Accountability

The Board of Directors is accountable to the shareholders for the development and successful implementation of the long-term development strategy of the Company, as well as for the establishment of milestones for evaluating the management performance efficiency and, ultimately, for evaluating this efficiency. The executive bodies of the Company are accountable to the Board of Directors and the General Meeting of Shareholders of the Company.

Equality

The corporate governance system protects the rights of shareholders and ensures their equal treatment. The Board of Directors provides all shareholders with the opportunity to receive timely protection in the event of a breach of their rights. Moreover, the Company does not allow discrimination based on gender, skin colour, or religion. We strive to ensure equality within the Company, and our dedication is manifested in the fact that expertise, consistently high performance and displaying adherence to the Company’s values are a necessary and sufficient condition, as well as the only guarantee of career growth and promotion within the Company.

Transparency

PhosAgro ensures proper disclosure and free access for all interested parties to reliable information on the Company's operations, including data on its financial position, social and environmental indicators, ownership and governance structure.

Responsibility

All material decisions made by the Company affect a large number of people: employees and their families, residents of the cities of operation, shareholders and investors, governmental and non-governmental organizations. We fully recognise the importance of the rights and interests of our employees and their family members, residents of the cities of operation, shareholders and investors, governmental and non-governmental organizations; we strive to respect these rights and interests to the fullest extent; we look for and develop ways of communication and cooperation with interested parties.

General Meeting of Shareholders

The General Meeting of Shareholders is the supreme governing body of PhosAgro PJSC.
General Meetings of Shareholders provide shareholders with the opportunity to make decisions on the most important issues of the Company’s operation.

The scope of authority of the General Meeting of Shareholders, the procedural issues of preparing and holding General Meetings are set out in the Company’s Charter and in the Regulations on the General Meeting of Shareholders.

Information on holding General Meetings of Shareholders and materials for the Meetings.

Internal Audit Commission

In order to exercise control over the financial and economic operation of the Company, the General Meeting of Shareholders in accordance with the Charter elects an Internal Audit Commission of the Company. The operating procedure of the Internal Audit Commission is determined by the Regulation on the Internal Audit Commission approved by the General Meeting of Shareholders.

Board of Directors

The Board of Directors carries out strategic management of the Company and controls the work of the executive body in the interests of shareholders. The goals of the Board of Directors are: sustainable and successful development of PhosAgro PJSC, long-term increase in the value of its assets, ensuring the protection of the rights and legitimate interests of shareholders, ensuring the completeness, reliability and objectivity of public information about the Company.

We strive to ensure that most members of the Board of Directors are independent—this approach helps ensure that the decisions made are impartial and the interests of various groups of shareholders are balanced.

When electing members of the Board of Directors, the highest priority is given to whether the nominees possess the required balance of skills, experience, independence and knowledge. Members of the Board of Directors who are well acquainted with the Company’s business play an important role in ensuring properly qualified governance. Therefore, the Company’s Corporate Governance Code does not limit the number of re-elections for the members of the Board of Directors. However, membership of the Board for more than 7 years is regarded as a reason to analyse rotation opportunities.

Members of the Company's Board of Directors receive remuneration, the amount of which is set based on the decision of the General Meeting of Shareholders and is adjusted in such a way as to involve highly skilled professionals and motivate them to work honestly and efficiently.

The operating procedure of the Board is determined by the Regulation on the Board of Directors approved by the General Meeting of Shareholders.

At the Annual General Meeting of Shareholders of the Company held on 24 May 2019, a new Board of Directors was elected. It consists of 10 members, 7 of whom are independent, thus complying with the requirements of the Listing Rules and the recommendations of the Corporate Governance Code. The Board of Directors is balanced in terms of a set of knowledge, skills and experience, as well as independence, as established by the Board of Directors’ Remuneration and Human Resources Committee (Minutes of the meeting dated 26 Aug. 2019).

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Board Committees

The Committees of the Board of Directors are consultative and advisory bodies and consist of current members of the Board who possess the necessary skills and expertise compliant with the functions of the Committees. In the course of operation, the Committees may also involve external experts and advisers. The primary objective of the Committees is to pre-consider the most important issues within the scope of authority of the Board of Directors.

The Board of Directors has six Committees, five of which are headed by independent directors:

• The Audit Committee;
• The Strategy Committee;
• The Remuneration and Human Resources Committee;
• The Environmental, Health and Safety Committee;
• The Risk Management Committee;
• The Sustainable Development Committee;

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The Audit Committee

The Audit Committee is vested with the following tasks, in particular:

• analysis of financial accounting processes, including regular audits and drawing up recommendations for the Board of Directors;
• preliminary assessment of potential auditors, drafting of recommendations for the auditor’s approval and ongoing interaction with the auditor on the job;
• analysis and support of the internal audit system and risk management procedures, including making recommendations for improvement thereof;
• ensuring that the practices and procedures adopted by PhosAgro comply with applicable laws and corporate governance standards.

The Audit Committee consists of:

• Marcus J. Rhodes, Chairman of the Committee, independent director;
• Sven Ombudstvedt, Member of the Committee, independent director;
• J. James Beeland Rogers, Member of the Committee, independent director;
• Andrey Sharonov, Member of the Committee, independent director.

The operating procedure of the Committee is determined by the Regulation on the Audit Committee approved by the Board of Directors.

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The Strategy Committee

The Strategy Committee is vested with the following tasks, in particular:

• development, monitoring and adjustment of the medium- and long-term strategy of the Company, including consideration of management reports and assessment of its performance in terms of compliance with the approved strategy;
• assessment of the development efficiency of subsidiaries, including the validity of their strategies and the extent to which they have achieved their goals;
• drawing up opinions on draft merger and acquisition transactions;
• review and preliminary assessment of potential strategic partnership projects.

The Strategy Committee consists of:

• Sven Ombudstvedt, Chairman of the Committee, independent director;
• Andrey G. Guryev, Member of the Committee;
• Андрей А. Гурьев, Member of the Committee;
• Mikhail Rybnikov, Member of the Committee.

The operating procedure of the Committee is determined by the Regulation on the Strategy Committee approved by the Board of Directors.

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The Remuneration and Human Resources Committee

The Remuneration and Human Resources Committee is vested with the following tasks, in particular:

• development of policies for the remuneration of members of the Board of Directors, executive bodies and other key executives, including the development of parameters for their short-term and long-term incentive programmes;
• supervision of the introduction and implementation of the Company's remuneration policies and various incentive programmes;
• assessing the work of executive bodies and other key executives, including an assessment of achievement of their goals as part of a long-term incentive programme;
• assessing the Board of Directors in terms of areas of expertise, experience, independence and involvement in the work of the Board; determining the priority areas for enhancing the Board;
• arranging for assessment and self-assessment of the operational efficiency of the Board;
• planning staff appointments for members of executive bodies and other key executives.

The Remuneration and Human Resources Committee consists of:

• J. James Beeland Rogers, Chairman of the Committee, independent director;
• Irina Bokova, Member of the Committee, independent director;
• Andrey Sharonov, Member of the Committee, independent director.

The operating procedure of the Committee is determined by the Regulation on the Remuneration and Human Resources Committee approved by the Board of Directors.

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Environmental, Health and Safety Committee

The Committee is vested with the following tasks:

• control over the compliance of the Company's business with the requirements of law and regulatory bodies in the field of environmental protection, occupational health and safety;
• development and monitoring of the implementation of the Company's policies, practices and procedures aimed at protecting the environment, health and safety of employees of the enterprises within the PhosAgro PJSC Group;
• assessing the efficiency of the use of natural resources and electricity, the introduction of resource-saving and energy-saving technologies in the business of the Company's enterprises and drawing up recommendations for the future development of this policy area;
• prevention of industrial accidents, including the development of action plans, programmes and processes for assessing, managing and reducing the risks of industrial accidents;
• improving labour conditions, monitoring compliance with safety procedures and reducing workplace injuries, as well as improving the occupational health and safety policy to reduce and prevent workplace injuries.

The Environmental, Health and Safety Committee consists of:

• Mikhail Rybnikov, Chairman of the Committee;
• Andrey A. Guryev, Member of the Committee;
• Natalia Pashkevich, Member of the Committee, independent director.

The operating procedure of the Committee is determined by the Regulation on the Environmental, Health and Safety Committee approved by the Board of Directors.

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The Risk Management Committee

The Risk Management Committee is vested with the following tasks:

• drawing up proposals to the Board of Directors on the risk management methodology, on the identification of the most significant risks for continuous monitoring and control, and recommendations for an integrated risk management system;
• evaluating the efficiency of the risk management system within the Company and drafting of recommendations to improve it;
• drawing up proposals to the Board of Directors on the justification of the risk appetite and risk tolerance.

The Risk Management Committee consists of:

• Sven Ombudstvedt, Chairman of the Committee, independent director;
• Xavier Rolet, Member of the Committee, independent director;
• Andrey A. Guryev, Member of the Committee.

The operating procedure of the Committee is determined by the Regulation on the Risk Management Committee approved by the Board of Directors.

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The Sustainable Development Committee

The Sustainable Development Committee is vested with the following tasks:

• establishment and periodic analysis of the Company’s system of internal regulatory documents in the field of sustainable development; control over the development of these documents, their relevance, effectiveness and quality;
• ensuring continuous displaying and promotion of ethical, transparent and responsible behaviour;
• involvement of key stakeholders, as well as contributing to the development and growth of healthy and sustainable communities in all regions of operation;
• monitoring compliance with legal requirements and internal goals in the field of sustainable development; commitments to comply with the principles of the UN Global Compact on Sustainable Development;
• arranging for staff training on best practices in sustainable development;
• drafting of recommendations to the Board of Directors on determining strategic goals in the field of sustainable development;
• consideration of reporting on sustainable development;
• supervising the disclosure of the information on the Company’s sustainable development activities.

The Sustainable Development Committee consists of:

• Irina Bokova, Chairman of the Committee, independent director;
• Andrey Sharonov, Member of the Committee, independent director;
• Mikhail Rybnikov, Member of the Committee.

The operating procedure of the Committee is determined by the Regulation on the Sustainable Development Committee approved by the Board of Directors.

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Management Board

The Management Board is the collegial executive body of the Company and reports to the Board of Directors and the General Meeting of Shareholders of the Company.

The scope of authority of the Management Board, in particular, includes:

• approving annual and quarterly income and expenditure estimates (budgets) of the Company, making amendments thereto;
• determining the investment policy and new business areas of the Company;
• ensuring that reports on the financial and operating performance of the Company are prepared and submitted to the Board of Directors;
• approving the Regulation on Bonuses and other local regulations determining the Company's incentive scheme and staff remuneration scheme.

The members of the Company’s Management Board are approved by the Company’s Board of Directors for the term of one year.

The operating procedure of the Management Board is determined by the Regulation on the Management Board approved by the General Meeting of Shareholders.

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Chief Executive Officer (CEO)

CEO is the Chairman of the Management Board of the Company, reports to the Board of Directors and the General Meeting of Shareholders.

The scope of authority of CEO includes all issues related to the management of the daily operations of the Company, with the exception of issues referred by the effective legislation of the Russian Federation and/or the Charter of the Company to the scope of authority of other governing bodies of the Company.

CEO of the Company is elected by the Board of Directors for a term of three years.

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Corporate Secretary

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Corporate Governance Directorate

The main functions of the Corporate Governance Directorate are as follows:

• to arrange and hold events as part of mergers and acquisitions (start-ups, reorganization, acquisition of shares and shares in the authorised capital of other organizations, etc.);
• to deal with legal issues arising in the process of preparing and conducting corporate procedures;
• to develop (legal examination of) the Charter and by-laws submitted for consideration by the Board of Directors and the General Meeting of Shareholders of the Company;
• prepare and disclose information about the Company and its operation in Russia in accordance with the requirements of corporate and securities laws.

Corporate Governance Director

Mr. Yuri Botnev
Tel.: 8 (495) 232-96-89, extension 2710
e-mail: kpu@phosagro.ru

Deputy Corporate Governance Director

Ms. Yekaterina Konovalova
Tel.: 8 (495) 232-58-98, extension 2192
e-mail: kpu@phosagro.ru

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Internal Audit

The Internal Audit Directorate of the Company assists the Board of Directors and executive management in improving the efficiency of business process management and the functioning of internal control and risk management systems.

The Internal Audit Directorate in its operation is guided by the Internal Audit Policy, adheres to a risk-based approach and works closely with the risk management, internal control and economic security departments, as well as with members of the governing bodies of the Company.

The audit plan for the calendar year is reviewed, discussed and approved by the Audit Committee and the Board of Directors. Audits are held both in the Company itself and in its individual subsidiaries and their separate divisions.

Moreover, the Internal Audit Directorate monitors the effectiveness and efficiency of corrective actions by the executive bodies of the Company based on the audit findings, and reports quarterly to the Board of Directors.

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Report on Compliance with the Principles and Recommendations of the Corporate Governance Code of the Central Bank of the Russian Federation

A report on compliance with the principles and recommendations of the Corporate Governance Code recommended by the Central Bank of the Russian Federation {pdf link} is approved annually by the Board of Directors and submitted as an appendix to the annual report of the Company for consideration by the Annual General Meeting of Shareholders of the Company.

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In accordance with the anti-corruption laws, all PhosAgro Group enterprises:

• have adopted standards aimed at the prevention of corruption and other offenses in the Company;
• have concluded agreements with employees on compliance with the requirements established by local regulations aimed at combating corruption and fraud;
• have set out in the employees’ job descriptions duties on compliance with anti-corruption requirements;
• have introduced restrictions in respect of certain categories of employees regarding part-time work in business entities;
• include a universal Anti-Corruption Clause section in all agreements being concluded.

Anti-Corruption Training

The Company strives to help its employees, as well as employees of its counterparties, understand the requirements for their business conduct and gives recommendations on recognising and resolving legal and ethical violations that they may encounter in their daily activities.

All employees of the Company undergo regular training and testing on anti-corruption issues. These measures intend to create an understanding among employees of the importance of countering corruption and maintaining a culture of intolerance to such violations in all areas of activity.

Our training programme contains information on compliance risks associated with certain duties of employees, as well as the instructions on how to behave in situations of concern, including giving and receiving gifts, entertainment, and hospitality expenses.

One of the primary target audiences for this type of training are employees dealing with third parties.

In order to inform employees and counterparties about the anti-corruption standards adopted by the Company, the relevant documents are posted:

• on the internal portal in the Combating Fraud, Corruption and Conflicts of Interest section;
• on the official PhosAgro website in the Anti-Corruption section.

In addition to such information sharing, the Company also provides full-time training for employees.

Information letters on the standards adopted by the Company that are aimed at countering corruption and fraud have been emailed to the counterparties.

Reporting Illegal Activities

We strive to create a culture of transparency within the Company and encourage our employees to report problems and troubling situations. In 2016, PhosAgro launched a single Hotline, for all Group organizations, which helps the Company’s management to respond quickly to reports of a wide variety of problems, including corruption-related issues, violations of the Company's internal regulations, potential and/or real conflicts of interest, violations of human rights, labour protection and industrial safety requirements, environmental violations, as well as any other violations.

In order to provide free access to the Hotline, information on all possible communication methods is posted on the public website of the Company and on its internal portal, which makes the Hotline available 24/7 not only for employees but also for suppliers, customers and third parties. Moreover, information about the Hotline operation is stated on employee badges, and on information sheets posted on boards on the territory of the Group enterprises. The Regulation on the Hotline is a mandatory document which each employee needs to read.

All messages to the Hotline are received around the clock by phone, email, or mail. The main principles of the Hotline include a guarantee of confidentiality for all persons reporting a problem, including the possibility of anonymous appeals, as well as prompt and objective consideration of all messages. The Company guarantees employees protection against any negative consequences caused by calling the Hotline.

The Economic Security Directorate is responsible for conducting internal investigations of all messages received by the Hotline, as well as for reporting all incidents requiring additional investigation or corrective action.

The Audit Committee of the Board of Directors of PhosAgro PJSC quarterly reviews a report containing an analysis of Hotline calls and management responses to such calls. The report contains information on the number of messages, types of illegal actions and the measures taken. Considering that the members of the said Committee are exclusively independent directors, the Company thus provides the most effective and unbiased system of reporting on inappropriate behaviour and feedback on such calls.

Social Policy

Social policy is an integral part of PhosAgro's strategy. Our business is based on responsibility to our employees and society. PhosAgro implements social projects aimed both at the stable development of the Company through the high motivation of employees to work, and at facilitating the sustainable social and economic development of the regions of operation.

PhosAgro has adopted the Charity Policy. The Company has identified the following basic principles for providing charitable assistance: targeting and intended use; control over spending; transparency and disclosure. PhosAgro does not provide charitable assistance to government representatives, political parties and associations, or commercial organizations. The main areas of the Company's charity work include education, sports, healthcare and social welfare, and support for the least protected groups of the population, for example, war veterans and the elderly.

Interaction with Governmental Authorities

The Company's Policy on Interaction with Governmental Authorities тrequires that PhosAgro’s relations with governmental authorities and their representatives be built within the scope of law and ethics, consistent with the principles of justice and partnership. According to this Policy, interaction with governmental authorities is limited to a number of specific issues related to the strategic development or business operations of the Company.

PhosAgro is not engaged in political activities and does not provide financial support to political parties and associations.