APPROVED:
by resolution of the Board of Directors of
Novorossiysk Commercial Sea Port
public Joint-Stock Company
dtd. 11 September 2007
Minutes No. 05 СД-НМТП dtd. 11 September 2007
Chairman of the Board of Directors
(Ponomarenko А.А) signature
Secretary of the Board of Directors
(Маtveyev V.N.) signature
NOVOROSSIYSK COMMERCIAL SEA PORT
PUBLIC JOINT-STOCK COMPANY
(NCSP PJSC)
CODE OF CORPORATE MANAGEMENT
City Novorossisk
2007
1. INTRODUCTION
1.1. The Company considers of corporate management to be important for successful running
business of the Company and for better understanding of all persons interested in activities of the
Company. The Company assumes obligation to conform to the principles set forth in the present Code
and to make all reasonable efforts to follow them in day-to-day activities of the Company.
1.2. Provisions of the present Code were developed on the basis of the Federal law «On jointstock companies», the Articles of Association of the Company with due regard to recommendations of
the Principles of Corporate Governance of the Organization for Economic Cooperation (ОEC) and of
the federal executive authority for securities market of the Russian Federation.
2. GENERAL PRINCIPLES OF CORPORATE MANAGEMENT
2.1. The purpose of the present Code is to introduce and to use appropriate practice of corporate
management conforming to Russian and International standards on the basis of observance of
requirements of legislation in force, standards of business (behavior) ethic and the respect to the interests
of interested parties - participants of corporate relations.
2.2. The system of corporate management of the Company shall be based on the following
principles:
• observance of rights and interests of all shareholders granted to them by legislation in
force, the Articles of Association and by other regulatory documents of the Company;
• accountability of the Board of Directors, the Board and the Director General of the
Company to the General Meeting of Shareholders;
• provision of transparency and openness of administrative and financial information of
the Company;
• provision of efficient system of internal control and audit of the Company;
• provision of observance of provisions and requirements of legislation in force,
• following Russian and International standards of corporate management in activities of
the Company;
• building up and development of confidence between participants of corporate
management.
• observance of corporate ethic in the course of business.
2.3. Following the standards and principles of the of the present Code shall allow to exercise
efficient and opportune control over activities of the Company, to reduce the risks,
to support and to improve financial conditions and to strengthen the goodwill of the Company.
3. STRUCTURE OF CORPORATE MANAGEMENT OF THE COMPANY
3.1. The Company has formed the following administrative bodies for the purpose of efficient
management:
• The General Meeting of Shareholders, the highest administrative body;
• The Board of Directors exercising general operating control over activities of the
Company;
• The Council exercising operating management of current activity of the Company;
• The Director General operating control over day-to-day activities of the Company.
3.2. The Company shall form the Audit Committee and the Personnel and Remuneration
Committee and shall have the right to form other committees to provide the efficient system of control
and audit of financial and economic activities and for the purpose of observance of rights and interests of
the shareholders, as well as for efficient and deep study of issues by the Board of Directors.
3.3. To provide the efficient system of control and audit of financial and economic activities the
Company shall form the Internal Audit Service, to outsource an Independent Auditor and to elect
members of the Audit Commission,
3.4. Management of the subsidiaries and affiliated companies shall be effected through their
administrative bodies.
3.5. In management by the subsidiaries and affiliated companies the Company shall be guided
by the following objectives:
• development of business;
• rise in profitability;
• market-share gain;
• leadership in the industry;
• rendering of high-quality services, regardful, honest and open work with clients.
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3.6. To achieve the specified objectives the Company shall solve the following problems:
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approving of main areas of activities including corporate strategy of the Company, its
subsidiaries and affiliated companies and maintaining control over their execution;
coordination of activities and interaction of the subsidiaries and affiliated companies of
the Company;
ensuring of operation of the subsidiaries and affiliated companies of the Company in
the integral legal and information space;
rendering assistance in search and recruitment of competent administrative personnel,
formation of personnel reserve.
3.7. The Company shall develop decisions on key activities and development of the
subsidiaries and affiliated companies and shall ensure adoption of administrative resolutions through its
representatives in administrative bodies of the said subsidiaries and affiliated companies.
3.8. The Company shall provide functioning of administrative bodies of the subsidiaries and
affiliated companies in the integral legal and information space by means of development of standard
internal documents and through subsequent approval of these documents by administrative bodies of the
subsidiaries and affiliated companies.
4. PERSONNEL POLICY
4.1. The Company considers improvement of the potential of personnel as one of the basic
elements for successful and long-term development of the Company.
4.2. The purpose of the Personnel Policy of the Company is to outsource highly professional
specialists, to improve the level of professional qualifications of the employees, to provide understanding
of their implication to performance of the Company by all employees of the Company.
4.3. Motivation of the employees to high results in labor, self-perfection and generation of
ideas shall be achieved through competitive labor payment, introduction and perfection of the system of
remuneration oriented to final results, rotation of personnel within the Company, formation of corporate
culture that provides easy communication of the employees of all levels of the Company.
4.4. The Company shall exclude possibility of discrimination of the candidates and employees
of the Company based on political, religious, national and other motives not related to professional
qualities.
5. INTERRELATIONS WITH SHAREHOLDERS, INVESTORS AND OTHER INTERESTED
PERSONS
5.1. The Company shall provide equal attitude towards all shareholders and shall guarantee
possibility of exercising their rights, including the right of participation in work of its administrative
bodies to all shareholders.
5.2. When holding the General Meeting of Shareholders the Company shall be bound to
observe the following principles:
• Furnishing of information to shareholders on issues of agenda of the General Meetings of
Shareholders within the scope and the time-limit allowing to shareholders to take justified
decisions;
• To provide formulation of the items of agenda of the General Meeting of Shareholders and
adopted resolution without variations in their interpretation;
• The Board of Directors of the Company shall prepare objective and well-grounded
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recommendations for each issue of the General Meeting of Shareholders to be presented to
the shareholders;
Selection of place and time of holding of the General Meeting of Shareholders in such a
way that participation of the shareholders in the General Meeting of Shareholders will not
be connected with large expenses and loss of time, providing at the same time equal
attitude to all shareholders;
Printing of information for contacts in the distributed documents;
observance of the principle «one share - one vote» by holders of voting shares;
The Company may invite to the General Meeting of Shareholders the Director General, the
members of the Board of Directors, the members of the Council, the members of the Audit
Commission and the Auditor of the Company.
5.3. All shareholders shall have the right to receive a part of net profit of the Company in the
form of dividends at the rate approved by the General Meeting of Shareholders upon the recommendation
of the Board of Directors. The Company shall be obliged to pay the dividends declared by the General
Meeting of Shareholders at the stated time.
5.4. The key factor of interaction with the investment community shall be well-timed
disclosure of objective, credible and consistent information in compliance with legislation in force,
regulations and requirements and provision of active dialogue with investors and analysts.
5.5. The Company shall perform its activities in compliance with legislation, regulations and
standards in force with respect to confidential information. For this purpose the Company shall use the
balanced approach in presentation of the required information directed towards better understanding of
business of the Company, its opportunities and prospects of development to investors and analysts, which
at the same time not decreasing competitive ability of the Company.
5.6. The Company shall execute work on maintenance and development of efficient dialogue
with representatives of mass media, state authorities and representatives of public displaying interest in
activities of the Company, as well as on rising of the level of transparency and openness of information.
5.7. For the purpose of provision of the maximal level of transparency and openness of
information, the Company may participate in international and national industrial exhibitions and forums,
organize meetings of representatives of mass media and public with officers of the Company.
5.8. Main principles of public relations of the Company shall be the following:
• uniform Information Policy;
• continuous and actual information flow illustrating in full degree and objectively all
aspects of activities of the Company;
• giving opportune replies to all requests for information incoming to the Company;
• meetings of the representatives of mass media and public with designated
representatives of the Company.
5.9. With respect to activities of the Company great attention shall be paid not only to
deepening of confidence of the shareholders and investors, but also of clients, creditors, partners and
other parties interested in activities of the Company to the management of the Company. In connection
with this maintenance and development of stable and continuous interrelations of the Company with the
interested parties in short-term and long-term periods shall be the major task during formation of
corporate management of the Company.
5.10. In the course of formation of interrelations with the clients the Company shall be
oriented towards maximal consumer satisfaction.
6. THE BOARD OF DIRECTORS
6.1. The members of the Board of Directors of the Company shall be accountable to the
General Meeting of Shareholders and shall be liable for successful development of the Company.
6.2. The Company shall aspire to form the Board of Directors from among the most qualified
specialists having necessary knowledge, skills and experience. For the purpose of enhancing of
objectivity and soundness of the adopted resolutions and keeping of balance between the different
interests the Company shall provide nomination and election of the Independent Director (Directors) to
the members of the Board of Directors.
6.3. A member of the Board of Directors cannot be recognized as independent one until the
Board of Directors upon the recommendation of the Personnel and Remuneration Committee adopts a
positive resolution confirming that such member of the Board of Directors meets the following
requirements:
• is not an official or employee of the Company at the date of election and within a period of one
year preceding his election,
• is not an official of other business entity in which any official of the Company is a member of
the Board of Directors on the Personnel and Remuneration;
• is not a husband (wife), parent, child, brother or sister of any official of the Company or a
managing company of the Company;
• is not an affiliated person of the Company except for a member of the Board of Directors of the
Company;
• is not a party being under obligation to the Company in compliance with conditions of which
such party may purchase property (receive funds) at the value of 10 and more percent of the
aggregate annual income of such member of the Board of Directors except for remuneration
received for participation in activities of the Board of Directors of the Company;
• is not a representative of the state, i.e., is not a representative of the Russian Federation or
constituent entities of the Russian Federation in boards of directors of join-stock companies with
respect to whom a resolution on exercising of the special right («the golden share right») was
adopted, and is not a person elected by the Board of Directors among candidates nominated by
the Russian Federation, a constituent entity of the Russian Federation or a municipal entity if
such member of the Board of Directors must vote on the ground of written documents
(instructions etc.) of such constituent entity of the Russian Federation or such municipal entity.
6.4. In accordance with the best principles of corporate management and for the purpose of
securing of the objectiveness of the adopted resolutions as well as for balancing of interests of different
groups the Board of Directors of the Company shall include not less than one independent director
complying with requirements specified in p. 6.3. of the present Regulations.
6.5. The members of the Board of Directors shall be elected annually by the General Meeting
of Shareholders of the Company. Term of office of the members of the Board of Directors shall begin
from the date of their election and shall expire at the date of election of new members of the Board of
Directors by a next General Meeting of Shareholders. Persons elected as the members of the Board of
Directors can be reelected unlimited number of times.
6.6. Competence of the Board of Directors, including the list of issues related to its exclusive
competence shall be stipulated by the Articles of Association of the Company.
6.7. The Board of Directors shall form the Audit Committee, the Personnel and Remuneration
Committee and shall have the right to form other Committees.
The committees of the Board of Directors shall regularly inform the Board of Directors on their
activities. Activities of the Committees of the Board of Directors shall be regulated by corresponding
provisions to be approved by the Board of Directors pursuant to legislation, legal norms and standards in
force.
In case of necessity the Committees may enlist the services of experts having required
professional knowledge for work with a concrete committee. Data of the reports on activities of the
committees shall be reflected in the Annual Report of the Company approved by the General Meeting of
Shareholders.
6.8. When assuming his/her office a member of the Board of Directors shall undertake
obligations fixed in the Articles of Association and in other internal documents of the Company with
respect to his/her activities to all shareholders and the Company in whole.
When exercising their rights and discharging duties the members of the Board of Directors
shall act in the interests of the Company and shall exercise their rights and discharge their duties
conscientiously and reasonably.
6.9. The members of the Board of Directors shall participate in the meetings of the Board of
Directors and its Committees in which they are the members and at the same time shall contribute
sufficient time for proper discharge of their duties.
6.10. For the purpose of protection of interests of the Company and its shareholders the Board
of Directors may adopt a resolution on conclusion of contracts for insurance of liability of the officials
and the members of the Board of Directors of the Company in connection with losses which may be
inflicted by such officials and the members of the Board of Directors of the Company to third persons in
the course of execution of their job duties and/or exercising powers as representatives of the Company.
6.11. Each member of the Board of Directors shall be obliged to abstain from actions that
results or may result in conflict of their interests and interests of the Company, and in case of origination
of such conflict the given member of the Board of Directors shall be obliged to disclose information
about such conflict to the Personnel and Remuneration Committee and/or to the Board of Directors of the
Company.
6.12. Each member of the Board of Directors shall be obliged to notify the Board of
Directors in writing on his/her intention to make a transaction with securities of the Company or with
securities of the affiliated companies of the Company in which the Board of Directors he/she is the
member, as well as to disclose information about transactions concluded by them with such securities to
the Board of Directors.
6.13. Procedure of convocation, holding and adoption of resolutions shall be fixed in
accordance with legislation in force, the Articles of Association of the Company and the Regulations on
the Board of Directors to be approved by the General Meeting of Shareholders.
Meetings of the Board of Directors of the Company shall be convoked by the Chairman of the
Board of Directors on his/her own initiative, on request of any member of the Board of Directors, the
Audit Commission or the Auditor of the Company, as well as on initiative of the Director General of the
Company.
The General Meetings of the Board of Directors of the Company shall be held not less
frequently than once per six weeks in the form of joint presence of the members of the Board of
Directors. In accordance with a resolution adopted by of the Chairman of the Committee of the Board of
Directors adoption of resolutions by the Board of Directors by absentee voting shall be permitted. A
resolution on the date and the form of holding of the meeting shall be adopted by the Chairman of the
Board of Directors.
The meeting of the Board of Directors shall be considered as duly constituted if more than a
half of the members of the Board of Directors determined by the Articles of Association participates in
the meeting and/or opinions in writing of more than a half of the members of the Board of Directors fixed
in the Articles of Association were submitted except for issues of adoption of resolutions for which
unanimous opinion or a majority of three-fourth of votes of all the members of the Board of Directors
without regard to votes of withdrawn members of the Board of Directors in compliance with Federal law
«On joint-stock companies» and the Articles of Association of the Company is required.
6.14. To provide efficient work, the members of the Board of Directors shall have access to all
information required. The members of the Board of Directors shall not disclose or use confidential or
insider information of the Company in private interests or in interest of third persons.
6.15. The Board of Directors of the Company is of opinion that it is not to be prohibited to its
members to participate in boards of directors and/or committees of other organizations. In connection
with this the Board of Directors of the Company shall not approve any special internal documents that
limit such participation.
6.16. Remuneration of the members of the Board of Directors shall be fixed in compliance
with the Articles of Association and the Regulations for the Board of Directors of the Company to be
approved by the General Meeting of Shareholders.
While paying out just and adequate compensation to the members of the Board of Directors of
the Company for their time, efforts and performance the amount, structure, conditions and other criteria
of remuneration can be specified in the Articles of Association and/or in the Regulations for the Board of
Directors of the Company in compliance with recommendations of the Personnel and Remuneration
Committee for the purpose of proper motivation of the members of the Board of Directors and for
provision of long-term and stable growth of the value of the Company and incomes of its shareholders in
the form of dividends as well as for the purpose of outsourcing of candidates having proper qualification.
7. EXECUTIVE BODIES
7.1. Governance of day-to-day activities of the Company shall be performed by the Director
General who shall be also the Sole Executive Body of the Company.
7.2. The Director General shall organize performing of resolutions adopted by the General
Meeting of Shareholders and the Board of Directors and shall be liable for implementation of corporate
strategy of the Company and financial performance of the Company.
7.3. The Director General of the Company shall exercise functions of the Chairman of the
Council of the Company.
7.4. For the purpose of ensuring of operating management of the Company, the Board of
Directors of the Company shall form the Council.
7.5. Main regulations governing activities of the Council shall be specified in the Articles of
Association, the Regulations for the Council and other internal documents of the Company.
7.6. The Board of Directors of the Company shall bear responsibility before the shareholders
of the Company and shall be liable for reasonable choosing of the members of the Council.
7.7. Persons who are participants/shareholders, the Director General (manager), members of
administrative body or employees of a legal entity competing with the Company, in judgement of
administrative bodies of the Company, cannot be the members of the Council of the Company.
7.8. Each member of the Council shall be obliged to abstain from actions that result or may
result in conflict between interests of such member and interests of the Company and in case of
origination of conflict such member of the Council shall be obliged to inform the Board of Directors of
the Company on origination.
7.9. The members of the Council shall be obliged to notify the Board of Directors in writing
on the fact of possession of securities of the Company, on intention to conclude contracts with securities
of the Company, its subsidiaries and affiliated companies as well as on deals maid with such securities.
7.10. The Council of the Company is maid aware of its responsibility before the shareholders
and the Board of Directors of the Company and makes it its main purpose to provide conscientious and
competent execution of its duties in operating management of the Company providing successful
development of the Company.
7.11. Remuneration of the members of the Council shall be fixed in compliance with the
Articles of Association and the Regulations for the Council of the Company to be approved by the
General Meeting of Shareholders. Resolution on rates of remuneration for each member of the Council
shall be adopted by the Board of Directors.
8. INTERNAL CONTROL AND AUDIT
8.1. For the purpose of securing stability in development of the Company, protection of
interests of its shareholders and investors the Company shall form a system of internal control and audit
of financial and economic activities of the Company.
8.2. The Audit Commission candidatures of members of which have to be approved by the
General Meeting of Shareholders shall exercise control over financial and economic activities of the
Company in compliance with the Regulations for the Audit Commission approved by the General
Meeting of Shareholders of the Company.
8.3. For the purpose of securing of the maximal objectiveness and credibility of financial and
accounting statements the Company shall outsource an independent qualified auditor for annual audit of
financial and accounting reporting.
8.4. Procedure of selection and appointment of the Independent Auditor shall be determined
and coordinated by the Audit Committee of the Board of Directors of the Company. The Audit
Committee shall preliminary adopt conditions of work of the Auditor and a list of auditing and other
services to be rendered to the Company. The Board of Directors of the Company upon recommendation
of the Audit Committee shall bring up a candidature of the Independent Auditor for approval by the
General Meeting of Shareholders.
Conditions of the contract concluded with the Auditor including services payment rate shall be
approved by the Board of Directors of the Company.
8.5. The Audit Committee shall exercise control over activity of the Independent Auditor and
shall examine financial statements, giving corresponding recommendations to the Board of Directors of
the Company in accordance with results of activity of the Auditor.
8.6. The Company shall make all efforts to provide presence of representatives of the
Independent Auditor of the Company at the General Meetings of Shareholders for giving explanations on
questing arising in connection with audit reports presented to the General Meeting of Shareholders.
8.7. The Audit Committee shall carry out its activities in compliance with
requirements of the Regulations on the Audit Committee of the Company approved by the Board of
Directors and legislation in force, as well as norms and standards of appropriate practice of corporate
management.
8.8. The Audit Committee of the Board of Directors shall be formed for the purpose of
rendering assistance to the Board of Directors of the Company in control over accuracy of procedures of
drawing up of accounting and financial statements of the Company, their credibility, completeness of
disclosed information, as well as for ensuring of conformity to requirements of applicable standards of
financial and accounting reporting and legislation in force.
8.9. Main tasks of the Audit Committee of the Board of Directors of the Company shall be the
following:
• Drawing up of recommendations to the Board of Directors of the Company on a
candidature of the Independent Auditor and cost of services of the Independent Auditor;
• Annual examination of activities by the Independent Auditor pursuant to examination of
the Independent Auditor’ report in accordance with any findings in auditing of financial
and economic activities of the Company before presentation of the report to the General
Meeting of Shareholders;
• Estimation of efficiency of current procedures of internal control of the Company and
preparation of proposals for their perfection.
8.10. The members of the Audit Committee shall be elected by the Board of Directors of the
Company among the members of the Board of Directors. When assuming new duties, liability and
necessity to contribute a great deal of time to obligations accompanying the work of the Audit Committee
and the work of the members of the Board of Directors, the members of the Audit Committee shall
participate in a limited number of the committees specified in the resolution of the Board of Directors.
8.11. The Board of Directors shall determine a level of possible negative impact of combining
of work in different Committees upon ability of directors being the members of the Audit Committee of
the Company to work efficiently in the given Committee.
8.12. At least one member of the Audit Committee of the Board of Directors of the Company
shall possess recent and proper work experience.
8.13. Basic requirements to activity of the Internal Audit Service shall be
set forth in the Regulations for financial and economic activities internal audit to be approved by the
Board of Directors of the Company.
8.14. The Board of Directors of the Company shall approve appointment and dismissal of the
Head of the Internal Audit Service, structure of the Internal Audit Service, staffing level, staff schedule
and a work schedule of the Internal Audit Service and shall examine business reports of the said service
each year.
8.15. Activities of the Internal Audit Service shall provide reasonable assurance in
credibility of financial statements and observance of procedures in the course of their generation in
compliance with Russian Accounting Standards (RAS), International Accounting Standards (IAS),
Generally Accepted Accounting Principles of the USA (US GAAP).
8.16. In addition, the procedures specified in p. 8.15 of the present of the Code shall include
the following:
• attestation of the fact that accounting records describe activities of the Company and its
assets in details;
• provision of reasonable assurance that all accounting transaction are entered in strict
compliance with requirements of RAS, IAS, US GAAP and can be used for formation of
credible financial reports;
• provision of reasonable assurance that all transaction were permitted by senior
management and the members of the Board of Directors of the Company, if required;
• provision of reasonable assurance that any unauthorized use of property of the Company,
which may have considerable negative impact on its financial statements would be
revealed or admonished in due time.
8.17. An organization department performing functions of the internal audit of financial and
economic activities of the Company shall have the right to cooperate with the Audit Committee of the
Board of Directors, the Independent Auditor and the Audit Commission as well as with executive bodies
and subdivisions of the Company in all above stated matters in compliance with requirements of the
Regulations for Internal Audit of Financial and Economic Activities,.
9. INFORMATION POLICY AND DISCLOSURE OF INFORMATION
9.1. Disclosure of information shall be the important element of corporate management of
the Company that provides possibility to obtain objective ideas about performance of the Company, its
plans and lines of economic development to its shareholders, investors and other interested parties.
9.2. The Company shall provide completeness and credibility of the disclosed information, its
efficient response and availability of such information to all shareholders and other interested parties.
9.3. The Company shall assume obligation to fulfill conditions provided for disclosure of
information by legislation in force and shall assume a number of additional obligations of information
disclosure.
9.4. Rules and principles of information disclosure, list of information to be disclosed by the
Company in accordance with legislation in force, norms and regulations, list of information considered by
the Company as to be disclosed supplementary and methods of information disclosure shall be set forth in
the Regulations for Information Policy of the Company to be approved by the Board of Directors of the
Company.
9.5. Disclosure of information of the Company shall be defined as a reasonable balancing of
information transparency of the Company and maintenance of security of commercial interests of the
Company.
9.6. The Board of Directors of the Company shall determine structure, scope and procedure of
protection of Information representing commercial secrets.
9.7. Liability to provide confidentiality of information shall be incurred by all employees of
the Company and members of the Board of Directors.
9.8. The Company shall be aimed to limitation of possibility of origination of conflicts of
interest and non-admission or misuse of the insider information. Requirements concerning the insider
information shall be specified in Regulations for the Insider Information to be approved by the Board of
Directors of the Company.
10. FINAL PROVISIONS
10.1. The Code of Corporate Management of the Company shall be approved by the Board
of Directors of the Company.
10.2. The present Code shall be revised and improved in proportion to accumulation of
positive experience of corporate management, amendments in Russian and International standards and
regulations with respect to corporate management.
10.3Text of the Code is published on the site of the Company in the Internet and can be
published as a separate booklet and is available for all interested parties.
In this document 11 (eleven) sheets have been numbered, bound and sealed.
Director General of Novorossiysk
Commercial Seaport PJSC
signature
I.E. Vilinov
Seal: Russian Federation, Krasnodar Region, city Novorossiysk.
Novorossiysk Commercial Sea Port Public Joint-Stock Company
Taxpayer identification number 2315004404