REGULATIONS On The Dividend Policy Of OJSC MMK

Transcription

1 Magnitogorsk Iron and Steel Works Open Joint Stock Company APPROVED BY decision of the Board of Directors of OJSC MMK dated , Minutes # 2 Chairman of the Board of Directors: V.F.Rashnikov REGULATIONS On The Dividend Policy Of OJSC MMK

2 CONTENTS 1 Sphere of Application References Terms, Definitions and Abbreviations General Provisions Procedure for Calculating Dividends Decisions Regarding Payment (Declaration) of Dividends Main Conditions of Dividends Payment List of Persons Entitled to Dividends Procedure for Calculating Dividends Organization of Dividend Payments Procedure of Dividend Payment Informing Shareholders of the Company s Dividend Policy Responsibility for Payment of Dividends Declared... 8

3 1 Sphere of Application 1.1. These Regulations determine the procedure and conditions of the calculation and payment of dividends on shares of the Magnitogorsk Iron and Steel Works Open Joint Stock Company ( OJSC MMK, the Company ). 1.2 These Regulations shall be mandatory for all the divisions and departments of the Company. 1.3 These Regulations is a document of the Quality Management System. 2. References 2.1. These Regulations are based on the following documents: Russian Federation Tax Code (Part One) dated , # 146-FZ Russian Federation Tax Code (Part Two) dated , 117-FZ Federal Law On Joint Stock Companies dated , # 208-FZ; Corporate Behaviour Code recommended for use by Resolution # 421/p of the Russian Federal Securities Commission dated ; Charter of the Magnitogorsk Iron and Steel Works Open Joint Stock Company (OJSC MMK) approved by decision of the OJSC MMK General Shareholders Meeting on ; Corporate Governance Code of OJSC MMK approved by decision of the OJSC MMK Board of Directors on , Minutes # Terms, Definitions and Abbreviations The following terms with their respective definitions are used in these Regulations: Dividend Policy the policy of the Company with regard to the use of profit seeking to establish and secure a balance of interests of the Company and its shareholders when determining the size of dividend payments, and to raise the current investor attractiveness of the Company and ensure its increased capitalization. Dividend(s) part of the Company s net profit distributed among the shareholders in proportion to the number of shares held by them; Agent Organization an organization engaged by the Company for the calculation and payment of dividends based on a contract; Registrar a professional participant of the securities market, with an exclusive function of keeping shareholder registries, contracted by the Company and licensed for such an activity The following shortened terms are used in these Regulations: The Law Federal Law On Joint Stock Companies dated , # 208-FRZ; The Company the Magnitogorsk Iron and Steel Works Open Joint Stock Company; The Meeting the general shareholders meeting of the Magnitogorsk Iron and Steel Works Open and Joint Stock Company; The Board of Directors the Board of Directors of the Magnitogorsk Iron and Steel Works Open Joint Stock Company;

4 The (Company s) Charter the Charter of the Magnitogorsk Iron and Steel Works Open Joint Stock Company; RF CB Russian Federation s Central Bank; 4. General Provisions 4.1. The Company s Dividend Policy is based on a balance of interests of the Company and its shareholders, on raising the Company s investor attractiveness and capitalization, on respect for and strict observation of the shareholders rights as provided for by Russian laws, the Company s Charter and Corporate Governance Code and its internal documents/bylaws The Company shall strive to pay dividends on an annual basis The Company shall be entitled to take decisions (declare) payment of dividends on placed shares according to the results of the first quarter, first six months, first nine months or the financial year A decision on payment of share dividends shall be a right, but not an obligation of the Company The Meeting shall be entitled to decide not to pay dividends or not to take any decisions regarding payment of dividends Dividends shall be paid in cash Payment of declared dividends shall be an obligation of the Company. It shall be responsible to the shareholders for failure to filfill such an obligation in accordance with applicable laws Should the Company have any fractional shares, it shall be guided by the applicable laws of the Russian Federation in determining the procedure for the calculation and payment of dividends on such shares The Company s shares which are the underlying assets for depositary receipts, shall grant its owners the right to dividend. The declaration, calculation and payment of dividends on depositary receipts shall be carried out according to the procedure established hereby, and subject to the terms and conditions of the deposit agreement between the Company, the depositary bank and owners of the depositary receipts. 5. Procedure for Calculating Dividends 5.1. Dividends to the Company s shareholders shall be paid from the net profit determined according to the consolidated financial statements of the Company prepared in accordance with the International Financial Reporting Standards The Board of Directors shall base its recommendations with respect to the size of dividends on the assumption that the monetary funds allocated for dividend, shall amount to at least 20% of the net profit determined according to the consolidated IFRS statements of the Company The Company s dividends shall be calculated according to the following formula: D = D ord x Q ord (1) where D is the dividend to be paid by the Company, in rubles; D ord is the amount of dividend per ordinary share as recommended by the Board of Directors to the Meeting, in rubles; and

5 Q ord is the quantity of ordinary shares issued by the Company. The following prerequisite shall be observed: D = NP x R NP /100 - D int (2) where NP is the net profit determined according to the consolidated IFRS statements of the Company in rubles; R NP is the ratio showing the proportion of the net profit allocated for dividend, in accordance with p.5.2 above, and D int is the amount of interim dividend accrued for the periods comprising the accounting period The size of the recommended dividend per share shall be determined based on the amount of the monetary funds allocated for dividend payments and recalculated at the RF CB s exchange rate as at the end of the accounting period, and the quantity of the shares placed and in circulation Recommendations of the Board of Directors regarding the size of the dividends for the first quarter, first six months and first nine months of any financial year shall be based on the data of consolidated IFRS financial statements of the Company for the corresponding period The recommendations of the Board of Directors shall specify the total sum of the net profit to be allocated towards dividend payments calculated in accordance with the procedure set out above, and the sum of dividend corresponding to each share. 6. Decisions Regarding Payment (Declaration) of Dividends 6.1. The time frame and procedure for dividend payment are set out in the Company's Charter. A decision regarding payment (declaration) or non-payment of dividends, including a decision regarding the size of dividend, and the form of payment, shall be taken by the Meeting. The decision on approval of the size of dividends and the payment procedure shall be taken only at the recommendation of the Board of Directors The decision on the size of dividends on shares and the payment procedure shall be taken at a meeting of the Board of Directors not later than 30 days prior to the date of the Meeting The decision on payment (declaration) of dividends shall specify: the category (type ) of shares on which dividend is declared; the size of dividends corresponding to one share of a certain category (type); form of payment; 6.4. The declared sum of dividends shall include taxes levied in accordance with the applicable laws of the Russian Federation The size of dividends approved by the Meeting shall not exceed the size of dividends recommended by the Board of Directors A decision on payment ( declaration) of dividends according to the results of the first quarter, first six or nine months of the financial year may be taken by the Meeting within three months of the end of the corresponding period.

6 7. Main Conditions of Dividends Payment 7.1. The main conditions for the payment of dividends to the Company s shareholders shall be as follows: the Company s earning an amount of net profit determined in accordance with the consolidated IFRS financial statements of the Company; absence of restrictions on payment of dividends as provided for by Article 43 of the Law; recommendations of the Board of Directors regarding the size of dividends and the payment procedure; the decision of the Meeting regarding payment (declaration) of dividends. 8. List of Persons Entitled to Dividends 8.1. On the instruction of the Company the Registrar of the Company shall make a list of persons entitled to dividends The list of persons entitled to dividends shall be made as on the date of making the list of persons entitled to participation in the Meeting which will take a decision on payment of corresponding dividends For the purpose of making the list of persons entitled to dividends, nominee holders of shares shall provide data on the beneficiaries thereof. 8.4 The list of persons entitled to dividends shall be provided to the Company by the Registrar. 8.5 The list of persons entitled to dividends shall contain data on such persons as provided for by the contract between the Company and the Registrar. 8.6 With respect to each person entitled to dividends the Agent Organization shall calculate: the amount of accrued dividends; the amount of taxes subject to deduction; amounts payable (the difference between the amount of accrued dividends and the amount of taxes subject to deduction). 8.7 For the purpose of additional protection of the Company shareholders rights, the Company s Registrar, in accordance with the Company s instruction, shall receive data from nominee shareholders, and documents confirming the eligibility for preferential tax treatment, from persons entitled to dividends, or their authorized representatives, until the date of the Meeting. 8.8 If one share belongs to several persons, the corresponding dividend shall be distributed among them in proportion to their share in the share s value, except as otherwise provided for by an agreement entered into by such persons. 9. Procedure for Calculating Dividends 9.1 The sum of accrued dividends payable to each shareholder shall be determined by multiplying the size of dividends adopted by the Meeting per one share, by the number of shares owned by such shareholder. 9.2 The sum of accrued dividend containing fractions of a kopeck, shall be rounded up to a whole kopeck according to the rules of mathematics.

7 9.3 Dividends shall not be calculated or paid: on shares not in circulation (not placed); on shares on the Company s balance sheet; or in other cases as provided for by applicable laws. 10. Organization of Dividend Payments 10.1 All actions with regard to the Company s organization of dividend payments as provided for by these Regulations, shall be prepared, coordinated and carried out by the Company s individual executive body, the General Director Payment of dividends shall be made by the Agent Organization or the Company itself. The Company shall not be released thereby from the responsibility towards shareholders for payment of dividends due to them Any shareholder shall be entitled to apply to the Company or the Company s Registrar for inclusion in the list of persons entitled to receive dividends, or for information on the procedure of calculation of dividends on shares, procedure of calculation and levy of taxes on the dividends amount, or regarding the conditions of dividends payment The Company, within 7 business days from the date of receipt of such application, shall prepare and provide a reply to such shareholder The Company shall have no right to grant any preferences to any holders of a certain category of shares with respect to the dates of dividend payment The Company shall inform its shareholders by the method specified in p.12.2 hereof, of the Agent Organization contracted for payment of dividends, and of the replacement of such Agent Organization or the expiry of its authority. 11. Procedure of Dividend Payment 11.1 The Company's dividends shall be paid out by transferring the corresponding funds to a shareholder's bank account stated in that shareholder's questionnaire in the register of the Company's shareholders. On a special instruction of an individual shareholder, payment can be made by a postal money order to the address stated in the shareholder's questionnaire, with charges for such postal order to be deducted from the amount of the dividends payable to such shareholder, or in cash through the Company's cash office (against presentation of an ID indicated in the shareholder's questionnaire). The Company's general shareholders' meeting may decide on a different procedure for dividend payment The Company, as a Russian organization, shall act as a tax agent when paying income on shares to the Company's shareholders who are tax payers with respect to corporate or individual income taxes. The Company shall calculate, deduct and transfer to the state budget tax amounts from the income of shareholders in accordance with the procedure and deadlines provided for by applicable Russian laws Dividends to shareholders shall be paid net of the taxes collected from such dividends, with rounding up to the next whole kopeck according to the rules of mathematics When calculating tax amounts to be deducted from the income of foreign entities, or individuals with a non-resident status in the Russian Federation, the Company shall take into account the existence of agreements (treaties, conventions) on avoidance of double taxation with the countries in which such foreign entities or individuals are registered.

8 11.5 Deduction of taxes from the income of shareholders in respect of which their nominee holders or they themselves did not provide required data on their tax status within the mandatory time period, shall be made at the rate provided for by the RF Tax Code The sum of calculated taxes containing fractions of rubles, shall be rounded up to the next whole ruble according to the rules of mathematics Subject to the decision of the Meeting, the date of dividend payment shall be deemed to be the date on which the Company or the Agent Organization transfers the corresponding funds from their respective accounts to the bank accounts of shareholders stated in the register system, or the date on which such amounts are sent to shareholders by a postal money order Resending the dividends to a shareholder according to corrected postal details shall be done at such shareholder s written request and for his own account Should declared dividends not be paid out to a person included in the list of persons entitled to dividends within the period for dividend payment set out in the Company's Charter, such a person shall be entitled, within three years of the expiry of such period, to claim such declared dividends from the Company. The right to claim unpaid dividend shall not be restored if such a three-year period is missed, unless the person in question failed to claim dividend under duress. Following the expiry of the period for claiming unpaid declared dividends, such dividends shall be included in the Company's retained profit. 12. Informing Shareholders of the Company s Dividend Policy 12.1 The Company shall place these Regulations, and amendments thereto, as well as the Company s dividend history, on the Company s website The Company shall inform its shareholders of the date, form, place and procedure of dividends payment by disclosing such information in accordance with a procedure established by the Russian Federation laws and the Company s Charter The materials to be presented to the shareholders for taking decisions at the Meeting, shall include information on whether or not the Board of Directors complied with these Regulations when presenting to the Meeting a proposal for the size of dividends to be paid. 13. Responsibility for Payment of Dividends Declared 13.1 The Company shall be obliged to pay the dividends declared on shares The Company shall bear responsibility to its shareholders for not honouring its obligation to pay declared dividends in accordance with the laws of the Russian Federation The Company and the Registrar shall bear no responsibility for the losses caused because persons registered in the Company s shareholders register did not comply with deadlines for providing statutory information to the Company's Registrar.