Compliance System

Taking a leading position in the industry, the Company is aware of its high responsibility for business transparency, ethics and lawfulness. For the purposes of maintaining and preserving its high business reputation to the state, shareholders, customers, partners, competitors and society in general, the Company for several years has been developing the corporate system of compliance with requirements of applicable legislation and business ethics (“compliance”).

The Company adheres to principles of compliance with requirements of applicable anti-corruption legislation (anti-corruption legislation of countries, on the territory of which the Company performs its activities, Foreign Corrupt Practices Act 1977, The Bribery Act 2010) and business ethics in all business relations and irrespective of a world country, in which the Company performs its business activities. The Company fixed the principle of non-acceptance of corruption in any forms and occurrences both in everyday activities and when implementing strategic projects.

Main documents governing compliance of the procedure inside MTS are the Code of Business Conduct and Ethics, Compliance with anti-corruption legislation Policy, Conflict of interests management Policy. Besides, procedures for assuring compliance with anti-corruption legislation are fixed in regulations of Company’s business-processes.

The compliance system in MTS PJSC sets forth measures aimed at regulatory risk management, improving corporate culture of the Company, implementing and developing in the Company best corporate governance practices as well as standards of responsible business conduct relying on norms of applicable legislation, recommendations of regulatory bodies, industrial specifics and best practices in this area.

Basic principles and elements of the compliance system in MTS PJSC are as follows.

  • Company’s management actively demonstrates its commitment to compliance principles as well as supports efforts for implementation and assurance of operation of the corporate compliance system (tone from the top).
  • The Company regularly conducts measures for discovery and subsequent updating of corruption risks paying special attention to risks specific for its activities, regions of operations as well as potentially vulnerable business-processes.
  • The Company develops and implements anti-corruption procedures reasonably and proportionally meeting the level and nature of discovered risks.
  • The Company implements and maintains the program of training of its employees and members of management bodies in principles and standards of compliance with applicable anti-corruption legislation by means of a specially developed training system. The Company by means of informing and training contributes to the increase of the level of corporate culture, awareness of anti-corruption and business ethics issues.
  • The Company exercises monitoring of efficiency of implemented procedures for corruption prevention, monitors compliance and, if required, improves them.
  • the Company established criteria for defining the need for inclusion of an anti-corruption clause in the text of a contract, which take into consideration the risk level both depending on contract party category and on the type of established relationships.
  • for the purposes of minimisation of the risk of Company’s involvement in corrupt practices, the Company developed due diligence procedures both in respect of contract parties – legal entities (including members of joint ventures, companies or associations) and in respect of individuals with whom the Company plans to enter into a labour contract or a civil law contract. The due diligence procedure is also applied if the Company acquires a stake in some legal entities.
  • the Company established the procedure for preliminary control as well as the reporting system and subsequent analysis of the most risky transactions in terms of compliance, including, but not limited to, in the area of granting, implementation of representation expenses, organisation of measures, corporate social responsibility, procurement, marketing, sales, M&A transactions etc.
  • as part of internal control procedures the Company conducts inspections of the discipline of execution of the established procedure for implementation of business processes, including inspections of lawfulness of executed transactions with Company’s assets;
  • the Company operates a hot line enabling, inter alia, to anonymously send messages about compliance violations. Bona-fide claimants are provided by the Company with protection from any forms of persecution or discrimination.

In 2015 the Company continued to improve the compliance system as follows.

  • The project of independent evaluation of efficiency of the compliance system of MTS PJSC was implemented. Based on the results of evaluation conducted by an international professional consultant, the corporate compliance system of MTS was marked as an example of the leading Russian anti-corruption compliance practice.
  • The project of independent evaluation of compliance risks by divisions in their specific business processes (evaluation of “from bottom to top”) with methodological support of the Compliance Department was implemented. Based on project results the compliance risk map was updated. The procedure for independent evaluation of compliance risks by business divisions will become annual and will be automated.
  • A number of system-important compliance procedures was reviewed and improved, regulatory documents were refined, including, proposals for modification of the procedure for contract party auditing for the purpose of its optimisation and implementation of a risk-oriented approach were drafted, the current version of the Code of Business Conduct and Ethics of MTS PJSC etc. was updated.

In 2015 the Company continued active development of the corporate compliance culture: the frequency of internal compliance communications was increased significantly, the range of used internal communication tools was expanded, the Ethics and Compliance Day was held for the first time in the Company. The number of MTS employees, who undergo training in compliance in-person and in electronic form, is rising.

Active development of compliance systems in subsidiaries and affiliates of MTS continued. The Company pays special attention to compliance development in jurisdictions with high country risks. Under the compliance system development strategy in the entire MTS Group of Companies the implementation program includes companies newly entered into MTS Group.

During a year Company’s specialists actively spoke at specialist conferences, participated in work groups, round tables dedicated to compliance as well as took direct part in establishment of international standards and best practices in this area.

Coduct of business conduct and ethics of MTS PJSC

The leading position of our Company in the market is largely determined by the size and scope of its activities, dynamic development and continuous differentiation of products and services for subscribers. Today, however, it takes more than just seeking to improve investment and operating efficiency to be a successful company. Prominence of our Company obliges us to support its reputation in a best possible way as a socially responsible organisation for our subscribers, shareholders, partners, and all stakeholders and the public.

Code of Business Conduct and Ethics (hereinafter, the Code) contains the basic business principles of MTS PJSC. In its activities, MTS complies with legislation and generally accepted standards of business ethics. The Company does not accept any other ways of doing business that are contrary to these rules.

The Code should be regarded as a document containing a minimum set of standards and requirements adopted by the Company in order to promote fair and ethical business practices and to prevent abuse. The Code defines the rules and standards that should be followed by the employees in their everyday work. In cases requiring application of higher standards than the accepted commercial practice, or regulations having greater legal force under the current legislation, MTS will use such higher standards.

The Code applies to the members of the Board of Directors, senior management and other employees of the Company.

All employees are responsible for compliance with the Code and are personally responsible for their actions.

The Code is a fundamental document, which guides us in our daily work and helps us to protect the good name of our Company and maintain our competitive advantage.

Insider Information

MTS as a company holding leading positions in the field of corporate governance and issuer, the securities of which are circulated not only in Russia but in USA pays special attention to the development of measures for counteraction to unlawful usage of insider information.

The Company operates the system of processes and procedures aimed at preventing breaches of legislation on the usage of insider information built with due account of best Russian and international practices. Thus, the company adopted regulatory acts establishing the procedure for usage of insider information and corresponding prohibitions regulating the procedure for maintaining the insider list, list of insider information as well as the procedure for submission of information upon requests from the Bank of Russia and the Moscow stock exchange.

In accordance with best international practices and for the purposes of prevention of transaction using inside information, the Company set restrictions for all employees and members of management bodies for execution of transactions with MTS securities in so called “Closed” periods.

Besides, an important system element is the program of regular training of company’s insiders in their duties, requirements and prohibitions of legislation on insider information as well as procedures for insider information protection applied in MTS.

Subsequent control, in the form of audits of compliance with rules for insider information disclosure and audits of insiders’ compliance with requirements of legislation and internal regulations of the company plays a no less important role. In 2015 such audits did not discover major breaches. High standards and quality of MTS policies in terms of compliance with legislation on protection of insider information were confirmed in 2015 as part of cooperation with an international law firm.

System of antimonopoly risk prevention

Developing its leadership not only in business but als in the area of corporate governance, MTS in 2015 implemented the antimonopoly risk management system. The system’s task is to mitigate legal risks arising during Company’s activities which are related to requirements of legislation on protection of competition.

Basic elements of the established system are based on generally accepted risk management and requirement compliance assurance principles and are developed together with major auditors and legal advisers.

The system’s core is periodic risk assessment, implemented preliminary and subsequent controls as well as regular employee training. In this regard, a series of specialised trainings aimed at forming in them a clear understanding of requirements of antimonopoly legislation as well as high compliance-culture level was conducted for MTS employees working in all Macro-regions — from Moscow to Vladivostok.

The operating system was presented to a regulator (FAS of Russia) which positively responded to MTS initiative.