Corporate governance has become the battle cry of investors over the last years. The investing community is screaming and demanding better corporate governance, with a particular emphasis on built in controls over the management and the running out any publicly owned company. In the past many boards were not fulfilling their role but were basically sympathizers with the chairmen or CEO's. An equilibrium between management and supervisory boards are a pre requisite for a modern company and RBC should become a model in the Russian market. There is no single model which is being applied. The key is to make sure that basic principles are observed. The model below was taken as a basis for RBC corporate governance institutes development.

Suggestions

As Russian legislation requests the creation of supervisory boards, RBC being majority owned by its management, should follow this principle. While it would be conceivable that given the majority control of its management RBC could have an internal board only. But investors will clearly prefer the addition of outsiders to the Board. To represent their interests the following structure is suggested:

Supervisory Board

Management Representative and Majority Owners Other Russian Board Members selected by Owners and Mgt. Foreign directors with industry knowledge

3 Members 2 members 4 members

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Executive Management

It is important for RBC and its majority owners to make sure that at all times they have a controlling majority on the Supervisory Board. This is perfectly understandable and will be accepted by investors as long as the present owners continue to hold above 50% of the voting shares. Therefore theoretically at all times the owners and management should have the necessary votes to introduce any policies they wish to adopt. RBC should not underestimate the impact the resignation of independed directors could have. At a minimum such resignations would be taken as a warning signal and investors would probably get worried. The psychological influence of independed directors even in a minority is therefore considerable and should not be underestimated. On the other hand, RBC's willingness to accept well known and experienced personalities from the outside on their Board will be seen by investors as a very positive indication that RBC wants to operate in the most transparent fashion and does not hesitate surrounding themselves with people who can make a contribution to the development of their business.

It has become a requirement in general that boards form basically a minimum of two committees namely a Compensation Committee and an Audit and Compliance Committee.

Compensation Committee Audit and Compliance Committee

Chairman + 2 Independed directors Independed directors + Chairman

In a typical Swiss or English company the principles and rules of the responsibilities and roles of the different organs of a company are laid down in the companies articles of incorporation, internal organization documents and the charters of the Board Committees, it will be of utmost importance for the IRQ to have a set of documents, charters and regulations, which describe in detail how the company is run and how the running of the company is being supervised.

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Role and Composition of the Board of Directors

1. The Board of Directors is elected by the shareholders and holds the ultimate decision-making authority of the Company except for those matters reserved to the shareholders. The senior management team, which is charged with the conduct of the Company's business, is elected by the Board.

2. The Board plans for succession to the position of Chairman of the Board and Chief Executive Officer as well as certain other senior management positions. To this end, the Board receives annual assessments of certain persons it and the Chairman and Chief Executive Officer designate.

3. Major decisions are taken by the Board as a whole. To assist the Board in carrying out its duties, two committees have been created: the Audit and Compliance Committee and the Compensation Committee. Each Committee has a written Charter outlining its duties and responsibilities and a Chairman elected by the Board. The Committees meet regularly and are charged with making full reports and recommendations to the Board at its regular meetings.

4. New Board members receive an extensive orientation to the Company and its business which includes meetings with key management and visits to Company facilities.

5. The Chairman and Chief Executive Officer is responsible for establishing effective communications with the Company's stakeholder groups, i.e. shareholders, customers, company associates, communities, suppliers, creditors, governments and corporate partners.

Functioning of the Board

1. The primary functions of the Board, as defined in general by law are:

 strategic direction and supervision of management of the company;

 accounting matters, financial control and financial planning;

 appointing and dismissing of key executives;

 overall supervision of business operations; and

 setting out the motions to be presented to the General meeting, including the individual and consolidated financial statements.

2. The Board of Directors delegates the conduct of the day-to-day business operations to the Executive Committee.

3. The agenda for Board meetings is set by the Chairman taking into account the needs of the Company and the requirement that the Board be fully informed of material matters of the Company's business. Any member of the Board may request in writing that an item be included on the agenda.

4. Board members receive in advance of Board meetings materials related to agenda items necessary to allow the Directors to prepare for discussion of the items at the meeting.

5. The Chairman and Chief Executive Officer recommends members of senior management who, at the invitation of the Board, attend Board meetings to report on areas of the business within their responsibility thereby ensuring that the Board has sufficient information to make appropriate decisions.

6. The Board should meet in executive session no less than once a year, to review the performance of the Chairman and Chief Executive Officer and other senior managers. The Board also meets in executive session from time to time to considers other matters of importance to the business of the company.

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Functioning of the Committees

1. The responsibilities of each of the Committees are determined by the Board in a charter to be revised from time to time.

2. The Chair of each Committee determines the frequency, length and agenda of meetings of the Committees. The Committee members receive, in advance of committee meetings, materials related to agenda items necessary to allow the Directors to prepare for discussion of the items at the meeting.

Board and Committee Membership

The Board of Directors has ultimate authority for the management of the business, property and affairs of the Company. The Board recognizes the importance of keeping fully informed on material matters involving the Company and it's business. Therefore, Members of the Board are required to hold discussions with the Chairman and other officers of the Company, to review materials provided to them, to visit the offices and to participating in no less than a majority of the meetings of the Board and its committees.

The Board of Directors is comprised of see before.

The Compensation Committee

1. The Compensation Committee is composed of three independent Directors and the Chairman.

2. The Compensation Committee recommends and approves the Company's compensation policies and programs, including option programs and other incentive-based compensation. The Compensation Committee is responsible for establishing annual and long-term performance goals for selected key officers. It is also responsible fore reviewing and approving the compensation paid to members of the Executive Committee and other selected key executives, and for reviewing the performance of the Chairman and Chief Executive Officer. The Compensation Committee from time to time seeks outside expert advice to support recommendations and decisions.

3. The compensation programs of the Company are designed to attract, develop, retain and motivate the high calibre of executives, managers and associates that are critical to the long-term success of the bus/ness. Compensation at the Company is composed of a base salary that is targeted at a median of comparable companies in the industry, annual cash incentive awards that are based on company and individual performance, and long-term incentive awards that are comprised of stock options and other forms of equity participation. Increasingly, we are relying on senior management compensation programs that strongly encourage significant levels of stock ownership and put a high portion of total compensation at risk, subject to individual and company performance and the appreciate of the shareholder value. (See Annex 1)

Audit and Compliance Committee

The Audit and Compliance Committee consists of three members. All members of the Committee shall have sufficient financial and compliance experience and the ability to enable them to discharge their responsibilities as members. The Committee meets at least four times a year and among its duties undertakes the following:

1. To select, evaluate and propose to the Board the external auditors to be nominated for approval by the annual Shareholders' Meeting. .

2. To review annually the external audit scope, audit plans and relevant processes, the results of the external audit, and whether recommendations made have been implemented by Company management.

3. To discuss with external auditors the results of the audit, any unusual items or disclosures contained in the audit.

4. To review annually the internal audit scope, audit plans and relevant processes, the results of the internal audit, and whether recommendations made have been implemented by Company management.

5. To review with external auditors, internal auditors and the financial and accounting personnel of the Company the accounting policies and financial controls of the Company.

6. To review with management, internal auditors and external auditors any significant risks or exposures the Company may face, and to assess the steps management has taken to minimize such risks to the Company.

7. To review the annual external financial statements and annual report to consider whether they conform to accepted accounting principles and the standards set by the Company.

8. To review the processes and procedures for management's monitoring the Company's compliance with laws, regulations and with the Company's Code of Conduct, as well as major legislative and regulatory developments that may have a significant impact on the Company,

9. To review compliance by management of the Company with those Company policies designated by the Board from time to time, including the Insider Trading Policy.

(See Annex 2)

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Compensation Committee

Mission Statement

The Compensation Committee ("the Committee") will recommend, review and approve Compensation Policies and Programs as well as individual executive compensation to retain and attract associates who are needed for ensuring the competitiveness and long-term success of the business and will perform such other tasks as may be delegated to it by the Board of Directors.

Organization

The Committee shall consist of three independent members of the Board of Directors and Chairman. It shall meet at least two times a year and may from time to time seek outside expert advice to support its recommendations and decisions. The CEO is not a member of the Compensation Committee, but he will attend all sessions, except the one during which his performance and remuneration are being discussed and determined.

Roles and responsibilities

The Committee has the following duties:

 to recommend, review and approve Compensation Policies and Programs;

 to advise the Board of Directors on changes in Board compensation;

 to evaluate the performance of the CEO and to determine and decide his

 remuneration;

 to review and approve the remuneration proposals for members of the Group Executive Committee and other key executives or the company with a yearly compensation; and

 to inform the Board of Directors about policies and programs as well as statistical comparisons of compensation levels with key competitors.

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The Audit and Compliance Committee

Mission Statement

The Audit and Compliance (the "Committee") will assist the Board of Directors in fulfilling its responsibilities with respect to the oversight of the Company's accounting and financial reporting practices, and its compliance with law and regulatory requirements. The Committee will maintain effective working relationships with the Board of Directors, Company management and the internal and external auditors. The Committee has oversight responsibilities for internal control, internal audit, the external auditors, and compliance with law, which is to be exercised through reports from and discussions with management.

Organization

The Committee shall consist of 3 members. All members of the Committee shall have sufficient financial and compliance experience and ability to enable them to discharge their responsibilities as members. At least one of these members must have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background that results in the individual possessing financial management expertise.

Members will be appointed for a 3-year term of office.

These members shall be independent of the Company and its affiliates, shall have no relationship to the Company or its affiliates that may interfere with the exercise of their independence, and shall otherwise meet the independence standards required by applicable law, regulation and listing agreements, in particular, none shall have been employed by the company or its affiliates during the last five years.

The Board will designate one member of the Committee as its chairperson.

The Committee will meet less than 1 times a year. Special meetings may be convened as required,

The Chairperson of the Audit Committee will report orally to the full Board on the results of these meetings. The Committee may invite to its meetings Company management, internal auditors, external auditors, and such other persons as the committee deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meetings any persons it deems appropriate in order to enable it to carry out its responsibilities. The internal and external auditors should be invited to make presentations to the Audit Committee as necessary.

Roles and Responsibilities

The Committee has the following responsibilities: Regarding External Auditors

1. To select, evaluate and propose to the Board the external auditors to be nominated from approval by the annual Shareholder's Meeting;

2. To review the terms of engagement of the external auditors, including their compensation, to evaluate their performance, and, if necessary, to review and approve their discharge;

3. To oversee the receipt from external auditors of a formal written statement delineating all relationship: between the auditor and the Company or its affiliates, and to engage in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the external auditor;

4. To review annually the external audit scope, audit plans and relevant processes, the results of the external audit, and whether recommendations made have been implemented by Company management;

5. To discuss with the external auditors the results of the audit, any unusual items or disclosures contained in the audit, including the following;

 The initial selection of and changes in significant accounting policies;

 The methods used to account for significant or unusual transactions and the effects of significant accounting policies in controversial or emerging areas;

 The process utilized by management to formulate significant accounting estimates and the basis for the auditors' conclusions regarding the reasonableness of these estimates;

 Audit findings and recommendations, including audit adjustments that either individually or in the aggregate have a significant effect on the audit;

 The auditors' responsibility for other information presented with the audit results, such as a management report on financial status;

 Any disagreements with management, whether or not satisfactorily resolved, concerning matters that individually or in the aggregate may be significant to the Company's financial status or the auditor's report1

 Significant matters that were the subject of consultations with other accountants;

 Significant issues discussed with management with regard to the initial or recurring retention of the auditor; and

 Any serious difficulties encountered in dealing with management during the performance of the audit.

Regarding Internal Auditors

6. To review periodically the adequacy of the organizational structure and qualifications of the internal audit staff, and to give input periodically to the Compensation Committee regarding the performance of the senior internal auditing executive;

7. To review annually the internal audit scope, audit plans and relevant processes, the results of the internal audit, and whether recommendations made hove been implemented by Company management;

Regarding The Company's Internal Control Structure and Risk Management

8. To review with external auditors, internal auditors and the financial and accounting personnel of the Company whether the accounting policies and financial controls of the Company are appropriate, adequate and effective;

9. To review with management, internal auditors and external auditors any significant risks or exposures the Company may face, and to assess the steps management has taken to minimize such risks to the Company;

Regarding financial Reporting

10. To meet with management and the external auditors to review the financial statements, and to understand significant transactions, significant business risk, or other unusual items or disclosures in the annual reports;

11. To review the annual external financial statements and annual report to consider whether they conform to accepted accounting principles and the standards set by the Company;

12. To review with management and the external auditors their qualitative judgments about the appropriateness, not just acceptability, of accounting principles, estimates and financial disclosure practices used in the preparation of the Company's financial statements and other public reports;

Regarding Compliance with Law and Risk Management

13. To review major issues regarding the status of the Company's compliance with laws, regulations and with the Company's Code of Conduct, as well as major legislative and regulatory developments that may have a significant impact on the Company;

14. To review the processes and procedures for management's monitoring of compliance with local laws and with the Company's Code of Conduct, To this end, the committee will review periodic reports submitted by those persons the Committee has designated as responsible for compliance with law and the Code of Conduct and give guidance and direction on how the Code of Conduct is to be administered;

15. To review with management, internal auditors and external auditors any significant risks or exposures the Company may face, to assess the steps management has taken to minimize such risks to the Company;

Regarding Compliance with Policies

16. To review compliance by management of the Company with those company policies designated by the Board from time to time, including the Insider Trading Policy. To this end, the Committee will review periodic reports submitted by those persons the Committee has designated as responsible for implementation of and compliance with such Policies and give guidance and direction on how said Policies are to be administered;

Other

17. To review such other matters in relation to the Company's accounting, auditing, financial reporting and compliance with law as the Committee may, in its own discretion, deem desirable in connection with the review functions described above;

18. To review and reassess the adequacy of this Charter annually and to submit proposed changes to the Board for approval.