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East Capital Summit

East Capital Summit. Russia – back to basics. Investor Protection Association of Russia. Alexander Shevchuk Assistant Executive Director Dennis Kulikov Chief Executive Officer. Russia’s Investor Protection Association. Investor Protection

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East Capital Summit

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  1. East Capital Summit

  2. Russia – back to basics

  3. Investor Protection Association of Russia Alexander ShevchukAssistant Executive Director Dennis Kulikov Chief Executive Officer

  4. Russia’s Investor Protection Association

  5. Investor Protection Association What is the IPA? We are a non-profitassociationof27 of the largestinstitutionalinvestorsinRussia We have an untarnished reputation for lobbying investors’ interests We are Russia’s only association of institutional investors OurGoals OrganizationalStructure • The IPA wasestablishedbyinvestorsandisactivelymanaged byinvestors • All key decisions are taken by the board of directors, which is comprised solely of representatives of our member funds • Systematic improvementofcorporategovernanceinRussia • Lobbying through the investors’ agenda with issuers and regulators • Ensuringthe inforcementofRussianlawswith respect toinvestors’ rights

  6. Investor Protection Association Who are our members? 60% ForeignFunds: 40% RussianFunds: • Alfa-Bank • ATON • IC RUSS-INVEST • KIT-FINANCE • Industrialinvestors • RenaissanceCapital • MC Leader • MC Uralsib • ….. • Deutsche Bank • East Capital • EOS Russia • Equinox • Fleming Family & Partners • NCH Advisors • PMI Marketing and Sales • PPF • Templeton • Prosperity Capital Management • … Ourmembershave investedover$25bnintotheRussianeconomy Our numerous long-term members can attest to the value they’ve derived from IPA membership

  7. Investor Protection Association What do we do? (1/2) Areas Examples • In 2012,through the IPA’s efforts, about 50 independentdirectorswereelectedat over 30 public companies: • Veropharm, GAZ, Mostotrest, M-Video, Dixy Group, Cherkizovo Group,OGK-2, IDGC Holding and many IDGC companies • Since 2000, over 450 independentdirectorshave beenelectedto over 160 Russiancompanies, including: • Sberbank, RAO UES ofRussia, Rostelecom, FSK UES • Since 2007, we have had a history productive of cooperation withISS, the leading global proxy advisory firm • Our candidates are recognized by ISS as independent ConsolidateInvestors’ Votes 1 • Take partinconsiderable restructurings of public companies: • RAO UES of Russia, Holdingof IDGC, Svyazinvest-Rostelecom reorganization • Engage in negotiationsto resolve disputes: • Veropharm-AFK Sistema M&A, GAZ dividend payout, forcedbuybackat7thContinentand PowerMachines • Pursue matters in the media and courts when negotiation fails • 7thContinent, GAZ dividend, Ingosstrakh, Norlisk Nickel Resolve Challenging Situations 2

  8. Investor Protection Association What do we do? (2/2) Areas Examples • Initiate the dialogue with shareholders at AGM/EGM, set up board of directors committees and otherwise improve the work of the board of directors • Play critical role in the development of corporate strategies, M&A deals and reorganizations • Negotiate with the majority shareholder for the establishment of KPI-based management motivation systems and internalcontrolsystems (independent internal auditing departments of various forms) • Block questionabletransactionsand initiatives ImproveCorporateGovernance 3 • We undertake lobbying activities to amend the laws concerning investors, and otherwise engage with government authorities • We interact with the Moscow Stock Exchange, Agency for Strategic Initiatives, international corporate governance organizations (OECD, EBRD, ICGN) • We are your worthy voting operations center in Russia • We are the best in Russia at ensuring that your votes are cast exactly as you want them to be; • We are your always-on-call Corporate Governance experts in Russia Other Activities 4

  9. Investor Protection Association Companies we are currently dealing with… Independent Directors from the IPA are present at: • Energy & Utilities • MRSK Holding • RAO Energy Systems of the East • OGK-2 • MRSKs: of the Volga, North Caucasus, North-West, Center, Center and Privolzhye, South • Smolenskenergoremont • Bashkirenergo • KuzbasskayaToplivnayaKompaniya • Lenenergo • Magadanenergo • Real Estate & Construction • LSR Group • MOSTOTREST • Transsignalstroy • Retail • Dixy Group • M.Video • Automotive • SOLLERS • GAZ • Other • VEROPHARM • Bank St. Petersburg • Cherkizovo Group • SelenginskyTsKK • SolombalskyTsBK • Bryansk Milk Combinate • ROSINTER

  10. Investor Protection Association Companies we are currently dealing with… IPA members have significant block of shares at 40 additional companies including: • Sberbank • Gazprom • Bashneft • TNK-BP • Rostelecom • FSK • Holding MRSK • Aeroflot • AFK Sistema • MTS • others.

  11. Investor Protection Association Recent achievements & plans Since the 2nd half of 2012 until present: • Election of about 50 independent directors to Russian companies at GSMs 2012; • Nominating IPA independent directors to the BoDs of 60 companies at AGSMs 2013 • 2. Cooperation with Rosimushchestvo (Federal Agency for State Property Management) • Implementing governance improvements to the state companies; • Consolidating votes with Rosimushchestvo as a minority shareholder • 3. Interaction with the FSFM (Federal service for financial markets) • Disclosing the Investment opinion referring to the “super-regulator” reform and integration with the Central Bank; • Suggesting new instruments to increase the influence of the FSFM; • Working actively to speed up amendments to the Russian legislation, including those concerning voluntary offers/mandatory buy-outs and establishing the Russian Corporate Governance Code.

  12. Investor Protection Association Recent achievements & plans Since the 2nd half of 2012 until present: • 4. Interaction with the Moscow Exchange to voice investors’ concerns and desires regarding the Exchange. • 5. Achieving consensus through negotiations with investors and issuers in numerous situations, including: • Consolidating investors in TNK-BP/Rosneft situation; • Potential AFK Sistema-Veropharm acquisition; • Mostotrest-SZKK acquisition; • Active work on the worst governance abuses in Russia in 2012: Seventh (7) Continent and Power Machines: courts, interaction with the FSFM; • The planned reform of the energy distribution companies in Russia (Russian Grids). • 6. Attraction of new investors to strengthen our lobbying power: 7 new members in 4 months

  13. Investor Protection Association Our contacts Demid Fedorov Investor Relations +7 (985) 431-2169 fedorov@ipa-moscow.com www.ipa-moscow.com Alexander Shevchuk Deputy Executive Director +7 (916) 441-8902 shevchuk@ipa-moscow.com

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