16 Equity

‘Acquisition of NCI without a change in control’ relates to the purchase of the remaining 40% non-controlling interest in Zhejiang DSM Zhongken Biotechnology Co., Ltd. See Note 17 Non-controlling interests.

Dividend

In 2020, the following dividends were proposed by the Managing Board.

The proposed final dividend on ordinary shares is subject to approval by the Annual General Meeting of Shareholders and has not been deducted from Equity.

For a description of the rules of profit appropriation and of the statutory rights attached to preference shares A and B, see Note 7 Shareholders’ equity to the Parent company financial statements.

Share capital

On 31 December 2020, the authorized capital amounted to €1,125 million (2019: €1,125 million), distributed over 330,960,000 ordinary shares, 44,040,000 cumulative preference shares A and 375,000,000 cumulative preference shares B. All shares have a nominal value of €1.50 each. The outstanding shares are entitled to one vote per share at the General Meeting of Shareholders. All rights attached to the Company’s shares held by the Group (treasury shares) are suspended until those shares are reissued.

Every year the Managing Board, with the approval of the Supervisory Board, shall decide which part of the profit shall be set aside. Out of the profit remaining, a dividend based on EURIBOR plus a premium at the company’s discretion, shall be distributed insofar as possible on the cumulative preference shares B. From the amount remaining of the profit, a dividend shall be distributed insofar as possible on the cumulative preference shares A, the percentage based on the effective return on government loans, increased by a mark-up to be determined at the company’s discretion. If, for any financial year, the distributions on the cumulative preference shares B and A cannot be effected or cannot be fully effected because the profit after reservation does not suffice, the deficit shall be distributed to the debit of the following financial years. In that case, each time as much as possible, the overdue dividend, augmented by the dividend for the last expired financial year, shall be distributed, first on cumulative preference shares B and next on cumulative preference shares A. The remaining profit shall be put at the disposal of the General Meeting of Shareholders.

The changes in the number of issued and outstanding shares in 2019 and 2020 are shown in the following table.

The average number of ordinary shares outstanding in 2020 was 171,535,921 (2019: 175,730,949). All shares issued are fully paid.

The cumulative preference shares A have been classified as equity, because there is no mandatory redemption and distributions to the shareholders are at the discretion of DSM.

On 31 December 2020, no cumulative preference shares B were outstanding (same as 2019).

Share premium

Of the total share premium of €489 million (2019: €489 million), an amount of €91 million (2019: €93 million) can be regarded as entirely free of tax.

Policies on financial risks

In 2020, DSM repurchased 2.9 million shares for an amount of €309 million in order to fulfill its obligations under share-based compensation plans (0.9 million), to cover commitments for stock dividend (0.7 million) and 1.3 million for capital reduction. On 12 June 2020, DSM announced that, as a prudent measure given the COVID-19 environment and given the acquisition of Erber Group, it had decided to cancel the remainder of its €1 billion share buy-back program.

At 31 December 2020, DSM possessed 9,205,661 (2019: 8,976,245) ordinary shares with a nominal value of €14 million, or 4.08% (2019: 3.98%) of the share capital. The average purchase price of the ordinary treasury shares as at 31 December 2020 was €105.98 (2019: €100.78). At 31 December 2020, 2,460,656 (2019: 3,020,830) of the total number of treasury shares outstanding were held for servicing share-option rights and share plans, 106,034 (2019: 592,479) shares for stock dividend, and 6,638,971 (2019: 5,362,936) shares earmarked for capital reduction.

The decrease in the Translation reserve in 2020 is mainly caused by a strengthening of the euro against the US dollar, Brazilian real, Chinese renminbi and Canadian dollar. As a consequence, the total value of the subsidiaries decreased, which led to a negative exchange difference of -€451 million.

The Translation reserve, Hedging reserve and Fair value reserve are legal reserves in accordance with Dutch law and cannot be distributed to shareholders. Additional information is provided in Note 7 Shareholders' equity to the Parent company financial statements.