Rosneft is the leader
of the Russian oil
industry.
We strive to be first
in all aspects of our
activities. We are planning
the future of the Company
by leveraging the latest
technology and preventing
adverse effects on society
and the environment.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
ABOUT THE
COMPANY
01
2
4
6
8
9
12
14
16
25
Message from the CEO and Chairman of the Management Board
Rosneft operations
Rosneft-2030 Strategy
Long-Term Development Programme and progress report
KPI structure
Investment programme
Operating and financial results
Health, safety and environment
Carbon management
CORPORATE
GOVERNANCE
02
26
32
37
38
40
52
56
Corporate governance
General Shareholders Meeting
Anti-corruption efforts
Audit Commission
Risk Management and Internal Control System
Shareholder relations,key events in 2022
Dividend Policy
APPENDICES
03
1
Message from
the CEO and Chairman
of the Management Board
Igor SECHIN
Chief Executive Officer and Chairman of the Management Board
Dear shareholders,
The Company’s preparedness
to respond to any challenges
was another advantage that enabled
us to ramp up hydrocarbon production
despite all the headwinds. Sakhalin-1
is a great example of this approach.
When the previous operator
left the project, it took us close
to no time to recover production,
resume tanker shipments, restart
the drilling programme and thus
save over 3.000 jobs for highly
skilled professionals. Thanks
to a coordinated response and precise
management decisions, in the fourth
quarter of 2022, the Company
increased average daily hydrocarbon
production at Sakhalin-1 to a record
high of 5.50 mmboe.
In 2022, Rosneft clearly demonstrated
that its industry leadership
is underpinned by commitment
to the Company’s own strategic
vision and a steadfast management
approach. The robust business model
and well-informed corporate policy
made the Company impervious
to negative external factors
and market fluctuations, while also
making it possible to independently
define operating priorities
and achieve goals. Our strong
operating and financial performance
is a tangible proof of this affirmation.
In 2022, the Company’s hydrocarbon
production increased by 2.3%
to 5.10 mmboe per day, mainly due
to the success of our gas programme.
As a result, gas production rose by 15%
to reach the historic high of 74.4 bcm.
The use of in-house innovations
and the reliance on a comprehensive
exploration approach helped
maintain the high quality
of geological exploration and enabled
the Company to discover seven
new fields and 153 hydrocarbon
deposits in 2022. The largest
of them – the Madachagskoye
field on the Pechora Sea shelf
with 82.3 mmt in recoverable
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
AB1C1+B2C2 oil reserves – also
proved to be Russia’s largest
discovery of the year.
The Russian market has always
been the Company’s No. 1 priority
in terms of petroleum product
supplies. In this context, the fact that
Rosneft set a new record by growing
domestic sales of petroleum products
to 42.1 mmt in 2022 is of particular
significance to us.
In the international market, Rosneft
continued to stick to the multi-vector
development model and promoted
mutually beneficial cooperation
with all stakeholders. Thanks
to the strategic pivot to the East
in the late 2010s, the Company
significantly increased energy
supplies to the Asia-Pacific Region
last year. The key driver behind
this success was the integrated
model to build partnerships across
the supply chain – from production
and oilfield services to processing
and fuel sales to end consumers.
In this context, let me highlight
a number of 2022 milestones.
In February, Rosneft entered
into a new ten-year contract
with China National Petroleum
Corporation (CNPC) to supply
additional 100 mmt of crude oil
to China. The companies also signed
an agreement envisaging cooperation
in various areas of the promising
low-carbon energy sector. One
of the new tools to amplify
the dialogue with international
partners was transition to settlements
in roubles and the national currencies
of friendly countries. In September,
the Company successfully completed
the offering of its debut CNY-
denominated bonds. This offering
became the largest corporate issue
in the Russian market with a record
low coupon rate. In addition
to that, Rosneft launched supplies
of proprietary catalysts to a number
of Asian countries. The Company
is not planning to stop at that,
with work underway to further
diversify sales channels and regions.
Improvements in operating
efficiency in 2022 came as a result
of implementing the most
preferable technical solutions
and best domestic technologies
in all areas of the Company’s
operation. The use of best available
equipment and techniques is fully
in line with Rosneft’s strategic
goals in the areas of carbon
management, promoting sustainability
and preserving the environment
for future generations.
In addition to the consistent efforts
to implement circular economy,
restore natural resources and protect
ecosystems, the Company comes
up with initiatives designed to set
new green trends. In 2022, Rosneft
launched an ambitious forest
and carbon management project
with a potential absorption capacity
of 10 mmt of CO2-equiv. Also,
over the past three years alone,
the Group Subsidiaries have planted
more than 18 million seedlings
and young trees.
Rosneft’s strong financial
performance was driven
by the combination of a large-scale
investment programme and tight
expense management. In 2022,
the Company’s capital investments
grew to exceed RUB 1.1 trln. While
the global oil and gas sector faces
massive underfunding, Rosneft
continues to deliver on its flagship
Vostok Oil megaproject, which I
believe will fundamentally transform
the energy market and have
a stabilising effect throughout
the world. Apart from that,
the Company managed to keep
the growth of unit production costs
below the producer price inflation
levels.
As a result, Rosneft’s revenue
and EBITDA in 2022 increased
by 3.2% and 9.5% respectively,
whereas its debt and trade liabilities
went down by RUB 0.7 trln.
In 2022, the net income of Rosneft
attributable to shareholders
amounted to RUB 813 bln.
For many years now, the Company’s
attractive dividend policy has been
one of its key draws. According
to the policy, dividends are paid
to shareholders twice a year
and make up at least 50% of net
income. In 2022, Rosneft paid annual
dividends for 2021 in the amount
of RUB 250 bln and approved
the payment of interim dividends
in the amount of RUB 216 bln.
The net profit achieved in 2022
is a reliable foundation for us
to pay full-year dividends
and honour all our commitments
to the shareholders.
I am convinced that in 2023, we
will maintain strong performance
across the board, keep the Company
going despite external pressure,
and strengthen our fundamental
role in the market as the leader
of the energy industry.
2
3
Rosneft
operations
Rosneft is Russia’s leading
petroleum company in terms
of launching new projects.
Rosneft is the largest
refiner in Russia.
Production assets
Refining and processing assets
AVERAGE HYDROCARBON PRODUCTION
GROWTH IN 2012–2022, %
6.6
2.3
a
n
i
h
C
o
r
t
e
P
1.4
0.3
n
o
r
v
e
h
C
s
a
r
b
o
r
t
e
P
-1.3
-1.3
l
i
b
o
M
n
o
x
x
E
-3.1
P
B
l
l
e
h
S
Source: company reports
4
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
HYDROCARBONS PRODUCTION IN 2022, MMBOE PER DAY
5.1
4.6
3.7
l
i
b
o
M
n
o
x
x
E
a
n
i
h
c
o
r
t
e
P
Liquid hydrocarbons
Gas
Source: company reports for 2022
2.9
2.9
2.7
2.4
n
o
r
v
e
h
C
l
l
e
h
S
s
a
r
b
o
r
t
e
P
P
B
5
Rosneft-2030
Strategy
Reliable energy and global
energy transition strategy
Higher
efficiency
Operational
leadership
Lower
carbon footprint
Strategic objectives
and priorities
Achievements in 2022
Increasing production to 330 mmtoe
2,3% growth in hydrocarbon production
Increasing gas share in total
output to 25%
15% growth in natural gas production vs 2021
Higher dividends and returns
9.5% EBITDA increase
Retaining leadership in terms of unit
production costs
Efficient cost control1
Pursuing biodiversity
conservation (net positive impact)
Overall approaches developed to preserve
biodiversity across the Company’s footprint
100% waste disposal
and remediation of legacy lands
16% reduction in the area
of legacy lands
1. Growth of unit production costs below the producer price inflation levels
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
ON THE PATH TOWARDS
CARBON NEUTRALITY
2022
11% reduction in absolute GHG emissions vs 20201
2.8 mmt of СО2-equiv.
reduction in emissions
as part of green power
purchases
0.9 mmt of СО2-equiv.
reduction in emissions
as part of the Energy Saving
Programme
STRATEGIC TARGETS
2025
5% reduction in absolute
GHG emissions
2030
<0.2% methane emissions
intensity
0 routine flaring
of associated petroleum gas
<20 kg of СО2-equiv.
per boe
GHG emissions
in Upstream
2035
> 25% reduction in absolute
GHG emissions vs 20201
2050
Carbon neutrality
GHG reduction targets are set against the base year of 2020.
GHG reduction and carbon neutrality targets cover 100% of Scope 1 and 2 emissions
in the Company’s reporting perimeter.
6
1 The Strategy’s base year.
7
Long-Term Development
Programme
and progress report
For the Programme’s key outcomes
in 2022, see the
and Financial Results section.
Operating
TSATR – Audit Services LLC,
an independent auditor, completed its
engagement and provided assurance
about Rosneft’s Programme Progress
Report and achievement of the key
performance indicators in 2022.
The opinion was received on 28 April
2023.
Originally developed in 20141,
the Long-Term Development
Programme (the Programme)
is subject to annual updates2.
In 2022, we revised the Programme,
taking into account the Company’s
performance, action plans
to achieve certain strategic goals,
and updated initiatives drafted
pursuant to the Russian Government’s
directives3. The updated Programme
was approved by the Company’s
Board of Directors (Minutes No. 13
dated 27 December 2022).
The Programme details
the Company’s strategic focus areas,
targets and goals for all business
areas and corporate functions. It
also includes a list of key initiatives
to achieve the Company’s strategic
goals.
The main priorities, key performance
indicators (KPIs) and actions
plans under the current Innovation
Development Programme, Import
Substitution and Equipment
Localisation Programme, and Energy
Saving Programme take into account
the Programme provisions
and are integrated into the current
version of the document.
Performance indicators include
an integrated KPI for innovations.
Rosneft’s Investment Programme
aims to help the Company achieve its
strategic objectives in key business
areas stipulated in the Strategy
and the Programme (
Programme in 2022 section).
Investment
We completed the Programme’s key
initiatives planned for core businesses
and functional units in 2022.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
KPI structure
The Company’s KPI system seeks to decompose the Company’ Development Strategy
and its Long-Term Development Programme into specific KPIs, cascade them
to all management levels, evaluate progress against targets, and create incentives
for efficient management decision-making. A strong motivation tool for employees,
KPIs ensure a step-by-step achievement of the Company’s strategic goals.
KPI PROGRESS
Long-Term Development
Programme
The Company’s
Strategy
Consolidated
business plan
Business plans
of business units
Business plans
of Group Subsidiaries
● Corporate KPIs
● Individual KPIs of the
Chief Executive Officer
● Bonus disqualification
(blocking) indicators
● Bonus disqualification
(blocking) indicators set
for heads and employees
of business units
● Individual KPIs
of the Company’s top
managers responsible
for the performance
of businesses
● Collective KPIs of Group
Subsidiaries
● Individual KPIs of Group
Subsidiaries’ senior
management
● Bonus disqualification
(blocking) indicators
KPI progress
1.
In accordance with Instruction of the President of the Russian Federation Vladimir Putin No. Pr-3086 dated 27 December 2013; approved
by Rosneft’s Board of Directors on 9 December 2014 (Minutes No. 12).
2. In accordance with the Russian Government Directive No. 4955p-P13 dated 17 July 2014.
3. No. 4955p-P13 dated 17 July 2014, No. 7558p-P13 dated 12 November 2014, No. 1346p-P13 dated 5 March 2015, No. 2303p-P13 dated
16 April 2015, No. 7389p-P13 dated 31 October 2014, No. 1472p-P13 dated 3 April 2016, No. 4531p-P13 dated 28 June 2016, No. 4750p-
P13 dated 4 July 2016, No. 830p-P13 dated 6 February 2017, No. 276p-P13 dated 17 January 2019, No. 6739p-P13 dated 30 July 2020,
and No. 3502p-P13 dated 15 April 2021.
8
9
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
KPI progress
To calculate annual bonuses
for managers and employees,
the Company analyses progress
against KPIs following the review
of the annual performance based
on the management accounts
and audited public financial
statements.
The Company’s Internal Audit Service
annually assesses the performance
against corporate and individual KPIs
set for calculating annual bonuses
for the management of the Company
and Group Subsidiaries. The audit
results for top managers are subject
to review by the Board of Directors’
HR and Remuneration Committee.
Top manager assessment
results are discussed by the HR
and Remuneration Committee
of the Board of Directors.
The Board of Directors makes
resolutions regarding annual bonus
payments and their size depending
on the management’s progress
against KPIs.
Target KPIs are normalised
to reflect the factors beyond
the management’s control, such as FX
volatility and global market prices,
in accordance with the Regulations
on the KPI Normalisation
Procedure Related to Management
Performance Review and Assessment
in the Reporting Period to Calculate
Annual Bonuses1.
THE KPI SYSTEM ENSURES:
● well-balanced integrated indicators motivating employees
to achieve the Company’s main goals;
● transparency, measurability, minimum sufficiency,
and consistency of KPIs;
● a top-down approach to cascading and breaking down KPIs.
THE KPI SYSTEM IS AIMED AT:
● delivering on the Company’s Strategy
and Long-Term Development Programme;
● consistently improving the Company’s financial
and operating (industry-specific) results;
● ensuring compliance with directives and instructions
of federal executive bodies.
With both financial (economic)
and operating (industry-specific) KPIs
in place, the system breaks down
relevant indicators into the following
groups:
● corporate KPIs based on the key
financial, economic, operating
and industry-specific indicators
from the Company’s consolidated
business plan and business plans
of its business units;
● individual KPIs based on individual
strategic goals for each top
executive.
Aside from that, for the purposes
of motivating the Company’s
employees to deliver on Rosneft’s
Strategy, Long-Term Development
Programme and business plan, we
introduced bonus disqualification
(blocking) indicators. A failure
to achieve targets under these
indicators reduces the employee’s
overall annual bonus amount
in the reporting period.
KPIs and targets for the senior
management are set by Rosneft’s
Board of Directors on an annual basis
subject to preliminary discussion
by the relevant committee.
10
11
1. The Regulations were approved (Minutes No. 27 dated 6 April 2015) and amended (Minutes No. 10 dated 27 September 2021)
by Rosneft’s Board of Directors.
Investment
programme
Rosneft’s 2022 investment programme was approved as part
of the 2022–2023 Business Plan at the Board of Directors meeting
on 17 December 2021 (Minutes No. 16 dated 20 December 2021).
business segments based
on portfolio management
approaches.
Within our portfolio, we evaluate
projects and investment
opportunities on the basis
of project profitability by taking
into account risk assessments
and the Company’s financial
capacity.
The 2022 capex was mainly focused
on maintaining and developing
mature and new oil and gas assets
to meet our strategic production
and reserve replacement goals,
as well as implementing cost-effective
projects to develop refineries
and a retail network development
programme.
As part of drafting and implementing
its investment programme,
the Company swiftly responds
to external and internal developments
by selecting and prioritising projects
and quickly optimising or reallocating
investments between different
>rub
1.1 trln
Capex in 2022
CAPEX, RUB BLN
1,049
1,132
785
2020
2021
2022
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Investment process
OUR INVESTMENT ACTIVITIES HELP US ENSURE COMMITMENT
TO THE FOLLOWING STRATEGIC PRIORITIES:
● Sustainable business growth driven by investments in competitive and high value-added projects based
on an ongoing portfolio optimisation
● Increasing efficiency across all business streams through an in-depth analysis of investment needs,
efficient decision-making and project implementation, monitoring and control throughout the project
life cycle
● Strengthening investment discipline by ensuring better project identification, classification, thorough
project analysis and efficient decision-making process reliant on delegation of authority
● Honouring social responsibility principles regarding occupational safety and environmental protection
● Focus on the UN Sustainable Development Goals to help achieve progress in addressing global economic,
social and environmental challenges, including those related to carbon management
DELEGATING: INVESTMENT DECISION-MAKING HIERARCHY
Board of Directors
Management Board
Investment Committee
Dedicated committees
Exploration and
Production
Refining, Commerce
and Logistics
Functional
Rosneft’s investment governance process is integrated with all related processes, including strategic
and business planning, budgeting, reporting and financial control, project management and corporate
governance.
12
13
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Refining and sales
In the reporting year, Rosneft refined
94.4 mmt of crude oil. The refining
depth and light product yield across
its oil refineries in 2022 improved
to 76.2% and 57.1%, respectively.
The Company continued to fully
meet the growing domestic demand
for high-quality motor fuels. In 2022,
domestic sales of petroleum products
reached a record-breaking 42.1 mmt,
up 6.0% year-on-year.
The Company has been consistently
working on domestic technologies
and import substitution, while
providing its oil refineries in Russia
with proprietary catalysts
for the production of motor fuels
compliant with the latest standards.
In the reporting year, Rosneft
launched export sales of its catalysts
given their high quality.
Financial results
In 2022, the Company achieved
growth across key financial metrics
thanks to its operating performance
in the prevailing macroeconomic
environment coupled with sound
decision-making.
The Company’s operating
performance and transportation costs
were negatively affected by higher
electricity prices, as well as increased
tariffs for transportation of oil
and petroleum products by rail
and pipeline.
Thus, our revenue increased by 3.2%
year-on-year, while EBITDA improved
by 9.5%.
In 2022, capex reached RUB 1.1 trln,
up 7.9% year-on-year.
In the reporting year, our net
income attributable to shareholders
amounted to RUB 813 bln, mainly
driven by non-cash items. The net
income so achieved forms a solid
basis for dividend payout for 2022.
In order to maintain financial
stability, Rosneft took a number
of steps which helped reduce
its financial debt and advance
payment arrears by RUB 0.7 trln
compared to the beginning of 2022.
The net debt/EBITDA ratio was 1.3x
as at 31 December 2022, generally
in line with that as at 1 January 2022.
EBITDA, RUB BLN
2,330
2,551
2021
2022
Operating
and financial results
Exploration and production
as at 31 December 2022. The 2Р
reserve replacement ratio
exceeds 100%.
Production drilling in 2022
amounted to 11.2 mln m, up
3.3% year-on-year. Despite
a volatile macroeconomic
and geopolitical environment
in recent years, Rosneft has
been maintaining consistently
high volumes of production
drilling. The reporting year saw
more than 3 thousand wells put
into operation, with the share
of the most efficient horizontal
wells reaching 68%. The number
of new horizontal wells drilled
using multi-stage hydraulic
fracturing techniques stood
at over 1,300, or 43% of all wells
commissioned during the year.
Production per horizontal
well was more than twice
as high as per directional well.
The Company relies on such
wells to sustain production
at mature fields by developing
more complex deposits,
as well as to reduce costs when
developing conventional ones.
Суточная добыча углеводородов, млн б.н.э. в сутки
DAILY HYDROCARBON
PRODUCTION,
KBOE PER DAY
4,985
5,102
+2.3 %
2021
2022
NATURAL GAS
PRODUCTION, BCM
64.7
74.4
+15.0 %
2021
2022
In 2022, the Company’s hydrocarbon
production reached 5.10 mmboe per
day, up 2.3% year-on-year. After
Sakhalin-1 resumed production
in the fourth quarter of 2022,
average daily output of hydrocarbons
increased to 5.50 mmboe.
The reporting year saw natural
gas production at an all-time high
of 74.4 bcm, up 15% year-on-year.
In 2022, Rosneft conducted
over 4.4 thousand linear km
of 2D seismic and more than
6.8 thousand sq. km of 3D seismic
onshore. 64 exploration wells
were completed and tested
with a success rate of 80%.
Our robust exploration
activities helped discover
seven fields and 153 deposits
with a total of around 0.3 btoe
in AB1C1+B2C2 reserves.
Some of the most important
discoveries included
the Madachagskoye field
on the Pechora Sea shelf
with 82.3 mmt in recoverable
AB1C1+B2C21 oil reserves, being
the largest discovery in Russia
in 2022. Under the Russian resource
classification system (АВ1С1+В2С2),
Rosneft’s hydrocarbon reserves
totalled 159.3 bboe (21.5 btoe)
as at 31 December 2022.
Following an audit under the PRMS
(Petroleum Resources Management
System) standards, the Company’s
1P, 2P and 3P hydrocarbon reserves
stood at 42.3 bboe, 84.2 bboe
and 132.4 bboe, respectively,
Проходка в эксплуатационном бурении, млн м
PRODUCTION
DRILLING, MLN M
10.9
11.2
+3.3 %
2021
2022
Vostok Oil project
In 2022, the Company conducted
over 2 thousand linear km of 2D
seismic and 2 thousand sq km of 3D
seismic, drilled six exploration wells
and completed construction of four
wells with five wells being tested
as part of the flagship Vostok Oil
project. As a result, its resource
base increased by 300 mln tonnes
to 6.5 bln tonnes, with the project’s
high resource potential confirmed
by an independent international audit.
In the second half of 2022,
Rosneft started pilot production
at the Payakhskoye field. So far,
it has drilled more than
25 thousand m and completed
seven production wells, while drilling
is in progress at five more wells.
expanded. As part of the project,
Rosneft built a record-breaking
2 thousand km of winter roads
passing through the north
of the Krasnoyarsk Territory
and the Yamal-Nenets Autonomous
Area.
The construction of the Vankor–
Payakha–Sever Bay trunk oil
pipeline is underway, with coastal
and berthing facilities being also
1. The reserves were booked in the Russian State Register of Mineral Reserves in 2022.
14
15
Health, safety
and environment
Strategic HSE guidelines and targets
As a national oil and gas champion
and a major global energy company,
Rosneft operates in strict compliance
with Russian health, safety
and environment (HSE) regulations.
Our top priority is to protect life
and health of the Company’s
and contractors’ employees.
The Company ensures safe working
conditions seeking to support
accident-free operations, keep
the equipment in good repair
and proper working order
and minimise environmental footprint
in compliance with HSE requirements.
Our strategic goals, targets
and initiatives as well as systemic
approaches to HSE management
are enshrined in the Rosneft-2030
Strategy.
Strategic HSE targets
● Drive towards:
– zero fatalities by 2030
or sooner;
– zero equipment breakdowns
by 2030 or sooner;
● minimisation of environmental
footprint;
● net positive impact on ecosystems.
HSE management system and principles
Resolutions adopted by the Board
of Directors in 2018 ensure that
Rosneft’s operating and strategic
priorities conform to the 17 UN
Sustainable Development Goals,
with five of them defined as key
focus areas: Good Health and Well-
Being, Affordable and Clean Energy,
Decent Work and Economic Growth,
Climate Action and Partnership
for Sustainable Development.
The Company pursues its HSE
objectives within the framework
of the Integrated Health, Safety
and Environment Management System
(IMS).
The system is certified annually
by external auditors to verify that it
meets the national and global HSE
standards.
In 2022, Rosneft and Group
Subsidiaries successfully passed
an external audit of the HSE IMS,
which increased the number
of certified Group Subsidiaries
to 74 as part of the Company’s overall
certification. 32 Group Subsidiaries
completed independent occupational
health and safety certification,
and 33 were certified in the area
of environmental management.
The certification process includes
more than 100 business units which
account for 72.5 % of the total
headcount of all Group Subsidiaries
covered by the Company’s
management accounting procedures.
In addition to the mandatory controls
required by law, the Company
employs the following main types
of regular controls:
● full-scope and ad hoc
inspections to verify compliance
with HSE requirements,
corporate plans and internal
documents of the Company,
as well as the adequacy of ongoing
operational and environmental risk
management efforts;
● internal HSE IMS audits to assess
compliance with the Environmental
Management System (ISO 14001)
and Occupational Health
and Safety Management System
(ISO 45001) standards.
Currently, Rosneft has an HSE control
system in place, which is governed
by the Regulations on HSE Control.
In 2022, Rosneft and Group
Subsidiaries conducted 61 full-scope
and ad hoc inspections and internal
ABOUT THE COMPANY
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GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Priority UN SDGs
HSE IMS audits. Following the audits,
Group Subsidiaries prepared
corrective action plans to bridge
the gaps identified with a focus
on the HSE management system
improvements.
The HSE Control Commission
regularly meets with the senior
managers of Rosneft and Group
Subsidiaries to address matters
of operational safety and HSE risk
management which require specific
decisions to be made by the top
management. In 2022, the HSE
Control Commission held 11 meetings.
Rosneft seeks to improve its risk-
oriented approach for the purposes
of planning and implementing
controls in a targeted way. In 2022, it
developed and introduced practices
to assess Group Subsidiaries based
on their specifics and HSE metrics.
This approach underpins the control
plan for 2023 which ensures objective
assessment and covers potentially
high-risk aspects of HSE activities,
including with a special focus on key
Group Subsidiaries and the most
important projects for the Company.
Corporate HSE governance
The Board of Directors
provides strategic management
of the Company’s HSE activities
and regularly reviews related
reports.
The HSE Committee is the Company’s
key standing coordinating body
in charge of HSE. In 2022, the HSE
Committee held six meetings
to review matters and adopt
decisions seeking to manage HSE
risks and prevent occupational
injuries and accidents, including
with an adverse environmental
impact.
16
17
Safe working environment
The Company’s top priorities
are to ensure the safety of all
employees and contractors who work
for us, implement environmentally
responsible work practices in all
operational activities and minimise
environmental footprint.
In order to achieve the goals
of the Rosneft-2030 Strategy,
systemic approaches to occupational
health and safety (OHS) management
have been defined:
● in terms of reducing fatal injuries:
– application of a risk-oriented
approach to OHS,
– absolute compliance
with the Golden Rules of Safety,
– implementation of the Control
of Work procedure,
– development of employee skills
and competencies;
● in terms of reducing equipment
breakdowns:
– implementation of equipment
reliability/integrity measures.
The Company provided ca. RUB 43.7
bln in OHS spending in 2022, including
on activities required by national
laws and corporate regulations,
and strategic initiatives.
≈ rub
43,7
bln
OHS spending
in 2022
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Contractor relations
Coordination of contractors’ efforts
in terms of operational safety
is an important element of our
safety culture and a prerequisite
for the Company’s sustainable
development.
The HSE Policy makes no
difference between the Company’s
and contractors’ employees
when protecting life and health
and ensuring operational safety.
When preparing contract terms
and procurement documentation,
the Company assesses the risks
associated with works and services
to be provided by prospective
contractors. Contractors are subject
to mandatory HSE qualification
procedures to verify they meet
the Company’s requirements
for the availability of an HSE
management system, qualified
employees and personal protective
equipment.
a comprehensive work authorisation
procedure to verify they are ready
to operate safely and meet
the Company’s requirements.
Rosneft monitors contractors’
operations, holds safety
awareness sessions and conducts
communication activities. Customers
and their contractors also participate
in joint accident and emergency drills.
Contractor cooperation on HSE
is a must throughout the entire cycle
of customer-contractor interaction.
Upon signing the contract,
contractors go through
Leadership and safety culture
Risk-oriented approach
To raise awareness of the Company’s
climate action among its employees,
Rosneft continued to run its updated
Carbon Management corporate
courses in 2022. In the reporting year,
Rosneft provided training to more
than 150 employees of the Company’s
Head Office and Group Subsidiaries.
A corporate distance learning
course was prepared and launched
in January 2023.
The managers of Rosneft and Group
Subsidiaries annually commit
to demonstrate their HSE leadership.
Since 2022, the HSE Committee
has been approving the HSE
leadership criteria for managers at all
levels. In line with these criteria,
the managers of Rosneft and Group
Subsidiaries develop their personal
HSE leadership commitments
with a focus on supporting employee
safety and HSE compliance, including
the Golden Rules of Safety covering
key operational safety requirements
of the Company.
Representatives of Group Subsidiaries
regularly meet with contractors
to discuss current health and safety
issues, review incidents and lessons
learned, and develop joint solutions
to ensure high safety standards
at the Company’s facilities.
In 2022, the Company held two major
environmental corporate events:
the Strategy Session and the 9th
Corporate Congress of Rosneft
Ecologists. The participants
included top management, leaders
and environmental experts from
more than 150 Group Subsidiaries,
and professionals from allied
business units of the Company’s
Head Office.
The events focused
on the environmental goals, strategic
initiatives and key objectives
set forth in the Rosneft-2030
Strategy, as well as the Company’s
progress towards them. Biodiversity
conservation, global energy
transition, circular economy
and law enforcement trends
were key issues in the reports
presented by the Company’s
experts. The participants also
discussed using forests as potential
natural CO2 absorbers to achieve
net zero emissions, being
the Company’s strategic target
for 2050, as well as measures
to implement Rosneft’s pilot forest
and carbon management project
in the Krasnoyarsk Territory aimed
at increasing absorption to 10 mmt
of CO2-equiv.
The aim of HSE risk management
is to introduce and maintain adequate
and sufficient management actions
regarding all identified risks that
are consistent with the level
of the risk assessed, provided
with the necessary resources
allocated by priority and approved
on the required management level
of the Company.
Application of the risk-oriented
approach in HSE risk management
includes assessment, analysis
and management taking into account
global and industry best practices,
and helps predict possible events
and take proactive steps to prevent
them.
HSE risk management is a set
of tools helping managers at various
levels, from senior executives
to line managers, to make the best
and most efficient comprehensive
decisions on operational safety
when having limited resources.
It is based on HSE risk analysis
and assessment using a bow-
tie diagram and single matrix
of HSE risk assessment. These
findings are a starting point
in prioritising mitigation efforts
and defining the management
level authorised to make
a decision on the implemented risk
management strategy.
The Company has developed
standard diagrams for fire, road,
blowout and pipeline leakage
risks defining a set of proactive
and reactive barriers (measures)
for a particular type of incident.
Based on the standard solutions,
Group Subsidiaries develop
programmes to create/enhance
barriers. In particular, they already run
programmes to prevent falls and road
accidents.
In 2022, Rosneft streamlined HSE
reporting timelines and formats
to further align the same
with the business planning process.
These efforts will be embodied
in new internal documents and put
into practice in 2023.
The Company also applies
the risk-oriented barrier approach
to the investigation of HSE incidents
and development of remedial
actions.
The barrier approach to incident
investigation is one of the key tools
for reducing occupational injuries
and accidents. It helps significantly
expand the scope and effectiveness
of risk management, identify gaps
in design solutions and/or applicable
regulations and technical standards
regarding the proactive and reactive
barriers in each case under investigation,
and develop specific remedial action
plans.
With the new Rosneft-2030 Strategy
in place, the risk-oriented approach
remains the central element in HSE
and covers the full cycle of operations,
from planning to performance audits.
Process safety in line with the proactive
and risk-oriented approach
results in a set of measures aimed
at achieving the Company’s safety
targets. These measures are aimed
not only at preventing accidents, but
also at mitigating potential adverse
consequences, primarily for people,
society and the environment.
18
19
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
The programmes run by Group
Subsidiaries in pursuance
of the Company’s Road Safety Plan
have a positive effect. In 2022,
Rosneft had zero road fatalities
through the fault of its employees.
With this in mind, we decided
to continue our efforts in 2023
and beyond.
Road traffic safety
In 2022, under its 2020–2022
Road Safety Plan, the Company
implemented the following proactive
measures to reduce road safety risks
and prevent accidents:
● identifying dangerous locations
on oilfield, on-site, industrial,
or temporary winter roads
and installing warning systems,
traffic signs, and cameras that
could help detect violations;
● monitoring the placement of road
safety notices, traffic signs giving
directions and alerting drivers
to danger, as well as priority traffic
signs, snow poles and hazard
delineators;
● assessing the equipment
of the Company’s and contractors’
vehicles using in-vehicle
monitoring systems and video
recorders;
● monitoring compliance
with safety requirements related
to transportation and trip planning
arrangements, compliance
with established travel routes
and work and rest schedules
by drivers of Group Subsidiaries
and contractors using in-vehicle
monitoring systems;
● running accident prevention
campaigns “Safe road – 2022”
and “We are for road safety –
2022” in the regions of operation;
● monitoring road infrastructure
● running the ten-day “Beware,
and maintenance (timely cleaning
and treatment of road surfaces,
placement of traffic signs,
condition of ice and winter roads,
readiness of utility vehicles);
● preventing road accidents,
including vehicle roll-overs,
and enhancing road safety across
Group Subsidiaries;
Children!” campaign in anticipation
of the school year held by Group
Subsidiaries in cooperation
with the traffic police, including
discussions and drawing
competitions devoted to road
safety.
of existing facilities and those
under construction, regular training
for the staff involved and safe
maintenance of facilities located
on the permafrost soil, while
also developing and updating
the Company’s internal documents
governing the geotechnical
monitoring design, construction
and operation of facilities located
on the permafrost soil.
As part of its target innovative project
to develop geotechnical monitoring
technologies, Rosneft intends
to promote geotechnical monitoring
at its facilities, including fundamental
research into current permafrost
processes, forecast of environment
alterations driven by global climate
change, search for and application
of new methodologies and techniques
enhancing the monitoring efficiency
(e.g. cost reductions that do not
translate into increased risks
of on-site accidents).
Process safety
The Company complies with federal
and corporate regulations on process
safety. Operational functions and HSE
units of Group Subsidiaries oversee
both the planning and implementation
of necessary actions when developing
operational programmes and business
plans, while Rosneft exercises
centralised control.
The Company plays an active role
in improving legislation on process
and fire safety, including the large-
scale revision on the federal level.
In 2022, Rosneft participated
in discussing 154 draft regulations
on occupational health and safety
(draft laws of the Russian Federation,
draft orders of Rostekhnadzor
and federal ministries, draft
resolutions of the Russian
Government) put forward
by Rostekhnadzor’s R&D Council,
the Industrial Safety Committee
of the Russian Union of Industrialists
and Entrepreneurs, federal
ministries, the Russian Government
and the State Duma of the Russian
Federation. The Company reviewed
and finalised consolidated comments
on, and additions to, the above
documents.
Rosneft is a regular participant
in industry-specific meetings
and conferences held
by Rostekhnadzor’s R&D
Council, the Ministry of Energy
and the Industrial Safety
Committee of the Russian Union
of Industrialists and Entrepreneurs.
The Company actively contributes
to Rostekhnadzor’s working groups
on revision of key federal standards
and rules dealing with oil and gas
industrial safety. In 2022, Rosneft
participated in 44 meetings and joint
sessions on HSE matters.
Since January 2019, the Company
has been extensively using a routine
to keep record of and categorise
industrial incidents in line
with its strategic target of zero
equipment breakdowns. Along
with the risk-oriented (barrier)
approach, special-purpose
programmes are also in place
to ensure the integrity of operational
facilities, which is achieved primarily
by including ad hoc inspections
and audits in the action plans
aiming to create/enhance barriers
where the incidents have revealed
inconsistencies.
In line with the Rosneft-2030 strategic
targets in Environmental Leadership
adopted in 2021 with a view
to reducing land contamination from
pipeline oil spills to zero by 2035,
the Company updated its special-
purpose programme titled “Oilfield
Pipeline Reliability Improvement
in 2020‒2025” with a prospect up
to 2035.
In 2022, the Company performed
the following actions under its
pipeline integrity programme
“Pipeline Reliability Improvement
in 2020‒2025”:
● revamp and repair of 1,580 km
of oilfield pipelines;
● inhibition of more than 16,200 km
of oilfield pipelines;
● in-line cleaning of 11,300 km
of pipelines;
● diagnostics and safety reviews
of 24,500 km of oilfield pipelines.
The Company continues to run
equipment reliability improvement
programmes in Oil Refining
and Petrochemicals, including long-
term pipeline replacement initiatives:
● replacement of CrMo steel
pipelines with austenitic welds;
● replacement of end-of-life carbon
steel pipelines;
● removal of dead-end sections;
● removal of various fittings;
● removal of open pressure relief
valves;
● replacement of overhead pipelines.
To reduce risks of on-site accidents,
the Company continues to run its
geotechnical monitoring project,
which includes continuous review
20
21
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Environmental responsibility
Water protection
Green investments
The Company consistently implements
investment projects and initiatives
seeking to achieve its strategic
targets of minimising environmental
footprint and facilitating biodiversity
conservation in the regions
of operation. In 2022, green
investments to improve pipeline
reliability, wastewater treatment
and waste management practices,
and remediate contaminated land
amounted to ca. RUB 57 bln.
≈ rub
57 bln
in green investments
One of the Company’s strategic
priorities is to minimise
the demand for fresh water
in alignment with the United
Nations Sustainable Development
Goals. This is achieved
through the implementation
of infrastructure modernisation
projects and the use of the best
available technologies. In 2022,
the Company continued to improve
the quality of wastewater
discharges through construction
and renovation of treatment
facilities. This was helped
by the renovated facilities reaching
their design capacity and existing
ones being maintained to show
the same efficiency as before.
The Company nearly halved the share
of excess pollutant discharges in 2022
vs 2021.
Non-greenhouse gas emissions
In 2022, the Company reduced gross
air pollutant emissions by 2% year-
on-year, while also halving its excess
emissions.
Our Gas Investment Programme
has many environmental effects
contributing to further reduction in air
pollutant emissions.
22
23
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Carbon management
Carbon management – risk and opportunity management
The Company takes into account
the importance and impact of carbon
management risks (including risks
associated with climate change)
on its operations. Our commitment
to sustainability principles was further
highlighted in the new Rosneft-2030
Strategy, which provides
for a reduction of the Company’s
carbon footprint while boosting its
operational and financial efficiency.
Rosneft plans to achieve carbon
neutrality by 2050 through a number
of strategic initiatives to reduce
emissions. These initiatives imply:
● a more than 25% reduction
in Scope 1 and 2 emissions by 2035
as compared to 2020;
● achievement of zero routine APG
flaring in line with the World Bank’s
Zero Routine Flaring by 2030
initiative;
● a reduction of methane intensity
to below 0.2%;
● a gradual transition
of the Company’s vehicles to low-
carbon fuels.
These initiatives will contribute
to the goals set by Russia’s Long-
Term Development Strategy
with Low Greenhouse Gas Emissions
to 2050 and will help Russia fulfil its
obligations under the Paris Climate
Agreement.
Biodiversity conservation
As part of its corporate
strategic initiatives designed
to achieve a net positive impact
on ecosystems, the Company
places a special focus
on biodiversity conservation.
In 2022, Rosneft developed
conceptual approaches
to biodiversity conservation,
formalising them in its internal
documents, and also started
drafting a corporate-wide
Programme for Biodiversity
Conservation in the regions
of operation.
In pursuance of the national
Environment project
and the Cooperation Agreement
between Rosneft and the Russian
Ministry of Natural Resources
and Ecology, the Company
continued to assess the current
natural state and population
dynamics of key species
in the marine and terrestrial
ecosystems of the Arctic.
These species are indicated
in the Agreement and include
wild reindeer, ivory gull, Atlantic
walrus, and polar bear – all (except
for the reindeer) listed in the Red
Data Book of the Russian
Federation.
Following up on the field work
to study polar bear populations
in 2020–2021, the Company
was processing field data throughout
2022. In August 2022, further
field studies were carried out
with a focus on walrus populations
on Alexandra Land, an island in Franz
Josef Land, as well as the Orange
Islands and Cape Zhelaniya, part
of the Novaya Zemlya archipelago.
Reconnaissance and aerial surveys
were conducted in wild reindeer
habitats near the Kheta and Khatanga
rivers, with their migration routes
studied in the Taimyrsky Dolgano-
Nenetsky and Evenki districts,
Krasnoyarsk Territory. An office
analysis of the findings and ivory
gull biological specimens offered
insights about eight ivory gull colonies
in the Kara Sea.
Drilling waste and oily waste handling, land remediation
as a result of past activities
of previous owners of assets prior
to their integration into Rosneft.
In 2022, the Company processed
more than 4 mmt of drilling
waste and around 1.2 mmt of oil-
contaminated waste, which enabled it
to dispose of the waste accumulated
in the reporting year and reduce
the amount of legacy waste.
Rosneft keeps handling waste in line
with the applicable Russian laws.
The Company continues to restore
land resources by reducing
the area of contaminated land,
with over 470 hectares remediated
(more than 90% owing to the efforts
of internal ecological services
established by key Group Subsidiaries).
Efforts are ongoing to survey
contaminated areas and develop land
remediation projects.
In 2022, the Company approved
and started implementing a programme
to eliminate environmental legacy
effects, which aims to fully eliminate
land contaminated and waste generated
24
25
Corporate governance
Key corporate governance principles
and improvements in 2022
Rosneft’s leading market position, both
domestically and globally, and its commitment
to creating a long-term sustainable value
make it of the utmost importance that our
corporate governance framework ensures
efficient communication and cooperation
between the shareholders, Board
members, top managers, employees,
business partners, and local communities
across the Company’s footprint.
Our corporate governance framework seeks
to drive the long-term sustainable growth
of the Company’s shareholder value.
Rosneft’s corporate governance
framework relies on the Corporate
Governance Code developed in line
with internationally recognised standards.
Rosneft maintains
compliance
with the Bank
of Russia’s Corporate
Governance Code
at a high level.
For evaluation of compliance
with the Bank of Russia’s
Code, see
Appendix 1 to this
Annual Report.
The internal documents
regulating corporate
governance are available
on the Company’s official
website.
The Corporate
Documents
section
of the Company’s
website
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
GUIDING PRINCIPLES FOR THE COMPANY’S GOVERNING BODIES
Commitment to shareholders
Rosneft has adopted the world’s best corporate governance practices, complies with the Bank of Russia’s
Corporate Governance Code to ensure the following:
● equal rights and opportunities for, and equitable treatment of all shareholders;
● professionalism and independence of the Board of Directors who act in the best
interests of all shareholders;
● efficiency of the Risk Management and Internal Control System (RM&ICS);
● timely disclosure information on the Company’s activities that is most relevant to shareholders
and investors for them to rely on in making informed decisions (references
to
Corporate Governance Code).
Appendix 2 and the
A substantial share of the Company’s net income is distributed as dividends.
In 2022, our shareholders received RUB 250.4 bln. We continue enhancing the Shareholder’s Personal
Account, a powerful tool for shareholders to stay in contact with the Company.
Innovation and global leadership
Continuous improvement and global leadership are the priorities that encourage us to develop
and invest in cutting-edge technologies.
Favourable environment for sustainable growth
The Company cares for its employees, their families, and members of local communities across its footprint.
We at Rosneft keep a clear focus on employee health, having adopted an integrated framework to respond
to epidemic threats. We supplied all production sites and offices with personal protective equipment
and arranged for regular testing of our employees and contractors.
The Company takes care of the environment by introducing carbon management initiatives and implementing
best waste management practices. Commitment to environmental safety is an integral part of our corporate
culture. The Company supports scientific research, culture, and sports. Rosneft respects and honours
human rights and freedoms in accordance with the Universal Declaration of Human Rights, Social Charter
of the Russian Business, relevant generally accepted standards, and the laws of the Russian Federation
and other countries where the Company operates.
Partnership with non-governmental organisations and cooperation with state institutions
The Company is a party to the UN Global Compact.
Rosneft is a major contributor to the revenue part of the national budget: over the past decade, the Company’s
taxes and other mandatory payments have accounted for 17% of all federal budget revenue for the period.
Protection of shareholders and key stakeholders
The Company implements best internal control and risk management practices, develops technologies for industrial
safety and information security, and ensures product safety, protecting its customers and contractors.
26
27
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Key achievements in 2022
Rosneft was able to improve its ranking in the Net Zero Company Benchmark,
which measures global companies’ progress towards carbon neutrality, and scored
ahead of all Russian peers. The Company enhanced its position after it had
announced its goals under the Rosneft-2030: Reliable Energy and Global Energy
Transition Strategy approved by the Board of Directors in December 2021.
Rosneft is among the first
companies in the Russian
oil and gas industry to set
a target of achieving net carbon
neutrality by 2050 with respect
to Scope 1 and 2 emissions.
The Rosneft-2030 Strategy
outlines the climate agenda
for short- and long-term horizons:
cut absolute GHG emissions by 5%
by 2025; reduce methane intensity
to below 0.2%, achieve zero routine
flaring of APG and cut specific
GHG emissions in Exploration
and Production to below 20 kg
of CO2 per boe by 2030; and cut
absolute GHG emissions by more
than 25% by 2035.
Rosneft’s Board of Directors
resolved to resume the Company’s
Open Market Share Buyback
Programme and extend it until
31 December 2023. The decision
to buy back its shares in the open
market testifies to the confidence
that Rosneft and its management
team have in the Company’s
robust development going
forward.
In line with the Bank of Russia’s
recommendations, the Company
engaged JSC Kept (KPMG
before 1 July 2022), an external
consultant, to carry out
external (independent)
assessment of performance
(effectiveness) of Rosneft’s Board
of Directors and its committees
in the 2021/2022 corporate year.
The assessment was based
on the independent consultant’s
methodology aligned
with the assignment approved
by the HR and Remuneration
Committee of the Board
of Directors and included
reviewing Rosneft’s internal
regulations that govern
the activities of the Board
of Directors, and surveying
members of the Board
of Directors.
Corporate
governance
plans for 2023
● Develop remote formats
of engagement with shareholders
and members of governing
and supervisory bodies
● Meet goals and objectives
outlined in the Rosneft-2030:
Reliable Energy and Global
Energy Transition Strategy
28
29
Governance and control structure
The Company operates a two-tier management model where management
functions are split between the Board of Directors and executive bodies.
Board of Directors
Executive bodies
The Board of Directors performs
the two key functions:
● strategic management of the joint-
stock company, which includes
approving strategic documents
and material transactions;
● oversight of the executive bodies.
● Under the law, the Chief Executive Officer (sole executive body) is authorised to act
on behalf of the Company without a power of attorney when dealing with third parties.
● Rosneft has established a collective executive body (Management Board)
chaired by the Chief Executive Officer. Pursuant to the laws of the Russian
Federation, the Management Board and its members (except for the CEO)
are not authorised to enter into transactions or execute legal acts on behalf
of the Company without a power of attorney.
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General Shareholders Meeting
Rosneft’s supreme governing body responsible for decision-making on key matters
of the Company’s business.
Board of Directors
Provides strategic management of the Company’s activities; it reports
to the General Shareholders Meeting and acts on behalf and for the benefit of all
shareholders within its remit.
Set-up
Committees of the Board of Directors
Audit Committee
HR and Remuneration Committee
Reviews and then issues
recommendations for overseeing
the Company’s business,
preparing complete and accurate
accounting (financial) statements
and other reports, and ensuring
reliability and effectiveness of risk
management and internal control
systems, compliance, internal audit,
and corporate governance
Reviews and then issues
recommendations for assessing
effectiveness of the Company’s
HR and succession policies
and the appointment
and remuneration system,
evaluating Board and management
candidates, reviewing independence
of independent directors,
and conducting performance
assessments of the Board
of Directors, the executive bodies,
and top managers of the Company
Strategy and Sustainable
Development Committee
Assists in defining the Company’s
strategic goals and growth targets,
including ESG goals, and issues
strategic and business planning
recommendations.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Reporting
Executive bodies (Chief Executive Officer and Management Board)
Executive bodies manage the day-to-day
operations for the benefit of the Company
and report to the Board of Directors and the General
Shareholders Meeting.
Chief Executive Officer
Sole executive body
Management Board
Collective executive body
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Coordinating and consultative bodies
Coordinating and consultative
bodies of the Chief Executive Officer
carry out in-depth reviews of matters
that are reserved to them.
These bodies include:
● Technological Council;
● Investment Committee;
● Budget Committee;
● Compliance Committee;
● Metrology Board;
● Carbon Management Committee;
● HSE Committee;
● Central Procurement Committee;
● Conflict Resolution Committee;
● Commission on Energy Efficiency;
● Information Technology Expert
Council;
● other coordinating
and consultative bodies
of the Company.
Head of Internal Audit and Corporate Secretary are appointed
by the Board of Directors
Internal Audit Service
Corporate Secretary
Assesses the robustness and effectiveness
of the Company’s business processes, identifies
internal potential for improving its financial
and business performance, including that of the Group
Subsidiaries.
Ensures the governing bodies’ compliance
with the applicable laws, the Company Charter
and internal regulations, which guarantee protection
of shareholders’ rights and legitimate interests.
Organises the work of the Board of Directors
and is responsible for efficient communication
between the Company’s shareholders, governing
and supervisory bodies, and management.
Functional subordination
External auditor
Audit Commission
A commercial organisation selected through
a procurement process and approved by the General
Shareholders Meeting upon recommendation
of the Board of Directors based on the Audit
Committee’s assessment.
Oversees the Company’s financial and business
operations and performance of its governing bodies,
executives, business units and functions, branches
and representative offices.
30
31
General Shareholders
Meeting
In 2022, the Company’s supreme governing body met twice – for one Annual
(FY2021) and one Extraordinary General Shareholders Meeting.
The procedure for convening, preparing for, holding and following
up on the General Shareholders Meeting is set forth by
Regulations on the General Shareholders Meeting.
Rosneft’s
Annual General Shareholders Meeting
Pursuant to Article 3 of Federal Law
No. 25-FZ dated 25 February 2022,
the Board of Directors had resolved
to use absentee voting as the format
for the Company’s Annual General
Shareholders Meeting, which was held
on 30 June 2022 (vote by means
of ballots).
The meeting approved the Annual
Report, annual accounting (financial)
statements and net income
distribution for 2021 (including
for dividend payment), elected
the Board of Directors and the Audit
Commission, determined
the remuneration of the Board
and Audit Commission members
for the period, and approved
the Company’s Auditor.
Extraordinary General Shareholders Meeting
As part of implementing its dividend policy, on 23 December 2022
the Company held an Extraordinary General Shareholders Meeting
by absentee voting, which resolved to pay interim dividends.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Exercise of rights by shareholders
THE COMPANY’S SHAREHOLDERS HAVE A NUMBER OF WAYS AVAILABLE TO THEM TO EXERCISE
THEIR RIGHT TO TAKE PART IN THE GENERAL SHAREHOLDERS MEETING, INCLUDING:
● participation (registration and voting) at in-person meetings (directly or through their representatives
acting by virtue of a power of attorney)
● e-voting through the Shareholder’s Personal Account
● absentee voting (voting by paper ballots or giving voting instructions to their respective nominees)
At the same time, given the COVID-19
pandemic and related restrictions
on public events, the Board of Directors
decided to hold the 2022 Shareholders
Meeting in absentia.
The Company’s own corporate
services and the existing tools
for remote communication enabled our
shareholders to participate in corporate
proceedings in full and provided
unconditional ability to exercise
shareholder rights without physical
presence.
The shareholders were able to carry out
the following activities remotely:
● review the information
on the meeting on the corporate
website and in the Shareholder’s
Personal Account;
● vote on the items on the agenda
via the Shareholder’s Personal
Account by sending completed
ballots to the Company or giving
voting instructions to their
respective nominees;
● ask questions on the agenda
via their personal accounts,
the shareholder hotline, or by mail.
Given that the Company’s initiative
to enable the shareholders to exercise
their rights remotely proved a success
and taking into account the current
changes in shareholder legislation
and a tendency towards an increasing
number of shareholders, Rosneft works
to expand electronic services available
to shareholders and develop other
remote communication channels.
INCREASE IN THE NUMBER OF SHAREHOLDERS OVER THE PAST THREE YEARS, ‘000 PEOPLE
796.6
659.7
All resolutions of the 2022 shareholders meetings
were implemented in full.
190.8
200.1
233.6
+4.9 %
+9.3
+16.8 %
+33.5
+182.4%
+426.1
+20.7 %
+136.8
2020
(May)
2021
(May)
2021
(September)
2022
(June)
2022
(November)
Number of shareholders
Increase in the number of shareholders vs previous period
32
33
Board of Directors
THE BOARD OF DIRECTORS PERFORMS THE TWO KEY FUNCTIONS:
1
2
Strategic management of the joint-stock company, which includes
approving strategic documents and material transactions
Oversight of the executive bodies
The Board of Directors has three standing committees
created in accordance with Rosneft’s internal regulations.
The committees are composed of non-executive directors
from the Company’s Board of Directors. The Audit
Committee and the HR and Remuneration Committee
are chaired by independent directors. Members of each
committee also include independent directors.
The committees of the Board of Directors are responsible
for the preliminary consideration of most important
matters and the provision of recommendations
to the Board of Directors to inform their decisions.
The committees operate in accordance with approved
plans to address the objectives set by the Board
of Directors during their tenures.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Responsibilities of the Audit Committee
The Committee assists the Board
of Directors in protecting the interests
of the Company’s shareholders
by checking the accounting
(financial) statements and other
reports for completeness
and accuracy and ensuring
reliability and effectiveness of risk
management and internal control
systems, compliance, internal audit,
and corporate governance.
In 2022, the Audit Committee positively
assessed the effectiveness of external
and internal audit processes and among
other things reviewed the Report
on Internal Audit Activities containing
conclusions on the organisational
independence of the Internal Audit
Service and individual independence
and impartiality of its employees.
Reference
to the Regulations
on Rosneft Board
Committees
Responsibilities of the HR and Remuneration Committee
The Committee assists the Board
of Directors in protecting
shareholder interests. To that
end, it is primarily tasked
with assessing the effectiveness
of the Company’s HR and succession
policies, and the appointment
and remuneration system; conducting
performance assessments
of the Board of Directors,
the executive bodies, and other top
managers of the Company.
In 2022, the Committee preliminarily
considered the report on external
(independent) assessment
of performance (effectiveness)
of Rosneft’s Board of Directors
and its committees in the 2021/2022
corporate year carried out by external
consultant JSC Kept (KPMG before
1 July 2022), which gave a positive
assessment of the performance
of the Board of Directors, its
committees, procedures, and team
competencies of the Board
of Directors.
Responsibilities of the Strategy and Sustainable
Development Committee
The Committee assists the Board
of Directors in providing strategic
management of the Company’s
activities and protecting shareholders’
interests by overseeing Rosneft’s
strategy and sustainable
development.
The Board of Directors positively
assessed the performance of the com-
mittees in the 2021/2022 corporate
year. In accordance with the Company’s
Regulations on Rosneft Board
Committees, each of the existing com-
mittees submits to the Board of Directors
an annual progress report.
In 2022, the Committee preliminarily
considered the 2021 Sustainability
Report and report on the progress
against the Rosneft-2030 Strategy.
The Committee noted positive trends
in the Strategy implementation
despite unprecedented changes
in the external environment.
Executive bodies
● Under the law, the Chief Executive
Officer (sole executive body)
is authorised to act on behalf
of the Company without a power
of attorney.
● Rosneft has established
a collective executive body
(Management Board) chaired
by the Chief Executive Officer.
Pursuant to the laws of the Russian
Federation, the Management
Board and its members (except
for the CEO) are not authorised
to enter into transactions or execute
legal acts on behalf of the Company
without a power of attorney.
34
35
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Anti-corruption
efforts
Rosneft works to maintain compliance with the requirements of the anti-
corruption laws of the Russian Federation, including through a set of measures
aimed at building an organisational structure and elements of corporate culture,
and establishing rules and procedures to prevent corporate fraud and corruption.
● conducted ongoing anti-corruption
audits of draft internal regulations;
● The All about Compliance
information bulletin dedicated
to the International Anti-Corruption
Day was sent to all Rosneft
employees on 9 December 2022.
The Company manages conflicts
of interest at all levels.
The rules for the avoidance
and prevention of conflicts of interest
are set forth in the Corporate
Governance Code, the Code
of Business and Corporate Ethics,
the Company’s Policy on Combating
Corporate Fraud and Involvement
in Corruption Activities,
and the Regulations on Managing
Conflicts of Interest.
The effort was also aligned
with the National Anti-Corruption Plan
for 2021–2024 approved by Presidential
Executive Order No. 478 dated
16 August 2021.
The new anti-corruption procedures
were developed in accordance
with the applicable international
anti-corruption laws, Federal
Law No. 273-FZ On Combating
Corruption dated 25 December 2008,
the guidelines of the Russian Ministry
of Labour and the Federal Agency
for State Property Management,
as well as International Anti-Corruption
Standard ISO 37001:2016 “Anti-bribery
management systems – Requirements
with guidance for use”, and the ICC
Guidelines on Conflicts of Interest
in Enterprises.
All of the Company’s governing bodies
contributed to these efforts within their
remit.
1. Rosneft’s Board of Directors
(the Audit Committee of the Board
of Directors) approved strategic
documents and guiding
principles, and regularly assesses
the efficiency of such efforts;
considered and approved the results
of a review of the anti-corruption
risk management and internal
control process.
2. Rosneft’s Chief Executive Officer
ensures the implementation
of the Company’s Policy
on Combating Corporate Fraud
and Involvement in Corruption
Activities, and approves the relevant
internal regulations.
3. In accordance with the National
Anti-Corruption Plan for 2021–2024
approved by Presidential Executive
Order No. 478 dated 16 August
2021 (Instruction of the Russian
Government No. MM-P17-12165
dated 6 September 2021) we
drafted a Comprehensive Anti-Fraud
and Anti-Corruption Programme
for 2021–2024 (approved
by Rosneft’s Compliance Committee
on 20 June 2022, Minutes No. KK-1).
In the reporting period, Rosneft:
● updated its employees on typical
violations of anti-fraud and anti-
corruption rules (including
management of conflicts of interest)
on a quarterly basis;
● on an ongoing basis informed
the relevant units about new
regulations and government
initiatives aimed at combating
corruption;
● assessed/reassessed the risk
of corporate fraud and corruption
on a quarterly basis in line
with the approved methodology;
The Regulations set out a framework
to classify conflicts of interest,
including conflicts of interest
between shareholders and members
of the Company’s governing bodies
(e.g. decisions made by corporate
governing bodies that might
adversely affect the Company’s
financial and operating performance;
the Company failing to make a statutory
disclosure or members of corporate
governing bodies underreporting
on their positions in governing
bodies of other entities, on interests
(stakes) held in other entities, or other
information required to be disclosed
by the applicable laws, the Company’s
Charter or internal regulations).
● carries out an annual campaign
to collect ethical declarations
of the Company’s officers
and employees in order to monitor
their compliance with restrictions,
prohibitions and requirements
of anti-corruption laws;
● requires new employees
and employees appointed
to new position to sign an anti-
corruption clause, which forms
part of their employment contracts
and includes the restrictions,
prohibitions and requirements aimed
at preventing the conflict of interest.
All Group Subsidiaries have set up
conflict of interest commissions.
The Board members’ obligations
to disclose a conflict of interest are set
out in the Regulation on the Holding
by Members of Rosneft Board
of Directors of Rosneft Shares,
Shares of and Equity Stakes in Group
Subsidiaries.
The Company runs ongoing corporate
training programmes in the field
of countering corporate fraud
and corruption for its employees,
including those whose job
responsibilities include participation
in combating corruption, and new hires.
The Company operates a 24/7 Security
Hotline to report on suspected, proven
and potential cases of corporate fraud,
corruption and conflict of interest.
In addition, the Company undertakes
the following:
● collects annual declarations
on property and property-
related obligations of its
officers and employees,
as well as on income, property
and property-related obligations
of their spouses and minor children
who are included in the list
of persons required to submit such
declarations;
15,273
reports
received by the Security
Hotline in 2022
In 2022, the Security Hotline received
15,273 reports.
Identified/prevented damage amounted
to RUB 172.0 mln.
Members of the Company’s Board
of Directors are updated on the Security
Hotline operation on a quarterly basis.
The Corruption Control section
on the official corporate website has:
● the Company’s statement on its zero
tolerance for corruption;
● key provisions of Russian
and applicable international anti-
corruption laws;
● internal documents
on anti-corruption;
● Security Hotline contact details, etc.
36
37
Audit
Commission
The Audit Commission monitors the Company’s financial and business
activities and comprises five members elected on an annual
basis by the Annual General Shareholders Meeting.
The Audit Commission audits
the Company’s financial and business
operations, verifies the accuracy
and reliability of data included
in Rosneft’s annual reports
and annual accounting (financial)
statements, and prepares proposals
and recommendations for improving
the asset management efficiency
and RM&ICS.
In 2022, the Audit Commission held two
meetings, which, among other things,
adopted its action plan and approved
an audit programme.
on the accuracy and reliability of data
included in Rosneft’s Annual Report
and annual accounting (financial)
statements as at 31 December 2021.
The findings of the Audit Commission
following the audit were communicated
as part of the materials for the General
Shareholders Meeting in the form
of an opinion of the Audit Commission
On 30 June 2022, the Annual General
Shareholders Meeting resolved to elect
the Audit Commission as follows:
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
MEMBERS OF THE AUDIT COMMISSION
Olga Andrianova
Born in 1958.
Graduated from the All-Russian State Distance-Learning Institute of Finance and Economics.
Holder of a ministerial award – Certificate of Merit of the Russian Ministry of Energy.
Chief Accountant – Head of Finance and Economics at JSC ROSNEFTEGAZ.
Sergey Poma
Born in 1959.
Graduated from Nakhimov Black Sea Higher Naval School and St Petersburg State University.
Vice President and Corporate Secretary of the National Association of Securities Market Participants (NAUFOR).
CHAIRMAN OF THE AUDIT COMMISSION
Mikhail Sorokin
Zakhar Sabantsev1
Born in 1974.
Born in 1990.
Graduated from the State University of Management.
Deputy Director of the Strategic Development Department of the Russian Ministry of Transport1.
Graduated from the Moscow State University of Economics, Statistics, and Informatics.
Holder of ministerial awards – Letter of recognition from the Minister of Finance of the Russian Federation (2007),
For Excellent Work in Finance badge of the Ministry of Finance of the Russian Federation (2012).
Section Head, Bank Sector Monitoring, Consolidated and Analytical Work Section, Financial Policy Department, Ministry
of Finance of the Russian Federation.
Aleksey Kulagin
Born in 1986.
Graduated from Lomonosov Moscow State University and Tula State University.
Holder of a ministerial award – Acknowledgement of the Russian Ministry of Energy.
Deputy Director of the Department of State Energy Policy of the Russian Ministry of Energy.
1. On 17 January 2023, Zakhar Sabantsev voluntarily resigned from his position as a member of the Audit
1. At the time of election – Deputy Head of the Department of Property Relations and Privatisation of Major Organisations
of the Federal Agency for State Property Management.
Commission.
38
39
Risk Management
and Internal
Control System
Rosneft has established and is continuously improving its Risk Management
and Internal Control System (RM&ICS) aimed at proactive identification
and analysis of risks that may impact the Company’s long-term targets
as well as its ongoing financial and business operations.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
The Company has in place processes
to identify, assess and manage
strategic risks that may hinder
the delivery against long-term
targets, financial and operational
risks that affect the implementation
of the Company’s current business
plan, and business process risks
that may hamper the Company’s ability
to achieve business targets.
MAIN RISK GROUPS
Short-term targets
First-year targets outlined in
the Company’s business plan
Medium-term and long-term targets
Targets outlined in
the Company’s development strategy
1 year
3 years
5 years and longer
To develop a well-structured and integrated risk management and internal control system,
the Company has put in place a multi-level regulatory framework in this area, which outlines key
RM&ICS principles at various stages.
Corporate financial and
operational risks
Strategic risks and
strategic threats
Company policy
● Policy on the Risk Management
and Internal Control System
Company
standards
● Standard on Risk Management and Internal Control System
● Standard on the Corporate-Wide Risk Management
System (CWRMS)
Company
regulations
● Regulations on Design, Implementation
and Maintenance of the Internal Control System
● Regulations on Market Risk Management
● Regulations on Development and Use
of the Company-Wide Register of Standard Risks
and Controls
Methodological
guidelines
● Guidelines for Determining and Applying Risk
Appetite
● Risk Assessment Guidelines
KEY PRINCIPLES
Principle of integration
Principle of continuity
Principle of optimality
Principle of separation
of duties and powers
Principle of full
responsibility
Principle of adaptability
and RM&ICS
enhancement
RM&ICS
operating
principles
Principle of reasonable
assurance
Principle
of methodological
integrity
Principle of risk-oriented
approach
Principle
of reasonableness
in formalising
control procedures
and documenting RM&ICS
The principles and objectives
of the RM&ICS are set out
in the Company’s Policy on the Risk
Management and Internal Control
System1 developed in accordance
with the Russian regulatory
requirements and drawing
on recommendations of international
firms engaged in risk management,
internal control and audit services.
These are intended to provide
reasonable assurance that
the Company will achieve its goals.
1. Rosneft’s Policy on the Risk Management and Internal Control System No. P4-05 P-01 approved by the Company’s Board of Directors,
Minutes No. 15 dated 13 December 2021.
40
41
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
RM&ICS stakeholders
Rosneft’s RM&ICS has various stakeholders whose roles are distributed depending
on their involvement in developing, introducing and monitoring the performance
of the system. The RM&ICS has three management levels.
Strategic level
Operational level
Board of Directors
and Audit Committee
of the Board of Directors
● Define RM&ICS principles
and approaches
● Approve RM&ICS focus
areas and follow up
on their progress
● Approve corporate
reports on financial
and operational risks
● Approve risk appetite
● Make sure the RM&ICS
performance is analysed
and evaluated
● Monitor the RM&ICS
reliability and performance
Chief Executive
Officer
● Validates RM&ICS
focus areas
● Validates RM&ICS
reports
● Validates risk
appetite
Risk Management
Committee
● Validates
the materi-
als for RM&ICS
issues reported
to the Chief
Executive Officer
● Resolves RM&ICS
operational
disputes
Management
Security Service
● Distributes roles
and responsibilities among
employees
● Manages risks
● Develops and implements
control procedures
● Conducts self-assessment
of internal controls
Risk and Internal Control
Methodology Department
● Plans RM&ICS focus areas
● Develops, implements and updates
Company-wide RM&ICS guidelines
● Prepares reports on risks
and internal controls
● Manages the RM&ICS roll-out
and operation across Rosneft’s
business units and Group
Subsidiaries
● Provides guidelines to key RM&ICS
stakeholders, trains them in risk
management and internal controls
● Develops, updates,
and introduces internal
anti-fraud and anti-cor-
ruption regulations
and implementing
documents
● Participates in ensuring
compliance with internal
regulations and imple-
menting anti-fraud
and anti-corrup-
tion initiatives taken
by Rosneft’s executive
bodies
Business Units Providing
Certain RM&ICS Functions
● Prepare and consolidate
RM&ICS reports
● Manage the roll-out
of RM&ICS elements
and develop proposals
for the risk management
methodology
● Assist the Company’s
management in con-
ducting self-assessment
of internal controls
● Manages the Security
Employees
Hotline
● Conducts inspections/
investigations into abu-
sive/unlawful prac-
tices by the Company’s
employees and third
parties
● Implement risk management
controls and initiatives
● Assist the Company’s
management in managing
risks
● Help identify, assess
and report on risks
and internal controls,
and conduct assessment
of internal controls
RM&ICS
independ-
ent monitoring
and performance
assessment
Internal Audit Service
● Monitors the RM&ICS
reliability and performance
● Conducts audits
● Monitors the implementation
of RM&ICS improvement
proposals made by internal
auditors
● Assists the Company’s
executive bodies
in investigating abusive/
unlawful practices
by the Company’s
employees and third parties
Audit Commission
● Audits the Company’s
financial and business
operations, verifies
the accuracy and reliability
of data included in Rosneft’s
annual reports and annual
accounting (financial)
statements
42
43
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
RM&ICS enhancement
Owing to ongoing improvements in its RM&ICS, the Company can promptly
respond to changes in the external environment and internal business processes,
achieve better performance, and increase its shareholder value.
RM&ICS enhancement highlights for 2022
RM&ICS enhancement initiatives
Results
Development and improvement
of guidelines on the Risk
Management and Internal Control
System
● Standard on Risk Management and Internal Controls
was successfully developed
Development and implementation
of an RM&ICS training programme
for the employees of Rosneft
and Group Subsidiaries
● Risk and internal control experts at RM&ICS business units
of Rosneft and Group Subsidiaries underwent training
● The existing risk management and internal control distance
course was updated and made available on the corporate
intranet portal
Enhancement of the risk assessment
framework leveraging economic
and mathematical models and expert
reviews
● The Company’s quantitative risk assessment models
were verified (back-tested)
● Methodological guidelines were approved on the assessment
of the risk of loss of rights to real estate as a result of non-
existent/incomplete documents of title or claims of third parties
Implementing and maintaining
the Internal Control System
● A self-assessment of the Company’s internal control was carried
out, including the evaluation of control procedures conducted
as part of a plan for testing their implementation
● A plan for developing, implementing and maintaining the Internal
Control System was approved by the top manager in charge
Improving the RM&ICS processes
across Group Subsidiaries
● The Corporate-Wide Risk Management System
was implemented by seven Group Subsidiaries
Key targets
and objectives
of the RM&ICS
enhancement,
as well as critical
steps to achieve
them, are set out
in the RM&ICS
Enhancement Plan,
which is subject
to approval
by the Company’s
Chief Executive Officer
and Board of Directors.
44
45
Internal Control
System
Corporate-Wide Risk
Management System
THE INTERNAL CONTROL SYSTEM (ICS) IS AN INTEGRAL PART OF THE RM&ICS
KEY COMPONENTS OF THE CORPORATE-WIDE RISK MANAGEMENT SYSTEM (CWRMS)
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
To achieve the ICS objectives, the Company needs to:
5
.
R
E
P
O
R
T
I
N
G
● The both systems have aligned goals.
● The ICS is governed by the Company’s Policy on the Risk Management and Internal Control System,
Standard on Risk Management and Internal Controls, and Regulations on Design, Implementation
and Maintenance of the Internal Control System.
● The Company relies on the above internal documents to identify risks inherent in its business processes
and develop and implement controls, thus improving manageability and efficiency across business
processes, reliability of financial statements, and compliance with the applicable laws and internal
regulations.
Define and update key ICS focus areas in alignment
with the Company’s needs and stakeholder requirements
Assess business process risks, develop, adopt and follow
controls, including the development of uniform guidelines
to support efficient ICS operations
Identify shortcomings in existing controls, develop
and implement initiatives to address the same, streamline
and upgrade controls
Develop and implement tools to facilitate communication
and information sharing among all RM&ICS stakeholders,
including via information systems
The Company’s
management
and employees ensure
the ICS efficiency
by managing
the relevant functions
and performing their
job duties.
1
2
3
4
46
NITO RIN G
O
K M
. RIS
6
A N N UAL PLANNING
1 .
2
.
R
Ongoing
enhancement of the
CWRMS
infrastructure and
process
Regulations
and policies
Interfaces between
the CWRMS
and other
processes
Distribution
of roles
within the CWRMS
I
S
K
I
D
E
N
T
I
F
I
C
A
T
I
O
N
T
N
E
M
S
S
E
3. RISK ASS
4. RESPONDING TO R I S K S
Risk management at Rosneft
is governed by the Company’s Policy
on the Risk Management and Internal
Control System1, Standard on Risk
Management and Internal Controls2
and Standard on the Corporate-Wide
Risk Management System3.
The CWRMS is a combination
of interrelated elements embedded
into various business processes
of the Company (including strategic
and business planning processes)
and implemented at all management
levels by all employees of the Company.
As part of CWRMS, our management
(at various organisational levels,
including the Group Subsidiaries
and the Company) regularly identifies
and assesses risks and develops
response measures covering, among
others, risks that affect the Company’s
long-term goals (strategic risks) along
with financial and operational risks. Risk
reports including all the information
on risks, their assessment
and description of mitigants
are submitted to the Board of Directors,
its Audit Committee, Company’s top
management and employees.
Risk management process
A combination of risk
management elements supported
by the existing organisational
structure, internal policies
and regulations, risk management
procedures and techniques,
which are applied across all
management levels and functions
of the Company to make its
risks acceptable in the context
of achieving Rosneft’s strategic
goals
Risk management
infrastructure
A set of elements that provide
a Company-wide basis,
tools, and framework for risk
management
Heads of the Company’s business units
arrange for, and steer risk management
processes within their remit. When
choosing a risk response and specific
mitigants, risk owners seek to find
an optimal trade-off while maintaining
an acceptable risk level (risk appetite).
1. Rosneft’s Policy on the Risk Management and Internal Control System No. P4-05 P-01 approved by Resolution of the Company’s Board
of Directors, Minutes No. 15 dated 13 December 2021.
2. Rosneft’s Standard on Risk Management and Internal Controls No. P4-05 S-0028 approved by Resolution of the Company’s Management
Board No. Pr-IS-09p dated 31 March 2022.
3. Rosneft’s Standard on Corporate-Wide Risk Management System No. P4-01 P-01 approved by Resolution of the Company’s Management
Board No. 660 No. Pr-IS-36p dated 28 September 2018.
47
Rosneft’s risks
INDUSTRY-WIDE RISKS
● Risk of accidents
● Risk of fatal injuries
● Risk of failure to achieve oil and gas
condensate production targets
● Risk related to rising purchase prices
for electric power
● Risk of penalties for the quality of gas
fed into transportation systems
● Risk of lower quality of refinery
● Risk of failure to achieve natural
feedstock
● Risk of failure to comply
with the repair plan in oil refining
and petrochemicals
● Risk of accumulation of unclaimed
liquid and non-liquid inventories
gas and gas condensate production
targets
● Risk of failure to achieve planned
volumes of bulk wholesale
of crude oil, petroleum products,
gas processing products,
and petrochemicals
FINANCIAL RISKS
● Risk of tax claims and risk of losing tax benefits
● Market risks
● Risk of an increase in overdue receivables
● Risk of default/cross-default
EXTERNAL CONSTRAINTS
LEGAL RISKS
● Risk of breach of competition
laws
● Litigation risk
CHANGES IN LEGISLATION
AND REGULATORY
ENVIRONMENT
Since 2014, the USA, EU
and some other countries have
been imposing various economic
constraints on the Russian
Federation, among other things,
affecting operations of certain
companies in the Russian
energy and other industries
(including Rosneft and some of its
subsidiaries). In 2022, the Company
was under considerably increased
sanctions pressure. However,
Rosneft factors in and continuously
monitors existing constraints
to minimise their adverse effects,
and consistently implements its
Import Substitution and Equipment
Localisation Programme
in Russia, expands cooperation
with companies from friendly
countries, and redistributes its
commodity flows.
The Company’s operating results
are very sensitive to changes
in the applicable laws, including tax,
currency and customs regulations,
etc. Rosneft continuously monitors
and assesses such changes, and makes
projections as to their likely effect
on the Company’s operations. Rosneft’s
experts are regular members of working
groups drafting bills in various fields
of law.
Risk appetite of the Company
The following risk appetite
indicators were approved for 2022:
Financial and economic
performance
The Company strictly complies
with its financial covenants.
The Company ensures that all its
short- and long-term commitments
are fulfilled as they fall due.
Health, safety, environment
Recognising the nature and scale
of the footprint of its business,
products and services, the Company
feels responsible for safe
and accident-free operation
and protects health and safety
of its employees and local residents
in regions of its operation. As part
of its commitment to preventing
any potential adverse impact
on the environment, the Company
makes every effort to protect,
preserve and restore natural
resources.
Corporate governance
The Company has zero tolerance
for any form or manifestation
of corporate fraud and corruption.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
analysis and statistical approaches.
The assessment horizon
and the metrics used depend
on the way specific targets are set out
in the Strategy. The results are then
consolidated using the probability
theory and mathematical statistics
methods to identify the key strategic
threats, assess strategic risks
and develop measures to mitigate them.
ESG risks
Rosneft is fully aware of the importance
and impact of sustainability risks,
including ESG, on the Company’s
business. Our commitment
to sustainable business principles
was further highlighted in the new
Rosneft–2030 Strategy. It seeks
to reduce the Company’s carbon
footprint and boost its operational
and financial efficiency. The Strategy
will help solidify Rosneft’s position
in the global hydrocarbon market
as a reliable producer and supplier
of energy, minimising its environmental
and climate impact. Rosneft aims
to achieve carbon neutrality by 2050
with respect to Scope 1 and 2
emissions. To accomplish this
goal, the Company plans to reduce
emissions, leverage low-carbon
generation, develop energy-
saving, carbon capture and storage
technologies, and promote natural
absorption.
We analyse sustainability risks as part
of the effort to identify and assess risks
that can affect the Company’s long-
term goals (strategic risks and threats).
The annual process to identify
and assess (prioritise) strategic risks
and threats takes into account Russian
and international research on the oil
and gas industry development,
and is based on the Company’s
strategic targets as set out in its
development strategy. Following this
analysis, we determine a list of strategic
threats that can potentially impact
the Company’s ability to achieve its
strategic goals. This list also includes
threats related to various aspects
of sustainable development.
Rosneft’s management evaluates
the impact of strategic threats
(including those related to sustainable
development) on the Company’s
strategic targets using expert
STRATEGIC THREATS RELATED TO SUSTAINABLE DEVELOPMENT
Environmental
Social
Corporate governance
● Accidents and environmental
damage
● Advance of alternative energy
and green technologies and
improvements in energy
efficiency
● Changes in the structure
of energy consumption
● Natural disasters
● Climate change in the regions
where the Company operates
● Epidemics
and diseases
● HR and social risks
● Armed conflicts,
terrorism, civil
disturbance
● Safety of critical
facilities
● Cyber security
● Deterioration of the tax
regime
● Tighter regulation
and requirements
in the industry
● Stricter regulation and
requirements related to
climate change. New
climate initiatives
● Reputation and less
appealing investment case
48
49
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Internal audit
In 2022, Rosneft’s Internal Audit Service was governed by the Company’s Policy on Internal Audit, Code
of Ethics of the International Institute of Internal Auditors and international practices of internal audit.
The Internal Audit Service assists
Rosneft’s Board of Directors
and the executive bodies of Rosneft
and Group Subsidiaries in enhancing
the Company’s management
efficiency and improving its financial
and business performance, including
through a systematic and consistent
approach to the analysis and evaluation
of the RM&ICS as well as corporate
governance, therefore providing
reasonable assurance that
the Company will achieve its goals.
It also helps ensure:
● accuracy, reliability, and integrity
of information on the Company’s
financial and business operations,
including those of Group Subsidiaries;
● efficiency and effectiveness
of the Company’s operations,
including those of Group Subsidiaries;
● room for improvement available
across the Company’s financial
and business operations, including
those of Group Subsidiaries;
● integrity of the Company’s
assets, including those of Group
Subsidiaries.
Reporting and accountability
lines of internal audit
Functionally and administratively, the Internal Audit Service reports to Rosneft’s
Board of Directors and Chief Executive Officer respectively.
The existing reporting lines
whereby the Head of Internal Audit
reports to the Board of Directors
and the Company’s executive bodies
provide sufficient independence
for performing internal audit
functions.
Heads of the Internal Audit functional
units do not participate in managing
functional areas of the Company’s
business requiring management
decisions on audited entities.
The Head of Internal Audit provides
Rosneft’s Chief Executive Officer,
Board of Directors (its Audit
Committee) with confirmation
of the organisational independence
of the Internal Audit Service
and individual impartiality of internal
auditors at least once a year, as part
of the internal audit performance
report.
Functional units of Rosneft’s Internal Audit
Service are mainly responsible for:
developing an internal audit plan based on the risk-oriented
approach;
assessing the RM&ICS reliability and performance
as well as its adequacy given the scale and complexity
of the Company’s business;
assessing corporate governance;
conducting audits and activities in line with the internal
audit plan approved by Rosneft’s Chief Executive Officer
and endorsed by the Board’s Audit Committee;
performing other inspections and tasks as instructed
by Rosneft’s Board of Directors (its Audit Committee) and/
or the Company’s Chief Executive Officer;
monitoring the Company’s progress in addressing breaches
and shortcomings identified during internal audits;
performing other functions essential to meet the tasks
assigned.
Rosneft’s internal audit
function is performed
by the Vice President –
Head of the Internal Audit
Service (Head of Internal
Audit) and functional
units of the Internal Audit
Service. In accordance
with Rosneft’s
organisational structure,
units of the Internal Audit
Service report directly
to the Head of Internal
Audit.
Internal Audit Quality Assurance
and Improvement Programme
In order to ensure proper quality control and performance evaluation of internal audit, the Internal
Audit Quality Assurance and Improvement Programme was developed and put in place.
To deliver against the Programme’s
targets, a regular in-house self-
assessment of the internal audit quality
was conducted in 2022. It was concluded
following the self-assessment that
the internal audit function was generally
in line with the requirements
of the Company’s Policy on Internal
Audit and other regulations on internal
audit, the International Standards
for the Professional Practice of Internal
Auditing, and the Code of Ethics
of the International Institute of Internal
Auditors.
In 2022, the risk-oriented internal audit
plan was implemented in full.
audit of the reliability and effectiveness
of the RM&ICS and also other internal
audit inspections conducted in 2022.
The Head of the Internal Audit
Service prepared a report
on the internal audit performance
for 2022 and submitted it
to Rosneft’s Board of Directors
and its executive bodies.
In accordance with Federal
Law No. 208-FZ On Joint-Stock
Companies, an internal audit opinion
was developed following a mandatory
Following the 2022 reliability
and effectiveness assessment
of RM&ICS, the Internal Audit
Service concluded that the RM&ICS
ensured overall support of the risk
management process and efficient
internal control system, providing
reasonable assurance that
the Company would achieve its
goals.
50
51
Shareholder relations,
key events in 2022
The Company has established a multi-level system to protect the rights of its shareholders.
Shareholder rights guaranteed by law
Pursuant to the Russian laws,
the Company’s shareholders have
the right to:
● vote at the General Shareholders
Meeting on a one-share-one-vote
basis;
● propose items for the agenda
of the General Shareholders
Meeting and nominate candidates
to the Board of Directors
(if a shareholder owns at least
2% of voting shares);
● exercise pre-emptive right to buy
shares in any future issue and issue-
grade securities convertible
into shares;
● receive dividends declared
by the Company, in proportion
to the number of shares held;
● review information and materials
provided in preparation
for the General Shareholders
Meeting;
● obtain information on the Company’s
operations upon request
and as established by the Russian laws;
● freely dispose of Rosneft’s shares;
● exercise other rights granted under
the Russian law.
Additional rights guaranteed by the Company’s
Charter and internal regulations
The Company offers equal and fair
opportunities for its shareholders
to exercise their legal rights by securing
additional rights and procedures
in the Charter and internal regulations,
including the right to:
● receive part of the Company’s profit
● participate in managing
as dividend;
the Company’s operations.
● receive necessary information
on the Company on a timely
and regular basis;
Independent and professional Board of Directors
The composition of the Board
of Directors and the number of Board
members reflect the Company’s
shareholding structure.
Electing Board members
by cumulative voting guarantees
the rights and legitimate interests
of shareholders.
The Board of Directors consists
of four independent directors
of internationally recognised
business standing.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Official channels of communication
with shareholders
The Company has established efficient
means of communicating with its
shareholders.
● Shareholder account
● email for requests:
on
the Company’s website;
shareholders@rosneft.ru;
● 24 hour shareholder Hotline
● fax: +7 (499) 517-86-53.
The Company has several
communication channels in place
to facilitate the exercise of corporate
rights and promote efficient
shareholder relations, including:
(a multichannel phone line to receive
and handle calls):
8 (800) 500-11-00 (toll free within
Russia) and +7 (495) 987-30-60;
● mailing address for letters: 26/1
Sofiyskaya Embankment, Moscow,
117997, Russia;
Shareholder’s Personal Account
Shareholder’s Personal Account enables all Rosneft shareholders, regardless of where their shares are kept,
to take part in the General Shareholders Meeting online: register, vote on the agenda items, review information
for the meeting, and ask their questions to the speakers.
All Rosneft shareholders of record also can:
● receive updates on their accounts in the register of shareholders online;
● use the registrar’s services remotely (request and receive certificates, extracts, and notices) and pay
for them online;
● monitor accrued dividends;
● request and receive 2-NDFL earnings certificates in a convenient way;
● exercise their rights in relation to several Shareholder’s Personal Accounts within one session (one
account).
Shareholders can log into their personal accounts at:
https://lka.rosneft.ru/auth/?authLg=en
To gain access to their Shareholder’s Personal Account, shareholders need to request login and password from
the Moscow Head Office or regional branches of the Company’s registrar, Reestr-RN LLC.
The rules governing the procedure of registering
a Shareholder’s Personal Account can be found
on the website of Reestr-RN LLC or on the Company’s
website. Any questions concerning access
to the Shareholder’s Personal Account can be addressed to:
● Reestr-RN LLC call centre by phone: +7 (495) 411-79-11
(email:
support@reestrrn.ru);
● Hotline for Rosneft shareholders at: 8 (800) 500-11-00
(toll free within Russia) and +7 (495) 987-30-60;
(email:
shareholders@rosneft.ru).
In 2022, the Corporate Governance Department handled 5,278 applications, including:
3,994
phone calls
630
letters
178
emails
476
requests claiming unpaid dividends
for prior periods
Answers to frequently asked questions can be found on
the Company’s website.
52
53
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Protecting shareholders’ title to shares
Corporate Secretary
The Company practices reliable and safe methods of recording title to its shares
and has engaged a professional registrar to maintain its Shareholder Register.
The registrar, Reestr-RN LLC,
registers holders of securities
in Rosneft, more than
100 issuers within the Group,
and over 1.4 thousand joint-stock
companies from various industries.
Reestr-RN LLC consistently ranks
among the top ten Russian registrars,
records rights to shares of more
than half a million security holders,
actively develops digital customer
services, and maintains a network
of 13 branches and 45 transfer agent
offices, which operate in the regions
where the majority of the Company
shareholders reside.
The Company, together
with Reestr-RN LLC, regularly
notifies its shareholders of the need
to update their personal data
recorded in the Shareholders Register
of Rosneft.
Resolutions
of the General
Shareholders Meeting
Regulation
on Provision
of Information
to Rosneft
Shareholders
Contact details
of the registrar and its
service offices
The Corporate Secretary of Rosneft oversees the Company’s compliance with applicable
laws, as well as Rosneft’s Charter and internal regulations ensuring execution
of the rights and legal interests of the Company’s shareholders and successful interaction
with shareholders, supports the Board of Directors’ performance, and refines corporate
governance practices in line with shareholders’ and other stakeholders’ interests.
The Corporate Secretary
reports to the Board of Directors
and is appointed and dismissed
by the Chief Executive Officer
on the basis of the Board of Directors’
resolution.
The Corporate Secretary acts
as the Board of Directors secretary
and the General Shareholders Meeting
secretary.
As part of their function to ensure
Rosneft’s shareholder relations
and prevent corporate conflicts,
the Corporate Secretary coordinates
activities to implement procedures
required under the laws of Russia
and Rosneft’s internal regulations
with a view to executing the rights
and legal interests of shareholders
and controlling the same,
as well as overseeing the execution
of rights and property interests
of shareholders in decision-making
by Rosneft’s governing bodies.
The Corporate Secretary engages
in actions required to prevent abuse
of rights by all the parties involved
in corporate relations, identifies
potential corporate conflicts early on,
and steps in to prevent and resolve
them.
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55
Dividend Policy
The Dividend Policy approved by the Board of Directors formalises the Company’s
key principles of, and approaches to, dividend payouts to shareholders
and introduces transparent decision-making processes for paying out
(declaring) dividends and determining their amount and payment procedure.
In 2022,
the Company
made no changes
to its
Policy.
Dividend
Principles of the Dividend Policy:
● ensuring compliance with the requirements
of the Russian laws, the Company’s Charter
and internal regulations when paying out
(declaring) dividends;
● maximising the transparency of the dividend
calculation process;
● increasing the Company’s investment appeal;
● maintaining the balance of short- and long-term
interests of shareholders;
● supporting shareholder commitment to improving
the Company’s profitability;
● ensuring that the dividend payout pattern
comfortably reflects an increase in Rosneft’s net
profit;
● making dividend payments in a way most
convenient for our shareholders;
● paying out dividends as soon as practicable.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
The decision to pay dividends is made by the General Shareholders
Meeting upon recommendation of the Board of Directors.
In 2022, the Company discharged
99.98% of its obligation to pay out
dividends. Dividends were paid
to all shareholders of record, except
for persons who failed to timely notify
the issuer’s registrar of changes
in the data recorded on their profile.
The Company’s Charter provides
for a five-year period when
shareholders may claim dividends
declared but not paid due to missing
address or banking details,
which is longer than required
by the applicable laws.
A total of RUB 216.1 bln was allocated
by Rosneft to paying its interim
dividends for the first half
of 2022, which represents 50%
of the Company’s IFRS net income
attributable to Rosneft shareholders.
In 2022, the Company
paid dividends for FY2021
in the amount of
RUB
250.4
bln
The interim dividends were not due
as at 31 December 2022.
On 25 May 2023, the Board of Directors
recommended that the General
Shareholders Meeting approve
RUB 17.97 per share as dividend
for FY2022. The total amount
of dividends recommended for FY2022,
including the interim dividends paid
in 2023, is RUB 406.5 bln or RUB 38.36
per share1. The dividend payout ratio
calculated as dividends divided by non-
consolidated net income under RAS
for 2022 is 90.3%, while the dividend
payout ratio calculated as dividends
divided by consolidated net income
under IFRS is 50% of the Company’s
IFRS net income attributable to Rosneft
shareholders.
In 2022,
the Extraordinary General
Shareholders Meeting resolved
to pay interim dividends
Dividends
section on
Rosneft’s website
ROSNEFT’S DIVIDEND HISTORY
RUB bln
500
400
300
200
100
0
%
50
40
30
20
10
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
7.53
8.05
12.85
8.21
11.75
5.98
10.48
25.91
33.41
6.94
41.66
38.36
Dividend payout ratio under IFRS, %
FY dividends, RUB bln
1H dividends, RUB bln
Dividend per share, RUB
FY dividend per share, RUB
7.53 – Dividend per share for the period, RUB
1.
Including the interim dividends and the dividends recommended by the Board of Directors to be approved at the Annual General
Shareholders Meeting in 2023.
56
57
APPENDICES
Report on compliance
with the principles
and recommendations
of the Corporate
Governance Code
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
This report on compliance
with the principles
and recommendations of the Corporate
Governance Code (the Report)
was reviewed by Rosneft’s Board
of Directors at a meeting held
on 25 May 2023 (Minutes
No. 20 dated 29 May 2023) as part
of the 2022 Annual Report.
The Board of Directors certifies
that this Report contains complete
and reliable information on Rosneft’s
compliance with the principles
and recommendations of the Corporate
Governance Code in 2022.
Rosneft assesses its compliance
with the Corporate Governance Code
as per the guidelines recommended
by the Bank of Russia in Letter
No. IN-06–28/102 on Disclosure
of Compliance with the Principles
and Recommendations of the Corporate
Governance Code in the Annual Report
of a Public Joint-Stock Company
dated 27 December 2021. Key
aspects of the Company’s corporate
governance model and practice
are outlined in Section Corporate
governance of Rosneft’s 2022 Annual
Report.
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
1
Status
of compliance
with a corporate
governance
principle
2
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
1.1. The Company shall ensure equitable and fair treatment of all shareholders
exercising their right to participate in managing the Company
To maintain effective relations
with shareholders, Rosneft provides
the following communication
channels: a shareholder hotline, mail
and email, fax.
The Company does not consider
setting up a dedicated online forum,
as it has other communication
channels in place, as well as provides
for the opportunity to discuss
agenda items at General
Shareholders Meetings and, if
relevant, using Rosneft’s social
networks, which are mentioned
on Rosneft’s official website
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1.1.1
1.1.2
The Company
provides the best
possible conditions
for shareholders
to participate
in General
Shareholders
Meetings, make
informed decisions
on agenda items,
coordinate their
actions and express
their opinions
on matters under
consideration
The procedure
to notify
shareholders
of a General
Shareholders
Meeting and provide
them with relevant
materials enables
them to get
well-prepared
1. The Company provides an easily
accessible communication channel,
such as a hotline, email or online forum,
for shareholders to express their
opinions and put questions regarding
the agenda in preparation for a General
Shareholders Meeting.
The Company provided such
communication channels and made
them available to shareholders before
every General Shareholders Meeting
held in the reporting period
1.
In the reporting year, the notice
of a General Shareholders
Meeting was posted (published)
on the Company’s website at least
30 days prior to the date of the Meeting,
unless the applicable law established
a longer period.
2. The notice specified the documents
required for admission to the Meeting
venue.
3. Shareholders were informed about
the persons who proposed agenda
items and nominated candidates
to the Company’s Board of Directors
and Audit Commission (if the Company’s
Charter required establishing such
Commission)
1. The “complied with” status is assigned only if the Company’s corporate practice meets all the criteria for compliance with a corporate
governance principle set out in the third column of the form to be used for reporting on compliance with the Code’s principles. If
the Company’s corporate practice meets only some of the compliance criteria or none of them, the “complied with in part” or “not
complied with” status is assigned in the fourth column of the form to be used for reporting on compliance with the Code’s principles.
2. Explanations are given for each criterion for compliance with a corporate governance principle (assessment criterion) if the Company
meets only some of the criteria or none of them.
58
59
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
When preparing
for and participating
in a General
Shareholders Meeting,
shareholders have
unrestricted and timely
access to any relevant
information
and materials,
and are able
to put questions
to the Company’s
executive bodies
and directors,
as well as communicate
with one another
1.
In the reporting period, shareholders
had the opportunity to put questions
to the Company’s executive bodies
and directors both before and during
the General Shareholders Meeting.
2. The Board of Directors’ opinions
(including dissenting opinions (if any)
recorded in the minutes) on each
of the agenda items of the General
Shareholders Meetings held
in the reporting period were added
to the Meeting materials.
3. The lists of persons entitled to participate
in each General Shareholders Meeting
in the reporting period were made
available to the shareholders
eligible to review such lists
as soon as the Company received those
There are no
unjustified difficulties
preventing
shareholders from
exercising their rights
to convene a General
Shareholders Meeting,
nominate candidates
to the governing
bodies and propose
items for the agenda
1. The Charter enables shareholders
to propose items for the agenda
of the Annual General Shareholders
Meeting during at least 60 days after
the end of the respective calendar year.
2. In the reporting period, the Company
rejected no item proposed
for the agenda and no candidate
to the Company’s bodies due
to misprints or other minor flaws
in shareholders’ proposals
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
Each shareholder is able
to exercise their voting
right without hindrance,
in the simplest and most
convenient way
1. The Company’s Charter enables
shareholders to fill out an electronic
voting ballot on the website specified
in the notice of a General Shareholders
Meeting
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
Explanation on items 1–3: no
General Shareholders Meetings
were held in the form of a meeting
(joint presence of shareholders)
during the reporting period in line
with Federal Law No. 25-FZ
of 25 February 2022 On Amending
the Federal Law On Joint-Stock
Companies and Suspending Certain
Provisions of Legislative Acts
of the Russian Federation.
Explanation on item 4: the Company
has the Corporate Governance
analytical information system
in place. It enables shareholders
to vote online and interact
with the Company and the registrar
via Shareholder’s Personal Account
The procedure
for holding a General
Shareholders
Meeting established
by the Company
provides all
persons present
at the Meeting
with equal
opportunities
to express their
opinions and ask
questions
1.
In the reporting period, sufficient
time for reporting on and discussing
agenda items was provided at General
Shareholders Meetings held
in the form of a meeting (joint presence
of shareholders), with shareholders having
an opportunity to express their opinions
and ask questions on agenda items.
2. The Company extended invitations
to the candidates nominated
to the Company’s governing
and supervisory bodies and took all
the necessary steps to make sure they
participate in the General Shareholders
Meeting convened to vote on their
candidacies. During the Meeting,
candidates to the Company’s governing
and supervisory bodies were available
for questions from the shareholders.
3. The sole executive body, the officer
in charge of accounting, the Chairman
or other members of the Board’s
Audit Committee were all available
for questions from the shareholders
during the General Shareholders
Meetings held in the reporting period.
4. In the reporting period, the Company
used telecommunications equipment
to provide shareholders with remote
access to participate in the General
Shareholders Meetings, or the Board
of Directors made a well-informed
decision to abstain from using such
equipment in the reporting period due
to its irrelevance (unavailability)
1.1.3
1.1.4
1.1.5
1.1.6
60
1.2. Shareholders are provided with an equitable and fair opportunity to receive
a share of the Company’s profits in the form of dividends
1.2.1
The Company
has developed
and implemented
a transparent
and clear procedure
to determine
the amount
of dividends and pay
them out
Complied with
Complied with in part
Not complied with
1. Regulations on the Company’s
Dividend Policy have been approved
by the Board of Directors and disclosed
on the Company’s website.
2. If, in accordance with the dividend
policy of a company issuing
consolidated financial statements,
the amount of dividends is determined
based on the company’s results
recorded in its financial statements,
the dividend policy shall employ
the consolidated financial statements.
3. In the reporting period, substantiation
of the suggested net income
distribution arrangements, including
dividend payments and allocations
for the Company’s own needs,
and their assessment for compliance
with the Company’s dividend
policy (including explanations
and the economic rationale
for allocating part of the net income
to cover the Company’s own needs)
were included in the materials
for the General Shareholders Meeting
set to consider income distribution
(including dividend payments / dividend
declaration)
1.
In addition to statutory restrictions,
the Regulations on the Company’s
Dividend Policy define financial/
economic circumstances under
which the Company shall not pay out
dividends
Complied with
Complied with in part
Not complied with
1.2.2
The Company does
not resolve to pay
out dividends if
such resolution,
though not in breach
of the legislation,
is not economically
viable and may
lead to false
assumptions about
the Company’s
operations
Explanation on item 3: the Company
has approved a Rosneft Dividend
Policy. In line with this Policy,
the Company shall distribute at least
50% of its net income recorded
in the IFRS consolidated financial
statements (subject to Resolution
of the Government of the Russian
Federation No. 774-r dated 29 May
2006). The Board of Directors also
works to establish if it is possible
to pay out dividends in the amount
determined pursuant to the Rosneft
Dividend Policy and includes
the relevant analysis in the Meeting
materials.
In accordance
with recommendations approved
by the Bank of Russia with respect
to the disclosure of a report
on compliance with the principles
and recommendations
of the Corporate Governance Code
in the annual report of a public joint-
stock company (Bank of Russia’s
Letter No. IN-06–28/102 dated
27 December 2021), the Company
included explanations of the Board
of Directors on allocating part
of the Company’s income
for certain needs in the materials
for the General Shareholders
Meeting set to consider income
distribution (for 2022)
Pursuant to Resolution
of the Government of the Russian
Federation No. 774-r dated 29 May
2006, the Rosneft Dividend
Policy sets the target dividend
at no less than 50% of Rosneft’s
IFRS net income. Said Resolution
of the Government contains no
restrictions (in addition to statutory
restrictions) on a resolution to pay no
dividends.
In accordance
with recommendations
approved by the Bank of Russia
with respect to disclosure
of compliance with the principles
and recommendations
of the Corporate Governance Code
in the annual report of a public joint-
stock company (Bank of Russia’s
Letter No. IN-06–28/102 dated
27 December 2021) and clause
2.2.3 of the Rosneft Dividend Policy
the Company included explanations
of the Board of Directors
on the absence of any financial
limitations on dividend payments
in the materials for the General
Shareholders Meeting set
to consider income distribution
(for 2022)
61
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
1.2.3
1.2.4
The Company
does not allow
any negative
changes
in the dividend
rights of its current
shareholders
The Company
makes every
effort to prevent
shareholders
from receiving
profit (gain) from
the Company other
than in the form
of dividends
and liquidation value
1.
In the reporting period, the Company
did not perform any actions causing
negative changes in the dividend rights
of its current shareholders
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1.
In the reporting period, persons
controlling the Company did not use
any means to receive profit (gain) from
the Company other than in the form
of dividends (for example, by resorting
to transfer pricing, unjustifiably
rendering services to the Company
at inflated prices, or using internal loans
issued to controlling persons and/or
their controlled entities as a substitution
for dividends)
1.3. Corporate governance framework and practices ensure equality of all shareholders owning shares of the same
class (type), including minority and foreign shareholders, and their equitable treatment by the Company
1.3.1
1.3.2
The Company
ensures fair
treatment of each
shareholder by its
governing bodies
and controlling
persons, specifically
allowing no
abuse of minority
shareholders
by major
shareholders
The Company
does not perform
any actions
that will or may
result in artificial
redistribution
of corporate control
1.
In the reporting period, persons
controlling the Company did not
abuse the rights of the Company’s
shareholders, and there were no
conflicts between persons controlling
the Company and the Company’s
shareholders (or even if there were any,
the Board of Directors gave such
conflicts due consideration)
Complied with
Complied with in part
Not complied with
1. The Company has no quasi-treasury
shares, or no quasi-treasury shares
were used in voting during the reporting
period
Complied with
Complied with in part
Not complied with
Pursuant to the Russian
Government’s resolution, Rosneft
signed an agreement with a 100%
government-owned company
to sell all of Rosneft’s interests
and cease participation in all of its
projects in Venezuela, including
the joint ventures of Petromonagas,
Petroperija, Boqueron, Petromiranda
and Petrovictoria, as well as oilfield
services companies, commercial
and trading operations.
Based on the agreement, all Rosneft
assets and trading operations
in Venezuela and/or those
with connection to Venezuela have
been disposed of, terminated or
liquidated.
The agreement and the sale
of assets resulted in Rosneft’s
wholly-owned subsidiary receiving
a 9.6% stake in its parent company.
In addition, the Company’s Open
Market Share Buyback Programme,
which also covers GDRs, saw its
100% subsidiary acquire a further
0.76% stake. None of these
shares were used in voting during
the reporting period
1.4. Shareholders are provided with reliable and effective methods of registering their ownership
of shares and the opportunity to dispose of their shares freely and without hindrance
1.4
Shareholders
are provided
with reliable
and effective
methods
of registering their
ownership of shares
and the opportunity
to dispose of their
shares freely
and without
hindrance
1. The technologies used
by the Company’s registrar
and the terms and quality
of rendered services meet the needs
of the Company and its shareholders
and ensure the most effective way
to keep record of share ownership
and exercise shareholder rights
Complied with
Complied with in part
Not complied with
2.1. The Board of Directors is responsible for the strategic management of the Company, formulating
key principles of and approaches to the risk management and internal control system in the Company,
supervising the work of the Company’s executive bodies and performing other core functions
1. The Board of Directors has the powers
stated in the Charter to appoint
and dismiss members of executive
bodies and to determine the terms
and conditions of their contracts.
2. In the reporting period, the Nomination
(Appointment, HR) Committee 3 1
considered the matter regarding
whether the members of executive
bodies had the necessary professional
qualification, skills and expertise
to meet the current and expected needs
of society in line with the Company’s
approved strategy.
3. In the reporting period, the Board
of Directors reviewed the report
(reports) of the sole executive body
and the collective executive body (if
applicable) on the implementation
of the Company’s strategy
1.
In the reporting period, the Board
of Directors addressed matters
related to the strategy implementation
and revision, approval of the Company’s
financial and business plan (budget),
and review of criteria and indicators
(including interim ones) as regards
delivering on the Company’s strategy
and business plans
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
2.1.1
2.1.2
The Board
of Directors
is responsible
for the appointment
of executive bodies
and their dismissal,
including as a result
of failure to perform
properly. The Board
of Directors also
ensures that
the Company’s
executive bodies
act in accordance
with the approved
development
strategy
and the Company’s
business profile
The Board
of Directors
sets major long-
term targets
for the Company,
as well as assesses
and approves its
key performance
indicators
and primary
business
goals, along
with the Company’s
strategy
and business plans
with regard to its
core operations
62
63
1.
3 The “Nomination Committee”.
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1. The principles of, and approaches
to, organising the Company’s risk
management and internal control
system were established by the Board
of Directors and are set out
in the Company’s internal regulations
defining the risk and internal control
management policy.
2. In the reporting period, the Board
of Directors approved (revised)
the Company’s acceptable risks (risk
appetite) or the Audit Committee and/
or the Risk Committee (if applicable)
considered the feasibility of putting
forward the revision of the Company’s
risk appetite for consideration
by the Board of Directors
1. The Company has developed
and implemented the policy (policies)
approved by the Board of Directors
on remuneration and reimbursement
of expenses (compensations) to its
directors, executive bodies and other
key managers.
2. In the reporting period, the Board
of Directors addressed matters related
to the above policy (policies)
1. The Board of Directors plays a key role
in preventing, identifying and resolving
internal conflicts.
Complied with
Complied with in part
Not complied with
2. The Company has developed
a framework for identifying transactions
involving a conflict of interest and a set
of measures for resolving such conflicts
1. The Company has determined persons
responsible for the implementation
of the Information Policy in its internal
regulations
Complied with
Complied with in part
Not complied with
1.
In the reporting period, the Board
of Directors reviewed the results of self-
assessment and/or external assessment
of the Company’s corporate governance
practices
Complied with
Complied with in part
Not complied with
2.1.3
The Board
of Directors
formulates
the principles
of and approaches
to risk management
and internal
control system
in the Company
The Board
of Directors
determines
the Company’s
policy
on remuneration
and/or
reimbursement
of expenses
(compensations)
to its directors,
executive bodies
and other key
managers
The Board
of Directors
plays a key role
in preventing,
identifying
and resolving
internal conflicts
between
the Company’s
bodies, shareholders
and employees
The Board
of Directors plays
a key role in ensuring
the Company’s
transparency, full
and timely information
disclosure,
and unhindered
access
of shareholders
to the Company’s
documents
The Board
of Directors
oversees
the Company’s
corporate
governance
practices and plays
a key role
in the Company’s
material corporate
events
2.1.4
2.1.5
2.1.6
2.1.7
64
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
2.2. The Board of Directors is accountable to the Company’s shareholders
2.2.1
Information
on the performance
of the Board
of Directors
is disclosed
and provided
to shareholders
1. The Company’s Annual Report
for the reporting period includes
information on attendance
of meetings of the Board of Directors
and Committees by each of directors.
2. The Annual Report includes information
on key results of the Board of Directors’
performance assessment (self-
assessment) carried out in the reporting
period
Complied with
Complied with in part
Not complied with
Explanation on item 1: information
on attendance of meetings
of the Board of Directors and its
Committees is not disclosed
in the Annual Report in accordance
with Resolution of the Government
of the Russian Federation No. 351
dated 12 March 2022
2.3. The Board of Directors manages the Company in an effective and competent manner, and is able to make
objective and independent judgements and decisions in the best interests of the Company and its shareholders
1.
In the reporting period, the Board
of Directors (or its Nomination
Committee) assessed candidates
to the Board of Directors in terms
of their required experience,
knowledge, business reputation, lack
of conflict of interest, etc.
Complied with
Complied with in part
Not complied with
1.
In all cases where the agenda
of a General Shareholders Meeting held
in the reporting period included election
to the Board of Directors, the Company
provided shareholders with biographical
details of all candidates to the Board
of Directors, results of assessment
carried out by the Board of Directors
(or its Nomination Committee)
to determine whether the members
had the necessary professional
qualification, skills and expertise
to meet the current and expected
needs of society, information on their
compliance with the independence
criteria as per Recommendations
102–107 of the Code, and their written
consent to be elected to the Board
of Directors
1.
In the reporting period, the Board
of Directors analysed its needs
in terms of professional qualifications,
expertise and skills and identified
the competencies the Board
of Directors needs to develop in short
and long run
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
2.3.1
2.3.2
2.3.3
Elected to the Board
of Directors are only
those individuals who
have an impeccable
business and personal
reputation,
as well as the knowledge,
skills and experience
required for making
decisions within
the remit of the Board
of Directors
and performing its
functions effectively
The Company’s
directors
are elected through
a transparent
procedure providing
shareholders
with sufficient
information
on candidates
to form an opinion
about their personal
and professional
qualities
The composition
of the Board
of Directors
is balanced,
including in terms
of directors’
expertise,
experience,
knowledge
and business
skills, and worthy
of shareholders’
trust
65
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
1.
In the reporting period, the Board
of Directors reviewed whether
the number of directors was in line
with the Company’s needs
and shareholders’ interests
2.3.4
The number
of directors ensures
the most effective
arrangement
of activities
of the Company’s
Board of Directors,
including by way
of establishing
Committees,
and enables
a candidate voted
for by the Company’s
substantial minority
shareholders
to be elected
to the Board
of Directors
2.4. The Board of Directors includes a sufficient number of independent directors
1.
In the reporting period, all independent
directors met all of the independence
criteria as per Recommendations
102–107 of the Code or were recognised
as independent by the Board
of Directors
Complied with
Complied with in part
Not complied with
2.4.1
An independent
director is a person
with sufficient
professional
skills, experience
and independence
to form their own
opinions and make
objective and fair
judgements
not influenced
by the Company’s
executive bodies,
certain groups
of shareholders or
other stakeholders.
Under normal
circumstances
a candidate (elected
director) may not
be considered
independent if
they are related
to the Company,
its substantial
shareholder,
its substantial
counterparty or
competitor, or
the government
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
2.4.2
Candidates
to the Board
of Directors
are assessed
for compliance
with the independence
criteria,
with independent
directors being
regularly checked
against these
criteria. Such
assessments is in line
with the substance
over form principle
1.
In the reporting period, the Board
of Directors (or its Nomination
Committee) formed an opinion
regarding the independence of each
candidate to the Board of Directors
and submitted the relevant report
to shareholders.
2. The Board of Directors (or
the Nomination Committee) considered
the independence of the current
directors (after they had been elected)
at least once in the reporting period.
3. The Company has developed
procedures determining actions
to be taken by a director if they
cease to be independent, including
their obligation to notify the Board
of Directors accordingly and in a timely
manner
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
2.4.3
2.4.4
Independent
directors make up
at least one third
of the elected
directors
Independent
directors play a key
role in preventing
internal conflicts
in the Company
and taking material
corporate actions
by the Company
1.
Independent directors make up at least
one third of the Board of Directors
Complied with
Complied with in part
Not complied with
1.
In the reporting period, independent
directors (with no conflict of interest)
make a preliminary assessment
of material corporate actions involving
a potential conflict of interest
and submit the results thereof
to the Board of Directors
Complied with
Complied with in part
Not complied with
2.5. The Chairman of the Board of Directors ensures that the Board
of Directors performs its functions in the most effective way
Complied with
Complied with in part
Not complied with
1. The Chairman of the Board of Directors
is an independent director, or a senior
independent director has been
appointed from among independent
directors.
2. The role, rights and responsibilities
of the Chairman of the Board
of Directors (and, if applicable,
of the senior independent director)
are duly specified in the Company’s
internal regulations
1.
In the reporting period, the performance
of the Chairman of the Board
of Directors was assessed as part
of the Board of Directors’ performance
assessment (self-assessment)
Complied with
Complied with in part
Not complied with
2.5.1
2.5.2
The Chairman
of the Board of Directors
has been elected from
among independent
directors, or a senior
independent director
has been appointed
from among the elected
independent directors
to coordinate their
work and liaise
with the Chairman
of the Board of Directors
The Chairman
of the Board
of Directors ensures
constructive
atmosphere during
meetings, facilitates
open discussion
of agenda items
and oversees
implementation
of the Board
of Directors’
resolutions
66
67
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
2.5.3
The Chairman
of the Board
of Directors ensures
that directors
are provided
with information
required to make
informed decisions
on agenda items
in a timely manner
1. The responsibility of the Chairman
of the Board of Directors to ensure
timely provision to directors of complete
and reliable information on agenda
items is specified in the Company’s
regulations
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
2.6. Directors act reasonably and in good faith in the best interests of the Company and its
shareholders, based on sufficient awareness and with due diligence and care
Complied with
Complied with in part
Not complied with
2.6.1
Directors make
decisions taking
into account
all available
information,
having no conflict
of interest, ensuring
equitable treatment
of the Company’s
shareholders
and keeping within
the limits of common
business risks
1. The Company’s internal regulations
specify that directors shall notify
the Board of Directors of any conflict
of interest they might have
in relation to any agenda item
prior to the discussion of that item
at a meeting of the Board of Directors or
its Committee.
2. The Company’s internal regulations
specify that a director shall abstain from
voting on any item where they have
a conflict of interest.
3. The Company has established
a procedure enabling the Board
of Directors to get professional
advice on matters within its remit
at the Company’s expense
2.6.2
Directors’ rights
and responsibilities
are clearly stated
and set forth
in the Company’s
internal regulations
2.6.3
Directors have
sufficient time
to perform their
duties
1. The Company has adopted
and published an internal regulation
clearly specifying directors’ rights
and responsibilities
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1. The assessment (self-assessment)
of the Board of Directors
in the reporting period included
the analysis of individual attendance
of meetings of the Board of Directors
and the Committees and a review
of whether a director had been
on the Board long enough.
2. As per the Company’s internal
regulations, directors shall notify
the Board of Directors of their intention
to join the governing bodies of other
companies (excluding those controlled
by the Company) and of the fact of such
an appointment
2.6.4
All directors have
equal access
to the Company’s
documents
and information.
Newly elected
directors are provided
with sufficient
information
on the Company
and the Board
of Directors’ activities
as soon as practicable
1. As per the Company’s internal
regulations, directors have the right
to access information and documents
needed for the performance of their
duties related to the Company and its
controlled entities, and the Company’s
executive bodies are obliged
to procure the relevant information
and documents.
2. The Company has a formalised
induction programme in place for newly
elected directors
Complied with
Complied with in part
Not complied with
68
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
2.7. Meetings of the Board of Directors, preparation for and attendance of these
meetings are key to the effectiveness of the Board of Directors
2.7.1
2.7.2
2.7.3
2.7.4
1. The Board of Directors held at least six
meetings in the reporting year
Complied with
Complied with in part
Not complied with
Meetings
of the Board
of Directors are held
as necessary, given
the Company’s
scope of operations
and objectives
at any given time
The Company’s
internal regulations
set out a procedure
to prepare
and hold meetings
of the Board
of Directors enabling
directors to make
proper preparations
1. The Company has approved
an internal regulation setting out
the procedure to prepare and hold
meetings of the Board of Directors
and specifying, among other things,
that the notice of a meeting shall
be generally given at least five days
prior to the date of the meeting.
2. In the reporting period, the directors
Complied with
Complied with in part
Not complied with
who were unable to attend the meeting
in person had the opportunity
to participate in discussion
and voting on agenda items remotely
– via conference calls and video
conferencing
1. The Company’s Charter or another
internal regulation specifies that
the most important matters (including
those listed in Recommendation
168 of the Code) shall be reviewed
at in-person meetings of the Board
of Directors
Complied with
Complied with in part
Not complied with
1. The Company’s Charter specifies that
resolutions on the most important
matters, as per Recommendation
170 of the Code, shall be adopted
at meetings of the Board of Directors
by a qualified majority of at least three
quarters of the votes or by a majority
vote of all elected directors
Complied with
Complied with in part
Not complied with
The format
of a meeting
of the Board
of Directors
is determined
taking into account
the importance
of agenda items.
Resolutions
on the most important
matters are adopted
at in-person meetings
Resolutions
on the most
important
matters related
to the Company’s
operations
are adopted
at meetings
of the Board
of Directors
by a qualified
majority vote
or by a majority
vote of all elected
directors
Paragraph 10.5.5 of Rosneft’s Charter
specifies the range of matters
to be resolved by the Board
of Directors by a qualified majority
vote. Given the scope of Rosneft’s
operations, the number of matters
reviewed by the Board of Directors,
the composition of the Board
of Directors and the economic
sanctions the Company is exposed
to, expanding this range to include all
matters set out in Recommendation
170 of the Code may materially
impede or prevent the resolution
of matters material to the Company.
Therefore, setting a higher quorum
as recommended by the Code may
result in the Board of Directors not
being able to resolve a number of key
matters. At the same time, the number
of directors, the structure of the Board
of Directors, including four independent
directors, the procedure to prepare
for meetings, discuss matters at them
and disclose information on them
guarantee the protection of rights of all
shareholder groups of the Company.
The Company has no intention to change
its approach in the medium term
69
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
2.8. The Board of Directors establishes Committees for preliminary consideration
of the most important matters related to the Company’s operations
2.8.1
2.8.2
For preliminary
consideration
of matters related
to the monitoring
of the Company’s
financial
and business
operations,
an Audit Committee
composed
of independent
directors has been
established
For preliminary
consideration
of matters related
to the development
of an effective
and transparent
remuneration
framework,
a Remuneration
Committee
composed
of independent
directors
and chaired
by an independent
director not being
the Chairman
of the Board
of Directors has
been established
Complied with
Complied with in part
Not complied with
1. The board of directors has a standing
audit committee comprised entirely
of independent directors.
2. The Company’s internal regulations
specify the Audit Committee’s
objectives, including, among others,
those set out in Recommendation 172
of the Code.
3. At least one member of the audit
committee, who is an independent
director, has knowledge and expertise
in the preparation, analysis, evaluation
and audit of accounting (financial)
statements.
4. The audit committee held at least
one meeting per quarter during
the reporting period
1. The board of directors has a standing
remuneration committee comprised
entirely of independent directors.
Complied with
Complied with in part
Not complied with
2. The remuneration committee is chaired
by an independent director who is not
the chairman of the board of directors.
3. The Company’s internal regulations
specify the Remuneration
Committee’s objectives, including,
among others, those set out
in Recommendation 180 of the Code
as well as the circumstances
(events) on the occurrence of which
the Remuneration Committee shall
consider a revision of the Company’s
remuneration policy for members
of the Board of Directors, executive
bodies and other key executive officers
The principle is not complied
with inasmuch as the HR
and Remuneration Committee
of the Board of Directors is not exclusively
composed of independent directors.
The HR and Remuneration
Committee of the Board of Directors
is mostly made up of independent
directors. The elected Chairman
of the HR and Remuneration
Committee of the Board of Directors
is an independent director.
The remit of the HR and Remuneration
Committee of the Board of Directors
includes matters reserved
for a Nomination Committee
and a Remuneration Committee
by the Corporate Governance Code.
Taking into account:
● the Company’s three standing
committees (the Audit
Committee, HR and Remuneration
Committee, and Strategic
Planning Committee);
● the recommendations
and restrictions set out
in the Code (on the minimum
number of Committee members
(three), on the maximum number
of Committees a director may
sit on, on the minimum number
of independent directors
on an Audit Committee and an HR
and Remuneration Committee,
and on the composition
of Committees based on directors’
relevant expertise), compliance
with the recommendation to have all
Committees chaired by independent
directors is impracticable.
At the same time, the Company’s internal
regulations, including the Regulations
on the Board of Directors, specify
procedures to prevent any conflict
of interest and eliminate the risk
of recommendations by the committee
of the Board of Directors being affected
by the controlling shareholder or
executive bodies.
The Company has no intention to change
its approach in the medium term
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1. The board of directors has a standing
nomination committee (or its objectives
specified in Recommendation 186
of the Code are implemented
by a different committee)
with the majority of its members being
independent directors.
2. The Company’s internal regulations
specify the objectives of the nomination
committee (or another relevant
committee with combined functionality),
including, among others, those set out
in Recommendation 186 of the Code.
3. To align the composition of the Board
of Directors with the objectives and purposes
of the Company, in the reporting period,
the Nomination Committee, acting on its own
or jointly with other Committees of the Board
of Directors, or an authorised shareholder
engagement division arranged for interaction
with a broad range of shareholders
to discuss the selection of candidates
for the Company’s Board of Directors
1.
In the reporting period, the Company’s
Board of Directors reviewed
the relevance of the structure of its
Board of Directors to the scale, nature,
objectives, needs of the Company
and its risk profile. Additional
committees have been either
established or found unnecessary
2.8.3
2.8.4
2.8.5
For preliminary
consideration
of matters related
to human resources
(succession)
planning, expertise
and performance
of the Board
of Directors,
a Nomination
(Appointment,
HR) Committee
mostly composed
of independent
directors has been
established
Given the scope
of operations and risk
levels, the Company’s
Board of Directors
has ensured that
the composition
of its Committees
is fully in line
with the Company’s
objectives. Additional
committees have been
either established or
found unnecessary
(a Strategy Committee,
a Corporate
Governance
Committee, an Ethics
Committee, a Risk
Management
Committee,
a Budget Committee,
a Health, Safety
and Environment
Committee, etc.)
The composition
of Committees
enables
comprehensive
discussion
of matters subject
to preliminary
consideration
with due regard
to varying opinions
Complied with
Complied with in part
Not complied with
1. The Audit Committee, the Remuneration
Committee and the Nomination
Committee (or another relevant
committee with combined functionality)
were chaired by independent directors
in the reporting period.
2. The company’s internal regulations
(policies) contain provisions that prohibit
the non-members to attend meetings
of Audit Committee, the Remuneration
Committee and the Nomination
Committee (or another relevant
committee with combined functionality),
unless they are invited by the chairman
of a respective committee
2.8.6
Committee
Chairmen report
on their Committees’
performance
to the Board of Directors
and its Chairman
on a regular basis
1.
In the reporting period, Committee
Chairmen regularly reported
to the Board of Directors on their
Committees’ performance
Complied with
Complied with in part
Not complied with
70
71
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
2.9. The Board of Directors arranges performance assessment of the Board of Directors, its Committees and directors
3.1.2
Complied with
Complied with in part
Not complied with
Explanation on item 3: due
to the pandemic in some of the
countries, the Board of Directors
reviewed the results of its
assessment by absentee voting
1. The Company’s internal regulations
set out the procedure for carrying out
the assessment (self-assessment)
of the Board of Directors.
2. In the reporting period, assessment
(self-assessment) of the Board
of Directors’ performance included
performance assessment of individual
directors and the Board of Directors
as a whole.
3. Results of the assessment (self-
assessment) of the Board of Directors
carried out in the reporting period
were reviewed at an in-person meeting
of the Board of Directors
1. To assess the Board of Directors’
performance on an independent basis,
the Company engaged an external
organisation (consultant) at least once
over the last three reporting periods
Complied with
Complied with in part
Not complied with
2.9.1
2.9.2
The Board
of Directors’
performance
assessment is aimed
at evaluating
the effectiveness
of the Board
of Directors,
its Committees
and directors,
checking their
performance against
the Company’s
development
needs, enhancing
their activities
and identifying areas
for improvement
Performance
assessment
of the Board
of Directors, its
Committees
and directors
is carried out
on a regular basis
at least once a year.
To assess the Board
of Directors’
performance
on an independent
basis, an external
organisation
(consultant)
is engaged at least
once every three
years
3.1. The Company’s Corporate Secretary ensures effective day-to-day interaction
with shareholders, coordinates the Company’s efforts to protect shareholder rights
and interests, and contributes to the Board of Directors’ efficient work
3.1.1
The Corporate
Secretary has
sufficient knowledge,
experience
and expertise
to perform
their duties,
as well as impeccable
reputation, and enjoys
shareholders’ trust
1. The Company’s website and Annual
Report provide biographical details
of the Corporate Secretary (including
the age, eduction, qualification
and expertise) and positions
the Corporate Secretary held
in governing bodies of other legal
entities at least over the last five years
Complied with
Complied with in part
Not complied with
In accordance with Resolution
of the Government of the Russian
Federation No. 351 dated 12 March
2022 On Special Aspects of Disclosing
and Providing Information Subject
to Disclosure and Provision
under the Federal Law On Joint-
Stock Companies and Federal
Law On the Securities Market
and on Special Aspects of Disclosing
Insider Information under the Federal
Law On Countering the Misuse
of Insider Information and Market
Manipulation and Amending Certain
Laws of the Russian Federation,
information about the Corporate
Secretary is not disclosed
The Corporate
Secretary
is sufficiently
independent from
the Company’s
executive bodies
and has the powers
and resources
required to perform
their duties
1. The Company has adopted
and disclosed an internal regulation
on Corporate Secretary.
Complied with
Complied with in part
Not complied with
2. The Board of Directors approves
the candidate for the position
of Corporate Secretary, terminates
the Corporate Secretary’s powers
and considers the payment of additional
remuneration to the Corporate
Secretary.
3. The Company’s internal regulations
define the Corporate Secretary’s
right to request and receive
the Company’s documents
and information from governing bodies,
structural subdivisions and officers
of the Company
4.1. Remuneration paid by the Company is sufficient to attract, motivate and retain employees
with the required competence and expertise. Remuneration is paid to the Company’s directors, executive
bodies and other key managers in accordance with the remuneration policy adopted by the Company
1. The remuneration of members
of the Board of Directors, governing
bodies and other key executive officers
of the Company is based on pay
benchmarking against peers
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1.
In the reporting period,
the Remuneration Committee reviewed
the remuneration policy (policies)
and (or) its (their) implementation
practices, assessed their effectiveness
and transparency and, where
necessary, submitted relevant
recommendations to the Board
of Directors to revise this policy
(policies)
4.1.1
4.1.2
Remuneration paid
by the Company
to directors, executive
bodies and other
key managers
is sufficient to ensure
their efficient
work and enables
the Company
to attract and retain
competent
and qualified
specialists.
At the same time,
the Company avoids
paying higher-
than-required
remuneration or
creating unreasonably
wide remuneration
gaps between
any of the above
persons and Company
employees
The Company’s
remuneration policy
has been developed
by the Remuneration
Committee
and approved
by the Board
of Directors.
The Board
of Directors,
supported
by the Remuneration
Committee, monitors
the introduction
and implementation
of the remuneration
policy
in the Company,
and revises
and amends it
as necessary
72
73
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
1. The Company’s remuneration
policy (policies) provides (provide)
for transparent mechanisms
to determine the amount
of remuneration payable to its directors,
executive bodies and other key
managers, and covers (cover) all types
of payments, benefits and privileges
provided to them
4.1.3
4.1.4
The Company’s
remuneration
policy provides
for transparent
mechanisms
to determine
the amount
of remuneration
payable to its
directors, executive
bodies and other key
managers, and covers
all types of payments,
benefits and privileges
provided to them
The Company
develops a policy
on reimbursement
of expenses
(compensations)
specifying
reimbursable expenses
and service levels that
its directors, executive
bodies and other
key managers
are entitled to. This
policy may form part
of the Company’s
remuneration policy
1. The Company’s remuneration policy
(policies) or other internal regulations
specify procedures to reimburse its
directors, executive bodies and other
key managers for the expenses incurred
Complied with
Complied with in part
Not complied with
4.2. Remuneration system for directors ensures alignment of their financial
interests with the long-term financial interests of shareholders
Complied with
Complied with in part
Not complied with
1.
In the reporting period, the Company
paid remuneration to members
of the Board of Directors in line
with the Company’s remuneration
policy.
2. In the reporting period, the Company
did not offer the members of its
Board of Directors any short-term
motivation plans and additional financial
incentives based on the Company’s
performance (performance indicators).
The Company did not pay remuneration
for participation in individual meetings
of the Board of Directors or its
Committees
1.
If the Company’s internal regulation
(regulations), namely its remuneration
policy (policies), allows (allow)
distribution of the Company’s
shares to directors, clear rules
on share ownership by directors
aimed at encouraging their long-
term ownership shall be introduced
and disclosed
Complied with
Complied with in part
Not complied with
The Company
pays fixed annual
remuneration
to its directors
The Company does
not pay remuneration
for participation
in individual meetings
of the Board
of Directors or its
Committees.
The Company does
not offer short-
term motivation
plans and additional
financial incentives
to the members of its
Board of Directors
Long-term ownership
of the Company’s
shares ensures best
alignment of directors’
financial interests
with the long-
term interests
of shareholders.
At the same time,
the Company does
not link the right to sell
shares to achieving
certain performance
indicators,
and directors do not
participate in options
plans
4.2.1
4.2.2
74
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
4.2.3
The Company does not
provide any additional
payments or
compensations
to directors in the event
of early termination
of office due
to a transfer of control
over the Company
or any other
circumstances
1. The Company does not provide
any additional payments or
compensations to directors
in the event of early termination
of office due to a transfer of control
over the Company or any other
circumstances
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
4.3. Remuneration system for members of executive bodies and other key managers of the Company
links their remuneration to the Company’s performance and their personal contribution thereto
4.3.1
4.3.2
4.3.3
Complied with
Complied with in part
Not complied with
Remuneration
paid to members
of executive
bodies and other
key managers
of the Company
ensures
a reasonable
and justified balance
between the fixed
and variable
components,
with the latter
depending
on the Company’s
performance
and an employee’s
personal (individual)
contribution thereto
1.
In the reporting period, the variable
remuneration for members of executive
bodies and other key managers
of the Company was linked to annual
performance indicators approved
by the Board of Directors.
2. During the latest assessment
of the remuneration system
for members of executive
bodies and other key managers
of the Company, the Board of Directors
(the Remuneration Committee)
ensured that the Company maintained
an effective balance between
the fixed and variable components
of remuneration.
3. The remuneration payable to members
of the executive bodies and other
officers of the Company factors
in the risks to which the Company
is exposed to prevent excessively risky
decision-making in management
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
If the Company introduces a share-
based long-term incentive plan
for members of its executive bodies
and other key officers (share-based
financial instruments), the right
to sell shares and other financial
instruments may be exercised no
earlier than three years after the date
on which they were granted. Moreover,
the right to sell them is subject
to the achievement by the Company
of certain performance indicators
In the reporting period, the amount
of severance pay (“golden parachute)
paid by the Company to members of its
executive bodies or key managers
in the event of early termination
of office, provided that such termination
was initiated by the Company
with no misconduct on the part
of the respective employee, did not
exceed twice the size of the fixed
component of their annual remuneration
1.
1.
The Company has
introduced a long-
term incentive
plan for members
of its executive
bodies and other
key managers
involving its shares
(options or other
derivatives with its
shares as underlying
assets)
The amount
of severance
pay (“golden
parachute”) payable
by the Company
to members of its
executive bodies
or key managers
in the event of early
termination of office,
provided that such
termination is initiated
by the Company with no
misconduct on the part
of the respective
employee, does not
exceed twice the size
of the fixed component
of their annual
remuneration
75
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
5.1. The Company has put in place an effective risk management and internal control
system to provide reasonable assurance that it will achieve its goals
5.2. The Company conducts internal audits to assess the reliability and effectiveness of its Risk
Management, Internal Control System and corporate governance on a regular and independent basis
The Board
of Directors
has formulated
the principles
of and approaches
to the risk
management
and internal
control system
in the Company
The Company’s
executive
bodies ensure
the establishment
and maintenance
of an effective
risk management
and internal
control system
in the Company
The Company’s
risk management
and internal control
system provides
an accurate, fair
and clear view
of the Company’s
current situation
and prospects,
and ensures integrity
and transparency
of the Company’s
statements,
as well as a reasonable
and acceptable level
of risk-taking
The Company’s
Board of Directors
takes the necessary
steps to ensure
that the Company’s
Risk Management
and Internal
Control System
functions effectively
and is in line
with the relevant
principles
and approaches
formulated
by the Board
of Directors
1. Risk management and internal control
functions of the Company’s governing
bodies and divisions are clearly set out
in the Company’s internal regulations /
relevant policy approved by the Board
of Directors
Complied with
Complied with in part
Not complied with
1. The Company’s executive bodies
have ensured the distribution of risk
management and internal control
duties, powers and responsibilities
among heads of units and divisions
accountable to them
Complied with
Complied with in part
Not complied with
1. The Company has approved an anti-
corruption policy.
2. The Company has established a safe,
secure and easily accessible channel
(hotline) to inform the Board of Directors
or its Audit Committee about violations
of law, internal procedures or the Code
of Corporate Ethics
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1.
In the reporting period, the Board
of Directors (the Audit Committee and/
or the Risk Committee (if applicable)
arranged for an assessment of reliability
and effectiveness of the risk
management and internal control
system.
2. In the reporting period, the Board
of Directors reviewed the findings
from the assessment of reliability
and effectiveness of the risk
management and internal
control system to include them
in the Company’s annual report
5.1.1
5.1.2
5.1.3
5.1.4
76
5.2.1
5.2.2
For the inter-
nal audit purposes,
the Company has
established a dedi-
cated unit or engaged
an independent exter-
nal organisation.
Functional account-
ability and adminis-
trative accountability
of the internal audit
unit are separated.
The internal audit unit
is functionally account-
able to the Board
of Directors
The internal audit
unit is responsible
for assessment
of reliability
and effectiveness
of the risk
management
and internal
control system
and the corporate
governance
system and relies
on generally
accepted internal
audit standards
1. For the internal audit purposes,
the Company has established
a dedicated internal audit
unit functionally accountable
to the Board of Directors, or engaged
an independent external organisation
with the same accountability principle
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1.
In the reporting period, as part
of internal audit, the reliability
and effectiveness of the internal
control and risk management system
was assessed.
2. In the reporting period, as part
of the internal audit, the corporate
governance practice (practices)
were assessed, including
the communication procedures
(including those relating to internal
control and risk management) at all
levels of the Company’s governance
and the stakeholder engagement
procedures
6.1. The Company and its operations are transparent to shareholders, investors and other stakeholders
6.1.1
6.1.2
The Company
has developed
and implemented
an Information
Policy ensuring
effective exchange
of information
between
the Company,
its shareholders,
investors and other
stakeholders
1. The Company’s Board of Directors
has approved its Information
Policy developed in accordance
with the Code’s recommendations.
2. In the reporting period, the Board
of Directors (or its Committee)
considered the effectiveness
of communication between
the Company, shareholders,
investors and other stakeholders
and the advisability of (need for)
a revision of the Company’s Information
Policy
The Company
discloses information
on its corporate
governance system
and practices,
including detailed
information on its
compliance
with the principles
and recommendations
of the Code
1. The Company discloses information
on its corporate governance system
and on the general corporate
governance principles it uses, including
by disclosing such information
on the Company’s website.
2. The Company discloses
information on the composition
of its executive bodies and Board
of Directors, on the independence
of directors and their membership
in the Committees of the Board
of Directors (as defined in the Code).
3. If there is a person controlling
the Company, the Company publishes
a memorandum on behalf of such
controlling person detailing their plans
as regards corporate governance
in the Company
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
Explanation on item 2:
information about the members
of the Management Board
is not disclosed in accordance
with Resolution of the Government
of the Russian Federation
No. 351 dated 12 March 2022
and the recommendations
of the Bank of Russia (Information
Letter No. IN-02-28/108 dated
24 August 2022)
77
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
6.2. The Company discloses complete, up-to-date and accurate information on the Company in a timely
manner to ensure that its shareholders and investors are able to make informed decisions
6.2.1
The Company
discloses
information
on a regular basis
and in a consistent
and timely
manner, in line
with the principles
of data accessibility,
accuracy,
completeness
and comparability
6.2.2
The Company avoids
formal approach
to information
disclosures
and discloses
material information
on its operations
even if such
disclosures are not
required by law
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1. The Company has in place a procedure
streamlining the work of all
the Company’s structural subdivisions
and employees involved in disclosing
information or whose activity may lead
to the need for disclosing information.
2. If the Company’s securities are traded
in established foreign markets,
disclosures of material information
during a reporting year are made
in Russia and in such markets
on a concurrent and equal basis.
3. If foreign shareholders own
a substantial number of shares
in the Company, disclosures during
the reporting year were made in Russian
and in one of the most widely used
foreign languages
1. The Company’s Information Policy
defines approaches to non-mandatory
disclosure of information on other
events (actions) that have a material
effect on the price and quotes of its
securities.
2. In accordance
with Recommendation 290 of the Code,
the Company discloses information
on its capital structure in the Annual
Report and on its website.
3. The Company discloses information
on its material controlled legal
entities, including their key business
areas, mechanisms for ensuring
their accountability, and the powers
of the Company’s Board of Directors
to define their strategy and assess their
performance.
4. The Company publishes a non-financial
report, i.e. a sustainability report,
environmental report, corporate social
responsibility report or another report
providing non-financial information,
including that on the Company’s
environmental (environment
protection and climate change), social,
and governance (ESG) performance,
other than the report of the issuer
of issue-grade securities or the annual
report of a joint-stock company
Explanation on item 3: the Company
discloses information on its mate-
rial controlled legal entities, includ-
ing their key business areas
and mechanisms for ensuring their
accountability.
Rosneft's Board of Directors over-
sees the development of the strat-
egy and performance assessment
at controlled legal entities using
the following mechanisms:
● control over executive bodies
whose remit includes the approval
of the Group Subsidiaries’ plans
as per Rosneft's Charter;
● corporate procedures governed
by Rosneft's internal regula-
tions, which ensure alignment
of all strategic planning docu-
ments of Rosneft and the Group
Subsidiaries with Rosneft’s
strategy approved by the Board
of Directors.
The powers of the Board of Directors
to approve Rosneft’s Strategy
and monitor its implementation,
and the powers of the Chief Executive
Officer and the Management Board
to approve the planning documents
of the Group Subsidiaries are set
forth in Rosneft’s Charter. The pow-
ers of the Strategy and Sustainable
Development Committee of Rosneft’s
Board of Directors to define
the Company's policy with respect
to the Group Subsidiaries are set
forth in the Regulations on Rosneft
Board Committees and disclosed
on the corporate website.
Detailed information on internal pro-
cedures for approval of strategic
documents of the Group Subsidiaries
and control over their implementation
by the Board of Directors (its commit-
tees) is not disclosed. The Company
has no intention to change this
approach in the medium term
1. The Company’s Annual Report
provides information on the results
of the external and internal audit
assessment by the Audit Committee.
2. The Company’s Annual Report
provides information on the Company’s
environmental and social policies
6.2.3
As a key
communication
tool to liaise
with shareholders
and other
stakeholders,
the Annual Report
provides information
needed to assess
the Company’s
performance
for the year
6.3. The Company provides shareholders with equal and unhindered access
to information and documents as per their request
1. The Company’s information policy
(internal regulations setting forth
the information policy) define(s)
the procedure ensuring unhindered
access to the Company’s information
and documents at the shareholders’
request.
2. The Company’s information policy
(internal regulations setting out
the information policy) contain(s)
provisions stipulating that the Company
shall take all necessary steps to obtain
the information on its controlled
entities from the relevant controlled
entities, as may be requested
by the shareholders
1.
In the reporting period, the Company
did not refuse to provide shareholders
with requested information, or such
refusals were justified.
2. If and when required by the Company’s
Information Policy, shareholders
are informed of the sensitive
nature of the information provided
and undertake to keep it confidential
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
6.3.1
No unreasonable
difficulties prevent
the shareholders
from exercising
their right to access
the Company's
documents
and information
6.3.2
When providing
information
to shareholders,
the Company
maintains
a reasonable
balance between
the interests
of individual
shareholders
and those
of the Company, as it
is in the Company’s
best interests
to keep confidential
any sensitive
commercial
information that may
have a material
effect on its
competitive position
78
79
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
No.
Corporate
governance
principles
Criteria for compliance
with a corporate governance
principle
7.1. Actions that have or may have a material effect on the Company’s shareholding structure and financial
position and, consequently, on the shareholders’ position (material corporate actions) are taken on fair
terms ensuring that rights and interests of the shareholders and other stakeholders are respected
7.1.3
Explanations on the failure
to meet criteria for compliance
with a corporate governance
principle
Status
of compliance
with a corporate
governance
principle
Complied with
Complied with in part
Not complied with
Complied with
Complied with in part
Not complied with
1. The Company’s Charter sets out a list
(criteria) of transactions or other actions
deemed to be material corporate
actions. As per the Company's
Charter, decision-making with regard
to material corporate actions
is reserved to the Board of Directors. If
and when the law expressly reserves
such corporate actions to the General
Shareholders Meeting, the Board
of Directors provides shareholders
with relevant recommendations
1. The Company has established
a procedure for independent directors
to express their opinions on material
corporate actions before their approval
Complied with
Complied with in part
Not complied with
Material corporate
actions include
reorganisation
of the Company,
acquisition
of 30% or more
of the Company’s
voting shares
(takeover), major
transactions made
by the Company,
increase or
reduction
in the Company’s
charter capital,
listing and delisting
of the Company’s
shares, and other
actions that may
result in a material
change in the rights
of shareholders
or be against
their interests.
The Company’s
Charter sets out
a list (criteria)
of transactions
or other actions
deemed
to be material
corporate actions
and reserved
to the Company’s
Board of Directors
The Board
of Directors plays
a key role in making
decisions or
recommendations
with regard
to material corporate
actions and relies
on the opinion
of the Company’s
independent
directors
7.1.1
7.1.2
80
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
1. Approval of the Company's material
transactions is reserved to Board
of Directors as per the Company's
Charter, with due regard to the specifics
of the Company's operations
and in addition to regulatory
requirements for transaction approvals.
2. In the reporting period, all material
corporate actions were duly approved
prior to their implementation
When taking material
corporate actions
affecting the rights
and legitimate
interests
of shareholders,
the Company
ensures equitable
treatment of all of its
shareholders, and,
where statutory
mechanisms
protecting
shareholder rights
are insufficient, takes
additional steps
to protect the rights
and legitimate
interests
of the Company’s
shareholders.
In doing so,
the Company
is guided not only
by the formal
regulatory
requirements, but
also by the corporate
governance principles
specified in the Code
7.2. The Company ensures that material corporate actions are taken in a manner enabling shareholders
to receive full information on such actions in due time and influence them, and guarantees
respect and due protection of shareholder rights when such actions are taken
7.2.1
7.2.2
Information
on material
corporate actions
is disclosed,
with an explanation
of the relevant
reasons, conditions
and consequences
Rules
and procedures
for taking material
corporate actions
are set forth
in the Company’s
internal regulations
1.
In the reporting period, the Company
disclosed information on its material
corporate actions (if any) in a timely
and detailed manner, including
the relevant reasons, conditions
and consequences for the shareholders
Complied with
Complied with in part
Not complied with
In the reporting period, the Company
disclosed information in line
with the requirements of the Bank
of Russia and the Federal Agency
for State Property Management.
Complied with
Complied with in part
Not complied with
1. The Company’s internal regulations
set out the rules and procedure
for engaging an appraiser to determine
the value of the property to be sold or
purchased in a major transaction or
a related-party transaction.
2. The Company’s internal regulations
set out a procedure for engaging
an appraiser to determine
the value of the Company’s shares
to be purchased or bought back.
3. If a member of the Company's Board
of Directors, the sole executive body,
a member of the collegial executive
body, or a person who is a controlling
person of the Company or a person
entitled to give the Company binding
instructions has no formal interest
in the Company's transactions, but
has a conflict of interest or other
actual interest with regard to such
transactions, such persons shall
abstain from voting on the approval
of such transactions as required
by the Company's internal documents
81
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
THIS ANNUAL REPORT HAS BEEN PREPARED
BASED ON THE FOLLOWING LOCAL
(INTERNAL) REGULATIONS OF ROSNEFT:
Information on core internal
regulations that serve as a basis
● Charter;
for the preparation of this
annual report, including key
internal documents regulating
the internal audit function
and the functioning of the RM&ICS
● Rosneft’s Corporate Governance Code;
● Code of Business and Corporate Ethics of Rosneft;
● Regulations on the General Shareholders Meeting;
● Regulations on the Board of Directors;
● Regulations on Rosneft Board Committees;
● Regulations on Remunerations and Compensations Payable to Members of the Board of Directors;
● Regulations on the Collective Executive Body (Management Board);
● Regulations on the Sole Executive Body (Chief Executive Officer);
● Standard on Payments and Compensations to Top Managers;
● Regulations on the Audit Commission;
● Regulations on Remunerations and Compensations Payable to Rosneft’s Audit Commission Members;
● Regulations on the Corporate Secretary;
● Regulations on the Information Policy;
● Regulations on Provision of Information to Rosneft Shareholders;
● Regulations on Internal Control Rules for the Prevention, Detection and Suppression of Illegal Use of Insider
Information in Rosneft and/or Market Manipulation;
● Rosneft’s Dividend Policy;
● Company Policy on Combating Corporate Fraud and Involvement in Corruption Activities;
● Company Policy on Internal Audit;
● Company Policy on Risk Management and Internal Control System;
● Company Policy on Health, Safety and Environmental Protection.
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83
General information
about Rosneft
Date of state registration
and registration number of Oil Company
Rosneft:
● date of state registration
of the Company as a legal entity:
7 December 1995;
● Number of State Registration
Certificate of the Company:
024.537;
● date of entry in the Uniform State
Register of Legal Entities about
a legal entity established prior
to 1 July 2002: 12 August 2002;
● series and number of Certificate
of Entry in the Uniform
State Register of Legal
Entities about a legal entity
established prior to 1 July 2002:
series 77 No. 004856711;
● Primary State Registration
Number under which entry about
the establishment of the Company
is made in the Uniform State
Register of Legal Entities:
1027700043502.
Constituent entity of the Russian
Federation in whose territory
the Company is registered: Moscow.
Main types of operations
of the Company: geological prospecting
and geological exploration work
aimed at oil, gas, coal and other
minerals search; extraction,
transportation and processing
of oil, gas, coal and other minerals
and timber; production of oil products,
petrochemicals and other products,
including electric power, woodworking
products, fast moving consumer goods
and provision of services to the public;
storage and sale (including sale
in the domestic market and export
sale) of oil, gas, oil products, coal,
electric power, woodworking products,
and other hydrocarbon and other
derivatives.
Pursuant to Decree of the Government
of the Russian Federation No. 1226-r
dated 20 August 2009, Rosneft
has been included into the list
of strategic enterprises charged
with implementation of uniform public
policy in those branches of economy
where such entities operate.
Pursuant to Decree of the President
of the Russian Federation No. 688
dated 21 May 2012, Rosneft has been
included into the list of strategic
enterprises and strategic joint-stock
companies.
ABOUT THE COMPANY
CORPORATE
GOVERNANCE
APPENDICES
ROSNEFT ANNUAL REPORT 2022
Contact details
FULL NAME:
FOR INSTITUTIONAL INVESTORS:
Public Joint-Stock Company Rosneft Oil
Company
Investor Relations Department,
Rosneft
Telephone: +7 (495) 411-05-04
ir@rosneft.ru
E-mail:
ABBREVIATED NAME:
PJSC Rosneft Oil Company
RAS AUDITOR OF THE COMPANY:
TSATR – Audit Services LLC
77 Sadovnicheskaya Embankment,
Bldg. 1, Moscow, 115035, Russia
Telephone: +7 (495) 705-97-00;
+7 (495) 755-97-00
Facsimile: +7 (495) 755-97-01
REGISTRAR OF THE COMPANY:
Reestr-RN LLC
2/6 Podkopaevsky Lane,
Bldg. 3–4, Moscow, 109028, Russia
Telephone: +7 (495) 411-79-11
Facsimile: +7 (495) 411-83-12
E-mail:
Website:
support@reestrrn.ru
www.reestrrn.ru
MOSCOW OFFICE:
10 Butyrskiy Val, Bldg. A, 13th Floor,
Moscow, 125047, Russia
Telephone: +7 (495) 967-71-13
LOCATION OF THE COMPANY:
26/1 Sofiyskaya Embankment, Moscow,
117997, Russia
POST ADDRESS:
26/1 Sofiyskaya Embankment, Moscow,
117997, Russia
INFORMATION SERVICE:
Telephone: +7 (499) 517-88-99
Facsimile: +7 (499) 517-72-35
Telex: 114405 DISVO.RU
E-mail:
postman@rosneft.ru
FOR SHAREHOLDERS:
Shareholder Relations Division,
Corporate Governance Department,
Rosneft
Telephone: +7 (495) 987-30-60;
8 (800) 500-11-00 (calls from Russia
toll-free)
Facsimile: +7 (499) 517-86-53
E-mail:
shareholders@rosneft.ru
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