Philips 2009 Annual Report Download - page 147

as set out in the Dutch Corporate Governance Code and each member
is financially literate. In accordance with this code, a financial expert has
relevant knowledge and experience of financial administration and
accounting at the company in question. The Supervisory Board
considers the fact of being compliant with the Dutch Corporate
Governance Code, in combination with the knowledge and experience
available in the Audit Committee as well as the possibility to take advice
from internal and external experts and advisors, to be sufficient for the
fulfillment of the tasks and responsibilities of the Audit Committee. The
Supervisory Board has determined that none of the members of the
Audit Committee is designated as an Audit Committee financial expert
as defined under the regulations of the US Securities and Exchange
Commission. The Audit Committee may not be chaired by the
Chairman of the Supervisory Board or by a (former) member of the
Board of Management.
All members of the Audit Committee are independent
The tasks and functions of the Audit Committee, as described in its
charter, which is published on the Company’s website as part of the
Rules of Procedure of the Supervisory Board, include the duties
recommended in the Dutch Corporate Governance Code. More
specifically, the Audit Committee assists the Supervisory Board in
fulfilling its oversight responsibilities for the integrity of the Company’s
financial statements, the financial reporting process, the system of
internal business controls and risk management, the internal and
external audit process, the internal and external auditor’s qualifications,
its independence and its performance, as well as the Company’s process
for monitoring compliance with laws and regulations and the General
Business Principles (GBP). 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
internal control policies and internal audit programs, 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
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 GBP including the
deployment thereof, overviews on tax, IT, litigation and legal
proceedings, environmental exposures, financial exposures in the area
of treasury, real estate, pensions, and the Group’s major areas of risk.
The Company’s external auditor, in general, attends all Audit
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 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.
10.4 General Meeting of Shareholders
Introduction
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 explanatory notes thereto and
additional information required by law, and the Supervisory Board
Report, 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. The Annual Report,
the financial statements and other regulated information such as
defined in the Dutch Act on Financial Supervision, will solely be
published in English. 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
General Meeting of Shareholders when the resolution is adopted. The
General Meeting of Shareholders is held in Eindhoven, Amsterdam,
Rotterdam, The Hague, Utrecht or Haarlemmermeer (Schiphol
Airport) no later than six months after the end of the financial year.
Meetings are convened by public notice, via the Company’s website or
other electronic means of communication and by letter or 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. The
agenda shall list which items are for discussion and which items are to be
voted upon. Material amendments to the articles of association and
resolutions for the appointment of members of the Board of
Management and Supervisory Board shall be submitted separately to
the General Meeting of Shareholders, it being understood that
amendments and other proposals that are connected in the context of a
proposed (part of the) governance structure may be submitted as one
proposal. 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 official price list of Euronext
Amsterdam, representing a value of at least EUR 50 million. Written
requests may be submitted electronically and shall comply with
conditions stipulated by the Board of Management, which conditions
are posted on the Company’s website. Furthermore, the shareholder
shall request an item to be included in the agenda, or request that a
General Meeting of Shareholders is convened, only after he consulted
the Board of Management about this. If such request may result in a
change in the Company’s strategy - as referred to in recommendation
IV.4.4 of the Dutch Corporate Governance Code - the Board of
Management shall be given the opportunity to stipulate a reasonable
period in which to respond, which response time and the use thereof
shall meet the conditions of recommendation II.1.9 of the Dutch
Corporate Governance Code, which response time shall be respected
by the shareholder(s) in question.
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 financial
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
10 Corporate governance 10.3 - 10.4
Philips Annual Report 2009 147