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Corporate Governance

The Novo Nordisk Foundation originates back from the 1920s when August Krogh and H. C. Hagedorn established Nordisk Insulinlaboratorium and the brothers Thorvald and Harald Petersen established Novo Terapeutisk Laboratorium  and later Novo's Fond.

The Novo Nordisk Foundation was founded in 1989 as a merger of Novo's Fond, Nordisk Insulinlaboratorium and Nordisk Insulinfond.

Framework
The Novo Nordisk Foundation is, as a commercial foundation, a Danish selfgoverning institution. As such the foundation is independent i.e. no person outside the Foundation, lay or legal, has a right of ownership of the capital or can direct its decisions. No person or entity exercises any kind of formal influence over the Foundation's Board.

The Foundation is governed by the Danish Foundation Act and the Danish Ministry of Justice and the Danish Ministry of Economic and Business Affairs have the oversight of the Foundation.

Objectives of the Foundation
The Novo Nordisk Foundation's objectives are:

1. to provide a stable basis for the commercial and research activities of Novo Nordisk A/S, which is engaged in research in, development, production and sale of pharmaceuticals and related products and services; of Novozymes A/S, which is engaged in carrying out research in, development, production and trade in biological solutions; and of any future public or private limited companies in which the Foundation's subsidiary, Novo A/S, may hold a material equity interest or over which Novo A/S may have material influence, whether through proxy or otherwise,

2. to support physiological, endocrinological, metabolic and other medical research,

3. to contribute to the preservation and operation of Novo Nordisk A/S' research hospital activities, and furthermore

4. to support other scientific, humanitarian and social purposes.

Board composition, nomination and election
The Foundation is governed by a Board of Directors which consists of a total of nine members.

Six members (of whom two have a medical or scientific background) are elected by the board members who have themselves been elected under the Articles of Association. Such board members serve for a one-year term and may be re-elected. The Board of Directors has established a competence profile describing the preferred competences for members of the board. On this basis the chairmanship presents a proposal for nomination of current and new board members to the Board. Ordinary election of board members takes place in April each year.

In addition three employee representatives are elected by the employees of the subsidiaries of the Foundation in accordance with Danish law. Employee-elected board members serve for a four-year term. Employee-elected board members have the same rights, duties and responsibilities as board members elected under the Articles of Association.

The board members elect among themselves a chairman and a vice chairman who constitute the chairmanship and who plan the board meetings.

Structure
In 1999, the Novo Nordisk Foundation established a wholly-owned subsidiary, Novo A/S, through investment in the subsidiary of a share of the Foundation's bond portfolio. All A and B shares in Novo Nordisk A/S previously held by the Novo Nordisk Foundation were transferred to Novo A/S on 31 December 1999.

At the end of 2009, Novo A/S held 25.5% of the share capital in Novo Nordisk A/S (26.9% excluding Novo Nordisk's portfolio of own shares) and 70.9% of the votes in Novo Nordisk A/S. Similarly, Novo A/S held 25.5% of the share capital in Novozymes A/S (26.7% excluding Novozymes' portfolio of own shares) and 70.1% of the votes in Novozymes A/S.

The Novo Nordisk Foundation's shares in Novo A/S are not negotiable instruments and may not be sold for as long as the Foundation exists. The Board of Directors of the Foundation shall always be obliged, through the Foundation's voting rights in Novo A/S, to:

• prevent any capital augmentation in Novo A/S that would result in the Novo Nordisk Foundation losing its controlling interest in Novo A/S
• prevent any sale of Novo A/S' class A shares in Novo Nordisk A/S and/or Novozymes A/S
• ensure that any decision in Novo A/S is made in accordance with and respect of the provisions of the Novo Nordisk Foundation's Articles of Association.

The Board of Directors of the Novo Nordisk Foundation shall be responsible, through appropriate provisions, including in Novo A/S if necessary, to ensure reasonable consolidation with a view to ensuring that the Foundation, possibly through Novo A/S, can participate to the extent that the Board of the Foundation deems necessary in future capital augmentations in Novo Nordisk A/S and Novozymes A/S. Through Novo A/S, the Foundation shall strive to maintain material influence in both Novo Nordisk A/S and Novozymes A/S.

The objective of Novo A/S
The objective of Novo A/S is to administer the bonds invested by the Novo Nordisk Foundation in Novo A/S, to administer and exercise its voting rights concerning Novo A/S' class A and B shares in Novo Nordisk A/S and Novozymes A/S and thereby to ensure satisfactory financial returns for the Novo Nordisk Foundation. This objective shall be achieved by Novo A/S

• ensuring that all enterprises in which the company has material influence contribute actively to the Novo Group's development and conduct their activities in accordance with the Novo Group's visions and values,
• upholding material influence in Novo Nordisk A/S and Novozymes A/S,
• adhering to the rules and principles, as stated in the Novo Nordisk Foundation's Articles of Association, regarding exercising of voting rights concerning class A and B shares in Novo Nordisk A/S and Novozymes A/S, respectively, and
• conducting investment and financing activities, including investment of capital in enterprises and in real estate in Denmark and abroad. All operational and strategic matters in relation to such investment activities are the responsibility of and are taken care of by the Board of Novo A/S.

Exercise of ownership and voting policies
As Novo A/S is a wholly-owned subsidiary of the Foundation, the Board of Directors of the Foundation constitutes in practice the Annual General Meeting of Novo A/S. As part of the competence profile established for the Board, the Foundation strives to have its chairman and vice chairman elected as board members in Novo A/S.

The exercise of ownership in Novo Nordisk A/S and Novozymes A/S is taken care of by Novo A/S, however the Foundation will always be involved if decisions require the approval of the Foundation.

All operational and strategic matters in relation to Novo Nordisk A/S and Novozymes A/S are the responsibility of and are taken care of by the Boards of Novo Nordisk A/S and Novozymes A/S, respectively.

The Novo Nordisk Foundation's results
The development in the Novo Nordisk Group, the Novozymes Group and Novo A/S is described in more detail in their respective annual reports, to which reference is made.

The Novo Nordisk Foundation's result for 2009 is a profit of DKK 2.176 million, which is primarily attributable to dividends from the subsidiaries.

The results of the Foundation's own activities in 2009 are presented below. Grants awarded are considered expenditures, and dividends received from Novo A/S are considered returns.

 

Dividends received	DKK	2.162	million
Management and administration	DKK	- 14	million
Finances, net	DKK	33	million
Tax	DKK	- 5	million
Result 2009	DKK	2.176	million
Grants awarded	DKK	- 185	million
Other changes	DKK	1	million
Change in net capital	DKK	1.992	million