As part of the strategy, the development of the Ecosystem continues. However, at the same time, there is a transformation into a Group of individual legal entities, many of which will have independent access to the capital market and valuation

Management of Subsidiaries of MTS Group

Current corporate governance system at the MTS Group ensures strict observance of the rights and legitimate interests of all shareholders, sustainable functioning and initiation of business within the borders of the MTS ecosystem, and achievement of the strategic goals of the MTS Group. The taken steps to develop the corporate governance system ensure the most effective use of shareholders’ investments and their protection, assists in development of the digital ecosystem of MTS products, taking into account the interconnected relationships and succession in decisions made by the MTS management bodies.

Principles of management of MTS controlled subsidiaries

• management and control is carried out through representatives of the MTS, elected to the management bodies of subsidiaries;
• with respect to subsidiaries, the uniform standards of corporate governance of the MTS Group are applied, including unified internal decision-making procedures and standard corporate documents, as well as uniform standards and procedures of the MTS Group in the field of anti-corruption compliance;
• MTS participates in the process of forming the composition of the Board of Directors and determines strategic and priority decisions of the Boards of Directors of subsidiaries.

The MTS Board of Directors is the center for strategic decisions which are transmitted to subsidiaries through MTS representatives in management bodies, including the following issues:

• Strategy and investments;
• Business plan and budget;
• Functional strategies;
• Remuneration system;
• Management control, audit, compliance;
• Asset control.

The following points are taken into account when forming Boards of Directors in subsidiaries:

• importance of the company for the overall strategy of the MTS Group
• current and target scale of the company’s business;
• sector / industry of the company;
• requirements of laws, regulators and exchanges;
• balance between the personal and numerical composition of the Board of Directors.

The Remuneration and Nomination Committee of the MTS Board of Directors approves the list of subsidiaries, for which it considers information on the formation, termination and change of the composition of the Boards of Directors.

The following criteria are taken into account when selecting candidates for members of the Board of Directors of subsidiaries:

• personal skills, qualifications, experience;
• knowledge of industry and sector of the subsidiaries;
• total employment, including in other management bodies of companies;
• exclusion of a possible conflict of interest;
• candidate’s consent, including consent to meet anti-corruption compliance requirements;
• positive opinion based on the candidate’s inspection results;

Training of MTS representatives in the subsidiary management bodies is carried out in accordance with the regulatory internal documents of MTS. MTS representatives participate in the work of subsidiary management bodies, guided by the norms of subsidiary internal documents.

In order to effectively fulfill their duties, the representatives:

• receive and analyze information about the company’s activities;
• initiate issues to be included in the agenda of management bodies;
• take active part in meetings of management bodies;
• vote taking into account the position of the MTS management bodies, determined in accordance with the MTS Articles of Association;
• control the implementation of decisions made;
• participate in developing a culture of ethical business conduct and compliance with applicable anti-corruption laws;
• inform MTS about the occurrence of a conflict of interest and possible violations of the requirements of the applicable anti-corruption legislation by the company.

Management of companies not controlled by the MTS Group, in respect of which persons from the MTS Group have the rights of a shareholder (member), involves protecting the interests of MTS in terms of target parameters of profitability, strategy priorities, property rights of shareholders (members). The degree of integration of corporate governance standards and anti-corruption compliance of the MTS Group in such companies is influenced by the share of participation of entities being part of the MTS Group and/or the terms of the corporate agreement entered into in relation to such a company. At the same time, MTS Group makes reasonable efforts to ensure compliance with and application of these standards in companies not controlled by the MTS Group.