Observance of the principles and corporate management processes 

FUNDAMENTAL PRINCIPLES OF THE CORPORATE MANAGEMENT CODE ARE:

• principle of protection of shareholders’ rights and interests;
• principle of efficient management of the Company by the Board of Directors;
• principle of efficient management of the Company by the Board;
• principle of independent activity of the Company;
• principles of transparency and fairness of disclosure of information concerning activity of the Company;
• principles of  legitimacy and ethics;
• principles of efficient dividend policy;
• principles of efficient personnel policy;
• principle of environmental protection;
• corporate conflicts and interests conflicts adjustment policy;
• principle of responsibility.

Corporate management Code of the Company is approved by the decision of the Sole shareholder of the Company (annex to the order № 165-П d/d 12 November 2007).

Report on observance of corporate management principles is published on web-site of Samruk-Energy JSC.

Mechanisms helping shareholders and employees of the Company to direct activity of highest governing body or to give it recommendations 

Interaction of members of the Board of Directors of the Company is regulated by Procedure of interaction concerning activity of representatives of National Wealth Fund Samruk-Kazyna JSC within the Boards of directors and supervisory councils of Samruk-Kazyna JSC group of companies (approved by the decision of the Board of Samruk-Kazyna JSC d/d 3 September 2010, protocol №53/10).

Special mechanisms helping employees to give recommendations to members of the Board of Directors are not applied within the Company. At the same time management system has no limitations for making the opinion and concern of employees available to the Board of Directors.

Membership in associations and/or national and international interest organizations 

Samruk-Energy JSC is a member of the following associations/organizations: 

• Kazakhstan Association of oil and energy complex organizations KAZENERGY;
• CIS Electric Power Council;
• Kazakh Electrical Association;
• World Energy Council;
• European wind energy association.

Interrelation of remuneration payment to members of the Board and the Board of Directors and results of activity  

Payment of remuneration to members of the Board is performed on the basis of approved efficiency coefficients. By the results of estimation of approved efficiency coefficients ratio and amount of remuneration with regard to planned sum as of calendar year-end is determined for every member of the Board. 

Additional condition for remuneration payment is availability of consolidated profit in the accounting period.

Payment of remuneration to independent members of the Board of directors is made on the basis of mechanisms captured in labor contracts. In accordance with concluded labor contracts for every independent member of the Board of Directors flat rate for participation in meetings of the Board of Directors is determined as well as variable component paid for membership in committees of the Board of Directors of the Company. 

In particular, remuneration to members of the Board of Directors shall not be paid is case of participation in less than a half of meetings as well as in case of degradation of financial and economic indicators of the Company and failure to achieve desired goals and indicators by the result of their estimation.

Procedures for monitoring of execution of targeted goals 

Procedures for monitoring of economic, environmental and social performance of the Company as well as monitoring of performance of targeted strategic goals will be performed by the Company by executing:

• Plan of actions for implementation of Development strategy of Samruk-Energy JSC  for 2012-2022 on a long-term basis;
• Development plan of Samruk-Energy JSC until 2015 on monthly, quarterly and annual basis.

Precautionary principle

The Company adheres to 15th precautionary principle set in the Declaration accepted at UN Conference on environment and development held in Rio-de-Janeiro on 3-4 June 1992. 

Within the frames of further protection of environment the Government of the Republic of Kazakhstan made a decision d/d 14 December 2007 № 1232 to approve Technical regulation Requirements to emissions from combustion of various types of fuel in boiler units of thermal stations which comes into force from 1st January 2013.

Samruk-Energy Group of Companies is aware of certain damage to the environment from their activity so implements measures contributing to reduction of emissions. 

In order the goals conform to the requirements of the Technical regulations Samruk-Energy Group of Companies strives to reduce its emissions and starts to install smoke filters which allow reducing environmental pollution considerably.

Participation in charters and initiatives 

From 2012 the Company started to provide with information on progress achieved, that served as statement about undeviating support of the United Nations Global Compact principals and describing measures focused on compliance with its principals, and their results. 

A lot of problems of the contemporary world such as changes in climate, environmental pollution, poverty and others covers all sides of people’s life and relate to all countries of the world. The Company being one of the largest organizations in the Republic of Kazakhstan accepts the major part of responsibility for settlement of these problems.

To demonstrate its adherence to principles of corporate social responsibility the Company entered the UN Global Compact on 5 October 2011 so today it supports ten principles of the UN Global Compact.

Management of conflicts

Prevention of interest conflicts is strictly observed by all employees irrespective of their status and occupation and covers all aspects of Company’s activity starting from personnel recruitment and finishing with procurements. 

Deliberate acts focused on violation of requirements of Code of Business Conduct and Corporate Management are considered by the Company as a disciplinary offence which can lead to prosecution established by the legislation of the Republic of Kazakhstan. 

In 2013 no cases in interest conflicts in Samruk-Energy Group of Companies were registered.

In order to inform employees the Company developed the Code of Business Conduct and Corporate Management regulating policy in the sphere of interest conflicts. A standard contract contains employees’ duties concerning observance of provisions of the Code of Business Conduct and the Code of Corporate Management. 

In order to ensure observation of requirements of the Code of Business Conduct Samruk-Energy JSC established a hot line number (+7 (7172) 55-30-95) and e-mail address (trust@samruk-energy.kz); this information can be found on the web-site and in the office of Samruk-Energy JSC. The Company also has a mailbox for complaints, applications and suggestions.

Concerning clarification of requirements of the Code and/or any ethical issues as well as concerning violations of the Code requirements, corruption and other illegal actions officials and employees of the Company, business partners and interested parties have the right to appeal:

• to direct supervisor;
• to Ombudsman;
• to Internal audit service;
• to Corporate secretary Service (violations of business ethics principles are considered by the Board of Directors of the Company).

By the decision of the Board of Directors Samruk-Energy JSC appointed an Ombudsman whose basic functions are collection of information concerning non-observation and/or violations of the Code provisions, statutory provisions of the Republic of Kazakhstan and other bylaws of the Company, consultations of Company’s employees, Company’s officials regarding Code provisions, initiation of resolution of disputes regarding violation of Code provisions and direct participation.

Example of observance of provisions of the Code of Business ethics and the Code of the Corporate management is the practice of discussion of remuneration amount for executive body within the Board of Directors of the Company where the Chairman of the Board is absent when the amount of his remuneration and other additional bonuses are being determined.

Responsibility for monitoring of observance of the provisions of the Corporate management Code by employees is assigned to the Corporate management department. At the end of 2013 the Corporate management department with participation of the Corporate secretary’s Secretariat prepared a Report on observation of principles of corporate management which later was posted in the web-site of the Company. In particular, in order to eliminate cases of interest conflicts the Company established a list of affiliates of the Fund group of companies which is brought to the attention of the members of the Board of Directors and the Board of the Company as well as by publishing it in the internal intranet portal of the Company.

In 2013 no cases in interest conflicts in Samruk-Energy Group of Companies were registered.

Quality management

The Company implemented a Corporate management system (hereinafter referred to as CMS) conforming to international standard ISO 9001:2008.

Within the frames of CMS implementation bylaws of the Company were unified and planned internal audit checks of CMS are performed. 

BESIDES THE FOLLOWING REGULATORY DOCUMENTS WERE DEVELOPED AND APPROVED:

• Company’s policy in relation to CMS;
• CMS authorities;
• CMS mandatory procedures; 
• Maps of all existing internal processes of structural subdivisions.

In 2011 CMS of the Company was successfully certified to conformance to international standard ISO 9001:2008 by a certification center TUV Rheinhland with application in the energy assets corporate management.

CMS distinctly distributes functionality for each business direction of the activity which provides strength of operational control and centralization of processes of key decisions acceptance in the group of companies of the Company at the corporate center level.

Improvement of management systems on the basis of international standards is important factors of dynamic development and strengthening of positions at the energy market of the country.

WITHIN THE YEAR 2013 IN ORDER TO DEVELOP AND IMPROVE CMS OF THE COMPANY THE FOLLOWING MEASURES WERE IMPLEMENTED:

• updating of the bylaws;
• updating of Process map of the Company’s structural subdivisions;
• questioning and analysis of content of internal consumers;
• internal audit check of internal processes in order to determine conformance of CMS to the requirements of international standard ISO 9001.

Performed work resulted into successful second audit of compliance of CMS with the requirements of international standard ISO 9001:2008 on 5 December 2013. External auditors mentioned strong preparation to audit check and the level of CMS implemented into the Company. In 2014 certificate of conformance to international standard ISO 9001:2008 issued in 2011 expires so recertification audit check of the Company is planned.

Also in the year just ended all subsidiaries and affiliates of the Company successfully passed all supervisory and some recertification audit checks and received assessment of conformity of existing management systems to the requirements of international standards. In 2013 Shardarinskaya HPP JSC which successfully confirmed correspondence of its integrated management system to the requirements of international standards ISO 9001, ISO 14001 and OHSAS 18001 joined the certified organizations of the Company’s group of companies. MREC JSC completed works on implementation of integrated management system and planed certification audit check in the first quarter of the year.

Subsidiaries and affiliates of the Company which are the subjects of the State energy register consume energy resources in the amount equivalent to one thousand five hundred and more tons of reference fuel per year; in 2014 works on implementation of energy management system in accordance with the requirements of international standard for energy management are planned. 

AS OF 31 DECEMBER 2013 MANAGEMENT SYSTEM OPERATES IN 11 ORGANIZATIONS OF THE COMPANY’S GROUP OF COMPANIES INCLUDING CORPORATE CENTER:

• the Company and 2 subsidiaries (AlmatyEnergoSbyt JSC, Shygysenergytrade LLP) – certified to ISO 9001 standard;
• 8 subsidiaries (Ekibastuz SDPS-1 LLP, Ekibastuz SDPS-2 Station JSC, Bogatyr Komir LLP, AlPP JSC, Alatau Zharyk Company JSC, EK REC JSC, Aktobe CHP JSC, Shardarinsk HPP JSC) – certified to three standards (ISO 9001, ISO 14001 and OHSAS 18001).

Improvement of management systems on the basis of international standards is important factors of dynamic development and strengthening of positions at the energy market of the country.