Corporate Governance System

The corporate governance system of OAO TMK (hereafter in this section, the Company) is regulated by a combination of publicly available documents that are accessible on the TMK website and include the Company’s Charter, regulations regarding executive management and control, the Code of Corporate Governance, the Code of Ethics, the information disclosure policy, the dividend policy, insider information regulations, the anti-corruption policy, the policy on selecting an external auditor, as well as the system of internal, regulatory and administrative documents.

The Company’s corporate governance practices are fully in line with the provisions of TMK’s Code of Corporate Governance (hereafter in this section, the Code). The Code was developed on the basis of Russian legislative requirements concerning joint stock companies and on the basis of the capital market regulator’s standards for companies whose securities are included in the highest level of exchange listing. The Code also takes into account the corporate governance principles of the Organization for Economic Cooperation and Development (OECD), as well as best Russian and international corporate governance practices.

The Code describes:

  • the Company’s general corporate governance principles and structure;
  • оprotection of shareholder rights;
  • purview and composition of the Company’s management bodies, requirements presented to members of the Board of Directors and executive bodies;
  • the Company’s interaction with other interested parties;
  • organization of information disclosure processes;
  • monitoring of the Company’s financial and business operations;
  • settlement of corporate conflicts.

OAO TMK’s Principles of Corporate Governance:

  • equal treatment of the Company’s shareholders, observance and protection of their rights;
  • accountability of the Board of Directors to the Company’s shareholders, as well as performance monitoring of the Company’s executive bodies from the Board of Directors;
  • maintenance of an effective internal control and audit system at the Company;
  • guarantee of informational and financial transparency concerning the Company’s operations;
  • adherence to ethical standards in business behavior;
  • effective interaction with Company employees in resolving social issues and provision of comfortable working conditions.

OAO TMK’s Corporate Governance Structure

The Company’s highest management body is the General Meeting of Shareholders. The Company’s primary management powers are delegated by the shareholders to the Board of Directors. In order to ensure the Company’s day-to-day management, the Board of Directors elects the CEO and confirms the members of the Management Board as advised by the CEO.

To ensure its efficiency, the Board of Directors establishes committees that are not bodies of the Company and whose resolutions are of an advisory nature.

In order to ensure effective control over the Company’s financial and business operations, as well as the Company’s adherence to Russian legislative requirements, the General Meeting of Shareholders elects the Revision Commission and confirms the Company’s auditor.

The Code provides for the following measures to ensure the basic rights of the Company’s shareholders:

Shareholder rights Measures to ensure rights
Reliable methods of certifying ownership of shares Maintenance and safekeeping of a register of shareholders by an independent registrar who has the appropriate equipment, control systems and an impeccable reputation
Receipt of regular and timely information on the Company's operations Constant improvement in the process of information disclosure, maintenance of a calendar of important future events, and the presence of special departments to work with shareholders and investors
Participation in the Company's management by adopting resolutions on the most important issues concerning the Company's operations at the General Meeting of Shareholders Publication of notes on General Meetings of Shareholders no later than 30 days before the meeting is held;
Publication of draft documents brought up for discussion at General Meetings of Shareholders; information on candidates nominated for the Company's management and its internal control bodies; Timely distribution of materials for the General Meeting of Shareholders to the Company's shareholders and holders of GDRs;
On the basis of the registrar's information, the Company independently verifies that shareholders have a sufficient number of shares to call a General Meeting of Shareholders and make recommendations for its agenda.
Receipt of a portion of the Company's net profits as dividends based on the results of the first quarter, half year, nine months and full year. The Company is obligated to pay announced dividends, in the amount and in the time period approved by the General Meeting of Shareholders on the recommendation of the Board of Directors, to shareholders who are included in the register of shareholders on the date of its closing as having the right to participate in the General Meeting of Shareholders where resolutions on dividend payments are made.
It is the Company’s dividend policy goal to pay dividends amounting to no less than 25% of annual consolidated net profits according to International Financial Reporting Standards (IFRS).

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