Philips 2004 Annual Report Download - page 204

compliance with laws and regulations and the General Business
Principles. It reviews the Company’s annual and interim financial
statements, including non-financial information, prior to
publication and advises the Supervisory Board on the adequacy
and appropriateness of internal control policies and internal audit
programs and their findings.
In reviewing the Company’s annual and interim statements,
including non-financial information, and advising the Supervisory
Board on the adequacy and appropriateness of internal control
policies and internal audit programs and their findings, the Audit
Committee reviews matters relating to accounting policies and
compliance with accounting standards, compliance with statutory
and legal requirements and regulations particularly in the financial
domain. Important findings and identified risks are examined
thoroughly by the Audit Committee in order to allow appropriate
measures to be taken. With regard to the internal audit, the Audit
Committee, in cooperation with the external auditor, reviews the
internal audit charter, audit plan, audit scope and its coverage in
relation to the scope of the external audit, staffing, independence
and organizational structure of the internal audit function.
With regard to the external audit, the Audit Committee reviews
the proposed audit scope, approach and fees, the independence of
the external auditor, its performance and its (re-) appointment,
audit and permitted non-audit services provided by the external
auditor in conformity with the Philips Policy on Auditor
Independence, as well as any changes to this policy. The Audit
Committee also considers the report of the external auditor and
its report with respect to the annual financial statements.
According to the procedures, the Audit Committee acts as the
principal contact for the external auditor if the said auditor
discovers irregularities in the content of the financial reports. It
also advises on the Supervisory Board’s statement to shareholders
in the annual accounts. The Audit Committee periodically
discusses the Company’s policy on business controls, the General
Business Principles including the deployment thereof, overviews
on tax, IT, litigation, environmental exposures, financial exposures
in the area of treasury, real estate, pensions, and the Company’s
major areas of risk. The Company’s external auditor attends all
Committee meetings and the Audit Committee meets separately
at least on a quarterly basis with each of the President/CEO, the
CFO, the internal auditor and the external auditor.
Group Management Committee
The Group Management Committee consists of the members of
the Board of Management, Chairmen of product divisions and
certain key officers. Members other than members of the Board of
Management are appointed by the Supervisory Board. The task of
the Group Management Committee, the highest consultative body
within Philips, is to ensure that business issues and practices are
shared across Philips and to implement common policies.
General Meeting of Shareholders
General
A General Meeting of Shareholders is held at least once a year to
discuss the Annual Report, including the report of the Board of
Management, the annual financial statements with explanation and
appendices, and the report of the Supervisory Board, any proposal
concerning dividends or other distributions, the appointment of
members of the Board of Management and Supervisory Board (if
any), important management decisions as required by Dutch law,
and any other matters proposed by the Supervisory Board, the
Board of Management, the Meeting of Priority Shareholders (until
the Amended Articles of Association enter into force) or
shareholders in accordance with the provisions of the Company’s
articles of association. As a separate agenda item and in application
of Dutch law, the General Meeting of Shareholders discusses the
discharge of the members of the Board of Management and the
Supervisory Board from responsibility for the performance of their
respective duties in the preceding financial year.
However, this discharge only covers matters that are known to
the Company and the shareholders when the resolution is
adopted. The General Meeting of Shareholders is held in
Eindhoven, Amsterdam, Rotterdam or The Hague no later than six
months after the end of the financial year.
Meetings are convened by public notice and by letter, or, insofar as
permitted by law, by the use of electronic means of
communication, to registered shareholders. Extraordinary
General Meetings of Shareholders may be convened by the
Supervisory Board or the Board of Management if deemed
necessary and must be held if the Meeting of Priority Shareholders
(until the Amended Articles of Association enter into force) or
shareholders jointly representing at least 10% of the outstanding
share capital make a written request to that effect to the
Supervisory Board and the Board of Management, specifying in
detail the business to be dealt with. The agenda of the General
Meeting of Shareholders shall contain such business as may be
placed thereon by the Board of Management, the Supervisory
Board or the Meeting of Priority Shareholders (until the Amended
Articles of Association enter into force), and agenda items will be
explained where necessary in writing. In accordance with the
articles of association and Dutch law, requests from shareholders
for items to be included on the agenda will generally be honored,
subject to the Company’s rights to refuse to include the requested
agenda item under Dutch law, provided that such requests are
203Philips Annual Report 2004