The Company’s internal control system focuses on:
- Identifying and assessing risks and issuing recommendations for mitigating their adverse impact on the Company’s operations;
- Implementing and improving the Company’s internal control procedures.
The corporate risk management system is at the core of everything that the Board of Directors does, placing an emphasis on compliance with the best global practices and effective processes.
Metalloinvest’s Board of Directors views internal control and audit functions as an essential mechanism for the Company’s sustainable development. The experience of Galina Aglyamova, Chairperson of the Audit Committee, and the expertise of Vladimir Manuilov, Director of the Internal Audit Department of Management Company Metalloinvest, who is an internationally Certified Internal Auditor (CIA), is enabling the Company to achieve this goal.
The internal audit framework is structured to cover all levels of governance and includes the Audit Committee of the Board of Directors of Management Company Metalloinvest, audit functions of the management company and regional audit control functions, the audit functions of Lebedinsky GOK, Mikhailovsky GOK, OEMK and Ural Steel headed by the Internal Audit Director.
This structure ensures the independence and neutrality of the internal audit functions (the Audit Committee of the Board of Directors is chaired by an independent director). The Internal Audit Director has a functional reporting line to the Audit Committee.
Metalloinvest prepares its financial statements in accordance with the applicable Russian and international standards (RAS and IFRS). The Company engages an external auditor to conduct an independent review of its financial and accounting statements. In 2016, the Company’s IFRS financial statements and RAS accounting statements were audited by PricewaterhouseCoopers.
The auditor is selected through negotiations with candidates subject to their credentials and service fees. The auditor is approved by the Company’s General Meeting of Shareholders.
Since 2015, Metalloinvest has been insuring the liability of the members of its Board of Directors, Management Board and officers of the Company (“insured persons”) on an annual basis. Directors and officers liability insurance (D&O insurance) protects the insured persons against possible third-party claims that may arise from unintended wrongdoings, and provides reimbursement of possible expenses incurred by Metalloinvest by covering the costs and damages of the insured persons.
The insurance covers the defence costs of the insured persons and related costs, as well as compensation for damage caused by the insured persons, when such damage has been proved and is subject to recovery.
Metalloinvest’s D&O insurance is provided by SOGAZ, Russia’s largest insurer, selected on a competitive basis.
The risks are reinsured internationally by major insurers with leading positions in terms of portfolio volume and experience in adjusting D&O claims in Russia Эand globally, such as Allianz, AIG, ACE, Zurich, QBE and Liberty.
The Company’s policy terms were developed jointly with reinsurance leader Allianz and provide optimal coverage, taking into account all Metalloinvest insurance requirements, with a total liability limit of USD 150 million.