Unilever 2008 Annual Report Download - page 57

Corporate governance continued
54 Unilever Annual Report and Accounts 2008
Report of the Directors
Margarine Union (1930) Limited: Conversion Rights
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.
When the will trusts were varied in 1983, the interests of the
beneficiaries of his will were also preserved. Four classes of special
shares were created in Margarine Union (1930) Limited, a
subsidiary of PLC. One of these classes can be converted at the
end of the year 2038 into 70 875 000 PLC ordinary shares of
31⁄9p each. This currently represents 5.4% of PLC’s issued ordinary
capital. These convertible shares replicate the rights which the
descendants of the first Viscount would have had under his will.
This class of the special shares only has a right to dividends in
specified circumstances, and no dividends have yet been paid.
PLC guarantees the dividend and conversion rights of the
special shares.
Foundation Unilever NV Trust Office
As at 27 February 2009, around 73% of NV’s ordinary shares and
around 34% of NV’s 7% cumulative preference shares were held
by the Foundation Unilever NV Trust Office (Stichting
Administratiekantoor Unilever N.V.), a trust office with a board
independent of Unilever. As part of its corporate objects, the
Foundation issues depositary receipts in exchange for these
shares. These depositary receipts are listed on Euronext
Amsterdam, as are the NV ordinary and 7% preference shares
themselves.
Holders of depositary receipts can under all circumstances
exchange their depositary receipts for the underlying shares
(and vice versa).
Holders of depositary receipts are entitled to dividends and all
economic benefits on the underlying shares held by the
Foundation.
The members of the board at the foundation are Mr J H Schraven
(chairman), Mr P P de Koning, Prof Dr L Koopmans and Mr A A
Olijslager.
The Foundation reports periodically on its activities.
Voting by holders of depositary receipts
Although the depositary receipts themselves do not formally have
voting rights, holders of depositary receipts are in practice
equated with shareholders. They can attend all NV’s General
Meetings, either personally or by proxy, and also have right of
speech. The holders of the depositary receipts will then
automatically, without limitation and under all circumstances,
receive a voting proxy on behalf of the Foundation to vote on the
underlying shares.
The Foundation is obliged to follow voting instructions of holders
of depositary receipts. The same applies to the voting instructions
of holders of depositary receipts not attending a shareholders’
meeting and who issue voting instructions to the Foundation via
the Dutch Shareholders’ Communication Channel.
Voting by the Foundation Unilever NV Trust Office
Shares for which the Foundation has not granted voting proxies
or for which it has not received voting instructions are voted
on by the Foundation in such a way as it deems to be in the
interests of the holders of the depositary receipts. This voting
policy is laid down in the Conditions of Administration that
apply to the depositary receipts.
Specific provisions apply in the event that a meeting of holders of
NV 7% cumulative preference shares is convened.
If a change to shareholders’ rights is proposed, the Foundation
will let shareholders know if it intends to vote, at least 14 days
in advance if possible.
Hitherto the majority of votes cast by ordinary shareholders at
NV meetings have been cast by the Foundation. Unilever and
the Foundation have a policy of actively encouraging holders
of depositary receipts to exercise their voting rights in
NV meetings.
Unilever considers the arrangements of the Foundation
appropriate and in the interest of NV and its shareholders given
the size of the voting rights attached to the financing preference
shares and the relatively low attendance of holders of ordinary
shares in its AGMs.
Foundation Unilever NV Trust Office’s shareholding
Foundation NV Trust Office’s shareholding fluctuates daily – its
holdings on 27 February 2009 were:
• NV ordinary shares of €0.16: 1 247 992 862 (72.78%); and
• NV 7% cumulative preference shares of €428.57: 9 776
(33.71%);
Further information on the Foundation, including its Articles of
Association and Conditions of Administration, can be found on its
website at www.administratiekantoor-unilever.nl
Requirements and compliance – general
Unilever is subject to corporate governance requirements in the
Netherlands, the UK and as a foreign private issuer in the US.
In this section we report on our compliance with the corporate
governance regulations and best practice codes applicable in the
Netherlands and the UK and we also describe compliance with
corporate governance standards in the US.
Under the UK Companies Act 2006 and rules of the US Securities
and Exchange Commission, we are required to provide
information on contracts and other arrangements essential or
material to the business of the Group. We believe we do not have
any such contracts or arrangements.