07-1
Corporate governance

Basic principles of corporate governance

General information on corporate governance in the Company

The Board of Directors and the executive body of the Company are responsible for the corporate governance system operation, which is designed to balance the interests of shareholders and management.

In 2016, the medium-term Program for the Improvement of Corporate Governance of Transtelecom JSC for 2016-2017 was adopted. The activities within the Program are aimed at improvement of the Board of Directors performance, performance of the Corporate Secretary, the executive body, the Internal Audit Service, risk management, internal audit, improvement of the mechanisms for confidential reporting of violations, sustainable development and transparency.

During the implementation of the principles of corporate governance in the framework of basic development course, significant work has been done to improve and ensure transparency of the Company's business.

The Company has a mechanism for the collection and confidential examination of information on violations. The hot line makes it possible to declare confidentially about known instances of corruption, fraud, discrimination, as well as other violations of the norms of the legislation of the Republic of Kazakhstan by the employees of Transtelecom JSC.

In accordance with the Corporate Governance Code of the Company (hereinafter - the Code) approved by the decision of the General Meeting of Shareholders of Transtelecom JSC dated August 4, 2016 (Minutes No.1), the corporate governance in the Company is based on the principle of shareholders' rights and legitimate interests protecting and respecting and contributes to effective operation of the Company, including the growth of the Company's assets and maintenance of the Company's financial stability and profitability.

The basic principles of the Code are the following:

  • the principle of shareholders' rights and interests protection;
  • the principle of effective management of the Company by the Board of Directors and the Management Board;
  • the principle of independent activity of the Company;
  • the principle of transparency and objectivity of information disclosure on the Company's activities;
  • principles of legality and ethics;
  • principles of the dividend policy effectiveness;
  • principles of effective personnel policy;
  • principle of environmental protection;
  • policy of corporate conflicts and conflicts of interest regulation;
  • principle of responsibility.

Thus, the Company acts in full compliance with the basic standards in the field of corporate governance, the essence of which is to give shareholders the opportunity to effectively monitor and control the activities of management and thereby contribute to the Company's capitalization increase.

Improvement of the corporate governance system

In order to improve the corporate governance system of Transtelecom JSC, the Company conducted a diagnosis of corporate governance in accordance with the Corporate Governance Diagnostics Methodology for the companies of Samruk-Kazyna SWF Group, according to this diagnostics based on the Report of Corporate Governance compliance with the best world practice following the results of the corporate governance system diagnostics, the rating of the Company's corporate governance compliance with the requirements of the best world practice amounted to 41.2%.

In pursuance of the recommendations on the elimination of identified non-conformities based on the results of the Company's corporate governance diagnostics, and also in order to further improve the Company's corporate governance system, the Company's Management Board approved the Action Plan for Improvement of Corporate Governance for 2016-2017.

Key actions aimed at improving corporate governance practices in 2017:

  • The Company's Development Strategy was adopted
  • The following documents have been adopted: amendments to the Charter, Regulations on the Board of Directors, Regulations on the Audit Committee under the Board of Directors of Transtelecom JSC, Regulations on the Management Board, Regulations on the Budget Committee, a package of IAS documents, Regulations on Dividend Policy, Tax Accounting Policy, Information Policy and etc.;
  • The work was done to introduce the information system for BoD materials, voting and trainings conduct;
  • The information on the bonuses payable to the members of the Management Board and the Board of Directors was disclosed;
  • The information is disclosed on the corporate website on the periodical basis in a timely manner;
  • The company's report on the results of its financial and economic operation was drawn up in accordance with the "Management comment" IFRS.

Interested party transactions

Interested party transactions are regulated by Article 71 of Joint Stock Companies Law of the Republic of Kazakhstan. In accordance with the requirements of the law, transactions involving the interest of shareholders, members of the Board of Directors or members of the executive bodies must be approved by the Board of Directors or the General Meeting of Shareholders.

Pursuant of the Company's Charter, the exclusive competence of the Board of Directors includes decision-making on the major transactions, as well as Company's interested party transactions and review of quarterly reports on major transactions and Company's interested party transactions.

Pursuant to Paragraph 10 of the Rules of transactions between Samruk-Kazyna JSC group's member-organizations, conclusion of which is subject to special conditions established by the Republic of Kazakhstan Law "On Joint Stock Companies", approved by the resolution of the Board of Directors of Samruk-Kazyna JSC as of April 27, 2009 (Minutes No.18), in the frameworks of the goods, works and services procurement, the transactions are concluded in the manner determined by the Board of Directors of Samruk-Kazyna JSC pursuant to Article 19 of the Republic of Kazakhstan Law "On the Sovereign Wealth Fund."

Thus, pursuant to Article 19 of the Republic of Kazakhstan Law "On the Sovereign Wealth Fund", the procurement of goods, works and services by the Fund and organizations, where fifty or more percent of shares (participatory interests) directly or indirectly belong to the Fund are made on the basis of the rules approved by the Board of Directors of the Fund.

The Company pays close attention to the identification of interested party transactions and control over their commission. Pursuant to Article 79, paragraph 2-2 of the Republic of Kazakhstan Joint Stock Companies Law and the Rules of information posting on corporate events, financial statements and audit reports on the website of financial statements depository or the stock exchange, adopted by the Management Board of the National Bank of the Republic of Kazakhstan in its Resolution No.26 dated January 28, 2016, the Company approved the procedure of information posting on the website of financial statements depository. Using the Unified Reporting System, the Company posts information about corporate events.

The list of interested-party transactions committed by the Company in 2017 is available on the Company's website at www.ttc.kz in the "Transactions" section.

Major transactions

By the decision of the Board of Directors of the Company dated March 17, 2017 (Minutes No.2/2017) two large transactions were concluded with the Branch of KTZ NC JSC - Main Communication Control Center by signing service agreements.

By the decision of the Board of Directors of the Company dated May 18, 2017 (Minutes No.3/2017) a major transaction was concluded with Grand Telecom Limited Partnership by signing a long-term contract for telecommunications services rendering.