Requirements for the issuer's corporate governance
to be complied with for inclusion of shares in Level 1 and Level 2

Requirement Level 1 Level 2
1 The issuer shall form a Board of Directors, which should include persons, each of whom has sufficient autonomy to shape their own position and can make objective judgment, independent of the influence of executive bodies of the issuer as well as selected groups of shareholders or other interested parties, and has a sufficient degree of professionalism and expertise (hereinafter the "Independent Director").
A member of the board of directors, as a rule, cannot be an independent director if he:
a) is affiliated with the issuer;
b) is affiliated with a material shareholder of the issuer;
c) is affiliated with a material counterparty of the issuer;
d) is affiliated with a competitor of the issuer;
g) is affiliated with the government (the Russian Federation, or a constituent entity of the Russian Federation) or a municipality.
The independence of the members of the board of directors shall be determined in accordance with the Board of Directors (Supervisory Board) Member Independence Criteria set out in Annex 4 of the Listing Rules.
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At least 1/5
of board
members and
at least three
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At least
two
2 The issuer's board of directors shall establish an audit committee, headed by an independent director, the core functions of which shall, among other things, include:
a) control of the assurance of completeness, accuracy and reliability of the issuer's financial statements ;
b) control of the reliability and efficiency of the risk management and internal control system;
c) assurance of independence and objectiveness of the internal and external audit functions;
Level 1 requirements:
The audit committee shall consist of independent directors or, where this is not possible for objective reasons, independent directors shall constitute the majority of the committee members, while other committee members may be members of the board of directors other than the chief executive officer and/or the members of the collegiate executive body of the issuer.
Level 2 requirements:
The audit committee shall consist of independent directors or, where this is not possible for objective reasons, it may consist of the members of the board of directors other than the chief executive officer and/or the members of the collegiate executive body of the issuer.
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3 The issuer's board of directors shall establish a compensation committee, the core functions of which shall, among other things, include:
a) development and periodic revision of the issuer's policy of remuneration of the members of the board of directors, members of the issuer's collegiate executive body, and the person acting as the chief executive officer, oversight of such policy implementation and delivery;
b) preliminary assessment of the performance of the issuer's collegiate executive body and the issuer's chief executive officer based on the year results in accordance with the issuer's compensation policy;
c) development of the conditions of early termination of employment contracts with the members of the issuer's collegiate executive body and the person acting as the issuer's chief executive officer, including all tangible liabilities of the issuer and the conditions of their provisions;
d) development of recommendations for the board of directors as regards determination of the amount of compensation and the principles underlying provision of incentives to the issuer's corporate secretary (head of the structural unit that performs the functions of the corporate secretary).
The compensation committee shall consist of independent directors or, where this is not possible for objective reasons, independent directors shall constitute the majority of the committee members, while other committee members may be members of the board of directors other than the chief executive officer and/or the members of the collegiate executive body of the issuer.
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4 The issuer's board of directors shall establish a nomination (HR, appointments) committee (hereinafter, the nomination committee)*, the core functions of which shall, among other things, include:
a) annual detailed formal self-assessment or external performance assessment of the board of directors and individual board members, as well as board committees, determination of priority areas for the reinforcement of the board of directors" capability;
b) interaction with shareholders, not to be limited to the major shareholders, with the purpose of the development of recommendations for the shareholders in relation to the voting on the election of nominees to the board of directors of the issuer;
c) planning of staff appointments, in particular, taking into account business continuity issues, of members of the collegiate executive body and of the chief executive officer, development of recommendations for the board of directors as regards nominees to the position of the corporate secretary (head of the structural unit that acts as the corporate secretary), members of the entity executive bodies and other key executives;
The majority of the nomination committee members shall be independent directors, while other committee members may be members of the board of directors, other than the chief executive officer and/or members of the issuer's collegiate executive body.
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5 The existence of the issuer's corporate secretary or special structural unit(s) performing the functions of the corporate secretary, which performs, among other things, the following functions:
a) support of the issuer's interaction with the regulatory authorities, trading authorities, the registrar, other professional securities market participants, within the corporate secretary's terms of reference;
b) prompt notification of the board of directors of any findings of violation of the law or the entity internal documents insofar as compliance with such documents is part of the entity corporate secretary's functions.
The corporate secretary (or the special structural unit performing the functions of the corporate secretary) may perform other functions as set out in the regulations of the corporate secretary (or of the special structural unit performing the functions of the corporate secretary).
The corporate secretary (the head of the structural unit performing the functions of the corporate secretary) shall report to the issuer board of directors, and shall be appointed to, and removed from, his office by the issuer's chief executive officer, subject to the consent of, or coordination with, the board of directors.
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6 The existence of the regulations of the issuer's corporate secretary (special structural unit(s) performing the functions of the corporate secretary) developed with reference to the provisions of the Code of Corporate Governance recommended by the Bank of Russia. In this regard, if such regulations do not conform to the Code of Corporate Governance recommended by the Bank of Russia, explanations of the reasons for such non-conformance shall be disclosed. +
7 The existence of a document regulating the issuer's dividend policy, approved by the issuer board of directors. + +
8 The existence of a separate structural unit of the issuer performing internal audit, or an arrangement where internal audit is conducted by an external independent organisation engaged by the issuer. For the purposes hereof, the internal audit functions shall include, among other things:
a) assessment of the internal control system efficiency;
b) assessment of the risk management system efficiency (for lending organisations, verification of the efficiency of the banking risk assessment methodology and banking risk management procedures established by the lending organisation internal documents (methodologies, programs, rules, regulations and procedures governing the performance of banking transactions and deals, banking risk management), and of the completeness of the application of the above-mentioned documents, review of the risk management function performance);
c) assessment of corporate governance matters (if a corporate governance committee does not exist).
The head of the issuer's structural unit conducting internal audit (the issuer's official responsible for internal audit to whom the head of such structural unit directly reports) shall be appointed to, and removed from, his respective office by the issuer's chief executive officer pursuant to the decision of the issuer's board of directors, and shall functionally report to the issuer's board of directors, and administratively, to the chief executive officer. For the purposes hereof, the above-mentioned persons shall not manage any of the issuer's functional areas of activity that require making of management decisions in relation to the audit targets.
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9 The existence of the issuer's policy in the area of internal audit (the internal audit regulations) approved by the issuer's board of directors which sets out the goals, objectives and terms of reference of the structural unit (external independent entity) performing the internal audit functions, and where an external independent entity is engaged to perform internal audit, also the procedure for the selection of, and contracting with, such entity. + +

 The Exchange may make the decision to include in (upgrade the listing level to) Level One, or to refrain from the decision to exclude from Level One, any shares, if the issuer finds a member of (nominee to) the board of directors independent, provided that all of the following conditions are met:
1)    The issuer's board of directors (on a case-by-case basis under exceptional circumstances) acknowledged independence of a member of (or nominee to) the board of directors, notwithstanding that it qualifies under the formal criteria of relationship to the issuer, a material shareholder of the issuer, a material counterparty and/or competitor of the issuer, the state (the Russian Federation, a constituent entity of the Russian Federation) and/or a municipality, as set out in the Board of Directors (Supervisory Board) Member Independence Criteria, only if such relationship does not affect the respective person's ability to make independent, objective and bona-fide judgment (hereinafter, acknowledgement of board of directors member's independence).
2)    The issuer provided a decision of the board of directors that contains a well-reasoned justification of the acknowledgement of independence of a member of (nominee to) the board of directors).
3)    The decision acknowledging the independence of a member of (or nominee to) the board of directors1, made by the issuer's board of directors (supervisory board) notwithstanding that it qualifies under the formal criteria of affiliation to the issuer, a material shareholder of the issuer, a material counterparty and/or competitor of the issuer, the state (the Russian Federation, a constituent entity of the Russian Federation) and/or a municipality (hereinafter, the decision acknowledging independence of the board of directors member) is disclosed on the issuer's webpage, with the indication to:

  • the quorum at the issuer's board of directors (supervisory board) meeting and the results of vote on such issue, with an indication of full name and the voting option (FOR, AGAINST, ABSTAINED) chosen, in relation to each member of the board of directors (supervisory board) that voted on the issue of acknowledging independence of the member of (nominee to) the board of directors or abstained from vote;
  • the content of the decision, with a well-reasoned justification of the acknowledgement of independence of the member of (nominee to) the board of directors);
  • the date of the issuer's board of directors (supervisory board) meeting where the respective decision was made;
  • the issue date and number of the minutes of issuer's board of directors (supervisory board) meeting where the respective decision was made.

The Exchange may decide to deny inclusion in (upgrade in the listing level to) Level One, or decide to exclude from Level One, any shares referred to in this Clause, if the conditions set out in this Clause are not met.

Upon the re-election of the board of directors, the procedure for acknowledging independence of a board of directors' member that meets the Independence Criteria shall be repeated.

 

 

* The functions of the nomination committee may be delegated to the compensation committee, the corporate governance committee or another committee of the board of directors.

1Such board of directors (supervisory board) decision shall be accessible on the issuer's website until the date of the next general shareholders' meeting at which the new board of directors (supervisory board) of the issuer is elected.