Preference shares as protection measure
On 26 May 2005, the Stichting Continuïteit TomTom (the “Foundation”) was established as an instrument of protection against hostile takeovers and to protect our interests in other situations. The purpose of the Foundation is to safeguard our interests and those of our subsidiaries in such a way that these interests as well as the interests of all those involved in the organisation, are safeguarded, and that influences, which in contravention with those interests could affect our independence, continuity and/or corporate identity, are repelled.
We believe that the issue of preference shares or the grant of rights to subscribe for preference shares to the Foundation, may have the effect of preventing, discouraging or delaying an unsolicited attempt to obtain (de facto) control and may help us to determine our position in relation to a bidder and its plans, and to seek alternatives.
There are currently no preference shares outstanding but a call option to issue preference shares is in place.
Composition of Continuity Foundation
In accordance with the Foundation’s Articles of Association, the Board members are appointed by the Board of the Foundation. The Board consists of three members. On 11 March 2009, the Board appointed Frans Koffrie as a member of the Board with immediate effect. The other Board members are Mick den Boogert and Robert de Bakker.
The Management Board of the company and the Board of the Foundation declare that they are jointly of the opinion that the Foundation is independent from the company.
Foundation Continuity TomTom
The company has granted the Foundation a call option (the “Call Option”), entitling it to subscribe for preference shares, equal to a maximum of 50% of the aggregate issued and outstanding share capital (excluding issued and outstanding preference shares) of the company at the time of issue.
The issue of preference shares in this manner would cause substantial dilution to the voting power of any shareholder whose objective was to gain control of the company.
In addition to the Call Option, the Management Board wishes to have the authority to issue preference shares. The Management Board believes that there might be circumstances under which the Management Board and the Supervisory Board would feel that the issue of additional preference shares could be required in the interest of the company and its stakeholders. For instance, the number of preference shares the Foundation can acquire might not be sufficient. Also the situation could occur whereby the Foundation already exercised its Call Option and subsequently the preference shares have been cancelled. Similar to the structure with the Foundation, possible issuances of preference shares will be temporary and subject to the company's Articles of Association and the legislation on takeovers.
During the Annual General Meeting held in April 2009, a resolution was passed to extend the authority of the Management Board to issue preference shares and to grant rights to subscribe for such shares until 28 October 2010, which authority is limited to 50% of the number of issued ordinary shares at the time of issue.
Also the authorisation of the Management Board to restrict or exclude pre-emptive rights pertaining to the (rights to subscribe for) preference shares was extended until 28 October 2010 at the Annual General Meeting of Shareholders in April 2009.
Pursuant to the Articles of Association, a resolution of our Management Board to issue preference shares, or to grant rights to subscribe for preference shares, as a result of which the aggregate nominal value of the issued preference shares will exceed 50% of the outstanding capital of ordinary shares at the time of issue, will at all times require the prior approval of the General Meeting of Shareholders.
Upon the issue of preference shares, subscribers for preference shares must pay at least 25% of the nominal value of the preference shares. Each transfer of preference shares requires the prior approval of the Management Board and Supervisory Board. No resolution of the General Meeting of Shareholders or the Management Board is required for an issue of preference shares pursuant to the exercise of a previously granted right to subscribe for preference shares (including the right of the Foundation to acquire preference shares pursuant to the Call Option).
The issue of preference shares is meant to be temporary. Unless the preference shares have been issued by a vote of the General Meeting of Shareholders, our Articles of Association requires that a General Meeting of Shareholders be held within six months after the issue of preference shares to consider their cancellation and redemption.
If the General Meeting of Shareholders does not resolve to redeem and cancel the preference shares, a General Meeting of Shareholders will be held every six months thereafter for as long as preference shares remain outstanding.
Obligations of shareholders to disclose holdings
Under the Financial Markets Supervision Act (Wet op het financieel toezicht), any person who, directly or indirectly, acquires or disposes of an interest in the capital and/or the voting rights of a limited liability company, incorporated under Dutch law with an official listing on a stock exchange within the European Economic Area, or a company organised under the laws of a state that is not a member of the European Union or party to the European Economic Area with an official listing on Euronext Amsterdam, must give written notice of such acquisition or disposal if, as a result of such acquisition or disposal, the percentage of capital interest and/or voting rights held by such a person meets, exceeds or falls below one of the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95% of a company’s issued and outstanding share capital. Such notification must be given to the Dutch securities regulator (Autoriteit Financiële Markten) (the “AFM”) without delay.
Under the Financial Markets Supervision Act, we are required to inform the AFM immediately if our issued and outstanding share capital, or voting rights, change by 1% or more compared with our previous notification. Other changes in our capital or voting rights need to be notified periodically.
The AFM will publish such notification in a public register. If a person’s capital or voting rights meets or surpasses the abovementioned thresholds as a result of a change in our issued and outstanding share capital or voting rights, that person is required to make such notification no later than the fourth trading day after the AFM has published our notification as described above.
The AFM keeps a public register of all notifications made pursuant to these disclosure obligations, and publishes any notification it receives. As at 31 December 2009, we do not know of any person or legal entity holding an interest in our ordinary share capital and/or voting rights of more than 5% (also based on the AFM register of substantial holdings) other than:
|Decree Article 10 EU Takeover Directive
According to the Decree Article 10 EU Takeover Directive, TomTom has to report on amongst others its capital structure, restrictions on voting rights and the transfer of securities, significant shareholdings in TomTom, the rules governing the appointment and dismissal of members of the Management Board and the Supervisory Board and the amendment of the Articles of Association and the powers of the Management Board (in particular the power to issue shares or to repurchase shares).
The information required by the Decree Article 10 EU Takeover Directive, to the extent applicable to TomTom, is included in this Corporate Governance section of this Annual Report.
Mandatory Statement within the meaning of the Governmental Decree of 20 March 2009 on Corporate Governance
According to the Governmental Decree of 20 March 2009 TomTom has to publish a statement on corporate governance (the “Corporate Governance Statement”). The Corporate Governance Statement has to report on compliance with the Code. In addition, the Corporate Governance Statement must provide information on the functioning of the General Meeting of Shareholders including its main rights, the composition of the Management Board and the Supervisory Board including its committees and the information which must be disclosed pursuant to the Decree Article 10 Takeover Directive.
The Management Board states that the aforementioned information is included in this Corporate Governance section.
In accordance with the Decree of 20 March 2009, the Corporate Governance Statement must also describe the main characteristics of the internal risk management and control systems connected to the company’s financial reporting process. This description is included in the Internal Control report section on page 26 of the Annual Report and is, for the purpose of complying to the Decree of 20 March 2009, included for reference in this Corporate Governance section.
Mandatory Statement for Large Companies within the meaning of 2:153 Dutch Civil Code
A statement within the meaning of clause 153 subparagraph 1 of Book 2 of the Dutch Civil Code was filed with the Trade Register in 2008 which provides that the company meets the requirements as set in clause 2:153 (2) Dutch Civil Code.
Statement within the meaning of article 5:25c (2) (c) financial markets supervision act
The Management Board is responsible for the preparation and fair presentation of the Financial Statements and for the preparation of the Management Report. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the company Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
The Management Board states that, to the best of its knowledge:
|18 February 2010|