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Note 16 Equity

Subscribed share capital

The holders of common shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the Annual General Meeting of shareholders. The holders of the priority shares are entitled to dividend of 6 percent per share or the statutory interest in the Netherlands, whichever is lower, plus any accrued and unpaid dividends. They are entitled to 200 votes per share (in accordance with the 200 times higher nominal value per share) at the Annual General Meeting of shareholders. In addition, the holders of priority shares have the right to draw up binding lists of nominees for appointment to the Supervisory Board and the Board of Management; amendments to the Articles of Association are subject to the approval of the Meeting of Holders of Priority Shares.

Priority shares may only be transferred to a transferee designated by a Meeting of Holders of Priority Shares and against payment of the par value of the shares, plus interest at the rate of 6 percent per annum or the statutory interest in the Netherlands, whichever is lower. There are no restrictions on voting rights of holders of common or priority shares. The Articles of Association set out procedures for exercising voting rights. The General Meeting of Shareholders has in 2009 resolved to authorize the Board of Management for a period of 18 months (i) to issue shares (or grant rights to shares) in the capital of the company up to a maximum of 10 percent, which in case of mergers or acquisitions can be increased by up to a maximum of 10 percent, of the total number of shares outstanding (and to restrict or exclude the pre-emptive rights to those shares) and (ii) to acquire shares in the capital of the company, provided that the shares that will at any time be held will not exceed 10 percent of the issued share capital. The issue or repurchase of shares requires the approval of the Supervisory Board.

Composition of share capital at year-end




In € 

Authorized share capital

Subscribed share capital




Priority shares (48 with nominal value of €400)



Cumulative preferred shares (200 million with nominal value of €2)


Common shares (600 million with nominal value of €2)









Outstanding common shares




Number of shares









Outstanding at January 1



Issued in connection to stock options exercised and performance shares granted



Share buyback program





Balance at year-end



In 2008, we completed a share repurchase program of €1.4 billion. Under the program, we repurchased and subsequently canceled 31.7 million shares (12 percent of the issued share capital). We held no common shares at year-end 2009 or 2008.

Earnings per common share are calculated by dividing net income by the weighted average number of common shares outstanding during the year.

Weighted average number of shares




Number of shares









Issued common shares at January 1






Effect of:



- Share buyback


- Issued common shares during the year



Shares for basic earnings per share for the year






Effect of dilutive shares:



- For stock options



- For performance-related shares






Shares for diluted earnings per share



Of the shareholders’ equity of €7.8 billion, an amount of €7.1 billion (2008: €6.8 billion) was unrestricted and available for distribution – subject to the relevant provisions of our Articles of Association and Dutch law.

Unrestricted reserves at year-end




In € millions









Shareholders’ equity at year-end



Subscribed share capital



Subsidiaries’ restrictions to transfer funds



Statutory reserve due to capital reduction



Revaluation reserve for step acquisitions


Reserve for development costs






Unrestricted reserves



At the General Meeting of Shareholders of April 26, 2001, an amendment to the Articles of Association was approved whereby the par value of the priority shares was decreased to €400 and of the common shares and the cumulative preferred shares to €2. As the revised nominal values are somewhat lower than the original par values, in accordance with section 67a of Book 2 of the Netherlands Civil Code, we recognized a statutory reserve of €77 million for this reduction in subscribed share capital. Statutory reserves also include €1 million for capitalized development costs, as well as the reserves relating to earnings retained by subsidiaries, associates, and joint ventures after 1983. In 2009, we acquired 70 percent equity interest in a company which we already owned for 30 percent. The revaluation of the initital interest of 30 percent was recorded on a revaluation reserve. Statutory and revaluation reserves are non-distributable.

Other components of shareholders’ equity

Changes in fair value of derivatives comprise the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. In 2008, an amount of €551 million was transferred to goodwill, which related to hedging activities for the acquisition of ICI. Tax related to cash flow hedges: 5 million negative (2008: €17 million positive).

Cumulative translation reserves comprise all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as from the translation of intercompany loans with a permanent nature and liabilities and derivatives that hedge the net investments in a foreign subsidiary. Tax related to exchange differences arising on translation of foreign operations were €33 million negative (2008: €117 million positive).

Equity-settled transactions include the stock option program and the performance-related share plan whereby options or shares are granted to the Board of Management and other executives. For details of the performance-related stock option plan and the performance-related share plan for the Board of Management and other executives, see note 8.


We will propose to pay a total dividend of €1.35 per share to the Annual General Meeting on April 28, 2010. An interim dividend of €0.30 per share was paid in November 2009. Our dividend policy is based on an annual pay-out ratio of at least 45 percent of net income before incidentals and fair value adjustments for the ICI acquisition. This proposed full-year dividend of €1.35 per share represents a 57 percent payment under our policy. In May 2009, we paid €1.40 as final dividend for 2008.

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