OREANDA-NEWS. October 29, 2010. Standard & Poor’s confirmed its GAMMA corporate governance rating for North-West Telecom at 5+ and announced that it would be withdrawing its rating going forward.  The withdrawal comes at the request of NWT in conjunction with the upcoming reorganization of the Company by way of a merger with Rostelecom and its liquidation as a standalone legal entity.

At the end of its rating assignment, NWT received the following evaluations in four analytical components on a scale of 1 (low) to 10 (high).

Ownership structure an external influence – 5

Shareholder rights – 7

Transparency, audit and risk management – 6+

Efficiency of the Board of Directors, strategic process, incentive system – 5+. 

In the opinion of Standard & Poor’s analysts, the strong points of NWT’s corporate governance practice are as follows:

Efficient procedures in preparing and conducting shareholders meeting,  and also publishing annual IFRS financial statements before the annual general shareholders meeting is held; 

High level of information disclosure, including the release of annual and quarterly IFRS financial statements, and support of a policy of active dialog with investors;

The active role of minority shareholders; their interests are represented by three directors.  Independent directors head two of the four committees under the Board of Directors (including he audit committee).  The Audit Committee is governed by an independent majority;

Extensive powers of the Board of Directors.  The board’s operations are supported by the presence of four attached committees.  The most effective operations are performed by the Strategic Development Committee compared with the previous period;

The Company has implemented parts of a risk management system;

The general shareholders meeting approved the terms of the merger between RTOs and Rostelecom.  An appraisal of the value of RTOs and Rostelecom was performed by Ernst & Young, using a method based on market prices and discounted cash flows.  Independent directors and representatives of the Investor Protection Association (IPA) were involved in the process through the Steering Committee set up by the parent company. 

The full version of the rating agency’s press release can be found on Standard & Poor’s website at www.standardandpoors.ru.  The Gamma rating reflects Standard & Poor’s opinion about the relative pros and cons of this company’s corporate governance practice in terms of investor interests, i.e. the ability to maintain the value of assets due to possible defects in the corporate governance system or the inability to create value.  GAMMA ratings are assigned in countries classifiable as emerging markets, first and foremost, in BRIC countries.  GAMMA ratings are assigned on a scale of 1 to 10.