Corporate governance at Baiterek
Principles of corporate governance
“Baiterek” NMH” JSC is considering corporate governance as the key tool for the increase of the Holding’s and its subsidiaries’ efficiency, ensuring transparency and accountability, consolidating its reputation and reducing the costs for capital raising. The Holding is striving to contribute to the rule of law in the Republic of Kazakhstan through the implementation of proper corporate governance practices.
The effective corporate governance structure implies respect for the rights and interests of all persons interested in the activities of the Holding and contributes to the success of the Holding’s activities. The Holding’s corporate governance system provides for a clear division of powers and responsibilities between the authorities, officials and employees of the Holding.
The fundamental principles of the Holding’s corporate governance are:
- delineation of powers principle;
- protecting the rights and interests of the Sole Shareholder principle;
- the Holding’s effective management by the Board of Directors and the Management Board principle;
- sustainable development principle;
- risk management, internal control and internal audit principle;
- corporate conflicts and conflicts of interest settlement principle;
- transparency and credibility of information disclosure in regard to the Holding’s activities principles.
Due to the adoption of the Model Corporate Governance Code in government-controlled joint-stock companies, except for the National Welfare Fund (the Decree No. 21of the Minister of National Economy of the Republic of Kazakhstan dated October 5, 2018), amendments and additions were made to the Holding’s Corporate Governance Code by the Decree No. 681 of the Minister of Industry and Infrastructural Development dated August 29, 2019.
Internal audit services evaluate the corporate governance system once in every two years in the Holding’s subsidiaries, followed by the approval and monitoring of action plans to improve the corporate governance system, including measures stipulated by international practices for corporate governance structure, conflict of interest settlement, Board of Directors performance efficiency processes, risk management systems, internal audit, transparency.
In accordance with the best corporate governance practices, the Holding annually prepares Corporate Governance Principles Performance Report.
The choice of the external auditor and the information on the external auditor of the JSC "Baiterek National Management Holding”
The choice of the auditor organization for the JSC "Baiterek National Management Holding” and the organizations, fifty and more percent of the voting actions (a fraction of participation) of which directly or indirectly belong to the JSC "Baiterek National Management Holding” on the property right or the confidential management is carried out according to the Rules of the realization of the purchases of the goods, works and services by the JSC " Baiterek National Management Holding” and organizations fifty and more percent of the voting actions (a fraction of participation) of which directly or indirectly belong to JSC "Baiterek National Management Holding” on the property right or the confidential management.
Since 2014, KPMG-Audit LLP is the auditor for “Baiterek” NMH” JSC in accordance with the following Decisions of the Board of Directors of “Baiterek” NMH” JSC: No. 06/14 dated July 24, 2014 for 2014, No. 02/15 dated February 12, 2015 for 2015–2018 and No. 04/19 dated May 15, 2019 for 2019–2021.
Mission of the internal audit is to maintain and increase the value of the organization by the objective internal audits based on a risk-oriented approach, recommendations providing and knowledge sharing.
In order to ensure the independence and objectivity of the internal audit, the Internal Audit Service of “NMH “Baiterek” JSC (IAS) is a body directly subordinated to the Board of Directors of “NMH “Baiterek” JSC and reports to it on the works performed.
In accordance with the requirements of the legislation of the Republic of Kazakhstan, the Charter and the Code of Corporate Governance of “NMH “Baiterek” JSC, the norms of the Regulation on IAS and the Rules of the internal audit organization of “NMH “Baiterek” JSC - IAS in its activity is guided by the International Fundamentals of Professional Internal Audit Practice, the elements of which are the mission and definition of the internal audit, basic principles of professional internal audit practice, the code of ethics and the International Professional Internal Audit Standards (IPIAS), as well as IPIAS application guidance and practical instructions of the Global Institute of Internal Auditors on the implementation of internal audit.
Following the results of the first five years of the IAS activity from 2013 to 2017, an independent external audit of its activity was conducted.
Compliance of the Internal Audit Service of “NMH “Baiterek” JSC activity to the International Professional Standards of the Internal Audit is confirmed by “KPMG Tax and Advisory” LLP an external independent appraiser in 2018.
In addition to the audits of risk-significant areas in the activity of “NMH “Baiterek” JSC and consulting services, IAS periodically conducts comprehensive assessments of the effectiveness of the internal control systems, information security, fraud and corruption control, risk management and corporate governance of the Holding in accordance with the statutory provisions, internal methods and taking into account applicable international corporate standards.
Risk management is an integral part of the Holding's activities. It is aimed at identifying, assessing and monitoring all significant risks of the Holding, as well as taking measures to reduce the risks level of these risks. The risk management system of the Holding is presented as three-level hierarchy:
- Board of Directors is absolutely responsible for the proper functioning of the risk management system, defines the objectives of the Holding's activities and approves the risk management documents.
- Management Board is responsible for creating of effective risk management processes, "risk awareness" culture and risk management philosophy.
- Risk Management Department controls compliance with the requirements of the regulatory documents, implementation of general principles and methods for financial and non-financial risks.
Compliance and anti-corruption management
1. Compliance-risk management
Compliance Service of Baiterek NMH JSC is part of the corporate governance system and is responsible for compliance risk management – the risk of loss (material and reputational) as a result of non-compliance of Baiterek NMH JSC and its employees with the requirements of the legislation of the Republic of Kazakhstan.
The main functions of the Compliance Service are coordination of compliance risk management, counteraction to corruption, prevention of conflicts of interest, consideration of applications of individuals and legal entities on violations of the requirements of the Code of Business Ethics, corruption and other unlawful actions.
2. Anti-Corruption policy
Baiterek NMH JSC, being the main financial agent of the Government of the Republic of Kazakhstan, is actively working to counteract corruption through the introduction of control functions to prevent and detect corruption, and the formation of an atmosphere of tough rejection of corruption in Baiterek NMH JSC in any of its manifestations.
For this purposes, Baiterek NMH JSC adopted an Anti-Corruption Policy, which includes a set of measures to combat corruption, as well as the formation of an anti-corruption culture of Baiterek NMH JSC employees, which ensures the observance of the principles of honesty and transparency in the performance of job duties.
3. Code of Business Ethics
Baiterek NMH JSC adopted the Code of Business Ethics, which provides a set of rules that establish the fundamental values and principles of corporate (business) ethics, which are guided by officials and employees of Baiterek NMH JSC.