Corporate governance rating

Press-release: National Rating of Corporate Governance Issued to PJSC ALROSA

 

The Russian Institute of Directors has issued a National Rating of Corporate Governance (NRCG) to Public Joint Stock Company ALROSA. The rating is NRCG 8+ “Best Practices of Corporate Governance.”

On November 1, 2021, changes to the methodology of the National Rating of Corporate Governance (NRCG) came into force. These changes primarily concern new criteria related to sustainable development and ESG management.

In that context, the Russian Institute of Directors (RID) reviewed corporate governance practices at PJSC ALROSA with regard to the following four components:

The following key positive aspects were noted in particular in regard to the “Shareholders’ Rights” component:

•          The functions of the counting commission at General Meetings of Shareholders are performed by an independent registrar.

•          Materials for the preparation of General Meetings of Shareholders are published on the Company’s website.

•          PJSC ALROSA facilitates shareholders’ use of electronic means of communication in the process of exercising their rights.

•          PJSC ALROSA has a positive dividend history.

•          In determining dividend amounts, the Company takes into account the debt burden and free cash flow indicators determined according to IFRS.

•          The Company’s dividend policy provides for a minimum level of dividends at year end based on the net profit indicators determined according to IFRS.

•          A recognized audit company selected on a competitive basis is involved in the audit of financial statements in accordance with IFRS and RAS.

The practices of PJSC ALROSA related to the “Operation of Governance and Control Bodies” component are characterized by the following key positive aspects:

•          The Supervisory Board includes five independent directors.

•          A senior independent director has been elected to the Supervisory Board of PJSC ALROSA.

•          PJSC ALROSA has comprehensive regulations to manage the conflicts of interest of the members of the Supervisory Board and its executive bodies.

•          The competence of the Supervisory Board in terms of approval of significant transactions has been expanded.

•          PJSC ALROSA provides liability insurance for members of the Supervisory Board and the Executive Committee.

•          Most of the important issues recommended for consideration at in-person meetings in the Corporate Governance Code are considered by the Supervisory Board at in-person meetings, and the corresponding requirement is included in the Company’s internal documents.

•          The Supervisory Board conducts proactive strategic management.

•          The Supervisory Board conducts annual self-assessments, and an independent consultant performs an external assessment every three years. The results of the evaluation are reviewed at an in-person meeting of the Board.

•          The Audit Committee and the Human Resources and Remunerations Committee include independent directors only.

•          PJSC ALROSA has developed and implemented a regulatory and methodological framework for risk management.

•          Functional accountability of the Internal Audit Department to the Supervisory Board has been achieved at PJSC ALROSA.

•          PJSC ALROSA has a well-developed institute of Corporate Secretary.

The experts noted the following key positive practices of PJSC ALROSA within the framework of the “Information Disclosure” component:

•          PJSC ALROSA discloses full information on the Company’s share ownership structure.

•          The Supervisory Board of PJSC ALROSA exercises control over the implementation of the Company’s information policy.

•          The Company discloses information in its annual reports on the individual remuneration of each member of the Supervisory Board.

•          The Company’s website contains detailed information about the members of its governing bodies and about its Corporate Secretary.

•          The Company discloses information on the remuneration paid to the external auditor in accordance with IFRS and RAS for the audit of financial statements, as well as for consulting services.

•          The annual report for 2020 was prepared in accordance with legal requirements, and it also discloses a large amount of additional information.

•          The Company’s web-site is regularly updated, and it contains a large amount of up-to-date information about the Company and the Company’s activities.

•          A separate section with information on the work of the Supervisory Board has been created on the Company’s web-site.

The practices of PJSC ALROSA in connection with the “Sustainable Development and ESG” component are characterized by the following key positive aspects:

•          The Supervisory Board has approved the ALROSA Group’s Sustainable Development Program for 2021–2025.

•          Sustainable development and ESG issues are in the focus of the Supervisory Board.

•          The Supervisory Board monitors the process of ESG risk management.

•          The Company implements compliance initiatives.

•          The Company prepares reports in accordance with TCFD and CDP standards.

•          The Company is developing a climate change adaptation program and a carbon neutrality program.

•          The operations of PJSC ALROSA have been certified for compliance with ISO 9001 and ISO 14001.

•          ALROSA prepares a Sustainability Report which complies with the GRI standards and is verified by an independent auditor.

The limiting factors that require additional efforts from the Company are:

•          Consulting services are rendered to the Company by an external auditor.

•          The number of in-person Supervisory Board meetings is rather small.

•          The Company does not disclose information on the individual remuneration of the members of the Executive Committee, nor on the remuneration paid to the sole executive body.

Thus, as a result of review according to the updated methodology and taking into account the corporate events that have taken place, an NRCG 8+ rating has been assigned to PJSC ALROSA.

NRCG 8+ means that ALROSA follows a significant portion of the recommendations of the Russian Corporate Governance Code and sustainable development standards. Stakeholder risks associated with the quality of corporate governance and the management of sustainable development are insignificant.

About the Company:

Public Joint Stock Company ALROSA is a Russian diamond mining company and the world leader in rough diamond production. The company also has the world’s largest diamond reserves. ALROSA Group is engaged in exploration for and the mining, processing, and sale of rough diamonds. The activities of the Group are concentrated in two regions of Russia, Yakutia and Arkhangelsk Region, and also in Africa.

The Russian Federation, with a 33.0256% stake in the authorized capital, the Republic of Sakha (Yakutia), with a 25.0002% stake, and the districts (uluses) of the Republic of Sakha (Yakutia), with an 8.0003% stake, are shareholders of the Company. The share capital structure also includes a significant number of minority shareholders.

PJSC ALROSA is a public company, and the Company’s shares are listed in Level One on the Moscow Exchange.

The Group’s revenue under IFRS in 2020 amounted to 217 billion rubles, with a net profit of 32 billion rubles.

For details, please contact:

Anzor Bekshokov

Leading Expert of the Russian Institute of Directors’ Expert Center

Phone: (495) 502-94-85

e-mail: bekshokov@rid.ru

Or

Ekaterina Nikitchanova

Deputy Director-Head of the Russian Institute of Directors’ Expert Center

Phone: (495) 502-94-85

e-mail: nikitchanova@rid.ru

This page was last updated on 10 April 2015 at 14.47