The General Meeting of Shareholders of NLMK Group on an annual basis appoints an auditor to review the financial and operating performance of the Company. The Audit Committee drafts proposals for the Board of Directors regarding the nomination of the auditor of the Company, selected from recognized independent auditors.
While drafting its proposals the Audit Committee is guided by the following principles:
In June 2015, ZAO PricewaterhouseCoopers Audit was approved as the Auditor of NLMK by the Annual General Meeting of Shareholders, acting on the advice of the Audit Committee. It performs audits of both RAS and IAS-based financial statements. Address: 125047, Butyrsky Val 10, Moscow, Russia.
Internal Audit Commission
The Internal Audit Commission is a full-time internal control authority exercising continuous supervision over the financial and business activities of the Company.
The Internal Audit Commission operates under the Charter and the Internal Audit Commission Regulations. It audits the financial and business activities of NLMK Group in order to obtain adequate assurance that the activities of NLMK Group comply with applicable Russian Federation laws and do not infringe upon the rights of Company shareholders, and that the Company reports and accounts contain no material misstatements.
The Internal Audit Commission acts in the interests of the shareholders and is elected by the General Meeting of Shareholders for a term of one year.
Composition of the Internal Audit Commission (elected on 05 June 2015)
The Audit Committee, chaired by an Independent Director, drafts and submits to the Board recommendations regarding the efficient supervision of the financial and business activities of the Company, including annual independent audits offinancial statements, the quality of services provided by the auditor and compliance with the requirements for auditor independence.
The Committee members comprise:
Internal Audit department
Internal auditing is performed in order to provide members of the Board of Directors (Audit Committee), the President (Chairman of the Management Board) with independent and objective guarantees and consultation aimed at improving NLMK Group performance, through a systematic and consistent approach to assessing and increasing the efficiency of risk management, control and corporate governance processes.
Goal: Maintaining or increasing the value of the company through a set of objective internal audits based on a risk-oriented approach; providing recommendations; and exchanging knowledge.
Policy on major and related party transactions
According to the Russian legislation, a transaction (including loan, credit, pledge, and guarantees) or several related transactions connected with the acquisition, disposal or option to dispose, either directly or indirectly, of property with a value equal to 25 or more percent of the book value of the Company’s assets, determined with respect to its records at the last reporting date, except transactions made in the normal course of business of the Company, transactions connected with the distribution of common shares of the Company by means of subscription (sale), transactions connected with the distribution of issued securities convertible to common shares of the Company, and transactions mandatory for the Company in line with federal laws and (or) other legal acts of the Russian Federation settled at prices determined as per the procedure set by the RF Government, or at the prices and tariffs set by the federal executive body authorized by the RF Government, are considered to be major transactions. NLMK has developed procedures to approve and complete such transactions in order to eliminate their negative effects.
The Management Board submits recommendations on approval of major transactions to the Board of Directors. Resolution on approval of a major transaction made in respect of the property with a value of 25 to 50 percent of the book value of the Company’s assets shall be adopted by the unanimous resolution of the Board of Directors of the Company, provided that the votes of retired members of the Board of Directors are disregarded.
In case there is no unanimous opinion in the Board of Directors of the Company, the issue on approval of a major transaction shall be transferred to the General Shareholders’ Meeting by resolution of the Board of Directors of the Company. In this case a resolution on approval of a major transaction shall be passed by the General Shareholders’ Meeting of the Company by a majority of votes of shareholders possessing voting shares and present at the General Shareholders’ Meeting.
Resolution on approval of a major transaction in respect of property with a value of more than 50 percent of the book value of the Company’s assets shall be passed by the General Shareholders’ Meeting by a majority of three fourths of votes given by shareholders possessing voting shares and present at the General Shareholders’ Meeting.
Related party transactions
Company’s policy on related party transactions is aimed at minimizing the risks of improper use of Company assets by senior management. NLMK has developed and implemented an efficient internal system for ensuring compliance with the requirements and a procedure for completing and approving related party transactions.
The Management Board submits recommendations on the approval of related party transactions to the Board of Directors. The decision to approve a related party transaction is made by a majority of votes cast by those members of the Board of Directors who are not related parties. If the transaction amount exceeds 2% of the total assets of the Company, then the matter is put before the General Shareholder Meeting for approval.