OJSC Atomenergomash has been operating the Central Arbitration Committee (hereinafter referred to as CAC), a body for dispute settlement, for one year. The economic effect from operating the CAC during this period is almost 100 million rubles.

The CAC's operation is aimed at extrajudicial resolution of intra-group intra-divisional commercial disputes. In addition, among the priority focuses of the Committee is promoting establishment of business ethic and harmonization of commercial relationships.

Before the creation of the CAC, the disputes were resolved in courts. The legal expenses were sometimes comparable with the prevailing party's "price of victory". If an enterprise, to resolve a dispute, applies to the CAC, it does not bear expenses except those covering communication and logistics.

Today, the CAC operating procedures provide for using mediation, an innovative institute of dispute resolution. This is an efficient mechanism for extrajudicial resolution of disputes (a group of mediators is planned to be established in the Division in spring 2014). Mediators are professionals with experience in the industry, not only competent in their specialization, but also in parallel areas (law, economics, economic security). Using several mediation procedures, the most effective of which is conciliation known in the international law as "shuttle diplomacy", they converge the parties' views finding a compromise for the parties and helping resolve the dispute.

It should be noted that the procedure itself, and, probably, execution of a resolution made by CAC is voluntary. During the year of the Committee's operation, there was only one case when a party to the dispute disagreed (not in the essence, but in respect of some statements) with the resolution made by CAC, which, in general, did not affect execution of the resolution.

The Regulation is neither an agreement for transferring functions of the sole executive body of the SASC (in accordance with the laws "On Joint Stock Companies" and "On Limited Liability Companies"), a paid services agreement (in accordance with Chapter 39 of the Civil Code of the Russian Federation), nor a simple partnership agreement (in accordance with Chapter 55 of the Civil Code of the Russian Federation) and it does not entitle OJSC Atomenergomash to define conditions for the Company's business activities (in accordance with the provisions of the Federal Law of No.135-FZ "On Protection of Competition" dated July 26, 2006)..

The Security Department of OJSC Atomenergomash and its SASC has the following objectives:

• Participation in the implementation of the state policy of the Russian Federation in the field of economic security and combating corruption;
• Informing the Company's management on economic security, asset protection and anti-corruption issues;
• Organizational, methodological and functional management of activities of the Division's economic security units;
• Identification and analysis of factors and conditions which contribute to the threats to the economic security and assets of Rosatom State Corporation and its organizations;
• Drawing up draft regulatory documents for the priority focuses in prevention of threats to the economic security and assets of the Division's enterprises;
• Protection of the economic interests of the Russian Federation and Rosatom State Corporation during cooperation with foreign partners;
• Protection of trade secrets and other confidential information;
• Protection of intellectual property;
• Technical protection of IT facilities from information leaks.

Main regulatory documents:

• • Charter of OJSC Atomenergomash
• • Terms of Reference for Security Department of OJSC Atomenergomash
• • Provision on credit risk management of Rosatom State Corporation and its organizations
• • Order No.1/385-P dated 05/02/2011 «On functional management of assets protection units at subordinate enterprises and organizations of Rosatom State Corporation»
• • Order No.33/428-P dated 12/25/2012 «On approval of regulations for the "organization of work on evaluation of property, assets and business of OJSC Atomenergomash and its SASC" process»
• • Order No.1/902-P dated 03/28/2013 «On approval of the Unified procedure for verification of reports regarding corruption and other offenses received over the hotline and other channels»
• • Order No.33/250-P dated 07/31/2012 «On approval of the Procedure for claims, actions and enforcement activities»
• • Order No.33/22-P dated 01/29/2013 «On organizing procurement activities at OJSC Atomenergomash»
• • Order No.33/206-P dated 06/21/2013 «On approval of the OJSC Atomenergomash Contracting Regulation»
• • Order No.33/288-P dated 09/06/2012 «On adoption and implementation of the Comprehensive Program to Combat Corruption and Embezzlement in the Nuclear Industry (20102-2013)»

Control measures are implemented in accordance with the current legislation of the Russian Federation, based on:

Orders of Rosatom State Corporation:

• №.1/1143-P dated 12/28/2012 "On approval of the Internal Control Policy of Rosatom State Corporation and its organizations";
• №.1/936-P dated 11/02/2011 "On approval of the procedure for planning and implementation of internal audit of the business processes carried out in Rosatom State Corporation and its organizations";
• №.1/464-P dated 05/06/2013 "On approval of the structure of the Internal Control and Internal Audit group of processes";
• №.1/682-P dated 06/28/2013 "On approval of Guidelines for development of a program for improvement of quality of the Internal Control and Internal Audit group of processes at Rosatom State Corporation";
• №.1/637-P dated 07/16/2012 "On approval of guidelines for designing controls within groups of processes/processes of Rosatom State Corporation";
• №.1/825-P dated 08/05/2013 "On approval of the Unified industry procedure for planning of controls by specialized internal control bodies of Rosatom State Corporation and its organizations".

2. Orders of OJSC Atomenergomash, which replicate the above orders of Rosatom State Corporation.

Main goals of the CRMS:

• To support implementation of the Strategy of the Division and Rosatom State Corporation as a whole;
• To support continuity (stability) of processes through identification, assessment and minimization of threats that could affect the activities of the Division and Rosatom State Corporation as a whole;
• To provide information support to the management and employees of the Corporation and its organizations for the adoption of management decisions.

Main objectives of the CRMS:

• To promptly identify emerging risks and to assess and minimize any risks that could affect the activities of the Division and Rosatom State Corporation as a whole;
• Continuous monitoring and risk communication;
• To identify risk owners and their responsibilities;
• To integrate the risk management process into the management decision-making process in order to better utilize resources through managing the balance of risk and return.

Main principles of CRMS:

• Compliance with the Corporate Strategy;
• Involvement of all employees of the organization;
• Continuity of the risk management process;
• Integration into the key planning processes;
• Transparency of the risk management process;
• Continuous improvement of the process.

2. Orders of OJSC Atomenergomash, which replicate the above orders of Rosatom State Corporation

As part of the work performed to identify and assess strategic risks using the financial and economic model, the risks most significant in terms of likelihood and impact on the adjusted consolidated cash flow were digitized.

Other risks were assessed partially, by expertise.

Currently, the Compliance Function is being introduced in the industry. Compliance means ensuring confidence that the Company complies with applicable codes, and that business management is at a high level of ethics and integrity. Such codes include both legal requirements and recommendatory standards and rules related to international business standards, compliance with which is ensured by organizations on a voluntary basis.

In 2013, Rosatom State Corporation conducted internal audit "Assessment of the compliance function in the organizations of Rosatom State Corporation". The objective of the audit was to analyze the compliance function management in the companies of the industry with the national and international legislation, business norms and best practices, including identification of a list of key risks and key factors of the compliance risks. Based on the results of the follow-up measure Rosatom State Corporation approved a Schedule of the compliance function development in the nuclear industry for 2013-2014. Pursuant to the Schedule of Rosatom State Corporation, in accordance with the instruction from the CEO of the Company, the Internal Audit Department has allocated roles of the Company Departments in their functional areas. The measures approved in the Schedule are implemented in a timely manner. Information on implementation the measures is timely sent to Rosatom State Corporation.

The plans in this area are to update and harmonize the Company's business processes with the national and international legislation in order to increase efficiency of management for all processes and to improve the attractiveness of the Company for the external environment.

The Board of Directors uses the following procedures to prevent conflicts of interests and manage them in respect of the following matters:

1. Simultaneous membership

Members of the Company's Board of Directors, in case they are at the same time members of management bodies of other companies, will not vote in the Company's BoD meetings on matters relating to approval of related party transactions, if they, by virtue of the Federal Law "On Joint Stock Companies", are deemed to be interested in such transactions. In addition, such persons will not vote at other companies' BoD meetings on matters regarding approval of related party transactions, if they, by virtue of the Federal Law "On Joint Stock Companies", are deemed to be interested in such transactions (or not deemed independent directors not interested in the transaction).

2. Affiliation

Before election to the Board of Directors, the nominees provide to the Company their Consent to be elected and a Statement. The Statement includes the nominee's obligation, in case he/she is elected to the Company's Board of Directors, to inform the Board of Directors, the Audit Committee and the auditor about him/herself, his/her spouses, parents, children, full and half brothers and sisters, adopters and adoptees, legal entities in which the nominee and/or such person(s) owns (own) solely or jointly with their affiliate(s) 20 or more percent of the voting shares; about legal entities in which the nominee and/or such persons is/are holds/hold positions in the management bodies, is/are a party, beneficiary, agent or representative in the transaction; about known and/or conducted or potential transactions in which the nominee and/or such persons may be deemed to be interested.