<PAGE> 1
1999-5
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
-------
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the period commencing July 22, 1999 through August 9, 1999
-------
KONINKLIJKE PHILIPS ELECTRONICS N.V.
--------------------
(Name of registrant)
Rembrandt Tower, Amstelplein 1, 1096 HA Amsterdam, The Netherlands
-------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
----- ------
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934:
Yes No X
------ ------
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- .
----------
<PAGE> 2
This report includes an English translation of the Articles of Association of
Koninklijke Philips Electronics N.V. (`Royal Philips Electronics'), as amended,
dated as of May 29, 1999, and a Certificate of English translation related
thereto, dated as of August 9, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf, by the
undersigned, thereunto duly authorized at Amsterdam, on the 9th day of August,
1999.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
/s/ C. Boonstra
C. Boonstra
(President,
Chairman of the Board of Management)
/s/ J.H.M. Hommen
J.H.M. Hommen
(Executive Vice-President,
Member of the Board of Management
and Chief Financial Officer)
<PAGE> 3
ARTICLES OF ASSOCIATION
OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
AS LAST AMENDED
ON MAY 29, 1999, PURSUANT TO THE RESOLUTION OF THE GENERAL
MEETING OF SHAREHOLDERS HELD ON MARCH 25, 1999.
TRANSLATION OF THE ORIGINAL AND AUTHENTIC DUTCH TEXT.
<PAGE> 4
NAME AND SEAT
ARTICLE 1
1. The name of the Company is: Koninklijke Philips Electronics N.V.
2. The Company is authorized to act as "Royal Philips Electronics".
3. Its registered office is situated in Eindhoven.
OBJECTS
ARTICLE 2
The objects of the Company are to establish, participate in, administer
and finance legal entities, companies and other legal forms for the
purpose of the manufacture and trading of electrical, electronic,
mechanical or chemical products, the development and exploitation of
technical and other expertise, including software, or for the purpose of
other activities, and to do everything pertaining thereto or connected
therewith, all this in the widest sense, as may also be conducive to
the proper continuity of the collectivity of business undertakings, in
the Netherlands and abroad, which are carried on by the Company and the
companies in which it directly or indirectly participates.
SHARE CAPITAL, SHARES, SHAREHOLDERS, SHARE CERTIFICATES AND SHARE
REGISTER
ARTICLE 3
1. The share capital of the Company is one and one half billion
euros (euros l,500,000,000), divided into ten priority shares of
five hundred euros (euros 500) each, in these articles of
association henceforth referred to as "priority shares", seven
hundred and fifty million ordinary shares of one euro (euro 1)
each, in these articles of association henceforth referred to
as "ordinary shares", and seven hundred and fourty-nine
million, nine hundred and ninety-five thousand preference
shares of one euro (euro 1) each, in these articles of association
henceforth referred to as "preference shares".
2. Unless otherwise stated, the term "shares" in these articles
shall refer equally to priority, ordinary and preference shares.
ARTICLE 4
1. The Board of Management shall have the power to issue ordinary
shares if and insofar as the Board of Management has been
designated by the General Meeting of Shareholders as the
authorized body for this purpose. Such a designation shall only
take place for a specific period of no more than five years and
may not be extended by more than five years on each occasion.
The Board of Management requires the approval of the
Supervisory Board and of the meeting of priority shareholders
for such an issue.
2. If a designation as referred to in clause 1 is not in force, the
General Meeting of Shareholders shall have the power, upon the
proposal of the Board of Management - which proposal must be
approved by the Supervisory Board and by the meeting of priority
shareholders - to resolve to issue ordinary shares.
3. In the event of an ordinary share issue in return for a cash
consideration, holders of ordinary shares shall have a
pre-emption right in proportion to the number of ordinary shares
which they own. The Board of Management shall have the power to
restrict or exclude the pre-emption right accruing to these
shareholders, if and insofar as the Board of Management has also
been designated by the General Meeting of Shareholders for this
purpose as the authorized body for the period of such
designation. The provisions in the second and third sentences of
clause 1 shall apply accordingly.
4. If a designation as referred to in clause 3 is not in force, the
General Meeting of Shareholders shall have the power, upon the
proposal of the Board of Management - which proposal must be
approved by the Supervisory Board and by the meeting of priority
shareholders - to restrict or exclude the pre-emption right
accruing to shareholders.
<PAGE> 5
5. A resolution of the General Meeting of Shareholders in accordance
with clauses 3 and 4 of this article requires a majority of at
least two-thirds of the votes cast if less than half of the
issued share capital is represented at the meeting.
6. Clauses 1 and 2 of this article apply mutatis mutandis to an
issue of preference shares. An option to take preference shares
was granted on 19 June 1989 to the Stichting Preferente
Aandelen Philips under the power vested in the Board of
Management at that time in the articles of association.
7. In order for resolutions of the General Meeting of Shareholders
to issue shares or to designate the Board of Management, as
referred to in clauses 1, 2 and 6, to be valid, a prior or simultaneous
resolution granting approval is required from each group of holders of
shares of the same type whose rights are affected by the issue.
8. The preceding clauses of this article shall apply accordingly
mutatis mutandis to the granting of rights to take shares, but
shall not apply to the issue of shares to someone who exercises a
previously acquired right to take shares. The Board of Management
shall have the power to issue such shares.
9. The issue price shall not be fixed below par, subject to
deviations which the law permits in this respect. The ordinary
and priority shares shall be fully paid up when they are taken.
At least a quarter of the nominal amount shall be paid on preference
shares when they are taken. Further payment on the preference shares
shall be made within one month after the Board of Management, subject to
the approval of the Supervisory Board and the meeting of priority
shareholders, has made a corresponding request in writing to the
shareholders concerned.
ARTICLE 5
1. Any acquisition by the Company of shares in its capital which
are not fully paid up shall be null and void.
2. The Company may acquire, for valuable consideration, ordinary
shares in its own share capital if and insofar as:
a. its shareholders' equity less the purchase price of the
ordinary shares is not less than is laid down in the relevant
statutory provisions;
b. the nominal amount of the shares in its capital which the
Company acquires, holds or holds as pledgee, or which are
held by a subsidiary, is not more than one-tenth of the
issued share capital; and
c. the General Meeting of Shareholders has authorized the Board
of Management to acquire such shares, which authorization may
be given for no more than 18 months on each occasion.
Shares thus acquired may again be disposed of. The Board of
Management shall not acquire shares in the Company's own share
capital as referred to above - if an authorization as referred to
above is in force - or dispose of such shares without the
approval of the Supervisory Board.
3. The Board of Management shall have the power, without the
authorization referred to in clause 2 but with the approval of
the Supervisory Board, to acquire on behalf of the Company shares
in its own share capital as referred to above in order to
transfer the shares to employees of the Company or of a group
company, in pursuance of a rule applying to them.
4. No voting right attaches to own shares referred to above. These
shares shall not rank for the purpose of determining any majority
or for deciding whether a specific proportion of the issued share
capital is represented at a general meeting of shareholders.
<PAGE> 6
5. Upon the proposal of the Board of Management - which proposal must have
the prior approval of the Supervisory Board and the meeting of priority
shareholders - the General Meeting of Shareholders shall have the power
to resolve, having regard to the provisions of Section 99 of Book 2 of
the Netherlands Civil Code, to reduce the issued share capital:
- by a cancellation of ordinary shares acquired by the Company
in its own share capital;
- by a reduction of the nominal amount of the shares by
amendment of the articles of association, with partial
repayment on those shares;
- by a cancellation of preference shares, with repayment on the
said preference shares; or
- by a release from the obligation to make further payment on
the preference shares upon implementation of a resolution to
reduce the nominal amount of such shares.
It shall be indicated in this resolution whether and, if so, to
what extent this relates to ordinary shares, to all or only to
certain preference shares or - insofar as this is permitted - to
all shares, and rules shall be drawn up for the implementation of
the resolution. A partial repayment or release from the
obligation to make further payment must be made proportionally to
all shares concerned.
ARTICLE 6
1. Priority shares and preference shares shall be registered.
Ordinary shares shall, at the option of the shareholder, be
either in bearer or registered form, as specified in the
following clauses.
2. Where a share belongs to more than one person in any form of
joint ownership, or where limited rights in rem attach to any
share, the Company is entitled to require those concerned to
designate in writing one person to exercise the rights attached
to the share.
3. The expression "shareholder", as used in these articles, shall,
if the ownership of a share is vested in more than one person,
mean the joint holders of such share, without prejudice, however,
to the provisions of clause 2 of this article. The expression
"person", as used in these articles, shall include a body
corporate.
4. Share certificates for bearer shares consist of a main part with a
dividend sheet not consisting of separate dividend coupons. Such
dividend sheets shall be issued solely to "depositaries" who have been
admitted to the Centre for Securities Administration in Amsterdam and
who are bound by the regulations that apply to such depositaries. Share
certificates for bearer shares shall be available for such numbers,
which may be subject to change, as the Board of Management may
determine.
5. Registered shares shall be available:
- in the form of an entry in the share register without issue
of a share certificate; shares of this type are referred to
in these articles as Type I shares;
- and - should the Board of Management so decide - in the form
of an entry in the share register with issue of a
certificate, which certificate shall consist of a main part
without dividend sheet; shares of this type and share
certificates of this type for ordinary shares are referred to
in these articles as Type II shares and share certificates,
these being available for such numbers, which may be subject to
change, as the Board of Management may determine.
6. The form in which share certificates are issued shall be
determined by the Board of Management.
7. The forms of share specified in clauses 4 and 5 may, on conditions
to be determined by the Company, be converted into other forms
referred to in the respective clauses.
<PAGE> 7
ARTICLE 7
1. In respect of registered shares a register shall be kept by or
on behalf of the Company, which register shall be regularly
updated and, in the form the Board of Management will decide,
may, in whole or in part, be maintained in more than one copy
and at more than one place. At least one copy will be
maintained at the office of the Company.
2. Each shareholder's name and address, the number and type of
shares registered in his name, the date on which registered
shares were acquired, the date of acknowledgement and/or service
upon the Company of the instrument of transfer, the amounts paid
thereon and such further data as the Board of Management shall
deem desirable, whether at the request of a shareholder or not,
shall be entered in the register. The names and addresses of
persons who have a right of usufruct or pledge in respect of
those shares, the date on which they acquired such a right, the
date of acknowledgement or service upon the Company of the
instrument of transfer, as well as the other data required by
law, shall also be entered in the register.
3. Upon request, a shareholder shall be given free of charge an
extract from the register in respect of the shares registered in
his name.
ARTICLE 8
1. Upon a written request from a person entitled to such
certificates, missing or damaged ordinary share certificates,
or parts thereof, may be replaced by new certificates, or by
duplicates bearing the same numbers and/or letters, provided
that the applicant proves his title and, in so far as
applicable, his loss to the satisfaction of the Board of
Management, and further subject to such conditions as the Board
of Management may deem fit.
2. In appropriate cases, at its own discretion, the Board of
Management may stipulate that the identifying numbers and/or
letters of missing documents be published three times, at
intervals of at least one month, in at least three newspapers to
be indicated by the Board of Management, announcing the
application made; in such a case new certificates or duplicates
may not be issued until six months have expired since the last
publication, always provided that the original documents have not
been produced and shown to the Board of Management before that
time.
3. The issue of new certificates or duplicates shall render the
original document invalid.
4. The issue of new certificates or duplicates for shares may in
appropriate cases, at the discretion of the Board of Management,
be published in newspapers to be indicated by the Board of
Management.
ARTICLE 9
1. The transfer of a registered share, including:
- the allotment of registered shares in the event of a judicial
partition and division of any form of community of property or
interests;
- the transfer of a registered share as a consequence of a
judgement execution;
- the creation of limited rights in rem on a registered share
shall require an appropriate instrument of transfer that has to meet the
conditions stipulated by the Company and for which a model will be
available for shareholders at no costs, as well as an acknowledgement.
This acknowledgement may be made:
- in the instrument of transfer; or
<PAGE> 8
- by a certificate with an officially recorded, or otherwise
fixed, date containing the acknowledgement on the instrument
of transfer or of a copy or extract thereof authenticated by a
civil law notary or by the transferor.
If a Type II share certificate has been issued, the share
certificate is also required to be handed over to the Company
for the purpose of the share transfer. In this case the
acknowledgement may be made by making an annotation on the share
certificate or by replacing the certificate with a new one in
the name of the transferee.
In the case of preference shares which have not been paid up in
full, the acknowledgement may be made only if there is an
instrument of transfer with an officially recorded, or otherwise
fixed, date. When preference shares which have not been paid up
in full are transferred, the date of transfer shall be entered
in the register.
2. The transfer of priority shares is subject to the provisions of
article 10, as well as to those of the preceding clause.
PRIORITY SHARES
ARTICLE 10
1. Without prejudice to the provisions of article 9, the transfer
of priority shares is subject to the conditions stated in the
following clauses of this article.
2. A priority share may only be transferred to a nominee nominated
by the meeting of priority shareholders, and upon payment of the
nominal value of such share, with interest at the rate of four
per cent per annum - or such lower rate as the statutory
interest rate will be at the beginning of the relevant financial
year - as from the beginning of the current financial year until
the date of the transfer.
3. A holder of a priority share wishing to transfer such share
shall notify the Board of Management of such intention by
registered letter. The Board of Management shall as soon as
possible bring the contents of such notification to the notice
of the Chairman of the Supervisory Board and of the holders of
priority shares. In that event the Chairman of the Supervisory
Board shall convene a meeting of priority shareholders, which
shall be held within a month after receipt of the notification
referred to above and which shall propose a nominee.
4. However, the holder of a priority share who, by registered
letter addressed to the Board of Management, has requested the
proposal of a nominee in accordance with the provisions of the
preceding clause shall be free to transfer the share offered by
him, if after a period of three months after receipt of such
notification the meeting of priority shareholders has not
proposed a nominee or no nominee has agreed to acquire the share.
5. In the event of transfer of any priority share upon the death of
the holder thereof or for any other reason, those who acquire
the share shall, by registered letter addressed to the Board of
Management, offer such share for transfer to a nominee to be
proposed by the meeting of priority shareholders.
In that event the provisions of clauses 3 and 4 of this article
shall apply mutatis mutandis. In such a case the Company shall
be irrevocably authorized on behalf of the successor or
successors in title to effect the transfer to such nominee and
to receive the payments on his or their behalf.
Until the transfer of the priority share has taken place in the
prescribed manner and is entered in the priority share register,
no vote may be cast in respect of such priority share at the
meeting of priority shareholders.
6. The provisions of clause 5 of this article shall apply mutatis
mutandis to a holder of priority shares who has been adjudicated
bankrupt or granted a moratorium of payments or placed in the
care of a guardian, or is unable for any other reason to dispose
freely of his property.
7. The transfer of a priority share shall be entered in the
priority share register.
<PAGE> 9
BOARD OF MANAGEMENT
ARTICLE 11
1. The Company shall be managed by a Board of Management,
consisting of at least three members, under the supervision of
a Supervisory Board. The Chairman of the Board of Management
shall be President of the Company. The other members shall be
Executive Vice-Presidents (1) of the Company. With due observance
of the minimum of three, the number of members shall be decided
by the meeting of priority shareholders in consultation with
the Supervisory Board.
2. Members of the Board of Management, as well as the Chairman of the Board
of Management and President of the Company, shall be appointed by the
General Meeting of Shareholders from a binding list of two nominees for
each vacancy to be filled, drawn up by the Supervisory Board in
agreement with the meeting of priority shareholders. Votes in respect of
persons who have not been so nominated shall be invalid. In the event
of an equality of votes, the nominee who is placed first on the list
shall be appointed.
3. The list of nominees shall be deposited for inspection by
shareholders at the office of the Company and at a bank at
Amsterdam to be specified in the notice convening the general
meeting at which the appointments are to be made, as from the date of
serving the said notice until the close of that meeting.
4. The list of nominees referred to in clause 2 of this article may
be deprived of its binding character by a resolution adopted at
a general meeting of shareholders by a majority of at least
two-thirds of the votes cast, representing more than one half of
the issued share capital. In that event a new binding list shall
be submitted to a subsequent general meeting of shareholders,
with due observance of the provisions of the preceding clauses
of this article. Should such a second list also be deprived of
its binding character in the manner provided for in the first
sentence, the General Meeting of Shareholders shall be free to
appoint.
5. Should the number of members of the Board of Management fall
below three, the powers of the Board of Management shall remain
intact. In such a case a general meeting of shareholders shall be
held at the earliest opportunity to fill the vacancies on the
Board of Management.
6. Without prejudice to the provisions of clause 2 of this article,
a proposal to make appointments to the Board of Management may
only be placed on the agenda of the general meeting of
shareholders by the Board of Management and only in consultation
with the meeting of priority shareholders and the Supervisory
Board.
- ------------
(1) In the original Dutch version of these articles of association the
term "Vice-President" is used.
<PAGE> 10
ARTICLE 12
1. Members of the Board of Management may be suspended or removed
by the General Meeting of Shareholders. A resolution to suspend
or remove a member of the Board of Management, other than a
resolution proposed by the Board of Management, the Supervisory
Board or the meeting of priority shareholders, may only be
adopted by a majority of at least two-thirds of the votes cast,
representing more than half of the issued share capital. The
provisions of Section 120 (3) of Book 2 of the Civil Code shall
not apply.
2. The members of the Board of Management may be suspended from
office by the Supervisory Board either collectively or
individually. Within three months of such suspension a general
meeting of shareholders shall be held to decide whether the
suspension shall be cancelled or upheld. The person so suspended
shall be entitled to be heard at the meeting.
ARTICLE 13
1. Two members of the Board of Management may jointly represent
the Company at law and otherwise.
2. The Board of Management may authorize each of its members
separately to represent the Company within the limits defined in
the authorization.
3. The authority of a member of the Board of Management to
represent the company does not cease to exist where there is a
conflict of interest with the company, unless a legal act
between the company and a director himself is involved, in which
case, without prejudice to the provisions of the last sentence
of Section 146 of Book 2 of the Civil Code, the other members of
the Board of Management shall have the authority to represent
the Company with regard to that legal act.
ARTICLE 14
1. The Board of Management shall have the power to enter into
contracts as specified in Section 94 (1) of Book 2 of the Civil
Code.
2. The Board of Management may grant powers of attorney to persons,
whether or not in the service of the Company, to represent the
Company and may thereby determine the scope of such powers of
attorney and the titles of such persons.
ARTICLE 15
Subject to the approval of the Supervisory Board, the Board of
Management shall draw up Standing Orders, regulating, inter alia, the
mode of convening its meetings and the internal procedure at such
meetings.
ARTICLE 16
1. Without prejudice to the provisions made elsewhere in these
articles, resolutions of the Board of Management concerning the
following matters shall be subject to the approval of the
Supervisory Board:
a. issue of shares in the Company, restricting or excluding the
pre-emption right in the event of an issue of shares, acquisition of
shares in the capital of the Company and the disposal of shares thus
acquired; issue of debentures chargeable to the Company;
<PAGE> 11
b. cooperation in the issue of certificates of shares in
the Company;
c. application for quotation or for withdrawal of the quotation
of the securities referred to under a. and b. in the price
list of any stock exchange;
d. long-term cooperation, directly or indirectly, with another
company or body corporate, and the discontinuation of such
cooperation, if the said cooperation or discontinuation
thereof is of fundamental significance;
e. taking a direct or indirect participation in the share
capital of another company, the value of which is at least
equal to the amount of one quarter of the issued share
capital plus the reserves of the Company, as shown by its
balance sheet and explanatory notes, and any fundamental
change in the scale of such participation;
f. any investment involving expenditure equal to at least one
quarter of the issued share capital plus the reserves of the
Company, as shown by its balance sheet and explanatory notes;
g. a proposal to amend the articles of association;
h. a proposal to dissolve the Company or for a legal merger of
the Company;
i. a petition for bankruptcy or for a moratorium of payments;
j. a proposal to reduce the issued share capital.
2. The Supervisory Board may grant the approvals required in
accordance with this article either for a specific legal act, or
for a group of such legal acts.
ARTICLE 17
Without prejudice to the statutory provisions, absence or inability to
act of members of the Board of Management is regulated in the Standing
Orders of the Board of Management.
ARTICLE 18
The remuneration and other terms of employment of the members of the
Board of Management shall be fixed by the Supervisory Board upon the
proposal of the President of the Company.
SUPERVISORY BOARD
ARTICLE 19
1. The Supervisory Board shall be responsible for supervising the
policy pursued by the Board of Management and the general
course of affairs in the group of companies within the
Netherlands and abroad, of which the Company forms part. The
Supervisory Board shall assist the Board of Management with
advice relating to the general policy aspects connected with
the activities of the Company and of the group of companies
associated with it.
2. The Board of Management shall provide the Supervisory Board in
due time with such information as the Supervisory Board needs for
the performance of its duties and shall regularly report on the
course of business of the Philips Group.
<PAGE> 12
ARTICLE 20
1. The members of the Supervisory Board shall be appointed and may
be removed by the General Meeting of Shareholders.
The Supervisory Board shall consist of at least five members.
2. Members of the Supervisory Board shall be appointed by the
General Meeting of Shareholders from a binding list of two
nominees for each vacancy to be filled, drawn up by the
Supervisory Board in agreement with the meeting of priority
shareholders. Votes in respect of persons who have not been so
nominated shall be invalid. In the event of an equality of votes,
the person who is placed first on the list shall be appointed. A
list of nominees shall be deposited for inspection by
shareholders at the office of the Company and at a bank in
Amsterdam to be specified in the notice convening the general
meeting on whose agenda the proposed appointment has been placed,
as from the date on which the said notice is served until the
close of that meeting.
Without prejudice to the provisions of the first sentence and in
compliance with Section 142 (3) of Book 2 of the Civil Code, a
proposal to appoint a member of the Supervisory Board may only be
placed on the agenda of the general meeting by the Supervisory
Board, though only in consultation with the Board of Management
and the meeting of priority shareholders. Persons as referred to
in Sections 142 (4) and 160 of Book 2 of the Civil Code shall not
be appointed.
3. The list of nominees referred to in clause 2 of this article may
be deprived of its binding character by a resolution adopted at a
general meeting of shareholders by a majority of at least
two-thirds of the votes cast, representing more than one half of
the issued share capital. In that event, a new binding list shall
be submitted to a subsequent general meeting of shareholders with
due observance of the provisions of the preceding clauses of this
article. Should such a second list also be deprived of its
binding character in the manner provided for in the first
sentence, the General Meeting of Shareholders shall then be free
to appoint.
4. A member of the Supervisory Board shall retire at the end of the
next general meeting of shareholders held after a period of four
years following his appointment. Should a member of the
Supervisory Board reach the age of 72 in any financial year, he
shall retire at the end of the ordinary general meeting of
shareholders held in that financial year.
After having held office for the first period of four years,
members of the Supervisory Board are eligible for reelection only
twice for a full period of four years. In specific cases the
Supervisory Board and the meeting of priority shareholders may
resolve to deviate from this provision.
The Supervisory Board may establish a rotation schedule.
5. A resolution to suspend or remove a member of the Supervisory
Board, other than a resolution proposed by the Supervisory Board
or the meeting of priority shareholders, may only be adopted by a
majority of at least two-thirds of the votes cast, representing
more than half of the issued share capital. The provisions of
Section 120 (3) of Book 2 of the Civil Code shall not apply.
ARTICLE 21
1. The members of the Supervisory Board shall appoint from their
number a Chairman, a Vice-Chairman and a Secretary.
2. The Supervisory Board may appoint one of its members to be a
Delegate Member and in so doing determine the period of such
appointment. Without prejudice to the duties and responsibilities
of the Supervisory Board and of its members, the Delegate Member
shall, on behalf of the Supervisory Board, maintain more frequent
contact with the Board of Management with regard to the general
course of affairs within the scope of article 20 of these
articles of association. In so doing, the Delegate Member of the
Supervisory Board shall assist the Board of Management with
advice.
3. Without prejudice to the duty and responsibility of the
Supervisory Board as such, the latter body may resolve to have
certain tasks performed or prepared and certain powers
exercised or prepared by a commission from their number. Such a
resolution shall specify the chairman and the secretary thereof
and in what manner and how frequently such commission shall
render account to the Supervisory Board as such.
<PAGE> 13
ARTICLE 22
1. The Supervisory Board may adopt resolutions by absolute
majority of the votes cast at a meeting attended by at least
one-third of its members. The Supervisory Board may adopt
resolutions in writing outside a meeting provided that the
proposals for such resolutions have been sent in writing to all
members and no member is opposed to this method of adopting a
resolution, and provided that in such a case more than half of
the members declare themselves in favour of the proposals.
2. Minutes shall be kept of the proceedings of the Supervisory
Board, which in any case shall include the resolutions adopted by
the meeting. In the event that the resolutions are adopted
outside a meeting, as referred to in the second sentence of the
preceding clause, the resolutions so adopted shall be recorded in
writing by the Secretary. Such record shall be signed by the
Chairman and the Secretary.
3. A certificate signed by two members to the effect that the
Supervisory Board has adopted a particular resolution shall
constitute evidence of such a resolution in dealings with third
parties.
4. The members of the Board of Management shall, if so invited by
the Supervisory Board, attend the meetings of the Supervisory
Board.
ARTICLE 23
The Supervisory Board shall draw up Standing Orders regulating the mode
of convening its meetings and the internal procedure at such meetings.
ARTICLE 24
1. Upon a proposal made by the Supervisory Board, the General
Meeting of Shareholders shall determine the remuneration of the
members of the Supervisory Board, which shall consist of a
fixed yearly amount.
2. The Supervisory Board may grant an additional remuneration to be
borne by the Company to its Chairman, to a Delegate Member or to
members who pursuant to a resolution of the Supervisory Board
have been designated to perform certain functions or activities
of the Supervisory Board.
GENERAL MEETINGS OF SHAREHOLDERS
ARTICLE 25
1. The ordinary general meeting of shareholders shall be held each
year not later than 30 June and, at the Board of Management's
option, at Eindhoven, at Amsterdam, at The Hague or at
Rotterdam; the notice convening the meeting shall inform the
shareholders accordingly.
Extraordinary general meetings of shareholders shall be held as
often as deemed necessary by the Supervisory Board or the Board
of Management, and must be held if the meeting of priority
shareholders or one or more shareholders jointly representing at
least one-tenth of the issued share capital make a written
request to that effect to the Supervisory Board and the Board of
Management, specifying in detail the business to be dealt with.
If the Board of Management fails to comply with a request as
referred to in the preceding clause in such a manner that the
general meeting of shareholders can be held within six weeks
after the request, the persons making the request may be
authorized by the President of the District Court at
`s - Hertogenbosch to convene the meeting themselves.
<PAGE> 14
2. The general meeting of shareholders will in any case deal with
and deliberate on the following:
a. the Company's annual report, including at least:
- the Board of Management's report;
- the annual accounts with explanation and appendices;
- the Supervisory Board's report;
this being without prejudice to the possibility of a deferment
granted to the Board of Management, as provided in Section 101 of
Book 2 of the Civil Code.
b. proposals placed on the agenda by the Supervisory Board, the
meeting of priority shareholders, the Board of Management or
shareholders in accordance with the provisions of these
articles;
c. the filling of vacancies on the Board of Management and/or
the Supervisory Board in accordance with the provisions of
these articles.
ARTICLE 26
1. The notice convening a general meeting shall be published in
the form of an advertisement which in the Netherlands shall be
inserted in at least one national daily newspaper and, at the
Board of Management's option, in one or more foreign newspapers.
In addition, holders of registered shares shall be notified by
letter that the meeting is being convened.
2. The notice convening the meeting shall be issued by the Board of
Management. In the case envisaged in the third paragraph of
clause 1 of the preceding article, the notice shall be issued by
the shareholders therein specified, subject to the relevant
provisions of Section 111 of Book 2 of the Civil Code.
3. The notice convening the meeting shall be issued no later than on
the fifteenth day prior to the meeting.
4. Without prejudice to what is provided in this respect elsewhere
in these articles, the agenda shall contain such business as may
be placed thereon by the Board of Management, the Supervisory
Board or the meeting of priority shareholders. Furthermore the
agenda shall contain such business as one or more shareholders
representing at least one-hundredth of the issued share capital
have requested the Supervisory Board and the Board of Management
to place on the agenda, at least 60 days before the date of the
meeting. The Supervisory Board and the Board of Management may
resolve not to place such business proposed by shareholders on
the agenda if they are of the opinion that such request would be
detrimental to the serious interests of the Company. The meeting
shall not adopt resolutions on matters other than those which
have been placed on the agenda.
5. Without prejudice to the provisions of Sections 99 and 123 of
Book 2 of the Civil Code, the notice convening the meeting shall
either mention the business on the agenda or state that the
agenda is open to inspection by shareholders at the office of the
Company and at a specified bank at Amsterdam.
ARTICLE 27
1. All shareholders are entitled, without prejudice to the
provisions of article 6, clause 2, to attend the general
meeting of shareholders, to address the meeting and, subject to
the provisions of Section 118 (7) of Book 2 of the
Civil Code, to vote.
2. In order to exercise the rights mentioned in clause 1 of
this article, the holders of bearer share certificates
shall deposit their share certificates prior to the meeting
at the office of the Company or at one of the banks or
other establishments to be indicated in the notice, at
least one of which shall be a depositary as mentioned in
article 6, clause 4, situated at Amsterdam. The notice
shall also mention the last day on which this can be done.
The deposit shall be made in return for a card of admission
to the meeting.
<PAGE> 15
3. In order to exercise the rights mentioned in clause 1 of
this article, the holders of registered ordinary shares
shall notify the Company in writing of their intention to
do so no later than on the day and at the place mentioned
in the notice convening the meeting, and also - insofar as
Type II ordinary shares are concerned - stating the
identifying number of the ordinary share certificate. They
may only exercise the said rights at the meeting for the
ordinary shares registered in their name both on the day
referred to above and on the day of the meeting.
4. In order to exercise the rights mentioned in clause 1 of
this article, the holders of preference shares shall notify
the Company of their intention to do so no later than on
the day prior to the meeting. They may exercise the said
rights at the meeting only for the shares registered in
their name on the day of the meeting.
5. The Company shall send a card of admission to the meeting
to holders of registered shares who have notified the
Company of their intention in accordance with the
provisions of the two preceding clauses.
6. Shareholders, usufructuaries and pledgees who are entitled
to attend a general meeting may be represented by proxies
with written authority. Without prejudice to the provisions
of the preceding clauses of this article, the written
authorization must be deposited not later than at the time
and at the place indicated in this article.
ARTICLE 28
With regard to the exercise of the rights referred to in the
preceding article, the Company is entitled to regard as correct
the statements regarding the depositing of share certificates
and/or the granting of authorizations by shareholders, and
regarding the quantities to which the deposits and/or
authorizations relate, which are made to it in due time by the
institutions designated for that purpose in the notice convening
the meeting.
ARTICLE 29
1. General meetings of shareholders shall be presided over by the
Chairman of the Supervisory Board or by any other person
nominated by the Supervisory Board. The Chairman may restrict
the time for which shareholders may speak, if he considers this
to be desirable with a view to the orderly conduct of the
meeting.
2. The resolutions adopted at a general meeting of
shareholders shall be recorded by a civil law notary. Such
record shall be co-signed by the Chairman of the meeting.
The latter shall ensure that a summary account is made of
the business transacted at the meeting.
ARTICLE 30
1. Unless otherwise stated in these articles, resolutions shall be
adopted by absolute majority of votes. Blank and invalid votes
shall not be counted. The Chairman shall decide on the method
of voting, including the possibility of voting by acclamation.
In the event of voting by acclamation, the votes against will
be recorded if a request to this effect is made.
2. Except as provided in article 11, clause 2 and article 20,
clause 2, in the event of an equality of votes the relevant
proposal shall be deemed to have been rejected.
<PAGE> 16
ARTICLE 31
Each ordinary share and each preference share shall entitle to
one (1) vote. Each priority share shall entitle to five hundred
(500) votes.
ARTICLE 32
1. Separate meetings of holders of preference shares shall be held
as often as a resolution of the meeting of holders of
preference shares is required by statutory provisions or these
articles of association, and further as often as the Board of
Management, the Supervisory Board or the meeting of priority
shareholders deems this necessary, and must be held if one or
more holders of preference shares representing at least
one-tenth of the capital issued in the form of preference
shares make a written request to that effect to the Board of
Management, specifying in detail the business to be dealt with.
2. A meeting of holders of preference shares shall be convened no
later than on the fifteenth day prior to the meeting by a
letter addressed to the persons entitled to attend this
meeting.
3. Meetings of holders of preference shares shall be held at
Eindhoven, at Amsterdam, at The Hague or at Rotterdam. The
notice convening the meeting shall inform the holders of
preference shares in respect thereof. Articles 27 to 31
inclusive shall apply accordingly to meetings of holders of
preference shares.
4. At a meeting of holders of preference shares at which the whole
of the capital issued in the form of preference shares is
represented, valid resolutions may be adopted, provided that
the vote is unanimous, even if the provisions governing the
place of the meeting, the manner in which it is convened, the
period of notice and the specification in the notice of the
business to be dealt with have not been observed.
ARTICLE 33
Separate meetings of holders of ordinary shares shall be held as often
as a resolution of the meeting of holders of ordinary shares is
required by statutory provisions or these articles of association. The
provisions of article 25, clause 1 and articles 26 to 31 inclusive
shall apply accordingly to such a meeting.
MEETINGS OF PRIORITY SHAREHOLDERS
ARTICLE 34
1. Meetings of priority shareholders shall be held on the proposal
of the Board of Management.
They shall be held at a place to be indicated by the Chairman of the
Board of Management.
2. Meetings of priority shareholders must be held if holders of priority
shares representing at least two-fifths of the issued priority share
capital make a written request to that effect to the Board of
Management, specifying in detail the business to be dealt with.
If the meeting is not convened within fourteen days after a request made
by priority shareholders, those shareholders shall be entitled to
convene the meeting themselves.
3. Meetings shall be convened by notice to every holder of a priority
share. A meeting shall not be deemed to be invalid by reason of a notice
not having been received or not received in due time, unless it cannot
be shown that the notice was indeed dispatched.
The notices shall be issued by the Chairman of the Board of Management
or, in the case provided in clause 2, by the priority shareholders
referred to therein.
Notices shall be served at least eight days prior to the meeting.
4. A meeting at which three-fifths of the priority share capital
is represented shall be exempted from all periods of notice and
formalities concerning the convening of the meeting.
<PAGE> 17
5. The meeting of priority shareholders may adopt resolutions in
writing provided that the proposals for such resolutions have
been sent in writing to all holders of priority shares and no
holder is opposed to this method of adopting a resolution.
6. A certificate signed by the holder(s) of at least half of the
priority shares to the effect that the meeting of priority
shareholders has adopted a particular resolution shall
constitute evidence of such a resolution in dealings with third
parties.
7. The consent of the meeting is required if a priority
shareholder wishes to be represented at the meeting by a proxy.
REPORT OF THE BOARD OF MANAGEMENT, ANNUAL ACCOUNTS AND DISTRIBUTIONS
ARTICLE 35
1. The financial year shall be identical with the calendar year.
2. Without prejudice to the provisions of article 25, clause 2,
the Board of Management shall, within four months after the
close of each financial year, submit to the Supervisory Board
annual accounts consisting of a balance sheet as at 31 December
of the preceding year and a profit and loss account in respect
of the financial year then ended, with the explanatory notes
thereto.
3. With the approval of the Supervisory Board and the meeting of
priority shareholders, the Board of Management shall have the
power to determine what portion of the profit - the positive
balance of the profit and loss account - shall be retained by
way of reserve.
Not available for retention in this way are amounts needed for
(a) the formation of legally required reserves and/or
(b) distributions as referred to in clauses 1 to 3 of article 37.
4. The Supervisory Board shall cause the annual accounts to be
examined by a registered accountant designated for that purpose
by the Company in compliance with the provisions of Section 393
of Book 2 of the Civil Code and shall report to the General
Meeting of Shareholders on the annual accounts. If the General
Meeting of Shareholders does not designate such a registered
accountant, the Supervisory Board, and in default thereof, the
Board of Management, shall have the power to do so. Such a
designation may be made for an indefinite period.
5. The Board of Management shall then have the annual report drawn
up, as provided in article 25. Sufficient copies of the annual
report shall be made available to the shareholders from the day
on which the annual general meeting of shareholders is convened
until the close of that meeting.
ARTICLE 36
Adoption by the General Meeting of Shareholders of the annual accounts,
as referred to in article 39 and without any express reservation made
by the General Meeting of Shareholders, shall have the effect of fully
discharging the Board of Management and the Supervisory Board from
liability for the performance of their respective duties in the
financial year concerned.
ARTICLE 37
1. From the profit shown in the annual accounts adopted by the
General Meeting of Shareholders, the percentage mentioned below
of the amount required to be paid from time to time in the
course of the financial year concerned on the preference shares
shall, as far as possible and in compliance with the provisions
of Section 105 (2) of Book 2 of the Civil Code, first be
distributed on those shares. The dividend on the preference
shares shall only be distributed for the number of days that
such shares were actually outstanding in the financial year
concerned.
<PAGE> 18
2. The percentage referred to in clause 1 shall be equal to the
Average Main Refinancing Rates during the financial year for
which the distribution is made, plus two percent (2%). Average
Main Refinancing Rate shall be understood to mean the average
value on each individual day during the financial year for which
the distribution is made of the Main Refinancing Rates prevailing
on such day. Main Refinancing Rate shall be understood to mean
the rate of the Main Refinancing Operation as determined and
published from time to time by the European Central Bank.
3. If the profit for a financial year is declared and one or more
preference shares have been withdrawn or preference shares have
been fully repaid in that financial year, those persons who
according to the register referred to in article 7 were holders
of preference shares at the time of the said withdrawal or
repayment shall have an inalienable right to a distribution of
profit as described below. The profit which, if possible, shall
be distributed to the said persons shall be equal to the amount
of the distribution to which they would have been entitled under
the provisions of clause 1 if they had still been holders of the
aforementioned preference shares at the time when the profit was
declared, this being calculated on the basis of the period for
which they were holders of preference shares in the said
financial year, a part of a month being counted as a full month.
With regard to an alteration to the provisions of this clause,
the proviso referred to in Section 122 of Book 2 of the Civil
Code is made.
4. From the profit that remains after the application of clause 3 of
article 35 and clauses 1 to 3 inclusive of this article, an amount of 20
euros (euros 20) shall first be distributed on every priority share. The
profit that remains thereafter shall be at the disposal of the General
Meeting of Shareholders, which is empowered to withhold distribution in
whole or in part or to make a distribution in whole or in part to
holders of ordinary shares in proportion to their holdings of ordinary
shares.
ARTICLE 38
1. Upon the proposal of the Board of Management, which proposal
shall have received the prior approval of the Supervisory Board
and of the meeting of priority shareholders, the General
Meeting of Shareholders shall be entitled to resolve to make
distributions charged to the "other reserves" shown in the
annual accounts or charged to "share premium account".
2. Upon the proposal of the Board of Management, which proposal
shall have received the prior approval of the Supervisory Board
and of the meeting of priority shareholders, the General Meeting
of Shareholders shall be entitled to make distributions to
shareholders under article 37, article 38, clause 1 and article
39 in the form of the issue of ordinary shares.
ARTICLE 39
At its own discretion and having regard to the statutory provisions
relating thereto, the Board of Management, with the prior approval of
the Supervisory Board and of the meeting of priority shareholders, may
distribute from the profits for the current financial year one or more
interim dividends on the shares before the annual accounts for any
financial year have been approved and adopted at a general meeting.
ARTICLE 40
1. The Board of Management determines for various types of shares
on what dates and in what form distributions will be payable.
Notices relating to such distributions shall in the Netherlands
be given in at least one national daily newspaper, and abroad in
at least one daily newspaper appearing in each of those countries
where, on the application of the Company, the Company's shares
have been admitted for official quotation, and further in such
manner as the Board of Management may deem desirable.
The provisions of this article shall apply accordingly in the
event of a share issue with pre-emption subscription rights.
<PAGE> 19
2. Cash distributions in respect of shares for which Type II share
certificates are outstanding shall, if such distributions are
made payable only outside the Netherlands, be paid in the
currency of the country concerned, converted at the rate of
exchange on the Amsterdam Stock Exchange at the close of business
on a date to be fixed and announced by the Board of Management.
This date may not be set earlier than the day before the date on
which the distribution is declared and not later than the date
which has been fixed for the shares concerned in accordance with
the provisions of clause 3.
3. With regard to the provisions of article 6, clause 2 and of
article 7, the person entitled to any distribution on registered
shares shall be the person in whose name the share is registered
- or, in the case of limited rights in rem, the person whose
right appears well-founded - at the date to be determined for
that purpose by the Board of Management in respect of the
distribution for each of the different types of shares.
4. A person entitled to a distribution on a bearer share for which a
share certificate is outstanding shall, in order to exercise his
right to such distribution, arrange for the dividend sheet
appertaining to that share to be in the safekeeping of a
depositary as mentioned in article 6, clause 4, at such a time as
shall be specified by the Board of Management. In respect of
distributions referred to herein, the Company shall have
discharged its liability to the persons entitled thereto by
making these distributions available to the depositary referred
to in article 6, clause 4 or to one or more third parties
designated by the latter and the Company, in favour of the
persons in whose name the dividend sheets were held by the
depositaries at the aforementioned time.
5. Rights of payment of distributions in cash shall lapse if such
distributions are not claimed within five years following the day
after the date on which they were made available.
6. In the case of a distribution in shares, any shares not claimed
within a period to be determined by the Board of Management shall
be sold for the account of the persons entitled to the
distribution who failed to claim the shares. These persons are
entitled only to the net proceeds in cash of such a sale. This
entitlement will be forfeited if the proceeds are not claimed
within five years following the day after the date on which the
distribution in shares was made payable.
7. In the case of a distribution in the form of shares on registered
shares, those shares shall be added to the share register. A Type
II share certificate for a nominal amount equal to the number of
shares added to the register shall be issued to holders of Type
II shares, without prejudice to the provisions of article 6,
clause 4.
8. The Board of Management may, for reasons which it considers
sufficient, and subject to such conditions as it may consider
necessary, rule that the provisions of clause 1, second paragraph
and clause 4 of this article shall not apply.
AMENDMENT OF ARTICLES OF ASSOCIATION AND DISSOLUTION
ARTICLE 41
1. A resolution to amend the articles of association or to
dissolve the Company shall be valid only provided that:
a. the consent of the Supervisory Board and of the meeting of
priority shareholders has been or will be obtained;
b. the consent of the meeting of priority shareholders is given
at a meeting at which more than half the issued priority
share capital is represented and by at least three-fourth of
the votes cast; if this requirement is not complied with, a
further meeting shall be held within four weeks thereof, at
which, irrespective of the priority share capital
represented, the resolution can be adopted by at least
three-fourth of the votes cast;
<PAGE> 20
c. the full proposals have been deposited for inspection by
shareholders at the office of the Company and at a bank at
Amsterdam specified in the notice convening the general
meeting of shareholders, as from the day on which the said
notice is served until the close of that meeting;
d. the resolution is adopted at a general meeting of
shareholders at which more than half of the issued share
capital is represented and by at least three-fourth of the
votes cast; if the requisite share capital is not represented
at a meeting called for that purpose, a further meeting shall
be convened, to be held within four weeks of the first
meeting, at which, irrespective of the share capital
represented, the resolution can be adopted by at least
three-fourth of the votes cast.
2. Where a resolution as referred to in the preceding clause of this
article is submitted by the Board of Management, the General
Meeting of Shareholders may, notwithstanding the provisions of
clause 1 d., resolve by absolute majority of votes to amend the
articles of association or to dissolve the Company, without more
than half of the issued capital having to be represented.
ARTICLE 42
Should the Company be dissolved, the liquidation and apportionment
shall be effected by the Board of Management in compliance with the
relevant provisions of Book 2 of the Civil Code and, insofar as they
are not inconsistent with the latter, the articles of association.
In adopting a resolution to dissolve the Company, the General Meeting
of Shareholders may approve the payment of a remuneration to the
liquidators.
ARTICLE 43
From the balance of the liquidation, a distribution shall first be made
on every preference share to the amount paid thereon, then on every
priority share to the nominal amount thereof, and the residue
thereafter shall be distributed on the ordinary shares.
Transitional provisions
ARTICLE 44
Rights attached to a Type A share certificate (K document), as referred to in
article 6 of the articles of association of Philips Electronics N.V. valid up
to 6 May 1994, as well as rights attached to shares with a nominal value of ten
guilders (NLG 10.--), may not be exercised so long as these shares have
not been converted into shares with a nominal value of one euro (euro 1.--).
Upon conversion the shareholder is entitled to the payment of dividends insofar
as this right has not lapsed under the provisions of article 40, clause 5 of
these articles of association.
<PAGE> 21
CERTIFICATE OF ENGLISH TRANSLATION
Pursuant to Rule 306 of Regulation S-T, the registrant certifies that the
Articles of Association, as amended, dated as of May 29, 1999, which is included
as part of the Form 6-K, dated August 9, 1999, is a fair and accurate English
translation.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(Registrant)
By: /s/ Arie Westerlaken
-----------------------
Name: Arie Westerlaken
Title: General Secretary
Date: August 9, 1999
