Magnitogorsk Iron & Steel Works : Brochure for MMK Sustainability Report

Corporate Governance of MMK

Brochure for MMK Sustainability Report 2022

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Corporate Culture

MMK has a history of more than 90 years, so we are working hard to preserve the corporate culture that has been developed by our successors for decades. People who stood at the origins of the enterprise unlikely knew the term "corporate culture," but they understood very well what style of work reflected and defined everything MMK aspired to.

Our priorities - the economic effect and quality - have not changed since that time. We establish partnership relations with all stakeholders, take care of the safety, health and well-being of our employees and make every effort to ensure that MMK employees receive fair remuneration for their work and have the opportunity to realise their ambitions in our Company. MMK strives for continuous improvement in all areas, be it business processes and ways of doing business, employee opportunities or product quality.

The history and identity of MMK and Magnitogorsk are inseparably connected: it was the establishment of our company here in the 1930s that formed the current appearance of the city. MMK is the major employer in the region, and we recognise the importance of our company for the social, economic and environmental health of our home city. Our activities are initially aimed at improving the quality of life of people living in Magnitogorsk and creating new opportunities for development of the region.

Our corporate culture is based on the principles of integrity and transparency, so we use well-established mechanisms to combat misconduct and corruption in all

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forms and manifestations. This robust governance system enables us to develop

trustworthy relations with all stakeholders.

We recognise our responsibility for the environmental impact of our operations and the need to value and protect the world around us. Our corporate culture reflects these priorities of the 21st century.

MMK's 90-year-old corporate culture is one of our most valuable assets. We protect and develop it and hope that we will be able to follow its principles in the long term.

Corporate Governance Approach

GRI 2-10, GRI 2-12

MMK's sound approach to corporate governance, combined with its leading position in the metals industry and strong performance, makes it a leading modern Russian company and a reliable partner in Russia and around the world. The Group is guided by international and Russian

corporate governance standards, including the provisions of the Corporate Governance Code recommended by the Bank of Russia and the listing rules of the Moscow Exchange.

MMK's corporate governance principles and rules are set out in the Company's Code of Corporate Governance that was revised and approved by the Board of Directors on 20 December 2019 (available on MMK's website)1. These principles and rules are as follows:

• protection of shareholder and investor rights
• compliance with effective laws and internal documents
• equal treatment of all shareholders (including foreign and minority shareholders)
• mutual trust and respect for all stakeholders, open dialogue
• integrity of management

• commitment to continuous reduction
  and prevention of harmful environmental impacts, an approach that will provide an environmental perspective to new development projects, and deployment of the best available technologies.

MMK follows these principles strictly and monitors new corporate governance requirements and best practices, continuously improving its own approach. This is specifically ensured through:

• the annual performance evaluation of the Board of Directors
• the Board of Directors' review of the report on compliance with the principles and recommendations of the Corporate Governance Code
• the Corporate Secretary's updates for the Board of Directors on changes in regulation and corporate governance practices
• communications with shareholders and investors and other stakeholders.

The Company engages proactively with stakeholders, including minority and foreign shareholders, on corporate governance matters. MMK adheres to a corporate-wide policy that applies to all its subsidiaries and affiliates and other legal entities of which it is a shareholder, founder or member.

1 All MMK's internal documents are available on the Company's website.

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The MMK Group's Code of Ethics: corporate culture and values

GRI 2-23, GRI 2-24

We have been creating a culture of success for many years by rewarding achievements fairly. A wide range of strategies and initiatives supported and approved by the Board of Directors strengthen our culture and help us unite the values of our employees and MMK. We believe that people are our key resource and expect high standards of business conduct and professional achievements from our employees. Our corporate values, principles and requirements that underpin our business ethics are set out in The MMK Group's Code of Ethics.

The Board of Directors is directly involved in developing MMK's corporate culture by

approving internal policies and regulations. The corporate culture and values laid down by the Board of Directors in the MMK Group's Code of Ethics and other internal documents ensure that MMK

enjoys the confidence of the investment community and the loyalty of its shareholders.

Compliance with best practices

GRI 2-23, GRI 2-24

The Company complies with most of the

corporate governance principles recommended by the Bank of Russia on 21 March 2014.

To assess its compliance with the principles set forth in MMK's Code of Corporate Governance, the Company used the recommendations for preparation of the report on compliance with the principles and recommendations of the Corporate Governance Code of the Bank of Russia.

Of the 79 principles of MMK's Code of Corporate Governance, 77 principles (97.5%) were fully or partially complied with in 2022.

Сompliance with the principles and recommendations of the Corporate Governance Code (Bank of Russia)

2.5%

8.9%

88.6%

Full compliance

Partial compliance

Non-compliance

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Following the recommendations of MMK's Code of Corporate Governance and best corporate governance practices, the Company uses, in particular, the following mechanisms and tools (in accordance with its Charter and internal regulations):

• The deadline for shareholders to submit proposals for the agenda of the
  Annual General Shareholders' Meeting has been set - this should be done within 60 days of the end of the financial year.
• Rules of responding to shareholders' questions during the meeting have been established.
• An additional means of

communications with shareholders has

been provided - e-mail ([e-mail]).

• An electronic voting system (STATUS online. Shareholder page) is used that enables every shareholder to exercise their right to vote freely and in the simplest and most convenient way.
• The list of matters to be decided on by a majority vote of all elected members of the Board of Directors and the list of matters to be decided on by the Board of Directors through in-person voting has been expanded.
• There is a collective executive body, the Management Board, whose main functions are to review the MMK
  Group's financial and economic plan (budget), forecast financial and economic indicators for the MMK Group, approve representatives in the
  MMK Group's companies and approve directives for the representatives to
  make decisions at general shareholders' meetings and meetings of boards of directors.
• There are representatives within the MMK Group companies to improve the
  quality of management. The representatives are guided by the
  Regulations on Representatives approved by MMK's CEO and the directives approved by MMK's
  Management Board.

• The Board of Directors is required to pass resolutions not only on transactions specified in Russian laws but also on transactions with a value exceeding 10% of the book value of the Company's assets, as well as on transactions to dispose of real estate regardless of the transaction value.
• The procedures for succession and selection of nominees to the Board of
  Directors are set out in MMK's
  Regulations on the Board of Directors and applied in practice.
• MMK's governing bodies can use electronic technologies in accordance with the Company's Charter and internal regulations and they do so in practice.
• Regular, open strategy sessions involving independent directors to discuss the implementation of the
  Company's portfolio of strategic initiatives and its KPI system are held.
• Particular attention is paid to
  environmental protection, social
  responsibility and corporate
  governance. The sustainability approach is embedded in all aspects of
  MMK's business and affects its decision-making. Our sustainability priorities are integrated into the
  Company's strategy. MMK promotes the development of the region where it operates, the social well-being of local communities and the preservation of the environment by meeting its economic obligations, social and environmental goals.

Disclosurepolicy (information policy)

GRI 2-23, GRI 2-24

In 2008, the Board of Directors approved MMK's Information Policy. The CEO is responsible for announcing the Company's performance.

The Information Policy of MMK is aligned with applicable Russian laws, the

Corporate Governance Code recommended by the Bank of Russia, rules and requirements of Russian securities market regulators and Russian and international best corporate governance practices.

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