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Corporate Governance Code of the “Latvijas dzelzceļš” Group

The Corporate Governance Code of the “Latvijas dzelzceļš” Group (the Group) was adopted on October 20, 2021. Its purpose is to establish common principles according to which SJSC “Latvijas dzelzceļš” (LDz) implements corporate governance, promoting ethical, responsible and transparent corporate governance practices in the Group.

The Corporate Governance Code includes the Group’s corporate values, information on LDz’s organizational structure and management, information on LDz shareholders and shareholders’ meetings, LDz Council and Management Board, as well as information on LDz subsidiaries (daughter companies). The Code includes information on the Group’s corporate governance instruments, corporate social responsibility, remuneration policy, prevention of conflicts of interest in the activities of the members of the Council and Management Board, as well as internal control and risk management. The Code also sets out information disclosure procedures, cooperation with related and concerned parties, and control mechanisms for ensuring corporate governance.

The Corporate Governance Code applies to LDz and subsidiaries of LDz, taking into account the restrictions set out in the Code.

In the case of subsidiaries in which LDz does not have a direct decisive influence on the basis of participation, compliance with the Corporate Governance Code is ensured by a subsidiary that has a direct decisive influence therein.

The Corporate Governance Code is not binding on LDz subsidiary LatRailNet, which performs the essential functions of the railway infrastructure manager in accordance with the Railway Law, and applies to it only to the extent that the rules laid down in the code are set out in external legal acts.

The mission, vision and values of LDz ​​are defined in the medium-term operational strategy in accordance with the general strategic goal set by the Cabinet of Ministers. Operations of LDz and its subsidiaries comply with the applicable laws and regulations and the principles of fair business practice. LDz and its subsidiaries comply with the applicable laws and regulations on competition.

The medium-term operational strategy is approved for a period of five years in accordance with the Law on Governance, and LDz ensures implementation of the strategy and fulfilment of the objectives set out therein. Annual objectives for the Group’s management are set by LDz once a year. If necessary, the objectives may be amended or additional objectives may be set for the given period.

LDz develops and submits to the LDz Council annual statements on corporate governance, which are also published on the website. LDz Council approves the Group’s corporate governance action plan and assesses its implementation. The Code and internal rules, which are developed in accordance with the principles set out in the Code, are reviewed at least every three years and updated if necessary, including in accordance with changes in the applicable laws and regulations.