Annual Report 2012

Compliance with the Corporate Governance Code

No. Corporate Governance Code Provision Compliance
(YES/NO)
Comments

General meeting

1

Shareholders shall be given at least a 30 day notice of a general meeting, irrespective of the matters included in its agenda, unless the law provides for a longer notice period.

YES

Clause 10.9 of the Charter.

Clause 5.1 of the Regulation on the General Shareholder Meeting.

This provision is only followed for annual general meetings.

2

Shareholders may review the list of persons entitled to attend general meetings, starting from the date of the meeting notice up through the closing of the meeting session or, in the event of absentee voting, up through the closing of ballot submission.

YES

Clause 2.3 of the Regulation on the General Shareholder Meeting.

Clause 2.7 of the Corporate Governance Code.

3

Shareholders may review information (documents) to be submitted for preparation for the general meeting in electronic format, including via the Internet.

YES

Clause 2.8 of the Corporate Governance Code.

4

Each shareholder may propose an item for the agenda of the general meeting or request that a general meeting be convened without submitting an excerpt from the share register, provided its title to shares is recorded in the share register system; if such title is recorded in the deposit account, a balance statement of such deposit account shall be sufficient for the shareholder to exercise the above rights.

YES

Clauses 10.12 and 10.13 of the Charter.

Clauses 3.1, 3.3, 7.1, and 7.4 of the Regulation on the General Shareholder Meeting.

Clause 2.6 of the Corporate Governance Code.

5

The company’s charter or regulations require the company’s chief executive officer, members of the managing board, board of directors, internal audit team and the company’s auditor to attend general meetings.

NO

Acron is working to comply with this provision in practice.

Clause 6.7 of the Regulation on the General Shareholder Meeting.

Clause 2.13 of the Corporate Governance Code.

6

When the general meeting elects members to the board of directors, the chief executive officer, members to the managing board and internal audit team, or approves the company’s auditor, the candidates to the above offices shall be present at such meeting.

NO

Acron is taking steps to ensure that the candidates to the Board of Directors or Internal Audit Team attend the respective sessions of the general meeting.

Clause 2.13 of the Corporate Governance Code.

The Board of Directors is responsible for appointing executive bodies of the Company and terminating their offices.

Clause 11.3.9 of the Charter.

7

The company’s internal documents establish the procedure for registering participants to attend general shareholders meetings.

YES

Section 9 of the Regulation on the General Shareholder Meeting.

Board of Directors

8

The company’s charter authorises the board of directors to approve the company’s financial and business plan each year.

NO

Acron’s Charter does not give its Board of Directors this authority, since financial and business plans are approved as necessary.

9

The board of directors has approved the company’s risk management procedure.

NO

Acron has not approved a risk management procedure.

The Board of Directors plans to consider this procedure.

10

The company’s charter authorises the board of directors to suspend the authorities of the chief executive officer appointed by the general meeting.

NO

Not applicable, as the Chief Executive Officer is elected/appointed (and his/her office is terminated) by Acron’s Board of Directors as per Clauses 13.2, 13.3 and 13.9 of the Charter.

11

The company’s charter authorises the board of directors to set the qualification requirements and remuneration of the chief executive officer, members of the managing board and heads of the company’s key business units.

NO

Acron considers it more appropriate to take an individual approach to addressing these matters when appointing the respective officers.

12

The company’s charter authorises the board of directors to approve the contracts of the chief executive officer and members of the managing board.

YES

Clause 11.3.9 of the Charter.

13

The company’s charter or internal documents do not allow a member of the board of directors who is also the chief executive officer (managing company or manager) or member of the managing board to vote on issues concerning the contracts of the chief executive officer (managing company or manager) or members of the managing board.

NO

This procedure is to be considered in the future.

14

The company’s board of directors includes at least three independent directors who meet the eligibility criteria of the Corporate Governance Code.

NO

The Company’s Board of Directors includes one independent director – Igor Belikov.

The issuer complies with the requirement of applicable Russian law to maintain the Company’s securities in quotation lists of a stock exchange (the company’s Board of Directors must include at least one independent director).

15

None of the company’s directors has been convicted of any economic violation or violation against the government, government operations or the operations of local authorities; or who has been subjected to administrative penalty for any violation committed in the capacity of an entrepreneur or a member of the financial industry or securities market, or for tax violations.

YES

Acron is in full compliance with this provision.

16

None of the company’s directors is a member, chief executive officer (manager), member of governing bodies or employee of the company’s competitors.

YES

Acron is in full compliance with this provision.

17

The company’s charter provides for cumulative voting for elections to the board of directors.

YES

Clause 11.7 of the Charter.

18

The company’s internal documents require members of the board of directors to refrain from actions that lead to a conflict of interests or have the potential to do so; if there is a conflict of interests, the member involved shall notify the board of directors of the same.

YES

Clause 3.9 of the Corporate Governance Code.

19

The company’s internal documents require the members of the board of directors to provide written notice to the board of their intent to perform any transactions with the company’s securities or securities of its subsidiaries/affiliates, and to disclose the details of such transactions.

YES

Clause 4.6 of the Regulation on the Board of Directors and Clause 3.10 of the Corporate Governance Code require notifying the Board of Directors solely of completed transactions.

20

The company’s internal documents require the board of directors to meet at least once every six weeks.

NO

Acron’s Board of Directors meets as necessary.

Clause 7.1 of the Regulation on the Board of Directors.

21

The company’s board of directors shall meet at least once every six weeks in the year covered by the annual report.

YES

Acron is in full compliance with this provision.

22

The company’s internal documents set the procedure for holding board of directors meetings.

YES

Section 7 of the Regulation on the Board of Directors.

23

The company’s internal documents require approval by the board of directors for any company transactions with a value equal to or exceeding 10 per cent of the company’s assets, excluding transactions concluded in the course of the company’s ordinary business.

NO

Compliance with this provision (given the specifics of the Company’s business) would impair the efficiency of managerial decision-making with regard to business activity, which can bring down the Company’s profitability. The Company acts in conformity with requirements of existing Russian laws on approving the Company’s transactions.

24

The company’s internal documents entitle members of the board of directors to receive the information they need to perform their job duties from the company’s executive bodies and heads of its business units; the internal documents impose liability for failure of such bodies or heads of business units to provide such information.

YES

Clause 6.2 of the Regulation on the Board of Directors.

Clause 7.1.2 of the Regulation on the Board of Directors Audit Committee.

Clause 7.1.2 of the Regulation on the Board of Directors Strategic Planning and Corporate Governance Committee.

Clause 7.1.2 of the Regulation on the Board of Directors Nomination and Remuneration Committee.

25

The company’s board of directors has a strategic planning committee, or the functions of a strategic planning committee are vested in another committee (other than the audit committee or nomination and remuneration committee).

YES

Clause 8.9.1 of the Regulation on the Board of Directors.

Members of the Strategic Planning and Corporate Governance Committee are Alexander Dynkin, Vladimir Gavrikov and Alexander Popov.

26

The board of directors has a committee (an audit committee) to provide recommendations to the board of directors regarding nominees to the company’s auditor; the audit committee is a contact point for the company’s external auditor and internal audit team.

YES

Clause 8.8.1 of the Regulation on the Board of Directors.

Members of the Audit Committee are Igor Belikov, Viktor Kochubey and Valery Shvalyuk.

27

Only independent members and members who are not executive directors may be on the audit committee.

YES

Clause 8.8.3 of the Regulation on the Board of Directors.

Clause 8.1 of the Regulation on the Board of Directors Audit Committee.

Members of the Audit Committee are Igor Belikov (independent director), Viktor Kochubey (non‑executive director) and Valery Shvalyuk (non-executive director).

28

The audit committee is chaired by an independent director.

YES

Clause 8.8.4 of the Regulation on the Board of Directors.

Clause 9.1 of the Regulation on the Board of Directors Audit Committee.

The chair of the Audit Committee is Igor Belikov (independent director).

29

The company’s internal documents set rules allowing all audit committee members to access any corporate documents and information, subject to their confidentiality obligations.

YES

Clause 4.8 of the Regulation on the Board of Directors.

Clauses 7.1.2, 14.1 and 14.2 of the Regulation on the Board of Directors Audit Committee.

30

The board of directors has a special committee (nomination and remuneration committee) to set eligibility criteria for candidates to the board of directors and to define the company’s remuneration policy.

YES

Clause 8.10.1 of the Regulation on the Board of Directors.

Members of the Nomination and Remuneration Committee are Igor Belikov, Vladimir Gavrikov, and Egor Gissin.

31

The nomination and remuneration committee is chaired by an independent director.

YES

Clause 8.10.4 of the Regulation on the Board of Directors.

Clause 9.1 of the Regulation on the Board of Directors Nomination and Remuneration Committee.

The Nomination and Remuneration Committee is chaired by Igor Belikov (independent director).

32

Company’s officers may not be on its nomination and remuneration committee.

NO

The chair of Acron’s Nomination and Remuneration Committee is an independent director who ensures unbiased consideration of matters at the Committee’s sessions.

33

The board of directors has a risk management committee, or the functions of a risk management committee are vested in another committee (other than the audit committee or nomination and remuneration committee).

YES

The functions of the Risk Management Committee are performed by Acron’s Strategic Planning and Corporate Governance Committee.

Clauses 6.30 through 6.33 of the Regulation on the Board of Directors Strategic Planning and Corporate Governance Committee.

34

The board of directors has a corporate conflict committee, or the functions of a corporate conflict committee are vested in another committee (other than the audit committee or nomination and remuneration committee).

YES

The functions of a corporate conflict committee are performed by Acron’s Strategic Planning and Corporate Governance Committee.

Clause 6.29 of the Regulation on the Board of Directors Strategic Planning and Corporate Governance Committee.

35

No members of the corporate conflict committee are company officers.

NO

Not applicable, as the functions of a corporate conflict committee are performed by Acron’s Strategic Planning and Corporate Governance Committee.

36

The corporate conflict committee is chaired by an independent director.

NO

Not applicable, as the functions of a corporate conflict committee are performed by Acron’s Strategic Planning and Corporate Governance Committee.

37

The company’s board of directors has approved internal documents setting the procedure for forming its committees and regulating their proceedings.

YES

Regulation on the Board of Directors Strategic Planning and Corporate Governance Committee.

Regulation on the Board of Directors Audit Committee.

Regulation on the Board of Directors Nomination and Remuneration Committee.

38

The company’s charter defines the procedure for determining quorum at board of directors meetings and requires mandatory attendance by the independent directors.

NO

Acron is taking steps to fully comply with this provision.

Clauses 11.10, 11.11 and 11.12 of the Charter.

Executive bodies

39

The company has a collegial executive body (managing board).

YES

Clause 12.1 of the Charter.

Members of the Managing Board are Vladimir Kunitsky, Ivan Antonov, Oscar Valters, Alexei Milenkov, Alexander Popov, and Dmitry Khabrat.

40

The company’s charter or internal documents require real estate transactions or proposed loans to be approved by the managing board, unless such transactions are major transactions or outside the Company’s ordinary business.

NO

Acron is taking steps to have the Managing Board discuss such transactions preliminarily.

41

The company’s internal documents set the procedure for approving any transactions that are beyond the limits of the company’s financial and business plan.

NO

Acron is taking steps to fully comply with this provision.

42

None of the members of the company’s executive bodies are members, chief executive officers (managers), members of governing bodies or employees of any of the company’s competitors.

YES

Acron is in full compliance with this provision.

43

None of the members of the company’s executive bodies has been convicted of any economic violation or violation against the government, government operations or the operations of local authorities; or subjected to administrative liability for any violation committed in the capacity of an entrepreneur or a member of the financial industry or securities market, or for tax violations. If the sole executive officer of the company is a managing company or a manager, the chief executive officer and members of the managing board of such managing company or manager must comply with the requirement to CEO and managing board.

YES

Acron is in full compliance with this provision.

44

The company’s charter or internal documents prohibit the managing company/manager from holding a similar office with any of the company’s competitors or from having any other interest in the company, other than that of a managing company/manager.

NO

Not applicable. Acron has not contracted any managing company/manager to act as its sole executive officer.

45

The company’s internal documents do not allow its executive bodies to take any actions which will result or may result in a conflict of interests; if such conflict of interests has occurred, the company’s executive bodies shall duly notify the board of directors thereof.

YES

Clause 4.5 of the Corporate Governance Code.

46

The company’s charter or internal documents establish the eligibility criteria for managing companies/managers.

NO

Not applicable. Acron has not contracted any managing company/manager to act as its sole executive officer.

47

The company’s executive bodies report to the board of directors on a monthly basis.

NO

The Company’s executive bodies report to the Board of Directors in accordance with the Board of Director’s action plan.

48

The company’s contracts with its chief executive officer (managing company/manager) or members of the managing board provide for liability for failure to comply with regulations on inside and sensitive information.

YES

Clause 7.10 of the Corporate Governance Code.

Corporate secretary

49

The company has appointed an officer (corporate secretary) to oversee compliance by the company’s bodies and officers with the rules of procedure aimed at protecting the rights and legal interests of the company’s shareholders.

YES

Clause 5.1 of the Corporate Governance Code.

The secretary of the Board of Directors acts in the capacity of a corporate secretary.

50

The company’s charter or internal documents establish a procedure for appointing/electing the corporate secretary and outline his/her job duties.

NO

The functions of corporate secretary are vested in the secretary of the Board of Directors.

51

The company’s charter establishes eligibility criteria for the corporate secretary.

NO

The functions of corporate secretary are vested in the secretary of the Board of Directors.

Material corporate actions

52

The company’s charter or internal documents require corporate approval of any major transactions before they are made.

YES

Clause 6.3 of the Corporate Governance Code.

53

The company must engage an independent appraiser to evaluate the market value of any assets that are subject to a major transaction.

NO

The subject matter of the Company’s major transactions are primarily attracting borrowings (loans), requiring no market evaluation.

Acron’s activities are governed by the law of the Russian Federation.

54

In the event of a purchase of a major stake in the company (merger), the company’s charter prohibits any actions to protect the interests of the company’s executive bodies (members thereof) or members of the board of directors, as well as any actions that may worsen the position of shareholders compared with the current position (including, but not limited to, a resolution by the board of directors to issue additional shares before the proposed deal is closed; or to issue any securities that may be converted to company shares or entitle the holder to purchase company shares, notwithstanding any provisions of the charter to the contrary).

NO

The procedure to purchase major stakes in the Company (over 30 per cent), as well as the rights (and guarantees thereof) of the Company’s shareholders for such purchases are envisaged by the law of the Russian Federation.

Acron’s activities are governed by the law of the Russian Federation.

55

The company’s charter requires an independent appraiser to be engaged to evaluate the current market value of shares and a possible change in such value as a result of a merger.

NO

Acron’s shares are traded at the Moscow Exchange and at the London Stock Exchange in the form of global depositary receipts.

56

The company’s charter does not relieve a purchaser from his/her obligation to offer the remaining shareholders an opportunity to sell their common shares (or other securities convertible into shares) in the event of a merger.

YES

Charter

57

The company’s charter or internal documents require an independent appraiser to be engaged to determine the share conversion ratio in the event of reorganisation.

YES

Clause 6.5 of the Corporate Governance Code.

Disclosure

58

The company’s board of directors has approved a regulation describing the company’s disclosure rules and procedures (Regulation on Information Disclosure).

YES

Regulation on Information Disclosure.

59

The company’s internal documents require the company to disclose information on the purpose of a share issue, the prospective buyers of shares, including buyers of major stakes, and regarding the intention of the company’s officers to purchase any shares in the issue.

NO

Acron’s activities are governed by the law of the Russian Federation. The Company does not plan additional placement of shares.

60

The company’s internal documents contain a list of information, documents and materials to be submitted to shareholders for transacting the matters on the agenda of a general meeting.

YES

Clauses 5.3 through 5.6 of the Regulation on the General Shareholders Meeting.

61

The company has a website that is regularly updated.

YES

Clause 3.4 of the Charter.

Clause 7.5 of the Corporate Governance Code.

http://www.acron.ru/en

The Company also makes disclosures on Interfax webpage at http://www.e-disclosure.ru/portal/company.aspx?id=357.

62

The company’s internal documents require the company to disclose any transactions with its officers as defined in the company’s charter, or any transactions with any entity when the company’s officers hold, directly or indirectly, 20 per cent or more interest in such entity, or may otherwise exercise material control over such entity.

NO

Procedure for adopting resolutions on approval and disclose of non-arm’s length transactions with the Company’s members of managing bodies (top executives) is envisaged by the law of the Russian Federation.

63

The company’s internal documents require the company to disclose any transactions that may affect the market value of the company’s shares.

YES

Acron’s activities are governed by the law of the Russian Federation.

64

The company’s board of directors has approved a regulation on sensitive information regarding the company’s business, shares and other securities and transactions therewith that is not in the public domain and, if disclosed, may have material impact on the price of the company’s shares or other securities.

YES

Regulation on Access to Acron’s Inside Information, Protection of its Confidentiality and Control over Compliance with Legal Requirements to Counteract the Misuse of Inside Information.

List of Acron’s Inside Information.

Financial and business controls

65

The company’s board of directors has adopted internal financial and business controls.

YES

Section 4 of the Regulation on Internal Control.

66

The company has a department supervising compliance with internal control procedures (internal control or audit department).

YES

Clause 8.5 of the Corporate Governance Code.

Clause 5.4 of the Regulation on Internal Control.

Regulation on the Internal Audit Department.

67

The company’s internal documents require the board of directors to outline the structure of and appoint members to the company’s internal audit department.

YES

Regulation on the Internal Audit Department.

68

None of the company’s internal auditors has been convicted of any economic violation or violation against the government, government operations or the operations of local authorities; or subjected to administrative penalty for any offense committed in the capacity of an entrepreneur, as a member of the financial industry or securities market, or for tax violations.

YES

Acron is in compliance with this provision to the extent applicable to its Internal Audit Department.

69

None of the company’s internal auditors is its executive, member, chief executive officer (manager), member of governing bodies or employee of the company’s competitors.

YES

Acron is in compliance with this provision to the extent applicable to its Internal Audit Department.

70

The company’s internal documents set the deadline for submission to the company’s internal audit department of documents or materials necessary to evaluate a financial or business transaction, and determine officers’ and employees’ liability for failure to comply with the deadline.

YES

Such deadlines are set by the Company’s individual regulations and orders.

71

The company’s internal documents set the internal audit department’s obligation to report any revealed deficiencies to the company’s audit committee or, if no such committee exists, to the board of directors.

YES

Clause 5.4.5 of the Regulation on Internal Control.

72

The company’s charter requires the internal audit department to issue their preliminary opinion as to the necessity of any transactions beyond the company’s financial or business plan (irregular transactions).

NO

Acron is taking steps to fully comply with this provision.

73

The company’s internal documents establish a procedure for the board of directors to approve any irregular transactions.

NO

Acron is taking steps to fully comply with this provision.

74

The company’s board of directors has approved a procedure for auditing the company’s financial and business transactions by the company’s internal audit department.

YES

Regulation on Acron’s Internal Audit Team was approved by the Company’s General Meeting.

75

The audit committee issues its opinion on audit reports before they are presented to the general shareholder meeting.

YES

Clause 6.3.6 of the Regulation on the Board of Directors Audit Committee.

Dividends

76

The company’s board of directors has issued guidelines for determining recommendations on dividends (dividend policy provisions).

YES

Dividend Policy Provisions.

77

Dividend policy provisions establishes the procedure for determining the minimum percentage of the company’s net profit to be distributed as dividends, as well as the conditions under which the preferred share dividends stipulated in the company’s charter are not paid or are not paid in full.

YES

Clause 3.2 of Dividend Policy Provisions.

Not applicable to dividends on preferred shares, since Acron has not issued preferred shares.

78

The company discloses its dividend policy and any amendments to the policy in the periodical publication listed in the company’s charter for publishing information regarding general meetings, as well as on its website.

YES

Clause 6.1 of Dividend Policy Provisions.

Clause 9.1 of the Corporate Governance Code.

Acron only discloses such information on its website.

 

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