Approved
Management Board
National Company
Kazakhstan Temir Zholy
Joint-Stock Company
November 15, 2008
(Minutes No.02/41)
Policy of Corporate GovernanceDevelopment
in subsidiaries of
National Company Kazakhstan Temir Zholy Joint-stock Company
Astana, 2008
1. General provisions
1.This Policy of Corporate Governance Development in subsidiaries (hereinafter – the Policy) of National Company Kazakhstan Temir Zholy Joint-stock Company (hereinafter – the Company) is developed in accordance with the Charter and the Code of the Company’s Corporate Governance.
2.The Policy establishes general terms of corporate interaction (hereinafter – the Interaction) of the Company, subsidiaries, including a system organization of corporate governance of subsidiaries.
3. The Company strives for a balanced development of subsidiaries based on efficient mechanisms of corporate governance.
2. Aims of corporate interaction
4.The Interaction of the Company and subsidiaries is carried out withthe aim of:
providing financial stability and profitability of the activities of the Company and subsidiaries;
achieving aims of subsidiaries provided for by the charters of subsidiaries;
providing a compliance with the legislation of the Republic of Kazakhstan in the activity process of the Company and subsidiaries;
providing a protection of rights and legally protected interests of the Company as a shareholder of subsidiaries;
rising investment attractiveness of the Company and subsidiaries by ensuring their corporate “transparency”, balance and predictability of the corporate policy as a whole;
providing a steady work of the Company and subsidiaries by timely designof strategic areas(plans) for the development of the Company and subsidiaries, and also by development of mechanisms of their implementation.
3. Mechanism of corporate governance implementation
5. Aims specified in paragraph 4 of this Policy are achieved by the Company by:
coordinating a planning process and implementing production, financial activities of subsidiaries;
coordinating recruitment policy in respect of governing and control bodies of subsidiaries;
defining a position of the Company in accordance with internal documents during decisions-making by the Boards of Directors of subsidiaries;
carrying out the Company’s control over prospective and current activity of subsidiaries (in all directions);
optimizing information flow between the Company and subsidiaries.
6. Corporate governance of subsidiaries is carried out by the Company through implementation of functions of the Sole Shareholder and representative body in the Boards of Directors of subsidiaries.
According to subparagraph 15-1) of paragraph 2 of Article 53 of the Law of the Republic of Kazakhstan “On joint-stock companies”, decisions on behalf of the Sole Shareholder are made by the Board of Directors of the Company.
7.The Sole Shareholder and the Boards of Directors of subsidiaries make decisions on the following issues of the activity of subsidiaries:
1) The Sole Shareholder make decisions on:
introduction of amendments and additions to charters of subsidiaries or their approval in a new edition;
approval of codes of corporate governance of subsidiaries, and also amendments and additions to them;
approval of development strategies of subsidiaries;
voluntary readjustment and liquidation of subsidiaries;
adoption of decisions on increasing the number of authorized shares of subsidiaries or changing a type of unplaced authorized shares of subsidiaries;
defining a quantitative composition, terms of office of the Boards of Directors of subsidiaries, electing members of the Boards of Directors and early termination of their powers, and also defining the amount and conditions of remuneration payment for the members of the Boards of Directors of subsidiaries;
election of Chairmen of the Board (Presidents) of subsidiaries in accordance with the applicable procedure, and also early termination of their powers.
adoption of decision on participation of subsidiaries in creating or activities of other legal entities by transferring a part or several parts of assets that in total equal to twenty five or more percent of all shares of subsidiary.
2) the Board of Directors of subsidiary make decisions on:
identifying priority areas of activity of subsidiary;
approval of development plans, budgets of subsidiary;
adoption of decisions on repurchase of outstanding shares or other securities by subsidiary and on the their repurchase price;
election of its members of the Board of subsidiaries, excluding its leader, and also early termination of their powers;
adoption of decision on subsidiary’s acquisition of ten and more percent of shares (equity share in authorized capital) of other legal entities;
increasing liabilities of subsidiary by 10 (ten) or more percent of its own capital dimension;
adoption of decision on conclusion of large-scale deals and deals whose conclusionarouses subsidiary’sinterest;
approval of staff (total number) and structure of management of central office of subsidiary.
The Sole Shareholder and the Boards of Directors of subsidiary make decision on other issues provided for by the Law of the Republic of Kazakhstan “On joint-stock companies” and the charters of subsidiaries
8. During implementation of their functions, the Company, members of the Board of Directors are governed by the requirements of this Policy and internal documents of the Company on issues of corporate governance and carry out control over their compliance by employees of the Company and subsidiaries.
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