Corporate
Governance
»

According to KEGOC’s Corporate Governance Code,
the corporate governance principles include:

• effective corporate governance system based on a clear division of responsibilities between the bodies;
• protection and enforcement of shareholder rights;
• equal conditions for shareholders;
• sustainable development and role of stakeholders in corporate governance;
• disclosure of information and transparency;
• efficient performance of the Board of Directors and Management Board of KEGOC.

Organizational
Structure
of the Company

Equity

As of 31 December 2022, the number of authorised and placed ordinary shares of the Company is 260,000,000, of which 234,000,001 shares (90% plus one share) belong to Samruk-Kazyna, the major shareholder, and 25,998,609 shares (9.9995%) belong to minority shareholders, the remaining 1,390 shares (0.0006%) are repurchased by KEGOC.

In 2022 there were no material transactions or changes to shares and shareholders that own five or more per cent of the number of the placed shares of the Company.

Data source: Kazakhstan Stock Exchange (https://kase.kz)

General Meeting of Shareholders

The General Meeting of Shareholders is the superior body of KEGOC.

The General Meeting of Shareholders runs its activities and exercises its rights in accordance with the Law of the Republic of Kazakhstan on Joint-Stock Companies, the Charter and the Regulations on the General Meeting of KEGOC Shareholders.

Dividend Policy

The dividend policy of KEGOC is designed to observe the interests of shareholders in respect to the amount of dividend payments, enhance the Company’s investment appeal and capitalization, respect and strictly observe the rights of shareholders stipulated by the laws of the Republic of Kazakhstan. The dividends payment conditions are: the availability of net profit of the Company for a reporting period, or retained profit; the absence of restrictions on payment of dividends envisaged by the laws of the Republic of Kazakhstan; and the decision of the General Meeting of Shareholders.

Dividend history

Report on the
Activities of the
Board of Directors

Members of the Board of Directors as of 1 January 2022

• Suinshlik Tiyessov, Chairman of the Board of Directors, representative of Samruk-Kazyna JSC;
• Zhanna Yegimbayeva, epresentative of Samruk-Kazyna JSC;
• Yernat Berdigulov, representative of Samruk-Kazyna JSC;
• Nurlan Akhanzaripov, independent director;
• Zhanbota Bekenov, independent director;
• Ulf Wokurka, independent director;
• Kanysh Moldabayev, Chairman of KEGOC’s Management Board.

On 10 March 2022 (Minutes No. 26) the extraordinary General Meeting of Shareholders of KEGOC:

• early terminated the powers of representatives of Samruk-Kazyna JSC: Suinshlik Tiyessov, Chairman of the Board of Directors and Zhanna Yegimbayeva, member of the Board of Directors;
• elected representatives of Samruk-Kazyna JSC: Yernat Berdigulov, Chairman of the Board of Directors, and Alexey Repin and Almat Zhamiyev, members of the Board of Directors.

On 18 July 2022 (Minutes No. 28) the extraordinary General Meeting of Shareholders of KEGOC:

• early terminated the powers of Zhanbota Bekenov, independent director, on the basis of his application dated 25 June 2022.
• elected Damir Suyentayev as a member of the Board of Directors, independent director.

Composition of the Board of Directors

as of 31 December 2022

Committees of
the Board of Directors

Audit Committee

The Audit Committee consists of three independent directors and a (non-voting) expert.

In 2022 the Committee held 11 meetings in praesentia and reviewed 64 issues.

Nomination and Remuneration Committee

The Committee consists of four (4) members including two (2) independent directors, one (1) representative of Samruk Kazyna, and a (non-voting) expert.

In 2022 the Committee held 12 meetings in praesentia and reviewed 52 issues.

Strategic Planning and
Corporate Governance Committee

The Committee consists of four (4) members including two (2) independent directors, one (1) representative of Samruk Kazyna, and a non-voting expert.

During the reporting period, the Committee held eleven (11) meetings in praesentia and considered twenty-six (26) agenda items.

Occupational Health, Safety and Environmental Protection Committee

The Committee consists of four (4) members including one (1) independent director, two (2) representatives of Samruk Kazyna, and a non-voting expert.

During the reporting period, the Committee held three (3) meetings in praesentia and considered four (4) agenda items.

Executive Body

Management Board Performance Report

Management Board Committees

In order to preliminarily review, take collegial decisions, and prepare recommendations on the supervised agenda items for KEGOC’s Management Board, the company operates the following advisory bodies:

• Investment Committee
• Risk Committee
• Budget Committee
• Human Resources Development Committee
• Debtors and Creditors Committee
• Inventory committee.

In addition, to organize and perform works on sustainable development management, develop, implement and function KEGOC’s integrated management system and constantly improve the management system performance, the Company established the advisory body, the Coordinating Council for Sustainable Development and IMS headed by KEGOC’s Chairman of Management Board.

Management
Assessment and
Remuneration

The Board of Directors (Minutes No. 11 dated 18 November 2022) approved self-assessment as a method for assessing the performance of the Board of Directors and its committees, the Chairman and members of the Board of Directors, the Corporate Secretary of KEGOC for 2022.

The self-assessment of the activities of the Board of Directors and its committees, the Chairman and members of the Board of Directors, the Corporate Secretary for 2022, was carried out in accordance with the Methodological recommendations for assessing the activities of the Board of Directors and its committees, the Chairman, members of the Board of Directors and the Corporate Secretary in Samruk-Kazyna’s organisations. The final rating is 95% at ‘AA’ level, this indicator confirms that the Board of Directors, its committees and the Corporate Secretary of KEGOC meet, in all material respects, most of the established criteria, and there is sufficient evidence that they work effectively. Members of the Board of Directors gave corresponding recommendations on aspects requiring further improvement.

In accordance with the Rules for assessing the performance of the Board of Directors and its committees, the Chairman, members of the Board of Directors and the Corporate Secretary of KEGOC, none of the directors was involved in the process of his/her assessment, except for participation in the survey.

In accordance with the Rules for establishment of the composition of the Board of Directors of KEGOC, determination of remuneration and reimbursement of expenses for members of the Board of Directors of KEGOC, approved by the General Meeting of Shareholders, the remuneration of directors consists of two parts: the annual fixed remuneration and additional remuneration for chairmanship or for participation in the meetings in praesentia of the committees of the Board of Directors, however, payments of additional remuneration to directors for participation in meetings in praesentia of the committees of the Board of Directors were excluded.

The Director is compensated for the expenses associated with his/her travel to meetings of the Board of Directors, committees of the Board of Directors and the meetings held beyond the place of permanent residence: transport including transfer, accommodation, daily allowance, telephone services (except mobile) in the Republic of Kazakhstan, documents scan, copy, fax, print, type services, access to the internet in Kazakhstan, courier and mail services. None of the members of the Board of Directors in 2022 took part in making decisions related to his/her own remuneration.

The remuneration system for the Chairman and members of the Management Board includes a salary and a year-end bonus. A year-end bonus in KEGOC is paid within the limits of cash assets provided in the budget of KEGOC upon approval of the results of the financial and economic performance based on the audited financial statements. The payment of remuneration is mainly conditioned by the consolidated total income available for the reporting period.

The performance of the Chairman and members of the Management Board is assessed using the motivational KPIs for the reporting (short-term) period, which are developed through KEGOC strategic goals cascading by specific indicators on business processes/areas of KEGOC operations in the form of KPI maps for each member of KEGOC Management Board. The motivational KPIs for the short-term period are divided into corporate and functional KPIs.

Corporate KPIs and functional KPIs of executive employees are approved by the Company’s Board of Directors. Thus, KEGOC’s Board of Directors approved motivational KPIs of the Management Board members and their target values for 2022.

Main motivational KPIs

At the end of 2022, the target values of the corporate KPIs were achieved.

Conflict of Interest

The officials and employees of the Company had no conflict of interest in 2022: there were no situations in which the personal interest could affect the proper performance of their duties; there were no situations with conflict of interest that affected or could potentially affect impartial decision-making; the officials who have an interest, did not participate in the discussion or adoption of such decisions. As a preventive measure (warning), KEGOC’s Officials and Employees Conflict of Interest Settlement Policy was amended in 2022 with a declaration form approved on disclosure of potential conflict of interest. Only independent directors took part in the discussion and voting on non-arm’s length transactions of the Board of Directors competence in 2022, no material transactions were made.

Corporate Ethics

The corporate ethics is a key element in uniting our employees.

The purpose of the corporate ethics is to regulate the relations of employees within a common team and is formed on the basis of generally accepted human values:

• competence and professionalism (the Company’s employees having quality education, work experience, decision-making skills, striving to improve their professional level);
• honesty and integrity (an important aspect in the organization’s activities, in preserving its business reputation and eliminating conflicts between personal interests and professional activities);
• responsibility as a guarantee of the quality of the Company’s activities;
• respect for the individual (every employee of the Company has the right to fair and just treatment regardless of race, language, political and religious beliefs, gender, ethnic and cultural background);
• safety, which is characterized by the desire to maintain commercial secret and ensure non-harmful and non-hazardous working conditions.

The Code of Conduct (Business Ethics Code) is mandatory for fulfilment by all employees of the Company, including senior executives.

The Ombudsman of the Company continues to work, which is accountable to the Board of Directors, one of the tasks of the Ombudsman is to ensure compliance with the Code of Conduct by officials and employees and explain the Code provisions. The basic principles of the Ombudsman work are independence, neutrality and impartiality, confidentiality and informality.

Anti-Corruption

KEGOC adheres to the policy of zero tolerance for corruption in all its manifestations in relations with all stakeholders as well as for concealment of corruption offences. The Company excludes any forms of bribery, including offering or receiving material remuneration, benefits or services of property, physical or moral nature for performance of works or rendering services for actions (inactions) in favour of persons who provided them, if such actions (inactions) are within the authority of the Company employees. The Company’s employees do not offer or accept hospitality or gifts that may further entail any obligation of the parties. Officials and employees involved in corruption shall be dismissed and held accountable in accordance with the procedure stipulated by the Republic of Kazakhstan laws.

KEGOC, in its daily operations, complies with the anti-corruption laws and takes maximum organizational and practical efforts to uncompromising anti-corruption efforts in all its forms and manifestations, and corruption risk management. Contracts with the Company’s counterparties contain anti-corruption commitments of the parties and their employees: the parties shall ensure the implementation of compliance verification procedures to prevent the risks of involving in corrupt activities.

All employees of the Company (100%) are familiar with the above anti-corruption standards. The Company’s officials accept anti-corruption restrictions by signing commitments to comply with anti-corruption legislation. Work is being done to comply with the Algorithm of actions to implement the institute of dismissal and bringing managers to responsibility for corruption-related offences committed by their subordinates.

Risk Management
and Internal
Control Systems

Risk
management
process

Internal Audit Service

The Internal Audit Service is established by the decision of KEGOC’s Board of Directors in 2006. As of 31 December 2022 the approved staff in the IAS consists of eight (8) people.

The mission of the Service is to provide necessary support to the Board of Directors and executive body in performance of their duties to achieve the strategic objectives of the Company. The main objective of the Service is to provide the Board of Directors with independent and objective information needed to secure efficient management of the Company by introducing the system approach to improvement of the risk management, internal control and corporate governance systems.

Following the results of audit engagements performed in 2022, the Service provided the relevant recommendations for the Company to eliminate the found inconsistencies. The audited entities together with the Service prepared the Corrective Action Plans. Every quarter the Service monitors the execution of the issued recommendations.

Goal 2 Achievement Indicators