on the record date is definitive for participation in and exercising voting rights. This means that the sale of shares after the record date has no impact on eligibility to participate or to exercise voting rights. Shareholders who did not own any shares on the record date, but only purchased them afterward, may therefore only 6

7 participate in the Annual General Meeting and exercise voting rights if someone authorizes them to do so or grants them power of attorney. The record date is not a relevant date for any dividend entitlement. 3. 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, or another third party. If the authorization is granted to neither a bank nor a shareholders' association or other equivalent institutions or persons in accordance with Section 135 (8) and (10) of the German Stock Corporation Act, the following must be taken into account with respect to the form of the authorization: In accordance with Section 134 (3) sentence 3 of the German Stock Corporation Act and Article 22 (4) of the Articles of Association, the authorization and evidence thereof vis-à-vis the company must be made in text form or electronically via an Web-based authorization system at The revocation of an authorization is possible in the form described in the foregoing or without a separate, express declaration if the shareholder granting the authorization attends the Annual Meeting personally. Shareholders wishing to authorize a proxy are kindly requested to use either the form on the reverse side of the admission ticket they received after registering, or the Web-supported proxy authorization system in order to grant the authorization. In order to use the Websupported authorization system, it is necessary to enter the admission ticket number as well as a special code that can also be found on the admission ticket. The Web-supported authorization system simultaneously serves as an electronic means of transmitting evidence to the company of having appointed a proxy. For technical reasons, the use of the Web-supported authorization system on the day of the Annual General Meeting (April 20, 2012) can only be offered until the end of the speech by the Chairman of the Executive Board. The authorization, its revocation and evidence of having authorized a proxy can be transmitted to the company prior to the Annual General Meeting by surface mail or by fax to the following address: Merck KGaA - HV-Büro Darmstadt Telefax: 06151/ If authorizations, their revocation or evidence of having authorized a proxy are sent to the company by surface mail or by fax, for organizational reasons it will only be possible to ensure they are taken into account if received by April 19, 2012 (15:00 hours). Providing evidence to the company of having authorized a proxy can also proceed on the day of the Annual General Meeting if the proxy presents the evidence (e.g. the original or a copy of the authorization) at the registration desk. 7

8 If authorizations to exercise voting rights are granted to banks, equivalent institutes or entities (sections 135 (10) and 125 (5) of the German Stock Corporation Act) and shareholders associations or persons as defined by Section 135 (8) of the German Stock Corporation Act, neither Section 123 (3) sentence 3 of the German Stock Corporation Act nor the Articles of Association stipulate a form requirement. However, according to Section 135 (1) sentence 2 of the German Stock Corporation Act, in these cases, evidence of the declaration of authorization is to be kept by the proxy. In addition, it must be complete and may only refer to the exercise of voting rights. We therefore kindly request shareholders wishing to authorize a bank, a shareholders association or any other equivalent institute, entity or person in accordance with Section 135 of the German Stock Corporation Act to confer with the proxy regarding the form and the content of the authorization. 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, authorizations and instructions to the proxies appointed by the company can be granted electronically via the form entitled Authorizations and Instructions for proxy voting by representatives named by Merck KGaA, which can be found on the reverse side of the admission ticket, which is sent to shareholders after registration. Authorizations and instructions to the proxies appointed by the company must be received by the company no later than April 18, 2012 (24:00 hours) at the following address. Merck KGaA - HV-Büro Darmstadt Telefax: 06151/ The same applies if shareholders wish to revoke the authorization granted to the proxy appointed by the company via the aforementioned procedure. Authorizations and instructions may also be granted, amended or revoked via the Web-based authorization system even during the Annual General Meeting (April 20, 2012) until the Chairman of the Executive Board has completed his speech. Also in the event of the shareholder being represented by a third party or by the proxy appointed by the company, it is necessary to register the shareholder and to submit evidence of share ownership before the specified deadlines as described in the foregoing. If the shareholder authorizes more than one person, the company may reject one or more of them. 8

9 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 by visiting Disclosure of rights of shareholders in accordance with sections 122 (2),126 (1), 127, 131 (1) of the German Stock Corporation Act 1. Additions to the agenda demanded by a minority in accordance with Section 122 (2) of the German Stock Corporation Act Shareholders whose shares amount in aggregate to not less than one-twentieth of the share capital or represent an amount of the share capital corresponding to 500,000, may demand that items are put on the agenda and published. Each new item shall be accompanied by an explanation or a draft proposal. Demands for additional items must be provided to the company at least 30 days before the meeting in writing; the day of receipt and the day of the Annual General Meeting shall not be included in this calculation. The last possible date of receipt is March 20, 2012, 24:00 hours. Shareholders demanding additional items must prove that they have owned the shares for at least three months prior to the date of the Annual General Meeting (i.e. since at least January 20, 2012, 0:00) (cf. Section 122 (2) sentence 1, (1) sentence 3 of the German Stock Corporation Act in conjunction with Section 142 (2) sentence 2 of the German Stock Corporation Act). Demands to add additional agenda items are to be addressed in writing to the Executive Board of the company. Shareholders who wish to make this type of demand are requested to submit them to the following address: Merck KGaA - HV-Büro - Frankfurter Strasse Darmstadt 2. Motions by shareholders in accordance with Section 126 (1) of the German Stock Corporation Act Every shareholder has the right to submit countermotions at the Annual General Meeting to proposals put forward by a General Partners and/or the Supervisory Board regarding a specific agenda item, stating the reasons for the countermotion. Countermotions that the company has received at least 14 days prior to the Annual General Meeting will be made available without delay at When calculating this submission deadline, the date of receipt and the date of the Annual General Meeting are not to be included in the count. Consequently, countermotions must be submitted no later than April 5, 2012, 24:00 hours. The countermotion will be made available together with the name of the shareholder, the grounds for the countermotion, and, where applicable, a statement by management. 9

10 The following address is definitive for the transmission of countermotions: Merck KGaA - HV-Büro - Frankfurter Strasse Darmstadt hauptversammlung@merckgroup.com Telefax: 06151/ Any countermotions sent to any other addresses will be disregarded. Countermotions are only deemed to have been made if they are submitted verbally during the Annual General Meeting. This does not affect the right of every shareholder to submit countermotions during the Annual General Meeting regarding various items on the agenda without having transmitted them to the company in advance and before the specified deadline. 3. Election proposals by shareholders in accordance with Section 127 of the German Stock Corporation Act In accordance with Section 127 of the German Stock Corporation Act, the preceding remarks on Section 126 (1) of the German Stock Corporation Act apply correspondingly to proposals by shareholders on the election of the auditor (agenda item 6) with the proviso that grounds for the election proposal need not be given. The Executive Board is not required to make the election proposal available if the proposal does not include the name, profession and place of residence of the auditor proposed for election. When proposing auditors, they are to be designated by their company name and location instead of their name, profession and place of residence. 4. Shareholders right to information in accordance with Section 131 (1) of the German Corporation Act Upon request, every shareholder will be provided with information by the Executive Board at the Annual General Meeting regarding the company s affairs, to the extent that such information is necessary to permit a proper evaluation of the relevant agenda item. The duty to provide information also extends to the company s legal and business relations with any affiliate as well as to the situation of the Group and the entities included in the consolidated financial statements. Under certain conditions (Section 131 (3) of the German Stock Corporation Act), the Executive Board may refuse to provide information. A detailed presentation of these conditions can be found in German at: 10

11 5. Further explanations Further explanations on the aforementioned shareholder rights in accordance with Sections 122 (2), 126 (1), 127 and 131 (1) of the German Stock Corporation Act can be found on the aforementioned website of the company (only in German). Reference to the company s website This notice of the Annual General Meeting, the documents that are required to be made available to the Annual General Meeting - in particular the documents specified under agenda item 1 as well as the control and profit and loss transfer agreement presented under agenda item 8 for approval, the relevant report to be provided by the Executive Board according to Section 293a of the German Stock Corporation Act as well as the annual financial statements and the management reports of Merck KGaA and heipha Dr. Müller GmbH for the past three fiscal years - and further information relating to the Annual General Meeting can be downloaded from the following website once the Annual General Meeting has been convened: The documents that are required to be made available will also be available during the Annual General Meeting. Any countermotions, nominations of candidates for election and demands for items to be included on the agenda will also be made available on the aforementioned website. Total number of shares and voting rights on the date when the AGM is convened As of the date on which the General Meeting is convened, the subscribed capital of the company amounts to 168,014, (in words: one hundred sixty-eight million fourteen thousand nine hundred twenty-seven euros and twenty cents), divided into 64,621,125 shares no par value bearer shares plus one registered share. Each of the total number of 64,621,126 shares grants the holder one vote, which means as of the date on which the General Meeting is convened, 64,621,126 voting rights existed. 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 20, 2012 from 10 a.m. until the Chairman of the Executive Board completes his speech. The speech by the Chairman of the Executive Board as well as the voting results will likewise be published on the aforementioned website after the Annual General Meeting. 11

12 The notice of this Annual General Meeting was published on March 8, 2012 in the electronic Federal Gazette and was forwarded to those media that can be assumed to disseminate information throughout the entire European Union. Darmstadt, March 8, 2012 Merck Kommanditgesellschaft auf Aktien The Executive Board 12