Corporate governance

Royal Philips has a two-tier board structure consisting of a Board of Management and a Supervisory Board, each of which is accountable to the General Meeting of Shareholders for the fulfillment of its respective duties.

The company is governed by Dutch corporate and securities laws, its Articles of Association, and the Rules of Procedure of the Board of Management and the Executive Committee and of the Supervisory Board respectively. Its corporate governance framework is also based on the Dutch Corporate Governance Code and US laws and regulations applicable to Foreign Private Issuers. Additionally, the Board of Management has implemented the Philips General Business Principles and underlying policies, as well as separate codes of ethics that apply to employees working in specific areas of our business, i.e. the Financial Code of Ethics and the Procurement Code of Ethics.

To gain a better understanding of the company’s corporate governance, including the responsibilities of the Board of Management, the Executive Committee and the Supervisory Board (and its committees) and the internal regulations and procedures governing their functioning, please refer to Corporate governance chapter of the company’s Annual Report and to the documents below.

Articles of Association – English translation

Articles of Association – authentic Dutch text

Rules of Procedure of the Board of Management and Executive Committee

Rules of Procedure of the Supervisory Board, including the Charters of the Board

Philips is required to comply with, inter alia, Dutch corporate governance rules, the US Sarbanes-Oxley Act, and other US securities laws and related regulations (including applicable stock exchange rules), insofar as such US laws and regulations are applicable to the company.

Summary of the significant differences between the Company’s corporate governance practice and the New York Stock Exchange corporate governance standards applicable to US domestic issuers

Diversity policy

To Philips, it is a strategic priority to increase the diversity of its workforce to mirror its stakeholders and markets, which will positively impact the company’s business performance in all countries it operates in. In line with this priority, and in accordance with the Dutch Corporate Governance Code, the Supervisory Board adopted the Diversity Policy to also promote diversity at the levels of the Board of Management, the Executive Committee and the Supervisory Board.

Diversity Policy

Insider trading

Members of the Board of Management, the Executive Committee and the Supervisory Board are only allowed to trade in Philips securities (including the exercise of stock options) during ‘windows’ of twenty business days following the publication of annual and quarterly results (provided the person involved has no 'inside information' regarding Philips at that time). They shall only hold shares in Philips for the purpose of long-term investment and must refrain from short-term transactions in Philips securities.

The members of the Board of Management, the Executive Committee and the Supervisory Board are furthermore prohibited, during certain blocked periods preceding the publication of annual and quarterly results, from trading directly or indirectly in securities issued by any of the peer companies (which together reflect the business portfolio of Philips) as determined by the Supervisory Board and published in the company’s Annual Report.

Pursuant to the European Market Abuse Regulation, the members of the Board of Management and the Supervisory Board have to notify the Dutch Authority for the Financial Markets (AFM) of any transaction in Philips securities concluded by or on behalf of them. The AFM discloses the notified transactions on its website (www.afm.nl).

Disclosure Committee

A Disclosure Committee has been appointed by the Board of Management to oversee the company’s disclosure activities and to assist the Board of Management in fulfilling its responsibilities in this respect.

Disclosure Committee Charter

Shareholder requests

Pursuant to article 24 paragraph 1 and article 25 paragraph 3 of the articles of association of Royal Philips, the Board of Management established procedural rules that apply to shareholders who wish to address requests to Royal Philips.

Rules of Procedure regarding Shareholder Requests