Description of corporate governance practice
In 2015, an extraordinary General Meeting of Shareholders approved the Code of Corporate Governance (the Code), which was drafted in accordance with the Code of Corporate Governance of the Central Bank of the Russian Federation, the generally accepted standards and principles of corporate governance and the primary objectives in the Company’s activities.
Corporate governance at the Company is based on the principle of sustainable development and increasing the shareholder value of Gazprom Neft in the long term. The Company implements this principle through a system of responsible interaction that involves building trust with employees, suppliers, customers as well as residents in the regions where it operates.
The Code aims to ensure the effective protection by the Company of the rights and interests of its shareholders and their fair treatment, the transparency of decision-making by its governance bodies, the professional and ethical responsibility of members of internal governance and control bodies to the Company, its employees and counterparties, greater information transparency and the development of a system of business ethics standards.
Recognising the importance of a high level of corporate governance for successful business, the Company has voluntarily committed to adhere to the principles and standards set forth in this Code in its activities.
The Board of Directors reviews information on improvements to the corporate governance practice of PJSC Gazprom Neft on an annual basis.
The corporate governance of PJSC Gazprom Neft features a single main shareholder — PJSC Gazprom with a stake of 95.68%. The remaining common shares are distributed among minority shareholders, including individuals and legal entities, which generally dictates the distribution of the balance of power among those involved in corporate relations.
The corporate governance practice of PJSC Gazprom Neft features the following positive aspects in terms of the protection of shareholder rights:
- Expanded powers of the Company’s Board of Directors as regards decision-making on significant transactions.
- JSC PwC Audit, a universally recognised auditor selected on a competitive basis, was hired to audit the Company’s IFRS and RAS financial statements.CJSC PricewaterhouseCoopers Audit until 23 July 2015.
- The Company successfully paid dividends for
- When determining dividend payments, PJSC Gazprom Neft focuses on IFRS net profit indicators.
- Information for the annual General Meeting of Shareholders is posted on the Company’s website.
The corporate governance practice of PJSC Gazprom Neft features the following positive aspects in terms of the activities of governance and control bodies:
- Independent directors are elected to the Board of Directors.
- Meetings of the Board of Directors are held regularly, with a sufficient number of members and in accordance with a previously approved plan.
- The preparation procedure for meetings of the Board of Directors provides Board members with the opportunity to properly prepare for the meeting.
- An Audit Committee and Human Resources and Remuneration Committee have been set up under the Board of Directors. The activities of the Committees are governed by the relevant Regulations.
- The PJSC Gazprom Neft Board of Directors evaluates its own work and the individual work of its members.
- PJSC Gazprom Neft provides liability insurance for members of the Board of Directors.
- The Company has established an Internal Audit Department, a structural unit that performs internal audit functions and is subordinate to the Audit Committee of the Board of Directors.
- The Company has drafted a regulatory and methodological risk management framework.
- PJSC Gazprom Neft has established an internal unit that is responsible for performing key risk management functions.
The financial and non-financial information disclosure practice features the following positive aspects:
- The Company discloses information about its majority shareholder, which owns 95.68% of its shares.
- The Company discloses detailed information about members of the Board of Directors and the Management Board.
- The Company discloses information about the structure of compensation for members of the Gazprom Neft Board of Directors and Management Board.
- The Company discloses all the main forms of financial statements prepared in accordance with IFRS and RAS. The disclosed statements are accompanied by the relevant auditor reports.
- PJSC Gazprom Neft discloses detailed information about related party transactions.
- The PJSC Gazprom Neft website is regularly maintained and updated with a large amount of current information about the Company and its operating results.
Corporate social responsibility and sustainable development activities performed by PJSC Gazprom Neft feature the following positive aspects:
- The Company has approved internal documents governing corporate social responsibility matters.
- PJSC Gazprom Neft has adopted a Corporate Conduct Code that states its mission, values, core ethical principles and business ethics standards.
- The Company implements corporate social projects for PJSC Gazprom Neft employees, clients, counterparties and people living where the Company operates in addition to charitable and sponsorship projects.
- The Company prepares a social report that meets GRI standards.
- The Company’s activities are certified for compliance with the ISO 14001 standard as regards environmental protection.