07-3

Report of the Company's Board of Directors

Composition of the Board of Directors

The Regulations of the Board of Directors of Transtelecom JSC were drawn up and adopted in 2016 to implement the principle of effective management of the Board of Directors. The Regulations of the Board of Directors determine the status, the procedure for establishment and operation, the composition of the Board of Directors, and the procedure for its interaction with other bodies of the Company, the rights, duties and responsibilities of the members of the Board of Directors, as well as the procedure for election and early termination of their powers.

The General Meeting of Shareholders of Transtelecom JSC in its resolution No.1 dated August 4, 2016 adopted the quantitative composition of the Board of Directors of Transtelecom JSC of 7 people with a term of office of 3 years. During 2017 there were no changes in the composition of the Board of Directors.

The composition of the Board of Directors as of December 31, 2017:

Full name Position
Bauyrzhan Pazylbekovich Urynbassarov Chairman of the Board of Directors - the Vice-President for Infrastructure Projects of KTZ NC JSC
Nurali Rakhatovich Aliyev Member of the Board of Directors of Transtelecom JSC
Marlen Savitovich Mukhanov Member of the Board of Directors of Transtelecom JSC
Askar Baimyrzauly Member of the Board of Directors of Transtelecom JSC, Head of the Legal Body of the Legal and Claims Department of KTZ NC JSC
Kanat Mukhametkarimovich Dosmukametov Independent Director, Member of the Board of Directors of Transtelecom JSC
Yerlan Orentayevich Issekeshev Independent Director, Member of the Board of Directors of Transtelecom JSC
Хекстер Давид Ричард Независимый директор, член Совета директоров Общества

Employment record of the members of the Board of Directors of Transtelecom JSC

Bauyrzhan Pazylbekovich Urynbassarov

Chairman of the Board of Directors - the Vice-President for Infrastructure Projects of KTZ NC JSC

Bauyrzhan Pazylbekovich Urynbassarov

For the first time, Mr.Urynbassarov was elected to the Board of Directors of Transtelecom JSC on February 19, 2016 (minutes No. 02/07 of the NC KTZ JSC dated February 19, 2016).

On August 4, 2016, by the decision of the General Meeting of Shareholders of Transtelecom JSC (Minutes No.1), he was reelected as a member of the Board of Directors and Chairman of the Board of Directors of Transtelecom JSC.

Date of birth: October 22, 1970.

Citizenship: Republic of Kazakhstan.

Education, including basic and additional:

1993 - Almaty Institute of Railway Transport Engineers, organization of transportation and traffic management in railway transport.

Work experience:

Mr.Urynbassarov began working in 1993 on the West Kazakhstan Railway.

During 1994 - 1997 he was the duty officer in the park of Kyzyl-Orda station, the duty officer of Almaty 2 station, train dispatcher of the Almaty branch of the road;

1997 - 2004 - road dispatcher, lead engineer, chief specialist, head of the department of the Main Transportation Directorate of Kazakhstan Temir Zholy RSE. Assistant to the First Deputy Director General, Adviser to the First Deputy Director General, Chief Engineer of the Transportation Process Coordination Authority of Kazakhstan Temir Zholy RSE;

2004 - 2010 - Chief Engineer of the Transportation Directorate, Chief Engineer of the Backbone Network Directorate, Director of KTZ NC JSC's branch - Karaganda Branch of the Road, Director of KTZ NC JSC's branch - Transportation Process Directorate. Director of KTZ NC JSC's branch - Almaty branch of the road;

2010 - 2014 - Managing Director-Chief Engineer, Managing Director for Operations of Kazakhstan Temir Zholy NC JSC;

from February to April 2014 - acting CEO of Kaztemirtrans JSC;

2014 - 2016 - Vice-President of Kazakhstan Temir Zholy NC JSC;

2016 - 2017 - Chief Engineer of Kazakhstan Temir Zholy NC JSC;

from 2017 - Vice President for Infrastructure of Kazakhstan Temir Zholy NC JSC.

Nurali Rakhatovich Aliyev

Member of the Board of Directors of Transtelecom JSC

Nurali Rakhatovich Aliyev

For the first time, Mr.Aliyev was elected to the Board of Directors of Transtelecom JSC by the General Meeting of Shareholders in its resolution dated August 4, 2016 (Minutes No.1).

Date of birth: January 1, 1985.

Citizenship: Republic of Kazakhstan.

Education:

2001-2002 - Pepperdin University, Malibu, California, USA.

2002-2003 - International University, Vienna, Austria.

2003-2005 - Abai Kazakh National Pedagogical University, Almaty, Kazakhstan. Bachelor of Economics and Finance.

2006 - University of Texas, McCOMBS School of Business, USA. Marketing strategies (EMBA course).

2005-2006 - "IMADEK" University, Vienna, Austria. Master of Business Administration.

Work experience:

2003-2004 - SUCDEN ET DENREES SA Corporation, France. Employee of the International Trade Department.

2004-2005 - Sugar Center JSC, Kazakhstan. Head of International Department/Deputy Head of International Department.

2005-2006 - Sugar Center JSC, Kazakhstan CEO.

2007-2010 - Nurbank JSC, Almaty. Chairman of the Board of Directors/First Deputy Chairman of the Management Board/Deputy Chairman.

2008-2013 - Development Bank of Kazakhstan JSC, Astana. Managing Director - Member of the Management Board.

2013-2014 - Transtelecom JSC CEO.

2014-2016 - Akimat of Astana. Deputy akim

Social activity:

Since 2013 - Member of the Board of Trustees of Ana uy Public Foundation.

Since 2015 - Member of the Coordination Council of the "Machine Builders Union of Kazakhstan".

Since 2016 - Chairman of the Board of Trustees of "Astana Invest" Association.

Since 2016 - the founder of "ZHANARTU" charitable fund.

Since 2017 - CEO of Federation of Mountaineering and Sport Climbing of the Republic of Kazakhstan.

Marlen Savitovich Mukhanov

Member of the Board of Directors of Transtelecom JSC

Marlen Savitovich Mukhanov

For the first time, Mr.Mukhanov was elected to the Board of Directors of Transtelecom JSC by the General Meeting of Shareholders in its resolution dated August 4, 2016 (Minutes No.1).

Date of birth: January 17, 1982.

Citizenship: Republic of Kazakhstan.

Education, including basic and additional:

2003 - O.A.Baikonurov Zhezkazgan University, Zhezkazgan, specialty "Fundamentals of Law and Economics".

2014 - Almaty Management University, Almaty, Master of Corporate Governance.

Work experience:

2003 - Specialist of the Small and Medium Business Lending Department of Halyk Bank of Kazakhstan JSC, Zhezkazgan;

2004 - leading specialist of the SME lending department of AB Nurbank JSC;

2005 - Head of the SME Lending Department of ASB of Bank Center Credit JSC;

2006 - Head of department of the Corporate Business Authority of Nurbank JSC;

2007 - Head of Corporate Business Authority of Nurbank JSC;

from May 2008 to the present - General Director of Capital Holding LLP.

Askar Baimyrzauly

Member of the Board of Directors of Transtelecom JSC, Head of the Legal Body of the Legal and Claims Department of KTZ NC JSC

Askar Baimyrzauly

For the first time, Mr.Baimyrzauly was elected to the Board of Directors of Transtelecom JSC by the General Meeting of Shareholders in its resolution dated August 4, 2016 (Minutes No.1).

Date of birth: January 9, 1985.

Citizenship: Republic of Kazakhstan.

Education, including basic and additional:

2006 - Al-Farabi Kazakh National University, Almaty, specialization - Jurisprudence.

2008 - Al-Farabi Kazakh National University, Almaty, Master of Jurisprudence.

2010 - T.Ryskulov Kazakh Economic University, Almaty, department of Economics.

Work experience:

2011-2016 - Senior Manager of Legal Support Department of KTZ NC JSC.

2016 - Head of the Legal Support Department of the Legal Support and Claims Department of KTZ NC JSC.

Yerlan Orentayevich Issekeshev

Independent Director, Member of the Board of Directors of Transtelecom JSC

Yerlan Orentayevich Issekeshev

For the first time, Mr.Issekeshev was elected to the Board of Directors of Transtelecom JSC by the General Meeting of Shareholders in its resolution dated August 4, 2016 (Minutes No.1).

Date of birth: July 1, 1968.

Citizenship: Republic of Kazakhstan.

Education, including basic and additional:

1992 - Alma-Ata Power Engineering Institute, Electrical Engineer, specialty "Electric Drive and Automation of Industrial Installations and Technological Complexes".

2003 - "Turan" University, Economist in "Taxes and taxation" specialty.

2003 - "Energy Industry for the Countries of Central Asia and Transcaucasia" seminar ( Tokyo, Japan).

2003 - "Energy Development in Malaysia" seminar ( Kuala Lumpur, Malaysia).

2004 - "Management of Energy Companies and Stations in the Transition to the Energy Pool in the Conditions of the Liberalized Market" seminar ( London, England).

2010 - "HEC" French Business School, Paris. "International Executive MBA", specialization - "Management in the field of "Oil, Gas, Energy".

Work experience:

1992 - 1993 - Engineer for the equipment of Kazakhgas state holding company, Uralsk;

1992 - 2000 - Director of Tabys LLP, Alex LLP, financial director of Rauan LLP;

1993 - 2000 - Financial Director of Karaganda Power LLP, Deputy Director of the Petrochemical Plant, Atyrau, work in senior positions of commercial structures;

2000 - 2002 - Deputy Director of Astana Energy Service LLP, Astanaenergoservise JSC, Astana;

2002 - 2005 - Commercial Director of Karaganda Zhylu LLP, Karaganda;

2005 - General Director of Karaganda Zharyk LLP, Karaganda;

2005 - 2007 - General Director of Karaganda Zhylu LLP, Karaganda;

2007 - 2008 - Deputy akim of the Karaganda region on municipal issues;

2008 - advisor to the Chairman of the Management Board of KazynaCapitalManagement JSC on the issues of establishment and development of "Ithmaar Kazyna CIS Regional Energy Fund" investment Fund for Energy;

2009 - 2011 - Managing partner of "Falah Partners" investment fund;

2009 - 2012 - Independent director, member of the Board of Directors of Samruk-Energo JSC;

from 2011 - Chairman of the Board of Directors of the multidisciplinary holding company "ISS Corporation" LLP.

Kanat Mukhametkarimovich Dosmukametov

Independent Director, Member of the Board of Directors of Transtelecom JSC

Kanat Mukhametkarimovich Dosmukametov

For the first time, Mr.Dosmukametov was elected to the Board of Directors of Transtelecom JSC by the General Meeting of Shareholders in its resolution dated August 4, 2016 (Minutes No.1).

Date of birth: December 22, 1973.

Citizenship: Republic of Kazakhstan.

Education, including basic and additional:

1994 - Kazakh State Academy of Management, specialty - Business and Management.

Candidate of Economic Sciences.

Work experience:

1994 - 2000 - Leading, Chief Economist, Head of Licensing Department, Head of Methodology Department, Deputy Head of the Banking Supervision Department, Deputy Director of the Banking Supervision Department of the National Bank of the Republic of Kazakhstan;

2000 - 2003 - Head of the Coordination Department of the National Bank of the Republic of Kazakhstan (Astana);

2003 - Deputy Director of the Financial Supervision Department of the National Bank of the Republic of Kazakhstan;

2004 - 2006 - Deputy Chairman of the Agency for Regulation of Financial Market and Financial Organizations;

2006 - 2007 - Managing Director of SAFC Investment Company;

2007 - Deputy Chairman of the Management Board of KazAgro National Holding JSC;

2007 - 2009 - Chairman of the Management Board of Delta Bank JSC;

2009 - Managing Director of Deloitte TCF LLP;

2009 - 2012 - Chairman of the Treasury Committee of the Ministry of Finance of the Republic of Kazakhstan;

2012 - Managing Director of Samruk-Kazyna joint-stock company;

2012-2015 - Deputy Chairman of the Management Board of the Eurasian Development Bank;

2015 - Deputy Chairman of the Management Board of Development Bank of Kazakhstan JSC;

2016 - to the present - General Director of Polymetal Eurasia LLP.

In different years:
Chairman of the Board of Directors of JV Pana Insurance JSC; Member of the Board of Directors of Development Bank of Kazakhstan JSC, Export-Credit Insurance Corporation KazExportGarant JSC, Investment Fund of Kazakhstan JSC, Alliance Bank JSC, Bank VTB JSC (Kazakhstan).

David Richard Hexter

Independent Director, Member of the Board of Directors of Transtelecom JSC

David Richard Hexter

For the first time, Mr.Hexter was elected to the Board of Directors of Transtelecom JSC by the Management Board of KTZ NC JSC in its resolution in 2011. By the decision of the General Meeting of Shareholders dated August 4, 2016 (Minutes No.1), he was re-elected to the Board of Directors.

Date of birth: March 11, 1949.

Citizenship: United Kingdom of Great Britain and Northern Ireland.

Education, including basic and additional:

1970 - Oxford University, studied philosophy, politics and economics. Master's Degree in the Humanities.

1973 - Cranfield School of Management, MBA.

2008 - University College London at the University of London - Jurisprudence and Political Theory.

2011 - Birkbeck (University of London) - studied ethics and political philosophy. Master's degree in Philosophy.

2016 - University of Queen Mary of London, Doctor of Philosophy in Political Philosophy.

Work experience:

1970 - 1992 - held various positions in Citibank.

1992 - 2004 - worked at the European Bank for Reconstruction and Development.

2002 - 2004 - Member of the Board of Directors of Small Business Bank.

Currently he is the Independent Director in the Board of Directors of Piraeus Bank SA, Independent Director in the Board of Directors of Bank Zachodni WBK , Chairman of the Supervisory Board of Private Equity New Markets.

Criteria for selecting the independence of directors, the Chairman of the Management Board and members of the Committees under the Board of Directors

Pursuant to paragraph 90, subparagraph 8) of the Charter of Transtelecom JSC, the issues of determining the number, term of office of the Board of Directors, election of the Chairman and its members and early termination of their powers, as well as determining the amount and terms of remuneration payment and expenses recovery to members of the Board of Directors for execution of their duties are within the exclusive competence of the General Meeting of Shareholders.

Pursuant to the Regulations of the Board of Directors of Transtelecom JSC, candidates for membership in the Board of Directors and members of the Board of Directors must have relevant work experience, skills, qualifications, positive achievements and impeccable reputation in the business and industry environment which are necessary to fulfill their duties and organize effective work of the entire Board of Directors in the interests of the General Meeting of Shareholders and the Company.

To date, the Board of Directors maintains a balance of skills, experience and knowledge, ensuring the adoption of independent, objective and effective decisions in the interests of the Company and taking into account the fair attitude to all shareholders and the principles of sustainable development.

The Board of Directors of the Company includes:

  • experts in the field of sustainable development - B.P.Urynbassarov, N.R.Aliyev, A.Baimyrzauly;
  • experts in economy, finance and auditing - David Richard Hexter, K.M.Dosmukametov;
  • experts in the field of commerce and sales - M.S.Mukhanov, Ye.O.Issekeshev.

Independent directors bring the experience of international management, strategic vision, knowledge of the specifics of the industry where the Company operates in, corporate governance, risk management. All directors also have skills in the field of financial reporting and audit, business planning and project management. Independent directors chair the Committees under the Board of Directors, actively participate in their work, ensure the development of objective decisions taking into account the interests of all shareholders.

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 duties of the independent director, membership in the committees under the Board of Directors;
  • shall be aware of general information on key issues specific to the organization, similar in scope and nature of operations with the Company, he/she shall also demonstrate the understanding of regulatory obligations; competitive environment in national and international markets; features in the field of corporate finance, audit and internal control, strategy and/or on the issues of appointment and/or remuneration to ensure expert opinion in membership in the relevant committee u the Board of Directors of the Company;
  • 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, both during the meetings of the Board of Directors and for proper study of materials for meetings of the Board of Directors.

The Audit Committee and the Nominations and Remunerations Committee are 100% composed of independent directors, the Strategic Planning Committee consists of three Independent Directors and one member of the Board of Directors, where the Independent Director is the Chairman, thus corresponding to Article 53-1, paragraph 3, of the Joint Stock Companies Law of the Republic of Kazakhstan.

The independence criteria for the members of the Committees that are Independent Directors meet the requirements described above.

Criteria for selecting an independence for 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.

Where 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, a fixed fee is not paid.

The independent director receive the reimbursement for 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.

Assessment of the Board of Directors performance, performance of its committees, individual members of the Board of Directors, the Management Board, the Internal Audit Service and its head

Pursuant to the Regulation of the Board of Directors, the Board of Directors assesses its own work, assesses the members of the Board of Directors, assesses the committees under the Board of Directors.

The Board of Directors may perform assessment:

  1. by own forces through the questioning, interviewing, etc.;
  2. with the involvement of consultants, professional associations and organizations that assign the corporate governance ratings;
  3. using a mixed approach: on their own with the process coordinated by consultants.

The assessment of activities for 2017 is planned in the first half of 2018.

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 November 8, 2017 (Minutes No. 9/2017), the KPI maps with actual values and calculations of the remuneration payable to CEO and members of the Management Board of Transtelecom JSC based on the results of 2016 and the Motivational Maps of CEO and members of the Management Board of Transtelecom JSC for 2017 and KPIs passports have been adopted.

The performance assessment of the head of the Internal Audit Service is made on the basis of the Rules of performance assessment and remuneration payment to the head of the Internal Audit Service of Transtelecom JSC, adopted by the Board of Directors of the Company in its resolution dated December 12, 2017 (Minutes No.10/2017). At the same meeting of the Board of Directors, a motivational KPI Map 2017 of the head of the Internal Audit Service of Transtelecom JSC was adopted.