CORPORATE
GOVERNANCE SYSTEM

1The documents are available at the Corporate web site

PJSC UAC has an effective corporate governance system that is based on the requirements of the Russian legislation and builds on Russian and international best practices.

The corporate players are PJSC UAC, its majority and minority shareholders, subsidiaries and affiliates, the Corporation’s management team, partners and employees.

CORPORATE GOVERNANCE MODEL
The corporate governance best practices engaged by PJSC UAC are based on:
• applicable laws of the Russian Federation;
• requirements to issuers of securities included in Quotation List Level 2 of the Moscow Exchange;
• principles and recommendations outlined in the Corporate Governance Code.

The UAC’s corporate governance model provides for a clear delineation of authorities and assigns the responsibilities of each of the corporation’s governing bodies; it implies that the interests of all the shareholders and information disclosure standards are equally and fairly respected. The Corporate governance model facilitates the creation and operation of effective risk management and internal controls

The UAC’s corporate governance system builds on the following key principles:
• Creating an atmosphere of mutual trust and respect for all corporate players;
• Providing the shareholders with a real opportunity to exercise their rights related to their participation in PJSC UAC and their share ownership;
• Ensuring strict compliance with the established standards of business conduct;
• Ensuring the protection of rights and interests of PJSC UAC’s shareholders, guarantee equal treatment of all shareholders, guaranteeing minority shareholders and foreign investors;
• Creating a streamlined structure and introducing modern corporate governance methods and technologies in PJSC UAC;
• Ensuring effective control over the financial and operating activities and key transactions of PJSC UAC;
• Improving the standards of corporate conduct;
• Exercising social responsibility: ensuring compliance with standards of legal and ethical business conduct.

GOVERNING AND CONTROL BODIES

The Charter of PJSC UAC lists the following governing bodies of the Corporation:
• General Shareholder Meeting—the supreme governing body;
• Board of Directors—the governing body responsible for overall management of the Corporation, with the exception of issues within the exclusive authority of the General Shareholder Meeting;
• Management Board—the collective executive body;
• President—the unitary executive body.

All matters of managing the current operations of PJSC UAC refer to the competence of the Management Board and the President, in line with the system of distribution of powers embodied in the Charter of PJSC UAC. The President and the Management Board are accountable to the General Shareholder Meeting and the Board of Directors.

The Board of Directors of PJSC UAC has the following committees: the Audit Committee, the Strategy Committee, the Human Resources and Remuneration Committee and the Budget Committee. To oversee the financial and operating activities of PJSC UAC, the General Shareholder Meeting elects the Revision Commission, a body of five persons that is elected for a period until the next Annual General Meeting.

IMPROVING THE CORPORATE GOVERNANCE MODEL

In 2017 PJSC UAC continued its effort on improving its corporate governance. In particular, taking into account the latest changes in the corporate legislation and the key guidelines and principles contained in the Code of Corporate Governance, an updated Charter was adopted in December 2017, as well as updated regulations on the General Shareholder Meeting, the Board of Directors and the governing bodies of PJSC UAC.

OBSERVING THE PRINCIPLES AND RECOMMENDATIONS CONTAINED IN THE CODE OF CORPORATE GOVERNANCE

An updated Code of Corporate Governance drafted in 2017 is scheduled for approval in 2018. In the reporting year PJSC UAC conducted an assessment of compliance with the corporate governance principles embodied in the Code (using the Recommendations for Reports on Compliance with the Principles and Recommendations of the Code of Corporate Governance—Annex to the Letter of the Central Bank of Russia No. 06-52/2463 of 10 April 2014).

The assessment of the implementation of corporate governance mechanisms proposed in the Code is a key element of ensuring the transparency of the Corporation’s activities, the effectiveness of communicating with its shareholders, investors and other stakeholders.

GENERAL SHAREHOLDER MEETING

Under the Federal Law on Joint Stock Companies and the Charter of PJSC UAC, the General Shareholder Meeting is the supreme management body of PJSC UAC.

The Annual General Meeting is held once a year, no less than two months prior to and no less than six months after the closure of the financial year. Any additional General Shareholder Meeting is regarded as an extraordinary general meeting, and is held by decision of the Board of Directors on its own initiative, at the request of the Revision Commission or following the results of the audit.

In 2017 PJSC UAC held three General Shareholder Meetings, including one Annual General Meeting and two extraordinary general meetings1. The Annual General Meeting was held on 30 June 2017 (Minutes of 30 June 2017 No. No ref.). Extraordinary general meetings were held on 3 February 2017 (Minutes of 7 February 2017 No. 27) to decide on the possibility of approving related-party transactions, and on 27 December 2017 (Minutes of 28 December 2017 No. 28) to decide on the approval of the updated Charter of PJSC UAC and a number of other updated documents (such as the Regulations on the General Shareholder Meeting of PJSC UAC, the Regulations on the Revision Commission of PJSC UAC, the Regulations on the governing bodies of PJSC UAC).

Structure of PJSC UAC as of 31 December 2017

Corporate governance structure (as of 31 December 2017)

Board of Directors of PJSC UAC1

Denis MANTUROV

Chairman of the Board of Directors, PJSC UAC

Born 23 February 1969, Murmansk
Education
Lomonosov Moscow State University (graduated in 1994 with a degree in social sciences)
Russian State Presidential Academy of Public Administration (graduated in 2006 with a degree in jurisprudence)
Candidate of economic sciences
Employment history
2008–2012
Deputy Minister of Industry and Trade of the Russian Federation
2012–present
Minister of Industry and Trade of the Russian Federation

Boris ALYOSHIN

Non-executive director, Chairman of the Strategy Committee, PJSC UAC

Born 3 March 1955, Moscow
Education
Moscow Institute of Physics and Technology (graduated in 1978 with a degree in physics)
D.Sc. in Engineering
Employment history
2009–2015
General Director, Central Aerohydrodynamic Institute (TsAGI)
2015–present
Advisor to the President of PJSC

Yuri BORISOV

Born 31 December 1956, Vyshny Volochek, Kalinin (currently known as Tver) Region
Education
Lomonosov Moscow State University (graduated in 1985)
D.Sc. in Engineering
Employment history
2008–2011
Deputy Minister of Industry and Trade of the Russian Federation
2011–2012
First Deputy Chairman of the Governmental Military-Industrial Commission of the Russian Federation
2012–2018
Deputy Minister of Defence of the Russian Federation
2018–present Deputy Prime
Minister of the Russian Federation

Evgeny YELIN

Born 8 May 1962, Leningrad
Education
Leningrad Polytechnic Institute (graduated in 1985 with a degree in electrical engineering)
Candidate of economic sciences
Employment history
2012–2013
Vice Governor of the Leningrad Region—Chairman of the Finance Committee
2013–2017
Deputy Minister of Economic Development of the Russian Federation

1 As approved by the General Shareholder Meeting of 30 June 2017

Board of Directors of PJSC UAC

Andrey IVANOV

Chairman of the Budget Committee, PJSC UAC

Born on 23 November 1975, Dudinka
Education
Krasnoyarsk State University (graduated in 1997 with a degree in jurisprudence)
Russian State Presidential Academy of Public Administration (graduated in 2009 with a degree in public administration and in 2010 with a degree in business administration)
Employment history
2008–2012
Deputy Director of Department, Director of Department of Budget Policy in the sphere of innovations, civil industry, energy, communication and public-private partnership, Ministry of Finance of the Russian Federation
2012–present
Deputy Minister of Finance of the Russian Federation

Valery OKULOV

Born 22 April 1952, Kirov
Education
Academy of Civil Aviation (graduated in 1975 with a degree in air navigation and engineering)
Employment history
2009–2017
Deputy Minister f Transport of the Russian Federation

Vladimir POTAPOV

Non-executive Director, PJSC UAC

Born 27 October 1982, Moscow
Education
State University—Higher School of Economics (graduated in 2004 with a degree in economics)
University of Chicago Booth School of Business (completed an MBA in 2016)
Employment history
2010–2011
Global Head of Portfolio Management, VTB Asset Management
2011–2013
CEO, CJSC Asset Management Company of the Bank of Moscow (from 12 August 2014 — CJSC Clients- Strategy-Result Management Company)
2013–2016
CEO, LLC VTB Capital Investment Management
2013–present
Chairman of the Board of Directors, CEO of JSC VTB Capital Asset Management
2010–present
Member of the Management Board, JSC VTB Capital Asset Management

Anatoly SERDYUKOV

Born 8 January 1962, Kholmsky, Krasnodar Territory
Education
Leningrad Institute of Soviet Trade (graduated in 1984)
St Petersburg State University (graduated in 2001)
Sc.D. in Economics
Employment history
2007–2012
Defence Minister of the Russian Federation
2014–2015
Advisor to First Deputy CEO, Rostec State Corporation
2013–2016
CEO, OJSC Federal Mechanical Engineering Research and Testing Centre (OJSC FIIC-M)
2015–present
Industrial Director of Aviation, Rostec State Corporation

Board of Directors of PJSC UAC

Yuri SLYUSAR

President, Chairman of the Management Board, PJSC UAC

Born 20 July 1974, Rostov-on-Don
Education
Lomonosov Moscow State University (graduated in 1996)
Postgraduate studies at the Russian Government Academy of National Economy (completed in 2003)
Candidate of economic sciences
Employment history
2010–2012
Director, Department of Aviation Industry
2012–2015
Deputy Minister of Industry and Trade of the Russian Federation
2015–present
President, Chairman of the Management Board, PJSC UAC
2017–present
President, PJSC Irkut Corporation

Ivan KHARCHENKO

Born 9 May 1967
Education
Krasnodar Higher Military Command Engineering School of the Rocket Forces
Kuban State University Kuban State Agrarian University
Employment history
2008–2011
Advisor to the Governor of the Krasnodar Territory
2012–present
First Deputy Chairman of the Government Military-Industrial Commission
2012–present
Deputy Chairman of the Russian Government Commission on Preventing the Bankruptcy of Strategic Enterprises and Organisations and Defence Industry Organisations
2012–2018
Member of the Government Military-Industrial Commission

Evgeny YURCHENKO

Non-executive Director, Chairman of the Audit Committee, PJSC UAC

Born 14 May 1968, Voronezh
Education
Voronezh State University (graduated in 1992 with a degree in radiophysics and radioelectronics, and in 1994 with a degree in economics)
Sc.D. in economics, Professor
Employment history
2009–2011
General Director, OJSC Svyazinvest
2011–present
Provisional Deputy Governor,
2018 – present
Voronezh Region–Provisional First Deputy Chairman of the Government, Voronezh Region

Committees of the
Board of Directors

The Board of Directors of PJSC UAC has four committees: the Strategy Committee, the Audit Committee, the Human Resources and Remuneration Committee and the Budget Committee. Their main task is to ensure that the issues within their responsibilities are thoroughly addressed and to develop appropriate recommendations for the Board of Directors. Though the Committees’ decisions are not legally binding, they may have the status of draft BoD decisions that will be examined at the Board meetings.

STRATEGY COMMITTEE

The authorities of the Strategy Committee include as follows:
• Preparing recommendations for the Board of Directors on identifying strategic goals and priority areas of the Corporation, or on adjusting its current strategy;
• Assessing the Corporation’s performance over the longer term, assessing the relevance of PJSC UAC’s business plan to its strategic targets;
• Examining issues related to innovation development, reorganisation of business processes and changes in the corporate structure of PJSC UAC.

The current Strategy Committee includes seven members. The Committee is chaired by a non-executive director.

The Strategy Committee membership (as of 31 December 2017)
Chairman: Boris Alyoshin (non-executive Director).
Committee members: Yuri Borisov, Oleg Bocharov, Evgeny Yelin, Andrey Klepach, Valery Okulov and Yuri Slyusar.

AUDIT COMMITTEE

The Audit Committee was established in line with the federal legislation and the Code of Corporate Governance. The Committee assists the Board of Directors on the following issues:
• Ensuring the adequacy, accuracy and reliability of the Corporation’s financial statements;
• Development of and control over the implementation of accounting policy;
• External and internal audit;
• Overseeing the effectiveness of risk management and internal control.

The Audit Committee includes three directors, two of them non-executive.

The Audit Committee membership (as of 31 December 2017)
Chairman: Evgeny Yurchenko (non-executive Director).
Committee members: Boris Alyoshin and Vladimir Potapov (non-executive Director).

BUDGET COMMITTEE

The Budget Committee prepares recommendations for the Board of Director on a number of issues, including as follows:
• Developing business plans for the Corporation;
• Approving the Corporation’s business plans, budgets and funds and examination of reports on their implementation;
• Establishing the procedure of dividend payment and the amount of dividends on shares, the planning, control and accounting processes.

The current Budget Committee includes four members.

The Budget Committee membership (as of 31 December 2017)
Chairman: Andrey Ivanov.
Committee members: Oleg Bocharov, Andrey Klepach and Yuri Slyusar.

HUMAN RESOURCES AND REMUNERATION COMMITTEE

The Human Resources and Remuneration Committee prepares recommendations for the Board of Directors on a number of issues, including as follows:
• Identifying the criteria for the selection of potential candidates to fill the positions in the Corporation’s governing bodies and preparation of recommendations for the nomination of such candidates;
• Ensuring remuneration, and assessing performance of the members of the Executive Board, the Revision Commission and the Corporate Secretary, as well as determining the amount of their remuneration.

The current HR and Remuneration Committee includes three directors, two of them non-executive.

The HR and Remunerations Committee membership (as of 31 December 2017)
Chairman: Evgeny Yurchenko (non-executive Director).
Committee members: Boris Alyoshin and Vladimir Potapov (non-executive Director).

President

The President is a solitary executive body of PJSC UAC and is also Chairman of the Management Board.
On 16 January 2015, by decision of the Board of Directors of PJSC UAC, Yuri Slyusar was appointed President of the Corporation for a period of five years.

YURI SLYUSAR

Born 20 June 1974, Rostov-on-Don

Education
Lomonosov Moscow State University (graduated in 1996 with a degree in jurisprudence).
Postgraduate studies at the Russian Government Academy of National Economy (completed in 2003)
Candidate of economic sciences (2007)

Employment history
2010–2012
Director, Department of Aviation Industry, Ministry of Industry and Trade of the Russian Federation
2012–2015
Deputy Minister of Industry and Trade of the Russian Federation
2015–present
President, Chairman of the Management Board, PJSC UAC
2017–present
President, PJSC Irkut Corporation

Management Board

The Management Board is a collective executive body of PJSC UAC. The members of the Management Board are elected by the Board of Directors. In 2017 there was one change in the membership of the Management Board: another member (Alexey Rogozin) was elected by decision of the PJSC UAC’s Board of Directors of 24 July 2017. In addition to examining the issues related to the Corporation’s strategic development, the Management Board meetings deal with operating matters that require to be acted upon without delay by the governing bodies.

Management Board 1

Alexander BOBRYSHEV

Born 8 January 1949,
Novokuznetsk, Kemerovo Region
Education
Novosibirsk Electrotechnical Institute (graduated in 1978 with a degree in aircraft engineering)
Candidate of engineering sciences (2009)
Employment history
2009–2014
President, General Director, OJSC Tupolev
2014–2015
General Director, Interstate Aviation Committee
2015–present
Vice President— Director of State Aviation Service Department, Vice President for State Defence Order and State Aircraft Servicing, PJSC UAC

Sergey GERASIMOV

Born 18 March 1969, Moscow
Education
Marshal of Aviation Sudets Stavropol Higher Military Aviation School of Pilots and Navigators (graduated in 1990, with a degree in command tactical fighter aircraft navigation)
Employment history
1986–2014
Service in the Armed Forces of the USSR and the Russian Federation
2015–present
Advisor to the President on Cooperation with Government Agencies and Non-profit Organisations, Vice President for Special-purpose State Aviation, PJSC UAC

Alexey DEMIDOV

Born 14 March 1976, Leningrad (now St Petersburg)
Education
St Petersburg Institute of Trade and Economics (graduated in 1998 with a degree in accounting and audit)
Employment history
2009–2015
Deputy CEO, Member of the Management Board, PJSC Rosseti
(before 2013—OJSC Holding MRSK)
2015–2015
Senior Vice President for Economics and Finance, JSC Sukhoi Civil Aircraft
2015–present
Vice President for Economics and Finance, PJSC UAC

Oleg DEMCHENKO

Born 13 October 1944, Presnovka village, North Kazakhstan Region, Kazakh SSR
Education
Academician Korolev Kuibyshev Aviation Institute (graduated in 1968 with a degree in aircraft engine technologies)
Academy of National Economy, USSR Council of Ministers (now Russian Government Academy of National Economy), graduated in 1987
Candidate of economic sciences (2005)
Employment history
2011–2012
General Director— General Designer, OJSC Yakovlev Design Bureau
2012–2017
President, Chairman of the Management Board, PJSC Irkut Corporation
2017–present
First Vice President—General Designer, PJSC Irkut Corporation

1 As of 1 January 2018, the Management Board also included Vladislav Masalov and Alexander Skokov

Management Board

Artur KOVAL

Born 22 August 1960, Tyrnyauz, Kabardino-Balkar ASSR (KabardinoBalkar Republic)
Education
Rostov Civil Engineering Institute (graduated in 1982 with a degree in industrial and civil engineering),
Dzerzhinsky Higher School of the KGB (graduated in 1990)
Employment history
2012–2015
Counsel, Embassy of the Russian Federation to France
2016–present
Vice President for Security, PJSC UAC

Alexander KONYUKHOV

Born 10 July 1975, Klin, Moscow Region
Education
Russian State University for the Humanities (graduated in 1997 with a degree in world economics)
Stockholm School of Economics (completed an MBA in 2009)
Employment history
2011–2016
Deputy Executive Director of OJSC Sukhoi Design Bureau, First Deputy CEO for Programmes, PJSC Company Sukhoi
2016–present
Vice President for Strategic and Special-Purpose Aviation, PJSC UAC
2016–present
CEO, PJSC Tupolev

Sergey KOROTKOV

Born 18 July 1959, Aniva, Sakhalin Region
Education
Ordzhonikidze Moscow Aviation Institute (graduated in 1983 with a degree in aircraft engineering)
Russian Government Academy of National Economy (completed an MBA in 2010)
Candidate for engineering sciences (2007)
Employment history
2009–2016
First Deputy CEO, CEO, JSC RSK MiG
2016–present
General Designer—Vice President for Innovation, PJSC UAC

Management Board

Igor OZAR

Born 26 September 1961, Moscow
Education
Moscow Ordzhonikidze Institute of Management, a degree in production management
Employment history
2011–present
CEO, PJSC Company Sukhoi
2016–present
Vice President for Military Aviation, PJSC UAC

Alexey ROGOZIN

Born 21 September 1983, Moscow
Education
Moscow State University of Economics, Statistics and Informatics (graduated in 2005 with a degree in world economics)
Employment history
2010–2012
Director for Development; General Director, LLC Promtekhnologiya
2012–2012
Deputy CEO for Development, Soyuz Federal Centre for Dual Technologies Federal State Unitary Enterprise
2012–2016
Executive Director, Aleksin Chemical Plant Federal Unitary Enterprise
2016–2017
Deputy Director, Department of Property Relations, Ministry of Defence of the Russian Federation
2017–present
Vice President for Transport Aviation, PJSC UAC
2017–present
CEO, PJSC IL

Alexander TULYAKOV

Born 7 September 1971, Moscow
Education
Higher School of Privatisation and Entrepreneurship (graduated in 2001 with a degree in jurisprudence)
Employment history
2008–2018
Director, Asset Management Department; Vice President for Administrative Issues; Executive Vice President; First Vice President, PJSC UAC

Sergey YURASOV

Born 4 January 1964, Dalnyi village, Kungur, Perm Territory
Education
Gorky Institute of Water Transport Engineers (graduated in 1986 with a degree in shipbuilding and ship repair)
Nizhny Novgorod State Technical University (completed an MBA in 2012)
Employment history
2009–2012
Executive Director; CEO, OJSC Ulyanovsk Automobile Plant (OJSC
UAZ)
2010–2012
CEO, OJSC Zavolzhye Engine Factory (OJSC ZMZ)
2012–2014
Vice President for Production, PJSC UAC
2014–2015
CEO, PJSC VASO
2015–present
Vice President for Production; Vice President for Production and Development Engineering, PJSC UAC
2017–present
Managing Director, JSC AviastarSP, PJSC IL

Internal control and audit

The internal controls of PJSC UAC is a multilevel system that effectively covers multiple entities and ensures that timely and effective management decisions are taken at every management level1.

1 The internal controls procedures are stipulated by the Regulations on Internal Controls over the Financial and Operational Activities of PJSC UAC adopted by the Board of Directors on 24 November 2011 (Minutes No. 58).

The internal controls build on the principles of cooperation and delineation of authorities of its entities that participate in the development, approval, implementation and assessment of the efficiency of internal controls procedures. The internal controls are effected by:
• the shareholders;
• the Board of Directors;
• the President and the Management Board;
• the Revision Commission;
• the BoD Audit Committee;
• the Department of Operational Audit Department led by Director of Internal Audit (established in 2017 as part of Internal Audit Department Reorganisation);
• vice presidents, Chief Accountant, Deputy Chief Accountants, department heads and other employees.

The main objective of the internal controls is to protect the interests of the shareholders and the assets of PJSC UAC. Each participant in the internal controls oversees the issues within their respective authorities stipulated by internal policies and procedures.

The most important internal control measures include allocating and delegating key authorities and responsibilities, facilitating effective cooperation of business units and employees of PJSC UAC, managing the system of data collection, processing and communication (which includes generation of reports and statements that contain operating, financial and other information on the activities of PJSC UAC), as well as identifying the best communication channels and instruments to ensure vertical and horizontal communication within PJSC UAC and provide the employees with adequate information on their responsibilities in the sphere of internal controls.

REVISION COMMISSION

The Revision Commission oversees the Corporation's financial and operating activities. It is elected annually by the General Shareholder Meeting, with a quorum of 5 members. The Revision Commission informs the Board of Directors of PJSC UAC on the results of the inspections. Pursuant to the Federal Law on Joint Stock Companies, if major violations are revealed, the Revision Commission may demand an extraordinary general meeting. The General Shareholder Meeting held on 30 June 2017 to discuss the 2016 results elected the following members to the Revision Commission:
Zaurbek Kodzoev, Deputy Head of Department of Organisations of the Industrial Complex, Federal Agency for State Property Management;
Oksana Milovanova, Deputy Head of Corporate Technologies Department, Federal Agency for State Property Management;
Zemfira Musina, Head of Strategic Development and Corporate Governance, Department of Aviation Industry, Ministry of Industry and Trade;
Anna Panina, Head of Division for Programmes of Creation and Production of Civil Aviation Equipment Department of Aviation Industry, Ministry of Industry and Trade;
Sergei Poma, Deputy Chairman of Executive Board of the National Association of Securities Market Participants selfregulatory (non-profit) organisation (NAUFOR), Council Member of the Federal Public-State Foundation for the Protection of Investor and Shareholder Rights.

Remunerations to the members of the Revision Commission are paid pursuant to the Procedure of payment of remunerations to the members of the Board of Directors and the Revision Commission of PJSC UAC of 16 June 20141, in full conformity with the provisions and requirements of the Russian legislation. The amount of remuneration is calculated by the HR and Remuneration Committee of the BoD and approved by the Board of Directors.

INTERNAL AUDIT

In April 2017, by decision of the Board of Directors, the Department of Internal Audit was reorganised into the Department of Operational Audit and the Department of Methodology and Development of Internal Audit; they are in charge of internal audit in PJSC UAC and report to the Director of Internal Audit. The two new departments were created with the aim of enhancing the internal audit function and ensuring compliance with the MICEX listing rules2 that require the Head of the business unit that is in charge of internal audit to be operationally accountable to the BoD of the issuer and administratively accountable to the unitary executive body (the President of the Corporation).

EXTERNAL AUDIT

To ensure unbiased assessment of the reliability of its financial accounting and reporting, PJSC UAC has its RAS and IFRS financial statements annually examined by an independent auditor.

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