Corporate governance

06

PhosAgro’s Corporate Governance Principles

PhosAgro believes that adherence to the highest standards of corporate governance is a key factor in ensuring open, responsible and trustworthy management, which paves the way to success and financial stability for the Company.

PhosAgro’s corporate governance system encompasses management and control processes that help to ensure the overall efficiency of the Company’s operations, its risk management systems and its interactions with key stakeholders. PhosAgro believesthat the implementation of an effective system of corporate governance strengthens the company’s reputation and reduces the cost of capital. Taken together, these factors will benefit the Company’s shareholders in the long term.

Corporate governance at PhosAgro complies with the requirements of Russian legislation and is based on the generally accepted standards and practices stipulated by the Russian Code of Corporate Conduct and the UK Corporate Governance Code. The Company’s corporate governance principles, structure, procedures and practices are set out in its Charter and Corporate Governance Code.

Accountability Equality Transparency Responsibility
The Board of Directors is accountable to all shareholders in accordance with current legislation. The Board is responsible for the formulation of the Company’s strategy and for holding management accountable for successful implementation of this strategy. PhosAgro’s corporate governance system is designed to protect shareholders’ rights and ensure equal treatment of all shareholders. The Board of Directors seeks to guarantee the protection of the rights of all shareholders. The Company strives to ensure the appropriate disclosure of reliable information on all significant issues relating to its operations, including its financial status, social and environmental performance, operating results and ownership and governance structure. It also ensures that all concerned have free access to such information. PhosAgro values the rights of all stakeholders, and seeks to cooperate with a wide range of individuals to ensure the Company’s financial stability and its successful, sustainable development.

The Structure of PhosAgro’s Corporate Governance System

The Company is governed by the General Shareholders Meeting, the Board of Directors and the Chief Executive Body (Chief Executive Officer). The General Shareholders Meeting is the highest governance body, through which the shareholders exercise their right to participate in governance of the Company. The Board of Directors is responsible for the overall guidance of the Company’s management and for the development of the Company’s strategy. It also controls the work of the Executive Body and decides on any issues that do not fall under the exclusive competence of the General Shareholders Meeting. The Chief Executive Officer, as the sole Executive Body, manages the day-to-day operations of the Company and implements the strategy defined by the Board of Directors and the shareholders.

Key Developments in 2011

  • The Board of Directors was increased from five to seven members, and now includes three Independent Directors.
  • The Committees of the Board of Directors were restructured, and the Environmental, Health and Safety Committee was established.
  • A new version of the Statute of the Board of Directors was approved.
  • A Regulation on Insider Information was approved.

The General Shareholders Meeting

The General Shareholders Meeting is the Company’s highest governing body, and is convened by the Board of Directors at least once a year. The Annual General Shareholders Meeting is convened between 1 March and 30 June each year. Extraordinary General Shareholders Meetings may be convened by the Board of Directors on its own initiative or at the request of the Review Committee, the external auditor, or a shareholder owning individually or together with other shareholders at least 10% of the issued votingshares.

The General Shareholders Meeting has the exclusive authority to make decisions on a number of matters, including:

  • amendments and additions to the Company’s Charter, or adoption of a new version of the Charter;
  • the re-organisation or liquidation of the Company;
  • election and removal of members of the Board of Directors;
  • increases or reductions in the Company’s share capital;
  • approval of the Company’s external auditor;
  • approval of the Company’s annual reports and financial statements;
  • distribution of profits, including payment of dividends;
  • payment of remuneration to the members of the Board of Directors and the Review Committee.

Voting at a General Shareholders Meeting is generally based on the principle of one vote per ordinary share, with the exception of the election of the Board of Directors, which is done by cumulative voting. According to the Law on Joint Stock Companies, the quorum requirement for a General Shareholders Meeting is that shareholders (or their representatives) accounting for more than 50% of the issued voting shares are present.

The General Shareholders Meeting may be held in the form of a meeting or by absentee ballot. All shareholders entitled to participate in a General Shareholders Meeting are notified of the Meeting by a notice sent by post or in person no less than 30 days prior to an Annual Meeting, or 20 days prior to an Extraordinary Meeting. The list of persons entitled to participate in a General Shareholders Meeting is compiled on the basis of data in the Company’s register of shareholders as at the date established by the Board of Directors. General Shareholders Meetings are usually held either in Russia (Moscow) or in Cyprus (Nicosia or Limassol).