A P P E N D I C E S

20 23

Report on Compliance with

the Principles and Recommendations of the Corporate Governance Code p. 2

Report on transactions made by PJSC PhosAgro in the reporting year 2023 deemed interested party transactions p. 24

Report by PJSC PhosAgro in the reporting year 2023 deemed on major transactions p. 25

REPORT ON COMPLIANCE WITH THE PRINCIPLES AND RECOMMENDATIONS

OF THE CORPORATE GOVERNANCE CODE

This Report on Compliance with the Principles and Recommendations of the Corporate Governance Code was reviewed by the Board of Directors PJSC PhosAgro at the meeting held on «16» February 2024 (minutes dd. «19» February 2024 unnumb.). The Board

of Directors confirms that the material presented herein contains comprehensive and reliable information on the Company's compliance with the principles and recommendations of the Corporate Governance Code for the 2023 reporting year.

N

Corporate governance principles

Corporate governance principle compliance criteria

1.1 The Company shall ensure equal and fair treatment of all shareholders when they exercise their right to participate in the Company's governance.

2023

Status1 of conformity with the

corporate governance Explanations2 of deviation from the assessment criteria of compliance with the corporate governance

principleprinciple

APPENDICES

  1. The Company should create the most favour- able conditions for its shareholders to enable them to participate in the general meeting and to develop informed positions on issues on its agenda, as well as to provide them with the opportunity to coordinate their actions and express their opinions on issues being discussed.
  2. Procedures for notification of the General Meeting and the provision of materials
    for it should enable shareholders to properly prepare for participation therein.
  3. During the preparation for, and hold-
    ing of, the General Meeting, shareholders should be able to freely receive informa- tion on a timely basis about the meeting and its materials, to pose questions to members of the Company's executive bodies and Board of Directors, and to communicate with each other.
  4. There should be no unjustified difficul- ties preventing shareholders from exer- cising their right to request that a General Meeting be convened, to nominate candi- dates to the company's governing bodies and to place proposals on its agenda.
  5. Each shareholder should be able to freely exercise his/her right to vote in a straightfor- ward and convenient way.

1. The Company provides an easy-to-access way to communicate with the community, such as a hotline, email or Internet forum that enables shareholders to express their opinion and to put forward issues for the agenda pending preparation for the General Meeting. These ways of communication were arranged by the company and made available to the shareholders during preparation for each General Meeting held in the reporting period.

  1. The notice of the General Meeting of Shareholders was posted (published) on the website at least 30 days prior to the date of the General Meeting.
  2. The meeting notice specifies the venue of the meeting and the documents required to get access to the premises.
  3. Access to the information on the individuals who proposed the agenda items and those who nominated candidates to the Board of Directors and the Internal Audit Commission of the Company was provided to shareholders.
  1. The shareholders were enabled to ask members of the executive bodies and members
    of the Company's Board of Directors before and during the Annual General Meeting in the reporting period.
  2. The standpoint of the Board of Directors (including any special opinions included in the minutes) on each agenda item of the General Meetings conducted during the reporting period was included in the materials of the General Meeting of Shareholders.
  3. The Company provided shareholders with the appropriate entitlement with access to the list of individ- uals eligible to attend the General Meeting, starting from the date of its receipt by the Company, in all cases of holding General Meetings in the reporting period.
  1. In the reporting period, shareholders were entitled, within not less than 60 days from the end
    of the respective calendar year, to put forward proposals to be included on the agenda of the Annual General Meeting.
  2. In the reporting period, the Company did not refuse to accept proposals for the agenda or candidates to the Company's bodies due to misprints or other insignificant defects in a shareholder's proposal.

1. The Company's Articles of Association provide for the possibility to complete the electronic voting bal- lot form on the website, the address of which is specified in the notification of the General Meeting

of Shareholders

complied partially complied did not comply

complied

partially complied

did not comply

complied partially complied did not comply

complied partially complied did not comply

complied partially complied

did not comply

Criterion 1 is partially met, since for one of the three General Meetings of Shareholders of the Company held in 2023,

the announcement of the General Meeting of Shareholders of the Company was made not 30, but 22 days in advance. This fact was due to the short timeframe for preparation of the Annual General Meeting of Shareholders of the Company.

At the same time, violation of the deadlines for notifying shareholders in accordance with Art. 52 of the Federal Law «On Joint-Stock Companies» dd. 26.12.1995 No. 208-FZ was not made.

The Company will continue to strive for proper compliance with the terms of posting (publication) of a notice on holding a general meeting of shareholders, provided for by law and recommendations of the Corporate Governance Code.

Formally, the principle is not observed, since the Articles of Association of the Company do not provide for the possibility of using the electronic form of the ballot on the internet website. However, please note that the vast majority

of the Company's shareholders are served by nominee holders (with the exception of only 25 shareholders out of 262 thou- sand, that is, 0.01%), which allows each of these shareholders to take advantage of remote voting by giving instruc-

tions to the nominal holder (proxy voting), and thus to exercise their right to vote freely, in a simple and convenient way.

In the future (for example, upon significant increase in the share of shareholders who do not use the services of nominal hold- ers), the Company may return to discussing the need to introduce electronic voting.

  1. The 'complied with' status is only indicated if the Company meets all the criteria of the corporate governance principle compliance assessment. Otherwise, the 'partially complied with' or 'not complied with' status is displayed.
  2. They are shown for each criterion of the corporate governance principle compliance if the Company meets only part of the criteria or fails to meet any of the principle compliance assessment criteria. If the Company indicated the 'complied with' status, no explanations are required.

2

3

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2023

Status of conformity with the

corporate governance

Explanations of deviation from the assessment criteria of compliance with the corporate governance

principle

principle

1.1.6 Procedures for holding a General Meeting set by the Company should provide equal oppor- tunity to all persons present at the General Meeting to express their opinions and ask questions that might be of interest to them.

  1. When General Meetings of Shareholders are held in the reporting period in the form of a meeting (joint presence of shareholders), sufficient time is envisaged for reports on agenda items and the time to dis- cuss these issues, the shareholders were given the opportunity to express their opinions and ask ques- tions of interest on the agenda.
  2. Nominees to the Company's governance and supervisory bodies were available to answer sharehold- ers' questions at the meeting where they were voted upon.
  3. The sole executive body, the person responsible for accounting, the Chairman or other members
    of the Board of Directors Audit Committee were available to answer shareholders' questions at General Meetings of Shareholders held in the reporting period.
  4. The Board of Directors reviewed the use of telecommunications tools to provide shareholders with remote access to participate in the General Meetings in the reporting period when making decisions related to the preparation and holding of General Meetings Shareholders.

complied partially complied did not comply

1.2 Shareholders are provided with an equitable and fair opportunity to participate in the Company's profits through the payment of dividends.

1.2.1

1.2.2

The Company should develop and put

in place a transparent and clear mechanism for determining the amount of dividends and payment thereof.

The Company should not make a decision on the payment of dividends if such deci- sion, without formally violating the limits set by the law, is unjustified from an economic perspective or might lead to the formation of false assumptions about the Company's activity.

  1. The Company's dividend policy was developed, approved by the Board of Directors and disclosed on the Company's website.
  2. If the Company's dividend policy uses criteria from the Company's financial accounts to determine the amount of dividends, the dividend policy shall employ the consolidated financial accounts.
  3. Rationale for the proposed distribution of net profit, inter alia for the purpose of paying dividends and satisfying the Company's own needs, and assessment of its compliance with the dividend policy adopted by the Company, with explanations and economic justification of the need to allocate a cer- tain portion of the net profit for own needs in the reporting period have been included in the materials for the General Meeting of Shareholders, the agenda of which contains the issue of profit distribution (including the payment (declaration) of dividends)

1. The Company's dividend policy comprises clear-cut indications in relation to the financial/economic cir- cumstances under which no dividends are due to the Company.

complied partially complied did not comply

complied partially complied did not comply

  1. The Company should not allow any deteri- oration of the dividend rights of its existing shareholder.
  2. The Company should strive to rule out
    any ways through which its shareholders can obtain any profit or gain at the Company's expense other than dividends and the pay- ment of the liquidation value thereof.

1. In the reporting period, the Company did not take any steps that impaired existing shareholders' divi- dend rights.

1. To eliminate other methods for shareholders to generate profit (income) at the Company's expense, other than dividends and the payment of the liquidation value thereof, the Company's internal docu- ments establish controls that ensure the timely identification and procedure for the approval of transac- tions with individuals affiliated (related) with substantial shareholders (individuals entitled to the votes attached to voting shares), where the law does not formally recognize such transactions as relat- ed-party transactions.

complied partially complied did not comply

complied partially complied did not comply

1.3 The system and practices of corporate governance should ensure equal terms and conditions for all shareholders owning shares of the same class (category) within a company, including minority and foreign shareholders, as well as their equal treatment by the Company.

APPENDICES

  1. The Company should create conditions that enable its governing bodies and con- trolling parties to treat each shareholder fairly and, in particular, that rule out the possibil- ity of any abuse of minority shareholders
    by majority shareholders.
  2. The Company should not perform any acts that will or might result in the artificial reallo- cation of corporate control therein.
  1. During the reporting period, the procedures for management of potential conflicts of interest among existing shareholders were efficient, and the Board of Directors paid enough attention to conflicts among shareholders, where such existed.
  1. Quasi-treasuryshares are not available or were not used in the voting during the reporting period.

complied partially complied did not comply

complied partially complied did not comply

4

5

1.4 Shareholders should be provided with reliable and efficient means of recording their rights in shares as well as with the opportunity to freely dispose of such shares in a non-onerous manner.

1.4 Shareholders should be provided with reli- 1. The Registrar's quality and reliability in keeping the register of securities holders meet the Company's

able and efficient means of recording their

and its shareholders' needs.

rights in shares as well as with the oppor-

tunity to freely dispose of such shares

in a non-onerous manner.

complied partially complied did not comply

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2.1 The Board of Directors shall be in charge of the strategic management of the company, determine the major principles of and approaches to the creation of a risk management and internal control system within

the Company, supervise the activity of the Company's executive bodies and carry out other key functions.

2023

Status of conformity with the

corporate governance Explanations of deviation from the assessment criteria of compliance with the corporate governance

principleprinciple

  1. The Board of Directors should be responsible for decisions to appoint and remove (mem- bers) of executive bodies, including in con- nection with their failure to properly perform their duties. The Board of Directors should also ensure that the Company's executive bodies act in accordance with an approved development strategy and the Company's main business goals.
  2. The Board of Directors should estab- lish the basic long-term objectives
    of the Company's activity, evaluate and approve its key performance indicators and principal business goals, as well as evaluate and approve its strategy and business plans in respect of its principal areas of operation.
  1. The Board of Directors has the powers stipulated in the Articles of Association to appoint and dismiss members of executive bodies, as well as determine the conditions of their contracts.
  2. In the reporting period, the Nomination (Appointment, Human Resources) Committee1 reviewed the compliance of the professional expertise, skills and experience of the members of the executive bodies with the current and expected needs of the Company, dictated by the Company's approved strategy.
  3. The Board of Directors reviewed the report(s) of the sole executive body and members of the collegial executive body on the fulfilment of the Company's strategy.

1. During the reporting period, meetings of the Board of Directors reviewed the progress made in the exe- cution and updating of the Company's strategy, the approval of its financial and business plan (budget), and the review of the criteria and measures (including intermediate) to implement the Company's strat- egy and business plan.

complied

partially complied did not comply

complied partially complied did not comply

Criterion 1 is partially met, because the Board of Directors appoints and dismisses members of executive bodies from their positions, sets contract terms for the general director, but not for each of the Board members (and therein lies a partial non-compliance with the criterion). In addition, this distribution of powers appears to be optimal, as the Board of Directors approves the income and expenditure estimates containing the planned remuneration costs for the members of executive bodies, budgetary control report, as well as approves the reports on their execution of key performance indicators, which serve as the basis for the accrual of additional remuneration. In this regard, non-fulfillment of the criterion is not time-lim- ited, and introduction to the Company of the Board of Directors' practice determining the terms of employment contracts with members of the Board other than the General Director is not considered in the current period.

Criteria 2 and 3 are fully met.

  1. The Board of Directors should determine the principles of, and approaches to, the cre- ation of the risk management and internal control system within the Company.
  2. The Board of Directors should determine
    the Company's policy on remuneration due to, and/or reimbursement of costs incurred by, its board members, members of its executive bodies and other key managers.
  1. The Board of Directors determines the principles and approaches to the risk management and internal control system within the Company which are formalized in the Company's internal documents which determine the risk management and internal control policy.
  2. The Board of Directors assessed the Company's risk management and internal control system during the reporting period.
  1. The Company has developed and implemented the policy(-ies) approved by the Board of Directors on the remuneration and reimbursement of costs incurred by the members of the Board of Directors, the Company's executive bodies and other key Company managers.
  2. The meetings of the Board of Directors reviewed issues related to the above policy(-ies) during the reporting period.

complied partially complied did not comply

complied

partially complied

did not comply

Criterion 1 is partially met, as there is no single document regulating payments to the members of the Board of Directors (and this is a partial failure to meet the criterion). However, during the establishment of each composition of the Board, the General Meeting of Shareholders approves the amounts and rules to determine and pay remunerations and compensations to the members of the Board of Directors. Determination of remuneration for executive bodies and executive officers is regulated by a number of internal documents of the Company and is subject to review by the Remunerations and Human Resources Committee of the Board of Directors at least twice a year. The Company believes that this procedure makes it possible to ensure the leadership role of the Board of Directors in determining the principles and rules for calculating and paying remunerations and compensations to both Board members and executive officers.

APPENDICES

In this regard, failure to meet the criterion is not time-limited, and the development and introduction of a unified policy

on remuneration and reimbursement of expenses of members of the Board of Directors, executive bodies of the Company and other key executives of the Company are not considered for the current period.

Criterion 2 is fully met.

2.1.5

2.1.6

2.1.7

The Board of Directors should play a key role in the prevention, detection and resolution of internal conflicts between the Company's bodies, shareholders and employees.

The Board of Directors should play a key role in ensuring that the Company is transparent, discloses information in full and in due time, and provides its shareholders with unhindered access to its documents.

The Board of Directors should monitor

the Company's corporate governance practices and play a key role in its material corporate events.

  1. The Board of Directors plays a key part in the prevention, detection and settlement of internal conflicts.
  2. The Company has established a system to identify the transactions related to conflicts of interest and a system of efforts aimed at the settlement of such conflicts.

1. The Company determined the individuals in charge of the implementation of the information policy.

1. During the reporting period, the Board of Directors reviewed the corporate governance practice within the Company.

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

2.2 The Board of Directors should be accountable to the Company's shareholders.

2.2.1

Information about the Board of Directors'

1.

The Company's annual report for the reporting period includes information on the attendance rate

work should be disclosed and provided

of meetings of the Board of Directors and its committees by individual directors.

to the shareholders.

2.

The annual report contains information on the principal findings of the Board of Directors' performance

assessment for the reporting period.

2.2.2

The Chairman of the Board of Directors

1.

The Company has a transparent procedure that enables shareholders to submit their questions and

must be available to communicate with

their standpoint thereon to the Chairman of the Board of Directors.

the Company's shareholders.

1 hereinafter - the "Nomination Committee".

6

7

complied partially complied did not comply

complied partially complied did not comply

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2.3 The Board of Directors should be an efficient and professional governing body of the Company that is able to make objective and independent decisions and adopt resolutions in the best interests of the Company and its shareholders.

2023

Status of conformity with the

corporate governance

Explanations of deviation from the assessment criteria of compliance with the corporate governance

principle

principle

2.3.1

Only individuals with an impeccable business

and personal reputation should be elected

to the Board of Directors; such individuals

should also have the knowledge, skills and

experience necessary to make decisions

that fall within the jurisdiction of the Board

of Directors and to perform its functions

efficiently.

1. In the reporting period, the Board of Directors (or its Nominations Committee) assessed the nominees to the Board of Directors in terms of their required experience, expertise, goodwill, the absence of con- flicts of interest, etc.

complied partially complied did not comply

2.3.2 Board members should be elected pursu-

ant to a transparent procedure enabling

shareholders to obtain information about

the respective candidates that is sufficient

for them to get an idea of the candidates' per-

sonal and professional qualities.

1. In all instances when a General Meeting of Shareholders was held during the reporting period

the agenda of which includes the election of the Board of Directors, the Company provided share-

holders with biographical information about all the nominees to the Board of Directors, assessments

assigned to the nominees by the Board of Directors (or its Nominations Committee) and information

on the conformity of the nominees with the independence criteria, according to the recommendations

in paragraphs 102 to 107 of the Code and the nominees' written consent to be elected to the Board

of Directors.

complied

partially complied

did not comply

The criterion is partially met, the shareholders were not provided with information regarding the assessment of the compliance of the professional qualifications, experience and skills of candidates with the current and expected needs

of the Company, conducted by the Board of Directors or its Remuneration and Human Resources Committee. This

was due to the lack of time between the second date for accepting proposals for the agenda of the annual general meeting of shareholders of the Company, as well as proposals for nominating candidates to the Board of Directors of the Company and the date of the meeting of the Board of Directors of the Company to consider these proposals.

In 2024 and subsequent years, information on the assessment of the compliance of the professional qualifications, experience and skills of candidates with the current and expected needs of the Company, conducted by the Board of Directors or the Remuneration and Human Resources Committee, will be provided to shareholders.

2.3.3 The composition of the Board of Directors

should be balanced, in particular, in terms

of the qualifications, expertise and busi-

ness skills of its members. The Board

of Directors should enjoy the confidence

of the shareholders.

1. As part of the assessment of the Board of Directors in the reporting period, the Board of Directors

reviewed its own needs in professional qualifications, experience and business skills.

complied partially complied did not comply

APPENDICES

2.3.4 The membership of the Company's Board

1. As part of the assessment of the Board of Directors held in the reporting period, the Board of Directors

of Directors must enable the Board to orga-

reviewed the conformity of the number of members of the Board of Directors with the Company's

nise its activities in the most efficient way

needs and the shareholders' interests.

possible, in particular, to create Board com-

mittees, as well as to enable the Company's

substantial minority shareholders to elect

a candidate to the Board of Directors

for whom they would vote.

2.4 The Board of Directors should include a sufficient number of independent directors.

complied partially complied did not comply

2.4.1 An independent director means any per- son who has the required professional skills and expertise and is able to have his/ her own position and make objective and bona fide judgments, free from the influ- ence of the Company's executive bod- ies, any individual group of shareholders

or other stakeholders. It should be noted that, under normal circumstances, a candidate (or an elected director) may not be deemed to be independent if he/she is associated with the Company, any of its substantial share- holders, material trading partners competitors or the government.

1. During the reporting period, all independent members of the Board of Directors met the independence criteria specified in recommendations 102 to 107 of the Code or were recognized as such by resolution of the Board of Directors.

complied partially complied did not comply

8

9

  1. It is recommended to evaluate whether or not candidates nominated to the Board of Directors meet the independence crite- ria as well as to review, on a regular basis, whether or not independent Board members meet the independence criteria. When car- rying out such evaluations, substance should take precedence over form.
  2. Independent directors should account
    for at least one-third of all directors elected to the Board of Directors.
  3. Independent directors should play a key role in the prevention of internal con- flicts in the Company and the performance by the latter of material corporate actions.
  1. In the reporting period, the Board of Directors (or the Nominations Committee of the Board of Directors) evaluated the independence of each nominee to the Board of Directors and submitted the relevant opinion to shareholders.
  2. In the reporting period, the Board of Directors (or the Nominations Committee of the Board of Directors) reviewed the independence of the existing members of the Board of Directors, as indicated
    by the Company in the annual report as independent directors, at least once.
  3. The Company has drafted procedures that determine the necessary actions to be taken by a mem- ber of the Board of Directors if he/she loses his/her independence, including the obligation to notify the Board of Directors accordingly and in a timely manner.

1. Independent directors must account for at least one-third of the Board of Directors.

1. Independent directors (who do not have any conflicts of interest) provide a preliminary assessment of substantial corporate actions related to a potential conflict of interest, and the findings of such an assessment are submitted to the Board of Directors.

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2.5 The Chairman of the Board of Directors should help it carry out the functions imposed thereon in the most efficient manner possible.

2023

Status of conformity with the

corporate governance Explanations of deviation from the assessment criteria of compliance with the corporate governance

principleprinciple

2.5.1

2.5.2

2.5.3

It is recommended to either elect an independent director to the position of the Chairman of the Board of Directors or to identify

the a senior independent director from among the Company's independent directors who would coordinate the work of the independent directors and liaise with the Chairman of the Board of Directors.

The Board Chairman should ensure that Board meetings are held in a constructive atmosphere and that any items

on the meeting agenda are discussed freely. The Chairman should also monitor fulfilment of decisions made by the Board of Directors.

The Chairman of the Board of Directors should take any and all measures as may be required to provide Board members,

in a timely fashion, with information required to make decisions on issues on the agenda.

  1. The Chairman of the Board of Directors is an independent director or a senior independent director identified from among the independent directors1.
  2. The role, rights and duties of the Chairman of the Board of Directors (and, if applicable, the senior inde- pendent director) are duly determined in the Company's internal documents.

1. The performance of the Chairman of the Board of Directors was assessed as part of the Board of Directors' efficiency assessment procedure in the reporting period.

1. The duty of the Chairman of the Board of Directors to make an effort to ensure the timely filing of doc- uments for members of the Board of Directors on agenda items of meetings of the Board of Directors is established in the Company's internal documents.

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

The Chairman of the Board of Directors shall be an independent director. This practice, from the Company's point of view, is the best possible option; the independent Chairman not only coordinates the work of the independent directors, but also leads and directs activities of the Board of Directors in general.

2.6 Board members must act reasonably and in good faith in the best interests of the Company and its shareholders, who should be properly informed, with due care and diligence.

APPENDICES

  1. Acting reasonably and in good faith means that Board members should make deci- sions by considering all available information, in the absence of a conflict of interest, treat- ing the Company's shareholders equally, and assuming normal business risks.
  2. The rights and duties of Board members should be clearly stated and documented in the Company's internal documents.
  3. Board members should have sufficient time to perform their duties.
  4. All Board members should have an equal opportunity to access the Company's doc- uments and information. Newly elected Board members should be provided with sufficient information about the Company and the work of its Board of Directors
    as soon as practicable.
  1. The Company's internal documents establish that a member Board of the Directors is obliged to notify the Board of Directors if he/she has a conflict of interest with respect to any item on the agenda
    for a meeting of the Board of Directors or a committee of the Board of Directors, before the start of the discussion of relevant agenda item.
  2. The Company's internal documents envisage that a member of the Board of Directors should refrain from voting on any item where he/she has a conflict of interest.
  3. The Company establishes a procedure that enables the Board of Directors to obtain professional advice on issues falling within its competence, at the Company's expense.

1. The Company adopted and published an internal document that clearly specifies the rights and duties of members of the Board of Directors.

  1. Individual attendance at meetings of the Board and committees as well as the time spent on prepa- ration for participation in meetings was taken into account as part of the assessment procedure of the Board of Directors in the reporting period.
  2. According to the Company's internal documents, members of the Board of Directors are obliged to notify the Board of Directors of their intention to join the governance bodies of other companies (except for the Company's affiliates and dependent companies) and about such actual appointments.
  1. According to the Company's internal documents, members of the Board of Directors are free
    to gain access to documents and to make requests pertaining to the Company and its affiliates, and the Company's executive bodies are obliged to provide the relevant information and documents.
  2. The Company has a formalised programme of introductory events for newly elected members of the Board of Directors.

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

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11

2.7 Meetings of the Board of Directors, preparation for them and participation of Board members therein should ensure efficient work of the Board.

2.7.1

It is recommended that meetings of the Board

1.

The Board of Directors held at least six meetings in the reporting year.

of Directors be held as needed, with

due account of the Company's scope of activ-

ities and its current goals.

2.7.2

It is recommended that a procedure

1.

The Company approved an internal document that governs the procedure for preparing for and holding

for preparing for and holding meetings

meetings of the Board of Directors, which stipulates, in particular, that the notice of the meeting should

of the Board of Directors be developed and

normally be published at least five days prior to the meeting.

set out in the Company's internal docu-

2.

During the reporting period, members of the Board of Directors who were absent from the venue

ments. The above procedure should enable

the shareholders to prepare properly for such

of the meeting were given the opportunity to participate in the discussion of agenda items and voting

meetings.

remotely - via conference call and video conferencing

1 Please specify which of the two alternative approaches admitted by the principle is implemented in the Company and explain the reasons for the selection made.

complied partially complied did not comply

complied partially complied did not comply

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2023

Status of conformity with the

corporate governance

Explanations of deviation from the assessment criteria of compliance with the corporate governance

principle

principle

  1. The form of a meeting of the Board
    of Directors should be determined with
    due account of the importance of the issues on the agenda of the meeting. The most important issues should be decided at meet- ings held in person.
  2. Decisions on the most important issues relating to the Company's business should be made at a meeting of the Board of Directors by a qualified majority vote or by a majority vote of all elected Board members.

1. The Company's Articles of Association or internal document envisage that the most significant issues (according to the list in Recommendation 168 of the Code) should be considered at personal meetings of the Board.

1. The Company's Articles of Association envisage that resolutions on the most critical issues set forth in Recommendation 170 of the Code shall be adopted at a meeting of the Board of Directors by a qualified, at least threefourths, majority of votes or by a majority of votes of all elected members of the Board of Directors.

complied partially complied did not comply

complied partially complied did not comply

2.8 The Board of Directors should form committees for preliminary consideration of the most important issues of the company's business.

  1. For the purpose of preliminary consideration of any matters of supervision of the com- pany's financial and business activities,
    it is recommended that an audit committee comprising independent directors be formed.
  2. For the purpose of preliminary consider- ation of any matters of development of effi- cient and transparent remuneration practices, it is recommended that a remuneration com- mittee comprising independent directors
    be formed and that it be chaired by an inde- pendent director who should not concurrently be the Board chairman.

APPENDICES

2.8.3 For the purpose of preliminary consideration

of any matters relating to human resources

planning (making plans regarding succes-

sor directors), professional composition and

efficiency of the Board of Directors, it is rec-

ommended that a nominating committee

(a committee on nominations, appoint-

ments and human resources) be formed with

the majority of its members being indepen-

dent directors.

  1. The Board of Directors established an Audit Committee comprising independent directors only.
  2. The Company's internal documents determine the objectives for the Audit Committee, including, in par- ticular, any objectives contained in Recommendation 172 К of the Code.
  3. At least one member of the Audit Committee, who is an independent director, has experience and expertise in drafting, reviewing, assessment and audit of financial statements (accounts).
  4. Meetings of the Audit Committee were held at least quarterly during the reporting period.
  1. The Board of Directors set up a Remuneration Committee consisting of independent directors only.
  2. The Chairman of the Remunerations Committee is an independent director who is not also the Chairman of the Board of Directors.
  3. The Company's internal documents determine the objectives of the Remunerations Committee, includ- ing those contained in Recommendation 180 of the Code, as well as the conditions (events), upon the occurrence of which the Remunerations Committee considers an issue on revising the Company's remuneration policy for the members of the Board of Directors, executive bodies and other key executives
  1. The Board of Directors established a Nominations Committee (or its objectives specified
    in Recommendation 186 of the Code are implemented as part of another committee1), the majority of whom are independent directors.
  2. The Company's internal documents determine the objectives of the Nominations Committee (or the rel- evant committee with a combined functionality), including those contained in Recommendation 186 of the Code.
  3. In order to establish the Board of Directors that meets the Company's goals and objectives to the full- est extent possible, during the reporting period the Nominations Committee, either independently
    or together with other committees of the Board of Directors, or the Company's authorized shareholder relations division, has organized interaction with shareholders not necessarily being major shareholders for the purpose of selecting candidates for the Company's Board of Directors.

complied partially complied did not comply

complied

partially complied

did not comply

complied partially complied did not comply

Criterion 1 is not met insofar as the Remuneration and Human Resources Committee includes a member of the Board

of Directors who does not have independent status. The committee was formed from the renewed composition of the board of directors by selecting those directors who had the work experience, professional training, skills and knowledge most essential for the effective implementation of the goals and objectives of the committee.

After the election of a new Board of Directors at the annual general meeting of shareholders of the Company in 2024,

the Board of Directors will seek to form a remuneration and human resources committee only from independent directors.

Criterion 2 is not met insofar as the Chairman of the Remuneration and Human Resources Committee is a member

of the Board of Directors who does not have independent status, however, he is a high-level expert in the field of personnel management, and his position on the agenda items of the Company's Board of Directors has always been based solely on his professional experience and knowledge, unbiased and independent of the views of other members of the Board of Directors and the Company's management.

Chairman of the Remuneration and Human Resources Committee is not the Chairman of the Board of Directors of the Company.

When forming a new composition of the Remuneration and Human Resources Committee in 2024, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee.

Criterion 3 is not met insofar as the fact that the Company's internal documents do not define the conditions (events) upon the occurrence of which the Remuneration and Human Resources Committee of the Board of Directors considers revising the Company's policy on remuneration of members of the Board of Directors, executive bodies and other key execu- tives. The Company proceeded from the fact that the task of periodically reviewing such a policy, specified in the Regulations on the Committee for Remuneration and Human Resources of the Board of Directors, implies keeping it up to date, meeting the current needs of the Company. Upon considering by the Board of Directors of amendments to the Regulations

on the Remuneration and Human resources Committee or upon approval of a new version of the regulations (presumably in 2024-2025), the conditions (events) for the revision of the policy will be introduced to drafts of such documents.

The relevant tasks are carried out by the Remunerations and Human Resources Committee of the Board of Directors, the majority of whom are independent directors. The tasks of the Remunerations and Human Resources Committee are determined by the Regulation on this Committee approved by the Board of Directors.

2.8.4 Taking account of its scope of activities

and levels of related risks, the Company

should form other committees of its Board

of Directors, particularly a strategy com-

mittee, a corporate governance commit-

tee, an ethics committee, a risk management

committee, a budget committee or a com-

mittee on health, security and the environ-

ment, etc.

1. In the reporting period, the Company's Board of Directors reviewed the conformity of the membership in its committees to the objectives assigned to the Board of Directors and to the Company's operating goals. Additional committees were either established or were not recognized as necessary.

complied partially complied did not comply

1 If the objectives of the Nomination Committee are only implemented as part of another committee, indicate its name.

12

13

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2023

Status of conformity with the

corporate governance Explanations of deviation from the assessment criteria of compliance with the corporate governance

principleprinciple

  1. The composition of the committees should be determined in such a way that it would allow a comprehensive discussion of issues being considered on a preliminary basis with due account of differing opinions.
  2. The Chairmen of the committees should inform the Board of Directors and
    its Chairman of the work of their committees on a regular basis.
  1. The Audit Committee, the Remuneration Committee, the Nomination Committee (or the relevant Committee with overlapping functions) were headed by independent directors in the reporting period.
  2. The Company's internal documents (policies) contain provisions whereby individuals not included on the Audit Committee, the Nominations Committee and the Remunerations Committee may attend meetings of these committees only upon the invitation of the Chairman of the respective committee.

1. During the reporting period, the Chairmen of the committees reported on the committees' operations to the Board of Directors on a regular basis.

complied

partially complied did not comply

complied partially complied did not comply

Criterion 1 is not met in the part that the Chairman of the Remuneration and Human Resources Committee is a member of the Board of Directors who does not have independent status, however, his competence, work experience, and special knowledge allow him to most effectively manage the activities of the committee. When forming a new composition of the Remuneration and Human Resources Committee in 2024, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee.

Criterion 2 is fully met

2.9 The Board of Directors should ensure that the quality of its work and that of its committees and Board members is evaluated.

  1. The evaluation of the quality of the work of the Board of Directors should be aimed at determining how efficiently the Board
    of Directors, its committees and Board mem- bers work and whether their work meets the Company's needs, as well as at mak- ing their work more intensive and identifying areas for improvement.
  2. The quality of the work of the Board
    of Directors, its committees and Board mem- bers should be evaluated on a regular basis, at least once a year. To carry out an inde- pendent evaluation of the quality of the work of the Board of Directors, it is recom- mended that a third-party entity (consultant) be retained on a regular basis, at least once every three years.
  1. The Company's internal documents determine the procedures for assessing (self-assessing) the Board of Directors' performance.
  2. The self-assessment or external assessment of the Board of Directors' performance conducted
    in the reporting period included an assessment of operations of the committees, individual members of the Board of Directors and the entire Board of Directors.
  3. The findings of the selfassessment or external assessment of the Board of Directors in the reporting period were reviewed at the personal meeting of the Board of Directors.
  1. For an independent quality assessment of the Board of Directors' performance, an external company (advisor) was engaged by the Company at least once in three recent reporting periods.

complied

partially complied did not comply

complied partially complied did not comply

Criteria 1 and 3 are fully met. Criterion 2 is not met insofar as no individual assessment of each member of the Board of Directors in 2023 (for 2022) and 2022 (for 2021) was carried out. Such an assessment was considered inappropriate

by the Remuneration and Human Resources Committee, since the composition of the Board of Directors has been updated by 70% since July 2022. In the current environment, the Board of Directors did not see any risks in not conducting an individual assessment. Starting with the assessment of the quality of work of the Board of Directors for 2024, the Company plans to return to the practice of assessing, including each member of the Board of Directors individually

3.1 The Company's Corporate Secretary shall be responsible for efficient interaction with

its shareholders, coordination of the Company's actions designed to protect the rights and interests of its shareholders and support for the efficient work of its Board of Directors.

  1. The Corporate Secretary should have suffi- cient knowledge, experience and qualifica- tions for the performance of his/her duties, as well as an impeccable reputation and should enjoy the trust of the shareholders.
  2. The Corporate Secretary should be suffi- ciently independent of the Company's exec- utive bodies and be vested with powers and resources required to perform his/her tasks.

1. The Company's website and annual report provide background information on the Corporate Secretary (including information about age, education, qualifications, experience), as well as information on posi- tions in management bodies of other legal entities held by the Corporate Secretary for at least the last five years.

  1. The Company has adopted and disclosed an internal document - the Regulation on the Corporate Secretary.
  2. The Board of Directors approved the appointment, dismissal and additional remuneration of the Corporate Secretary.
  3. The Company's internal documents stipulate for the right of the Corporate Secretary to request and receive the Company's documents and information from the Company's management bodies, subdivi- sions and officers.

complied partially complied did not comply

complied partially complied did not comply

4.1 The level of remuneration paid by the Company should be sufficient to enable it to attract, motivate and retain individuals with the required skills and qualifications. Remuneration due to Board members, executive bodies and other key Company managers should be paid in accordance with a remuneration policy approved by the Company.

APPENDICES

14

15

4.1.1 It is recommended that the level of remu- neration paid by the Company to its Board members, executive bodies and other key managers should be sufficient to moti- vate them to work efficiently and enable the Company to attract and retain knowl- edgeable, skilled and duly qualified indi- viduals. The Company should avoid setting the level of remuneration any higher than necessary, and should also avoid excessively large gaps between the level of remunera- tion of any of the above individuals and that of the Company's employees.

1. The remuneration paid to the members of the Board of Directors, executive bodies and other key executives of the Company is determined based on the results of a comparative analysis of the level of remuneration in comparable companies.

complied partially complied did not comply

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2023

Status of conformity with the

corporate governance Explanations of deviation from the assessment criteria of compliance with the corporate governance

principleprinciple

4.1.2

The Company's remuneration policy should

1. In the reporting period, the Remuneration Committee reviewed the remuneration policy(-ies) and

be developed by its Remuneration Committee

the practice of its/their implementation and, if necessary, submitted the relevant recommendations

and approved by the Board of Directors. With

to the Board of Directors.

the help of its Remuneration Committee,

the Board of Directors should monitor imple-

mentation of, and compliance with, the remu-

neration policy by the Company and, should

this be necessary, review and amend

the same.

complied

partially complied

did not comply

The criterion is partially met as the remuneration policy as a self-standing document was not subject to review

by the Remunerations and Human Resources Committee, and therein lies the partial non-compliance with the crite- rion. However, the Committee reviewed periodically the reports on the implementation of internal documents regulating the remunerations for executive officers, including the reports on the achievement of key performance indicators, issued recommendations to change the composition and procedure for determining the target values of key performance indica- tors. The Company believes that the approach used ensures a sufficient level of involvement of the Board of Directors and its Remunerations and Human Resources Committee in the process of creating the incentive system, monitoring its implementation and execution. For this reason, non-fulfillment of the criterion is not time-limited, and development and introduction of a uniform policy (in the form of a separate document) on remuneration and reimbursement of expenses of members of the Board of Directors, executive bodies of the Company and other key executives of the Company are not reviewed

in the current period.

  1. The Company's remuneration policy should provide for transparent mecha- nisms to be used to determine the amount of remuneration due to members of the Board of Directors, the executive bodies and other key Company managers, as well as to regu- late any and all types of payments, benefits, and privileges provided to any of the above individuals.
  2. It is recommended that the Company develop a policy on the reimbursement of expenses that would contain a list of reimbursable expenses and specify service levels pro- vided for members of the Board of Directors, the executive bodies and other key Company managers. Such a policy could form part
    of the Company's policy on compensation.
  1. The Company's remuneration policy(-ies) contain(s) transparent arrangements on determining
    the amount of remuneration paid to members of the Board of Directors, executive bodies and other key Company managers and govern(s) all types of fees, benefits and advantages provided to these individuals.
  1. The remuneration policy(-ies) or other internal documents of the Company establish(-es) the rules on the reimbursement of costs to the members of the Board of Directors, executive bodies and other key Company employees.

complied

partially complied

did not comply

complied partially complied did not comply

The criterion is partially met, as the mechanism of determining the remuneration paid to members of governance bodies and other executive officers is transparent, but it is not indicated in a single document. It is stipulated by a set of internal documents of the Company and resolutions of its governance bodies (and therein lies the partial non-compliance with the crite- rion). The approach used ensures availability and transparency of information about the remuneration system in the Company for all interested parties. In this regard, failure to meet the criterion is not time-limited, and the development and introduction of a unified policy on remuneration and reimbursement of expenses of members of the Board of Directors, executive bodies of the Company and other key managers of the Company are not considered for the current period.

4.2 The system of remuneration for Board members should ensure harmonisation of the financial interests of the directors with the long-term financial interests of shareholders.

APPENDICES

4.2.1

4.2.2

4.2.3

A fixed annual fee will be the preferred form of monetary remuneration for Board mem- bers. It is not advisable to pay a fee for participation in individual meetings of the Board of Directors or its committees. It is not advisable to use any form of short-term incentives or additional financial incentives in respect of Board members.

Long-term ownership of shares

in the Company contributes to aligning

the financial interests of Board members with the long-term interests of the Company's shareholders. However, it is not recommended that the right to dispose of shares be made dependent on the Company's achievement of certain performance results; nor should Board members take part

in the Company's option plans.

It is not recommended that any additional allowance or compensation be provided in the event of the early dismissal of Board members in connection with a change

in control over the Company or other circumstances.

  1. In the reporting period, the Company paid remuneration to the members of the Board of Directors in accordance with the remuneration policy adopted by the Company.
  2. In the reporting period, the Company did not apply any forms of short-term incentives or addi- tional financial incentives to the members of the Board of Directors, the payment of which depends on the Company's operating results (performance). No remuneration was paid for participation in indi- vidual meetings of the Board or its committees.
  1. If the Company's internal remuneration policy(-ies) envisage(s) the granting of shares to members
    of the Board of Directors, clear rules for holding shares by members of the Board of Directors, intended to encourage long-term ownership of such shares, should be available and disclosed.
  1. The Company does not envisage any additional benefits or compensation in case of the early termina- tion of authority of the members of the Board of Directors in connection with a change in control over the Company or other circumstances.

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

4.3 The system of remuneration due to the executive bodies and other key Company managers should provide that their remuneration is dependent on the Company's performance results and their personal contributions to the achievement thereof.

4.3.1 Remuneration due to the executive bodies and other key Company managers should be set in such a way as to ensure a reason- able and justified ratio between its fixed por- tion and its variable portion that is dependent on the Company's performance results and employees' personal (individual) contributions to the achievement thereof.

  1. During the reporting period, the annual performance indicators approved by the Board of Directors were used to determine the amount of variable remuneration of members of executive bodies and other key Company managers.
  2. During the most recent assessment of the remuneration system for the members of executive bodies and other key Company managers, the Board of Directors (the Remunerations Committee) made sure the Company applied an efficient ratio of the fixed portion of remuneration to the variable portion.
  3. When determining the amount of remuneration to be paid to the members of executive bodies and other key executives of the Company, the risks borne by the Company should be taken into account, in order to avoid creating incentives to take high risk management decisions.

complied partially complied did not comply

16

17

Integrated report

N

Corporate governance principles

Corporate governance principle compliance criteria

2023

Status of conformity with the

corporate governance

Explanations of deviation from the assessment criteria of compliance with the corporate governance

principle

principle

  1. Companies whose shares are admitted
    to trading at organized markets are recom- mended to put in place a long-term incen- tive program for the Company's executive bodies and other key managers involving the Company's shares (or options or other derivative financial instruments the under- lying assets for which are the Company's shares).
  2. The amount of severance pay (a so-called golden parachute) payable by the Company in the event of the early dismissal of an exec- utive body or other key manager at the ini- tiative of the Company, provided that there have been no bad-faith actions on the part of the individual in question, should not exceed two times the fixed portion of his/her annual remuneration.

1. The long-term incentive programme for the members of executive bodies and other key Company man- agers implies that the right to sell the shares and other financial instruments used in this programme will not arise until three years from their provision provided that the right to sell the same is conditional upon the Company's achievement of certain performance indicators.

1. The amount of compensation (golden parachute) paid by the Company in case of the early termina- tion of the authority of members of the executive bodies or key managers at the Company's initiative and in the absence of unfair actions on their part did not exceed the amount of twice the fixed portion of their annual remuneration in the reporting period.

complied partially complied did not comply

complied partially complied did not comply

5.1 The Company should have in place an efficient risk management and internal control system designed to provide reasonable confidence that the Company's goals will be achieved.

APPENDICES

5.1.1

5.1.2

5.1.3

5.1.4

The Board of Directors should determine the principles of, and approaches to, the creation of the risk management and internal control system at the Company.

The Company's executive bodies should ensure the establishment and continuing operation of an efficient risk management and internal control system at the Company.

The Company's risk management and internal control system should enable one to obtain an objective, fair and clear view of the Company's current condition and prospects, the integrity and transparency of its accounts and reports, and the reasonableness and acceptability of the risks being assumed by the Company.

It is recommended that the Board of Directors take the required and sufficient mea-

sures to ensure that the Company's existing risk management and internal control system is consistent with the principles of, and approaches to, its creation as set forth by the Board of Directors and that it operates efficiently.

  1. The functions of various governance bodies and business units at the Company in the risk management and internal control system are clearly determined in the Company's relevant internal policy approved by the Board of Directors.
  1. The Company's executive bodies ensured the allocation of the functions and powers related to risk management and internal control among their subordinate managers (heads) of business units and divisions.
  1. The Company approved an anti-bribery policy.
  2. The Company established an affordable method (hot line) to notify the Board of Directors or the Board of Directors Audit Committee on violations of laws, internal procedures or the Company's ethics code.
  1. During the reporting period, the Board of Directors (Audit Committee and/or Risk Committee, (if any) organized an assessment of reliability and effectiveness of the risk management and internal control system.
  2. During the reporting period, the Board of Directors reviewed the results of the reliability and effi- ciency assessment of the Company's risk management and internal control system, and the information on the review results was included in the Company's annual report.

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

complied partially complied did not comply

5.2 To independently evaluate, on a regular basis, the reliability and efficiency of the risk management and internal control system and corporate governance practices, the Company should arrange for internal audits.

  1. It is recommended that internal audits be car- ried out by a separate structural division (internal audit department) to be created
    by the Company or by retaining an indepen- dent third-party entity. To ensure the inde- pendence of the internal audit department, it should have separate lines of functional and administrative reporting. Functionally, the internal audit department should report to the Board of Directors, while from the administrative standpoint, it should report directly to the company's oneperson execu- tive body.
  2. When carrying out an internal audit, it is rec- ommended that the efficiency of the inter- nal control system and the risk management system be evaluated, that the corporate gov- ernance system also be evaluated and that generally accepted standards of internal auditing be applied.

1. For the purposes of internal audit, the Company established a separate business unit for internal audit, which reports, functionally, to the Board of Directors or the Audit Committee, or it engaged an indepen- dent external company that followed the same reporting procedure.

  1. In the reporting period, as part of an internal audit, the efficiency of the internal control and risk man- agement system was assessed.
  2. In the reporting period, as part of an internal audit the corporate governance practice (individual prac- tices) was assessed, including the information interaction procedures (including those related to inter- nal control and risk management) at all management levels of the Company, as well as interaction with stakeholders.

complied partially complied did not comply

complied partially complied did not comply

18

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Integrated report

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OAO PhosAgro published this content on 07 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 June 2024 15:05:01 UTC.