Philips 2011 Annual Report Download - page 112

11 Corporate governance 11.3 - 11.4
112 Annual Report 2011
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
issue (rights to) shares, to restrict or exclude pre-emptive rights and
to repurchase shares. 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 includes
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 significance 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 applies principle IV.1 of the Dutch Corporate Governance
Code 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 is 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 is 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 in refusing to provide information,
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 convenience, make public its position on the bid and
the reasons for this position.
A resolution to dissolve the Company or change its articles of
association can be adopted at the General Meeting of Shareholders by
at least three-fourths of the votes cast, at which meeting more than half
of the issued share capital is represented. If the requisite share capital
is not represented, a further meeting shall be convened, to be held
within eight weeks of the first meeting, to which no quorum
requirement applies. Furthermore, the resolution requires the approval
of the Supervisory Board. If the resolution is proposed by the Board of
Management, the adoption needs an absolute majority of votes and no
quorum requirement applies to the meeting.
Repurchase and issue of (rights to) own shares
The 2011 General Meeting of Shareholders has resolved to authorize
the Board of Management, subject to the approval of the Supervisory
Board, to acquire shares in the Company within the limits of the articles
of association and within a certain price range until September 30, 2012.
The maximum number of shares the company may hold, will not exceed
10% of the issued share capital as of March 31, 2011, which number
may be increased by 10% of the issued capital as of that same date in
connection with the execution of share repurchase programs for capital
reduction programs.
In addition, the 2011 General Meeting of Shareholders resolved to
authorize the Board of Management, subject to the approval of the
Supervisory Board, to 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 30, 2012. This authorization
is limited to a maximum of 10% of the number of shares issued as of
March 31, 2011 plus 10% of the issued capital in connection with or on
the occasion of mergers and acquisitions.
11.4 Logistics of the General Meeting of
Shareholders and provision of information
Introduction
The Company will set a registration date for the exercise of the voting
rights and the rights relating to General Meetings of Shareholders. In
accordance with Dutch law this registration date is fixed at the 28th day
prior to the day of the meeting. Shareholders registered at such date
are entitled to attend the meeting and to exercise the other
shareholder rights (in the meeting in question) notwithstanding
subsequent sale of their shares thereafter. This date will be published
in advance of every General Meeting of Shareholders. Shareholders
who are entitled to attend a General Meeting of Shareholders may be
represented by proxies.
Information which is required to be published or deposited pursuant
to the provisions of company law and securities law applicable to the
Company and which is relevant to the shareholders, 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 15 days 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 respond to this summary for three months, after which a
final 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. Also other persons entitled to vote shall be given the
possibility to give voting proxies or instructions to an independent third
party prior to the meeting. 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 a result, the Stichting Preferente Aandelen Philips (the
‘Foundation’) was created, which was granted the right to acquire
preference shares in the Company. The mere notification that the
Foundation wishes to exercise its rights, should a third party ever seem
likely in the judgment of the Foundation to obtain (de facto) control of
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. No preference shares have been issued as of December 31, 2011.
In addition, the Foundation has the right to file a petition with the