99
20 Equity attributable to common shareholders continued
Ahold
Annual Report 2011
Groupata glance
Performance
Governance
Investors
Notes to the consolidated financial statements continued
Cumulative preferred shares
The Company's Articles of Association provide for the possible issuance of cumulative preferred shares. The Company believes that its
ability to issue this class of shares could prevent, or at least delay, an attempt by a potential bidder to make a hostile takeover bid. In this
respect, but also in other circumstances, this ability may safeguard the interests of the Company and all stakeholders in the Company and
resist influences that might conflict with those interests by affecting the Company's continuity, independence, or identity. No cumulative
preferred shares were outstanding as of January 1, 2012, or during 2011 and 2010.
In March 1989, the Company entered into an agreement with Stichting Ahold Continuïteit (SAC) as amended and restated in April 1994,
March 1997, December 2001and December 2003 (the Option Agreement). Pursuant to the Option Agreement, SAC was granted an
option for no consideration to acquire from the Company, from time to time until December 2016, cumulative preferred shares up to a total
par value that is equal to the total par value of all issued and outstanding shares of Ahold's share capital, excluding cumulative preferred
shares, at the time of exercising the option. In case the authorized share capital of the Company is amended during the term of the option,
the Option Agreement provides for a corresponding change of the total par value of cumulative preferred shares under option. The holders
of the cumulative preferred shares are entitled to 1,666.67 votes per share and a cumulative dividend expressed as a percentage of the
amount called-up and paid-in to purchase the cumulative preferred shares. The percentage to be applied is the sum of (1) the average
basic refinancing transaction interest rate as set by the European Central Bank - measured by the number of days during which that rate
was in force in the fiscal year over which the dividend is paid - plus 2.1 percent, and (2) the average interest surcharge rate - measured
by the number of days during which that rate was in force in the fiscal year over which the dividend is paid - that would be charged by the
largest credit institution in the Netherlands (based on balance sheet total as at the close of the fiscal year immediately preceding the fiscal
year over which the dividend is paid). The minimum percentage to be applied is 5.75 percent. Subject to limited exceptions, any potential
transfer of cumulative preferred shares requires the approval of the Corporate Executive Board. Cumulative preferred shares can only be
issued in a registered form. The Company may stipulate that only 25 percent of the par value will be paid upon subscription to cumulative
preferred shares until payment in full is later required by the Company. SAC would then only be entitled to a market-based interest return
on its investment.
SAC is a foundation organized under the laws of the Netherlands. Its statutory purpose is to safeguard the interests of the Company
and all stakeholders in the Company and to resist, to the best of its ability, influences that might conflict with those interests by affecting
the Company's continuity, independence, or identity. In the case of liquidation, the SAC board of directors will decide on the use of any
remaining residual assets. The SAC board of directors has three members, who are appointed by the board of SAC itself.
Legal reserves
In accordance with the Netherlands Civil Code and statutory requirements in other countries, legal reserves have to be established in
certain circumstances. Legal reserves are not available for distribution to the Company's shareholders. The currency translation reserve,
cash flow hedging reserve, and other reserves include non-distributable amounts. From the total equity as per January 1, 2012, of €5,877
million, an amount of €732 million is non-distributable (January 2, 2011: €754 million out of total equity of €5,910 million). See Note 6 to the
parent company financial statements for more detail on the legal reserves.
