The Company is a Corporate centre proactively engaged in operational activities. It has a divisional structure for managing production processes (by type of activity), with a vision to attain the strategic goal of boosting the efficiency of minerals extraction and processing.

When formulating the organisational structure, the target business processes necessary to implement the strategic goals and objectives of the Group in all key areas of its activity were taken into account. The best practices applied by comparable companies in the global uranium and nuclear industries were referred to, as well as the legislative requirements of the Republic of Kazakhstan and shareholders’ requirements.

The Company’s corporate governance system seeks to ensure that there is an appropriate level of management and control, long-term value growth, and sustainable development. Corporate governance is based on the three pillars of efficiency, responsiveness, and transparency.

The main objectives of the Company’s corporate governance system are to raise the transparency of operations and to maintain effective long-term relationships with shareholders and stakeholders. The system is based on the following principles:

Upholding shareholder rights is a key corporate governance principle of Kazatomprom. The Company treats all shareholders equally (including minority ones), regardless of their ownership interests, and distributes information evenly among them.

On 30 May 2019 the annual General Meeting of Shareholders was held for the first time in the history of the Company at the Company’s office. The London Stock Exchange recommends that in such meetings members of the Board of Directors take part, hence an independent director participated directly in the meeting, while the remaining Board members joined via a conference call.

The following issues were on the agenda:

• the election and early removal of members to and from the Board of Directors;
• approving the financial statements of Kazatomprom;
• approving dividends;
• amending the Kazatomprom Charter.

Also, on 4 December 2019 the Company held an extraordinary General Meeting of Shareholders by absentee voting; the only issue on the agenda of the meeting (in addition to a formal agenda item) was “approval of the audit company that will conduct an audit of Kazatomprom”.

The next General Meeting of Shareholders is scheduled for 18 May 2020. Full details of the meeting will be set out in a meeting notification, which will be circulated among shareholders in April 2020. Shareholders that cannot attend are encouraged to vote by proxy, as indicated in the notification. All documents related to the General Meeting of Shareholders will be available on the Company’s website, in the Investors section.

In November 2018 the Company listed its shares and global depositary receipts (GDRs) on the AIX and LSE stock exchanges.

In September 2019 Samruk-Kazyna additionally placed 9,863,021 GDRs, priced at USD 13.00 each. Total proceeds stood at USD 128,219,273, including USD 65,299,273 from sales through the AIX. Both international and Kazakh investors participated in the placement.

During the IPO in November 2018 Samruk-Kazyna placed on the AIX and LSE around 15% of the issued share capital of Kazatomprom. After the additional placement, the total number of shares in the free float rose to 18.72%.

In September 2019 Kazatomprom placed bonds (ISIN KZ2C00006153) on the organised securities market of the Kazakhstan Stock Exchange (KASE) JSC, in order to refinance bonds issued by Kazatomprom in October 2018 (NIN KZ2C0M13F960); early redemption of the latter bonds was made on 27 September 2019.

Kazatomprom held its first Capital Markets Day on 30 September 2019 at the London Stock Exchange in London in the UK. Over 100 participants registered for the event, including 40 as institutional investors, 29 as individual investors, and 43 as analysts or in some other capacity. After the LSE event a two-day tour of the Company’s uranium mining fields in Kazakhstan was organised.

The Board of Directors is responsible for the stewardship of the Company’s activities. It directs the Company’s strategy and is authorised to make decisions regarding all aspects of the Company’s activities, except for those matters expressly reserved for the General Meeting of Shareholders under the Law of the Republic of Kazakhstan “On Joint Stock Companies”, the Law Governing the Sovereign Wealth Fund, other applicable laws, and the Company’s Charter. The Board operates in accordance with the principles set forth in the Charter, the Corporate Governance Code, and the regulations for the Board of Directors.

As at 31 December 2019 the Board of Directors comprised six directors, including two independent directors. The Board Chairman is an independent director, and ensures that the rights of minority shareholders are observed. A description of the criteria for complying with independence standards for Board members is set forth in the Charter and regulations for the Board of Directors, which are posted on the Company’s website.

In March and September 2019 Jon Dudas, who was the Board Chairman at that time (in the periods open for trading deals for the Company’s insiders and individuals, executing management functions) acquired 2,000 and 3,000 GDRs of the Company. Relevant information was disclosed to the stock exchanges and reported to the regulatory and supervisory authorities.

Other members of the Board of Directors hold no shares (equity interests) in the Company, its affiliates, suppliers, or competitors.

The current Board of Directors was elected on 14 August 2018 for a term of three years, and the appointments of present Board members expire on 14 August 2021.

• Under a decision of the General Meeting of Shareholders dated 30 May 2019, the term of Alik Aidarbayev the member of the Board of Directors, was terminated early, and Almasadam Satkaliyev was appointed to the Board.
• In December 2019 Jon Dudas resigned as Chairman of the Board of Directors and Neil Longfellow was appointed acting Chairman of the Board, until the General Meeting of Shareholders adopts a relevant decision.

Members of the Management Board can be representatives of the shareholders of the Company or employees of the Company that are not shareholder representatives, and they are appointed and discharged by the Board of Directors. The quantitative composition and term of office of the Management Board is determined by the Board of Directors. The Management Board must consist of at least five members.

During the reporting period the Management Board held 42 meetings in presentia and adopted 112 decisions through absentee voting. In total, 682 issues were positively considered, including 452 through voting in person and 230 by absentee voting, of which:

The existing Risk Management System of the Company was established in 2010 and since then has played a fundamental role in the Company’s activities and development strategies. The Company’s management is confident that the accurate and timely identification, assessment, and monitoring of risks and responding to risks facilitates effective decision-making at all management levels and helps ensure that the strategic goals and key performance indicators of the Company are achieved.

The key structural division of the system is the Risk Management Department, which is responsible for providing methodological support and coordination in all aspects of risk management. The Risk Management Committee, under the supervision of the Management Board, sets the overall tone and direction of the risk management system by reviewing, agreeing, and approving key issues. Separate structural divisions responsible for organising risk management operate at the level of the Company’s subsidiaries and affiliates, or risk managers are appointed.

Detailed information about the structure, participants, and responsibilities of members of the risk management system is provided in the Company’s risk management policy, which can be found on the corporate website; see Kazatomprom risk management policy, which can be found on the corporate website.

The Company’s risk management system is based on a risk culture that is fostered through engaging all key departments and stakeholders, as well as the effective exchange of information about risk management among the Board of Directors, the Management Board, and Company divisions.

In order to continually improve the quality of the risk management system, corporate trainings in risk management and internal control are organised for corporate managers and other employees that are considered to be risk owners, and a roundtable on topical issues is held annually for employees responsible for enterprise risk management.

The internal control system of the Company seeks to prevent risks in three key areas of activity: the preparation of financial and management reports, compliance with legislation and internal regulations, and enhancing the effectiveness of processes within the Company’s operating activities.

The Company’s internal control system has been designed in accordance with the COSO model Internal Control — Integrated Model, with a view to creating a management system that can respond quickly to process-related risks and overseeing main and auxiliary processes and daily operations. The system consists of five interdependent components:

• control environment;
• risk assessment;
• control procedures;
• information and its transfer;
• monitoring.

The rules of the internal control system at Kazatomprom can be accessed at the Company’s website; see Kazatomprom rules of the internal control system.

As part of the internal control system, the Company regularly performs the following activities:

• testing the operational efficiency of control procedures for the business processes of the Company's structural divisions;
• diagnostics in relation to developing the internal control system in subsidiaries and affiliates via self-assessment procedures by subsidiaries and affiliates, as well as through visits to subsidiaries and affiliates.

Boosting the efficiency of Kazatomprom’s production activities, competitiveness, and export potential, as well as improving the quality of its products, are achieved by enhancing, controlling, and monitoring the activities of the Company’s subsidiaries and affiliates in the areas of technical regulation, standardisation, metrology, testing, quality management, and certification and accreditation.

A unified approach to monitoring and confirming product quality in order to attain the goals of the Development Strategy of the Company is ensured by implementing the Kazatomprom policy on technical regulation, standardisation, metrology, testing, and quality management, with a view to improving infrastructure quality at uranium industry enterprises. The result of the improved infrastructure quality ensures that the stated technical characteristics of products are confirmed and that respective consumer (market) requirements are fully met.

In order to promote Kazatomprom’s market position, it is important to ensure the quality, packaging, and timely and incident-free transportation of the Company’s products. Hence work will intensify in this area in 2020.

The IAS uses a systematic, integrated, and risk-oriented approach for assessment and improvement of corporate governance, risk management, and control processes at Group entities.

The IAS applies international internal audit standards in its activities and complies with the Code of Ethics for Internal Auditors.

The performance results of the IAS are regularly discussed and evaluated by the Audit Committee.

The annual audit plan for 2020 has been drawn up, and takes into account the expectations of Board of Director members, strategic projects, risks identified by management, as well as the audit results for 2019.

In 2020 an external assessment of IAS activities from the perspective of compliance with international internal audit standards is planned. The results will be reviewed by the Board of Directors.

Based on the results of an extraordinary General Meeting of Shareholders held on 4 December 2019, the General Meeting of Shareholders appointed PricewaterhouseCoopers LLP to audit the IFRS consolidated and standalone financial statements of Kazatomprom for 2020, 2021, and 2022. The total fee for the audit services under the respective contract for 2020–2022 is KZT 917,150,976 (nine hundred seventeen million one hundred fifty thousand nine hundred seventy-six) including VAT.

As part of the 2020–2022 audit, a seminar on changes to international financial reporting standards is scheduled to be held at Kazatomprom once a year. In addition, under the contract with PricewaterhouseCoopers LLP, five Company employees will be trained to receive ACCA DipIFR and CIMA certification.

During a Board meeting held on 19 February 2019, the Company approved an updated Kazatomprom policy on engaging an audit firm, which will be published on the Company's website. The policy was updated to include amendments on the rotation of the audit partner. Now, after five consecutive years, the lead audit partner can serve for an additional two years, and hence serve no more than seven years in total. In the event of such a decision being made, the Company will inform the shareholders in a press release, together with the reason behind the decision.

Prior approval from the Audit Committee is required before an auditor is engaged by the Company to provide services that may impact its independence. For any such potential services, the audit firm is required to provide the respective rationale to Kazatomprom, explaining why obtaining such approval will not jeopardise the independence of the Auditor. In accordance with the Company's policy on engaging audit firms, the total fee for non-audit services provided to the Group is limited to no more than 70% of the average of the sum of fees paid for the past three consecutive financial years for audit services to the Group. Decisions taken by the Audit Committee related to non-audit services provided by an audit firm are transferred to the Kazatomprom Board of Directors for informational purposes.

The total fee for non-audit services provided to the group in 2019 was KZT 80.6 million, including VAT.

The non-audit services received from the auditor may entail the threat of a conflict of interest, where the actual or anticipated loss of independence of the Auditor can only be reduced to an acceptable level by the Company’s refusal to receive such services from an audit firm or by the Company’s refusal to receive the services of an audit firm for the audit of its financial statements. For details on the full circumstances for non-audit services, see Clause 9.4 of the policy on the engagement of audit firms.

The Company recognises that the social and economic environment in which it operates is enhanced by increasing the reliability and integrity of transactions, preventing corruption, and the submission of reliable information for decisionmaking by stakeholders. Consequently, transparency in business is necessary in communications with stakeholders and in order to build trust-based internal corporate relationships.

All Company employees are familiar with the Code of Ethics and Compliance as a part of the hiring process, as well as any amendments to the code. The compliance team provides coaching to new employees, explains the principles of compliance during welcome trainings and master classes, and maintains a compliance column in the corporate journal. Staff undergo regular tests to ensure that they understand and comply with the Code of Ethics and Compliance.

The Company is committed to the highest standards and principles of corporate ethics, as set forth in the Code of Ethics and Compliance, which is posted on the Company’s website (Code of Ethics and Compliance).

In 2019 training was conducted for management and those employees involved in processes that are most exposed to compliance risks. Clarifications were provided for management and representatives of Group entities.

The Company has in place regulations on the settlement of corporate conflicts and conflicts of interest, approved by a decision of the Board of Directors, which determines the causes of corporate conflicts, conflicts of interests, and the procedures to prevent them, and also regulates the activities of the Company's bodies as part of conflict resolution activities.

As part of this process, in 2020 the Company launched a declaration of conflicts of interest for all employees. There are also plans to roll this out to subsidiaries.

The Company monitors the circulation and use of insider information, notifies stock exchanges about transactions made by insiders, and helps prevent insider transactions.

In the event of labour disputes or conflicts, certain issues are resolved in accordance with labour law. Mediation is also used to resolve labour disputes.

The Company strives to foster competitive conditions and enshrines in its Code of Ethics that anti-competitive methods of doing business harm partners, obstruct the work of markets, and cause serious damage to partnerships, thereby violating the trust that underlies them.

One of the duties of the Ombudsman is to submit, in accordance with the established procedure and at least once a year, a report on the results of its work to the Company’s Board of Directors, which then evaluates the results of its activities.

In 2019 the Ombudsman investigated 15 complaints, of which five were anonymous. The appeals related to the provision of social support, the conditions for competitive selection for vacancies, and unethical behaviour on the part of employees. Based on the results of the review, the Ombudsman issued clarifications to the applicants and helped resolve the issues. All appeals are considered in accordance with the legislation of the Republic of Kazakhstan.

In 2019, based on the results of an independent assessment of compliance risks held at Kazatomprom in 2018 and recommendations submitted on how to improve the compliance function at the Company, certain procedures were put in place to minimise compliance risks in a number of areas, including: the settlement of corporate disputes and conflicts of interest, the prevention of corruption and fraud, and the disposal and use of insider information.

The Company has a special hotline for reporting ethics-related violations. The hotline is administered by an external provider, thereby ensuring the independence of reports and guaranteeing confidentiality, including the anonymity of the person making the report. The Company’s actions to prevent and discourage violations of Kazakh legislation or internal rules are governed by a number of internal regulations, chief of which is the confidential information policy.

In 2019, 38 requests received via the hotline were considered. An equal share of requests were related to the topics of procurement and HR. 10% of the requests were classified as other topics. All the requests in the reporting period were considered by the deadlines stipulated under the legislation of the Republic of Kazakhstan.

The Code of Ethics and Compliance of the Company, approved by a decision of the Board of Directors, determines the basis for the occurrence of conflicts of interest, as well as procedures to prevent them. The Company has also put in place regulations on the resolution of corporate conflicts and conflicts of interest, which were approved by the Board of Directors. The regulations determine the grounds for the occurrence of corporate conflicts, conflicts of interest, prevention procedures, and also regulate the activities of Company bodies as part of measures to resolve them.

The Anti-Corruption clause is an additional tool used to minimise the risk of a conflict of interest and to prevent corruption, and is contained in all Company contracts.

The policy regulates the actions of employees and officials if they identify cases of corporate fraud or corruption. Each employee and official of the Company signs an undertaking to comply with anticorruption laws; consequently, it is the personal duty of each Company official and employee to combat corruption and fraud.