The shareholders in Ascelia Pharma AB, Reg. No. 556571-8797 (“Ascelia Pharma”), are hereby invited to the annual general meeting (Sw. årsstämma) to be held on Wednesday 5 May 2021.
The English text is an unofficial translation. In case of any discrepancies between the Swedish text and the English translation, the Swedish text shall prevail.
In light of the ongoing Covid-19 pandemic and in order to reduce the risk of infection spreading, the board of directors has decided that the annual general meeting will be held only by advance voting (postal vote) in accordance with temporary legislation. This means that the annual general meeting will be conducted without the physical presence of shareholders, proxies or external parties and that shareholders' exercise of voting rights at the annual general meeting can only take place by shareholders voting in advance in the order prescribed below. Information on the resolutions passed by the annual general meeting will be published on Wednesday 5 May 2021, as soon as the outcome of the advance voting is finally compiled.
Right to participate and notice of participation
Shareholders wishing to attend the annual general meeting by advance voting must:
- be registered in the company’s share register kept by Euroclear Sweden AB (the Swedish Securities Register Center) as of Tuesday 27 April 2021; and
- have notified their participation no later than Tuesday 4 May 2021 by casting their advance vote to the company in accordance with the instructions under the heading “Voting in advance” below so that the advance vote is received by the company no later than that day.
Trustee-registered shares
Shareholders whose shares are trustee-registered in the name of a bank or other trustee must, to be able to exercise their voting rights at the annual general meeting by advance voting, request the trustee to register their shares in their own name with Euroclear Sweden AB (so called “voting rights registration”). Such voting rights registration must be implemented by the trustee no later than as of Thursday 29 April 2021. Accordingly, shareholders must well in advance before this date notify their trustee of their request of such voting rights registration.
Voting in advance
Shareholders may exercise their voting rights at the annual general meeting only by voting in advance, so called postal voting in accordance with Section 22 of the Act (2020:198) on temporary exceptions to facilitate the execution of shareholders’ meetings in companies and other associations. A special form shall be used for advance voting. The form is available on the company’s website (www.ascelia.com). The advance voting form is considered as the notification of attendance to the annual general meeting. The completed voting form must be submitted to the company no later than on Tuesday 4 May 2021. The completed and signed form shall be sent to Ascelia Pharma AB, att: Kristian Borbos, Hyllie Boulevard 34, SE-215 32 Malmö, Sweden. A completed form may also be submitted electronically and is to be sent to kb@ascelia.com. If a shareholder votes in advance through a proxy, a written and dated power of attorney signed by the shareholder must be attached to the form. A proxy form is available on the company's website (www.ascelia.com). If the shareholder is a legal entity, a registration certificate or equivalent document shall be enclosed to the form. The shareholder may not provide special instructions or conditions in the voting form. If so, the vote is invalid. Further instructions and conditions are included in the advance voting form.
Proposed agenda
0. Opening of the meeting.
1. Election of chairman of the meeting.
2. Preparation and approval of the voting list.
3. Approval of the agenda.
4. Election of one or two persons who shall approve the minutes of the meeting.
5. Determination of whether the meeting was duly convened.
6. Submission of the annual report and the audit report and the consolidated annual report and consolidated audit report as well as the statement by the auditor on the compliance of the applicable guidelines for remuneration to senior executives.
7. Resolutions regarding:
a. adoption of the income statement and the balance sheet and the consolidated income statement and the consolidated balance sheet;
b. allocation of the company’s profits in accordance with the adopted balance sheet; and
c. discharge of the members of the board of directors and the CEO from liability.
8. Determination of
a. the number of members of the board of directors.
b. the number of auditors and deputy auditors.
9. Determination of
a. remuneration for the members of the board of directors.
b. remuneration for the auditors.
10. Election of members of the board of directors and chairman of the board of directors.
a. Peter Benson (re-election).
b. Niels Mengel (re-election).
c. Bo Jesper Hansen (re-election).
d René Spogárd (re-election).
e. Helena Wennerström (re-election).
f. Hans Maier (re-election).
g Lauren Barnes (re-election).
h. Chairman of the board of directors: Peter Benson (re-election).
11. Election of auditors.
12. Resolution on approval of remuneration report.
13. Resolution on authorization for the board of directors regarding issues.
14. Resolution on implementation of a long-term incentive program by way of (A) implementation of a performance-based share saving program; (B) authorization on directed issues of series C shares; (C) authorization for repurchase of series C shares; and (D) resolution on transfer of own ordinary shares.
15. Closing of the meeting.
Proposed resolutions
Item 1: Election of chairman of the meeting
The Nomination Committee, that has consisted of Jørgen Thorball (chairman), appointed by Sunstone Life Science Ventures II K/S, Anna Sundberg, appointed by Handelsbanken Fonder AB, Håkan Nelson, appointed by Øresund-Healthcare Capital K/S, and Peter Benson, chairman of the board of directors, proposes that lawyer Ola Grahn is elected as chairman of the meeting or, in his absence, the person appointed by the Nomination Committee instead.
Item 2: Preparation and approval of the voting list
The voting list that is proposed to be approved is the voting list prepared by the company, based on the share register of the meeting and received advance votes, controlled by the person approving the minutes of the meeting.
Item 4: Election of one or two persons who shall approve the minutes of the meeting
Håkan Nelson, representing Øresund-Healthcare Capital K/S, is proposed to, together with the chairman, approve the minutes of the meeting, or, in his absence, the person appointed by the board of directors instead. The assignment to approve the minutes also includes controlling the register of voters and that received advance votes are correctly reproduced in the minutes.
Item 7 b: Resolution regarding allocation of the company’s profits in accordance with the adopted balance sheet
The board of directors proposes that no dividends are paid to the shareholders and that the available funds of SEK 215,868,704 are carried forward.
Item 8 a: Determination of the number of members of the board of directors
The Nomination Committee proposes that the board of directors shall be composed of 7 members.
Item 8 b: Determination of the number of auditors and deputy auditors
The Nomination Committee proposes, in accordance with the recommendation from the Audit Committee, that one registered accounting firm is appointed as auditor.
Item 9 a: Determination of remuneration for the members of the board of directors
The Nomination Committee proposes that board remuneration shall be paid with SEK 500,000 to the chairman of the board (SEK 400,000 previous year) and with SEK 250,000 to each of the other board members who are not employed by the company (SEK 200,000 previous year). It is further proposed that remuneration for committee work shall be paid with SEK 100,000 to the chairman of the Audit Committee (unchanged since previous year), with SEK 25,000 to each of the other members of the Audit Committee (unchanged since previous year), with SEK 100,000 to the chairman of the Commercialization Committee (unchanged since previous year) and with SEK 25,000 to each of the other members of the Commercialization Committee (unchanged since previous year). No separate remuneration shall be paid for work in the Remuneration Committee. It is finally proposed that, in addition to the above, board members residing outside of Europe shall be paid additional board remuneration with SEK 10,000 per physical board meeting attended (unchanged since previous year).
Item 9 b: Determination of remuneration for the auditors
The Nomination Committee proposes, in accordance with the recommendation from the Audit Committee, that remuneration for the auditor shall be paid in accordance with customary norms and approved invoice.
Item 10: Election of members of the board of directors and chairman of the board of directors
The Nomination Committee proposes that Peter Benson, Niels Mengel, Bo Jesper Hansen, René Spogárd, Helena Wennerström, Hans Maier and Lauren Barnes are re-elected as ordinary board members, and that Peter Benson is re-elected as chairman of the board of directors.
Information on the board members proposed for re-election can be found at the company website (www.ascelia.com) and in the annual report.
Item 11: Election of auditors
The Nomination Committee proposes, in accordance with the recommendation from the Audit Committee, that Öhrlings PricewaterhouseCoopers AB is re-elected as accounting firm. Öhrlings PricewaterhouseCoopers AB has informed that the authorized public accountant Carl Fogelberg will continue to be the auditor in charge.
Item 12: Resolution on approval of remuneration report
The board of directors proposes that the annual general meeting resolves to approve the board of directors’ remuneration report for the financial year 2020.
Item 13: Resolution on authorization for the board of directors regarding issues
The board of directors proposes that the annual general meeting resolves to authorize the board of directors, at one or several occasions, during the time up until the next annual general meeting, with or without deviation from the shareholders’ preferential rights, and with or without provisions regarding payment in kind or through set-off or other provisions, to resolve to issue new ordinary shares, convertibles and/or warrants. The reason for that deviation from the shareholders’ preferential rights shall be permitted is to enable the company to raise working capital, to execute acquisitions of companies or operating assets as well as to enable issues to industrial partners within the framework of partnerships and alliances. The total number of ordinary shares that that may be issued (alternatively be issued through conversion of convertibles and/or exercise of warrants) shall not exceed 8,417,066, which corresponds to a dilution of approximately 20 percent calculated on the number of outstanding ordinary shares in the company after final registration with the Swedish Companies Registration Office of the directed new share issue of 5,000,000 ordinary shares, which was resolved by the board of directors on 17 March 2021, subject to approval from the extraordinary general meeting on 13 April 2021. To the extent an issue is made with deviation from the shareholders’ preferential rights, the issue should be made on market terms.
The CEO shall be authorized to make minor formal adjustments of the resolution which may be required for registration with the Swedish Companies Registration Office (Sw. Bolagsverket).
Item 14: Resolution on implementation of a long-term incentive program by way of (A) implementation of a performance-based share saving program; (B) authorization on directed issues of series C shares; (C) authorization for repurchase of series C shares; and (D) resolution on transfer of own ordinary shares
The board of directors proposes that the annual general meeting resolves to implement a long-term incentive program in the form of a performance-based share saving program (the “LTI 2021”) for employees in accordance with A below. The resolution is conditional upon that the annual general meeting also resolves on hedging measures in accordance with B – D below.
A. Implementation of a performance-based share saving program
Background
The overall purpose with LTI 2021 is to align the interests of the employees with those of the shareholders and thus ensure a maximum long-term value adding commitment. LTI 2021 is also considered to create a long-term focus on increase in earnings and growth among the participants. LTI 2021 is further considered to facilitate for the company to recruit and retain employees.
At the annual general meetings in 2019 and 2020, it were resolved to implement corresponding incentive programs for employees in the company (LTI 2019 and LTI 2020).
Terms and conditions for LTI 2021
1. LTI 2021 shall comprise senior executives and key employees divided into three categories.
2. LTI 2021 means that the participants will invest in ordinary shares in the company (”Saving Shares”). Following a predefined time period, the participants will, free of charge, have the right to receive additional shares in the company (“Matching Shares”). In addition, conditional upon fulfilment of a goal related to the development of the share price, the participants will further, free of charge, have the right to receive additional shares in the company (“Performance Shares”). The conditions for receipt of Matching Shares and Performance Shares are set out below.
3. The maximum number of Saving Shares that each participant shall be entitled to invest in shall amount to the following:
| Position | Maximum number of Saving Shares |
| CEO | 10,000 |
| Other senior executives (3) persons) | 7,000 |
| Directors (8 persons) | 2,400 |
| Other employees (12 persons) | 750 |
4. The board of directors shall, within the limits stated above, resolve on the maximum number of Saving Shares that each individual participant may acquire.
5. The investment in Saving Shares shall be made through acquisition of ordinary shares on the stock market on 30 September 2021 at the latest (the “Investment Period”). The board of directors shall be entitled to prolong the Investment Period in case participants have been unable to acquire shares due to applicable insider regulations.
6. For each Saving Share, the participant shall be entitled to receive 1 Matching Share. In addition, for each Saving Share, the participant shall have the possibility to receive up to 5 Performance Shares for each Saving Share.
7. The total number of Matching Shares will not exceed 59,200 and the total number of Performance Shares will not exceed 296,000, meaning that the total number of shares that can be issued to the participants in connection with LTI 2021 will not exceed 355,200. The number of shares that can be issued in connection with LTI 2021 might be recalculated in accordance with what is set out in Section 11 below.
8. Receipt of both Matching Shares and Performance Shares are conditional upon the fulfilment of the following conditions:
(a) that the participant has retained all Saving Shares during the period from the expiration of the Investment Period to 30 September 2024 (the “Saving Period”); and
(b) that the participant has continued to be employed by the company (or another company in its group) throughout the Saving Period.
As regards the employment condition as per (b) above, the board of directors shall in certain cases be entitled to resolve on proportionate allocation in case the employment is terminated prior to the expiration of the Saving Period as set out in Section 14 below.
9. Receipt of Performance Shares is further, in addition to the conditions following from Section 8 above, conditional upon that the requirement related to the development of the company’s share price from the date of the annual general meeting on 5 may 2021 to and including 30 September 2024 (the “Performance Target”) is fulfilled. The Performance Target will be measured based on the volume weighted average share price 30 trading days immediately following the annual general meeting on 5 May 2021 and 30 trading days immediately preceding 30 September 2024. An increase in the share price with less than 20 per cent does not entitle to any vesting of any of the Performance Shares, an increase in the share price with 20 per cent entitles to vesting of 1 Performance Share per Saving Share and an increase in the share price with 80 per cent or more entitles to vesting of all the 5 Performance Shares per Saving Share. In the event of an increase in the share price of between 20 and 80 per cent, vesting of the Performance Shares will occur linearly between 1 and 5.
10. Before the number of Performance Shares to be allocated is finally determined, the board of directors shall evaluate if allocation pursuant to the principles set out above is reasonable, having regard to the company’s results and financial standing, to conditions on the stock market and to other circumstances in general. If the board of directors finds that it is not reasonable, then the board of directors may decrease the number of Performance Shares to be allocated to the lower number of shares that the board of directors finds reasonable.
11. The number of Matching Shares and Performance Shares that may be allotted by virtue of Saving Shares shall be subject to recalculation in consequence of a bonus issue, split or reverse split, rights issue, and/or other similar company actions.
12. Allotment of Matching Shares and Performance Shares shall take place within 30 days from the publication of the financial report for the period June – September 2024.
13. Participation in LTI 2021 is conditional upon that the participation is legally possible and that the participation in the company’s sole opinion can be made with reasonable administrative costs for the company.
14. LTI 2021 shall be governed by separate agreements with the respective participant. The board of directors shall be responsible for the preparation and management of LTI 2021 within the above mentioned principal terms and guidelines. In connection herewith, the board of directors shall be entitled to resolve on diverging terms for the allocation of Matching Shares and Performance Shares in connection with cessation of employment during the Saving Period due to death, early retirement or similar occasions or due to termination by the company that is not related to misconduct by the participants. In these cases the board of directors may resolve that the participant will be entitled to receive a proportionate part of the Matching Shares and the Performance Shares. Furthermore, in the event of a public take-over offer, a sale of the company’s business, liquidation, merger or any other such transaction affecting the company, the board of directors shall, at its sole discretion, be entitled to resolve that the Matching Shares and Performance Shares (partially or in full) shall vest and be allotted on completion of such transaction. The board of directors will make this resolution based on the level of achievement of the Performance Target, the remainder of the Saving Period and any other factors deemed relevant by the board of directors.
B. Authorization on directed issues of series C shares
The board of directors proposes that the annual general meeting resolves to authorize the board of directors, for the period up until the next annual general meeting, on one or several occasions, to issue a maximum of 441,121 series C shares. The new shares may, with deviation from the shareholders' preferential rights, only be subscribed for by a bank or a securities company at a subscription price which corresponds to the quota value of the shares. The purpose of the authorization and the reason for the deviation from the shareholders’ preferential rights in connection with an issue of shares is to secure delivery of Matching Shares and Performance Shares under LTI 2021 and, in terms of liquidity, to hedge payments of future social security contributions related to LTI 2021. It is noted that this shall be achieved through the company repurchasing the series C shares issued pursuant to the authorization in section C below whereafter the repurchased series C shares will be converted to ordinary shares and transferred in accordance with section D below.
C. Authorization on repurchase of series C shares
The board of directors proposes that the annual general meeting resolves to authorize the board of directors, for the period up until the next annual general meeting, on one or several occasions, to repurchase its own series C shares. Repurchase may only be effected through a public offer directed to all holders of series C shares and shall comprise all outstanding series C shares. Repurchase may also be made of so-called interim shares, by Euroclear Sweden AB designated as a Paid Subscribed Share (Sw. Betald Tecknad Aktie (BTA)), regarding a series C share. Repurchase shall be made at a purchase price per share which corresponds to the quota value of the share. The purpose of the proposed repurchase authorization is to secure delivery of Matching Shares and Performance Shares under LTI 2021 and, in terms of liquidity, to hedge payments of future social security contributions related to LTI 2021.
The board of directors’ statement pursuant to Chapter 19, Section 22 of the Swedish Companies Act (Sw. aktiebolagslagen) is presented in a separate document provided with this proposal.
D. Resolution on transfer of own ordinary shares
In order to fulfil the company’s obligations towards participants in LTI 2021, the board of directors proposes that the annual general meeting resolves that the company shall be entitled to transfer the company’s own ordinary shares as follows:
1. The company shall have the right to transfer the number of ordinary shares that the company has a maximum obligation to allocate as Matching Shares and Performance Shares to participants in LTI 2021, at most 355,200 shares.
2. The number of shares that may be transferred pursuant to LTI 2021 shall be subject to recalculation in consequence of a bonus issue, split or reverse split, rights issue, and/or other similar corporate action which affects the number of shares in the company.
3. The right to acquire ordinary shares shall, with deviation from the shareholders’ preferential rights, vest in participants in LTI 2021 who are entitled to be allotted Matching Shares and Performance Shares in accordance with the terms and conditions of the program.
4. Transfer of shares to participants in LTI 2021 shall be made free of charge and be executed at the relevant time specified in the terms and conditions for LTI 2021.
The reason for the deviation from the shareholders’ preferential rights in connection with the transfers of own ordinary shares is to enable the company’s delivery of Matching Shares and Performance Shares to participants in LTI 2021.
Since LTI 2021 is not expected to initially give rise to any costs for social security contributions for the company (and since a resolution on transfer is valid only until the next annual general meeting), the board of directors has decided not to propose that the annual general meeting 2021 resolves on an authorization for the board of directors to transfer the company’s own ordinary shares on a regulated market for hedging of cash flow for social security payments. However, before any transfers of shares to participants in LTI 2021 are made, the board of directors intends to propose to a later general meeting to resolve on an authorization for the board of directors to transfer own ordinary shares on a regulated marked in order to hedge such payments.
Costs, impact on key ratios, existing incentive programs and dilution
The board of directors has made a preliminary cost calculation for LTI 2021. The costs for LTI 2021 are accrued over the vesting period which runs until 30 September 2024. The calculation has been made using the generally accepted modelling technique Monte-Carlo simulation based on the quoted closing price for shares in the company as per 26 March 2021, i.e. SEK 45.60 per share, and with the following assumptions: (i) all participants acquire the maximum number of Saving Shares; (ii) an annual dividend yield of 0 per cent; (iii) an estimated annual employee turnover of 0 per cent; and (iv) a share price volatility of 58 per cent. Based on these assumptions, the total costs for LTI 2021 are estimated to amount to approximately SEK 9.8 million, excluding social security contributions. The costs for social security contributions are estimated to amount to approximately SEK 2.4 million, based on the above assumptions, and an average tax rate of 24.2 per cent for social security contributions.
The anticipated annual costs of approximately SEK 4.0 million, including social security contributions, correspond to approximately 14 per cent of the company’s total employee costs for the financial year 2020. Based on the calculation of costs as described above, the key figure earnings per share for the financial year 2020 had been changed from SEK –3.76 to SEK –3.91. It should be noted the calculations are based on the assumptions stated above and are only intended to provide an illustration of the outcome.
As per the date of the notice, the number of shares in the company amounts to 29,178,807 shares, of which 28,668,262 are ordinary shares and 510,545 are series C shares which were issued in connection with the share saving program resolved at the annual general meeting 2019 and which will be converted into ordinary shares prior to delivery to the participants. Further, on 17 March 2021 the board of directors resolved on a new issue of 5,000,000 ordinary shares that is subject to approval at an extraordinary general meeting to be held on 13 April 2021. Finally, prior to the annual general meeting on 5 may 2021, the board of directors intend to issue 397,641 C-shares in relation to the share saving program resolved at the annual general meeting in 2020. Provided that the directed new issue of ordinary shares is approved at the extraordinary general meeting to be held on 13 April 2021 and considering the new issue of additional C-shares, the number of shares in the company will amount to 34,576,448, of which 33,668,262 will be ordinary shares and 908,186 will be series C shares.
The maximum number of shares that can be issued in relation to LTI 2021 is 441,121, whereof 355,200 for delivery of Matching Shares and Performance Shares to the participants and in the aggregate 85,921 related to hedging of cash flow for social security payments, which corresponds to a dilution of approximately 1.3 per cent of the company’s ordinary shares after full dilution, calculated on the number of ordinary shares that will be added upon full issuance of shares in connection with LTI 2021 (and also including the ordinary shares to be issued upon approval by the extraordinary general meeting on 13 April 2021).
Since previously, there are incentive programs in the form of one employee option program and two performance-based share saving program outstanding in the company. In case all outstanding incentive programs as well as the proposed LTI 2021 are exercised in full, a total of 1,967,283 new ordinary shares will be issued, which corresponds to an aggregate dilution of approximately 5.5 per cent of the company’s ordinary shares after full dilution, calculated on the number of ordinary shares that will be added upon full exercise of all outstanding incentive programs as well as the suggested LTI 2021 (and also including the ordinary shares to be issued upon approval by the extraordinary general meeting on 13 April 2021).
The above calculations regarding dilution are subject to re-calculation of the warrants in accordance with the customary recalculation terms included in the complete applicable warrant terms.
Preparation of the proposal and other information
The proposal for LTI 2021 has been prepared by the Remuneration Committee together with external consultants. The final proposal has been resolved upon by the board of directors.
The board of directors’ proposal on implementation of a long-term incentive program in accordance with Sections A to D above constitutes an overall proposal which shall be resolved upon as one resolution.
The chairman of the board of directors, or anyone appointed by him, shall be authorized to make minor formal adjustments of the resolution which may be required for registration with the Swedish Companies Registration Office (Sw. Bolagsverket) or Euroclear Sweden AB.
Particular majority requirements
For a valid resolution on the proposal pursuant to item 13, the proposal has to be supported by shareholders representing at least two-thirds of the votes cast as well as of all shares represented at the annual general meeting. For a valid resolution on the proposal pursuant to item 14, the proposal has to be supported by shareholders representing at least nine-tenths of the votes cast as well as of all shares represented at the annual general meeting.
Shareholders’ right to information
The board of directors and the CEO shall, if any shareholder so requests and the board of directors believes that it can be done without significant harm to the company, provide information regarding circumstances that may affect the assessment of items on the agenda, circumstances that can affect the assessment of the company’s or its subsidiaries financial position and the company’s relation to other companies within the group. Requests for such information must be submitted via e-mail to kb@ascelia.com or by post Ascelia Pharma AB, att: Kristian Borbos, Hyllie Boulevard 34, SE-215 32 Malmö, Sweden, no later than Sunday 25 April 2021. The information is provided by keeping it available at the company's office and website, no later than Friday 30 April 2021. The information will also be sent within the same time to the shareholders who have requested it and provided their postal or e-mail address.
Meeting documents
Financial statements, the audit report, the board of directors remuneration report, the statement by the auditor on the compliance of the applicable guidelines for remuneration to senior executives, complete proposals for resolutions and other documents for the annual general meeting, are presented by keeping them available at the company’s office, at Hyllie Boulevard 34, SE-215 32 Malmö, Sweden, and at the company’s website (www.ascelia.com) as from no later than three weeks before the annual general meeting, and will also be sent to shareholders who request it and provide their address. The share register of the annual general meeting will also be available at the company’s office.
Number of shares and votes in the company
As per the date of the notice to the annual general meeting, the total number of shares in the company amounts to 29,178,807 shares, of which 28,668,262 are ordinary shares with one vote per share and 510,545 are series C shares with one-tenth of a vote per share. The number of votes in the company amounts to 28,719,316.5 votes. After final registration with the Swedish Companies Registration Office of the directed new share issue of 5,000,000 ordinary shares, which was resolved by the board of directors on 17 March 2021, subject to approval from the extraordinary general meeting on 13 April 2021, the total number of shares in the company will amount to 34,178,807 shares, of which 33,668,262 are ordinary shares with one vote per share and 510,545 are series C shares with one-tenth of a vote per share. The number of votes in the company will amount to 33,719,316.5 votes. The company holds all 510,545 outstanding series C shares, corresponding to 51,054.5 votes, which cannot be represented at the meeting.
Processing of personal data
For information on how your personal data is processed, see https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf.
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Malmö in March 2021
Ascelia Pharma AB (publ)
The Board of Directors