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Национальная Холдинговая Компания “Узбекнефтегаз”

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Provision on audit commission of NHC "Uzbekneftegaz"

Appendix No.7 to the protocol of the annual general shareholder meeting of
NHC “Uzbekneftegaz” from 04.11.2016 № 2
"APPROVED“by the decision of annual general meetingshareholders of NHC “Uzbekneftegaz” from 4 November, 2016

PROVISION ON AUDIT COMMISSION
OF NATIONAL HOLDING
JOINT-STOCK COMPANY
“UZBEKNEFTEGAZ”
(new edition)
Tashkent — 2016

Section I.
General provisions

1.1. This Provision is developed according to the Law of the Republic of Uzbekistan “About joint-stock companies and protection of shareholder rights”, recommendations of the Code of corporate governance approved by the minutes of the Commission on increase in efficiency of activities of joint-stock companies and to enhancement of a corporate management system (from 11.02.2016 № 02-02/1-187), by the charter of NHC “Uzbekneftegaz” (further — the Company) also determines the status, functions, power, duties of audit commission of the Company and election procedure of members and their work.

Section II.
Legal status of audit commission

2.1. The audit committee is the body of the Company performing functions of internal financial-economic and legal control behind activities of the Company, its divisions and services, branches and representations.

2.2. The audit committee is guided by the legislation of the Republic of Uzbekistan, by laws of state bodies, the company charter, the present Provision and other documents of the Company.

2.3. The person can be a member of audit commission who has sufficient qualification in questions of the analysis of financial and economic activity and accounting, owning methods of auditing work.

Section III.
Election and termination of powers of audit commission members

3.1. The procedure of introduction of offers on promotion of candidates for audit committee of the Company, consideration and decision made by the Board of governors according to the offers is performed according to articles 63 and 65 of the Law of the Republic of Uzbekistan “About joint-stock companies and protection of shareholders’ rights” and the company charter.

3.2. The offer on promotion of candidates for audit committee is made in written form by the direction of the letter by special delivery to the Company or is given to chancellery of the Company. The date of introduction of the offer is determined by the date of the mailing or by the date of its delivery to the office.

The offer is signed by the shareholder or his authorized representative if the offer is signed by the authorized representative, then the power of attorney is attached.

If the initiative proceeds from the shareholder — the legal entity, the signature of the representative of the legal entity is certified by a seal of this legal entity acting according to his charter without power of attorney. If the requirement is signed by the representative of the legal entity acting from his name by the power of attorney which is attached to the requirement.

3.3. The audit committee is elected in number of 3 people by the general shareholder meeting for a period of one year, by a majority vote shareholders — owners of the voting shares of the Company (ordinary majority) participating at the meeting. The members of audit committee of the Company can not be members of council of managing company at the same time and also work according to the employment agreement (contract) in the Company. Elections of audit commission are made by separate vote, on each candidate personally. The same person can not be chosen into the audit committee members of the Company more than three times in a row.

3.4. The audit commission elects the chairman and the secretary from the structure. The chairman and the secretary of audit commission are elected at a meeting of audit commission by a majority vote from the total number of the elected members of the commission.

The audit commission has the right to re-elect the chairman and the secretary by a majority vote from the total number of the elected members of the commission, except for voices of the left members of audit commission at any time.

3.5. The member of audit commission has the right on the initiative to leave its structure any time, having informed on the audit commission and the Board of governors in written form in one month prior to the termination of the work in audit commission. In this case the general shareholder meeting performs replacement of the member of audit committee at the nearest meeting.

3.6. The person is obliged to stop implementation of the activities as the member of audit committee in case of entry of the audit committee member into structure of liquidation commission, election (appointment) into the Board of governors or the Board of the Company or beginning of work on the employment contract (contract) in the Company. At the same time, the general shareholder meeting performs replacement of the member of Audit committee at the nearest meeting.

3.7. Powers of certain members or all audit committee members can be stopped ahead by the decision of general shareholder meeting made by a majority vote shareholders — owners of the voting shares of the Company participating at the meeting on the following bases:

3.7.1. rejection of participation in work of audit commission more than 3 times for the disrespectful reasons;

3.7.2. when conducting checks members (member) of audit committee have studied all documents and materials in an inadequate way relating to a check subject that entailed the incorrect conclusions of audit committee of the Company;

3.7.3. non-performance by certain members of audit commission

or audit committee in general item 4.3. of the present provision; 3.7.4. making of other actions (failure to act) by members of audit committee which entailed consequences, adverse for the Company.

3.8. If the number of members of audit committee becomes less than a half of the number provided by the company charter and this provision, the Board of governors is obliged to call the extraordinary general shareholder meeting for election of new audit committee members.

If the audit committee powers terminate early the newly elected members of audit committee will work until election of audit committee by the next annual general shareholder meeting.

3.9. If the extraordinary general meeting has stopped powers of all structure of audit commission ahead of schedule in general or her certain members therefore their number became less than a half from the elected structure, then within no more than three working days from the moment of adoption of this decision, the Board of governors is obliged to make the decision on convocation of the extraordinary general meeting with the item on the agenda on election of new structure of audit commission.

Section IV.
Functions and obligations of audit commission

4.1. The check (audit) of financial and economic activities of the Company is performed according to the results of activities in a year or other period at the initiative of audit committee, general shareholder meeting, the Board of governors or upon the demand of the shareholder (shareholders) who has (have) not less than 5% of voting shares of the Company in total by the prior notice of the Board of governors.

4.2. When performing the functions the audit commission carries out the following types of works:

4.2.1. verification of financial and economic documentation of the Company, the conclusions of the commission on inventory count of property, comparison of the specified documents according to primary financial accounting;

4.2.2. check of legality of the signed agreements on behalf of the Company, made transactions, calculation with partners;

4.2.3. the analysis of compliance of the accounting and statistical recording to the existing regulating documents;

4.2.4. observance control of financial-economic and production activity to the established standards, rules, and so on;

4.2.5. the analysis of the financial position of the Company, its solvency, liquidity of assets, ratios of own and borrowed funds, allowances identification of improvement of an economic condition of the Company, development of recommendations for governing bodies of the Company in financial-economic activity;

4.2.6. accounts analysis of profits and losses as well as correctness of their distribution;

4.2.7. check of timeliness and correctness of introduction of payments by product suppliers and services, payments in the budget, charges and payments of the earned payment and dividends, percent on bonds, settlements of other liabilities;

4.2.8. check of correctness in creation of balances of the Company, the annual statement, profit and loss account, profit distribution, reporting documentation for tax authorities, statistical bodies, state bodies;

4.2.9. check of correctness of the decisions made by the Board, their compliance to the Company charter, Regulations on the Board of the Company and to decisions of the General shareholder meeting;

4.2.10. the analysis of decisions of the General shareholder meetings, introduction of offers on their change in case of discrepancy with the legislation and other regulations of the Republic of Uzbekistan.

4.2.11. check of work with the applications of shareholders submitted to the address of governing bodies of the Company.

4.2.12. check of observance by the Company of legislative requirements and regulations on the market securities and joint-stock companies;

4.2.13. other types of work including the request of general shareholder meeting and the Board of governors, carried by the company charter to competence of audit committee.

4.3. The audit commission is obliged:

4.3.1. to inform timely general shareholder meeting, the Board of governors, the Board on results of the performed audits and checks in the form of the conclusion, written reports, messages at the meetings of governing bodies of the Company;

4.3.2. to give an assessment to accuracy of the data, included in the annual statement of the Company and containing in the annual accounting records of the Company;

4.3.3. to give an assessment to vulnerability of the Company to the risks or other circumstances capable to affect its financial position;

4.3.4. to perform audit of financial and economic activities of the Company according to the results of its activities in a year and also any time at the initiative of persons according to the legislation, the company charter and this provision;

4.3.5. to observe a trade secret; not to disclose the data which is confidential to which members of audit committee have access in case of accomplishment of the functions. If the persons who are not the members of audit committee are involved to work as the experts, they shall be warned about observance of a trade secret. Responsibility for their actions is conferred on the members of audit committee attracting them in audit;

4.3.6. to consider timely claims of shareholders to actions of the governing bodies and officials of the Company and to make relevant decisions;

4.3.7. to require convocation of meetings of the Board of governors, convocation of extraordinary general meeting in cases when the revealed violations in production and economic, financial, legal activities or emergence of real threat to the interests of the Company require the solution by the governing bodies of the Company.

4.4. When conducting check members of audit commission are obliged to study carefully all documents and materials related to a check subject. Members of audit committee bear responsibility which measure is determined by the general shareholder meeting and the current legislation of the Republic of Uzbekistan for the incorrect conclusions.

4.5. The members of audit committee are obliged to be present at the general shareholder meeting and answer participants’ questions of the meeting within competence.

Section V.
Rights and powers of audit commission

5.1. The audit commission for appropriate performance of the functions has the following rights (powers):

5.1.1. to check any financial documentation of the Company, including documents of the commission on inventory count of the Company, to compare the specified documents to data of primary financial accounting;

5.1.2. to require and receive from the governing bodies of the Company, its divisions and services, officials of documents, necessary for implementation of the activities. The specified documents and materials have to be submitted to audit commission within three days after letter of inquiry;

5.1.3. to require convocation of the general shareholder meeting, meetings of the Board of governors in cases when violations are detected in production and economic, financial, legal activities or there is other threat to interests of the Company;

5.1.4. to demand convocation of the Board of governors’ meeting. The chairman of the board of governors has no right to refuse to audit commission in convocation of the Board of governors’ meeting according to the requirement;

5.1.5. to be present at the Board of governors meetings by the invitation of any of its members;

5.1.6. to put a question of responsibility of employees of the Company including officials, before managing bodies of the Company, its divisions and services in case of violations of the provisions, rules and instructions existing in the Company;

5.1.7. other rights (powers) according to the legislation and the Company charter.

5.2. The member of audit commission has the right:

5.2.1. to demand convocation of a special session of the commission in case of identification of the violations requiring the urgent solution of audit commission;

5.2.2. to express the disagreement with conclusions of the audit committee in written form and to bring it to the attention of the general meeting of shareholders of the Company.

Section VI.
Meetings of the audit commission. Procedure of conducting checks (audits)

6.1. The audit commission resolves all issues at the meetings. The meetings of the audit commission are held according to the approved plan as well as before check or audit and by their results. The member of audit commission can demand convocation of a special session of the commission in case of identification of the violations requiring the urgent solution of audit commission.

6.2. The meeting of audit commission is considered competent if there are not less than two thirds of its members. All meetings of audit commission are held in person.

6.3. Each member of audit commission possesses one voice. The acts and the audit commission conclusions are approved by a simple majority of votes of members who are present at the audit commission. The voice of the chairman of audit commission is decisive at equality of votes.

The members of audit committee have the right to fix a special opinion in the minutes and to bring it to the attention of the Board of governors and the general shareholder meeting in case of the disagreement with the decision of the commission.

6.4. The audit commission elects the chairman and the secretary from the structure. The Chairman of audit commission:

6.4.1. convokes and holds meetings;

6.4.2. will organize the current work of audit commission;

6.4.3. represents audit committee at the board meetings, the Board of governors and at the general shareholder meetings;

6.4.4. signs the documents on behalf of the commission.

6.5. One of members of audit commission carries out the chairman functions in case of his absence according to the solution of most of the members of audit commission who are present at the meeting.

6.6. Secretary of audit commission:

6.6.1. will organize guiding of protocols of its meetings;

6.6.2. brings acts and the conclusions of audit committee to addresses, and hands over them to archive of the Company.

6.7. The check (audit) of financial and economic activities of the Company is performed according to the results of activities of the Company within a year.

6.8. The audit committee submits the report with the conclusions by results of check (audit) of financial and economic activities of the Company within a year to the Board of governors and the conclusion confirming or confuting accuracy of the data, included in the annual statement of the Company and contained in the annual balance sheet, not later than 3 days before the date of the Board of governors meeting where the report on the advance approval of the annual statement of the Company is considered.

6.9. Unscheduled inspection (audit) of financial and economic activities of the Company is performed according to:

6.9.1. the decision of the general shareholder meeting;

6.9.2. the decision of the Board of governors;

6.9.3. the requirement of the shareholder (shareholders) of the Company owning (owning in total) at least 5 percent of voting shares of the Company;

6.9.4. an initiative of the audit commission.

6.10. The decision on unscheduled inspection (audit) is made at the general meeting of shareholders by a simple majority of votes of shareholders — owners of the voting shares of the Company participating at the meeting. The audit committee starts check (audit) after receipt of the relevant minutes of the general shareholder meeting.

6.11. The decision on unscheduled inspection (audit) is made unanimously by the Board of governors by a majority of votes of the members at the meeting, in case of an absentee voting (by poll) by all members of the managing council. This decision is addressed to the chairman of audit commission and is signed by all members of council of managing directors voting for his acceptance.

6.12. The member of audit commission sends the written description of the revealed violations requiring the solution of audit commission to the chairman of audit commission at identification of violations.

The chairman of audit commission is obliged to convene the meeting of audit commission within 3 working days after obtaining the requirement.

The chairman of audit commission is obliged to organize and start carrying out the check (audit) at adoption by audit commission of the decision on conducting check (audit).

6.13. Promotion of requirements about carrying out unscheduled inspection (audit) by shareholders of the Company:

6.13.1 Shareholders — initiators of check (audit) send the written requirement to the audit commission which has to contain:

— Family name, name, patronymic (name) of shareholders;

— Data on the stocks (quantity and type) owned by them; — motivated justification of this requirement.

The requirement is signed by the shareholder or his authorized representative. If the requirement is signed by the authorized representative, then the power of attorney is attached.

If the initiative proceeds from the shareholder — the legal entity, the signature of the representative of the legal entity is certified by a seal of this legal entity acting according to his charter without power of attorney. If the requirement is signed by the representative of the legal entity acting from his name by the power of attorney which is attached to the requirement.

6.13.2 The requirement of initiators of conducting check (audit) is sent to the Company addressed to the chairman of audit committee as the letter by special delivery with the assurance of receipt or is given to chancellery of the Company.

The date of submission of demand is determined by the date of the notification on its delivery or the date of delivery to chancellery of the Company.

6.13.3 The audit committee shall make the decision on carrying out unscheduled inspection (audit) financial and economic activities of the Company or give motivated refusal of carrying out audit within 10 working days from the date of submission of demand.

6.13.4 The refusal of check (audit) can be given by audit commission in the following cases:

— the shareholder (shareholders) is/are not the owner(s) who imposed the requirement necessary for this number of voting shares for the date of submission of demand;

— the initiators of submission of demand are the persons who are not registered in the shareholder register or not possessing representative — powers of the corresponding shareholders, for the date of submission of demand;

— the motive of conducting check (audit) isn’t specified in the requirement;

— in the facts which are motives of conducting check (audit); an inspection (audit) is carried out and the audit commission has approved the conclusion;

— incomplete data are specified in the requirement;

— doesn’t conform requirements to the legislation and regulatory legal acts of the Republic of Uzbekistan or the company charter.

6.14. When conducting checks (audits) members of audit commission are obliged to study all available and received documents and materials relating to a check subject.

6.15. The audit committee of the Company constitutes the conclusion according to the results of check of financial and economic activities of the Company, which shall contain:

6.15.1. assessment of accuracy of the data, containing in reports and other financial records of the Company;

6.15.2. information on the facts of violation of an order of conducting financial accounting and accounts presentation, and also the legislation in case of implementation of financial and economic activities.

This conclusion is heard at the annual general shareholder meeting.

6.16. Initiators of check (audit) of financial and economic activities of the Company have the right to withdraw at any time before adoption by audit committee of the decision on conducting check (audit) the requirement, having notified audit committee in written form.

6.17. The audit committee quarterly submits the conclusion about availability of transactions with affiliates or large deals in the Company as well as observance of requirements of the legislation and internal documents of the Company for settlement of such transactions at the meeting of the Board of governors.

Section VII.
Procedure of remunerations to the members of the audit commission

7.1. The remuneration is paid to members of audit committee for work and the provision of reports (conclusions) performed by the following results of audits (checks).

7.2. The results of work of audit committee and provision of reports (conclusions) form the basis for the determination of the remuneration amounts paid to the chairman and members of the audit committee.

7.3. The amount of remuneration paid to each member of audit committee makes 3 minimum wages a month. The remunerations are paid quarterly.

7.4. If the conclusions of audit commission are not introduced quarterly in the supervisory board then remuneration is not paid.

Section VIII.
Final provisions

8.1. This Provision comes into force from the date of its statement by the general shareholder meeting.

8.2. When one of the rules of the present provision has become invalid, this rule is not the reason for suspension of other rules.

8.3. If other provisions are established by the existing legal acts of the Republic of Uzbekistan or by the company charter that is provided by this Provision, then rules are applied of the existing legal acts of the Republic of Uzbekistan and the company charter.

PROVISION on audit commission of NHC “Uzbekneftegaz” (new edition) (.docx 47KB)

PROVISION on audit commission of NHC “Uzbekneftegaz” (.docx 48КB)

Last change: 18.02.2017

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