CORPORATE GOVERNANCE

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Corporate Governance System

Pursuant to the laws of the Republic of Kazakhstan and KMG Charter, KMG’s corporate governance structure is as follows:

• The supreme body is the General Shareholders Meeting;
• The management body is the Board of Directors, accountable to the General Shareholders Meeting;
• The executive body is the Management Board, accountable to the Board of Directors;
• The Internal Audit Service, a centralised body directly subordinated and accountable to the Board of Directors, exercising control over the financial and economic activities of the Company and other entities of KMG Group, which are members of the Fund in accordance with National Welfare Fund Act No. 550-IV ZRK dated 1 February 2012 of the Republic of Kazakhstan, assessment in the field of internal control and risk management, execution of documents in the field of corporate governance and consulting for the purpose of improving the activities of KMG and KMG Group;
• The Corporate Secretary, who performs his/her functions on a permanent and independent basis, is not a member of the Board of Directors and (or) executive body of the Company, is appointed by KMG’s Board of Directors and is accountable to KMG’s Board of Directors, performs implementation and control and supervisory functions in KMG’s corporate governance system within his/her competence;
• The Compliance Service, accountable to the Board of Directors, whose activities are aimed at ensuring compliance with mandatory regulatory requirements and international best practices on anti-corruption and formation of KMG Group’s internal corporate culture, ensuring transparency, honesty among employees, as well as creating conditions for doing business in accordance with the best international standards, internal policies and laws of the Republic of Kazakhstan;
• The Ombudsman, a person appointed by KMG’s Board of Directors, whose role is to advise KMG’s employees who have applied to him/her and assist in resolving labour disputes, conflicts, social and labour issues, as well as in ensuring compliance with the principles of business ethics by KMG’s employees.

KMG’s corporate governance system is based on respect for the rights and legitimate interests of shareholders and key stakeholders: the state, strategic partners and counterparties (suppliers and buyers), investors, KMG employees, municipalities, local communities and residents of the regions where the Company operates.

The Company’s corporate governance system is constantly being improved to meet the requirements and standards of Kazakhstan and international corporate governance practices.

In order to address the most critical issues and to develop recommendations to the Board of Directors, the dedicated committees are established at KMG under the Board of Directors. As of 31 December 2023, the Board of Directors had the following Committees:

Composition of the Management Body and its Committees

As of 31 December 2023, KMG’s Board of Directors has the following members¹⁰:

• Ernat Berdigulov, Chairman of the Board of Directors, Representative of Samruk-Kazyna JSC;
• Magzum Mirzagaliyev, Chairman of KMG’s Management Board;
• Holland Philip Malcolm, Independent Non-Executive Director;
• Uzakbay Karabalin, Non-Executive Director, Representative of Samruk-Kazyna JSC;
• Elzhas Otynshiev, Representative of Samruk-Kazyna JSC;
• Armanbay Zhubayev, Independent Non-Executive Director;
• Arman Argingazin, Independent Non-Executive Director;
• Saya Mynsharipova, Independent Non-Executive Director;
• Askar Shakirov, Independent Non-Executive Director.

As of 31 December 2023, KMG’s Board Committees are as follows (Resolution of KMG’s Board of Directors dated 31 August 2023, Minutes No. 18/2023).

Audit Committee:

• Arman Argingazin, Chairman
• Holland Philip Malcolm, Member
• Armanbay Zhubayev, Member
• Saya Mynsharipova, Member

Strategy and Portfolio Management Committee:

• Armanbay Zhubayev, Chairman
• Uzakbay Karabalin, Member
• Holland Philip Malcolm, Member
• Elzhas Otynshiev, Member
• Saya Mynsharipova, Member

Nomination and Remuneration Committee:

• Holland Philip Malcolm, Chairman
• Arman Argingazin, Member
• Saya Mynsharipova, Member

Health, Safety, Environment and Sustainability Committee:

• Armanbay Zhubayev, Chairman
• Arman Argingazin, Member
• Uzakbay Karabalin, Member

The Company complies with requirements of the Corporate Governance Code regarding the number of Non-Executive Directors on the Board of Directors, according to which the number of Non-Executive Directors is up to 50 % of the total number of Members of the Board of Directors.

The Board of Directors is chaired by a representative of Samruk-Kazyna JSC, and all KMG’s Board Committees are chaired by Non-Executive Directors.

As of 31 December 2023, the total number of members of the Board of Directors is 9, including:

• Non-Executive Directors – 5,
• Representatives of Samruk-Kazyna JSC – 3;
• Executive Director (Chairman of the Management Board) – 1.

Of nine members of the Board of Directors, eight are citizens of the Republic of Kazakhstan, and one is from the United Kingdom.

Term of Office

The term of office of the Board of Directors is three years. Members of the Board of Directors may be re-elected for a period exceeding six consecutive years subject to special consideration of a need for qualitative renewal of the Board of Directors. In exceptional cases, re-election for a term of up to nine years is allowed (in this case, for non-executive directors, a detailed and convincing explanation of such necessity should be prepared and disclosed by the Company to all stakeholders).

However, following an independent corporate governance audit carried out at KMG, the Company received a recommendation to consider discussing with the Shareholder an approach to retain shareholder representatives and non-executive directors on the Company’s Board of Directors for a longer period of time. It was also recommended that consideration should be given to aligning the tenure of representatives with the period of the chosen Company Strategy. According to the independent consultant, this can have the following advantages: the term of office of individual directors of five to six years and their rotation in different years will ensure continuity of knowledge of the Company’s operations and its corporate governance processes. A longer term on the Board of Directors contributes to the quality of performed work and accountability for successful implementation of the Company Strategy.

The Board of Directors and its Committees maintain the balance of skills, experience and knowledge to ensure the independent, unbiased and efficient decision-making process in the interests of KMG and in view of fair treatment of all shareholders and sustainable development principles. Pursuant to clause 4 of Article 54 of the Joint Stock Companies Act of the Republic of Kazakhstan and paragraph 9 of Chapter 5 of KMG’s Corporate Governance Code, members of the Management Board, other than the Chairman of the Management Board, cannot be elected to the Board of Directors, and the Chairman of the Management Board cannot be elected as Chairman of the Board of Directors.

For more details on the members of the Board of Directors, visit KMG’s website: https://www.kmg.kz/en/sustainable-development/corporate-governance/directors_board/.

As of 31 December 2023, the Board of KMG consists of 9 people.

THE COMPOSITION OF KMG’S MANAGEMENT BOARD IS AS FOLLOWS:

The Management Board operates in accordance with the Work Plan of the Management Board of JSC NC “KazMunayGas” for 2023, approved by the Resolution of KMG’s Management Board dated 23.12.2022 (Minutes No. 68).

According to the Work Plan, in-person meetings of the Management Board were held weekly.

These quantitative data indicate the regularity of in-person meetings of the Management Board, which fully complies with the provisions of the KMG Corporate Governance Code.

During 2023, KMG’s Management Board made 572 Resolutions (100 %) at in-person meetings. 59 minutes of meetings of the Executive Body were drawn up.

From the total number of in-person resolutions of the Management Board made at the end of 12 months of 2023, 154 issues were duly submitted to KMG’s Board of Directors for consideration.

During January–December 2023, the following KMG’s Management Board Resolutions were also approved:

• Basic Tariff Rate 2023 for Some Companies of KMG Group;
• KMG Group Roadmap for HSE Improvement 2023;
• KMG Group Adjusted Development Plan / Business Plan 2023;
• KMG Group Adjusted Budget 2023;
• KMG Group Business Plan 2024–2028;
• KMG’s Management Board Work Plan 2024;
• KMG Group Budget 2024.

In addition, 36 Resolutions approved amendments and supplements to certain KMG’s internal documents.

Economic, Environmental and Social Responsibility

Pursuant to the Corporate Governance Code, the Board of Directors and the Management Board establish and implement the appropriate sustainable development system within their competence, while every employee and officer at every level contribute to sustainable development.

As of 31 December 2022, the responsibilities for sustainable development were allocated as follows at the management body level:

• The Compliance Service is responsible for ensuring compliance with mandatory regulatory requirements and international best practices on anti-corruption and formation of KMG Group’s internal corporate culture, ensuring transparency, honesty among employees, as well as creating conditions for doing business in accordance with the best international standards, internal policies and laws of the Republic of Kazakhstan;
• The Ombudsman Service is responsible for the observance of fairness and interests of all Company employees through: early prevention and settlement of disputes and conflicts; submission of problematic issues of a systemic nature requiring resolution to the relevant bodies and officials for consideration; putting forward proposals to stabilise conflict situations.

The responsibilities for sustainable development were allocated as follows at the executive body level:

• Deputy Chairmen of the Management Board is responsible for development and implementation of the sustainability management system to ensure compliance with the principles of sustainable development and integration of sustainable development into the key processes, the Company’s development strategy and decision-making processes, the Company’s low-carbon development and ESG rating, as well as addressing a range of issues related to the economic component of sustainable development, including the promotion of economic development of the regions of operation;
• Director of HSE Department is responsible for development and implementation of KMG’s health, safety and environment strategy and policies, and in general for health, safety and environment mattes;
• Director of the Department of Low-Carbon Development: issues of greenhouse gas emissions management, implementation of an energy management system, as well as assistance in the implementation of low-carbon projects and improvement of activities in the supervised area, in accordance with KMG’s targets in the field of reducing the carbon footprint;
• Director of HR Department is responsible for implementation of processes and management of labour, human and social aspects of sustainable development.

The above persons are accountable to the Chairman of KMG’s Management Board. Accountability of those responsible for economic, environmental and social issues is governed in detail by the Company’s internal regulatory documents, internal control and business continuity procedures. These issues are regularly presented for review to the Management Board and the Board of Directors. Before the relevant issues are considered at Board of Directors meetings, the Board Committees make recommendations to the Board of Directors according to the following allocation comprehensive control over implementation of duties and actions aimed at improving the corporate governance is delegated to the Audit Committee under KMG’s Board of Directors; initiation, in-depth review and decision-making on the economic, environmental and social aspects of the Company’s impacts, and monitoring of sustainable development in KMG are assigned to the Health, Safety, Environment and Sustainability Committee (HSESC) of KMG’s Board of Directors.

Consulting of Stakeholders in Economic, Environmental and Social Matters

Economic, environmental and social consultations between the stakeholders and the Company’s supreme corporate governance body are implemented in various ways and on a continuous basis.

For instance, the Health, Safety, Environment and Sustainability Committee of KMG’s Board of Directors (hereinafter, the Committee) is in charge of general management of the activities of the above-mentioned officers.

Thus, five meetings of the Committee were held in 2023, where 31 issues were addressed.

Health, Safety, Environment and Sustainability Committee of KMG’s Board of Directors considers and manages sustainability issues, the status of SDG achievement, prepares recommendations for approval of the sustainability policy, annual KMG Sustainability Report, action plans and other internal documents on sustainability, the approval of which falls under the authority of BoD, implementation of social, economic and environmental components of sustainability, formation of a sustainability management system, setting sustainable development goals and KPIs, monitoring the implementation of sustainability in KMG, integrating sustainability into KMG’s key processes.

In 2023, the Committee was mainly focused on health, safety and environment, strategic management of the ESG (Environmental – Social – Governance) aspects, and implementation of a sustainable development system.

The key issues on the Committee’s agenda in 2023 are as follows:

• Health, safety and environment reports
• Status of implementation of KMG’s 2022–2031 Low-Carbon Development Programme
• KMG’s ESG (Environmental – Social – Governance) rating
• Approval of the Action Plan to Improve KMG’s ESG Rating
• Status report on the implementation of the sustainable development system at KMG and its business units and incorporation of sustainable development principles into key business processes
• KMG’s contribution to the sustainable development goals
• Results of the work on the Project Development of KMG’s Action Plan to Improve Corporate Governance for Climate Transition and Disclosures in accordance with TCFD recommendations

Moreover, the Committee reviewed and approved the 2022 Sustainability Report of KMG in 2023.

KMG officers and employees were regularly invited to take part in the Committee’s activities by attending the meetings of the Committee without the voting right.

The KMG’s Board of Directors has accepted every recommendation developed by the Committee.

Economic, environmental and social consultations are provided to a wide range of stakeholders via the Company’s website, public relations service (media office), as well as by issuing the annual Sustainability Report that serves as the central communication channel between KMG and its internal and external stakeholders in terms of disclosing sustainable development information. At the same time, KMG has various communication methods in place, which enable a proper dialogue with the stakeholders and the Company. For example, information for the investment community is posted on a dedicated porta
https://www.kmg.kz/en/investors/, employment issues are posted on the portalhttp://work.kmg.kz, violations of the rights and legitimate interests of employees can be addressed through nysana@cscc.kz, a confidential reporting system is available through http://www.sk-hotline.kz/, and there is functional communication on work of the Ombudsman through ombudsman@kmg.kz, on health, safety and environment through hse@kmg.kz and on sustainability through sustainability@kmg.kz.

Communicating the Critical Issues

Critical issues are communicated to KMG’s Board of Directors through regular reports on the Company’s operations including but not limited to the following: report by the Chairman of KMG’s Management Board on key business developments, information on occupational health and environmental protection, report on preliminary results of financial and business activities, information on the impact of sanctions against the Russian Federation on KMG’s activities*, report on non-arm’s length transactions concluded, decisions on which were made by the Management Board, review of strategy implementation status, key performance indicators and investment projects, report on implementation of KMG’s Consolidated Development Plan, risk report, report on the implementation of the Board of Directors’ decisions, and reports of the chairmen of the Board of Directors’ Committees.

In addition to the above reports, the BoD from time to time identifies matters that need to be reported on immediately, such as, for example, information on the current situation in KMG Group, operational performance, etc., financial performance, significant health and safety incidents in KMG Group companies, including reports on fires (even if such events occurred after the reporting period). The Health, Safety, Environment and Sustainability Committee of KMG’s Board of Directors regularly reviews and discusses reports on implementation of the sustainability system in KMG and its business units and incorporation of sustainability principles into key business processes, as well as information on the status of work on improving the ESG rating.

Nature and Number of Critical Issues

As part of the review of KMG’s HSE information, which is considered at each in-person meeting of the Board of Directors, the instructions were given to promptly inform the Board of Directors’ members of any HSE incidents in KMG Group companies, regardless of the reporting period.

In addition, the Committee considers a status report on the implementation of sustainability at KMG and its business units and the integration of sustainability principles into key business processes, as well as KMG’s ESG risk rating and the status of implementation of the Low-Carbon Development Programme.

KMG Group’s HSE Policy is based on top management’s commitment to HSE issues and is aimed at involving each employee in the development of a safety culture.

Nomination and Selection of Management Body

Procedure for Nomination and Selection of Candidates to the Board of Directors

The procedure for nomination and selection of candidates to the Board of Directors is determined by the KMG’s Charter and other regulatory documents, and implemented by the General Shareholders Meeting together with the Chairman of the Board of Directors and the Chairman of the Nomination and Remuneration Committee, and is governed by the transparent, fair and professional approach to recruitment and employment of candidates.

Members of the Board of Directors are elected from among the candidates nominated as representatives of shareholders and other parties. Candidates to the Board of Directors must have the knowledge, skills and experience necessary to perform their duties and to ensure growth of long-term value and sustainable development, and must also have impeccable business reputation.

The Chairman of the Board of Directors is elected by the General Shareholders Meeting.

Non-executive directors are selected in accordance with the Regulations on Forming the Composition of the Board of Directors/the Supervisory Board of Samruk-Kazyna JSC Companies, approved by the Management Board of Samruk-Kazyna JSC dated 26 September 2016, Minutes No. 35/16.

*For reference

The Company monitors the existing sanctions to minimise negative effects and consequences, taking into account the potential expansion of sanctions, which may have a point impact on the Company’s promising projects. In order to mitigate risks, the Company provides for mechanisms to withdraw from projects or independently implement them in the event of a tightening of the sanctions regime. A working group has been formed to analyse the impact of sanctions on KMG’s operations and develop the necessary actions. Consolidated information on the impact of sanctions on KMG’s operations is periodically provided to KMG’s Board of Directors, the Fund, the Ministry of Energy of the Republic of Kazakhstan and KMG’s interested business units.

Conflict of Interest

The main processes for managing the conflicts of interest in the company are described in the Policy on Managing the Conflict of Interest of Employees and Officers in KMG and its SDEs approved by the Board of Directors of KMG, as well as in the Code of Conduct.

It is the responsibility of every employee, regardless of position, and of every officer of the Company to comply with requirements of this Policy. The Company has now implemented an Initial Disclosure of Potential Conflict of Interest Procedure for employees and/or officers when hiring/appointing/assigning and taking up a new position. This Disclosure includes the following information: 1) Information on beneficial ownership/shareholding and management in companies – Counterparties/Competitors of KMG and its SDEs; 2) Information on participation in the sole and collegial bodies of Counterparties/Competitors of KMG and its SDEs, 3) Information on interaction with Counterparties of KMG and its SDEs; 4) Information on intention to acquire assets and/or securities owned by KMG and/or its SDEs, etc. It is arranged to check for conflicts of interest and compliance with requirements and procedures of KMG’s compliance policies and/or other documents, including presence of signs of affiliation of officers of Samruk-Kazyna JSC Group with persons considered as candidates for employment, appointments to managerial positions, as well as when concluding non-arm’s length transactions. In addition, consent to anti-corruption restrictions under Anti-Corruption Act No. 410-V ZRK dated 18 November 2015 of the Republic of Kazakhstan is collected from the above persons.

Role of the Management Body in Setting Goals, Values, Mission and Strategy

KMG’s Board of Directors is actively involved in strategic planning and implementation of KMG’s Development Strategy.

To monitor KMG’s strategic initiatives and take timely corrective actions, the Board of Directors regularly hears the report by the Chairman of KMG’s Management Board on key business developments, information on occupational health and environmental protection, report on non-arm’s length transactions concluded, decisions on which were made by the Management Board, review of strategy implementation status, key performance indicators and investment projects, report on implementation of KMG’s Consolidated Development Plan, reports of the chairmen of the Board of Directors’ Committees, report on the implementation of decisions of the Board of Directors, as well as reports on the activities of the services reporting to the Board of Directors.

The Board of Directors is responsible for determining the priority areas of KMG’s activities and approving KMG’s Development Strategy, as well as monitoring the implementation of KMG’s Development Strategy.

A scheduled meeting was held on 26 July 2023 to review the Development Strategy and analysis of external factors and their impact on KMG’s Development Strategy 2022–2031 approved by the Board of Directors on 3 November 2021 (Minutes No. 17/2021). The relevance of the current KMG Development Strategy was considered, including its compliance with the ongoing reform of Samruk-Kazyna JSC and external factors, as well as the current status of KMG’s strategy in relation to major oil and gas assets.

The Board of Directors considered a number of strategic issues in 2023:

• Alternative routes of oil delivery to foreign markets
• KMG Group Consolidated Business Plan 2024–2028
• Approval of KMG’s corporate key performance indicators and their target values
• Approval of the structure of KMG’s Central Office
• Report on the Implementation of KMG’s Development Strategy 2028 in 2022
• Issues of implementation of investment projects
• Approval of maps of motivational key performance indicators for managers and their target values
• Conclusion of contracts by KMG for the procurement of oil, procurement and sale of oil products
• Procedure for distribution of KMG’s net income for 2022 and the amount of dividend per common share of KMG
• Issue of KMG bonds and determination of the terms and conditions of KMG bonds issue
• Approval of the KMG Sustainability Report 2022
• Early redemption (repurchase) of medium-term Global Notes due 2025 and determination of early redemption (repurchase) price
• Implementation of buy-back of 50 % of shares of KMG Kashagan B.V. Coöperatieve KazMunaiGaz U.A. from Samruk-Kazyna JSC
• Approval of Roadmaps for the Divestment of KMG’s Non-Strategic Assets
• Approval of KMG’s Non-Strategic Assets List
• Cybersecurity issues
• Relevance of KMG’s Development Strategy 2022–2031

The annual meeting of KMG’s Board of Directors on Sustainable Development was held on 6 October 2023, during which the following topical issues were discussed:

• Sustainable development system and ESG risk rating of KMG
• Disclosures according to TCFD recommendations and new financial reporting standards for KMG
• Status of implementation of KMG’s Low-Carbon Development Programme

The Board of Directors recognises the high priority given to environmental issues, the lives and health of the Company’s employees and its contractors at all its production facilities, human resource development and commitment to the generally recognised global goals of sustainable development, therefore, it defines sustainable development and progressive reduction of carbon intensity of production as one of KMG’s main strategic goals, which is in line with Samruk-Kazyna JSC’s vision, the Republic of Kazakhstan Development Strategy and the agenda of the global investment community.

Role of the Highest Corporate Governance Body in the preparation of Sustainability Report

In accordance with the Company’s Charter, approval of Sustainability Report falls within the competence of KMG’s Board of Directors.

Health, Safety, Environment and Sustainability Committee of KMG’s Board of Directors is the body that reviews and makes a recommendation to the KMG Board of Directors on the approval of the Sustainability Report.

In accordance with the new GRI standards, the disclosure of material topics in the Sustainability Report (GRI 3: Material Topics 2021) is determined in each reporting period and with the direct participation of the members of the Board of Directors.

To confirm the data presented in the Sustainability Report, an independent party verifies it, which, in turn, contributes to increasing the reliability of the information disclosed in the Report and the confidence of investors and, as a result, improving the investment attractiveness of KMG.

Management Body’s Competence and Performance Review

Collective Knowledge of the Management Body Members

The members of the Board of Directors strive to regularly enhance their skills and professionalism, including those related to economic, environmental and social management. The Nomination and Remuneration Committee regularly reviews the current balance of skills and knowledge among the members of the Board of Directors.

Information on training of the members of the Board of Directors is regularly updated on the Company’s website and is available at https://www.kmg.kz/en/sustainable-development/corporate-governance/directors_board/.

Meetings of the Board of Directors, including the separate annual meeting of the Board of Directors on sustainable development, as well as of the Health, Safety, Environment and Sustainability Committee of KMG’s Board of Directors regularly discuss the most relevant topics within ESG (environmental, social, governance) scope, including information on international trends and in-country initiatives.

Management Body’s Performance Review

In accordance with the Corporate Governance Code and on the basis of Methodological Recommendations for Evaluating the Activities of the Board of Directors and its Committees, the Chairman, Members of the Board of Directors and the Corporate Secretary of Samruk-Kazyna JSC, a Regulation on Evaluating the activities of the Board of Directors, Committees of the Board of Directors, Chairman, Members of the Board of Directors and the Corporate Secretary of KMG was developed (hereinafter – Position). The Regulation stipulates that the Board of Directors, Committees and members of the Board of Directors should be evaluated on an annual basis within the framework of a structured process approved by the Board of Directors. At the same time, at least once every three years, the assessment is carried out with the involvement of an independent professional organization.

In 2021, an independent corporate governance audit was carried out in 11 portfolio companies of Samruk-Kazyna JSC, including KMG, by the team of PricewaterhouseCoopers LLP (PwC) for the period from 1 January 2020 to 31 May 2021. This audit assessed performance in five areas: efficiency of the Board of Directors and executive body; risk management, internal control and audit; sustainable development; shareholders’ rights; transparency. Based on the results of the independent audit, KMG approved the 2022–2023 Action Plan to Improve the Corporate Governance of KMG.

Therefore, no separate independent assessment of the Board of Directors was carried out in 2023.

However, a self-assessment of the members of the Board of Directors at the end of 2022 was carried out in 2023 through a questionnaire survey as required in the Corporate Governance Code. The self-assessment questionnaire was developed jointly by the Chairmen of the Nomination and Remuneration Committee and the Board of Directors. The questionnaire consisted of two sections – Composition & Processes and Behaviour & Actions – and 30 questions. Self-assessment results were pre-reviewed at a meeting of the Nomination and Remuneration Committee of the Board of Directors, during which it was recommended that the Chairman of the Board of Directors together with the Chairman of the Nomination and Remuneration Committee of the Board of Directors discuss the following aspects when discussing the performance self-assessment of the Board of Directors for 2022:

• Diversity in all aspects;
• Succession plan and the process for electing the members of the Board of Directors;
• KMG’s Strategy;
• Professional development and training.

At the December 2023 meeting of KMG’s Board of Directors, the issue of assessment of the KMG’s Board of Directors performance at the end of 2023 was considered. The purpose of the annual self-assessment is to identify the trends based on questionnaires completed by members of the Board of Directors. KMG’s Board of Directors decided to assess KMG’s Board of Directors’ performance in 2023 through a self-assessment in order to identify provisions requiring attention and to compare the results with the previous ones.

At the meeting of the Board of Directors of KMG dated March 7, 2024, the Report on the results of the self-assessment of the activities of the Board of Directors for the year 2023 was considered. By the decision of the Board of Directors dated April 10, 2024, an action plan was approved to improve the activities of the Board of Directors of JSC NC KazMunayGas.

Remuneration Determination Policy and Process

The remuneration level for members of KMG’s Board of Directors is set based on the Decision of the General Shareholders Meeting in accordance with the contracts with members of KMG’s Board of Directors.

The remuneration of the members of KMG’s Board of Directors is fixed. However, the Chairman of the Board of Directors also has additional remuneration for chairing the Board of Directors in addition to the fixed remuneration.

According to the Corporate Governance Code, “the remuneration level of the Board of Directors’ members should be sufficient to attract, retain and motivate each Board of Directors member to the level required for successful management of the company. Remuneration to a member of the Board of Directors of the company is determined in accordance with the procedure developed by Samruk-Kazyna JSC considering the expected benefit for the Company from participation of this person in the Board of Directors”. Also, according to the Corporate Governance Code, no person may participate in decisions relating to their own remuneration.

The procedure for determining the remuneration is determined by the General Shareholders Meeting. Resolution of the Management Board of Samruk-Kazyna JSC dated 26 September 2016 (Minutes No. 35/16), approved the Regulations on Forming the Composition of the Board of Directors/the Supervisory Board of Samruk-Kazyna JSC Companies, including, among other things, the procedure for determining the remuneration for members of the Board of Directors.

Pursuant to Section 3 of the Regulations, Remuneration and Reimbursement of Expenses, the remuneration depends on responsibilities of directors, scale of the Company’s operations, and the long-term goals and objectives set out in the development strategy and business plan. Remuneration is paid to non-executive directors. Representatives of Samruk-Kazyna JSC in the Board of Directors of SamrukKazyna JSC Group companies are remunerated on the basis of the resolution of the Management Board of Samruk-Kazyna JSC. In order to form competitive remuneration to attract and retain professional directors, the maximum annual remuneration amounts are set by the resolution of the Fund’s Management Board for certain sectors of the Fund’s assets. The maximum annual remuneration amounts (limits) are set in comparison with the remuneration amounts accepted in similar companies.

In 2023, KMG did not engage consultants to determine the remuneration of members of the Board of Directors.

Stakeholders’ Involvement in Remuneration

The procedure for determining the remuneration is determined by the General Shareholders Meeting of KMG – Samruk-Kazyna JSC. In accordance with the Corporate Governance Code, the Nomination and Remuneration Committee of the Board of Directors makes proposals on the level of remuneration of candidates for non-executive directors.

Meetings of the Nomination and Remuneration Committee of KMG’s Board of Directors discuss issues related to remuneration of members of KMG’s Board of Directors, as necessary.

During the reporting period, the Nomination and Remuneration Committee of the Board of Directors has reviewed the results of the performance self-assessment of KMG’s Board of Directors at the end of 2022, which included assessment of the level of remuneration of KMG’s Board of Directors’ members.

For more detailed information on GRI 2-12, 2-20, 2-21 (risk management, remuneration of the Board of Directors), see KMG’s 2023 Annual Report at KMG website: https://www.kmg.kz/en/investors/reporting/.