Corporate governance and corporate governance recommendations report

Corporate governance is a system of principles for the control and management of a Company. These principles are regulated by law, by the Articles of Association and by the internal rules of the Company. As of 1st January 2006, companies listed on the Nasdaq Tallinn Stock Exchange have been encouraged to follow the Corporate Governance Recommendations issued by the Financial Supervision Authority. AS Tallinna Vesi is committed to following those recommendations and acted accordingly throughout 2015. This report covers the principles applicable as of 31st December 2015 and approved by the Financial Supervision Authority.

AS Tallinna Vesi is committed to high standards of corporate governance, for which the Management Board and the Supervisory Board are accountable to the shareholders. The corporate governance model and operational structure are designed to ensure that all employees work towards the common objectives of the Company. Good corporate governance, internal controls and risk management are all key elements to a successful business. Good corporate governance, transparency, sustainability, internal controls and risk management are fundamental components to build and maintain the trust and credibility of all stakeholders of the Company. AS Tallinna Vesi considers it crucial to be transparent in its methods of operation, making corporate disclosures and in its relations with its stakeholders. AS Tallinna Vesi has received recognition for best investor relations by Nasdaq Baltic on several occasions:

In 2009, AS Tallinna Vesi was awarded Best Investor Relations in Nasdaq Tallinn; the Company was also bestowed with an award for Best Annual Report.
In 2010, AS Tallinna Vesi was awarded Best Investor Relations in Nasdaq Tallinn while the Baltic Corporate Governance Institute awarded AS Tallinna Vesi with Best Corporate Governance in Estonia.
In 2011, AS Tallinna Vesi was conferred with Best Investor Relations on the Nasdaq Tallinn Stock Exchange and second place in the Nasdaq Baltic Markets.
In 2012, AS Tallinna Vesi’s was recognized as one of the final nominees for the “Best Interactive Investor Relations”and its annual report was awarded second place in the Baltic Markets
In 2013, as recognition to the work done in the field of corporate governance and investor relations, AS Tallinna Vesi won the main category award for Best Investor Relations in the Baltic Markets thus becoming the first Estonian recipient of the award.
In 2014, AS Tallinna Vesi received Best Investor Relations in the Baltic Markets for a second year. In addition, AS Tallinna Vesi was also recognized as the most attractive company in the Baltic Markets.
In 2015, AS Tallinna Vesi won the Nasdaq Market Awards main category “Best Investor Relations in the Baltics” for a third consecutive year. Additionally, the Company was recognized with first places in the following categories: “Best Investor Relations according to market professionals”, “Best Interactive Investor Relations” and the “Most Trustworthy Company within the Baltic Markets”.

Since 2010, AS Tallinna Vesi has been a member of the Baltic Institute of Corporate Governance, which promotes the best practices of corporate governance in the region. All members of the Management Board of AS Tallinna Vesi have successfully completed the Executive Program of Professional Board Members provided by the Baltic Institute of Corporate Governance.

Investor Relations and Disclosure of Information

Corporate Governance Recommendations statements are available on AS Tallinna Vesi’s homepage https://www.tallinnavesi.ee under the section “Investor”. The Corporate Governance Recommendations Report is an integral part of the Annual Report of AS Tallinna Vesi, which is prepared at the end of each financial year. Annual reports are made public on the Nasdaq Tallinn Stock Exchange and are also available on the Company’s homepage https://www.tallinnavesi.ee –> Investor –> Reports.

AS Tallinna Vesi discloses the following year’s financial calendar on the Nasdaq Tallinn Stock Exchange prior to the end of the calendar year. This information includes the dates of the quarterly and annual financial information and the date of the Annual General Meeting (AGM) of Shareholders. All information disclosed via the Nasdaq Tallinn Stock Exchange is also subsequently made available on AS Tallinna Vesi’s homepage.

Additionally, prior to the AGM being held, AS Tallinna Vesi discloses the following information on its website:

AGM notice,
background information about the agenda, including the Annual Report to be approved, the Supervisory Board´s report and the Auditor´s report;
information about the Supervisory Board member to be elected and the auditor candidate;
the total number of voting rights and number of voting rights by share type;
procedure for adding items to the agenda and presenting draft resolutions;
procedure for inquiring about the Company’s activities from the Management Board
the list of identification documents required for attending the general meeting, including the form of power of attorney.

Decisions of the General Meetings and Management Board presentations are being published shortly after the meeting via the Nasdaq Tallinn Stock Exchange. Finalised and certified minutes of the General Meetings are published seven days following the date of the General Meeting. All documents and information published via Nasdaq Tallinn Stock Exchange are available on AS Tallinna Vesi’s homepage https://www.tallinnavesi.ee -> Investor -> Shareholders meeting.

AS Tallinna Vesi has a regular dialogue with its major shareholders and potential investors and to this purpose, the Company holds General Meetings for shareholders, not less than once per year, to keep shareholders informed and to provide shareholders with an opportunity to question directly the Management Board and the Supervisory Board. The Management Board also meets both existing and potential investors outside of the General Meetings.

AS Tallinna Vesi organises quarterly investor conferences, webinars, using the NASDAQ webinar service. Webinar is a virtual conference, in which company representatives give information about the company and its performance. Webinar allows interactive communication and the possibility to ask questions and receive answers directly from the Management Board members of the Company. The webinar information is announced via the Nasdaq Tallinn Stock Exchange and is open to all interested parties. All webinar recordings and presentations of the webinars are disclosed on the Nasdaq Tallinn Stock Exchange and on AS Tallinna Vesi’s homepage.

The General Meeting of Shareholders

AS Tallinna Vesi is a public limited company, the management bodies of which are the General Meeting of Shareholders, the Supervisory Board and the Management Board. The General Meeting of Shareholders is AS Tallinna Vesi’s highest management body.

In accordance with the Commercial Code and with the Corporate Governance Recommendations, AS Tallinna Vesi convenes both Annual General Meetings (AGM’s) and Extraordinary General Meetings (EGM’s) by notifying all of its shareholders via the Nasdaq Tallinn Stock Exchange and by publishing information on its homepage and in one national daily newspaper at least 3 weeks in advance. Information related to General Meetings is disclosed in Estonian and English on the Company’s homepage and on the Stock Exchange announcements. The announcement in the daily newspaper is published only in Estonian.

The agendas of AGM’s and EGM’s of AS Tallinna Vesi are pre-approved by the Supervisory Board, which also puts forward proposals for attention and for voting at the General Meeting. The General Meeting agenda items, the Supervisory Board’s proposals along with relevant comments about the agenda items, procedural instructions for participating in a General Meeting and procedure for proposing additional items to the agenda are disclosed within the General Meeting’s notice.

Specific rights for adding agenda items granted to shareholders, whose shareholding represents at least 1/20 of the share capital, are clarified in the General Meeting’s notice, as well as on AS Tallinna Vesi’s homepage. Voting rights are explained to the shareholders on the Company’s homepage, as well as at the beginning of each General Meeting.

On 27th May 2015, AS Tallinna Vesi held the Annual General Meeting (AGM) of its shareholders to approve the 2014 Annual Report and distribution of profit and to elect a Supervisory Board member and an auditor. The Management Board made a presentation on the overall performance of the Company, highlighting the improvements in the occupational environment and –safety area as well as in the financial and operational performance. No questions regarding the items in the 2015 AGM agenda were asked, nor were any additional agenda item proposals made in 2015.

The Chairman of any AGM is an independent person. In 2015, the AGM was chaired by Mr. Sven Papp, who introduced the procedure for conducting the General Meeting, including the procedure for inquiring about AS Tallinna Vesi’s activities from the Management Board.

All members of the Management Board, the Chairman of the Supervisory Board and the lead auditor participated in the AGM in 2015. When a Supervisory Board member or a lead auditor stands for election at the General Meeting, the candidate for the respective position usually participates in the Meeting. Therefore, the Supervisory Board member candidate Mr Allar Jõks participated in the 2015 AGM. The candidate for the position of lead auditor, Mr. Ago Vilu, also participated in the 2015 AGM.

AS Tallinna Vesi does not allow its shareholders to participate at the General Meetings via electronic communication tools, as it has been too complicated and expensive to establish reliable solutions to identify the shareholders, especially those who are overseas’ residents.

No shareholders have shares that grant them a right for specific control. AS Tallinna Vesi is unaware of any shareholders having concluded any voting agreements.

As per the Articles of Association of AS Tallinna Vesi, amended 24th May 2011, AS Tallinna Vesi has issued one registered preferred share with a nominal value of 60 euros (B-share). The B-share grants the holder the right to participate in General Meetings, in the distribution of profits and of assets remaining upon dissolution of AS Tallinna Vesi and other rights provided by law and by the Articles of Association of AS Tallinna Vesi. The B-share grants the holder preferential right to receive a dividend to an agreed sum of 600 euros. The B-share grants the shareholder 1 (one) vote at the General Meeting (restricted right to vote) when deciding on amendments to the Articles of Association of AS Tallinna Vesi, on increasing or reducing the share capital of AS Tallinna Vesi, on issuing convertible bonds, on acquisition of treasury shares by AS Tallinna Vesi, on deciding on a merger, division, transformation and/or dissolution of AS Tallinna Vesi and on deciding issues related to the activities of AS Tallinna Vesi that have not been placed under the exclusive competence of the General Meeting by the law.

The Supervisory Board

The Supervisory Board plans the activities of AS Tallinna Vesi, organises its management and supervises the activities of the Management Board. Pursuant to the Articles of Association of AS Tallinna Vesi, the Supervisory Board consists of nine members each with a term of two years. In 2015, five regular and no extraordinary Supervisory Board meetings were held. The Supervisory Board pre-approved the 2014 Annual Report presented to the Annual General Meeting for approval and reviewed AS Tallinna Vesi’s budget for 2016. In addition, in its meetings, the Supervisory Board reviews major risks that the Company faces, regulatory and legal issues, matters regarding operations, finances and human resources, customer service and satisfaction, market development for non-regulated businesses and other operational and business matters.

The following points are usually brought up at every Supervisory Board meeting:

minutes of the previous meeting;
information on issues dealt with by the Supervisory Board’s committees as appropriate;
the Management Board report covering operational, legal and regulatory, financial, communication, human resources, health, safety and quality areas;
major projects and issues;
decisions on special cases.

At the time of compilation of this report, AS Tallinna Vesi’s Supervisory Board consisted of the following members:

Mr. Simon Gardiner (United Utilities (Tallinn) B.V.), Supervisory Board member until 22nd May 2016;
Mr. Steven Richard Fraser (United Utilities (Tallinn) B.V.), Supervisory Board member until 21st January 2018;
Mr. Brendan Francis Murphy (United Utilities (Tallinn) B.V.), Supervisory Board member until 27th October 2017;
Mr. Martin Benjamin Padley (United Utilities (Tallinn) B.V.), Supervisory Board member until 31st October 2016;
Mr. Priit Lello (Tallinn City), Supervisory Board member until 15th November 2017;
Mr. Rein Ratas (Tallinn City), Supervisory Board member until 22nd May 2016;
Mr. Toivo Tootsen (Tallinn City), Supervisory Board member until 5th April 2017;
Mr. Mart Mägi (independent) Supervisory Board member until 22nd May 2016;
Mr. Allar Jõks (independent) Supervisory Board member until 28th May 2017.

AS Tallinna Vesi has not made any transactions with members of the Supervisory Board nor their related parties.

The Supervisory Board has formed three committees to advise the Supervisory Board on audit, on nomination and remuneration and on corporate governance matters as described below.

The Audit Committee and Internal Audit

The Audit Committee is the subcommittee to the Supervisory Board, which provides an oversight of the financial reporting process, the audit process, the systems of internal controls and compliance with the laws and regulations. The Audit Committee follows the Authorised Public Accountants Act and the guidelines issued by the Financial Supervision Authority regarding the composition and working processes of an Audit Committee.

The main responsibilities of the Audit Committee are:

to review quarterly and annual financial statements, including reporting to the Supervisory Board on significant issues considered by the Audit Committee in relation to the financial statements and how those issues were addressed;
to monitor and analyse the effectiveness of risk management systems and internal controls;
to review annual report and the scope, processes and results of the annual audit and to report to the Supervisory Board on the effectiveness of the audit process;
to monitor and analyse the independence and objectivity of external auditors and the legality of their activity regarding AS Tallinna Vesi and how the objectivity has been safeguarded;
to annually evaluate the work of external auditors and report to the Supervisory Board about the results of such evaluation;
to make recommendations to the Supervisory Board for the appointment or reappointment of the external auditor and to be responsible for the tender of the external audit and to agree the fees paid to the auditor;
to monitor the independence of the internal auditor;
to review the scope effectiveness of the internal audit function, including reviewing and approving the annual audit plan and KPI’s from the internal auditor.

At the time of compilation of this report, the Audit Committee consisted of the following members of the Supervisory Board:

Mr. Brendan Francis Murphy acting as the Chairman of the Audit Committee;
Mr. Allar Jõks and
Mr. Simon Gardiner.

At each Supervisory Board meeting, an internal audit report is presented to the Supervisory Board. The internal auditor of AS Tallinna Vesi reports directly to the Audit Committee.

The external auditor appointed and any member of the external audit team cannot provide any service outside the scope of annual audits without prior approval from the Audit Committee. In 2015, the external auditor did not provide any services to the Group outside the scope of the annual audit.

Pursuant to the Articles of Association of AS Tallinna Vesi, an external auditor is elected by the General Meeting of Shareholders to conduct the annual audit. The remuneration of the external auditor is regulated in the contract signed between the external auditor and the Management Board respectively. In 2015, the Group paid EUR 29 thousand for the annual audits against the relevant invoices issued. AS Tallinna Vesi chooses an external auditor by following internal procurement procedures (which include approval by the Audit Committee and the Supervisory Board of AS Tallinna Vesi), thus ensuring the best match of service-quality and price offered for the services. Offers are taken only from internationally respected, high-quality audit companies. AS Tallinna Vesi signs a 3-year audit contract with a clause that requires re-appointment of the lead auditor each year and follows the Financial Supervision Authority guidelines of 1st November 2013 “Rotation of the auditors of certain subjects of financial supervision by the state” with regard to the requirement to rotate the lead auditor every 5 years.

Based on the report of the Audit Committee, the Supervisory Board evaluates the quality of the work of the external auditor annually, in the course of the approval of the Annual Accounts, and discloses the summary of such evaluation in the AGM notice. The external auditor is present at the AGM and participates where necessary.

Nomination and Remuneration Committee

In 2015, the Nomination and Remuneration Committee continued to advise the Supervisory Board on management remuneration issues and Management Board nominations.

At the time of compilation of this report, the Nomination and Remuneration Committee consisted of the following members of the Supervisory Board:

Mr. Steven Richard Fraser, acting as the Chairman of the Nomination and Remuneration Committee;
Mr. Mart Mägi and
Mr. Simon Gardiner.

The Supervisory Board approves the remuneration principles of the issuer’s managers and appoints the Nomination and Remuneration Committee. The Nomination and Remuneration Committee recommends the remuneration principles of AS Tallinna Vesi and exercises due supervision to ensure that the principles approved by the Supervisory Board and the requirements of the Securities Market Act are being followed.

The Nomination and Remuneration Committee ensures that the remuneration principles proposed are based on the short- and long-term objectives of AS Tallinna Vesi, taking into account the financial performance of AS Tallinna Vesi and the legitimate interests of investors. The Nomination and Remuneration Committee also ensures that the proportion of remuneration for the principal job and performance related pay (PRP) are in accordance with the duties of the Management Board Member and that the remuneration for the principal job forms a sufficient part of the total remuneration. According to the existing PRP principles, members of the Management Board are entitled to a maximum PRP of 25% of their annual gross salary. The PRP depends on the annual financial and operational performance of the company. If the annual results are worse than expected, a decision can be taken not to pay any PRP.

Corporate Governance Committee

In 2015, the Corporate Governance Committee continued to advise the Supervisory Board on the improvement of corporate governance of AS Tallinna Vesi for the benefit of its Supervisory Board and shareholders.

At the time of compilation of this report, the Corporate Governance Committee consisted of the following members:

Mr. Allar Jõks acting as Chairman of the Corporate Governance Committee;
Mr. Karl Heino Brookes and
Mr. Simon Gardiner.

The Management Board

The Management Board is a management body that represents and manages the day-to-day business of AS Tallinna Vesi in accordance with the law and the Articles of Association of AS Tallinna Vesi. The Management Board is obliged to act in the most economically efficient manner. The Management Board can be composed of two to five members, in line with the Articles of Association and is elected for a term of 3 years. The Management Board always prepares management reports for the Supervisory Board meetings and such reports are distributed to the Supervisory Board members 1 (one) week in advance of the meeting, as required by the Commercial Code. The Management Board also reports ad hoc to the Supervisory Board outside of meetings, when considered necessary, and if requested to do so by the Chairman of the Supervisory Board.

Both Management Board and Supervisory Board Members are deemed to be insiders who are aware of AS Tallinna Vesi’s insider rules and together with their related persons, are listed in the Group’s insider list. Since 2nd June 2014 and until compilation of this report, the Management Board of AS Tallinna Vesi has consisted of three members. The Supervisory Board of AS Tallinna Vesi has appointed all Management Board members. The members are as follows:

Mr. Karl Heino Brookes, with the powers of Management Board member until 20th March 2017;
Ms. Riina Käi, with the powers of Management Board member until 29th October 2018;
Mr. Aleksandr Timofejev, with the powers of Management Board member until 29th October 2018.

The responsibilities of all Management Board members are specified below.

The duties of the Chairman of the Management Board, Mr. Karl Heino Brookes, are to, inter alia, fulfil the everyday obligations of the Chief Executive Officer (CEO) of AS Tallinna Vesi by leading and representing AS Tallinna Vesi, by ensuring its compliance with contracts and the law, by organizing the activities of the Management Board and by coordinating the preparation of strategies and ensuring their implementation.

The duties of the member of the Management Board, Mr. Aleksandr Timofejev, are to, inter alia, fulfil the everyday obligations of the Chief Operations Officer (COO) of AS Tallinna Vesi by managing and being responsible for the operations of the treatment facilities, the planning and delivery of long-term investments and the management of AS Tallinna Vesi’s water and sewerage networks’ everyday operations, as well as being responsible for customer services and for relations established with external partners.

The duties of the member of the Management Board, Ms. Riina Käi, are to, inter alia, fulfil the everyday obligations of the Chief Financial Officer (CFO) of AS Tallinna Vesi by managing and being responsible for the accounting and financial activities of AS Tallinna Vesi.

AS Tallinna Vesi has signed service contracts with all members of the Management Board. AS Tallinna Vesi has not made any transactions with the members of the Management Board nor with any of their related parties.

According to the Articles of Association of AS Tallinna Vesi, the Chairman of the Management Board has the sole representation right of AS Tallinna Vesi; other Management Board members can represent AS Tallinna Vesi only jointly. In order to make daily decisions, the Management Board has approved a framework of principles, according to which certain Management Team members are authorized to conclude transactions in small amounts.

The Management Board of AS Tallinna Vesi also acts on behalf of AS Tallinna Vesi as the sole shareholder of OÜ Watercom.

Equal opportunities and diversity in selecting Management Board and Supervisory Board Members.

In selecting members to the Management and Supervisory Boards, AS Tallinna Vesi is committed to the principles of equality being adhered to. No one is discriminated against because of their age, gender, religion, ethnic origin or other characters. In selecting Management Board Members and Supervisory Board Members, experience in the business or area of expertise, education and background are considered to be the most important, in order to provide an effective and balanced Board. The allocation between men and women in the Supervisory Board and Management Board is outlined in the Management Report.

Conformity with NASDAQ Tallinn Stock Exchange Corporate Governance Recommendations

As of 1st of January 2006, companies whose shares have been admitted for trading on the regulated market operating in Estonia shall describe, in accordance with the ‘Comply or Explain’ principle, their management practices in a Corporate Governance report and confirm their compliance or non-compliance with the Corporate Governance Recommendations. If the issuer does not comply with the Corporate Governance Recommendations, it shall explain the reasons for its non-compliance in the report.

Declaration of Conformity by AS Tallinna Vesi

In 2015, AS Tallinna Vesi complied with the vast majority of the Corporate Governance Recommendations. However, AS Tallinna Vesi did not comply with certain recommendations, which are listed below, along with the reasons for such non-compliance:

”2.2.3. The basis for Management Board remuneration shall be clear and transparent. The Supervisory Board shall discuss and review regularly the basis for Management Board remuneration. Upon determination of the Management Board remuneration, the Supervisory Board shall be guided by evaluation of the work of the Management Board members. Upon evaluation of the work the Management Board members, the Supervisory Board shall, above all, take into consideration the duties of each member of the Management Board, their activities, the activities of the entire Management Board, the economic condition of the Issuer and the actual state and future prediction and direction of the business in comparison with the same indicators of companies in the same economic sector. “

The arrangements undertaken, in connection with the privatisation of AS Tallinna Vesi in 2001, provided that, in return for certain fees, United Utilities International Ltd. would provide AS Tallinna Vesi with technical and asset management services and make its personnel available to AS Tallinna Vesi in connection with its operation and management. The working hours, rates of compensation, and all other matters relating to the employment of the individual directly employed by United Utilities International Ltd. are to be determined solely by United Utilities International Ltd., the Supervisory Board does not review the principles of remuneration of the relevant Management Board member.

”2.2.7. Basic wages, performance pay, severance packages, other payable benefits and bonus schemes of a Management Board member, as well as their essential features (incl. features based on comparison, incentives and risk) shall be published in clear and unambiguous form on the website of the Issuer and in the Corporate Governance Recommendations Report. Information published shall be deemed clear and unambiguous if it directly expresses the amount of expense to the Issuer or the amount of foreseeable expense as of the day of disclosure.”

AS Tallinna Vesi discloses the overall Management Board remuneration in Note 25 of the annual accounts but considers that individual remuneration is sensitive and private information and that additional disclosure would bring no benefit to the shareholders.

”3.2.2. At least half of the members of the Supervisory Board of the Issuer shall be independent. If the Supervisory Board has an odd number of members, then there may be one independent member less than the number of dependent members.”

Pursuant to the Articles of Association of AS Tallinna Vesi, the Supervisory Board consists of nine members. Under the Shareholders` Agreement, United Utilities (Tallinn) B.V. (hereinafter UUTBV) and the City of Tallinn have agreed that the division of seats in the Supervisory Board shall be such that, UUTBV shall have four seats, the City of Tallinn shall have three seats and two seats shall be reserved for independent members to be elected to the Supervisory Board as permitted by the Tallinn Stock Exchange on listing in June 2005.

Information Disclosure

“2.2.2. The member of the Management Board shall not be at the same time a member of more than two management boards of an Issuer and shall not be the Chairman of the Supervisory Board of another Issuer. A member of the Management Board can be the Chairman of the Supervisory Board in a company belonging to same group as the Issuer.”

The Management Board Members of AS Tallinna Vesi are not in Management Boards and Supervisory Boards of other Issuers.

“2.3.2. The Supervisory Board shall approve the transactions which are significant to the Issuer and concluded between the Issuer and a member of its Management Board or another person connected/close to them and shall determine the terms of such transactions.”

The Supervisory Board approves the remuneration principles of the Management Board. In 2015, there were no other transactions between AS Tallinna Vesi and either any member of the Management Board or any persons or companies related to them.

“3.2.5. The amount of remuneration of a member of the Supervisory Board shall be published in the Corporate Governance Recommendations Report, indicating separately, basic and additional payment (incl. compensation for termination of contract and other payable benefits).”

The Supervisory Board member’s fee was determined by the General Meeting in 2005, at the listing of the Company’s shares on the Tallinn Stock Exchange. The remuneration of Supervisory Board members was set at 6,391 euros per year per person and has remained unchanged. The fee has been paid to five members out of nine. The Supervisory Board member’s fee is not paid to the members representing UUTBV. The fee is subject to deduction and payment of applicable taxes and is payable on a monthly basis. The Supervisory Board members were not paid any additional benefits in 2015.

“3.2.6. If a member of the Supervisory Board has attended less than half of the meetings of the Supervisory Board, this shall be indicated separately in the Corporate Governance Recommendations Report.”

In 2015, five Supervisory Board meetings were held as follows: 29th January 2015, 26th March 2015, 23rd April 2015, 30th July 2015 and 5th November 2015.

The 29th January 2015 Supervisory Board meeting was attended by, Messrs. Simon Gardiner, Martin Padley, Brendan Murphy, Steven Richard Fraser, Mart Mägi, Toivo Tootsen, Allar Jõks and Rein Ratas.

The 26th March 2015 Supervisory Board meeting was attended by, Messrs. Simon Gardiner, Martin Padley, Brendan Murphy, Steven Richard Fraser, Mart Mägi, Toivo Tootsen, Priit Lello and Rein Ratas.

The 23rd April 2015 Supervisory Board meeting was attended by, Messrs. Simon Gardiner, Martin Padley, Brendan Murphy, Mart Mägi, Allar Jõks, Toivo Tootsen, Priit Lello and Rein Ratas.

The 30th July 2015 Supervisory Board meeting was attended by, Messrs. Simon Gardiner, Martin Padley, Brendan Murphy, Mart Mägi, Allar Jõks, Toivo Tootsen, Priit Lello and Rein Ratas.

The 5th November 2015 Supervisory Board meeting was attended by, Messrs. Simon Gardiner, Martin Padley, Brendan Murphy, Mart Mägi, Allar Jõks, Toivo Tootsen, Rein Ratas and Priit Lello.

Considering the above, Messrs. Simon Gardiner, Martin Padley, Brendan Francis Murphy, Rein Ratas, Mart Mägi and Toivo Tootsen attended all Supervisory Board meetings. Messrs. Priit Lello and Allar Jõks attended more than 50% of the meetings. Mr. Steven Richard Fraser attended two meetings out of five. He did not attend one meeting due to a planned holiday and two other meetings due to performance of other duties in United Utilities. Nevertheless, Mr. Steven Richard Fraser familiarised himself with all papers distributed for each Supervisory Board meeting and has been well informed of matters concerning AS Tallinna Vesi.

“3.3.2. A Supervisory Board member candidate shall inform other members of the Supervisory Board about the existence of conflict of interests before their election and immediately upon arising of it later. Members of the Supervisory Board shall promptly inform the Chairman of the Supervisory Board and Management Board regarding any business offer related to the business activity of the Issuer made to him, a person close to him or a person connected with him.”

All Supervisory Board members are aware of this requirement and at minimum once per year, AS Tallinna Vesi requires all Supervisory Board members to update the record of their business interests. No business transactions took place between AS Tallinna Vesi and either any Supervisory Board member or any persons or companies related to them in 2015.

Management Report which consists of Chairman's statement, Results of operations – for the year 2015, Corporate Governance and Corporate Governance Recommendations Report is an integral part of the annual report of AS Tallinna Vesi for the financial year ended 31 December 2015. The Management Report gives a true and fair view of the trends and results of operations, main risks and doubts of AS Tallinna Vesi.