The Corporate Governance structure

The Corporate Governance structure of Transtelecom JSC

Corporate governance is a key factor in ensuring sustainable business development and one of the most important criteria in making management and investment decisions. High-quality and effective corporate governance contributes to improvement of efficiency of financial and economic activities of organizations, ensures effective risk management and a reliable system of internal control.

The Company pays significant attention to the corporate governance system improvement and to the shareholder's interests.

The Company has an advanced corporate governance system that is built on the basis of international standards of corporate governance and business ethics, the requirements of the legislation of the Republic of Kazakhstan and the principles of the Corporate Governance Code.

On May 3, 2018, the General Meeting of Shareholders of Transtelecom JSC in tis resolution of May 3, 2018 adopted the Charter of Transtelecom JSC as amended.

On May 29, 2018, a report on the work of the Board of Directors for 2017 was reviewed at the General Meeting of Shareholders of Transtelecom JSC.

Corporate governance system of Transtelecom JSC

Criteria for selectin Independent Directors, the Chairman of the Management Board and members of the Committees under the Board of Directors

The Board of Directors believes that the majority of members of the Committees should be Independent Directors. Thereby, in 2016 the Board of Directors of the Company ap proved the composition of the Audit Committee and the Human Resources and Remuneration Committee, which is 100% composed of Independent Directors, the Strategic Planning Committee consisted of three Independent Directors and one member of the Board of Directors. Independent Directors were elected to Chair the Committees, that meets the requirements of clause 3, Article 53-1 of the Law of the Republic of Kazakhstan “On Joint Stock Companies” dated May 13, 2003 No. 415-II.

The independent directors of the Company over the reporting period fully complied with the independence criteria stipulated in Article 1 of the Joint Stock Companies Law of the Republic of Kazakhstan.

  • An independent director shall not be an affiliated person of Transtelecom JSC and did not represent it within three years preceding his/her election to the Board of Directors (except for the case of his/her being the independent director of this joint-stock company);

  • An independent director shall not be an affiliated person in relation to affiliated persons of Transtelecom JSC;

  • An independent director shall not be bound by subordination to officials of Transtelecom JSC or affiliated entities of Transtelecom JSC and was not bound by subordination to these persons during three years preceding his/her election to the Board of Directors;

  • An independent director shall not be a civil servant;

  • An independent director shall not participate in the audit of Transtelecom JSC as an auditor working for the audit firm, and did not participate in such an audit for three years preceding his/her election to the board of directors.

The Regulation of the Board of Directors establishes additional requirements for candidates to the position of Independent Director, which are also met by Independent Directors of the Company. Thus the candidate shall be as follows:

  • Shall have special skills in certain areas related to the functional responsibilities of an independent director, membership in committees of the Board of Directors;

  • Should have general information about key issues specific to the organization, similar in scope and nature of operations with the Company, including an understanding of: regulatory obligations; competitive environment in the national and international markets; specifics in the field of corporate finance, audit and internal control, strategy and / or on matters of appointment and / or remuneration to ensure expert opinion on membership in the relevant committee of the Company's Board of Directors;

  • Shall have an impeccable reputation/positive achievements in the business and/or industry environment, adhere to high ethical standards. The candidate shall not have the criminal records in economic activity field, as well as administrative offenses in business activity;

  • Shall have sufficient time to participate in the work of the Board of Directors, not only during meetings of the Board of Directors, but also for proper study of materials for meetings of the Board of Directors.

Criteria for independence relating to the Chairman of the Management Board are not provided for by the legislation and Company's bylaws.

Directors remuneration

Representatives of shareholders in the Board of Directors do not receive a remuneration.

For performance of duties of a member of the Board of Directors of the Company, independent directors receive a fixed remuneration determined by the resolution of the General Meeting of Shareholders dated August 4, 2016, Minutes No. 1.

If the Independent Director took part in less than half of all in-person meetings of the Board of Directors held during the reporting period, except for absence at in-person meetings due to illness, vacation, business trip, he shall not receive a fixed remuneration.

The independent director's expenses (travel, accommodation, per diem), related to traveling for the purpose of meetings of the Board of Directors and Committees under the Board of Directors of the Company held outside the permanent residence of the independent director shall be recovered.

Performance assessment of the Board of Directors, its Committees, individual members of the Board of Directors, the Management Board, the Internal Audit Service and its head

In 2018 the Board of Directors passed a self-assessment of the work in 2017. The assessment was carried out through a survey (questioning) of members of the Board of Directors on the activities of the Board of Directors and Committees (as regard members of the Committees) for the period from January 1 to December 31, 2017.

The performance assessment of the Board of Directors is conducted to obtain a comprehensive analysis of the main areas of the Board's responsibility and allows the Board of Directors:

  • To analyze and determine the strengths and weaknesses of the Board and its Committees' work;

  • To adjust the work of the Board of Directors;

  • To determine the effectiveness of the BoD members' remuneration system;

  • To determine the need for training, advanced training of the BoD members.

The subject of the BoD performance assessment is an assessment of its activities as a whole and activities of each individual Committee.

According to the results of the conducted self-assessment of the activities of the Board of Directors, a positive assessment was given to the work of the Board of Directors in 2017. The results of the assessment were taken into account when preparing work plans for the Board of Directors and Committees under the Board of Directors.

In order to assess the performance of the Company's Management Board, the Board of Directors on September 25, 2017 (Minutes No. 5/2017) adopted the Rules for performance assessment and Payment of Remuneration to the Management of Transtelecom JSC. Based on the above Rules, on June 19, 2018 (Minutes No.8/2018), the Key Performance Indicators Maps were adopted with actual values and calculations of the remuneration amounts of the Chairman of the Management Board and members of the Management Board of Transtelecom JSC for the year 2017.

Performance evaluation of the head of the Internal Audit Service is carried out on the basis of the Rules of performance evaluation and remuneration payment to the head of the Internal Audit Service of Transtelecom JSC, adopted by the decision of the Company's Board of Directors dated December 12, 2017 (Minutes No.10/2017). On June 19, 2018 (Minutes No. 8/2018), a motivational map of key performance indicators was adopted with the actual values of the Head of the Internal Audit Service of Transtelecom JSC based on the results of work in 2017.