Corporate Governance System

The Company’s well-developed and well-functioning corporate governance framework encourages sustained communication between its shareholders and internal governing bodies, as well drives up its shareholder value. For this reason, INARCTICA PJSC pays great attention to its corporate governance system and continually improves it, in deference to international best practices, Russian corporate law norms, the Company’s Charter, internal documents regulating the activities of the Company’s governing bodies, recommendations of the Corporate Governance Code of the Bank of Russia and the Listing Rules of MoscowExchange PJSC.

For its own corporate governance, the Company establishes the following vital principles:

Сompliance with the legislation of the Russian Federation

Transparency

Accountability

Equality of all shareholders

Commitment to the Company’s sustainable development

On top of that, the Company unconditionally complies with all basic and recognised principles of corporate governance.

Ensuring the successful development of the Company while maintaining a reasonable balance between the legitimate interests of the Company’s shareholders and management has been, and remains, the primary objective of corporate governance. Reduced investment risks, increased investment appeal,and improved corporate reputation are all goals of the Company’s effective corporate governance.

The management of the Company constantly reviews current corporate governance practices in Russia and abroad, and the best of them are incorporated into the Company’s corporate governance structure.

Internal documents regulating the corporate governance system in the Company

Charter (approved on 31 August 2022)
Regulations on the General Meeting of Shareholders (approved on 2 March 2023)
Regulations on the Board of Directors (approved on 2 March 2023)
Regulations on Remuneration and Compensation for Members of the Board of Directors (approved on 23 June 2022)
Regulations on Dividend Policy (approved on 29 March 2019)
Regulations on the Strategy Committee of the Board of Directors (approved on 15 December 2021)
Regulations on the Audit Committee of the Board of Directors (approved on 30 June 2022)
Regulations on the Nomination and Remuneration Committee of the Board of Directors (approved on 15 December 2021)
Regulations on the Sustainable Development Committee of the Board of Directors (approved on 15 December 2021)
Regulations on the Internal Audit Service (approved on 30 September 2016)
Regulations on the Corporate Secretary (approved on 30 September 2016)
Regulations on Insider Information (approved on 14 August 2020)
Regulations on Information Policy (approved on 31 December 2020)
Performance Assessment Methodology for the Board of Directors, Board Committees and Board members (approved on 11 May 2017)
Risk Management Policy (approved on 4 May 2022)
Shareholder Relations Policy (approved 14 March 2022)

Assessment of corporate governance quality

In past years, one of the Company’s top corporate governance goals was to continually raise the bar for excellent corporate governance and put as many of the Bank of Russia Corporate Governance Code’s (hereafter, the Corporate Governance Code) principles into practice as possible. The management of the Company made great efforts in 2022 to substantially reduce the number of Corporate Governance Code recommendations that the Company did not comply with or complied with partially.

Based on the Company’s self-assessment of compliance with the recommendations of the Corporate Governance Code, the level of full or partial compliance in 2022 was 96%, up from 92% in 2021. Thus, the Company fully complied with 66 recommendations, partially complied with ten recommendations, and did not comply with only three recommendations.

Compliance of INARCTICA PJSC with the recommendations of the Corporate Governance Code in the period from 2020 to 2022

Corporate Governance Principle	Number of recommendations	Full compliance			Partial compliance			No compliance
Corporate Governance Principle	Number of recommendations	2020	2021	2022	2020	2021	2022	2020	2021	2022
Shareholder rights and equal conditions for shareholders in the exercise of their rights	13	12	9	11	1	2	2	–	2	–
Board of directors of a company	36	30	25	27	5	10	7	1	1	2
Corporate secretary of a company	2	2	2	2	–	–	–	–	–	–
Remuneration system for members of the board of directors, executive bodies and other key executives of a company	10	8	10	10	2	–	–	–	–	–
Risk management and internal control system	6	4	5	6	2	1	–	–	–	–
Disclosure of company information, company information policy	7	7	6	6	–	1	1	–	–	–
Major corporate actions	5	–	–	4	1	2	–	4	3	1
Total	79	63	57	66	11	16	10	5	6	3
Total	100%	80%	72%	83%	14%	20%	13%	6%	8%	4%

The Company prioritised the interests of its shareholders by making significant adjustments to its internal documents during the reporting year. The Company’s Charter and the Regulations on the General Meeting of Shareholders stipulated that notices of general meetings of shareholders should be posted on the Company’s website at least 30 days before the meeting. Provision is made for completing the electronic form of the ballot and the use of information and communication technology to enable remote participation in general meetings of shareholders, discussion of agenda items and decision-making on issues put to a vote.

The new version of the Company’s Charter (dated 31 August 2022) sets out a list of major corporate actions on which the Board of Directors decides or makes recommendations to the General Meeting of Shareholders. The Board members present at the meeting must vote with a qualified three-quarters majority in order to decide on these issues.

The Analytical Credit Rating Agency (ACRA) reviewed the Company’s rating in 2022 and found that the corporate governance of the Company was at a moderately high level.

Plans for further improvements in corporate governance in the Company

The following areas are where the Company intends to continue its work in 2023:

To further improve the quality of corporate governance
To upgrade the risk management and internal control system
To increase the Company’s information transparency
To integrate newly acquired assets into the INARCTICA Group’s general structure and establish group management standards across them
To develop additional corporate documents and further improve existing ones
To engage independent consultants to conduct external assessments of the work of the Company’s Board of Directors, its members and committees

Structure of corporate governance bodies

In 2022, the Company had the following structure of corporate governance bodies.

The provisions in the Company’s Charter requiring the election of the Auditing Commission and governing its operations were eliminated in 2022 by decision of the General Meeting of Shareholders in line with the Federal Law on Joint Stock Companies.