Corporate Governance System

The Chairman of the OAO TMK Board of Directors, Dmitry Pumpyanskiy, was pronounced the winner of 6th National Prize “Director of the Year” 2011 in the category of “Chairman of the Board of Directors: input in development of corporate management.”

The corporate governance system of OAO TMK regulates the interaction process between management bodies and internal Company control, shareholders and other interested parties and is aimed at ensuring balance of their interests.

The corporate governance system is regulated by Company’s internal documents that are accessible on the TMK website ((http://www.tmk-group.com/company_documents.php), and include the Code of Corporate Governance of OAO TMK (the Code), which was approved in the reporting year by OAO TMK’s Board of Directors and can be accessed at (http://www.tmk-group.ru/files/corp_gov_code_ru.pdf). The Code is fully in line with the Russian legislative requirements concerning joint stock companies and capital market regulator’s standards for companies whose securities are included in the highest level of exchange listing. The Code also follows the corporate governance principles of the Organization for Economic Cooperation and Development (OECD), as well as best Russian and international corporate governance practices. The corporate governance practice of the Company in 2011 was in full compliance with the Code of Corporate Governance.

OAO TMK’s Principles of Corporate Governance

  • equal treatment of the Company’s shareholders, observance and protection of their rights;
  • accountability of the Board of Directors to the Company’s shareholders, as well as performance monitoring of the Company’s executive bodies from the Board of Directors;
  • maintenance of an effective internal control and audit system at the Company;
  • guarantee of informational and financial transparency concerning the Company’s operations;
  • adherence to ethical standards in business behavior;
  • effective interaction with Company employees in resolving social issues and provision of comfortable working conditions.

OAO TMK’s Corporate Governance Structure

The Company’s highest management body is the General Meeting of Shareholders. The Company’s primary management powers are delegated by the shareholders to the Board of Directors. In order to ensure the Company’s day-to-day management, the Board of Directors elects the CEO and confirms the members of the Management Board as advised by the CEO. The Board of Directors also establishes committees whose resolutions are of an advisory nature.

In order to ensure effective control over the Company’s financial and business operations, as well as the Company’s adherence to Russian legislative requirements, the General Meeting of Shareholders elects the Revision Commission and confirms the Company’s auditor.

In order to exercise the principle “equal treatment of the Company’s shareholders, observance and protection of their rights,” TMK purposefully works on increasing shareholders’ awareness about the Company’s activities and on protecting insider information.

In 2011, the Company modified its internal documents to meet Russian legislative requirements, and implemented additional procedures on insider information protection as well as on timely release of information. The new revised Provision on insider information (http://www.tmk-group.ru/ files/tmk_pol_inside_ .pdf) and List of insider information (http://www.tmk-group.ru/files/tmk_per_inside1.pdf) can be found on TMK’s website.

TMK keeps its accounting practices and prepares financial and accounting reports in compliance with Russian and international standards. Starting from 2011 TMK began quarterly preparation of the consolidated IFRS reports (http://ir.tmk-group.ru/phoenix.zhtml?c=238837&p=irolresultcenter). In order to provide interested parties with additional information, the Company distributes press releases including analysis of changes in financial indicators and conducts conference calls involving members of Company’s executive bodies

TMK has a functioning structural subdivision, which monitors development and realization of single information policy. There is also a department that controls compliance with legislative requirements on insider information.

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