**Exhibit 1.3**

 

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

 

 

 

 

REGULATIONS

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

(restated version No. 5)

 

 

 

 

 

 

 

 

Moscow2006

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**1.****                                      GeneralProvisions**

1.1.**                             **TheseRegulations on the Board of Directors (hereinafter, “Regulations”) shall, inaccordance with the Civil Code of the Russian Federation, the Law “OnJoint-Stock Companies” and the Charter of the Company, govern the procedure forconvocation and holding of meetings of the Board of Directors, the amount andprocedure for payment of remuneration and compensation to members of the Boardof Directors of the Company.

1.2.**                             **TheBoard of Directors is the collegial governing body of the Company which carriesout general management activities except for the issues relegated by theFederal Law “On Joint Stock Companies” to the General Shareholders’ Meeting ofthe Company.

**2.****                                      Purposesand Principles of Operation of the Board of Directors**

2.1.**                             **Thepurposes of the Board of Directors activities shall be the procurement ofmaximum profits and increase of assets of the Company, protection of rights andlegitimate interests of the shareholders and provision of complete, accurateand objective public information about the Company.

2.2.**                             **Inorder to accomplish its purposes the Board of Directors shall adhere to thefollowing principles:

-**                   **makedecisions on the basis of reliable information about the Company’s activities;

-**                   **excluderestrictions on rights of the shareholders to participate in the management ofthe Company’s activities and to receive dividends and information on theCompany;

-**                   **procurethe balance between interests of different groups of shareholders and makedecisions of Board of Directors in an objective manner for the benefit of allshareholders of the Company.

2.3.**                             **Anyirremovable ambiguity of rules, stipulated in legislation and internaldocuments shall be interpreted by the Board of Directors in favor of rights andlegitimate interests of the shareholders.

3.**                                      **Rightsand Duties of a Member of the Board of Directors; Proceedings for TheirExecution

3.1.**                             **Amember of the Board of Directors shall have the right:

-**                   **to requestfrom the officers of the Company any information on the Company’s activitiesand documents specified in Article 89 of the Law “On Joint Stock Companies”in accordance with the procedure stipulated by these Regulations;

-**                   **to receiveremuneration for performance of his or her duties and compensation of expensesrelated to the performance of functions of a member of the Company’s Board ofDirectors in the instances and in the amounts stipulated herein;

-**                   **to demandhis or her dissenting opinion on issues on the agenda and approved decisions tobe recorded in the minutes of the meeting (absentee voting) of the Board ofDirectors.

3.2.**                             **Amember of the Board of Directors shall:

-**                   **be loyalto the Company, i.e., refrain from using his or her position in the Company forthe benefit of other persons;

-**                   **act withinthe scope of his or her authorities in accordance with the purposes andprinciples of operation of the Board of Directors;

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-**                   **actreasonably and in good faith with respect to the Company’s affairs;

-**                   **notdisclose non-public and confidential information (as stipulated by theapplicable legislation and internal documents) on the activities of the Companybecame known to him or her as fulfilling his or her duties as a member of theBoard of Directors;

-**                   **initiatemeetings or absentee voting by the Board of Directors in order to decide urgentmatters;

-**                   **participatein the decision-making of the Board of Directors by voting on issues on theagenda of meetings or by absentee voting;

-**                   **makereasonable decisions having reviewed all necessary information (materials);

-**                   **evaluaterisks and adverse consequences in the course of decision-making;

-**                   **notify theCompany in time that he or she is affiliated or that there are changes in thegrounds for his or her affiliation;

-**                   **notify theBoard of Directors of proposed transactions in which he/she may be deemedinterested;

-**                   **notify inwriting the Corporate Secretary about (i) possession of securities of theCompany, (ii) intentions to conduct deals with securities of the Companyand its affiliates, and (iii) executed transactions with such securities —in an order set by applicable internal document, approved by the Board ofDirectors; and

-**                   **notestablish or participate in organizations competing with the Company exceptwhere this has been permitted by a majority of the independent directors of theBoard of Directors or by the shareholders holding a majority of the ordinaryshares in the Company.

3.3.**                             **Theactivities of a member of the Board of Directors shall be continuous and shallnot be limited to participation in decision-making of the Board of Directors.

3.4.**                             **TheCompany shall, at the oral or written request of a member of the Board ofDirectors, provide him or her with personal access to the information anddocuments stipulated in Section 3.1 hereof.

The requested informationand documents shall be provided in person to a member of the Board of Directorsfor review within five days from the moment when such request was made orwithin another period agreed upon with the member of the Board of Directors whohad made such request.

The Company shall, at therequest of a member of the Board of Directors, provide him or her with copiesof the requested documents.

**4.****                                      Chairmanof the Board of Directors**

4.1.**                             **TheChairman of the Board of Directors shall be elected by and from among themembers of the Board of Directors by a majority of votes of the members of theBoard of Directors participating in the first meeting following their electionby the General Shareholders Meeting of the Company.

4.2.**                             **Theperson performing the functions of the individual executive body of the Companymay not at the same time be the Chairman of the Board of Directors.

4.3.**                             **TheBoard of Directors may re-elect the Chairman of the Board of Directors at anytime.

4.4.**                             **Themembers of the Board of Directors shall have the right to elect a DeputyChairman. In the absence of the Chairman of the Board of Directors of theCompany, all of his or her 

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functions(including the right to sign documents) shall be performed by the DeputyChairman and, in the absence of the latter, by one of the members of the Boardof Directors authorized by a decision of the Board of Directors of the Companymade by the majority of votes of its members participating in the meeting.

4.5.**                             **TheChairman of the Board of Directors shall organize the work of the Board ofDirectors, convene and chair its meetings, organize absentee voting and keepingof minutes at the meetings of the Board of Directors.

4.6.**                             **TheChairman of the Board of Directors may not delegate his or her functions toanother person.

**5.****                                      CorporateSecretary**

5.1.**                             **Theworking efficiency of the Board of Directors is assured by the CorporateSecretary. The duties of the Corporate Secretary are stipulated by theRegulations on the Corporate Secretary and the Corporate Secretary’s Department.

5.2.**                             **Forthe period of absence of the Corporate Secretary his/her duties shall beperformed by other person designated for this period by the Board of Directors.In the case when such decision has not been taken by the Board of Directors theduties of the Corporate Secretary are performed by the Acting CorporateSecretary designated by the Company’s order.

5.3.**                             **TheCorporate Secretary shall have the right:

-**                   **to requestfrom the Company’s officers information and documents required for thepreparation of materials regarding the agenda issues of meetings of the Boardof Directors;

-**                   **to receiveremuneration for the performance of his or her duties and compensation forexpenses related to the performance of functions of the Secretary of the Boardof Directors and its committees.

5.4.**                             **TheCorporate Secretary shall:

-**                   **keep anddraw up minutes of meetings and absentee voting of the Board of Directors;

-**                   **record andkeep incoming documentation and copies of outgoing documentation of the Boardof Directors;

-**                   **notifymembers of the Board of Directors about meetings (absentee voting) of the Boardof Directors in the manner and within the time stipulated herein;

-**                   **send outthe materials necessary for consideration of the agenda issues of meetings(absentee voting) of the Board of Directors to the members of the Board ofDirectors in the manner and within the term stipulated herein;

-**                   **make andsign extracts from minutes of meetings and absentee voting of the Board ofDirectors; and

-**                   **performother functions as provided herein.

5.5.**                             **TheCorporate Secretary shall be quarterly remunerated for the performance of hisor her functions and compensated for expenses related to the performance ofthese functions.

The amount ofremuneration and compensation payable to the Corporate Secretary, theprocedure, sources and order for their calculation shall be determined by adecision of the Board of Directors and by the Regulations on the CorporateSecretary and the Corporate Secretary’s Department.

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**6.****                                      Meetingof the Board of Directors**

6.1.**                             **Adecision of the Board of Directors may be taken in the form of joint presence(including video- or audio- conference call) or by absentee voting.

6.2.**                             **Themeetings of the Board of Directors shall be held regularly in accordance withthe work schedule approved by the meeting of the Board of Directors, but notless than one time every three months. If so required, the Board of Directorsshall consider issues that are not included in the work schedule.

Meeting of the Board ofDirectors to be held with respect to preparation to and holding of the annualGeneral Shareholders’ Meeting shall be held not later than one (1) monthupon the occurrence of the time for submission of annual accounting statementsin order to consider draft annual reports, the annual balance sheet includingprofit and loss statement of the Company, distribution of its profit and lossbased on the results of the fiscal year, and the report of the external auditorof the Company.

6.3.**                             **Ameeting (absentee voting) of the Board of Directors shall be convened(initiated) by the Chairman of the Board of Directors on his or her owninitiative, at the request of a member of the Board of Directors, the AuditCommittee, the external auditor of the Company or the individual executive bodyor collegial executive management body of the Company or at the request of ashareholder (shareholders) holding in aggregate not less than two (2) percentof the Company’s voting shares.

6.4.**                             **Therequest to convene a meeting (absentee voting) of the Board of Directors shallcontain the following information:

-**                   **name ofthe person initiating the meeting or the name of the body or the legal entitymaking the request;

-**                   **if therequest for convocation of a meeting is submitted by a shareholder, it shallinclude the number and category (type) of his or her shares;

-**                   **the formof decision-making (by joint presence or by absentee voting);

-**                   **the dateof the meeting or, in the event of absentee voting, the final date forcollecting of written opinions of the members of the Board of Directors on theagenda issues;

-**                   **agenda ofthe meeting (of absentee voting);

-**                   **list ofinformation (materials) to be furnished to the members of the Board ofDirectors for the meeting (absentee voting);

-**                   **if theproposals on behalf of a shareholder are signed by his or her authorizedrepresentative, the proposal of agenda issues shall be accompanied by anotarized copy of the power of attorney or other evidence of the powers of therepresentative (minutes of election as a person entitled to represent ashareholder which is a legal entity without a power of attorney).

In addition, the requestto convene a meeting (absentee voting) of the Board of Directors may containthe following information:

-**                   **time andvenue of the meeting (in case of a meeting);

-**                   **draftresolutions on the agenda issues; and

-**                   **otherinformation at the discretion of the party initiating the convening of themeeting (absentee voting).

6.5.**                             **TheChairman of the Board of Directors may not refuse to convene a meeting(initiate absentee voting) except for the cases, where:

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-**                   **therequest to convene a meeting (absentee voting) does not comply with the Company’sCharter or these Regulations;

-**                   **theinitiating person has no right to request the convocation of a meeting(absentee voting) of the Board of Directors.

6.6.**                             **TheChairman of the Board of Directors shall consider a submitted request for theconvocation of a meeting (initiation of absentee voting) of the Board ofDirectors and send to the initiating person notification of the decision not laterthan three (3) business days from the date when the decision was made.

In the event the Chairmanof the Board of Directors satisfies the request for the convocation of ameeting (absentee voting) the Chairman of the Board of Directors shall have theright to change the form of the decision-making by the Board of Directors andadd to the agenda of the meeting (absentee voting).

6.7.**                             **Meetingsof the Board of Directors may not consider issues not specified in thenotification of the meeting of the Board of Directors unless it is decidedunanimously by all of the members of the Board of Directors present at themeeting but subject to quorum. The Corporate Secretary shall allow thedirectors not present on the meeting to vote on introduced issues in writing,or by any other means, including mail, wire, phone, e-mail, or any othercommunications.

6.8.**                             **Notificationof the convocation of the meeting of the Board of Directors shall be signed bythe Chairmen of the Board of Directors and delivered to each member of theBoard of Directors together with the necessary materials not less than fourteen(14) business days prior to the date of the meeting (absentee voting).

If it is required to holda meeting of the Board of Directors on a tighter schedule in accordance withapplicable legislation, the term for delivering the notification with necessarymaterials shall be reduced.

Such term may also bereduced if it is required to decide urgently on any issues provided that noneof the members of the Board of Directors objects.

Notification period abouta meeting in accordance with the first paragraph of Clause 6.8 hereof may notbe reduced if the agenda includes an issue related to the Company’s budget(including its approval, adjustment and results of its performance).

The first(organizational) meeting of the Board of Directors shall be held without priornotification on the date of the General Shareholders Meeting which has electedthe Board of Directors (provided that the decision on election of the Board ofDirectors and the voting results thereon were announced at the GeneralShareholders Meeting at which the voting took place).

Notification of a meetingshall be sent to the members of the Board of Directors in writing or in anyother form convenient to them (including mail, telegraph, teletype, telephone,e-mail or other types of communication).

Notification of a meetingshall specify the address to which the members of the Board of Directors maysend their written opinions.

Should it becomeimpossible or predicament to hold a meeting of the Board of Directors at thevenue or time notified to the members of the Board of Directors, the meetingunder the planned agenda may be held at another location or at another time.

All the members of theBoard of Directors shall be notified sufficiently in advance of a change ofeither location or time of the meeting of the Board of Directors so the membersof the Board of Directors are able to arrive to the meeting. Notification ofsuch changes shall 

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be sent to the members ofthe Board of Directors in any form guaranteeing receipt of such notification bya member of the Board of Directors at his or her residential mailing address.

6.9.**                             **Inthe course of making decisions by the Board of Directors the members of theBoard of Directors who are present at the meeting shall express their opinionon the agenda issues by voting.

6.10.**                       **If amember of the Board of Directors cannot attend a meeting in person and if ameeting is held by absentee voting, the member of the Board of Directors shallexpress his or her opinion on the issues on the agenda in writing.

If the written opinion ofa member of the Board of Directors contains his or her vote on all or a numberof issues on the agenda, it shall be counted in determining the quorum and thevoting results.

A written opinion shallbe submitted by a member of the Board of Directors prior to the meeting of theBoard of Directors or, if the meeting is held in the form of absentee voting,by the final date for the collection of written opinions from members of theBoard of Directors.

6.11.**                       **TheChairman shall announce the written opinion of a member of the Board ofDirectors who is absent from the meeting prior to the commencement of voting onan agenda issue with respect to which such opinion is submitted.

In the event of absenteevoting the Corporate Secretary shall, on the basis of the written opinionsreceived from the members of the Board of Directors in the form of signaturesaffixed to questionnaires or other written evidence of expression of will ofthe members of the Board of Directors (facsimile message, telegram, etc.), drawup the minutes of the absentee voting within three (3) business days ofthe final date for collecting written opinions from the members of the Board ofDirectors.

If the received writtenopinion contains a proposal of a draft resolution materially different fromthat proposed for voting initially, the Corporate Secretary shall, prior to thedrawing up of the minutes, bring such opinion to the attention of the othermembers of the Board of Directors and suggest that they express their opinionby voting in writing or in any other form convenient for them (including butnot limited to mail, telegraph, teletype, telephone, e-mail or other means ofcommunication).

6.12.**                       **Whenthe Board of Directors considers the issues each member of the Board ofDirectors shall have one vote.

A member of the Board ofDirectors may not delegate his or her voting right to another person, includinganother member of the Board of Directors.

In the event of a tievote the Chairman of the Board of Directors shall have the deciding vote.

6.13.**                       **TheCorporate Secretary shall keep the minutes of the meetings of the Board ofDirectors.

The minutes of a meeting(absentee voting) of the Board of Directors shall be drawn up within three (3) businessdays of the date of the meeting (final day for the collecting of writtenopinions in the event of absentee voting).

The minutes of a meeting(absentee voting) shall specify:

-**                   **venue,date and time or, in the event of absentee voting, the place where the minutesare drawn up and the final date for collecting of written opinions of themembers of the Board of Directors;

-**                   **personswho were present at the meeting (in case of meeting);

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-**                   **personswho have submitted written opinions on agenda issues;

-**                   **agenda ofthe meeting;

-**                   **issues putto a vote and the voting results thereof; and

-**                   **takendecisions.

The minutes of a meetingof the Board of Directors shall be signed by the Chairman of the meeting and bythe Corporate Secretary.

In case of absenteevoting, the minutes of the meeting of the Board of Directors shall be signed bythe Chairman of the Board of Directors and the Corporate Secretary.

If the written opinionsreceived from members of the Board of Directors are taken into account indetermining the quorum and the voting results, such written opinions shall beattached to the minutes.

6.14.**                       **TheCompany shall keep the minutes of meetings (absentee voting) of the Board ofDirectors at the location of its executive body in accordance with theprocedure and during the periods determined by the federal executive body forthe securities market. If such period is not determined, the Company shall keepthe minutes of the meetings (absentee voting) of the Board of Directors permanently.

The Company shall providethe members of the Board of Directors, the Audit Committee, the externalauditor of the Company and in accordance with stipulated by applicablelegislation the shareholders of the Company with access to minutes of themeetings of the Board of Directors.

6.15.**                       **In theevent where a decision is made in accordance with the Charter of the Company bya three-quarters majority or unanimously by all members of the Board ofDirectors without taking into account the votes of dismissed members of theBoard of Directors, persons indicated in the Charter of the Company shall bedeemed as dismissed members of the Board of Directors.

**7.****                                      Remunerationof Members of the Board of Directors and Compensation for Expenses Related tothe Performance of Their Functions**

7.1.**                             **Forthe period of performance by the members of the Board of Directors of theirduties, the Company shall remunerate them and compensate costs connected withthe performance by members of the Board of Directors of their functions.

7.2.**                             **Theremuneration of the members consists of quarterly and annual payments. Theremuneration of the Board of Directors is paid out of the Company’s net income.

7.3.**                             **Thequarterly payment to the every member of the Board of Directors shall be equal980,000 rubles. The Chairman of the Board of Directors shall receive quarterlypayment with a coefficient 1.3 as compared to the average personal remunerationof the members of the Board of Directors excluding members performing theirduties on non-paid basis.

7.3.1.**                    **Thequarterly payment of the member of Board of Directors may be reduced by:

-**                   **30%, inthe case of absence on less then half of the Board of Directors meetings held;

-**                   **100%, inthe case of absence on more then half of the Board of Directors meetings held.

7.3.2.**                    **For thequarter when the new composition of the Board of Directors is elected theremuneration to the members of the Board of Directors is paid on a pro ratabasis.

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7.4.**                             **Theannual payment to the members of the Board of Directors shall be equal 0.26% ofOIBDA calculated in accordance with Russian accounting standards for the lastfinancial year.

The annual remunerationshall be equally distributed among members of the Board of Directors with theChairman receiving payment with a coefficient 1.3 as compared to the averagepersonal remuneration of the members of the Board of Directors excludingmembers performing their duties on non-paid basis. The annual remuneration tothe member of the Board of Directors may be reduced by 50% in the case of absenceon more then half of the Board of Directors meetings held.

7.5.**                             **Theannual remuneration to the member of the Board of Directors shall be paid notlater then 3 months after its approval by the General Shareholders’ Meeting.

7.6.**                             **Themembers of the Board of Directors who also serve as members of the AuditCommittee shall receive quarterly extra payment equal 150,000 rubles. TheChairman of the Audit Committee shall receive extra payment with a coefficient1.2.

The members of the Boardof Directors who serve as members of the other committees of the Board ofDirectors shall receive quarterly extra payment equal 80,000 rubles for theparticipation in each committee. The Chairmen of the committees shall receiveextra payment with the coefficient 1.2 for each committee.

7.7.**                             **Membersof the Board of Directors who are state officials shall perform their duties onnon-paid basis.

7.8.**                             **Membersof the Board of Directors may not receive remuneration or compensation forexpenses for the performance of their duties in any kind or manner for makingdecisions by the Board of Directors or other bodies of the Company, or also forthe exercise of their rights and performance of their duties as members of theBoard of Directors, other than remuneration and compensation for expensesreceived in accordance with these Regulations or by the decision of the GeneralShareholders Meeting.

**8.****                                      Proceedingsfor Approval and Introduction of Amendments and Additions to the Regulations**

8.1.**                             **TheseRegulations shall be approved by the General Shareholders Meeting by a majorityof votes of the shareholders holding the voting shares of the Company andparticipating in the meeting.

8.2.**                             **TheRegulations may be amended by the General Shareholders Meeting by a majority ofvotes of the shareholders holding the voting shares of the Company andparticipating in the meeting.

8.3.**                             **If,as a result of a change in the legislation of the Russian Federation or theCharter of the Company, certain provisions of these Regulations will not be incompliance with such changes, such provisions shall cease to be in force andbefore amendments to these Regulations are made the members of the Board ofDirectors shall act in accordance with effective legal acts of the RussianFederation and the Company’s Charter.

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