Subsidiaries Management

The Company established a multilevel corporate management system, which provides for consecutive interaction of all holding’s management bodies starting from the General Meeting of Shareholders of MTS to the executive bodies of a subsidiary. Such a model enables a parent company to efficiently coordinate operations of all subsidiaries while assuring interests of all stakeholders.

During management of subsidiaries (hereinafter – the Subsidiaries) MTS adheres to the following principles:

1. Subsidiary management is carried out through MTS representatives in subsidiaries.

The following management methods are applied:

  • Adoption of resolutions at GSM/GMM1 of subsidiaries and affiliates (heads of divisions responsible for forming a position for the purposes of implementation of member/shareholder rights in respect of a subsidiary acting based on a power of attorney were appointed)
  • Appointment/election of MTS representatives in management and control bodies of subsidiaries (collegiate management bodies (BD2, Management Board), SEB3, SC4).

Definition of MTS position regarding participation in voting of MTS Representatives in GSM/GMM, collegiate management bodies and while making decisions of SEB of MTS subsidiary as well as other business companies, direct and indirect participation.

1 GSM / GMM: General Meeting of Shareholders/General Meeting of Participants

2 BD / SB: Board of Directors/Supervisory Board

3 SEB: Sole Executive Body

4 SC: Auditing Committee

2. Coordinated use of functional, strategic and project management in subsidiary management:

Strategic management through approval at BD/SB of:

  • strategy;
  • main areas of activities;
  • report on strategy implementation.

Functional management through approval at BD/SB of:

  • business-plan;
  • budget;
  • organisational structure;
  • functional strategies;
  • personnel motivation system;
  • reports on financial and economic activities;
  • internal control and audit principles.

Project management through approval at BD/SB of:

  • relevant business issues;
  • transactions with assets;
  • establishment of special committees;
  • priority projects.
3. Meeting requirements of applicable legislation, articles of associations, internal documents of companies, legitimate rights and interests of shareholders/members of subsidiaries

At the level of MTS as part of strategic and financial management processes principal decisions on areas of subsidiaries are made.

Decisions of MTS management bodies are translated to particular subsidiaries through participation of MTS representatives in GSM/OMS and collegial management bodies meeting requirements of all internal regulatory documents of subsidiaries and applicable legislation.

4. Unified Corporate Governance Standards

Unified internal decision-making procedures, unified management standards and cycle at all management phases are applied in MTS:

  • scheduling;
  • data accounting and collection;
  • control and analysis.

Corporate secretaries of subsidiaries are liable for timely drafting and approval of internal corporate governance documents of subsidiaries.

5. Application of best management practices

Corporate directors — professional and independent members of collegiate management bodies in foreign subsidiaries is a decent alternative to representative of holding’s parent company.