Unilever 2003 Annual Report Download - page 156

Unilever Annual Report & Accounts and Form 20-F 2003 153
Control of Unilever
would have to pay a dividend that was unreasonable (ie,
substantially larger or smaller in its own currency than the
dividend it paid in the previous year)
• the governments of the Netherlands or the United Kingdom
could in some circumstances place restrictions on the
proportion of a company’s profits which can be paid out as
dividends; this could mean that in order to pay equal dividends
one company would have to pay out an amount which would
breach the limitations in place at the time, or that the other
company would have to pay a smaller dividend.
In either of these rare cases, NV and PLC could pay different
amounts of dividend if the Boards thought it appropriate. The
company paying less than the equalised dividend would put the
difference between the dividends into a reserve: an equalisation
reserve in the case of exchange rate fluctuations, or a dividend
reserve in the case of a government restriction. The reserves
would be paid out to its shareholders when it became possible
or reasonable to do so, which would ensure that the shareholders
of both companies would ultimately be treated the same.
If both companies go into liquidation, NV and PLC will each use
any funds available for shareholders to pay the prior claims of
their own preference shareholders. Then they will use any surplus
to pay each other’s preference shareholders, if necessary. After
these claims have been met, they will pay out any equalisation
or dividend reserve to their own shareholders before pooling
the remaining surplus. This will be distributed to the ordinary
shareholders of both companies, once again on the basis that
the owner of €5.445 nominal NV ordinary share capital will get
the same as the owner of £1 nominal PLC ordinary share capital.
If one company goes into liquidation, we will apply the same
principles as if both had gone into liquidation simultaneously.
In addition to the Equalisation Agreement, NV and PLC have
agreed to follow common policies, to exchange all relevant
business information, and to ensure that all group companies act
accordingly. They aim to co-operate in all areas, including in the
purchase of raw materials and the exchange and use of technical,
financial and commercial information, secret or patented
processes and trade marks.
More information about our constitutional documents
Under Article 2 of the Articles of Association of NV and Clause 3
of the Memorandum and Article 3 of the Articles of Association
of PLC, both companies are required to carry out the Equalisation
Agreement with the other. Both documents state that the
agreement cannot be changed or terminated without the
approval of both sets of shareholders.
For NV the necessary approval is as follows:
• at least one half of the total issued ordinary capital must be
represented at an ordinary shareholders meeting, where the
majority must vote in favour; and
• (if they would be disadvantaged or the agreement is to be
terminated), at least two-thirds of the total issued preference
share capital must be represented at a preference shareholders’
meeting, where at least three-quarters must vote in favour.
For PLC, the necessary approval must be given by:
• the holders of a majority of all issued shares voting at a General
Meeting; and
• the holders of the ordinary shares, either by three quarters in
writing, or by three quarters voting at a General Meeting where
the majority of the ordinary shares in issue are represented.
The Articles of NV establish that any payment under the
Equalisation Agreement will be credited or debited to the profit
and loss account for the financial year in question.
The PLC Articles state that the Board must carry out the
Equalisation Agreement and that the provisions of the Articles are
subject to it.
We are advised by Counsel that these provisions oblige
the Boards to carry out the Equalisation Agreement, unless it is
amended or terminated with the approval of the shareholders
of both companies. If the Boards fail to enforce the agreement,
shareholders can compel them to do so under Netherlands and
United Kingdom law.
General Meetings and voting rights
General Meetings of shareholders of NV and PLC are held
at times and places decided by the Boards. NV meetings are held
in Rotterdam and PLC meetings are held in London.
To be entitled to attend and vote at NV General Meetings, you
must be a shareholder on the Record Date, which may be set by
the Directors and must be not more than 7 days before the
meeting. In addition you must, within the time specified in the
Notice calling the meeting, either:
• (if you have registered shares) advise NV in writing that you
intend to attend; or
• (if you have bearer shares) deposit your share certificates at the
place specified in the Notice.
You can vote in person or by proxy, and you can cast one vote for
each €0.05 (Fl.0.10) nominal amount you hold of NV preference
shares, ordinary shares or New York registry shares. NV Elma and
United Holdings Limited, the holders of the special shares, and
other group companies of NV which hold preference or ordinary
shares, are not permitted to vote, by law.
For information on the rights of Nedamtrust certificate holders
see page 155.
To be able to vote by proxy at NV General Meetings, the written
power of attorney must be received by NV not later than seven
days before the meeting.
To be able to vote by proxy at PLC General Meetings you must
lodge your Form of Appointment of Proxy with PLC’s Registrars
48 hours before the meeting, either in paper or electronic format.
You can cast one vote for each PLC ordinary 1.4p share you hold.
United Holdings Limited, which owns half of the deferred stock,
is not permitted to vote at General Meetings.