Corporate governance means the principles and rules defining the network of relationships between NCC’s shareholder, Supervisory Board, executive bodies and other stakeholders and aimed at defining NCC’s goals and tool to achieve the goals.
The corporate governance is intended to appropriately incentivize NCC’s Supervisory Board and employees to achieve the goals desired by both NCC and its shareholder, as well as facilitate effective control encouraging NCC to utilize its resources more efficiently.
During the reporting year, the Memorandum of Understanding was entered into by and between NCC and the Moscow Exchange. The Memorandum was drafted to ensure the balance of interests of users of services provided by NCC and Moscow Exchange and to ensure the effectiveness of NCC’s corporate governance while generating the development plans, carrying out the operating activities and providing the services to users of NCC and Moscow Exchange.
As a part of the improving effectiveness of NCC’s corporate governance in 2020, a number of committees and commissions were established.
6.1. Principles of Corporate Governance
NCC places strong focus on the improvement of its corporate governance and endeavors to comply with the best practices and standards in this area, inter alia, the most significant principles and guidelines set forth in the Corporate Governance Code approved by the Bank of Russia on 21.03.2014, the recommendations of the Bank of Russia and the Basel Committee on Banking Supervision, the principles of corporate governance recognized in international practice and the requirements of the Bank of Russia.
NCC has given effect to the Corporate Governance Principles (approved by the Supervisory Board, hereinafter referred to as the “Principles”), which main purpose is to describe NCC’s existing corporate governance rules and system to improve business efficiency, increase transparency, maintain financial sustainability and appeal to the shareholder, clients (users of services), employees, lenders, the Bank of Russia.
Application of the Principles by NCC is caused by the endeavor to enhance NCC’s appeal to prospective clients and users of services, to ensure the stability of NCC as a systemically important component of the financial market and is based on the following principles:
- providing NCC with the governance system meeting its strategic goals, consistent with its corporate values, features of activity and its clients’ needs and interests;
- ensuring activity of NCC’s Supervisory Board based on:
- strategic management;
- the Supervisory Board’s monitoring of the executive bodies’ activity and decision making aimed at rectification of weaknesses of the executive bodies’ activity in case of their detection in the result of such monitoring;
- evaluating the Supervisory Board’s activity and evaluating the quality of performance by the Supervisory Board’s committees and disclosing the results of such assessment;
- segregating the control functions and managerial duties, determining the individual and collective responsibility of the Supervisory Board members.
The Principals establish the requirement that at least 1/3 of members of NCC’s Supervisory Board should be independent directors, define the independent director criteria, affiliation and materiality criteria, which are based on separate provisions of the Corporate Governance Code of the Bank of Russia.
In 2020, the compliance of the independence of the current members of the Supervisory Board with the updated independence and affiliation criteria was reviewed, resulting in recognition of five members of NCC’s Supervisory Board to be independent directors.
The Supervisory Board’s practice demonstrates strong engagement of its members in the management of NCC’s activities and efficient control over the efforts taken by the Executive Board and CEO of the Company.
All members of the Supervisory Board have higher education and necessary knowledge, skills and competencies to address the long-term strategic goals of NCC development as well as significant experience of engagement in collective management bodies. At the same time, all members of the Supervisory Board meet the necessary skill and reputational requirements imposed by the applicable legislation of the Russian Federation. In their activity, the Supervisory Board members are accountable to the sole shareholder of NCC.
To ensure sound and timely decision-making in the area of nominations and remuneration, the Nomination and Remuneration Committee is functioning as a part of the Supervisory Board. In compliance with the Federal Law on Clearing, Clearing Activities and Central Counterparty and to tighten control over the risk management framework, the Risk Committee is operating as a part of NCC’s Supervisory Board. In the reporting year, the Audit Committee of the Supervisory Board was established to ensure the adequate quality and effectiveness of the corporate governance.
The corporate governance practices existing at NCC enables the Executive Board and CEO to exercise effective management of the daily operations reasonably, in good faith, solely for the benefit of the Company, and to guarantee the accountability of the above bodies to the Supervisory Board and the General Shareholders Meeting (sole shareholder). The Executive Board and CEO arrange adherence to the resolutions approved by the General Shareholders Meetings (sole shareholder) and the Supervisory Board.
The principles and amendments made thereto are published on NCC’s official website. NCC also discloses information on the compliance with and the results of implementation of the Principles annually within two months from date of the annual general meeting held by NCC.
One of the tools to control the corporate governance quality is assessment of NCC’s corporate governance on an annual basis. In 2020, the regular assessment of NCC’s corporate governance was performed, which results were approved by the Supervisory Board and documented in the Report on the Assessment of NCC’s Corporate Governance, including information on the compliance with and results of implementation of the provisions contained in the Principles of Corporate Governance. Specified information is disclosed on NCC’s official website.
One of the key principles of NCC’s corporate governance is the timely disclosure of reliable information in compliance with the legislation of the Russian Federation and NCC’s internal documents. The information is disclosed pursuant to NCC’s Information Policy Regulation based on the principles of regularity and promptness, accessibility for stakeholders, reliability and completeness of the disclosed information.
To protect the rights and legitimate interests of the sole shareholder and provide efficient control of its financial and business operations, NCC has the Revision Committee, whose members are elected by the General Shareholders Meeting. The Revision Committee reports to the General Shareholders Meeting and operates independently from other management bodies of the Company.
NCC annually engages a professional audit firm, which has no property interests in NCC or its sole shareholder, to audit and confirm the reliability of its financial statements on a contractual basis.
NCC maintains the Code of Business Ethics, which sets forth the principles governing the relations between NCC’s employees, including members of its executive bodies, and clients, partners, mass media, public and political organizations, as well as other rules for external communications.
NCC has also approved the Procedure to Prevent Conflicts of Interest setting forth the causes of conflict of interest, measures taken for prevention thereof and procedure for settlement of conflict of interests and the Anti-Corruption Policy establishing the principles governing the Company’s activity in compliance with the anti-corruption legislation and the situations showing the signs of corruption risk, as well as the measures aimed at their prevention and combating corruption in the Company’s activity.
 Bank of Russia Ordinance No. 5062-U dated 17.01.2019 ‘On Requirements for the Internal Document on Corporate Governance of a Trade Organizer, Clearing House, Central Counterparty, Central Depository, as well as on the Procedure and Timeframes for the Disclosure of the Contents of the Internal Document on Corporate Governance and Information on the Compliance Therewith’.