Key MTS corporate governance principles are:

• comprehensive protection of shareholder rights and interests;
• information openness and transparency;
• single corporate policy in respect of subsidiaries;
• independence of the Board of Directors in definition of the Company’s strategy, approval of business plans, other important decisions;
• control over management activities;
• observance of business ethics when doing business;
• doing socially responsible business aimed at assuring sustainable development of the Company, its welfare growth.

Procedures of preparation and conduction of the general shareholder meeting enable MTS to assure equal attitude to all shareholders from the Company when they exercise their rights to participation in Company’s management and profits’ receipt.

The remuneration system applied in MTS is aimed at the growth of Company’s shareholder value, and the level of remuneration paid is fair and sufficient for motivation of employees and members of management bodies.

The risk management and internal control system was developed taking into account generally accepted conceptual foundations COSO (The Committee of Sponsoring Organizations of the Treadway Commission), is efficient and is aimed at assuring reasonable confidence in achievement of objectives faced by the Company.

The Company has an efficient system of control over transactions executed amidst the conflict of interests.

The information disclosure system is built taking into account requirements of listing rules of the Moscow Stock Exchange and NYSE, is efficient and assures compliance with the transparency principle.

The Company’s system approach also covers areas where compliance with legislation is essential. Thus, systems of assurance of compliance with anticorruption, antimonopoly and insider legislation were built in the company based on best international compliance standards.

Settlement of possible conflicts of interests of management bodies of MTS PJSC

For the purposes of establishment of a uniform and efficient actual and potential conflict of interests management system as well as definition of requirements for employees’ conduct, observance of which enables to minimise risks of making decisions under the influence of personal interests and connections, in 2012 the Company put into operation the Conflict of Interests Management Policy”. Compliance with the Policy is an obligation of any employee of the Company, irrespective of its official position. Employees holding management positions are obliged to show the example of law-abiding and ethical conduct and actively support execution of the Conflict of interests management Policy.

When hired all employees familiarise themselves with this Policy, fill in and sign the form “Disclosure of information about the conflict of interests.” As the conflicts of interests arise, each situation must be reviewed and settled.

For the purposes of non-admission of conflicts of interests, the Company holds an annual knowledge testing and certification of compliance with norms of the Code of Business Conduct and Ethics for executives and top management, the result of which are reviewed at the Auditing Committee at the Board of Directors of MTS PJSC.

Members of the Management Board and employees are not entitled to participate in approval, agreement, other decision-making in respect of transactions concluded by the Company if they are or may be under the influence of the conflict of interests.

During the conflict of interests management the Company is guided by the principles of lawfulness, confidentiality, impartiality, objectiveness and reasonable sufficiency, obligatory immediate disclosure of information by Company’s employees about the actual or potential conflict of interests or likelihood of such a conflict.

During 2015 no conflict of interests of members of the Management Board of MTS PJSC was found.

Besides, procedures preventing a possible conflict of interests of directors are established in our Company. Members of the Board of Directors must refrain from actions which may result in appearance of a conflict of interests and, if such a situation exists or arises, disclose information about it to the Board of Directors and not participate in voting on conflict agenda items.

Members of the Board of Directors, who have interest in agenda items of the Board of Directors, do not take part in discussion and voting on the specified agenda items.

During 2015 no conflict of interests of members of the Board of Directors of MTS PJSC was found.

Development of the Corporate Governance System and Plans for 2016

In 2015 we continued the work on development of our corporate governance system.

Beginning of 2015 saw the completion of the audit of the company’s corporate governance, conducted following the instruction of the Corporate Governance Committee under the Board of Directors within the framework of implementation of the recommendations Corporate Governance Code (hereinafter for the purposes of this section – the Code) within the company. Audit confirmed high level of corporate governance and implementation of principles and recommendations of the Code.

Following the audit results we approved the Roadmap for implementation of Code recommendations in MTS, and started its enforcement. Most of the Roadmap activities were done by the end of 2015. Details on fulfilment of the Code see in the section on observation of principles and recommendations of the Corporate Governance Code.

In 2015 we also introduced new institute of anti-monopoly compliance, new for Russian practices of corporate governance. Details on implementation of the system see in the Compliance System section.

We positively assess the results we managed to achieve, however we do not settle for them. We strive to continuously improve our corporate governance in view of the experience and practices in the market, listing regulations and legislation changes. That is why our main goal for the next year is to continue implementation of Roadmap activities with regard to changing regulatory environment.