|No.||PRINCIPLES OF CORPORATE GOVERNANCE CODE||Compliance/ Non-compliance /Partially compliance||Information on observance / not observance of provisions of the Code|
|1. Government as the Shareholder of the Fund|
|2||The Government of the Republic of Kazakhstan is the Sole Shareholder of the Fund.
The main strategic objective of the Fund and Organizations is the growth of long-term value and Sustainable development of the Fund and Organizations that is reflected in the Development Strategy of the Fund and the Companies. All decisions and actions must conform to the Development Strategy.
The optimal assets structure must be designed in the Fund and Companies. The Fund and the Companies should seek to simplify as much as possible the structure of their assets and their organizational and legal forms.
Organizations perform their activities within its core (main) activities. Implementation of new activities is permitted if there is no competition in this market or participation of the Fund and Organizations will contribute to the development of small and medium-sized businesses.
It is recommended to have and keep the controlling share (interest ) in the Organizations of the Fund.
|Complied||The Board of directors approved on October 15, 2015 the Long-term development strategy of Samruk-Energy JSC for the period till 2025 with the following strategic objectives: ensuring reliable and competitive supply of energy resources in the markets of presence; ensuring social responsibility of business, sustainable development; increase in the cost of the share capital. All decisions and actions correspond with the Strategy. In order to monitor the implementation of the Strategy the Board of directors and Board of the Company hold strategic sessions during which the main activities, tasks, problematic issues, risks correcting measures are discussed. Investment activity of the Company is be carried out within the framework of the Strategy implementation.
The Company’s investment activities are carried out within the framework of the Strategy implementation.
The group of companies includes the Company’s subsidiaries and dependent companies of various organizational – legal forms: the joint-stock companies and limited liability partnerships.
Concerning providing optimum structure of Company’s assets and their legal forms, regarding reorganization of joint-stock companies in the limited liability companies: at this stage Society sells 5 joint-stock companies according to the resolution of the government of the Republic of Kazakhstan of December 30, 2015 No. 1141 «About some questions of privatization for 2016–2020»; JSC Moynak HPP JSC and Shardarinsk HPP JSC have the long-term credit agreements attracted within implementation of investment projects, the change of legal form in the limited liability companies will lead to emergence of risk of presentation of the early requirement, possible loss of the first-class state guarantees, that can lead to rise in price of cost of loan, toughening of the existing covenant package and other terms of credit, and emergence of additional expenses on involvement of consultants within reapproval of the existing credit and mortgage documentation. In this regard, coordination with creditors about of changes of legal form of data of the companies into limited liability partnership, will be expedient, after optimization of a debt portfolio or after full repayment of the existing loans.
According to the long-term strategy, the Company carries out the activity within the primary (profile) activity, development of new kinds of activity is planned in the form of joint ventures
|5||The Government provides to the Fund and Organizations the full operating self-sufficiency and does not allow interference by the Government and government agencies the in the operational (current) activities of the Fund and Organizations, except for cases provided by laws, acts and orders of President of the Republic of Kazakhstan.
The Fund’s Management Board and Chief Executive officer (CEO) of the Fund, authorities of the Organizations are fully autonomous and independent at decision-making and implementation of any action within their competence.
|Complied||In 2016 and until the approval of the Report there were no facts of direct intervention in Company’s operational activity from the Government and public authorities. All decisions on strategic and operating activities issues were accepted by the Board of directors and Board independently, considering at the same time the state program and normative documents.|
|8||Investment activity of the Fund or Organization is constructed on market principles, in accordance with the Development strategy of the Fund or Organization
and oriented to growth of the value and optimal assets structure. Distribution of net income to the Government as the Sole Shareholder has made in the form of dividends on the basis of a formalized and transparent dividend policy.
Cases of implementation by the Fund or Organization of low-profit and socially significant projects should be disclosed in the annual report of the Fund or Organization by identifying the sources of funding for such projects.
|Complied||The development strategy of Samruk-Energy JSC, approved by the Board of Directors, contains a portfolio of investment projects implemented to fulfill the Company’s mission in the economy of the State. Information on the Company’s investment activities is detailed in the Annual Reports.|
|14||The Fund and Organizations are committed to the maintenance of highest ethical standards and to the implementation of appropriate procedures to ensure the continued application of these standards by all employees and partners of the Funds and Organizations.
Notifications on possible infringement should be sent directly to the IAS or the Board of Directors of the Fund or Organization. Executive body and all of its structural units of the Fund and the Organization, including security, should not prevent the transmission of notifications of alleged violations to the IAS and the Board of Directors.
|Complied||The Board of directors on 31.03.2017 approved the Code of corporate business ethics as the uniform corporate standard for Samruk-Energy group of companies in which are established the high ethical standards and standards of behavior of all interested parties (stakeholders) regulating the main fields of relationship. All members of Company’s team (officials and employees) adhere to high ethical standards, and familiar with the provisions and observe requirements of the Code of corporate business ethics. Boards of directors / the Supervisory boards of dependent companies approve the updated code in the organizations.
The BoD has provided existence of the mechanism for collecting and confidential consideration of data on violation of the Company’s Policy by the organization of «the hot line» at Audit Committee. By means of the requisites published on the website of the Company, stakeholders can notify through IAS to Audit Committee on estimated violations of the law, etc. At the same time confidentiality of addressed remains. Besides, in Group of companies there was created the institute of the Ombudsman which can address concerning violation of the Code of business ethics. The Board of directors periodically receives reports on the arrived messages (complaints), about accepted actions, etc.
|15||The Ombudsman is appointed in order to comply with the principles of business ethics and optimal regulation of social and labor disputes arising in the Fund and Organizations.
A candidate for the position of Ombudsman should have an impeccable reputation, high authority and have the ability in making impartial decisions.
The Ombudsman is appointed by the Board of Directors of the Fund and shall be reelected every two years. The role of the Ombudsman is to advise employees who referred to him, participants of labor disputes and conflict. The Ombudsman assists them in developing a mutually constructive and workable solution based on compliance with the laws of the Republic of Kazakhstan (including confidentiality if necessary), in solving the problem of social and labor questions of workers and the
Fund and Organizations, as well as in complying with the principles of business ethics by employees of the Fund and Organizations.
The Ombudsman shall submit to the relevant authorities and an official of the Fund and/or the organizations identified problematic issues which are systemic in nature and require appropriate solutions (integrated measures), puts forward constructive suggestions for their solution.
The Ombudsman at least once a year submits a report on the results of the work to the Nomination and Remuneration Committee and the Audit Committee of the Board of Directors of the Fund, which evaluate the results of its activities. The Board of Directors of the Fund assesses the performance of the Ombudsman and makes a decision on the extension or termination of office of the incumbent Ombudsman.
Place of work, working conditions of the Ombudsman are determined by the decision of the Fund’s Management Board.
|Complied||For the purpose of respect the principles of business ethics and optimum regulation of the social and labor disputes arising in the Company, on October 15, 2015 the Board of directors of the Company (Minutes of meeting No. 06/15) elected and assigned Bekbas O. T. – the chairman of the Central Committee of OO “Kazakhstan Branch Labor Union of Power Engineering Specialists” as the Ombudsman of Company, who has faultless business reputation, high authority and the ability to make impartial decisions..
On October 20, 2015 The BoD ( Minutes of meeting
The Ombudsman sends a report on the work done to the members of the Board of Directors on a quarterly basis. The report of the Ombudsman is published in the annual report of the Company.
|2. Corporate governance system in the Fund and Organizations|
|1||The role of the Fund as a National Holding Company.
The corporate governance system in the Fund and Organizations provides due governance and control over the operations of the Fund and Organizations and ensure growth of the long-term value and Sustainable development. The Fund as a national managing holding plays the role of a strategic holding in respect to its Companies. The efficiency, operability and transparence should be the basis for the
|Complied||The shareholder sends letters of expectation to the Chairman of the Board of Directors of JSC Samruk-Energy, which are communicated to the Board of Directors.In accordance with the Company’s Charter, the Board of Directors determines the directions of the Company’s activities, approves the Development Strategy and the medium-term development plan for 5 years, including for realization of the expectations of a major shareholder. The Board ensures implementation of the Strategy, development plans and achievement of the approved strategic efficiency, reporting periodically to the Board of Directors.|
|2||Corporate governance system is a set of processes which provides control and monitor the activities of the Fund and Organizations as well as the system of relationship between the Executive Body, Board of Directors, shareholders and stakeholders. Competence of authorities and decision-making procedures should be clearly defined and enshrined in the charter.||Complied||In the Company, the corporate governance system provides:
1) compliance with the hierarchy of the order of consideration of issues and decision-making: all issues submitted for consideration by the Board of Directors are carefully considered by the relevant specialized Committees of the Board of Directors;
2) a clear delineation of powers and responsibilities between the Board of Directors, the Management Board, officers and employees: the competence, authority and responsibility of the bodies are determined by the Charter, the Regulations on the Board of Directors and the Management Board; By order of the Chairman of the Board «On the distribution of duties and authorities», the areas of responsibility of the members of the Management Board of «Samruk-Energy» JSC are clearly delineated; The structural divisions of the Company carry out their activities on the basis of the Regulations on the subdivisions; Job descriptions have been developed for each position.
3) the Board of Directors and the Management Board make decisions in a timely and qualitative manner;
4) compliance with the legislation and internal documents of the Board of Directors and the Management Board.
|3||The Fund interacts in management of Companies by implementing the functions of the Shareholder/Participant, as well as thought the Board of Directors/Supervisory Board in accordance with order that is defined in charters of the Companies and this Code. The Fund annually directs to the Chairman of the Board of Directors and representatives of the Fund in Board of Directors of the Company the expectations of the shareholder for the coming financial year. The Fund in the format of the Annual General Meeting of Shareholders shall meet with the members of the Board of Directors/Supervisory Board of the Companies all voting shares of which are owned by the Fund.||Complied||Samruk-Kazyna JSC, being the sole shareholder of the Company, participates in the management of the Company by sending letters of expectation to a major shareholder, through participation in the Board of Directors of its representatives.
The Board of Directors consists of two representatives of the shareholder, the presence of four independent directors ensures the adoption of well-considered independent decisions.
|4||Fund based on discussions with the Companies forms a uniform policies for the Companies, approves methodological guidelines and corporate standards for the
The decision to use corporate standards in the field of internal audit and internal control system that are approved by the Fund in the Organization will be accepted the by the Board of Directors Organization taking into account insurance of compliance with these standards, the specifics of the Organizations.
|6||Distribution of net income to the Government as the Sole Shareholder is in the form of dividends on the basis of a formalized and transparent dividend policy.||Complied||The Company is guided by dividend policy of Samruk-Kazyna JSC in relation to its affiliated organizations – the document in which the most transparent procedures of definition and payment of dividends are formalized. Other redistributions, except as dividends to shareholders, aren’t provided.|
|7||The governance of Organizations is implemented by the authorities of the Organizations in accordance with the competences and procedures specified by the charter of the Organizations. This principle also applies to Organizations with several shareholders (participants).||Complied||Company’s bodies are the following:
1) the supreme body – the Sole Shareholder;
2) the management body – the Board of Directors;
3) the collegial executive body – the Board, headed by the Chairman of the Management Board
Competences of each Body and Chairmen of the BoD and the Board are defined by the Charter of Samruk-Energy JSC, and also the relevant provisions. There is no duplication of functions of Company’s Bodies.
|8||The Fund, Organizations and their officials shall be responsible for the growth of long-term value and the Sustainable development of the Fund and the organizations, and respectively for the decisions and actions/inactions taken in the order established by the laws of the Republic of Kazakhstan and internal documents.
The key element of performance evaluation of the Fund, the Organizations and Executive Body is the KPI system. The Fund, through its representatives on the Board of Directors/Supervisory Board submits to the Companies its expectations, in terms of KPI. The list and targets KPI’s of the Company are approved by the Board of Directors/Supervisory Board of the Company. In order to achieve the KPI, the Companies shall develop an appropriate
Development Plans that should be approved by the decision of the Board of Directors/Supervisory Board.
The achievement of KPIs of the Fund and Organizations is assessed annually by comparison with approved Development plan. This assessment has the impact on the
payment system of the year-end remuneration to the CEO and members of Executive Body, taken into account in their re-election and may be the basis for their early removal.
|Complied||The Company’s development strategy defines strategic goals, including «Ensuring the social responsibility of business, sustainable development» and «Increasing the cost of share capital», as well as indicators of their achievement. To implement the Strategy, a medium-term Development Plan has been developed, which ensures the effective implementation of the Strategy. The evaluation of the activities of the members of the Management Board is carried out using motivational efficiency, responsibility for implementation of which is fixed by the decision of the Board of Directors for the specific position of the executive officer, contributes to the achievement of the Company’s performance targets characterizing the efficiency of its financial and economic activities and the extent to which the strategic goals are achieved. The values of the indicators affect the remuneration of the members of the Management Board, are taken into account when they are reelected, and may be grounds for their removal from office early.|
|9||The Board of Directors of the Holding company must ensure the effectiveness of governance, the growth of long-term value and Sustainable development in all legal entities within its group. Results of effective management in the group of Holding Company must be an increase of operational efficiency, improvement of reporting,
improved standards of corporate culture and ethics, greater openness and transparency, risk reduction, proper system of internal control.
|Complied||In accordance with the Charter, the Board of Directors of Samruk-Energy JSC approved a unified Long-term strategy for the development of the Samruk-Energy group of companies, approved the Samruk-Energy Sustainable Development Guidance, takes decisions on activities, approves documents regulating the management of subsidiaries Organizations, and develops policies regarding the appointment of officials in subsidiaries. The Company has approved the Regulation on working with subsidiaries, which regulates the interaction of the corporate center and the work of the BoD / SB of subsidiaries. The Charters of dependent companies differentiate the powers and competences of Bodies. The Company defines common policies in the main areas of activity for the whole Group, while affiliated companies, as independent organizations, can develop their GNI for additions / detailing (in the areas of planning, risk management, etc.).|
|3. Sustainable Development|
|The Fund and the Organizations recognize the importance of their impact on the economy, environment and society and seeking to growth of the long-term value should ensure their sustainable development in the long run observing a balance of the interests of stakeholders. This principle of responsible, thoughtful and rational interaction with stakeholders will contribute to the successful development of the Fund and Organizations.||Complied||The development strategy defines strategic goals, including «Ensuring the social responsibility of businesses and sustainable development», which include tasks to increase the Company’s long-term value, environmental protection, labor safety, personnel management, and also determine the efficiency in these areas. The roadmap for implementing the Strategy includes activities aimed at achieving these goals and values, the planned Efficiency. The Company annually approves the Register and Risk Map, which provides preventive and reactive measures to prevent the implementation of risks in three aspects of sustainable development. The Board of Directors has approved the Samruk-Energy Sustainable Development Management Board, in accordance with which the Board of Directors determines, revises and approves the general principles of the Group’s activities in the field of sustainable development, ensures the formation of an appropriate system in the field of Sustainable Development and its implementation.
The Board ensures the implementation of the goals, objectives and achievement of indicators in the field of sustainable development, as determined by the Board of Directors. All employees and officials at all levels contribute to Sustainable Development. The Board provides a thorough, in-depth and thoughtful analysis of the internal and external situation in three components: economic, environmental and social, on the basis of which it ensures the formation of appropriate plans, programs for the implementation of goals, objectives and achievement of indicators determined by the Board of Directors.
|The Fund and Organizations should aim at the growth of the long-term value while ensuring their Sustainable Development and observe a balance of the Stakeholders’ interests. The activities in the field of Sustainable Development should correspond to the best international practice.||Complied|
|3||The Fund and Organizations should ensure the consistency of their economic, environmental and social goals for Sustainable Development in the long term which includes, inter alia, the growth of long-term value for shareholders and investors. Sustainable development of the Fund and Organizations covers the following three fields: economic, environmental and social.
The economic component should direct the activities of the Fund and the Organization for the growth of long-term value, ensuring the interests of shareholders and investors, increase in efficiency, increase in investment in the development of more advanced technologies, increasing productivity.
The environmental component should ensure minimization of impact on biological and physical natural systems, the optimal use of scarce resources, the use of ecofriendly,
energy and material saving technologies, creation of environmentally friendly products, minimization, recycling and disposal of waste.
|3||The social component of Sustainable development is focused on the principles of social responsibility, which among other things include: ensuring the safety and preservation of the health of employees, fare remuneration and respect of the employees’ rights, staff development, the implementation of social programs for staff, creating new jobs, sponsorship and charity, ecological and educational actions.
The Fund and Organizations should conduct a review of its activities and the risks for these three aspects and strive to avoid or reduce the negative impact of its performance on the Stakeholders.
|4||Principles in area of Sustainable development are flowing: openness, accountability, transparency, ethics, respect of Stakeholders’ interest, justice, observance of human rights, intolerance to corruption, the inadmissibility of conflict of interests, personal example.||Complied|
|5||The Fund and Organizations should design the management system in the field of Sustainable development, which includes but is not limited to, the following elements:
1) commitment to the principles of Sustainable development at the level of the Board of Directors, the Executive Body and employees;
2) analysis of the internal and external situation on three components (economic, environmental and social issues);
3) identification of risks in the field of sustainable development in social, economic and environmental spheres;
4) construction of maps of stakeholders;
5) defining the objectives and KPI in the field of Sustainable development, the development of an action plan and identification of responsible persons;
6) the integration of Sustainable development into key processes, including risk management, planning, human resources management, investment, accounting, operations, and others, as well as development strategy and decision-making processes;
7) training of officials and employees in the field of Sustainable development;
8) regular monitoring and evaluation of activities in the field of Sustainable development, assessment of the achievement of objectives and KPI, the adoption of corrective measures, the introduction of a culture of continuous improvement.
The Board of Directors and the Executive Body of the Fund and Organizations should ensure the formation of a proper system in the field of Sustainable development and its implementation.
All employees and officials at all levels contribute to Sustainable development.
Holding companies are responsible for implementing the principles of Sustainable development in the whole group.
|Partially complied||The BoD has approved the sustainable development Guidelines, containing the following elements:
1) Sustainable development policy;
2) Analysis of the internal and external situation in three components (economy, ecology, social issues);
3) Risks in the field of sustainable development in social, economic and environmental spheres;
4) Stakeholder map;
5) Action plan for the implementation of sustainable development goals with the definition of terms and responsible units. Also, the leaders of the year 2017 took into account the goals for sustainable development, with the exception of the Efficiency of the environmental aspect.
6) Advanced training of officials and employees in the field of sustainable development is planned for 2017 year
7) Implementation, monitoring and reporting on the implementation of the Action Plan;
8) Importance matrix.
|6||The Fund and Companies annually publish report on Sustainable development in order to provide the clarity and transparency of their operations for stakeholders with
a view to ensuring the protection of information that constitutes a business, commercial or any other legally protected secrets. The report on Sustainable development is approved by the Board of Directors.
|Complied||To ensure transparency of its activities in the field of sustainable development for stakeholders, Samruk-Energy JSC annually develops and publishes an integrated (hereinafter – the Report). The development of the Report ensures the protection of information constituting official, commercial and other secrets protected by law. The report is a consolidated information on the results of the Company’s activities for the year, as well as information on sustainable development. In preparing the report, the Company is guided by generally accepted international standards: the International Standard for Integrated Reporting (IIRC), the Sustainability Reporting Standards of the Global Reporting Initiative (GRI); Standards of series АА1000. The report is approved by the Board of Directors and communicated to the interested parties by posting on the corporate website and providing on paper and electronic media.|
|7||The Fund and Organizations should strive to encourage and facilitate the application of the principles of Sustainable development by Business partners.||Complied||In 2016, standard contracts with suppliers of goods, works and services include requirements for compliance with legislation in the field of ecology, occupational safety, health protection, labor relations, and anti-corruption legislation. In addition, the requirements are included to comply with the Company’s internal rules for occupational safety, health, fire safety and environmental protection during work and entry into the territory of the Company’s entities.|
|4. Shareholders’ (participants’) rights and fair treatment of all shareholders
|1||Observance of the rights of Shareholders (Participants) is a fundamental condition for attracting investment to the Fund and Organizations. The Organization should ensure the rights of Shareholders (Participants). In the presence of several Shareholders (Participants) in the Organization all shareholders must be treated
|Complied||The shareholder has an opportunity to obtain information on Company necessary for adoption of the relevant decision, taking into account requirements of confidentiality and disclosure of information of the Organization. In Company’s regulating documents (Regulations on work with dependent organizations of Fund, the Politician of information security, Information policy) is defined the order of providing information and on direct inquiries of the interested structural divisions of Fund|
|2||Rights, responsibilities and competence of the Shareholders (Participants) are determined by the law and the constituent documents and are written in them. Shareholder (Participants) rights include, but are not limited to:
getting information sufficient for decision-making in the order established by the laws of the Republic of Kazakhstan, charter and internal documents of the Organization in the field of information disclosure;
participation at the Annual General Meeting of Shareholders (participants) and voting on matters within competence;
|Complied||According to Company’s Charter the Sole Shareholder shall be entitled to:
1) participate in the Company’s management as set forth in the Laws of the RK and this Chapter;
2) receive dividends;
3) receive information on the Company’s activity, including review of financial accountability of the Company as prescribed by the Sole Shareholder and/or this Charter;
4) receive from the registrar of the Company or nominee holder the statements confirming his securities ownership;
5) elect members of the Company’s Board of Directors;
6) contest in the courts the resolution s made by the Company bodies;
7) receive information on the Company’s activity with respect to affiliated organizations, including confidential information within the term established in inquiry and no later than thirty days from the date of inquiry receipt;
8) have a portion of property in case of the Company’s liquidation;
|2||participation in determination of the composition and terms of office of the Board of Directors (Supervisory Board and Executive Body), the election of its members and early dissolution, as well as determining the amount and terms of remuneration;
receiving dividends in the amounts and dates to be determined by the Annual General Meeting of Shareholders (Participants)on the basis of the clear and transparent dividend policy.
|Complied||9) have a priority right to purchase shares or other Company’s securities convertible into its shares as set forth in the Laws of the Republic of Kazakhstan;
10) propose to the Board of Directors the inclusion of additional matters for consideration by the Sole Shareholder in accordance with the Laws of the RK;
11) demand the convening of a meeting of the Board of Directors;
12) demand, at his own expense, auditing of the Company by an auditing organization;
13) send written requests to the Company on its activity and receive well grounded replies within the timeframe established by the request or no later than within thirty days from the moment the request is received;
14) receive compensation for violation of his rights as prescribed by the Laws of the RK;
15) discuss with Company’s representatives the issues of observance of fundamental rights of the Sole Shareholder and issues of corporate governance policy;
16) seize the law courts on his own behalf in cases as prescribed by the Laws of the RK, with demand of compensation of losses to the Company by its officials, refunding profit (benefit) to the Company by its officials or affiliated persons, received as a result of resolution s on making major transactions (transaction offer) or transaction, that one is interested in.
|5. Effectiveness of the Board of Directors and Executive Body|
|The Board of Directors is the governing body accountable to the annual general meetings of shareholders, which provides strategic managing of the Organization and supervision of the Executive Body. The Board of Directors ensures implementation of all privations of this Code.
Executive body accountable to the Board of Directors, it manages the daily operations of the Organization and ensure its compliance with the strategy, development plans and decisions approved by the Annual General Meeting of Shareholders and the Board of Directors.
The Board of Directors and the Executive Body shall interact in a spirit of collaboration, act in the interests of the Organization, and make decisions based on the principles of sustainable development and equitable treatment of all shareholders.
The Board of Directors and the Executive Body shall ensure the growth of long-term value and sustainable development of the Fund or Organization.
|Complied||According to the Charter and the Provision on the Board of directors, the BoD is governing body, performing the general management of Company’s activity, accountable to the Sole shareholder. The Board is accountable to the Board of directors, performs management of daily activity and provides realization of strategy, the development plan and the decisions made by the Sole shareholder and the Board of directors. The Board of directors and Board interact in the spirit of cooperation, act for the benefit of the organization and make decisions on the basis of the principles of sustainable development and the fair attitude towards all shareholders.|
|2||The Board of Directors shall have an authority which is sufficient for governance of the Organization and controlling the activities of the Executive Body. The Board of Directors carries out its functions under the charter and pays special attention to the following issues:
1) definition of the development strategies (directions and results);
2) setting and monitoring of KPIs (key performance indicators) of Development plan;
3) organization and supervision of the effective functioning of the system of risk management and internal control;
4) approval and monitoring the effective implementation of major investment projects and other key strategic projects within the competencies of the Board of Directors;
5) election, remuneration, succession planning and control over supervision of the activities of CEO and members of the Executive Body;
6) Corporate governance and ethics;
7) compliance with the provisions of this Code in the Organization and corporate standards of the Fund in the field of business ethics (Business Ethics Code).
|Complied||The following issues fall within the exclusive competence of
the Board of
1) outline priority areas of the Company’s activity;
2) approval of the Company’s development strategy, the Company’s development plan, and monitoring implementation of realization of the Company’s development strategy, implementation of the Company’s development plan;
3) approval of the budget of the Company for the first calendar year planned by the development plan (business plan) for Company of the period and also regulation of processes of his formation, the statement, adjustment and monitoring of execution;
4) approval of key motivating performance indicators for the members of the Company’s Management Board and Corporate Secretary (according to the recommendations of the Appointment and Remuneration Committee of the Board of Directors of the Company), employees and the Head of the Internal Audit Service of the Company and its targets (according to the recommendations of the Committee on the Audit of the Board of Directors of the Company), as well as monitoring implementation of its achievements;
11) determination of quantitative composition, terms of powers of the Management Board of the Company, election of its members and early termination of their powers, as well as appointment and early termination of the powers of the Chairman of the Management Board, upon agreement of the Sole Shareholder of the Company the appointment and early termination of the powers of the Chairman of the Management Board in accordance with subparagraph 23) of paragraph 1 of the Article 9 of the Charter;
12) salary adjustment and determination of terms of labor remuneration of the Chairman and the members of the Company’s Board of Directors;
19) effectiveness appraisal of the Company’s Corporate Governance, approval of amendments in the system of the Company’s Corporate Governance on the issues in the competence of the Company’s Board of Directors or proposal preparation to the Company’s Sole Shareholder on the issues of the Company’s Corporate Governance, in the competence of the Company’s Sole Shareholder;
20) recommendations preparation to the Sole Shareholder regarding qualification and independence criteria to the members of the Company’s Board of Directors;
21) recommendations preparation to the Sole Shareholder on amount, procedure of determination and terms of remuneration to the members of the Board of Directors;
23) approval of the Company’s Code of Business Ethics as well as providing of following of its regulations;
24) approval of the Company’s Risk Management policy;
26) approval of the Company’s External Audit policy;
27) approval of the sustainable development documents, report and action plan for sustainable development activities;
28) approval of the Company’s Ecology, Labor Protection and Security policy;
34) approval of the provision on the Management Board of the Company;
36) approval of the Company’s common risk-appetite, tolerance levels in respect of every Company’s key risk and determination of limits for risk level and approval of key risk indicators;
37) approval of the Company’s register and risks maps;
38) increase in the Company’s liabilities by the amount making ten or more percent of its equity capital;
|2||Complied||39) approval of procedure and forms of presentation to the Company’s Board of Directors management reports on realization of the Company’s development strategy and plan, achievements of key indicators of the Company’s activity and its designations, on the Company’s key risks and its management effectiveness;
46) approval of essential terms of contracts between the Company and members of the Company’s Management Board and other employees in accordance with the list, approved by the Company’s Board of Directors;
47) approval of the appraisal indicators of the members of the Company’s Management Board and other employees activity in accordance with the list, approved by the Company’s Board of Directors;
48) appraisal of the activity of the members of the Company’s Management Board and other employees in accordance with the list, approved by the Company’s Board of Directors;
49) approval of the Succession Planning Program of the members of the Company’s Management Board, and other employees in accordance with the list approved by the Company’s Board of Directors;
51) decision-making on the purchase (alienation) by the Company of ten and more percent of shares (participation shares in the authorized capital) of other legal entities;
52) decision-making on the Company’s participation inestablishment of other organizations;
54-9) company’s participation in establishment or activity of other legal entities or cessation of membership (ownership) other legal entities through granting (receiving) part or several parts of assets amounting in the aggregate to twenty-five and more percents of the total assets owned by a company;
56) decision-making on concluding major transactions and transactions, that the Company has an interest in, except for transactions, that were concluded by the Management Board of the Company on the basis of the procedure, determined by the Board of Directors of «Samruk-Kazyna» JSC in accordance with the Law of the RK «On National Welfare Fund» (transactions which size is equal belong to the category of large deals or exceeds 10 % of the general size of cost of assets of Society). Large deal the transaction or set of the interconnected transactions as a result of which it is got or alienated by Society (it can be acquired or it is aloof) property which cost makes ten and more percent from the general size of book value of assets of Society admits;
62) consideration of quarterly reports on risk management of the division of the Company with the description and analysis of the key risks of the Company, as well as information on the implementation of plans and programs to minimize the risks of the Company;
63) approval of the performance indicators of risk management system and internal control of the Company
64) determination of the procedure and terms of receiving information on the Company’s activity to the members of the Board of Directors, including financial one
|3||Members of the Board of Directors shall properly achieve their duties and ensure growth of the long-term value and Sustainable Development of the Organization. The Board of Directors of Organization is accountable to shareholders. This accountability implemented thought mechanism of annual general meetings of shareholders.||Complied||According to the Regulations on the Board of Directors, the decisions of the Sole Shareholder, taken within its competence, are mandatory for the Board of Directors. The Board of Directors reports annually on its activities by providing the Company’s Annual Report for the past year.
In the annual report of the Board of Directors on the work done submitted for approval to the General Meeting of Shareholders, as part of the annual report, information on:
1) the composition of the Board of Directors, the criteria for selecting independent directors, the Chairman of the Management Board and members of the committees;
2) information about each director;
3) the number of meetings of the Board of Directors and its committees, as well as visits by each director to meetings;
4) a report on the work of the committees on the performance of their functions;
5) consideration of information on the work of the Board of Directors;
6) evaluation of the Company’s position and prospects for its development;
7) the process of assessing the activities of the Board of Directors;
8) the adopted measures for the Board of Directors to take into account the views of the Shareholder in relation to the Company.
|4||The Board of Directors and its committees should have a balance of skills, experience and knowledge to ensure independent, objective and effective decisions in the interests of the Organization and with regard to equitable treatment of all shareholders and principles of the Sustainable Development.||Complied||The Board of Directors is formed in the number of seven members, of which four are independent directors: A. Spitsyn, L. Sutera, A. Storzel, Joaquin Galindo Velez. Independent directors are specialists in finance, accounting, auditing, engineering, strategic management, energy including the development of green energy. Also, in 2017 the director was elected: N. Rakhmetov is a representative of the shareholder, who has deep knowledge in the sphere of economy and finance, management.
The Chairman of the Board of Directors is K. Bektemirov, who has an impeccable reputation, who has skills and experience in management, in the industry, which effectively manages the Board of Directors (according to the Board of Directors members based on the results of the Board of Directors’ performance evaluations).
|5||It is necessary to provide a variety of experience, personal characteristics and gender composition in the composition of the Board of Directors. The Board of Directors shall consist of independent directors, in an amount sufficient to ensure the independence of decision-making and equitable treatment of all shareholders. Recommended number of independent directors on the Board of Directors of the Company is in the amounts up to fifty percent of the total number of Board members.||Partially complied||In the Board of directors there is no variety on gender structure|
|6||The Annual General Meeting of Shareholders shall elect the members of the Board of Directors on the basis of clear and transparent procedures taking into account competencies, skills, achievements, reputation and professional experience of the candidates. The re-election of individual members of the Board of Directors or its whole composition for the new term their contribution to the effectiveness of the Board of Directors of the Organization is taken into account. In the Companies, all the voting shares of which are owned by the Fund, the following features on the process of election of members of the Board of Directors are exist:
1) Chairman of the Board of Directors elected by the decision of the Sole shareholder. If the Fund’s representative is elected as Chairman, the Board of Directors elects the Senior Independent Director among independent directors;
2) The process of search and selection of candidates for the Board of Directors is carried out by the Fund jointly with the Chairman of the Board of Directors and the Chairman of the Nomination and Remuneration Committee of the Board of
Directors of the Company.
Participation of members of the Government, public officials in the Board of Directors of the Organization is not allowed. The term of office of the Board of Directors members coincides with the term of office of whole Board of Directors and shall expire at the time of the decision by the general meeting of shareholders to elect new Board of Directors.
Members of the Board of Directors are elected for the period of up to 3 years thereafter, subject to satisfactory performance may be re-elected for another period of up to 3 years. Any period of election to the Board of Directors for a period of more than 6 years in a row (for example, two 3-year term) shall be subject to special consideration in view of the necessary update the qualitative composition of the Board of Directors.
Independent director cannot be elected to the Board of Directors for a period of more than 9 years. In exceptional cases, the election for more than 9 years is allowed, the election of independent director to the Board of Directors shall take place each year with a detailed explanation of the need to elect a member of the Board of Directors and the influence of this factor on the independence of the decision.
No one shall be involved into decision making related to his (her) own nomination, election and reelection.
|Complied||In compliance with the Company’s Charter definition of quantitative structure, a term of office of the Board of directors, election of BoD’s members and the early termination of their powers is within the exclusive competence of the Only shareholder.
Only the physical person can be the Board member.
The chairman of the board of directors is Bektemirov K. A. – Sole shareholder representative; Luka Sutera is the senior independent director, he is elected at July 5 2016.
According to the Provision on the Board of directors, members are elected for the term of no more than 3 (three) years, in the subsequent, on condition of satisfactory results of activity, there can be a re-election for the term up to 3 (three) years. Any term of election in structure of the Board of directors for the term of more than 6 (six) years in a row (for example, 2 (two) three-year terms) is subject to special consideration taking into account need of high-quality updating of structure of the Board of directors.
The independent director can’t be elected in structure of the Board of directors more than 9 (nine) years in a row. Election for the term of more than 9 (nine) years is in exceptional cases allowed. The term of office of board members coincides with a term of office of all Board of directors.
Any person doesn’t participate in decision-making, connected with own appointment, election and re-election.
As a part of the Board of directors of JSC Samruk-Energy there are no representatives of the Government and public authorities.
|7||The Board of Directors approves the induction program for newly elected members of the Board of Directors and a professional development program for each member of the Board of Directors. Corporate Secretary shall ensure the
implementation of this program.
|Complied||The Company has an induction program for newly elected members of the Board of Directors. In addition, in order to implement a mechanism for monitoring the implementation of this program, in 2016 it was updated with a view to formalizing this procedure. The Corporate Secretary ensured the passage of the Induction Program by elected new members of the Board of Directors.|
|8||Chairman of the Board of Directors is responsible for overall management of the Board of Directors, ensuring the full and effective performance of its activities and in establishing a constructive dialogue with members of the Board of Directors,
shareholders and the Executive Body.
|Complied||In accordance with the Regulations on the Board of Directors, the Chairman of the Board of Directors is responsible for the overall management of the Board of Directors, ensures full and effective implementation by the Board of Directors of its main functions and constructive dialogue between the members of the Board of Directors, shareholder and the Management Board.
Chairman of the Board of Directors:
has responsibility for the management of the Board of Directors, ensures its effective activity in all aspects of its responsibilities, ensures effective communication with the shareholder;
will be responsible for ensuring an appropriate dialogue with the shareholder;
ensures the effective contribution of the members of the Board of Directors to the activities of the Board of Directors, and constructive relations between members of the Board of Directors and the Management Board;
provides effective interaction with the shareholder, as well as bringing the shareholder’s perspective to the Board of Directors as a whole.
Based on the results of an independent evaluation of the Board of Directors conducted in 2015 by an independent audit company, it was concluded that the Chairman of the Board of Directors:
is an experienced person with extensive experience in the energy sector;
has a professional and personal authority, which makes it easy to coordinate the work of the members of the Board of Directors;
provides the necessary level of interaction with the shareholder.
|9||The role and functions of the Chairman of the Board of Directors and CEO of the Executive Body shall be clearly separated and fixed in the charter of the Organization,
Regulations of the Board of Directors and Executive body.
|Complied||The role and functions of the chairman of the Board of Directors and the head of the executive body are clearly delineated by the Charter, the Regulations on the Board of Directors and the Regulation on the Management Board of Samruk-Energy JSC.|
|10||The level of remuneration of Board of Directors members should be sufficient to attract, retain and motivate each member of the Board of Directors at the level required for the successful management of the Fund and the Organization. The establishment of the remuneration for member of the Board of Directors should be made in accordance with the methodology developed by the Fund. Additionally the expected positive effect to the Organization of participation in the Board of Directors of particular member should be taken into account. In Organizations with several shareholders the relevant rules of the remuneration of members of the Board of Directors are developed based on the methodology of the Fund and approved by the Annual General Meeting of Shareholders.
The Nomination and Remuneration Committee submits its proposals related to size of the remuneration of candidates for independent directors. No one shall be involved into decision making related to his (her) own remuneration.
|Complied||The remuneration is paid only to independent directors and consists of the following components:
additional remuneration for participation in full-time meetings of committees of the Board of Directors
In the case of the participation of an independent director in less than half of all meetings of the Board of Directors held in person during the reporting period (without valid reasons), a fixed remuneration is not paid.
The member of the Board of Directors is also compensated for the expenses related to the visit to the meetings of the Board of Directors.
According to the Regulations on the Appointment and Remuneration Committee of the Board of Directors, the Committee compares the level and effectiveness of the directors’ remuneration policy, and provides recommendations to the Board of Directors. No person participates in making decisions related to their own remuneration.
|11||Committees of the Board of Directors promote deep and careful consideration of matters within the competence of the Board of Directors and increase in the quality of made decisions, in particular in areas such as audit, risk management, proper and
effective application of the Rules of procurement of goods, works and services of the Fund and the Organization, appointment and remuneration members of the Board of
Directors and the Executive Body, Sustainable development, including security and safety of work and the environment. The existence of committees shall not relieve the Board of Directors from liability for the decisions taken within the jurisdiction of the Board of Directors.
|Complied||All issues submitted for consideration by the Board of Directors are carefully preliminarily considered by specialized committees. Committees of the Board of Directors are consultative and advisory bodies, all proposals worked out by the Committees are recommendations. The Board of Directors makes a final decision on the issues to be taken, the members of the Board of Directors are responsible for the decisions they have taken.
When purchasing goods, works and services, the Company is guided by the Fund’s Purchase Rules approved by the Board of Directors of Samruk-Kazyna JSC
|12||The preparation and conduction of meetings of the Board of Directors should promote maximum effectiveness of its activities. In order to perform their duties, members of the Board of Directors shall have access to the complete, relevant and timely information. The Board of Directors meets regularly to perform its functions effectively. Board of Directors meeting held in accordance with the work plan approved before the start of the calendar year. Meetings of the Board of Directors
and its committees is carried out by a full-time or part-time (absentia meeting) forms of voting, the number of meetings with voting in absentia should be minimized.
Consideration and adoption of decisions on important and strategic character is only at meetings of the Board of Directors with voting. In special cases a combination of both forms the meeting of the Board of Directors and its committees might be possible.
Meetings of the Board of Directors and its committees properly minutes by Corporate Secretary by indicating sufficient outcome of the discussions and decisions.
|Complied||Materials and information on the upcoming meeting of the Board of Directors in advance (10 days prior to the meeting) are sent by the corporate secretary to the members of the Board of Directors.
The Board of Directors approves the Work Plan indicating the expected dates of the meetings for the coming year. All meetings of the Board of Directors and its Committees are detailed by the Corporate Secretary and the Secretary of the Audit Committee.
|13||The Board of Directors, committees and members of the Board of Directors shall be assessed on an annual basis as part of a structured and approved process that is approved by the Board of Directors of the Organization. This process should follow the methodology of the Fund. At the same time at least once in every three years assessment is carried out by involving an independent professional organization.||Complied||Annually, the Board of Directors conducts a self-evaluation of the activities of the Board of Directors, its Committees, the Chairman and members of the Board of Directors, IAS, and the Corporate Secretary by questionnaire in accordance with relevant rules developed on the basis of the Fund’s methodology. In 2015, in accordance with the Code of Corporate Governance, an independent evaluation was carried out by an external audit organization. The evaluation was conducted through interviews, as well as using the questionnaire method. Based on the analysis of the responses received, the audit organization proposed recommendations on increasing the effectiveness of the Board of Directors, Committees, IAS, and Corporate Secretary.The conclusions of the evaluation were reviewed by the Board of Directors and measures are taken to improve the management of the Company.|
|14||Assessment should identify the contribution of the Board of Directors and each of its members in the growth of long-term value and sustainable development of Organizations, as well as to identify trends and recommend measures for improvement. The assessment results are taken into account in the re-election or termination of office of the members of the Board of Directors.||Complied|
|15||For the efficient organization of the Board of Directors’ operations and the interaction of the Board of Directors, Executive Body with the shareholders, the Board of Directors appoints the Corporate Secretary. The Board of Directors decides on the appointment of the Corporate Secretary,
determines the term of office, functions and procedures of operations, the size of the salary and terms of remuneration, shall decides on the establishment of the service (the secretariat) and Corporate Secretary, determines the budget of this service. The Corporate Secretary is accountable to the Board of Directors of the Fund and independent from the Executive Body of the Fund. The main duties of the Corporate Secretary include assistance in a timely and quality corporate decision-making by the Board of Directors, the Sole Shareholder, acting as advisor to the Board of Directors on all matters of their activities and the application of the provisions of this Code, as well as monitoring the implementation of this Code and participation in improving
corporate governance in Funds and Organizations. The Corporate Secretary also prepares a report on compliance with the principles and provisions of this Code, which should be included in the annual report of the Fund. This report must contain a list of principles and provisions of this Code which are not observed with giving of corresponding explanations for it.
|Complied||According to the Charter and internal documents, the BoD makes the decision on appointment of the Corporate secretary, determines the term of his powers, functions and an order of activity, the size of an official salary and condition of remuneration. The Corporate secretary is completely accountable to the BoD. The corporate secretary of JSC Samruk-Energy has been appointed in 2009, exercises control of preparation and holding meetings of the Board of Directors of the Company, ensuring formation of materials for a meeting of the BoD, conducting control of ensuring access to them. For performance by the Corporate secretary of the functions, in the Company is created the Service of the corporate secretary.
Fundamental obligations of the Corporate secretary – assistance in timely and high-quality adoption of corporate decisions by the BoD, the Sole shareholder, performance of a role of the adviser for BoD members for all questions of their activity.
Changes and additions regarding addition of functions of the Corporate secretary, by implementation of monitoring of implementation of the Code of corporate management, participation in improvement of corporate governance, preparation of the report on respect for the principles and provisions of the Code which is included the Annual report are made to the Provision on the Corporate secretary.
|16||The collegial Executive Body establishes in the Companies, in the rest of the Organization, and in case of creation of the Company – a joint venture Executive Body may be collegial or individual body at the discretion of the sole shareholders
(participants). The CEO and members of the Executive Body should have high professional and personal characteristics, and have an impeccable reputation and follow high ethical standards.
|Complied||The Management Board is the collegial executive body of the Company and manages its current activities. The board consists of six people. All of them have highly professional skills and experience in management in finance, law, engineering, energy, corporate governance, procurement, have an impeccable reputation and high experience.. The functions and duties of Board members are accurately defined by the Charter, the the Regulations on the Management Board, the Order «About Distribution of Duties and Powers».|
|17||Executive body accountable to the Board of Directors and supervises the daily activities of the Organization. It is responsible for implementation of the strategy, development plan and the decisions taken by the Board of Directors and the Annual general meeting of shareholders.||Complied||The Management Board manages the day-to-day activities, reports to the Board of Directors, is responsible for the implementation of the strategy, the Development Plan, the investment plan, as well as for the implementation of decisions taken by the Sole Shareholder and the Board of Directors.|
|18||The Board of Directors elects the CEO and members of the Executive Body, defines the terms of reference, the size of the salary, the terms of their remuneration. The Nomination and Remuneration Committee of the Board of Directors of the Organization plays a key role in the search and selection of candidates for the Executive Body, the determination of their remuneration.
The CEO of the Executive Body makes suggestions on candidates for election to the collegial Executive Body to the consideration of the nomination and remuneration of the Board of Directors. In case of rejection by the Board of Directors of the candidate proposed by the CEO of the Executive Body, on the same vacant position in the Executive Body for the second time, the right to make proposals for candidates for the vacant post goes to the Board of Directors.
In the Companies’ 100 % of shares (interest) of which are owned by the Fund, the candidacy for the post of CEO of Executive Body previously agreed by the Board of Directors of the Fund.
The Board of Directors may at any time terminate the powers of the CEO and members of the Executive Body.
It is recommended to choose the CEO and members of the Executive body for the period of up to three years. The terms of office of the CEO and members of the Management Board coincide with the term of office of the Management Board as a whole.
|Complied||According to the Charter and internal documents the Board of directors defines quantitative structure, a term of office of Board, elects the Chairman and board members, ahead of schedule stops their powers, approves rules of compensation and awarding, the scheme of official salaries, and also determines the sizes of official salaries of the Chairman of the Board, Board members, approves motivational efficiency of Board members. When electing board members the Board of directors follows the provisions of internal documents of the Company defining qualification requirements to candidates and the procedure of their election. Workers of IAS can’t be elected to Board. Offers on candidates for election for board for consideration to the Board of directors are submitted by the Chairman of the Board. The chairman of the Board has the right to submit for consideration of the Board of directors of the offer on the candidate recommended for election for the same vacant post in Board no more than two times. Selection and election of board members is made on the basis of the most transparent and accurate procedures determined by the Board of directors. The Board of directors can stop powers of the head and members of executive body at any time.
According to the Provision on Board and the Code the Board has to be elected for a period of 3 years.
|19||The Candidature for the CEO of the Company agreed with the President or the Administration of the President of the Republic of Kazakhstan in the case of the inclusion of the Company in the relevant list, approved by the Decree of the President of the Republic of Kazakhstan. In this case, the company has the following search and the election order of members of the Board of Directors:
1) Nomination and Remuneration Committee of the Board of Directors determines the requirements for the competence and skills of the candidates for the post of CEO of Executive Body, ways to find candidates (either by themselves or with the assistance of the recruiting organization);
2) Nomination and Remuneration Committee of the Board of Directors carries out the search and selection of candidates, conducts interviews and makes a ranked shortlist of candidates;
|19||3) Fund’s Management Board agrees on the candidacy of CEO of the Executive Body and shall send to the ranked list of candidates of the Nomination and Remuneration Committee of the Board of Directors of the Fund;
4) Nomination and Remuneration Committee of Fund’s Board of Directors considers and directs candidacy from the ranked list of candidates signed by the Chairman of the Board of Directors of the Fund (the Prime Minister of the Republic of Kazakhstan) to the President of the Republic of Kazakhstan:
5) Agreed candidacy by the President of the Republic of Kazakhstan or the head of the Presidential Administration of the Republic of Kazakhstan appoints by the Board of Directors of the Company as CEO of the Executive Body of the Company.
|Complied||The decree of the President No. 828 from 3/28/2002 year, regulates an order of approval of candidate to a position of the Head of Company.
Regulations on Board and on NR Committee define requirements to competences and skills for candidates for a position of the Head of Executive body, ways of search of candidates (independently or with involvement of the recruiting organization), implementation of search and selection of candidates, holding an interview and makes the ranged short list of candidates.
By the law on Fund it is fixed – the Board of Fund approves the candidacy to a position of the head of Executive body and directs with Nomination and Remuneration Committee of the BoD of Fund ranged by the list of candidates; Fund considers Nomination and Remuneration Committee of the Board of directors and signed by the Chairman of the board of directors of Fund (the Prime minister of the Republic of Kazakhstan) sends the candidate with the ranged list of candidates to the President of the Republic of Kazakhstan.
|20||The CEO and members of the Executive Body are assessed by the Board of Directors. The main criterion of assessment is the achievement of KPIs. Motivational KPIs of the CEO and members of the Executive Body are approved by the Board of Directors. The CEO makes suggestions regarding motivational KPIs of the Executive Body to the Board of Directors.
The assessment results have an impact on the amount of remuneration, promotion, re-election (appointment) or early termination of powers.
|Complied||According to the Charter and internal documents of Company the Board of directors approves rules of compensation and awarding, the scheme of official salaries, and also determines the sizes of official salaries of the Chairman of the Board, Board members, approves KPIs of Board members. Monitoring of execution of efficiency is carried out by the Board of directors for determination of amount of remuneration, encouragement, re-election (appointment) or the early termination of powers of board members.|
|21||In the cases of violations of the Business Ethics Code by the members of the Executive Body, the CEO of the Executive Body shall notify the Board of Directors.
Member of the Executive Body who committed violations of norms of the Business Ethics Code cannot be a member of the Executive body of any other Organization.
|Complied||In 2016 there were no cases of violation of standards of the Code of business ethics by Board members of Samruk-Energy JSC.|
|22||In the event of a corporate conflict participants are seeking for ways to resolve them through negotiations in order to ensure effective protection of the interests of Organizations and Stakeholders.
The effectiveness of the prevention and settlement of corporate conflicts involves, above all, the maximally complete and speedy identification of such conflicts and
precise coordination of all authorities of the Organization.
Corporate conflicts with the assistance of the Corporate Secretary of the Board of Directors considered by Chairman of Board of Directors of the Organization. In the cases that involve the Chairman of the Board of Directors in the corporate conflicts, such cases are considered by the Nominating and Remuneration Committee.
|Complied||The Company has developed mechanisms for resolving corporate conflicts reflected in the internal document «Policy on the settlement of corporate conflicts in Samruk-Energy JSC, which establishes the procedure and procedures for resolving corporate conflicts between their participants. This document is applied by all structural divisions of the Company, including SDCs and is included in the documentation of the IMS.
The Company’s policy for the settlement of Corporate conflicts is based on the fact that the order of their settlement must ensure compliance with and protection of shareholder rights, as well as protection of the property interests and business reputation of the Company. The competence of the Company’s management bodies for the examination of corporate conflicts is delineated, depending on whether the issue of a corporate conflict belongs to the competence of a particular body. The Board of Directors reviews corporate conflicts, the subject of which is the action (inaction) of the Management Board, the Chairman of the Management Board, other employees of the Company to whom the relevant powers were delegated or decisions taken by them. The Board of Directors participates in the settlement of Corporate conflicts. If the Corporate Conflict can not be regulated by the Chairman of the Management Board, its settlement shall be referred to the Board of Directors for consideration. At the end of 2016, corporate conflicts were not identified.
|6. Risk management, internal control and audit|
|1||The efficiently functioning system of risk management and internal control should be established in the Fund and Organizations. The system is aimed at assurance of
reasonable trust in achievement of strategic and operating objectives by the Fund and Organizations. The Board of Directors and Executive Body should ensure the
introduction of proper culture of risk management in the Fund and Organizations.
Risk management and internal control system of the Fund and Organizations is a set of organizational policies, procedures, norms of conduct and actions, methods and mechanisms of management that are established by the Board of Directors/Supervisory Board and Executive board of the Fund and Organizations, to ensure:
1) optimal balance between growth of the company’s value, profitability and risk inherent to them;
2) efficiency of financial and economic activity and achievement of financial sustainability of the company;
3) soundness of assets and effective use of the resources of the company;
4) completeness, reliability and accuracy of financial and managerial reporting;
5) compliance with the requirements of legislation of the Republic of Kazakhstan and internal documents;
6) appropriate internal controls to ensure the prevention of fraud and to provide effective support for business processes and performance analysis.
The Board of Directors and the Executive Body should ensure the implementation of appropriate risk management culture in the Fund and Organizations. Implementation
and operation of risk management and internal control system in the Fund and the Organization must have a clear regulatory framework based on best practices (COSO) and methodology (policy) of the Fund.
|Complied||The Company has an effectively functioning risk management and internal control system aimed at providing reasonable confidence in achieving strategic and operational goals, and is a set of organizational policies, procedures, standards of conduct and actions, management methods and mechanisms created by the Board of Directors and the Executive Body. The Board of Directors approved regulatory documents governing the process of risk management and internal control. Annually, the Board of Directors approves the Risk Map, Risk Register, Risk-Appetite and Tolerance Levels, Action Plan for minimizing key risks, key risk indicators. It holds quarterly meetings devoted to risk management issues, considers risk migration on the risk map, information on the risks that have been realized, revises risk mitigation plans and approves risk reports. Thus, the set of measures taken for the system of risk management and internal control is aimed at ensuring:
the optimal balance between the growth of the value of the organization, profitability and accompanied by their risks;
the efficiency of financial and economic activities and the achievement of financial stability of the company;
safety of assets and effective use of company resources;
completeness, reliability and reliability of financial and management reporting;
compliance with the requirements of the legislation of the Republic of Kazakhstan and internal documents;
Proper internal controls to prevent fraud and ensure effective support for the operation of core and supporting business processes and performance analysis.
The Board of Directors and the Executive Body ensured the introduction of a culture of good risk management. The normative documents on risk management and internal control approved by the Board of Directors developed on the basis of best practice (COSO) and methodology (policy) of Samruk-Kazyna JSC (Risk Management Policy, Rules for Identification and Risk Assessment, Regulations on Internal Control System Etc.) The executive body continuously ensures the implementation of the norms and requirements for the risk management and internal control process prescribed in the approved regulatory documents. In order to strengthen the role of the risk management system And internal control as an integral part of the Company’s corporate culture, the Committee on Risks and Quality Management was established under the Executive Body.
|2||The Board of Directors/Supervisory Board of the Fund and Organizations must define the principles and approaches to the organization of the risk management and
internal control system based on the tasks of this system and taking into account best practices, work and methodology of the Fund in the field of risk management and internal control.
|Complied||The Board of Directors determines the principles and approaches to the organization of the risk management and internal control system, which are prescribed in the Risk Management Policy and the Regulation on the Internal Control System.
The Board of Directors approved the main principles:
risk management systems:
involvement of the Company’s management in risk management; continuous improvement of the risk management system; continuity of training and exchange of knowledge in the field of risk management by company employees;
Openness and honesty in reporting and escalating risks.
Internal control systems:
integrity; complexity; continuity of functioning; a responsibility; segregation of duties; reporting of participants in the internal control system; unity of methodological basis; Appropriate approval and approval of operations; timeliness of reporting on any significant deficiencies and weaknesses in control; Continuous development and improvement.
The structure of the risk management system in the Company’s Group is represented by risk management at several levels with the involvement of the following bodies and divisions of the Company: the Board of Directors, the Audit Committee under the Board of Directors, the Management Board, the Risk Committee under the Management Board, the structural division responsible for risk management, structural units. Structural units, in the person of each employee identify risks, conduct risk assessment, determine the level of tolerance.
|3||The Executive Bodies of the Fund and Organizations should insure the development and support of effective function of the risk management and internal control system. The risk management process should be integrated with the planning processes (strategy and development plans, the annual budget) and operation’s evaluation of the Organization (management accounting). Each officials of the Fund or Organization ensure appropriate consideration of risks in decision making.
Executive Body of the Fund or Organization should ensure implementation of risk management procedures by employees, who have appropriate qualifications and
|Complied||The Executive body has provided creation and maintenance of functioning of an effective control system of risks and internal control. Process of management of risks is integrated with processes of planning and an assessment of results of activity. In the Development plan for Company, f.1p-2 information on the realized risks and the performed actions which have influenced achievement of efficiency is opened. In the Development plan for 2015-2019, f.1p-3 information on possible risks, and the planned actions for risk management, is opened by the efficiency influencing achievement. Monthly in the administrative reporting under execution of the Development plan, information on the actions directed to minimization of risks reveals.
Officials of Company provide appropriate consideration of risks at decision-making. The development plan is coordinated with all structural divisions and top managers of Company.
Responsibility for introduction of the procedure of risk management in Company is conferred on workers with the 5th summer experience and more, having the corresponding qualification, periodically trained. The Risk management Unit manager has the International certificate in the field of CRMA risk management
|4||The system of risk management and internal control of the Fund and the Organizations must be based on a strong culture – led by the Executive body – of risk management that provides mandatory procedures for the identification, assessment and monitoring of all significant risks and takes timely and appropriate measures to reduce the risks that may affect the achievement of strategic objectives,
implementation of operational targets, and the company’s reputation.
The procedures on risk management must ensure that when the new risks are occurred, they are quickly identified and ownership is assigned to them. In case of any unforeseen changes in the competitive or economic environment of the Fund and Organizations an urgent reassessment of the risk map and its compliance with risk appetite should be done.
|Complied||The Company’s control system of risks and internal control is based on the high culture of a risk management which is carried out by Executive body. In Company, according to Rules of identification and an assessment of risks the procedure of identification, an assessment and monitoring of all essential risks is carried out. The Plan of measures on risk management which can negatively influence achievement of strategic objectives, realization of operational tasks and reputation of the company is developed and approved. The culture of a risk management takes root since the beginning of training of again accepted workers and is supported by periodic training of all workers through internal and external trainings and seminars. The result of identification and an assessment of risks is presented in the register and the map of risks. Timely and adequate measures are provided in the Plan of measures on minimization of risks where executives for decrease in level of risks are also fixed. For achievement of strategic and reputation efficiency risks are identified and key risk indicators which at an early stage signal about possible risks are provided.
The one from functions of owners of risks of business processes, according to Rules of identification and an assessment of risks, is providing operational information about the implemented risk or threat of realization of risk. This function allows to provide quick response to new risks, their accurate identification and definition of owners of risk. On the basis of operational information and timely identification in Company urgent revaluation of the card of risks and its compliance risk appetite is carried out. Migration of risks is reflected in the card of risks. The strategy of Company is actualized on a periodic basis.
|5||The Fund and Organizations should develop, approve, formalize and document control procedures in three key areas: operating activities, preparation of financial statements and compliance with laws of the Republic of Kazakhstan and internal documents.||Complied||Control procedures are described in the Matrix of risks and control, and also Policies of usage of charges, etc. are provided in Rules of planning, coordination and implementation of payments, Rules of interaction of structural divisions on process of management of purchases, the Instruction for ensuring safety of confidential information, the Regulations of an assessment, realization and monitoring of investment projects, Rules of development, coordination, the statement, adjustment, execution and monitoring of execution of Development plans, Corporate accounting policies, tax accounting policies.|
|6||Transparent principles and approaches in the field of risk management and internal control, the practice of training employees and officials about the risk management system, as well as the process of documentation and timely communication of necessary information to official should be established in the Fund and Organizations.||Complied||The Company introduced the transparent principles and approaches in the field of risk management and internal control. The internal documents, regulating process of management of risks and internal control, are posted on the website and on the internal portal of Company, along with the register and the map of risks. Training of workers and officials about a control system of risks it is carried out regularly, and also at acceptance for work of newcomers of workers. Documenting of process is reflected in results of testing. Results of testing in due time are brought to the attention of officials.|
|7||The Board of Directors/Supervisory Board of the Fund and Organizations are required to take relevant actions in order to ensure that existing risk management and internal control system complies with principles and approaches to its arrangement defined by the Board of Directors/Supervisory Board and works effectively. Risks
reports should be receive and fully discussed by the Board of Directors at least once in the quarter.
|Complied||The Board of Directors approved the Methodology for the evaluation of the corporate risk management system and internal control that determines the methods for assessing the functioning of the corporate risk management system and internal control for compliance with the principles and approaches to their organization and effective functioning established by the Board of Directors. Risk reports are submitted to meetings of the Board of Directors on a quarterly basis. Extracts from the meeting of the Board of Directors on approval of risk reports, as well as recordings of meetings, indicate the discussion of properly and fully in-house risk reports.(Minutes of the Board of Directors: No. 03/16 from 25.03.16, No. 05/16 from 24.05.16, No. 06/16 from 26.08.16, No. 11/16 from 12.12.16.)|
|8||The IAS must be established in the Fund and Organizations for a systematic independent evaluation of the reliability and effectiveness of risk management and internal control system as well as corporate governance practices.||Complied||The IAS is created by the decision of the BoD. The mission of the IAS is to provide the necessary assistance to the Board of Directors and the Executive Body in the performance of their duties in achieving the Company’s strategic goals. The main objective of the IAS is to provide the Board of Directors with independent and objective information designed to ensure effective management of the Company by introducing a systematic approach to the improvement of risk management systems, internal control and corporate governance..|
|9||The internal audit in the Fund and Organizations should be carried out by establishment of a separate structural unit IAS (In Organizations in the form of limited partnerships the internal audit function may be assigned to the Audit Commission/auditor in the absence of other mechanisms (for example, the implementation of the internal audit of the IAS of higher authority within the annual audit plan, or under the authority established by the Board of Directors). At that, the purpose, functions and tasks of the Audit Commission/Auditor, the order of its interaction with the bodies of the Organization should be established taking into account the principles set out in this Code in relation to the internal audit service). The goals, authority and responsibility of the IAS, qualification requirements (requirements for the professionalism of internal auditors) must be defined in the internal document of company (the Regulation on the IAS). Regulation on the IAS must be developed and approved in accordance with International professional standards of internal audit and corporate standards of the Fund in area of internal audit. The responsibility of the Organization’s Board of Directors is to insure full compliance of the Regulation on IAS with the specific business needs of Organizations.||Provision about IAS definite purposes, powers and responsibility of IAS, qualification requirements. The provision about IAS completely conforms to the International professional standards. The Regulation on IAS fully meets the specific business needs of Samruk-Energy JSC|
|10||In order to ensure the independence and objectivity of the internal audit IAS organizationally and functionally should be subordinated to the Board of Directors. The Board of Directors make decisions on approval of action plans and strategies of IAS, budget of the IAS, determines the composition of the IAS, size and terms of salary payments, remuneration of its staff.||Complied||Organizational subordination and the functional accountability of IAS to the BoD is reached by the following conditions:
1) the approval by the BoD (preliminary consideration by Audit Committee) of situation and others the politician in the field of internal audit, regulating the purposes, tasks, functions and an order of activity of IAS;
2) the approval by the BoD (preliminary consideration by Audit Committee ) risk – the focused annual auditor plan;
3) granting to the Board of directors ( Audit Committee ) quarterly and annual report on implementation of the annual auditor plan and other information on activity of internal audit;
4) approval by BoD (preliminary consideration by Audit Committee) of decisions on appointment, dismissal, remuneration of the head and employees of division of internal audit;
5) approval by the BoD ( Audit Committee ) of the budget of IAS;
6) consideration by the BoD ( Audit Committee ) of essential restrictions of powers of IAS or other restrictions capable is negative to influence implementation of internal audit
|11||The Head of IAS should develops internal documents regulating activities of the unit based on corporate standards of the Fund in the field of internal audit and
ensures their review and approval by the audit committee and Board of Directors.
|Complied||The head of IAS has developed the internal documents regulating activity of IAS (Situation, Policy of the organization of internal audit, the Program of a guarantee and quality, etc.) on the basis of methodical support of Fund, the specified documents are considered and approved by Audit Committee and Light of directors.|
|12||The Internal Audit Service operates on the basis of a risk-oriented annual audit plan approved by the Board of Directors. The results of the audit reports and key detection should be quarterly submitted to the Board of Directors.||Complied||IAS carries out the activity on a basis of a risk-oriented annual audit plan, approved annually by the Board of Directors and revised as necessary.|
|13||In carrying out its activities the IAS should assess the effectiveness of the internal control and risk management systems, assess corporate governance with the use of common standards of activities in the area of internal audit and corporate standards and recommendations of the Fund in the field of evaluation of corporate governance, effectiveness of internal control and risk management.||Complied||The IAS periodically evaluates the effectiveness of the internal control system and the risk management system, evaluates corporate governance using generally accepted standards of internal audit and corporate standards, and is guided by the Fund’s methodology for assessing corporate governance, assessing the effectiveness of internal control and risk management.|
|14||The Head of the IAS must develop and maintain the warranty and quality assurance program that covers all activities of the internal audit and provides the obligation to carry out internal and external evaluation of the IAS performance. Evaluation of the effectiveness of the IAS, its Head and staff is carried out by the Board of Directors on basis of the consideration of IAS’s reports, compliance with deadlines of annual audit plan and reporting, assessment reporting conformity to requirements of standards and internal regulations of the IAS.||Complied||The head of IAS has developed a guarantee and quality improvement Program approved by the Audit Committee, covering all kinds of internal audit activities of, and IAS providing obligatory carrying out an internal and external assessment of activity. The head of Service of internal audit bears full responsibility for the Program which covers all activity of Service of internal audit, including advisory. At the end of the year, the BoD assesses the effectiveness of IAS|
|1||In order to observe interests of the stakeholders the Fund and the Organizations timely and fairly disclose information on all important aspects of its activities, including the financial condition, results of operations, ownership and management structure.||Complied||The website of the Company discloses all information in accordance with the legislation of the Republic of Kazakhstan and the Exchange Listing Rules affecting the interests of stakeholders. All information is placed on time.|
|2||The Fund and Organizations disclose in timely manner information prescribed by law of the Republic of Kazakhstan and internal documents. Internal documents determining the principles and approaches to disclose and protection of the information as well as a list of information to be disclosed to the Stakeholders should be approved in the Fund and Organizations. The Fund and Organizations determine the order of assignment of the information to the categories of access, terms of storage and use of information, including set of people who has right of free access to information of commercial and official secret and take measures to protect its confidentiality.||Complied||The Company approved normative documents regulating principles and approaches to information disclosure and protection.
The Company has the following:
Information policy, which defines principles and approaches to information disclosure,
The list of information that is disclosed to the Interested Parties The rules for the preparation and posting of information on the Company’s website, where reporting formats, officials and functional units responsible for the disclosure and provision of information are provided.
Information Security Policy,
Instruction on securing the confidentiality of confidential information in “Samruk-Energy” JSC
|3||The Fund, Company and Organizations shares or interest bearing obligations of which are listed at a recognized Stock Exchange should post on its Internet website on a timely basis audited annual financial statements that is prepared in compliance with IFRS and also financial statements prepared in accordance with IFRS for the first quarter, for six months and the first nine months of the reporting period. In addition to primary forms of the financial statements it is encouraged to disclose additional information about the financial condition of the Fund, Companies and Organizations, shares or interest bearing obligations of which are listed at the Stock Exchange.||Complied||The Company’s website in the «Shareholder» section contains audited annual financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and financial statements prepared in accordance with IFRS for the first quarter, for the six months and for the first nine months of the reporting Period. All these reports are posted on time, in accordance with the established deadlines.|
|4||The Fund and the Organizations should carry out the audit of the financial
statement on annual basis through attraction of the independent and qualified auditor which as a third-party entity provides objective assurance to the Stakeholders about authenticity of the financial statement and its compliance with IFRS. Norms in part of
audited statements are applied, if an audit of annual financial statement is prescribed by legislation of the Republic of Kazakhstan and/or internal documents of the Organization.
|Complied||The Company annually audits annual and semi-annual financial statements through the involvement of an independent and qualified auditor. The external auditor of the Company “PricewaterhouseCoopers” LLP meets the following criteria: high level of qualification of specialists of the audit organization; Experience in both Kazakhstan and international markets; Knowledge of the industry’s business; Positive reputation, both on the Kazakhstani and international markets; Compliance with the auditing organization of the International Standards of Auditing, the legislation of the Republic of Kazakhstan in the field of auditing, the Code of Ethics for Professional Accountants of the International Federation of Accountants; Effectiveness of work to identify gaps and provide recommendations for improving internal controls on the financial reporting process.|
|5||The Fund, Companies and Organizations shares or interest bearing obligations of which are listed at the Stock Exchange should prepare an annual report in compliance with the provisions of this Code and best practice of information disclosure. The
annual report is approved by the Board of Directors.
|Complied||Annually the Company prepares the Annual Report, which is one of the key sources of information for the shareholder and other interested parties. Annual reports of “Samruk-Energy” JSC for several years receive prizes at the Republican Competition of RAEX annual reports (Expert RA Kazakhstan), supported by the Kazakhstan Stock Exchange. So, in 2016 the Company became the winner in the nominations «The best report of the non-financial sector», the nominee «Best interactive annual report» among 137 companies. The annual report of the Company was included in the top five annual reports of Kazakhstan companies.|
|6||Internet website should be well structured, easy for navigation and contain information that is necessary for Stakeholders to understand the activities of the Fund and Organizations||Complied||The official site of the company www.samruk-energy.kz, was created using a modern interface, with convenient navigation on the site and on individual pages (“usability”).
The topic of the sections of the site complies with all requirements of the Corporate Update Code and accepted standards. Materials are posted in the state, Russian and English languages. The rules for the preparation and placement of information on the Company’s website provide for the responsibility of individuals from among the structural units for the completeness and relevance of information posted on the website relating to the activities of the Company. Information is updated on a regular basis; monthly responsible persons of structural divisions monitor the assigned departments for updating and updating the content. The site is the first and one of the main sources of receipt by the stakeholders of the Company of the necessary information on the main activities of “Samruk-Energy” JSC