Corporate Governance Principals

Table of contents


			Introduction
			Shareholders and the Annual General Meeting
					Shareholders
					Annual General Meeting
					Invitation to the Annual General Meeting, Proxies
			Board of Directors
					Tasks and Responsibilities
					Composition and Compensation
					Audit Committee
					Remuneration and Nomination Committee
			Transparency
					Price Sensitive Information
					Significant Shareholders
					Director’s Dealing
					Insider Dealing
					Loans to Director or Senior Executive
					Takeover
			Reporting and Audit of the Annual Financial Statements
					Reporting
					Audit

Introduction

Dialog Semiconductor Plc (“Dialog” or the “Company”) has implemented the following internationally recognized standards of fair and responsible corporate governance, which are based upon English law and which comply in substance with all recommendations of the German Corporate Governance Code and specific provisions contained therein. In addition, the Company has established internal guidelines protecting against insider trading.

Dialog has adopted and will follow these principles in order to enhance the confidence of shareholders, customers, employees and the general public in the Company.

Shareholders and the Annual General Meeting

Shareholders
Shareholders exercise their rights through their vote at the annual general meeting of Dialog. Each share carries one vote. There are no shares with multiple voting rights, preferential voting rights (golden shares) or maximum voting rights.

Annual General Meeting
The Board of Directors present the annual financial statements and the consolidated financial statements, director’s reports and report of the independent auditors to the annual general meeting. The annual general meeting approves the payment of any final dividend. It elects directors to the Board of Directors and appoints the independent auditor. The annual general meeting also authorizes the directors to approve the compensation of the auditor and, if applicable, increases shares available under the employee share option scheme.

The general meeting passes any resolution required to amend the Company’s Memorandum and Articles of Association and gives the directors authority to issue new shares from time to time and to purchase its own shares.

When new shares are issued, shareholders, in principle have pre-emptive rights corresponding to their share of the equity capital. This right of pre-emption will not apply if disapplied by the shareholders in general meeting (generally the Company will look to have available for issue shares equal to 5% of the issued share capital to which the rights of pre-emption will not apply) or in respect of shares issued to satisfy employee options or to satisfy the consideration on any acquisition.

Invitation to the Annual General Meeting, Proxies
At least once a year the shareholders' annual general meeting is to be convened by the Board of Directors giving details of the agenda. The Board of Directors shall not only provide the reports and documents, including the annual report, required by law for the general meeting, and send them to shareholders upon request, but shall also publish them on the Company's internet site together with the agenda. Subject to certain requirements a specified quorum of shareholders may require that additional resolutions be put to the Annual General Meeting.

The Company shall provide:

notice of any general or extraordinary shareholders meeting to the shareholders, including the time and place at which the meeting will be held;

a description of the procedure that should be followed by the shareholders to attend the shareholders meeting (in person or represented by a third party); and

a description of the procedure that should be followed by the shareholders to vote their financial instruments.

The Company shall inform all domestic and foreign shareholders, shareholders' associations and financial advisors, which, in the preceding 12 months have requested such notification, of the convening of the general meeting and, upon request, shall also provide meeting documents (if appropriate by electronic channels).

The Company shall facilitate the personal exercising of shareholders' voting rights. The Company shall also assist the shareholders in the use of proxies. The Board of Directors shall arrange for the appointment of a representative to exercise shareholders' voting rights in accordance with instructions; this representative should also be reachable during the general meeting.

Each shareholder is entitled to participate in the annual general meeting, to take the floor on matters on the agenda and to submit materially relevant questions.

The Company shall publish key information related to the annual general meeting on its website on the day of the annual meeting.

In addition to the Annual General Meeting the directors, or shareholders holding not less than one tenth of the paid-up share capital, may call an extraordinary general meeting.

Board of Directors

Tasks and Responsibilities
Dialog relies on the Board of Directors to oversee its business. The Board, which consists of executive and non-executive directors, supervises the general management and makes decisions regarding the implementation of central strategic and operational guidelines.

Each director is required under English law to carry out his functions as a director with the degree of skill and care that may reasonably be expected of a person of his skill and experience. Each director is obliged to act in the interests of the Company’s shareholders as a whole and should avoid allowing any conflicting interests, whether his or those of the persons that appointed him, to influence his judgment in acting as a director. The Board is ultimately required to manage Dialog’s affairs in accordance with the Memorandum and Articles of Association in accordance with local laws and regulations.

The Board of Directors develops the Company’s strategy, coordinates it with the Chief Executive Officer and promotes its implementation. The Board of Directors overseas appropriate risk management and risk controlling in the Company.

Each director has power to execute documents on behalf of the Company following specific or general authorization by the Board of Directors.

Composition and Compensation
The Board of Directors shall be comprised of seven persons and will be headed by a Chairman. Dialog currently has seven non-executive directors and one executive director on the Board. While these non-executive directors do not play an active role in day to day operations, they provide the board with an independent element which brings a greater depth of skill, experience and objectivity to the making of key decisions.

Non-executive directors receive compensation of (£) 20,000 per annum (plus additional fees for serving on the Board's committees). In addition each non-executive-director receives 50,000 share options on appointment and 20,000 sahre options following each Annual General Meeting.

The directors are reimbursed for their reasonable travel expenses incurred in connection with attending meetings of the Board or related committees.

The compensation of the Executive Director is comprised of a fixed salary and variable components. Variable compensation includes an annual bonus linked to and dependent on certain business targets as well as long-term incentives, and, in particular, stock options.

Compensation of each member of the Board of Directors will be reported in the annual report broken down according to fixed, performance-related and long-term incentive components.

Audit Committee
Dialog has established an Audit Committee of the Board of Directors which reviews, acts on and reports to the Board of Directors with respect to various auditing and accounting matters, including the selection of the external auditor, the scope of the annual audit, fees to be paid to the auditor, the performance of our independent auditor and our accounting practices. The Audit Committee consists of independent directors: Messrs. Hughes (chairman of the Audit Committee), McMonigall and Tan. Requirements for independence are no payment to the members of the Committee by the Company of consulting, advisory, or other compensatory fees other than for board service and no affiliation with the Company. For purposes of determining whether a person is an affiliate solely by virtue of stock ownership, an Audit Committee member will be considered an affiliated person of the Company if such member owns or controls, directly or indirectly, 20% or more of the Company’s voting stock.

Remuneration and Nomination Committee
The Remuneration and Nomination Committee of the Board of Directors determines the salaries and incentive compensation of Dialog’s officers and the officers of the Company’s subsidiaries and provides recommendations for the salaries and incentive compensation of other employees and consultants. The Remuneration and Nomination Committee also administers the Company’s various compensation, stock and benefit plans. The Remuneration and Nomination Committee also reviews the board structure, size and composition and makes recommendations to the Board. The Remuneration and Nomination Committee is responsible, amongst other things, for identifying and nominating board candidates for approval by the Board. Our Remuneration and Nomination Committee consists of Messrs. Shaw (Chairman), Burke and Weber. None of the members of this Committee should serve as an employee of the Company.

Transparency

Price Sensitive Information
Dialog promptly discloses price sensitive information. Ad-hoc notifications are first sent to the stock exchanges and the Federal Financial Supervisory Authority in Germany (Bundesanstalt für Finanzdienstleistungsaufsicht – BAFin) and then be published via an electronic information system.

Significant Shareholders
The UK Companies Act 2006 requires that if a person becomes directly or indirectly interested in 3% or more of any class of our issued voting shares, they must notify the Company of this interest within two business days. After the 3% threshold is exceeded, such persons must notify us with respect to increases or decreases of 1% or more.

Following notification to us, we will notify BAFin within seven calendar days of any person who increases or decreases their shareholding in the share capital of the Company by 1 per cent or more.

Director’s Dealing
Transactions in securities of the Company’s own shares carried out by members of the Board of Directors and of their family members will be reported within 5 business days and published without delay, if the total value of such transactions in any 1 year exceeds €5,000, pursuant to and in accordance with section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz).

Insider Dealing
Dialog has adopted a Code of Dealing in which it complies with the following:

Any director, senior executive, relevant employee and relevant third party will not abuse, will not place themselves under suspicion of abusing, and will maintain the confidentiality of, price sensitive information that they may have or be thought to have.
A director, senior executive or other relevant employee likely to have access to unpublished price sensitive information must not deal in any of the Company’s financial instruments during a closed period, being:
- the period commencing fourteen days prior to the relevant financial year end or the relevant quarter end and ending forty-eight hours after the time of the announcement of the Company's annual results or quarterly results as the case may be;
- the period of fourteen days immediately preceding the announcement by the Company of any Price Sensitive Information.
A director or senior executive must not deal in any of the Company’s financial instruments on considerations of a short-term nature. Any purchase or sale of any of the Company’s financial instruments within a period of six months after having sold or purchased such financial instruments will automatically be deemed to be a deal on considerations of a short-term nature.

Loans to Director or Senior Executive
The Company will not provide or guarantee any loans to directors or senior executives.

Takeover
Dialog falls within the scope of the provisions of the German and English Takeovers regulations. The general principle of these regulations are that that all shareholders of the target company are to be treated equally to ensure fair and equal treatment of all shareholders in relation to takeover and merger transactions. Accordingly, any offer must be published in English and German and the Board of Directors must publish sufficient information and advice to enable shareholders to reach a properly informed decision. If appropriate and practical, the Board of Directors should convene an extraordinary General Meeting at which shareholders are able to vote on the takeover offer and on corporate actions.

Under the UK City Code on Takeovers any party or persons acting in concert are required to make a mandatory bid for the whole company if they acquire 30% or more of the Company’s issued share capital.

Reporting and Audit of the Annual Financial Statements

Reporting
Dialog will prepare annual and quarterly consolidated financial statements in accordance with generally accepted accounting principles in the United Kingdom and International Financial Reporting Standards. These financial statements are the main information instruments for our shareholders.

Dialog also provides up to date information on the web site at http://www.dialog-semiconductor.com/. Interested parties can download quarterly and annual reports online and register on the homepage to receive latest press releases by email.

The consolidated financial statements will be prepared by the Company and examined by the auditor and Board of Directors. The consolidated financial statements shall be publicly accessible within 60 days of the end of the financial year; interim reports shall be publicly accessible within 30 days of the end of the reporting period.

Audit
The independent auditor shall perform an audit of the financial statements.

Prior to the Audit Committee proposing the appointment or re-appointment of the auditor the audit committee shall obtain a statement from the proposed auditor stating whether, and where applicable, which professional, financial and other relationships exist between the auditor on the one hand, and the Company on the other, that could call its independence into question. This statement shall include the extent to which other services were performed for the Company in the past year, especially in the field of consultancy, or which are contracted for the following year.

The Audit Committee shall agree with the auditor that the Chairman of the Audit Committee will be informed immediately of any grounds for disqualification or impartiality of the auditor occurring during the audit, unless such grounds are eliminated.

The Audit Committee shall arrange for the auditor to report to it without delay on all facts and events of importance, that should be brought to the attention of the Board of Directors, which come to light during the performance of the audit.

The Audit Committee shall arrange for the auditor to inform it and/or note in the auditor's report if, during the performance of the audit, the auditor comes across facts which show a misstatement by the Board of Directors on the Company’s Corporate Governance Principles.

The independent auditor takes part in the Audit Committee meetings on the annual and quarterly consolidated financial statements and reports on the essential results of its audit.