4.0
Corporate
Governance
4.1
CORPORATE
GOVERNANCE
Approach
to corporate
governance

The majority of assets in the form of stocks/shares belong to VSW JSC – the sole shareholder of (participant in) the group of companies that comprises OMK JSC, CSW JSC, APP JSC, Trubodetal JSC, BVP JSC, VRK-3 JSC, OMK-IT LLC, VSW-Techno LLC, VSW-Universal LLC, OMK-ETC LLC, and others.

The functions of sole executive body of the core production units of the group are transferred by agreement to the managing company (United Metallurgical Company), which is the managing company of VSW JSC, Trubodetal JSC, APP JSC, CSW JSC, and BVP JSC.

OMK JSC is a privately owned company. The approach to corporate governance established both at OMK JSC and within the group as a whole is based on fundamental principles enshrined in OMK’s Corporate Governance Code.

The structure of the managing company includes the following managing bodies:

  • General Meeting of Shareholders (sole shareholder)
  • Board of Directors
  • Management Board (collegial executive body)
  • The Chair of the Management Board (the sole executive body, which acts without power of attorney both on behalf of OMK JSC and on behalf of the companies with which agreements have been concluded on the transfer of sole executive body powers).

НIn spite of OMK’s status as a private company, it conducts self-assessments of its corporate governance system based on the principles and guidelines generally employed by public companies. We did not conduct an independent assessment of corporate governance in 2019.
In perfecting its corporate governance system, OMK is guided by legislation and best practice. Following guidelines and recommendations from the Central Bank of Russia,

the Russian Federal Agency for State Property Management (Rosimushchestvo), and other similar organizations, OMK works systematically to improve corporate governance and risk management.

Our primary focus is our strategic objectives: improving efficiency, properly structuring supervisory and management functions, implementing reliable and effective risk management, and refining our general corporate approach to assessing, accepting, and managing risk. We are committed to improving our return on capital.

Our corporate governance principles
  1. Safeguarding the rights of our shareholders.
  2. Establishing a Board of Directors as an effective governing body.
  3. Executive management is represented both by a sole executive body and by a collegial body.
  4. Transparency and disclosure of information on a voluntary basis. This is not merely a matter of providing information at the request of banks and other counterparties, but also, and primarily, of disclosing information to an unlimited circle of stakeholders by publishing press releases, detailed annual reports, and other similar documents.
  5. Risk management, internal monitoring, and internal auditing. OMK’s Internal Audit Service has been operating successfully for more than 10 years.
  6. Corporate social responsibility, business ethics, and compliance.
4.2
CORPORATE
GOVERNANCE
Board
of Directors

In 2019, 50 meetings of the Board of Directors were held. Discussions covered issues within the Board’s remit: the formation of the Management Board, review of budgets (including spending on charity, approval of donations, etc.) and reports on budget implementation, approval of transactions (optimization of ownership structure, project implementation, etc.).

There are plans to establish a system of committees under the Board of Directors in 2020. Currently functioning committees are created under executive bodies.

Anatoly Sedykh
Chair of the Board of Directors
Natalya Eremina
Chair of the Management Board
Vladimir Markin
Deputy Chair of the Board of Directors
Anastasia Poletaeva
Lawyer at Moscow Lawyers Board
Svetlana Obolenskaya
Corporate Secretary
Petr Trushin
Efficiency Management Director
4.3
CORPORATE
GOVERNANCE
Management Board
Dmitry Chernyshev
Head of the Asset Development
and Investment Department
Natalya Eremina
Chair of the Management Board,
Member of the Board of Directorsя
Eduard Stepantsov
Head of the Commercial Department
Svetlana Nikolashina
Head of the Human Resources Department
Yulia Shkhiyants
Head of the Economy and Finance Department
4.4
CORPORATE
GOVERNANCE
Compliance
system

In 2019, OMK adopted a compliance policy. This document confirms our commitment to ensuring the compliance of our actions with current legislation, regulatory requirements, and the principles of ethical business conduct.

OMK has identified the following key areas for the development of its compliance system:

  1. competition compliance
  2. tax compliance
  3. anticorruption compliance and observance of ethical standards
  4. compliance with respect to trade and economic sanctions
  5. industry-specific regulatory compliance, including: (a) ensuring compliance with respect to the implementation of state support measures; (b) protecting personal data; (c) protecting the environment; (d) preventing the legalization of funds obtained through criminal activity and the financing of terrorism
OMK’s compliance objectives
  • To minimize compliance risks
  • To establish a compliance culture
  • To analyse and prevent situations in which compliance requirements might not be observed
Achieving these objectives will require the following:
  • Creating a system for identifying compliance requirements
  • Assessing compliance risks and subsequently developing and implementing policies, procedures, and measures to minimize them
  • Ensuring that all company employees adhere to policies, procedures, and measures developed to minimize compliance risks
  • Creating a system to monitor fulfilment of compliance requirements and to prevent and rectify any violations
  • Organizing regular training and increasing employee awareness of compliance requirements and emerging compliance risks

The system is supported by a compliance group consisting of a head compliance manager and area-specific compliance officers, and the group’s activities are regulated by the Compliance Group Regulation adopted in 2019 and policies in relevant areas.

The compliance group was established by order of Management Board Chair Natalya Eremina and is accountable to her. Group members combine their compliance remit with their principal role.

OMK’s compliance principles
  1. A comprehensive approach to identifying compliance requirements and assessing compliance risks: We continually evaluate compliance of the company’s activities with current legislation and with standards, regulations, and other external requirements. Our compliance officers are responsible for identifying compliance requirements in their area in a timely manner, and for promptly informing colleagues of risks so that appropriate procedures can be implemented and measures taken to minimize them. Company employees are obliged to inform the group of any compliance risks.
  2. Involvement of all company employees in the creation of a compliance system: All OMK employees are involved in the process of creating a compliance system, monitoring compliance with requirements, and preventing and rectifying violations.
  3. Adoption and observance of compliance system requirements by all company employees: All employees are guided by established compliance system requirements. Following the measures, rules, and procedures developed to minimize compliance risks is the personal responsibility of every employee.
  4. Ensuring unimpeded, rapid, and unlimited access to information: The members of OMK’s compliance group are provided with any information that they require in order to do their jobs, in accordance with the required level of data protection.
4.4
CORPORATE
GOVERNANCE
Compliance
system
Competition compliance

In 2019 OMK adopted a competition policy. Its objectives are as follows:

  • to ensure that the company’s activities comply with the competition legislation of the Russian Federation or of other jurisdictions where the company operates or is planning to operate
  • to cultivate a shared understanding among employees and managers of measures, rules, and procedures intended to ensure compliance with the requirements of competition legislation
  • to prevent and minimize the risk of competition violations by OMK and its employees

The key rules established by the competition policy relate to the following aspects of OMK’s activities:

  • our dominant position
  • our interactions with our competitors
  • our participation in business associations
  • unfair competition
  • our interactions with our counterparties
  • our interactions with government bodies
  • our participation in public procurement
4.4
CORPORATE
GOVERNANCE
Compliance
system
Anticorruption compliance

Anticorruption compliance is ensured in accordance with OMK’s Anticorruption Policy, which we adopted in 2018. During the reporting period:

  • We ensured that the giving and receiving of gifts complied with our Anticorruption Policy. Employees must declare any gifts from counterparties with a value greater than RUB 1,000. We received 101 such notifications during the reporting period. A compliance officer recommended the return of gifts in two cases for failure to comply with the established requirements. Compliance checks on OMK corporate gifts are conducted on an annual basis.
  • In accordance with the Anticorruption Policy, we implemented procedures for monitoring the use of charitable aid by reporting on how funds are deployed.
  • We also created a Compliance section on our internal corporate portal, where employees can familiarize themselves with current requirements. Compliance officers send a biannual newsletter to all employees to remind them of the requirements.
  • We have also put up posters in offices and at production sites reminding employees of the need to comply with anticorruptionrequirements and of how to report violations.
  • In addition, we developed a mandatory online course to train employees in anticorruption policy and test their knowledge.
  • We developed a new procedure for approving agreements with agents which removes tax, legal, and corruption risks. The approval process now includes input from dedicated taxation specialists and from OMK’s Directorate for Legal Affairs.
  • We also created an additional procedure for examining reports of corruption-related violations received via the OMK hotline. Over the course of the reporting period, we received one report which was not confirmed by subsequent checks.

The company considers implementation of the anticorruption compliance system, which was begun in 2018, to be fully complete. Planned measures for 2020 include training and awareness-raising for employees, monitoring for conflicts of interest, reassessing corruption risks, and stress-testing the established system.

4.4
CORPORATE
GOVERNANCE
Compliance
system
Compliance in relation to personal data

In 2012, a series of organizational measures intended to meet requirements for ensuring the security of personal data was implemented at the managing company, OMK, and at key production sites:

  • We developed and approved the necessary local regulations.
  • We identified those employees responsible for safeguarding personal data.
  • We developed a range of information security documents.

At the end of 2019, a planned review of regulatory and administrative documents on personal data security was carried out to ensure their compliance with current regulations.

We also set up relevant training courses:

  • for employees with access to personal data: training on safeguarding personal data during data processing and the procedure for interacting with people on whom personal data is held
  • for all company employees: training on the general principles of personal data processing

We conducted on-site training for employees involved in personal data processing in Moscow and Vyksa. Other employees were instructed to complete mandatory online courses.

We developed a checklist and conducted a compliance audit to confirm that personal data safeguarding requirements were being met at the company’s Moscow office. Based on the outcome of the audit, we issued recommendations for adjustments to some procedures.

We carried out measures to differentiate and restrict employee access to personal data held in various areas of our SAP information system. In connection with continually changing processes and the implementation of new information systems, we are updating old local regulations and organizational and administrative documents relating to personal data protection, and developing new ones.