Philips 2006 Annual Report Download - page 232

Philips Annual Report 2006232
Information which is required to be published or deposited pursuant
to the provisions of company law and securities law applicable to
the Company, is placed and updated on the Company’s website, or
hyperlinks are established. The Board of Management and Supervisory
Board shall ensure that the General Meeting of Shareholders is informed
by means of a ‘shareholders circular’ published on the Company’s
website of facts and circumstances relevant to the proposed resolutions.
Resolutions adopted at a General Meeting of Shareholders shall be
recorded by a civil law notary and co-signed by the chairman of the
meeting; such resolutions shall also be published on the Company’s
website within one day after the meeting. A summary of the discussions
during the General Meeting of Shareholders, in the language of the
meeting, is made available to shareholders, on request, no later than
three months after the meeting. Shareholders shall have the opportunity
to react to this summary in the following three months, after which
a fi nal summary is adopted by the chairman of the meeting in question.
Such summary shall be made available on the Company’s website.
Proxy voting and the Shareholders Communication Channel
Philips was one of the key companies in the establishment of the
Shareholders Communication Channel, a project of Euronext
Amsterdam, banks in the Netherlands and several major Dutch
companies to simplify contacts between a participating company
and shareholders that hold their shares through a Dutch securities
account with a participating bank. The Company uses the Shareholders
Communication Channel to distribute a voting instruction form for
the Annual General Meeting of Shareholders. By returning this form,
shareholders grant power to an independent proxy holder who will
vote according to the instructions expressly given on the voting
instruction form. The Shareholders Communication Channel can
also be used, under certain conditions, by participating Philips
shareholders to distribute - either by mail or by placing it on the
Company’s or Shareholders Communication Channel’s website -
information directly related to the agenda of the General Meeting
of Shareholders to other participating Philips shareholders.
Preference shares and the Stichting Preferente
Aandelen Philips
As a means to protect the Company and its stakeholders against an
unsolicited attempt to obtain (de facto) control of the Company, the
General Meeting of Shareholders in 1989 adopted amendments to the
Company’s articles of association that allow the Board of Management
and the Supervisory Board to issue (rights to) preference shares to
a third party. As then anticipated and disclosed, the Stichting Preferente
Aandelen Philips (the ‘Foundation’) was created, which was granted
the right to acquire preference shares in the Company. The mere
notifi cation that the Foundation wishes to exercise its rights, should
a third party ever seem likely in the judgment of the Foundation to
gain a controlling interest in the Company, will result in the preference
shares being effectively issued. The Foundation may exercise this right
for as many preference shares as there are ordinary shares in the
Company outstanding at that time.
The object of the Foundation is to represent the interests of the
Company, the enterprises maintained by the Company and its affi liated
companies within the Group, in such a way that the interests of Philips,
those enterprises and all parties involved with them are safeguarded
as effectively as possible, and that they are afforded maximum protection
against infl uences which, in confl ict with those interests, may undermine
the autonomy and identity of Philips and those enterprises, and also
to do anything related to the above ends or conducive to them. In the
event of (an attempt at) a hostile takeover this arrangement will allow
the Company and its Board of Management and Supervisory Board
to determine its position in relation to the bidder and its plans, seek
alternatives and defend Philips’ interests and those of its stakeholders
from a position of strength.
The members of the self-electing Board of the Foundation are Messrs
S.D. de Bree, F.J.G.M. Cremers, M.W. den Boogert, W. de Kleuver and
G.J. Kleisterlee. As Chairman of the Supervisory Board and the Board
of Management respectively, Messrs De Kleuver and Kleisterlee are
members of the Board ex offi cio. Messrs De Kleuver and Kleisterlee
are 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 of frustrating future public bids for 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 specifi cally have the purpose of preventing
a bidder who has acquired 75% of the shares in the capital of the
Company from appointing or dismissing members of the Board of
Management and subsequently amending the articles of association
of the Company. It should be noted that also in the event of (an
attempt at) a hostile takeover, the Board of Management and the
Supervisory Board are authorized to exercise in the interests of
Philips all powers attributed to them.
Audit of the fi nancial reporting and the position of
the external auditor
The annual fi nancial 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 are published together with the fi nal
opinion of the external auditor. The Board of Management is responsible,
under the supervision of the Supervisory Board, for the quality and
completeness of such publicly disclosed fi nancial reports. The annual
fi nancial statements are presented for discussion and adoption to the
Annual General Meeting of Shareholders, to be convened subsequently.
Philips, under US securities regulations, separately fi les 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 fi gures and ad
hoc fi nancial 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 fulfi lling
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 1995
General Meeting of Shareholders. In 2002, when the Auditor Policy
was adopted, the appointment of KPMG Accountants N.V. was confi rmed
by the Supervisory Board for an additional three years. The 2005
112 Group fi nancial statements 172 IFRS information 218 Company fi nancial statements