AstraZeneca Annual Report and Form 20-F Information 2008

UK corporate governance requirements

The Board has prepared this Report with reference to the UK Combined Code on Corporate Governance and related guidance published in June 2006 by the Financial Reporting Council. A new version of the UK Combined Code was published in June 2008 and applies to accounting periods beginning on or after 29 June 2008. The Board believes that, were these standards to be applied with respect to the current arrangements, it would comply with the latest standards.

The Company is applying all the main and supporting principles of good governance in the UK Combined Code as described below. The Company has complied throughout the accounting period and is also continuing to comply with all of the provisions of the UK Combined Code.

The Board has overall responsibility for the Company’s system of internal controls. Since the publication in September 1999 by the Institute of Chartered Accountants in England and Wales of the Turnbull Report, ‘Internal Control: Guidance for Directors on the UK Combined Code’, the Directors have continued to review the effectiveness of the Group’s system of controls, risk management and the Group’s high-level internal control arrangements. These reviews have included an assessment of internal controls, and in particular internal, financial, operational and compliance controls and risk management and their effectiveness, supported by management assurance of the maintenance of control, reports from GIA, as well as the external auditor on matters identified in the course of its statutory audit work. The Board is also responsible for reviewing the effectiveness of the system of internal controls and risk management policies. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable (not necessarily absolute) assurance of effective operation and compliance with laws and regulations.

Underpinning these reviews is an annual ‘letter of assurance’ process by which responsible managers confirm the adequacy of their systems of internal financial and non-financial controls, their compliance with Group policies, relevant laws and regulations (including the industry’s regulatory requirements), and confirm they have reported any control weaknesses through the Group’s ‘continuous assurance’ process.

The internal control framework has been in operation for the whole of the year under review and continues to operate up to the date of the approval of this Report. The Directors believe that the Group maintains an effective, embedded system of internal controls and complies with the Turnbull Report guidance and, in the view of the Directors, no significant failings have been identified in the system.

Further information on the ways in which we manage our business risks is set out in the section titled Risk and a list of the principal risks and uncertainties is set out in the Principal Risks and Uncertainties section.

During 2008, the Board considered the independence of each Non-Executive Director. With the exception of two of them (as set out below), the Board considers that all of the Non-Executive Directors are independent in character and judgement and that there are no relationships or circumstances that are likely to affect, or could appear to affect, their independent judgement. Louis Schweitzer was considered by the Board to be independent upon his appointment as Non-Executive Chairman; in accordance with the UK Combined Code, the test of independence is not appropriate in relation to the Chairman after his appointment.

For the reasons explained below, the Board believes that neither Håkan Mogren, Non-Executive Deputy Chairman, nor Marcus Wallenberg can be determined independent under the UK Combined Code. However, the Board believes that they both have brought, and continue to bring, considerable business experience and to make valuable contributions to the work of the Board.

Håkan Mogren was previously the Chief Executive Officer of Astra AB and Executive Deputy Chairman of the Company and is now a member of the Board of Directors of Investor AB, a company that, as at 31 December 2008, held approximately 3.6% of the Ordinary Shares of the Company. This holding represents a significant proportion of Investor AB’s overall investment portfolio. Marcus Wallenberg was a member of the Board of Directors and Chief Executive Officer of Investor AB until 1 September 2005, when he stepped down.

The Board also considered, in particular, the position of Michele Hooper who joined the board of UnitedHealth Group as a Non-Executive Director in 2007. The Board’s approval to this appointment was conditional upon Michele Hooper resigning from the board of UnitedHealth Group in the event of a conflict or non-independence. It is the Board’s view that Michele Hooper is independent and that she discharges her duties in a properly independent manner, constructively and appropriately challenging the Executive Directors and the Board.

Jane Henney is a Non-Executive Director of AmerisourceBergen Corporation and CIGNA Corporation, both of which are customers of the Group in the US. The Board has considered these relationships and concluded that they did not compromise her independence.

The position of Senior Non-Executive Director of the Company was established in 2002. Michele Hooper (who was appointed as a Non-Executive Director in 2003) became the Company’s Senior Non-Executive Director in April 2007.

At the AGM in 2008, a resolution was passed to amend the Articles to enable the Directors to sanction conflicts of interest in relation to any Director, that amounts, or could amount, to a conflict with the Company’s interests and which would otherwise be a breach of the Director’s duty, under the relevant sections of the UK Companies Act 2006.

In September 2008, letters were sent to each of the Directors requesting them to notify the Company of any such conflicts or potential conflicts. The Board considered the responses to these letters and in particular whether or not they amounted to an actual or potential conflict. In respect of the Executive Directors, the Board (with the Executive Directors abstaining) authorised any conflict that may arise in relation to any of the Executive Directors holding another directorship of a company within the AstraZeneca Group. In respect of the Non-Executive Directors, no conflicts or potential conflicts were considered to exist that required authorisation. The Company Secretary will be responsible for maintaining a register of notifications received from Directors in relation to conflicts of interest and, where appropriate, any authorisation given. The Board will go through a similar process on at least an annual basis.

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