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Corporate Governance Practice

CORPORATE GOVERNANCE

In accordance with the Corporate Governance Code, the relationship between the main management bodies - the Management Board, the Board of Directors and the Sole Shareholder is carried out within the framework of approved corporate procedures through appropriate authorities. Following the generally accepted principles of corporate governance, the Company has operating institutions of independent directors, the internal audit service, committees under the Company’s Board of Directors and the Corporate Secretary.

Corporate governance refers to a set of processes that provides management of and control over the Company's activities and includes relations between the Sole Shareholder, the Board of Directors, the Board, the Company’s other bodies and the stakeholders for the benefit of the Sole Shareholder.

The Company considers the corporate governance as a mean of enhancing the Company’s effectiveness, profile raising and reducing costs for capital attracting. The Company considers proper corporate governance system as its contribution to the rule of laws in the Republic of Kazakhstan and a factor that determines its place in the modern economy and society as a whole.

Corporate governance is based on principles of fairness, honesty, responsibility, transparency, professionalism and competence. An effective corporate governance structure presupposes respect of rights and interests of the Company’s all stakeholders and provides the Company’s success, including an increase in its value, keeping financial stability and profitability.

The corporate governance principles are aimed at developing trust in relations arising in connection with the Company management, and are the basis of all the rules and recommendations of the Corporate Governance Code. The fundamental principles of this Code are:

1.       Principle of protection of the Sole Shareholder’s rights and interests;

2.       Principle of effective management of the Company, the Board and its Board of Directors;

3.       Principle of the Company’s independent activity;

4.       Principle of transparency and objectivity of the Company’s information disclosure;

5.       Principle of legality and ethics;

6.       Principle of responsibility to the stakeholders.

Review

In 2015, Holding “KazAgro” has for the first time conducted the Company’s corporate management review in accordance with the best international practice resulting in determination of the corporate management level with the world standard compliance rate being 58.3%.

According to the review of the Company’s corporate management, the need in improvement of efficiency of the Board of Directors and strengthening the role of independent directors, as well as improvement of internal control system, risk management, strategic and budget planning of the Company has been found.

Diagnostics

According to the international best practices, in 2015, the National Management Holding KazAgro JSC performed diagnosis of the Company's corporate governance, as a result of which the level of corporate governance complied with international standards by 58.3%.

According to the assessment of the Company's corporate governance, there was identified the need to increase the efficiency of the Board of Directors and strengthen the role of independent directors, improve systems of internal control and risk management, as well as to develop the Company’s strategic and budget planning, etc.

 Improvement of Corporate Governance System

The Company is taking and intends to take active measures to improve the corporate governance level by following the recommendations of the diagnostics. For example, next year the Company is going to approve the plan of measures for the improvement of corporate governance for the period from 2016 to 2020.

For the purpose of qualitative monitoring, the execution of the plan will be one of the key performance indicators of the development strategy of KazAgroFinance JSC for 2011-2020 and by 2017 the planned corporate governance level will be 73.3%, by 2018 - 83.3%.

This event will substantially contribute to improving the effectiveness of the Company's activities, as well as to improving the quality of making decisions for smooth implementation of strategic goals and objectives. Transparency and corporate governance in line with international best practices will increase the level of trust of internal and external target audiences, which ultimately affect the profitability, the value of shares and positive dynamics taking into account the Company’s income and image.

Overall, the achievement of the planned corporate governance level will enable the Company to become a successful company operating in accordance with the highest international standards.