The Carlsberg Foundation is an industrial foundation with a charitable purpose. According to its Charter, the Foundation shall promote several general charitable purposes by donating grants, and the Board of Directors shall further ensure that the Foundation controls the majority of the voting rights in Carlsberg A/S. In exercising engaged ownership, the Carlsberg Foundation recognises Carlsberg A/S status as a listed company with a significant number of minority shareholders. Furthermore, the Foundation respects the fact that management of Carlsberg A/S rests with the company’s Executive Committee and Supervisory Board. Background The Foundation’s historical connection to Carlsberg A/S The Foundation’s policy for engaged ownership Background The Foundation shall as such work to foster and support the natural sciences as well as mathematics and philosophy, the humanities, and social sciences, grant funds to the Carlsberg Research Laboratory, maintain and develop the Museum of National History at Frederiksborg Castle, and grant funds for socially beneficial purposes through the Tuborg Foundation, especially in support of Danish trade and industry. As well as the Carlsberg Foundation’s general charitable purpose, the Charter also describes in detail the close connection between the Carlsberg Foundation and the brewery group Carlsberg A/S. The Foundation’s Board of Directors shall fulfil the Charter as best possible in line with the founder J.C. Jacobsen’s wishes and based on how society and trade and industry have developed since the Carlsberg Foundation was established in 1876, when its Charter was formulated by J.C. Jacobsen, and the transfer of Carlsberg to the Carlsberg Foundation under the terms of J.C. Jacobsen’s will in 1888. The Charter includes the following provisions: The Carlsberg Foundation shall at all times own a holding of shares which gives an entitlement to not less than 51% of the votes in Carlsberg A/S, and the Carlsberg Foundation shall never, whether by sale or gift of shares or subscription rights, by voting for capital increases, or by any other means whatsoever, act in such a manner that the aforesaid requirements are not fulfilled, or in a manner creating a risk thereof. It shall be the duty of the Carlsberg Foundation to exercise its influence on Carlsberg A/S in such a manner that the following objects clause, set forth by the founder J.C. Jacobsen, shall be complied with to the utmost possible extent: “In running the breweries, it shall be the constant purpose, regardless of immediate profit, to develop the art of making beer to the highest possible degree of perfection in order that these breweries and their products may ever stand as ideal models and so, by their examples, assist in keeping the brewing of beer in this country on a high and honourable level.” This ownership policy sets out guidelines and principles for how the Carlsberg Foundation shall manage its ownership of Carlsberg A/S with the object of being a long-term and engaged owner of the company. The historical background to the Foundation’s ownership and connection with Carlsberg A/S is fundamental to the Foundation’s policy of engaged ownership and is therefore summarised below. The Foundation’s historical connection to Carlsberg A/S The Carlsberg brewery was founded by Brewer J.C. Jacobsen in 1847. He went on to establish the Carlsberg Foundation in 1876. In accordance with the terms of his will, after his death in 1887 the Carlsberg Breweries were transferred to the Carlsberg Foundation effective 1 October 1888. The founder’s son, Brewer Carl Jacobsen, and his wife, Ottilia Jacobsen, donated the New Carlsberg brewery to the Carlsberg Foundation in 1902, simultaneously establishing the New Carlsberg Foundation as an independent foundation under the Carlsberg Foundation. After 1902, the breweries donated to the Carlsberg Foundation were managed by the Foundation as an independent business, known as the Carlsberg Breweries. In 1970, the Carlsberg Breweries merged with The United Breweries A/S (Tuborg). The merger arrangements included an addendum to the Charter requiring the Carlsberg Foundation to own, at all times, not less than 51% of the share capital in the company. In 2000, by virtue of an amendment to the Charter, it became possible in certain circumstances for the Board of Directors of the Carlsberg Foundation to accept the Carlsberg brewery business, in connection with a share issue and/or merger, becoming part of an ownership structure in which the Carlsberg Foundation exercises non-controlling, yet significant influence capable of ensuring both the preservation of “Carlsberg” as a widely known and recognised beer brand and the continuance of beer production in Denmark. In 2000, Carlsberg’s brewery business was incorporated into Carlsberg Breweries A/S, 60% owned by Carlsberg A/S and 40% by the Norwegian company Orkla ASA and its Swedish subsidiary Orkla AB. At the initiative of Carlsberg A/S, the cooperation with Orkla ASA ended in 2004 by Carlsberg A/S acquiring Orkla’s shareholding in Carlsberg Breweries A/S. In 2007, the Charter was amended such that the Carlsberg Foundation was now only obliged to own, at all times, more than 25% of the share capital of Carlsberg A/S with an entitlement to not less than 51% of the votes in Carlsberg A/S. The Charter was amended to allow for the opportunity of procuring new equity in Carlsberg A/S by way of a share issue, without obliging the Carlsberg Foundation to participate proportionately in the capital increase. This opportunity was exercised in 2008, when a consortium of Carlsberg A/S and Heineken acquired the entire Scottish brewery group Scottish & Newcastle and divided the brewery activities between themselves. Under the agreement with Heineken, Carlsberg A/S acquired 50% of the Russian brewery group Baltic Beverages Holding (BBH), in which it already held a 50% shareholding. Moreover, Carlsberg A/S acquired the French brewery Brasseries Kronenbourg as well as brewery operations in Greece, Vietnam, and China. In 2013, the Charter was revised such that the Carlsberg Foundation was now only obliged to own, at all times, a shareholding that provides entitlement to not less than 51% of the voting rights in Carlsberg A/S. This change was made to give Carlsberg A/S significantly improved financial resources through the ability to issue shares, whilst allowing the Carlsberg Foundation to retain the same controlling interest in Carlsberg A/S as hitherto. The Foundation’s policy for engaged ownership In exercising engaged ownership, the Carlsberg Foundation recognises Carlsberg A/S’ status as a listed company with a significant number of minority shareholders. Furthermore, the Foundation respects the fact that management of Carlsberg A/S rests with the company’s Executive Committee and Supervisory Board. The Carlsberg Foundation exercises ownership via dialogue and participation. Members of the Foundation’s Board of Directors are represented on the Supervisory Board of Carlsberg A/S, and there is ongoing dialogue between the Foundation’s Board of Directors and the management of Carlsberg A/S to ensure that the Carlsberg Foundation is kept informed of activities in Carlsberg A/S. Since the merger of the Carlsberg and Tuborg breweries and the consequent stock exchange listing of “The United Breweries A/S” in 1970, which was renamed Carlsberg A/S at the Annual General Meeting in 1987, it has been tradition that the five members of the Carlsberg Foundation’s Board of Directors are automatically elected as members of the Supervisory Board of Carlsberg A/S. This is not required by the Carlsberg Foundation’s Charter, in law or elsewhere, but follows the Foundation’s practice. The Board of Directors of the Carlsberg Foundation has discussed the existing practice and, following consideration of the matter at a board meeting on 11 November 2020, decided that new members of the Foundation’s Board of Directors will no longer automatically be elected to the brewery group’s Supervisory Board. After a transitional period, the decision entails that the Foundation will be represented by two members on the Carlsberg Group Supervisory Board. One candidate will be the Chairman of the Carlsberg Foundation, who is intended to become Deputy Chairman of the Carlsberg Group Supervisory Board, while the other candidate will be elected from and by the Foundation board based on relevant competencies in relation the Carlsberg Group Supervisory Board. Pursuant to the Charter, the Carlsberg Foundation’s ownership is not time-limited and, by means of its majority shareholding, the Foundation helps to facilitate a long-term strategy for the brewery group and stable management by how it casts its votes at Carlsberg A/S’ Annual General Meetings. In light of the Carlsberg Foundation’s social status, heritage and ethical guidelines, the Foundation will, through its ownership of Carlsberg A/S and in other ways, support Carlsberg A/S’ sustainability programme, as the Foundation believes that running a company with a long-term, sustainable perspective also safeguards long-term value creation for the shareholders. In order to maintain the Supervisory Board as a relevant corporate body, the Foundation believes that the composition of the Supervisory Board of Carlsberg A/S should be based on relevant factors such as competences, diversity, efficient board work, and value-creating sparring for the company’s Executive Committee. Furthermore, the composition of both the Executive Committee and Supervisory Board of Carlsberg A/S is an important element in the company’s preparedness, including in relation to any need to attract capital, acquisitions, and other significant transactions. By means of its engaged ownership, the Carlsberg Foundation aims to support the development of Carlsberg A/S in accordance with the provisions and intentions of the Charter, and through dialogue with the management of Carlsberg A/S, with a view to being able to support the proposals to be voted on at Annual General Meetings of Carlsberg A/S.