The Board of Directors

As a governing body the Board of Directors ensures strategic management of the Company and long-term performance by making informed decisions, considering the interests of all stakeholders, and relying on principles of sustainable development.

The Company strives for balance and ensuring diversity in terms of experience and personal characteristics in the composition of the Board of Directors. The size of the Board of Directors corresponds to the scale, complexity, goals, and objectives of the Company, is not excessive and does not reduce the dynamism of the Board of Directors or the decision-making process of the Board of Directors members.

The selection and nomination of members of the Board of Directors is carried out by the decision of the Sole Shareholder in accordance with the norms and principles of the Corporate Governance Code (see on the website: www.samruk-energy.kz).

In 2021, the number of members of the Board of Directors was 5 people, including 2 independent directors.

THE COMPOSITION OF THE COMPANY’S BOARD OF DIRECTORS AS OF 31.12.2021:

You may learn about full resume of each Board member on the website: www.samruk-energy.kz

Changes in the composition of the Board of Directors at the time of publication of this Annual Report

The powers of Akchulakov B.U., Chairman of the Board of Directors, were terminated on February 18, 2022 by the resolution of the Sole Shareholder (Minutes No. 12/22).

The powers of Kravchenko A.N., Chairman of the Board of Directors, were terminated on February 18, 2022 by the resolution of the Sole Shareholder (Minutes No. 12/22).

The following members of the Board of Directors were elected on February 18, 2022 by the resolution of the Sole Shareholder (Minutes No. 12/22):

Kazutin Nikolay Yurevich – Chairman of the Board of Directors of “Samruk-Energy” JSC.

Repin Aleksey Yurevich – member of the Board of Directors of “Samruk-Energy” JSC.

A high-quality Board of Directors is key to the successful implementation of our Strategy, so balance is an important requirement for the composition of the Board, not only in terms of the number of directors, but also in terms of experience, diversity of skills, knowledge and thinking styles.

The sole shareholder elects the members of the Board of Directors on the basis of clear and transparent procedures in accordance with the current legislation, the Charter and the Regulations on the Board of Directors, taking into account the competencies, skills, achievements, business reputation and professional experience of the candidates. When re-electing individual members of the Board of Directors or its entire composition for a new term, their contribution to the efficiency of the Board of Directors is taken into account.

Acting members of the Board of Directors have the business skills and mindset necessary to make an appropriate contribution to the Company's business. Members of the Board of Directors have an impeccable business and personal reputation and act in the interests of the Company, and in their work are based on the principles of sustainable development.

Current composition of the Board of Directors is balanced in terms of industry experience, skills, international relations, and independence, but does not ensure diversity in terms of gender.

Evaluation of the efficiency of the Board of Directors

The Board of Directors, committees and members of the Board of Directors must be evaluated on an annual basis through a structured process approved by the Board of Directors. Methods of assessment are self-assessment or the involvement of an independent consultant to improve the quality of the assessment. At the same time, an assessment with the involvement of an independent consultant is carried out at least once every three years.

In 2021, as part of an independent diagnostics of corporate governance, an assessment was made of the performance of the Board of Directors, committees and members of the Board of Directors by an independent consultant. The overall performance rating of the Board of Directors was 'BB', which is up from the 2018 rating ('B'). The activities of the Board of Directors of the Company comply in all material respects with most of the established criteria.

The result of the evaluation of the activities of the Board of Directors showed directions for further development of corporate governance practices. The activities identified based on the results of the assessment were included in the Action Plan to improve corporate governance for 2022.

Meetings schedule

Meetings of the Board of Directors are held in line with the work plan approved prior to the start of the calendar year, which includes a list of items under consideration and a schedule of meetings. Critical and strategic items are considered and decisions on them are made only at meetings of the Board of Directors with in-person voting. Information materials for the Board of Directors meetings are sent in advance – no less than 7 calendar days in advance, and on more important items no less than 15 business days in advance.

Independence of decisions made

The presence of Independent Directors in the Board of Directors ensure the independence of decisions made by the Board of Directors.

The main criterion for the selection of Independent Directors is to have sufficient professionalism and autonomy to make unbiased decisions free from the influence of any parties. Independent directors actively share their experience and knowledge to apply the best international practice standards at the Company. Independent directors chair the committees of the board of directors and bring in international management experience.

Independent Directors actively participate in the discussion of issues where a conflict of interests is possible (preparation of financial and non-financial statements, conclusion of interested-party transactions, nomination of candidates to the executive body, establishment of remuneration to members of the executive body). “Samruk-Energy” JSC Independent Director monitors the possible loss of independence status.

According to the 2021 results, the Independent Directors of the Company fully met the independence criteria.

Dynamics of the Board of Directors meetings

The Board of Directors approves the annual work schedule before the start of the financial year and follows the plan after its approval. The Chairman of the Board of Directors controls that the agenda of the meetings of the Board of Directors covers all important issues for the Company.

In 2021, the Board of Directors of the Company considered 204 items. Critical and strategic items are considered only at in-person meetings of the Board of Directors. The Company strives to reduce in absentia meetings of the Board of Directors.

The procedure for informing the Board of Directors about critical financial and non-financial issues is regulated in accordance with the current legislation and internal regulations. According to the 2021 results, these cases were unavailable.

Attendance of the members of the Board of Directors

The role of the Board of Directors in determining the Company's Strategy and monitoring its implementation

The Board of Directors is directly involved in the development and monitoring of the implementation of the company’s main document – the Development Strategy.

The main roles of the Board of Directors on the issues of the Company's Development Strategy are the development/updating, approval and monitoring of the Company's Development Strategy. In 2021, “Samruk-Energy” JSC performed a comprehensive work on updating of the Development Strategy for the coming years. In the course of this work, issues on macroeconomic and industry trends, market development prospects, analysis of the internal environment, PESTEL analysis, SWOT analysis, benchmarking results and other issues were considered jointly during the meetings of the Strategic Planning Committee, the Board of Directors, and strategic sessions. The result of the work is the calculation of target values of strategic KPI.

10 strategic sessions were held in 2021, where the issues related to the market trend in the future and changes in tariff regulation, improving the performance of existing facilities, innovative development, enhancing the Company's financial stability and many other issues were discussed.

The role of the Board of Directors in the corporate risk management and internal control system

The role of the Board of Directors in risk monitoring is based on the principle of a risk-based decision-making approach. The approach “possible risks in adopting and not adopting the resolution” is applied to all decisions made by the Managing body. The Charter of the Company clearly delimits the responsibility between the bodies: the exclusive competence of the Board of Directors includes such items as increasing liabilities by 10 percent or more of the Company's equity; acquisition or alienation of 10 or more percent of shares of other legal entities; as well as issues related to operations of legal entities, 10 or more percent of shares of which is held by “Samruk-Energy” JSC.

The Board of Directors has established risk appetites – restrictions on the types of the Company's business: operating, financial, and investment activities. These restrictions include such indicators as minimum restrictions on the degree of investment development; minimum restrictions on the technical readiness of generating capacities; restrictions on the timing of the implementation of the Roadmap of the Digital Transformation Program, financial restrictions, for example, foreign exchange transactions and liquidity issues; restrictions on new investments, etc. The Board of Directors, as part of the Risk Management Report, regularly conducts detailed monitoring of the implementation of all the above restrictions every quarter and, if necessary, gives specific instructions. Thus, at the initiative of the Company’s Board of Directors, the information regarding the information security of “Samruk-Energy” JSC, occupational safety, the degree of production readiness of facilities to bear loads, the current situation in terms of exposure to credit risk, etc is considered during the meetings regularly every quarter.

Participation of the Board of Directors in the risk management system is significant and highly effective; key risks are monitored on a quarterly basis: information on changes in exposure to these risks is provided, and the implementation of mitigation plans for them is monitored.

The role of the Board of Directors in monitoring investment projects

Major and significant investment projects at “Samruk-Energy” JSC group is implemented if there is a positive approval of the Board of Directors. These requirements and procedures are clearly described and regulated by the Rules for the management of capital investment projects.

Furthermore, the members of the Board of Directors are provided with a report on the Company's investment activities every quarter. After the end of the calendar quarter, independent directors of the Board of Directors are presented with a detailed report on investment projects: detailed schedules, plans and necessary measures to achieve project milestones (points) are discussed at a meeting of the Strategic Planning Committee.

The role of the Board of Directors in promoting ESG principles

The Board of Directors implements the sustainable development policy and reviews the main ESG documents. The Board of Directors approved the Guidelines in sustainable development, which is the main document in this area, which is aimed at systematizing the processes of sustainable development at “Samruk-Energy” JSC group. The Board of Directors approved the Plan of Initiatives in sustainable development, prepared for the medium term until 2023. The plan contains initiatives in three areas – economic, environmental, and social, which include activities, timing, and efficiency of the implementation of these initiatives. Initiatives are considered annually at a special strategic session with the participation of members of the Board.

In 2021, the Board of Directors determined the direction in ESG and, as part of the updated Development Strategy for 2022–2031, the Company is making arrangments for receiving ESG rating from internationally recognized analysts.

Сontinuity of performance of the Board of Directors

To maintain continuity of performance and progressive renewal of the composition of the Board of Directors, the Company has a Succession Plan for “Samruk-Energy” JSC Board of Directors including, among other things, an Action Plan for its implementation.

The procedure for appointment and selection of candidates for members of the Board of Directors, its committees, as well as the criteria used in the nomination and selection considering diversity factors, including, but not limited to independence, professional qualifications and experience, is carried out in accordance with the Regulations on the Board of Directors, the RK Law “On joint-stock companies”, Corporate Governance Code. These documents regulate the procedures used by the Board of Directors to prevent and manage conflicts of interest.

The Company has approved the Induction Program for newly elected members of the Board of Directors, which allows the newly elected member of the Board to learn about their rights and obligations, key aspects of the Company's activities and documents, including those associated with huge risks.

Remuneration of members of the Board of Directors

Independent directors receive annual fixed remuneration for performing their duties as members of the Company’s Board of Directors. The amount and procedure for paying remuneration is determined by the decision of the Sole Shareholder.

An independent director is reimbursed for expenses (transport, accommodation and daily allowance) related to departure for meetings of the Board of Directors and committees of “Samruk-Energy” JSC Board of Directors held outside the place of the permanent residency of an independent director.

In total, remuneration to independent directors for 2021 amounted to 122,222 US dollars or 52,527,182 tenge, which is 46% less compared to the previous period (in 2020 – 76,937,592 tenge).

Conflict of interest

A number of actions are taken to create an effective system for managing conflicts of interest and to set the requirements for employees’ behavior, the observance of which allows mitigating the risks of making decisions under the influence of personal interests and connections in the Company.

The Policy on settlement of corporate conflicts and conflicts of interest has been in effect since 2018, under which executives and employees from the head of the department and those holding higher positions, fill in the declaration of absence of a conflict of interest.

Preliminarily, to eliminate corruption risks and conflicts of interest in the selection process, candidates for vacant positions at “Samruk-Energy” JSC and senior positions at subsidiaries and affiliates (according to the list of positions) are checked for compliance with expertise requirements and affiliation with officials of “Samruk-Kazyna” JSC group.

In accordance with the Policy for Settling Corporate Conflicts and Conflicts of Interest, members of the Board of Directors did not have a conflict of interest in 2021, situations at which personal interest of the Board of Directors members could affect the proper performance of their job responsibilities were unavailable; situations with conflicts of interest that affect or could potentially affect the impartial decision-making were not reported, the members of the Board of Directors were not involved in the discussion and adoption of such decisions.

THE BOARD OF DIRECTORS COMMITTEES

The Board delegates authority to its committees to carry out certain tasks on its behalf, so that it can perform its roles effectively and give an appropriate attention to more in-depth study and quality study of issues and decisions taken.

The Company has Committees under the Board of Directors responsible for preparing recommendations on economic, environmental and social issues: the Audit Committee, the Appointment and Remuneration Committee and the Strategic Planning Committee, as well Health, Safety and Environmental Protection Committee. Based on the in-depth study and developed recommendations of the Committees, the Board of Directors makes decisions on the specified aspects, taking into account the principles of sustainable development.

THE REPORT ON PERFORMANCE RESULTS OF THE BOARD OF DIRECTORS COMMITTEES

The number of items considered at the meetings broken down Committees

The Audit Committee

The purpose of the Committee's activities is to assist the Board of Directors for in-depth study of issues to establish an effective system of control over the financial and economic activities of the Company, including the completeness and reliability of financial statements, control over the reliability and efficiency of internal control and risk management systems, and the execution of documents in areas of corporate governance, monitoring the independence of external and internal audit, as well as the process of ensuring compliance with the legislation of the Republic of Kazakhstan.

The Committee’s composition:

• Andreas Stoerzel – Senior Independent Director, Chairman of the Committee;
• Joaquin Galindo – Independent Director, member of the Committee.

Number of the audit committee meetings

Main items considered

Meetings with the executive body regarding the preparation of financial statements, meetings with external auditors were held. The issues of the work of the Internal Audit Service, Compliance Service and Risk Management and Internal Control Department were considered.

The Appointment and Remuneration Committee

The Appointment and Remuneration Committee is an advisory body of the Board of Directors, which provides recommendations on the issues of appointment and remuneration of members of the Board of Directors, the Management Board, the Corporate Secretary, and other employees in accordance with the internal regulatory documents of the Company.

The Committee’s composition:

• Joaquin Galindo – Independent Director, Chairman of the Committee
• Andreas Stoerzel – Senior Independent Director, member of the Committee

Number of meetings of the Appointment and Remuneration Committee

Main items considered

During the reporting period the Board of Directors was provided with recommendations on the election of members of the Supervisory Boards / Boards of Directors across “Samruk-Energy” JSC group. Recommendations were provided as regards a preliminary review of the Program for succession to key positions of CEO-1 for 2021–2022, on the preliminary approval of the job description and assessment of the position of the Managing Director for Business Transformation, on the preliminary review of the individual development plan of the Managing Director for Business Transformation – a member of the Management Board of "Samruk-Energy" JSC for 2021, on preliminary approval of the Report on the progress of implementation of the HR policy of "Samruk-Energy" JSC, on approval of the organizational structure of the Company in the new edition.

Actual values of key performance indicators of the Management Board members, Head of the Internal Audit Service and Corporate Secretary of “Samruk-Energy” JSC, motivational KPI of members of the Management Board, Head of Internal Audit Service and Corporate Secretary of “Samruk-Energy” JSC were considered.

The Strategic Planning Committee

The aim of the Committee is to provide recommendations to the Council on the development of priority areas of activity (development), strategic goals (development strategies) of the Company, the implementation of a sustainable development management system, including labor and environmental issues, the implementation of investment projects, the Company's master plan and events that contribute to improving the efficiency of the Company in the long term.

The Committee’s composition:

• Andreas Stoerzel – Senior Independent Director, Chairman of the Committee.
• Joaquin Galindo – Independent Director, member of the Committee.

Number of the Strategic Planning Committee meetings

Main items considered

Consideration of the following Reports every quarter: on preliminary consideration of the Development Strategy for 2022–2031, on the implementation of the Action Plan for improving corporate governance and the introduction of the Corporate Governance Code of “Samruk-Energy” JSC, on the consideration of the Action Plan for the implementation of the Company's Development Strategy for 2018–2028, on the implementation of the Development Plan of the Company, on the use of investments in the investment projects of the Company, on the progress of the Company's Digital Transformation Program.

Consideration of the Company’s Materiality Matrix, Innovation policy of “Samruk-Energy” JSC, Financial strategy of the Company, project on major repair of power unit No.4 of Ekibastuz SDPP-1 worth more than 1 bn.tenge, the list of non-strategic assets (divestments) subject to withdrawal at the Company level, stakeholder engagement and feedback mechanism report for 2020.

Health, Safety and Environmental Protection Committee

The purpose of the Committee is to ensure an increase the Company's performance by preparing recommendations for the Board of Directors, evaluation, analysis and effective work on occupational safety and environmental protection issues.

The Committee’s composition:

• Joaquin Galindo – Independent Director, Chairman of the Committee;
• Andreas Stoerzel – Senior Independent Director, member of the Committee.

Number of Health, Safety and Environmental Protection Committee meetings

Main items considered

Consideration of the Report on the work performed in occupational health and safety and workplace injuries on a quarterly basis.

Consideration of the Policy of the corporate governance system of “Samruk-Energy” JSC group, the Action Plan for management of occupational health and safety and environmental protection issues at the Company’s group for 2021.