**Exhibit 1.6**

APPROVEDby the General Shareholders’ Meetingof OJSC Rostelecom on June 24, 2006

 

 

 

 

 

REGULATIONS

on the AuditCommission ofthe Open Joint Stock CompanyLong-Distance and International Telecommunications Rostelecom

(restated version No. 1)

 

 

 

 

 

 

 

 

Moscow2006

----

 

**1.****                                      GENERALPROVISIONS**

1.1                                 TheseRegulations (the “Regulations”) are drawn up pursuant to the Law “On JointStock Companies” and the Charter of the Company.

1.2                                 TheRegulations set forth terms and conditions for operations of the AuditCommission, including arrangements for holding of the meetings of the AuditCommission, conducting of audits, powers of the members of the AuditCommission, and interaction with management bodies of the Company.

1.3                                 TheAudit Commission shall be elected at the General Shareholders Meeting, inaccordance with the applicable law and the Charter of the Company for the termtill the next Annual General Shareholders Meeting and shall consist of five (5) members.

1.4                                 Theauthorities of the Audit Commission or any of its members can by terminatedpursuant to the provisions of the applicable law, the Charter of the Companyand these Regulations.

**2.****                                      AUTHORITIES OF THE AUDIT COMMISSION**

2.1                                 TheAudit Commission carries out control over the financial and business operationsof the Company, including its branches and representative offices.

2.2                                 TheAudit Commission within the limits of its authority, stipulated by the Charterof the Company, carries out supervision over the Company’s activities in thefollowing areas:

-                    auditof the financial accounts and business documentation of the Company, includingprimary accounting, if required;

-                    auditof the legitimacy of the decisions and actions of the Company’s executivebodies, including validity of concluded contracts and transactions;

-                    verificationof consistency of the transactions terms concluded by the Company with theterms of other transactions concluded under similar circumstances;

-                    analysisof compliance of accounting and statistics reporting with the applicable law;

-                    analysisof the financial standing of the Company, identification of resources toimprove the economic position of the Company;

-                    analysisof the timeliness and accuracy of the settlements with counterparties, budgetsof all levels and other Company’s creditors;

-                    analysisof the settlements with the debtors of the Company, including timeliness andcompleteness of measures taken by the executive bodies;

-                    otheractivity undertaken within the authority of the Audit Commission.

**3.****                                      RIGHTS OF MEMBERS OF THE AUDIT COMMISSION**

3.1                                 Inthe course of its operations the Audit Commission is entitled to request, andthe Company’s officers are obliged to provide, documentation regarding thefinancial and business activities of the Company, including confidential documents,in the following order:

2

----

 

3.1.1                        therequest to submit the documents regarding financial and economic activities ofthe Company can be both oral and in writing; the officers of the executivebodies are entitled to demand a written confirmation of the request;

3.1.2                        thedocuments regarding the financial and business activities of the Company shallbe promptly submitted at the Audit Commission’s request within 5 business days,and in case if the prompt provision of the documents requested is not possibledue to subjective circumstances, the documents shall be submitted within 10business days following the date of the request;

3.1.3                        the AuditCommission’s members shall have access to the Company’s documents, includingconfidential documents, at any time during the business hours of the Company,and if required, after the business hours upon written request;

3.1.4                        in orderto keep proper records of the audits (reviews) of the Company’s activities, theAudit Commission shall be entitled to assure that properly certified copies offinancial and business documents of the Company are attached to the audit(review) materials;

3.1.5                        in casesof provision of the false information, or in cases of refusal to provide therequested documents, or in case of violation of the terms stipulated bysubsection 3.1.2 hereof, or if the Audit Commission’s activity is blockedotherwise, the Audit Commission is entitled to request that the executives ofthe Company undertake measures provided for by applicable law with respect to personswho committed the said violations, and demand that the requested documents beprovided immediately within 5 business days;

3.1.6                        theCompany’s Board of Directors shall be notified of the incidents of violationsof requirements set forth in subsection 3.1.5 above by executives of theCompany, and measures taken towards those who committed the violations, andsuch occasions shall be noted in the report of the Audit Commission;

3.1.7                        access tothe financial and business documents, which contain state secrets, shall begoverned by applicable law.

3.2                                 Ifthe revealed violations in the activities of the Company jeopardize the Company’sinterests, the Audit Commission shall be entitled to:

3.2.1                        requestthat a meeting of the Management Board, the Board of Directors, the AuditCommittee or an extraordinary General Shareholders Meeting be convened in orderto settle the issues within the authorities of the respective management bodyof the Company;

3.2.2                        requestconvocation of an extraordinary General Shareholders Meeting on other grounds,stipulated by applicable law, by the Company’s Charter and by theseRegulations.

3.2.3                        theprocedure for the convening the Management Board, the Board of Directors, theAudit Committee and the extraordinary General Shareholders Meeting upon theAudit Commission request is set by applicable law, the Company’s Charter andregulations regarding the respective management body of the Company. If theorder for convening such meetings is not provided, the meeting shall beconvened within a reasonable period as from the date when the request wasfiled.

3.3                                 TheAudit Commission is entitled may propose to the Audit Committee to review anyissue within the competence of the Audit Commission and the Audit Committee.

3.4                                 TheAudit Commission shall also be entitled to demand written statements of opinionfrom the Company’s officers responsible for certain financial and businessactivities of the Company on the issues within the authorities of theseofficers.

3

----

 

These statements shall be reviewed by the Audit Commissionalongside other documents and information received in the course of exercisingby the Commission of its duties, according to applicable legislation, theCompany’s Charter and these Regulations.

3.5                                 Explanationsand statements submitted at the Audit Commission’s request shall be providednot later than 5 business days following the day of the request. If theexplanations or statements of opinion are not provided, or knowingly falseexplanations or statements are submitted, the Audit Commission shall act inaccordance with the procedure stipulated in subsection 3.1.5 and 3.1.6 hereof.

3.6                                 TheAudit Commission is entitled to involve, in the course of its activities, otherexperts (individuals or legal entities), who are not members of the AuditCommission and not the Company’s employees, for solving certain complicatedissues.

3.7                                 TheAudit Commission is entitled, upon revealing incidents of violations within itsauthorities, to raise before the management bodies of the Company the possibilityof imposing sanctions on the person (officer) whose action or omission causedthe violation.

3.8                                 Themanagement bodies of the Company shall inform the Audit Commission on measurestaken by them upon its request.

**4.****                                      RESPONSIBILITIES OF MEMBERS OF THE AUDITCOMMISSION**

4.1                                 Membersof the Audit Commission shall:

4.1.1                        notdisclose confidential information (which contains commercial secrets), whichwere revealed to members of the Audit Commission in the course of their duties.

4.1.2                        providetheir opinion on the results of the audits (review) of the financial andbusiness activities of the Company, according to provisions set forth in theCompany’s Charter and these Regulations.

4.1.3                        carry outunscheduled audit (review) of the financial and business activities of theCompany not later than 30 days from the date of the relevant resolution waspassed in accordance with section 5.3 hereof.

4.1.4                        carry outmandatory audit (review) of the financial and business activities of theCompany upon the annual results of the Company’s activities and submit thereport to the Board of Directors not later than 16 business days before thepreliminary approval of the annual financial statements by the Board ofDirectors.

4.2                                 Membersof the Audit Commission shall incur liability for any breach occurred in thecourse of exercising their duties in accordance with applicable legislation ofthe Russian Federation.

**5.****                                      PROCEDURES OF THE AUDIT COMMISSION**

5.1                                 Electionof the Chairman and the Secretary of the Audit Commission and their Authorities

5.1.1                        TheChairman of the Audit Commission shall supervise its activity and shall beelected by a majority vote of the members of the Audit Commission participatingin the first meeting of the Audit Commission. The Chairman can be re-elected atany time upon the decision of a majority of the members of the AuditCommission.

5.1.2                        Acandidate for the Chairman’s position can be nominated by any member of theAudit Commission. A member of the Audit Commission is entitled to nominatehimself/herself as a candidate to the Chairman’s position as well. The Chairmanof the Audit Commission shall organize 

 

4

----

the work of the AuditCommission, convene and chair its meetings, organize keeping of minutes at themeetings.

5.1.3                         TheChairman’s instructions regarding organizational issues (including thenecessity and dates of carrying out an audit (review) of the financial andbusiness activities of the Company) are mandatory for the members of the AuditCommission.

5.1.4                        TheChairman is not entitled to influence on the conclusions made by any member ofthe Audit Commission upon the results of an audit (review) conducted by theAudit Commission.

5.1.5                        TheSecretary of the Audit Commission elected on the first meeting of the AuditCommission provides organizational support to activities of the AuditCommission. The election of the Secretary shall follow the same proceduresstipulated for election of the Chairman of the Audit Commission.

5.1.6                        Onceelected, the Secretary shall notify the Company about the manner of providingto him/her the documents, submitted to the Audit Commission under subsection6.1 hereof.

5.1.7                        TheSecretary of the Audit Commission shall keep minutes and ensure the storage ofthe documents, related to the activities of the Audit Commission, in accordancewith section 6 hereof.

5.2                                 HoldingMeetings of the Audit Commission

5.2.1                        All issuespertaining to the activities of the Audit Commission, not referred to in theduties of the Chairman, shall be resolved at the Audit Commission’s meetings.Meetings of the Audit Commission are held as required, but at least quarterly.

5.2.2                        The firstmeeting of the Audit Commission shall be held not later than 15 days from thedate of election of the Audit Commission.

5.2.3                        Themeetings of the Audit Commission are presided over by the Chairman of the AuditCommission. In cases of an absence of the Chairman, a deputy Chairman iselected by a majority vote of the members participating in the meeting of theAudit Commission.

5.2.4                        Minutes ofthe meeting shall be kept at the meetings of the Audit Commission. In cases ofan absence of the Secretary of the Audit Commission, the person acting as theSecretary is appointed by a majority vote of the members participating in themeeting of the Audit Commission. The minutes shall be signed by allparticipants of the meeting.

5.2.5                        Meetingsof the Audit Commission shall be mandatory prior and after conducting an audit(review) of the financial and business activities of the Company.

5.2.6                        Decisionsof the Audit Commission can be passed by both the personal presence of themembers and by absentee vote. If a decision is passed by absentee vote, thedocuments concerning the agenda of the meeting and the voting ballots shall besent to the members of the Audit Commission clearly expressing the positions onthe issues of the agenda.

5.2.7                        Uponinstructions of the Chairman of the Audit Commission the Secretary of the AuditCommission provides for preparation of the documents for the absentee vote andtheir distribution. The Chairman of the Audit Commission shall set a deadlinefor the members of the Audit Commission to express their views on the issues ofthe agenda.

5.2.8                        Themeeting of the Audit Commission is deemed to have a quorum, if at least half ofthe elected members of the Audit Commission are participating in the meeting.If a decision is passed by absentee vote, it is deemed to have a quorum, if atleast half of the elected members of the Audit Commission participate in thevoting.

5

----

 

5.2.9                        Decisionsof the Audit Commission are adopted by a majority vote of the members of theAudit Commission participating in the meeting (participating in the vote incase the decision is passed by absentee vote).

Eachmember of the Audit Commission has one vote. If the votes are equally split, theChairman casts the deciding vote.

5.3                                 ConductingAudits by the Audit Commission

5.3.1                        The AuditCommission shall conduct audits of the Company’s financial and businessactivities upon its annual results of operations.

5.3.2                        The AuditCommission is entitled, in addition to the audit (review) described insubsection 5.3.1 above, to conduct special unscheduled audits (reviews) of thefinancial and business activities of the Company at any time, in accordancewith these Regulations.

5.3.3                        Anunscheduled audit (review) of financial and business activities of the Companyshall be mandatory, if it is initiated by:

-                    the GeneralShareholders’ Meeting;

-                    the Board ofDirectors;

-                    theshareholder(s) owning, in total, at least 10% of the Company’s votingshares;

-                    the AuditCommission itself.

5.3.4                        Thegrounds for conducting an audit (review), initiated at the General Shareholders’Meeting or by the Board of Directors, shall be an appropriate decision of therespective management body of the Company.

TheChairman of the Audit Commission shall arrange an unscheduled audit (review)not later than 30 days from the date of the relevant decision of the GeneralShareholders’ Meeting or the Board of Directors.

5.3.5                        Thegrounds for conducting an audit (review), initiated by a shareholder(s), shallbe the relevant written request received by the Audit Commission. The Chairmanof the Audit Commission shall arrange an unscheduled audit (review) not laterthan 30 from the date of such request.

5.3.6                        If amember of the Audit Commission deems necessary to conduct an unscheduled auditof the Company’s activity, he (she) shall apply with the relevant proposal tothe Chairman of the Audit Commission. The Chairman convenes a meeting of theAudit Commission, at which the necessity of the unscheduled audit and time ofits conducting are considered. The unscheduled audit (review) of the financialand business activities initiated by the Audit Commission shall be conducted,if the majority of the members of the Audit Commission vote for such audit(review).

5.3.7                        Not laterthan in 10 days before the beginning of an audit (review), the Chairman of theAudit Commission shall notify, in writing, the Board of Directors and theGeneral Director (or his deputy) about the audit (review), issues to be audited(reviewed), the party that initiated the audit (review), necessity to involvein the audit the experts (individuals or legal entities) who are not members ofthe Audit Commission, and about other significant conditions of conducting theaudit (review).

5.3.8                        In orderto support the operations of the Audit Commission, the General Director of theCompany (his deputy) shall appoint a group of the Company’s employees to beresponsible for interaction with the Audit Commission.

5.4                                 Procedurefor Involving Experts (Individuals and/or Legal Entities) who are not Membersof the Audit Commission for Audits (Reviews) Conducted by the Audit Commission

6

----

 

5.4.1                        If thegrounds stipulated by the subsection 3.6 hereof are in place the Board ofDirectors, as well as any member of the Audit Commission, shall be entitled toapply to the Chairman of the Audit Commission with a proposal to involveexperts (individuals and/or legal entities) who are not members of the AuditCommission or the Company’s employees, for conducting an audit (review) at anymoment.

Thedecision to involve experts (individuals and/or legal entities), who are notmembers of the Audit Commission, shall be adopted at the meeting of the AuditCommission.

5.4.2                        Ifinvolvement of experts (individuals and/or legal entities), who are not membersof the Audit Commission, is possible only on the remuneration basis, suchinvolvement shall be effected upon the preliminary consent of the Board ofDirectors. The Board of Directors by the relevant decision determines paymentarrangements and other essential terms and conditions of involvement of theexperts (individuals and/or legal entities), who are not members of the AuditCommission, in the audit (review) conducted by the Audit Commission.

5.4.3                        In thecase of involvement of the experts the Audit Commission has to assure thesigning of the confidentiality agreement with those experts before their actualinvolvement. The services agreement and the confidentiality agreement with theexperts on the terms and conditions defined by the Board of Directors shall besigned by the Company’s General Director.

5.4.4                        Theexperts shall keep the confidentialinformation (commercial secrets) that has become known to them during the audit(review).

5.5                                 Presentationof the Results of the Audits (Reviews) of Financial and Business Activities ofthe Company, Conducted by the Audit Commission

5.5.1                        Upon theresults of the audit (review) of the financial and business activities, an Actcontaining a streamlined description of the documented violations committed inthe course of the financial and business activities of the Company revealed inthe course of the audit (review) or a statement on the absence of suchviolations, as well as the conclusions and recommendations of the Audit Commissionfor elimination of the revealed violations shall be provided. The Act shall bedrawn up within 10 days after the end of the audit (review).

5.5.2                        Within 5days after the completion the Act shall be provided to the General Director.Within 10 days after the date then the Act has been received the GeneralDirector shall provide to the Audit Commission some explanations on the issuesmentioned in the Act. If the explanations presented by the General Directorpointed out that no violations have been committed the Audit Commission priorto the preparation of the opinion has to conduct the meeting to discuss thoseexplanations with the relevant employees invited to the meeting.

5.5.3                        Based onthe Act of the audit (review) of the financial and business activities of theCompany and the explanations of the General Director, the Audit Commissionprepares an opinion, in which it, inter alia, sets forth its conclusions on thevalidity of the data contained in the reports and other financial documents ofthe Company.

5.5.4                        Theopinion, together with the data incorporated into the opinion of the AuditCommission pursuant to Article 87 of the Law “On Joint Stock Companies,”shall contain the following information:

-                    a briefprofile of the audited company;

-                    information onthe members of the Audit Commission;

-                    the periodthat was audited;

-                    the method ofauditing;

7

----

-                    conclusions ofthe Audit Commission regarding the validity of the accounting statements inwhole or in part, or on its inaccuracy.

5.5.5                        Theopinion shall be signed by the Chairman and members of the Audit Commission whoparticipated in the audit (review). All disputes arising during the preparationof the opinion shall be resolved by voting. A member of the Audit Commissionwho does not agree with the conclusions drawn in the opinion is entitled tostate his/her position in writing.

5.5.6                        Within 20days following the drawing up of the Act the opinion is executed in threecounterparts, to be submitted within 5 days to the following bodies:

-                    the Board ofDirectors of the Company (through the Corporate Secretary);

-                    the GeneralDirector of the Company.

A copy of the opinion shall be kept in thefiles of the Audit Commission.

5.5.7                        If theaudit (review) was initiated by a shareholder or by a group of shareholders,the opinion shall be made in four counterparts, one of which is to be deliveredto the shareholder(s). In other cases an interested person may review theopinion of the Audit Commission in accordance with the provisions of Article 91of the Law “On Joint Stock Companies”.

**6.****                                      KEEPING THE AUDIT COMMISSION’S DOCUMENTS ANDPROVISION OF THE DOCUMENTS TO INTERESTED PARTIES**

6.1                                 Alldocuments addressed to the Audit Commission (particularly, requests forconducting audits) shall be sent by registered mail to the Company’s address ordelivered to the secretariat (office) of the Company. Executive bodies of theCompany ensure forwarding of the received documents to the Chairman or theSecretary of the Audit Commission.

6.2                                 Theopinions and the minutes if the meetings of the Audit Commission shall be keptat the location of the executive body of the Company. In order to comply with Article 89of the Federal Law On Joint Stock Companies the Secretary of the AuditCommission has to transfer the opinions and the minutes if the meetings of theAudit Commission to the Company before the new composition of the AuditCommission by the General Shareholders’ Meeting.

6.3                                 Opinionsof the Audit Commission are provided to parties entitled to have access tothese documents, in accordance with applicable legislation and in the orderstipulated by applicable law and by the Company’s Charter.

6.4                                 Documentspertaining to the activities of the Audit Commission, including copies of theminutes of the Audit Commission’s meetings and opinions, shall be kept by theSecretary of the Audit Commission. Upon the election of a new Secretary of theAudit Commission, the former Secretary shall hand over these documents to thenewly elected Secretary of the Audit Commission.

**7.****                                      MATERIAL SUPPORT OF THE ACTIVITY OF THE AUDITCOMMISSION. REMUNERATION AND COMPENSATION TO MEMBERS OF THE AUDIT COMMISSION**

7.1                                 TheCompany shall provide offices equipped with communications and other means(phones, faxes, computers, printers and other equipment upon the reasonablerequest of the Chairman of the Audit Commission) for the Audit Commission’soperations.

8

----

 

7.2                                 Atthe Company’s expense the Audit Commission shall be provided with stationeryand other consumables in volumes sufficient for normal operations of the AuditCommission.

7.3                                 Theremuneration and the compensation of expenses of the Audit Commission membersincurred while executing their duties are provided upon the decision of theGeneral Shareholder’s meeting in the amount stipulated by these Regulationsexcept for the instances when the General Shareholders Meeting regardless thegrounds for the such decision has resolved not to pay any remuneration or toprovide it in different amount and terms.

7.4                                 Themembers of the Audit Commission shall be compensated for all proven expensesincurred by them while executing their duties.

7.5                                 Amember of the Audit Commission, while exercising his duties, shall receivequarterly remuneration in the amount of 50% (fifty percent) of the averagequarterly remuneration of a member of the Board of Directors, determined on thebasis of the total amount of quarterly remuneration to all members of the Boardof Directors divided by the number of members of the Board of Directors of theCompany.

Thequarterly remuneration to the members of the Audit Commission shall be paid atthe same time and following the same procedure as the one set for disbursementof remuneration to members of the Board of Directors.

Forthe quarter when the Audit Commission has been re-elected or some members haveresigned in a way stipulated by the paragraph 8 of these Regulations thequarterly remuneration shall be paid on the pro rata basis.

**8.****                                      EARLY TERMINATION OF AUTHORITIES**

8.1                                 Theauthorities of any member or the whole Audit Commission may be early terminatedupon the decision of the General Shareholders Meeting.

8.2                                 Theauthority of any member of the Audit Commission shall be terminated due tohis/her election to the Board of Directors, Management Board, Liquidation andCounting Commissions or General Director of the Company. In this case theauthority of the Audit Commission’s member shall be terminated on the date whenthe decision upon his/her election has been taken by the governing body. Amember of the Audit Commission is entitled to resign from the Audit Commission,at any time, at his own will, by notifying in writing the Chairman of the AuditCommission and the Company. In this case, the authorities of the member theAudit Commission shall be terminated on the date of such notification.

8.3                                 Ifthe Chairman of the Audit Commission resigns, the following procedures shall beobserved:

-                    the Chairmanshall notify the Company about his/her decision to resign;

-                    the Chairmanshall convene a meeting of the Audit Commission ;

-                    a new Chairmanshall be elected at the meeting of the Audit Commission.

8.4                                 Theauthority and duties of the Audit Commission’s Chairman shall remain in forceuntil a new Chairman is elected.

8.5                                 Shouldthe actual number of the Audit Commission’s members become less than three membersthe Chairman of the Audit Commission within 10 days from the date of occurrenceof such event shall apply to the Board of Directors with a request to convene aGeneral Shareholders Meeting to elect (additionally elect) members of the AuditCommission.

9

----

 

**9.****                                      MISCELLANEOUS**

9.1                                 TheseRegulations shall be approved by the General Shareholders Meeting by a majorityvote of shareholders, i.e., owners of voting shares of the Companyparticipating in the General Shareholders Meeting.

9.2                                 Proposalsto introduce amendments to the Regulations are made in accordance with theprocedure for making proposals to the agenda of the General ShareholdersMeeting set forth by the Company’s Charter.

9.3                                 Decisionsto introduce amendments to these Regulations shall be adopted by a majorityvote of shareholders, i.e., owners of voting shares of the Companyparticipating in the General Shareholders Meeting.

9.4                                 Ifdue to the changes in applicable legislation of the Russian Federation or ofthe Company’s Charter, any provisions of these Regulations contradict suchchanges, the provisions shall become invalid and until introduction of theamendments to the Regulations, members of the Audit Commission shall begoverned by the applicable legislation.

 

10

----