Exhibit 1.2  Regulations of the Board of Directors, its
Committees and the Executive Committee of Novartis AG  (Organisationsreglement)


Novartis AG 4002
Basel, Switzerland  © January 2008, Novartis AG


Table of ContentsRegulations
  of the Board of Directors, its Committees and the Executive Committee of
  Novartis AG
  2Section 1
  General
  Provisions
  3Section 2
  Board
  of Directors
  6Section 3
  Committees
  of the Board
  9Section 4
  Chairman and Chief
  Executive Officer, Vice Chairmen,Lead Director, Deputy Chief Executive Officer
  9Section 5
  Executive
  Committee
  10Section 6
  Internal
  Audit
  12Section 7
  Effectiveness,
  Amendments
  12Charter
  The
  Chairmans Committee of Novartis AG
  13Charter
  The
  Compensation Committee of Novartis AG
  15Charter
  The
  Audit and Compliance Committee of Novartis AG
  17Charter
  The
  Corporate Governance and Nomination Committee of Novartis AG
  23Appendix
  Independence
  Criteria for the Board of Directors and its Committees
  26  1


Regulations
of the Board of Directors, its Committees and the Executive Committee of Novartis AG  Based on Article 26 of the articles of
incorporation of Novartis AG (the Articles of Incorporation), the board of
directors (the Board) promulgates the following regulations (the
Regulations).  These Regulations govern the
internal organization as well as the duties, powers and responsibilities of the
following executive bodies and persons of Novartis AG (the Company):  · Board; · Committees of the Board; · Chairman of the Board; · Vice Chairmen; · Lead Director; · Chief Executive Officer; · Executive Committee (including its
sub-committees); and · Internal Audit.  All references to functions
in these Regulations shall apply to both male and female persons.  2


Section 1
  
  General ProvisionsArticle 1Duty of Care and Loyalty
  
  Each member of the Board,
  or the Executive Committee are under the duty to safeguard and further the
  interests of the Company and its shareholders.Article 2Conflict of Interests
  
  No member of the Board, the
  committees of the Board, or the Executive Committee shall participate in the
  deliberations and resolutions on matters which affect, or reasonably might
  affect, the interests of that member or of a person close to that member.Article 3Confidentiality
  
  Each
  member of the Board, the committees of the Board, or the Executive Committee
  shall at all times keep strictly confidential all information  except
  information which is already in the public domain  relating to the Company
  and its affiliated companies (the Group) which the member has learned
  during the exercise of his duties. This obligation and duty shall continue
  even after the term of office of the member has expired.Business documents of the
  Company and the Group shall be returned by members of the Board, the
  committees of the Board, or the Executive Committee at the latest on expiry
  of their term of office.Article 4No Representation of
  Members
  
  A member of the Board, the
  committees of the Board, or the Executive Committee who is not able to
  participate in a meeting of the executive body may not be represented by
  another member of the body or any other person.Article 5Quorum, Majority
  Requirements
  
  Unless stated otherwise in
  these Regulations, the quorum for any meeting of the Board, the committees of
  the Board, or the Executive Committee shall be the majority of the duly
  elected or appointed members.Resolutions of the Board,
  the committees of the Board, or the Executive Committee require the
  affirmative majority of the votes cast.  3


In the event of a tie on
  any issue, (i) in a committee of the Board, the full Board shall decide
  the issue, and (ii) in the Executive Committee, the Chairman/CEO shall
  decide the issue.No quorum is required for
  meetings at which the sole order of business is to deliberate and approve
  resolutions providing for the confirmation of capital increases or the
  amendment of the Articles of Incorporation in connection with an increase in
  the share capital.The adoption of resolutions
  on items not on the agenda requires the affirmative vote of at least two
  thirds of the members of the Board, the committees of the Board, or the
  Executive Committee present at a meeting.Article 6Meetings and Resolutions
  
  Meetings of the Board, the
  committees of the Board and the Executive Committee may be held in any
  location determined by the Chairman/CEO or the chairperson of the respective
  committees.Meetings may also be held
  and resolutions adopted by telephonic communication, or by means of a written
  document circulated among all members of the Board, the committees of the
  Board, or the Executive Committee respectively, unless a member of such body
  requests oral deliberation.Article 7Secretary, Minutes
  
  The Board, the committees
  of the Board and the Executive Committee shall each appoint a secretary, who
  need not be a member of the body.The secretary of each body
  shall keep the minutes of meetings, which shall contain all resolutions
  adopted at the meeting. If meetings are held or resolutions passed by
  telephone or in writing, the secretary shall record such resolutions in
  minutes and communicate the outcome to the members of the respective body as
  soon as practicable.Article 8Participation of
  Non-Members
  
  Persons who are not members
  of the Board, the committees of the Board, or the Executive Committee may
  participate in meetings of such bodies if their expertise is required and
  they have been invited by the chairperson of the body. Such persons shall not
  vote in any resolutions.  4


Article 9Application of General
  Provisions to other Management Committees
  
  Articles 18 shall apply
  analogously to all other management committees of the Company and their
  members.Article 10Business
  and Legal Separateness
  
  The
  Company is a holding company which directly or indirectly owns a global group
  of subsidiaries that conduct business operations (the Business). To ensure
  proper functioning of the Business in the interests of the Company and its
  shareholders and to comply with various requirements imposed by relevant laws
  and regulatory authorities, the Board shall supervise and, where necessary
  and appropriate, coordinate the Business by providing overall guidance and
  support.Each
  company in the Group (Group Company) shall be legally separate from all
  other Group Companies and shall manage its business independently. No Group
  Company shall operate the business of another Group Company nor shall any Group
  Company act as agent of any other Group Company.Article 11Divisions
  
  The Business shall have
  four operating divisions: Pharmaceuticals, Consumer Health, Generics and
  Vaccines and Diagnostics.Each
  division shall be headed by a division head who shall be responsible for:a)
  The management of the
  division and its business units, if any.b)
  The
  implementation within the division and its business units, if any, of
  corporate policies and strategies approved by the Board, the committees of
  the Board or the Executive Committee.c)
  Proposals
  for new strategies and policies and organizational changes for the attention
  of the Executive Committee.d)
  The proper reporting by the
  division and its business units, if any, to the Executive Committee,
  including the implementation under the supervision of the Chairman/CEO and
  Chief Financial Officer of appropriate disclosure controls and procedures and
  internal controls.  5


Section 2
  
  Board of DirectorsArticle 12Duties of the Board
  
  The
  Board is the ultimate executive body of the Company. It shall resolve all
  Business matters which are not reserved to the authority of the general
  meeting of shareholders or to other executive bodies of the Company by law,
  the Articles of Incorporation, or these Regulations.In
  particular, the Board shall have the following duties:a)
  The
  ultimate direction of the Business, including, without limitation, the
  promulgation of resolutions and the giving of necessary instructions or
  overall guidance and support regarding the following matters:· the strategic direction of the Business;· entry into new areas of activity and
  withdrawal from existing areas of the Business;· acquisitions and divestments of companies,
  participations in companies or businesses, or incorporations or liquidations
  of companies or businesses, if such matters are of fundamental significance
  to the Business;· the opening and closing down of sites of
  fundamental significance to the Business;· the initiation and settlement of legal
  proceedings of fundamental significance to the Business;· the setting of financial targets and
  financial means to reach such targets;· the promulgation of corporate policies, in
  particular on financial matters, investments, personnel matters, leadership,
  compliance with laws, corporate citizenship, communication and safety and
  environmental protection and supervising managements compliance therewith;· the adoption from time to time of further
  regulations and instructions regarding the organization of the Business and
  the duties and responsibilities of the executive bodies.b)
  The determination of the
  organization of the Company and the Group.c)
  The manner of governance of
  the Company, including the adoption from time to time of principles of
  corporate governance that are in the best interests of the Company and its
  shareholders.  6


d)
  The structuring of the
  accounting system, financial controls and financial planning.e)
  The approval of the annual
  reports of the Company and the Group and the corresponding financial results
  releases.f)
  The appointment, removal,
  and determination of duties and responsibilities of the persons entrusted
  with management of the Company, in particular:· the Chairman and Chief Executive Officer;· the members of the committees of the Board;· the members of the Executive Committee;· the head of Internal Audit;· such other persons as the Board may
  determine, from time to time, as having significant impact on the Business.g)
  the designation of those
  persons who shall have signatory power for the Company and the manner in
  which such persons may sign on behalf of the Company;h)
  The ultimate supervision of
  the persons entrusted with management of the Business, specifically in view
  of their compliance with laws, the Articles of Incorporation, these
  Regulations and other applicable regulations and instructions.i)
  The preparation of the
  meetings of shareholders and of the annual reports and such other documents
  and information as are required for the meetings of shareholders, and to
  carry out the resolutions adopted at the meetings of shareholders.j)
  Notification of the court
  if liabilities exceed assets.k)
  The adoption of resolutions
  concerning an increase of the share capital to the extent that such power is
  vested in the Board (Article 651 paragraph 4 of the Swiss Code of
  Obligations), as well as resolutions concerning confirmation of capital
  increases and related amendments to the Articles of Incorporation.l)
  The determination of the
  remuneration of its members, based on the proposals of the Compensation
  Committee.m)
  The determination of
  (i) whether or not a Board member is independent, based on a proposal by
  the Corporate Governance and Nomination Committee, and (ii) whether or
  not the members of the Audit and Compliance Committee meet the financial
  literacy and expertise standards, both as stipulated by applicable law,
  regulation and listing requirements.  7


n)
  The approval of other
  business, if such business exceeds the authority delegated from time to time
  by the Board to the committees of the Board or to the Executive Committee.Article 13Delegation of Management
  
  Where
  not stipulated as a Board responsibility in law, the Articles of
  Incorporation or these Regulations, the Board delegates to the Executive
  Committee the management of the Business pursuant and subject to these
  Regulations.Article 14Meetings,
  Agenda
  
  The
  Board shall meet at the invitation of its Chairman as often as may be
  required.Invitations
  for meetings of the Board shall contain the agenda for the meeting and shall
  be issued at least ten days in advance, except for urgent matters.Also,
  any member of the Board may request a meeting for a specific purpose or the
  inclusion of a certain item on the agenda. Such requests must be submitted to
  the Chairman in writing at least ten days prior to the meeting.The Chairman shall take the
  chair at the meetings of the Board.The
  independent members of the Board shall meet regularly in separate sessions.Article 15Right
  to Request Information
  
  The
  members of the Board have full and unrestricted access to management and
  employees of the Company and the affiliated companies in the execution of
  their duties. This includes the right to request information and inspection
  pursuant to Article 715a of the Swiss Code of Obligations.Article 16Authorized
  Signatories
  
  The
  only members of the Board who shall be authorized to sign documents on behalf
  of the Company shall be the members of the Chairmans Committee.  8


Section 3
  
  Committees of the BoardArticle 17Committees of the Board
  
  The Board shall form the
  following permanent committees:· Chairmans Committee;· Compensation Committee;· Audit and Compliance Committee;· Corporate Governance and Nomination
  Committee.The composition and duties
  of these committees shall be as set forth in the applicable committee
  charters, which are attached to these Regulations and incorporated herein by
  reference.Section 4
  
  Chairman and Chief Executive Officer, Vice Chairmen, Lead Director,
  Deputy Chief Executive OfficerArticle 18Chairman and Vice Chairmen
  
  The Board shall designate
  one of its members as chairman (the Chairman). In addition to other duties
  described in these Regulations and the Articles of Incorporation, the
  Chairman provides leadership to the Board in its governance role.In addition, the Board may
  designate one or more vice chairmen.Article 19Lead Director
  
  The Board shall elect a
  lead director (the Lead Director), who shall have the following duties:a)
  Ensure an orderly process
  in evaluating the performance of the Chairman/CEO.b)
  Chair the sessions of the
  independent members of the Board.c)
  Lead the independent
  members of the Board in case of a crisis or matter requiring their separate
  consideration or decision. Every independent Board member may request
  separate meetings of the independent members if the need arises.Article 20Deputy Chief Executive Officer
  
  The Chairman/CEO may
  appoint a deputy, who shall be his legal representative in his function as
  Chief Executive Officer of the Company in the event of his incapacity.  9


Section 5
  
  Executive CommitteeArticle 21Members of Executive
  Committee
  
  The executive committee
  (the Executive Committee) is headed by the Chairman and chief executive
  officer (the Chairman/CEO). It shall consist of such additional members as
  may be appointed or removed by the Board from time to time. Each member of
  the Executive Committee shall serve at the discretion of the Chairman/CEO.The Chairman/CEO may
  appoint or remove (non-voting) permanent attendees at the meetings of the
  Executive Committee.Article 22Duties of Executive
  Committee
  
  The Executive Committee is
  responsible for the management of the Business and functions as a
  coordination committee independent of any legal entity of the Group.In particular, and without
  limitation, the Executive Committee shall have the following duties:a)
  Implement the strategies
  and policies agreed upon by the Board.b)
  Regularly assess the
  achievement of the targets for the Business.c)
  Prepare corporate policies,
  strategies and strategic plans for the attention of and approval by the Board
  or its committees.d)
  Submit the following to the
  Board or to one of its committees for approval or advice in accordance with
  such regulations and standards as are promulgated by the Board from time to
  time:· appointments to and removals of associates with
  material impact on the Business;· capital investments, financial measures,
  and the acquisition or divestiture of companies, participations and
  businesses of material significance in accordance with such regulations and
  standards as are promulgated by the Board from time to time;· significant agreements with third parties
  and engagement in new business activities;· the revenue, financial, and investment
  budgets of the Business and its divisions, business units and supporting
  functions, including any addenda thereto.  10


e)
  Implement the matters
  approved by the Chairmans Committee.f)
  Prepare and submit
  quarterly and annual reports for the attention of and approval by the Board
  or its committees, and to keep the Board informed of all matters of material
  significance to the Business.g)
  Appoint and promote senior
  management subject to such standards as shall be adopted by the Board from
  time to time.h)
  Implement modifications to
  the organization of the Business to ensure efficient operation of the
  Business and achievement of optimized consolidated results.i)
  Promote an active internal
  and external communications policy.j)
  Ensure that management capacity,
  financial and other resources are provided and used efficiently.k)
  Promulgate guidelines,
  including guidelines for planning, controlling, reporting, finance,
  personnel, information and other technologies.l)
  Deal with such other
  matters as are delegated by the Board to the Executive Committee from time to
  time.Article 23Sub-committees of the
  Executive Committee
  
  The Executive Committee may
  delegate to sub-committees duties as stipulated in Article 22 above. The
  Chairman/CEO shall ensure proper reporting of all such sub-committees to the
  Executive Committee or the Board as the case may be.  11


Section 6
  
  Internal AuditArticle 24Duties of Internal Audit
  
  The Groups internal audit
  shall:a)
  Carry
  out operational and system audits, assisting the organizational units in the
  accomplishment of objectives by providing an independent approach to the
  evaluation, improvement, and effectiveness of their risk management and
  internal control framework. All organizational units of the Group are subject
  to audit.b)
  Prepare
  reports regarding the audits it has performed, and report to the Audit and
  Compliance Committee and the Chairman/CEO material actual or suspected
  irregularities without delay.c)
  Perform
  such other functions and audits as are assigned to it by the Board, the
  Chairman/CEO, or the Audit and Compliance Committee from time to time.Section 7
  
  Effectiveness, AmendmentsArticle 25Effectiveness, Amendments
  
  These Regulations shall
  come into effect on 12 December 2007, and shall replace the Regulations
  governing the internal organization of the Company of 27 June 2007.These Regulations may only
  be amended or replaced by the Board.Dr. Daniel Vasella
  Bruno
  HeynenChairman
  Corporate
  Secretary  12


Charter
  
  The
  Chairmans Committeeof
  Novartis AGMission StatementThe
  chairmans committee (the Chairmans Committee) will deal with business
  matters falling within the authority of the board of directors (the Board)
  that may arise in between meetings of the Board, will assist the chairman of
  the Board and chief executive officer (the Chairman/CEO) in fulfilling his
  responsibilities with respect to the stewardship of Novartis AG (the
  Company), and will perform such other tasks as may be delegated to it by
  the Board.OrganizationThe Chairmans Committee
  shall consist of three to five members of the Board: the Chairman/CEO, the
  vice chairman or chairmen, and such other members as the Board may elect. The
  members of the Chairmans Committee shall serve at the discretion of the
  Board.The
  Chairman/CEO shall preside over the meetings of the Chairmans Committee.The
  Chairman/CEO shall convene a meeting of the Chairmans Committee as often as
  required by the business of the Company, or if requested in writing by one of
  its members.Invitations
  to meetings of the Chairmans Committee shall contain the agenda for the
  meeting.Roles
  and ResponsibilitiesThe
  Chairmans Committee has the following duties:1.
  Comment
  on significant matters falling within the authority of the Board before the
  Board makes decisions on such matters.2.
  Deal
  with business matters falling within the authority of the Board that may
  arise in between meetings of the Board, including the ability to take
  preliminary and required action on behalf of the Board in urgent cases and to
  inform the Board of such matters and the actions taken.3.
  Make preparations for each
  meeting of the Board.  13


4.
  Recommend
  for approval by the full Board appointments proposed by the Chairman/CEO for
  key positions directly reporting to the Chairman/CEO.5.
  Approve, upon application
  by the Executive Committee, capital investments, financial measures, and the
  acquisition or divestiture of companies, participations and businesses of
  material significance in accordance with such regulations and standards as
  are promulgated by the Board from time to time.6.
  Submit
  to the Board any matters which the Chairmans Committee deems appropriate,
  including matters mentioned in subparagraph (5) above.7.
  Deal
  with such other matters as may be delegated to the Chairmans Committee by
  the Board from time to time.Effective:
  12 December 2007  14


Charter
  
  The Compensation Committeeof Novartis AGMission
  StatementPay for performance is the
  guiding principle of the compensation strategy of Novartis AG and its
  affiliates (the Group). The Group aims to reward those associates who
  achieve competitive business results and exemplify our Group values. The
  compensation strategy strives to strengthen the performance-oriented culture
  and reinforce entrepreneurial behavior resulting in contributions that
  motivated and dedicated associates make to sustain superior business results.The
  compensation committee (the Compensation Committee) reviews on behalf of
  and recommends to the board of directors (the Board) the Group compensation
  policies and programs in the light of this compensation strategy. The Compensation
  Committee also approves the employment contracts and the individual
  compensation for selected key executives and will perform such other tasks as
  may be delegated to it by the Board from time to time.OrganizationThe Compensation Committee
  shall consist of three to four members of the Board. These members shall be
  independent in accordance with the independence criteria set forth in the
  Appendix.The chairman of the Board
  and chief executive officer (the Chairman/CEO) shall not be a member of the
  Compensation Committee, but he may attend the sessions, except when his
  compensation is being discussed and determined.The
  Board will designate one member of the Compensation Committee as its
  chairperson.The
  Compensation Committee shall meet at least two times a year.The
  Compensation Committee shall have the authority to retain and terminate any
  compensation consultant assisting in the evaluation of Board member or senior
  executive compensation, and shall have authority to approve the consultants
  fees and other retention terms. The Compensation Committee shall also have
  authority to obtain advice and assistance from internal or external legal,
  accounting or other advisors.  15


The Compensation Committee
  shall regularly report to the Board on decisions and deliberations of the
  Compensation Committee.Roles and ResponsibilitiesThe Compensation Committee
  shall have the following roles and responsibilities:1.
  Recommend and periodically
  review the Group compensation policies and programs for approval by the
  Board.2.
  Advise the Board on the
  compensation of Board members.3.
  Approve the employment
  agreements (including substantive changes thereto and payments upon
  termination) for the Chairman/CEO and the executives mentioned under
  subparagraph (5) below.4.
  Decide on the variable
  compensation including special awards for the Chairman/CEO for the past year
  based on the overall appraisal of his performance by the independent members
  of the Board and decide on the base salary and the total target compensation
  for the coming year based on all relevant factors, including his objectives
  relevant to his compensation and market data.5.
  Decide  based on the
  achievement of financial and non-financial objectives  on the variable
  compensation including special awards of the members of the Executive
  Committee, global business unit heads, nominated key corporate executives and
  other executives with a target total compensation in excess of USD 2 million
  and decide on the base salary and target compensation for the new year taking
  into account relevant market data.6.
  Inform the Board about
  policies, programs and key decisions as well as statistical comparisons of
  compensation levels at key competitors.7.
  Review and reassess the
  adequacy of this charter annually and submit proposed changes to the Board
  for approval.8.
  Conduct an annual
  self-evaluation of the Compensation Committees performance.Effective: 12
  December 2007  16


Charter
  
  The Audit
  and Compliance Committeeof Novartis AGMission StatementThe
  audit and compliance committee (the ACC) will assist the board of directors
  (the Board) in monitoring (1) the integrity of the financial
  statements of Novartis AG (the Company) and its affiliated companies (the
  Group), (2) the external auditors qualifications and independence,
  (3) the performance of the Groups internal audit function and external
  auditors, and (4) the compliance by the Group with legal and regulatory
  requirements.OrganizationThe
  ACC shall consist of three to five members of the Board. The Board will
  designate one member of the ACC as its chairperson.The
  members of the ACC shall be independent in accordance with the independence
  criteria set forth in the Appendix.Each member of the ACC must
  be financially literate, as such qualification is interpreted by the Board in
  its business judgment. At least one member shall be an audit committee
  financial expert. Such member has (1) an understanding of generally
  accepted accounting principles and financial statements, (2) the ability
  to assess the general application of such principles in connection with the
  accounting for estimates, accruals and reserves, (3) experience
  preparing, auditing, analyzing or evaluating financial statements that
  present a breadth and level of complexity of accounting issues that are
  generally comparable to the breadth and complexity of issues that can
  reasonably be expected to be raised by the Groups financial statements, or
  experience actively supervising one or more persons engaged in such
  activities, (4) an understanding of internal control over financial
  reporting, and (5) an understanding of audit committee functions.The
  ACC shall meet as often as it determines necessary. The ACC shall meet
  periodically in separate executive sessions with management, the internal
  auditors and, but not less frequently than quarterly, the external auditor,
  and have such other direct and independent interaction with such persons from
  time to time as the members of the ACC deem appropriate.  17


The ACC may invite to its
  meetings Company management, internal auditors, external auditors, and such
  other persons as the ACC deems appropriate in order to carry out its
  responsibilities. The ACC shall exclude from its meetings anyone with a
  personal interest in the matters to be discussed.The
  ACC shall regularly report to the Board on decisions and deliberations of the
  ACC.The
  ACC shall have the authority to retain independent counsel and other
  advisers, and to conduct or authorize investigations into any matters within
  the scope of its responsibilities.The
  Company shall provide for appropriate funding, as determined by the ACC, for
  payment of compensation to the external auditors and any outside advisors
  engaged by the ACC.ResponsibilitiesThe ACC has the following
  roles and responsibilities:Regarding
  External Auditors1.
  Evaluate the
  qualifications, performance and independence of the external auditors,
  including considering whether the auditors quality controls are adequate and
  the provision of permitted non-audit services is compatible with maintaining
  the auditors independence, taking into account the opinions of management
  and internal auditors.2.
  Ensure rotation of the
  audit partners of the external auditors at least every five years. Consider
  whether, in order to ensure continuing auditor independence, it is
  appropriate to adopt a policy of rotating the external auditing firm on a
  regular basis. Set policies for the Companys hiring of employees or former
  employees of the external auditors.3.
  On behalf of the Board,
  which has fully delegated this task to the ACC, (1) select and nominate
  the external auditors for election by the meeting of the shareholders
  (pursuant to mandatory Swiss company law), and (2) be directly
  responsible for the supervision and compensation of the external auditors
  (including the resolution of any disagreement between management and the
  external auditors regarding financial reporting). The external auditors shall
  report directly to the ACC.  18


4.
  On behalf of the Board,
  which has fully delegated this task to the ACC, pre-approve all auditing
  services, internal control-related services and non-audit services permitted
  under applicable statutory law, regulations and listing requirements to be
  performed for the Group by its external auditor. The ACC shall establish and
  maintain the necessary approval procedures.5.
  Obtain and review a report
  from the external auditors at least annually regarding (1) the external
  auditors internal quality-control procedures, (2) any material issues
  raised by the most recent quality-control review, or peer review, of the
  firm, or by any inquiry or investigation by governmental or professional
  authorities within the preceding five years respecting one or more independent
  audits carried out by the firm, (3) any steps taken to deal with any
  such issues, and (4) all relationships between the external auditors and
  the Group.6.
  Discuss with the external
  auditors the results of their audits, any unusual items or disclosures
  contained in the audits and the matters required by the US Statement on
  Auditing Standards No. 61, as revised, including the following:· the initial selection of and changes in
  significant accounting policies;· the methods used to account for significant
  or unusual transactions and the effects of significant accounting policies in
  controversial or emerging areas;· the process utilized by management to
  formulate significant accounting
  estimates and the basis for the auditors conclusions regarding the
  reasonableness of these estimates;· audit findings and recommendations,
  including audit adjustments that either individually or in the aggregate have
  a significant effect on the
  audit;· the auditors responsibility for other
  information presented with the
  audit results, such as a management report on financial status;· any disagreements with management, whether
  or not satisfactorily resolved, concerning matters that individually or in
  the aggregate may be significant to the Companys or the Groups financial
  status or the auditors report;· significant matters that were the subject
  of consultations with other accountants;  19


· significant issues discussed with
  management with regard to the initial or recurring retention of the auditor;
  and· any serious difficulties encountered in
  dealing with management during the performance of the audit.Regarding
  Internal Auditors7.
  Review periodically the
  adequacy of the organizational structure, budget and appointment and
  replacement of the senior internal auditing executives.8.
  Review the significant
  reports to management prepared by the internal audit department and
  managements responses.9.
  Discuss with the external
  auditor and management the internal audit departments responsibilities,
  staffing and any recommended changes in the planned scope of the internal
  audit.Regarding
  Financial Reporting10.
  Review and discuss with
  management and the external auditors the Companys and Groups quarterly and
  annual financial statements (including the sections on Operating and
  Financial Review and Prospects) to consider significant financial reporting
  issues and judgments made in connection with the preparation of the Companys
  and Groups financial statements, including any significant changes in the
  Companys or Groups selection or application of accounting principles.11.
  On behalf of the Board,
  which has fully delegated this task to the ACC, review and approve the
  Companys and Groups quarterly financial statements for the first three
  quarters of each calendar year and the corresponding financial results
  releases. The Board remains responsible for the approval of the annual
  financial statements of the Company and the Group and of the corresponding
  financial results releases.Regarding
  Compliance with Laws12.
  Review major issues
  regarding the status of the Companys compliance with laws and regulations,
  as well as major legislative and regulatory developments that may have
  significant impact on the Company.  20


13.
  Review the processes and
  procedures for managements monitoring of compliance with local laws. To this
  end, the ACC will obtain and review reports submitted at least annually by
  those persons the ACC has designated as responsible for compliance with laws.Regarding
  Risk Management14.
  Discuss with management,
  internal auditors and external auditors the Companys major operational as
  well as financial risks and the steps management has taken to monitor and
  control such risks, including the Companys risk assessment and risk
  management policies. To this end, the ACC will obtain and review reports from
  each of management, the internal auditors and the external auditors at least
  annually.Regarding
  Compliance with Policies15.
  Review compliance by
  management of the Company with those Company policies designated by the Board
  from time to time, including policies on ethical business standards. To this
  end, the ACC will obtain and review reports submitted at least annually by
  each of those persons the ACC has designated as responsible for
  implementation of and compliance with such policies and give guidance and
  direction on how the policies are to be administered.16.
  Supervise the Companys
  participation in the UN Global Compact. To this end, the ACC will review
  periodic reports submitted by those persons the ACC has designated as
  responsible for implementation of the Companys participation in the UN
  Global Compact and compliance of the Company with its undertakings with
  respect to the UN Global Compact.Other17.
  Review the financial
  literacy of each ACC member to determine whether he or she meets the
  applicable legal standards and propose to the Board the appropriate
  determination and its disclosure.  21


18.
  Establish procedures for
  (a) the receipt, retention and treatment of complaints received by the
  Group regarding accounting, internal accounting controls or auditing matters,
  and (b) the confidential, anonymous submission by employees of the Group
  of concerns regarding questionable accounting or auditing matters.19.
  Review disclosures made by
  the chief executive officer and chief financial officer regarding compliance
  with their certification obligations, including the Companys disclosure
  controls and procedures and internal controls for financial reporting and
  evaluations thereof.20.
  Review such other matters
  in relation to the Groups accounting, auditing, financial reporting and
  compliance with law and policies as the ACC may, in its own discretion, deem
  desirable in connection with the review functions described above.21.
  Annually review and
  reassess the adequacy of this charter and submit proposed changes to the
  Board for approval.22.
  Conduct an annual
  self-evaluation of the ACCs performance.Limitation of ACCs RoleWhile
  the ACC has the responsibilities and powers set forth in this charter, it is
  not the duty of the ACC to plan or conduct auditsor to determine that the Companys financial
  statements and disclosures are complete and accurate and are in accordance
  with generally accepted accounting principles and applicable rules and
  regulations. These are the responsibilities of management and the external
  auditor.Effective:
  12 December 2007  22


Charter
  
  The Corporate Governance and Nomination Committeeof Novartis AGMission StatementThe Corporate Governance
  and Nomination Committee (CGNC) will assist the board of directors (the
  Board) of Novartis AG (the Company) in fulfilling its responsibilities
  with respect to (i) the determination of the appropriate size, functions
  and needs of the Board, and (ii) the identification of individuals who
  are qualified to become (or be re-elected as) Board members.OrganizationThe
  CGNC shall consist of three to five members of the Board. These members shall
  be independent in accordance with the independence criteria set forth in the
  Appendix.The
  Board will designate one member of the CGNC as its chairperson.The
  CGNC will meet no less than two times a year. Special meetings may be
  convened as required.The
  CGNC shall regularly report to the Board on decisions and deliberations of
  the CGNC.The
  CGNC may invite to its meetings other Board members, Company management and
  such other persons as the CGNC deems appropriate in order to carry out its
  responsibilities.  The chairman of the
  Board and chief executive officer (the Chairman/CEO) may attend the
  meetings as guest. The CGNC shall exclude from its meetings anyone with a
  personal interest in the matters to be discussed.The
  CGNC shall have sole authority to retain and terminate any search firm to be
  used to identify candidates for election to the Board, and shall have sole
  authority to approve the search firms fees and other retention terms. The
  CGNC shall also have authority to obtain advice and assistance from internal
  and external legal, accounting or other advisors.  23


Roles and ResponsibilitiesThe CGNC has the following
  roles and responsibilities:In
  General1.
  Review periodically the
  articles of incorporation of the Company (the Articles of Incorporation)
  and the regulations of the board of directors, its committees and the
  executive committee (the Regulations) and recommend to the Board changes
  thereto in respect of good corporate governance and fostering shareholders
  rights.2.
  Consult with the
  Chairman/CEO in carrying out the duties of the CGNC.3.
  Recommend such other
  actions not set out below regarding the governance of the Company that are in
  the best interests of the Company and its shareholders, as the CGNC shall
  deem appropriate.Board
  Composition4.
  Review the composition and
  size of the Board in order to ensure the Board has the proper expertise and
  its membership consists of persons with sufficiently diverse backgrounds.5.
  Determine the criteria for
  selection of the Chairman/CEO, Board members and Board committee members.6.
  With the participation of
  the Chairman/CEO, actively seek, interview and screen individuals qualified
  to become Board members for recommendation to the Board.7.
  Assess and recommend to the
  Board as to whether members of the Board should stand for re-election. For
  its assessment, the CGNC considers, among other things, age limit and ability
  and willingness to commit adequate time to the Board and committee matters.8.
  Prepare and annually review
  succession plans for the Chairman/CEO in case of resignation, retirement, or
  death.9.
  With the Chairman/CEO and
  the corporate secretary, develop and periodically review an orientation
  program for new Board members and an ongoing education program for existing Board
  members.  24


Board
  Committees10.
  With the Chairman/CEO,
  periodically review the Regulations and the charters and composition of the
  Board committees and make recommendations to the Board for the creation of
  additional Board committees or a change in mandate or dissolution of Board
  committees.11.
  With the Chairman/CEO,
  recommend to the Board persons to be members of Board committees.12.
  Ensure that each Board
  committee is composed of members suitable for the tasks of the committee and
  that each committee conducts the required number of meetings and makes sufficient
  reports to the Board on its activities and findings.Conflicts,
  Other Directorships and Board member independence13.
  Review directorships and
  consulting agreements of Board members for conflicts of interest.14.
  Clear actual and potential
  conflicts of interest a Board member may have and issue to a Board member
  having an actual or potential conflict of interest instructions on how to
  conduct himself/herself in matters before the Board which may pertain to such
  a conflict.15.
  Annually submit to the
  Board a proposal concerning the determination of the independent status of
  the Board members and the corresponding disclosure.Evaluation
  of Performance16.
  Conduct an annual
  self-evaluation of the CGNCs performance.Effective: 12 December 2007  25


Appendix
  
  Independence
  Criteria for the Board of Directors and its CommitteesIndependence of the members
  of the Board of DirectorsThe Corporate Governance
  and Nomination Committee (CGNC) annually submits to the full Board of
  Directors a proposal concerning the determination of the independent status
  of the Board members (Director). For purposes of such assessment, the CGNC
  considers all relevant facts and circumstances of which it is aware. The
  majority of Directors and any member of the Audit and Compliance Committee
  (ACC Director) shall meet the independence criteria set forth below.In order to be considered
  independent, a Director shall not have any material relationship with
  Novartis AG and any of its subsidiaries (Novartis) other than his/her
  service as a director.I. Material Relationships1. A
  Director will not be considered independent if· the
  Director or his/her immediate family member (Family Member)(1) owns more
  than 10% of the stock of Novartis AG;· the Director
  has received direct compensation (other than for former service as an interim
  Chairman or CEO or other executive officer) of more than USD 120000 p.a.
  (other than dividends or Board/Board Committee fees and retirement or
  deferred pay for prior service [provided such compensation is not contingent
  in any way on continued service]) from Novartis within the last 3 years;· a
  Family Member has received direct compensation of more than USD 120000 p.a.
  (other than compensation received for service as an employee [other than an
  executive officer]) from Novartis within the last 3 years;· the
  Director is, or has been within the last three years, an employee of
  Novartis;· a
  Family Member is, or has been within the last three years, an executive officer
  of Novartis;(1)Family
  Member includes a persons spouse, parents, children, stepchildren, siblings,
  mother-, father-, brothers-, sisters-, sons- and daughters-in-law and anyone
  (other than domestic employees) who shares such persons home.  26


· the
  Director is a current partner or employee of the auditor of Novartis
  (Auditor);· a
  Family Member is a partner of the Auditor or is an employee of the Auditor
  and works on Novartis audit;· the
  Director or a Family Member is a former partner or employee of the Auditor
  who personally worked on Novartis audit during the last 3 years;· the
  Director or a Family Member is, or has been within the last three years,
  employed as an executive officer of an enterprise while any of Novartis
  present executive officers serves or has served on that enterprises
  compensation committee;· an
  enterprise has made payments to or received payments from Novartis for goods,
  property or services in an amount that exceeds, in any of the last 3 fiscal
  years, the greater of USD 1 million or 2% of the enterprises consolidated
  gross revenues, and· the
  Director is a board member or employee of that enterprise or holds more than
  10% of the shares in that enterprise; or· a
  Family Member is a board member or executive officer or holds more than 10%
  of the shares in that enterprise.2. In
  addition to the independence criteria set above, an ACC Director shall not be
  considered independent if· the
  ACC Director or his/her spouse, minor child, minor stepchild or child or
  stepchild sharing the ACC Directors home accepts any salary or consulting,
  advisory or other compensatory fee (other than Board/Board Committee
  compensation) from Novartis;· the
  ACC Director is a partner, a member, an officer such as a managing director,
  executive officer or occupies a similar position in an enterprise that
  provides advisory services such as accounting, legal, investment banking or
  financial advisory services to Novartis.If an ACC Director
  simultaneously serves on the audit committees of more than 2 public companies
  other than Novartis, then the CGNC must determine that such simultaneous
  service would not impair the ability of such Director to effectively serve on
  the ACC.  27


II. Immaterial
  RelationshipsUnless the CGNC concludes
  in its assessment to the contrary,a relationship is presumed not to impair the independence of a
  Director if· the
  Director or a Family Member received from Novartis, during the last fiscal
  year, personal benefits (other than the coverage of travel expenses incurred
  by a Family Member in connection with meetings of the Board of Directors)
  having an aggregate value of less than USD 5 000;· a
  Family Member is an employee but not an executive officer of Novartis, unless
  the Family Member is an ACC Directors spouse, minor child, minor stepchild
  or child or stepchild sharing the ACC Directors home;· the
  Director or a Family Member holds less than 10% interest in any legal entity
  that has a relationship with Novartis;· the
  Director or a Family Member is a board member of a legal entity and that
  legal entity has made payments to or received payments from Novartis for
  goods, property or services in an amount that did not exceed, in any of the
  last 3 fiscal years, the greater of USD 1 million or 2% of the legal entitys
  consolidated gross revenues;· the
  Director or a Family Member is a board member or executive officer of a
  non-profit organization and Novartis contributions to such organization did
  not exceed, in any of the last
  3 fiscal years, the greater of USD 1 million or 2% of the organizations
  consolidated gross revenues;· a
  legal entity in which the Director or a Family Member is director, executive
  officer or employee has been indebted to Novartis in connection with a
  transaction in the ordinary course of business or in an amount that did not
  exceed USD 100 000 during the last fiscal year;· the
  Director or a Family Member serves on the board of another enterprise at
  which an executive officer or another board member of Novartis also serves as
  board member.The enumeration of
  relationships mentioned in this Section II is merely exemplary. The fact
  that a particular relationship is not listed does not mean that the
  relationship affects the independence of a Director.Effective: 16 October 2008  28