CORPORATE GOVERNANCE STRUCTURE
The Сompany fully recognizes the importance of effective corporate governance, therefore, an appropriate corporate governance is one of strategic objectives of “Samruk-Energy” JSC.
The corporate governance system of the Company is built on the basis of requirements of the Republic of Kazakhstan law, the principles and provisions of the Corporate Governance Code of “Samruk-Kazyna” JSC, internal regulatory documents of the Company, considering developing corporate governance practice in Kazakhstan and across the globe. The current corporate governance system of the Company ensures a clear delineation of powers and responsibilities between management bodies, officials and employees of the Company, adherence to the hierarchy of the procedure for considering issues and making decisions, as well as compliance with legislation and internal documents of the Company.
“Samruk-Energy” JSC operations are effective because of properly structured corporate governance processes at each of the levels, which ensure increased transparency, control and delineation of powers, and allow avoiding various risks by timely response.
To improve corporate governance, the Company has an Action Plan for improvement of corporate governance of the Company for 2019–2021 (hereinafter – CGI Plan), which was created using the recommendations of an external independent evaluation.
CGI Plan is monitored every quarter, the level of its achievement was included into KPI tree.
According to the 2020 results, the implementation of CGI Plan amounted to 86 %.
ORGANIZATIONAL STRUCTURE OF “SAMRUK-ENERGY” JSC
The following changes were made to the organizational structure of the Company in 2020
For the purposes of implementation of the Head of State to reduce the number of companies, as well as in pursuance of the order, the Chairman of the Management Board of “Samruk-Kazyna” JSC dated May 15, 2020 No. 39-r on the need to revise the organizational structures of companies, the new organizational structure was approved, with the entry into force from April 1, 2021 by the decision of the Company’s Board of Directors dated December 14, 2020 (Minutes No. 12/20):
— The total headcount of the Company reduced by 19 units (from 194 to 175 units);
— The number of structural units reduced by 4 units (from 31 to 27 units);
— The number of CEO-2 level employees (directors, executives, advisers) reduced from 37 to 29.
— The number of CEO-3 level employees (heads of departments) was completely reduced from 13 to 0.
The following changes were made in 2021:
The position of Deputy Chairman of the Management Board was introduced by the decision of the Board of Directors dated May 4, 2021 (Minutes No. 05/21).
Compliance with the principles and provisions of the Corporate Governance Code
In 2020, the Company evaluated and analyzed the actual compliance of the Company’s current operations with principles and provisions of the Code, the results of which show that the Company has ensured compliance with the basic principles and provisions of the Code. At year-end 2020, 59 provisions out of 64 provisions of the Code complied, 5 provisions partially complied. Inconsistencies are presented in the sections “Government as a shareholder of the Fund” and “Effectiveness of the Board of Directors and the Executive Body”:
1. Item 2 of Chapter 1 “Government as the shareholder of the Fund” according to which Companies should seek to simplify the structure of their assets and their legal forms to the maximum. So, the Company’s group includes subsidiaries of various corporate forms: both joint-stock companies and limited liability partnerships.
Due to the implementation of activities on the sale of the Company for the purpose of the execution of the RK Government decree dated December 30, 2015 No. 1141 “On some matters of privatization for 2016–2020,” as well as the decisions made by the State Commission for the Modernization of the Economy of the Republic of Kazakhstan and authorized bodies of the Fund in this connection, on issues relating to the approval of the method and strategy of sale of the Company, including the perimeter of companies included in the group of the Company as part of the privatization of the Company as a whole, at present, changing/simplification of the structure of “SamrukEnergy” JSC group of companies and corporate forms of subsidiaries and affiliates of “Samruk-Energy” JSC is not expected.
2. Item 15 of Chapter 1 “Government as the shareholder of the Fund” according to which, an ombudsman is appointed in order to comply with the principles of business ethics and effective management of social and labor disputes arising at a company, who at least once a year submits a report on the results of the work performed to the Appointment and Remuneration Committee and the Audit Committee of the Board of Directors of a company, which in turn evaluate his performance results. Thus, to comply with the principles of business ethics and effective addressing of social and labor disputes arising at a Company, on August 23, 2019, the Board of Directors of the Company (Minutes No. 07/17) elected and appointed Bekbas O.T. Ombudsman. – Chairman of the Public Association “Samruk-Energy Local Trade Union” with a term of office until August 23, 2020. As of December 31, 2020, the term of office of the Ombudsman of the Company expired, the decision on the election of a new Ombudsman was not made. Also, the Ombudsman’s reports were not submitted to the Board of Directors, the Appointment and Remuneration Committee and the Audit Committee throughout the 2020.
3. Item 5 of Chapter 5 “Effectiveness of the Board of Directors and the Executive Body”, according to which it is necessary to ensure diversity in the composition of the Board of Directors in terms of experience, personal characteristics, and gender composition. The current composition of the Board of Directors provides diversity in the required skills, knowledge, and competencies, but does not provide diversity in terms of gender.
4. Item 13 of Chapter 5 “Effectiveness of the Board of Directors and the Executive Body”, according to which the Board of Directors, committees and members of the Board of Directors of a company should be assessed on an annual basis through a structured process approved by the Board of Directors of a company. The Company did not evaluate the Board of Directors performance in 2019 due to the planned independent diagnostics of corporate governance by “SamrukKazyna” JSC. However, according to “Samruk-Kazyna” JSC letter dated September 17, 2020 (No. 20-07-50.8 / 5050), the diagnostics of corporate governance was postponed to 2021. In this regard, a self-assessment of performance for 2019–2020 will be conducted in 1–2 quarters of 2021.
5. Item 18 of Chapter 5 “Effectiveness of the Board of Directors and Executive Body”, according to which the Board of Directors elects the head and members of the executive body, sets the terms of office, the amount of wages, conditions of their labor remuneration, and terminates the powers of the head and members of the executive body. In accordance with the Charter and internal documents of the Company, the Board of Directors determines the size, term of office of the Management Board, elects members of the Management Board, early terminates their powers (except for the Chairman of the Management Board).
The matter of appointment (election) and early termination of powers of the Company’s Chairman of the Management Board pertains to the competence of the Sole Shareholder. The Corporate Governance Code was approved by the decision of “Samruk-Kazyna” JSC Management Board, and accordingly it is regulated by the Sole Shareholder.
The company, recognizing the importance of adhering to national and international corporate governance standards, plans to continue to develop the corporate governance system on a regular basis to maintain a high level of trust of all stakeholders and ensure sustainable business development.
Please follow the link https://www.samruk-energy.kz/en/ shareholder/other-statements to learn more about the report on compliance of corporate governance practices with principles and provisions of the Corporate Governance Code.