Annual Report & Accounts 2012

Corporate governance

We adhere to high standards of corporate governance and maintain a policy of maximum transparency. This policy allows our shareholders and investors to have all the necessary information on the activities of NLMK provided in a timely manner so that they can make an investment decision regarding the Company’s securities.

NLMK governance structure*

* as at 30 January 2013

As a public company, NLMK is constantly improving its corporate governance standards in order to make management more efficient, ensure a sustainable business model and grow the Company’s long-term valuation. The Group’s corporate governance standards were developed in accordance with the core principles recommended by the OECD and they comply fully with the current legislation of Russia and of the countries where the Group’s companies operate.

The primary objective of the Group’s corporate governance system is to protect shareholders’ rights to participate in the management of the Group by attending meetings of the management and audit bodies, to vote on agenda items and to receive timely information on NLMK’s activities. In addition, our corporate governance system provides guaranteed protection of shareholder investments, as it follows the principle of equal treatment of all shareholders.

Our approach to corporate governance

Corporate governance principles

The key document which sets out all the core rules and principles of corporate governance at the Company is the Code of Corporate Governance of NLMK, which was adopted in 2006 and is based on the recommendations of the Organization for Economic Cooperation and Development (OECD), Russian legislation and on international best practice that NLMK has adopted in recent years.

The document is available on the Group’s website in the Corporate Documents section

The following principles lie at the heart of NLMK’s corporate governance system:

The desire to ensure effective and transparent mechanisms in guaranteeing the rights and interests of shareholders.

Equal treatment of all shareholders.

Guaranteeing the rights of shareholders to participate in the management of the Group.

Observing the rights of third parties.

Commitment to a common corporate policy with respect to subsidiaries, affiliated companies and other legal entities in or of which NLMK is a participant, founder, or member.

A policy of transparency and disclosure.

A policy of adhering to business ethics.

Ensuring compliance with applicable laws and international standards of corporate governance.

Corporate governance structure

The General Shareholder Meeting is the supreme governing body of NLMK. The Board of Directors exercises overall management of activities and determines long-term strategy. NLMK’s executive officers, made up of the President (Chairman of the Management Board) and members of the Management Board, manage day-to-day activities.

NLMK named best company by Euromoney magazine

According to the results of the eighth annual ranking of Central and Eastern European companies compiled by Euromoney magazine, NLMK came first in the ‘Most Convincing and Coherent Strategy’ category in the Metals&Mining sector and second in the ‘Best-Managed Companies’ category.

An independent auditor and the Internal Audit Commission oversee financial and economic activities. Financial statements are audited in compliance with Russian legislation and the US Generally Accepted Accounting Principles.

For more information on our corporate governance please visit Corporate Governance section of the corporate website

Company’s policy on related party transactions

This policy is aimed at minimizing the risks of improper use of Company assets by senior management. Related party transactions are approved by NLMK in accordance with applicable law (the Federal Law ‘On Joint Stock Companies’) and corporate documents (the NLMK Charter). 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.