Press release
Nizhny Novgorod, August, 2009: International rating agency Standard & Ðoor’s has affirmed VolgaTelecom’s corporate governance rating (CGR) at CGR-5. At the same time, Standard & Ðoor’s confirmed the company’s Russian scale CGR at CGR-5.4.
Following the confirmation, the CGRs were withdrawn at the request of VolgaTelecom. “Collaboration with Standard & Poor’s rating agency in the area of improving and evaluating the corporate governance rating of VolgaTelecom has lasted for six years. During this period, the company has made concerted efforts to enhance its corporate governance practice, many international and domestic standards for operations were introduced, and information transparency was greatly improved. Further efforts to improve the quality of corporate governance will be made by company on its own”, said Taisiya Sipatova, deputy general director of VolagTelecom for economics and finance.
As noted in a report by the Corporate Governance Rating Service of Standard & Ðoor’s, “over the past year a number of improvements have been made at the company which concern the schedule for preparing financial reports, as well as the lineup of the board of directors.
Among the strong points in VolgaTelecom’s corporate governance practice, the report notes the following:
- The procedures for preparing and conducting shareholders meetings are efficient.
- The company adheres to a high level of information disclosure.
- VolgaTelecom is the first RTO to have drafted a social report.
- Minority shareholders are quite active; the number of external directors not exposed to major conflicts of interests, with seats on the Board of Director rose to three this year.
- The Board of Directors possesses significant authority. The operations of the Board of Directors are supported by the presence of four attached committees; independent directors are members of all committees.
- The Company uses the services of an external auditor which has an international reputation and was selected during a public tender.
- Minority shareholders are vested with broad voting rights in accordance with Russian legislation and the Company Charter.
At the same time, among the shortcomings, analysts note such factors as the strong influence of Svyazinvest, which holds the majority of seats on the Board of Directors of VolgaTelecom. The disclosure level of financial information could be raised in a number of ways, including the disclosure of quarterly IFRS financial reports.
VolgaTelecom’s CGR is the result of an evaluation based on four analytical components on the international/Russian scale with scores ranging from 1 to 10: ownership structure and external influence – 5/5.0; shareholder rights and relations with financially interested parties – 7/7.1; financial transparency, disclosure of information and audit – 6/6.3; lineup and efficiency of the Board of Directors - 4+/4.9.
More complete information on ratings can be found on the website Standard & Poor’s: http://www.standardandpoors.ru or on the corporate website of VolgaTelecom at http://www.vt.ru.
