1. Russia’s Legal and Regulatory Reforms (2012-2015): Promoting Foreign Investment or Creating Barriers Natalia Drebezgina, Alan Kartashkin March 5, 2015

2. Agenda Russian Corporate Regulatory Framework: Key Amendments Amendments to Russian Civil Code: Types of Legal Entities, Public and Non-Public Companies Shareholders’ Rights and Duties; Controlling Shareholder’s, Directors and Officers Liability Shareholders’ Agreements Amendments to Listing / Delisting Regime and Increased Role of Corporate Governance 2

3. 3 Russian Corporate Regulatory Framework: Key Amendments

4. Amendments to the Russian Civil Code on, among other things, the types of legal entities, shareholders’ (“corporate”) agreements and corporate liability (in most part came into force on 1 September 2014) Amendments to Joint Stock Company Law on, among other things, approval of listing and delisting of securities issued by a joint stock company – further amendments expected to bring it in compliance with the Civil Code Amendments to Russian Securities Market Law New Listing Rules adopted by the Moscow Stock Exchange (“MOEX”) (latest version came into force in September 2014) (“MLR”) in furtherance of the FSFM Order “On Admission of Securities to Organized Trading” adopted in July 2013 (came into force on 30 September 2013) New Corporate Governance Code (adopted by the Board of Directors of the Central Bank of Russia in March 2014) (“CGC”) –replaced Corporate Governance Code approved in April 2002 –is recommended for use by Russian joint stock companies –MOEX Listing Rules to be brought in compliance with it 4

5. 5 Amendments to Russian Civil Code: Types of Legal Entities, Public and Non-Public Companies

6. Amendments to Russian Civil Code: Types of Legal Entities Clearer division of legal entities into commercial and non-commercial Strictly limited rights of non-commercial organisations to be involved in commercial activity Exhaustive list and classification of types of non-commercial organisations Exhaustive list of commercial legal entities: –Partnerships (full and limited) –Companies » limited liability companies (“LLCs”) » joint stock companies (“JSCs”) (a single joint stock company corporate form is established, without division into open joint stock companies and closed joint stock companies (“OJSC” and “CJSC”) – see next slide) –Other entities: unitary enterprises, production cooperatives, economic partnerships, peasant (farm) holdings Amendments introduced concept of corporations as legal entities formed by members –All commercial legal entities other than unitary enterprises –Certain non-commercial organizations 6

7. 7 LLCCJSCOJSC Number of participants / shareholders Up to 50 Not limited Company issues shares?NoYes Right of first refusal to acquire previously issued shares Yes No Public offering and trading possible? No Yes Requirement to endorse resolutions of shareholders’ meetings Procedures flexible and can be regulated in company’s bylaws No, minutes signed by chairman of the meeting and secretary Change of competence of general meeting in the charter YesNo Board of directorsNot requiredRequired (minimum 5) unless company has less than 50 shareholders and functions of the Board are performed by the shareholders’ meeting Right to demand that a participant / shareholder be expelled Yes by at least 10% participant(s) No Pursuant to recent amendments to the Russian Civil Code all corporate entities are divided into public (former OJSCs) and non-public (former CJSC / LLCs). Public company is defined as a company with shares that were publicly issued and placed (via open subscription) or are publicly traded. Adjusting amendments into LLC Law and JSC Law are expected. Main types of Russian Companies Prior to Amendments: Overview

8. Amendments to Russian Civil Code: Public and Non-Public Companies (1) A public company is: –a JSC with securities publicly issued (by way of open subscription) or publicly traded; and –rules on public companies apply to JSCs that indicated in their charter or registered names that they are public JSCs All other JSCs and all LLCs are non-public Issuance of publicly traded non-convertible bonds does not change the status of non- public JSCs or LLCs Implications: –Companies due to change their charters to reflect changes to form when first amendments are introduced some have already done so, some are waiting for amendments to the JSC Law – Change of name may require re-issuance of certain documents, notification of counterparties, regulatory authorities, etc. 8

9. Amendments to Russian Civil Code: Public and Non- Public Companies (2) Any public JSC must: –have a board of directors comprised of minimum 5 members –engage a licensed registrar and delegate to it maintenance of shareholder register and functions of vote counting committee (same applies to non-public JSCs) –disclose information to public in accordance with disclosure requirements In respect of a public JSC: –no preemptive rights can be given and no other restrictions can be imposed on sale of shares –no restrictions on shareholding (number of shares or votes) are possible –no issuance of preferred shares with nominal value that is less than nominal value of ordinary shares –no expansion of scope of competence of general shareholders meeting 9

10. Main types of Russian Companies Under Amended Provisions LLCNon-public JSCPublic JSC Number of participants / shareholdersUp to 50Not limited Company issues shares?NoYes Right of first refusal to acquire previously issued shares YesNo Public offering and trading possible?No Yes Resolutions of shareholders' meetings must be endorsed by: Notary public or by means provided for in the charter or unanimous resolution of shareholders Notary public or registrar Registrar Change of competence of general meeting in charter Yes No Board of DirectorsNot required Required (minimum 5 persons) Right to demand that a participant / shareholder be expelled Yes No Preferred shares may be issued with a par value lower than the par value of ordinary shares Not applicableYesNo 10

11. Non-public Companies – Potential Form For a Joint Venture More opportunities for shareholders of non-public JSCs to establish corporate governance structure as they see fit The following provisions may be included in its charter by unanimous shareholder vote: –expansion of general shareholders’ meeting’s competence –amendments to procedures for convening, holding and adopting resolutions at general meetings (provided that such amendments do not deprive participants of the right to participate in and receive information on meetings) –delegation of matters falling within the competence of the general meeting to the competence of the supervisory board or executive bodies (with certain exceptions, such as amendments to the charter, reorganisation, etc.) –number of members, formation and activities of the supervisory board that differ from those set forth by law –limit the maximum shareholding in the company –procedure for the exercise of pre-emptive rights in an LLC or upon placement of additional shares in a JSC –other provisions envisaged by laws on corporate entities If the law does not require that the above provisions be included in the charter, they may be set forth in a shareholders' agreement signed by all participants of a corporation 11

12. Governing bodies Governing bodies: –Shareholders’ meeting –Sole executive body –Collective executive body (management board) –Supervisory board (board of directors) The sole executive body and members of collective executive bodies may not constitute more than 25% of the supervisory board or be elected as its chairman The charter may set forth that several persons are executing the functions of the sole executive body jointly (“two keys principle”) or separately –Unclear how authorities will be divided Members of the supervisory board are granted vast powers: to obtain information, challenge transactions, claim compensation of damages to the corporation 12

13. Competence of the shareholders' meeting Reserved shareholder matters of a public company are confined to issues specified in the Civil Code and JSC Law and may not be extended by the charter Reserved shareholder matters of a non-public company may be extended by the law and charter As compared to the current regulatory regime, in case of broad interpretation of amendments to the Civil Code, the following issues would be added to reserved shareholder matters: –Amendments to the charter even where the JSC Law permits amendments without a shareholder resolution (such as amendments reflecting establishment of branches and representative offices or amendments reflecting changes to share capital upon issuance or cancellation of shares) –Election and early termination of powers of the management board 13

14. 14 Shareholders’ Rights and Duties; Controlling Shareholder’s, Directors and Officers Liability

15. Shareholders' rights Rights are proportionate to the share / participation interest held −Charter or a shareholders' agreement (disclosed and entered into unified register of legal entities) can provide otherwise Civil Code sets forth general rights of members of a corporation including rights to: –Challenge resolutions of governing bodies –Claim compensation of damages caused to the corporation by members of its governing bodies and controlling persons (a new concept) –Challenge corporation's transactions in cases provided for by law –Demand withdrawal of any other member of the corporation in court if such member caused material damage to the company or materially hinders its activities, including by gross violation of such member’s obligations (a new concept applicable to non-public companies) –Right to access information “in cases and in the manner envisaged by the law and charter” 15

16. Right to challenge transactions and resolutions and claim compensation of damages to the company The right to make such claim does not depend on the amount of a participation interest A shareholder making such claim is deemed a representative of the corporation by virtue of the law and is required to act reasonably and in good faith Special procedure for making a claim: –Duty “to take reasonable steps for prior notification” of other members of the corporation and “provide them with other relevant information” (in the manner provided for by the organizational documents or laws on corporations): »How to notify before the laws are amended? »Should the company compensate expenses? –Shareholders that failed to accede to such claim are not entitled to subsequently make similar claims, unless the court recognizes the grounds to apply as reasonable 16

17. Shareholders' duties The amendments establish general duties of shareholders, including the duties to: –“participate in formation of the corporation's assets in the amount, under the procedure, in the manner and within the timing stipulated by the Code, other laws or organizational document of the corporation” »are capital calls permitted? –participate in adopting resolutions required for corporation's business: »does the right to vote sometimes transform into a duty? »can minority shareholders be compelled to approve an interested-party transaction? –refrain from taking any acts that are knowingly aimed at causing harm to the corporation –refrain from any acts (omission) that materially hinder attainment of the corporation's objective or render the same impossible General duty to act in good faith, including in relations between shareholders 17

18. Enhanced Rules on Directors’, Officers’ and Controlling Persons’ Liability Rules on liability of directors and officers in Russian companies further clarified: –Obligation to act reasonably and in good faith in the interests of the company taking into account normal commercial risk and customary rules –Those who voted against or abstained from voting acting in good faith cannot be held liable –Fault-based liability; joint liability of all liable persons –Agreements limiting or eliminating liability of a controlling shareholder, officers or directors of public companies, or liability of officers and directors of non-public companies for acting in bad faith are void Subsidiary liability of sole shareholder in wholly-owned companies; information on sole shareholder of the company must be included in the state register of legal entities (which is publicly available) Parent company is secondary liable if its subsidiary acted with consent or on the instruction of the parent company Shareholders of a subsidiary may bring a tort claim seeking for compensation of damages caused by the parent company to the subsidiary 18

19. 19 Shareholders’ Agreements

20. Shareholders’ Agreements Concept Developed (1) Concept of shareholders’ agreements was initially introduced to LLC and JSC Laws in 2008-2009 but certain issues remained Recent amendments introduced general rules regulating shareholders’ (“corporate”) agreements directly into the Civil Code Subject matter of any corporate agreement is the exercise of corporate rights and duties, including: –Concerted voting –Other concerted actions related to management of the company –Acquisition or sale of shares at a fixed price and upon occurrence of certain circumstances –Abstaining from sale of shares until occurrence of certain circumstances A corporate agreement may not: –Oblige shareholders to vote in accordance with instructions of management bodies of the company –Determine structure and competence of management bodies of the company 20

21. Shareholders’ Agreements Concept Developed (2) Regulation prior to amendments (using JSC as an example) New regime PartiesOnly shareholders (resulting in issues with execution of the agreement prior to acquisition of shares) Shareholders Creditors of the company and other persons having legally protected interests Subject matter of the agreement Exercise of rights arising out of shares and rights to shares, including: voting in a certain way; acquisition or disposal of shares at a previously agreed price and/or upon the occurrence of certain circumstances refraining from disposal of shares prior to the occurrence of certain circumstances concerted actions in respect of other corporate governance matters In general, similar for public companies Dealing with certain issues that resulted in problems in court practice: corporate agreement cannot determine the structure of governing bodies but shareholders can undertake to vote in favor of the relevant amendments the parties may not refer to invalidity due to contradiction to the provisions of the charter Significantly more flexible for non-public companies Consequences of violation Standard contractual remedies plus “compensation” Option to invalidate a transaction entered in violation of the agreement if the other party was aware or should have been knowingly aware of the restrictions Not possible to invalidate resolutions adopted by the governing bodies in breach of the agreement Distinctions: no “compensation” it is now possible to invalidate resolutions adopted by the governing bodies if all shareholders are parties to the agreement 21

22. Shareholders’ Agreements Concept Developed (3) Governing law: a shareholders' agreement may be governed by foreign law but without prejudice to “mandatory provisions of personal law” of the corporation (i.e. Russian law) Disclosure of the shareholders' agreement: – Duty to notify the public of the existence of such agreement » Failure to notify entitles the remaining shareholders to claim compensation of damages to the corporation caused by such failure – In a public company, the contents of the agreement shall be disclosed to the extent and in the manner provided for by the law – In a non-public company, there is no direct duty to disclose the contents of the agreement; however, if such agreement provides for participants' rights that are not proportionate to their participation interest, the relevant entry must be made in the unified register of legal entities 22

23. 23 Amendments to Listing / Delisting Regime and Increased Role of Corporate Governance

24. Amendments to JSC Law: Listing / Delisting (1) Starting from January 2013 delisting of shares of Russian public companies requires shareholder approval (no shareholder vote was required before that) Delisting implies exclusion of shares from list of securities admitted to trading, including from a quotation list Conditions for delisting: –Approval at a general meeting by a ¾ majority vote –Preferred shares can vote on the issue of delisting –Shareholders that voted against or did not participate in voting are entitled to buy- out (redemption) rights –Buy-out (redemption) price must be determined by an independent appraiser and cannot be lower than the average weighted market price for 6 months preceding shareholders’ resolution on approval of delisting –Shareholders’ resolution on delisting comes into effect provided that the issuer can buy out all shares submitted for buy out (redemption), i.e. their value does not exceed 10% of net assets’ value of the issuer 24

25. Amendments to JSC Law: Listing / Delisting (2) Starting from September 30, 2013 applying for listing of shares of Russian companies requires shareholders’ approval unless the matter was delegated to the board of directors by the company’s charter –JSC’s should amend the charters to delegate share listing approval to board of directors in order to simplify the procedure Holders of preferred shares of certain type are entitled to vote at shareholders’ meetings on approval of listing or delisting of preferred shares of such type 25

26. New Listing Rules of the Moscow Stock Exchange: General Overview (1) New Listing Rules of the Moscow Stock Exchange (“MOEX”) became effective in September 2014 New system of quotation lists: Levels I, II and III –Level I (broadly in lieu of previous “A1” and “A2” quotation lists) –Level II (broadly in lieu of previous “B” and also “V”, “I” quotation lists) –Level III - a “non-quoted” part of the list of securities admitted to trading Stock exchange now more closely monitors and is required to disclose more information on issuers’ compliance with Listing Rules and other statutory requirements Stock exchange may delist the shares (or, where applicable, grant grace periods to correct or remedy breaches) in cases of: –Issuer’s failure to comply with securities laws/ regulations and rules on mandatory disclosure of information –Issuer’s insolvency or liquidation –Termination of listing services agreement 26

27. New Listing Rules of the Moscow Stock Exchange: Comparison of Level I and Level II (1) Listing Requirement Level ILevel II Free float* and market value of issued shares** Market Capitalization ≥60 billion RUB:  Market value of issued shares constituting free float should be ≥3 billion RUB  Free float should be ≥10% of all issued ordinary shares of the issuer Market Capitalization <60 billion RUB:  Market value of issued shares constituting free float should be ≥3 billion RUB  Free float should be calculated pursuant to the following formula: Free Float = (0.25789-0.00263*Cap)*100%, where Cap is market capitalization of the issuer (in billion RUB)  Market value of issued shares constituting free float should be ≥1 billion RUB  Free float should be ≥10% of all issued ordinary shares of the issuer * According to Methodology of Free Float Calculation approved by the Moscow Stock Exchange the following shares are excluded from free float: (i) shares held by the State, state corporations and state institutions, Bank of Russia and Central Banks of foreign states, (ii) treasury shares, (iii) shares encumbered in favor of third parties pursuant to transactions with them, (iii) shares held by top managers or their affiliates, (iv) shares held by entities or individuals amounting to 5% of all issued ordinary shares except for shares held by investment funds, pension funds or other funds, and (v) shares in respect of which nominee holders – depositories are registered as holders (“vladelets”), except for depository bank holding shares deposited into depositary receipts program or Russian depositary receipt program. ** The requirement applies only to issued shares. 27

28. New Listing Rules of the Moscow Stock Exchange: Comparison of Level I and Level II (2) Listing RequirementLevel ILevel II Non-compliance with the free float requirement as a ground for exclusion from the quotation list If within (6) six months in a row free float is 2.5 percentage points below the required level If within (6) six months in a row free float is 5 percentage points below the required level Term of existence of the issuer Not less than (3) three yearsNot less than (1) one year Preparation and disclosure of IFRS accounts For at least (3) three years preceding the date when the shares are listed on Level I list For at least (1) one year preceding the date when the shares are listed on Level II list 28

29. New Listing Rules of the Moscow Stock Exchange: Comparison of Level I and Level II (3) Listing RequirementLevel ILevel II Corporate governance requirements Board of Directors shall be composed of at least 20% of the independent directors (but in any event shall include at least (3) three independent directors) Audit committee of the Board of Directors comprised of the independent directors Remuneration committee of the Board of Directors comprised of the independent directors Nominations and hiring committee of the Board of Directors comprised of the independent directors; Appointment of corporate secretary and approval of regulations on the corporate secretary Adoption of the dividend policy Establishment of the internal audit department and adoption of internal audit policy Charter of the issuer must contemplates at least 30 days prior notice of the general shareholders meeting Charter or bylaws of the issuer must contemplate that the date when list of shareholders entitled to participate in the general shareholders’ meeting is prepared is disclosed at least five days prior to such date Board of directors shall include at least (2) two independent directors Audit committee of the Board of Directors comprised of the independent directors Establishment of the internal audit department and adoption of internal audit policy Charter of the issuer must contemplate at least 30 days prior notice for the general shareholders meeting Charter or bylaws of the issuer must contemplate that the date when list of shareholders entitled to participate in the general shareholders meeting is prepared is disclosed at least five days prior to such date 29

30. New MOEX Listing Rules: Compliance with Corporate Governance Requirements Corporate governance requirements are an important part of listing regime, in particular, new criteria for director independence MOEX Listing Rules on corporate governance are to a significant extent based on the new Corporate Governance Code approved by the Central Bank of Russia MOEX may include into a quotation list securities of the issuer that does not comply with corporate governance requirements, provided that: –Such issuer and its securities comply with other rules set forth in the FSFM order on admission to trading and MOEX Listing Rules –MOEX is provided with the plan of remedy of non-compliance, which should be agreed with a shareholder holding more than 50% of issuer’s shares and approved by issuer’s board of directors –Grace period for remedy of non-compliance should not exceed 2 years from the date the MOEX Listing Rules became effective If shares or depositary receipts or issuers remain non-compliant with corporate governance requirements upon expiration of the 2-year grace period, MOEX can either: –move securities to a lower level of quotation list, or –include the securities in non-quotation part of the list 30

31. Independent Directors Criteria in Russia No uniform definition or approach Historically different criteria of director independence for different purposes: –Approval of so-called “interested party” transactions under the JSC Law (where transactions are to be approved by independent disinterested directors) –Criteria set our in listing rules for listing purposes –Criteria recommended by Corporate Governance Code New Corporate Governance Code and new Listing Rules did not alter the approach but criteria of director independence are now closer to international standards 31

32. Independent Directors Criteria : JSC Law PurposeCriteria General criteria for independence of directors set forth in the JSC Law for the purposes of approval of interested-party transactions Continues to apply Under the JSC Law, a director is considered independent if is not and has not been for one year preceding the adoption of the decision: a person who carries out the functions of the executive body of the company, including a manager thereof, a member of a collective executive body or a person who holds positions in the management bodies of a managing organization; an affiliate of the company other than a member of the board of directors (supervisory board) of the company; a person whose spouse, parents, children, full or half- brothers and sisters, adoptive parents and adopted children are persons holding positions in the above-mentioned management bodies of the company or of a managing organization of the company or are managers of the company 32

33. Independent Directors Criteria: Old Listing Rules and Corporate Governance Code (1) PurposeCriteria Criteria for independence for the listing purposes If the shares of the company were listed as class А1 (class A level one shares), the Board of Directors was required to include no less than three directors who shall not be: persons holding positions in the executive body of the issuer, including a manager thereof, or employees of the issuer, at the date of any such director’s election or within 1 year prior to that date; persons holding positions in the human resources or remuneration committees established by the board of directors of other company; spouses, parents, children, full or half- brothers and sisters, adoptive parents and adopted children of persons holding positions in the management bodies of the issuer or of its management company; the issuer’s counterparties under agreements which grant such counterparties with a right to acquire assets, including cash, with value of 10% or more of such persons’ annual income, except for remuneration received as members of the board of directors; 33

34. Independent Directors Criteria: Old Listing Rules and Corporate Governance Code (2) PurposeCriteria Criteria for independence for the listing purposes (continued) If the shares of the company were listed as class А1 (class A level one listing), the Board of Directors was required to include no less than three directors who shall not be: persons holding positions in the executive body of the issuer, including a manager thereof, or employees of the issuer, at the date of any such director’s election or within 1 year prior to that date; Old Corporate Governance Code The old Code of Corporate Governance recommended, in addition to criteria listed above, independent director should be a director: is not an affiliated person of an officer (manager) of the company (officer of the company’s managing organization); over the last three years has not been an officer (manager) or employee of the company, or an officer or employee of the management company of the first company; is not a major counterparty of the company (a counterparty with an annual value of transactions with the company in excess of 10 percent of the asset value of the company); has not been an independent director of the company for the period of time exceeding 7 years. 34

35. Independent Directors Criteria: New MOEX Listing Rules (1) CriteriaDescription of the requirements General requirements New criteria are aligned with guidelines and practices applied and used by global leading stock exchanges and are based on the new Corporate Governance Code An independent director is a director who is not connected with: 1)the issuer; 2)significant shareholder of the issuer (a holder entitled either directly or indirectly to dispose of more than 5% of votes attaching to the shares of the issuer); 3) significant counterparty of the issuer (with liabilities exceeding 2% of assets of the issuer or counterparty or 2% of profits of the issuer or counterparty); or 4)competitor of the issuer; or 5)the state (includes Russian Federation, its sub-federal units/ regions and municipalities). Individuals connected with the director (or connected individuals) are family members (spouse, children, parents, including adopted children and foster parents, sisters and brothers) of the director or a person living in the same household with the director. 35

36. Independent Directors Criteria: New MOEX Listing Rules (2) CriteriaDescription of the requirements Connections with the issuer A director is deemed to be connected with the issuer if he or any of his connected individuals: 1)is (or was during last three years) a member of the executive body or an employee of the issuer or an entity controlled by the issuer or the management company of the issuer; 2)in the course of any year within last three years has received any form of compensation or remuneration (in the amount exceeding ½ of fixed base annual compensation of the member of the board of directors of the issuer) from the issuer or entities controlled by the issuer; 3)is a holder of more than 1% of shares of the issuer (or is an ultimate beneficial owner of such shares); 4)is a member of executive bodies of an entity or an employee of an entity whose compensation/ remuneration is set by the remuneration committee of the board of directors of such entity in case when any member of executive bodies of the issuer or any employee of the issuer is also a member of the remunerations committee of the board of directors of said entity; 5)is rendering consulting services to the issuer, the person controlling the issuer or an entity controlled by the issuer or is a member of executive bodies, or is an employee of an organization rendering consulting services to the issuer and the said entities; 6)is rendering (or has rendered in the last three years) appraisal, tax advisory, audit or accounting services to the issuer, the person controlling the issuer or an entity controlled by the issuer, or has been during last three years a member of executive bodies of organizations rendering such services to the said entities, or is has been during last three years a member of executive bodies or an employee of the rating agency of the issuer. Director is also deemed to be connected with the issuer if his term of the office in the position of the member of the board of directors of the issuer in aggregate exceeds seven years. 36

37. Independent Directors Criteria: New MOEX Listing Rules (3) CriteriaDescription of the requirements Connections with significant shareholder of the issuer Director is deemed to be connected with significant shareholder of the issuer if he or any of his connected individuals: 1)is an employee and/or a member of executive bodies of significant shareholder of the issuer (or entities controlling significant shareholder of the issuer); 2)in the course of any year within last three years has received any form of compensation or remuneration (in the amount exceeding ½ of fixed base annual compensation) from significant shareholder of the issuer or entities controlling or controlled by significant shareholder of the issuer (where information on the entities controlled by significant shareholder of the issuer is available). Connections with significant counterparty or competitor of the issuer Director is deemed to be connected with significant counterparty or competitor of the issuer if he: 1)is an employee and/or a member of the governing bodies of significant counterparty of the issuer or competitor of the issuer; 2)is a holder (or an ultimate beneficial owner) of more than 5% of shares of the share capital (or more than 5% of voting shares) of significant counterparty of the issuer or competitor of the issuer. 37

38. Independent Directors Criteria: New MOEX Listing Rules (4) CriteriaDescription of the requirements Connections with the state/ municipality Director is deemed to be connected with the state or municipality if he: 1)is or has been during one year preceding his election to the board of directors a public sector employee, a local authorities employee or an employee of the Central Bank of Russia; 2)is a representative of the Russian Federation, a sub-federal unit of the Russian Federation or municipality in the board of directors of the entity where the state/ municipality reserved special voting/ management rights (“golden share”); 3)is mandated to vote on matters within the competence of the board of directors of the issuer as per instructions of the Russian Federation, a sub-federal unit of the Russian Federation or municipality; 4)is or has been during one year preceding his election to the board of directors (i) an employee or a member of the executive body of an entity controlled by the Russian Federation, a sub-federal unit of the Russian Federation or municipality, (ii) an employee of the state or municipal unitary enterprise or a public institution, if he is nominated as a member of the board of directors of the issuer where the Russian Federation, a sub-federal unit of the Russian Federation or a municipality controls more than 20% of the share capital of the issuer (or more than 20% of voting shares of the issuer). 38

39. Independent Directors Criteria: New Corporate Governance Code Independent directors criteria set out in MOEX Listing Rules were based on the new Corporate Governance Code (“CGC”) but CGC contains several additional requirements, including: –Connection with the issuer: holding or beneficially owning voting shares of the issuer, market value of which exceeds fixed base annual compensation by more than 20 times –Connection with significant shareholder: » being an employee or member of governing bodies not only of the shareholder or its controlling entities but also of any other entity within the group of entities of such significant shareholder » being member of the board of directors in more than two legal entities controlled by the significant shareholder or its controlling shareholder –Connection with significant counterparty or competitor: being an employee or member of executive bodies not only of the relevant party but also of any of its controlling or controlled entities MOEX plans to amend its Listing Rules to bring them in compliance with the CGC 39

40. New Corporate Governance Code: Other Provisions Even though CGC is not mandatory and only recommended for use by public companies, each public company with its shares listed on the stock exchange is obliged to disclose its level of compliance with CGC requirements in its annual report. In general CGC requirements on corporate governance correspond to those provided in Moscow Exchange Level I quotation list requirements (or rather vice versa) though in certain cases CGC requirements are more stringent. Recommendations on remuneration of the Board members, internal audit and risk management mechanisms. Additional recommendations on assessment, review and approval of material corporate actions: –Material deals not otherwise falling within definition of major transactions under Russian Joint Stock Companies Law; –Active role of independent directors when reviewing and assessing material corporate actions and material deals; –Material deals of controlled companies shall be approved by the issuer’s Board. Additional recommendations on proper, fair and full disclosure of company’s information and transparency when liaising with company’s shareholders; and other matters. 40

41. Listing Foreign Securities in Russia Foreign securities can be listed on Russian stock exchanges –Russian depositary receipts representing foreign shares: procedures significantly simplified –Equity securities (shares) directly –Depositary receipts –Debt securities (bonds, notes, etc.) Since 2014 amendments to the Securities Market Law and certain other regulations securities of foreign companies, including shares, can be admitted to trading without consent from, or agreement with, with issuer –Disclosure requirements set forth in the Securities Market Law (material fact statements, quarterly reports, etc.) do not apply to such issuers –Burden of disclosure obligations lies with the stock exchange –Russian Insider Trading Law does not apply A number of international companies were admitted to trading on the SPB Exchange following the above procedure 41

42. Questions? 42

43. 43 Contacts Alan Kartashkin Partner, Moscow akartashkin@debevoise.com +7 495 139 4004 Natalia Drebezgina Partner, Moscow nadrebezgina@debevoise.com +7 495 139 4024 500103641