CHARTER

CHARTER OF

Oil Transporting Joint Stock Company “Transneft”

 

Oil Transporting Joint Stock Company "Transneft" (hereinafter referred to as the “Company”)  was established according to the Decision #810 of the Council of Ministers – Government of the Russian Federation dated 14 August 1993 “On the Establishment of the Oil Transporting Joint Stock Company "Transneft"” in pursuance of the Decree #1403 of the President of The Russian Federation dated 17 November 1992 “On Specific Features of the Privatization and Transformation into Joint Stock Companies of State Enterprises and Industrial and Research-Industrial Associations in the Oil and Oil-Refining Industries and Oil Product Supply”.

Chapter I. General Provisions

Article 1. Name and Location of the Company

1.1. The full official name of the Company is Открытое акционерное общество "Акционерная компания по транспорту нефти "Транснефть".

The abbreviated official name of the Company is ОАО "АК" Транснефть".

The full company name in English is Oil Transporting Joint Stock Company "Transneft".

The abbreviated name in English is JSC "Transneft".

1.2. The location of the Company (legal address) is: ul. Bolshaya Polyanka, 57, Moscow, 119180, Russian Federation.

1.3 The correspondence address of the Company is: ul. Bolshaya Polyanka, 57, Moscow, 119180, Russian Federation.

Article 2. Legal Status of the Company

2.1. The Company is a legal entity and owns separate property accounted for on its independent balance sheet, may acquire and exercise property and personal non-property rights, incur obligations and act as plaintiff and defendant in a court of law.

2.2. The Company acquires the rights of a legal entity from the date of its state registration under the laws of the Russian Federation. The company is established without without limitation of the period of its existence.

2.3. The Company shall have the right to open bank accounts inside and outside the Russian Federation pursuant to the established procedure.

2.4.  The Company has a round seal bearing its full name in Russian and indicating its location.

 

2.5. The Company shall have the right to own stamps and letterheads with its name, its own logo, duly registered trademark and other means of visual identification.

 

 2.6 The company shall have the right to form the unions with other enterprises and organizations of any type of property in compliance with the laws of the Russian Federation. The Company shall have the right to establish enterprises, international unions and organizations both in the Russian Federation and abroad pursuant to the established procedure, and to take part in established joint enterprises, international unions and organizations both in the Russian Federation and abroad.

 

2.7. The Company performs in compliance with the laws of the Russian Federation and this charter.

 

2.8. The company is liable for the safety of the documents (administrative, financial, personnel), secures the transfer to the governmental custody of the documents, which have scientific and historical value, into the central archives of Moscow according to the enumeration of documents, coordinated with the union “Mosgorarhiv”.

 

2.9. The conditions of the operation of the Company, connected to the fulfillment of the interests of the Russian Federation, are defined in the performance contract, that the Company concludes with the authorized by the Government of the Russian Federation federal body of executive authority and which regulates the realization by the Company and its subsidiary stock companies of the production activity in compliance with this Charter.

 

Article 3. Liability of the Company  

3.1. The Company is liable for its obligations to the extent of its assets.

3.2. The Company is not liable for the obligations of its shareholders.

3.3. If the insolvency (bankruptcy) of the Company is provoked by the actions (inaction) of its shareholders or other persons, who are entitled to give to the Company mandatory directions or have the possibility of influence its actions otherwise, then the mentioned shareholders or other persons in case of the insolvency of the Company may be entitled to the subsidiary liability for its obligations.     

The insolvency  of the Company is deemed to be provoked by the actions (inaction) of its shareholders or other persons, who are entitled to give to the Company mandatory directions or have the possibility of influence its actions otherwise, only in the case when they used their right to give mandatory directions  or the possibility to define the cations of the Company, having the advance knowledge of that the consequence of the execution of the mentioned action will be insolvency of the Company.

3.4 Shareholders are not liable for the Company’s obligations and bear the risk of losses related to the Company’s operations to the extent of the value of the Company’s shares owned by shareholders. Shareholders, who haven’t paid for the shares fully, hold joint responsibility for the Company’s obligations to the extent of the unpaid part of the price of the shares belonging to them.

3.5. The state and its bodies are not liable for the Company’s obligations; likewise, the Company is not liable for the obligations of the state and its bodies excluding the cases which comply to the laws of the Russian Federation.

 

Article 4. Branches and Representative Offices of the Company

4.1. The Company shall have the right to establish branches and open representative offices in the Russian Federation in compliance with the demands of the laws of the Russian Federation and abroad in compliance with the demands of the laws of the foreign state in the location of the branches and representative offices unless otherwise notified by the international treaties of the Russian Federation.

4.2. The Company’s branches and representative offices are not legal entities and shall operate on the basis of the Regulations of the Company. Branches and representative offices are provided with property by the Company which shall be recorded on their separate balance sheets and on the balance sheet of the Company.

4.3. The management of the branches and representative offices shall be executed by the persons,  appointed by the Company. The heads of branches and representative offices shall act under a power of attorney.

4.4. Branches and representative offices shall carry out their activities on behalf of the Company, which shall bear responsibility for their activities.

4.5. The Company has the following representative offices:

in the Republic of Poland  – oil custody transfer station “Adamowo-Zastawa”

in the Republic of Hungary – oil custody transfer station “Fényeslitke”

in the Slovak Republic – oil custody transfer station “Budkovce”

in the Republic of Lithuania – oil custody transfer station “Mažeikiai”

in the Republic of Iraq in Bagdad 

in the Republic of Belarus – oil custody transfer station “Polots”

in Ukraine in Kiev

4.6. The company has a branch in Saint-Petersburg, Russian Federation. The correspondence address is the following: pereulok Baskov, 14, Saint-Petersburg, 191014, Russian Federation.

 

Article 5. Subsidiaries and Dependent Companies

5.1. The Company may have subsidiaries and dependent companies with rights of legal entities on the territory of the Russian Federation  in compliance with the demands of the laws of the Russian Federation and abroad in compliance with the demands of the laws of the foreign state in the location of the branches and representative offices unless otherwise notified by the international treaties of the Russian Federation.

5.2. The company is declared subsidiary, in the case if the Company due to its participation in the charter capital or in accordance with the signed contract or in another way has the possibility to define the decisions made by such company.

5.3. The subsidiary company isn’t liable for the debts of the Company. If the Company has the right to give to the subsidiary mandatory directions, then the Company holds the subsidiary liability with the subsidiary for the deals, made in pursuance of such directions.The company is deemed to have the right to give to the subsidiary mandatory directions only in case if the right is mentioned in the contract with the subsidiary or in the charter of the subsidiary. In case of the insolvency (bankruptcy) of the subsidiary through the fault of the  Company, the Company is entitled to the subsidiary liability for its debts. The insolvency (bankruptcy) of the subsidiary is deemed to have happened through the fault of the  Company, only in the case if the Company has used the mentioned right having the advance knowledge of that the consequence of the execution of the mentioned action will be insolvency of the subsidiary.

5.4. The company is deemed as dependent only, if the Company possesses more than 20 percent of the voting stock of the company.

 

Chapter II. Objectives and Types of Activity of the Company

 

Article 6. The Objectives and Purposes of the Activity of the Company

6.1. The objectives of the establishment of the Company are as follows:

-  realization of  technical and social and economic interests of the shareholders with the fulfillment of the interests of the Russian Federation in the sphere of realization of trunk pipeline transportation of oil, gas and their products; earning profit. 

6.2.The main purpose of the activity of the Company is organization and realization of trunk pipeline transportation of oil, gas and their products.

6.3. The purposes of the Company are as follows:

-  coordination and management of the process of transportation of oil, gas and their products to the consumers, including those outside customs territory of the Russian Federation;

-  coordination of the activity of the complex development of the network of trunk pipelines, transfer tank farms, railway overpasses and other objects of the system of oil trunk pipelines;

-  provision of the execution of the demands of industrial and ecological security with the objective of reliable work of the system of oil trunk pipelines;

-  execution of rights of the shareholder in subsidiary and dependent companies of the system of oil trunk pipelines;

-  coordination of the activity in pursuance of the solution of tasks of scientific and technological progress in oil trunk pipeline transport, introduction of advanced technologies, new types of equipment and materials;

-  cooperation in the sphere of oil transportation with pipeline enterprises of different branches of industry of Russian Federation, and other countries as well, including in accordance with intergovernmental treaties; 

-   the development of the external economic connections of the Company and its subsidiaries of the system of oil trunk pipelines;

-   the realization of the investment activity for the development of the production basis, expansion, reconstruction and technical re-equipment of the subsidiary companies of the system of oil trunk pipelines;

-   management of the system of prevention and elimination of emergencies on the oil pipeline transport;

-   organization of the labour protection at the enterprises of the system of oil trunk pipelines

-   the provision of the security of the assets of the Company, the objects of the life support of the system of oil trunk pipelines, protection of economic interests of the Company;

-   organization of works of objective training and retraining of the personnel of the Company and its subsidiaries of the system of oil trunk pipelines;

-   mobilization of financial and material resources of the system of oil trunk pipelines for satisfying its needs, including by creating the centralized fund for the general system needs.

 

Article 7. The main types of activity of the Company

The main types of the production activity of the Company are the types of activity connected to realization of tasks mentioned in the Clause 6.3 of this Charter, including:

1)  provision of services in the sphere of oil, gas and their products transportation via the system of oil trunk pipelines in the Russian Federation and abroad;

2)  involvement and realization of investments into the development of the system of oil trunk pipeline transport, including the sphere of production of goods, works and services for maintenance of the system of oil trunk pipelines, with the purpose of keeping normal working condition, increasing of the efficiency and security of its work;

3)   realization of scientific and technological, production, financial and external economic activity, including intermediary, on the territory of the Russian Federation and abroad;

4)  accomplishment of civil law deals, permitted by the laws of the Russian Federation and the international state treaties with the participation of the Russian Federation; 

5)  realization of works connected to the usage of information being state secret (protection of the state secret), provision of the services of protection of the state secret;

6)  transportation via oil trunk pipelines of oil, gas and their products;

7)  exploitation of the oil trunk pipeline transport;

8)  storage of oil, gas and their products;

9)  realization of oil, gas and their products.

The Company may also execute other types of activities, not prohibited by the laws of the Russian Federation.

 

Chapter III. Charter Capital of the Company

 

Article 8. Charter Capital and Shares of the Company

8.1. The Charter Capital of the Company shall be 7 101 722 (seven million one hundred one thousand seven hundred twenty-two) roubles.

The Charter Capital of the Company is divided into 7 101 722 (seven million one hundred one thousand seven hundred twenty-two) shares with a par value of 1 (one) rouble  per share, including:

-    1 554 875 (one million five hundred fifty-four thousand eight hundred seventy-five) preferential shares, which presents 21,8943 per cent of the charter capital;

-    5 546 847 (five million five hundred forty-six thousand eight hundred forty-seven) common shares which presents 78,1057 per cent of the charter capital.

All the shares are registered.

8.2. At the moment of registration of the Charter of the Company in the present redaction, the charter capital is paid completely.

8.3. The Company shall have the right to place common and preferential shares.

 

Article 9. Increase of Charter Capital of the Company

9.1. The charter capital of the Company may be increased by increasing the par value of its shares or by placing additional shares.

A resolution to increase the charter capital of the Company by increasing the par value of its shares shall be approved by the General Shareholders Meeting. Additional shares may be placed by the Company within the limit of the authorized shares established by the Charter of the Company.

A resolution to increase the charter capital of the Company by placing additional shares shall be approved by the General Shareholders Meeting simultaneously with  the decision of introduction into the Charter of the Company of the clause of the authorized shares, necessary in accordance with the Federal Law “On Joint Stock Companies” for making such a decision, or of the change of the clauses on the authorized shares.

9.2. An increase of the charter capital of the Company by placing additional shares may be realized at the expense of the assets of the Company.  An increase of the charter capital of the Company by increasing the par value of its shares must be realized only at the expense of the assets of the Company.

The amount of the increase of the charter capital at the expense of the assets of the Company must not exceed the difference between the amount of net assets of the Company and the amount of the charter capital and the reserve fund of the Company.

On increasing of the chart capital of the Company at the expense of its assets, the shares are distributed among all the shareholders. Every shareholder is distributed with the shares of the same category that he holds, proportionally to the amount of the actions he holds.

The increase of the charter capital at the expense of the assets of the Company with the result of appearance of fractional shares isn’t admissible.

The increase of the charter capital of the Company is admissible after the full payment of it in the order stipulated by the laws of the Russian Federation. The increase of the charter capital of the Company for covering the losses is not admissible. 

Article 10. Reduction of Charter Capital

10.1. The charter capital of the Company may be reduced by decreasing the par value of shares or reducing their total number, including by acquisition of a portion of shares by the Company, stipulated by this Charter and the Federal Law “On Joint Stock Companies”.

10.2. The charter capital of the Company may be reduced by acquisition of a portion of the Company’s shares under a resolution of the General Shareholders Meeting with the purpose of reducing their total number.

10.3. The charter capital of the Company shall be reduced under a resolution of the General Shareholders Meeting on the reduction of the charter capital by redemption of shares, which are recorded on the balance sheet of the Company in the following cases:

-   if the shares, whose ownership came to the Company as a consequence of non-full payment by the founder in the given period have not been sold within one year from the date of their acquisition;

-   if the shares, bought by the Company on the demand of the shareholders have not been sold within one year from the date of their acquisition (excluding the cases of the acquisition on the decision of reorganization of the Company);

-   if the shares, bought by the Company according to Clause 2 of Article 72 of the Federal Law “On Joint Stock Companies” have not been sold within one year from the date of their acquisition.

10.4. In case of the reduction of the charter capital of the Company according to the Clause 17.2 of this Charter, the reduction is realized by decreasing the par value of shares.

10.5. The Company shall not have the right to reduce the charter capital if in the result of this action its amount will be less than the minimal charter capital of the Company, defined in accordance with the Federal Law “On Joint Stock Companies”, for the moment of presenting the documents for the state registration of the proper amendments in the Charter, and in cases when in accordance with the Federal Law “On Joint Stock Companies”, the Company is obliged to reduce the charter capital, – for the date of the state registration of the Company.

10.6.The decision on reduction of the charter capital of the Company by decreasing the par value of shares or by acquisition of a portion of shares in order to reduce their total number, is made by the General Shareholders Meeting.

10.7. Within 30 days following the resolution to reduce its charter capital, the Company shall notify its creditors in writing about the reduction of the charter capital of the Company and its adjusted amount and publish an announcement of the approved resolution in a print edition designated for publication of information about the state registration of legal entities.

10.8.  The charter capital of the Company shall be reduced by redemption of shares under a resolution of the General Shareholders Meeting on the reorganization of the Company in the following cases:

-   stipulated by Paragraph 1, Clause 6 of the Article 76 of the Federal Law “On Joint Stock Companies”;

-   in case of reorganization of the Company in the form of spin-off at the expense of redemption of the converted shares.

CHAPTER IV. SHAREHOLDERS‘ RIGHTS AND OBLIGATIONS

Article 11. The Rights of the Holders of Common Shares

11.1. Each common share in the Company shall have the same par value and shall provide to the shareholder holding it the same scope of rights.

11.2. The holders of common shares in the Company shall have the following rights:

-   to participate in voting (including in absentee voting) at the General Shareholders Meeting on all matters falling within its competence;

-   to elect and to be elected into the management and control bodies of the Company in the way stipulated by the laws of the Russian Federation and this Charter;

-    to sell the shares owned by them without permission from other shareholders and the Company;

-  to receive a portion of the net profit (dividends) to be distributed among shareholders in the manner prescribed by the laws of the Russian Federation and this Charter;

-  to have access to the Company’s documents in the manner and to the extent provided for under the laws of the Russian Federation and the Charter and to obtain copies of such documents for a fee;

-  to demand the repurchase of all or any portion of its shares by the Company in the cases provided for by the laws of the Russian Federation;

-   the preemptive right to acquire additional shares and issuable securities convertible into shares, which are placed by open subscription, in a number proportionate to the number of shares of the category (type) they hold;

-  to receive a portion of the property and other assets of the Company (liquidation quota) in the way stipulated by the laws of the Russian Federation and this Charter;

-  to exercise other rights provided for by the laws of the Russian Federation, the Charter of the Company and resolutions of the General Shareholders Meeting adopted within its competence.

11.3. Conversion of common shared into preferential shares, bonds and other assets shall not be allowed.

Article 12. The Rights of the Holders of Preferential Shares

12.1. Preferential shares of the same type in the Company shall have the same par value and shall provide to the shareholder holding them the same scope of rights.

12.2. The holder of preferential shares in the Company shall have the right to participate in the General Shareholders Meeting. The holders of preferential shares in the Company shall not have the right to vote at the General Shareholders Meeting, excluding the cases stipulated in the Federal Law “On Joint Stock Companies”.

12.3. The holders of preferential shares in the Company shall have the right to receive an annual fixed dividend.

The total amount of the paid dividend for each preferential share is fixed to be 10% of the net profit of the Company as a result of the last financial year, divided by the number of preferential shares on the basis of the information of the share register of the Company.

12.4. The holders of preferential shares in the Company shall have the right to participate in the General Shareholders Meeting with the right to vote on the following matters:

-  on reorganization and liquidation of the Company

-  on introduction of amendments and addenda into the Charter of the Company, which restrain the rights of the shareholders – holders of preferential shares, including the cases of definition and increase of the amount of the dividend and (or) definition of the liquidation quota, paid to the holders of outstanding actions of the previous priority

-  on all matters within the competence of the General Shareholders Meeting, beginning from the General Shareholders Meeting following the annual General Shareholders Meeting, during which disregarding the reasons the decision of payment of dividends has not been made or the decision of partial payment of dividends to holders of preferential shares was made. The right of the shareholders – holders of preferential shares to participate at the General Shareholders Meeting with the right to vote is suspended on the moment of the first full payment of the dividends by the mentioned shares.

Article 13. Shareholders’ Obligations:

Shareholders of the Company are obliged:

-   to follow the demands of this Charter;

-  to follow the decisions of the management bodies of the Company, made within their competence;

-  to inform the registrar of the share register of the Company about the changes in their address, passport information for well-timed addition of amendments into the share register of the Company;

-  not to disclose confidential information on activity of the Company and keep the information, which is state secret and commercial classified information;

-  to exercise other obligations provided for by the laws of the Russian Federation, the Charter of the Company and resolutions of the General Shareholders Meeting adopted within its competence.

CHAPTER V. BONDS AND OTHER ISSUABLE SECURITIES OF THE COMPANY

Article 14. Bonds and Other Issuable Securities

14.1. The Company shall have the right to place bonds and other issuable securities, prescribed by the laws of the Russian Federation on securities.

The placement of bonds and other issuable securities is made under the Decision of the Board of Directors of the Company.

14.2. The par value of the total number of bonds issued by the Company shall not exceed the amount of the charter capital of the Company or the amount of guarantee, provided to the Company by third parties in order to issue bonds.

The placement of bonds by the Company is allowed after the full payment of the charter capital of the Company.

The Company may place bonds with nonrecurrent maturity or bonds with series’ maturity in certain period of time.

Redemption of bonds may be exercised by money or others assets according to the decision of bonds’ issue.

The Company shall have the right to issue bonds, secured by the pledge of certain assets of the Company, or bonds secured by the provision, given to the Company by third parties in order to issue bonds, and non-secured bonds.

The bonds may be registered and unregistered. Issuing registered bonds, the Company is obliged to make the register of their owners. The right to own an unregistered bond, lost by its owner, are proven by the court, in the way prescribed by the judiciary laws of the Russian Federation.

CHAPTER VI. PAYMENT OF BONDS AND OTHER ISSUABLE SECURITIES OF THE COMPANY ON THEIR PLACEMENT

Article 15. Order of Payment

15.1. The payment of shares of the Company may be realized by money, securities, other thing or property rights or other rights, having the money value. The form of payment of additional shares is defined by the decision of the placement. The payment period of additional shares is defined by the decision of the placement, but shall not exceed one year from the date of their acquisition (placement).

The payment of other issuable securities may be realized only by money. 

Additional shares and other issuable securities of the Company, placed by subscription, are placed on condition of the full payment.

15.2. While paying for additional shares with non-monetary assets, the money value of the assets, introduced to pay for the shares is estimated by the Board of Directors of the Company in the way prescribed by the laws of the Russian Federation. While paying for shares with non-monetary assets, independent assessor shall be drawn in order to define the market-value of mentioned assets. The amount of the money value, made by the Board of Directors of the Company may not exceed the money value made by the independent assessor.

15.3. The share shall nor provide with the right to vote until full paid.

CHAPTER VII. FUNDS AND NET ASSETS OF THE COMPANY

Article 16. Funds of the Company

The Company shall create a reserve fund equal to 15 percent of its charter capital.

The reserve fund shall be formed by obligatory deductions made until the reserve fund reaches the amount determined under the Charter. The annual deductions for the Company reserve fund shall be equal to 5 per cent of its net profits. The reserve fund of the Company shall be used to cover its losses, for the redemption of the Company’s bonds and for the buyout of the Company’s shares in the absence of other resources. The reserve fund shall not be used for other purposes. Other than funds prescribed by the Charter, the Company may create other funds under a resolution of the Board of Directors of the Company.

 

Article 17. Net Assets of the Company

17.1. The value of the Company net assets shall be appraised based on accounting data in the manner established by the laws of the Russian Federation.

17.2. If at the end of the second and each subsequent fiscal year the value of the Company’s net assets, according to its annual balance sheet submitted to the Company’s shareholders for approval or according to the results of an audit, proves to be less than its charter capital, the Company shall declare a reduction of its charter capital to an amount not exceeding the value of its net assets.

17.3. If at the end of the second and each subsequent fiscal year the value of the Company’s net assets, according to its annual balance sheet submitted to the Company’s shareholders for approval or according to the results of an audit, proves to be less than the minimal charter capital, prescribed by the article 26 of the Federal Law “On Joint Stock Companies” the Company shall declare its liquidation.

17.4. If in cases prescribed by the clauses 17.2 and 7.3 of this Charter, the Company won’t make the decision to declare a reduction of its charter capital or its liquidation with reasonable time, the creditors have the right to demand the long-term suspension or execution of the obligation and covering the losses from the Company. In these cases the body providing state registration of legal entities, which is entitled to have the right of a such demand by the federal law, shall have the right to present the demand of liquidation of the Company in the court.

 

CHAPTER VIII. DIVIDENDS

Article 18. Order of Paying the Dividends

18.1. The Company may decide on (declare) the payment of dividends on placed shares once a year, taking into account the restrictions, prescribed by the laws of the Russian Federation. The company is obliged to pay dividends on shared of each category (type). Dividend may be paid by money or other assets.

18.2. Dividends shall be paid from the Company’s net profits.

18.3. Decisions on the payment of dividends, the size and form of payment of dividends on each category (type) of shares shall be taken by the General Shareholders Meeting. Annual dividends may not exceed the amount recommended by the Company’s Board of Directors.

18.4. Dividends for a fiscal year shall be paid before December 31 of the year in which the resolution to pay such dividends was adopted. The list of persons entitled to receive dividends shall be compiled as of the date for the compilation of a list of persons entitled to participate in the General Shareholders Meeting. In order to prepare the list of persons entitled to receive dividends, nominal shareholders shall provide information on the persons on whose behalf they hold shares.

 

Article 19. Restrictions on Paying the Dividends

19.1. The Company shall not have the right to take the decision (declare) the payment of dividends in the following cases:

-    before the full payment of the charter capital of the Company;

-    before the buyout of all the shares, which are to be bought out in accordance with the article 76 of the Federal Law “On Joint Stock Companies”;

-    in case if on the day of taking such a decision the Company corresponds to the signs of insolvency (bankruptcy) in accordance with the laws of the Russian Federation on insolvency (bankruptcy) or if such signs will appear at the Company as a result of the payment of dividends;

-    in case if on the day of taking such a decision the amount of net assets of the Company is less than its charter capital and reserve fund or will become less than them as a result of taking such a decision;

-    in other cases, prescribed by the federal laws.

19.2. The Company shall not have the right to take the decision (declare) the payment of dividends on common shares, if the the decision on payment of dividends on preferential shares in full has not been taken, the size of the dividend on preferential shares is defined by this Charter.

19.3. The Company shall not have the right to pay declared dividends on shares in the following cases:

-    in case if on the day of payment the Company corresponds to the signs of insolvency (bankruptcy) in accordance with the laws of the Russian Federation on insolvency (bankruptcy) or if such signs will appear at the Company as a result of the payment of dividends;

-    in case if on the day of taking such a decision the amount of net assets of the Company is less than its charter capital and reserve fund or will become less than them as a result of payment;

-    in other cases, prescribed by the federal laws.

On cessation of such circumstances the Company is obliged to pay declared dividends to the shareholders.

 

CHAPTER IX. SHARE REGISTER OF THE COMPANY

Article 20. Share Register of the Company

20.1.  In the share register of the Company information on each registered person, amount and category (type) of shares, registered to the name of each registered person, other information, prescribed by the laws of the Russian Federation, is kept.

20.2. The Company shall maintain and keep a share register of the Company  n accordance with the laws of the Russian Federation from the moment of state registration of the Company.

20.3. The keeper of the share register is a professional securities market participant maintaining a register of the holders of registered securities (hereinafter, the “registrar”) of the Company.

20.4. The Company, who has entitled the registrar to keep and maintain the share register of the Company, shall provide for the safekeeping and maintenance of the share register.

20.5. Person, registered in the share register of the Company, is obliged to to inform the registrar of the share register of the Company about the changes in their information. In case of non-provision of information on the changes, the Company and the registrar are not liable for the caused losses.

 

Article 21. Introduction of an Inscription into the Share Register of the Company

21.1. Introduction of an inscription into the share register of the Company is realized on the demand of a shareholder within three days from the moment of provision of documents, prescribed by the laws of the Russian Federation. The laws of the Russian Federation may establish a shorter term of introduction of an inscription into the share register of the Company.

21.2. Refusal on introduction of an inscription into the share register of the Company is not allowed, excluding the cases prescribed by the laws of the Russian Federation. In case of refusal on introduction of an inscription into the share register of the Company, the registrar sends a motivated notice of refusal on introduction of an inscription to the person, who has demanded the inscription, within 5 days of the demand introduction of an inscription into the share register of the Company.

21.3. Refusal on introduction of an inscription into the share register of the Company may be appealed against in the court. On court decision the registrar is obliged to introduce the inscription into the share register of the Company.

 

Article 22. Extract from the Share Register of the Company

On the demand of a shareholder or nominal holder os shares the registrar of the Company shall confirm their rights to the shares in the manner of giving an extract from the the share register of the Company, which is not a security.

 

CHAPTER X. GOVERNING BODIES OF THE COMPANY

The governing bodies of the Company are as follows:

-  General Shareholders Meeting;

-   Board of Directors

-   President

-   Management Board

Article 23. General Shareholders Meeting

The General Shareholders Meeting shall be the supreme governing body of the Company. The General Shareholders Meeting shall act in accordance with the laws of the Russian Federation, on the basis of this Charter and the Regulations on the General Shareholders Meeting, affirmed by the General Shareholders Meeting on presentation of the Board of Directors of the Company.

Article 24. Competence of the General Shareholders Meeting

The General Shareholders Meeting shall adopt resolutions on the following matters:

1)    amendments and addenda to and restatement of the Charter of the Company;

2)    reorganization of the Company;

3)  liquidation of the Company, appointment of the liquidation commission and approval of interim and final liquidation balance sheets;

4)  election of the members of the Board of Directors of the Company and early termination of their powers;

5)   determination of the number, par value, category (type) of authorized shares and the rights attached to such shares;

6)   increase of the charter capital of the Company by way of increase of the par value of the shares or of placement of additional shares;

7)  reduction of the charter capital of the Company by way of reduction of the par value of shares, by way of acquisition by the Company of a portion of shares with the purpose to reduce their total number, and by way of redemption of shares acquired or repurchased by the Company in accordance with the Federal Law “On Joint Stock Companies”;

8) approval and demotion of the President of the Company; 

9) election of the members of the Audit Commission of the Company and early termination of their powers;

10)     approval of the auditor of the Company;

11)     approval of the annual financial statements, including the profit and loss statements (profit and loss accounts) of the Company, distribution of profits, including payment (declaration) of dividends, and losses of the Company based on the results of a fiscal year;

12)     establishment of the procedure for conduct of the General Shareholders Meeting;

13)     split and consolidation of shares;

14)     approval of transactions in the cases provided for by Article 83 of the Federal Law “On Joint Stock Companies”;

15)     approval of major transactions in the cases provided for by Article 79 of the Federal Law “On Joint Stock Companies”;

16)     acquisition by the Company of the placed shares, in the cases provided for by the Federal Law “On Joint Stock Companies”;

17)     participation in financial and industrial groups, associations and other alliances of commercial organizations;

18)     approval of internal documents regulating the activities of the Company’s bodies, including:

-   Regulations on the General Shareholders Meeting of JSC “Transneft”;

-   Regulations on the Board of Directors of JSC “Transneft”;

-   Regulations on Management Board of JSC “Transneft”;

-   Regulations on the Audit Commission of JSC “Transneft”.

19) other matters referred to by the Federal Law “On Joint Stock Companies”

24.2. Resolution on the questions, stipulated in paragraphs 1-18 of the Clause 24.1 of this Charter are referred to the competence of the General Shareholders Meeting. The questions, referred to the competence of the General Shareholders Meeting cannot be passed for decision to the executive bodies of the Company. The questions, referred to the competence of the General Shareholders Meeting cannot be passed for decision to the Board of Directors of the Company, excluding the cases stipulated by the Federal Law “On Joint Stock Companies”.

24.3. General Shareholders Meeting shall not have the right to examine and take decision on the questions, which are not referred to its competence by the Federal Law “On Joint Stock Companies” and this Charter.

Article 25. Types and Forms of General Shareholders Meeting

25.1. The Company shall hold Annual General Shareholders Meetings annually, not earlier than two and not later than six months after the end of the financial year. Other than annual General Shareholders Meetings are extraordinary.

25.2. General Shareholders Meeting of the Company may be held in the manner established by the laws of the Russian Federation, this Charter and Regulations on on the General Shareholders Meeting of the Company in the following forms:

-   meeting (prescribes taking of the decision by joint presence of shareholders for the discussion of agenda and taking decisions on questions for voting);

-   absentee voting. It prescribes taking of the decision of the General Meeting without holding a meeting (joint presence of shareholders for the discussion of agenda and taking decisions on items for voting).  

Article 26. Annual General Shareholders Meeting

26.1. Annual General Shareholders Meeting is convoked by the Board of Directors of the Company. The annual General Shareholders Meeting shall settle the following issues: the election of the Board of Directors; approval of the annual report and annual financial statements, including income statements (profit and loss accounts) of the Company, distribution of profits (including through the payment (declaration) of dividends) and losses based on the results of the financial year; the election of the Audit Commission of the Company; approval of the Auditor of the Company. The General Shareholders Meetings, the agenda of which includes mentioned issues cannot be conducted in the form of absent voting.

26.2. As well as the issues mentioned in the clause 26.1 of this Charter, Annual General Shareholders Meeting’s agenda may include other issues, which refer to the competence of the General Shareholders Meeting.

26.3. The shareholder (shareholders) holding in aggregate at least two per cent of the Company’s voting shares shall have the right to make proposals for the agenda of the General Shareholders Meeting and candidates to the Board of Directors, Audit Commission and Management Board of the Company, the number of which cannot exceed the quantitative composition of the respective body, and to the office of President. Such proposals shall be made not later than 60 days after the end of the financial year. If the proposed agenda of an extraordinary General Shareholders Meeting includes the issue of election of the members of the Board of Directors of the Company the shareholder (shareholders) holding in aggregate at least two per cent of the Company’s voting shares shall have the right to make proposals for candidates to the Board of Directors, the number of which cannot exceed the quantitative composition of the Board of Directors. Such proposals shall be made at least 30 days prior to the date of such General Shareholders Meeting.

26.4. Proposals on the inclusion of items to the agenda of the General Shareholders Meeting and on the nomination of candidates shall be submitted in writing, specifying the names (company names) of the proposing shareholders (shareholder) and the number and the category (type) of shares owned by them and shall be signed by the shareholders (shareholder).

26.5. A proposal on the inclusion of items to the agenda of the General Shareholders Meeting shall contain the wording of each proposed item and a proposal on the candidates to be elected at the General Shareholders Meeting shall contain the name of the candidate, the name of the body, to which a candidate is proposed for election and the information prescribed by the correspondent internal documentation of the Company.

26.6. The Board of Directors of the Company shall consider the submitted proposals and resolve to include or not to include them to the agenda of the General Shareholders Meeting within 5 days from the expiration of terms set in Clause 26.3 of this Charter.

26.7. An item proposed by shareholders (shareholder) shall be included to agenda of the General Shareholders Meeting, and nominee shall be included in the list of candidates for election to the relevant body of the Company, unless:

-  shareholders (shareholder) have failed to meet the terms set in Clause 26.3 of this Charter;

-  shareholders (shareholder) are not the owners of the amount of voting shares of the Company, prescribed by Clause 26.3 of this Charter;

-    the proposal fails to meet the requirements provided for by the Clauses 26.3, 26.4, 26.5 of this Charter;

-  the item proposed to be included to agenda of the General Shareholders Meeting does not refer to its competence or fails to meet the requirements of the law.

26.8. The motivated decision of the Board of Directors of the Company on refusal to include the proposed item to the agenda of the General Shareholders Meeting, or the proposed nominee to the list of candidates to the relevant body of the Company, shall be sent to the proposing or nominating shareholders (shareholder) within 3 days from the date of such decision.

26.9. The decision of the Board of Directors of the Company on refusal to include the proposed item to the agenda of the General Shareholders Meeting or the proposed nominee to the list of candidates for election to the relevant body of the Company as well as evasion of the Board of Directors of the Company from making such decision may be appealed against in the court.

26.10. The Board of Directors of the Company shall not change the wording of items proposed for inclusion to the agenda of the General Shareholders Meeting or the wording of the resolutions on such items.

26.11. In addition to items proposed by shareholders for inclusion to agenda of the General Shareholders Meeting or in the absence of such proposed items or absence or insufficient number of nominees proposed by shareholders for the formation of the relevant body, the Board of Directors of the Company has the right to include items to the agenda of the General Shareholders Meeting or nominees to the list of candidates at its own discretion.

Article 27. Extraordinary General Shareholders Meeting

27.1. An extraordinary General Shareholders Meeting shall be conducted under the resolution of the Board of Directors of the Company adopted:

-   at its initiative; 

-   at the request of the Audit Commission of the Company;

-   at the request of the auditor of the Company; 

-   at the request of shareholders (shareholder) that hold at least 10 per cent of the voting shares of the Company as of the date of such a request.

The convocation of an extraordinary General Shareholders Meeting at the request of the Audit Commission of the Company, the auditor of the Company or shareholders (shareholder) that hold at least 10 per cent of the voting shares of the Company, is made by the Board of Directors of the Company.

The exercise of the demand by a person entitled to make such a demand is made in the manner stipulated by the laws of the Russian Federation and the Regulations on General Shareholders Meeting of the Company.

27.2. The convocation of an extraordinary General Shareholders Meeting at the request of the Audit Commission of the Company, the auditor of the Company or shareholders (shareholder) that hold at least 10 per cent of the voting shares of the Company shall be conducted within 40 days from the date of submission of the request to convene the extraordinary General Shareholders Meeting. If the proposed agenda of an extraordinary General Shareholders Meeting includes the election of the members of the Board of Directors of the Company, such General Shareholders Meeting shall be convened within 70 days from the date of submission of the request to convene the extraordinary General Shareholders Meeting.

27.3. In the cases when the Board of Directors of the Company shall resolve to convene an extraordinary General Shareholders Meeting, such General Shareholders Meeting shall be conducted within 40 days from the date of the resolution of the Company Board of Directors to convene the General Shareholders Meeting.

In the cases when pursuant to the Federal Law “On Joint Stock Companies” the Board of Directors of the Company shall resolve to convene an extraordinary General Shareholders Meeting for the election of the members of the Board of Directors, such General Shareholders Meeting shall be conducted within 70 days from the date of the resolution of the Company Board of Directors to convene the General Shareholders Meeting.

27.4. The request for convening an extraordinary General Shareholders Meeting shall contain the wording of each item proposed on the inclusion to the agenda of the General Shareholders Meeting. The request for convening an extraordinary General Shareholders Meeting may contain the wording of resolutions for each item, and the proposal on the form of convening of the General Shareholders Meeting. If the request for convening an extraordinary General Shareholders Meeting  includes the proposal for candidates, such proposal falls under the Clauses 26.4, 26.5 of this Charter. The Board of Directors of the Company shall not change the wording of items proposed for inclusion to the agenda of the General Shareholders Meeting or the wording of the resolutions on such items and change the form of convening of an extraordinary General Shareholders Meeting, convoked at the request of the Audit Commission of the Company, the auditor of the Company or shareholders (shareholder) that hold at least 10 per cent of the voting shares of the Company.

27.5. The Board of Directors of the Company shall resolve to convene or refuse to convene an extraordinary General Shareholders Meeting within 5 days from the date of submission of the request of the Audit Commission of the Company, the auditor of the Company or shareholders (shareholder) that hold at least 10 per cent of the voting shares of the Company.

The resolution on refusal to convene an extraordinary General Shareholders Meeting at the request of the Audit Commission of the Company, the auditor of the Company or shareholders (shareholder) that hold at least 10 per cent of the voting shares of the Company shall only be adopted in the following cases:

-   the stipulated by the laws of the Russian Federation order of the request on convocation of an extraordinary General Shareholders Meeting was not respected;

-   none of the issues proposed for the agenda of an extraordinary General Shareholders Meeting falls under its competence and (or) corresponds to the obligations of the Federal Law “On Joint Stock Companies” and other laws of the Russian Federation;

-   shareholders (shareholder), requesting the convocation of an extraordinary General Shareholders Meeting do not possess the amount of voting shares, stipulated by the Clause 27.3 of this Charter.

27.6. The resolution of the Board of Directors of the Company to convene an extraordinary General Shareholders Meeting or the motivated resolution on refusal to convene such meeting shall be sent to the persons requesting its convocation no later than 3 days from the date of adoption of such a resolution.

27.7. The Board of Directors of the Company shall not change the wording of items proposed for inclusion to the agenda of the General Shareholders Meeting or the wording of the resolutions on such items. In addition to items proposed by shareholders for inclusion to agenda of the extraordinary General Shareholders Meeting or in the absence of such proposed items or absence or insufficient number of nominees proposed by shareholders for the formation of the relevant body, the Board of Directors of the Company has the right to include items to the agenda of the General Shareholders Meeting or nominees to the list of candidates at its own discretion.

27.8. If, within the period set by the Federal Law “On Joint Stock Companies”, the Board of Directors of the Company fails to resolve to convene an extraordinary General Shareholders Meeting or resolves to refuse its convocation, such extraordinary General Shareholders Meeting may be convened by bodies and persons requesting such convocation. In addition bodies or persons, convening the extraordinary General Shareholders Meeting, shall have powers provided for by the Federal Law “On Joint Stock Companies”, which are required for convocation and conduct of the General Shareholders Meeting. The expenses for preparation and conduct of the General Shareholders Meeting are paid by the initiators of the convocation. The mentioned expenses may be reimbursed by a resolution of the General Shareholders Meeting at the expense of the Company.

Article 28. Resolutions of the General Shareholders Meeting

28.1. The following persons have the right to vote on items on the agenda:

-   shareholders, owners of common shares of the Company;

-   shareholders, owners of preferential shares of the Company in cases stipulated by the Federal Law “On Joint Stock Companies”.

Voting share is a common or an preferential share, which presents its holder with the right to vote on the item put to vote. Each common or an preferential share presents its holder with one vote at the voting.

28.2. The resolution of the General Shareholders Meeting on the item put to vote is taken by the majority of votes the shareholders-owners of the voting shares of the Company, taking part in the voting, unless other is stipulated for taking the decision by the Federal Law “On Joint Stock Companies”.

Calculation of votes at the General Shareholders Meeting on the item put to vote, while the right to vote pertains to the shareholders-owners of the common and preferential shares of the Company, is realized jointly, unless other is stipulated by the Federal Law “On Joint Stock Companies”.

Amendments and addenda to and restatement of the Charter of the Company, restricting the rights of the shareholders-owners of the preferential shares, including the cases of determination of the amount or increase of the dividend, is deemed adopted by the majority of three fourths of votes of shareholders – owners of voting shares who participate in the meeting, excluding the votes of shareholders-owners of the preferential shares, whose rights are restricted and three fourths of the votes of all the shareholders-owners of the preferential shares, whose rights are restricted.

The resolutions on the matters, mentioned in paragraphs 2, 6, 13-18 of the Clause 24.1 of this Charter  shall be adopted by the General Shareholders Meeting only on the suggestion of the Board of Directors.

The resolutions on the matters, mentioned in paragraphs 1-3, 5 and 16 of the Clause 24.1 of this Charter  shall be adopted by the General Shareholders Meeting by the majority of three fourths of votes of shareholders – owners of voting shares who participate in the meeting.

The General Shareholders Meeting shall have the right to adopt resolutions only on items included in the agenda. The General Shareholders Meeting shall not amend the agenda.

The resolutions adopted by the General Shareholders Meeting and the voting results shall be declared at the General Shareholders Meeting at which the voting took place, or shall be communicated to the persons included in the list of those entitled to participate in the General Shareholders Meeting within 10 days from the date the protocol of the voting results is drawn up in the form of a report on the voting results via announcement in “Rossiyskaya Gazeta” or a registered letter.

The protocol on voting results shall be drawn up  within 15 days from the date of the closing of the General Shareholders Meeting of from the date of cessation of acceptance of the voting ballots in case of the holding the General Shareholders Meeting in the form of absentee voting.

 

28.4. The right to take part in the General Shareholders Meeting is exercised by the shareholder in person, as well as by proxy. A shareholder’s proxy shall act to the extent of the authority provided for in the orders of the federal bodies or the acts of the competent governmental or local authorities, or a written power of attorney. Power of attorney shall include the information on the proxy and on the proxy giver (name or title, address or location, passport information). The power of attorney may be notarized or certified by the organization, in which proxy giver works or studies, residential commission of his allocation, or the administration of the medical institution where he is being treated.

The shareholder shall have the right to replace his proxy at any time, or, by eliminating the power of attorney, participate in the General Shareholders Meeting in person.

In case of selling of the share by the shareholder after the date of making the list of persons, having the right to participate in the General Shareholders Meeting, before the date of holding the General Shareholders Meeting, the person, included in the list is obliged to give to the buyer the power of attorney or vote at the General Shareholders Meeting in accordance with instructions of the buyer of the shares.

In case if the share of the Company is in common tenancy of several persons, the the right to vote at the General Shareholders Meeting is exercised at their will by one of the participators of common tenancy or by their proxy. The powers of each mentioned person shall be formalized in the established order.

 

28.5. The list of persons, having the right to participate in the General Shareholders Meeting is made on the basis of the information of the share register of the Company. The date of making of the list of persons, having the right to participate in the General Shareholders Meeting shall not be fixed earlier than the date of taking decision of convocation of the General Shareholders Meeting and earlier than 50 days before that, and in the case stipulated by the Clause 2 of the Article 53 of the Federal Law “On Joint Stock Companies”, earlier than 65 days before the date of holding the General Shareholders Meeting.

 

28.6. The meeting shall be authorized (quorate) if it is attended by shareholders holding in aggregate more than half of the placed voting shares of the Company.

 

Shareholders registered to participate in the Meeting and shareholders whose ballots are received by the Company at least two days prior to the date of the Shareholders Meeting shall be deemed to have participated in the Meeting.

In the event a Shareholders Meeting is held in the form of absentee voting, shareholders whose ballots are received prior to the deadline for receipt of ballots shall be deemed to have participated in the Meeting.

If the agenda of any Shareholders Meeting contains issues to be voted by different types of voters, quorum for voting on such issues shall be determined separately. In such cases, a lack of quorum for voting on issues to be voted by one set of voters shall not preclude voting on issues to be voted by another set of voters for which a quorum is present.

In the absence of a quorum, the date of a rescheduled Shareholders Meeting with the same agenda shall be announced.

The rescheduled Shareholders Meeting convened in place of the canceled meeting shall be quorate if attended by shareholders holding in aggregate at least 30 per cent of the placed voting shares of the Company.

In the event a rescheduled General Shareholders Meeting is conducted within 40 days from the date of original General Shareholders Meeting, persons entitled to participate in the General Shareholders Meeting shall be determined in accordance with the list of persons entitled to participate in the original General Shareholders Meeting.

28.7. Voting on items on the agenda of the General Shareholders Meeting shall be performed by casting the voting ballots in the order established by the Federal Law “On Joint Stock Companies” and the Regulations on the General Shareholders Meeting.

Article 29. Order of Preparation for the General Shareholders Meeting

29.1 While preparing to hold the General Shareholders Meeting, the Board of Directors of the Company establishes:

-   form of the conduct of the General Shareholders Meeting (joint presence or absentee voting);

-   date, place and time of conduct of the General Shareholders Meeting and where the number of persons entitled to participate in the General Shareholders Meeting, holding voting actions, is more than 1000, when the completed voting ballots may be sent to the Company, the correspondence address, where the completed voting ballots may be sent, or, in the case of conduct of the General Shareholders Meeting in the form of absentee voting, the deadline for the receipt of the voting ballots and the correspondence address, where the completed voting ballots shall be sent;

-   agenda of the General Shareholders Meeting;

-   date of the making of the list of the persons entitled to take part in the General Shareholders Meeting;

-   order of announcing the conduct of the General Shareholders Meeting to the shareholders;

-   information (materials) to be provided to shareholders in course of preparation for the General Shareholders Meeting (in accordance with the demands of the Federal Law “On Joint Stock Companies”);

-   in case of voting via ballots – the form and text of the voting ballots (in accordance with the demands of the Federal Law “On Joint Stock Companies”);

29.2. The announcement of an extraordinary General Shareholders Meeting shall be made at least 20 days prior to such Meeting, and the announcement of an annual General Shareholders Meeting and the announcement of General Shareholders Meeting, the agenda of which includes the issue of reorganization of the Company – at least 30 days prior to the date of its conduct, unless the laws of the Russian Federation stipulate a larger period.

In cases stipulated by the Clauses 2 and 8 of the Article 53 of the Federal Law #208-F3 “On Joint Stock Companies”, dated December, 26 1995, the announcement of an extraordinary General Shareholders Meeting shall be made at least 70 days prior to the date of such meeting.

The announcement of the General Shareholders Meeting shall be communicated to the shareholders by sending them a registered letter notification or by publishing the information in “Rossiyskaya Gazeta” in the stipulated period of time. In case of rescheduling of the date of the General Shareholders Meeting due to the absence of quorum, the announcement of the adjourned meeting is made in accordance with the same demands, the Clause 29.2 of this Charter does not apply. Handing, sending and publishing of the voting ballots in case of the adjourned meeting is made in accordance with the demands of Article 60 of the Federal Law “On Joint Stock Companies”.

 

29.3. Announcement of the General Shareholders Meeting shall contain:

-   full title and location of the Company;

-   date, place and time of conduct of the General Shareholders Meeting and where the number of persons entitled to participate in the General Shareholders Meeting, holding voting shares, is more than 1000, when the completed voting ballots may be sent to the Company, the correspondence address, where the completed voting ballots may be sent, or, in the case of conduct of the General Shareholders Meeting in the form of absentee voting, the deadline for the receipt of the voting ballots and the correspondence address, where the completed voting ballots shall be sent;

-   form of t conduct of the General Shareholders Meeting (joint presence or absentee voting);

-   date of the making of the list of the persons entitled to take part in the General Shareholders Meeting;

-   agenda of the General Shareholders Meeting;

-   date, place and time of the beginning of the registration of the participants of the General Meeting;

-   order of studying the information (materials) to be provided to shareholders in course of preparation for the General Shareholders Meeting, and the address where it can be studied.

In case of including into the agenda the items, voting on which according to the laws of the Russian Federation may provoke the origin of the right of the shareholders to demand the buyout of the shares by the Company, the notification shall contain the following information as well:

-   on the presence of the right of the shareholders to demand the buyout of the shares by the Company;

-   on the order and term of the buyout.

In this case a special form for demand in writing of the buyout by the Company of the shares, pertaining to the shareholder, is attached to the notification of the conduct of the General Shareholders Meeting.

  

Article 30. Board of Directors of the Company

30.1. The Company’s Board of Directors shall exercise general management of the Company’s activities, with the exception of issues within the jurisdiction of the General Shareholders Meeting. The activity of the Board of Directors shall be set forth by the laws of the Russian Federation, this Charter and by the Regulations on the Board of Directors of the Company.

30.2. In the exercise of its management functions the Board of Directors of the Company shall:

1)    determine the priority directions of the Company’s activities;

2)    convoke annual and extraordinary General Shareholder Meetings, excluding the cases stipulated in the Clause 27.3 of this Charter;

3)    approve the agenda of the General Shareholders Meeting;

4)    determine the date for compilation of the list of persons entitled to participate in the General Shareholders Meeting and make decisions on any other matters falling within the competence of the Board of Directors of the Company related to preparation and conduct of the General Shareholders Meeting;

5)  exercise powers with regard to placement and of shares and other issuable securities in the Company, stipulated in the Federal Law “On Joint Stock Companies”;

6)   determine the offering price of the property, of the placement price and the buyout price of issuable securities in the cases provided for under the Federal Law “On Joint Stock Companies”;

7)   acquire shares, bonds and other securities placed by the Company, in cases provided for by the Federal Law “On Joint Stock Companies”;

8)  appoint the members of the Management Board, make decision on early termination of powers of certain or all members of the Management Board;

9)  recommend on the amount of remuneration and compensation payable to the members of the Company's Audit Commission and determination of the amount of the Auditor's fee;

10)               recommend on the amount of dividends on shares and the procedure for their payment;

11)               use of the reserve and other funds of the Company;

12)               approve the internal corporate documents other than those the approval of which falls within the authority of the General Shareholders Meeting according to the Federal Law “On Joint Stock Companies” and the Company's executive bodies according to this Charter;

13)               establish branches and representative offices of the Company;

14)               approve major transactions stipulated by Chapter X of the Federal Law “On Joint Stock Companies”;

15)               approve transactions stipulated by Chapter XI of the Federal Law “On Joint Stock Companies”;

16)               approve the Company's registrar and the terms of the contract with the registrar, termination of such contract;

17)               determine the position of the Company (the Company’s representatives) with regard to the following matters of the agenda of the Board of Directors and General Shareholders Meeting (the participants) of the subsidiary companies (including the form of voting on issues of the agenda):

-   reorganization of the company;

-   liquidation of the company;

-   determination of the amount, par value, category (type) of the declared shares and the rights provided by these shares;

-   increase of the charter capital by increasing the par value of the shares or by placing additional shares;

-   split and consolidation of the shares;

-   approval of major transactions.

18)     make decisions on any other matters in accordance with provisions of the Federal Law “On Joint Stock Companies” and this Charter.

The questions falling under the competence of the Board of Directors cannot be passed to the executive body of the Company for the decision.

Article 31. Election of the Board of Directors

31.1. The Board of Directors shall be composed of 7 members.

Members of the Board of Directors of the Company shall be elected by the General Shareholders Meeting in the manner established by the Federal Law “On Joint Stock Companies” for the period until the next annual General Shareholders Meeting.

If an annual General Shareholders Meeting is not conducted within the term specified in the Clause 1 of the Chapter 47 of the Federal Law “On Joint Stock Companies”,  powers of the Board of Directors shall terminate, except for the powers to prepare for, convene, and conduct an annual General Shareholders Meeting. Only individuals may be members of the Board of Directors of the Company. A member of the Board of Directors of the Company may not be a shareholder of the Company. The members of the Management Board cannot exceed one fourth of the Board of Directors of the Company.

The individuals elected to the Board of Directors of the Company may be re-elected unlimited amount of times.

The President of the Company cannot be the Chairman of the Board of Directors of the Company simultaneously.  

31.2. The Board of Directors shall be elected by a cumulative vote.

The procedure of the cumulative vote is the following: the number of the votes owned by each shareholder is multiplied by the number of persons, which are to be elected to the Board of the Directors, and the shareholder shall have the right to give the obtained votes for one person or to distribute them among two or more persons.

Persons receiving the largest number of votes are deemed elected to the Board of the Directors.

31.3. The General Shareholders Meeting may resolve to early terminate the powers of the Board of Directors in respect of all the members of the Board of Directors only.

Article 32. Chairman of the Board of Directors of the Company

32.1. The Chairman of the Board of Directors of the Company shall be elected by the members of the Board of Directors of the Company from among themselves by the majority of votes of all the members of the Board of Directors of the Company.

 The Board of Directors of the Company shall have the right to re-elect its chairman by the majority of votes of all the members of the Board of Directors of the Company in the manner established by the laws of the Russian Federation.

32.2. The Chairman of the Board of Directors of the Company shall organize its work, convene and preside over the meetings of the Board of Directors, arrange for the keeping of minutes at its meetings.

In case of absence of the Chairman of the Board of Directors, his duties shall be performed by one of the members of the Board of Directors by a resolution of the Board of Directors of the Company.

Article 33. Resolutions of the Board of Directors of the Company

33.1. The meeting of the Board of Directors of the Company shall be convened by the Chairman at his/heown initiative or at the request of a member of the Board of Directors, the Management Board, the President, the Audit Commission of the Company or the auditor of the Company.

33.2. The presence and/or the availability of a written opinion, of more than one-half of the elected members of the Board of Directors shall constitute a quorum for the conduct of a meeting of the Board of Directors. When deciding on matters at a meeting of the Board of Directors of the Company, each member of the Board of Directors of the Company shall have one vote. In case of equality of votes, the Chairman of the Board of Directors shall have a casting vote. No member of the Board of Directors shall be allowed to delegate his voting right to another person, including another member of the Board of Directors.

The resolutions at the meetings of the Board of Directors shall be adopted by the majority of votes of the members of the Board of Directors of the Company present at the meeting, unless otherwise provided for by the Federal Law “On Joint Stock Companies” or the Company’s Charter, or the Regulations on The Board of Directors of the Company.

33.3. When determining the presence of a quorum and the results of voting on the items on the agenda, a written opinion of the member of the Board of Directors, who are not present at the meeting of the Board of Directors, shall be taken into account. 

A written opinion shall be presented by the member of the Board of Directors to the chairman or the secretary of the Board of Directors before the voting on the mentioned item of the agenda of a meeting of the Board of Directors.

A written opinion of the member of the Board of Directors may contain his votes on all the items of the agenda, as well as only on certain items. A written opinion of the member of the Board of Directors is taken into account only on determining the quorum and the results of the voting on the items of the agenda, on which it contains the votes of the absent member of the Board of Directors.

33.4. If a copy of the written opinion of the member of the Board of Directors has not been included into the information (materials), provided to the the members of the Board of Directors for the meeting, than the Chairman of the meeting is obliged to read off the the written opinion of the absent member of the Board of Directors before the voting on the items of the agenda, on which the opinion is presented.

In case of presence of the member of the Board of Directors at the meeting of the Board of Directors, his written opinion, received before the meeting, shall not be read-off and shall not be taken into account while determining the quorum and the results of the voting.

33.5. The minutes of the meeting of the Board of Directors are made within three days after such meeting in the order, established by the Federal Law “On Joint Stock Companies” and Regulations on the Board of Directors of the Company.

33.6. If necessary, the resolutions of the Board of Directors may be adopted by absentee voting.    

A decision of the Board of Directors adopted by absentee voting shall be deemed valid, if more than half of the number of members of the Board of Directors provided by the Company’s Charter participated in the absentee voting, except for the matters the decisions-making on which shall comply with other requirements provided for by the Federal Law “On Joint Stock Companies” or the Company’s Charter.

33.7. If the number of the members of the Board of Directors of the Company becomes less than the number that constitutes a quorum, the Board of Directors of the Company shall resolve to conduct an extraordinary General Shareholders Meeting aimed at election of the new members of the Board of Directors of the Company. The remaining members of the Board of Directors of the Company shall only take decisions on the convocation of such an extraordinary General Shareholders Meeting.

33.8.The General Shareholders Meeting may resolve to pay to the members of the Board of Directors in the period of exercising their powers awards and compensations of the expenses, connected to execution of the functions of the members of the Board of Directors. The amounts of such awards and compensations are determined by the resolution of the General Shareholders Meeting.

CHAPTER IX. EXECUTIVE BODIES OF THE COMPANY

The management of the current operations of the Company is executed by the single-person executive body of the Company – the President of the Company and Company’s collective executive body – the Management Board. The executive bodies of the Company are accountable to the Board of Directors of the Company and to the General Shareholders Meeting.

The executive bodies of the Company shall provide the execution of the resolutions made by the General Shareholders Meeting and the Board of Directors of the Company.

Article 34. President of the Company

34.1. The President shall be appointed by the General Shareholders Meeting for a term of five years and shall be the Chairman of the Management Board.

34.2. The President of the Company shall manage the current operations of the Company and head the Management Board and reports to the Board of Directors of the Company and to the General Shareholders Meeting.

34.3.Pursuant to the laws of the Russian Federation, the President of the Company is vested with all powers he may need to manage the Company.

The President shall act without the power of attorney on behalf of the Company within his competence.

34.4. The following matters shall fall within the competence of the President of the Company:

-   issuing of orders and instructions and other resolution on the current operations of the Company;

-   taking resolutions on transactions, connected to acquiring or selling or the possibility of selling by the Company in direct in indirect ways of the property, the value of which does not exceed 10 per cent of the balance value of the assets of the Company, determined on the data of the accountancy of the Company as of the last balance sheet date, excluding the transactions, made in the process of executing common household activity, transactions connected to the placement via subscription (realization) of the common shares of the Company and transactions connected to the placement of issuable securities, convertible into common shares;

-   representation on behalf of the Company in the relations with any Russian and foreign legal entities and individuals, conclusion of treaties, agreements on behalf of the Company and issue of the power of attorney to execute these actions;

-   conclusion of employment contracts with Assistants Directors General (vice-presidents), Company employees, heads of the branches and representative offices of the Company;

-   approval and termination of powers of the Company employees;

-   approval of the time-table, labour conditions and payment of the Company employees;

-   resort on behalf of the Company to any institutions on the issues of protection of interests of the Company;

-   filing of claims and suits on the Company’s behalf against legal entities and individuals according to the laws of the Russian Federation

-   determination of structure and amount of the information, which is commercial secret, and the order of its protection.

34.5. The Chairman of the Board of Directors on behalf of the Company concludes with the President of the Company a contract, in which the remuneration, rights, obligations and liability of the President of the Company are determined.

34.6. The President of the Company appoints Assistants – vice-presidents of the Company and may charge them with exercising of the part of his powers.

34.7. In case the President cannot fulfill his obligations, the Board of Directors of the Company shall have the right to decide on the formation of the temporary single-person executive body of the Company (the President) and on the conduct of an extraordinary General Shareholders Meeting for solving the issue of forming of the new executive body of the Company.

34.8. If the term of the powers of the President has expires, or his powers have been terminated early, and the new executive body of the Company isn’t formed yet, the the Board of Directors of the Company shall have the right to decide on the formation of the temporary single-person executive body of the Company (the President) and on the conduct of an extraordinary General Shareholders Meeting for solving the issue of forming of the new executive body of the Company.

34.9. The temporary single-person executive body of the Company executes the management of the Company within the competence of an executive body of the Company.

Article 35. Collective executive body (Management Board) of the Company

The Management Board of the Company shall act on the basis of this Charter as well as on the basis of the Regulations on the Collective Executive Body (Management Board) of the Company approved by the General Shareholders Meeting, and organizes the execution of management functions.

The following matters shall fall within the competence of the Management Board:

-   taking resolutions on transactions, connected to acquiring or selling or the possibility of selling by the Company in direct in indirect ways of the property, the value of which lies between 10 and 25 per cent (inclusive) of the balance value of the assets of the Company, determined on the data of the accountancy of the Company as of the last balance sheet date, excluding the transactions, made in the process of executing common household activity, transactions connected to the placement via subscription (realization) of the common shares of the Company and transactions connected to the placement of issuable securities, convertible into common shares;

-   development of recommendations for the Board of Directors on using and adding to the reserve fund of the Company;

-   development of recommendations for the Board of Directors on changing and enhancing of the activity of the Company, its representative offices, branches and subsidiaries;

-   formation of the producing program of the Company, its separate branches, subsidiaries and the definition of the volumes of production;

-   choice of suppliers and consumers of the Company, determination of the order and the conditions of the production sale;

-   organization of provisions, connected to realization of resolutions of the Board of Directors and the General Shareholders Meeting of the Company;

-   development and discussion of the conditions of the collective contract with employees of the Company, and of the regulations on the relations, resulting from the collective contract;

-   determination of the list of measure of social security of the employees of the Company;

-   distribution of the determined by the General Shareholders Meeting part of the income of the Company to the development of the production, including for its separate branches, subsidiaries and dependents;

-   establishment of the order of the external economic activity of the Company;

-   approval of cost sheets and plan of activity for the following year;

-    rendition to the Board of Directors of the proposal on changing local normative acts and documents, regulating the activity of the executive bodies of the Company;

-   conclusion of the contracts of society in participation, excluding the cases stipulated by the Federal Law “On Joint Stock Companies”.

-   other matters not falling within the competence of other management bodies of the Company.

Article 36. Election of the Management Board

36.1. The structure of the Management Board is affirmed by the Board of Directors of the Company as advised by the President of the Company. Rights and obligations of the members of the Management Board are stipulated by the laws of the Russian Federation, this Charter, Regulations on Management Board of the Company, also by the contract concluded by each of them with the Company.

The contract on behalf of the Company with the members of the Management Board is signed by the President of the Company. The period of the contract may be prolongated on the resolution of the Board of Directors of the Company for the next term unlimited number of times. The Board of Directors of the Company shall have the right to terminate the powers of the members of the Management Board early as advised by the President of the Company.

36.2. Combination by the persons, who are the members of the Management Board of the Company, of positions in management bodies of other organizations is allowed only on consent of the Board of Directors of the Company.

36.3. The President of the Company shall organize the meetings of the Management Board of the Company. The procedure of convocation of meetings of the Management Board, conduct of meetings and making of decisions by the Management Board shall be established by the Regulations on Management Board of the Company.

At the meetings of the Management Board minutes shall be kept, which shall be signed by the President thereafter. Minutes of meetings of the Management Board shall be made available to the members of the Board of Directors, the Audit Commission, and the auditor of the Company upon their request.

36.4. The presence of more than half of the number of the members of the Management Board of the Company shall constitute a quorum for conduct of a meeting of the Management Board of the Company.

Delegation of the right to vote to another person, including another member of the Management Board is not allowed.

If the number of the members of the Management Board of the Company becomes less than the number constituting the quorum, the Board of Directors of the Company shall have the right to form a temporary collective executive body of the Company or to form a collective executive body of the Company.

Article 37. Liability of the Members of the Board of Directors, Members of the Management Board and the Director of the Company

37.1. When exercising their rights and performing their duties, the members of the Board of Directors of the Company, the President of the Company and the members of the Management Board, the temporary sole executive body of the Company shall act in the interests of the Company and exercise their rights and perform their duties in good faith and in a reasonable manner.

The members of the Board of Directors of the Company, the President of the Company and the members of the Management Board, the temporary sole executive body of the Company shall be liable to the Company for damages caused to the Company by their wrongful actions (inactions), unless other grounds for or amount of, the liability are provided for by the federal laws.

The members of the Board of Directors of the Company and the members of the Management Board of the Company who voted against the decision that caused damages to the Company or who did not participate in the vote shall not be liable.

While defining the basis and the amount of liability of the Board of Directors of the Company, the President of the Company and the members of the Management Board, the common conditions of the business norms and other circumstances of importance shall be taken into account.

37.2.The Company or shareholders (shareholder) holding, in aggregate, at least 1 per cent of outstanding common shares in the Company shall have the right to file a court claim against a member of the Board of Directors of the Company, the President of the Company, and a member of the Management Board of the Company for damages caused to the Company by their wrongful actions (inactions).

37.3. The representatives of the State in the Board of Directors of the Company shall be liable to the Company for damages caused to the Company by their wrongful actions (inactions) alongside with other members of the Board of Directors.

CHAPTER XII. ACQUISITION AND BUYOUT BY THE COMPANY OF OUTSTANDING SHARES

Article 38. Acquisition by the Company of outstanding shares

38.1. The Company shall acquire its outstanding shares under a resolution of the General Shareholders Meeting to reduce the charter capital of the Company by acquiring a part of the outstanding shares in order to reduce their quantity.

38.2. The shares acquired by the Company under a resolution of the General Shareholders Meeting to reduce the charter capital of the Company shall be redeemed. 

38.3. The Company shall have the right to acquire outstanding shares under a resolution of the Board of Directors of the Company, excluding the cases stipulated by the Clause 38.1 of this Charter.

The shares acquired by the Company under a resolution of the Board of Directors shall not vote and shall not be taken into consideration when counting votes for quorum and no dividends shall accrue thereon. Such shares shall be sold at the price not less than the market price within one year from the date of their acquisition. Otherwise, the General Shareholders Meeting shall resolve to reduce the charter capital of the Company by way of redemption of such shares.

 

38.4. The resolution to acquire shares in order to redeem them shall define the categories (types) of the shares to be acquired, quantity of the shares of each category (type), the acquisition price, way and terms of payment, and the term within which the acquisition of the shares is realized.

 

The outstanding shares acquired by the Company shall be paid for in monetary value. The term, within which the acquisition of the shares is realized, is counted from the officially fixed by the Board of Directors date of the beginning of the acquisition of the share and shall not be less than 30 days. The acquisition price of the shares is defined according to the laws of the Russian Federation. Each shareholder – owner of the shares of the category (type), the decision on acquisition of which is taken, shall have the right to sell the mentioned shares, and the Company shall be obligated to buy them. In case if the general quantity of the shares, about which the claims to sell have been sent to the Company, exceeds the quantity of the shares that can be bought by the Company under a resolution of the General Shareholders Meeting to reduce the charter capital of the Company, the shares are bought proportionally to the claims.

38.5. 30 days in advance to the period of the share acquisition, the Company is obliged to notify the shareholders – owner of the shares of the category (type), the decision to buy which has been made. The notification shall contain the information, stipulated in the Clause 38.4 of this Charter.

 

Article 39. Restrictions on the Acquisition by the Company of the outstanding shares

39.1. The Company shall not have the right to acquire its outstanding shares in the following cases:

-  in case if on the day of acquisition the Company corresponds to the signs of insolvency (bankruptcy) in accordance with the laws of the Russian Federation on insolvency (bankruptcy) or if such signs will appear at the Company as a result of the acquisition;

-    in case if on the day of acquisition the amount of net assets of the Company is less than its charter capital, reserve fund and exceeding the nominal value of the liquidation quota of the outstanding shares, defined by the Charter, or will become less than them as a result of the acquisition;

-    before the buyout of all the shares, demands on the buyout of which are made in the accordance with the Article 42 of this Charter.

39.2. The Company shall not have the right to acquire part of its outstanding shares in order to redeem them, if the nominal value of the remaining shares will become lower than the minimal amount of the charter capital, defined by the laws of the Russian Federation for the date of registration of corresponding amendments in this Charter.

The quantity of common shares acquired for redemption shall not break the proportion of common and preferential shares stipulated by the laws of the Russian Federation.

39.3. The Board of Directors of the Company shall not have the right to make a resolution to acquire shares, if the par value of the remaining number of outstanding shares in the Company shall be less than 90 per cent of the Charter Capital.

 

Article 40. Consolidation and Split of the Shares of the Company

40.1. Under a resolution of the General Shareholders Meeting the Company shall have the right to realize the consolidation of the outstanding shares, which will result in conversion of two or more shares of the Company into one new share of the same type. Herewith into this Charter correspondent amendments are included in regards to the par value and the quantity of outstanding and declared shares of the Company of the correspondent category (type).

40.2. Under a resolution of the General Shareholders Meeting the Company shall have the right to realize the split of the outstanding shares, which will result in conversion of one share of the Company into two and more shares of the same category (type). Herewith into this Charter correspondent amendments are included in regards to the par value and the quantity of outstanding and declared shares of the Company of the correspondent category (type).

 

Article 41. The Buyout of the Shares by the Company Upon the Request of the Shareholders

41.1. The shareholders – owners of the voting shares shall have the right to request the buyout by the Company of all or part of shares belonging to them in the following cases:

-   reorganization of the Company, or a major transaction, the decision on which is taken by the General Shareholders Meeting in accordance to the Clause 2 of the Article 79 of the Federal Law “On Joint Stock Companies”, if they voted against the decision of reorganization or approval of the mentioned transaction or did not take part in the voting;

-   introduction of amendments and addenda into the Charter of the Company, or approval of the Charter in the new edition, restricting their rights, if they voted against the decision or did not take part in the voting.

41.2. The list of the shareholders having the right to request the buyout by the Company of shares belonging to them, is constituted in the basis of the information of the share register of the Company as of the date of constituting the list of the persons of the Company, who have the right to participate in the General Shareholders Meeting, the agenda of which includes the items, the voting on which according to the laws of the Russian Federation may result in the origin of the right to request the buyout of the shares.  

41.3. The buyout of the shares by the Company is realized by the price, determined by the Board of Directors of the Company, but not lower than the market-value, which ought to be defined by an independent assessor without taking into account its changes in the result of the actions of the Company, which have provoked the right of demand of the value and the buyout of the shares.

 

Article 42. The Order of the Realization by the Shareholders of the Right to Demand the Buyout by the Company of the Shares, Belonging to Them

42.1. The Company is obliged to notify the shareholders of their right to demand the buyout of the shares, belonging to them, the price and the order of the realization of the buyout.

42.2. The notification of the shareholders on the conduct of the General Shareholders Meeting the agenda of which includes the items, the voting on which according to the laws of the Russian Federation may result in the origin of the right to request the buyout of the shares, shall contain the information, mentioned in the Clause 42.1 of this Charter.

42.3. The written claim of the shareholder on the buyout of the shares, belonging to him, is sent to the Company with mention of the address (location) of the shareholder and the quantity of the shares, the buyout of which he demands, within the period of 45 days from the date of taking of the correspondent decision by the General Shareholders Meeting. On expiring of the mentioned period, the Company is obliged to buy the shares from the shareholders, who have claimed the request of the buyout, within 30 days.

42.4. The buyout of the shares is realized by the price, mentioned in the notification on the conduct of the General Shareholders Meeting the agenda of which includes the items, the voting on which according to the Clause 41 of this Charter may result in the origin of the right to request the buyout of the shares.

The total amount of assets, directed by the Company to the buyout of the shares, in regards to which the request on the buyout is made, may not exceed 10 per cent of the net assets of the Company as of the date of the decision which resulted in the origin of the right to request the buyout of the shares.       

In case if the general quantity of the shares, about which the claims to sell have been sent to the Company, exceeds the quantity of the shares that can be bought by the Company under the above mention restriction, the shares are bought proportionally to the claims.

42.5. The shares, bought by the Company in case of its reorganization are redeemed. The shares, bought by the Company in other cases, prescribed by the Clause 41.1 of this Charter, come into Company’s disposition. The mentioned shares shall not vote and shall not be taken into consideration when counting votes for quorum and no dividends shall accrue thereon. Such shares shall be sold at the price not less than the market price within one year from the date of their acquisition. Otherwise, the General Shareholders Meeting shall resolve to reduce the charter capital of the Company by way of redemption of such shares.

 

Article 43. Determination of the Market-Value of the Property

43.1. The price (monetary value) of the property, and the price of placement of the price of buyout of the issuable securities are defined on the basis of their market-value, by the independent directors, not interested in the consummation of the transaction.

An independent director is such a member of the Board of Directors of the Company, who is not and who has not been for a year, preceding the making of the decision on the transaction:

-   the person, exercising the functions of the sole executive body of the Company, including its administrator, member of the Management Board (collective executive body), the person, holding the positions in the executive bodies of the managing organization;

-   the person, whose spouse, parents, children, full blood and half blood brothers and sisters, adopters and adoptees, are not the persons, holding the positions in the mentioned bodies of the company or are not administrators of the Company.

-    affiliate person of the Company.

43.2. For the determination of the market-value an independent assessor may be drawn.

The draw of the independent assessor for the determination of the market-value of the property is obligatory for defining the price of the buyout by the Company of the shares, belonging to the shareholders, according to the Clause 42 of this Charter.

In case if the property, the price of which needs to be assessed, is shares or other securities, the purchase value of which or the price of supply and demand of which are published on the regular basis in the media, the draw of the independent assessor is not necessary, for the determination of the market-value of the property this purchase value or the price of supply and demand can be taken into account.

 

CHAPTER XIII. MAJOR TRANSACTIONS

Article 44. Major transactions, Connected to the Acquisition and Sale by the Company of its Property

44.1. The transaction or several connected transactions are deemed to be major (including loan, credit, pledge, guarantee) if they involve acquisition, sale, possibility of sale by the Company directly or indirectly of assets with a value of more than 25 per cent of the book value of the Company's assets according to its financial statements as of the latest reporting date with the exception of transactions made during the usual course of the Company's business, transactions related to placement of the Company’s common shares by way of subscription (sale) and transactions related to placement of issuable securities convertible into the Company's common shares.

In case of sale or possibility of sale of the assets to the book value of the assets of the Company is compared the value of this property, and in case of acquisition of property – the price of its acquisition.

44.2. For the making of the decision by the Board of Directors of the Company and by General Shareholders Meeting on approval of a major transaction, the price of the property (services) to be acquired or sold is determined by the Board of Directors of the Company in accordance with the Article 77 of the Federal Law “On Joint Stock Companies”.

 

Article 45. Realization of a Major Transaction Connected to the Acquisition and Sale by the Company of its Property

45.1. Major transaction shall be approved by the Board of Directors of the Company or by the General Shareholders Meeting. Approval of major transactions involving assets with a value of 25 to 50 percent of the book value of the Company's assets is made by all members of the Board of Directors unanimously, herewith the votes of the members of the Board of Directors, who have quit, are not taken into account.

In case if unanimity of the members of the Board of Directors of the Company on the issue of approval of a major transaction has not been reached, on the resolution of the the Board of Directors of the Company the issue of approval of a major transaction may be transferred to the competence of the General Shareholders Meeting. In this case the resolution on approval of the major transaction is made at the General Shareholders Meeting by the majority of shareholders – owners of the voting shares, taking part in the General Shareholders Meeting.

45.2. Resolution on approval of a major transaction involving assets with a value of 25 to 50 percent of the book value of the Company's assets is made by the General Shareholders Meeting by the majority of three fourths votes of shareholders – owners of the voting shares, taking part in the General Shareholders Meeting.

45.3. In the resolution on approval of a major transaction shall be included information on person (persons), who are the party (parties) of the transaction, beneficiary party (parties), price, item of the transaction and other essential conditions.

45.4. In case if the major transaction is simultaneously the transaction of interest, to the order of its realization apply  only the Clauses of Chapter XI of the Federal Law “On Joint Stock Companies”.

45.5. Major transaction, realized with breaking of the demands of the laws, can be deemed as invalid on the suit of the Company or the shareholders.

 

Chapter 46. Acquisition of 30 and More Per Cent of the Common Shares of the Company

46.1. In case if in the Company the quantity of the shareholders – owners of the common shares exceeds one thousand, the person, intending to buy independently or with his affiliated person (persons) 30 and more per cent of the outstanding common shares of the Company, taking into account the quantity of the shares, belonging to him, is obliged to send a written notification on buying the mentioned shares to the Company within the period from 90 to 30 days prior to the date of buying.

46.2. The person that has purchased independently or with affiliates more than 30 percent of the outstanding common shares of the Company with the number of shareholders - owners, exceeding one thousand, taking into account the number of shares already owned by the person, within the period of 30 days from the date of acquisition shall be required to publicly offer to purchase the common shares in the Company and the issuable securities of the Company convertible into common shares from the shareholders that hold them, at the market-value, but not lower than the weighted average price for the six months, preceding to the date of acquisition.

On resolution of the General Shareholders Meeting, the release from the obligation mentioned in this Clause can be realized. The resolution of the General Shareholders Meeting, the release from this obligation can be made by the majority of the votes of the owners of the voting shares, excluding the votes on the shares, which belong to the person, who has acquired or intends to acquire 30 or more per cent of the common shares and his affiliates.

46.3. The proposition of the person, mentioned in the Clause 46.1 of this Charter, on acquisition of the common shares of the Company is sent to all the shareholders  – owners of the common shares in writing.

46.4. The shareholder shall have the right to take the proposition within the period of 30 days from the date of receiving of it. In case of taking by the shareholder of the proposition on purchase of the shares from him, such share shall be bought from him and paid for within 15 days from the date of taking by the shareholder of the correspondent decision.

46.5. The proposition to the shareholders on acquisition of the common shares from them shall contain the information on the person who has acquired 30 or more per cent of the common shares of the Company (name or title, address or location), and the indication of the quantity of common shares, which he has acquired, the price of the acquisition of the shares, offered to the shareholders, the period of acquisition and payment of the shares.

46.6.The person, who has acquired the shares with violations of the demands of this Article shall have the right to vote at the General Shareholders Meeting, with the shares, the total quantity of which does not exceed the quantity of the shares, purchased by him with respect of the demands of this Article.

46.7. The rules of this article enlarge upon the acquisition of each 5 per cent of the outstanding common shares exceeding 30 per cent of the outstanding common shares.

 

 

CHAPTER XIV. INTEREST IN THE CONSUMMATION OF THE TRANSACTION BY THE COMPANY

Article 47. Interest in the Consummation of the Transaction by the Company

47.1. Transactions (including loan, credit, pledge, guarantee), in which there is interest of the member of the Board of Directors of the Company, the person, exercising the powers of the President of the Company, the member of the Board of Directors of the Company, or the shareholder of the Company, owner of 20 and more per cent of the voting shares with his affiliates, and the person, who has the right to give to the Company mandatory directions, are made by the Company in accordance with Clauses of this Chapter.

The mentioned persons are deemed interested in the consummation of the transaction, in cases if they, their spouses, parents, children, full blood and half blood brothers and sisters, adopters and adoptees and (or) their affiliates:

-   are the party, beneficiary party, intermediary or representative of the transaction;

-   own each in particular or in common 20 or more per cent of the shares (parts, participatory interests) of the legal entity, which is the the party, beneficiary party, intermediary or representative of the transaction;

-   hold positions in the management bodies of the legal entity, which is the the party, beneficiary party, intermediary or representative of the transaction, and also the positions in the management body of the direction organization of such legal entity.

47.2. The Clauses of this Chapter do not apply:

-   to the transactions, in the realization of which all the shareholders are interested;

-   while realizing the preemptive right  of the acquisition of the shares, placed by the Company;

-   at the acquisition and buyout by the Company of the outstanding shares;

-   at the reorganization of the Company in the form of the merge (accession) of the companies, if the other company, participating in the merge (accession) owns more than three fourths of the voting shares of the company under reorganization.

 

Article 48. Information on Interest in the Consummation of the Transaction by the Company

The persons, mentioned in the Article 47 of this Charter, are obliged to notify the Board of Directors, the Audit Commission and the auditor of the Company of the following information:

-    on the legal entities, in which they own independently or with their affiliates 20 or more of the voting shares (parts, participatory interests);

-    on the legal entities, in the executive bodies of which they hold positions;

-    on known to them transactions which are being realized or are intended to be realized. in which they may be deemed to be interested persons.

 

Article 49. The Order of Approval of the Transaction, in the Consummation of Which There is an Interest

49.1. The transaction, in the consummation of which there is an interest, shall be approved before its realization by the Board of Directors of the Company or by the General Shareholders Meeting in accordance with this Article. The resolution on approval of the transaction, in the consummation of which there is an interest, is made by the Board of Directors of the Company by the majority of votes of independent directors, who are not interested in its consummation. In case if all the members of the Board of Directors of the Company are admitted to be interested parties and (or) are not independent directors, the transaction may be approved by the resolution of the General Shareholders Meeting, taken in the order, established by this Article.

49.2. In case if the quantity of the shareholders – owners of the voting shares is one thousand and less, the resolution on approval of the transaction, in the consummation of which there is an interest, is made by the Board of Directors of the Company by the majority of votes of the directors, who are not interested in its consummation. If the quantity of the nor interested composes less of the defined by the Charter of the quorum for the conduct of the meeting of the Board of Directors, the resolution on this item shall be adopted by the General Shareholders Meeting, in the order established by the Clause 49.3 of this Charter.  

49.3. The resolution on approval of the transaction, in the consummation of which there is an interest, is adopted by the General Shareholders Meeting of the owners of the voting shares by the majority of votes of all shareholders - owners of the voting shares, not interested in the consummation of the transactions, in the following cases:

-    if the subject of the transaction or several interconnected transactions is the property, the value of which on the information of the accountancy (the price of the acquired property) of the Company is 2 or more per cent of the book value of the Company's assets according to its financial statements as of the latest reporting date with the exception of transactions, prescribed by the Paragraphs 3 and 4 of this Clause;

-    if the transaction or several interconnected transactions present the placement by subscription or realization of the share, which constitute more than 2 per cent of the common shares, placed before by the Company, and common shares, in which the placed before issuable securities, convertible into shares, can be converted;

-    if the transaction or several interconnected transactions present the placement by subscription of the issuable securities, convertible into shares, which can be converted into common shares which constitute more than 2 per cent of the common shares, placed bfore by the Company, and common shares, in which the placed before issuable securities, convertible into shares, can be converted;

49.4. The transaction, in the consummation of which there is an interest, does not need to be approved by the General Shareholders Meeting, prescribed by the Clause 49.3 of this Charter, in cases if the conditions of the transaction do not differ essentially from the conditions of the similar transactions, which have been made between the Company and the interested person in the usual course of the business of the Company, having taken place before the interested person has been admitted interested.

The mentioned exception is enlarged solely upon the transactions, in the consummation of which there is an interest, made within the period from the date when the interested person has been admitted interested up to the date of the next annual General Shareholders Meeting.

 49.5. In the resolution on approval of the transaction, in the consummation of which there is an interest, the following shall be indicated: the person (persons), who are the party (parties) of the transaction, beneficiary party (parties), price, item of the transaction and other essential conditions. The General Shareholders Meeting may adopt the resolution on approval of the transaction (transactions) between the Company and the interested person, which may be realized in future in the usual course of the business of the Company. Herewith in the resolution of the General Shareholders Meeting shall be indicated the maximum amount of such transaction. Such resolution has has legal force until the next annual General Shareholders Meeting.

49.6. For the adoption by the Board of the Directors and by the General Shareholders Meeting of the resolution on approval of the transaction, in the consummation of which there is an interest, the price of the sold or acquired property or services is established in accordance with the Article 77 of the Federal Law “On Joint Stock Companies”.

 

Article 50. The Consequence of the Non-Respect of the Demands to the Transaction, in the Consummation of Which There is an Interest

50.1. The transaction, in the consummation of which there is an interest, realized with violations of the demands prescribed by the Article 49 of this Charter, can be deemed as invalid on the suit of the Company or the shareholders.

50.2. The interested person is liable to the Company for the losses, caused by him to the Company. In case if several persons are liable, their liability to the Company is joint.

 

CHAPTER XV. CONTROL OVER THE FINANCIAL AND ECONOMIC ACTIVITY OF THE COMPANY

 

Article 51. Audit Commission of the Company

The financial and business operations of the Company shall be supervised by the Audit Commission which will be elected annually by the General Shareholders Meeting.

The General Shareholders Meeting may resolve to pay to the members of the Audit Commission in the period of exercising their powers awards and compensations of the expenses, connected to execution of the functions of the members of the Audit Commission. The amounts of such awards and compensations are determined by the resolution of the General Shareholders Meeting.

51.2. The Audit Commission of the Company shall consist of the Chairman and two members of the Commission. No member of the Audit Commission of the Company may concurrently serve as a member of the Board of Directors of the Company or hold position on the Company’s governing bodies. The shares belonging to members of the Board of Directors of the Company or the persons holding position in the Company’s governing bodies cannot vote in the election of the members of the Audit Commission.

51.3. Resolutions of the Audit Commission shall be adopted by the majority of votes.

51.4. Under the competence of the Audit Commission falls the following:

-   examination (audit) according to the laws of the Russian Federation of the financial and business operations of the Company shall be performed based on the annual performance of the Company as well as at any time on the initiative of the Company’s Audit Commission, a resolution of the General Shareholders Meeting or the Board of Directors of the Company or upon request of shareholders (shareholder) holding, in aggregate, at least 10 per cent of the voting shares in the Company;

- request  to the officers of the Company’s governing bodies to provide documents on the Company’s financial and business operations;

-  request on the convocation of an extraordinary General Shareholders Meeting.

The operating procedures of the Audit Commission shall be determined by the Regulations on the Audit Commission of the Company approved by the General Shareholders Meeting.

51.5. Upon request of the Audit Commission of the Company, the officers of the Company’s governing bodies shall provide documents on the Company’s financial and business operations.

51.6. The Audit Commission presents the results of the audits to the General Shareholders Meeting of the Company.

Article 52. Auditor of the Company

52.1. Acting on the basis of legal acts of the Russian Federation, the Auditor of the Company shall perform an audit of the Company’s financial and economic activities, on the basis of a signed contract.

52.2. The Auditor of the Company shall be approved by the General Shareholders Meeting. The amount of remuneration of the services of the auditor is determined by the Board of Directors of the Company.

52.3. The signing of the contract of the auditing services is made as a result of the open competition in accordance with the laws of the Russian Federation.

Article 53. Conclusion of the Audit Commission or the Auditor of the Company

On the basis of audit of the Company’s financial and economic activities, the Audit Commission of the Company or the auditor shall prepare a report, which must contain the following:

-    confirmation of the reliability of the data contained in the reports and other financial documents of the Company;

-    information on violations of accounting and financial reporting rules established by the legal acts of the Russian Federation, and on violations of the legal acts of the Russian Federation in the course of the performance of financial and economic activities.

CHAPTER XVI. ACCOUNTING AND REPORTING, THE DOCUMENTATION AND THE INFORMATION ON THE COMPANY

Article 54. Accounting and Reporting of the Company

54.1. The Company shall perform financial, tax and other types of accounting and provide financial, tax and other reports according to the procedure established by effective legislation.

54.2. The President is responsible for the organization, maintenance and reliability of financial and tax accounting at the Company; the timely submission of the annual report and other financial statements to the relevant bodies; and the information on the Company’s operations to be provided to shareholders, creditors and the mass media according to the effective legislation of the Russian Federation and this Charter.

54.3. The annual report of the Company shall be subject to preliminary approval by the Board of Directors of the Company, not later than 30 days prior to the date of the annual Shareholders Meeting.

The Company’s Audit Commission shall confirm the reliability of information contained in the annual report and annual financial statements of the Company.

Before publishing the annual report, the Company must draw for the annual audit and confirmation of the annual financial statements an auditor, not connected by the property interests to the Company or its shareholders.

Article 55. The Storage of the Documentation of the Company

55.1. The Company shall store the following documents:

- The Charter, amendments and addenda, included into the Charter of the Company, registered in the established order, the decision on founding the Company, certificate of the State registration of the Company;

-  the documents, confirming the rights for the property of the Company, which is on the balance sheet of the Company;

-  internal documents of the Company, affirmed by the General Shareholders Meeting and other governing bodies of the Company;

-  Regulations on branches or representative offices of the Company;

-  annual financial statements;

-  prospects of the issue of the shares of the Company;

-  accountancy documents;

-  financial statement documents, presented to the correspondent bodies;

-  the minutes of the General Shareholders Meetings of the Company, Meetings of the Board of Directors of the Company, Audit Commission and Management Board of the Company;

-  voting ballots and the powers of attorney (copies of the powers of attorney) for participating in the General Shareholders Meeting;

-  list of the affiliates of the Company with indication of the quantity and category of the shares belonging to them;

-  conclusions of the Audit Commission of the Company, the auditor of the Company, state an local bodies of financial control;

-  prospects of the issue, trimestrial reports of the issuer and other documents, containing information, which is to be published or disclosed in another way  in accordance with  the Federal Law “On Joint Stock Companies” and other Federal Laws;

-  other documents, prescribed by the Federal Law “On Joint Stock Companies”, the Charter of the Company, internal documents of the Company, resolutions of the General Shareholders Meeting, he Board of Directors of the Company, executive bodies of the Company, and the documents, prescribed by the legislative acts of the Russian Federation.

55.2. The Company stores the documents, prescribed by the Clause 55.1 of this Charter, at the registered address of its executive body in the order and within the period, which are established by the laws of the Russian Federation.     

Article 56. Provision of Information by the Company

The information on the Company is presented by it in accordance with the demands of the Federal Law “On Joint Stock Companies”, other legislative acts of the Russian Federation and this Charter.

Article 57. Provision of Information by the Company to the Shareholders

57.1. The Company shall provide the shareholders with access to the documents stipulated by the Clause 55.1 of this Charter. Accounting documents and minutes of meetings of the Management Board shall be available to the shareholders (shareholder) holding, in aggregate, at least 25 per cent of the voting shares in the Company.

57.2. The documents provided for the Clause 57.1. of this Charter shall be made available for review within seven days from the date of respective request. Upon request of the persons that are entitled to access the documents specified in the Clause 57.1. of this Charter, the Company shall provide them with copies of such documents.

57.3. Confidential information of the Company which is not to be disclosed is the following:

-   information on obligations and rights of the Company in regards to the shareholders, debtors and creditors;

-   information on the current losses and debts of the Company, amount, period and order of the redemption of them;

-   scientific and technical developments, internal, program and informational materials of the Company;

-   other information, which is commercial secret in accordance with the laws of the Russian Federation.

57.4. Confidential information can be communicated on the resolution of the President of the Company to the persons and bodies, who are entitled with the right to demand such information in accordance with the laws of the Russian Federation.

Article 58. Mandatory Disclosure of the Information by the Company

58.1. The Company must disclose the following information:

-   annual report of the Company, annual accountancy;

-  prospects of the issue of the shares of the Company in the cases stipulated by the legislative acts of the Russian Federation

-  announcement on the conduct of the General Shareholders Meeting in the order, established by this Charter;

-  other information, established by the federal body of the executive power on the security market.

58.2. The company in case of the public placement of the bonds or other issuable securities must publish the information in the volume and order, established by the federal body of the executive power on the security market.

Article 59. Information on the Affiliates of the Company

59.1. The person is admitted affiliate in accordance with the laws of the Russian Federation.

59.2. Affiliates of the Company shall notify the Company in writing of the shares belonging to them, with indication of the quantity and categories (types) within 10 days from the date of acquisition of the shares.

59.3. In case if the non-presentation or untimely presentation of the mentioned information through the affiliate’s fault has resulted in causing property damage, the affiliate is liable to the Company in the amount of the caused damage.

59.4. The Company shall maintain the record-keeping of its affiliates and present reports in them in accordance with the laws of the Russian Federation.

 

CHAPTER XVII. REORGANIZATION AND LIQUIDATION OF THE COMPANY

Chapter 60. Liquidation of the Company

60.1. The Company shall be liquidated of its own accord pursuant to the decision of the General Shareholders Meeting and in the order stipulated by the laws of the Russian Federation and the Charter of the Company. The Company may be liquidated by the decision of the Court on the basis, prescribed by the Civil Code of the Russian Federation.

The liquidation of the Company results in termination of its activity without the transfer of the rights and duties of the Company to its legal successor.

60.2. In case of the liquidation of the Company of its own accord the Board of Directors of the Company appoints to the General Shareholders Meeting the question of the liquidation of the Company and appointment of the liquidation commission.

The General Shareholders Meeting of the Company being liquidated of its own accord make a resolution on the liquidation of the Company and appointment of the liquidation commission. In case of compulsory liquidation, the liquidation commission is appointed by the court (arbitration court), which determines its composition.

60.3. From the time the liquidation commission is appointed, all authorities in the management of the Company shall pass to the liquidation commission. The liquidation commission shall act in the court on behalf of the Company. In case when the State or local institution is the shareholder of the Company, the representative of the correspondent committee on property management or property fund or the local government body is included into the liquidation commission. In case of non-respect of this demand, the body, realizing the State registration of the Company does not have the right to consent to appointment of the liquidation commission.

60.4. The liquidation commission evaluates the assets, finds the creditors and satisfies their claims, and also those of the shareholders, composes the liquidation balance sheet, presents if to the Shareholders Meeting and the interested state bodies, acts in the court on behalf of the Company.

Article 61. Order of Liquidation of the Company

61.1. The liquidation commission shall publish, in the print media where information on the registration of legal entities is published, an announcement of the liquidation of the Company and the procedure and deadlines for the filing of claims by creditors. The deadline for filing of claims by creditors may not be less than two months from the date of publication of the announcement of the Company’s liquidation.

61.2. In case if for the moment of the resolution on the liquidation of the Company it does not have obligations to the creditors, its property is distributed among the shareholders in the accordance with the laws of the Russian Federation.

61.3. Liquidation commission takes measure for finding creditors and the accounts receivable, and notifies the creditors in writing of the liquidation of the Company.

61.4. On the expiration of the period of the filing of the claims by the creditors, the liquidation commission makes the intermediate liquidation balance sheet which contains information on the structure of the property of the Company which is being liquidated, the claims filed by the creditors,  and the results of the examination of them. The intermediate liquidation balance sheet is approved by the General Shareholders Meeting on the consent of the body, realizing the State registration of the Company, which is being liquidated.

61.5. If the monetary assets of the Company are not enough for satisfying the claims of the creditors, the liquidation commission sells other property of the Company on the public sale in the order established for execution of the court decisions.

61.6. The order in which the creditors' claims are satisfied in case of the Company’s liquidation shall be determined by the Civil Code of the Russian Federation, in accordance with intermediate liquidation balance sheet, from the date of its appointment, with the exception of the creditors of the fifth turn, the payments to which are made after a month from the date of of appointment of the intermediate liquidation balance sheet.

61.7. On finishing of dealing with the creditors, the liquidation commission composes  liquidation balance sheet which is approved by the General Shareholders Meeting on the consent of the body, realizing the State registration of the Company, which is being liquidated.

Article 62. Distribution of the Property of the Company among the Shareholders

62.1. The property of the Company, remaining after dealing with the creditors is distributed by the liquidation commission among the shareholders in the following order:

-  firstly the payments on the shares that must be bought out in accordance with the laws of the Russian Federation and with the article 41 of this Charter are realized

-  secondly the payment of the dividends on the preferential shares which have not been paid are realized

-  thirdly the distribution of the property of the Company, which is being liquidated, is realized among the shareholders - owners of the common shares and all types of the preferential shares.

62.2. The distribution of property of each turn is realized after full distribution of property of the previous turn. If the property belonging to the Company is not enough for paying the dividends to the shareholders - owners of the preferential shares, than the property is distributed among the shareholders - owners of the preferential shares proportionally to the quantity of shares belonging to them.

Article 63. Termination of Liquidation of the Company 

63.1. The liquidation of the Company shall be deemed complete, and the Company shall be deemed to have been liquidated from the date the appropriate entry is made in the Unified State Register of Legal Entities.

63.2. The controversies of the Company with legal entities and individuals, including foreign ones, are regarded in the order, established by the laws of the Russian Federation.

63.3. In the event of the liquidation of the Company, documents designated for permanent storage, having scientific and historical value, shall be transferred to the Archives of the union “Mosgorarhiv”, documents on personnel shall be transferred to the archive of the administrative okrug, on the territory of which the Company is allocated. The transfer and arrangement of the documents are realized by the forces and at the expense of the Company in accordance with the demands of the archive bodies.

Article 64. Reorganization of the Company

64.1. The reorganization of the Company (merger, takeover, split-up, spin-off, transformation) shall be carried out by decision of the General Shareholders Meeting.

64.2. In the event of reorganization, the rights and duties of the Company  shall be transferred to its legal successors.

64.3. In the event of a reorganization of the Company,all documents shall be transferred to the legal successor in compliance with the order established by the laws of the Russian Federation.

CHAPTER XVIII. EXECUTION OF MOBILIZATION TASKS

Article 65. Responsibilities of the Company on execution of the mobilization tasks

The Company is obliged:

-    to execute the tasks on mobilization preparation and civil defense, mobilization tasks in accordance with the laws of the Russian Federation, legislative acts of the federal bodies of executive power and affirmed mobilization plans;

-    conclude with correspondent state bodies in the order established by the laws of the Russian Federation the contracts on execution of the mobilization task;

-    use the objects of the civil defense and mobilization purpose, mobilization reserves (stockpiles), which are not entitled to privatization, on the conditions of the contracts, concluded by the Company with correspondent state bodies in the order established by the laws of the Russian Federation;

-    maintain the security of information, which constitutes state secret and other confidential information.

JSC "Transneft", 2002-2011