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Corporate governance

Akzo Nobel N.V. is a public limited liability company (“Naamloze Vennootschap”) established under the laws of the Netherlands. Its common shares are listed on Euronext Amsterdam. AkzoNobel’s management and supervision structure is organized in a so-called two-tier system, comprising a Board of Management, solely composed of executive directors, and a Supervisory Board, solely composed of non-executive directors. The two Boards are independent of each other and are accountable to the Annual General Meeting of shareholders for the performance of their functions.

AkzoNobel’s corporate governance structure is based on the requirements of the Dutch Civil Code, the company’s Articles of Association and the rules and regulations applicable to companies listed on the stock exchange of Euronext, Amsterdam, complemented by several internal procedures. These procedures include a risk management and control system, as well as a system of assurance of compliance with laws and regulations.

Over the last decade, AkzoNobel has been consistently enhancing and improving its corporate governance standards in accordance with applicable laws and regulations. Most notable are the Dutch Corporate Governance Code adopted in 2003 (the “Code”) and the US Sarbanes-Oxley Act of 2002 and its implementation rules. Even though AkzoNobel has delisted from NASDAQ and deregistered from the SEC, the company will continue to build on the improvements it has made to its corporate governance over the last few years.

The Code contains principles and best practices for Dutch companies with listed shares. AkzoNobel agrees both with the general approach and with the vast majority of its principles and best practice provisions. Corporate governance at AkzoNobel was placed on the agenda of the 2004 and 2005 Annual General Meetings of shareholders as a separate item for discussion. This specifically included a number of aspects where AkzoNobel’s corporate governance deviates from the Code, as explained in the 2004 Annual Report. The Board of Management and the Supervisory Board have taken these discussions into account in formulating a position on the company’s corporate governance. One of the results was an amendment of the Articles of Association which was approved by the Annual General Meeting of shareholders in 2005.

This chapter describes AkzoNobel’s corporate governance. Deviations from the Code are explained, in accordance with the Code’s “apply or explain” principle.

The Board of Management and the Supervisory Board believe that the company’s corporate governance structure as described here is the most appropriate for AkzoNobel at this point in time. Except for those aspects of the company’s governance structure which can only be amended with the approval of the Annual General Meeting of shareholders, the Board of Management and the Supervisory Board may make adjustments to the way the Code is applied as described below, if this is considered to be in the interest of the company. If adjustments are made, they will be published and reported in the annual report for the relevant year.

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