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 of Bank of Russia (hereinafter referred as the “CGC”) has been prepared with due regard to the special aspects provided for in clause 70.4. of the ‘Regulations on Disclosure of Information by Issuers of Securities’ approved by the Bank of Russia as of December 30, 2014 No 454P, using the form recommended by the MICEX Stock Exchange for companies whose shares are admitted to on-exchange trading¹.

Rosneft Corporate Governance System is developed according to the requirements of the Russian legislation, the MICEX listing rules, the CGC principles and recommendations, the international standards for corporate conduct and business ethics, and the disclosure and transparency procedures. As declared by the Rosneft Board of Directors, the Company conforms to the majority of CGC principles and recommendations. Essential aspects of the corporate governance model and practices, as well as the information on our conformance to the CGC principles and recommendations, are specified in the Corporate Governance System section of the Annual Report and herein.

Compliance with the highest standards of corporate governance and maximum information transparency are critical factors to increase the investment attractiveness and economic efficiency of the Company’s operations that contribute to strengthening the confidence of investors and contractors, reducing the Company’s risks of inefficient use of resources, and increasing its value and the well-being of its shareholders.

During the reporting year, the Company continued working on the improvement of the corporate governance model and practices. Pursuant to the Activity Plan for the implementation of the key CGC provisions in the Company’s operations, as approved February 27, 2015 by the Board of Directors (the “roadmap”), the following key internal documents were developed / updated and approved to regularize the corporate governance principles — the Corporate Governance Code, the Corporate and Business Conduct Code, the Internal Audit Policy, the Policy ‘Risk Internal Control and Management’, the Dividend Policy, the Regulations ‘On the Corporate Secretary’, the Regulations on the Induction of Members of the Board of Directors, the Regulations on the Remuneration and Reimbursement of Expenses of Members of the Board of Directors, the Regulations on the Remuneration and Reimbursement of Expenses of Members of the Audit Commission, the Standard of Payments and Benefits for Top Managers. These documents were developed in view of the CGC recommendations Methodology Explanations (Instructions / Recommendations) of the RF Ministry of Economic Development (and of the Federal Agency for State Property Management).

The assessment of compliance with the CGC provisions was carried out by the Company with the use of a critical approach based on the Corporate Governance Quality Self-Assessment Methodology in State-Owned Companies, approved by the order of the Federal Agency for State Property Management as of August 22, 2014 No 306; this Methodology involves the analysis and assessment of the Company’s implementation of recommendations for the corporate governance principles contained in the CGC (Part B). The Assessment Methodology included the comparison of the Company practices with the detailed CGC recommendations set out in Part B of the CGC².

The Company’s work, aimed at improving the corporate governance in the reporting period, allowed reaching the 88 % implementation of CGC recommendations by the Company, in particular, in terms of the observance of shareholders’ rights, the Company’s compliance with the CGC recommendations is 91 %, in terms of organizing the activities of the Board of Directors — 80 %, in terms of organizing the activities of the executive bodies — 87 %, in terms of disclosure of information about the Company’s operations — 97 %, in terms of risk management, internal control and internal audit — 94 %, in terms of corporate social responsibility, business conduct and compliance — 84 %.

The Report contains all the CGC recommendations contained in the form recommended by the MICEX Stock Exchange and other CGC recommendations not complied with (not complied with in full) by the Company within the reporting period, with a rationale behind the non-compliance (partial compliance) with individual CGC recommendations and an indication of alternative arrangements and instruments used by the Company, or of corporate governance improvement plans.

In cases where at least one of the detailed CGC recommendations was not complied with adequately, the corresponding item was recognized by the Company to have been complied with in part in the assessment below. In cases where all the detailed recommendations in an item were not complied with, the item was recognized by the Company to have not been complied with. Individual CGC recommendations not applicable to Rosneft activities (about 6 % of the recommendations given in Part B of the CGC) have not been included in this Report.

1. MICEX information letter No.31-14/236 as of March 13, 2015.

2. Part B contains 356 CGC recommendations.

Item No.	Corporate governance principle or key criterion (recommendation)	Brief description of where the principle or key criterion is not complied with	Explanation of primary causes, factors and circumstances resulted in the fact that the principle or key criterion is not complied with or complied with not in full; description of alternative corporate governance arrangements and tools in use, other explanations (if necessary)
I. SHAREHOLDER RIGHTS AND EQUITABLE TREATMENT OF SHAREHOLDERS IN THE EXERCISE OF THEIR RIGHTS
1.1.	The Company shall ensure fair and equitable treatment of all shareholders in the exercise of their right to participate in the Company management. The corporate governance system and practices should ensure equitable treatment of all shareholders — owners of shares of one class (type), including minority (small) shareholders and foreign shareholders, and equal treatment thereof by the Company.
1.1.1.	The Company has approved the internal document defining the basic procedures for the preparation, convening and holding of General Meeting of Shareholders, that conforms to the Corporate Governance Code recommendations, including the Company's obligation to: Notify shareholders of the General Meeting of Shareholders and provide them with access to the materials, including posting the announcement and materials on the Company website not later than 30 days before the date of the meeting (unless a longer term is provided for by the laws of the Russian Federation); Disclose the date of preparation of the list of persons entitled to attend the General Meeting of Shareholders, not later than 7 days before the date; Submit to the General Meeting of Shareholders additional information and materials on the agenda in accordance with the Corporate Governance Code recommendations.	Complied with in part. These principles (except for the period of disclosure of the notice of the General Meeting of Shareholders) are not formalized in the internal documents of the Company.	The CGC recommendations were implemented by the Company in preparation for the annual General Meeting of Shareholders as of year-end 2014: Access to information (materials) of the General Meeting of Shareholders was provided 30 days before the General Meeting; The information of the date of preparation of the list of persons entitled to attend the General Meeting of Shareholders was disclosed by the Company not later than 7 days before the date (the date of the list — May 04, 2015 (close of business), the date of disclosure — April 24, 2015); The Company's website contains information about access to the venue of the General Meeting of Shareholders, as well as model proxy form for the participation in the General Meeting of Shareholders; Materials for the General Meeting of Shareholders contain details of the initiators of items proposed for the agenda of the General Meeting of Shareholders and candidates nominated to the Board of Directors and the Audit Commission of the Company. Materials for the General Meeting of Shareholders also contain position of the Board of Directors of the Company with regard to the agenda of the General Meeting of Shareholders as of year-end 2014, as well as minority opinions of members of the Board of Directors of the Company in respect to each agenda item. In accordance with the Activity Plan for the implementation of the CGC recommendations in the Company's operations, the appropriate changes to the Rosneft Charter and Regulations of the General Meeting of Shareholders are planned.
1.1.2.	The Company entered into liability to provide shareholders, during the preparation and holding of the General Meeting of Shareholders, with the opportunity to ask members of the management and supervisory bodies, the Audit Committee, the Chief Accountant, the Company's auditors, and the nominees to the management and supervisory bodies questions about the Company's operations. This liability is enshrined in the Charter or in the internal documents of the Company.	Complied with.	The corresponding opportunity of shareholders and liability of the Company are provided for by clauses 6.6.2 and 6.6.3 of the Regulations of the General Meeting of Shareholders of Rosneft. The aforementioned individuals are present at the General Meeting of Shareholders.
1.1.3.	The Company entered into liability to adhere to the principle of inadmissibility of actions that may lead to an artificial reallocation of corporate control (for example, voting with quasi-treasury stock, making decision to pay dividends on preferred shares in the conditions of limited financial resources, making decisions not to pay dividends on preferred shares prescribed by the Charter if there are sufficient resources for the payment). This liability is enshrined in the Charter or in the internal documents of the Company.	Complied with in part. The Charter and internal documents of the Company do not provide for the inadmissibility of voting with quasi-treasury stock, of approving dividend payment on preferred shares in the conditions of limited financial resources, etc.	This obligation is de facto performed by the Company. In the period of operation of the CGC, no case of voting with quasi-treasury stock at the General Meeting of Shareholders was recorded. No quasi-treasury stock was present in the Company during the reporting period. No placement of preferred shares is provided for in the Company (clause 5.2 of the Charter).
1.1.4.	The Charter or internal documents of the Company provide for the receipt by the shareholder, whose rights are recorded in the Register, on the basis of the shareholder application, of the notice of the General Meeting of Shareholders and the access to the General Meeting materials in an electronic form. The Company provides shareholders with the opportunity to participate in the vote by filling an electronic voting form, for example — via a personal account on the Company's website, subject to adequate security and protection, as well as unique identification (authentication) of persons taking part in the General Meeting. Considering its technical capacity, the Company is committed to providing for a procedure for making requests for access to information and documents of the Company that is convenient for shareholders (in particular, the Company regulates the use of modern means of communication and exchange of information in an electronic form). Provision of information and documents to shareholders by the Company shall be performed by a method convenient for shareholders in a convenient form, including electronic media and modern means of communication (taking into account the desires of those who submitted requests to provide documents and information of shareholders in the form they were provided, confirming the authentication of copies documents and the method of delivery).	Complied with.	The option of obtaining by the shareholder, whose rights are recorded in the Register, of the notice of the General Meeting of Shareholders and the access to the General Meeting materials in an electronic form is provided for in clause 5.2.2. Regulations on the General Meeting of Shareholders of Rosneft. The implementation of the system of providing shareholders with information in an electronic form, as well as the processing system of requests received in an electronic form is provided for by the Activity Plan for the implementation of the CGC recommendations in the Company's operations before the end of 2018. The option of voting with the use of electronic means is provided for by clauses 9.1.3, 9.10.3 of the Charter, clause 3.1 of the Corporate Governance Code, and clause 8.1.3 of the Regulations on the General Meeting of Shareholders of Rosneft. Provided legislative control, the Company will be ready to implement the appropriate practices (currently, the development of shareholders personal accounts is underway).
1.1.5.	The Company created the necessary organizational and technical conditions to ensure functioning of a forum regarding the General Meeting agenda on the Company's website during the period of preparation for the General Meeting.	Not complied with.	The implementation of this CGC recommendation in the Company's operations is unnecessary, taking into account the opportunity to discuss the agenda during the Meeting, and if needed — through social networking.
1.2	Shareholders must be given fair and equitable opportunity to participate in the Company's profits by receiving dividends.
1.2.1.	The Company has approved an internal document that defines the Company dividend policy, in compliance with recommendations of the Corporate Governance Code, and provides for, inter alia, the following:	Complied with.	Rosneft Dividend Policy approved by the Board of Directors as of June 05, 2015 is a public document available on the official corporate website at: http://www.rosneft.ru / Investors / corpgov /.
1.2.1.	The procedure for determining the share of the net income (for companies that prepare consolidated financial statements, — the minimum portion (share) of the consolidated net income) used for the payment of dividends, the conditions under which the dividends are declared; The minimum size of dividends on Company shares in different classes (types); The obligation to disclose the document defining the Company dividend policy on the Company’s website.		In determining the size of dividend to be recommended to the General Meeting of Shareholders, the Board of Directors is guided by the value of net income determined according to the Company’s financial statements prepared in accordance with the requirements of Russian Accounting Standards and the Company’s consolidated financial statements prepared in accordance with the requirements of International Financial Reporting Standards. The recommended amount to be paid in dividends is determined by the Board of Directors subject to the Company’s financial performance within the reporting year, and is usually equal to at least 25 % of the Company’s net income in accordance with the International Financial Reporting Standards. Only one class of shares is to be placed in the Company — ordinary shares (clause 5.2. of the Charter);
II. BOARD OF DIRECTORS OF THE COMPANY
2.1.	The Board of Directors decides on the main strategic guidelines of the Company's operations in the long term, the key performance indicators of the Company, provides the strategic management of the Company, determines the basic principles and approaches to the risk management and internal control system, controls the activities of the executive bodies, decides on the Company policy of remuneration of members of the Board of Directors and the executive bodies, and performs other core functions.
2.1.1.	The Company has its Board of Directors which: Decides on the main strategic guidelines of the Company's operations in the long term, and the key performance indicators of the Company; Supervises the activities of the Company's executive bodies; Determines the principles and approaches to the risk management and internal control within the Company; Decides on the Company policy of remuneration of members of the Board of Directors, the executive bodies and other key employees of the Company.	Complied with.	The respective functions are enshrined in the Charter of Rosneft.
2.1.2.	The Company which is the controlling entity determines the powers of the Board of Directors in respect to the development strategy and performance assessment of controlled companies. The Company which has a significant number of controlled companies determines the powers of the Board of Directors in respect to the nomination of candidates to the executive bodies and the candidates to the Boards of Directors of the controlled companies.	Complied with in part. Not complied with regard to referring nomination of candidates to the executive bodies and the candidates to the Boards of Directors of the controlled companies to the competence of the Board of Directors.	In accordance with clause 10.2.1 (2) of Charter of Rosneft, the Board of Directors of Rosneft approves the strategy covering the operations of Rosneft itself, and the operations of the Rosneft controlled companies as a whole. The Charter of Rosneft refers the decision-making on the nomination of candidates to the executive bodies and the candidates to the Boards of Directors of the controlled companies to the competence of the executive bodies of the Company (clauses 12.10 (7), 12.11 (1), 11.10 (19) and 11.11 (2, 5) of the Charter of Rosneft, due to the number of companies controlled by the Company and the strategic roles of the Board of Directors. The Board of Directors of Rosneft decides on the position of the Company on the strategic issues of the operations of the controlled companies.
2.2.	The Board of Directors should be an effective and professional Company management body able to make objective independent judgments and decisions that meet the interests of the Company and its shareholders. The Chairman of the Board of Directors should contribute to the most effective implementation of the functions assigned to the Board of Directors. Meetings of the Board of Directors, the preparation for them and participation in them by members of the Board of Directors must ensure the effective operation of the Board of Directors.
2.2.1.	Persons, holding executive positions and (or) being employed by a competing legal entity, are not elected to the Board of Directors.	Not complied with.	The Board of Directors of the Company includes persons nominated by the Company's shareholder — BP Russian Investments Limited R. Dudley (Group Chief Executive of the BP group of companies) and G. Quintero (Regional President Brazil, Uruguay, Venezuela and Colombia (BP Energy do Brasil and BP Brasil Ltda). Compliance with this CGC recommendation violates the statutory right of Company shareholders to nominate, at their discretion, candidates to the Board of Directors.
2.2.2.	Chairman of the Board of Directors is an Independent Director, or senior Independent Director from among the elected Independent Directors, who coordinates the activities of the Independent Directors and is responsible for interaction with the Chairman of the Board of Directors.	Not complied with.	According to the Resolution of the Government of the Russian Federation No 738 on the election of the Chairman of the Board of Directors, members of the Board of Directors — representatives of the state shall vote under the directives of the Russian Federation, thus expressing the will of the shareholder, which may not be restricted by the Company. Professional agent was the Chairman of the Board of Directors of the Company in 2015. Position of Senior Independent Director in the the Board of Directors of the Company is not available. Also, the recommended responsibilities of the senior Independent Director in their implementation may have a negative impact on the exercise of the rights of other members of the Board of Directors, including Independent Directors, as the coordination of interaction may be regarded by other Independent Directors as an infringement of their rights (the right to interaction, giving demands, receiving information, etc.)
2.2.3.	Internal documents of the Company provide for the procedure for preparation and holding of meetings of the Board of Directors, which gives members of the Board of Directors the opportunity to properly prepare for the meetings and sets out, inter alia: Period of notice for members of the Board of Directors about the forthcoming meeting; Deadlines for sending documents for voting (voting forms) and receiving the completed documents for voting (voting forms) in case of meetings in absentia; The option of giving and considering a written opinion on the agenda items for the members of the Board of Directors, who are absent at the physical meeting; The option of discussing and voting via conference communication, including videoconferencing.	Complied with.	These provisions are enshrined in the Regulations on the Board of Directors of Rosneft.
2.2.4.	The most important matters are addressed at the meetings of the Board of Directors held in person. The list of such matters corresponds to the Corporate Governance Code recommendations¹.	Complied with.	Clause 10.5.4 if the Charter provides for in-person consideration of the most important matters related to the Company's operations: Determination of the priority directions in the Company's operations; Approval of the long-term development strategy of the Company and monitoring its implementation; Approval of financial and economic activity plans (business plans, budgets) of the Company and monitoring their implementation; Matters relating to the preparation and holding of the General Meeting of Shareholders of the Company; In addition to requirements provided for in the Charter, the Rosneft Corporate Governance Code approved by the Board of Directors contains some matters the Board of Directors seeks to address at physical meetings. Also, the form of meetings of the Board of Directors is determined by the Chairman of the Board of Directors during the convening of the meeting, taking into account the substance of the matter under consideration and opinions of the Directors. Each of the Directors shall be entitled to point out the expediency of considering a particular matter at a physical meeting, taking into account the substance and significance of the matter for the Company.
2.2.5.	The Company has approved an internal document defining the Company policy in respect to the ownership by members of the Board of Directors of Company's shares and shares of legal entities controlled by the Company	Complied with in part. Not complied with in respect to availability of the Company policy as a separate internal document.	The introduction of a separate Company's internal document determining the procedure for the ownership by members of the Board of Directors of Company's shares and shares of (stake in) legal entities controlled by the Company is provided for in the Activity Plan for the implementation of the CGC recommendations in the Company's operations not later than 2017. At the same time, the Regulations on the Board of Directors of Rosneft and the Regulations on Remuneration and Reimbursement of Expenses of Members of the Board of Directors of Rosneft provide for the general standards and responsibilities of members of the Board of Directors during their transactions with the Company's shares; To notify the Board of Directors (through the Chairman of the Board of Directors and / or the Corporate Secretary of the Company) of the intent to make, in their own name, transactions with securities of the Company or its subsidiaries and affiliates, and to disclose details of transactions with these securities. In the event the General Meeting of Shareholders of Rosneft decides to pay remuneration to the members of the Board of Directors in the form of the Company's shares, not to sell the majority of the Company's shares they hold (50 % and more Company's shares obtained by the member of the Board of Directors), and not to use any hedging arrangements for at least 1 (one) year after the withdrawal from the Board of Directors.
2.2.6.	Charter or internal documents of the Company provide for the right of a shareholder holding a certain percentage of voting shares (shareholders holding in the aggregate a certain percentage of voting shares) to request the convening of a meeting of the Board of Directors to consider the most important matters related to the Company's operations. This threshold is set as not more than 2 percent of voting shares (in cases where the law has established other requirements for the size of the relevant threshold of voting shares, this recommendation is not applicable)	Not complied with.	The Board of Directors takes into account shareholders' proposals on the matters submitted to the Board of Directors. Given the number of shareholders of the Company (over 100 thousand), provisions for such a right would create a substantial risk of increasing the load on the Board of Directors.
2.2.7.	The Company's Charter provides for a number of matters, decisions on which are adopted by a special majority or majority of all the elected members of the Board of Directors (in case the matter has been referred to the competence of the Board of Directors): Approval of the priority directions in the Company's operations and the financial and economic activity plan; Approval of the Company dividend policy; Making decisions on listing of Company's shares and / or Company's securities convertible into its shares; Determination of the value of Company's important transactions and approval thereof; Presenting to the General Meeting of Shareholders on matters of reorganization or liquidation of the Company; Presenting to the General Meeting of Shareholders on matters of increase or reduction of the authorized capital of the Company, determining the price (monetary value) of the property contributed as payment for the additional shares of the Company; Presenting to the General Meeting of Shareholders on matters relating to making amendments to the Company's Charter, approval of important transactions of the Company, listing and delisting of Company's shares and / or securities convertible into its shares; Accepting recommendations in respect to voluntary or mandatory proposals received by the Company; Accepting recommendations in respect to the size of dividends on the Company's shares; Making decisions on substantive matters in respect to the operations of legal entities controlled by the Company.	Complied with in part. Not complied with in respect to individual matters referred to in the recommendation.	Clause 10.5.5 of the Charter of Rosneft provides for some matters decisions on which are adopted by a special majority of the members of the Board of Directors.
2.2.8.	The Regulations on the Board of Directors of Rosneft provide for the consideration of material aspects of the operations of legal entities controlled by the Company at the meetings held in person (in cases where such matters have been referred to the competence of the Board of Directors) (material aspects of the operations of legal entities controlled by the Company shall mean transactions of legal entities controlled by the Company, as well as other aspects of their operations, which, in the Company's opinion, have a significant impact on the financial position, financial performance and changes in the financial position of the group of entities that includes the Company and legal entities controlled by the Company).	Complied with in part. Not complied with in respect to regulatory consolidation of this rule in the Regulations on the Board of Directors of Rosneft.	This rule is not provided for in the Regulations on the Board of Directors of Rosneft, however, in accordance with clause 5.2 of the Corporate Governance Code of Rosneft, the Board of Directors seeks to address matters of material aspects of legal entities controlled by the Company at physical meetings.
2.3.	The Board of Directors should include a sufficient number of Independent Directors.
2.3.1.	Independent Directors shall be not less than one third of all the elected members of the Board of Directors. Independent Directors shall conform with the independence criteria recommended by the Corporate Governance Code. The Board of Directors shall ensure the disclosure of information in respect of loss of Independent Director status by a member of the Board of Directors. Company's internal documents provide for the procedures to be applied in case of loss of Independent Director status by a member of the Board of Directors.	Complied with in part. Not complied with in respect of the number of Independent Directors in the Board of Directors.	From among nine members of the Board of Directors elected by the annual General Meeting of Shareholders of Rosneft as of June 17, 2015, only 2 meet the independence criteria (D. Humphreys, O. V. Viyugin). Pursuant to clause 5.1 of the Corporate Governance Code of Rosneft and clause 2.1.2 of the Regulations on the Board of Directors of Rosneft, Independent Directors should be not less than one-third of the total number of members of the Board of Directors, and the Board of Directors must include at least 3 Independent Directors. The Independent Director criteria are provided for in the Regulations on the Board of Directors of Rosneft. D. Humphreys and O. V. Viyugin have fully met the independence criteria provided for in Appendix 1 to the Regulations on the Board of Directors of Rosneft and recommended by the CGC. Evaluation of independence of members of the Board of Directors is provided by the Human Resources and Remuneration Committee of the Board of Directors. Pursuant to the Activity Plan for the implementation of the CGC recommendations in the Company's operations, the Regulations on the Information Policy are planned to be updated before the end of 2016 to include the rule for the need to disclose information about the loss of Independent Director status by a member of the Board of Directors.
2.3.2.	The Board of Directors (the Nomination / HR Committee) assesses the compliance of candidates to the Board of Directors with the independence criteria.	Complied with in part. No assessment of the compliance of candidates to the Board of Directors by the Human Resources and Remuneration Committee of the Board of Directors was provided in 2015.	This CGC principle has been enshrined in clause 2.2.5. of the Regulations on the Board of Directors of Rosneft. Also, the relevant function is assigned to the Human Resources and Remuneration Committee of the Board of Directors in clause 1.3.1 of the Regulations on the Human Resources and Remuneration Committee of the Board of Directors of Rosneft, according to which the Committee provides preliminary assessment of candidates to the Board of Directors (which may include assessment of independence of the candidates). Pursuant to the Activity Plan for the implementation of the CGC recommendations in the Company's operations, the assessment of compliance of candidates to the Board of Directors with independence criteria is planned to be put into practice as from 2016.
2.4.	The Board of Directors shall create committees for the preliminary consideration of the most important matters of the Company.
2.4.1.	The Board of Directors has established the Audit Committee consisting of independent directors, the functions of which are set out in the internal documents and comply with the Corporate Governance Code recommendations².	Complied with in part. Not complied with in respect to the inclusion of only independent directors into the Audit Committee of the Board of Directors.	The Board of Directors has created 3 committees (Audit Committee, Human Resources and Remuneration Committee, Strategic Planning Committee). Considering this: Quantitative composition of the Board of Directors is nine (9) members. Recommendations and restrictions under the CGC (for the number of committees' members of at least 3 persons and the maximum number of committees in which members of the Board of Directors may participate, the minimum number of independent directors on the Board Committee (2 persons), as well as the need to form committees, on the basis of the relevant expertise competence of members of the Board of Directors), the implementation of the CGC principle of independence of all Audit Committee members does not seem possible. As of December 31, 2015, 2 of 3 members of the Audit Committee met the independence criteria (one of them is the Chairman of the Committee)
2.4.2.	The Board of Directors has established a Remuneration Committee (may be combined with Nomination / HR Committee) consisting of independent directors, the functions of which comply with the Corporate Governance Code recommendation³.	Complied with in part. Not complied with in respect to the inclusion of only independent directors into the Human Resources and Remuneration Committee of the Board of Directors.	The Board of Directors has created a Human Resources and Remuneration Committee, the functions of which cover the matters provided by the CGC for the Nomination Committee and the Remuneration Committee Considering this: Quantitative composition of the Board of Directors is nine (9) members. Recommendations and restrictions under the CGC (for the number of committees' members of at least 3 persons and the maximum number of committees in which members of the Board of Directors may participate, the minimum number of independent directors on the Board Committee (2 persons), as well as the need to form committees, on the basis of the relevant expertise of members of the Board of Directors), the implementation of the CGC principle of independence of all Human Resources and Remuneration Committee members does not seem possible.
2.4.3.	The Board of Directors has created a dominating / HR Committee (may be combined with Remuneration Committee) consisting mostly of independent directors, the functions of which comply with the Corporate Governance Code recommendations⁴;
2.5.	The Board of Directors should provide performance assessment of the Board of Directors, its Committees and members of the Board of Directors.
2.5.1.	Performance assessment of the Board of Directors is held on a regular basis at least once a year, and at least once every three years it is provided with assistance of an external organization (consultant).	Complied with.	In April-June 2015, self-assessment of the Board of Directors with the same membership as in the corporate year 2014 – 2015 was conducted on the basis of a survey form approved by the Human Resources and Remuneration Committee. The results of the self-assessment were submitted for consideration to the Human Resources and Remuneration Committee and the Board of Directors, upon the consideration of which the Company has developed a plan of operational improvement of the Company's Board of Directors. Pursuant to the Activity Plan for the implementation of the CGC recommendations in the Company's operations, engagement of an independent consultant is planned starting with 2017 (which corresponds to the CGC recommendation in respect of independent assessment to be provided once in 3 years).
III. CORPORATE SECRETARY OF THE COMPANY
3.1	Effective interaction with current shareholders, coordination of Company's activities to protect the rights and interests of shareholders, support for the effective work of the Board of Directors shall be provided by Corporate Secretary (or, a special structural unit headed by Corporate Secretary).
3.1.1.	Corporate Secretary reports to the Board of Directors, and is appointed to and removed from office by a decision or with consent of the Board of Directors.	Complied with.	The role, reporting relationship, the procedure for appointment and termination of appointment, functions, responsibilities and remuneration of the Corporate Secretary are set out in the Regulations on Corporate Secretary of OJSC Rosneft Oil Company, approved by the Board of Directors June 11, 2015, which include all the CGC recommendations. In practice, the Corporate Secretary of the Company performs everything that is provided for in the CGC and the Regulations.
3.1.2.	The Company has approved an interal document defining the rights and obligations of the Corporate Secretary (Regulations on the Corporate Secretary), the content of which complies with the Corporate Governance Code recommendations⁵.	Complied with.
3.1.3.	Corporate Secretary position may not be combined with any other functions in the Company. Corporate Secretary is charged with functions in accordance with the Corporate Governance Code recommendations⁶ Corporate Secretary has sufficient resources to carry out its functions.	Complied with in part. Not complied with in respect to the limitation of functions performed by Corporate Secretary.	The functions of Corporate Secretary of the Company are assigned to the Director of Corporate Governance Department. This corresponds to the clarifications of the Federal Agency for State Property Management with regard to the possibility of combining the position of Corporate Secretary with the position of the Secretary of the Board of Directors or any other position that provides for the performance of obligations under the corporate governance procedures. In addition, such practices are sustainable in the context of involvement of Corporate Secretary in the processes of the Company's operations related to its corporate governance as a legal entity and as a group.
IV. THE REMUNERATION OF MEMBERS OF THE BOARD OF DIRECTORS, THE EXECUTIVE BODIES AND OTHER KEY EMPLOYEES OF THE COMPANY
4.1.	The level of remuneration paid by the Company should be sufficient to engage, motivate and retain individuals with the required competence and qualifications. Payment of remuneration to members of the Board of Directors, the executive bodies and other key employees of the Company must be made in accordance with the remuneration policy adopted in the Company.
4.1.1.	All payments, benefits and privileges granted to members of the Board of Directors, executive bodies and other key employees of the Company have been regulated.	Complied with.	The procedure for payment of remuneration to the members of the Board of Directors is governed by the Regulations on the Remuneration and Reimbursement of Expenses of Members of the Board of Directors of Rosneft approved by the Board of Directors as of April 09, 2015. Basic principles of the remuneration and other incentive payments to the executive bodies and other key employees of the Company are set out in the Rosneft Standard for Payments and Reimbursements for Top Managers approved by the Board of Directors as of April 23, 2015.
4.2.	The system of remuneration for members of the Board of Directors must ensure the convergence of financial interests of the Directors with the long-term financial interests of shareholders.
4.2.1.	The Company shall not apply forms of remuneration for members of the Board of Directors other than fixed annual remuneration.	Complied with.	The Regulations on the Remuneration and Reimbursement of Expenses of Members of the Board of Directors of Rosneft approved by the Board of Directors as of April 09, 2015 do not provide for such possibility.
4.2.2.	Within the Company, members of the Board of Directors may not participate in option programs, and the right to sell their Company's shares shall not be conditional on achievement of certain performance indicators.	Complied with.
4.3.	The system of remuneration for the executive bodies and other key employees of the Company should provide for dependence of the remuneration on the Company's performance and their personal contribution to the achievement of this result.
4.3.1.	The Company has implemented the long-term incentive programs for members of the executive bodies and other key employees of the Company.	Complied with in part. No long-term incentive programs for members of the executive bodies and other key employees have been implemented in the Company.	Pursuant to the Rosneft Standard for Payments and Reimbursements for Top Managers approved by the Board of Directors as of April 23, 2015, for the purposes of aligning the interests of top managers and shareholders of the Company by tying in the labor payment of top managers to the increase in the value of Rosneft shares in the long term, top managers are entitled to participate in the option programs approved by the Board of Directors.
V. THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
5.1.	The Company should have a well-functioning risk management and internal control system designed to provide reasonable assurance in achieving the goals set for the Company.
5.1.1.	The Board of Directors has defined the principles and approaches to the organization of risk management and internal control system within the Company.	Complied with.	November 16, 2015, the Board of Directors approved the Company Policy on risk management and internal control system defining the following: Goals, objectives, common principles and components of the risk management and internal control system of the Company; Distribution of authority of persons as part of the risk management and internal control system.
5.1.2.	The Company has established a separate structural unit for risk management and internal control.	Complied with.	The Company has established the Internal Control Department and the Risk Department.
5.1.3.	The Company has developed and implemented its Anti-Corruption Policy that defines the measures aimed at the development of the corporate culture, the organizational structure, the anti-corruption rules and procedures.	Complied with.	The Company has approved the Company Policy on the prevention of involvement in corrupt activities and the Company Policy on the prevention of corporate fraud.
5.2.	For the purposes of a systematic independent evaluation of the reliability and efficiency of the risk management and internal control system and corporate governance practices, the Company should arrange internal audit activities.
5.2.1.	The Company has a separate structural unit performing the internal audit functions, which reports to the Board of Directors. The functions of this unit comply with the Corporate Governance Code recommendations; these functions include, in particular: Performance assessment of the internal control system; Performance assessment of the risk management system; Assessment of the corporate governance (if Corporate Governance Committee is not available).	Complied with.	The Company has established Internal Audit Service that includes (1) Operational Audit Department, (2) Corporate Audit Department, (3) Regional Audit Department, (4) Office for Economic and Organizational Analysis, (5) Office for Internal Audit Methodology and Management with report directly to the Head of the Internal Audit Service of Rosneft with the functions specified.
5.2.2.	The Head of the Internal Audit Service reports to the Board of Directors, and is appointed to and removed from office by a decision of the Board of Directors.	Complied with.	The relevant function is provided for in clause 10.2.1 (19) of the Charter.
5.2.3.	The Company has approved the Internal Audit Policy (the Regulations on the Internal Audit) defining the internal audit goals, objectives and functions.	Complied with.	The Company Internal Audit Policy was approved by the Board of Directors as of January 30, 2015.
VI. DISCLOSURE OF INFORMATION ABOUT THE COMPANY, INFORMATION POLICY OF THE COMPANY
6.1.	The Company and its operations should be transparent to shareholders, investors and other stakeholders.
6.1.1.	The Company has approved an internal document that defines the Company information policy in compliance with the Corporate Governance Code recommendations. The Company information policy includes the following methods of interaction with investors and other stakeholders: A special page on the Company's website that contains answers to standard questions from shareholders and investors, a regularly updated calendar of corporate events of the Company, as well as other useful shareholder and investor information; Regular meetings of members of the executive bodies and other key employees of the Company with analysts; Regular presentations (including in the form of teleconferences and webcasts) and meetings with members of the management bodies and other key employees of the Company including those contributing to the publication of accounting (financial) statements of the Company or related to the major investment projects and Company strategic development plans.	Complied with.	The Company has introduced the Regulations on the Information Policy of Rosneft approved by the Board of Directors as of April 14, 2011, which provide for all the CGC recommended methods of Company interaction with investors and other stakeholders.
6.1.2.	The implementation of the Company information policy is provided by the executive bodies of the Company. The supervision over proper information disclosure and compliance with the information policy are ensured by the Board of Directors.	Complied with.	The relevant rule is provided for in section 7 of the Corporate Governance Code of Rosneft.
6.1.3.	The Company has established procedures for the coordination between all the functions and structural units of the Company, involved in the information disclosure or whose activities may result in the need to disclose information.	Complied with.	The relevant rule is provided for in section 7 of the Corporate Governance Code of Rosneft. The Company has also introduced the Regulations on the Disclosure of Information in the Securities Market defining the procedure for interaction between the structural units of the Company during the disclosure of information in the securities market.
6.2	The Company should timely disclose complete, current and accurate information about the Company to enable informed decision-making by shareholders and investors of the Company.
6.2.1.	In the event of a significant share of foreign investors in the capital, the Company executes, along with the disclosure of information in Russian, disclosure of the most significant information about the Company (including the notices of the General Meeting of Shareholders, the Annual Report of the Company) in a foreign language, accepted in the financial market.	Complied with.	The official Company's website is maintained in the Russian and English languages (http://www.rosneft.ru/ and http://www.rosneft.com).
6.2.2.	The Company has provided the disclosure of information not only about itself, but also about legal entities controlled by and having substantial significance for the Company.	Complied with.	The information is disclosed by the Company in the section 'Disclosure of Information' at: http://www.rosneft.ru/Investors/information/.
6.2.3.	The Company discloses annual and interim (semi-annual) consolidated or individual financial statements prepared in accordance with the International Financial Reporting Standards (IFRS). Annual consolidated or individual financial statements are disclosed along with the auditor's report and interim (semi-annual) consolidated or individual financial statements — along with the report on the audit review or the auditor's report.	Complied with.	The financial statements are disclosed by the Company on the official website at: http://www.rosneft.ru/ Investors/statements_and_presentations.
6.2.4.	The Company has disclosed a special memorandum containing plans in respect to the Company of the entity controlling the Company. This memorandum is prepared in accordance with the Corporate Governance Code recommendations⁷.	Not complied with.	The Company is not aware of a memorandum containing the plans and intentions of the entity controlling the Company, in relation to the Company. The Company does not influence the decision-making of the controlling entity, therefore this CGC principle is not applicable.
6.2.5.	The Company has provided the disclosure of details of the biographical data of members of the Board of Directors, including information on whether they are independent directors, as well as prompt disclosure of information about the loss of Independent Director status by a member of the Board of Directors.	Complied with.	This information is disclosed at the Company's official website at: http://www.rosneft.ru/about/board
6.2.6.	The Company has disclosed information on the capital structure in accordance with the Corporate Governance Code recommendations.	Complied with.	This information is disclosed on the Company's official website at: http://www.rosneft.ru/Investors/structure/share_capital/
6.2.7.	The Annual Report of the Company provides additional information recommended by the Corporate Governance Code: A brief overview of the most important transactions, including inter-related transactions entered into by the Company and legal entities controlled by the Company during the past year; A report on the performance of the Board of Directors (including Committees of the Board of Directors) during the year, containing, inter alia, information about the number of physical meetings (meetings in absentia), the participation of each member of the Board of Directors in the meetings, the description of the most important issues and the most difficult problems considered at the meetings of the Board of Directors and Committees of the Board of Directors, and the main recommendations the Committees have given to the Board of Directors; Information about the direct or indirect possession of Company's shares by members of the Board of Directors and the executive bodies of the Company; Information about conflict of interests between members of the Board of Directors and the executive bodies (including those associated with the participation of these persons in the management bodies of the Company's competitors);	Complied with in part. Not complied with in respect to the information in the Annual Report concerning: The aggregate remuneration for the year for a group of at least five highest paid members of the executive bodies and other key employees of the Company, broken down by each type of remuneration; The remuneration for the sole executive body for the year.	This CGC principle is planned to be introduced in the Company's operations in accordance with the Activity Plan for the implementation of the CGC recommendations in the Company's operations in 2018.
6.2.7.	Description of the system of remuneration for members of the Board of Directors, including the size of the individual remuneration as of year-end for each member of the Board of Directors (broken down to the base remuneration and supplementary remuneration for chairing the Board of Directors, for chairing (membership) in the Committees of the Board of Directors, the amount of participation in the long-term incentive program, the extent of participation in the option program, if any, by each member of the Board of Directors), the amount of compensation costs associated with participation in the Board of Directors, as well as Company costs of liability insurance for Directors as members of the management bodies; Information about the aggregate remuneration for the year: а) For a group of at least five of the highest paid members of the executive bodies and other key employees of the Company, broken down by each type of remuneration; b) For all members of the executive bodies and other key employees of the Company, who are covered by the Company’s remuneration policy, with a breakdown by each type of remuneration; Information about the remuneration of the sole executive body for the year, received or be received from the Company (or, a legal entity from among the group of companies, which includes the Company) broken down by each type of remuneration, both for the performance of its duties as the sole executive body and on other grounds.
6.3.	Provision of information and documents at the request of the shareholders by the Company shall be implemented in accordance with the principles of equal and unhindered access.
6.3.1.	Pursuant to the Company information policy, shareholders of the Company holding the same number of voting shares in the Company are provided with equal access to the Company information and documents.	Complied with.	Regulations on the Information Policy of OJSC Rosneft Oil Company and on the provision of information to Rosneft shareholders, approved by the Board of Directors as of April 14, 2011, contain the principles of granting access to information to shareholders.
6.3.2.	The Company information policy provides for the option of receiving by shareholders of the required information about the legal entities controlled by the Company. In order to provide shareholders with this information, the Company shall make efforts necessary to obtain such information from the relevant legal entity controlled by the Company.	Complied with in part. Not complied with in respect to the provision of information on the basis of individual shareholder requests.	Shareholders have access to information about the legal entities controlled by the Company as disclosed by the Company in accordance with legal requirements, including in the Issuer's quarterly report. Recommendation regarding the provision of information on the basis of individual shareholder requests cannot be effectively implemented in the framework of the current law: shareholders are entitled to receive information about the Company; the provision of information about a legal entity controlled by the Company may result in disclosure of information constituting a trade secret, confidential or insider information.
VII. SIGNIFICANT CORPORATE ACTIONS
7.1.	Actions that significantly affect or may affect the structure of the share capital and the financial status of the Company and, accordingly, the status of shareholders (significant corporate actions) shall be carried out under fair terms that ensure respect for the rights and interests of shareholders and other stakeholders.
7.1.1.	The Company's Charter contains a list (criteria) of transactions or other actions that are significant corporate actions, the consideration of which is referred to the competence of the Board of Directors, including: Reorganization of the Company, acquisition of 30 percent or more of Company's voting shares (takeover), increase or decrease in the authorized capital of the Company, listing and delisting of Company's shares; Sale of shares of (stake in) legal entities controlled by and having substantial significance for the Company, following which the Company loses control over such legal entities; Transactions, including inter-related transactions, in respect to the property of the Company or legal entities controlled by the Company, the value of which exceeds the amount specified in the Company's Charter or which is of substantial significance for the Company's operations; Creation of a legal entity controlled by and having substantial significance for the Company's operations; Transfer of treasury and quasi-treasury shares by the Company.	Complied with in part. Not complied with in respect to the referral of the transfer of treasury and quasi-treasury shares by the Company to significant corporate actions. Pursuant to the requirement of the Law on Joint-Stock Companies and the Charter, making decision on applying for Company' shares delisting is referred to the competence of the General Meeting of Shareholders and not the Board of Directors. Acquisition of 30 percent or more of Company's voting shares (takeover) is not expressly provided for by the Company's Charter.	Significant corporate actions, consideration of which or making proposals on which, has been referred to the competence of the Board of Directors of the Company shall include matters provided for by clauses 9.3.3 (1) — (4), 10.2.1 (21), 10.2.4 (6), 10.2.5 – 10.2.7, 10.2.13 (2, 3, 4 (i)) of the Company's Charter. For the term of the Corporate Governance Code, such significant corporate actions as transfer of Company's treasury and quasi-treasury shares, delisting of Company's shares, acquisition of 30 percent or more of Company's voting shares have not been implemented. No obstacle to the implementation of this CGC principle exists.
7.2.	The Company shall ensure such a procedure for the implementation of significant corporate actions, as to enable shareholders to receive timely full information about such actions, give them the opportunity to influence such actions and ensure the observance and adequate level of protection of their rights in the implementation of such actions.
7.2.1.	The Company's internal documents have established the pari passu principle for all Company's shareholders in the implementation of significant corporate actions affecting the rights and legitimate interests of shareholders, and also secured additional measures to protect the rights and legitimate interests of Company's shareholders under the Corporate Governance Code, including: Engagement of an independent appraiser with excellent reputation in the market and experience in appraisal activities in the relevant field, or provision of reasons not to engage the independent appraiser in determining the value of the assets acquired or disposed under major transaction or interested party transaction;	Complied with in part. The Company's internal documents do not contain requirements to the experience and reputation of the appraiser, the appraisal procedure, the additional grounds of affiliation of members of the Board of Directors and the Company's top managers.	Pursuant to subclause (7) clause 1 Art. 65 of the Law on Joint-Stock Companies and clause 10.2.1. (13) of the Charter, the Board of Directors determines the price (monetary value) of property in cases stipulated by the Law on Joint-Stock Companies. Independent appraisers are selected in accordance with the tender procedures approved by the Company's internal documents relating to the procurement of goods, work and services, which provide a non-biased selection of appraisers not only on the criterion of minimum cost of services, but also on availability of a consistent business reputation and significant experience in the relevant field.
7.2.1.	Determination of the price of Company's shares in their acquisition and redemption by an independent appraiser with an excellent reputation in the market and experience in appraisal activities in the relevant field, taking into account the weighted average share price over a reasonable period of time, excluding the effect associated with the entering into the relevant transaction by the Company (in particular, without taking into account changes in share prices in connection with the dissemination of information about the relevant transaction of the Company), and excluding the discount for the sale of shares as part of the non-controlling interest; Extension of the list of grounds on which members of the Board of Directors and other persons stipulated by law may be deemed to be interested in the Company's transactions company with a view to assessing the actual relatedness of the relevant persons.		Pursuant to the requirements of clauses 1 and 3 Art. 75 of the Law on Joint-Stock Companies, the redemption of shares shall be made at the price determined by the Board of Directors, but not less than the market value to be determined by an independent appraiser. Having been a public company since 2006, the Company in the commission of acts that result in the right to redemption of shares must engage an independent appraiser. The appraisal procedure (the procedure for determining a fair price) shall be determined by the appraiser on its own, taking into account the requirements of appraisal standards and best industry practices. Provisions in the Company's documents for elective requirements to the nature of appraisal is not appropriate and could lead to the restriction of access of shareholders and investors to the best appraisal services as defined from open bidding procedures. The actual observance of this principle will be provided by the engagement of first-class appraisers based on the results of transparent bidding procedures. The Company makes efforts to identify the actual affiliation of the Company's top managers on the basis of the Assignment of the Chairman of the RF Government No VP-P13–9308 dated December 11, 2011 and the Rosneft Order No 728 dated December 23, 2011. This information is taken into account in the determination of stakeholders in the framework of coordination of materials by the Company's structural units in proposing approval of transactions to the Board of Directors. In respect to reflecting this CGC principle in the Charter, the Company considers the following: Shareholders and members of the Board of Directors having the right to demand the recognition of such transactions void shall not have legally defined (as part of the disclosure and the provision of information to shareholders) ways to obtain information about managers of contractors (not members of the management bodies) for the purpose of identifying affiliation and effective contesting such interested party transactions. In view of the above, pursuant to the current laws (taking into account actual measures by the Company to identify the affiliation), introduction of amendments into the Charter cannot be regarded as an effective measure to improve the protection of shareholders' rights.
7.2.2.	Consideration of transactions that do not meet the criteria of major transactions established by the law, but are of substantial significance for the Company has been referred by the Charter to the competence of the Board of Directors, by applying to them the statutory procedure for entering into major transactions by the Company and / or by referring them to the competence of the Board of Directors with the adoption of a decision on their approval by majority — of not less than three fourths of the votes — or of all elected (non-retired) members of the Board of Directors. The Company has defined arrangements for prior consideration and approval by the Board of Directors of the transactions entered into by third parties on their behalf, but at the expense of the Company, which, if entered into in the name of the Company would constitute major or interested party transactions.	Complied with in part. Not complied with in respect to special majority requirement to make decisions and the said arrangements in relation to transactions with third parties which are not Companies of the Group.	The approval of transactions of the Company or Companies of the Group in amounts of more than 1.5 billion US dollars and gift transactions in amounts of more than 50 million US dollars has been referred by the Charter of OSJC Rosneft Oil Company to the competence of the Board of Directors (clauses 10.2.7, 10.2.13 (2) of the Charter). These transactions are approved by a simple majority of votes. The arrangements for prior consideration and approval by the Board of Directors in respect of transactions entered into by the Companies of the Group at the Company's expense, which, if entered into in the name of the Company, would be deemed to be major transactions (thus, the Company's major transactions far exceed the material threshold of 1.5 billion US dollars, established for any transactions of Companies of the Group that require the approval of the Board of Directors). In respect to transactions of third parties (not referred by the Charter to the category of Companies of the Group), as well as interested party transactions, these arrangements have not been provided. Extension of the scope of these arrangements is unreasonable due to significant increase in the number of transactions that require the approval of the Board of Directors.

1. Set out in clause 168 part B of the Corporate Governance Code.

2. Set out in clause 172 part B of the Corporate Governance Code.

3. Set out in clause 180 part B of the Corporate Governance Code.

4. Set out in clause 186 part B of the Corporate Governance Code.

5. Set out in clause 217 part B of the Corporate Governance Code.

6. Set out in clause 218 part B of the Corporate Governance Code.

7. Set out in clause 279 part B of the Corporate Governance Code.

Appendix 2.

Appendix 4.

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