Interaction between the new code and new listing requirements Dr. Jochen Biedermann OECD Russia Corporate Governance Roundtable Moscow, October 2013

Disclaimer: The views expressed in this presentation are those of the author and do not necessarily represent the opinion of the OECD Russia Corporate Governance Roundtable, the OECD or its Member countries, or of the Moscow Exchange. OECD Russia Corporate Governance Roundtable Moscow, October 2013

Why consider including Corporate Governance requirements into listing rules CG report (e.g. declaration of conformity) becomes part of the annual reporting, thus increasing transparency for investors Exchange can directly monitor and sanction missing/late reports or lack of transparency/clarity Companies with a high grade of conformity can be emphasized, e.g. by a premium segment membership 3 Corporate Governance Requirements within Stock Exchange Listing Rules National Corporate Governance Codes OECD Principles of Corporate Governance

International comparison does not provide a clear picture how to implement Corporate Governance rules 4 * set by the listing authority (regulator or stock exchange), at least for a premium segment** referencing German CG Codex CountryCG LawCG CodeCG as part of Listing Rules* USSarbanes-Oxley ActNYSE CG Rules, Nasdaq Listing Rules 56xx UKUK CG CodeFSA Listing Rules GermanyAktiengesetz**German CG Codex FranceLoi de sécurité financièreAFEP-MEDEF CG Code NetherlandsAct FrijnsTabaksblat Code Switzerland(Obligationenrecht)Swiss CodeSIX Richtlinie AustriaAustrian CG CodexWiener Börse Regelwerk Prime Market PolandCode of Best Practice for WSE Listed Comp. TurkeyCMB CG Principles for ISE Listed Companies IndiaClause 49 of SEBI Listing Rules ChinaCSRC Sec. CG Guidelines South AfricaKing Code on CG for S-A IIIJSE Listing Requirements BrazilIBGC Code of Best PracticeBM&FBOVESPA Novo Mercado Rules

“Living the code” rather than “obeying the law” 5 ●Focus on compliance: ○Reducing legal and resulting financial risks for the company ○Avoiding penalties or fines ●Transparency vis-à-vis relevant authorities ○CG reports are not necessarily public ●Over-fulfilling of CG requirements does not make sense ○Efforts and impact on existing governance are minimised ●National scope of legal requirements ○Might differ significantly from international CG best practice CG as cost factor ●Focus on investor communication: ○Demonstrating superior governance to ease capital market financing ○Creating and maintaining trust ●Transparency vis-à-vis investors, in particular existing shareholders ○CG reports become part of annual company reporting ●Over-fulfilling of CG requirements can make lots of sense ○Achieve outstanding position among peers ●International best practice of CG rules ○Exchanges compete globally for listings of leading international companies - their reputation is at risk CG as important differentiator Fulfilling legal requirementsQualifying for a (premium) listing segment

Corporate Governance as a process: Requirements have to be constantly adapted to a changing world Example: Social Networks and Corporate Governance Analysis of hidden relationships suggests to introduce a completely different definition of independence in board of directors ( “Say, for example, you have an independent director who is actually closely connected to the rest of the board. Their efforts to maintain independence might be compromised by having been recommended to the board by an executive director with prior social ties or sharing the same mindset – these kind of ties could be disastrous if they are unable to see a problem in time.” (Murat Ünal, SONEAN) 6 Exchanges can usually adapt listing rules much faster than lawmakers, who often have to wait for crisis to be able to sell major changes to the public. Exchanges must take the leadership role in the marketplace in every field of work, including governance and listing. It is a responsibility to society, and also very good business, the right way to work.

Dr. Jochen Biedermann Independent Exchange Industry Expert Mobile: Thank you for your attention! Спасибо за Ваше внимание!