Philips 2004 Annual Report Download - page 207

The members of the self-electing Board of the Foundation are
Messrs J.R. Glasz, S.D. de Bree, W.E. Scherpenhuijsen Rom, L.C.
van Wachem and G.J. Kleisterlee. As Chairman of the Supervisory
Board and the Board of Management respectively, Messrs Van
Wachem and Kleisterlee are members of the Board ex officio. Mr
Kleisterlee is not entitled to vote.
The Board of Management of the Company and the Board of the
Foundation declare that they are jointly of the opinion that the
Foundation is independent of the Company as required by the
Listing Requirements of Euronext Amsterdam N.V.’s stock
market.
The Company does not have any other anti-takeover measures in
the sense of other measures which exclusively or almost
exclusively have the purpose to frustrate future public bids on the
shares in the capital of the Company in case no agreement is
reached with the Board of Management on such public bid.
Furthermore the Company does not have measures which
specifically have the purpose that a bidder also once it has acquired
75% of the shares in the capital of the Company, is frustrated in
appointing or dismissing members of the Board of Management
and subsequently amending the articles of association of the
Company. For the avoidance of doubt it should be noted that also
in the event of (an attempt to) a hostile takeover, the Board of
Management and the Supervisory Board are authorized to
exercise in the interest of Philips all powers attributed to them.
Audit of the financial reporting and the position of
the external auditor
The annual financial statements, observing Dutch law and applying
US GAAP, are prepared by the Board of Management and
reviewed by the Supervisory Board upon the advice of its Audit
Committee and the external auditor. Upon approval by the
Supervisory Board, the accounts are signed by all members of both
the Board of Management and the Supervisory Board and,
together with the final opinion of the external auditor, published.
The Board of Management is responsible, under supervision of the
Supervisory Board, for the quality and completeness of such
publicly disclosed financial reports. The annual financial statements
are presented for discussion and adoption to the Annual General
Meeting of Shareholders, to be convened subsequently. Philips,
under US securities regulations, separately files its Annual Report
on Form 20-F, incorporating major parts of the Annual Report as
prepared under the requirements of Dutch law.
Internal controls and disclosure policies
Comprehensive internal procedures, compliance with which is
supervised by the Supervisory Board, are in place for the
preparation and publication of the Annual Report, the annual
accounts, the quarterly figures and ad hoc financial information. As
from 2003, the internal assurance process for business risk
assessment has been strengthened and the review frequency has
been upgraded to a quarterly review cycle, in line with emerging
best practices in this area.
As part of these procedures, a Disclosure Committee has been
appointed by the Board of Management to oversee the Company’s
disclosure activities and to assist the Board of Management in
fulfilling its responsibilities in this respect. The Committee’s
purpose is to ensure that the Company implements and maintains
internal procedures for the timely collection, evaluation and
disclosure, as appropriate, of information potentially subject to
public disclosure under the legal, regulatory and stock exchange
requirements to which the Company is subject. Such procedures
are designed to capture information that is relevant to an
assessment of the need to disclose developments and risks that
pertain to the Company’s various businesses, and their
effectiveness for this purpose will be reviewed periodically.
Auditor information
In accordance with the procedures laid down in the Philips Policy
on Auditor Independence and as mandatorily required by Dutch
law, the external auditor of the Company is appointed by the
General Meeting of Shareholders on the proposal of the
Supervisory Board, after the latter has been advised by the Audit
Committee and the Board of Management. Under this Auditor
Policy, once every three years the Supervisory Board and the
Audit Committee conduct a thorough assessment of the
functioning of the external auditor. The main conclusions of this
assessment shall be communicated to the General Meeting of
Shareholders for the purposes of assessing the nomination for the
appointment of the external auditor. The current auditor of the
Company, KPMG Accountants N.V., was appointed by the General
Meeting of Shareholders on May 2, 1995. In 2002, when the
Auditor Policy was adopted, the appointment of KPMG
Accountants N.V. was confirmed by the Supervisory Board for an
additional three years. The General Meeting of Shareholders has
to decide again at its meeting in 2005 on the appointment of the
auditor. Mr. J.F.C. van Everdingen is the current partner of KPMG
Accountants N.V. in charge of the audit duties for the Philips
Group. In accordance with the rotation schedule determined in
accordance with the Auditor Policy, he will be replaced by another
partner of the auditing firm no later than in 2006.
The external auditor shall attend the Annual General Meeting of
206 Philips Annual Report 2004
Other information