tfg corporate governance code

8/2/2019 TFG Corporate Governance Code

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CORPORATEGOVERNANCECODEAPPR.OVEDBy thedecision f the Boardof Directorsof TenGerFinancialGroupLLC

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CORPORATE GOVERNANCE CODE OFTENGER FINANCIAL GROUPLLC

Ulaanbaatar,ongolia


2/13

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Tableof ContentsPREAMBLEBACKGROUNDAND PROFILEPARTI. COMMITMENT TO CORPOMTE GOVERNANCEL Definition and Principles2. Internal CorporateDocumentation3. General GovernanceStructure4. Compliancewith andAdherence o Corporate GovernancePART I. GOODBOARD PMCTICESL At theSupervisoryBoard Level

2. At theExecutiveBodyLevel3. InteractionBetweenhe supemisoryBoardand ExecutiveBodiesand theRole of the Corporate Secretary if establishedJPARTIII. SHAREHOLDER RIGHTSI. GeneralMeetingsof Shareholders2. (Minority) ShareholderRightsProtection3. RelatedParty Transactions4. DividendPolicyPARTIV. INFORMATION DISCLOSUREAND TMNSPARENCYL Disclosure Policies and Practices2. Financial Reporting3. InternalAudit and Control4. TheExternal Audit5. OwnershipStructure

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#PreambleThe purposeof this CompanyCode of CorporateGovemance hereinafter he CompanyCode) s to improve and systematizehe governance f the Limited Liability Company (hereinafter o'the Comp&try"), make its governancemoretransparent, nd demonstratehe Company'scommitment o goodcorporategovemance ydeveloping nd urthering. Responsible,ccountable,ndvalue-basederformancemanagement;. Effective oversight, with executivebodies hat act in the best nterestsof the Companyand ts shareholders,ncludingminority shareholders,nd seek o enhance hareholdervalue n a sustainablemanner;andr Appropriate nformation disclosureand transparency s well as an effective systemofrisk management nd nternalcontrol.By adopting, ollowing, andupdating he CompanyCode, he Company'scharter,and by-laws on a regularbasis, he Company onfirms ts desire o demonstrablyeadandpromotegood corporategovernance.To foster the confidenceof its shareholders, mployees,investors, nd he general ublic, he CompanyCodegoesbeyond he establishedegalandregulatory ramework n Mongolia today,and embraces oth nationaland internationallyrecognizedorporate overnance rinciplesandpractices.The Company'sgoverningbodiesand employees nderstandhis CompanyCodeas theirjoint obligation,and accordingly,obligate hemselveso ensure hat its provisionsand itsspirit are adhered o and acted upon throughout he Companyand its subsidiaries nddependentompanies.Backgroundand ProfileThe Company'sMissionand Visionare he following:Vision:TenGerFinancialGroup s a family of companies uilt to provideequitable ccessto inclusive inancial services.The Group will strive to be dynamic leadersetting hehighest standardsof triple bottom line mission in corporategovernance, ocial andenvironmentalesponsibilitywhile returning air value o the Shareholder.Mission: TenGerFinancialGroup's mission s to createsynergies mong ts affiliates norder o maximizeboth socialand financialgains o our stakeholders. ur businesses il lbe drivenby innovationanddynamism n deliveringpremium quality services nd addedvalue o the customers.The Company's subsidiariesand affiliates operate n the fol lowing businesssectors:commercial banking, financial leasing, general insurance, software development andsecuritv.


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Part I. Commitment to Corporate Governance1. Definition and Principles

The Companydefinescorporate governanceas a set of structuresand processesor thedirection and control of companies,which involves a set of relationships etween heCompany'sshareholders,oard of Directors,and executivebodieswith the purposeofcreating ong-termshareholder alue. t views corporategovernance sa meanso improveoperationalefficiency, attract inancingat a lower cost,andbuild a betterreputation. i alsoviews a sound systemof governanceas an important contribution to the rule of law inMongoliaandan importantdeterminant f the role of the Company n a moderneconomyandsociety.- The CompanyCodesetsout the Company'scorporategovernancerameworkand isbased n Mongolian egislation,he CorporateGovernance odeapproved y the FinancialRegulatoryCommission FRC), as well as internationally ecognizedbesi practicesandprinciples, uchas heoECD Principles f corporateGovernance.

The Company's corporate govemanceframework is based on the followingprinciples:' Accountability:This CompanyCodeestablisheshe Company'saccountability

to all shareholdersnd guides he Company'sBoard of Directors n seitingstrategy, niguidingandmonitoring he Company's xecutivemanagement.' Fairness: he Companyobligatestself to protectshareholderightsand ensuretheequitablereatment f all shareholders,ncludingminority and oreignshlareholders.' Transparency: he Company s to ensurehat timely andaccurate isclosuresmadeon all material matters egarding he Company, ncluding the financial situation,performance, wnership, ndgovemance f the Company,n a mannereasilyaccessibleointerested arties.' Responsibility:The Company ecognizeshe rights of other stakeholders sestablished y laws and regulations,and encourages o-operationbetween he Companyandstakeholdersn creatingsustainable nd financially soundenterprises.

The Company, its key officers and all employees act in accordancewith allapplicable aws and regulations,and, furthermore,shall comply with ethical standards fbusiness onductasdefinedby this CompanyCodeandotherapplicable ocuments.2. Internal Corporate Documentation

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This Company Code is principle-based.More specific corporategovernancestructures,processes,ndpracticesareregulated n the Company'sCharterand he by-laws for the:' GeneralMeetingof ShareholdersGMS);' Board of Directors;r Executivemanagement;. Standing ommittees f the Boardof Directors;. Dividendpolicy;. Risk management;I Human resourcesmanagement; nd. Informationdisclosure nd ransparency.

This set of internal corporatedocuments ollows legal and regulatory requirements,and ncorporateshe mainprovisionsof the CompanyLaw of Mongolia and nternationallyrecognized orporategovernance ractices.

3. General GovernanceStructureTheCompany as he followinggoverning ndotherbodies:

. The GeneralMeeting of Shareholder.he highestgoverningbody of the Companyallows heshareholderso participaten thegovernance f the Company;

. The Board of Directors s responsibleor the strategicdirection of the Company,and he guidance nd oversightof management;he Boardof Directorsmay also establishcommittees on audit, risk management, corporate governance, nominations andremuneration, trategic lanningetc;

. The Chief Executive Officer (CEO) and his/herteam carry out the day-to-daymanagement f the Companyand implement he strategyset by the Board of Directorsandshareholders;' The CorporateSecretaryensures hat the governingbodies ollow internal rules andexternal egulations o facilitate clear communicationsbetween he governingbodies,andactsas an adviser o directorsand seniorexecutives;. The Internal Auditor developsand monitors internal control procedures or the

business perations f the Company.The InternalAuditor reportsdirectly to the Board ofDirectors hrough he Audit Committee,andreportsadministratively o the Chief ExecutiveOfficer.4. Compliance with and Adherence to Corporate Governance Policies andPractices

The Company's Corporate Secretary s responsible for ensuring the development of,compliancewith, andperiodic review of corporategovernance oliciesand practicesn the


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Part II. Good Board PracticesThe Company views a vigilant, professional,and independentBoard of Directors asessential or good corporate governance.The Board of Directors cannot substitute ortalented professional managerso or change the economic environment in which theCompanyoperates. t can, however, nfluence he performanceof the Company hrough tssupervision,guidance,and controlof managementn the interestsand for the benefitof tneCompany's shareholders.Executive bodies also play a crucial role in the governanceprocess.The effective interactionbetweenall governingbodies,and a clear separation fauthoritiess key to soundcorporategovernance.

1. At the Board of Directors Levela.AuIhorily. The Boardof Directors' scopeof authority s set forth in the Company,sCharter, n conformity with relevant egislationand the recommendations f the CorporateGovernanceCodeapprovedby FRC.b. Size. The Board of Directors, upon the recommendationof its Govemance,Nominatingand CompensationCommittee, ecommendshe appropriatesizeof the Boardof Directors.The Board of Directors' size s fixed in the Company'i charter.Achievingtheneeded uality and mix-of-skills will be the primaryconsiderationn aniving at the ovirallnumber.c. Election. Term. and Dismissal. Directors are elected for a two-year term. TheCompanyusesordinary voting to elect its directors.The Board of Directors does notbelieve t is in the best nterestsof the Companyor its shareholderso introduce erm limits.Experienceddirectors amiliar with the Companyand the industry in which it operates rekey to providingproperguidance.The GMS may only dismissall directors.d. Compositionand Independence.he compositionof the Board of Directors sdeterminedn sucha way that combines he representativesf variousshareholder roups,includingminority shareholders.The Board of Directors' composition,competencies, nd mix-of-skills are adequatefor oversightduties,and the developmentof the Company'sdirection and strategy.Eachindividual director has the experience,knowledge,qualifications,expertise,and integritynecessaryo effectively discharge he Board of Directorsdutiesand enhance he Board'sability to serve he long-terminterestsof the Companyand its shareholders. he BoardofDirectorshas a broadrangeof expertise hat covers he Company'smain business, ector,and geographical areas. A full and complete set of information on the directors'qualifications is set forth and annually reviewed by the Board of Directors upon therecommendation f its Governance,Nominating and CompensationCommitteeand fixedin the Company'sCharteror by-laws.


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The law prohibits the CEO from beingthe Chairmanof the Board of Directors of theCompany.However, it doesnot preclude he CEO to fulfill the dutiesof Chairmanof theBoard of Directorsof the subsidiaries nd affiliates of the Company.To enhanceunbiasedoversight, he Companybelieves that a non-executivedirector should chair the Board ofDirectors.

The Company'sBoard of Directors s composedof not more than25%o f executivedirectorswho are employeesof the Company.To ensure he impartiality of decisionsand o maintain he balanceof interestsamongvariousgroupsof shareholders, (two) of the Board membersare independentdirectors.The Companydefines hosedirectorswho have no material relationshipwith the Companybeyond their directorship as independent.The Board of Directors ascertainswhichmembers are to be deemed independentduring its meeting. Criteria for determining

director ndependencehallbe basedon the CorporateGovernanceCodeapprovedby FRC,complemented by other intemationally recognized definitions, and specified in theCompany'sCharterand annual eport.e. Structureand Committees.The Companyhas established he following Board ofDirectors'committees:. Governanceoominating andCompensationCommittee;. Audit Committee;. The InvestmentCommittee;and. Othercommitteesdeemednecessary y the Boardof Directors.All committeeshave by-laws containingprovisions on the scope of authority,competencies, omposition,working procedures, s well as the rights and responsibilitiesof thecommitteemembers.Eachcommittee s to provide provisionalconsiderationof the most important ssuesthat fall within the authority of the Board of Directors. After each of its meetings, hecommitteeshall reporton themeeting o the Board of Direetors.f. Working Procedures.The Board of Directors meetsaccording o a fixed schedule,setat the beginningof its term, which enablest to properlydischarge ts duties.As a rule,the Board of Directorsshall meet at least4 (four) timesa year.Detailedprocedures or calling and conducting he Board of Directorsmeetingsaredefined in the Board of Directors' by-law. All directorsare provided with a concisebutcomprehensive set of information by the Corporate Secretary in a timely manner,concurrently with the notice of the Board meeting,but no less than 14 (fourteen)daysbeforeeachmeeting.This setof documentss to include:an agenda;minutesof the priorBoard meeting; key performance ndicators, ncluding relevant financial and operationalinformationpreparedby the management; nd clearrecommendationsor action.


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'F:-i}$.3ffi,rreThe Boardof Directorskeepsdetailedminutesof its meetings hat adequately eflectBoarddiscussions, ignedby the Chairmanand he CorporateSecretary, nd includevotingresults on an individual basis. The Company keeps transcripts (verbatim reports) o?importantBoarddecisions,suchas he approvalof extraordinary ransactions.g. Self-Evaluation.The Board of Directors conductsa yearly self-evaluation.Thisprocesss to be organizedby the Chairmanof the Boardand he resultsare o be discussedby the full Board of Directors. Independent onsultantsmay also be invited to assist heBoardof Directors n this process.h. Training and Access o Advisers. The Companyoffers an orientationprogram ornew directorson the Company, ts business, nd other issues hat will assist hem indischarging heir duties. The Companyalsoprovidesgeneralaccess o training coursesoits directorsas a matterof continuousprofessionaleducation.The Board of Directorsandits committees hall alsohave he ability to retain ndependentegal counsel,accounting, rotherconsultantso advise he Boardof Directorswhennecessary.i. Remuneration.The remunerationof non-executivedirectors s competitiveand iscomprisedof a meeting attendance ee and an additional fee for the membershipofcommitteesor the Board of Directors tself. The remunerationpackageshall,however,notjeopardize a director's independence.Executive directors ire no1 paid beyond theirexecutiveremunerationpackage.The Board of Directors' Governance,Nominating andCompensationCommittee periodically reviews the remunerationpaid to directors.Alldirectors sign a contract with the Company. The Company publicly discloses theremuneration f eachdirectoron an ndividualbasis.j. Duties and Responsibilities.Directorsact in good faith, with due careand in thebest interestsof the Companyand all its shareholders and not in the interestsof anyparticularshareholder on the basisof all relevant nformation.Each director s expecteito attendall Boardof Directorsand applicablecommitteemeetings.The Board of Directorsmust decideas to whether ts directorscan hold positions nthe governingbodiesof other companies. he Companyshallnot prohibit its directors romserving on other Board of Directors. Directors are expected to ensure that othercommitmentsdo not interfere n thedischargeof their duties.Directors shall not divulge or use confidential or insider information about theCompany.Directorsshall abstain rom actions hat will or may lead o a conflict of interestwiththe Company.When such a conflict exists, directorsshall disclose nformation abouttheconflict of interestso the otherdirectorsandshallabstain rom voting on such ssues.2. At the ExecutiveManagementLevel

The Company understands hat the day-to-day managementof the Company requires


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F i ::i:*i i l il iif l\ i; i: 'airstrong eadershiprom the CEO. It also ecognizeshe challenge ndcomplexityof runninga Companyand believes n teamwork,a collectiverather han individual approach.

a. Authority. The CEO carries out the Company's day-to-day management,implementing ts goalsand objectives,and carrying out its strategy.b. Election.Term. and Dismissal.The Boardof Directorsappoints he CEO for aspecified ermproposedby the Governance,Nominatingand CompensationCommittee.

The Board of Directorsmay dismiss he CEO. Grounds nclude,amongother hings,providing false informationto the Board of Directors,willful neglect of his dutiesandresponsibilities, r convictionof a criminalact"c. Succession lanning.The Board of Directors s to adopt a succession lan that

outlines how it will effectively deal with the temporary or perrnanentoss of seniorexecutives. o assist n this process,he CEO is to provide he Board of Directorswith alist of individuals best suited to replace he Company'skey executives, ncluding thepositionof the CEO.d. Remunerationand Evaluation. The Board of Directors sets the amount ofremuneration f the CEO. The remuneration hall havea fixed and variable component,and the latter is tied to key performance ndicators, n-line with the input into theCompany'song-termdevelopment ndcreation f shareholderalue.e. DutiesandResponsibilities. he CEO shallact n good aith and with duecare nthe best interestsof the Company and all its shareholders and not the interestsof a

particularshareholder on thebasisof all relevant nformation.The CEO shall abstain rom actions hat will or may lead o a conflict betweenhisand he Company's nterests.When sucha conflict exists,members f the executive odiesshalldisclose nformationabout he conflictof interestso the Board of Directors.and shallabstain rom deliberating ndvotingon such ssues.3. Interaction between he Board of Directors and ExecutiveBodiesand the Roleof the Corporate Secretary

Good corporategovernanceprovidesfor an open dialogue between he Company'sBoardof Directorsand executivebodies.The Board of Directorsshall further have unrestrictedaccesso the Company'smanagement nd ts employees. he CorporateSecretary laysakey, overall ole in facilitating hisprocess.The Company's Corporate Secretary s employed on a full-time basis. The CorporateSecretarypossesseshe necessaryqualificationsand skills to ensure hat the governingbodies follow intemal rules and external regulations; facilitates clear communicationsbetween the governing bodies in-line with the Company's charter, by-laws, and otherinternal rules; and keeps the Company's key officers abreast of the latest corporate


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Part III. ShareholderRightsAll shareholders ave the right to participate in the governanceand the profits of thecompany.All rightsare egulatedn thecompany'scharterandby-laws.

l. GeneralMeetingsof ShareholdersThe Companyhasa by-law for the GMS thatprovidesa detaileddescriptionof all theproceduresor preparing,conducting,and makingdecisionsat the GMS.a. Preparation.Every shareholderhat holds voting shares s entitled to participateand vote during the GMS, andreceiveadvancenotification,an agenda,aswell as accurate,objective,and timely information sufficient for making an informed decision about theissueso be decidedat the GMS. The Company'sexecutive odieswill be responsibleorthisprocess,which is to be implementedby thecorporateSecretary.The Company has a fair and effective procedurefor submitting proposals o theagendaof the GMS, includingproposals or the nominationof the Board-of Directorsmembers.The agendaof the GMS is not changedafterthe Boardof Directorsapproves t.b. Conducting he GMS. The Company akesall the stepsnecessaryo facilitate heparticipationof shareholdersn the GMS and vote on the agendatems.The venue of the GMS is easily accessible or the majority of shareholders.Registrationproceduresare convenientand allow for quick and iasy admittance o theGMS.The Company'sexecutivebodiesare o help shareholders xercise heir voting rightsin the event hey are unable o physicallyattend he GMS. The executivebodieswiit do soby providing shareholderswith a power of attorney form, based upon which theshareholder ill havean opportunity o instructhis proxy on how to vote on agenda tems.The Companyensureshat membersof the Boardof Directors,executivebodies,andExternalAuditor arepresentduringthe GMS to answerquestions.Eachshareholder as heright to take the floor on matters on the agenda,and submit relevant proposalsandquestions.The chairman of the GMS conductsthe meeting professionaliy,'fairly, andexpeditiously.

. The Company has effective shareholdervoting mechanisms n place to protectminority shareholdersagainst unfair actions, as regulated in its Charter, ShareholdersAgreementand by-law for the GMS. The procedures or counting votes at the GMS aretransparent ndexclude hepossibilityof manipulatingvoting results.c. Results. The voting results and other relevant materials are distributed to

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g ' , ' t s i ;' vz\. u a r a l l c l r a c a o u a r l lshareholders, ither at the end of the GMS or very soon afterthe GMS is held, as well as othe general ublic by posting hem on the Company'swebsiteandpublishing hem n themassmedia n a timely manner.

2. (Minority) ShareholderRights ProtectionThe Companyhas a systemof registeringshareholder omplaintsand effectively regulatingcorporatedisputes hrough he Board of Directors.

a. Board of Directorsrepresentation.Minority shareholders ave 2 (two) identifiablerepresentativesn the Board of Directors.b. Takeover olicy. The Companyhasa clearly articulated nd enforceableolicy inplacethat protects he rights of minority shareholdersn specialcircumstances, uch as a

change fcontrol.3. RelatedParty Transactions

The Companyavoidsrelatedparty transactions.When this is not possible, he Companydiscloses ll relevant nformationon relatedparty transactions,ncluding nformationonthe affiliatedpartiesand he affiliation of directors ndmembers f othergoverning odies.4. Dividend Policy

The Company has formally developedand follows a written dividend policy. TheCompany's ividendpolicy:. Establishes a transparent,understandable, nd predictable mechanism fordetermininghe amountof the dividends;. Ensures hat the dividendpaymentprocedures easyand efficient; and. Provides or the complete nd imely paymentof declared ividends.Part IV. Information Disclosureand TransparencyTransparency, nd timely and accurate nformation disclosure s a key corporategovernancerinciple or the Company.1. DisclosurePoliciesand Practices

The Companydiscloses ndprovideseasyaccesso all material nformation, ncluding hefinancial situation,performance,ownership,and the govemancestructureof the Companyto shareholdersree of charge.The Board of Directorspreparesand approvesa by-law oninformationdisclosureand makes t publicly availableon the Company'swebsite.TheCompanypublishesa comprehensiveannual report that includesa co{porategovernancesection,and preparesother reports, such as the prospectus, uarterly reports,and materialfacts eports.

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The Companydisclosests corporategovernance ractices, orporateeventscalendar,and othermaterial nformationon its website n a timely manner.

The Company akesmeasureso protectconfidential nformationas defined n its by-law on informationdisclosure. ny informationobtained y the Company'semployees ndthemembers f thegoverningbodiesmay not be used or theirpersonal enefit.2. Financial ReportingThe Company keeps records and preparesa full set of financial statements naccordancewith InternationalFinancialReportingStandards nd discloses hese n itsregulatoryilings, ncluding he annual eport,andon its website.Detailednotesaccompany inancialstatementso that the usersof the statements anproperly interpret he Company's inancialperformance. management iscussion ndanalysis MD&A), as well as the opinionsof the ExternalAuditor, shall complement llfinancialnformation.TheCompanyalsoproduces onsolidatedccounts.3. Internal Audit and Controla. The Internal Auditor. The Company hasan office of the Internal Auditor who isresponsibleor the daily internalcontrol of the Company's inancesand operations. heInternalAuditor is staffed by a highly respectedand reputableperson,and reports o theBoardof Directors'Audit Committee unctionallyand o the CEO. The InternalAuditor's

authority,composition,working procedures, nd other relevantmattersare regulated n itsby-law.b. The Board of Directors' Audit Committee.The Audit Committee s to focusontwo key areas: inancial reporting,and internal and externalaudit. This committee s to bechairedby an independent irector and composedof non-executive irectors,each ofwhom is recognized or his or her financial literacy. Its exact authority, composition,working procedures, nd other relevantmattersare regulatedn its charter.4. The External Audit

An ExternalAuditor audits he Company's inancial statements. he ExternalAuditor is apublicly recognized ndependent uditing firm, where independentmeans ndependencefrom the Company, he Company'smanagement, nd major shareholders. he Companyensureshat theAudit partner s periodicallyrotated.The remunerationof the auditor is disclosed o shareholders.The External Auditor isselectedby the GMS and/or the tsoardof Directors in accordancewith the Charter andShareholdersgreement.

5.OwnershipStructure1 . tA Z


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The Companyensureshat beneficial ownersof five percentor more of the voting sharesaredisclosed.

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