07-4

The work of the board of directors in 2017

Number of meetings and attendance of meetings by members of the Board of Directors

In 2017, Transtelecom JSC held 11 meetings of the Board of Directors, including 8 in-person and 3 in-absentia meetings. In accordance with the best practice of corporate governance, the number of absentee meetings of the Board of Directors was reduced to minimum.

A total of 72 issues were considered on key aspects of Transtelecom JSC's business, 16 orders were issued, all of which have been executed.

Information about the attendance of the meetings of the Board of Directors of Transtelecom JSC by members of the Board of Directors in 2017

# Director's full name Participation in the BoD meetings %
1 B.P.Urynbassarov 8 out of 11 72%
2 N.R.Aliyev 10 out of 11 91%
3 M.S.Mukhanov 11 out of 11 100%
4 A.Baimyrzauly 11 out of 11 100%
5 Ye.O.Issekeshev 10 out of 11 91%
6 K.M.Dosmukametov 8 out of 11 72%
7 David Richard Hexter 10 out of 11 91%
# Director's full name Participation in the BoD meetings %

The key issues considered by the Board of Directors and the Management Board in 2017

The key issues considered by the Board of Directors in 2017

Over the reporting period, the Board of Directors at its meetings considered both strategic and current issues of the work within its competence. The list of issues and decisions thereon are recorded in the relevant minutes and resolutions of the meetings of the Board of Directors.

Development Strategy

Pursuant to the Joint Stock Companies Law of the Republic of Kazakhstan, the Development Strategy of Transtelecom JSC until 2026 was adopted on January 20, 2017 (Minutes No. 1/2017).

One of the most important areas of work of the Board of Directors in the reporting period was the adoption of a new long-term development strategy for Transtelecom JSC until 2026 (hereinafter referred to as the "Strategy"). As part of the Strategy drawing up, the extensive work was carried out to discuss the draft Strategy, which includes the implementation of following three main areas:

  1. Development of telecommunication services, which includes: fixed communication, telegraph communication, wholesale sales, cellular communications;
  2. Development of IT services, including: IT services (a single service center, managed security service provider (MSSP), a cloud service provider), IT projects (IT projects in the logistics industry, sectorial IT projects in the prospective markets (oil and gas sector, mining and metallurgical industry, defense industry, education, healthcare, banking, smart cities));
  3. Internal transformation, which includes: improvement of corporate governance, development of process management, increase of personnel potential.

The Development Strategy is aimed at increase of the long-term value of the Company and determines the mission, vision, strategic directions of development, goals and objectives for a ten-year period. The mission of Transtelecom JSC is defined as "To create infrastructure opportunities and useful IT solutions, exceeding the expectations of customers and partners."

Establishment of the Internal Audit Service

The Board of Directors of Transtelecom JSC in tis resolution dated October 18, 2016 adopted a new organizational structure of the Central Office of the Company, effective from February 1, 2017, which provides for the Internal Audit Service. The Board of Directors in its resolution dated January 20, 2017 (Minutes No.1) established an Internal Audit Service composed of three people, Dilyara Issamadiyeva was appointed as the head of the Internal Audit Service. During the reporting period, 9 audits were conducted.

Establishment of a representative offices of Transtelecom JSC in Moscow and Minsk

For the purpose of further development of Transtelecom JSC's business and entry new foreign markets, it is necessary to carry out measures to expand the geographical presence, in this regard, on December 27, 2017 (Minutes No.11/2017), the Board of Directors decided to open representative offices of the Company in the city of Moscow, Russian Federation and in the city of Minsk, Republic of Belarus.

The main tasks performed by the representative offices in Moscow and Minsk, will be the following ones:

  1. work with existing partners of the company, registered in the Russian Federation and the Republic of Belarus;
  2. assistance in the search of potential partners for joint projects;
  3. analysis of IT and telecommunications market of the Russian Federation and the Republic of Belarus in order to search for new promising areas for business development.

During the reporting period, the Board of Directors, considered a number of key issues that govern the following areas:

Financial and economic activity
  • on convocation of the annual General Meeting of Shareholders of Transtelecom JSC;
  • on pre-adoption of the annual financial statements of Transtelecom JSC;
  • on the provision of proposals to the General Meeting of Shareholders of Transtelecom JSC on the procedure for the distribution of net income of Transtelecom JSC for 2016 and the amount of dividend per one ordinary share of Transtelecom JSC;
  • conclusion of transactions of the Company's interest.
Strategic development
  • adoption of the Development Strategy of Transtelecom JSC until 2026;
  • consideration of the report on the budget execution of Transtelecom JSC for 2016;
  • adoption of the budget of Transtelecom JSC for 2018;
  • adoption of the Development Plan 2018-2022 of Transtelecom JSC.
Corporate governance
  • election, determination of the term of office and amount of the official salary of CEO and members of the Management Board of Transtelecom JSC;
  • adoption of Motivational Maps of the CEO, members of the Management Board and Head of the Internal Audit Service of Transtelecom JSC for 2017 as well as their KPIs passports;
  • hearing of reports of executed instructions issued by the Board of Directors of Transtelecom JSC;
  • adoption of a new version of the Regulations on the Audit Committee under the Board of Directors of Transtelecom JSC;
  • adoption of the total number of employees and the structure of Transtelecom JSC's Central Office;
  • preliminary consideration and adoption of the issue: "On adoption of changes and additions to the Charter of Transtelecom JSC", subject to submission to the General Meeting of Shareholders for consideration;
  • preliminary consideration and adoption of the issue: "On adoption of changes and additions to the Regulations on the Board of Directors of Transtelecom JSC", subject to submission to the General Meeting of Shareholders for consideration.
Internal audit
  • determination of the number of staff, term of office of the Internal Audit Service, the appointment of its head, the amount of the salary of the head of the Internal Audit Service and qualification requirements for the head and employees of the Internal Audit Service;
  • adoption of the annual audit plan of the Internal Audit Service of the Company for 2017 and 2018;
  • on a quarterly basis, the Board of Directors hears the reports of the Internal Audit Service.
In the field of sustainable development
  • adoption of the scheme of salaries of administrative - management and production personnel of the Central Office of Transtelecom JSC;
  • adoption of a new version of Rules for the sale of a dwelling in installments to employees of Transtelecom JSC and registration of those in need of housing and improvement of housing conditions;
  • on adoption of a new version of an Integrated Management System Manual "Regulation on the compensations and benefits payment to administrative, management and production personnel of Transtelecom JSC's Central Office."
  • adoption of amendments to the Regulations on the branches of Transtelecom JSC.

The key issues considered by the Management Board in 2017

The competence of the Management Board of the Company includes the resolution of all issues of the Company's activities which according to the Law, other legislative acts of the Republic of Kazakhstan and the Charter are not within the competence of other bodies and officials of the Company.

During the reporting period, 24 meetings of the Company's Management Board were held, where 101 issues within the competence of the Company's Management Board were considered.

The measures taken by the Board of Directors for noting the shareholders' opinions with respect to the Company

Representatives of both shareholders of the Company are represented equally in the Board of Directors in order to take into account the shareholders' opinions regarding the Company.

Representatives of shareholders work out opinions on the agenda of the meeting of the Board of Directors and voice this position at a meeting of the Board of Directors. This fact is recorded in the minutes of the meeting of the Board of Directors and is taken into account by other members of the Board of Directors when voting on items of the agenda. Shareholders through their representatives in the Board of Directors have the right to initiate issues, affecting the interests of shareholders, to be considered by the Board of Directors of Transtelecom JSC.

The Board of Directors is the representative of the interests of shareholders and must respond promptly to complaints and appeals received from shareholders through their consideration at the meetings.

During the reporting period, the Board of Directors did not receive any opinions from shareholders regarding the Company.