Report on compliance with the principles and provisions of the Corporate Governance Code of Kazakh­telecom JSC for 2022

This Report is prepared in accordance with item 15 of chapter 5 of the Corporate Governance Code of Kazakhtelecom JSC “Effectiveness of the Board of Directors and Executive Body”.

Kazakhtelecom JSC’s activity and its corporate practice show full compliance with the principles and provisions of the Corporate Governance Code.

Despite the title of the chapter of the Code, it contains a number of provisions that should and should be governed by the Company in its operations. In particular, the Foundation’s main strategic objective is to increase long-term value and sustainable development. All decisions and actions should be in line with the development strategy.

The Company’s bodies are wholly independent and independent in taking decisions and taking any actions within their competence. Relations (interaction) between shareholders and the Company shall be performed through the Board of Directors in accordance with the principles of good corporate governance.

Information on the Company’s operations is disclosed in accordance with the Law On Joint Stock Companies and the Company Charter by placing the necessary information in the mass media (Internet resources of the depository of financial statements and exchanges). At the request of shareholders, part of the information was provided to them personally.

The Company has the Internal Audit Service, the Compliance Service, the Corporate Secretary and the Ombudsman, who perform their tasks as provided for by law and the Company’s internal documents.

These provisions are disclosed in more detail later in this Report.

The corporate governance system is a set of processes ensuring management and control over the Company’s activities, as well as the system of relations between the Management Board, the Board of Directors, shareholders, and stakeholders. These issues are clearly regulated in the Charter, regulations on GMS, the Board of Directors, Management Board and other internal documents.

Samruk-Kazyna JSC (hereinafter — the Fund) participates in the management of companies by exercising the functions of a major shareholder, as well as through the Board of Directors.

The Board of Directors of the Company has full independence in decision-making within its competence. The Foundation’s position on certain issues is communicated through representatives of the Foundation on the Board of Directors.

The Company is managed by its bodies in accordance with legislation and the Charter.

Coordination of sustainable development measures is carried out by the Corporate Governance Service. In 2021, following the state climate agenda “Achieve carbon neutrality by 2060” and in accordance with the instructions of Samruk-Kazyna JSC, Kazakhtelecom JSC started introducing ESG principles and transition to low-carbon development. In 2022 the Decision of the Board of Directors as of 09.12.2022 No.13 adopted the Low-carbon development program of Kazakhtelecom JSC for 2022-2032, according to which the Company has to reduce greenhouse gas emissions by 13% in the next 10 years. Verification of greenhouse gases on Scope 1 and Scope 2 of Kazakhtelecom JSC for 2021 by an independent verification body was carried out in 2022. Low-carbon development, as part of the general corporate strategy in the mid- and long-term perspective, will strengthen the sustainability of business, attract additional investments, improve the Company’s positioning in terms of responsible business management. Implementation of the low-carbon development program demonstrates Kazakhtelecom JSC’s commitment to the national policy of Kazakhstan as the main telecommunications enterprise in the country.

The Company set a goal to obtain ESG rating, which is an important tool for increasing investment attractiveness of the Company. Kazakhtelecom JSC intends to obtain ESG-rating from the leading rating agency Sustainalytics, in connection with which further measures and initiatives will be taken to strengthen its rating positions.

Compliance with shareholders rights is a key obligation of the Company. The Company strictly respects the rights of its shareholders, as set forth in legislation and internal documents, and ensures fair treatment of its shareholders. Shareholders are promptly notified of events affecting their interests, such as meetings of shareholders, decisions made, etc. The Company shall promptly provide the shareholders, upon their request, with the necessary information on the Company’s activities.

The Board of Directors is a management body reporting to the General Shareholders Meeting, ensuring strategic management of the organization and control over the activity of the Management Board.

The Management Board reports to the Board of Directors, manages the day-to-day activity of the organization, and ensures its compliance with the strategy, the Development Plan and the decisions adopted by the General Shareholders Meeting and the Board of Directors.

The powers of the Board of Directors and Management Board are clearly defined and delineated.

The Board of Directors and its Committees maintain a balance of skills, experience, and knowledge, ensuring the adoption of independent, objective and effective decisions in the interests of the Company and taking into account fair treatment of all shareholders and the principles of sustainable development.

The Board of Directors of the Company is represented by specialists in various fields of knowledge (telecommunications, finance, marketing, technical sphere, etc.) with extensive experience, including international. The number of independent directors corresponds to the recommended by the legislation (not less than 30%) and even exceeds it.

The Board of Directors is elected only within the procedures established by law and the Company’s Charter. The procedure of election, term of office and activities of the Board of Directors are regulated by the internal documents of the Company. There is an induction program for newly elected members of the Board of Directors.

Chairman of the Board of Directors is responsible for general management of the Board of Directors, ensures full and effective implementation of its main functions by the Board of Directors and building a constructive dialogue between the members of the Board of Directors, major shareholders, and the Management Board.

The roles and functions of the Chairman of the Board of Directors and the head of the executive body are clearly delineated and set out in the Company’s Charter, regulations on the Board of Directors and the Management Board.

Committees of the Board of Directors contribute to in-depth and thorough consideration of issues within the competence of the Board of Directors and improve the quality of decisions made, especially in such areas as audit, risk management, strategic planning, human resources, and social issues. In 2022, the Company had three committees: Audit and Sustainability Committee, Human Resources, Remuneration and Social Issues Committee, and Strategic Planning Committee. Their role is quite clearly regulated in their regulations, they consider a wide range of issues and make the necessary recommendations to the Board of Directors. The results of the committees’ activities are constantly reviewed and positively evaluated by the Board of Directors.

The preparation and conduct of meetings of the Board of Directors contributes to the maximum efficiency of its activities. Members of the Board of Directors have access to complete, relevant and timely information to perform their duties.

The Board of Directors holds regular meetings for the effective performance of its functions. Meetings of the Board of Directors are held in accordance with the work plan approved before the beginning of the calendar year. Meetings of the Board of Directors and its committees are held by in-person or absentee voting, with the number of meetings with absentee voting kept to a minimum. In 2022, no meetings of the Board of Directors were held in absentia. Consideration and adoption of decisions on issues of important and strategic importance are only carried out at meetings of the Board of Directors with voting in presentia.

Meetings of the Board of Directors and its committees shall be duly recorded by the Corporate Secretary, indicating the results of discussions and decisions made.

In order to effectively organize the activities of the Board of Directors and interaction of the Board of Directors, the Management Board with shareholders, the Board of Directors appointed a corporate secretary, who performs his functions in accordance with the law, the charter and other internal documents.

The Company has a collegial executive body — the Management Board. The Management Board reports to the Board of Directors and manages the daily operations of the Company, is responsible for the implementation of the strategy, development plan and decisions made by the Board of Directors and the General Shareholders Meeting.

The Board of Directors elects the head and members of the Management Board, determines the term of office, salary, and terms of their remuneration. The recommendation to elect the head and members of the executive body for a term of up to three years is complied with.

Incentive KPI of the director and members of the executive body shall be approved annually by the Board of Directors.

In the event of corporate conflicts, participants seek ways to resolve them through negotiations to ensure the effective protection of the interests of the organization and interested parties.

To comply with the principles of business ethics and to ensure the optimal regulation of social and labor disputes arising at the Company, an Ombudsman has been appointed. The role of the Ombudsman is to advise the employees who have contacted him, the participants in labor disputes, the conflict, and to assist them in developing a mutually acceptable, constructive and implemented solution, taking into account compliance with the norms of the laws of the Republic of Kazakhstan (including maintaining confidentiality where necessary), and to assist them in resolving problem social and labor issues, as well as in complying with the principles of business ethics of the Company’s employees.

The Compliance Service is active and effective, aimed at ensuring compliance with mandatory regulatory requirements and international best practices on anti-corruption and the formation of internal corporate culture of the Company and its subsidiaries to ensure transparency and honesty among employees, as well as creating conditions for doing business in accordance with best international standards, internal policies, and legislation of the Republic of Kazakhstan.

The Company has a risk management and internal control system in place. The Board of Directors plays an active role in risk management.

On a quarterly basis, risk management reports are reviewed by the Audit and Sustainability Committee and the Board of Directors. If necessary, they adjust measures and processes in this area.

The Company has an effective Internal Audit Service reporting to the Board of Directors. The IAS reports are also reviewed by the Audit and Sustainability Committee and the Board of Directors on a quarterly basis.

To comply with the interests of the Company’s interested parties, discloses information on all important aspects of its operations, including the financial position, results of operations, ownership and management structure, on a timely and reliable basis. The relevant information is placed on various resources, including the Internet resources of the depository of financial statements and the stock exchange.

The Company audits its financial statements annually by an independent and qualified auditor. Annual financial statements audited by the external auditor are approved annually by the General Shareholders Meeting.

The Company also approves an integrated annual report on an annual basis, which discloses all aspects of the Company’s operations for the past year, including sustainability measures.