3.11 Information requested under article 34 of the Royal Decree of 14 November 2007
The following elements may have an impact in the event of a takeover bid:
3.11.1 UCB’s capital structure, with an indication of the different classes of shares and, for each class of shares, the rights and obligations attached to it and the percentage of total share capital that it represents on 31 December 2018
As from 13 March 2014, the share capital of UCB amounts to € 583 516 974, represented by 194 505 658 shares of no par value, fully paid up. All UCB shares are entitled to the same rights.
There are no different classes of UCB shares (see section 3.2.2).
3.11.2 Restrictions, either legal or prescribed by the articles of association, on the transfer of securities
Restrictions on the transfer of securities only apply to not fully paid up shares according to article 11 of UCB’s articles of association (the “Articles of Association”) as follows:
B) any shareholder holding shares not fully paid who wishes to transfer all or part of his shareholding, should notify his intention by registered letter to the Board of directors, indicating the name of the candidate to be approved, the number of shares offered for sale, the price and the proposed terms of sale.
The Board of directors may, by registered letter, oppose this sale within a month of such notification, by presenting another candidate as purchaser to the selling shareholder. The candidate proposed by the Board will have a right of pre-emption on the shares offered for sale, unless the proposed seller withdraws from the sale within 15 days.
The right of pre-emption will be exercisable at a unit price corresponding to the lower of the two following amounts:
- The average closing price of a UCB ordinary share on the “continuous trading market” of Euronext Brussels in the 30 stock exchange working days preceding the notification under the preceding paragraph, reduced by the amount still to be paid up;
- The unit price offered by the third-party proposed for approval.
The above-mentioned notification by the Board of directors shall be taken as notification of the exercise of the right of pre-emption in the name and for the account of the purchasing candidate presented by the Board. The price will be payable within the month of this notification without prejudice to any more favorable conditions offered by the third-party presented for approval.
C) if the Board does not reply within the period of a month from notification set out in the first paragraph of subsection b) above, the sale may take place on conditions no less favorable than those set out in the above-mentioned notification for the benefit of the candidate presented for approval.
To date, the capital of UCB is fully paid up.
3.11.3 Holders of any securities with special control rights and a description of those rights
There are no such securities.
3.11.4 System of control of any employee share scheme where the control rights are not exercised directly by the employees
There is no such system.
3.11.5 Restrictions, either legal or prescribed by the articles of association, on the exercise of voting rights
The existing UCB shares entitle holders thereof to vote at the General Meeting.
According to article 38 of the Articles of Association, the following restrictions apply:
“Each share gives the right to one vote.
Any person or entity who acquires or subscribes to beneficial ownership in shares, whether registered or not, in the capital of the company, conferring a right to vote, will be obliged to declare within the period required by law, the number of shares purchased or subscribed for, together with the total number of shares held, when such number in total exceeds a proportion of 3% of the total voting rights exercisable, before any possible reduction, at a General Meeting. The same procedure will have to be followed each time that the person obliged to make the initial declaration mentioned above increases his voting strength up to 5%, 7.5%, 10% And subsequently for each additional 5% of the total voting rights acquired as defined above or when following the sale of shares, his voting rights fall below one of the limits specified above. The same notification requirements will apply to any instrument, option, future swap, interest term agreement and other derivative granting its holder the right to acquire existing securities carrying voting rights pursuant to a formal agreement (i.e. an agreement that is binding pursuant to the applicable law) and only on the holders’ own initiative. In order for the notification requirements to apply, the holder must either have an unconditional right to acquire existing securities carrying voting rights or be able to make free use of its right to acquire them. A right to acquire securities carrying voting rights is considered to be unconditional if it depends merely on an event that can be caused to happen or prevented from happening by the holder of the right. These notifications will occur according to the modalities described in the legislation applicable to the disclosure of large shareholdings in issuers whose securities are admitted to trading on a regulated market. Failure to respect this statutory requirement will be able to be penalized in the manner laid down by article 516 of the Belgian Companies Code. No one may at a General Meeting cast a greater number of votes than those relating to such shares as he has, in accordance with the above paragraph, declared himself to be holding, at least twenty days before the date of the Meeting.”
The voting rights attached to UCB shares held by UCB or by its direct or indirect subsidiaries are, as a matter of law, suspended.
3.11.6 Agreements between shareholders which are known to UCB and may result in restrictions on the transfer of securities and/or the exercise of voting rights
UCB has no knowledge of agreements which may result in restrictions on the transfer of its securities and/or the exercise of voting rights. UCB received notification on 25 January 2018 of the termination of the concert agreement between Tubize and Schwarz.
3.11.7 A. Rules governing the appointment and replacement of Board members
Under the Articles of Association:
“The company shall be managed by a Board of directors having at least three members, whether shareholders or not, appointed for four years by the general meeting and at all times subject to dismissal by the General Meeting.
Outgoing directors are eligible for re-election.
The period of office of outgoing directors, who are not re-appointed, ceases immediately on the closing of the Ordinary General Meeting.
The General Meeting shall determine the fixed or variable remuneration of the directors and the value of their attendance vouchers, to be charged to operating expenses.”
The General Meeting decides by a simple majority of votes on these matters. The rules relating to the composition of the Board of directors are detailed in section 3.2 of the Corporate Governance Charter as follows:
Composition of the Board of directors
The Board is of the opinion that a number of between ten and fifteen members is appropriate for efficient decision-making on the one hand, and contribution of experience and knowledge from different fields on the other hand. Such a number also allows for changes to the Board’s composition to be managed without undue disruption. This is way within the provisions of the law and the Articles of Association of UCB from which the Board shall be composed of at least three members. The General Meeting of Shareholders decides on the number of Directors, upon proposal of the Board.
A large majority of the Board members are non-executive directors.
The curricula vitae of the directors and directorship candidates are available for consultation on the UCB’s website (www.ucb.com). These curricula vitae mention, for each director, the directorships in other listed companies.
Appointment of Directors
The directors are appointed by the General Meeting of Shareholders, following a proposal by the Board, and upon recommendation of the GNCC.
In proposing candidates at the general meeting of shareholders, the Board takes particular account of the following criteria:
- A large majority of the directors are non-executive Board members;
- At least three non-executive directors are independent in accordance with the legal criteria, and those adopted by the Board;
- No single director or group of directors may dominate decision-making;
- The composition of the Board guarantees diversity and contribution of experience, knowledge and ability required for UCB’s specialist international activities; and
- Candidates are fully available to carry out their functions and do not take more than five directorships in listed companies.
The GNCC gathers information, allowing the Board to ensure that the criteria set out above have been met at the time of the appointments and renewals and during the term of office.
For each new directorship appointment, the GNCC performs an assessment of existing and required abilities, knowledge and experience on the Board. The profile of the ideal candidate is drawn up on the basis of this assessment and proposed to the Board for discussion and definition.
When the profile is established, the GNCC selects candidates that fit the profile in consultation with the Board members (including the Chair of the Executive Committee) and possibly using a recruitment firm. Recommendation of final candidates is made by the GNCC to the Board. The Board decides on the proposals to be submitted to Shareholders’ approval.
Duration of mandates and age limit
Directors are appointed by the General Meeting of Shareholders for a four-year term, and their terms may be renewed.
Moreover, an age limit of seventy has been stipulated. A director shall give up his/her current term the day of the Annual General Meeting of Shareholders following his/her 70th birthday. The Board may propose exceptions to that rule.
Procedure for appointment, renewal of terms
The process of appointment and re-election of directors is run by the Board, which strives to maintain an optimum level of abilities and experience within UCB and its Board.
The proposals for appointment, renewal, resignation or possible retirement of a director are examined by the Board based on a recommendation from the GNCC. The GNCC assesses for each of the directors who are candidate for re-election at the next General Meeting of Shareholders, their commitment and effectiveness and makes recommendations to the Board regarding their re-election.
Special attention is given to the evaluation of the Chair of the Board and the Chairs of the Board Committees.
The assessment is conducted by the Chair of the GNCC and the Vice-Chair of the Board or another member of the GNCC, who have meetings with each of the Directors in their capacity as a Director and, as the case may be, as Chair or member of a Board Committee. For the Chair of the Board and of the GNCC, the assessment is conducted by the Vice-Chair of the Board and a senior independent Director. The sessions are based on a questionnaire and cover the Director’s role in the governance of the Company and the effectiveness of the Board, and, amongst others, how they evaluate their commitment, contribution and constructive involvement in the discussions and decision-making.
Feedback is given to the GNCC who then reports to the Board and makes recommendations as to the proposed re-election.
The Board submits to the General Meeting of Shareholders its proposals concerning the appointments, renewals, resignations or possible retirement of directors. These proposals are communicated to the general meeting of shareholders as part of the agenda of the relevant shareholders meeting.
The General Meeting of Shareholders resolves on the proposals of the Board in this area by a majority of the votes.
In the event of a vacancy during a term, the Board is empowered to fill the post and to allow its decision to be ratified at the next General Meeting of Shareholders.
Proposals for appointment state whether or not the candidate is proposed as an executive director, define the term proposed for the mandate (i.e., Not more than four years, in accordance with the articles of association), and indicate the place where all useful information in relation to the professional qualifications of the candidate, in addition to the main functions and directorships of the candidate, may be obtained or consulted.
The Board also indicates whether or not the candidate meets the independence criteria, in particular those stipulated in article 526ter company code, such as the fact that a director, in order to qualify as “independent” may not hold a mandate for more than three consecutive terms (with a maximum of twelve years). In case the director meets the independence criteria, a proposal will be submitted to the general meeting of shareholders to acknowledge such independent character. The proposals for appointment are available on the UCB website (www.ucb.com).
The Charter additionally stipulates that a Director qualifies as independent if he or she has not had business or other relations with the UCB group which could compromise his/her independent judgment. In the assessment of this criterion, significant status as customer, supplier or shareholder of the UCB group is taken into consideration by the Board on an individual basis.
3.11.7. B. Rules governing the amendment of UCB’s articles of association
The rules governing the amendment of the articles of association are set by the Belgian Companies Code.
The decision to amend the articles of association has to be made by a general meeting, provided that at least 50% of the share capital of UCB is present or represented at the meeting, in principle with a majority of 75% of the votes cast.
If the attendance quorum is not met at the first extraordinary general meeting, a second general meeting can be convened and will decide without any attendance quorum having to be reached.
In exceptional circumstances (for example amendment of the object of the company, changing of rights of securities), additional attendance and voting requirements may be applicable.
3.11.8 Powers of the Board of Directors, in particular to issue or buy back shares
Powers of the Board of Directors
The Board is UCB’s governing body. It has the power to take decisions on all matters which the Law does not expressly attribute to the general meeting of shareholders.
The Board has kept responsibility for certain key areas for itself and has delegated the remainder of its powers to an Executive Committee (further detailed in the Charter). In all matters for which it has exclusive responsibility, the Board works in close cooperation with the Executive Committee, which in particular is responsible for preparing most of the proposals for decisions by the Board of Directors.
The Board’s authorizations to issue or buy back shares
The Extraordinary General Meeting of 26 April 2018 decided to renew:
- the authorization of the Board (and to amend the Articles of Association accordingly), for another period of 2 years, to increase the share capital, amongst other by way of the issuance of shares, convertible bonds or warrants, in one or more transactions, within the limits and under the conditions as set out above under section 3.2.4 Authorized capital, and
- the authorization of the Board, for another period of 2 years (and 2 months) expiring on 30 June 2020, to acquire, directly or indirectly, whether on or outside of the stock exchange, by way of purchase, exchange, contribution or any other way, up to 10% of the total number of Company’s shares as calculated on the date of each acquisition, within the limits and under the conditions as set out above under 3.2.3 Treasury shares.
3.11.9 Significant agreements to which UCB is a party and which take effect, alter or terminate upon a change of control of UCB following a takeover bid, and the effects thereof, except where their nature is such that their disclosure would be seriously prejudicial to UCB; this exception shall not apply where UCB is specifically obliged to disclose such information on the basis of other legal requirements
- Facility agreement in the amount of € 1 billion between, amongst others, UCB SA/NV, BNP Paribas Fortis SA/NV, Commerzbank Aktiengesellschaft, filiale Luxembourg, ING Bank N.V. and Mizuho Bank Europe N.V. as coordinating bookrunners, Banco Santander, S.A., Bank of America Merrill Lynch International Limited, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Barclays Bank PLC, BNP Paribas Fortis SA/NV, Commerzbank Aktiengesellschaft, filiale Luxemburg, Crédit Agricole Corporate and Investment Bank, HSBC Bank PLC, Belgian branch, ING Bank N.V., Intesa SanPaolo Bank Luxembourg S.A., Amsterdam branch, KBC Bank NV, Mizuho Bank Europe N.V., Sumitomo Mitsui Banking Corporation and The Royal Bank of Scotland PLC, as mandated lead arrangers, and Wells Fargo Bank International Unlimited Company as lead arranger, dated 14 November 2009 (as amended and restated on 30 November 2010, on 7 October 2011, on 9 January 2014 and for the last time on 9 January 2018), which change of control clause was last approved by the General Meeting of 26 April 2018, according to which any and all of the lenders can, in certain circumstances, cancel their commitments and require repayment of their participations in the loans, together with accrued interests and all other amounts accrued and outstanding thereunder, following a change of control of UCB SA/NV.
- Euro Medium Term Note Program dated 6 March 2013, with last update of the base prospectus per 10 March 2015, for an amount of up to € 3 billion (the “EMTN Program”), providing for a change of control clause (condition 5 (e) (i)) under which, for any Notes issued thereunder where a change of control put clause is included in the relevant final terms, any holder of such Note and following a change of control of UCB SA/NV, has a right to redeem that Note by exercising such put right, and as such change of control clause has been approved by the General Meetings of 25 April 2013, 24 April 2014, 30 April 2015, 28 April 2016, 27 April 2017 and 26 April 2018. The following notes have been issued under the EMTN Program by UCB NV/ SA and are subject to the above described change of control clause:
- Retail bond 3.75% due 27 March 2020 in the amount € 250 million issued on 27 March 2013;
- Institutional bond 4.125% due 4 January 2021 in the amount of € 350 million issued on 4 October 2013;
- Institutional private placement bond 3.292% due 28 November 2019 in the amount of € 55 million issued on 28 November 2013;
- Institutional private placement bond 3.284% due 17 December 2019 in the amount of € 20 million issued on 10 December 2013;
- Institutional bond 1.875% due 2 April 2022 in the amount of € 350 million issued on 2 April 2015.
- Senior unsecured retail bonds of UCB SA/NV issued on 2 October 2013 and maturing 2 October 2023 in the amount of € 175 717 000 bearing a 5.125% fixed rate, and which states that in case of change of control (as defined in the terms and conditions of the offering) the bondholders have the right to require the issuer to redeem such bonds. This change of control clause was approved at the general meeting of 24 April 2014.
- Facility agreement in the amount of € 100 million between UCB Lux S.A. As borrower, UCB SA/ NV as promoter and guarantor, and the EIB dated 15 April 2013, as amended, restated and assigned to UCB SA/NV as borrower on 20 October 2016 with effect as of 24 October 2016, of which the change of control clause was approved by the general meeting of 25 April 2013.
- Facility agreement in the amount of € 75 million/USD 100 million between UCB SA/NV as borrower and the EIB, dated 16 June 2014, as amended and restated on 20 October 2016 with effect as of 21 October 2016, of which the change of control clause was approved by the General Meeting of 24 April 2014, and whereby the loan, together with accrued interests and all other amount accrued and outstanding thereunder, could in certain circumstances become immediately due and payable – at the discretion of the EIB – following a change of control of UCB SA/NV.
- EIB co-development agreement in the amount of € 75 million entered with the EIB and of which the change of control clause has been approved by the General Meeting of 24 April 2014 and whereby such agreement can be terminated by the EIB in the event of a change of control of UCB SA/NV and UCB SA/NV may be bound to pay a termination payment corresponding, depending on the circumstances, to all, part of or an increased amount (capped at up to 110%) of the funding received from the EIB.
- The UCB stock awards and performance share plans by which UCB shares are granted annually by UCB to certain employees according to grade and performance criteria, vest according to the rules of both plans after three years, upon condition that its beneficiary remains in continuous employment with the UCB group. They also vest upon change of control or merger. On 31 December 2018, the following number of stock awards and performance shares are outstanding:
- 2 201 916 Stock awards, of which 626 292 will vest in 2019;
- 383 835 Performance shares, of which 96 948 will vest in 2019.
3.11.10 Agreements between UCB and its Board members or employees providing for compensation if the Board members resign or are made redundant without valid reason or if the employment of the employees ceases because of a takeover bid
- For more details, see section 3.7.3 on the main contractual terms on hiring and termination arrangements for the CEO and members of the Executive Committee. No other agreements provide for a specific compensation of Board members in case of termination because of a takeover bid.
- In addition to the Executive Committee members identified in section 3.7.3, at the end of 2018 only one employee in the U.S. and one outside the U.S. benefited from a change of control clause that guarantees their termination compensation if the employment of the employee ceases because of a public takeover bid.