Report on Compliance with the Principles and Recommendations of the Corporate Governance Code
This Report on Compliance with the Principles and Recommendations of the Corporate Governance Code was reviewed by the Board of Directors of INARCTICA PJSC at the meeting held on 5 June 2023 (Minutes No. 403 dated 06.06.2023). Following the results of the review, the Board of Directors confirms that the data contained in this Report represent complete and reliable information on the Company’s compliance with the principles and recommendations of the Corporate Governance Code in 2022.
Assessment methodology: compliance with the corporate governance principles recognised in the Corporate Governance Code was assessed in accordance with the template proposed in the recommendations on the preparation of a report on compliance with the principles and recommendations of the Corporate Governance Code (Letter of the Bank of Russia No. IN-06–28/102 dated 27 December 2021).
|S.No.||Corporate governance principles||Criteria for assessing compliance with the corporate governance principle||Status of compliance with the corporate governance principle||Explanations of deviation from criteria for assessing compliance with the corporate governance principle|
|1.1||THE COMPANY HAS TO ENSURE EQUAL AND FAIR TREATMENT OF ALL SHAREHOLDERS IN EXERCISING THEIR RIGHT TO TAKE PART IN THE COMPANY MANAGEMENT|
|1.1.1||The company creates the most favourable conditions for shareholders to participate in the general meeting, develop a justified position on the agenda items of a general meeting, coordinate their actions, as well as an opportunity to express their views on the items considered||The company ensures easy communication, such as via a hotline, email or an internet forum, allowing shareholders to express their opinion and submit agenda items in the course of the preparation for a general meeting. These ways of communication were prepared by the company and made available to shareholders at each general meeting during the reporting period||Full compliance|
|1.1.2||The procedure for informing about holding of a general meeting and providing files to a general meeting gives shareholders an opportunity to prepare properly for the participation therein|| ||Full compliance|
|1.1.3||During the preparation and holding of a general meeting, shareholders had an opportunity to receive information about the meeting and files of the meeting in a free and timely manner, ask questions to the executive bodies and members of the board of directors of the company, communicate with each other|| ||Full compliance|
|1.1.4||Shareholders came across no unjustified difficulties in exercising of their right to demand convention of a general meeting, nominate candidates to the management bodies and propose agenda items of a general meeting|| ||Full compliance|
|1.1.5||Each shareholder had an opportunity to exercise the right to vote in the easiest and most convenient way without any obstacles|| ||Full compliance|
|1.1.6||The procedure established by the company for holding of a general meeting gives all persons present at a meeting an equal opportunity to express their opinion and ask questions|| ||Partial compliance|| |
Criteria 2 and 4 are not complied with.
The Company did not comply with Criterion 2 because the annual General Meeting of Shareholders, which elected the Board of Directors, was held in the form of absentee voting.
The Company’s notification of the General Meeting of Shareholders lists the phone number for shareholders to call and the email address where they can send questions to the Company’s management and Board of Directors through the Corporate Secretary. The Corporate Secretary is responsible to forward any shareholder questions to the appropriate parties and to make sure that as much feedback is obtained as possible.
In the materials for the General Meeting of Shareholders, the Company also provides shareholders with comprehensive information on the candidates for the Company’s Board of Directors, including information on their professional experience, place of employment at the time of nomination, the people who nominated them, and whether or not they agree to be elected to the Board, and whether or not they meet the independence criteria.
The Company is committed to adhering to all of the Code’s recommendations and, in the event that a General Meeting of Shareholders is called at which the election of the Board of Directors is to be decided, will take all reasonable steps to ensure that candidates for the Board of Directors are present at the General Meeting of Shareholders in the form of joint attendance.
The Company intends to return to holding annual general meetings of shareholders in the form of joint attendance in 2023.
Criteria 4 is not complied with, since the Company did not use telecommunications to provide remote access for shareholders to participate in general meetings of shareholders during the reporting period. This is because the Company has not established technical requirements for setting up such access and has not approved the necessary paperwork.
The Company’s Board of Directors will consider using telecommunications to enable shareholders to participate in general meetings remotely when making decisions in 2023 regarding the planning and holding of shareholder general meetings, and together with the Company’s management, will make a reasoned decision on the use or non-use of such means.
|1.2||SHAREHOLDERS ARE GIVEN AN EQUAL AND FAIR OPPORTUNITY TO SHARE PROFITS OF THE COMPANY THROUGH THE RECEIPT OF DIVIDENDS|
|1.2.1||The company developed and implemented a transparent and easily understandable mechanism for the determination of the amount of dividends and the dividend payment procedure|| ||Partial compliance|| |
Criterion 3 is not complied with.
A justification for the proposed distribution of net profit, including for the payout of dividends and the Company’s own needs, and an evaluation of its compliance with the Company’s dividend policy were not included in the materials for the General Meeting of Shareholders during the reporting period.
The Board of Directors received this justification from the management of the Company, which took the Company’s quarterly performance into consideration.
Due to the high level of geopolitical and economic uncertainty in 2022, management and the Board of Directors of the Company decided not to disclose the financial results of the Company and, as a result, did not give shareholders any information on how to calculate and determine whether distributing net profits is economically feasible.
The Company is committed to complying with the recommendations of the Code and, as the full disclosure regime is resumed, plans to include this information in materials for general meetings of shareholders.
|1.2.2||The company makes no dividend payment decision if such decision, although it formally violates no legal restrictions, is unreasonable from the financial standpoint and may lead to the forming of false perceptions about the company's operations|| ||Full compliance|
|1.2.3||The company prevents any adverse impact on the dividend rights of existing shareholders|| ||Full compliance|
|1.2.4||The company is committed to excluding any other ways of obtaining profit (income) by shareholders at the expense of the company except for dividends and the liquidation value|| ||Full compliance|
|1.3||THE SYSTEM AND PRACTICE OF CORPORATE GOVERNANCE ENSURE EQUAL CONDITIONS FOR ALL SHAREHOLDERS THAT OWN SHARES OF THE SAME CATEGORY (TYPE) INCLUDING MINORITY (SMALL) SHAREHOLDERS AND FOREIGN SHAREHOLDERS, AS WELL AS EQUAL TREATMENT OF SUCH SHAREHOLDERS BY THE COMPANY|
|1.3.1||The company created conditions for fair treatment of each shareholder by the management bodies and controlling persons of the company, including conditions that ensure inadmissibility of application of any abusive practices by large shareholders in respect of minority shareholders|| ||Full compliance|
|1.3.2||The company does not take actions that result or may result in the artificial redistribution of corporate control|| ||Full compliance|
|1.4||SHAREHOLDERS ARE PROVIDED WITH RELIABLE AND EFFECTIVE MEANS OF KEEPING RECORD OF THE RIGHTS TO SHARES AND AN OPPORTUNITY TO DISPOSE OF HELD SHARES IN A FREE AND EASY MANNER|
|1.4||Shareholders are provided with reliable and effective means of keeping record of the rights to shares and an opportunity to dispose of held shares in a free and easy manner|| ||Full compliance|
|2.1||THE BOARD OF DIRECTORS CARRIES OUT STRATEGIC MANAGEMENT OF THE COMPANY, DEFINES THE BASIC PRINCIPLES OF AND APPROACHES TO SETTING UP THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM IN THE COMPANY, CONTROLS THE ACTIVITIES OF THE EXECUTIVE BODIES OF THE COMPANY AND PERFORMS OTHER KEY FUNCTIONS|
|2.1.1||The board of directors is responsible for making decisions related to the appointment to and dismissal from positions in the executive bodies, including in connection with improper performance of duties. The board of directors also controls that the executive bodies of the company act in accordance with the approved development strategy and the main directions of the company's operations|| ||Full compliance|
|2.1.2||The board of directors establishes the main benchmarks of the company's operations over a long-term horizon, evaluates and approves the key performance indicators and the key business objectives of the company, evaluates and approves the strategy and business plans related to the main operations of the company|| ||Full compliance|
|2.1.3||The board of directors determines the principles of and the approaches to setting up the risk management and internal control system in the company|| ||Partial compliance|| |
Criterion 2 is not complied with.
The Company’s Board of Directors has not set an acceptable amount of risk (risk appetite) for the Company.
It is currently challenging for the Company to develop and maintain an adequate risk appetite due to the numerous uncertainties, many new projects, and considerable investment project costs.
Even yet, management continually keeps an eye on the budget and sporadically updates the Board of Directors and the Audit Committee of the Board of Directors on the progress of investment projects and budget execution.
The Company is committed to implementing the recommendations of the Code and will consider discussing with members of the Audit Committee and the Board the need to determine the Company’s risk appetite in the new reporting period.
|2.1.4||The board of directors determines the company's policy on remuneration and (or) reimbursement of expenses (compensation) to members of the board of directors, the executive bodies and other key employees of the company|| ||Full compliance|
|2.1.5||The board of directors plays the key role in preventing, identifying and resolving internal conflicts between bodies of the company, shareholders of the company and employees of the company|| ||Full compliance|
|2.1.6||The board of directors plays the key role in ensuring transparency of the company, timeliness and completeness of disclosure of information by the company and easy access of shareholders to documents of the company|| ||Full compliance|
|2.1.7||The board of directors exercises control over the corporate governance practice in the company and plays the key role in significant corporate events of the company|| ||Full compliance|
|2.2||THE BOARD OF DIRECTORS IS ACCOUNTABLE TO THE COMPANY’S SHAREHOLDERS|
|2.2.1||The information about the work of the board of directors is disclosed and provided to shareholders|| ||Full compliance|
|2.2.2||The chairperson of the board of directors is available for communication with the company's shareholders|| ||Partial compliance|| |
There is no formalised procedure for shareholders to approach the Chair of the Board of Directors.
In practice, this procedure is performed by the Corporate Secretary or the person responsible for shareholder and investor relations. Shareholders should send their request to the Corporate Secretary by email to the Company’s official website. The Corporate Secretary is then to be required to convey the message to the Chair of the Board of Directors’ office and make sure the reply to the message is received.
The Company will seek to formalise its shareholder relations process in the following reporting period to guarantee a clear process for submitting messages to the Chair of the Board of Directors and communicating this process to shareholders.
|2.3||THE BOARD OF DIRECTORS IS AN EFFECTIVE AND PROFESSIONAL MANAGEMENT BODY OF THE COMPANY CAPABLE OF MAKING OBJECTIVE INDEPENDENT JUDGEMENTS AND TAKING DECISIONS IN THE INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS|
|2.3.1||Only persons having an impeccable business and personal reputation along with the knowledge, skills and experience necessary to make decisions falling within the jurisdiction of the board of directors and required for the effective performance of its functions, are elected to the board of directors|| ||Full compliance|
|2.3.2||Members of the board of directors of the company are elected through a transparent procedure, allowing shareholders to obtain information about the candidates sufficient to form an idea about their personal and professional qualities|| ||Full compliance|
|2.3.3||The composition of the board of directors is balanced, including in terms of the qualification of its members, their experience, knowledge and business qualities, and enjoys the trust of shareholders|| ||No compliance|| |
In the reporting period, the board of directors did not analyse its own needs in terms of professional qualifications, experience and skills and did not identify the competencies required by the board of directors in the short and long term
In 2021, more than half of the Board of Directors were renewed. The selection of new candidates for the Board of Directors was based on the Company’s need for certain qualifications, experience, skills and competencies.
For the time being, the shareholders, the Board of Directors and the management of the Company believe that the Board of Directors works effectively for the benefit of the Company, given the shareholders’ interest in the economic stability and development of the Company, and does not seek to fundamentally renew the Board of Directors again.
The effectiveness of the Board of Directors is confirmed, among other things, by the results of the self-assessment of the Board of Directors, its Committees and members of the Board of Directors in 2021 and 2022.
The Company is committed to implementing the recommendations of the Code and will encourage Board members in future reporting periods to review their needs in terms of professional qualifications, experience and skills and identify the competencies required by the Board in the short and medium term.
|2.3.4||The quantitative composition of the board of directors of the company makes it possible to organise the activities of the board of directors in the most effective way including the possibility of creating committees of the board of directors, and gives substantial minority shareholders of the company an opportunity to get the candidate they vote for to be elected to the board of directors|| ||Full compliance|
|2.4||THE BOARD OF DIRECTORS INCLUDES A SUFFICIENT NUMBER OF INDEPENDENT DIRECTORS|
An independent director is a person who has sufficient professionalism, experience and autonomy to form his or her own position and who is able to judge objectively and good faith judgement, independent of the influence of the сompany’s executive bodies, individual shareholder groups or other stakeholders.
It should be borne in mind that in normal conditions, a candidate (an elected member of the board of directors) related to the society, a substantial shareholder, substantial contractor or competitor of the company or related to the state cannot be considered independent
| ||Full compliance|
|2.4.2||The company assesses whether candidates to members of the board of directors comply with the independence criteria, and regularly analyses whether independent members of the board of directors comply with the independence criteria. In such an assessment, content should prevail over form|| ||Full compliance|
|2.4.3||Independent directors make up at least one third of the elected composition of the board of directors|| ||Full compliance|
|2.4.4||Independent directors play the key role in preventing of internal conflicts in the company and making of significant corporate actions by the company|| ||Full compliance|
|2.5||THE CHAIRPERSON OF THE BOARD OF DIRECTORS PROMOTES THE MOST EFFECTIVE PERFORMANCE OF FUNCTIONS ASSIGNED TO THE BOARD OF DIRECTORS|
|2.5.1||An independent director is elected as chairperson the board of directors, or a senior independent director is appointed from the number of the elected independent directors to coordinate the work of independent directors and interact with the chairperson of the board of directors|| ||Partial compliance|| |
Criterion 1 is not complied with.
As at the reporting date, the Board of Directors of the Company had not found it possible to elect an independent non-executive director as Chair or to appoint a Senior independent non-executive director.
The Chair of the Board of Directors may not always be an independent member of the Board of Directors.
In accordance with the Company’s internal documents and established practice, the Chair of the Board of Directors is elected by the Board members of the Company from among their number by a majority vote of the total number of votes of the Board of Directors, the Board of Directors may at any time re-elect the Chair of the Board of Directors by a majority vote of the total number of votes of the Board of Directors of the Company.
Ekaterina Chernova was unanimously chosen as the Board Chair in 2022 by the Board members. Ekaterina has been on the Company’s Board of Directors for more than six years, and she makes a valuable contribution to the Board’s productive work and the use of best practises in corporate governance. Ekaterina Chernova encourages open debate and the active participation of the Board members during meetings. Additionally, the Board members were quite pleased with the work Ms Chernova did as Chair in 2022.
Nevertheless, the Company is committed to complying with the recommendations of the Code, and the Corporate Secretary of the Company periodically informs the independent members of the Board of Directors at Board meetings about the possibility of electing a Senior Independent Director. At this time, however, the Board of Directors have not elected a Senior Independent Director from among its members.
Throughout the reporting period, the Company’s Corporate Secretary will keep suggesting to the independent members of the Board of Directors that they elect the Senior Independent Director from among themselves.
|2.5.2||The chairperson of the board of directors creates a constructive atmosphere during meetings, ensures free discussion of the meeting agenda issues, control over the execution of decisions made by the board of directors|| ||Full compliance|
|2.5.3||The chairperson of the board of directors takes the required measures for the timely provision of members of the board of directors with the information necessary to make decisions on the agenda issues|| ||Full compliance|
|2.6||MEMBERS OF THE BOARD OF DIRECTORS ACT IN GOOD FAITH AND REASONABLY IN THE INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, BEING DULY INFORMED, WITH DUE CARE AND DILIGENCE|
|2.6.1||Members of the board of directors make decisions taking into account all available information, in the absence of a conflict of interest, based on the principles of equal treatment of shareholders of the company, within the limits of usual business risk|| ||Full compliance|
|2.6.2||Rights and obligations of members of the board of directors are clearly formulated and enshrined in the internal documents of the company|| ||Full compliance|
|2.6.3||Members of the board of directors have sufficient time to carry out their duties|| ||Full compliance|
|2.6.4||All members of the board of directors have equal access to the documents and information of the company. Newly elected members of the board of directors are provided with sufficient information about the company and operations of the board of directors as soon as possible|| ||Full compliance|
|2.7||MEETINGS OF THE BOARD OF DIRECTORS, PREPARATION FOR AND PARTICIPATION OF MEMBERS OF THE BOARD OF DIRECTORS IN SUCH MEETINGS ENSURE EFFECTIVE PERFORMANCE OF THE BOARD OF DIRECTORS|
|2.7.1||Meetings of the board of directors are held as necessary, taking into account the scope of activities and objectives of the company at a particular point in time|| ||Full compliance|
|2.7.2||The internal documents of the company enshrine a procedure for the preparation and holding of meetings of the board of directors providing members of the board of directors with an opportunity to prepare properly for such meetings|| ||Partial compliance|| |
Criterion 1 is not complied with.
The Company has adopted Regulations on the Board of Directors, which set out the procedure for preparing and holding Board meetings. This regulation stipulates that members of the Board of Directors must be notified at least three days in advance of the meeting.
The company is often required to make decisions on matters within the Board’s purview as quickly as possible. This was particularly often required in a period of high uncertainty and sanctions risks in the reporting period. Accordingly, voting materials for the Board of Directors were sent to the members three days before the meeting.
Previously, the Company has always endeavoured to give five or more calendar days’ notice of meetings to Board members.
At the end of 2022 the Company drafted a new version of the Board of Directors’ Regulations, which included a condition that the members of the Board of Directors should be given at least five days’ notice of the meeting, and submitted it for approval at the General Meeting of Shareholders on 2 March 2023.
|2.7.3||The form of a meeting of the board of directors is determined depending on the importance of the issues on the agenda. The most important issues are resolved at the meetings held in praesentia|| ||Full compliance|
|2.7.4||Decisions on the most important issues of the company's activities are made at a meeting of the board of directors by a qualified majority or a majority of votes of all elected members of the board of directors|| ||Full compliance|
|2.8||THE BOARD OF DIRECTORS FORMS COMMITTEES FOR PRELIMINARY CONSIDERATION OF THE MOST IMPORTANT ISSUES OF THE COMPANY’S ACTIVITIES|
|2.8.1||The audit committee consisting of independent directors was formed for preliminary consideration of the issues related to control over financial and economic operations of the company|| ||Partial compliance|| |
Criterion 1 is not complied with.
During the reporting year, the Audit Committee comprised two independent directors with experience and expertise in the preparation, analysis, evaluation and audit of accounting (financial) statements, one of whom is the Chair of the Audit Committee. One member of the Committee is not independent, but the long service on the Board of Directors, knowledge of business specifics, qualifications and competencies in audit, finance, risk management and impressive experience in management positions allow this member of the Audit Committee to effectively perform the functions stipulated by the Regulations on the Audit Committee of the Board of Directors of INARCTICA PJSC.
The Company is committed to complying with the recommendations of the Code, and the Corporate Secretary of the Company notifies members of the Board of Directors (prior to the election of the Committee) of the recommendations of the Code and the requirements of the Listing Rules of the Moscow Exchange.
The Audit Committee may be made up entirely of independent Board members in 2023, according to plans made by the Board of Directors.
|2.8.2||A remuneration committee consisting of independent directors and headed by an independent director who is not the chairperson of the board of directors is formed for the preliminary consideration of the issues related to the development of the effective and transparent remuneration practice|| ||Partial compliance|| |
Criterion 3 is not complied with.
The Regulations on the Nomination and Remuneration Committee of the Board of Directors set out the tasks of the Nomination and Remuneration Committee, including those contained in recommendation 180 of the Code. However, these Regulations do not define the conditions (events), upon the occurrence of which the Nomination and Remuneration Committee of the Board of Directors considers the review of the Company’s remuneration policy for members of the Board of Directors, executive bodies and other key management personnel.
Nevertheless, the Nomination and Remuneration Committee occasionally addresses issues relating to the remuneration of the Company’s executive bodies and employees at its meetings. In 2022, active work was being done to create a target map and establish KPI values for not just the Company’s CEO but also for all top management. Additionally, the employee incentive scheme and new stock option programme were occasionally discussed.
The Company is committed to implementing the recommendations of the Code, and its 2023 work plan includes the revision of the Regulations on the Nomination and Remuneration Committee of the Board of Directors of the Company and the addition of conditions to review the Company’s policy on remuneration of the Board of Directors, executive bodies and other key executives.
|2.8.3||The company formed the nomination (appointment, human resources) committee with the majority of members being independent directors for the preliminary consideration of issues related to human resources planning (succession planning), professional composition and efficiency of performance of the board of directors|| ||Partial compliance|| |
Criterion 3 is not complied with.
The Nomination and Remuneration Committee has been a part of the Board of Directors for a number of years. It oversees the Company’s human resources policy, improves the professionalism and effectiveness of the Board of Directors, and ensures the succession of the Company’s governing bodies.
In 2021, the more than half of the Company’s Board members were replaced with new ones, and the Board of Directors was formed from candidates proposed by all shareholders entitled to nominate candidates to the Board of Directors.
The current membership of the Company’s Board of Directors fully meets shareholders’ expectations in terms of competence, knowledge, experience and qualifications. For the past two years, this Board has been productively serving the interests of the Company.
Moreover, in 2022 it became difficult to find new independent candidates with the competencies required by the Company and meeting the expectations of the Company’s shareholders due to the refusal of many independent directors from foreign countries to serve on the boards of directors of Russian companies.
Therefore, the Nomination and Remuneration Committee of the Board of Directors in 2022 did not engage with shareholders on the issue of selecting new candidates to the Company’s Board of Directors.
The Company is committed to following the Code’s recommendations, and if any of the current Board members are found to be incompetent, the Nomination and Remuneration Committee will begin working with all of the Company’s shareholders, not just the largest ones, to choose new candidates for the Board of Directors.
Given the resignation of Board members with rare aquaculture capabilities in 2022, the Company does not rule out the possibility that such work may be done in 2023
|2.8.4||The board of directors of the company made sure that the composition of its committees fully met the purposes of the company, taking into account the scope of operations and the level of risk. Additional committees were either formed or not recognised as necessary (the strategy committee, the corporate governance committee, the ethics committee, the risk management committee, the budget committee, the health, safety and environment committee, etc.)|| ||Full compliance|
|2.8.5||The composition of the committees is determined in such a way as to allow for a comprehensive discussion of the preliminary considered issues, taking into account different views|| ||Full compliance|
|2.8.6||Committee chairpersons regularly inform the board of directors and its chairperson of the operations of their committees|| ||Full compliance|
|2.9||THE BOARD OF DIRECTORS ENSURES THE ASSESSMENT OF THE QUALITY OF PERFORMANCE OF THE BOARD OF DIRECTORS, COMMITTEES AND MEMBERS OF THE BOARD OF DIRECTORS|
|2.9.1||Assessment of the quality of performance of the board of directors is aimed at determination of the effectiveness of performance of the board of directors, committees and members of the board of directors, the degree of compliance of their operations with the company development needs, activation of operations of the board of directors and identification of areas where their operations can be improved|| ||Full compliance|
|2.9.2||The performance of the board of directors, committees and members of the board of directors is assessed on a regular basis at least once a year. An external company (consultant) is engaged at least once every three years to conduct an independent assessment of the quality of the performance of the board of directors|| ||No compliance|| |
Criterion 1 is not complied with.
In accordance with Art. 2.9.2 of the Code, the performance of the Board of Directors, Committees and members of the Board of Directors should be assessed on a regular basis at least once a year. It is recommended to engage an external company (consultant) on an occasional basis (at least once every three years) to conduct an independent assessment of the quality of the performance of the Board of Directors.
The current Board of Directors was elected in 2021 and at the time of writing this Report has been in office for less than three years. Thus, in 2022, there was not enough information gathered to conduct an objective independent assessment of the work of the Board of Directors in its current membership.
The Board of Directors independently assesses its performance annually in accordance with the Company’s approved methodology for assessing the effectiveness of the Board of Directors and Board Committees. The results of such assessments in recent years are given in the Corporate Governance section of this Annual Report.
The Company is committed to complying with the recommendations of the Code and plans to propose to the Board of Directors to consider engaging external organisations to conduct an independent assessment of the Board of Directors’ performance in 2023.
|3.1||THE CORPORATE SECRETARY OF THE COMPANY IS EFFECTIVELY INTERACTING WITH SHAREHOLDERS, COORDINATES THE ACTIONS OF THE COMPANY TO PROTECT THE RIGHTS AND INTERESTS OF SHAREHOLDERS, SUPPORTS THE EFFECTIVE PERFORMANCE OF THE BOARD OF DIRECTORS|
|3.1.1||The corporate secretary has the knowledge, experience and qualification sufficient for performing his/her duties, an impeccable reputation and enjoys the trust of shareholders|| ||Full compliance|
|3.1.2||The corporate secretary has sufficient independence from the executive bodies of the company and has the necessary powers and resources for fulfilling the tasks assigned to him/her|| ||Full compliance|
|4.1||THE LEVEL OF REMUNERATION PAID BY THE COMPANY IS SUFFICIENT TO ATTRACT, MOTIVATE AND RETAIN PERSONS WHO HAVE THE COMPETENCE AND QUALIFICATION NECESSARY FOR THE COMPANY. REMUNERATION IS PAID TO MEMBERS OF THE BOARD OF DIRECTORS, THE EXECUTIVE BODIES AND OTHER KEY EXECUTIVES OF THE COMPANY IN ACCORDANCE WITH THE REMUNERATION POLICY ADOPTED IN THE COMPANY|
|4.1.1||The level of remuneration provided by the company to members of the board of directors, the executive bodies and other key executives creates sufficient motivation for their effective work, enables the company to attract and retain competent and qualified professionals. At the same time, the company avoids greater than necessary levels of remuneration, as well as an unjustified big gap between the rates of remuneration of the mentioned persons and the company employees|| ||Full compliance|
|4.1.2||The company's remuneration policy is developed by the remuneration committee and approved by the board of directors of the company. The board of directors together with the remuneration committee ensures control over the introduction and implementation of the remuneration policy in the company, and revises and amends it if necessary|| ||Full compliance|
|4.1.3||The company's remuneration policy contains transparent mechanisms for the determination of the amount of remuneration of members of the board of directors, the executive bodies and other key executives of the company and regulates all types of payments, benefits and privileges granted to the mentioned persons|| ||Full compliance|
|4.1.4||The company determines the policy of expense compensation (compensations) that specifies a list of expenses to be compensated for and the level of service that the members of the board of directors, of the executive bodies and other key managers of the company can count on. Such policy may be a component of the company’s remuneration policy|| ||Full compliance|
|4.2||THE SYSTEM OF REMUNERATION TO THE MEMBERS OF THE BOARD OF DIRECTORS ENSURES CONVERGENCE OF FINANCIAL INTERESTS OF THE DIRECTORS WITH LONG-TERM FINANCIAL INTERESTS OF THE SHAREHOLDERS|
The company pays a fixed annual remuneration to the members of the board of directors. The company does not pay any remuneration for participation in individual meetings of the board of directors or its committees.
The company does not apply any types of short-term motivation or additional financial incentives to members of the board of directors
| ||Full compliance|
|4.2.2||The long-term ownership of the company’s shares mostly contributes to convergence of financial interests of the members of the board of directors with long-term interests of the shareholders. In doing so, the company does not precondition the right of realisation of shares by achieving certain performance indicators and the members of the board of directors do not participate in stock option plans|| ||Full compliance|
|4.2.3||The company does not provide for any additional payments or compensations in case of early termination of the powers of the members of the board of directors in connection resulting from the change of control over the company or otherwise|| ||Full compliance|
|4.3||THE SYSTEM OF REMUNERATION TO THE MEMBERS OF THE EXECUTIVE BODIES AND OTHER KEY MANAGERS OF THE COMPANY STIPULATES THE DEPENDENCE OF REMUNERATION ON THE COMPANY’S PERFORMANCE AND THEIR CONTRIBUTION TO ACHIEVING THIS RESULT|
|4.3.1||The remuneration to the members of the executive bodies and other key managers of the company is determined in such a way as to ensure reasonable and justified correlation between the fixed and variable portions of the remuneration which depends on the company's performance and personal (individual) contribution of the employee to the outcome|| ||Full compliance|
|4.3.2||The company implemented the programme of long-term motivation for the members of the executive bodies and other key managers of the company using the shares of the company (stock option plans or other derivative financial instruments with company shares as the underlying asset)|| ||Full compliance|
|4.3.3.||The amount of compensation (golden parachute) that the company pays in case of early termination of their powers to the members of the executive bodies or key managers, as initiated by the company, and in the absence of unfair acts on their part, shall not exceed a two-fold amount of the fixed portion of the annual remuneration|| ||Full compliance|
|5.1||THE COMPANY HAS A RELIABLE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM IN PLACE TO GIVE REASONABLE CERTAINTY THAT ITS GOALS WILL BE MET|
|5.1.1||The Board of Directors determined the principles of and the approaches to setting up the risk management and internal control system in the company|| ||Full compliance|
|5.1.2||The company's executive bodies are in charge of establishing and maintaining an efficient internal control and risk management system|| ||Full compliance|
|5.1.3||The risk management and internal control system of the company provides an objective, fair and clear view of the current state and prospects of the company, integrity and transparency of the company's reporting, reasonableness and acceptability of the risks taken by the company|| ||Full compliance|
|5.1.4||The board of directors of the company takes necessary measures to make sure that the risk management and internal control system of the company is consistent with the principles of and approaches to its organisation defined by the board of directors and is functioning effectively|| ||Full compliance|
|5.2||THE COMPANY ORGANISES INTERNAL AUDITS TO METHODICALLY AND IMPARTIALLY ASSESS THE ACCURACY AND EFFICIENCY OF THE RISK MANAGEMENT, INTERNAL CONTROL SYSTEM, AND CORPORATE GOVERNANCE PROCEDURES|
|5.2.1||The company has a separate structural unit or engages an independent external company to conduct an internal audit. The functional and administrative accountability of the internal audit unit is differentiated. Functionally, the internal audit unit reports to the board of directors|| ||Full compliance|
|5.2.2||The internal audit unit assesses the reliability and effectiveness of the risk management and internal control system, as well as the corporate governance, and applies generally accepted standards of internal audit|| ||Full compliance|
|6.1||THE COMPANY AND ITS ACTIVITIES ARE TRANSPARENT FOR SHAREHOLDERS, INVESTORS AND OTHER INTERESTED PERSONS|
|6.1.1||The company developed and implemented an information policy that ensures effective information exchange between the company, shareholders, investors and other interested persons|| ||Full compliance|
|6.1.2||The company discloses the information on the corporate governance system and practice, including detailed information on the compliance with the principles and recommendations of the Code|| ||Full compliance|
|6.2||THE COMPANY TIMELY DISCLOSES COMPLETE, UP-TO-DATE AND RELIABLE INFORMATION ABOUT THE COMPANY TO ENSURE OPPORTUNITIES FOR MAKING JUSTIFIED DECISIONS BY THE COMPANY’S SHAREHOLDERS AND INVESTORS|
|6.2.1||The company discloses information in accordance with the principles of regularity, consistency, efficiency, accessibility, reliability, completeness and comparability of the information disclosed|| ||Full compliance|
|6.2.2||The company avoids a formal approach to disclosing information and discloses the substantial information on its business, even if the disclosure of such information is not stipulated by the law|| ||Partial compliance|| |
Criterion 2 is complied with partially.
In order to safeguard its shareholders and the Company itself in 2022, the Company decided not disclose information regarding its shareholding structure on the Company’s website owing to heightened sanctions risks.
However, the Company has consistently made its shareholding structure public knowledge and disclosed it in the Company’s annual reports, and will do so again in the text of the Company’s Annual Report 2022.
The Company is now withholding information about the capital structure, but once public companies resume the full disclosure regime, it will provide that data on its website.
|6.2.3||As one of the most important tools for the exchange of information between shareholders and other stakeholders, the annual report contains information enabling assessment of the company's performance for the year|| ||Full compliance|
|6.3||THE COMPANY PROVIDES INFORMATION AND DOCUMENTS AS REQUESTED BY THE SHAREHOLDERS IN ACCORDANCE WITH EQUAL AND UNHINDERED ACCESS PRINCIPLES|
|6.3.1||There are no unreasonable difficulties for shareholders in exercising their right of access to the company’s documents and information|| ||Full compliance|
|6.3.2||When the company provides information to shareholders, it maintains a reasonable balance between the interests of individual shareholders and the interests of the company itself, seeking to protect the confidentiality of important commercial information, which can have a significant impact on the company’s competitiveness|| ||Full compliance|
|7.1||THE ACTIONS THAT SIGNIFICANTLY INFLUENCE OR MAY INFLUENCE THE STRUCTURE OF THE SHARE CAPITAL AND FINANCIAL STANDING OF THE COMPANY AND, ACCORDINGLY, THE SHAREHOLDERS’ STATE (MATERIAL CORPORATE ACTIONS), ARE PERFORMED ON EQUITABLE CONDITIONS THAT ENSURE COMPLIANCE WITH THE RIGHTS AND INTERESTS OF THE SHAREHOLDERS AS WELL AS OF OTHER STAKEHOLDERS|
|7.1.1||Material corporate actions include reorganisation of the company, acquisition of 30 percent and more of the voting shares of the company (take-over), the performance of material transactions by the company, increase or decrease of the share capital of the company, listing and delisting of shares of the company and other actions that may lead to a significant change in the shareholders’ rights or infringe upon their interests. The charter of the company defines a list (criteria) of transactions or other actions that are recognised as material corporate actions, and such actions refer to the competence of the company’s board of directors|| ||Full compliance|
|7.1.2||The board of directors plays a key role in making decisions or developing recommendations concerning material corporate actions; the board of directors relies on the position of independent directors of the company|| ||No compliance|| |
The Company does not have a procedure for independent members of the Board of Directors to state their position on material corporate actions.
The concept and list of material corporate actions appeared in the Company’s new Charter in 2022, and the Company has not yet regulated the procedure for independent Board members to state their position on such matters.
Nevertheless, all members of the Board of Directors are entitled to express their dissenting opinions on items on the agenda of the meeting, including those relating to material corporate actions. Such dissenting opinion shall be appended by the Company Secretary to the minutes of the relevant meeting.
The Company strives to implement the recommendations of the Code and in 2023 will consider amending the Company’s internal documents to regulate the procedure for independent members of the Board of Directors to declare their positions on material corporate actions.
The company ensures equal conditions for all of its shareholders if material corporate actions affect the rights and legal interests of shareholders, and implements additional measures protecting the rights and legal interests of shareholders of the company if the legal mechanisms aimed at protecting the rights and legal interests of shareholders are insufficient.
The company is guided not only by formal legal requirements but also by the corporate governance principles set forth in the Code
| ||Full compliance|
|7.2||THE COMPANY PROVIDES A PROCEDURE FOR PERFORMING MATERIAL CORPORATE ACTIONS THAT ALLOWS THE SHAREHOLDERS TO OBTAIN IN DUE TIME COMPLETE INFORMATION ON SUCH ACTIONS AND GIVES THEM AN OPPORTUNITY TO INFLUENCE THE PERFORMANCE OF SUCH ACTIONS AND GUARANTEES COMPLIANCE WITH THE APPROPRIATE LEVEL OF PROTECTION OF THEIR RIGHTS AS SUCH ACTIONS ARE PERFORMED|
|7.2.1||The information on performance of material corporate actions is disclosed with an explanation of the reasons, conditions and consequences of such actions|| ||Full compliance|
|7.2.2||The rules and procedures associated with the company’s performance of material corporate actions are enshrined in the internal documents of the company|| ||Full compliance|