RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of August 27, 2013 No. 240

About approval of Rules of forming of risk management system and internal control for the single accumulation pension fund and the Voluntary accumulation pension funds

According to the Law of the Republic of Kazakhstan of June 21, 2013 "About provision of pensions in the Republic of Kazakhstan", the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Rules of forming of risk management system and internal control for the single accumulation pension fund and the Voluntary accumulation pension fund.

2. This resolution becomes effective after ten calendar days after day of its first official publication and extends to the relations which arose since August 22, 2013.

Approved by the Resolution of Board of National Bank of the Republic of Kazakhstan of August 27, 2013 No. 240

Rules of forming of risk management system and internal control for the single accumulation pension fund and Voluntary accumulation pension funds

These rules of forming of risk management system and internal control for the single accumulation pension fund and the Voluntary accumulation pension funds (further - Rules), are developed according to the laws of the Republic of Kazakhstan of July 2, 2003 "About the security market" (further - the Law on the security market) and of June 21, 2013 "About provision of pensions in the Republic of Kazakhstan" (further - the Law on provision of pensions) and establish procedure for forming of risk management system and internal control of the single accumulation pension fund (further - Fund) and the Voluntary accumulation pension funds (further - DNPF).

1. General provisions

1. The board of directors and board of Fund provide compliance of risk management system and internal control to Rules and create conditions for execution by structural divisions and employees of Fund of the obligations assigned to them in the field of risk management and implementation of internal control.

2. In Rules the following concepts are used:

1) corporate management - the system of strategic and tactical management of Fund representing the complex of relations between general shareholder meeting, the board of directors, board and other bodies aimed at providing effective functioning of Fund, protection of the rights and interests of its shareholder and giving to the shareholder opportunity of effective control and monitoring of activities of Fund;

2) management of conflict of interest - creation of mechanisms of non-admission of situations in case of which interests of the official or employee of Fund can affect objectivity and independence of adoption by them of decisions and fulfillment of duties, and also to conflict to their obligation to act for the benefit of investors (receivers of retirement benefits) of Fund and (or) the shareholder of Fund;

3) operational risk - risk of emergence of expenses (losses) as a result of shortcomings or mistakes during implementation of internal processes made from workers, functioning of information systems and technologies, and also owing to external events, including the risks connected with:

uncertain and inefficient organizational structure of Fund, including distribution of responsibility, structure of accountability and management;

inefficient strategy, politicians and (or) standards in information technologies, shortcomings of use of the software;

inappropriate reality information or its inappropriate use;

poor control of personnel and (or) unskilled staff of Fund;

insufficiently effective creation of processes of implementation of activities of Fund or weak control of observance of internal regulations;

unforeseen or uncontrollable factors of external impact on activities of Fund;

availability of shortcomings or mistakes of internal documents (rules) regulating activities of Fund;

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