Unilever 2010 Annual Report Download - page 54

Unilever Annual Report and Accounts 2010 51
Report of the Directors Governance
Our Foundation Agreements
Foundation Agreements
The Unilever Group is created and maintained by a series of
agreements between the parent companies, NV and PLC, together
with special provisions in their respective articles of association,
whichare together known as the Foundation Agreements. These
agreements enable Unilever to achieve unity of management,
operations, shareholders’ rights, purpose and mission and further
information on these agreements is provided in the document
entitled ‘The Governance of Unilever’ which is available on our
website at www.unilever.com/investorrelations/corp_governance.
NV’s Articles of Association contain, among other things, the
objects clause, which sets out the scope of activities that NV is
authorised to undertake. They are drafted to give a wide scope
and provide that the primary objectives are: to carry on business
as a holding company, to manage any companies in which it has
an interest and to operate and carry into effect the Equalisation
Agreement. At the 2010 PLC AGM, the shareholders agreed that
the objects clause be removed from PLC’s Articles of Association
so that there are no restrictions on its objects.
Equalisation Agreement
The Equalisation Agreement makes the economic position
oftheshareholders of NV and PLC, as far as possible, the same
asif they held shares in a single company. The Equalisation
Agreement regulates the mutual rights of the shareholders of
NVand PLC. Under the Equalisation Agreement, NV and PLC
must adopt the same financial periods and accounting policies.
Each NV ordinary share represents the same underlying economic
interest in the Unilever Group as each PLC ordinary share.
The Equalisation Agreement can be found on our website at
www.unilever.com/investorrelations/corp_governance.
The Deed of Mutual Covenants
The Deed of Mutual Covenants provides that NV and PLC and
their respective subsidiary companies shall co-operate in every
way for the purpose of maintaining a common operating policy.
They shall exchange all relevant information about their respective
businesses – the intention being to create and maintain a
common operating platform for the Unilever Group throughout
the world. The Deed also contains provisions for the allocation
ofassets between NV and PLC.
The Deed of Mutual Covenants can be found on our website at
www.unilever.com/investorrelations/corp_governance.
The Agreement for Mutual Guarantees of Borrowing
Under the Agreement for Mutual Guarantees of Borrowing
between NV and PLC, each company will, if asked by the other,
guarantee the borrowings of the other. The two companies
alsojointly guarantee the borrowings of their subsidiaries. These
arrangements are used, as a matter of financial policy, for certain
significant public borrowings. They enable lenders to rely on our
combined financial strength.
The Agreement for Mutual Guarantees of Borrowing can be found on
our website at www.unilever.com/investorrelations/corp_governance.
Our requirements and compliance
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 European Takeover Directive as implemented in the
Netherlands and the UK, 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.
Our governance arrangements are designed and structured
topromote and further the interests of our companies and their
shareholders. The Boards however reserve the right, in cases
where they decide such to be in the interests of the companies
orour shareholders, to depart from that which is set out in
thepresent and previous sections in relation to our corporate
governance. Any such changes will be reported in future Annual
Reports and Accounts and, when necessary, through changes
tothe relevant documents published on our website. As
appropriate, proposals for change will be put to our shareholders
for approval.
Further information can be found on our website and in the
document entitled ‘The Governance of Unilever’. This describes
the terms of reference of our Board Committees, including their
full responsibilities. It will be kept up to date with changes in
ourinternal constitutional arrangements that our Boards may
make from time to time and it is available on our website at
www.unilever.com/Investorrelations/corp_governance.