Unilever 2003 Annual Report Download - page 157

154 Unilever Annual Report & Accounts and Form 20-F 2003
Control of Unilever
If you are a holder of NV New York shares or PLC American
Depository Receipts of shares, you will receive a proxy form
enabling you to authorise and instruct ABN AMRO N.V. or
JPMorgan Chase Bank respectively to vote on your behalf at the
shareholders’ meeting of NV or PLC.
Resolutions are usually adopted at NV and PLC shareholder
meetings by an absolute majority of votes cast, unless there are
other requirements under the law or the NV or PLC Articles of
Association. There are special requirements for resolutions relating
to the alteration of NV or PLC’s Articles of Association or the
Equalisation Agreement, or to the liquidation of NV or PLC.
According to NV’s Articles of Association, shareholders who
together represent at least 10% of the issued capital of NV can
propose resolutions for inclusion in the agenda of any General
Meeting. They can also requisition Extraordinary General Meetings
to deal with specific resolutions.
In addition, shareholders may propose resolutions if:
• they individually or together hold 1% of the issued capital in
the form of shares or depositary receipts; or
• they individually or together hold shares or depositary receipts
worth at least €50 million.
They must submit the request at least 60 days before the date
of the General Meeting, and it will be honoured unless, in the
opinion of the Board, it is against a substantive interest of the
Company.
Under United Kingdom company law,
• shareholders who together hold shares representing at least
5% of the total voting rights of PLC; or
• at least 100 shareholders who hold on average £100 each in
nominal value of PLC capital
can require PLC to propose a resolution at a General Meeting.
There are no limitations on the right to hold NV and PLC shares.
Directors
The Directors of NV are able to vote on transactions in which they
are materially interested so long as they are acting in good faith.
In general, PLC Directors cannot vote in respect of contracts in
which they know they are materially interested, unless, for
example, their interest is shared with other shareholders
and employees.
The borrowing powers of NV Directors are not limited by
the Articles of Association of NV. PLC Directors have the power
to borrow up to three times the Adjusted Capital and Reserves
of PLC without the sanction of an ordinary resolution.
The Articles of Association of NV and PLC do not require Directors
of NV, or full-time employed Directors of PLC, to hold shares in
NV or PLC. Directors of PLC who are not employed full-time by
NV or PLC are currently required to hold either £1 000 in nominal
value of PLC ordinary shares, or €5 445 in nominal value of NV
ordinary shares. However, a proposal to remove this from PLC’s
Articles of Association will be put to the shareholders at the
Annual General Meeting in 2004. The remuneration
arrangements applicable to Directors as employees contain
requirements for the holding and retention of shares (see
Remuneration report on page 66).
Mutual guarantee of borrowings
There is a contractual arrangement between NV and PLC under
which each will, if asked by the other, guarantee the borrowings
of the other. They can also agree jointly to guarantee the
borrowings of their subsidiaries. We use this arrangement,
as a matter of financial policy, for certain significant public
borrowings. The arrangements enable lenders to rely
on our combined financial strength.
Combined earnings per share
Because of the Equalisation Agreement and the other
arrangements between NV and PLC, we calculate combined
earnings per share for NV and PLC (see note 7 on page 89).
We base the calculation on the average amount of NV and PLC’s
ordinary capital in issue during the year. For the main calculation
we exclude shares which have been purchased to satisfy
employee share options. We also calculate a diluted earnings per
share figure, where we include these shares, as well as certain
PLC shares which may be issued in 2038 under the arrangements
for the variation of the Leverhulme Trust (see below).
The process by which we calculate earnings per share
is as follows. First, we convert the average capital of NV and
PLC into units using the formula contained in the Equalisation
Agreement: one unit equals 10.7 NV shares or 71.4 PLC shares.
We add these together to find the total number of units of
combined share capital. Then the amount of net profit in euros
which is attributable to ordinary capital is divided by this total
number of units to find the amount per combined unit. Finally,
we convert the combined unit back into NV and PLC ordinary
shares, to show the amount per one share of each. The amount
per unit is divided by 10.7 to find the amount per €0.51 share,
and by 71.4 to find the amount per 1.4p share.
Despite the Equalisation Agreement, NV and PLC are independent
corporations, and are subject to different laws and regulations
governing dividend payments in the Netherlands and the United
Kingdom. We assume in our combined earnings per share
calculation that both companies will be able to pay their dividends
out of their part of our profits. This has always been the case in
the past, but if we did have to make a payment from one to
the other it could result in additional taxes, and reduce
our combined earnings per share.
Leverhulme Trust
The first Viscount Leverhulme was the founder of the company
which became PLC. When he died in 1925, he left in his will a
large number of PLC shares in various trusts. The High Court of
Justice in England varied these trusts in 1983, and established two
independent charitable trusts: