Russian Railways Corporate Governance

Russian Railways is a vertically-integrated national transportation company undergoing dynamic development.

Russian Railways follows best practice and standards in its corporate governance.

The Company recognises good governance as an essential condition for improving the effectiveness and success of its financial activities and enhancing the investment attractiveness of the Company and its subsidiaries.

We also believe that good governance helps ensure the proper implementation of railway reform.

The Company continues to work constantly on improving its corporate governance system based on international standards and focusing on the interests of shareholders and partners, as well as on increasing the efficiency and speed of management decision-making and improving the transparency of the Group’s activities.

Principles of Corporate Governance at Russian Railways

1. Improving the Effectiveness of the Board of Directors

  • Board committees and commissions have been set up which are capable of providing substantial assistance in preparing decisions on the most important issues at Russian Railways. Highly professional managers are being brought in to work on the committees and commissions, managers who have extensive experience in collegiate management and can bring the necessary knowledge and competence to bear in finding the solutions to meet the long-term strategic objectives of developing the Company.
  • Board members are very closely involved in formulating strategy at Russian Railways and defining the Company’s position in interacting with stakeholders.
  • We are expanding the powers of the Board of Directors at Russian Railways in approving transactions, thereby increasing the Company’s protection against the siphoning off of assets. This will also enable the representatives of the shareholder on the Board to assess the economic feasibility of deals involving large assets proposed by the executive body.

2. Standardisation and Regulation of Key Management Processes

The Company is developing and implementing common standards of corporate governance aimed at creating a unified legal space, improving the quality of management decision-making at the Company and its subsidiaries and implementing common strategic objectives.

Main policies of Corporate Management at Russian Railways Subsidiaries:

  • formulating strategy and monitoring strategy implementation at Russian Railways subsidiaries;
  • planning and monitoring the financial results of subsidiaries, including the identification of policies and monitoring the distribution of profits;
  • monitoring the financial activities of subsidiaries, including transactions involving assets;
  • continuously improving the efficiency of internal processes in business management at subsidiaries;
  • ensuring the investment attractiveness and increasing market capitalisation of Russian Railways subsidiaries;
  • developing and implementing personnel policies at subsidiaries.

3. Completeness and Accuracy of Information provided to the Company’s Shareholders and their Partners

In line with the principle of informational openness and operational transparency, the Company provides shareholders and their partners with all the necessary information about its activities, as well as with the analytical conclusions about its financial, economic, social and environmental indicators, as laid down by the Information Policy of Russian Railways.

In disclosing information, the Company makes full use of the most appropriate methods. As much information as possible is made available on our corporate website.

Russian Railways also discloses information through news agencies and other media outlets and mass media.

In addition, every significant event or action at Russian Railways is accompanied by a press release.

The Company also holds regular press conferences on important operational issues.

4. Dialogue with Shareholders

Russian Railways is open to discussing business management issues with interested parties and stakeholders and considers regular dialogue with other shareholders and stakeholders in its subsidiaries as a point of departure in developing corporate governance.

The Company also makes active use of shareholder agreements in particular.

5. Implementing Ethical Principles at Russian Railways

One of the most important areas improving our corporate governance system is the effective implementation of ethical principles throughout the Company.

With that in mind, the Board of Directors at Russian Railways has approved a Code of Ethics which contains company-wide professional and ethical principles, as well as rules governing the action of Russian Railways in preventing and resolving corporate disputes.

The Code of Ethics helps to strengthen the corporate spirit at Russian Railways and orients the Company’s employees towards our common corporate goals.

6. Mutually Beneficial Resolution of Corporate Disputes

Russian Railways attaches great importance to the timely prevention and equitable settlement of corporate disputes and tries to prevent their emergence at an early stage.

The Company seeks to resolve corporate disputes through negotiations and compromises with those involved and takes into account the legitimate interests of all participants.

The Company’s internal documents lay down procedures for notifying members of the executive bodies of Russian Railways that a conflict of interest exists and for the mandatory reporting to the Board of Directors that such conflicts have arisen. This practice will strengthen the interests of the shareholder.

7. Corporate Strategy of High Social Responsibility

Russian Railways is implementing a corporate strategy of high social responsibility by:

  • promoting regional development;
  • ensuring increasing mobility for the population;
  • improving the quality of services provided;
  • fully implementing all government social programmes.

8. Social Support For Employees

The system for providing social support to the staff at Russian Railways is one of the most important factors in improving performance at the Company.

At the initiative of Russian Railways, incentive programmes for staff are being developed and implemented, including:

  • a large-scale mortgage programme;
  • a corporate system of private pensions;
  • a programme to support young professionals;
  • a programme to motivate members of the executive bodies based on company performance.