APPROVED
By Decision of OJSC IC RUSS-INVEST Board of Directors
18 January 2007
Minutes No. 11/06-07
Board of Directors Chairman
 _______________ А.Т. Arutyunyan

 

 

Open Joint Stock Company 
INVESTMENT COMPANY IC RUSS-INVEST

PROVISIONS ON SETTLEMENT 
OF CORPORATE CONFLICTS 

 

 

 

 

Moscow 
 
2007 

 
 
TABLE OF CONTENTS 
 
1. GENERAL PROVISIONS 
2. WORK PROCEDURE FOR COMPANY BODIES SETTLING CORPORATE CONFLICTS 
 
3. COMPANY PARTICIPATION IN SETTLEMENT OF CORPORATE CONFLICTS BETWEEN SHAREHOLDERS 

 

 

 

 

 

 

 

 

 

 

 

 

 

These Provisions were set up to prevent and settle corporate conflicts in OJSC IC RUSS-INVEST (hereinafter referred to as “Company”). 
These objectives shall be successfully achieved only if the Company provides for terms to prevent and settle corporate conflicts between the Company and its shareholders, as well as between the shareholders, if such conflict affects the Company’s interests.
The Company shall endeavor to prevent the occurrence of corporate conflicts. Should a corporate conflict arise, the Company’s position shall comply with Russian laws in force and the Company’s policies and procedures.
The prevention and settlement of corporate conflicts in the Company shall equally ensure the protection of shareholder rights and the Company’s property interests and business reputation. The Company shall prevent and settle corporate conflicts in strict compliance with the law. The Company shall maintain bona fide and reasonable relations with its shareholders. 
 
The following provisions on pre-trial settlement of corporate conflicts shall not preclude the persons whose rights have been violated to appeal to courts of law. 
 
1. General provisions 
 
1.1. The Company shall fully and timely identify corporate conflicts if they have arisen or may arise in the Company and shall coordinate the actions of all its bodies, namely: 
	-Corporate conflicts must be identified at their earliest development stages by the Company, its executive officers and employees; 
	- The Company Corporate Secretary jointly with the Commission for Work with Shareholders shall be in charge of preventing and recording corporate conflicts. They shall also determine their position regarding a specific conflict as soon as possible, adopt the appropriate decision and put it forward to the shareholders. 
1.2. The Commission for Work with Shareholders (hereinafter referred to as “Commission”) shall be set up on the basis of an order of the President-CEO and shall act under the Provisions approved by the Board of Directors. The Commission shall review all disputed issues arising between the Company and its shareholders requiring thorough examination and final decision.

1.3. The Company’s position in a corporate conflict must be based on provisions of the law, namely: 
	• The Company’s response to a shareholder’s address must be complete and detailed and the refusal to meet a shareholder’s request must be motivated and based on provisions of the law and the Company’s internal documents; 
	• In the event that the Company’s consent to meet a shareholder’s request is connected with the need for the shareholder to act in accordance with the law, the Company Articles of Association or other internal documents, the Company shall indicate in detail such conditions in its response to the shareholder. The Company shall also indicate the necessary information for their implementation. 

In cases when the Company and shareholders do not dispute their obligations, but dispute the procedures, ways, terms and other conditions for performing these obligations, the Company shall offer to the shareholders to settle these disagreements and lay down the conditions under which the Company shall meet a shareholder’s request. 

2. Work procedure for Company bodies settling corporate conflicts 
 
2.1. One of the most important conditions to ensure the shareholders’ rights and interests shall be to set up a mechanism to settle conflicts arising within the Company, as well as between the Company and its shareholders. The sole executive body, the Board and the Board of Directors shall play an important role in settling such conflicts.

2.2. Competence of the Company’s bodies to examine and settle corporate conflicts: 
 
2.2.1. On behalf of the Company, the sole executive body shall settle corporate conflicts on all issues and decide on issues which do not fall under the competence of the Company’s other bodies. 
The Company sole executive body shall specify the procedure for settling corporate conflicts. 

2.2.2. The Company Board shall be competent to:
- Prepare materials and draft decisions on issues to be reviewed at the General Meeting of Shareholders and Board of Directors, including proposals for approval of transactions under the competence of the General Meeting of Shareholders and Company Board of Directors;
- Elaborate the Company’s financial, economic and tariff policy, approve interest rates, tariffs and prices for services rendered by the Company;
- Develop proposals for the President-CEO, Board of Directors and Board of Directors Committees on the Company’s main activities, including draft budgets, business plans, development strategies and programs;
- Approve the Company’s internal labor policy;
- Specify the information constituting the Company’s trade secrets and procedure for storing and forwarding such information;
- Approve internal documents regulating issues under the Company Board’s competence save for the documents to be approved by the General Meeting of Shareholders, Board of Directors and Company President-CEO;
- Propose agenda items for the General Meeting of Shareholders held in the subsidiaries where the Company is the sole shareholder;
- Deal with other issues specified by Russian laws, the Company Articles of Association and internal documents.

2.2.3. The Board of Directors shall guarantee and protect the shareholder rights, as well as take all necessary measures to prevent and settle corporate conflicts arising between the Company’s bodies and executive officers, and its shareholders. 
The Company Board of Directors shall settle corporate conflicts on issues under its competence. 
The Company Board of Directors shall manage the Company in general except for the matters under the competence of the General Meeting of Shareholders in accordance with Russian laws and the Company Articles of Association.  
In the event that a corporate conflict subject-matter falls under the competence of the Board of Directors or the Company executive body, to settle this conflict, the Board of Directors may set up a provisional committee for settling corporate conflicts.

The Company Board of Directors shall be competent to:  
 
- Determine the Company’s business priorities;

- Convene the annual and extraordinary General Meetings of Shareholders save for cases specified by laws in force;

- Approve the agenda of the General Meeting of Shareholders;

- Set the date for compiling the list of persons entitled to participate in the General Meeting of Shareholders and other issues under the Company Board of Directors’ competence according to the provisions of the Federal Law “On Joint Stock Companies” relating to the preparation and holding of the General Meeting of Shareholders;

- Preliminarily approve the Company’s annual report, as well as the Board of Directors’ report to the General Meeting of Shareholders;

- Increase the Company’s authorized capital by placing additional shares in public offering within the number of authorized shares, if the number of shares additionally placed amounts to 25 (twenty five) per cent or less than the ordinary shares placed previously by the Company;

- Place bonds and other equity securities when under the placement terms of these bonds and other equity securities, they are not convertible into Company shares; 

- Place bonds convertible into shares and other equity securities convertible into shares, if the bonds stated (other equity shares) are placed by public offering, are convertible bonds (other equity securities) and may be converted into ordinary Company shares constituting 25 (twenty five) percent or less than the ordinary shares placed previously; 

- Determine the price (monetary value) of assets, placing and repurchasing price of equity securities in cases specified by the Federal Law “On Joint Stock Companies”;

- Advise on the remunerations and compensations to be paid to the members of the Company Audit Commission and determine the amount of payment for the auditor’s services;

- Advise on the distribution of profits, including the amount of dividends on Company shares, procedure for their payment and Company losses (if any);

- Use the Company’s reserve funds and other funds;

- Approve the provisions on the  Company’s funds, provisions on its branches and representations, provisions on tendering, as well as provisions on the Company representative’s activities in holdings and subsidiaries;

- Establish and liquidate the Company’s branches and/or representations;

- Establish and liquidate subsidiary and affiliate companies with the rights of legal entities in Russia and abroad; 

- Approve internal procedures for risk management, internal control over the Company’s financial and business activities, strategic plans and the Company’s annual financial business development plan (budget); 

- Approve the Company’s transactions in the amount of 10 (ten) to 25 (twenty five) per cent of the balance sheet value of the Company’s assets in accordance with the procedure specified in Items 23.2, 23.3 of the Company Articles of Association;

- Approve the Company’s major transactions in the amount of 25 (twenty five) to 50 (fifty) per cent of the balance sheet value of the Company’s assets in accordance with the procedure specified in Items 23.1, 23.4 of the Company Articles of Association;

- Approve interested party transactions in the cases specified in the Federal Law “On Joint Stock Companies”;

- Approve the Company’s registrar and the terms and conditions of the agreement with the registrar, as well as the termination of this agreement;

- Elect (re-elect) the chairman of the Company Board of Directors;

- Purchase outstanding shares to sell them within a year of their purchase;

- Appoint (form) the Company sole executive body (President-CEO) and the Company collegial executive body (Board), as well as terminate their powers early, establish the remunerations and compensations to be paid to these bodies. Approve the contract (agreement) with the President-CEO and its amendments. Granting consent to the President-CEO and members of the Board to hold positions in other companies’ management bodies;

- Approve the Provisions on Company Corporate Secretary, appoint the Company corporate secretary, specify the contract terms with the corporate secretary, as well as the amount and terms of his/her remuneration;

- Approve the Provisions on Company Dividend Policy and its amendments;

- Ensure the exercise and protection of shareholder rights, as well as assist in settling corporate conflicts; 

- Monitor the Company’s financial and business activities, exact execution of the financial and business plan, reliability of the financial information used in the Company;

- Initiate audits according to international standards;

- Set up and dissolve permanent and/or provisional Board of Directors committees;

- Approve the members of the Company’s tender committees. Approve the results of tenders in the Company and their winners;

- Specify the requirements for an extraordinary audit of the Company’s financial and business activities by the Audit Commission;

- Decide on the issue of promissory notes by the Company;

- Deal with other issues specified in the Federal Law “On Joint Stock Companies”, the Company Articles of Association and Provisions on Company Board of Directors.
Issues under the Company Board of Directors’ competence may not be delegated to the Company sole executive body and Company Board. 
 
2.3. The Company shareholders shall directly participate in settling conflicts through negotiations or correspondence. 
Where necessary, an agreement on corporate conflict settlement may be signed between the Company and a shareholder. The decision on corporate conflict settlement agreed upon with a shareholder may also be adopted and executed by the Company’s appropriate body. 
In accordance with their competence, the Company’s bodies shall assist in the performance of the agreements signed on behalf of the Company with shareholders, as well as implement their decisions on corporate conflict settlement or organize the implementation of the decisions. 
 
2.4. The persons whose interests are affected or may be affected by a conflict (in case claims are filed against them) must not participate in rendering a decision on the conflict. 
 
2.5. If a conflict affects or may affect the interests of the person acting as the Company sole executive body, this conflict shall be settled by the Company Board of Directors. Board of Directors members and Board members whose interests are affected or may be affected by a conflict must not participate in the conflict resolution process. 
 
2.6. The person who must participate in conflict resolution by virtue of his/her duties in the Company must immediately inform that a conflict affects or may affect his/her interests as soon as he/she becomes aware of this. 

2.7. In the event that a corporate conflict between the Company and a shareholder (group of shareholders) may not be settled, upon mutual agreement of the parties, the dispute may be referred to an arbitration court for consideration.

3. Company participation in settlement of corporate conflicts between shareholders
 
3.1. Should a corporate conflict arise between Company shareholders likely to affect the Company’s interests or the Company’s other shareholders, the Company’s body responsible for considering this dispute must settle the question of whether the Company’s interests are affected in this dispute and whether the Company may participate in resolving this dispute, as well as take all necessary and possible measures to settle this conflict. 
 
3.2. Should a corporate conflict arise between Company shareholders, the person acting as the Company sole executive body may offer to the shareholders the services of the Company as a mediator to settle the conflict. The corporate secretary may also participate in conflict settlement.

3.3. With the consent of the shareholders parties to a corporate conflict, the Company’s bodies (its members) may participate in the negotiations between the shareholders, submit to the shareholders documents and information relating to the conflict and at their disposal, explain the rules of corporate law and provisions of the Company’s internal documents on conflict settlement to be signed by the shareholders. The Company’s bodies may also on behalf of the Company and within their competence accept to assume obligations to the shareholders to the extent to which this may contribute to settle the conflict. 

4. Conflict of interests with other interested parties

4.1. The Company’s employees shall endeavor to avoid situations which shall or may result in conflict of interests. These situations may arise in interactions with business partners and clients, public authorities and other business entities.
	The Company’s employees and their families must not have any personal interests in the activities of the Company’s business partners. This shall apply to any kind of expected benefit from business partners, including capital participation and direct or indirect interest in transactions with the Company.
	The Company’s employees may not engage in activities interfering with their responsibilities in the Company.
	All conflicts of interests resulting from transactions and business relationships must be reported to OJSC IC RUSS-INVEST Board of Directors Ethics Committee.
4.2. In its activities, the Company shall focus on developing mutually beneficial and long-term relations with contractors. The Company’s management and employees must strictly follow the principles of honesty, fairness and reasonableness in dealing with the Company’s contractors and competitors. The Company’s management and employees may not distort, withhold or otherwise misuse information to derive profits at the expense of the Company’s contractors, competitors and the Company itself.

Amendments to these Provisions shall be approved by the Company Board of Directors.