Letter to Shareholders
Sistema is a recognised leader among Russian companies in terms of corporate governance. The Corporation was ranked among the top 10 Russian companies with the best corporate governance in the National Corporate Governance Index published in 2017 by the TopCompetence Corporate Development Centre with support from the Moscow Exchange.
The Corporation aims to comply with leading global standards of corporate governance, and works closely with regulators, market participants and the investment community to improve transparency in the Russian market. Responsibility to shareholders, transparency for all stakeholders and regular active communication with investors are core values for Sistema. The Corporation also works to help embed these values at its portfolio companies as part of preparing them for capital markets activity.
The responsibilities of the Board of Directors’ Investor Relations and Dividend Policy Committee include developing and executing the Corporation’s strategy on investor communications and dividend policy, as well as exercising oversight of the implementation of this strategy. All of the members of the Committee are independent directors with professional knowledge from a range of fields as well as many years of both managerial experience and of serving on the boards of directors of leading international and Russian companies.
To improve the Committee’s operational efficiency and strengthen dialogue with the investment community, we are introducing new channels for communications with the Corporation. On this page we have created a new page with an FAQ that will be regularly updated. Should you have a question that is not answered on this page, please contact Sistema’s IR Department by email at firstname.lastname@example.org. You can also reach out directly to Sistema’s independent directors at IR_Committee@sistema.ru.
We look forward to receiving your questions, ideas and suggestions, and to continue building productive engagement that will further support the strengthening of Sistema’s investment case.
The independent directors and members of the Investor Relations and Dividend Policy Committee of the Board of Directors of Sistema PJSFC
Anna Belova – Chairwoman of the Investor Relations and Dividend Policy Committee, Independent Director
Jeannot Krecké – Independent Director
Roger Munnings – Independent Director
David Iakobachvili – Independent Director
How can I learn more about the business of Sistema's portfolio companies?
Information about the Corporation's key assets is available in the Our Investments section. Visit the Press Releases section to find out the latest news of our assets.
What are the Corporation's goals with regard to debt reduction and when does it expect to achieve them?
Reducing the Corporate Centre's debt is a priority for the Corporation. At the same time, Sistema wants to maintain a healthy balance between cutting debt, ensuring returns for shareholders and continuing its investments. We see the optimal level of Corporate Centre's gross debt at RUB 140 - 150bn. Achievement of this target will depend on the pace of asset monetisation, the amount of the Corporate Centre's investments, changes in the macroeconomic situation and FX rates, and other factors.
What industries does the Corporation invest in?
Sistema invests first of all in high-potential industries already represented in its portfolio (e.g., private healthcare, agriculture, timber industry), segments adjacent to the ones where it already operates, and also new sectors of the Russian economy that have a sufficiently big market (min. USD 1bn), high growth rates, and a potential for import substitution and exports. The Corporation is actively looking for investment opportunities in new technologies that are at the early stage of practical application and may achieve wide industrial use in the medium term, such as the Internet of Things, virtual assistants, machine learning and neural networks, cyber security, medtech, AR/VR, etc. Investments in new technologies are made predominantly via the Corporation's venture funds.
How does the Corporation select investment targets?
Sistema's investment process is governed by strict internal regulations and procedures and also complies with the principles of responsible investment. All potential investment projects are registered on a single digital platform and analysed by the teams of Managing Partners and functional departments. Each project is thoroughly considered before being submitted for review by the Expert Council and the Finance and Investment Committee. Over the course of review, the project also gets approvals from the Strategy Department, the Finance and Investment Department, and the Corporate Governance and Legal Affairs Department. In addition to financial and industrial analysis lying at the basis of decision-making on each project, such elements as quality of management, HR processes, production base, infrastructure, technologies, social responsibility and environmental risks are also taken into account. After the FIC gives its approval, the project is submitted to the Board of Directors and/or the general meeting of shareholders of Sistema.
What does the Corporation do to increase the value of its portfolio companies?
Investing in the development of existing portfolio assets in order to increase their value is one of the key stages of Sistema's value creation model. Value creation includes a number of mandatory steps, starting from active management of acquired assets - boards of directors are formed at controlled companies that must have independent directors with recognised industry and/or functional expertise, efficient managers are hired and offered an incentive plan designed to create value for shareholders; cycles of strategic and financial planning are introduced based on best international corporate governance practices. Assets receive comprehensive support with regard to finding financial and other resources; opportunities of bringing in a financial partner are considered. Operational efficiency is increased through restructuring and cooperation with industrial partners to enhance expertise and mitigate financial risks. The Corporation also identifies new technologies, testing and adoption of which can increase efficiency, streamline processes, develop innovative products and services for customers, and expand current markets of portfolio companies.
Corporate Social Responsibility
What does the Corporation do in the area of corporate social responsibility?
Sistema sees corporate social responsibility (CSR) as a platform for sustainable and harmonious development of its business, the communities and regions where the company operates and their environment, while taking into account the interests and needs of key stakeholders in order to strengthen the Corporation's reputation as a responsible investor and a reliable partner. By following the core principles of the UN Global Compact in the area of human rights, employment relations, environmental protection and zero tolerance to corruption for more than 15 years, as well as the principles of the Social Charter of Russian Business (which Sistema joined in 2017), the Corporation pursues its policy not only through strict compliance with laws and ethical business practices but also through consistent and long-term social investments, first of all, via Sistema Charitable Foundation, social and economic partnerships with regions, support of communities and non-profit initiatives, and promotes responsible business practices among its portfolio companies, partners and suppliers. For more information about Sistema's CSR activities, please have a look at our ustoichivoe-razvitie/socialnye-otchety/
How is Sistema related to Sistema Charitable Foundation?
Sistema Charitable Foundation (hereinafter, "SCF") was founded by Sistema Group companies in 2004.
SCF carries out a number of long-term interrelated programmes designed to create opportunities for unlocking a person's potential in the technological environment, provide conditions for technological inventions addressing social problems and to find ways to improve the quality of life with the help of new technologies. SCF gives priority to infrastructure projects of national scale and importance. Special focus is on projects that can ensure significant long-term changes of the social environment and create incentives for its development.
SCF's supreme governance body is the Board composed of members of Sistema's Board of Directors and CEOs of its biggest portfolio companies (MTS, Medsi, etc.).
The Foundation's charitable programme is shaped taking into account the Corporation's development strategy. This programme is reviewed by the Investor Relations and Dividend Policy Committee on an annual basis and pre-approved by Sistema's Board of Directors. This ensures the necessary level of transparency of SCF's activities, and coordinates corporate charitable work with the general investment strategy.
For more information about SCF, visit http://bf.sistema.ru/
Registrar (registration of rights to shares)
How do I find out the exact number of Sistema's shares I hold?
If your rights to Sistema's shares are recorded with a depositary (nominee holder), you should address this question to your broker or depositary.
If your rights to Sistema's shares are recorded in the shareholders' register, you should contact the Corporation's registrar, JSC Reyestr. Sistema as the issuer does not keep record of the rights to shares.
How do I find out whether my rights to shares are recorded by the depositary or the register?
You should contact the Corporation's registrar, JSC Reyestr.
If JSC Reyestr tells you that your rights to Sistema's shares are not recorded in the shareholders' register, you should contact the National Settlement Depositary to find out which depositary keeps record of your rights to shares.
Why is it that I don't see my entire stake in the shareholder's personal account on the website of JSC Reyestr?
If your rights to Sistema's shares are recorded with a depositary (nominee holder), you need to remember that information about the number of Sistema's shares you hold is submitted to the personal account by the nominee holder in connection with general meetings of shareholders. Complete information about the shares you hold may be available in the personal account only 2 days before a general meeting of shareholders (the deadline for submission of ballot papers).
We also recommend that you check the instructions you gave your broker or depositary with regard to disclosure of information about your ownership of Sistema's shares.
Where can I buy or sell Sistema's shares and/or GDRs?
You can buy or sell Sistema's ordinary shares on the Moscow Exchange or global depositary receipts on the London Stock Exchange (LSE). To do so, you need to use the services of a broker or another intermediary that gives individuals an opportunity to participate in stock trading. It is up to you to choose a broker for operations with securities.
If your rights to shares are recorded with the shareholders' register, you can find a detailed instruction on the website of the Corporation's registrar, JSC Reyestr.
Where and how do I receive an excerpt from the shareholders' register?
You should contact the Corporation's registrar, JSC Reyestr.
I am a holder of your bonds. How do I find out the terms of a potential next put or coupon payment?
Information about bonds is available on Sistema's website in the Bonds section. In addition, you can find issue documents on all of the Corporation's bond issues in circulation in the Shares and Securities section.
The Corporation publishes information on coupon payments and put offers on the website in the Material Facts section and provides this information to the news feeds of news agencies.
General meetings of shareholders
When and where will the next general meeting of shareholders take place?
Information about the date and venue of a general meting of shareholders is announced immediately after a corresponding resolution is passed by Sistema's Board of Directors.
How can I vote at the general meeting of shareholders? Is it necessary to attend the meeting in person?
If your rights to Sistema's shares are recorded with a depositary (nominee holder), you have the following options to vote on the agenda of the general meeting of shareholders: 1) by filling in an e-form in the shareholder's personal account on the website of the Corporation's registrar, JSC Reyestr; 2) by giving instructions to your broker or depositary, including via electronic means of communication, if they offer such an option; 3) by sending a ballot paper to Sistema by mail; 4) by filling in a ballot paper at the meeting of shareholders held in the form of joint presence.
If your rights to Sistema's shares are recorded with the shareholders' register, you have the following options to vote on the agenda of the general meeting of shareholders: 1) by filling in an e-form in the shareholder's personal account on the website of the Corporation's registrar, JSC Reyestr; 2) by sending a ballot paper to Sistema by mail; 3) by filling in a ballot paper at the meeting of shareholders held in the form of joint presence.
If I have already issued a power of attorney for participation in a general meeting of shareholders to another person, can I still attend the meeting?
As a shareholder, you are be entitled to replace your representative at a general meeting of Shareholders at any time or to attend the meeting in person. If you revoke a power of attorney, you must send a written notification to your representative and the registrar. If you have failed to notify the registrar about revocation of the power of attorney and your representative has already registered for participation in the meeting on the basis of this power of attorney, you can still attend the meeting, but you will not receive ballot papers for voting.
How do I set up the personal account of a shareholder?
Detailed instructions are available on the website of JSC Reyestr.
Where can I study the materials of the general meeting of shareholders?
According to the Charter of Sistema PJSFC, materials for general meetings of shareholders are published on the Corporation's website 30 days before the meeting. Also, your broker or depositary should provide you with materials they will receive from the central depositary.
I have not received documents in connection with a general meeting of shareholders. What do I do?
You should contact your broker or depositary to find out why you have not received the materials.
You should also take into account that materials on paper are not sent to persons whose rights to shares are recorded with nominee holders.
I have received a report on voting results at the AGM. What does it mean?
In accordance with the Federal Law "On Joint-Stock Companies", a report on voting results after a general meeting of shareholders shall be circulated to all persons included in the list of persons entitled to participate in a general meeting, to postal addresses specified in such list.
If you did not know that you were included in the list, you should contact the Corporation's registrar, JSC Reyestr, and the Central Settlement Depositary to find out which organisation keeps record of your rights to shares.
The broker/depositary that kept record of my rights to Sistema's shares had its licence revoked. What do I do?
You should contact the Corporation's registrar, JSC Reyestr, and the Central Settlement Depositary to find out which organisation will now keep record of your rights to shares.
Sistema as the issuer does not have access to information about holders of shares whose rights are recorded by nominee holders.
How much will Sistema pay in dividends?
The recommended amount of dividends payable by the Corporation for a year is established by the Dividend Policy of Sistema.
In order to maintain a balance between the rights and interests of all shareholders and Sistema's ability to pay dividends, the Board of Directors, when determining the amount of dividends, takes into account the acceptable rate of Sistema's debt reduction and the proportionality of dividends to the current cash flow of the Corporation.
Information about all decisions made by the Board with regard to dividend payout will be disclosed immediately.
I have not received the announced dividends. What do I do?
If your rights to Sistema's shares are recorded with a depositary (nominee holder), you should contact your broker or depositary and check if they have your correct bank details. You may need to submit an application for the dividend payment to be repeated.
If your rights to Sistema's shares are recorded in the shareholders' register, you should contact the Corporation's registrar, JSC Reyestr.
In order to receive the announced dividends timely, we recommend that you regularly update your personal and bank details recorded by the registrar or your broker.
Shall I pay taxes upon receiving dividends?
In accordance with the Russian Tax Code, calculation and payment of tax on income in form of dividends shall be performed by the tax agent for each taxpayer and each dividend payout at the tax rates stipulated by the Tax Code, i.e. you shall receive dividends after tax. As a general rule, the rate of the personal income tax is 13%, but the Tax Code also envisages other rates, e.g. for individuals who are not tax residents of Russia.
The taxable base for calculation of the personal income tax on dividends is reduced pro rata to a ratio of D2 (the amount of dividends received by Sistema from certain companies) to D1 (the amount of dividends payable to Sistema's shareholders).
How can I obtain a personal income tax certificate (2-NDFL)?
If your rights to Sistema's shares are recorded with a depositary (nominee holder), you should contact your broker or depositary.
If your rights to Sistema's shares are recorded in the shareholders' register, you should contact Sistema directly.
I am an heir of a Sistema shareholder. How can I receive dividends on his/her shares?
In order to receive the announced dividends that were not paid to a deceased person, you should contact your broker or depositary where the rights to the shares are recorded and submit an application for the dividend payment to be repeated. You should attach a certificate of inheritance to your application.
Detailed instructions on exercising inheritance rights are available at the website of the Corporation's registrar, JSC Reyestr.
Can I subscribe to receive news/press releases/IR blog articles of the Corporation?
You can subscribe by sending a request to the IR service: email@example.com. To subscribe to the IR blog, you can use the registration form at http://www.sistema.com/investors-shareholders/ir-blog/
How can I contact the IR service of the Corporation?
You can contact the IR service of Sistema by e-mail or phone. Contacts of the IR service can be found in the Contacts section.
I have an investment proposal. How can I contact the management?
You can tell us about your investment proposal on Sistema's website: clicking "Your Investments Proposal" at the top of the main page will open a form where you can describe your project in detail and attach necessary files. All messages are delivered to the e-mail address of a relevant unit.
In addition, we have set up a separate website for your investment ideas, Sistema on the Cutting Edge, where you have options to "Propose a Project" or "Invest Together."