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Memorandum of controlling entity - PJSC "Transneft"
with respect to controlled company - PJSC "NCSP"


NCSP Group[1] is the leading stevedoring operator in Russia and ranks third among European ports in terms of cargo turnover.

NCSP Group includes two of the largest Russian ports by cargo turnover: Novorossiysk on the Black Sea and Primorsk on the Baltic Sea, which brings it to a leading position in the Russian market of stevedoring services.

PJSC "NCSP" and NCSP Group operations ensure efficient function and development of key elements of port infrastructure in the Russian Federation, satisfaction of customers in port services, contribution to the countrys sustainable economic growth and stable social development.

PJSC "Transneft", as a controlling entity of PJSC NCSP (hereinafter - Company), manages the Company in accordance with the same corporate principles and standards aimed at Company's long-term development, ensuring growth of its financial performance and increasing the value of the business.

For PJSC Transneft NCSP Group represents:

●full delivery cycle for oil and petroleum products before loaded on board the vessel (23% of the oil and petroleum products processed in Russian ports);

●effective investment: a significant contribution to production and financial performance of Transneft Group.

PJSC "Transneft" considers PJSC "NCSP" as a strategic asset and its disposition is not planned neither fully nor partially.

PJSC "Transneft" also represented by the majority of PJSC "NCSP" Board members understands the importance of improving corporate governance in the Company, strives to ensure openness and transparency of its activities, increase its investment attractiveness, uphold legal provisions with respect to its minority shareholders and promotes implementation of the best generally recognized standards of corporate governance and principles of the Bank of Russia Corporate Governance Code as well as best practices of industrial and environmental safety and social responsibility in the Company's business practice.

PJSC "Transneft" guarantees compliance with market principles in commercial relations between PJSC "NCSP" and PJSC "Transneft".



[1] By the date of memorandum, NCSP Group and its subsidiary businesses
(JSC "NLE", JSC "Novorossiysk Shipyard", JSC "FNCSP", LLC "Baltic Stevedore Company", LLC "PTP", LLC "SFP", "IPP" Ltd.).




NCSP Group corporate governance system

 

NCSP Groups corporate governance system complies with Russian law, and meets Russian and international standards of best practice and business ethics, while taking into account the interests of all stakeholders. The Company complies with the requirements of the UK Listing Authority/Financial Services Authority (UKLA/FSA) for issuers of Global Depositary Receipts (GDRs).

 

The General Shareholder Meeting, Board of Directors, Chief Executive Officer and Management Board form the basis of NCSP Groups corporate governance system.

 

PJSC NCSP corporate governance structure

 

PJSC NCSP subsidiaries are governed by the election of representatives of PJSC NCSP and its shareholders to the boards of directors of these companies. The main document specifying corporate governance mechanisms at PJSC NCSP is the companys Charter. Amendments to the Charter fall within the authority of the General Shareholder Meeting, with the exception of amendments pertaining to the creation of branches, and the opening and liquidation of offices, which fall under the authority of the Board of Directors.

 

The Russian Federation (RF) has had a special right to participation in the management of PJSC NCSP through a golden share since April 2011. This right is exercised by the ability to appoint one representative of the government to both the Board of Directors and the Audit Commission. The RF representative on the Board of Directors has the right to veto decisions by the General Shareholder Meeting concerning amendments to the Charter or the approval of a new version of the Charter, the reorganization of the Company, liquidation, changes to charter capital, and execution of major transactions and related-party transactions.

 

The Company adopted a Corporate Governance Code in 2007 that takes into account the recommendations of the Organization for Economic Cooperation and Development and the Russian financial markets regulator. The Code is based on the Federal Law On Joint-stock Companies and the PJSC NCSP Charter. The Code does not apply to PJSC NCSP subsidiaries, which voluntarily comply with the Corporate Governance Code approved by the Russian Federal Financial Markets Service on April 5, 2002. The subsidiaries disclose this information in their annual reports.

 

The Internal Control Service (until June 14, 2012), Internal Audit Department (since June 14, 2012), as well as the Internal Audit Commission are responsible for internal control and auditing at NCSP Group and PJSC NCSP.

 

PJSC NCSPs Charter, Corporate Governance Code, internal documents regulating management and control bodies, as well as information on the Companys information policy, are available on the NCSP Group website:

 

http://www.nmtp.info/holding/investors/info_disclosure/uch_documents/