ORDER OF THE MINISTER OF NATIONAL ECONOMY OF THE REPUBLIC OF KAZAKHSTAN

of October 5, 2018 No. 21

About approval of the Model code of corporate management in the joint-stock companies controlled by the state, except for National welfare fund

According to Item 3 of article 182 of the Law of the Republic of Kazakhstan "About state-owned property" PRIKAZYVAYU:

1. Approve the enclosed Model code of corporate management in the joint-stock companies controlled by the state, except for National welfare fund.

2. To provide to department of policy of management of the state assets of the Ministry of national economy of the Republic of Kazakhstan in the procedure established by the legislation:

1) state registration of this order in the Ministry of Justice of the Republic of Kazakhstan;

2) within ten calendar days from the date of state registration of this order in the Ministry of Justice of the Republic of Kazakhstan the direction in electronic form in the Kazakh and Russian languages in the Republican state company on the right of economic maintaining "The republican center of legal information" for official publication and inclusion in Reference control bank of regulatory legal acts of the Republic of Kazakhstan;

3) placement of this order on Internet resource of the Ministry of national economy of the Republic of Kazakhstan;

4) within ten working days after state registration of this order in the Ministry of Justice of the Republic of Kazakhstan submission to Legal department of the Ministry of national economy of the Republic of Kazakhstan of data on execution of the actions provided by subitems 1), 2) and 3) of this Item.

3. To impose control of execution of this order on the supervising vice-minister of national economy of the Republic of Kazakhstan.

4. This order becomes effective after ten calendar days after day of its first official publication.

It is approved Ministry of Finance of the Republic of Kazakhstan

Approved by the Order of the Minister of national economy of the Republic of Kazakhstan of October 5, 2018, No. 21

The model code of corporate management in the joint-stock companies controlled by the state, except for National welfare fund

Chapter 1. General provision

1. The model code of corporate management in the joint-stock companies controlled by the state, except for National welfare fund (further - the Code) is developed according to Item 3 of article 182 of the Law of the Republic of Kazakhstan "About state-owned property" (further - the Law on state-owned property) and determines approaches of corporate management in the relations in the joint-stock company controlled by the state (further - Society) and with other concerned parties.

2. In this Code the following basic concepts are used:

1) the shareholder (participant) - person who is the owner of shares (share) in the authorized capital of Society;

2) general shareholder meeting (participants) - the supreme body of Society. The procedure for holding general shareholder meeting (participants), is determined by the laws of the Republic of Kazakhstan "About joint-stock companies" (further - the Join-stock companies law), "About partnerships with the limited and accessorial liability" (further - the Limited liability partnership act), the Charter of Society;

3) partners are suppliers and contractors, partners in joint projects;

4) board - executive body of Society the speaker jointly;

5) the development plan – the document determining the main activities and indicators of financial and economic activities of the state company, joint-stock company and limited liability partnership, controlling stock (share in the authorized capital) which belongs to the state, for the five-year period;

6) the development plan for national managing holdings, national holdings and national companies – the document determining and proving mission, vision, strategic objectives and tasks of national managing holding, national holding, national company for the ten-year period;

6-1) actions plan – the document determining the main activities and indicators of financial and economic activities of national managing holding, national holding and national company for the five-year period;

7) the board of directors - governing body in Society which is formed by election of his members at general meeting of shareholders (the single shareholder) of Society, responsible for the common directorship and control of activities of Society and board;

8) the affiliated organization - the legal entity whose prevailing part of the authorized capital was created by other legal entity (further - the parent organization);

9) the institutional investor - the legal entity investing the money attracted with him in securities and other financial instruments according to the legislation of the Republic of Kazakhstan;

10) corporate management - set of the processes which are providing management and control of activities of Society and including the relations between shareholders, the board of directors, board, other bodies of Society and interested persons for the benefit of shareholders. Corporate management also determines structure of Society by means of which its purposes are established, methods of achievement of these are more whole, and also monitoring and performance appraisal;

11) corporate events - the events having significant effect on activities of Society, infringing on the interests of shareholders and investors of Society determined by the Join-stock companies law, the laws of the Republic of Kazakhstan "About financial accounting and the financial reporting" and "About the security market" and also the Charter of Society;

12) the corporate conflict - disagreements or dispute between shareholders and bodies of Society; board members and executive body, head of Service of internal audit, corporate secretary;

13) the corporate secretary - the employee of joint-stock company who is not the board member and (or) executive body of society which is appointed the board of directors of society also is accountable to the board of directors of society, and also within the activities controls preparation and holding meetings of shareholder meeting and the board of directors of society, provides forming of materials concerning the agenda of general shareholder meeting and materials for meeting of the Board of Directors of society, controls behind ensuring access to them. Competence and activities of the corporate secretary are determined by internal documents of society;

14) key indicators (indicators) of activities (further – efficiency) – the indicators characterizing the level of efficiency of activities of Society officials and employees of Society who allow to estimate efficiency of their activities. Efficiency have the quantitative value approved for Society as a part of the development plan and/or the actions plan of Society, or approved differentially for each employee of Society and corresponding to results of their activities for the planned and accounting periods;

15) the official - the board member (supervisory board), executive body;

16) concerned parties - physical persons, legal entities, groups of physical persons or legal entities which exert impact or can come under influence of activities of Society, their products or services and the actions connected with it owing to regulations of the legislation, the signed agreements (contracts) or indirectly (indirectly); the main representatives of concerned parties are shareholders, workers, clients, suppliers, state bodies, the affiliated and dependent organizations, bondholders, creditors, investors, public organizations, the population of regions in which activities of Society are performed;

17) the ombudsman - person designated by the board of directors of Society which role consists in consultation of the employees of Society who addressed it and rendering assistance in permission of employment disputes, the conflicts, problematic issues of social and labor nature, and also in respect for the principles of business ethics by employees of Society;

18) sustainable development is development in case of which Society manages influence of the activities on the environment, economy, society and make decisions taking into account respect for interests of concerned parties. Sustainable development shall meet needs of present generation, without depriving future generations of opportunity to satisfy the requirements;

19) the dependent organization - the legal entity is recognized dependent if another (participating, prevailing) the legal entity has more than twenty percent of its voting shares (shares);

20) the independent director - the board member who is not affiliirovanny person of this Society and was not him within three years preceding its election in the board of directors (except for case of its stay to positions of the independent director of this Society), is not affiliirovanny person in relation to affiliirovanny persons of this Society; it is not connected by subordination with officials of this Society - affiliates of this Society and it was not connected by subordination with these persons within three years preceding its election in the board of directors; is not government employee; is not the shareholder's representative at meetings of bodies of this Society and was not it within three years preceding its election in the board of directors; does not participate in audit of this Society as the auditor working as a part of auditing organization and did not participate in such audit within three years preceding its election in the board of directors;

21) authorized body on management of the corresponding industry (sphere) of public administration (further - authorized body of the corresponding industry) - the central executive bodies, local executive bodies or their departments which transfers rights of possession and uses of the state block of shares of Society, and also Committee of state-owned property and privatization or its territorial subdivisions performing functions of the shareholder in relation to it according to the Law on state-owned property;

22) the organizations - legal entities whose more than fifty percent of voting shares (shares) in the authorized capital directly or indirectly belong to Society on the property right or trust management;

23) fiducial obligations - the obligations assumed by any person performing the professional activity for benefit of other person. There are two fundamental fiduciary duties: conscientiousness and rationality. The obligation of conscientiousness is shown that in case of conflict of interest the subject of this obligation shall act only for the benefit of Society. In turn, the obligation of rationality is shown in use of skills, knowledge and abilities, usually required in similar situation.

Members of governing bodies of Society, her workers, majority and minority shareholders, and also other concerned parties treat the subjects connected by fiducial obligations in relation to Society. For example, members of governing bodies of Society, her workers, and also the controlling shareholder have no right to use business opportunities of Society exclusively to own advantage. The return will mean violation of obligation of conscientiousness in relation to Society.

24) holding company - the company which directly or indirectly owns stocks (shares) in other organizations, and the having opportunity to influence the decisions made by these organizations.

Other terms applied in this Code correspond to the terms and determinations used in the legislation of the Republic of Kazakhstan.

3. The joint-stock companies controlled by the state, except for National welfare fund, approve codes of corporate governance according to the Code, and also carry out independent assessment of corporate management at least once in three years which results place on Internet resource of joint-stock companies.

4. Society recommends implementation of this Code in the organizations in which directly or indirectly Society possesses more than fifty percent of voting shares (shares) (further - the organizations).

5. Society recommends implementation by limited liability partnerships following to provisions of this Code in the part which is not contradicting the Limited liability partnership act.

6. When implementing activities Society provides:

1) management of Society with respect for the principle of legality and proper level of responsibility, differentiation of powers, accountability and efficiency;

2) risk management system and internal control;

3) exception of conflict of interest.

7. Control of execution of this Code by Society is exercised by the board of directors of Society. Corporate secretaries conduct monitoring and advise the boards of directors and executive body of Society concerning proper observance of this Code, and also on annual basis create the report on observance/non-compliance with its principles and provisions.

In subsequent the report is submitted for consideration of Committees of the board of directors, affirms the board of directors and is included the annual statement of Society.

8. Cases of non-compliance with provisions of this Code are considered on committee meetings and the boards of directors with decision making directed to further enhancement of corporate management in Society.

Chapter 2. Principles of corporate management of Society

9. Society considers corporate management as means of increase in efficiency of activities of Society, ensuring transparency and accountability, strengthening of its reputation and cost reduction on attraction of the capital by it. The corporate management system provides differentiation of powers and responsibility between bodies, officials and employees of Society.

10. Corporate management of Society is based on justice, honesty, responsibility, transparency, professionalism and competence. The structure of corporate management is based on respect of the rights and interests of all persons interested in activities of Society and promotes successful performance of Society, including growth of its value, support of financial stability and profitability.

11. The fundamental principles of this Code are:

principle of differentiation of powers;

principle of protection of the rights and interests of shareholders;

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