Creation of authorized capital
Approval of Article 4b para. 2 of the Articles of Association
The Board of Directors proposes the creation of authorized capital in an amount not to exceed 10% of the issued share capital by means of the following addition to the Articles of Association.
Article 4b para. 2 (new)
The Board of Directors shall be authorized to increase the share capital by a maximum of CHF 29,325,805 through the issuance of a maximum of 293,258,050 fully paid registered shares with a par value of CHF 0.10 per share by not later than 15 April 2011. Increases in partial amounts shall be permitted.
The Board of Directors shall determine the issue price, the manner in which the new shares shall be paid up, the date of issue and the beginning date for the dividend. The Board of Directors shall determine the conditions for the exercise of preemptive rights. New shares may be issued by means of a firm underwriting through a banking institution, a syndicate or another third party with a subsequent offer of these shares to the shareholders. Pre-emptive rights that have not been exercised shall be used as the Board of Directors determines to be in the interest of the Corporation.
The Board of Directors shall be authorized to exclude the pre-emptive rights of the shareholders and allocate such rights to one or more investors, for issuance of such shares against a cash contribution, where the Board of Directors, after consultation with the Corporation's prudential regulator, believes it appropriate in order to protect the capital of the Corporation.
The subscription and acquisition of the new shares, as well as each subsequent transfer of the shares, shall be subject to the registration requirements set forth in Article 5 of the Articles of Association.
In 2008, certain peers of UBS AG were able to raise capital faster and with greater flexibility in their choice of instruments than UBS AG due to the availability of existing authorized capital and more lenient prospectus filing procedures. To increase UBS AG's flexibility for potential future financial markets capital raisings in the sense of a contingency plan, the Board of Directors proposes to create authorized capital in the maximum amount of CHF 29,325,805.
The Board of Directors will be authorized to increase the share capital as necessary by not later than 15 April 2011. The increase of the share capital will not exceed 10% of the currently issued share capital or 8.3% of the share capital following conversion of both mandatory convertible notes issued in 2008.
When issuing new shares, a Swiss corporation may exclude the pre-emptive rights of the existing shareholders for valid reasons. The Board of Directors, when proposing such exclusion, must determine whether the exclusion of pre-emptive rights is in the best interests of the Corporation, and whether it is necessary to achieve the desired aim.
The Board of Directors of UBS AG will be authorized to restrict or withdraw the pre-emptive rights of the existing shareholders only for the participation of strategic investors if it believes, following consultation with UBS AG's prudential regulator, that such participation is appropriate in order to protect the capital of UBS AG.
If the Board of Directors resolves to issue new shares to one or several strategic investors, the immediate strengthening of the capital base of UBS AG is the overriding objective which needs to be achieved within a short period of time. This objective may be materially facilitated if the Board of Directors can restrict the preemptive rights of the shareholders.