FAQs KGaA General questions about the KGaA What does the…

FAQs KGaA

General questions about the KGaA

What does the abbreviation KGaA mean?
KGaA stands for Kommanditgesellschaft auf Aktien (partnership limited by shares), and is
a particular legal form used by only a few companies in Germany.


What is the difference between a KGaA and a `normal' Aktiengesellschaft (German
Stock Corporation)?
The KGaA is a hybrid of a Kommanditgesellschaft (KG ­ limited partnership) and an
Aktiengesellschaft (AG ­ German Stock Corporation). The KGaA has two types of
shareholders: at least one personally liable shareholder (general partner), as well as
limited liability shareholders (limited partners). In the case of Merck KGaA, the general
partners are E. Merck OHG (with equity interest) and all members of the Executive Board
of Merck KGaA (without equity interest). The limited partners are not personally liable for
corporate liabilities. The KGaA's capital is split into the share held by the general partner
with equity interest, and the share of the limited partners.


Who appoints / discharges the Board of Management?
Unlike the Aktiengesellschaft, the KGaA does not have a Board of Management, with the
result that the management responsibility for the KGaA ­ which has a structure similar to
that of a KG ­ is assumed by the general partners. Since the Articles of Incorporation of
Merck KGaA exclude E. Merck OHG from managing the company, this responsibility lies
with the remaining general partners, in other words, the current members of the Executive
Board of Merck KGaA.


What responsibilities and rights does the Supervisory Board have?
The Supervisory Board of a KGaA mainly has the same responsibilities as the Supervisory
Board of an Aktiengesellschaft and thus performs a control and monitoring function;
however, unlike the AG, it does not have the right to appoint the Board of Management
(here: Executive Board).


Does a KGaA have different reporting obligations from those of a `normal'
Aktiengesellschaft?
No, a KGaA is largely subject to the same rules of the HGB (German Commercial Code)
as an AG. In addition, the German Stock Exchange has defined special obligations for
participants of the Prime Standard that apply irrespective of a company's legal form.


What rights do shareholders have at the General Meeting?
The limited partners have the same rights at the General Meeting as at an AG; the General
Meeting is also responsible for adopting the annual financial statements.
Do the general partners have voting rights at the General Meeting?
No, the General Meeting is regulated exclusively by the limited partners. General partners
may, however, have voting rights, if ­ as is the case with limited partners ­ they hold
ordinary shares. They are, however, subject to extensive voting restrictions.


Questions about Merck


Can the KGaA be transformed into an AG?
In principle, yes. This would, however, require the approval of both the family company E.
Merck OHG and the General Meeting.


In the event of a takeover, do the limited partners and the family have equal rights?
The interest held by the family company E. Merck OHG and the interest of the limited
partners in the total capital of the company are legally separate. A change in the character
of the general partner E. Merck OHG requires the approval of the General Meeting, as this
would involve an amendment of the Articles of Incorporation. A change in the ownership
structure within the family company E. Merck OHG may, however, take place without the
participation of the limited partners. Furthermore, the shareholders may sell their ordinary
shares freely on the capital market at any time.


How many shares are in free trading?
Currently, around 52 million shares are listed at the Frankfurt Stock Exchange.


Does the family company E. Merck OHG also hold shares?
Not that we are aware of. E. Merck OHG would, however ­ just like any other legal or
natural entity ­ be obliged to make a notification in line with the German Securities Trading
Act, when the holding reaches certain thresholds.


Is Merck open to a `hostile' takeover?
A `third party' may acquire the majority of the free shares. However, such an acquisition is
not connected with any direct control over the company, since its management is regulated
exclusively by the general partner E. Merck OHG, and the decisions of Merck KGaA
require the approval of E. Merck OHG.