Corporate governance framework

FESCO is continuously enhancing its corporate governance framework to comply with relevant best practices and standards. The framework is aligned with the principles and requirements set out in the applicable laws of the Russian Federation, the Listing Rules of the Moscow Exchange and recommendations of the Bank of Russia’s Corporate Governance Code (the Corporate Governance Code)Letter of the Bank of Russia No. 06-52/2463 dated 10 April 2014 On the Corporate Governance Code..

To assess the quality of corporate governance, FESCO relies on the Bank of Russia’s Corporate Governance Code defining the relevant principles. The Report on Compliance with the Principles and Recommendations of the Corporate Governance Code pre-approved by the Company’s Board of Directors as part of the annual report details the extent of the compliance.

In 2021, the Company continued to consistently improve the quality of corporate governance with a focus on achieving its goals and balancing the interests of the business, Company and its stakeholders.

In 2021, we fully complied with a larger number of the Code principles. Thanks to our focused efforts, the Board of Directors was assessed for independence, the Audit Committee was mostly made up of independent directors and the Company’s Articles of Association provided for using electronic ballots available on the corporate website to participate in the General Shareholders Meeting.

Certain compliance gaps were due to preparations for introducing assessment (self-assessment) practices for the Board of Directors, the need for adding more independent directors to the Board of Directors to set up a fully independent Audit Committee, and the lack of a long-term incentive scheme for executive bodies and other key managers based on the Company’s shares resulting from to anti-crisis measures and market volatility amid the pandemic and macroeconomic shocks.

Nevertheless, FESCO is strongly committed to ensuring full or partial compliance with more principles and strengthening its corporate governance both Company and Group-wide. In particular, we plan to do the following in 2022:

• amend the Regulations on the Board of Directors to align them with the Corporate Governance Code;
• arrange for self-assessment of the Board of Directors;
• provide shareholders with more information on candidates to the Board of Directors as part of materials drafted for General Shareholders Meetings;
• improve the Group’s corporate culture and draft relevant internal regulations.

Information policy

Our information policy ensures full and timely communication of information on the Group’s operations to shareholders, investors and other stakeholders. Disclosures are a key engagement tool in this area.

When making disclosures, the Company is guided by applicable laws, recommendations of the Corporate Governance Code and its internal Regulations on Information DisclosureApproved by the Board of Directors on 14 October 2016, Minutes No. 34 dated 17 October 2016.. The Company seeks to provide information on its operations in a timely manner and to the extent necessary and sufficient for making informed decisions on membership in the Company and/or taking other actions affecting its financial and business operations.

Our information policy relies on the following key principles:

• regular, consistent, and timely manner of disclosure;
• accessibility of the disclosed information;
• reliable and complete information;
• maintaining the right balance between the Company’s openness and business interests.

During the reporting year, the Company disclosed information in a timely manner and in full without avoiding disclosures that could adversely affect the image of FESCO.

Information is disclosed on the website of an authorised agency accredited by the Bank of Russia at website and on the Company’s website.