Corporate governance

TNK-BP’s strategy identifies good corporate governance as one of the key elements of building a world—class Russian company.

Since the company’s inception in 2003, TNK-BP has implemented a comprehensive corporate governance system designed to safeguard the interests of all shareholders, promote effective and timely decision-making, and provide transparent management information. Our standards of corporate governance are among the most stringent in the Russian marketplace, and we are continuously working to drive them to match international best practice.

The enabling document underpinning TNK-BP’s governance system is the shareholder agreement between BP and AAR, which establishes the general principles of the company’s corporate governance.

TNK-BP is governed by an eleven-member Board of Directors with four representatives from each of the two shareholder groups and three independent directors. The Board has three committees, the Audit Committee, the Compensation Committee and the Health, Safety and Environment (HSE) Committee.

TNK-BP’s senior management team runs the day-to-day operations of the company.

TNK-BP has implemented several projects targeted at improving corporate governance and increasing information transparency. A large-scale Accounting Transformation Project (ATP) modernized the company’s accounting systems and practices. As the first major project of its kind in the Russian oil industry, it delivered faster, more accurate and comprehensive financial information for both internal and external needs. Today:

• We are closing accounts within ten workdays.
• A uniform Chart of Accounts is put in place. 
• IAS accounting (previously conducted at headquarters) has been extended to the company’s regional operations.
• Data security\integrity is ensured by deployed and controlled consolidation tools.

In addition, the company has launched a group-wide Internal Controls Improvement Project and continues to develop its Code of Business Policies. All these projects have allowed us to enhance corporate governance through increased transparency driven by an efficient two-way flow of accurate information from businesses to management, effective forecasting and planning, informed decision-making and efficient resource allocation.

In 2004 TNK-BP launched a major corporate restructuring program to streamline the company’s complex legacy structure, reduce the number of legal entities and improve corporate governance. In the course of restructuring, heritage companies TNK, SIDANCO and ONAKO were merged into TNK-BP Holding, which now holds the majority TNK-BP’s upstream and downstream assets in Russia. As a result of restructuring, we have rationalized our structure and improved the transparency of our operations. The shareholders of TNK-BP Holding meet twice a year at the Annual General Meeting (AGM) and Extraordinary General Meeting (EGM) of Shareholders to review full-year and half-year results and present dividend recommendations.

Information about TBH shareholder meetings

TNK-BP Holding’s Annual reports

For 2006, TNK-BP Holding prepared its first set of consolidated financial statements under US GAAP. These have been prepared in addition to Statutory Accounts under RAS that TNK-BP Holding files with the Russian Financial Markets Service according to Russian legislation. In the future, TNK-BP Holding will continue to report according to US GAAP as well as RAS.

In 2005, TNK-BP was the first Russian company to join the World Economic Forum’s Partnering Against Corruption (PACI) Initiative. This document calls for companies to adopt a zero-tolerance policy towards the payment of bribes and to develop an action plan to counter corruption.

TNK-BP is a performance driven and progressive company. It seeks excellence and enhanced outcomes from everything it does. All management have specific performance contracts describing what is expected of them to deliver the corporate objectives included in the business plans.