Corporate governance

Managing Possible Conflicts of Interest

Integrity is one of the Company’s priorities and key values. It allows Rosneft to balance interests of shareholders with interests of management and ensures trust and high standards of business culture and ethics in their interaction.

The Company is committed to managing possible conflicts of interest at all corporate governance levels.

Rosneft's Charter contains a number of restrictions for related party transactions that could benefit certain members of the governing bodies or shareholders.

Rosneft’s Regulations on Internal Control Rules for the Prevention, Detection and Suppression of Illegal Use of Insider Information in Rosneft and/or Market Manipulation.

The Corporate Secretary (see the Corporate Secretary section) is in charge of compliance with regulatory and internal requirements for countering the illegal use of insider information.

The internal documents available on the Company’s website set forth the values and principles underlying the Company's corporate culture, as well as key rules aimed at preventing and managing conflicts of interest at all corporate governance levels.

Shareholders

Rosneft's Charter regulates the basic rights and obligations of shareholders, as well as the decision-making procedures for the most significant issues.

The Corporate Secretary coordinates the efforts to protect shareholder rights and interests, ensures effective day-to-day interaction with shareholders, and contributes to preventing corporate conflicts.

The Corporate Secretary is required to promptly notify the Board of Directors of any potential violation of the applicable laws or shareholder rights and any potential conflicts of interest.

For Shareholders:

Shareholder Relations Division, Corporate Governance Department, Rosneft

Phone: 8-800-500-11-00 (toll-free within Russia); +7 (495) 987-30-60;
Fax: +7 (499) 517-86-53
E-mail: shareholders@rosneft.ru

Dear shareholders, Outside working hours, you can text us at +7 (926) 685-44-86. Please include your full name, and we will get back to you.

To foster dialogue with the shareholders, the Company's website features contacts for shareholders, including the shareholder hotline.

Shareholders

Board of Directors

The Board of Directors is responsible for managing any conflicts of interest in the Company.

The Regulations on the Board of Directors determine the duties of Board members related to prevention and management of any conflicts of interest.

In particular, Board members shall refrain from any actions which result or may result in a conflict between their interests and those of the Company.

Board members must report any actual/potential conflicts of interest to the Chairman of the Board of Directors or the Corporate Secretary.

With respect to any issues that may, in the opinion of a Board member, result in a conflict with the Company's interests, the director shall not participate in voting and, where necessary, in the discussion of such issues.

For the avoidance of any potential conflicts among the Company’s employees, the Board of Directors introduced rules for conducting transactions in financial instruments by persons included in the insider list and their related parties.

“The Board of Directors reviews, on a regular basis, information on assessment and monitoring of potential conflicts of interest of the Head of Internal Audit and considers the Company’s efforts to minimise this risk as adequate.”

As part of its major role in ensuring transparency and timely and full disclosure, the Board of Directors approved the rules for disclosing insider information.

The Company's Chief Executive Officer exercises day-to-day control over compliance with regulatory and internal requirements related to insider information.

In the reporting period, Andrey Polyakov, member of the Management Board, Vice President – Chief Geologist, reported his potential conflict of interest, partially related to the positions held in the governing bodies of other organisations. The Corporate Secretary, Chief Executive Officer and Chairman of the Board of Directors were duly notified. In the reporting period, all grounds for this conflict of interest were resolved in accordance with corporate procedures.

Executive Bodies

The Regulations on the Management Board and on the Chief Executive Officer contain special sections with the following rules to prevent a conflict of their interests with the interests of the Company:

  • these persons shall refrain from any actions that may cause a conflict of interest and, should such a conflict arise, immediately notify the Chairman of the Management Board / the Chairman of the Board of Directors and/or the Corporate Secretary;
  • while in office, these persons may not hold and/or control 20 or more percent of voting shares (interests or stakes) in any entity competing or having any business interest in maintaining relations with the Company;
  • these persons may not accept any gifts from persons interested in resolutions passed as part of their duties or otherwise benefit from such persons.

Top Managers and Employees

The rules for the avoidance and prevention of conflicts of interest are set forth in the Corporate Governance Code and the Code of Business and Corporate Ethics.

Possible conflicts of interest are also regulated by a number of internal documents, including the Corporate Governance Code, Code of Business and Corporate Ethics, and the Regulations on Managing Conflicts of Interest in Rosneft and Group Subsidiaries.

These documents establish the rules for preventing the conflicts of interest, define the terms “conflict of interest” and “corruption” and set out the procedure for preventing corporate fraud.

The Company’s Council for Business Ethics also contributes to managing conflicts of interest.

The Company continuously works to prevent corporate fraud. Special rules for its prevention are governed by the Company’s Policy on Combating Corporate Fraud and Involvement in Corruption Activities. The Policy establishes a comprehensive set of principles, procedures and initiatives aimed at preventing and combating corporate fraud and involvement in corruption, as well as at compliance with the anti-corruption laws of the Russian Federation. The Policy defines the Company’s efforts in building anti-corruption elements of the corporate culture and organisational structure, as well as rules and procedures intended to prevent corporate fraud and corruption.

The list of special rules aiming to prevent the securities market manipulation and the illegal use of insider information is laid down in the Company's Regulations on Internal Control Rules for the Prevention, Detection and Suppression of Illegal Use of Insider Information in Rosneft.

The document is publicly available on the Company's official website and establishes the rules for access to insider information and its disclosure, the procedure for conducting transactions in financial instruments by persons included in the insider list and their related persons, as well as the rules for protection of confidentiality of the insider information of Rosneft.

Special rules for the prevention of corporate fraud are governed by the Company’s Policy on Combating Corporate Fraud and Involvement in Corruption Activities.

Anti-corruption Efforts

Rosneft works to maintain compliance with the requirements of the anti-corruption laws of the Russian Federation, including through a set of measures aimed at building an organisational structure and elements of corporate culture, and establishing rules and procedures to prevent corporate fraud and corruption.

The effort was also aligned with the National Anti-Corruption Plan for 2018–2020 approved by Presidential Executive Order No. 378 dated 29 June 2018 (Instruction of the Russian Government No. DM-P17-4575 dated 23 July 2018).

The new anti-corruption procedures were developed in accordance with the applicable international anti-corruption laws, Federal Law No. 273-FZ On Combating Corruption dated 25 December 2008, the guidelines of the Russian Ministry of Labour and the Federal Agency for State Property Management, as well as International Anti-Corruption Standard ISO 37001:2016 “Anti-bribery management systems — Requirements with guidance for use”, and the ICC Guidelines on Conflicts of Interest in Enterprises.

All of the Company’s governing bodies contributed to these efforts within their remit:

  1. Rosneft's Board of Directors (the Audit Committee of the Board of Directors) approved strategic documents The Company’s Policy on Combating Corporate Fraud and Involvement in Corruption Activities was approved by resolution of Rosneft's Board of Directors (Minutes No. 19 dated 21 May 2018). and guiding principles, and regularly assesses the efficiency of such efforts; considered and approvedThe results for 2019 were reviewed and approved by Rosneft’s Board of Directors (Minutes No. 19 dated 3 April 2020). the results of a review of the anti-corruption risk management and internal control process.
  2. Rosneft’s Chief Executive Officer ensures the implementation of the Company’s Policy on Combating Corporate Fraud and Involvement in Corruption Activities, and approves the relevant internal regulations. In 2020, Rosneft:
    • approved and implemented the Company’s Regulations on Coordinating Anti-Fraud and Anti-Corruption Processes, including the following procedures: (i) assessment of corporate fraud and corruption risks; (ii) protection of whistleblowers; (iii) reporting of suspected corporate frauds or corruption and investigations; (iv) training and communications in combating corporate fraud and corruption; (v) monitoring and control of anti-fraud and anti-corruption processes (Order No. 61 dated20 January 2020);
    • updated the Company’s Procedure for Documenting and Reporting Business Expenses and Other Transactions with Employees (Order No. 366 dated 22 June 2020).
  1. The Rosneft Council for Business Ethics, which includes senior executives responsible for key areas of the Company's activities, (i) reviews reports on implementation, execution and operating efficiency of the anti-fraud and anti-corruption risk management and internal control systemThe Report for 2019 was approved on 8 June 2020 by the resolution of the Council for Business Ethics (Minutes No. 13)., (ii) approves the results of collecting and analysing ethical declarations in order to identify conflicts of interest among the Company's employees in accordance with the Regulations on Managing Conflicts of Interest in Rosneft and Group Subsidiaries.

Moreover, as part of the Comprehensive Anti-Fraud and Anti-Corruption Programme for 2019–2020Approved by the Council for Business Ethics on 10 December 2018 (Minutes No. 7)., the Company in the reporting period:

  • updated its employees on typical violations of anti-fraud and anti-corruption rules (including management of conflicts of interest) on a quarterly basis;
  • on an ongoing basis informed the relevant units about new regulations and government initiatives aimed at combating corruption;
  • assessed/reassessed the risk of corporate fraud and corruption on a quarterly basis in line with the approved methodology.
    • Clause 2.6 of the Recommendations for Public Joint-stock Companies to Organise Risk Management, Internal Controls, Internal Auditing, and the Work of Auditing Committees under Boards of Directors (Supervisory Boards)Letter of the Bank of Russia No. IN-06–28/143 dated 1 October 2020. establishes a qualitative indicator of risk appetite for corporate fraud and corruption risk in order to reflect the Company’s zero tolerance to this risk (Minutes of the Risk Management Committee of Rosneft No. 4–2020 dated 2 November 2020);
  • conducted ongoing anti-corruption audits of draft internal regulations;
  • published the quarterly All about Compliance information bulletin, and distributed the bulletin devoted to the International Anti-Corruption Day to all Rosneft employees on 9 December 2020.

The Company manages conflicts of interest at all levels.

The rules for the avoidance and prevention of conflicts of interest are set forth in the Corporate Governance Code, the Code of Business and Corporate Ethics, the Company's Policy on Combating Corporate Fraud and Involvement in Corruption Activities, and the Regulations on Managing Conflicts of Interest in Rosneft and Group Subsidiaries.

The Regulations set out a framework to classify conflicts of interest, including conflicts of interest between shareholders and members of the Company’s governing bodies (e.g. decisions made by corporate governing bodies that might adversely affect the Company’s financial and operating performance; the Company failing to make a statutory disclosure or members of corporate governing bodies underreporting on their positions in governing bodies of other entities, on interests (stakes) held in other entities, or other information required to be disclosed by the applicable laws, the Company’s Charter or internal regulations).

The Board members’ obligations to disclose a conflict of interest are set out in the Regulation on the Holding by Members of Rosneft Board of Directors of Rosneft Shares, Shares of and Equity Stakes in Group Subsidiaries.

In the reporting period, Andrey Polyakov, member of the Management Board, Vice President – Chief Geologist, declared his potential conflict of interest, partially related to the positions held in the governing bodies of other organisations. The Corporate Secretary, Chief Executive Officer and Chairman of the Board of Directors were duly notified. In the reporting period, this conflict of interest was resolved in accordance with corporate procedures.

To abide by Clause 12 of the National Anti-Corruption Plan for 2018–2020, as well as ensure compliance with the anti-corruption laws for the prevention and settlement of conflict of interest, during the reporting period the Company:

  • introduced a procedure that requires participants of procurement procedures to declare any conflict of interest (Order No. 69 dated 27 July 2020);
  • collected annual declarations on property and property-related obligations of its officers/employees, as well as on income, propertyand property-related obligations of their spouses and minor children who are included in the list of persons required to submit such declarations;
  • carried out an annual campaign to collect ethical declarations of the Company’s officers/employees in order to monitor their compliance with restrictions, prohibitions and requirements of anti-corruption laws, with the results of the analysis of such ethical declarations being approved by the Business Ethics CouncilMinutes of the Council for Business Ethics No. 14 dated 12 August 2020.;
  • informed employees of the matters related to the management of the conflict of interest (in October 2020, methodology support on frequently asked questions related to conflicts of interest was circulated to the Company's employees);
  • required new hires and employees appointed to new positions to sign an anti-corruption clause, which forms part of their employment contracts and includes the restrictions, prohibitions and requirements aimed at preventing the conflict of interest.
    • All Group Subsidiaries have set up conflict of interest commissions.

Pursuant to Clauses 22 and 28 of the National Anti-Corruption Plan for 2018–2020, the Company runs ongoing corporate training programmes in the field of countering corporate fraud and corruption for its employees, including those whose job responsibilities include participation in combating corruption, and new hires.

Multimedia training courses on Countering Corporate Fraud and Business Ethics Compliance:Managing Conflicts of Interest were updated (to reflect changes in key internal documents).

Participated in the 5th International Corruption in Business conference and workshop.

The Company operates a 24/7 Security Hotline to report on suspected, proven and potential cases of corporate fraud, corruption and conflict of interest.

Identified/prevented damage amounted to RUB 38.7 mln. The Company took disciplinary actions against 96 employees, terminated 32 employment contracts, and submitted findings of 18 audits to law enforcement authorities.

Members of the Company’s Board of Directors are updated on the Security Hotline operation on a quarterly basis.

In the reporting year, the Company kept on updating the Executive Office of the Russian Government on its progress towards Instruction of the Russian Government No. DM-P17-4575 dated 23 July 2018 on the implementation of the National Anti-Corruption Plan for 2018–2020.

>37,000
calls received by the Security Hotline in 2020
The Corruption Control section on the official corporate website has:
  • the Company’s statement on its zero tolerance for corruption;
  • key provisions of Russian and applicable international anti-corruption laws;
  • internal corruption control regulations of the Company (Rosneft’s Code of Business and Corporate Ethics and Policy on Combating Corporate Fraud and Involvement in Corruption Activities);
  • Security Hotline contact details;
  • information on cooperation with law enforcement authorities.

Corruption Control section

ANTI-CORRUPTION EFFORTS