UCB — Capital/Financing Update 2014

Mar 25, 2014

UCB

Public limited liability company Registered offices: B-1070 Brussels, Allée de la Recherche 60 Enterprise number: 0403.053.608 (RPM Brussels) $("UCB SA")$

SPECIAL REPORT BY THE BOARD OF DIRECTORS TO THE SHAREHOLDERS on the use and purpose of the authorized capital prepared in accordance with article 604 of the Belgian Companies Code ("BCC")

The Board of Directors of UCB SA (the "Board") hereby presents its special report in relation to the proposal to include in the Articles of Association an authorization to the Board to increase UCB SA's share capital within the framework of the so-called "authorized capital".

THE AUTHORIZED CAPITAL - CIRCUMSTANCES IN WHICH THE AUTHORIZED L. CAPITAL MAY BE USED

The Board proposes to the shareholders of UCB SA to authorize the Board to increase UCB SA's share capital, including by way of the issue of warrants and convertible bonds, in one or more transactions with an aggregate amount not exceeding $\epsilon$ 500 000 000. Any such capital increase may take any form (e.g. contributions in cash or in kind, with or without share premium, the incorporation of reserves and/or share premiums).

The use of the authorized capital requires a special majority in the Board: (i) a majority of independent directors on the one hand, and (ii) a majority of directors representing the Reference Shareholder on the other hand. 'Reference Shareholder' means the person or persons representing any company that did a notification pursuant to article 74 of the Law of 1 April 2007 relating to public take-over bids.

The Board will be entitled to limit or cancel the preferential subscription rights of the existing shareholders (including for the benefit of one or more specific persons who are not employees of UCB SA or of its subsidiaries). If the Board decides to do so, he will prepare a special report setting out the justification of its decision, as well as the financial consequences of such decision. The statutory auditor will also prepare a report in that respect.

The Board proposes to the shareholders of UCB SA to extend the authority to make use of the authorised capital in the case of a public take-over bid, subject to Section 607 BCC.

Should the shareholders of UCB SA approve this proposal of the Board, then article 6 of UCB SA's Articles of Association will be amended to reflect the proposed terms and conditions for the use of the authorized capital (and therefore circumstances in which the authorized capital may be used), as follows:

Amendment of article 6 of the Articles of Association by adding a section 2 to this article. The current sole paragraph will become section 1 of article 6:

Section 2

"The Board of Directors is authorised to increase the Company's share capital by an amount not exceeding five hundred million euros ( $\epsilon$ 500 000 000), in one or more operations, including by way of the issuance of warrants or convertible bonds.

The Board of Directors is expressly authorised to make use of this mandate for the following operations:

• 1. A capital increase or the issuance of convertible bonds or warrants with cancellation or limitation of the preferential subscription rights of the existing shareholders.
• 1. A capital increase or the issuance of convertible bonds with cancellation or limitation of the preferential subscription rights of the existing shareholders for the benefit of one or more specific persons who are not employees of the Company or of its subsidiaries.
• 1. A capital increase by incorporation of reserves and/or share premiums.

Any such capital increase may take any and all form, including, but not limited to, contributions in cash or in kind, with or without share premium, the incorporation of reserves and/or share premiums, to the maximum extent permitted by the law.

Any use of the mandate granted in this Section may only occur via special majority in the Board of Directors, namely a majority of independent directors on the one hand and a majority of directors representing the Reference Shareholder on the other hand. Reference Shareholder for the purposes of this section shall mean the person or persons representing any company notified pursuant to article 74 of the Law of 1 April 2007 relating to public takeovers.

The mandate to the Board of Directors pursuant to this section is granted for a period of five years as from the date of its publication."

Further amendment of article 6 of the Articles of Association by adding an additional section 3 to this article:

Section 3

"The Board of Directors is expressly authorized, in case of a public take-over bid on securities of the company, to increase the capital by an amount not exceeding five hundred million euros ( $\epsilon$ 500 000 000), in one or more operations, including by way of the issuance of warrants or convertible bonds, in the manner and under the conditions set out in article 607 of the Companies Code and in the same ways and modalities provided in the preceding section.

The mandate to the Board of Directors pursuant to this section is granted for a period of three years as from the date of its publication.

The total amount of the share capital increased by means of this section and section 2 above may not exceed five hundred million euros ( $\epsilon$ 500 000 000). The Board of Directors is empowered, with full power of substitution, to amend the Articles of Association to reflect the capital increases resulting from the exercise of its powers pursuant to this section and section 2 above."

PURPOSES FOR WHICH THE AUTHORIZED CAPITAL MAY BE USED П.

The technique of the authorized capital offers the Board a sufficient degree of flexibility and speed of implementation, which may be required in order to ensure, amongst other things, an optimum governance, funding or other pursuit of the interests of UCB SA.

The relatively complex, expensive and time-consuming procedures for a listed company to have an extraordinary general shareholders meeting convened to resolve upon a capital increase may, in certain circumstances, be incompatible with certain fluctuations on the capital markets or certain opportunities which may present themselves to UCB SA or certain threats which UCB SA may be confronted with. The inability to, in such circumstances, timely have an extraordinary shareholders meeting convened may be to the detriment of UCB SA.

Also, when UCB SA wishes to admit one or more institutional, strategic or other shareholders to its capital structure or wishes to finance, pay (e.g., as consideration for any public take-over bid) or support (e.g. by way of "equity kicker") a certain transaction (e.g. a restructuring, an acquisition (whether private or public) of securities or assets in one or more companies), capital expenditure or investment (in part or entirely) by way of issuing securities, convening an extraordinary shareholders meeting may, under the circumstances, lead, for instance, to a premature announcement of the relevant transaction which in turn may jeopardize the favourable outcome of the negotiations in respect of such transaction. In addition, making approval at the shareholders meeting a condition of such transaction, may, under the circumstances, jeopardize the ability to actually enter into such transactions.

The Board may also use the authorized capital in the framework of the remuneration policy of UCB SA, including for the issuance of shares, stock options or warrants to employees, directors, executives or consultants of UCB SA and its subsidiaries, as well as to persons who in the scope of their professional activity have made themselves useful to UCB SA and its subsidiaries. It will also make it possible to remunerate shareholders in a particular manner, such as by paying a stock dividend.

Finally, the Board may use the authorized capital as a potential reaction to and defence mechanism against a public take-over bid or the risk of being confronted with (a) minority shareholder(s) possessing sufficient voting power to block the decision making process of UCB SA, capable of jeopardizing the stability, continuity or development of UCB SA. The Board will be able to use such authority in respect of any public take-over bid notice that is received by the Financial Services and Markets Authority during a period of three years.

The above-mentioned terms and conditions governing the use of the authorized capital and the above-mentioned purposes for the use of the authorized capital, all should be interpreted in the most extensive possible way.

Brussels, 20 February 2013

On behalf of the Board,

Roch Doliveux Director

Evelyn dy Monceau Director