The Foundation's assets
The objective of the Novo Nordisk Foundation is twofold:
- to provide a stable basis for the commercial and research activities conducted by the companies within the Novo Group; and
- to support scientific, humanitarian and social purposes.
The Foundation’s wholly owned subsidiary, Novo Holdings A/S, is responsible for the commercial activities, including providing a stable basis for the companies in the Novo Group, and managing the Foundation’s assets optimally. The Foundation is responsible for awarding grants.
Earnings and taxation
The Novo Nordisk Foundation receives dividends from Novo Holdings A/S, comprising:
- dividends from commercial companies; and
- the proceeds from other investments.
Dividends are taxed within the companies in which investments are held, and the proceeds from other investments are taxed according to Denmark’s regulations governing corporate taxation.
Grants and tax offset provisions
The Novo Nordisk Foundation has several considerations when determining how much money to allocate for grants. The most important of these is the purpose enshrined in the Articles of Association: to provide a stable basis for Novo Nordisk A/S and Novozymes A/S, and also with a view to consolidate the Foundation’s endowment in general.
The Foundation’s grants reduce its tax liability. As an incentive for awarding grants, the Foundation may deduct 25% of the amounts awarded for grants against taxable income, thereby allowing it to consolidate its total endowment so that it is not eroded when awarding grants. The Foundation is taxed in accordance with the general rules of Denmark’s tax legislation on the earnings that are not awarded.
Assets, liabilities and the stable basis
Novo Holdings A/S manages the Foundation’s endowment and is obligated to maintain the Foundation’s controlling interest in Novo Nordisk A/S and Novozymes A/S.
The Foundation’s endowment comprises the following.
- The basic endowment is as mandated by the Articles of Association, which primarily derives from the Foundation’s equity stake in Novo Nordisk A/S and Novozymes A/S. The shareholding (capital share) in each of the two companies is 26.5% and 25.5% respectively, based on the A and B shares. The A (multiple voting rights) shares are not listed or traded and have voting rights that are 10 times greater than those of the B (ordinary) shares. This ensures a controlling interest in the companies in accordance with the share of the votes represented. The Novo Nordisk Foundation controls almost 70% of the votes in Novo Nordisk A/S and Novozymes A/S. The Foundation, through the agency of Novo Holdings A/S, is obligated to maintain a financial reserve to be able to support Novo Nordisk A/S and/or Novozymes A/S in the event of either company requiring an injection of capital.
- The basic endowment that is not stated in the Articles of Association is the part of the endowment that is not connected to the ownership of Novo Nordisk A/S or Novozymes A/S. This is placed in:
◦ liquid financial reserves comprising equity investments in publicly listed life-science companies, corporate bonds, as well as government and mortgage bonds; and
◦ long-term investments in life-science and bioindustrial companies.
Not all the assets are immediately convertible into cash and a large proportion of this endowment comprises underlying commercial guarantees.
Updated on February 11, 2015. JxpL