App 1. Acron Report on Compliance with Corporate Governance Code Principles and Recommendations (as of 31 December 2014)

No. Principle(s) of corporate governance or key criterion (recommendation) Rating based on assessment of compliance with corporate governance principles and brief description of that part of the principle or key criterion with which the Group failed to comply Clarification of key reasons, factors and circumstances behind partial compliance or failure to comply with principle or key criterion; description of alternative mechanisms and instruments of corporate governance
1. Shareholder Rights and Equal Conditions for Shareholders Exercising their Rights
1.1 A company should ensure equal and fair treatment of all its shareholders as they exercise their rights to participate in the management of the company. The corporate governance system and practices shall ensure equal conditions and treatment for all shareholders having an equal number of shares of the same type (category), including minority and foreign shareholders.
1.1.1 The company has an approved internal document establishing the main procedures for preparing, convening and holding the general meeting and complying with the Corporate Governance Code, including the following obligations: –
  • To inform shareholders that a general meeting will be convened and grant them access to materials, including disclosure of the notification and materials on the company'’s website, at least 30 days prior to the date of the general meeting (unless Russian law stipulates a longer term)
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  • To disclose information on the record date at least seven days prior to such date
  • –
  • To provide the general meeting with additional information and materials related to its agenda in accordance with recommendation of the Corporate Governance Code
  • Rating: Partially in Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: Notification of the annual general meeting is made a minimum of 30 days prior to the general meeting date. Notification of an extraordinary general meeting is made a minimum of 20 days prior to the date of the extraordinary general meeting (Clause 5.1 of the Regulation on Acron General Meeting). The Group provides information and materials on agenda items at least 20 days prior to the general meeting date. The Group undertook to disclose information on the record date no later than five days prior to such date (Clause 2.2 of the Regulation on Acron General Meeting). The Group does not provide additional information and materials on the agenda in the full scope recommended by the Corporate Governance Code (the Group provides additional information on actions considered by the Group to be major corporate actions requiring additional clarification).
    The Group’'s corporate governance system is designed to ensure compliance with corporate governance requirements established by applicable legislation and MICEX listing rules.
    The Group’'s objective in continuing improvement of its corporate governance is to implement the recommendations of the Corporate Governance Code.
    The Group is committed to replying to shareholders’ requests for information and materials regarding general meeting agendas as promptly and comprehensively as possible. Since such inquiries are very rare in the Group’'s general meetings practice, the Group believes that the scope of information and materials provided satisfies its shareholders.
    Information on the record date in the Group’'s practice is disclosed no later than seven days prior to such date.
    1.1.2 The company undertakes to grant shareholders an opportunity to address their questions on the company'’s activity to members of the company'’s management and supervisory bodies, members of the Audit Committee, Chief Accountant, the company'’s auditors and nominee's to the management and supervisory bodies in the course of preparation for the general meeting. These obligations are established by the company'’s internal documents. Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Group did not undertake to ensure that members of management and supervisory bodies, the Audit Committee, Chief Accountant, the Group’'s auditor and nominee's to its management and supervisory bodies will be present at each general meeting. In accordance with Clause 6.8 of the Regulation on Acron General Meeting, these persons may be invited to attend the general meeting.  
    Section 6 of the Regulation on Acron General Meeting stipulates that shareholders participate in discussion on agenda items and have opportunities to ask questions and make proposals on discussion of agenda items.
    However, for operational and organisational reasons the Group finds it impossible to ensure that any and all member of the Group’'s management and supervisory bodies, the Audit Committee, Chief Accountant, the Group’'s auditor and nominee's to the Group’'s management and supervisory bodies be present at each general meeting.
    In the Group’'s practice of holding shareholder meetings, the Chairman of the Board of Directors, the Chairman of the Managing Board (CEO), an independent member of the Group’'s Board of Directors, the Chief Accountant and first-time nominee's to the Board of Directors attend the general meeting. Shareholders have the opportunity to ask these individuals questions.
    1.1.3 The company undertakes to adhere to the principle that no actions may be taken that lead to an artificial redistribution of corporate control (for instance, voting by quasi-treasury shares, resolving to pay dividends on preferred shares in an environment of limited financial opportunities, resolving not to pay dividends established by the company'’s Charter on preferred shares while having sufficient sources for such payment). The company'’s Charter or internal documents establish these obligations. Rating: Not in Compliance   Taking into account the Group’'s existing capital structure, the Group believes that the risk of an artificial redistribution of corporate control using the indicated mechanisms is very low. The Group has issued no preferred shares that could be used to redistribute corporate control. 
    1.2 Shareholders should have equal and fair opportunities to participate in the profits of the company by receiving dividends.
    1.2.1 The company has approved an internal document determining the company'’s dividend policy that complies with recommendations of the Corporate Governance Code and establishes the following: –
  • Procedure to determine net profit (or the minimum share of net profit for companies preparing consolidated financial statements) allocated to pay dividends and the conditions required to pay dividends
  • – Minimal amount of dividends on various categories (types) of the company'’s shares
  • –
  • Obligation to disclose a document establishing the company'’s dividend policy on the company'’s website  
  • Rating: In Compliance    
    2. Board of Directors
    2.1 The Board of Directors determines the company'’s key strategic benchmarks over the long term and the company'’s performance highlights, carries out strategic management of the company, determines the main principles and approaches for the risk management and internal control system, monitors the activity of the company'’s executive bodies, defines the company'’s policy on remunerating members of the Board of Directors and executive bodies and exercises other key functions. 
    2.1.1 The company has formed a Board of Directors which
  • – Determines the company'’s key strategic benchmarks over the long term and the company'’s performance highlights
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  • Monitors the activity of the company'’s executive bodies
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  • Determines the main principles and approaches for the risk management and internal control system
  • –
  • Defines the company'’s policy on remunerating members of the Board of Directors, executive bodies and other company executives.  
  • Rating: In Compliance    
    2.2 The Board of Directors shall be an efficient and professional governing body of the company, able to make objective and independent judgements and pass resolutions in the best interests of the company and its shareholders. The Chairman of the Board of Directors shall promote the most efficient means of exercising the functions assigned to the Board of Directors. Board meetings, preparations for meetings and Board member participation in meetings should ensure the efficient functioning of the Board.
    2.2.1 The Chairman of the Board of Directors shall be an independent director, or a senior independent director shall be appointed to coordinate the work of independent directors and interact with the Chairman of the Board of Directors. Rating: Not in Compliance   The Group believes that the main criterion for electing the Chairman of the Board of Directors is the nominee’s positive authority with the Group’'s shareholders, members of management bodies and employees, in addition to his/hers relevant knowledge, skills and expertise in the Group’'s sphere of activity required to make decisions related to the Board’s scope of authority. In order to avoid a potential conflict of interests, as of 31 December 2014, the Chairman of the Board of Directors is excluded from the Group’'s executive body (Managing Board) and cannot be the employee of a legal entity competing against the Group. 
    A senior independent director was not chosen to coordinate the work of independent directors, since only one independent director was elected to the Group’'s Board of Directors in 2014. The independent director has direct access to the Chairman of the Board of Directors.
    2.2.2 The company'’s internal documents establish the procedure for preparing and holding meetings of the Board of Directors and providing Board members with an opportunity to prepare for the meeting, which contains the following: –
  • Deadline for notifying Board members about an upcoming meeting
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  • Deadline for sending voting documents (ballots) and receiving completed documents (ballots) in the event of absentee voting
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  • Provision for sending and recording a written opinion on the agenda items for those Board members who are absent from a meeting held in person
  • –
  • Provision for discussing and voting by conference call and video conference
  • Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The procedure for preparing for and holding meetings of the Board of Directors is established in the Regulation on Acron Board of Directors, but it does not provide for the following: –
  • Specific deadline for notifying Board of Directors members about an upcoming meeting
  • –
  • Specific deadline for sending voting documents (ballots) and receiving completed voting documents (ballots) in the event of absentee voting
  • – Provision for discussing and voting via conference call and video conference.
  • The Group does not establish a specific deadline for notifying Board members about upcoming meeting or a specific deadline for sending and receiving voting documents (ballots) for absentee voting, because the Group finds it necessary to provide the Chairman of the Board of Directors with a degree of flexibility in decision-making regarding these matters.  

    The Group believes that the procedure for preparing and holding Board of Directors meetings established by the Regulation on Acron Board of Directors grants members of the Board of Directors the opportunity to duly prepare for meetings. Specific deadlines for notifying Board members and for sending ballots and receiving completed ballots for absentee voting shall be determined by the Chairman of the Board of Directors. In practice, members of the Board of Directors absent from a meeting held in person have the opportunity to participate in discussion of agenda items and vote remotely (by conference call or video conference).
    2.2.3 The most important issues shall be resolved at Board of Directors meetings held in person. The list of such issues complies with the recommendation of the Corporate Governance Code[1]. Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: In most cases, Board of Directors meetings are held as absentee votes. 
    The Group’'s internal documents stipulate that Board of Directors meetings may be held both in person and in the form of absentee voting. Most of the issues on the agenda of a Board meeting are considered in advance by the relevant Board committees and discussed by the Board members prior to voting in person, by telephone, (including conference calls) or by email. Board members use modern telecommunications to discuss agenda items comprehensively even during absentee voting. When discussing the most vital issues, the Group prefers holding Board of Directors meetings in person.
    2.3 The Board of Directors should include a sufficient number of independent directors.
    2.3.1 Independent directors shall compose at least one third of elected Board of Directors. Rating: Not in Compliance Only one independent director was elected to the Group’'s Board of Directors in 2014. Nominations to the Board of Directors were held prior to the release of the amended Corporate Governance Code.
    The goal of the Group’'s corporate governance programme is to implement the recommendation of the Corporate Governance Code in full.
    The Group expects that compliance with this recommendation of the Corporate Governance Code will be met in 2015 – 2016 by electing three independent directors to the Board of Directors. It should be noted that compliance with this recommendation of the Corporate Governance Code primarily depends on shareholders, since the general meeting elects members to the Board of Directors. Shareholders holding at least 2% of the Group’'s voting shares may nominate members to the Group’'s Board of Directors. The Board of Directors may, at its own discretion, include nominee's for the voting list if shareholders do not propose enough candidates (Article 53, Russian Federal law “On Join Stock Companies”).
    2.3.2 Independent directors meet all independence criteria recommended by the Corporate Governance Code. Rating: In Compliance  
    2.3.3 The Board of Directors (the Nomination Committee) assesses nominee compliance with independence criteria. Rating: Not in Compliance Since any assessment of a nominee'’s compliance with independence criteria requires legal knowledge, the decision on a nominee’'s compliance with independence criteria shall be made by the Group’'s legal department. Implementing this recommendation of the Corporate Governance Code is an objective for continuing improvement of the Group’'s corporate governance. The Group plans to ensure compliance with this recommendation of the Corporate Governance Code in 2015.
    2.4 The Board of Directors shall form committees for preliminary consideration of the most important issues of the company'’s business.
    2.4.1 The company'’s Board of Directors has formed an Audit Committee composed of independent directors, the functions of which are established by the company'’s internal documents and comply with recommendations of the Corporate Governance Code[2]. Rating: Partially In Compliance  

    Brief description of that part of the principle or key criterion with which the Company failed to comply: Not all members of the Audit Committee are independent directors. The Regulation on Acron Audit Committee attributes fewer functions than recommended by the Corporate Governance Code to the direct scope of authority of this committee.  
    Composing the Audit Committee only of independent directors is impossible since only one independent director was elected to the Board of Directors in 2014. The Audit Committee includes members of the Board of Directors who are not members of the Group’'s executive bodies, and is headed by independent member of the Board of Directors. The Group believes that this composition of the Audit Committee ensures comprehensive, independent and unbiased consideration of issues within its scope of authority.
    The Regulation on Acron Board of Directors Audit Committee leaves the list of committee functions open. The Board of Directors may, at its discretion, instruct the Committee to submit recommendations on multiple issues overseen by the Board of Directors but not directly attributed to the Audit Committee in accordance with the Regulation on Acron Board of Directors Audit Committee (Clause 6.5). The Committee may, at its discretion, submit to the Board of Directors its recommendations on any issue related to the subject of its activity. An open list of functions allows the Committee to consider additional issues recommended by the Corporate Governance Code (even if they are not assigned directly by the Committee’s Regulation).
    2.4.2 The company'’s Board of Directors has formed a Remuneration Committee (which may be integrated with the Nomination Committee) composed of independent directors, which functions in compliance with the recommendations of the Corporate Governance Code[3]. Rating: Partially In Compliance  

    Brief description of that part of the principle or key criterion with which the Company failed to comply:
    Independent directors do not form a majority in Acron’s Nomination and Remuneration Committee. The Regulation on Acron Board of Directors Nomination and Remuneration Committee attributes fewer functions than recommended by the Corporate Governance Code to the direct scope of authority of this committee.  
    The Remuneration Committee is integrated with the Nomination Committee. It is not possible for the Nomination and Remuneration Committee to be made up exclusively of independent directors, because only one independent member was elected to the Board of Directors in 2014.
    The Nomination and Remuneration Committee is headed by an independent member of the Board of Directors. The Group believes that this composition of the Committee ensures comprehensive, independent and unbiased consideration of issues within the scope of the Committee. The Regulation on Acron Board of Directors Nomination and Remuneration Committee leaves the list of the Committee’s functions open. The Board of Directors may, at its discretion, instruct the Committee to submit recommendations on multiple issues within the scope of the Board of Directors but not directly attributed to the scope of authority of the Committee by the Regulation on Acron Board of Directors Nomination and Remuneration Committee. The Committee may also, at its discretion, submit to the Board of Directors its recommendations on any issue related to the subject of its activity (Clauses 6.9 and 6.10). An open list of functions allows the Committee to consider additional issues recommended by the Corporate Governance Code to the Committee (even if they are not directly assigned by the Regulation to the relevant committee).
    2.4.3 The company'’s Board of Directors has formed a Nomination Committee (which may be integrated with the Remuneration Committee) composed mainly of independent directors, which functions in compliance with the recommendations of the Corporate Governance Code[4]. Rating: Partially In Compliance  

    Brief description of that part of the principle or key criterion with which the company failed to comply: Independent directors do not form a majority in Acron’s Nomination and Remuneration Committee. The Regulation on Acron Board of Directors Nomination and Remuneration Committee attributes fewer functions than recommended by the Corporate Governance Code to the direct scope of authority of this committee.
    See explanation in Item 2.4.2.
    2.5 The Board of Directors shall ensure assessment of its performance and the performance of its committees and members.
    2.5.1 Assessment of the performance of the Board of Directors shall be carried out on a regular basis at least once a year. Such assessment shall be performed by a third-party organisation (consultant) at least once every three years. Rating: Not in Compliance In the absence of a generally accepted methodology for assessing Board performance at Russian public companies, and until completion of the active phase of corporate law reform, the Group believes that assessment of the Board’s performance is premature.
    Instead, a report by the Group’'s Board of Directors and its committees is included in the Group’'s Annual Report. The Group believes it will be possible to assess the Board’s performance in future after developing relevant methodology.
    3. Corporate Secretary
    3.1 The company'’s Corporate Secretary (special business unit headed by Corporate Secretary) shall efficiently interact with shareholders, coordinate the company'’s actions designed to protect the rights and interests of its shareholders, and support the efficient functioning of the Board of Directors.
    3.1.1 The Corporate Secretary is accountable to the Board of Directors. He/she shall be appointed and removed by resolution and with the consent of the Board of Directors. Rating: Not in Compliance At present, the role of Corporate Secretary is performed by several of the Group’'s business units (securities circulation division, legal department, investor relations division and secretary of the Board of Directors), along with their officers, to ensure the efficient functioning of general meetings and the Board of Directors, cooperate with shareholders and coordinate the Group’'s efforts to protect the rights and interests of its shareholders. In order to further improve its corporate governance system and protect the rights and interests of Acron'’s shareholders, in 2015 the Board of Directors plans to consider appointing a sole person to function as Corporate Secretary and coordinate the activity of various business units in the Group.
    3.1.2 The company has approved an internal document establishing the rights and obligations of the Corporate Secretary (Regulation on Corporate Secretary), which complies with the Corporate Governance Code[5]. Rating: Not in Compliance See explanation in Item 3.1.1.
    3.1.3 The Corporate Secretary's position is incompatible with performance of other functions in the company. The Corporate Secretary is vested with functions in accordance with the recommendations of the Corporate Governance Code[6]. The Corporate Secretary shall have sufficient resources to exercise his/her functions. Rating: Not in Compliance See explanation in Item 3.1.1.
    4. System of Remuneration of Members of the Board of Directors, Executive Bodies and other Key Executives of the Company
    4.1 The level of remuneration shall be sufficient to attract, motivate and retain employees with the competence and expertise required by the company. Remuneration of members of the Board of Directors, executive bodies and other key executives of the company shall be paid in accordance with the company'’s remuneration policy.
    4.1.1 The company regulates all payments, exemptions and concessions granted to members of the Board of Directors and other key executives of the company. Rating: In Compliance Remuneration and compensation of members of the Group’'s Board of Directors are regulated by applicable law and Section 9 of the Regulation on Acron Board of Directors. The amount of such remuneration and grounds for compensation shall be established by the Group’'s general meeting.
    The salary of members of the Group’'s executive bodies and key employees shall be established by labour contracts in accordance with applicable local regulations establishing the remuneration system, and in accordance with the Regulation on Grading Acron Employees, which describes additional corporate opportunities (benefits and privileges).
    4.2 The system of remuneration of the Board of Directors members should ensure that directors’ financial interests are in line with the long-term financial interests of shareholders.
    4.2.1 The company does not apply any monetary remuneration of members of the Board of Directors other than fixed annual remuneration. Rating: In Compliance In accordance with the Group’'s practice, only independent directors (members of the Board of Directors) are remunerated in an amount determined by the general meeting for participating in a management body. Such remuneration is established as fixed annual remuneration. The Group does not practice remuneration for participation in certain meetings of the Board of Directors or Board of Directors committees.
    Other members of the Board of Directors and the Managing Board may be remunerated under labour contracts executed with them as Group employees holding other officers, or under civil law contracts (if such labour or civil law contracts were executed). The Group also compensates all members of the Board of Directors for reasonable expenses related to the performance of their obligations, in actual and documented amounts.  
    4.2.2 The company does not provide members of the Board of Directors with the opportunity to participate in options programmes; their right to sell the company'’s shares they hold does not depend on their achieving certain performance indicators. Rating: Generally in Compliance  
    Brief description of that part of the principle or key criterion with which the company failed to comply: The Group does not exclude members of the Board of Directors who are not independent directors and hold other offices in the Group from participating in options programmes.
    The Group usually does not remunerate members of its Board of Directors with the Group’'s shares and does not buy back the Group’'s shares from members of its Board of Directors if certain performance levels are achieved. At the same time, the Group does not exclude members of the Group’'s Board of Directors who are not independent directors and hold other offices in the Group from participating in options programmes.
    4.3 The system of remuneration of the company'’s executive bodies and other key executives shall stipulate that remuneration depends on the company'’s performance and their personal contributions to achieving such results.
    4.3.1 The company implements a programme for long-term motivation of members of the company'’s executive bodies and other executives. Rating: Generally in Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The long-term incentive programmes are applied solely with respect to specific Group projects.
    The Group applies a long-term incentive programme for members of the Group’'s executive bodies and other executives while implementing specific projects. This incentive programme is implemented with consideration of the Group’'s performance on specific projects and the individual contributions of project participants.
    5. Risk management and internal control
    5.1 The company shall create an efficient system of risk management and internal control to provide reasonable assurance in achieving the company'’s targets.
    5.1.1 The Board of Directors determines the principles and approaches for creating the risk management and internal control system. Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Board of Directors has not established the principles and approaches for organising the risk management system.
    The Board of Directors approved the Regulation on Internal Control over Acron Financial and Business Activity, which establishes the tasks and procedures of internal control over the Group’'s financial and business activity, and the principles for organising a relevant internal control system.
    At present, organization of the risk management system is performed by the Group’'s executive bodies. The Board of Directors plans to consider defining the principles and approaches for organising the risk management system in a separate document.
    5.1.2 The company has created a separate structural unit for risk management and internal control. Rating: Not in Compliance In accordance with the Group’'s practice, risk management and internal control functions are divided among several business units (internal audit department, legal department, internal security department, and business sustainability department) and their officers.
    5.1.3 The company has developed and implemented an anti-corruption policy determining the measures for establishing the elements of corporate culture, organizational structure, and rules and procedures preventing corruption. Rating: In Compliance  
    5.2 In order to independently evaluate the reliability and efficiency of the risk management and internal control system and corporate governance practices on a regular basis, the company shall arrange for internal audits.
    5.2.1 A separate structural unit has been established in the company to perform the functions of internal audit under the control of the company'’s Board of Directors. The unit'’s functions comply with the Corporate Governance Code recommendations and include, in particular:
  • Assessment of the effectiveness of the internal control system
  • Assessment of the effectiveness of the risk management system
  • Corporate governance assessment (if there is no Corporate Government Committee)
  • Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Regulation on Acron Internal Audit Team attributes fewer functions than recommended by the Corporate Governance Code to the direct scope of this team. This Regulation does not put the Internal Audit Team under the Board of Directors.  
    In 2015, the Board of Directors plans to consider making relevant amendments to the Regulation on Acron Internal Audit Team in light of the Group’'s corporate governance practices and the recommendations of the Corporate Governance Code.
    5.2.2 The Head of the Internal Audit Team shall be accountable to the company'’s Board of Directors, appointed and removed by resolution of the Board of Directors. Rating: Partially In Compliance  

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Regulation on Acron Internal Audit Team does not directly require that the Board of Directors approve nominee's for head of the Internal Audit Team or that the head of the Internal Audit Team report to the Board of Directors. 
    Despite the absence of formal requirements, in practice the Head of the Internal Audit Team is accountable to the Board of Directors Audit Committee.
    Also see explanation in Item 5.2.1.
    5.2.3 The company has approved an internal audit policy (regulation on internal audits) establishing its objectives, tasks and functions. Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The purposes, objectives and functions of the internal audit are only partially established by the Regulation on Acron Internal Audit Team.
    See explanation in Item 5.2.1.
    6. Information Disclosure, Information Policy
    6.1 The company and its business shall be transparent for shareholders, investors and other related parties.
    6.1.1 The company has approved an internal document establishing its information policy in compliance with the recommendations of the Corporate Governance Code. The company'’s information policy includes the following methods of interacting with investors and other related parties:
  • – Creating a dedicated webpage on the company'’s website containing the answers to frequently asked questions from shareholders and investors, a regularly updated calendar of the company'’s corporate events and other useful information for shareholders and investors
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  • Holding meetings of the company'’s executive bodies and other key executives with analysts on a regular basis
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  • Making presentations (including teleconferences and webcasts) and holding meetings with the company'’s management bodies and other executives on a regular basis, including meetings supporting disclosure of the company'’s financial statements (accounts) or related to the company'’s core investment projects and strategic development plans.
  • Rating: Generally in Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Regulation on Information Policy does not stipulate directly that the Group’'s website have a frequently asked questions page for shareholders.
    In practice, the Group promptly submits its responses to questions from the media, security market professionals and other related parties (including shareholders), both orally and in writing, as well as via telephone and e-mail. 
    6.1.2 The company'’s executive bodies implement its information policy. Control over due information disclosure and compliance with the information policy is exercised by the Board of Directors. Rating: In Compliance  
    6.1.3 The company has established procedures ensuring the coordination of all of its services and structural units connected with information disclosure or whose activity may lead to the necessity of information disclosure.   Rating: In Compliance  
    6.2 The company shall disclose complete, updated and reliable information about itself on a timely basis to enable its shareholders and investors to make informed decisions.
    6.2.1 If foreign investors hold a significant share of the company'’s capital, the company shall ensure that, in addition to information disclosure in Russian, it discloses the most significant company information (including notification of general meetings and the annual report) in the foreign language commonly used in the financial market. Rating: In Compliance  
    6.2.2 The company shall disclose its own information and information on any legal entities controlled by it and of major importance to it. Rating: In Compliance  
    6.2.3 The company shall disclose its annual and interim (semi-annual) consolidated or individual IFRS financial statements. Annual consolidated or individual financial statements shall be disclosed together with the auditor'’s report; the interim (semi-annual) consolidated or individual financial statements shall be disclosed together with the auditor review report or auditor’'s report. Rating: Generally in Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Group requests and discloses auditor’s reports only for its 9M interim financial statements.
    The Group believes it is not necessary to obtain an audit review for interim 3M and 6M consolidated financial statements. Such reports would entail an unreasonable increase in audit costs.

    The Group may review its practice in this regard should it receive relevant requests from shareholders and other investors.
    6.2.4 The company has disclosed a special memorandum explaining the plans of the person controlling the company. This memorandum shall be executed in accordance with the recommendations of the Corporate Governance Code[7]. Rating: Not in Compliance A description of the Group’'s priorities and development prospects are presented in its Annual Report, approved each year by the Group’'s shareholders. The Group believes that a document duplicating the contents of the annual report would be redundant.
    6.2.5 The company shall ensure disclosure of detailed biographical information on members of the Board of Directors, including information on whether they are independent directors; the company shall also provide prompt disclosure of information if a Board member loses his/her status as independent director. Rating: In Compliance  
    6.2.6 The company shall disclose information on its capital structure in accordance with the recommendations of the Corporate Governance Code. Rating: In Compliance  
    6.2.7 The company'’s annual report shall contain the following additional information recommended by the Corporate Governance Code: –
  • Overview of the major transactions executed by the company and legal entities under the company'’s control over the last year
  • –
  • Report on the annual performance of the Board of Directors (including the Board’'s committees), containing information on the number of meetings (absentee votes), each member’s participation in meetings, a description of the most significant matters and the most complicated issues discussed during meetings of the Board of Directors and its committees, and a description of the main recommendations from the committees to the Board of Directors
  • – Information on direct or indirect ownership of the company'’s shares by members of the company'’s Board of Directors and executive bodies
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  • Information on any conflicts of interests of members of the company'’s Board of Directors and executive bodies (including conflicts of interest related to their participation in managing bodies of the company'’s competitors)
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  • Description of the system of remuneration for members of the company'’s Board of Directors, including the amount of individual remuneration at year-end for each member of the Board of Directors (broken down into basic remuneration, additional remuneration for chairing the Board of Directors, for chairing or sitting on Board of Directors committees, amounts received under any long-term incentive programme, amounts earned by each member of the Board of Directors under the stock options plan, if any), reimbursement of expenses connected with Board of Directors membership, and the company'’s expenses for directors and officers liability Insurance
  • – Information on annual cumulative remuneration:
    а) For at least the five most highly paid members of executive bodies and other key administrative officers of the company, broken down by type of remuneration
    b) For all members of executive bodies and other key administrative officers of the company to which the company'’s remuneration policy applies, broken down by type of remuneration
  • – Information on annual remuneration paid or payable to the sole executive body by the company (or by a legal entity in the group of organisations that includes the company), broken down by type of remuneration for performing the duties of sole executive body and for other reasons.
  • Rating: Generally in Compliance  

    Brief description of that part of the principle or key criterion with which the company failed to comply: The Group usually does not disclose the amount of individual remuneration, including information on annual remuneration of the sole executive body.
    The Group does not disclose the amount of remuneration paid to members of the Group’'s because it has a responsibility to protect personal information (unless such disclosure is required by law). The recommendations of the Corporate Governance Code shall not provide grounds for disclosing information that is confidential under the law. The Group is considering options for improving its disclosure practices regarding the remuneration of members of its management bodies without prejudice to its confidentiality obligations regarding such information.
    6.3 The company should provide information and documents requested by its shareholders in accordance with the principle of equal and unhindered access.
    6.3.1 In accordance with the company'’s Information Policy, shareholders with equal numbers of voting shares have equal access to the company'’s information and documents. Rating: In Compliance  
    7. Material Corporate Actions
    7.1 Any actions that will or may materially affect the company'’s share capital structure and its financial position and, accordingly, the position of its shareholders "“material corporate actions" should be taken on fair terms and conditions ensuring that the rights and interests of the shareholders and other related parties are observed.
    7.1.1 The company'’s Charter establishes a list or set of criteria for major corporate transactions that shall be considered by the company'’s Board of Directors, including the following: –
  • The company'’s restructuring, any purchase of 30% or more of the company'’s voting shares (acquisition), an increase or decrease in the company'’s authorised capital, the listing or delisting of the company'’s shares
  • –
  • Sale of shares (stakes) in legal entities that are important to the company and controlled by the company, causing the company lose its control over such legal entities  
  • –
  • Transactions, including interrelated transactions, with a property of the company or legal entities controlled by the company, the value of which exceeds the amount specified in the company'’s Charter, or which is significantly important for the company'’s business
  • –
  • Establishing a legal entity controlled by the company and significantly important to the company
  • – Disposal of treasury and quasi-treasury shares by the company.
  • Rating: Partially In Compliance

    Brief description of that part of the principle or key criterion with which the company failed to comply: Not all specified corporate actions are considered by the Group’'s Board of Directors. In particular, the Board of Directors does not consider transactions with the property of legal entities controlled by the Group.
    Decision-making on many of these matters is attributed by law to the scope of authority of other bodies. The Board of Directors considers matters related to major corporate actions when these matters are directly attributed to the scope of authority of the Board of Directors by applicable law.
    Monitoring of major corporate actions shall be performed by the Group’'s executive bodies (unless applicable law explicitly establishes otherwise). The Group believes that over-regulation of corporate relations (without practical necessity) can significantly complicate corporate decision-making and restrict the Group’'s competitive power in a dynamic economic environment.
    7.2 The company should have in place a procedure for taking material corporate actions that enable its shareholders to receive full information about such actions in due time and provides them with an opportunity to influence such actions, in addition to guaranteeing that shareholder rights are observed and duly protected in the course of such actions.
    7.2.1 The company'’s internal documents establish the principle of equal conditions for all company shareholders when executing major corporate actions affecting shareholders’ rights and legitimate interests, and it ensures additional measures to protect the rights and legal interests of company shareholders provided for by the Corporate Governance Code, including the following: –
  • Engaging an independent appraiser with a flawless market reputation in a relevant segment or submitting reasons for not engaging an independent appraiser to appraise the value of a property disposed of or acquired in a major or related-party transaction
  • –
  • Having an independent appraiser with a flawless market reputation in a relevant segment establish the price of the company'’s shares during share acquisition or buyback, with consideration of the weighted average share price for a reasonable period of time, regardless of the effect of execution of the transaction (including changes in the share price related to dissemination of information about the company'’s transaction) and regardless of the discount on disposal of shares in a non-controlling stake
  • – Expansion of the list of grounds on which members of the Board of Directors and other persons stipulated by law shall be recognised as related parties in the company'’s transactions for the purpose of evaluating such party’s actual relationship.
  • Rating: Partially In Compliance  

    Brief description of that part of the principle or key criterion with which the company failed to comply:
    The Group’'s internal documents do not provide for engaging an independent appraiser during each major corporate action. The Group has not expanded the list of grounds on which members of the Board of Directors and other persons stipulated by law shall be recognised as related parties in the Group’'s transactions.
    When executing major corporate actions that affect shareholders’ rights and legitimate interests, the Group ensures equal conditions for all its shareholders. This goal is achieved by establishing a transparent and fair procedure based on due disclosure of information about the reasons for and conditions of such major corporate actions and about their possible consequences for the Group and its shareholders. Information about important major corporate actions is generally disclosed along with an explanation of their reasons, conditions and consequences.
    The Group buys back its shares at the share price determined by the Board of Directors with consideration of the weighted average share price for a reasonable period of time, regardless of the effect of execution of a transaction (including changes in the share price related to dissemination of information on the Group’'s transaction) and regardless of the discount on disposal of shares in a non-controlling stake.
    The Group has undertaken to engage an independent appraiser (Clause 6.5, Acron Corporate Governance Code) to determine the market price of converted shares and the share conversion ratio during restructuring (swap ratio).

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