Corporate governance

REPORT FROM THE BOARD OF DIRECTORS

We consider maintaining efficiency and transparency in our corporate governance practices as fundamental for the confidence of our shareholders, investors and other stakeholders, which is of the utmost importance for us, and we are pleased to note that Uralkali’s approach has once again been proven successful in 2019.

CORPORATE GOVERNANCE IN 2019

Uralkali passed a key milestone in 2019, with its return to the international debt capital market. In 2019, Uralkali successfully launched a Eurobond issue worth USD 500 mln with an interest rate of 4%. The placement attracted high levels of interest from both Russian and international investors. A contributory factor to the success of the Eurobond was the Company’s continued compliance with the highest standards of corporate governance, even after the Company discontinued the listing of its GDRs on the London Stock Exchange and the free float on the Moscow Exchange had been non-existent. We are able to confirm that Uralkali’s approach to corporate governance is not merely based on ensuring all requirements are formally observed, but is a culture that allows the Company to run on the fundamental values of transparency and openness, under guidance from a highly professional Board of Directors and an experienced management team, both of which serve the interests of Uralkali and its shareholders.

We have always done our best to maintain a high level of corporate governance in the Company. Our Board continues to have four independent directors, almost half of the board composition, which served of particular importance given the shareholding changes that took place recently. In 2019, Rinsoco Trading Co. Limited, a shareholder of Uralkali has made a mandatory tender offer, and consequently purchased a block of shares from the minority shareholders. As a result of this long-term initiative, the number of shareholders went down from several thousand to two key major shareholders and a subsidiary1 , which holds a large quasi-treasury stake in the Company.

DIVERSITY, ROLE DISTRIBUTION AND INDEPENDENCE CRITERIA OF THE BOARD OF DIRECTORS

In 2019, the Board consisted of four Independent Directors (Sergey Chemezov, Paul Ostling, Luc Maene and Daniel Wolfe), four Non-Executive Directors (Dmitry Mazepin, Dmitry Lobyak, Dimitry Tatyanin and Dimitry Tatyanin) and one Executive Director – Dmitry Osipov, the Company’s CEO.

In terms of demographic diversity, the composition of the board includes representatives from Russia, the USA, Belgium and Belarus, while the age of directors ranged from 50 to 73, averaging at 58 years.

The directors’ professional backgrounds cover a number of sectors including banking, finance, administration, high technologies, risk management and internal control, audit and consulting, mining, law, HR, business processes and many other valuable areas of business acumen within Russian markets and abroad.

Such a diverse team creates a unique synergy in the Company. Our directors truly work as one team, serving a collective goal underpinned by their mutual regards and understanding.

The Company regularly evaluates nominees and existing directors against independence criteria. These are mainly based on the Code of Corporate Governance, which was recommended for adoption by the Bank of Russia in 2014. Furthermore, our independent directors comply with every criterion specified in the UK Code of Corporate Governance, which served as benchmark to Uralkali until 2015, and its recommendations are still followed by the Company. Independence, in this context, means a director’s ability to formulate and express their own opinions, which are not limited by interests of the host company’s management or its individual shareholders, or competitors, counterparties and the state. Both the Russian and UK Codes note, quite fairly, that independence of a director’s opinion in some cases is not determined by whether the director fully meets all applicable criteria, and that it is up to the company’s Board of Directors to ascertain the director’s independence. Accordingly, Uralkali has adopted this practice (see below).

In line with long-established practices, the Chairman of the Board does not participate in Board Committee activities and is not involved in specific projects and transactions. However, the Chairman organises the Board’s activities, determines meeting agendas and chairs physical meetings.

Non-Executive Directors play a significant role in the Company’s activities. As they are more deeply involved in what the Company and its shareholders do than Independent Directors, they provide valuable support in several areas such as: running internal processes, facilitating external communications, and engaging with stakeholders.

CORPORATE SECRETARY

The corporate secretary facilitates ongoing interaction with shareholders, coordinates the Company’s activities to protect the rights and interests of its shareholders, and makes sure the Board of Directors follows all necessary corporate procedures and works effectively and efficiently, and also coordinates communication between the Board and the management. Since 2011, the position of the corporate secretary of Uralkali and the secretary of the Board of Directors and all Board Committees has been held by Maria Klimashevskaya.

Maria Klimashevskaya

Corporate Secretary

ACTIVITIES OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES
IN 2019

A number of major corporate events took place in the Company in 2019 which involved the Board of Directors. These included a mandatory tender offer and a buyout of shares by Rinsoco Trading Co. Limited, a shareholder of Uralkali (following a preliminary review by the Bank of Russia), approval of the investment programme, issuance of Eurobonds, and the reorganisation of the Company by means of a merger with JSC Uralkali-Technology, a subsidiary of Uralkali that holds over 55% of quasi-treasury shares in Uralkali.

Furthermore, in April 2019, the Strategy Committee of the Board of Directors was established in 2019, an important development for the Company. The Strategy Committee holds regular meetings to consider new strategic opportunities for the Company. The committee is chaired by Igor Bulantsev, who was first elected to the Board in 2019 as a Non-Executive Director.

In addition, several key regulatory documents were updated including the Regulations on the Dividend Policy (that now permits the payment of dividends from retained profits of previous years) and the Regulations on Information Policy (where a number of amendments were introduced including those related to insider information and disclosure).

The Board and its committees were also involved in the following processes: development and review of financial statements, development of the investment programme, setting the budget, the review of transactions, the appointment of key officers, assessment of fulfilment of KPIs, the development of plans for 2020, improvement of the risk management and internal control system, reviewing the global potash market, and finally the convocation of general shareholders’ meetings.

ACTIVITIES OF THE GENERAL MEETINGS

Three general shareholders’ meetings were held in 2019. In April 2019, an extraordinary general meeting elected the new composition of the Board of Directors, which for the first time included Igor Bulantsev. Igor has considerable managerial experience and expertise in finance and banking. At the Annual General Meeting held on 24 June 2019, the Board of Directors was re-elected in full, as well as the Regulations on Remuneration and Reimbursement of the Members of the Board of Directors (hereinafter, Remuneration Regulations) being approved. Finally, the Revision Commission was elected, and the auditors of the company were approved.

An extraordinary general meeting held on 4 December 2019 approved reorganisation of the Company through a merger with JSC “Uralkali-Technologia”, a subsidiary holding a quasitreasury stake, to be followed by redemption of this stake. The shareholders also approved the new versions of the Company’s Charter and the Regulations on General Meetings, which were amended to reflect the latest legislative changes and to allow general meetings to be held not just in Berezniki, but also in Moscow. New regulations on the Management Board were also approved, which allowed the direct implication on possibility of holding the Management Board’s meetings in absentia.

In December 2019, the Board of Directors simultaneously convened two extraordinary general meetings, which were held on 13 January and 17 February 2020. Both meetings were requested by JSC UCC URALCHEM as a shareholder of the Company. The shareholder proposed to increase the number of directors from 9 to 10, and the respective changes to the Charter were approved by the extraordinary general meeting on 13 January 2020. On the 17th of February, the general meeting elected the new Board of Directors. Aleksandr Bazarov became the tenth member of the Board of Directors, and currently holds the post of Senior Vice President at PJSC Sberbank.

CHANGES IN THE BOARD’S COMPOSITION AND THE BOARD’S ACTIVITIES IN EARLY 2020

On 21 February 2020, the newly elected Board of Directors resolved to appoint Alexander Bazarov to the Appointments and Remuneration Committee as well as the Strategy Committee. The composition of the Management Board remained unchanged.

Shortly after, on 5 March 2020, the Board of Directors approved the 2019 IFRS consolidated financial statements, and the RAS financial statements for 2019. Lists of candidates for the Board of Directors and the Revision Commission elections at the Annual General Meeting of Shareholders were also approved, which will both be held in 2020. The Audit Committee met several times ahead of the meeting of the Board of Directors. During these meetings, the Audit Committee primarily reviewed the company’s financial statements and planned for the meeting of the Appointments and Remuneration Committee to conduct an assessment of candidates looking to join the Board of Directors, evaluating their compliance with the applied independence criteria.

ACTIVITIES OF THE BOARD COMMITTEES

PERFORMANCE ASSESSMENT AND PLANNING OF THE BOARD OF DIRECTORS

In 2019, the Board of Directors performed a traditional self-review exercise, inviting members of the board to fill in questionnaires that were developed and approved by the Appointments and Remuneration Committee. Questions covered various aspects of activities conducted by the Board, its Committees, Management, the Corporate Secretary, as well as the quality of planning and preparation of documents. The assessment report was presented to the Board of Directors at a meeting on 25 June 2019 in person. During the discussion of the report’s results, directors shared additional comments and made a number of suggestions to further optimise the efficiency of the Board. Currently, the Company is not planning to conduct an external review of the Board’s performance. However, the Board may decide to conduct such a review in the future, taking into account both internal and external factors.

We always pay considerable attention to work planning and endeavour to anticipate key issues in advance that need to be addressed by the Board and its Committees. Modern technology facilitates the participation of the Company’s directors via video or conference call; this format is mainly used for committee meetings. The Board usually convenes in Moscow, and Board and Committee meetings are almost always universally attended, which means that all directors devote significant time and resources to their work for the Company.

REPORT OF THE AUDIT COMMITTEE

In 2019, the Audit Committee was exclusively made up by independent directors, which is in line with the best corporate governance standards.

In 2019, the Audit Committee included the following members:

• Paul Ostling (Chairman, Senior Independent Director, and a financial expert);
• Daniel Wolfe (Independent Director);
• Luc Maene (Independent Director).

In 2019, the Audit Committee, in addition to its traditional business competencies, such as reviewing preliminary reports, interacting with external and internal auditors, and generally consolidating risk management and internal control, was also involved in the process of preparing the Eurobonds prospectus. In particular, the committee reviewed the draft agreement between the auditor, the Company, the Eurobond issuer, and the project organisers, which was necessary in order to comply with financial information requirements of the International Standard on Related Services No 440 (Previously ISA 920) “Engagements to perform agreedupon procedures regarding financial information”, given the proposed issue of Eurobonds by the issuer, and the entry into a loan agreement with PJSC Uralkali to be financed from the bond issue proceeds. The agreement was subsequently approved by the Board of Directors.

In October 2019, the Audit Committee reviewed the Eurobond prospectus and recommended that the Board of Directors approve a transaction to raise a loan, to be financed from the bond issue proceeds between the Company and the Eurobond issuer (Uralkali Finance Designated Activity Company).

Paul Ostling, the Chairman of the Audit Committee and the Senior Independent Director, took part in the pre-issue road show for the Eurobond, covering all issues related to corporate governance, risk management, internal control, and compliance.

The Company continued to update its risk map in 2019, with the involvement of the Audit Committee, and this work will also be continued in 2020. Uralkali is also planning to hold a session on risks to Company Management (for more information, please refer to the Risk Management and Risk Management and Internal Control Sections).

In the reporting year, the Audit Committee has reviewed the Company’s financial statements, as is standard practice, and was in constant contact with the external auditors of the Company.

In April 2019, the Audit Committee gave the recommendation to the Board of Directors and the General Shareholders to retain the previous auditors — AO Deloitte & Touche CIS for the IFRS statements, and JSC Energy Consulting for RAS accounting statements (financial statements), and also gave a recommendation on the value of the auditors’ fees.

Total remuneration paid to the auditors in 2019 was RUB 76,512,228: In 2019, JSC Energy Consulting received RUB 3,118,200 (including VAT), while AO Deloitte & Touche CIS and its affiliates were paid RUB 73,794,028 - see details in the table below:

Taking into account the internal standards adopted by auditors in order to ensure their independence and to avoid a conflict of interest, the Company is reasonably assured that the provision of non-audit (consulting) services does not threaten the auditors’ independence in terms of the provided audit services. At its meeting held on 4 March 2020, the Committee reviewed the non-audit services provided to the Company and established that the audit/consulting fee ratio makes the impartiality and independence of the auditors of the Company’s financial statements evident.

The Audit Committee also assessed the efficiency of the external audit processes and concluded that the auditors had duly discharged their obligations which included regular monitoring of the accounting, fiscal and tax book-keeping practices of the Company, and that the auditors’ reports reflected the actual RAS statements and the IFRS-consolidated financial statements.

The Company’s executive bodies are the Chief Executive Officer (who is the sole executive body) and the Management Board (which is the collective executive body). The executive bodies manage the Company’s day-to-day operations. The responsibilities of the CEO and the Management Board are defined in the Company’s Charter. In addition, the CEO also reviews matters which by law are outside the competence of the General Meeting or the Board of Directors. The Management Board’s numerical and personal composition is determined by the Board of Directors.

In 2019, Dmitry Boyarkin, Procurement Director, and Igor Senokosov, Capital Construction Director, both joined Uralkali and became Management Board members. Their predecessors, Alexander Kulbitsky and Aleksey Yashnikov (respectively), left the Company. However, Aleksey Yashnikov returned to head the newly-formed Construction and Technical Project Supervision Department. Eduard Smirnov, who has been with Uralkali for many years, and is currently Director for Subsoil Management, was also elected to the Management Board. Therefore, as of 31 December 2019, the Management Board includes the following members:

• Dmitry Osipov (Chairman)
• Dmitry Boyarkin
• Anton Vishchanenko
• Irina Konstantinova
• Vitaly Lauk
• Igor Senokosov
• Eduard Smirnov
• Marina Shvetsova.

In 2019, the Management Board held 13 meetings.

COMMITTEES UNDER THE CEO (WORKING GROUPS)

The Company’s structure includes several committees and commissions (hereinafter, Working Groups) which report directly to the CEO and focus on key aspects of the Company’s activities. To date, there are 10 Working Groups:

• Health, Safety, Environment and Corporate Social Responsibility;
• Procurement;
• Investments;
• Subsidiary Management;
• Mine Safety;
• Compensation, Benefits and HR Policy;
• Information Technology;
• Innovation;
• Risks;
• Quality.

These groups are represented by senior executives and are personally led by the CEO. The Working Groups’ tasks include information monitoring and review, preliminary discussions, risk analysis, and the follow-up of scheduled activities. This approach ensures a continuous dialogue with the management team and a two-way flow of information on the most crucial aspects of the Company’s activities. 119 Working Group meetings were held in 2019.

MEMBERS OF THE MANAGEMENT BOARD AS OF 31 DECEMBER 2019

REMUNERATION OF THE BOARD OF DIRECTORS

Members of the Board of Directors receive remuneration in line with the Remuneration Regulations. According to these regulations, remuneration is provided to independent and non-executive directors, who may choose to voluntarily waive their remuneration.

In 2019, the Remuneration Regulations were amended to reflect the amount of remuneration payable to the Board’s deputy chairpersons. Currently, the Board members’ remuneration consists of several parts:

• Remuneration for activities on the Board of Directors;
• Annual remuneration for additional duties (chairman of a committee, Senior Independent Director, or Deputy Chairman of the Board of Directors). These remuneration amounts are generally fixed but can be increased if a Director performs several additional duties.

Remuneration payable to the Chairman of the Board of Directors is governed by a specific section of the Remuneration Regulations. The Chairman’s remuneration is also fixed and is paid on a monthly basis in equal amounts.

In 2019, remuneration was paid to five Board members, including four Independent Directors (Sergey Chemezov (Chairman), Daniel Wolfe, Paul Ostling and Luc Maene), and one Non-Executive Director (Dmitry Lobiak). Since July 2019, remuneration has also been paid to Dmitry Mazepin, the Deputy Chairman and Non-Executive Director of the Company.

In accordance with the Remuneration Regulations, directors are reimbursed for their travel expenses (in relation to meetings of the Board), accommodation expenses as well as expenses not directly related to participation in the meetings, but still connected with the business of the Company.

Total payments to the Board members in 2019

REMUNERATION OF THE MANAGEMENT BOARD

Remuneration payable to members of the Management Board consists of two parts: a monthly salary, the size of which is specified in individual employment contracts, and an annual bonus. The bonus amount depends on the achievement of individual KPIs set each year, which reflect the contribution of a member of the management team to the achievement of strategic and operating goals of the Company. Members of the Management Board do not receive any additional remuneration. In 2019, amendments were made to the Regulations on the Appointments and Remuneration Committee, which now means that any additional amounts (including remuneration, bonuses and compensations1 ) to be paid to key managers of functional and production units who report directly to the CEO, are only possible after prior review of such payments and a subsequent recommendation by the committee.

Currently, the Company does not have a long-term management incentive programme, and senior executives of the Company are not paid additional bonuses.

Total amounts paid to the Management Board in 2019

CEO REMUNERATION POLICY

The CEO is appointed by the Board of Directors. The Board of Directors’ prerogative also includes the approval of the CEO’s employment contract and his annual KPI targets (after those have been reviewed by the Appointments and Remuneration Committee). The Board of Directors generally follows the committee’s recommendations but may introduce certain amendments if deemed necessary.

The following policy for the CEO’s remuneration in 2019 has been applied: as a general rule, total remuneration payable to the CEO (as well as to other executive directors including members of the Management Board) consists of two parts: a monthly salary, the size of which is specified in individual employment contracts, and an annual bonus. As of the end of the year, the CEO may also receive a bonus in line with the Regulations on Bonuses for Senior Executives, which is based on a performance management system adopted by the Company. This system allows for correlation between the corporate and individual goals and ensures that performance is measurable and transparent. Bonuses are only paid if an executive (including the CEO) has met their individual KPIs and can also be subject to deductions in certain conditions. The employment contract also provides for a special bonus calculation procedure. This bonus is paid annually, but only in the case of achieving certain goals in addition to the goals specified in the annual designation of key performance indicators.

The KPI-based performance is reviewed by the Board’s committees, including the Appointments and Remuneration Committee which makes the final recommendation to the Board of Directors, according to which a certain bonus amount is paid to the CEO. The Appointments and Remuneration Committee may also recommend an ad hoc bonus or another type of remuneration not expressly provided for in the employment contract. In 2018, the Board of Directors made appropriate amendments to the CEO’s employment contract.

The CEO is also the Chairman of the Management Board; however, the CEO and other members of the Management Board do not receive additional remuneration for these roles.

All security and reimbursement clauses provided by internal regulations and the collective bargaining agreement also apply to the CEO. The CEO’s expenses incurred in relation to his office duties are reimbursed against supporting documents. Just like any other employee, the CEO’s travel expenses are fully reimbursed within the limits set by internal regulations. In addition, the CEO’s hospitality expenses are also reimbursed.

MANAGEMENT’S EQUITY OWNERSHIP

According to the Company’s registrar JSC VTB Registrar, in the period of 1 January 2019 to 31 December 2019, the Company’s list of registered securities holders did not include persons who held positions in the governing bodies of Uralkali in 2019. There is no record of any transactions made by members of Uralkali’s governing bodies to acquire or dispose of shares of the Company, which were the subject matter of transactions from 1 January 2019 until 31 December 2019. The share register has no records of nominee shareholders as of 1 January 2019 and 31 December 2019.

DIRECTORS’ AND OFFICERS’ (D&O) LIABILITY INSURANCE

In line with global best practice, the Company provides annual liability insurance for its Directors and Officers (D&O) at its own expense. The D&O policy protects members of the Board of Directors, the Management Board and Uralkali’s management team, and covers possible damages arising from claims against them or persecution by public authorities for their actions/ inaction in the exercise of their duties. Following the Eurobond offering in 2019, the Company also provided D&O liability insurance in connection with the securities placement (POSI) to the Board of Directors and Management Board.

RISK MANAGEMENT AND INTERNAL CONTROL

The risk management and internal control system (RMICS) is based on the principles incorporated in ERM1 (Enterprise Risk Management), an integrated risk management framework which:

• is a continuous process that covers all of the Company and is implemented by its employees at every level;
• is used in the Company’s strategy development;
• is applicable to the entire organisation and includes a corporate-level review of the risk portfolio;
• aims to identify events that may affect the organisation and develop measures to minimise this potential impact;
• provides the management and the Board of Directors with reasonable confidence in achieving its desired goals.

Roles and responsibilities of Uralkali units and officials in RMICS

ANTI-FRAUD AND COMPLIANCE SYSTEM

As of the end of 2019, the compliance system included the following components:

The Board of Directors delegated its powers to review issues concerning the compliance system and its individual aspects to the Audit Committee. As part of this responsibility, the committee regularly reviews management reports on compliance measures, and initiates improvement and/ or implementation of new control procedures in certain compliance areas, if necessary.

According to the compliance system, the Company’s officers and employees are responsible for the implementation of certain control procedures stipulated in the internal documents for prevention and detection of violations, their correction and subsequent monitoring.

The Anti-Fraud and Anti-Corruption Programme developed in 2011 continues to be effective. The anti-fraud and anti-corruption action plan for the following year is approved on an annual basis. Anti-fraud and anti-corruption procedures are developed based on the analysis of the Company’s business processes with regards to their vulnerabilities and fraud and corruption susceptibility. The procedures constitute a cycle of certain stages: risk assessment based on the analysis of goals and possible negative consequences, analysis of employees’ compliance with the procedures in place for risk prevention, risk detection and response, and analysis of the sufficiency of existing anti-fraud and anti-corruption procedures.

The programme provides for a reporting system to detect cases of fraud or corruption, while Uralkali management regularly receives and reviews relevant reports from the Security Directorate.

PREVENTION OF CONFLICTS OF INTEREST

The Code of Corporate Governance recommended by the Bank of Russia defines a conflict of interest as any contradiction between interests of the Company and personal interests of a board member, a member of a collegial executive body, or a sole executive body, which means any direct or indirect personal interests or interests in favour of a third party, including business relationships, friendship, kinship or other relations, a personal or related person’s membership, employment or equity ownership in another legal entity, and contradictions between obligations to the company and another party. In particular, conflicts of interest may arise in respect of transactions a person has a direct or indirect interest in; acquisition of the company competitors’ shares; employment in legal entities and establishment of contractual or other relations with them.

At the same time, according to the developed judicial practice, the CEO’s activities in the face of a conflict of interest (if the information on the conflict of interests is not disclosed and the CEO’s actions are not approved in line with the established procedures) are considered the signs of bad faith.

Russian legislation provides for a number of mechanisms to prevent conflicts of interest among the Company’s directors and members of executive bodies, which may for instance be related to their employment in governing bodies of the Company’s competitors, or their ownership of shares in other organisations whose interests may contradict those of the Company. These mechanisms include:

• A Director’s and/or Officer’s obligation to inform the Company of any positions and/or of any equity ownership they may hold in other organisations;
• A Director’s obligation to refrain from voting on a transaction if he or she may be considered an interested party to a transaction;
• A Director’s obligation to inform the Company of any parties where the director may be considered an interested party to a transaction.

To ensure the implementation of the specified mechanisms, the Company also has a number of internal controls to effectively identify a conflict of interests. In particular, a Director is obliged to inform the Company of any persons in relation to which the Director is an affiliate or a controller. Moreover, the corporate information system has a regularly updated list of related parties, which is used to pinpoint the transactions that must be put before the Board of Directors or the General Meeting of the Company.

In 2019, the Company and other members of the Uralkali Group did not grant any loans to Directors of the Company.

MAJOR AND RELATED PARTY TRANSACTIONS

In 2019, Uralkali entered into several transactions which were deemed major and/or related party transactions pursuant to the Russian Federal Law “On Joint-Stock Companies” (the Law). The Law stipulates that such transactions must be approved, and the approval procedure must be explained at the General Meeting or by the Board of Directors, depending on the value of transactions and the identity and number of related parties.

All related party transactions were carried out in accordance with the Law.

SHARE CAPITAL

As of 31 December 2019, Uralkali’s share capital amounted to RUB 1,483,007,945.50 divided into 2,936,015,891 ordinary shares with a face value of RUB 0.50 each, and 30,000,000 preferred shares with a face value of RUB 0.50 each.

In accordance with the Russian legislation and the Company’s Charter, preferred shares are not cumulative and do not carry voting rights, except cases explicitly stipulated by the legislation. Shareholders that own preferred shares have the right to vote starting from the meeting following the Annual General Shareholders Meeting, during which the decision has been made not to pay dividends on preferred shares or to pay them partially.

The minimum dividend amount is stated in the Charter and amounts to RUB 0.1 per preferred share. In July 2019, the Company paid out minimum dividends for 2018 in the amount of RUB 3 million to holders of preferred shares.

GLOBAL DEPOSITARY RECEIPTS (GDRS)

Uralkali’s ordinary shares are subject to the Global Depositary Receipts (GDRs) Programme under Regulation S, at a ratio of five ordinary shares per one GDR. PJSC Uralkali’s securities are interchangeable: ordinary shares can be converted to GDRs and vice versa.

The Bank of New York Mellon is the depositary bank for the GDR Programme. The GDRs of PJSC Uralkali were traded on the London Stock Exchange until 22 December 2015.

As at 31 December 2019, there are no GDRs.

STOCK EXCHANGE

Ordinary shares of PJSC Uralkali are included in the list of securities admitted to trading on the Moscow Exchange (Level 3 listing).

On 18 December 2017, the Company’s Extraordinary General Meeting decided to delist the Company’s ordinary shares from the Moscow Exchange. As of 31 December 2019, the delisting procedure was not completed.

The Moscow Exchange has suspended the trading of PJSC Uralkali’s ordinary shares on 20 September 2019 at the request of the Company’s shareholder, Rinsoco Trading Co. Limited to repurchase the securities in accordance with Article 84.8 of the Federal Law «On Joint Stock Companies». The trading of shares can be resumed at the request of the Company.

As of 31 December 2019, the trading of PJSC Uralkali’s ordinary shares at the Moscow Stock Exchange has not been resumed.

SHARE BUYBACK PROGRAMME

PJSC Uralkali has not implement the share buyback programme in 2018 and 2019.

In 2019, the Company purchased 0.26% and 0.00195% of the total outstanding ordinary shares, respectively, as part of the mandatory buyback following the results of general shareholder meetings held on 26 December 2018 and 24 June 2019. The Company had no own shares on its balance sheet as of 31 December 2019.

Shares of PJSC Uralkali on stock exchange

Moscow Exchange trading volume for 2019 (Moscow Exchange: Uralkali’s ordinary shares)

Uralkali's securities identification numbers

Uralkali's ordinary shares traded on the Moscow Exchange

EUROBONDS

In 2019, the Company returned to the international debt market. On 22 October 2019, PJSC Uralkali has successfully placed its USD 500 million 5-year Eurobond offering with a record low annual coupon rate of 4.000%, reflecting strong investor demand. The debt instrument has ratings from Moody’s (Ba2) and Fitch (BB-).

DIVIDENDS

The Annual General Meeting of shareholders of Uralkali was held on 24 June 2019 in Berezniki (Perm Region). The meeting approved a resolution to not pay dividends on ordinary registered shares for 2018, but to pay dividends on preferred shares in the amount of RUB 0.1 per one such share. The decision to pay the minimum amount of dividends on preferred shares was recommended by the Board of Directors in order to maintain the current ratio of voting and nonvoting shares of the Company and thereby ensure that the current percentage of voting shares of Uralkali minority shareholders remained unchanged as of the date of the decision.

Taxation

As a general rule, the tax rate on dividends in the Russian Federation is as follows:

• for legal entities:
  • 0% for tax residents of the Russian Federation, if such an entity owns over 50% of the Company’s share capital for a period of more than 365 days at the day of the decision on dividend payment;
  • 13% for other Russian entities;
  • 15% for foreign entities.
• for individuals:
  • 13% for Russian tax residents;
  • 15% for tax non-residents.

Should the recipient of dividends be a tax resident of a state with which the Russian Federation has signed a treaty on avoidance of double taxation, tax payments must be made in accordance with the rate specified in such a treaty (subject to the conditions set forth in the treaty)1.

On 26 December 2014, Uralkali held the Extraordinary General Shareholders Meeting. The decision to pay interim dividends in monetary terms in the amount of RUB 2.96 per ordinary share was not made (Meeting Minutes No. 44 of 29 December 2014).

On 15 June 2015, Uralkali held the Annual General Shareholders Meeting. The meeting decided not to pay the dividends for 2014 (Meeting Minutes No. 45 of 16 June 2015).

On 17 June 2016, Uralkali held the Annual General Shareholders Meeting. The meeting decided not to pay the dividends for 2015 (Meeting Minutes No. 51 of 22 June 2016).

On 20 June 2017, Uralkali held the Annual General Shareholders Meeting. The meeting decided not to pay the dividends for 2016 (Meeting Minutes No. 55 of 20 June 2017).

On 29 June 2018, Uralkali held the Annual General Shareholders Meeting. The meeting decided to pay dividends for 2017: The dividends on ordinary shares shall not be paid for 2017. The dividends on preferred shares shall be paid in monetary terms in the amount of RUB 0.1 per preferred share (Meeting Minutes No. 57 of 29 June 2018).

On 24 June 2019, Uralkali held the Annual General Shareholders Meeting. The meeting decided to pay dividends for 2018: The dividends on ordinary shares shall not be paid for 2018. The dividends on preferred shares shall be paid in monetary terms in the amount of RUB 0.1 per preferred share (Meeting Minutes No. 60 of 24 June 2019).

* The indicated amount includes preferred shares that are non-voting.

INVESTOR AND SHAREHOLDER ENGAGEMENT

PJSC Uralkali re-iterates its continued commitment to the principles of openness and transparency. The Company continues to provide accurate information to its stakeholders in a timely manner and maintains regular interaction with the representatives of the investment community.

Interested parties should contact members of the Investor Relations department using the following contacts:

Tel.: +7 (495) 730-23-71

Fax: +7 (495) 730-23-93

ir@msc.uralkali.com