REPORT ON MOSCOW EXCHANGE COMPLIANCE WITH THE PRINCIPLES AND RECOMMENDATIONS OF THE CORPORATE GOVERNANCE CODE

1.1.1

The company should create most favourable conditions for its shareholders enabling them to participate in the general meeting and develop informed positions on issues on its agenda, as well as provide them with the opportunity to coordinate their actions and express their opinions on issues being discussed.

1. The Company provides an easy-to-access way to communicate with the community, such as the “hotline”, email or Internet forum that enables shareholders to express their opinion and to put forward issues to the agenda pending preparation for the General Meeting.

These communication options were organised by the company and provided to shareholders in preparation for each general meeting held in the reporting period.

✔ complied with

☐ partly complied with

☐ not complied with

1.1.2

Procedures for notification of the general meeting and provision of materials for it should enable the shareholders to get properly prepared for participation therein.

1. The notice of the General Meeting of Shareholders was posted (published) on the website at least 30 days prior to the General Meeting date.

2. The notice of the meeting specifies the venue of the meeting and the documents required to get access to the premise.

3. Access to the information on the person who proposed the agenda items and the one who nominated candidates to the Board of Directors and the Internal Audit Commission of the Company was provided to shareholders.

✔ complied with

☐ partly complied with

☐ not complied with

1.1.3

During the preparation for and holding of the general meeting, the shareholders should be able to freely and timely receive information about the meeting and its materials, to pose questions to members of the company’s executive bodies and board of directors, and to communicate with each other.

1. The shareholders were enabled to ask members of the executive bodies and members of the Company’s Board of Directors before and during the annual General Meeting in the reporting period.

2. The standpoint of the Board of Directors (including any special opinions included into the minutes) on each agenda item of the General Meetings conducted during the reporting period was included into the materials of the General Meeting of Shareholder.

3. The Company provided the shareholders with the appropriate entitlement with the access to the list of persons eligible to attend the General Meeting, starting from the date of its receipt by the Company, in all cases of holding the General Meetings in the reporting period.

✔ complied with

☐ partly complied with

☐ not complied with

This recommendation concerning shareholders’ posing questions to members of executive bodies and members of the board of directors of the company in the course of the general meeting is not applicable was not applicable, as no general meetings were held in the form of joint attendance of shareholders in the reporting period.

1.1.4

There should be no unjustified difficulties preventing shareholders from exercising their right to demand that a general meeting be convened, nominate candidates to the company’s governing bodies, and to place proposals on its agenda.

1. In the reporting period, shareholders were entitled, within 60 days from the end of the respective calendar year a minimum, put forward proposals to be included into the agenda of the annual General Meeting.

2. In the reporting period, the Company did not refuse to accept proposals to the agenda or candidates to the Company’s bodies due to misprints and other insignificant defects in the shareholder’s proposal.

✔ complied with

☐ partly complied with

☐ not complied with

1.1.5

Each shareholder should be able to freely exercise his right to vote in a straightforward and most convenient way.

1. The Charter of the company includes provisions for filling in the electronic form of the ballot on the website specified in the notice of the General Meeting of Shareholders.

✔ complied with

☐ partly complied with

☐ not complied with

1.2.1

The company should develop and put in place a transparent and clear mechanism for determining the amount of dividends and their payment.

1. The dividend policy provisions of the Company were developed, approved by the Board of Directors, and disclosed at the Company’s website.

2. If the Company produces consolidated financial statements and its dividend policy uses these financial statements to determine the amount of dividends, the relevant dividend policy provisions incorporate the consolidated measures of financial statements.

3. Rationale for the proposed net profit distribution, including for dividend payments and for the company’s own needs, along with compliance assessment in respect of the company’s dividend policy and explanations and economic substantiation of the need to allocate a certain portion of net profit for the company’s own needs in the reporting period were included in the materials for the general meeting of shareholders, where the agenda of the meeting included an item on profit distribution (including the payment (announcement) of dividends).

✔ complied with

☐ partly complied with

☐ not complied with

1.2.2

The company should not make a decision on the payment of dividends, if such decision, without formally violating limits set by law, is unjustified from the economic point of view and might lead to the formation of false assumptions about the company’s activity.

1. In addition to statutory restrictions, the Company’s dividend policy clearly indicates financial/ economic circumstances when the Company should not pay dividends.

✔ complied with

☐ partly complied with

☐ not complied with

1.2.3

The company should not allow deterioration of dividend rights of its existing shareholders.

1. In the reporting period, the Company did not take steps that impaired the existing shareholders’ dividend rights.

☐ compiled with

☐ partly complied with

✔ not complied with

The Company followed this principle until 2023. At the beginning of the reporting period, the Supervisory Board resolved on suspension of the Dividend Policy’s provision which required at least 60 % of profits to be allocated for dividend payouts. The dividend paid for 2022 was 30 % of the Company’s net profit according to IFRS for 2022.

The main factors behind this decision were regulatory requirements, the technological re-equipment programme and the need for investment in development, as well as major changes in the external environment.

At the end of Q3 2023, the Supervisory Board approved a new dividend policy, whereby the share of profit allocated to dividends was fixed at 50 % of the MOEX Group’s net profit for the reporting year.

1.3.1

The company should create conditions which would enable its governing bodies and controlling persons to treat each shareholder fairly, in particular, which would rule out the possibility of any abuse of minority shareholders by major shareholders.

1. During the reporting period the persons, controlling the Company, did not abuse their authorities towards shareholder, no conflicts between controlling persons and shareholders existed, and, if such conflicts existed the Board of Directors paid enough attention to address them.

✔ complied with

☐ partly complied with

☐ not complied with

2.1.1

The board of directors should be responsible for decisions to appoint and remove [members] of executive bodies, including in connection with their failure to properly perform their duties. The board of directors should also procure that the company’s executive bodies act in accordance with an approved development strategy and main business goals of the company.

1. The Board of Directors has the powers stipulated in the Charter to appoint, dismiss, and determine conditions of the contracts, with respect to members of executive bodies.

2. In the reporting period, the Nominations CommitteeHereinafter, the Nominations Committee. considered how the professional qualifications, skills and experience of the members of the executive bodies meet the current and expected needs of the company, prompted by the approved strategy of the company.

3. In the reporting period, the Board of Directors reviewed the report(s) of the sole executive body and members of the collegial executive body on fulfilment of the Company’s strategy.

✔ complied with

☐ partly complied with

☐ not complied with

2.1.2

The board of directors should establish basic long-term targets of the company’s activity, evaluate and approve its key performance indicators and principal business goals, as well as evaluate and approve its strategy and business plans in respect of its principal areas of operations.

1. During the reporting period, meetings of the Board of Directors reviewed the progress of execution and updating the strategy, approval of the Company’s financial and business plan (budget), and the review of the criteria and measures (including intermediate) to implement the Company’s strategy and business plans.

✔ complied with

☐ partly complied with

☐ not complied with

2.1.3

The board of directors should determine principles of and approaches to creation of the risk management and internal control system in the company.

1. The principles of and approaches to the risk management and internal control system in the Company are set forth by the Board of Directors and documented in the Company’s internal regulations defining the risk management and internal control policy.

2. In the reporting period, the Board of Directors approved (revised) the acceptable level of risk (risk appetite) of the Company, or the Audit Committee and (or) Risk Committee (if any) considered the expediency of bringing the issue of risk appetite revision to the attention of the Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

2.1.4

The board of directors should determine the company’s policy on remuneration due to and/or reimbursement of costs incurred by its board members, members of its executive bodies and other key managers.

1. The Company has developed and implemented the policy(-ies) approved by the Board of Directors on remuneration and reimbursement of costs incurred by the members of the Board of Directors, the Company’s executive bodies and other key managers of the Company.

2. The meetings of the Board of Directors reviewed issues related to the above policy (-ies) during the reporting period.

✔ complied with

☐ partly complied with

☐ not complied with

2.1.5

The board of directors should play a key role in prevention, detection and resolution of internal conflicts between the company’s bodies, shareholders and employees.

1. The Board of Directors plays a key part in prevention, detection, and settlement of internal conflicts.

2. The Company has established the system to identify transactions related to the conflict of interest and the system of efforts designed to settle such conflicts.

✔ complied with

☐ partly complied with

☐ not complied with

2.1.6

The board of directors should play a key role in procuring that the company is transparent, discloses information in full and in due time, and provides its shareholders with unhindered access to its documents.

1. Company’s internal documents list the persons responsible for information policy implementation.

✔ complied with

☐ partly complied with

☐ not complied with

2.2.1

Information about the board of directors’ work should be disclosed and provided to the shareholders.

1. The Company’s annual report for the reporting period includes information on the Board of Directors and committee meeting attendance by individual directors.

2. The annual report contains information on the principal findings of the Board of Directors’ performance self-assessment (assessment) in the reporting period.

✔ complied with

☐ partly complied with

☐ not complied with

2.3.1

Only persons with impeccable business and personal reputation should be elected to the board of directors; such persons should also have knowledge, skills, and experience necessary to make decisions that fall within the jurisdiction of the board of directors and to perform its functions efficiently.

1. In the reporting period, the Board of Directors (or its Nominations Committee) assessed the nominees to the Board of Directors in terms of the required experience, expertise goodwill, lack of the conflict of interests, etc.

✔ complied with

☐ partly complied with

☐ not complied with

2.3.2

Board members should be elected pursuant to a transparent procedure enabling the shareholders to obtain information about respective candidates sufficient for them to get an idea of the candidates’ personal and professional qualities.

1. Where the agenda of the General Meeting of Shareholders held in the reporting period included election of the Board of Directors d, the Company provided shareholders with biographical data for all the nominees to the Board of Directors, results from assessment of whether the candidates’ professional qualifications, experience and skills meet the company’s current and expected needs performed by the Board of Directors or Nominations Committee, and information on conformity of the nominees to the independence criteria, according to the recommendations in paragraphs from 102 to 107 of the Code and the nominees’ written consent to be elected to the Board of Directors.

☐ complied with

✔ partially complied with

☐ not complied with

In previous reporting periods, the Company complied with this principle. In the reporting period, the Company’s management decided to limit biographical details disclosure of Supervisory Board candidates for election at the Annual General Meeting in 2023, so as to minimise the risk of restrictive measures against the persons in question.

According to the Company, what steps the Company took to minimise the risks of partial non-compliance with the recommendation of the CCG of the Bank of Russia was that the Company allowed shareholders to seek additional information from the Company. In addition, the line up of candidates to the Supervisory Board and results of their professional qualifications, experience and skills compliance with the current and expected needs of the Company assessment by the Supervisory Board were disclosed on the Company’s website. For each candidate to the Supervisory Board, the Company discloses on its website a recommendation on his/her election as an independent or non-executive director and information on the availability of written consent of the candidates for election to the Supervisory Board.

The company intends to resume disclosure so to adhere to this recommendation once the geopolitical situation stabilises and the risk of restrictive measures against the persons concerned returns to an acceptable level.

2.3.3

The composition of board of directors should be balanced, in particular, in terms of qualifications, expertise, and business skills of its members. The board of directors should enjoy the confidence of the shareholders.

1. In the reporting period, the Board of Directors reviewed its own needs in professional qualifications, experience, and business skills, and identified competencies required for the Board of Directors in the short and long term.

✔ complied with

☐ partly complied with

☐ not complied with

2.4.1

An independent director should mean any person who has required professional skills and expertise and is sufficiently able to have his/her own position and make objective and bona fide judgments, free from the influence of the company’s executive bodies, any individual group of its shareholders or other stakeholders.

It should be noted that, under normal circumstances, a candidate (or an elected director) may not be deemed to be independent, if he/she is associated with the company, any of its substantial shareholders, material trading partners or competitors, or the government.

1. During the reporting period, all independent members of the Board of Directors met the independence criteria specified in recommendations 102 to 107 of the Code or were recognized as such by resolution of the Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

2.4.2

It is recommended to evaluate whether candidates nominated to the board of directors meet the independence criteria as well as to review, on a regular basis, whether or not independent board members meet the independence criteria. When carrying out such evaluation, substance should take precedence over form.

1. In the reporting period, the Board of Directors (or the Nominations Committee of the Board of Directors) formed the estimate of independence of each nominee to the Board of Directors and submitted the relevant opinion to shareholders.

2. In the reporting period, the Board of Directors (or the Nominations Committee of the Board of Directors) reviewed the independence of the existing members of the Board of Directors (after their election) at least once.

3. The Company has drafted the procedures that determine the necessary actions to be taken by a member of the Board of Directors, if he/she loses his/her independence, including the obligations to timely notify the Board of Directors accordingly.

✔ complied with

☐ partly complied with

☐ not complied with

2.4.3

Independent directors should account for at least one-third of all directors elected to the board of directors.

1. Independent directors account for at least one third of the Board of Directors.

☐ complied with

✔ partially complied with

☐ not complied with

At the beginning of the reporting year, only three out of 10 members of the Supervisory Board were independent or were recognised as independent. The non-compliance with the recommendation of the CCG of the Bank of Russia in some part at the beginning of the reporting year was due to external circumstances emerged in 2022, specifically due to the increasing pressure from foreign states on Russian companies. The Company was forced to do so because this was outside the purview of the Company.

Thus, the Annual General Meeting of Shareholders in 2022 elected 12 members of the Supervisory Board with 5 of them being independent at the time of election, which was in line with this recommendation. However, during the year 2022, two independent directors decided to withdraw as members of the Supervisory Board of the Company.

In 2023, the Annual General Meeting of Shareholders elected nine members of the Supervisory Board, of which five were recognises as independent, which makes up more than one third of the elected membership.

The Annual General Meeting of Shareholders also resolved to expand the membership of the Supervisory Board from nine to 12. In this connection, the Company also held an Extraordinary General Meeting of Shareholders in 2023, which elected a Supervisory Board of 12 members. Seven of them were recognised as independent, representing more than one third of the elected membership. Therefore, the new Supervisory Board line-ups of the Company elected by the General Meetings of Shareholders held in 2023 were created in line with the recommendation on the number of independent directors.

2.5.1

It is recommended to either elect an independent director to the position of the chairman of the board of directors or identify the senior independent director among the company’s independent directors who would coordinate work of the independent directors and liaise with the chairman of the board of directors

1. The Chairman of the Board of Director is an independent director, or a senior independent director is identified among independent directorsPlease specify, which of the two alternative approaches admitted by the principle is implemented in the Company and explain the reasons for the selection made..

2. The role, rights and duties of the Chairman of the Board of Directors (and, if applicable, the senior independent director) are duly determined in the Company’s internal documents.

✔ complied with

☐ partly complied with

☐ not complied with

2.5.2

The board chairman should ensure that board meetings are held in a constructive atmosphere and that any items on the meeting agenda are discussed freely. The chairman should also monitor fulfilment of decisions made by the board of directors.

1. Performance of the Chairman of the Board of Directors was estimated as part of the Board of Directors efficiency assessment procedure in the reporting period.

✔ complied with

☐ partly complied with

☐ not complied with

2.6.1

Acting reasonably and in good faith means that board members should make decisions considering all available information, in the absence of a conflict of interest, treating shareholders of the company equally, and assuming normal business risks.

1. The Company’s internal documents require that a member of the Board of Directors should notify the Board of Directors if he/she has a conflict of interests with respect to any agenda item of the meeting of the Board of Directors or a committee of the Board of Directors, before the start of the discussion of the relevant agenda item.

2. The Company’s internal documents envisage that a member of the Board of Directors should refrain from voting on any item where he/she has a conflict of interests.

3. The Company has established the procedure that enables the Board of Directors to obtain professional advice on issues falling within its competence, at the Company’s expense.

✔ complied with

☐ partly complied with

☐ not complied with

2.6.2

Rights and duties of board members should be clearly stated and documented in the company’s internal documents.

1. The Company has adopted and published the internal document that clearly determines rights and duties of members of the Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

2.6.3

Board members should have sufficient time to perform their duties.

1. Individual attendance of meetings of the Board and committees as well as the time spent on preparation for participation in the meetings was taken into account as part of the assessment (self-assessment) procedure of the Board of Directors in the reporting period.

2. According to the Company’s internal documents, members of the Board of Directors are obliged to notify the Board of Directors of their intention to join management bodies of other companies (except for the Company’s affiliates and dependent companies) and about such actual appointment.

✔ complied with

☐ partly complied with

☐ not complied with

2.7.1

It is recommended to hold meetings of the board of directors as needed, with due account of the company’s scope of activities and its then current goals.

1. The Board of Directors held at least six meetings in the reporting year.

✔ complied with

☐ partly complied with

☐ not complied with

2.7.2

It is recommended to develop a procedure for preparing for and holding meetings of the board of directors and set it out in the company’s internal documents. The above procedure should enable the shareholders to get prepared properly for such meetings.

1. The Company approved the internal document that governs the procedure for preparation for and holding of meetings of the Board of Directors, which, in particular, stipulates that the notice of the meeting should be normally made at least five (5) days prior to the meeting.

2. In the reporting period, members of the Board of Directors who were not in attendance at the meeting were given the opportunity to participate in the discussion of the agenda items and voting remotely via conference and videoconference calls

✔ complied with

☐ partly complied with

☐ not complied with

2.7.3

The form of a meeting of the board of directors should be determined with due account of importance of issues on the agenda of the meeting. Most important issues should be decided at the meetings held in person.

1. The Charter or the internal document of the Company envisage that the most significant issues (according to the list in Recommendation 168 of the Code) should be considered at the personal meetings of the Board.

☐ complied with

✔ partially complied with

☐ not complied with

According to the Charter, the issues listed in Recommendation 168 of the Code (except for material related party transactions and placing the issue of delegating the CEO’s powers to the asset management company for the AGM for consideration) are decided at the meetings held in person.

Issues of material related party transactions are not included on the said list since the Company’s Code of Corporate Governance does not classify related party transactions as a specific material transaction criterion. Measures aimed at minimizing the risk of partial compliance with the CGC’s recommendation include the Company’s setting materiality thresholds in terms of amount and subject of a transaction, regardless of parties to the transaction. Therefore, the Supervisory Board considers interested-party transactions at in-person meetings of the Supervisory Board if the amount and/or subject matter of such transactions meet the established materiality criteria. The Audit Committee considered whether it was appropriate to define other materiality criteria for interested-party transactions and found it inappropriate to do so. Accordingly, the Company has no immediate plans to achieve full compliance with the said recommendation.

Placing the issue of delegating the sole executive body’s powers to the asset management company before the AGM is not within the Supervisory Board competence, since, in pursuance with the Federal Law on Organised Trading, (1) the Company’s sole executive body is elected by the Supervisory Board, and

(2) the Organiser of Trading is not authorised to delegate the powers of the sole executive body to other entity (asset manager, asset management company).

2.8.1

For the purpose of preliminary consideration of any matter of control over the company’s financial and business activities, it is recommended to form an audit committee comprised of independent directors.

1. The Board of Directors established the Audit Committee comprising independent directors only.

2. The Company’s internal documents determine the objectives for the Audit Committee, including, in particular, the objectives contained in Recommendation 172 of the Code.

3. At least one member of the Audit Committee, which is an independent director, has experience and expertise in drafting, reviewing, assessment and audit of financial statements (accounts).

4. Meetings of the Audit Committee were held at least quarterly during the reporting period.

☐ complied with

✔ partially complied with

☐ not complied with

1. Partially complied with.

At the beginning of the reporting period (before the 2023 Annual General Meeting of the Company), the Audit Committee consisted of one Independent director, who was also the Chairman of the Committee, and two non-executive directors.

This was due to the lack of enough independent directors on the Supervisory Board with the competences required for the Audit Committee because of the limited number of candidates and because two independent directors withdrew in the second half 2022. In forming the Audit Committee, the Supervisory Board relied not on the need to comply formally with the recommendations of the Corporate Governance Code of the Bank of Russia, but on the competencies that the remaining directors in the Supervisory Board of the Company had, so that the Audit Committee could perform as efficiently as the prevailing circumstances allowed and could protect interests of the Company and Company’s shareholders.

To minimise the risks of partial non-compliance with the recommendation of the Bank of Russia’s Corporate Governance Code, the Supervisory Board also addressed the key issues considered by the Audit Committee, which were generally in-person meetings of the Supervisory Board at which independent directors were able to voice their position.

When forming the Audit Committee, the Supervisory Board resolved to suspend the rules on the Audit Committee, which require that the Audit Committee be composed only of independent directors until the Supervisory Board, elected by the AGM in 2023, forms a new Audit Committee.

After the 2023 AGM and the 2023 EGM, the Audit Committee was formed to comprise of independent directors only.

2. Complied with.

3. Complied with.

4. Complied with.

2.8.2

For the purpose of preliminary consideration of any matters of development of efficient and transparent remuneration practices, it is recommended to form a remuneration committee comprised of independent directors and chaired by an independent director who should not concurrently be the board chairman.

1. The Board of Directors set up the Remuneration Committee consisting of independent directors only.

2. Chairman of the Remunerations Committee is an independent director, who is not the Chairman of the Board of Directors.

3. The Company’s internal documents determine the objectives of the Remunerations Committee, including those contained in Recommendation 180 of the Code and the circumstances (events), upon the occurrence of which the Remuneration Committee shall consider revising the Company’s remuneration policy with respect to members of the Board of Directors, executive bodies, and other key executives.

☐ complied with

✔ partially complied with

☐ not complied with

1. Partially complied with.

At the beginning of the reporting period and before the new Nomination and Remuneration Committee was formed (the new Committee was formed after the election of the Supervisory Board at the Extraordinary General Meeting of Shareholders held on 07 September 2023), only two of the three members of the Nomination and Remuneration Committee of the Supervisory Board were independent directors, including the Chairman of the Committee, and one member was a non-executive director.

In forming the Nomination and Remuneration Committee, the Supervisory Board relied not on the need to comply formally with the recommendations of the Corporate Governance Code of the Bank of Russia, but proceeded from the competencies that the members in the Supervisory Board of the Company had, so that the Nomination and Remuneration Committee could perform as efficiently as the prevailing circumstances allowed and could protect interests of the Company and Company’s shareholders.

To minimise the risks of partial non-compliance with the recommendation of the Bank of Russia’s Corporate Governance Code, the Supervisory Board also addressed the key issues considered by the Nomination and Remuneration Committee, which were generally in-person meetings of the Supervisory Board at which independent directors were able to voice their position. After the Extraordinary General Meeting of Shareholders held on 7 September 2023, the Supervisory Board elected the Nomination and Remuneration Committee comprising solely independent directors.

2. Complied with.

3. Partially complied with.

At the beginning of the reporting period, the Company’s internal documents did not outline the circumstances (events) giving the rise for the Remuneration Committee’s revising the Company’s remuneration policy with respect to members of the Board of Directors, executive bodies, and other key executives. In June 2023, the Policy on remuneration and compensations to members of executive bodies was amended to include provisions on the terms (events) following which the Nomination and Remuneration Committee revises the policy. Thus, the Policy of the Company may be amended due to changes in the Company’s strategy, the nature and scale of operations, as well as depending on the results of the Company’s activities, the level and mix of accepted risks, and socio-political climate in the Russian Federation, inflation rate, sanctions against Russian companies and other factors affecting the Company’s operations.

At present, the Company’s Policy on Remuneration and Compensations to Members of the Supervisory Board has no provisions regarding the terms (events) which, if they occur, will cause the Nomination and Remuneration Committee to revise the Policy. The Company intends to make the appropriate changes in the near future. Until the boardroom pay policy is amended as necessary, the Company applies a different practice for its review.

Thus, every three years, with the assistance of an independent consultant engaged for this purpose, the Company revises the remuneration system for members of the Supervisory Board. Between these cycles, remuneration due to members of the Supervisory is adjusted for inflation in accordance with the Regulations on Remuneration and Compensation due to Members of the Supervisory Board of Moscow Exchange. These actions seek to minimise the risks of partial non-compliance with this recommendation.

2.8.3

For the purpose of preliminary consideration of any matters relating to human resources planning (making plans regarding successor directors), professional composition and efficiency of the board of directors, it is recommended to form a nominating committee (a committee on nominations, appointments and human resources) with a majority of its members being independent directors

1. The Board of Directors established the Nominations Committee (or its objectives specified in Recommendation 186 of the Code are implemented as part of another committeeIf the objectives of the Nominations Committee are only implemented as part of another committee, indicate its name.), a majority of which are independent directors.

2. The Company’s internal documents determine the objectives of the Nominations Committee (or the relevant committee with a combined functionality), including those contained in Recommendation 186 of the Code.

3. For the purposes of forming the board of directors that best meets the Company’s goals and objectives, during the reporting period the Nominations Committee independently or jointly with other committees of the board of directors or the authorised division of the Company for shareholder relations arranged for interactions with shareholders, including but not limited to the major shareholders, in the context of selecting candidates for the Company’s Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

2.8.4

Taking account of its scope of activities and levels of related risks, the company should form other committees of its board of directors, in particular, a strategy committee, a corporate governance committee, an ethics committee, a risk management committee, a budget committee or a committee on health, security and environment, etc

1. In the reporting period, the Company’s Board of Directors reviewed the conformity of membership in its committees to the objectives assigned to the Board of Directors and to the Company’s operating goals. Additional committees were either established or were not recognized as necessary

✔ complied with

☐ partly complied with

☐ not complied with

2.8.5

The composition of the committees should be determined in such a way that it would allow a comprehensive discussion of issues being considered on a preliminary basis with due account of differing opinions.

1. In the reporting period the Committees of the Board of Directors (Audit Committee, Nominations Committee, or a committee which combines the functions) were headed by independent directors.

2. The Company’s internal documents (policies) contain the provisions, whereby persons not included into the Audit Committee, the Nominations Committee (or a committee which combines the functions), may attend meetings of the committees upon invitation of the Chairman of the respective committee only.

✔ complied with

☐ partly complied with

☐ not complied with

2.9.1

Evaluation of quality of the board of directors’ work should be aimed at determining how efficiently the board of directors, its committees and board members work and whether their work meets the company’s needs, as well as at making their work more intensive and identifying areas of improvement.

1. Thee internal documents of the Company set out procedures for assessment (self-assessment) of quality of the Board of Director’s work.

2. Self-assessment or external assessment of the Board of Directors’ performance conducted in the reporting period included the assessment of operations of the committees, individual members of the Board of Directors and the entire Board of Directors.

3. The findings of assessment (self-assessment) of the Board of Directors in the reporting period were reviewed at the personal meeting of the Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

3.1.1

The corporate secretary should have knowledge, experience, and qualifications sufficient for performance of his/her duties, as well as an impeccable reputation and should enjoy the trust of the shareholders

1. The Company’s website and the annual report include biographical information about the corporate secretary (including age, education, qualifications, experience), as well as information about the positions in the management bodies of other legal entities held by the corporate secretary during at least the last five years

✔ complied with

☐ partly complied with

☐ not complied with

4.1.1

It is recommended that the level of remuneration paid by the company to its board members, executive bodies, and other key managers should be sufficient to motivate them to work efficiently and enable the company to attract and retain knowledgeable, skilled, and duly qualified persons. The company should avoid setting the level of remuneration any higher than necessary, as well as an excessively large gap between the level of remuneration of any of the above persons and that of the company’s employees.

1. The level of remuneration due to members of the Board of Directors, executive bodies and to other key managers is set based on remuneration level benchmarking among peer companies.

✔ complied with

☐ partly complied with

☐ not complied with

4.1.2

The company’s remuneration policy should be developed by its remuneration committee and approved by the board of directors. With the help of its remuneration committee, the board of directors should monitor implementation of and compliance with the remuneration policy by the company and, should this be necessary, review and amend the same.

1. In the reporting period, the Remunerations Committee reviewed the remuneration policy(-ies) and the practice of its/their implementation, assessed whether they were efficient and transparent, and, where it was necessary, submitted the relevant recommendations to the Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

4.1.3

The company’s remuneration policy should provide for transparent mechanisms to be used to determine the amount of remuneration due to members of the board of directors, the executive bodies, and other key managers of the company, as well as to regulate any and all types of payments, benefits, and privileges provided to any of the above persons.

1. The Company’s remuneration policy(-ies) contain(s) transparent arrangements on determining the amount of the remuneration of members of the Board of Directors, executive bodies and other key managers of the Company and govern(s) all types of fees, benefits and advantages provided to these persons.

✔ complied with

☐ partly complied with

☐ not complied with

4.2.1

A fixed annual fee shall be a preferred form of monetary remuneration of the board members. It is not advisable to pay a fee for participation in individual meetings of the board of directors or its committees.

It is not advisable to use any form of short-term incentives or additional financial incentives in respect of board members.

1. In the reporting period the Company paid remuneration due to members of the Board of Directors pursuant to the Company’s remuneration policy.

2. In the reporting period the Company did no use short-term incentives based on the company’s performance indicators, neither the Company paid a fee for participation in individual meetings of the Board of Directors or its committees.

✔ complied with

☐ partly complied with

☐ not complied with

4.2.2

Long-term ownership of shares in the company contributes most to aligning financial interests of board members with long-term interests of the company’s shareholders. However, it is not recommended to make the right to dispose of shares dependent on the achievement by the company of certain performance results; nor should board members take part in the company’s option plans.

1. If the Company’s internal document(s), such as the remuneration policy(-ies), envisage(s) granting of shares to members of the Board of Directors, clear rules for holding shares by members of the Board of Directors, intended to encourage longterm ownership of such shares, should be available and disclosed.

✔ complied with

☐ partly complied with

☐ not complied with

Company’s internal documents do not provide for the provision of shares to the Supervisory Board members.

4.3.1

Remuneration due to the executive bodies and other key managers of the company should be set in such a way as to procure a reasonable and justified ratio between its fixed portion and its variable portion that is dependent on the company’s performance results and employees’ personal (individual) contributions to the achievement thereof.

1. During the reporting period, the annual performance indicators approved by the Board of Directors, were used to determine the amount of variable remuneration of members of executive bodies and other key managers of the Company.

2. During the most recent assessment of the remuneration system for the members of executive bodies and other key managers of the Company, the Board of Directors (the Remunerations Committee) made sure the Company applied an efficient ratio of the fixed remuneration portion to the variable one.

3. While setting the size of remuneration due to members of the executive bodies and other key managers, the Company proceeds from risk the Company bears, so to avoid creating incentives for highly risky management decisions.

✔ complied with

☐ partly complied with

☐ not complied with

4.3.2.

Companies whose shares are admitted to trading at organised markets are recommended to put in place a long-term incentive program for the company’s executive bodies and other key managers involving the company’s shares (or options or other derivative financial instruments the underlying assets for which are the company’s shares).

1. In case the Company has introduced a long-term incentive program for members of executive bodies and other key managers of the Company using shares in the Company (financial instruments based on the shares in the Company), the program implies that the right to sell the shares and other financial instruments used in such program will not arise until three years from their provision; provided that the right to sell the same is conditional upon achievement of certain performance indicators of the Company.

☐ compiled with

✔ partially complied with

☐ not complied with

Partially complied with.

According to long-term incentive program involving the shares of the Company approved by the Supervisory Board in 2020, the right to shares vested after 3, 4 and 5 years from the date of inclusion of the participant in the programme, subject to meeting bonus award criteria, so the recommendation was fully complied with.

According to long-term incentive program involving the shares of the Company approved by the Supervisory Board in 2023, it was resolved that the remuneration due to program participants should be paid in money terms. The right to receive funds depends on the target price of the Exchange shares and arises after 1, 2, 3, 4 or 5 years depending on the tranche.

If the target Exchange share price is not achieved, no bonus is paid to programme participants under the relevant tranche. This approach is driven by the economic and geopolitical environment. It meets the needs and interests of the Company and proceeds from the risk profile, when nearly all risks have a duration of less than one year.

The measures to minimise the risks of non-compliance with this recommendation in part are as follows:

• the size of remuneration depends on the price of the Exchange shares at the time of exercising rights under the Programme;
• no remuneration is paid for the respective tranche if the Exchange share price has not reached a certain level;
• remuneration is paid only if there are no losses in the latest annual accounts according to IFRS.

The Company has no immediate plans to achieve full compliance with the said recommendation. However, while developing a new long-term incentive program, the Company will also take into account the potential to comply with this recommendation in the event of economic and geopolitical stability.

5.1.1

The board of directors should determine the principles of and approaches to creation of the risk management and internal control system in the company.

1. Functions of various management bodies and business units of the Company in the risk management and internal control system are clearly determined in internal documents/ the Company’s relevant policy approved by the Board of Directors.

✔ complied with

☐ partly complied with

☐ not complied with

5.1.2

The company’s executive bodies should ensure the establishment and continuing operation of the efficient risk management and internal control system in the company.

1. The Company’s executive bodies ensured allocation of the functions and powers as concerns risk management and internal control among their subordinate managers (heads) of business units and divisions.

✔ complied with

☐ partly complied with

☐ not complied with

5.1.3

The company’s risk management and internal control system should enable one to obtain an objective, fair and clear view of the current condition and prospects of the company, integrity and transparency of its accounts and reports, and reasonableness and acceptability of risks being assumed by the company.

1. The Company approved the anti-corruption policy.

2. The Company established a secure, confidential and affordable method to notify the Board of Directors or the Board of Directors Audit Committee on actual violations of the laws, internal procedures, and the Company’s ethics code.

✔ complied with

☐ partly complied with

☐ not complied with

5.2.1

It is recommended that internal audits be carried out by a separate structural division (internal audit department) to be created by the company or through retaining an independent third-party entity. To ensure the independence of the internal audit department, it should have separate lines of functional and administrative reporting. Functionally, the internal audit department should report to the board of directors.

1. For the purposes of internal audit, the Company established a separate business unit for internal audit, which functionally reports to the Board of Directors or the Audit Committee, or engaged an independent external company with the same principle of reporting.

✔ complied with

☐ partly complied with

☐ not complied with

6.1.1

The company should develop and implement an information policy enabling the company to efficiently exchange information with its shareholders, investors, and other stakeholders.

1. The Company’s Board of Directors approved the Company’s information policy developed with the view to the Code’s recommendations.

2. During the reporting period, the Board of Directors (or one of its committees) reviewed whether the Company exchanged information with its shareholders, investors and other stakeholders efficiently and whether it was expedient (necessary) to revise the Company’s information policy.

✔ complied with

☐ partly complied with

☐ not complied with

6.2.1

The company should disclose information in accordance with the principles of regularity, consistency and timeliness, as well as accessibility, reliability, completeness and comparability of disclosed data.

1. The company has a procedure for coordinating the work of all company divisions and employees associated with the disclosure of information or whose activities may require the disclosure of information.

2. If the Company’s securities are traded in foreign organized markets, materials information is disclosed in the Russian Federation and on such markets simultaneously and equivalently in the reporting year.

3. If foreign shareholders hold a significant number of shares in the Company, then, in the reporting period, disclosures were carried out not only in Russian but also in one of the most common foreign languages.

✔ complied with

☐ partly complied with

☐ not complied with

1. Complied with

2. Not applicable, as the Company securities do not trade on foreign regulated markets.

3. Complied with

6.2.2

The company is advised against using a formalistic approach to information disclosure; it should disclose material information on its activities, even if disclosure of such information is not required by law.

1. The Company’s information policy sets out the approaches to and criteria for determining the information that may materially influence the value or prices of its securities and disclosure of information not required by law.

2. The Company discloses comprehensive information on the Company’s capital structure, according to Recommendation 290 of the Code in the annual report and on the Company’s website.

3. The Company discloses information on the controlled entities that are material to it, including their key activities, methods for ensuring accountability of controlled entities, the powers of the Company’s Board of Directors regarding strategy definition and evaluation of the controlled entities’ performance.

4. The Company discloses a non-financial report, the ESG or any other report containing non-financial information, including factors related to the environment (inclusive of environmental factors and factors related to climate change), society (social factors) and corporate governance, except for the report of the issuer of issuegrade securities and the annual report of a joint stock company.

✔ complied with

☐ partly complied with

☐ not complied with

6.3.1

Exercise by the shareholders of their right to access the company’s documents and information should not be unreasonably burdensome.

1. The Company’s information policy (internal documents setting the information policy) defines an easy procedure for providing access for shareholders to Company’s information and documents upon their request.

2. The Company’s information policy (internal documents setting the information policy) include provisions requiring that if a shareholder requests information on entities under the company’s control, the company shall make the necessary efforts to obtain such information from the relevant entities under the company’s control.

☐ complied with

✔ partially complied with

☐ not complied with

1. Complied with.

2. Partially complied with.

The Company’s information policy has no provisions requiring that if a shareholder requests information on entities under the company’s control, the company shall make the necessary efforts to obtain such information from the relevant entities under the company’s control.

This recommendation of the CGC of the Bank of Russia is observed partially due to the following reasons:

• a controlled entity may establish a special protocol for information, which may entail keeping it confidential.
• if such information is provided to the shareholder, it may give rise to a risk that restrictive measures may be applied not only to the Company or the controlled entity in respect of which the information is requested, but also to other companies within the Group.

However, the information on controlled entities, which the Company decided to disclose, is available on the Company’s website. The Company assumes no obligations towards shareholders to provide any other information due to the reasons stated above.

To minimize non-compliance risk, the Company discloses the list of entities under the Company’s control on the Company’s website on the Internet. If such a request is received from a shareholder, the Company reserves the right to provide the shareholder with the information requested proceeding from the principle of reasonableness, as long as the regime of the requested information is respected and the risks mentioned above are not involved At the same time, it should be noted that shareholders have not made any such queries and, according to the Company, no other risk mitigation actions need to be taken.

In referring to the above, the Company does not plan to achieve full compliance with this recommendation of the Code in this respect.

7.1.1

Material corporate actions shall be deemed to include reorganisation of the company, acquisition of 30 or more percent of its voting shares (takeover), entering by the company into any material transactions, increasing or decreasing its share capital, listing and delisting of its shares, as well as other actions which might result in material changes in rights of its shareholders or violation of their interests. It is recommended to include in the company’s articles of association a list of (criteria for identifying) transactions or other actions falling within the category of material corporate actions and provide therein that decisions on any such actions should fall within the jurisdiction of the company’s board of directors

1. The Company’s Charter determines a list of transactions and other efforts that constitute material corporate actions. According to the Company’s Charter, decision-making on material corporate actions falls within the competence of the Board of Directors. Where taking of these corporate actions is directly referred by law to the competence of General Meeting of Shareholders, the Board of Directors makes the relevant recommendations to the shareholders.

☐ complied with

✔ partially complied with

☐ not complied with

1. Partially complied with.

The list of material corporate actions is not defined in the Charter, but in the Company Corporate Governance Code.

As part of its review of the issue of the Bank of Russia CGC implementation, the Audit Committee found it appropriate to provide, in the Company’s Charter, a reference to the Corporate Governance Code that contains the List of Material Corporate Actions. At present, the Company has no intention to include the list of transactions and actions that constitute material corporate actions for the Company.

The applicable law and the Company Charter reserve decisions on material actions for the Supervisory Board or the shareholders meeting. In connection with any matters brought before the shareholders meeting, including those related to material corporate actions, the Supervisory Board provides relevant recommendations to shareholders.

7.1.2

The board of directors should play a key role in passing resolutions or making recommendations relating to material corporate actions; for that purpose, it should rely on opinions of the company’s independent directors.

1. The Company envisages the procedure; whereby independent directors announce their standpoint on material corporate actions before their approval.

✔ complied with

☐ partly complied with

☐ not complied with

7.2.1

When disclosing information about material corporate actions, it is recommended to give explanations concerning reasons for, conditions and consequences of such actions.

1. If the Company implemented any material corporate actions during the reporting period, such actions were disclosed by the Company in a timely and detailed manner, including the reasons, terms of such actions, and their consequences for shareholders.

✔ complied with

☐ partly complied with

☐ not complied with

In 2023, the Company did not conduct any material corporate actions.

7.2.2

Rules and procedures in relation to material corporate actions taken by the company should be set out in its internal documents.

1. The Company’s internal documents define when and how to engage an independent appraiser in evaluating the assets disposed of or purchased under a major transaction or a related party transaction.

2. The Company’s internal documents envisage the procedure for engaging an independent appraiser in evaluating the purchase and redemption price for the shares in the Company.

3. If a member of the board of directors, the sole executive body, a member of the collegial executive body of the company or a person who controls the company, or a person who has the right to give the company binding instructions, has no formal interest in transactions of the company, but has a conflict of interest or any other de facto interest, the internal documents of the company require that such persons shall not participate in voting on the approval of such transaction.

☐ complied with

✔ partially complied with

☐ not complied with

1. Partially complied with.

In February 2019, the new Corporate Governance Code of the Company was adopted, allowing for the engagement of an appraiser when purchasing or selling assets under major transactions.

Company’s internal documents do not provide for an independent appraiser to be engaged in assessing assets sold or purchased under related party transactions (as separate grounds). However, the new Corporate Governance Code of the Company provides for the engagement of an appraiser for the real estate or non-core assets valuation when the value of such assets exceeds RUB 600 mln, whether there is an interested party in the transaction or not. The Company believes that this approach aims to reduce the risk of non-compliance with the Code’s principle described above.

2. Partially complied with.

In redemption requested by shareholders, an appraiser is engaged under the law.

The Company’s by-laws do not envisage the obligation to engage an appraiser to evaluate the Company’s shares.

The reason for this non-compliance is that since Company’s shares are traded on the exchange, the share purchase price has been determined subject to share weighted average price according to trading results for six months. Hence, the Company does not plan to establish the obligation to involve an appraiser in purchasing its shares in the near future.

However, the Company may engage an appraiser in any other cases not expressly provided for by law, in particular, to determine the share acquisition price. Thus, in accordance with the Company’s Corporate Governance Code, the decision to engage an independent appraiser may be made by the executive management bodies or may be recommended by the Supervisory Board depending on the nature of the transaction and the assets to be disposed of or acquired.

Regardless of the purpose of the engagement, the appraiser shall be chosen in accordance with the internal procedures of Moscow Exchange which ensure that the choice is efficient and transparent.

3. Complied with.