Faron Pharmaceuticals Ltd (“Faron” or the “Company”)

Company announcement, March 25, 2022 at 11:00 AM (EET) / 09:00 AM (GMT) / 05:00 AM (EDT) 

NOTICE OF Faron pharmaceuticals LTD’s Annual GENERAL MEETING

Shareholders of Faron Pharmaceuticals Ltd (the “Company”) are notified of the Annual General Meeting (the “AGM”) to be held on 22 April 2022 at 12:00 p.m. EEST (Finnish time). The meeting venue is Event Venue Eliel, Töölönlahdenkatu 2, Helsinki, Finland. The shareholders of the Company may participate in the AGM and exercise their shareholder rights only by voting in advance, by submitting counterproposals in advance and asking questions in advance in accordance with the instructions given in this notice and otherwise by the Company. It is not possible to participate in the AGM at the meeting venue.

The Board of Directors (the “Board”) has resolved on exceptional meeting procedures based on the temporary legislative act (375/2021, “Temporary Act“) approved by the Finnish parliament on 7 May 2021. In order to prevent the spread of the COVID-19 pandemic, the AGM will be held without shareholders’ and their proxy representatives’ presence at the meeting venue. This is necessary in order to ensure the health and safety of the shareholders, employees and other stakeholders of the Company as well as to organize the AGM in a predictable way allowing equal means for shareholders to participate while also ensuring compliance with the restrictions set by the authorities from time to time. For these reasons, shareholders and their proxy representatives can participate in the AGM and use shareholder rights only by voting in advance, by submitting counterproposals in advance and by asking questions in advance. Further instructions can be found in part C of this notice (Instructions for the Participants).

The AGM can be followed on the Company’s website. Persons following the meeting in this manner are not considered participants in the AGM. Accordingly, shareholders will not have the possibility to address the meeting or participate in any vote, among other things, during the meeting. The webcast will be arranged only if it can be arranged in compliance with all regulatory rules and restrictions imposed by the authorities due to the COVID-19 pandemic.

The CEO of the Company will attend the meeting. The Chairman of the Board, the members of the Board, other management of the Company and the auditor will not attend the AGM.

1. MATTERS ON THE AGENDA OF THE AGM

1. Opening of the meeting

1. Calling the meeting to order

Attorney-at-law Riikka Rannikko shall act as the Chairman of the meeting. If due to weighty reasons Riikka Rannikko is not able to act as Chairman, the Board shall appoint another person it deems most suitable to act as Chairman.

1. Election of persons to scrutinize the minutes and to supervise the counting of votes

The Company’s Corporate Counsel Kaisa Kyttä shall scrutinize the minutes and supervise the counting of the votes. In case Kaisa Kyttä would not be able to act as the person to scrutinize the minutes and to supervise the counting of the votes due to weighty reasons, the Board shall appoint another person it deems most suitable to act in that role.

1. Recording the legality of the meeting

1. Recording the attendance at the meeting and adoption of the list of votes

The shareholders who have voted in advance and who have the right to participate in the meeting pursuant to Chapter 5, Sections 6 and 6a of the Finnish Limited Liability Companies Act (624/2006, as amended; the “Companies Act”) will be recorded to have been represented at the meeting. The list of votes will be adopted according to the information provided by Euroclear Finland Oy (“Euroclear”) and Innovatics Ltd (“Innovatics”).

1. Presentation of the financial statements, the Board’s report and the auditor’s report for 2021

As shareholders can only participate in the AGM by voting in advance, the financial statements, the Board’s report and the auditor’s report for 2021, published by the Company on 25 March 2022 and which have been made available on the Company’s website at https://www.faron.com/investors/general-meetings, will be deemed to have been presented to the AGM.

1. Adoption of the financial statements

1. Resolution on the use of the profit shown on the balance sheet and the payment of dividend

The Board proposes that no dividend for the financial year 2021 will be paid and that the losses of the Company for the financial year, amounting to EUR 21.2 million (IFRS), will be carried forward to the reserve for invested unrestricted equity.

1. Resolution on the discharge of the members of the Board and the CEO of the Company from liability

1. Resolution on the remuneration of the members of the Board

The Board proposes, on the basis of the proposal of the remuneration committee, that the annual remuneration of the members of the Board remain unchanged and that EUR 35,000 will be paid to the Board members, in addition to which an annual remuneration of EUR 35,000 will be paid to the chair of the Board. In addition, a further annual remuneration of EUR 11,000 will be paid to the chair of the audit committee, a further annual remuneration of EUR 9,000 will be paid to the chair of the remuneration committee and a further annual remuneration of EUR 6,000 will be paid to the chair of the nomination committee. In addition, a further annual remuneration of EUR 6,000 will be paid to the audit committee members, a further annual remuneration of EUR 5,000 will be paid to the remuneration committee members and a further annual remuneration of EUR 3,000 will be paid to the nomination committee members.

The Board furthermore proposes that meeting fees will be paid to the Board members as follows:

• a meeting fee of EUR 1,000 will be paid to Board members per Board meeting where the Board member was physically present, and which was held on another continent than the member’s place of residence; and
• no meeting fees will be paid to Board members who were attending a Board meeting but not physically present or for Board meetings held on the same continent as the member’s place of residence.

In addition, it is proposed that all reasonable and properly documented expenses incurred in the performance of duties of the members of the Board would be compensated.

The Board also proposes, on the basis of the proposal of the remuneration committee, that no remuneration will be paid based on the Board membership of the CEO of the Company or a person serving the Company under a full-time employment or service agreement.

1. Resolution on the number of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that seven (7) members be elected to the Board.

1. Election of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that Frank Armstrong, Gregory Brown, John Poulos, Leopoldo Zambeletti, Markku Jalkanen and Anne Whitaker be re-elected to the Board for a term that ends at the end of the next AGM. In addition, the Board proposes, on the basis of the proposal of the nomination committee, that Erik Ostrowski be elected as a new member to the Board for a term that ends at the end of the next AGM.

Erik Ostrowski (born 1972), citizen of the U.S., holds no other board memberships at the moment. He is independent of the Company and its significant shareholders. Information on the proposed new Board member is available on the Company’s website at https://www.faron.com/investors/general-meetings.

All proposed Board member candidates have given their consent for the election. The proposed Board members have informed the Company that in the event they are elected, they intend to elect Frank Armstrong as chair of the Board.

Information on the Board member candidates proposed to be re-elected are available on the Company’s website at https://www.faron.com/faron/leadership/board-directors.

1. Resolution on the remuneration of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that the auditor be remunerated in accordance with the invoice presented.

1. Election of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that PricewaterhouseCoopers Oy (“PwC”), a firm of authorised public accountants, continue to act as the Company’s auditor.

PwC has informed the Company that it will appoint Panu Vänskä, authorised public accountant (KHT), as the key audit partner.

1. Authorising the Board to decide on the issuance of shares, options or other special rights entitling to shares

The Board proposes that the AGM authorise the Board to resolve by one or several decisions on issuances of shares, options or other special rights entitling to shares referred to in Chapter 10, Section 1 of the Companies Act, which authorisation contains the right to issue new shares or dispose of the shares in the possession of the Company. The authorisation would consist of up to ten million six hundred thousand (10,600,000) shares in the aggregate (including shares to be received based on options or other special rights), which corresponds to approximately twenty (20) per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board’s right to decide on the issuance of shares, options or other special rights entitling to shares in deviation from the shareholders’ pre-emptive rights. The authorisation is proposed to be used for material arrangements from the Company’s point of view, such as financing (including, without limitation, issuance of warrants under the funding agreement with IPF Partners announced on February 28, 2022) or implementing business arrangements, investments or for other such purposes determined by the Board in which case a weighty financial reason for issuing shares, options or other special rights entitling to shares, and possibly deviating from the shareholders’ pre-emptive rights, would exist.

The Board would be authorised to resolve on all other terms and conditions of the issuance of shares, options or other special rights entitling to shares.

The authorisation would be effective until 30 June 2023.

1. Authorising the Board to decide on the issuance of shares without consideration to the Company

The Board proposes that the AGM authorise the Board to resolve by one or several decisions on a share issue without consideration to the Company itself. The authorisation would consist of up to ten million six hundred thousand (10,600,000) shares in the aggregate, which corresponds to approximately twenty (20) per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board’s right to decide on the issuance of shares in deviation from the shareholders’ pre-emptive rights. The Board would be authorised to resolve on all other terms and conditions of the issuance of shares, including the right to issuances without consideration. Issuances without consideration require that there is an especially weighty financial reason for doing so from the Company’s point of view and observing the interests of all the shareholders of the Company.

The authorisation would be effective until 30 June 2023. The proposed authorisation does not revoke the share issue authorisations granted to the Board otherwise during this AGM.

1. Closing of the meeting

1. DOCUMENTS OF THE AGM

The proposals of the Board to the AGM and this notice are available on the Company’s website at https://www.faron.com/investors/general-meetings. The financial statements, the Board’s report and the auditor’s report for 2021 are available on the above-mentioned website no later than on 25 March 2022. Copies of these documents and of this notice will be sent to shareholders upon request. The minutes of the AGM will be available to be viewed on the Company’s website from 6 May 2022 at the latest.

1. INSTRUCTIONS FOR THE PARTICIPANTS

In order to prevent the spread of the COVID-19 pandemic, the AGM will be organized so that the shareholders and their proxy representatives are not allowed to be present at the meeting venue. The shareholders and their proxy representatives can participate in the meeting and use their shareholder rights only by voting in advance, by submitting counterproposals in advance and asking questions in advance in the manner described below. Proxy representatives shall also vote in advance in the manner described below.

1. The right to participate

Each shareholder who on the record date of the AGM, being 8 April 2022, is registered in the Company’s shareholders’ register held by Euroclear has the right to participate in the AGM. A shareholder whose shares are registered on their personal Finnish book-entry account is registered in the Company’s shareholders’ register. If you do not have a Finnish book-entry account, see section C.4 (Holder of nominee-registered shares (including depositary interest holders)) for all instructions on participating and voting in advance.

A shareholder may only participate in the meeting by voting in advance or by way of proxy representation and by submitting counterproposals and asking questions in advance in accordance with the instructions below.

1. Registration and advance voting

Registration for the AGM and advance voting will begin on 4 April 2022 at 12:00 noon EEST (Finnish time) when the deadline for submitting counterproposals has passed. A shareholder entered in the Company’s shareholders’ register who wishes to participate in the AGM by voting in advance must register and vote in advance at the latest on 19 April 2022 at 10:00 a.m. EEST (Finnish time), by which time the registration shall be completed and votes need to be received.

A shareholder whose shares are registered on their Finnish book-entry account can register and vote in advance on certain items on the agenda of the AGM from 12:00 noon EEST (Finnish time) on 4 April 2022 until 10:00 a.m. EEST (Finnish time) on 19 April 2022 by the following means:

a) Through the Company’s website

The Finnish personal identity code or business ID as well as strong identification with Finnish or Swedish banking codes or mobile certificate is needed for electronic registration and advance voting. The terms and other instructions concerning electronic voting are available on the Company’s website at https://www.faron.com/investors/general-meetings.

b) By mail or email

The advance voting form and instructions relating to the advance voting will be available on the Company’s website at https://www.faron.com/investors/general-meetings no later than on 4 April 2022 at 12:00 noon EEST (Finnish time). A shareholder may send the advance voting form available on the aforementioned website or corresponding information to Innovatics by regular mail to Innovatics Ltd, Annual General Meeting / Faron Pharmaceuticals Ltd, Ratamestarinkatu 13 A, FI-00520 Helsinki, Finland or by email to agm@innovatics.fi. If the shareholder participates in the meeting by sending the votes in advance by mail or email to the above-mentioned addresses, this constitutes registration for the AGM, provided that the above-mentioned information required for registration is provided. Additional information is also available through email at general.meeting@faron.com.

In connection with the registration, a shareholder or a proxy representative is required to provide the requested personal information such as the shareholder’s name, personal ID/date of birth and email address and/or phone number. The personal data given to the Company and Innovatics by shareholders and proxy representatives is only used in connection with the AGM and with the processing of related necessary registrations.

Additional information on the registration and advance voting is available during the registration period by telephone at +358 10 2818 909 on business days during 9:00 a.m. until 12:00 noon and from 1:00 p.m. until 4:00 p.m. (EEST).

1. Proxy representative and powers of attorney

A shareholder may participate in the AGM and exercise their rights at the meeting by way of proxy representation. Also the proxy representative of a shareholder may only participate by voting in advance in the manner instructed above. Shareholders who do not vote in advance are requested, due to the COVID-19 pandemic, to exercise shareholders’ rights through a centralized proxy representative designated by the Company by authorizing attorney-at-law Anniina Järvinen from Hannes Snellman Attorneys Ltd, or a person appointed by her, to represent them at the AGM in accordance with the shareholder’s voting instructions. Authorizing the designated proxy representative will not accrue any costs for the shareholder, excluding possible postal fees for proxy documents. Further information on the designated proxy representative is available at the following website: www.hannessnellman.com/people/all/anniina-jaervinen/.

Shareholders may also participate in the AGM and exercise their rights at the meeting by way of another proxy representative. Proxy representatives must use strong electronic authentication when registering for the meeting and voting in advance online, after which they can register and vote in advance on behalf of the shareholder they represent. A proxy representative shall present a dated proxy document or otherwise in a reliable manner demonstrate their right to represent the shareholder at the AGM. Statutory right of representation may be demonstrated by using the suomi.fi e-Authorisations service which is in use in the online registration service. When a shareholder participates in the AGM by means of several proxy representatives representing the shareholder with shares at different securities accounts, the shares by which each proxy representative represents the shareholder shall be identified in connection with the registration for the AGM.

Proxy and voting instruction templates are available on the Company’s website at https://www.faron.com/investors/general-meetings on 4 April 2022 at the latest. The proxy representative of a shareholder shall deliver duly populated and signed proxy documents together with the signed and duly populated advance voting form in accordance with the instructions set out in the form primarily as an attachment in connection with the electronic registration and advance voting or alternatively through email to general.meeting@faron.com or as originals to the address Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland before the end of the registration period, by which time the proxy documents must be received.

If a shareholder delivers a proxy to the Company in accordance with the applicable instructions before the expiry of the registration and advance-voting period, this constitutes due registration for the AGM, provided that all required information is included in the proxy documents. In addition, proxy representatives must also vote in advance in the manner described in this notice.

Further information is available on the Company’s website at https://www.faron.com/investors/general-meetings.

1. Holder of nominee-registered shares (including depositary interest holders)

A holder of nominee-registered shares (including depositary interest holders) has the right to participate in the AGM by virtue of such shares based on which the holder would be entitled to be registered in the Company’s shareholders’ register maintained by Euroclear on the AGM’s record date of 8 April 2022. The right to participate in the AGM requires, in addition, that the shareholder on the basis of such shares has been registered into the temporary shareholders’ register maintained by Euroclear by 19 April 2022 at 10:00 a.m. EEST (Finnish time), at the latest. As regards nominee-registered shares this constitutes due registration for the AGM.

A holder of nominee-registered shares is advised to request necessary instructions regarding the registration in the temporary shareholders’ register of the Company, the issuing of proxy documents and registration for the AGM from their custodian bank in good time. A holder of nominee-registered shares shall note that custodian banks may apply deadlines for the registration and advance voting of holders of nominee-registered shares. The account management organisation of the custodian bank has to register a holder of nominee-registered shares into the temporary shareholders’ register of the Company at the latest by the time stated above and see to the voting in advance on behalf of a holder of nominee-registered shares.

Further information on holders of nominee-registered shares is available on the Company’s abovementioned website.

1. Other instructions and information

Shareholders who hold at least one hundredth (1/100) of all the shares in the Company have the right to pose counterproposals concerning the matters on the agenda of the AGM to be placed for a vote. Such counterproposals shall be delivered to the Company by email to general.meeting@faron.com by no later than 1 April 2022 at 4:00 p.m. EEST (Finnish time), by which time the counterproposals must be received by the Company.

The shareholders shall in connection with the counterproposal present adequate evidence of their shareholding in the Company. The counterproposal is admissible for consideration at the AGM if the shareholders who have made the counterproposal have the right to attend the meeting and on the record date of the AGM represent at least one hundredth (1/100) of all shares in the Company. If a counterproposal will not be taken up for consideration at the AGM, the votes given in favour of the counterproposal will not be taken into account. The Company will publish possible counterproposals to be put to a vote on the Company’s website at https://www.faron.com/investors/general-meetings by no later than 4 April 2022.

A shareholder has the right to ask questions referred to in Chapter 5, Section 25 of the Companies Act with respect to the matters to be considered at the AGM. Such questions may be delivered by email to general.meeting@faron.com or by regular mail to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland by no later than 8 April 2022, by which time the questions must have been received.

Such questions by shareholders, the Company’s management’s answers as well as other counterproposals than those admissible for voting will be available on the Company’s website at https://www.faron.com/investors/general-meetings on 13 April 2022 at the latest. In connection with asking questions, shareholders are required to provide adequate evidence of shareholding.

The AGM can be followed on the Company’s website. Persons following the meeting in this manner are not considered participants in the AGM. Accordingly, shareholders will not have the possibility to address the meeting pursuant to Chapter 5, Section 25 of the Companies Act or participate in any vote, among other things, during the meeting. The attendance list of the AGM and voting results are determined solely based on the advance votes. Shareholders cannot thus exercise their voting rights when following the meeting through the webcast, i.e., votes must be cast in advance.

Changes in the share ownership following the record date of the AGM do not have an impact on the right to participate in the AGM nor on the number of votes of the shareholder.

On the date of this notice, 25 March 2022, the total number of shares and votes in the Company is 53,232,032.

Turku, 25 March 2022

FARON PHARMACEUTICALS LTD

Board of Directors

For more information please contact:

Media / Investor Contact

Faron Pharmaceuticals

Eric Van Zanten

Head of Communications

eric.vanzanten@faron.com

investor.relations@faron.com

Phone: +1 (610) 529-6219

Cairn Financial Advisers LLP, Nomad

Sandy Jamieson, Jo Turner

Phone: +44 (0) 207 213 0880
 

Peel Hunt LLP, Broker
Christopher Golden, James Steel
Phone: +44 (0) 20 7418 8900

Sisu Partners Oy, Certified Adviser on Nasdaq First North
Juha Karttunen
Phone: +358 (0)40 555 4727
Jukka Järvelä
Phone: +358 (0)50 553 8990

Consilium Strategic Communications
Mary-Jane Elliott, David Daley, Lindsey Neville
faron@consilium-comms.com
Phone: +44 (0)20 3709 5700

About Faron Pharmaceuticals Ltd

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs caused by dysfunction of our immune system. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology, organ damage and bone marrow regeneration. Bexmarilimab, a novel anti-Clever-1 humanized antibody, is its investigative precision immunotherapy with the potential to provide permanent immune stimulation for difficult-to-treat cancers through targeting myeloid function. Currently in Phase I/II clinical development as a potential therapy for patients with untreatable solid tumors, bexmarilimab has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine is an investigational intravenous (IV) interferon beta-1a therapy for the treatment of acute respiratory distress syndrome (ARDS) and other ischemic or hyperinflammatory conditions. Traumakine is currently being evaluated in global trials as a potential treatment for hospitalized patients with COVID-19 and with the 59th Medical Wing of the US Air Force and the US Department of Defense for the prevention of multiple organ dysfunction syndrome (MODS) after ischemia-reperfusion injury caused by a major trauma. Faron is headquartered in Turku, Finland with additional offices in Zürich, Switzerland and US operations in Boston, Massachusetts. Further information is available at www.faron.com.

NOTICE OF FARON PHARMACEUTICALS LTD’S ANNUAL GENERAL MEETING

NOTICE OF Faron pharmaceuticals LTD’s Annual GENERAL MEETING

Shareholders of Faron Pharmaceuticals Ltd (the “Company”) are notified of the Annual General Meeting (the “AGM”) to be held on 23 April 2021 at 2:00 p.m. EEST (Finnish time) at the premises of Inderes Oy at Itämerentori 2, FI-00180 Helsinki, Finland. The shareholders of the Company may participate in the AGM and exercise their shareholder rights only by voting in advance, by submitting counterproposals in advance and asking questions in advance in accordance with the instructions given in this notice and otherwise by the Company. It is not possible to participate in the AGM at the meeting venue.

The Board of Directors (the “Board”) has resolved on exceptional meeting procedures based on the temporary legislation approved by the Finnish parliament, which entered into force on 3 October 2020. In order to prevent the spread of the COVID-19 pandemic, the AGM will be held without shareholders’ and their proxy representatives’ presence at the meeting venue. This is necessary in order to ensure the health and safety of the shareholders, employees and other stakeholders of the Company as well as to organize the AGM in a predictable way allowing equal means for shareholders to participate while also ensuring compliance with the current restrictions set by the authorities. For these reasons, shareholders and their proxy representatives can participate in the AGM and use shareholder rights only by voting in advance, by submitting counterproposals in advance and by asking questions in advance. Further instructions can be found in part C of this notice (Instructions for the Participants).

The AGM can be followed on the Company’s website. Persons following the meeting in this manner are not considered participants in the AGM. Accordingly, shareholders will not have the possibility to address the meeting or participate in any vote, among other things, during the meeting. The webcast will be arranged only if it can be arranged in compliance with all regulatory rules and restrictions imposed by the authorities due to the COVID-19 pandemic.

The CEO of the Company will attend the meeting. The Chairman of the Board, the members of the Board, other management of the Company and the auditor will not attend the AGM.

1. MATTERS ON THE AGENDA OF THE AGM

1. Opening of the meeting

1. Calling the meeting to order

Attorney-at-law Riikka Rannikko shall act as the Chairman of the meeting. If due to weighty reasons Riikka Rannikko is not able to act as Chairman, the Board shall appoint another person it deems most suitable to act as Chairman.

1. Election of persons to scrutinize the minutes and to supervise the counting of votes

The Company’s General Counsel Pessi Honkasalo shall scrutinize the minutes and supervise the counting of the votes. In case Pessi Honkasalo would not be able to act as the person to scrutinize the minutes and to supervise the counting of the votes due to weighty reasons, the Board shall appoint another person it deems most suitable to act in that role.

1. Recording the legality of the meeting

1. Recording the attendance at the meeting and adoption of the list of votes

The shareholders who have voted in advance and who have the right to participate in the meeting pursuant to Chapter 5, Sections 6 and 6a of the Finnish Limited Liability Companies Act (624/2006, as amended; the “Companies Act”) will be recorded to have been represented at the meeting. The list of votes will be adopted according to the information provided by Euroclear Finland Oy (“Euroclear”) and Innovatics Ltd (“Innovatics”).

1. Presentation of the financial statements, the Board’s report and the auditor’s report for 2020

As shareholders can only participate in the AGM by voting in advance, the financial statements, the Board’s report and the auditor’s report for 2020, published by the Company on 25 March 2021 and which have been made available on the Company’s website at https://www.faron.com/investors/general-meetings, will be deemed to have been presented to the AGM.

1. Adoption of the financial statements

1. Resolution on the use of the profit shown on the balance sheet and the payment of dividend

The Board proposes that no dividend for the financial year 2020 will be paid and that the losses of the Company for the financial year, amounting to EUR 16,946,216.84 (IFRS), will be carried forward to the reserve for invested unrestricted equity.

1. Resolution on the discharge of the members of the Board and the CEO of the Company from liability

1. Resolution on the remuneration of the members of the Board

The Board proposes, on the basis of the proposal of the remuneration committee, that the annual remuneration of the members of the Board remain unchanged and that EUR 35,000 will be paid to the Board members, in addition to which an annual remuneration of EUR 35,000 will be paid to the chair of the Board. In addition, a further annual remuneration of EUR 11,000 will be paid to the chair of the audit committee, a further annual remuneration of EUR 9,000 will be paid to the chair of the remuneration committee and a further annual remuneration of EUR 6,000 will be paid to the chair of the nomination committee. In addition, a further annual remuneration of EUR 6,000 will be paid to the audit committee members, a further annual remuneration of EUR 5,000 will be paid to the remuneration committee members and a further annual remuneration of EUR 3,000 will be paid to the nomination committee members.

The Board furthermore proposes that meeting fees will be paid to the Board members as follows:

• a meeting fee of EUR 1,000 will be paid to Board members per Board meeting where the Board member was physically present, and which was held on another continent than the member’s place of residence; and
• no meeting fees will be paid to Board members who were attending a Board meeting but not physically present or for Board meetings held on the same continent as the member’s place of residence.

In addition, it is proposed that all reasonable and properly documented expenses incurred in the performance of duties of the members of the Board would be compensated.

The Board also proposes, on the basis of the proposal of the remuneration committee, that no remuneration will be paid based on the Board membership of the CEO of the Company or a person serving the Company under a full-time employment or service agreement.

1. Resolution on the number of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that seven (7) members be elected to the Board.

1. Election of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that Frank Armstrong, Gregory Brown, John Poulos, Leopoldo Zambeletti, Markku Jalkanen and Matti Manner be re-elected to the Board for a term that ends at the end of the next AGM. In addition, the Board proposes, on the basis of the proposal of the nomination committee, that Anne Whitaker be elected as a new member to the Board for a term that ends at the end of the next AGM.

Anne Whitaker (born 1967), Bachelor of Science, a citizen of the United States, currently serves as a member of the board of directors of three publicly listed companies: UDG Healthcare Plc, Caladrius Biosciences Inc., Mallinckrodt Plc and privately held Aerami Therapeutics Inc. Previously, she has acted as the CEO at, inter alios, Aerami Therapeutics, Inc., KNOW Bio LLC, Novoclem Therapeutics, Inc. and Synta Pharmaceuticals Inc., and as the Executive Vice President, Company Group Chairman of Bausch Health Company and President of North America for Sanofi.

Anne Whitaker is independent of the Company and its significant shareholders.

All proposed Board member candidates have given their consent for the election. The proposed Board members have informed the Company that in the event they are elected, they intend to elect Frank Armstrong as chair of the Board and Matti Manner as vice-chair of the Board.

Descriptions of the Board member candidates proposed to be re-elected are available on the Company’s website at https://www.faron.com/faron/leadership/board-directors.

1. Resolution on the remuneration of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that the auditor be remunerated in accordance with the invoice presented.

1. Election of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that PricewaterhouseCoopers Oy (“PwC”), a firm of authorised public accountants, continue to act as the Company’s auditor.

PwC has informed the Company that it will appoint Panu Vänskä, authorised public accountant (KHT), as the key audit partner.

1. Resolution on the amendment of the Option Plan 2015

The Company’s Extraordinary General Meeting has on 15 September 2015 adopted the terms and conditions of an option plan which has later been amended by the decisions of the AGMs held on 16 May 2017 and 18 May 2020 (the “Option Plan 2015”). The subscription period for shares based on options is currently scheduled to end on 30 September 2021. The Board proposes that the AGM resolves to amend the terms and conditions of the Option Plan 2015 so that the subscription period for shares based on the options is extended by two (2) years, i.e., until 30 September 2023. For the sake of clarity, it is noted that the proposal applies to all options under the Option Plan 2015 (A options, B options, C options and D options). The Board deems that the proposed amendment will enhance the usability of the options and thereby significantly increase the desired benefits of the incentivisation system for the management and personnel of the Company.

The consolidated terms and conditions of the Option Plan 2015, incorporating the amendments proposed herein, are attached to this notice.

1. Amendment of the Articles of Association

The Board proposes that article 13 (regarding the reduction of equity of the company) be removed from the Articles of Association as the rules applicable to the Company are directly based on the Companies Act.

1. Authorising the Board to decide on the issuance of shares, options or other special rights entitling to shares

The Board proposes that the AGM authorise the Board to resolve by one or several decisions on issuances of shares, options or other special rights entitling to shares referred to in Chapter 10, Section 1 of the Companies Act, which authorisation contains the right to issue new shares or dispose of the shares in the possession of the Company. The authorisation would consist of up to ten million (10,000,000) shares in the aggregate (including shares to be received based on options or other special rights), which corresponds to approximately twenty (20) per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board’s right to decide on the issuance of shares, options or other special rights entitling to shares in deviation from the shareholders’ pre-emptive rights. The authorisation is proposed to be used for material arrangements from the Company’s point of view, such as financing or implementing business arrangements, investments or for other such purposes determined by the Board in which case a weighty financial reason for issuing shares, options or other special rights entitling to shares, and possibly deviating from the shareholders’ pre-emptive rights, would exist.

The Board would be authorised to resolve on all other terms and conditions of the issuance of shares, options or other special rights entitling to shares.

The authorisation would be effective until 30 June 2022. This authorisation shall not replace the authorisation relating to item A.15 of this notice.

1. Closing of the meeting

1. DOCUMENTS OF THE AGM

The proposals of the Board to the AGM and this notice are available on the Company’s website at https://www.faron.com/investors/general-meetings. The financial statements, the Board’s report and the auditor’s report for 2020 are available on the above-mentioned website no later than on 25 March 2021. Copies of these documents and of this notice will be sent to shareholders upon request. The minutes of the AGM will be available to be viewed on the Company’s website from 7 May 2021 at the latest.

1. INSTRUCTIONS FOR THE PARTICIPANTS

In order to prevent the spread of the COVID-19 pandemic, the AGM will be organized so that the shareholders and their proxy representatives are not allowed to be present at the meeting venue. The shareholders and their proxy representatives can participate in the meeting and use their shareholder rights only by voting in advance, by submitting counterproposals in advance and asking questions in advance in the manner described below. Proxy representatives shall also vote in advance in the manner described below.

1. The right to participate

Each shareholder who on the record date of the AGM, being 13 April 2021, is registered in the Company’s shareholders’ register held by Euroclear has the right to participate in the AGM. A shareholder whose shares are registered on their personal Finnish book-entry account is registered in the Company’s shareholders’ register. If you do not have a Finnish book-entry account, see section C.4 (Holder of nominee-registered shares (including depositary interest holders)) for all instructions on participating and voting in advance.

A shareholder may only participate in the meeting by voting in advance or by way of proxy representation and by submitting counterproposals and asking questions in advance in accordance with the instructions below.

1. Registration and advance voting

Registration for the AGM and advance voting will begin on 1 April 2021 at 12:00 noon EEST (Finnish time) when the deadline for submitting counterproposals has passed. A shareholder entered in the Company’s shareholders’ register who wishes to participate in the AGM by voting in advance must register and vote in advance at the latest on 19 April 2021 at 10:00 a.m. EEST (Finnish time), by which time the registration shall be completed and votes need to be received.

A shareholder whose shares are registered on their Finnish book-entry account can register and vote in advance on certain items on the agenda of the AGM from 12:00 noon EEST (Finnish time) on 1 April 2021 until 10:00 a.m. EEST (Finnish time) on 19 April 2021 by the following means:

a) Through the Company’s website

The Finnish personal identity code or business ID as well as strong identification with Finnish banking codes or mobile ID is needed for electronic registration and advance voting. The terms and other instructions concerning electronic voting are available on the Company’s website at https://www.faron.com/investors/general-meetings.

b) By mail or email

The advance voting form and instructions relating to the advance voting will be available on the Company’s website at https://www.faron.com/investors/general-meetings no later than on 1 April 2021 at 12:00 noon EEST (Finnish time). A shareholder may send the advance voting form available on the aforementioned website or corresponding information to Innovatics by regular mail to Innovatics Ltd, Yhtiökokous / Faron Pharmaceuticals Ltd, Ratamestarinkatu 13 A, FI-00520 Helsinki, Finland or by email to agm@innovatics.fi. If the shareholder participates in the meeting by sending the votes in advance by mail or email to the above-mentioned addresses, this constitutes registration for the AGM, provided that the above-mentioned information required for registration is provided. Additional information is also available through email at general.meeting@faron.com.

In connection with the registration, a shareholder or a proxy representative is required to provide the requested personal information such as the shareholder’s name, personal ID and email address and/or phone number. The personal data given to the Company and Innovatics by shareholders and proxy representatives is only used in connection with the AGM and with the processing of related necessary registrations.

1. Proxy representative and powers of attorney

A shareholder may participate in the AGM and exercise their rights at the meeting by way of proxy representation. Also the proxy representative of a shareholder may only participate by voting in advance in the manner instructed above. Shareholders who do not vote in advance are requested, due to the COVID-19 pandemic, to exercise shareholders’ rights through a centralized proxy representative designated by the Company by authorizing attorney-at-law Anniina Järvinen from Hannes Snellman Attorneys Ltd, or a person appointed by her, to represent them at the AGM in accordance with the shareholder’s voting instructions. Authorizing the designated proxy representative will not accrue any costs for the shareholder, excluding possible postal fees for proxy documents. Further information on the designated proxy representative is available at the following website: www.hannessnellman.com/people/all/anniina-jaervinen/.

Shareholders may also participate in the AGM and exercise their rights at the meeting by way of another proxy representative. A proxy representative shall present a dated proxy document or otherwise in a reliable manner demonstrate their right to represent the shareholder at the AGM. When a shareholder participates in the AGM by means of several proxy representatives representing the shareholder with shares at different securities accounts, the shares by which each proxy representative represents the shareholder shall be identified in connection with the registration for the AGM.

Proxy and voting instruction templates are available on the Company’s website at https://www.faron.com/investors/general-meetings on 1 April 2021 at the latest. Possible proxy documents shall be delivered primarily through email to general.meeting@faron.com or as originals to the address Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland before the end of the registration period, by which time the proxy documents must be received.

If a shareholder delivers a proxy to the Company in accordance with the applicable instructions before the expiry of the registration and advance-voting period, this constitutes due registration for the AGM, provided that all required information is included in the proxy documents. In addition, proxy representatives must also vote in advance in the manner described in this notice.

Further information is available on the Company’s website at https://www.faron.com/investors/general-meetings.

1. Holder of nominee-registered shares (including depositary interest holders)

A holder of nominee-registered shares (including depositary interest holders) has the right to participate in the AGM by virtue of such shares based on which the holder would be entitled to be registered in the Company’s shareholders’ register maintained by Euroclear on the AGM’s record date of 13 April 2021. The right to participate in the AGM requires, in addition, that the shareholder on the basis of such shares has been registered into the temporary shareholders’ register maintained by Euroclear by 20 April 2021 at 10:00 a.m. EEST (Finnish time), at the latest. As regards nominee-registered shares this constitutes due registration for the AGM.

A holder of nominee-registered shares is advised to request necessary instructions regarding the registration in the temporary shareholders’ register of the Company, the issuing of proxy documents and registration for the AGM from their custodian bank in good time. A holder of nominee-registered shares shall note that custodian banks may apply deadlines for the registration and advance voting of holders of nominee-registered shares. The account management organisation of the custodian bank has to register a holder of nominee-registered shares into the temporary shareholders’ register of the Company at the latest by the time stated above and see to the voting in advance on behalf of a holder of nominee-registered shares.

Further information on holders of nominee-registered shares is available on the Company’s abovementioned website.

1. Other instructions and information

Shareholders who hold at least one hundredth (1/100) of all the shares in the Company have the right to pose counterproposals concerning the matters on the agenda of the AGM to be placed for a vote. Such counterproposals shall be delivered to the Company by email to general.meeting@faron.com by no later than 30 March 2021 at 4:00 p.m. EEST (Finnish time), by which time the counterproposals must be received by the Company.

The shareholders shall in connection with the counterproposal present adequate evidence of their shareholding in the Company. The counterproposal is admissible for consideration at the AGM if the shareholders who have made the counterproposal have the right to attend the meeting and on the record date of the AGM represent at least one hundredth (1/100) of all shares in the Company. If a counterproposal will not be taken up for consideration at the AGM, the votes given in favour of the counterproposal will not be taken into account. The Company will publish possible counterproposals to be put to a vote on the Company’s website at https://www.faron.com/investors/general-meetings by no later than 1 April 2021.

A shareholder has the right to ask questions referred to in Chapter 5, Section 25 of the Companies Act with respect to the matters to be considered at the AGM. Such questions may be delivered by email to general.meeting@faron.com or by regular mail to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland by no later than 9 April 2021, by which time the questions must have been received.

Such questions by shareholders, the Company’s management’s answers as well as other counterproposals than those admissible for voting will be available on the Company’s website at https://www.faron.com/investors/general-meetings on 14 April 2021 at the latest. In connection with asking questions, shareholders are required to provide adequate evidence of shareholding.

The AGM can be followed on the Company’s website. Persons following the meeting in this manner are not considered participants in the AGM. Accordingly, shareholders will not have the possibility to address the meeting pursuant to Chapter 5, Section 25 of the Companies Act or participate in any vote, among other things, during the meeting. The attendance list of the AGM and voting results are determined solely based on the advance votes. Shareholders cannot thus exercise their voting rights when following the meeting through the webcast, i.e., votes must be cast in advance.

Changes in the share ownership following the record date of the AGM do not have an impact on the right to participate in the AGM nor on the number of votes of the shareholder.

On the date of this notice, 25 March 2021, the total number of shares and votes in the Company is 50,417,874.

Turku, 25 March 2021

FARON PHARMACEUTICALS LTD

Board of Directors

Faron Pharmaceuticals - AGM notice - 250321

NOTICE OF faron pharmaceuticals LTD’s ANNUAL GENERAL MEETING

Shareholders of Faron Pharmaceuticals Ltd (the “Company“) are notified of the annual general meeting (the “AGM“) to be held on 18 May 2020 at 10:00 a.m. (Finnish time) at the offices of the Company at Joukahaisenkatu 6, 20520 Turku, Finland. The registration of attendees and the distribution of voting slips will commence at the meeting venue at 9:00 a.m. (Finnish time).

Due to the SARS-CoV-2 situation, the AGM will only be held if the number of participants at the meeting is low enough to allow the AGM to be conducted safely and in compliance with the regulations issued by the authorities. The Company encourages its shareholders to participate in the AGM by way of centralised proxy representation and to follow the AGM by webcast. The special arrangements are described in more detail under section C.5.

The Company’s annual report for 2019 is available on the Company’s website at https://www.faron.com/investors/results.

A.  MATTERS ON THE AGENDA OF THE AGM

1.   Opening of the meeting

2.   Calling the meeting to order

3.   Election of persons to scrutinise the minutes and to supervise the counting of votes

4.   Recording the legality of the meeting

5.   Recording the attendance at the meeting and adoption of the list of votes

6.   Presentation of the financial statements, the Board’s report and the auditor’s report for 2019

Review by the CEO; measures to remedy equity shortfall.

7.   Adoption of the financial statements

8.   Resolution on the use of the profit shown on the balance sheet and the payment of dividend

The board of directors (the “Board“) proposes that no dividend for the financial year 2019 will be paid and that the losses of the Company for the financial year, amounting to EUR 13,261,911.93 (IFRS), will be carried forward to the reserve for invested unrestricted equity.

9.   Resolution on the discharge of the members of the Board and the CEO of the Company from liability

10. Resolution on the remuneration of the members of the Board

The Board proposes, on the basis of the proposal of the remuneration committee, that an annual remuneration of EUR 35,000 will be paid to the Board members, in addition to which an annual remuneration of EUR 35,000 will be paid to the chair of the Board. In addition, a further annual remuneration of EUR 11,000 will be paid to the chair of the audit committee, a further annual remuneration of EUR 9,000 will be paid to the chair of the remuneration committee and a further annual remuneration of EUR 6,000 will be paid to the chair of the nomination committee. In addition, a further annual remuneration of EUR 6,000 will be paid to the audit committee members, a further annual remuneration of EUR 5,000 will be paid to the remuneration committee members and a further annual remuneration of EUR 3,000 will be paid to the nomination committee members.

The Board furthermore proposes that meeting fees will be paid to the Board members as follows:

·    a meeting fee of EUR 1,000 will be paid to Board members per Board meeting where the Board member was physically present, and which was held on another continent than the member’s place of residence; and

·    no meeting fees will be paid to Board members who were attending a Board meeting but not physically present or for Board meetings held on the same continent than the member’s place of residence.

In addition, it is proposed that all reasonable and properly documented expenses incurred in the performance of duties of the members of the Board would be compensated.

The Board also proposes, on the basis of the proposal of the remuneration committee, that no remuneration will be paid based on the Board membership of the CEO of the Company or a person serving the Company under a full-time employment or service agreement.

11. Resolution on the number of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that six (6) members be elected to the Board.

12. Election of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo Zambeletti, Gregory Brown and John Poulos be re-elected to the Board for a term that ends at the end of the next AGM.

Descriptions of the Board member candidates are available on the Company’s website at https://www.faron.com/faron/our-people.

The proposed Board members have informed the Company that in the event they are elected, they intend to elect Frank Armstrong as chair of the Board and Matti Manner as vice-chair of the Board.

13. Resolution on the remuneration of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that the auditor be remunerated in accordance with the invoice presented.

14. Election of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that PricewaterhouseCoopers Oy (“PwC“), a firm of authorised public accountants, continue to act as the Company’s auditor.

PwC has informed the Company that it will appoint Panu Vänskä, authorised public accountant (KHT), as the key audit partner.

15. Resolution on the amendment of the option programmes

A. The Company’s extraordinary general meeting has on 15 September 2015 adopted the terms and conditions of an option programme which have later been amended by the decision of the AGM held on 16 May 2017 (the “Option Plan 2015“). The options cannot currently be transferred or pledged before the subscription of shares without the consent of the Board. The Board proposes, on the basis of the proposal of the remuneration committee, that the AGM resolves to amend the terms and conditions of the Option Plan 2015 so that the options may be transferred or pledged after the conditions for share subscription have been fulfilled under the terms and conditions of the Option Plan 2015. The Board deems that the proposed amendment will enhance the usability of the options and thereby significantly increase the desired benefits of the incentivisation system for the management and personnel of the Company.

The consolidated terms and conditions of the Option Plan 2015, incorporating the amendments proposed herein, are attached hereto.

B. The Company’s AGM has on 28 May 2019 decided to authorise the Board to resolve on issuances of options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act. Pursuant to the decision of the AGM, the authorisation may be used for implementing an option plan for the employees and directors of, and persons providing services to, the group, substantially in the form of the rules attached to that decision (the “Share Option Plan 2019“). The options cannot currently be transferred or pledged before the subscription of shares. The Board proposes, on the basis of the proposal of the remuneration committee, that the AGM resolves to approve implementing a change corresponding the aforementioned in the rules of the Share Option Plan 2019 so that the options may be transferred or pledged after the conditions for share subscription have been fulfilled. The Board deems that the proposed amendment will enhance the usability of the options and thereby significantly increase the desired benefits of the incentive system for the management and personnel of the Company.

The consolidated rules of the Share Option Plan 2019, incorporating the amendments proposed herein, are attached hereto.

16. Authorising the Board to decide on the issuance of shares, options or other special rights entitling to shares

The Board proposes that the AGM authorise the Board to resolve by one or several decisions on issuances of shares, options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act, which authorisation contains the right to issue new shares or dispose of the shares in the possession of the Company. The authorisation would consist of up to 8,650,000 shares in the aggregate (including shares to be received based on options or other special rights), which corresponds to approximately 20 per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board’s right to decide on the issuance of shares, options or other special rights entitling to shares in deviation from the shareholders’ pre-emptive rights. The authorisation is proposed to be used for material arrangements from the Company’s point of view, such as financing or implementing business arrangements, investments or for other such purposes determined by the Board in which case a weighty financial reason for issuing shares, options or other special rights entitling to shares, and possibly deviating from the shareholders’ pre-emptive rights, would exist.

The Board would be authorised to resolve on all other terms and conditions of the issuance of shares, options or other special rights entitling to shares.

The authorisation will be effective until 30 June 2021. This authorisation shall not replace the authorisation referred to in item 15 of this notice.

17. Closing of the meeting

B.   DOCUMENTS OF THE AGM

The above-mentioned proposals to the AGM and this notice are available immediately after publication of this notice on the Company’s website at https://www.faron.com/investors/general-meetings. The Company’s annual report for 2019, including the financial statements, the report of the Board and the auditor’s report, is available on the Company’s website at https://www.faron.com/investors/results. The Board proposals and the other above-mentioned documents will also be available at the AGM. Copies of these documents and of this notice will be sent to shareholders upon request. The minutes of the AGM will be available to be viewed on the Company’s website from 1 June 2020 at the latest.

C.  INSTRUCTIONS FOR THE PARTICIPANTS

1.   The right to participate and registration

Each shareholder who on the record date of the AGM, being 6 May 2020, is registered in the Company’s shareholders’ register held by Euroclear Finland Ltd (“Euroclear“) has the right to participate in the AGM. A shareholder whose shares are registered on their personal book-entry account is registered in the Company’s shareholders’ register.

A shareholder who is registered in the Company’s shareholders’ register and who wants to participate in the AGM should register for the meeting by no later than 4 p.m. (Finnish time) on Wednesday, 13 May 2020 by giving a prior notice of participation:

•     by email to general.meeting@faron.com; or

•     by mail to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland.

When registering, a shareholder shall state their name, personal identification number or business identity code, address, telephone number and the name of a possible proxy representative or assistant and the personal identification number of the proxy representative. In addition, the shareholder shall state whether they will follow the AGM by webcast. The personal data given by shareholders to the Company are used only in connection with the AGM and the necessary processing of related registrations.

Shareholders and their authorised representatives or proxy representatives should, when necessary, be able to prove their identity and/or right of representation.

Registrations submitted to the cancelled annual general meeting, convened to be held on 15 April 2020, will not be valid for this AGM. Therefore, the previously registered shareholders must re-register.

2.   Following the AGM by webcast

The Company’s shareholders can follow the AGM by webcast. By following the meeting by webcast, a shareholder does not attend the meeting nor can use the right to request information in accordance with the Finnish Limited Liability Companies Act nor exercise their voting rights. A link to the webcast will be sent to all shareholders who have given notice of attendance to the meeting and provided their email address.

Shareholders may pose questions about the items on the agenda of the AGM by 4 p.m. (Finnish time), 13 May 2020 by sending email to general.meeting@faron.com. The presentations by the Company will be prepared, to the extent possible, so that such questions will be answered.

3.   Proxy representative and powers of attorney

Shareholders may participate in the AGM and exercise their rights at the meeting by way of proxy representation. A proxy representative must present a dated power of attorney or other reliable proof of their authority to represent the shareholder.

Due to the SARS-CoV-2 situation, the Company encourages its shareholders to participate in the AGM by way of a centralised proxy representation. Shareholders are able to exercise their voting rights at the AGM without physical presence through the centralised proxy representation service provided by the Company’s General Counsel Pessi Honkasalo. Shareholders who wish to participate in the AGM through authorising Dr Honkasalo as proxy representative are required to register to the AGM as specified in this notice and deliver the proxy form, available on the Company’s website at https://www.faron.com/investors/general-meetings, to the Company before the end of registration period. Authorising Dr Honkasalo as proxy representative will not accrue any costs for the shareholder (excluding potential postal fees).

A shareholder may participate in the AGM by means of several proxy representatives who represent the shareholder with shares held on different book-entry accounts. In such case, the shares represented by each proxy representative shall be identified when registering for the AGM.

Proxy documents should be sent to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland or by email to general.meeting@faron.com before the end of registration period.

4.   Holder of nominee-registered shares (including depositary interest holders)

A holder of nominee-registered shares (including depositary interest holders) has the right to participate in the AGM by virtue of such shares based on which the holder would be entitled to be registered in the Company’s shareholders’ register held by Euroclear on the AGM’s record date of 6 May 2020.

Additionally, participation requires that the holder of nominee-registered shares is temporarily registered in the Company’s shareholders’ register held by Euroclear by 10 a.m. (Finnish time) on Wednesday, 13 May 2020. Temporary registration in the shareholders’ register shall be deemed to be a registration for the AGM.

Holders of nominee-registered shares are advised to request the necessary instructions regarding the temporary registration in the shareholders’ register, the issuing of proxy documents and registration for the AGM from their custodian bank without delay. The account management organisation of the custodian bank shall notify a holder of nominee-registered shares who wants to participate in the AGM to be temporarily entered into the Company’s shareholders’ register by the above-mentioned time.

5.   Other instructions and information

The AGM will be organised in compliance with the regulations issued by the Finnish authorities in response to SARS-CoV-2. Due to the SARS-CoV-2 situation, the Company intends to limit the amount of the physical participants of the AGM to the minimum. Developments in the SARS-CoV-2 situation and complying with the governmental regulations may even lead to a situation where the number of participants arriving at the meeting venue will need to be limited. The Company requests its shareholders to comply with the following instructions regarding the meeting that are aimed to enable organising the meeting in consideration of the health and the safety of the Company’s shareholders:

·    All of the shareholders are asked to participate in the AGM by way of centralised proxy representation and to follow the AGM by webcast (see detailed provisions under sections 1-3 above).

·    No food or refreshments will be served at the meeting.

·    The AGM and all of the presentations, including the review by the CEO, will be kept as short as possible.

·    The participation by the Board and management will be restricted to minimum.

Shareholders are asked to comply with authority regulations and recommendations for their own part. The Company takes the threat of SARS-CoV-2 seriously and is following the situation carefully. Developments in the SARS-CoV-2 situation may require other special arrangements to organise the AGM or even to postpone the AGM to a later date. The Company’s shareholders are asked to follow the Company’s announcements as well as the web page https://www.faron.com/investors/general-meetings for any possible changes or additional information.

Pursuant to chapter 5, section 25 of the Finnish Limited Liability Companies Act, shareholders who are present at the AGM are entitled to request information regarding the matters addressed by the meeting.

On the date of this notice, 14 April 2020, the total number of shares and votes in the Company is 43,290,747.

The AGM shall be held in Finnish and in English.

Turku, 14 April 2020

FARON PHARMACEUTICALS LTD

Board of Directors

For more information please contact:

Faron Pharmaceuticals Ltd

Dr Markku Jalkanen, CEO

investor.relations@faron.com 

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

+44 207 886 2500

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jussi Majamaa

+358 40 555 4727

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

+44 20 3709 5700

faron@consilium-comms.com 

About Faron Pharmaceuticals Ltd

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology and organ damage. Clevegen, its precision immunotherapy, is a novel anti-Clever-1 antibody with the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. Currently in phase I/II clinical development as a novel macrophage checkpoint immunotherapy for patients with untreatable solid tumours, Clevegen has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine, the Company’s pipeline candidate to prevent vascular leakage and organ failures, has completed a phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS). Plans for its future development are being finalised to avoid interfering steroid use together with Traumakine. Faron is based in Turku, Finland. Further information is available at www.faron.com.

Faron Pharmaceuticals Oy

(“Faron” or the “Company”)

AGM to be postponed

Company announcement, 3 April 2020 at 4.45pm (EEST)

TURKU, FINLAND – Faron Pharmaceuticals Oy (AIM: FARN, First North: FARON), the clinical stage biopharmaceutical company, today announces that, due to the prevailing Covid-19 situation, the Company’s Board of Directors has decided to cancel the Company’s annual general meeting (“AGM”) scheduled to be held on 15 April 2020.

A new notice will be published in due course to convene the AGM at a later stage.

For more information please contact:

Faron Pharmaceuticals Oy

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com 

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

Phone: +44 207 886 2500

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jussi Majamaa

Phone: +358 (0)40 555 4727

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

About Faron Pharmaceuticals Oy

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology and organ damage. Clevegen, its precision immunotherapy, is a novel anti-Clever-1 antibody with the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. Currently in phase I/II clinical development as a novel macrophage checkpoint immunotherapy for patients with untreatable solid tumours, Clevegen has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine, the Company’s pipeline candidate to prevent vascular leakage and organ failures, has completed a phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS). Plans for its future development are being finalised to avoid interfering steroid use together with Traumakine. Faron is based in Turku, Finland. Further information is available at www.faron.com.

NOTICE OF faron pharmaceuticals LTD’s ANNUAL GENERAL MEETING

Company announcement, 20 March 2020 at 1.30 PM (EET)

Shareholders of Faron Pharmaceuticals Ltd (the “Company“) are notified of the annual general meeting (the “AGM“) to be held on 15 April 2020 at 2:00 p.m. (Finnish time) at the BioCity building, meeting room Manu at Tykistökatu 6, 20520 Turku, Finland. The registration of attendees and the distribution of voting slips will commence at the meeting venue at 1:00 p.m. (Finnish time). Due to the prevailing SARS-CoV-2 situation, the Company encourages its shareholders to participate in the AGM by way of centralised proxy representation and to follow the AGM by webcast.

The annual financial statement release containing the most important information from the Company’s annual report for 2019 has been published on the date of this notice. The Company’s annual report for 2019 will be available on the “Results” section of the Company’s website at https://www.faron.com/investors/results no later than three weeks before the AGM, i.e. as of 25 March 2020 at the latest.

A.  MATTERS ON THE AGENDA OF THE AGM

1.   Opening of the meeting

2.   Calling the meeting to order

3.   Election of persons to scrutinise the minutes and to supervise the counting of votes

4.   Recording the legality of the meeting

5.   Recording the attendance at the meeting and adoption of the list of votes

6.   Presentation of the financial statements, the Board’s report and the auditor’s report for 2019

Review by the CEO; measures to remedy equity shortfall.

7.   Adoption of the financial statements

8.   Resolution on the use of the profit shown on the balance sheet and the payment of dividend

The board of directors (the “Board“) proposes that no dividend for the financial year 2019 will be paid and that the losses of the Company for the financial year, amounting to EUR 13,261,911.93 (IFRS), will be carried forward to the reserve for invested unrestricted equity.

9.   Resolution on the discharge of the members of the Board and the CEO of the Company from liability

10. Resolution on the remuneration of the members of the Board

The Board proposes, on the basis of the proposal of the remuneration committee, that an annual remuneration of EUR 35,000 will be paid to the Board members, in addition to which an annual remuneration of EUR 35,000 will be paid to the chair of the Board. In addition, a further annual remuneration of EUR 11,000 will be paid to the chair of the audit committee, a further annual remuneration of EUR 9,000 will be paid to the chair of the remuneration committee and a further annual remuneration of EUR 6,000 will be paid to the chair of the nomination committee. In addition, a further annual remuneration of EUR 6,000 will be paid to the audit committee members, a further annual remuneration of EUR 5,000 will be paid to the remuneration committee members and a further annual remuneration of EUR 3,000 will be paid to the nomination committee members.

The Board furthermore proposes that meeting fees will be paid to the Board members as follows:

·     a meeting fee of EUR 1,000 will be paid to Board members per Board meeting where the Board member was physically present, and which was held on another continent than the member’s place of residence; and

·     no meeting fees will be paid to Board members who were attending a Board meeting but not physically present or for Board meetings held on the same continent than the member’s place of residence.

In addition, it is proposed that all reasonable and properly documented expenses incurred in the performance of duties of the members of the Board would be compensated.

The Board also proposes, on the basis of the proposal of the remuneration committee, that no remuneration will be paid based on the Board membership of the CEO of the Company or a person serving the Company under a full-time employment or service agreement.

11. Resolution on the number of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that six (6) members be elected to the Board.

12. Election of members of the Board

The Board proposes, on the basis of the proposal of the nomination committee, that Frank Armstrong, Markku Jalkanen, Matti Manner, Leopoldo Zambeletti, Gregory Brown and John Poulos be re-elected to the Board for a term that ends at the end of the next AGM.

Descriptions of the Board member candidates are available on the Company’s website at https://www.faron.com/.

The proposed Board members have informed the Company that in the event they are elected, they intend to elect Frank Armstrong as chair of the Board and Matti Manner as vice-chair of the Board.

13. Resolution on the remuneration of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that the auditor be remunerated in accordance with the invoice presented.

14. Election of the auditor

The Board proposes, on the basis of the proposal of the audit committee, that PricewaterhouseCoopers Oy (“PwC“), a firm of authorised public accountants, continue to act as the Company’s auditor.

PwC has informed the Company that it will appoint Panu Vänskä, authorised public accountant (KHT), as the key audit partner.

15. Resolution on the amendment of the option programmes

A. The Company’s extraordinary general meeting has on 15 September 2015 adopted the terms and conditions of an option programme which have later been amended by the decision of the AGM held on 16 May 2017 (the “Option Plan 2015“). The options cannot currently be transferred or pledged before the subscription of shares without the consent of the Board. The Board proposes, on the basis of the proposal of the remuneration committee, that the AGM resolves to amend the terms and conditions of the Option Plan 2015 so that the options may be transferred or pledged after the conditions for share subscription have been fulfilled under the terms and conditions of the Option Plan 2015. The Board deems that the proposed amendment will enhance the usability of the options and thereby significantly increase the desired benefits of the incentivisation system for the management and personnel of the Company.

The consolidated terms and conditions of the Option Plan 2015, incorporating the amendments proposed herein, are attached hereto.

B. The Company’s AGM has on 28 May 2019 decided to authorise the Board to resolve on issuances of options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act. Pursuant to the decision of the AGM, the authorisation may be used for implementing an option plan for the employees and directors of, and persons providing services to, the group, substantially in the form of the rules attached to that decision (the “Share Option Plan 2019“). The options cannot currently be transferred or pledged before the subscription of shares. The Board proposes, on the basis of the proposal of the remuneration committee, that the AGM resolves to approve implementing a change corresponding the aforementioned in the rules of the Share Option Plan 2019 so that the options may be transferred or pledged after the conditions for share subscription have been fulfilled. The Board deems that the proposed amendment will enhance the usability of the options and thereby significantly increase the desired benefits of the incentive system for the management and personnel of the Company.

The consolidated rules of the Share Option Plan 2019, incorporating the amendments proposed herein, are attached hereto.

16. Authorising the Board to decide on the issuance of shares, options or other special rights entitling to shares

The Board proposes that the AGM authorise the Board to resolve by one or several decisions on issuances of shares, options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act, which authorisation contains the right to issue new shares or dispose of the shares in the possession of the Company. The authorisation would consist of up to 8,650,000 shares in the aggregate (including shares to be received based on options or other special rights), which corresponds to approximately 20 per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board’s right to decide on the issuance of shares, options or other special rights entitling to shares in deviation from the shareholders’ pre-emptive rights. The authorisation is proposed to be used for material arrangements from the Company’s point of view, such as financing or implementing business arrangements, investments or for other such purposes determined by the Board in which case a weighty financial reason for issuing shares, options or other special rights entitling to shares, and possibly deviating from the shareholders’ pre-emptive rights, would exist.

The Board would be authorised to resolve on all other terms and conditions of the issuance of shares, options or other special rights entitling to shares.

The authorisation will be effective until 30 June 2021. This authorisation shall not replace the authorisation referred to in item 15 of this notice.

17. Closing of the meeting

B.  DOCUMENTS OF THE AGM

The above-mentioned proposals to the AGM and this notice are available immediately after publication of this notice on the Company’s website at https://www.faron.com/investors/general-meetings. The Company’s annual report for 2019, including the financial statements, the report of the Board and the auditor’s report, will be made available as of 25 March 2020 at the latest on the Company’s website under the section Investors > Results. The Board proposals and the other above-mentioned documents will also be available at the AGM. Copies of these documents and of this notice will be sent to shareholders upon request. The minutes of the AGM will be available to be viewed on the Company’s website from 29 April 2020 at the latest.

C.  INSTRUCTIONS FOR THE PARTICIPANTS

1.   The right to participate and registration

Each shareholder who on the record date of the AGM, being 1 April 2020, is registered in the Company’s shareholders’ register held by Euroclear Finland Ltd (“Euroclear“) has the right to participate in the AGM. A shareholder whose shares are registered on their personal book-entry account is registered in the Company’s shareholders’ register.

A shareholder who is registered in the Company’s shareholders’ register and who wants to participate in the AGM should register for the meeting by no later than 4 p.m. (Finnish time) on Wednesday, 8 April 2020 by giving a prior notice of participation:

•     by email to general.meeting@faron.com; or

•     by mail to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland.

When registering, a shareholder shall state their name, personal identification number or business identity code, address, telephone number and the name of a possible proxy representative or assistant and the personal identification number of the proxy representative. In addition, the shareholder shall state whether they will follow the AGM by webcast. The personal data given by shareholders to the Company are used only in connection with the AGM and the necessary processing of related registrations.

Shareholders and their authorised representatives or proxy representatives should, when necessary, be able to prove their identity and/or right of representation.

Due to the SARS-CoV-2 situation, the Company intends to limit the amount of the physical participants of the AGM to the minimum. Developments in the SARS-CoV-2 situation and complying with the governmental regulations may even lead to a situation where the number of participants arriving at the meeting venue will need to be limited. Therefore, the Company encourages its shareholders to participate in the AGM by way of proxy representation and to follow the AGM by webcast.

2.   Following the AGM by webcast

The Company’s shareholders can follow the AGM by webcast. By following the meeting by webcast, a shareholder does not attend the meeting nor can use the right to request information in accordance with the Finnish Limited Liability Companies Act nor exercise their voting rights. A link to the webcast will be sent to all shareholders who have given notice of attendance to the meeting and provided their email address.

3.   Proxy representative and powers of attorney

Shareholders may participate in the AGM and exercise their rights at the meeting by way of proxy representation. A proxy representative must present a dated power of attorney or other reliable proof of their authority to represent the shareholder.

A shareholder may participate in the AGM by means of several proxy representatives who represent the shareholder with shares held on different book-entry accounts. In such case, the shares represented by each proxy representative shall be identified when registering for the AGM.

Shareholders are also able to exercise their voting rights at the AGM without physical presence through the centralized proxy representation service provided by the Company’s Corporate Legal Counsel Pessi Honkasalo. Shareholders who wish to participate in the AGM through authorising Dr Honkasalo as proxy representative are required to register to the AGM as specified in this notice and deliver the proxy form, available at the Company’s website at https://www.faron.com/investors/general-meetings, to the Company before the end of registration period. Authorising Dr Honkasalo as proxy representative will not accrue any costs for the shareholder (excluding postal fees).

Proxy documents should be sent to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland or by email to general.meeting@faron.com before the end of registration period.

4.   Holder of nominee-registered shares (including depositary interest holders)

A holder of nominee-registered shares (including depositary interest holders) has the right to participate in the AGM by virtue of such shares based on which the holder would be entitled to be registered in the Company’s shareholders’ register held by Euroclear on the AGM’s record date of 1 April 2020.

Additionally, participation requires that the holder of nominee-registered shares is temporarily registered in the Company’s shareholders’ register held by Euroclear by 10 a.m. (Finnish time) on Wednesday, 8 April 2020. Temporary registration in the shareholders’ register shall be deemed to be a registration for the AGM.

Holders of nominee-registered shares are advised to request the necessary instructions regarding the temporary registration in the shareholders’ register, the issuing of proxy documents and registration for the AGM from their custodian bank without delay. The account management organisation of the custodian bank shall notify a holder of nominee-registered shares who wants to participate in the AGM to be temporarily entered into the Company’s shareholders’ register by the above-mentioned time.

5.   Other instructions and information

The Company takes the threat of SARS-CoV-2 seriously and is following the situation carefully. Developments in the SARS-CoV-2 situation may require special arrangements to organise the AGM or even to postpone the AGM to a later date. The Company’s shareholders are asked to follow the Company’s announcements as well as its website, https://www.faron.com/investors/general-meetings, for any possible changes or additional information.

Pursuant to chapter 5, section 25 of the Finnish Limited Liability Companies Act, shareholders who are present at the AGM are entitled to request information regarding the matters addressed by the meeting.

On the date of this notice, 20 March 2020, the total number of shares and votes in the Company is 43,290,747.

The AGM shall be held in Finnish and in English.

Turku, 20 March 2020

FARON PHARMACEUTICALS LTD

Board of Directors

For more information please contact:

Faron Pharmaceuticals Ltd

Dr Markku Jalkanen, CEO

investor.relations@faron.com 

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

+44 207 886 2500

Sisu Partners Oy, Certified Adviser on Nasdaq First North

Juha Karttunen, Jussi Majamaa

+358 40 555 4727

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

+44 20 3709 5700

faron@consilium-comms.com 

About Faron Pharmaceuticals Ltd

Faron (AIM: FARN, First North: FARON) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline based on the receptors involved in regulation of immune response in oncology and organ damage. Clevegen, its precision immunotherapy, is a novel anti-Clever-1 antibody with the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. Currently in phase I/II clinical development as a novel macrophage checkpoint immunotherapy for patients with untreatable solid tumours, Clevegen has potential as a single-agent therapy or in combination with other standard treatments including immune checkpoint molecules. Traumakine, the Company’s pipeline candidate to prevent vascular leakage and organ failures, has completed a phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS). Plans for its future development are being finalised to avoid interfering steroid use together with Traumakine. Faron is based in Turku, Finland. Further information is available at www.faron.com.

NOTICE OF faron pharmaceuticals LTD’s ANNUAL GENERAL MEETING

Shareholders of Faron Pharmaceuticals Ltd (the “Company“) are invited to attend the Annual General Meeting to be held on 28 May 2019 at 10.00 a.m. (Finnish time) at the BioCity building, Mauno Conference Center, address Tykistökatu 6, 20520 Turku, Finland. The registration of attendees and the distribution of voting slips will commence at the meeting venue at 9.00 a.m. (Finnish time).

The Company’s Annual Report 2018 is available to view and download on the “Results” section of the Company’s website at https://www.faron.com/investors/results.

A.  MATTERS ON THE AGENDA OF THE ANNUAL GENERAL MEETING

1.   Opening of the meeting

2.   Calling the meeting to order

3.   Election of persons to scrutinise the minutes and to supervise the counting of votes

4.   Recording the legality of the meeting

5.   Recording the attendance at the meeting and adoption of the list of votes

6.   Presentation of the financial statements, the Report of the Board of Directors and the Auditor’s Report for 2018

Review by the CEO; measures to remedy equity shortfall

7.   Adoption of the financial statements

8.   Resolution on the use of the profit shown on the balance sheet and the payment of dividend

The Board of Directors proposes that no dividend for the financial year 2018 will be paid and that the losses of the Company for the financial year, amounting to EUR 20,075,949.50 (IFRS), will be carried forward to the reserve for invested unrestricted equity.

9.   Resolution on the discharge of the members of the Board of Directors and the CEO of the Company from liability

10. Resolution on the remuneration of the members of the Board of Directors

The Board of Directors proposes, on the basis of the proposal of the Remuneration Committee, that an annual remuneration of EUR 35,000 will be paid to the Board members, in addition to which an annual remuneration of EUR 35,000 will be paid to the Chairman of the Board of Directors. In addition, a further annual remuneration of EUR 11,000 will be paid to the Chairman of the Audit Committee, a further annual remuneration of EUR 9,000 will be paid to the Chairman of the Remuneration Committee and a further annual remuneration of EUR 6,000 will be paid to the Chairman of the Nomination Committee. In addition, a further annual remuneration of EUR 6,000 will be paid to the Audit Committee members, a further annual remuneration of EUR 5,000 will be paid to the Remuneration Committee members and a further annual remuneration of EUR 3,000 will be paid to the Nomination Committee members.

The Board of Directors furthermore proposes that meeting fees will be paid to the Board members as follows:

·    a meeting fee of EUR 1,000 will be paid to Board members per Board meeting where the Board member was physically present and which was held on another continent than the member’s place of residence; and

·    no meeting fees will be paid to Board members who were attending a Board meeting but not physically present or for Board meetings held on the same continent than the member’s place of residence.

In addition, it is proposed that all reasonable and properly documented expenses incurred in the performance of duties of the members of the Board of Directors would be compensated.

The Board of Directors also proposes, on the basis of the proposal of the Remuneration Committee, that no remuneration will be paid based on the Board membership of the CEO of the Company or a person serving the Company under a full-time employment or service agreement.

The Board of Directors notes that, in order to support the Company’s cost savings measures, the members of the Board of Directors have voluntarily waived 20 per cent of their annual remuneration and meeting fees between 1 July 2018 and 31 March 2019, the Company’s CEO Markku Jalkanen has voluntarily agreed on a salary reduction of 40 per cent between 1 June 2018 and 30 April 2019, and the Company’s CFO Yrjö Wichmann has been laid off by 40 per cent between 16 July 2018 and 31 March 2019.  

11. Resolution on the number of members of the Board of Directors

The Board of Directors proposes on the basis of the proposal of the Nomination Committee that seven (7) members be elected to the Board of Directors.

12. Election of members of the Board of Directors

The Board of Directors proposes, on the basis of the proposal of the Nomination Committee, that Frank Armstrong, Markku Jalkanen, Matti Manner, Yrjö Wichmann, Leopoldo Zambeletti, Gregory Brown and John Poulos be re-elected for a term that ends at the end of the next Annual General Meeting.

Descriptions of the Board member candidates are available on the Company’s website: https://www.faron.com/about-us/board-of-directors.

The proposed Board members have informed the Company that in the event they are elected, they intend to elect Frank Armstrong as Chairman of the Board and Matti Manner as Deputy Chairman of the Board.

13. Resolution on the remuneration of the Auditor

The Board of Directors proposes, on the basis of the proposal of the Audit Committee, that the Auditor be remunerated in accordance with the invoice presented.

14. Election of the Auditor

The Board of Directors proposes, on the basis of the proposal of the Audit Committee, that PricewaterhouseCoopers Oy, Authorised Public Accountants, continue to act as the Company’s auditor.

PricewaterhouseCoopers Oy has informed the Company that it will appoint Panu Vänskä, Authorised Public Accountant, as the Auditor with principal responsibility for the completion of the Audit.

15. Authorising the Board of Directors to decide on the issuance of options or other special rights entitling to shares

The Board of Directors proposes, on the basis of the proposal of the Remuneration Committee, that the Annual General Meeting authorise the Board of Directors to resolve by one or several decisions on issuances of options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act. The authorisation would consist of up to 2,000,000 shares in the aggregate, which corresponds to approximately 5.6 per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board of Directors’ right to decide on the issuance of options or other special rights entitling to shares in deviation from the shareholders’ pre-emptive rights. The authorisation is proposed to be used for implementing an option plan for the employees and directors of, and persons providing services to, the group, substantially in the form of the option plan attached hereto as Annex 1. There is a weighty financial reason for issuing options, as options are an integral part of the incentivisation system for the management and personnel of the Company.

Maximum number of options to be granted to the members of the Company’s management and the Board of Directors shall be as follows:

·    to the Chairman of the Board, a maximum of 180,000 options;

·    to each member of the Board (excluding the Chairman of the Board and the CEO and the CFO if they would be considered as members of the Company’s Board), a maximum of 90,000 options;

·    to the CEO, a maximum of 360,000 options; and

·    to the CFO, a maximum of 130,000 options.

The exercise of options will be subject to fulfilment of certain criteria to be resolved by the Board of Directors (the “Exercise Conditions“).

Subject to fulfilment of the Exercise Conditions, the options may be exercised at the exercise price, which may not be less than the market value of a share at the grant date, as determined by the Board of Directors (the “Exercise Price“). In determining such market value, if shares are traded on the AIM market of the London Stock Exchange, the Board of Directors shall have regard to the average price per share at which shares have been so traded over a period of 90 days immediately preceding the grant date. The Exercise Price will be determined so as to create a sufficient incentive for the recipients of options. The Exercise Price shall be recorded in the Company’s reserve for invested unrestricted equity.

The Board of Directors would be authorised to resolve on all other terms and conditions of the issuance of options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act.

The authorisation will be effective until 30 June 2023. This authorisation shall not replace previous authorisations granted to the Board of Directors.

16. Authorising the Board of Directors to decide on the issuance of shares, options or other special rights entitling to shares

The Board of Directors proposes that the Annual General Meeting authorise the Board of Directors to resolve by one or several decisions on issuances of shares, options or other special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act, which authorisation contains the right to issue new shares or dispose of the shares in the possession of the Company. The authorisation would consist of up to 7,095,000 shares in the aggregate (including shares to be received based on options or other special rights), which corresponds to approximately 20 per cent of the existing shares and votes in the Company.

The authorisation would not exclude the Board of Directors’ right to decide on the issuance of shares, options or other special rights entitling to shares in deviation from the shareholders’ pre-emptive rights. The authorisation is proposed to be used for material arrangements from the Company’s point of view, such as financing or implementing business arrangements, investments or for other such purposes determined by the Board of Directors in which case a weighty financial reason for issuing shares, and possibly deviating from the shareholders’ pre-emptive rights, would exist.

The Board of Directors would be authorised to resolve on all other terms and conditions of the issuance of shares, options or other special rights entitling to shares.

The authorisation will be effective until 30 June 2020. This authorisation shall not replace previous authorisations granted to the Board of Directors.

17. Closing of the meeting

B.   DOCUMENTS OF THE ANNUAL GENERAL MEETING

The above-mentioned proposals to the Annual General Meeting, the Company’s Annual Report 2018, including the financial statements, the Report of the Board of Directors and the Auditor’s Report, and this notice are available immediately after publication of this notice on the Company’s website at https://www.faron.com/investor-relations/annual-general-meeting-material. The Board proposals and the other above-mentioned documents will also be available at the Annual General Meeting. Copies of these documents and of this notice will be sent to shareholders upon request. The minutes of the Annual General Meeting will be available to be viewed on the Company’s website from 11 June 2019 at the latest.

C.  INSTRUCTIONS FOR THE PARTICIPANTS

1.   The right to participate and registration

Each shareholder who on the record date of the Annual General Meeting, being 16 May 2019, is registered in the Company’s shareholders’ register held by Euroclear Finland Ltd has the right to participate in the Annual General Meeting. A shareholder whose shares are registered on their personal book-entry account is registered in the Company’s shareholders’ register.

A shareholder who is registered in the Company’s shareholders’ register and who wants to participate in the Annual General Meeting should register for the meeting by no later than 4 p.m. (Finnish time) on Thursday 23 May 2019 by giving a prior notice of participation:

•     by email to virve.nurmi@faron.com; or

•     by mail to Faron Pharmaceuticals Ltd, attn. Virve Nurmi, Joukahaisenkatu 6, FI-20520 Turku, Finland.

When registering, a shareholder shall state their name, personal identification number / business identity code, address, telephone number and the name of a possible proxy representative or assistant and the personal identification number of the proxy representative. The personal data given by shareholders to the Company are used only in connection with the Annual General Meeting and the necessary processing of related registrations.

Shareholder, and their authorised representatives or proxy representatives should, when necessary, be able to prove their identity and/or right of representation.

2.   Proxy representative and powers of attorney

Shareholders may participate in the Annual General Meeting and exercise their rights at the meeting by way of proxy representation. A proxy representative must present a dated power of attorney or other reliable proof of their authority to represent the shareholder.

A shareholder may participate in the Annual General Meeting by means of several proxy representatives, who represent the shareholder with shares held on different book-entry accounts. In such case, the shares represented by each proxy representative shall be identified when registering for the Annual General Meeting.

Possible proxy documents should be sent in originals to Faron Pharmaceuticals Ltd, Joukahaisenkatu 6, FI-20520 Turku, Finland before the end of registration period.

3.   Holder of nominee-registered shares (including depositary interest holders)

A holder of nominee-registered shares (including depositary interest holders) has the right to participate in the Annual General Meeting by virtue of such shares based on which the holder would be entitled to be registered in the Company’s shareholders’ register held by Euroclear Finland Ltd on the Annual General Meeting’s record date of 16 May 2019.

Additionally, participation requires that the holder of nominee-registered shares is temporarily registered in the Company’s shareholders’ register held by Euroclear Finland Ltd by 10 a.m. (Finnish time) on Thursday 23 May 2019. Temporary registration in the shareholders’ register shall be deemed to be a registration for the Annual General Meeting.

Holders of nominee-registered shares are advised to request the necessary instructions regarding the temporary registration in the shareholders’ register, the issuing of proxy documents and registration for the General Meeting from their custodian bank without delay. The account management organisation of the custodian bank shall notify a holder of nominee-registered shares who wants to participate in the Annual General Meeting to be temporarily entered into the Company’s shareholders’ register by the above-mentioned time.

4.   Other instructions and information

Pursuant to chapter 5, section 25 of the Finnish Limited Liability Companies Act, shareholders who are present at the Annual General Meeting are entitled to request information regarding the matters addressed by the meeting.

On the date of this notice, 7 May 2019, the total number of shares and votes in the Company is 35,476,519.

The Annual General Meeting shall be held in Finnish and in English.

Turku, 7 May 2019

FARON PHARMACEUTICALS LTD

Board of Directors

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For more information please contact:

Faron Pharmaceuticals Ltd

Dr Markku Jalkanen, Chief Executive Officer

investor.relations@faron.com 

Consilium Strategic Communications

Mary-Jane Elliott, David Daley, Lindsey Neville

Phone: +44 (0)20 3709 5700

E-mail: faron@consilium-comms.com

Panmure Gordon (UK) Limited, Nomad and Broker

Emma Earl, Freddy Crossley (Corporate Finance)

James Stearns (Corporate Broking)

Phone: +44 207 886 2500

Westwicke Partners, IR (US)

Chris Brinzey

Phone: 01 339 970 2843

E-mail: chris.brinzey@westwicke.com

About Faron Pharmaceuticals Ltd

Faron (AIM:FARN) is a clinical stage biopharmaceutical company developing novel treatments for medical conditions with significant unmet needs. The Company currently has a pipeline focusing on acute organ traumas, vascular damage and cancer immunotherapy. The Company’s first candidate Traumakine, to prevent vascular leakage and organ failures, has completed a Phase III clinical trial in Acute Respiratory Distress Syndrome (ARDS). An additional European Phase II Traumakine trial is underway for the Rupture of Abdominal Aorta Aneurysm (“RAAA”). Faron’s second candidate Clevegen is a ground breaking early clinical anti-Clever-1 antibody. Clevegen has the ability to switch immune suppression to immune activation in various conditions, with potential across oncology, infectious disease and vaccine development. This novel macrophage-directed immuno-oncology switch called Turn-on-your-Immunity or Turn-It may be used alone or in combination with other immune checkpoint molecules for the treatment of cancer patients. Faron is based in Turku, Finland. Further information is available at www.faron.com.