“SAMRUK-ENERGY” JSC | Integrated ANNUAL REPORT

On compliance of corporate governance practices with the principles of the Corporate Governance Code

The Company is guided Corporate Governance Code, the provisions of which are binding upon all bodies, officials and employees. In view of this, the Corporate Secretary advises the Board of Directors and the Executive Body on matters regarding the appropriate compliance with the Code, monitors the compliance with the Code, and annually prepares a report on compliance / non-compliance with its principles and provisions.

The Company conducted a self-assessment for compliance with the principles and provisions of the Code in 2018, based on which it prepared the Report. The Company’s Internal Audit Service evaluated the GAP analysis and verification of the Report.

The Сompany in its activities fulfils the requirements and recommendations of the Corporate Governance Code, except:

PRINCIPLES OF “SAMRUK-ENERGY” JSC CORPORATE GOVERNANCE CODE

Compliance /Non-compliance/

Partially compliance

Information on compliance /non-compliance of provisions of the Code

Chapter 1. Government as the Shareholder of the Fund

2

The Government of the Republic of Kazakhstan is the Sole Shareholder of the Fund.

The main strategic objective of the Fund and Organizations is the growth of long-term value and Sustainable development of the Fund and Organizations that is reflected in the Development Strategy of the Fund and the Companies. All decisions and actions must conform to the Development Strategy.

The optimal assets structure must be designed in the Fund and Companies. The Fund and the Companies should seek to simplify as much as possible the structure of their assets and their organizational and legal forms.

Organizations perform their activities within its core (main) activities. Implementation of new activities is permitted if there is no competition in this market or participation of the Fund and Organizations will contribute to the development of small and medium-sized businesses.

It is recommended to have and keep the controlling share (interest) in the Organizations of the Fund.

Partially complied

The Board of Directors approved “Samruk-Energy” JSC Development Strategy until 2028 on August 28, 2018. Strategic objectives of which are: to ensure reliable competitive energy supplies in the markets where the Company operates, shareholder value maximization and and sustainable development. All decisions and actions taken are consistent with the Strategy. In order to monitor the implementation of the Strategy, the Board of Directors and the Management Board of the Company hold strategic sessions (during the review of reports on the implementation of the Strategy), during which the main activities, tasks, issues, risks, corrective actions are discussed. The Company’s investment activity is performed as part of implementation of the Strategy.

The group of companies of the Company includes subsidiaries and affiliates of various organizational and legal forms: joint-stock companies and limited partnerships. The Code recommends that “The Fund and companies should create an appropriate asset structure. The Fund and companies should seek to simplify the structure of their assets and their organizational and legal forms to the fullest extent ”

At the moment, the Company sells 3 assets in accordance with the Resolution of the Republic of Kazakhstan Government dated December 30, 2015 No. 1141 “On some matters of privatization for 2016–2020”: “Tegis-Munay” LLP, which includes “Mangyshlak-Munay” LLP, and 26 % of equity stake in “Energia Semirechya” LLP. Activities on holding the tender for sale of “Tegis-Munay” LLP, which includes “Mangyshlak-Munay” LLP were carried out repeatedly in 2018. The tender failed due to the absence of bids. As regards the sale of “Energia Semirechya” LLP. the agreement on sale and purchase of 26 % equity stake was concluded. Re-registration procedures in justice agencies are nearing completion.

“Ust-Kamenogorsk HPP” JSC. “Shulbinsk HPP” JSC and “Bukhtarminskaya HPP” JSC are not engaged in production activities; “Moynak HPP” JSC and “Shardarinskaya HPP” JSC have long-term loan agreements, which were executed as part of implementation investment projects, changing of a legal form to limited liability partnerships (hereinafter – LLP) will lead to the risk of early repayment requirements, possible loss of first-class state guarantees that may result in rise in borrowing costs, tightening of current covenant package and other terms of a loan and the emergence of additional costs for engaging consultants in connection with the reapproval of current credit and pledge documentation. In this regard, it would make sense to negotiate changing of these companies’ legal forms to LLP with lenders after optimization of the debt portfolio or after full repayment of existing loans.

15

The Ombudsman is appointed in order to comply with the principles of business ethics and optimal regulation of social and labor disputes arising in the Fund and Organizations.

A candidate for the position of Ombudsman should have an impeccable reputation, high authority and have the ability in making impartial decisions.

The Ombudsman is appointed by the Board of Directors of the Fund and shall be reelected every two years. The role of the Ombudsman is to advise employees who referred to him, participants of labor disputes and conflict. The Ombudsman assists them in developing a mutually constructive and workable solution based on compliance with the laws of the Republic of Kazakhstan (including confidentiality if necessary). in solving the problem of social and labor questions of workers and the

Fund and Organizations, as well as in complying with the principles of business ethics by employees of the Fund and Organizations.

The Ombudsman shall submit to the relevant authorities and an official of the Fund and/or the organizations identified problematic issues which are systemic in nature and require appropriate solutions (integrated measures), puts forward constructive suggestions for their solution.

The Ombudsman at least once a year submits a report on the results of the work to the Appointment and Remuneration Committee and the Audit Committee of the Board of Directors of the Fund, which evaluate his/her performance results.

The Board of Directors of the Fund assesses the performance of the Ombudsman and makes a decision on the extension or termination of office of the incumbent Ombudsman.

Place of work, working conditions of the Ombudsman are determined by the decision of the Fund’s Management Board.

Partially complied

In order to comply with the principles of business ethics and an appropriate settlement of social and labor disputes arising at the Company, on June 16, 2017, the Company’s Board of Directors (Minutes No. 07/17) elected and appointed Bekbas O.T. – Chairman of “Samruk-Energy Local Trade Union”, which has an spotless business reputation, high authority and has the ability to make unbiased decisions.

On November 20. 2015, the Company’s Board of Directors (Minutes No. 07/15) approved the Regulation on the Company’s Ombudsman (hereinafter – the Regulation). The Regulations clearly sets out the tasks, roles and responsibilities, rights and obligations of the Ombudsman.

The Ombudsman sends a report on the work performed to the members of the Board of Directors every quarter. The Company’s Annual Report includes the report of the Ombudsman.

The Ombudsman does not submit the report to the ARC and the AC. he submits the report on the work performed only to the Board of Directors members.

Section 5. Effectiveness of the Board of Directors and Executive Body

5

It is necessary to provide a variety of experience, personal characteristics and gender composition in the composition of the Board of Directors. The Board of Directors shall consist of independent directors, in an amount sufficient to ensure the independence of decision-making and equitable treatment of all shareholders. Recommended number of independent directors on the Board of Directors of the Company is in the amounts up to fifty percent of the total number of Board members.

Partially complied

The Board of Directors lacks gender diversity.

7

The Board of Directors approves the induction program for newly elected members of the Board of Directors and a professional development program for each member of the Board of Directors. Corporate Secretary shall ensure the implementation of this program.

Partially complied

The Company has an induction program for newly elected members of the Board of Directors. In addition, in order to implement a mechanism for monitoring the implementation of this program, in 2016 it was updated with a view to formalizing this procedure. The Corporate Secretary ensured the completion of the Induction Program by elected new members of the Board of Directors. The program of professional development was approved for certain members of the Board of Directors.

12

The preparation and holding of meetings of the Board of Directors should promote maximum effectiveness of its activities. In order to perform their duties, members of the Board of Directors shall have access to the complete, relevant and timely information. The Board of Directors meets regularly to perform its functions effectively. Board of Directors meeting held in accordance with the work plan approved before the start of the calendar year. Meetings of the Board of Directors and its committees is carried out by a full-time or part-time (absentia meeting) forms of voting, the number of meetings with voting in absentia should be minimized. Consideration and adoption of decisions on important and strategic character is only at meetings of the Board of Directors with voting. In special cases a combination of both forms the meeting of the Board of Directors and its committees might be possible.

Meetings of the Board of Directors and its committees properly minutes by Corporate Secretary by indicating sufficient outcome of the discussions and decisions.

Partially complied

The Board of Directors approves the Work Plan indicating the expected dates of meetings for the coming year. All meetings of the Board of Directors and its Committees are detailed by the Corporate Secretary and the Secretary of the Audit Committee.

Materials and information on the upcoming meeting of the Board of Directors are sent in advance (10 days prior to the meeting) by the corporate secretary to the members of the Board of Directors.

However, there have been cases of additional issues on the agenda during meetings of the Board of Directors (minutes of the Board of Directors dated January 25, 2018, April 27, 2018, May 25, 2018, June 29, 2018), respectively, the deadline for submission of materials is not met.

There are cases when the members of the BD pay attention to the need to improve the quality of the materials to the issues submitted for the consideration of the BD.

Chapter 7. Transparency

2

The Fund and Organizations timely disclose information prescribed by law of the Republic of Kazakhstan and internal documents. Internal documents determining the principles and approaches to disclose and protection of the information as well as a list of information to be disclosed to the Stakeholders should be approved in the Fund and Organizations. The Fund and Organizations determine the procedure for classifying information (assigning a category of access), terms of storage and use of information, including a group of persons who has right of free access to information of commercial and official secret and take measures to protect its confidentiality.

Partially complied

The Company approved regulatory documents, which govern principles and approaches to information disclosure and protection.

The Company has the following documents:

The list of information that is disclosed to stakeholders

The rules for the preparation and posting of information on the Company’s website, which describes reporting formats. officials and business units responsible for the disclosure and provision of information

Information Security Policy.

Instruction on protection of “Samruk-Energy” JSC confidential information.

Rules for the preparation and posting of information on the Internet resources of the depository of financial statements and the stock exchange.

The Company also has an Information Policy, which determines the principles and approaches to information disclosure, but currently requires updating.

To learn full report on the compliance with principles and provisions of the Corporate Governance Code, please follow the link https://www.samruk-energy.kz/ru/shareholder/other-statements.