Philips 2007 Annual Report Download - page 249

Philips Annual Report 2007 255
compliance with accounting standards, compliance with statutory
and legal requirements and regulations, particularly in the nancial
domain. Important ndings and identied 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, stafng, 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 nancial statements. According to the procedures, the Audit
Committee acts as the principal contact for the external auditor if
the auditor discovers irregularities in the content of the nancial
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 GBP
including the deployment thereof, overviews on tax, IT, litigation,
environmental exposures, nancial exposures in the area of treasury,
real estate, pensions, and the Company’s major areas of risk. The
Company’s external auditor, in general, 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 and certain key ofcers. 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 nancial 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 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 nancial 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 nancial 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
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 or the Supervisory Board, 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 made in writing at
least 60 days before a General Meeting of Shareholders to the Board
of Management and the Supervisory Board by shareholders representing
at least 1% of the Company’s outstanding capital or, according to the
ofcial price list of Euronext Amsterdam, representing a value of at least
50 million euros.
Main powers of the General Meeting of Shareholders
All outstanding shares carry voting rights. The main powers of the
General Meeting of Shareholders are to appoint, suspend and dismiss
members of the Board of Management and of the Supervisory Board,
to adopt the annual accounts, declare dividends and to discharge the
Board of Management and the Supervisory Board from responsibility
for the performance of their respective duties for the previous nancial
year, to appoint the external auditor as required by Dutch law, to adopt
amendments to the articles of association and proposals to dissolve or
liquidate the Company, to issue shares or rights to shares, to restrict
or exclude pre-emptive rights of shareholders and to repurchase
or cancel outstanding shares. Following common corporate practice
in the Netherlands, the Company each year requests limited
authorization to issue (rights to) shares, to restrict or exclude pre-
emptive rights and to repurchase shares. The 2007 General Meeting
of Shareholders has resolved to authorize the Board of Management,
subject to the approval of the Supervisory Board, to (i) acquire shares
in the Company within the limits of the articles of association and
within a certain price range until September 29, 2008, and (ii) issue shares
or grant rights to acquire shares in the Company as well as to restrict
or exclude the pre-emption right accruing to shareholders until
September 29, 2008. The latter authorization is limited to a maximum
of 10% of the number of shares issued plus 10% of the issued capital
in connection with or on the occasion of mergers and acquisitions.
In compliance with Dutch law, decisions of the Board of Management
that are so far-reaching that they would greatly change the identity
or nature of the Company or the business require the approval of
the General Meeting of Shareholders. This concerns resolutions
to (a) transfer the business of the Company, or almost the entire
business of the Company, to a third party (b) enter into or discontinue
long-term cooperation by the Company or a subsidiary with another
legal entity or company or as a fully liable partner in a limited
partnership or ordinary partnership, if this cooperation or its
discontinuation is of material signicance to the Company or
(c) acquire or dispose of a participating interest in the capital of a
company to the value of at least one third of the amount of the assets
according to the balance sheet and notes thereto or, if the Company
prepares a consolidated balance sheet, according to the consolidated
balance sheet and notes thereto as published in the last adopted
annual accounts of the Company, by the Company or one of its
subsidiaries. Thus the Company puts principle IV.1 of the Dutch
Corporate Governance Code into practice within the framework
of the articles of association and Dutch law and in the manner as
described in this corporate governance report.
The Board of Management and Supervisory Board are also
accountable, at the Annual General Meeting of Shareholders, for
the policy on the additions to reserves and dividends (the level and
purpose of the additions to reserves, the amount of the dividend and
the type of dividend). This subject shall be dealt with and explained as
a separate agenda item at the General Meeting of Shareholders. Philips
aims for a sustainable and stable dividend distribution to shareholders
in the long term. A resolution to pay a dividend shall be dealt with
as a separate agenda item at the General Meeting of Shareholders.
The Board of Management and the Supervisory Board are required
to provide the General Meeting of Shareholders with all requested
information, unless this would be prejudicial to an overriding interest
of the Company. If the Board of Management and the Supervisory
Board invoke an overriding interest, reasons must be given. If a serious
private bid is made for a business unit or a participating interest and
the value of the bid exceeds a certain threshold (currently one third
of the amount of the assets according to the balance sheet and notes
thereto or, if the Company prepares a consolidated balance sheet,
according to the consolidated balance sheet and notes thereto as
published in the last adopted annual accounts of the Company), and
such bid is made public, the Board of Management shall, at its earliest
Group nancial statements Company nancial statements 250 Corporate governance246 Reconciliation of
non-US GAAP information 258 The Philips Group in the last ten years 260
Investor information