OPEN JOINT-STOCK COMPANY SEVERSTAL CHARTER (NEW EDITION)

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1 Working translation from Russian APPROVED: by the General Shareholders Meeting of OAO Severstal on December 30, 2011 Minutes 3 dated January 10, 2012 General Director of OAO Severstal Mordashov A. A. OPEN JOINT-STOCK COMPANY SEVERSTAL CHARTER (NEW EDITION) City of Cherepovets 2011

2 Open Joint-Stock Company "Severstal" has been founded in accordance with Decree #721 of the President of the Russian Federation "On organizational measures on conversion of state enterprises, voluntary associations of state enterprises into joint-stock companies", dated July 1, CLAUSE 1. FOUNDERS OF THE COMPANY 1.1. The founder of the Company is the Committee for the management of assets of Vologda regional administration. CLAUSE 2. NAME AND LOCATION OF THE COMPANY 2.1. The full Company's name is Otkrytoie aktsyonernoie obshchestvo "Severstal". The abbreviated Company's name is OAO "Severstal". The abbreviated Company's name in English is: OAO Severstal The location of the Company is as follows: the Russian Federation, , Vologda region, Cherepovets, ulitsa Mira, 30. The location of the Company is defined as the place of its state registration, and also as the location of its sole executive body The postal address of the Company: the Russian Federation, , Vologda region, Cherepovets, ulitsa Mira, 30. CLAUSE 3. LEGAL STATUS OF THE COMPANY 3.1. The Company is a legal entity, its activities being regulated by the law of the Russian Federation and the present Charter The Company acquires the rights and duties of a legal entity from the moment of its state registration in accordance with the procedure established by the law of the Russian Federation The Company owns the property reflected on its independent balance, including the assets transferred to it by shareholders in exchange for shares. The Company enjoys the rights of ownership of the assets, i.e. the right of possession and of use and disposal. The assets of the Company are not subject to requisition and confiscation by administrative order, except for the cases stipulated by the law of the Russian Federation The Company on its own behalf has the right to conclude transactions, acquire the right of ownership and other rights, perform duties, and be a claimant and a defendant in the court The Company has the right to establish its branches and representative offices in the territory of the Russian Federation as well as abroad The Company has the right to participate in activities, and to found enterprises, establishments and organizations, stipulated by the current law of the Russian Federation and the law of foreign states, both in the territory of the Russian Federation and beyond it On a voluntary basis, the Company has the right to be a part of any unions, associations or other corporate combinations in accordance with the law of the Russian Federation The Company bears no liability for the obligations of its shareholders. The Company's shareholders bear no liability for the obligations of the Company; they only assume the risk of loss connected with the Company's activities up to a maximum amount equal to the cost of the shares owned by them, unless otherwise stipulated by the law of the Russian Federation. 2

3 The shareholders who have not paid for their shares in full bear joint liability for the obligations of the Company up to a maximum amount equal to the cost of the shares owned by them The State and its bodies bear no liability for the Company's obligations; the Company bears no liability for the obligations of the State and its bodies Should the Company be declared an insolvent debtor (bankrupt), its shareholders will bear responsibility for the same only in cases specified and in accordance with the procedures established by the law of the Russian Federation The Company has a round seal containing in full the Company's name and an indication of its location. The seal may contain the abbreviated name of the Company in any foreign language or language of any nation of the Russian Federation. The Company is entitled to possess stamps, letterheads and an emblem as well as its trademark registered in accordance with an established procedure, and any other means of visual identification The Company has the right to open bank accounts both in roubles and foreign currency and any other accounts in the territory of the Russian Federation and beyond, in accordance with the established procedure The Company may implement all kinds of foreign trade activities in accordance with the law of the Russian Federation Insurance of the Company's assets and the Company's activities is provided and maintained in accordance with the law of the Russian Federation and other applicable law Workers of the Company are subject to compulsory health insurance and social security in accordance with the conditions stipulated by the law of the Russian Federation. The Company performs all necessary mobilisation and civil defence actions specified by the law of the Russian Federation and also makes provisions for safe keeping and security of documents concerning the Company's staff and line as well as their timely transfer to the State archives in case of reorganization and liquidations of the Company The Company enjoys other rights and fulfils other duties in accordance with the law of the Russian Federation. Branches and representative offices of the Company established outside the Russian Federation are governed in their activity by the law of the countries, in which they are located The Company is founded without any limitation of its period of activity Company s principal activities include working with information classified as state secret. Information classified as state secret can only be accessed by those persons who have the relevant level of access to secret information. CLAUSE 4. SUBJECT AND AIMS OF THE COMPANY'S ACTIVITIES 4.1. The basic aim of the Company is to receive the profit and to use it in the Company's interests The Company has the right to implement any kind of business activity except for those prohibited by the Russian Federation law. Some kinds of activities, the list of which is determined by the law of the Russian Federation, can be implemented by the Company only on the basis of special permissions (licenses) The Company independently organises protection of the data constituting its trade secrets. The composition and volume of the data constituting trade secrets as well as the procedure for their protection is determined by the Company's Board of directors and the General Director in accordance with the law of the Russian Federation. 3

4 The General Director, the members of the Board of directors as well as all the Company's employees are obliged to keep trade secrets of the Company strictly confidential. CLAUSE 5. CHARTER CAPITAL OF THE COMPANY. PURCHASE OF SHARES OF THE COMPANY 5.1. The charter capital of the Company amounts to ,55 (ten million seventy seven thousand and thirteen roubles and fifty five kopecks). The Company's charter capital is divided into of ordinary nominal shares with the face-value of 0,01 roubles each (100 % of the charter capital) The charter capital defines the minimum amount of the Company's assets that guarantee the interests of its creditors The amount of the charter capital may be changed in accordance with the procedure established by the law of the Russian Federation and the present Charter The Company's charter capital may be enlarged by increasing the face value of shares or by placing additional shares A decision to increase the Company's charter capital by increasing the face value of shares shall be made by the shareholders in the General Shareholders Meeting. A decision to increase the Company's charter capital by placing additional shares shall be made by the Company's Board of directors, except for in the cases when, pursuant to the current law, the charter capital may be increased exclusively pursuant to a decision of the shareholders in a General Shareholders Meeting Additional shares may be placed by the Company up to a maximum limit equal to the quantity of the declared shares established by this Charter. A decision to increase the Company's charter capital by placing additional shares may be taken by the shareholders in a General Shareholders Meeting simultaneously with the decision to amend this Charter by including the provisions on declared shares or by revising such provisions, as necessary for such placement A decision to increase the Company's charter capital by placing additional shares, should include the quantity of placed additional ordinary shares and preferential shares of each type defined within the limits of the quantity of the declared shares of each category (type); details of the manner of the placing, the price of the placing of the additional shares placed by means of a subscription or the procedure for the same, including the price of placing or the order of determination of the price of placing the additional shares among the shareholders having the priority right of acquiring the same, the form of payment for the additional shares placed by means of a subscription, and any other conditions of the share placing, as appropriate An increase of the Company's charter capital may be done at the expense of the Company's assets The Company is entitled, and in the cases stipulated by the Russian Federation law, is obliged to reduce its charter capital. The Company's charter capital may be reduced by either diminishing the face value of shares or diminishing the total quantity of shares, which can be done through the acquisition and the redemption of part of the total shares, respectively A decision to reduce the Company's charter capital by either diminishing the nominal value of shares or by acquiring a part of shares with the purpose of reducing their total quantity, is taken by the shareholders in a General Shareholders Meeting. 4

5 5.11. The Company is obliged to notify its creditors of a reduction of the Company's charter capital in accordance with the procedure and in the form established by current law The Company is entitled to purchase its own shares for purposes other than the reduction of their total number, upon a decision of the Board of directors (clause 2, article 72 of the Federal Law On joint stock companies ). Shares purchased pursuant to this clause of the Charter may be paid for in cash and/or any other property (including securities issued pursuant to foreign law outside the Russian Federation and any other things recognised as property, rights, or objects pursuant to foreign law). Shares purchased by the Company pursuant to this clause of the Charter must be disposed of (divested) in accordance with the procedure and within the time limits established by current law. ARTICLE 6. SHARES, BONDS AND OTHER SECURITIES ISSUED BY THE COMPANY 6.1. The Company is obliged to provide for the safekeeping and security of the Company's shareholders register in accordance with legal acts of the Russian Federation from the moment of state registration of the Company The holder of the Company's shareholders register (hereinafter referred to as the registrar) is a professional participant of the securities market authorised to keep a register of security holders The registrar of the Company, on demand of a shareholder or a nominal holder of shares is obliged to confirm that shareholder s rights to the shares by issuing an appropriate abstract from the Company's shareholders register that is not considered a security by itself. Shares of the Company 6.4. The Company places ordinary shares and has the right to place one or several types of preferential shares. All shares of the Company are registered and are issued in book-entry form The face value of the Company's ordinary shares should be identical Shares of the same category may differ in type. The percentage of preferential shares may comprise not more than 25 per cent of the charter capital. The procedure for a share issue and registration is defined by the current law of the Russian Federation. Bonds and other securities issued by the Company 6.7. The Company has the right to place bonds and other emissive securities, stipulated by the current law of the Russian Federation The placing of bonds and other securities issued by the Company is implemented by a decision of the Company's Board of directors, except for the cases, when, pursuant to current law, the placing of bonds and other issued securities may be implemented exclusively by a decision of the shareholders in a General Shareholders Meeting of the Company. A decision on the issue of bonds should specify the form, terms and other conditions of the bonds redemption. 5

6 Payment for shares and other securities issued by the Company 6.9. Payment for the shares placed by means of a subscription, may be effected by money, securities (including those issued pursuant to foreign law outside the Russian Federation), property rights or other rights and objects having money's worth (including objects recognised as property rights or objects pursuant to foreign law). Ways of placing shares and other securities issued by the Company The Company has the right to place additional shares and other issued securities by any means provided by current law The Company has the right to place shares and issued securities, including those convertible into shares, through either open or closed subscription. ARTICLE 7. RIGHTS AND RESPONSIBILITIES OF THE COMPANY S SHAREHOLDERS 7.1. Each ordinary share gives its owner a right to have one vote in a General Shareholders' Meeting, except in the case of cumulative voting Holders of ordinary shares have the right: - to participate in the management of the Company in accordance with the procedure stipulated by the present Charter and current law; - to participate in General Shareholders' Meetings with the right to vote on all questions within his/her competence; - to receive a part of the profit (dividends) from the Company's activities (provided a relevant decision is taken by the shareholders in a General Shareholders Meeting); - to receive a part of the Company's assets in the event of a liquidation of the Company. Shareholders have other rights provided by current law, this Charter and internal documents of the Company Shareholders are obliged: - to respect the requirements of the present Charter; - not to commit actions inflicting any damage to the Company; - to pay for shares in accordance with the provisions stipulated by the current law of the Russian Federation and the present Charter; - not to disclose any confidential information relating to the Company's activity, and to keep business secrets; and - timely inform the Company of any change of their residence and other details contained in the Company's shareholders register. Neither the Company nor the registrar bears any responsibility for losses incurred by the shareholders as a result of the failure by that shareholder to submit information about themselves. Shareholders also have other responsibilities provided by current law, this Charter and internal documents of the Company Shareholders that possess voting shares have the right to demand the redemption by the Company of all or a part of the shares owned by them in cases and on conditions established by current law Events obliging the Company to and the procedure for forwarding to its shareholders voluntary and compulsory offers to purchase shares, events or activities by another shareholder of the 6

7 Company creating the right of shareholders to demand redemption of shares owned by them and the procedure for implementing the aforesaid right, and events causing and the procedure for compulsory redemption of shares (upon demand of one of the shareholders) shall be determined by current law. ARTICLE 8. ASSETS, FUNDS, PROFIT AND REIMBURSEMENT OF DAMAGES 8.1. The assets being the property of the Company are formed at the expense of: - balance-sheet assets of the Company, except for the assets transferred to the Company on a different legal basis; - proceeds from the issuance and placement of shares and other securities; - proceeds from the sale of goods, products, work performed and services rendered; and - other receivables not prohibited by the Russian Federation law Risk of any accidental loss or damage of the assets transferred by a shareholder to the Company for temporary use is incurred by the shareholder The Company creates an emergency fund in the amount of 5 % of its charter capital. Formation of the emergency fund is realised by annual deductions until achieving a fund of the indicated size. The emergency fund of the Company is intended to cover its losses, and also for settlement of any bonds of the Company and the redemption of shares of the Company in case of absence of other remedies. The emergency fund may not be used for other purposes. The Company may create other funds necessary for its activity. The purpose and the order of formation of funds, their size, and also directions of use of their remedies, are defined in the appropriate provisions affirmed by the Company's Board of directors The balance and net profit of the Company are established in accordance with the procedure stipulated by the law of the Russian Federation The profit received by the Company and remaining at the command of the Company after tax payment (net profit), is used pursuant to decisions of the shareholders in General Shareholders Meetings and the Board of directors taken within the scope of their competence, including to pay dividends on the Company s shares On the basis of the results of the first quarter, six months, and nine months of a financial year and/or by the results of a financial year, the Company has the right to declare a disbursement of dividends on the placed shares, unless otherwise is specified by the Federal Law "On joint-stock companies" and other normative acts. Dividends are paid from the net profit of the Company for a relevant reporting period and retained earnings from prior periods. The Company shall pay dividends declared on the shares of each category (type). Dividends are paid in money and/or, if a relevant decision is taken by the shareholders in a General Shareholders Meeting, in other assets (including securities issued pursuant to foreign law outside the Russian Federation and other objects recognised as property rights or objects pursuant to foreign law). The form and procedure of payment and the amount of dividends shall be determined by the shareholders in a General Shareholders' Meeting. The amount of dividends based on the results of the first quarter, six months, or nine months of a financial year and/or by the results of a financial year is determined by the shareholders in a General Shareholders' Meeting, such amount not being more than that recommended by the Company's Board of directors. The period of the dividends disbursement shall not be more than 60 (sixty) days since the date of the decision by the shareholders in a General Shareholders Meeting on the disbursement of 7

8 dividends. The list of the persons having the right of to receive the dividends is compiled as of the date determined pursuant to current law. Dividends shall be paid within the term which was stipulated by the Company charter edition being in force at the date when the decision on such dividends payment has been taken. Any later changes to the present Charter in respect of the term of dividends payment shall not change the term of dividends payment declared earlier, unless otherwise is stipulated by a relevant decision on amendments to the present Charter. CLAUSE 9. STRUCTURE OF THE COMPANY'S MANAGEMENT AND SUPERVISION BODIES 9.1. The Company s management bodies are as follows: The General Shareholders Meeting; The Board of directors; and The General Director as a sole executive body The rights, competence, and rules of work of the Company's management are determined by the Russian Federation law, the present Charter and by-laws of the Company. If the competence of a management body of the Company is changed due to amendments to this Charter (including adoption of a new version of the Charter), all decisions previously taken by such body acting within the scope of its competence shall irrevocably remain in full force and effect and shall not require additional approvals The Company's Internal Audit Commission is the Company's financial and economic activity supervision body. CLAUSE 10. GENERAL SHAREHOLDERS' MEETING Competence of General Meeting The Company's General Shareholders' Meeting is a supreme management body of the Company. The annual General Shareholder s Meeting is conducted once a year, not earlier than two months and not later than six months after the termination of a fiscal year. The annual meeting is convened by the Board of directors. Any other shareholders' meeting, except for the annual one, is considered extraordinary. Extraordinary General Shareholders Meetings are held in accordance with a procedure stipulated by the Federal law "On joint-stock companies", the present Charter and internal documents of the Company The competence of General Shareholders' Meeting includes: Introduction of changes and addenda to the Company's Charter or approval of a new Company's Charter edition; Reorganisation of the Company; Liquidation of the Company, appointment of the liquidating commission and approval of intermediate and final liquidation balance sheets; Determination of the number of members of the Company's Board of directors, election of the Board's members and the early termination of their authority; Determination of quantity, face value, category (type) of the declared shares and the rights given by these shares; 8

9 Increase of the charter capital of the Company by increasing the face value of shares or by placing additional shares only in cases, when, pursuant to current law, the charter capital may be increased by placing additional shares exclusively by decision of the General Shareholders Meeting; Reduction of the charter capital of the Company by reducing the face value of shares or through acquiring by the Company of a part of shares with a view of reducing their total quantity or through redemption of the shares acquired or purchased by the Company; Formation of the executive body of the Company and the early termination of its authority; Election of members of the Company's Internal Audit Commission and the early termination of its authority; The approval of the Company's auditor; The approval of annual statements, annual accounting and reporting documents, including reports on profit and loss (profit and loss accounts) of the Company as well as distribution of the profit, including disbursement of dividends, with the exception of profit, distributed as dividends by the results of the first quarter, half year, the first nine months of a fiscal year and distribution of the Company's loss at the end of a fiscal year; Determination of the procedure for a General Shareholders' Meeting; Split and consolidation of shares; Adoption of decisions on approval of transactions in the cases stipulated by current law; Adoption of decisions on approval of major transactions in the cases stipulated by current law; Acquisition by the Company of the placed shares pursuant to clause of this Charter; Decision making about participation in financial and industrial groups, associations and other commercial corporations; Approval of the internal documents regulating the activities of the Company's bodies; and Decisions on other matters stipulated by the Federal law "On joint-stock companies" and this Charter The matters referred to the competence of the General Shareholders' Meeting cannot be transferred to the competence of the Company's executive body for decision-making. The matters referred to the competence of the General Shareholders' Meeting, can not be transferred to the competence of the Company's Board of directors for decision-making, except for the matters stipulated by the Federal law "On joint-stock companies" The shareholders in a General Shareholders Meeting shall take decisions on all matters referred to the scope of its competence by a simple majority of votes of shareholders, unless current law provides for a larger number of votes for taking certain decisions. The decision on the matters specified in items , , , shall be taken by the shareholders in a General Shareholders' Meeting only when proposed by the Company's Board of directors. Information on conducting General Shareholders Meeting The notice on conducting the General Shareholders' Meeting is to be published no later than 30 days prior to the date of the meeting. 9

10 If the extraordinary General Shareholders Meeting agenda contains an item on the election of the Company Directors, the notice on the conducting of the extraordinary General Shareholders Meeting is to be published no later than 70 days prior to the date of the meeting. Within the period mentioned the notice on the conducting the General Shareholders Meeting is to be published in the newspapers: СЕВЕРСТАЛЬ Российская сталь (SEVERSTAL Russian steel) (Cherepovets) and «Российская газета» ( The Russian Newspaper ). The Company has the right to additionally inform the shareholders about the conducting of the General Shareholders Meeting by any other means. Before the General Shareholders Meeting (annual or extraordinary), voting ballots shall be directed to each person specified in the list of persons, having the right to participate in the General Shareholders' Meeting, to be signed within the period no later than 20 days before the conducting of the General Shareholders Meeting. Dispatch of ballots is done by means of registered mail. Quorum of General Shareholders' Meeting The General Shareholders' Meeting is authorised (has quorum) if the shareholders taking part in the meeting have in aggregate more than half of the votes in relation to placed voting shares of the Company. The shareholders registered for participation in the General Shareholders' Meeting and shareholders whose bulletins have been received not later than two days before the date of the meeting are considered taken part in the General Shareholders' Meeting. Terms for the beginning and the termination of registration for participation in the General Shareholders' Meeting are determined by the Company's Board of directors and are specified in the notice convening the meeting. The shareholders whose bulletins have been received prior to the date of closing the submission of bulletins are considered to take part in the General Shareholders' Meeting in the form of an absentee ballot. If the agenda of the General Shareholders' Meeting includes issues the voting on which is to be carried out by different contingents of votes, determination of quorum for the decision making on those issues is done separately. Thus, absence of quorum for decision making on issues, voting on which is carried out by one contingent of votes, does not interfere with decision making on issues, voting on which is carried out by any other contingent, for which the quorum is present If quorum for conducting the annual General Shareholders' Meeting is absent, a repeated General Shareholders' Meeting with the same agenda should be held. If quorum for conducting an extraordinary General Shareholders' Meeting is absent, a repeated General Shareholders' Meeting with the same agenda may be held. A repeated General Shareholders' Meeting is competent (has quorum) if the shareholders taking part hold in aggregate no less than 30 per cent of the votes of placed voting shares of the Company. When conducting a repeated General Shareholders' Meeting less than 40 days after the failure of the initial General Shareholders' Meeting, the persons having the right to participate in the General Shareholders' Meeting shall be determined according to the list of the persons who had the right to participate in the failed General Shareholders' Meeting. 10

11 Motions in the agenda of the General Shareholders Meeting The shareholders (shareholder) being in aggregate the owners of no less than 2 per cent. of voting shares of the Company, have the right to bring forward their motions to the agenda of the annual General Shareholders' Meeting and to put forward candidates to the Company's Board of directors and the Company's Internal Audit Commission, the number of nominees may not exceed the number of seats in the relevant body. Such motions should be submitted to the Company no later than 60 days after the termination of a fiscal year. In the event that the offered agenda of extraordinary General Shareholders' Meeting contains a question on the election of members of the Company's Board of directors which should be elected by cumulative voting, the shareholders (shareholder) of the Company being in aggregate the owners of no less than 2 percent of the Company s voting shares shall have the right to offer their candidates for election to the Company's Board of directors whose number may not exceed the approved number for the Board of directors. Such motions should be submitted to the Company no less than 30 days prior to date of conducting the extraordinary General Shareholders' Meeting The motion on entering issues in the agenda of a General Shareholders' Meeting and the nominations of candidates are to be filed in writing with indication of the names of the shareholders who have presented them, amounts and categories (types) of the shares owned by them and such filings are to be signed by shareholders. The motions to enter issues into the agenda of General Shareholders' Meeting should contain the formulation of each proposed issue and the nominations of candidates the name and identification of document information (series and (or) number of the document, date and place of issuance, body issuing the document) for each proposed candidate, the name of the body into which the candidate is being nominated for election, as well as other data about him, as stipulated by the internal documents of the Company. The motions entered in the agenda of General Shareholders' Meeting may contain the formulation of the decision on each proposed issue. The shareholders in a General Shareholders' Meeting have no right to adopt resolutions on issues which have not been included in the agenda. Extraordinary General Shareholders' Meeting All General Shareholders Meetings are considered extraordinary, except for the annual ones. Extraordinary General Shareholders' Meeting are conducted pursuant to a resolution of the Company's Board of directors at its own initiative, or a demand of the Company's Internal Audit Commission, the Company's auditor, or a shareholders (shareholder) that own no less than 10 per cent of the Company s voting shares as of the date the demand is presented Assembly of an extraordinary General Shareholders' Meeting on the demand of the Company's Internal Audit Commission, the Company's auditor or the shareholders (shareholder) that own no less than 10 per cent of the Company s voting shares, is carried out by the Company's Board of directors An extraordinary General Shareholders' Meeting assembled on the demand of the Company's Internal Audit Commission, the Company's auditor or the shareholders (shareholder) that own no less than 10 per cent of voting shares of the Company should be conducted within the time period established by current law The form and contents of the demand to convene an Extraordinary General Meeting shall comply with current law, this Charter and internal documents of the Company. 11

12 A decision to refuse to convene an Extraordinary General Shareholders Meeting on demand of the Company's Internal Audit Commission, or the Company's auditor or the shareholders (shareholder) that own no less than 10 per cent of voting shares of the Company, may be adopted in the following situations: - the procedure for making a demand to convene an Extraordinary General Shareholders Meeting, as established by current law, has not been observed; - the shareholders (shareholder) initiating the assembly of an Extraordinary General Shareholders' Meeting are not the owners of the number of voting shares required for making such demand; - none of the issues proposed for the agenda of the Extraordinary General Shareholders' Meeting are within its competence and (or) meet the demands of the Federal law "On joint-stock companies" and other legal acts of the Russian Federation. Forms of conducting the General Shareholders Meeting A resolution of the shareholders in a General Shareholders' Meeting may be adopted by way of holding the meeting (i.e. the joint presence of shareholders for the discussion of the agenda issues and decision making on those issues which have been put to vote,with a preliminary direction of bulletins for voting before the meeting is held) A resolution of the shareholders in a General Shareholders' Meeting may also be adopted without conducting a meeting (i.e. without the joint presence of shareholders for the discussion of the agenda issues and adoption of decisions on those issues which have been put to vote) by conducting an absentee ballot. Shareholders whose bulletins have been received before the final date for the collection of bulletins shall be considered to have taken part in the General Shareholders' Meeting conducted in the form of absentee ballot. The form of the General Shareholders Meeting shall be determined by the bodies or persons convening the meeting, unless otherwise provided by current law. Procedure for shareholders participation in the General Shareholders' Meeting The quantity of votes of a shareholder is determined by the quantity of shares he owns, calculated on the basis of a proportion of one placed voting share per one vote, except in the event of cumulative voting the election members of the Company s Board of directors A representative of a shareholder may participate in the General Shareholders' Meeting, provided his authority is confirmed pursuant to regulatory acts of the Russian Federation The General Shareholders' Meeting is conducted by the Chairman of the Board of directors, unless by decision of the Board of directors of the Company the functions of the chairman of the meeting are entrusted to another person. If the person presiding, pursuant to this clause, at the Extraordinary General Shareholders Meeting convened by the decision of the persons entitled to demand the assembly of an Extraordinary General Shareholders Meeting, is absent, the chairman of the General Shareholder s Meeting shall be the person who took the decision to convene the Extraordinary General Meeting (his representative), or, if the decision to convene the General Shareholder s Meeting was taken by several shareholders one of such persons, determined by their decision Voting on the issues in the agenda of the General Shareholders' Meeting is implemented by bulletins for voting. 12

13 The Counting Commission (the registrar of the Company) Functions of the counting commission are discharged by the registrar of the Company (registrar) The registrar checks authorities and registers the persons participating in the General Shareholders' Meeting, defines quorum of the General Shareholders' Meeting, explains the issues arising in connection with realisation by shareholders (or their representatives) of their right to vote at the General Meeting, explains the voting procedure on the issues intended for voting, provides the established voting procedure and rights of shareholders for their participation in voting, polls and sums up voting, makes up the report on results of voting, and transfers voting bulletins to the archive. CLAUSE 11. THE COMPANY S BOARD OF DIRECTORS General provisions The Board of directors carries out the general management of the Company s activities, except for resolving on matters referred to the competence of the General Shareholders' Meeting. The Board of directors is accountable to the General Shareholders' Meeting and organises the execution of the resolutions of the latter The Chairman of the Company's Board of directors is a member of the Company s Board of directors elected by the other members of the Company's Board of directors by a majority of votes of the total number of members of the Board of directors as determined by this Charter. The Board of directors may re-elect its Chairman at any time by the same number of votes. The Chairman of the Company's Board of directors organises its work, convenes the sessions of the Board of directors and presides over them, maintains protocol at sessions, and discharges other duties provided by current law, this Charter, internal documents of the Company and decisions of the Board of directors. The Chairman of the Company's Board of directors or other person authorised by the Board of directors concludes an agreement on behalf of the Company with the General Director; the agreement contains information on his rights and obligations while managing current activities of the Company. In the event of absence of the Chairman of the Company's Board of directors, his functions are performed by one of the other members of the Company's Board of directors by decision of the Board of directors, and functions specified by clause of this Charter may be performed by a person who is not a member of the Board of directors of the Company Members of the Company's Board of directors are elected by the shareholders in a General Shareholders' Meeting through the cumulative voting, and remain members for the period until the next annual General Shareholders' Meeting. If the annual General Shareholders' Meeting was not conducted within the period established by current law, the authority of the Company's Board of directors will cease, except for the authority to prepare, convene and conduct the annual General Shareholders' Meeting. From the moment the decision to elect new members of the Board of directors is taken, the authority of the former Board of directors shall cease. The authority of the Chairman of the Board of directors shall also cease, even if the person who was Chairman of the Board of directors is re-elected to the Board of directors. The procedure of convening and holding the first meeting of the Board of directors of the Company after its re-election shall be determined by internal documents of the Company. 13

14 Each members of the Company's Board of directors must be an individual. A member of the Company's Board of directors may not be a shareholder of the Company. The persons elected to the Company's Board of directors, may be re-elected an unlimited number of times. The person fulfilling the functions of a sole executive body may not be simultaneously the Chairman of the Company's Board of directors Elections of members of the Board of directors are implemented by cumulative voting. At cumulative voting the votes belonging to each shareholder are multiplied by the number of persons which should be elected to the Company's Board of directors, and the shareholder has the right to give the votes received thus completely for one candidate or to distribute them between two and more candidates. The candidates to the Company's Board of directors, who collected the greatest number of votes, are considered elected. The shareholders may decide in a General Shareholders' Meeting to terminate the authorities of all (but not some) members of the Board of directors prematurely By a decision of the shareholders in a General Shareholders' Meeting, remuneration may be paid to members of the Company's Board of directors during execution of their duties and/or by way of compensation for their expenses connected to the execution by them of the functions of members of the Company's Board of directors. The amount of such remuneration and/or compensation is established by the decision of the shareholders in a General Shareholders' Meeting. Unless otherwise provided for by decision of the shareholders in a General Shareholders Meeting, remuneration established pursuant to this clause of the Charter of the member of the Board of directors, whose authority was terminated before expiration of his term of office (i.e. before expiration of the term specified by clause of this Charter) for any reason whatsoever (including by reason of filing with the Company a notice of divesting himself from authority, terminating discharge of his duties or any similar notice), is paid pro rata to the portion of his term of office that expired before its termination The following issues refer to the competence of the Company's Board of directors: Determination of priority directions for the Company s activities; Assembly of annual and extraordinary General Shareholders Meetings, except for the cases stipulated by current law; The approval of the agenda of the General Shareholders' Meeting; Determination of the date for compiling the list of the persons having the right to participate in the General Shareholders' Meeting, and other questions related to the preparation and conduct of the General Shareholders Meeting within the competence of the Company's Board of directors according to current regulatory acts of the Russian Federation; Placing by the Company of bonds and other issued securities except for the cases when, pursuant to current law, the Company may place bonds and other issued securities exclusively pursuant to a decision of the shareholders in a General Shareholders Meeting; Determination of the price (a pecuniary estimation) of assets, the price of placing and the redemption of issued securities in the cases stipulated by the Federal Law "On joint-stock companies"; Acquiring the shares placed by the Company, bonds and other securities in the cases stipulated by the Federal Law "On joint-stock companies", including redemption by the Company of its placed securities for purposes other than reduction of their total number (clause 2, article 72 of the Federal Law On joint stock companies, clause 5.12 of this Charter); Recommendations for the amount of remuneration and compensation paid to members of the Company's Internal Audit Commission; and determination of the amount of remuneration paid for the services of the auditor; 14

15 Recommendations for the amount of the dividend on shares and the procedure for its disbursement; Use of the emergency fund and other funds of the Company; The approval of internal documents of the Company regulating activity of committees of the Board of directors of the Company and the Corporate Governance Code of the Company; Opening of branches and representative offices of the Company and their liquidation, entering of respective alterations and addenda to the Company's Charter; Approval of large-scale transactions in the cases stipulated by current law; Approval of interested party transactions in cases stipulated by current law; The approval of the registrar of the Company and provisions of the contract concluded with him as well as termination of that contract; Approval of transactions, whose amount exceeds 10 per cent of the book value of assets of the Company as at the date of decision making on the conclusion of such transactions; Approval of transactions for the acquisition of (1) shares or participation interests or rights to the aforesaid shares or participation interests or (2) fixed assets or intangible assets, if the amount of a relevant transaction exceeds the equivalent of US$500 million using an applicable exchange rate, notwithstanding the correlation of such amount with the value of the Company s assets; Review of the consolidated budget of the Company s group of companies and submission of recommendations related to such budget; Review of the appointment and remuneration policy in respect of the chief officials of the Company, including the General Director, and submission of recommendations related to such policy; Approval of internal documents of the Company regulating the procedure for providing access to insider information, confidentiality rules and monitoring of compliance with the requirements of insider legislation, as well as any other issues on handling insider information of the Company; and Other questions stipulated by current law and this Charter Sessions of the Board of directors The Board of directors consists of 10 (ten) persons Terms and the procedure for convening and conducting of the sessions, and also the method of adoption of decisions by the Company's Board of directors is determined by the Regulation on the Company's Board of directors The quorum for conducting a session of the Board of directors is determined by the presence of no less than half of the number of the elected members of the Board of directors. In a case when the number of members of the Company's Board of directors becomes less than the number required for quorum, the Company's Board of directors is obliged to take a decision on conducting the Extraordinary General Shareholders' Meeting for election of a new team of the Company's Board of directors. The remaining members of the Company's Board of directors have the right to make a decision only on convocation of such an Extraordinary General Shareholders' Meeting. In those cases when in accordance with this Charter or current law the decision is taken by the majority of two thirds, three quarters, unanimously by all members of the Board of directors or by another number of votes disregarding the votes of the retired members of the Board of directors, the following categories of persons shall be considered as retired: - the deceased, missing or disqualified persons; - the persons who voluntarily divested themselves of the authority of a member of the Board of directors due to health reasons, in case of conflict of interest and other cases upon the written 15

16 application of the retiring member of the Board of directors, and the date, on which the Company received a relevant application shall be considered to be retirement day; - the persons, whose authority as members of the Company s Board of directors is terminated or suspended by the consummated law-enforcement representative offices decisions. While determining the quorum and the results of voting, the written opinion of a member of the Company's Board of directors absent from the meeting of the Board of directors on the issues of the agenda may be taken into consideration Decisions on the issues specified in items and hereof are to be adopted by the majority of two thirds of the votes of the total number of members of the Board of directors of the Company disregarding the votes of retired members of the Company's Board of directors. Election and re-election of the Chairman of the Board of directors of the Company shall be made by the number of votes specified in clause hereof. On all other questions of the decision of the Board of directors are accepted by simple majority of voices of members of the Company's Board of directors, participating in the meeting, unless current law provides for a different number of votes for taking decisions. While making decisions at session of the Company's Board of directors each member of the Company's Board of directors has one vote The Company's Board of directors appoints a corporate secretary (secretary of the Board of directors). The corporate secretary keeps minutes of the Board of directors meetings and performs functions of the secretary of the General Shareholders Meeting, ensuring, among other things, keeping of the minutes of the General Shareholders Meeting, unless the Board of directors decides to entrust such functions to a different person. If the corporate secretary of the Company is not a member of the Board of directors, his authority does not cease upon election of a new composition of the Board of directors and its term is not limited. The Board of directors has the right to terminate the authority of the current corporate secretary at any time and to appoint a new one, and in case of temporary absence of the corporate secretary to entrust his functions temporarily to another person Decisions of the Board of directors may be taken by absentee ballot (polling method). Those members of the Board of directors are considered to have taken part in absentee ballot, whose bulletins on questions of the agenda were handed over no later the established date of bulletins reception termination The questions within the competence of the Company's Board of directors may not be transferred (handed over) for the consideration to the executive body of the Company By decision of the Board of directors of the Company committees of the Board of directors may be formed from its members. The number, name, personal composition, procedure of activity of committees of the Company s Board of directors and the list of matters reviewed by the committees are determined by decisions of the Company s Board of directors. Committees of the Company s Board of directors are not the Company s bodies Members of the Board of directors are obliged to undertake all necessary efforts for the Board of directors to: take decision on inclusion of candidates to the relevant list of candidates at its own discretion in case of absence or insufficient quantity of candidates proposed by shareholders to establish any of the Company s bodies; take decision on establishment of temporary sole executive body of the Company and on conducting of the Extraordinary General Shareholders meeting to take a decision on early termination of authorities of the Company s sole executive body or managing organization (manager) 16

17 and on establishment of new executive body of the Company in case the sole executive body of the Company or managing organization (manager) can not execute its functions No later than December 20 of each year the Company s Board of directors shall approve: the lists of recommended to the shareholders candidates for nomination to the Board of directors and the Internal Audit Commission of the Company with specification of the name and the personal identification document (series and (or) number of the document, date and place of issue, issuing authority) of each recommended candidate including contact address for each of the candidates; a recommended to the shareholders candidate for nomination to the position of the Company s sole executive body, - in case in the relevant year the authorities of the earlier elected sole executive body of the Company expire (earlier elected managing organization/manager) with specification of the name and the personal identification document (series and (or) number of the document, date and place of issue, issuing authority) of the recommended candidate including contact address for such candidate; in case of a proposal to transfer the authorities of General Director to managing organization name, PSRN (Principal State Registration Number) (if available) and postal address of the managing organization, as well as the name of its authorized representative; recommendations to the Company s shareholders for the item of approval of the Company s auditor containing the recommended wording and a draft decision for such approval. The resolution of the Company s Board of directors stipulated by this clause shall be put within three business days of its date on the internet site used by the Company for official disclosure of information in accordance with Russian legislation. CLAUSE 12. THE SOLE EXECUTIVE BODY OF THE COMPANY The General Director is a sole executive body of the Company The General Director is appointed by the Company s General Shareholders Meeting for the period of three years and can be re-elected unrestricted number of times. The shareholders in a General Shareholders Meeting may take a decision on early termination of the General Director authority. If upon expiration of three years of the moment when the Company s General Director s authority started the Company s General Director is nor re-elected (by extending the period of authority of the current Director or electing a new one) and the functions of the sole executive body of the Company are not transferred to a managing organisation, the term of the General Director s authority is automatically extended until the next Annual General Shareholder s Meeting following the date specified in this clause The General Director without any letter of attorney acts on behalf of the Company i.e. represents its interests, commits transactions on behalf of the Company, approves manning schedules, issues orders and instructions, obligatory for execution by all workers of the Company All issues of management refer to the competence of the General Director of the Company, including the current activity of the Company, except for the issues referred to the competence of the General Shareholders' Meeting and the Company's Board of directors. The General Director of the Company: - Provides execution of current and long-term plans of the Company; - Organises the preparation and execution of resolutions of the shareholders in a General Shareholders' Meeting and the Board of directors, submits reports on the results of execution; 17

18 - Has the right of the first signature under financial documents; - Disposes of assets of the Company, including its money resources which cost does not exceed 10 per cent of the book value of the Company s assets as of the date of decision making about the conclusion of such transactions; - Represents the Company in relations with other organisations, enterprises and establishments, state bodies on all issues of the Company s activity both in the Russian Federation, and beyond its territory; - Issues letters of attorney on behalf of the Company; - Organises the monthly arrangement of the reports on a turnover, production, personnel, expenses, profits, and also on other positions established by the Company's Board of directors; - Organises the bookkeeping and the accountability of the Company; - Approves and signs regulations for structural divisions of the Company; - Takes the decisions and issues orders on operative issues of internal activity of the Company; - Approves the list of staff of the Company, its branches and representative offices; - Employs and discharges from office the Company s employees, determines the measures of encouragement and imposes penalties on employees in accordance with the employment contracts; - Approves internal documents of the Company except for those internal documents of the Company whose approval is referred to the competence of the General Shareholders Meeting and the Board of directors of the Company by current law and this Charter; - Takes decisions on participation and termination of participation of the Company in other organisations (except for organizations where the decisions on participation in are within the competence of the Company s General Shareholders Meeting); - Ensures that the appropriate measures are taken aimed at protection of information classified as state secret; - Discharges other functions according to the current law of the Russian Federation and this Charter When so moved by the Board of directors, the General Shareholders Meeting may assign the powers vested in the General Director to an external Manager, be it a legal entity or an individual. The for-profit entity (individual entrepreneur) to serve as the Managing Entity or Managing Individual within the General Director s scope of authority shall be elected by the shareholders in a General Shareholders Meeting. Said powers shall be assigned to the Managing Entity or Managing Individual for a term indefinite, unless otherwise provided in the General Meeting s resolution on the assignment of said powers or in the contract made between the Managing Entity or Managing Individual and the Company The contract made between the Managing Entity or Managing Individual and the Company shall be signed by the Chairman of the Company s Board of directors or another officer authorised for the purpose by the Board of directors. CLAUSE 13. LIABILITY OF THE MEMBERS OF BOARD OF DIRECTORS AND THE GENERAL DIRECTOR OF THE COMPANY Members of the Company's Board of directors, the General Director of the Company, while implementing their rights and responsibilities, should act in the interests of the Company and implement their rights and duties as regards the Company honestly and reasonably. 18

19 13.2. Members of the Company's Board of directors, the General Director of the Company bear the responsibility before the Company for the losses caused to the Company by their actus reus (inactivity) if other grounds and the amount of responsibility are not established by federal acts. Members of the Company's Board of directors voting against the resolution which has caused loss to the Company, or those who did not participate in voting, shall not bear the responsibility While determining the grounds for and the amount of the responsibility of members of the Board of directors, the General Director s usual conditions for business turnover and other circumstances important for the case should be taken into account If several persons bear the responsibility in accordance with the provisions of this clause of the Charter, their responsibility before the Company is to be considered joint. CLAUSE 14. REPRESENTATIVE OFFICES AND BRANCHES OF THE COMPANY The Company has the right to create branches and to open representative offices in the territory of the Russian Federation and beyond its limits, observing the demands established by current law of the Russian Federation and relevant law of the foreign states at the place of performance of the branches and representative offices, unless otherwise stipulated by an international treaty of the Russian Federation The branch and representative office are not legal entities; they act on the basis of the regulation approved by the Company. The branch and representative office are given some assets from the Company; such assets are taken into account both on their separate balances and on the Company's balance. Heads of branches and the heads of representative offices are appointed by the Company and they have to act on the basis of the letter of attorney given them by the Company. Heads of representative offices and branches both outside the Russian Federation and in the territory of the Russian Federation may be foreign subjects The branches and representative offices implement activity on behalf of the Company. The Company bears responsibility for activity of branches and representative offices. A message on changes in this Charter, connected with any change of data about the Company's branches and representative offices, are to be submitted to the State representative office for registration of legal entities in the form of notification. Such changes become effective for third persons from the moment of notifying the body carrying out the state registration of legal entities Branches of the Company are: Branch in Moscow Representative offices of the Company are: Representative office in Nizhni Novgorod, representative office in Tolyatti, representative office in Kiev. CLAUSE 15. INTERNAL AUDIT COMMISSION. AUDIT The Company's Internal Audit Commission consisting of three persons and is elected by the shareholders in a General Shareholders' Meeting to carry out supervision of the financial and economic activities of the Company. The Internal Audit Commission members are elected for a period until the next annual General Shareholders' Meeting. According to the resolution of the shareholders in a General Shareholders' Meeting, members of the Company's Internal Audit Commission may be remunerated during the period of execution of their duties in order to compensate the expenses connected with such duties. The amount of such 19

20 remuneration/compensation is established by the resolution of the shareholders in a General Shareholders' Meeting The procedure for activity of the Company's Internal Audit Commission is established by the Regulation on the Company's Internal Audit Commission, approved by the shareholders in a General Shareholders' Meeting Audit of the financial and economic activities of the Company is performed in relation to the results of activity of the Company during one year, and at any other time it can be initiated by the Company's Internal Audit Commission, resolution of the shareholders in a General Shareholders' Meeting, the Company's Board of directors or on demand of the shareholder (shareholders) of the Company that own in aggregate no less than 10 per cent. of voting shares of the Company On demand of the Company's Internal Audit Commission, any persons occupying the posts in the Company's management are obliged to present documents about the financial and economic activities of the Company The Company's Internal Audit Commission has the right to demand the assembly of an Extraordinary General Shareholders' Meeting pursuant to current law and this Charter Members of the Company's Internal Audit Commission cannot be the members of the Company's Board of directors and also occupy other posts in the Company's management at the same time. The shares belonging to members of the Company's Board of directors or persons, occupying posts in the Company's management, may not participate in voting at election of members of the Company's Internal Audit Commission The auditor (a citizen or an auditing representative office) of the Company implements the auditing of the financial and economic activities of the Company in accordance with the legal acts of the Russian Federation on the basis of the agreement concluded with him It is the shareholders in a General Shareholders' Meeting that approve the Company's auditor. The amount of remuneration for his services is determined by the Company's Board of directors. The Company's Internal Audit Commission or the Company's auditor should make a conclusion on the results of auditing of the financial and economic activities of the Company which should contain: - confirmation of the validity of the data contained in statements and other financial documents of the Company; and - any information on the facts of infringement of the procedures established by legal acts of the Russian Federation as regards book keeping and representation of the fiscal accounting and reporting documents as well as any legal acts of the Russian Federation, while running the Company's financial and economic activities Prior to publication of the annual statement, annual accounting and reporting documents, the Company is obliged to invite an auditor who is not connected by valuable interests with the Company or its shareholders, to perform the annual audit of the Company's activities. CLAUSE 16. ACCOUNTING AND ACCOUNTABILITY OF THE COMPANY The Company is obliged to conduct book keeping and to exhibit the fiscal accounting in the order established by the Federal Law "On joint-stock companies" and other legal acts of the Russian Federation. 20