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204 2005 NORILSK NICKEL • ANNUAL REPORT •NORILSK NICKEL • ANNUAL REPORT •200520560. By-laws of the company contain a list of information,documents and materials that shouldbe provided to shareholders for the decisionon the issues put for the consideration ofthe General Meeting.61. The company has a web site and regularly disclosesinformation about the company onthe web site.62. By-laws of the company contain a requirementto disclose information on the deals ofthe company with persons that are seniorexecutives of the company in accordancewith the Charter and deals of the companywith entities where senior executives of thecompany directly or indirectly hold 20 or morepercent of the share capital or on which suchpersons may otherwise exercise significantinfluence.63. By-laws of the company contain a requirementto disclose information on all transactionsthat may affect the market value of thecompany's shares.64. There is an internal document approved bythe Board of Directors on the use of significantinformation on the activity, shares andother securities of the company and transactionswith such shares and other securities,which is not publicly available and thedisclosure of which may have material impacton the market value of shares and other securitiesof the company.CompliedComplied Charter, Clause 5.4.Not compliedNot compliedCompliedCharter, Clause 5.7; Regulation on the GeneralMeeting, Clause 9.This requirement is not defined in the By-lawsof the Company.In accordance with the requirements of Clause8.6.1 (e) of the Regulation on InformationDisclosure by Issuers of Emission Securitiesapproved by Order of the FSFM No. 05-5/pz-nof 16 March 2005, the Company discloses informationon a deal with interested parties whichmust be approved by the authorized managementbody of the Company in accordance withthe legislation of the Russian Federation if theprice of the deal is equal to or exceeds 5% ofthe carrying value of assets of the Company asper its financial statements for the last reportingdate before the deal is approved by an authorizedmanagement body of the Company.This requirement is not contained in the By-lawsof the Company.In accordance with the requirements of theRegulation on Information Disclosure by Issuersof Emission Securities (Clause 1.14, Clause 6.1)approved by Order of the FSFM No. 05-5/pz-nof 16 March 2005, the Company discloses informationthat may affect the market value of theCompany's shares and information in the formof material events reports.Besides, the Company discloses, on a regularbasis, information on all significant transactionsthrough dissemination of press-releases and postinginformation on the corporate web-site.The Regulation on Insider Information approvedby the Board of Directors on 30 December 2004,is in effect in the Company.Control of financial and economicoperations of the company65. There are internal control procedures overthe financial and operational activities of thecompany approved by the Board of Directors.66. There is a special division in the companyensuring compliance with the internal controlprocedures (internal control service).67. By-laws of the company contain a requirementthat the structure and members of theinternal control service should be determinedby the Board of Directors.68. There are no persons in the internal control servicerecognized guilty of committing offencesin the sphere of economic activity, against thegovernment, against interests of the federal,regional and local government service or thathave been subject to administrative penaltiesfor offences in the sphere of entrepreneurialactivities or in the sphere of finance, taxes andlevies and the securities market.69. There are no persons in the internal controlservice who serve as members of the executivebodies of the company, as well as members,the General Director (manager), membersof the management bodies or employeesof any competitor of the company.Not compliedNot compliedIn accordance with the Company's Charter(Clause 6.3.3.26), the competence of the Boardof Directors includes approval of internal controlsystems and procedures and management informationsystem; however, no internal documentthat would stipulate specific internal control procedureshas been approved by the Board ofDirectors.The current version of the Charter (Clause6.3.3.27, 6.3.3.28, 6.3.3.29) provides for thecreation of an internal control service at theCompany, and includes approval of the requirementsto the candidates for officers of the service,as well as decision making regarding hiringof the head of such service in thecompetence of the Board of Directors.The Company has a division ensuring compliancewith the internal control procedures, theInternal Control Department, which does notfully comply with the requirements for the internalcontrol service.Complied Charter, Clauses 6.3.3.27, 6.3.3.28, 6.3.3.29.Not applicableNot applicableThe Company has a division ensuring compliancewith the internal control procedures, the InternalControl Department, whose staff meets the specifiedrequirements. Meanwhile, the Departmentitself does not fully comply with the requirementsfor the internal control service.The Company has a division ensuring compliancewith the internal control procedures, theInternal Control Department, whose staff meetsthe specified requirements. Meanwhile, theDepartment itself does not fully comply withthe requirements for the internal control service.APPENDIX 1
206 2005 NORILSK NICKEL • ANNUAL REPORT •NORILSK NICKEL • ANNUAL REPORT •200520770. By-laws of the company establish dates forthe submission of documents and materialsto the internal control service for the assessmentof financial and operational transactionsperformed and liability of officials andemployees of the company for failure to providethem in time.Not compliedThis requirement is not defined in the By-lawsof the Company.Dividends76. There is an internal document approved bythe Board of Directors used as guidance bythe Board of Directors in developing recommendationson the size of dividends(Regulation on Dividend Polices).CompliedProtocol of the Board of Directors No. GMK/18-pr-sd dated 4 June 2002.71. By-laws of the company provide for the obligationof the internal control service to communicateany violations detected to the AuditCommittee and where there is no such committeeto the Board of Directors.72. The company's charter contains a requirementon preliminary assessment of the practicalityof transactions not envisaged in thecompany's financial and operational plan(unusual transactions) by the internal controlservice.73. By-laws of the company establish a procedurefor the agreement of any unusual transactionswith the Board of Directors74. There is an internal document determining theprocedure of audits of the financial and operatingactivities by the internal audit commissionapproved by the Board of Directors.Not compliedNot compliedNot compliedCompliedAt the date of approval of this annual report, thisrequirement is not defined in the By-laws of theCompany.Meanwhile, the Company is developing the regulationson internal control over financial andoperating activities (to be approved by theCompany's Board of Directors) in accordancewith which the Internal Control Department"shall inform the Audit Committee of the Boardof Directors and the Company's Sole ExecutiveBody of the identified breaches of internal controlprocedures."The Company's Charter contains no such requirement.Actually, all unusual transactions are consideredby the Company's Board of Directors.Regulation on the Revision commission,section 5 Procedure of Audits (Inspections)77. The Regulation on Dividend Policies containsa procedure for the determination of theminimum share of the net profit of the companyused for the payment of dividends andconditions under which dividends are notpaid or are not paid in full on preferred sharesfor which the size of dividends is determinedin the company's charter.78. Publication of information on dividend policiesof the company and any amendmentsthereto in a periodical stipulated in the company'scharter for publication of announcementson General Meetings and on the website of the company.CompliedCompliedProtocol of the Board of Directors meeting No.GMK/18-pr-sd dated 4 June 2002.Recommendations regarding terms of dividendpayment on preferred stock are not applicableto the Company due to absence of this class ofshares.Information on Dividend Policy (when approvedby the Board of Directors) was placed on theCompany's web site in its annual reports and distributedin the form of a press release whereasno such information was placed in periodic publicationsas envisaged by the Company's Charter.Notes:(1) This report on compliance with the Code of Corporate Conduct was prepared in accordance with the Methodological Recommendations approved by theDirective of the FCSM of Russia No. 03-849/r dated 30 April 2003.(2) For the purposes of this Report, "complied"/"not complied" answers in respect of a specific provision of the Corporate Governance Code should be interpretedas compliance/non-compliance by the Company with the principal (material) part of the provision in accordance with the Company's Charter or by-lawseffective at the time of preparation of this compliance report and/or based on the existing corporate governance practices at the Company. For the purposes ofthis compliance report, "not applicable" in respect of a specific provision of the Corporate Governance Code should be interpreted as the non-applicability ofthe Code's provision to the Company, since the Code's provision refers to an institution/a procedure which does not exist within the Company.APPENDIX 175. The Audit Committee performs an assessmentof the auditor's report before it is presentedto the shareholders in the GeneralMeeting.CompliedClause 2.3.1 (e) of the Regulation of the AuditCommittee of the Board of Directors providesthat it is within the competence of the AuditCommittee to "review financial statements andresults of audits, discuss them with external auditorsand management of the Company beforethey are presented to the Board of Directors ofthe Company".In accordance with Clause 5.7 of the Charter,"the review of the Auditor's Report preparedby the Audit Committee" constitutes "information(materials) to be made available to personseligible to participate in a Meeting in thecourse of preparation for the Meeting".
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