Annual Report 2005/06 THE WORLD OF SOUND - Sonova

Authorized share capitalAs of March 31, 2006, the company had authorized sharecapital of 3,301,120 registered shares with a par value of CHF0.05 per share.The Annual General Shareholders’ Meeting held on July 7,2005, approved the creation of authorized share capital of3,301,120 registered shares with a par value of CHF 0.05 pershare. The Board of Directors is authorized to exclude subscriptionrights of shareholders and to allocate them to third partiesif the new shares are to be used for the acquisition of companies,parts of companies, equity stakes or the financing of suchtransactions. The authorized share capital of 3,301,120 registeredshares created on July 7, 2005, has not yet been used.The authorization granted to the Board of Directors to augmentthe company’s share capital with the authorized share capitalcreated expires on July 6, 2007.Changes in shareholders’ equityRegarding changes in shareholders’ equity see Note 3.6to the Financial Statements of Phonak Holding AG (for thethird financial year prior to the reporting period, refer to thesame Note in the Annual Report 2004/05).Restrictions on transferabilityFor restrictions on transferability, see the chapter entitled“Voting rights restriction and representation” on page 31 of thisreport.Board of DirectorsThe primary duty of the Board of Directors of PhonakHolding AG is the overall direction of the company and thesupervision and control of the management. To this end, theBoard of Directors works in close collaboration with the ManagementBoard. The Articles of Association of Phonak Holding AGstate that the Board of Directors must consist of a minimum ofthree and a maximum of nine members.During the reporting period, the Board of Directors held sixmeetings, one of which was a two-day strategy workshop.Telephone conferences were organized to discuss time-sensitivebusiness issues. The Board of Directors receives consolidatedfinancial statements (balance sheet, income statement as wellas statement of cash flows) on a monthly, semi-annual, andannual basis. In addition, the Board of Directors receives monthlyconsolidated sales reports, providing data on turnover, averageselling prices, and units for each major product, subsidiary, andmarket.The Board of Directors approves resolutions and holdselections with the majority of its members present at the meeting.In the event of an equal number of votes, the Chairman hasthe casting vote.Elections and term of officeAt the Annual General Shareholders’ Meeting, the shareholderselect the Board of Directors of Phonak Holding AG.In general, each member is elected for a period of three businessyears. The term ends on the day of the ordinary Annual GeneralShareholders’ Meeting for the last business year of the term. If,during a term, a substitute is elected to the Board of Directors,the newly elected member finishes the term of his predecessor.Re-elections for successive terms are possible. A member ofthe Board of Directors who reaches the age of 70 during his orher term must resign at the next ordinary Annual GeneralShareholders’ Meeting.22Corporate Governance