Gazprom Neft’s compliance system includes processes designed to prevent unlawful actions by the company’s employees, regardless of their position. The aims of the processes include:
- combating fraud and corruption;
- preventing the misuse of insider information
- preventing manipulation of the securities market;
- complying with requirements of antitrust laws and protecting competition;
- complying with ethical standards and norms;
- complying with the company’s values; and
- risk management in the area of company officers’ personal responsibility.
Identification of conflict of interest
The shareholders and management interact on the basis of trust, strong business culture and ethical standards and the company seeks to maintain the balance between their respective interests. The company’s majority shareholder has sufficient votes to make decisions on a significant number of issues that fall within the remit of the General Meeting of Shareholders, as well as to decide on the composition of the Board of Directors. The company, nonetheless, strives to apply measures to mitigate the risks associated with a management structure characterised by a significant concentration of shareholding.
The company adheres to the principle of equal voting rights of shareholders and has put in place mechanisms to protect voting rights. These mechanisms are described in the company’s internal regulations.
The key elements for preventing conflicts at shareholder level are:
- complying with the rules and procedures for decision-making on the most significant issues;
- complying with procedures for concluding related-party transactions;
- engaging independent appraisers who are recognised as having authority in determining property value in related-party transactions;
- ensuring maximum transparency both in the preparation for the shareholders’ meetings and in how the meetings are conducted as well as prompt disclosure of information on the decisions made by the Board of Directors;
- disclosure of information on related-party transactions. In this context, according to the company’s 2020 financial statements, transactions with related parties were carried out in the ordinary course of business and had a clear economic rationale. The most frequent type of transactions are sales and purchases of oil, oil products and gas;
- putting in place anti-dilution mechanisms to offset dilution of the company’s value. To this end, the procedure for organising and conducting the selection of counterparties for the procurement of goods, works and services is carried out in accordance with the Procurement Regulation approved by the Board of Directors, which is mandatory throughout all Gazprom Neft’s subsidiaries.
Gazprom Neft has approved internal regulations (the Corporate Code and the Corporate Governance Code) that set out the values and principles underpinning the establishment and development of the company’s corporate culture.
That Code regulates situations in which conflicts of interest may arise, including acceptance of gifts, use of Company assets and resources, interaction with stakeholders, and handling of confidential and insider information.
The Committee plays a crucial role in shaping the new corporate culture, setting a benchmark for employee behaviour in line with the company’s values and acting as an authority in ethically debatable situations.
The composition of Gazprom Neft’s Ethics Committee was changed in 2020 as part of an annual rotation. Due to the importance and significance of the issues that the Committee address ed, it was decided to change the composition of the Committee in order to increase the seniority of its members to the level of the company’s Management Board. The updated Committee includes Elena Ilyukhina, Deputy CEO for Legal and Corporate Affairs, Kirill Kravchenko, Deputy CEO for Administration, and Vadim Yakovlev, Deputy CEO for Exploration and Production.
We created a section in the company’s Intranet portal dedicated to the Ethics Committee, where every employee can ask a question, see answers to frequently asked questions in the Q&A library, and get acquainted with results of the Committee’s work. Tutorials on how to act in the most frequently encountered ethical disputes have been created for employees. In addition, we share examples of such cases with all employees through our internal communications channels.
To implement individual principles of the Code, the company has adopted the necessary internal regulations, relating to such areas as access to confidential information, trade secrets, and HR policy and talent development.
Gazprom Neft’s Corporate Governance Code establishes the Board members’ obligation to refrain from actions that will or may lead to a conflict of interest, to refrain from voting on issues in which they have personal interest, and not to disclose or use for their own benefit or the benefit of third parties any confidential and/or insider information about the company.
The Corporate Code defines exactly what constitutes a conflict of interest, it sets out the control points in managing conflicts of interest, and specifies those roles in which employees are most likely to be exposed to conflicts of interest. It also contains examples of situations in which a conflict of interest may arise.
The main points of control in managing conflicts of interest include:
- contractor selection and liaison;
- the system of settlements and payments, particularly in connection with involvement of agents/intermediaries;
- hiring company personnel;
- involving employees in political and state activities;
- charitable and sponsorship activities;
- gifts and entertainment expenses.
Employees who are in top management roles and the management of business units whose functions include conducting external relations and contacts on behalf of the company are the employees who are most exposed to conflicts of interest.
The Code contains the requirement for company employees to inform their line managers and the Corporate Security Directorate of all cases of corruption, fraud, embezzlement, conflict of interest or suspicion of such cases. There is a telephone hotline, as well as an e-mail address and special mailboxes that allow employees to report violations anonymously. Reports to the company hotline may also be sent by third parties who are not employees of the company, in particular, by contractors. The results of the hotline operation, including statistics on received (processed) reports and identified violations, are reviewed by the Board of Directors on a biannual basis. 230 reports were received on the hotline in 2020.
Regulation on the Board of Directors contain a section «Identification and Prevention of Conflict of Interest among members of the Board of Directors», which sets out procedures designed to avoid conflict of interest in the Board of Directors as follows:
- a member of the Board of Directors facing a potential conflict of interest, including his/her personal interest in a transaction by the company, such member shall notify the Board of Directors of such situation by sending a notice to its Chairman or the Secretary to the Board of Directors;
- information on a conflict of interest, including any interest in a transaction, shall be included in materials distributed to Board members at the meeting;
- The Chairman of the Board of Directors, where the nature of the matter under discussion or the specifics of the conflict of interest require so, may advise the member of the Board of Directors having the relevant conflict of interest not to attend the meeting at which the matter is discussed;
- Members of the Board of Directors and individuals related to them are prohibited from accepting gifts from parties interested in decision-making, as well as from enjoying any other direct or indirect benefits provided by such persons (except for symbolic tokens of attention in accordance with generally accepted rules of courtesy or souvenirs during official events).
In addition to that, the company carries out investigations of members of the company’s Management Board and their relatives to identify any conflicts of interest upon their employment in the company. Pursuant to Regulations on the Management Board its members may combine their participation in management bodies of other organisations, as well as their partial employment, only by consent of the company’s Board of Directors.
The company reconfirms on a quarterly basis information on participation of members of its Management Board and Board of Directors in other organisation.
The company collects and processes information on beneficial owners of contractor companies that have entered into contracts with Gazprom Neft or its subsidiaries.
Combatting fraud and corruption
The company has adopted an Anti-Fraud and Anti-Corruption Policy, which is a fundamental internal regulation applicable to the whole company and its subsidiaries in the area of anti-corruption.
This Policy defines the concept of fraud and other terminology in the area of anti-corruption. It also shapes the approach of the company’s senior management, who have put in place a single and cohesive ethical standard for zero-tolerance of any type or form of corruption. The Policy specifies methods and procedures used in the company for combating fraud and corruption, in particular, the company hotline, internal investigations, and prosecutions of identified fraud cases.
Risks of corruption specific to companies in the oil production and processing industries are listed separately. The Policy contains a section setting out the basis for implementing those of the company’s business processes that are most exposed to fraud risks, namely interaction with officials, receiving and giving gifts, charitable and sponsorship activities, and financial affairs with third parties.
The company’s Deputy CEO for Security and Head of Internal Audit and the Risk Management Directorate report on a periodic basis to the company’s management on anti-fraud and anti-corruption matters.
Countering misuse of insider information
Management and organisation of the company’s efforts in preventing, identifying, and combating the misuse of insider information is governed by Regulation on Gazprom Neft PJSC’s Insider Information, which was approved by the Board of Directors in December 2019.
The company’s Corporate Governance and Project Support Department monitors regulatory requirements and ensures they are complied with.
In 2020, the Board of Directors reviewed the report of the Head of the Corporate Governance and Project Support Department on Gazprom Neft PJSC’s compliance with legal requirements on combating unlawful use of insider information and market manipulation.
Guidelines for internal control to prevent, identify and combat unlawful use of insider information and/or market manipulation at PJSC Gazprom Neft were approved in 2020.
As at 31 December 2020, Gazprom Neft PJSC’s insiders included 531 individuals and 43 corporate legal entities. The company maintains a list of insider roles which is updated upon hiring or dismissing employees to these positions. All contracts entered into with any individuals and legal entities are examined for their exposure to the company insider information. The Board of Directors approved a prohibition period of 30 calendar days before the date of publication of the company’s annual and interim financial (accounting) statements and/or its Annual Report. During the period of 30 calendar days from the date of transaction with Gazprom Neft’s financial instrument, the insider’s position (portfolio) shall remain unchanged.
Access to insider information is granted only to those persons included in the List of Insiders. Confidentiality of information is ensured by persons on such list being notified of their liability for any dissemination of such insider information, and such notifications being acknowledged and signed by such “Insiders”. The risk of insider information being made available without appropriate notification has been minimised with the commissioning of the «Automatic Notification of Company Insiders” module, since inclusion in the List of Insiders and forwarding of appropriate notifications occurs automatically once an Employment Contract has been entered into and the relevant individual included in the Company’s Employee Register (an integral part of the SAP HR records system). The company monitors insider dealing by distributing questionnaires on transactions involving company securities.
There were no cases of insider information use in transactions carried out by insiders throughout 2020. Members of the Board of Directors and the Management Board did not perform any transactions with shares in the reporting year.
The company aims to communicate information on its activities on a timely and regular basis to all interested parties and to the extent necessary to make an informed decision about participating in the company or taking other actions that may affect the company’s financial and economic activities.
The Board of Directors has approved the Regulation on Information Policy. The implementation of the company’s information policy is carried out by Gazprom Neft’s executive bodies. Compliance with the Information Policy is overseen by the company’s Board of Directors.
The Board of Directors’ Audit Committee reviewed the implementation of the company’s Information Policy in 2020, including information on Gazprom Neft’s full compliance with legal requirements in information disclosure.
The company Charter and internal regulations, information on equity structure, governing bodies, independent auditor and registrar, as well as information subject to disclosure in forms as established by applicable legislation and the company’s internal regulations, including Gazprom Neft’s Annual Reports, are made available through the company’s official website in Internal Regulations section.
The company maintains part of its website as a dedicated Investor Relations portal, providing answers to frequently asked questions from shareholders and investors, a regularly updated investor calendar, dividend history for the last five years, key performance indicators, contact details, and other information useful to shareholders and investors.
Gazprom Neft regularly hosts presentations and meetings of members of the company’s executive bodies and other key management representatives with investors and analysts, including those relating to the disclosure (publication) of accounting (financial) statements or to major investment projects and plans for the company’s strategic development.
The company discloses information on its controlled entities on its website, in particular, a list of such entities, their main type of activity, and links to their websites, which complies with recommendations of the Russian Corporate Governance Code.
Pursuant to requirements of Regulations on Information Disclosure, when publishing information on the Internet, the company also uses an Internet page provided by one of the distributors of information on the securities market (Interfax Centre for Corporate Information Disclosure).
One of the most important principles of Gazprom Neft’s corporate governance is its information transparency. The company has consistently ranked among leaders in information disclosure in Russian and international awards.
Based on its 2020 results, Gazprom Neft won the annual award For Active Corporate Policy in Information Disclosure instituted by Interfax and AK&M news agencies. The jury for this award includes representatives of the Moscow Exchange, the Association of Independent Directors, and the Russian Financial Communications and Investor Relations Alliance (ARFI). The award criteria include completeness and timeliness of reporting, corporate events, information on corporate governance, the concurrence of disclosures for Russian and international investors, and proactivity and cohesiveness of information policy. In addition to that, the use of interactive formats, the informative value of news content, attention to environmental, social responsibility and corporate governance (ESG) issues was also taken into account. The jury noted the layout and navigation of Gazprom Neft’s Investor Relations portal, citing its greater depth of archives compared to its peers, and it praised the company’s active involvement in «The single disclosure window» project.
|Type of disclosure||Number|
|On bond issue||6|
|On agenda and resolutions of the issuer's management bodies||108|
|On an issuer’s disclosure of various types of reporting (quarterly reports, list of affiliated entities, the annual report, consolidated financial report, annual accounts)||12|
|On transactions concluded by the issuer and its controlled entities||24|
|On changes in participation in other organisations||6|
|On accrued and paid income||35|