FREEDOM HOLDING CORP.
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
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by the Registrant ☒ Filed by a Party other
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☐
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Freedom Holding Corp.
(Name
of Registrant as Specified in Its Charter)
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Check box if any part of the fee is offset as provided by Exchange
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Freedom Holding Corp.
“Esentai Tower” BC, Floor 7
77/7 Al Farabi Ave.,
Almaty, 050040, Republic of Kazakhstan
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Dear Stockholders:
You are cordially invited to attend the 2019
annual meeting of stockholders (the ‘‘2019 Annual
Meeting’’) of Freedom Holding Corp. (the
‘‘Company,’’ “FRHC,”
“us,” “our,” or “we”) which
will be held at the Ritz Carlton Hotel, Altitude Conference Hall,
28
th
Floor, Esentai Tower, 77/7 Al Farabi
Ave., Almaty, 050040, Republic of Kazakhstan on September 10, 2019
at 7:00 p.m. local time.
The
formal notice of the 2019 Annual Meeting is provided in the
enclosed proxy statement. At the 2019 Annual Meeting we will
discuss each item of business described in the Notice of 2019
Annual Meeting of Stockholders and proxy statement.
Important notice regarding the
availability of proxy materials for the 2019 Annual
Meeting
. On or about July 26,
2019, we will begin mailing to certain stockholders a Notice of
Internet Availability of Proxy Materials containing instructions on
how to access our proxy materials, including our Annual Report on
Form 10-K for the year ended March 31, 2019 (the “2019 Annual
Report”), via the Internet. The Notice of Internet
Availability of Proxy Materials also contains instructions on how
to receive a paper copy of the proxy materials. Stockholders who do
not receive the Notice of Internet Availability of Proxy Materials
will receive a paper copy of the Notice of Annual Meeting of
Stockholders, Proxy Statement, Form of Proxy and 2019 Annual
Report, which we will also begin mailing on or about July 26, 2019.
Copies of our Notice of Annual Meeting of Stockholders, Proxy
Statement, Form of Proxy and 2019 Annual Report are available at
www.proxyvote.com.
Voting
by the internet or telephone is fast and convenient, and your vote
is immediately confirmed and tabulated. If you receive a paper copy
of the proxy materials, you may also vote by completing, signing,
dating and returning the accompanying proxy card in the enclosed
return envelope furnished for that purpose. By using the internet
or telephone, you help us reduce postage and proxy tabulation
costs.
Your vote is important to
us.
The enclosed proxy
statement provides you with detailed information regarding the
business to be considered at the 2019 Annual Meeting. Your vote is
important. We urge you to please vote your shares now whether or
not you plan to attend the 2019 Annual Meeting. You may revoke your
proxy at any time before the proxy is voted by following the
procedures described in the enclosed proxy
statement.
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By order of the board of directors,
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/s/ Timur Turlov
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Timur Turlov
Chief Executive Officer and Chairman
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July 26, 2019
FREEDOM HOLDING CORP.
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 10, 2019
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Time and Date:
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7:00
p.m. local time, on September 10, 2019
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Location:
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Ritz Carlton Hotel, Altitude Conference Hall, 28
th
Floor, Esentai Tower, 77/7 Al Farabi
Ave., Almaty, 050040, Republic of Kazakhstan.
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Items of Business:
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(1)
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Elect
two Class III directors until the 2022 Annual Meeting of
Stockholders, and until their respective successors have been duly
elected and qualified, the following two nominees recommended by
the Board of Directors: Timur Turlov and Jason Kerr
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(2)
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Ratification
of the appointment of WSRP, LLC. as our independent registered
public accounting firm for the 2020 fiscal year.
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(3)
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Transact
such other business as may properly come before the meeting or any
postponement or adjournment thereof.
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Record Date:
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You can
vote if you were a stockholder of record at the close of business
on July 15, 2019.
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Internet Availability:
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We are
using the internet as our primary means of furnishing our proxy
materials to our stockholders. Rather than sending stockholders a
paper copy of our proxy materials, we are sending them a notice
with instructions for accessing the materials and voting via the
internet. We believe this method of distribution makes the proxy
distribution process more efficient and less costly and will limit
our impact on the environment. This notice of the 2019 Annual
Meeting, the proxy statement and our Annual Report on
Form 10-K for the fiscal year ended March 31, 2019, are
available at www.proxyvote.com.
We anticipate that the Notice of Internet Availability of Proxy
Materials will first be sent to stockholders on or about July 26,
2019. The proxy statement and the form of proxy relating to the
2019 Annual Meeting are first being made available to stockholders
on or about July 26, 2019.
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Proxy Voting:
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It is
important that your shares be present or represented and voted at
the 2019 Annual Meeting. You can vote your shares on the internet
at www.proxyvote.com, by telephone by
calling 1-800-690-6903, by completing and returning your
proxy card, or in person at the 2019 Annual Meeting. Voting
instructions are printed on your proxy card or included with your
proxy materials. You can revoke a proxy before its exercise at the
2019 Annual Meeting by following the instructions in the
accompanying proxy statement.
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By order of the board of directors,
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/s/ Timur Turlov
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Timur Turlov
Chief Executive Officer and Chairman
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July
26, 2019
TABLE
OF CONTENTS
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Page
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INFORMATION ABOUT
THE 2019 ANNUAL MEETING AND VOTING
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1
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PROPOSAL ONE
– ELECTION OF DIRECTORS
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5
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CORPORATE
GOVERNANCE
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9
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DIRECTOR
COMPENSATION
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16
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SECURITY
OWNERSHIP
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17
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EXECUTIVE
COMPENSATION
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18
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PROPOSAL TWO
– RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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20
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PRINCIPAL
ACCOUNTANT FEES AND SERVICES
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CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
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STOCKHOLDER
PROPOSALS FOR THE 2020 ANNUAL MEETING
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2019
ANNUAL REPORT ON FORM 10-K
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OTHER
MATTERS
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24
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Why did I receive these Proxy Materials?
We
are providing this notice of annual meeting of stockholders, proxy
statement, voting instructions and Annual Report on Form 10-K for
the fiscal year ended March 31, 2019 (the “Proxy
Materials”) in connection with the solicitation by the board
of directors (the “Board”) of Freedom Holding Corp.
(the “Company,” “FRHC,” “we,”
“us” or “our”), a Nevada corporation, of
proxies to be voted at our 2019 annual meeting of stockholders and
at any adjournment or postponement thereof (the “2019 Annual
Meeting”).
We
anticipate that the Notice of Internet Availability of Proxy
Materials will first be sent to stockholders on or about July 26,
2019. The proxy statement and the form of proxy relating to the
2019 Annual Meeting are first being made available to stockholders
on or about July 26, 2019.
You are invited to attend the 2019 Annual Meeting
on September 10, 2019, beginning at 7:00 p.m. local time. The 2019
Annual Meeting will be held at the Ritz Carlton Hotel, Altitude
Conference Hall, 28
th
Floor, Esentai Tower, 77/7 Al Farabi
Ave., Almaty, 050040, Republic of Kazakhstan. Stockholders will be
admitted to the 2019 Annual Meeting beginning at 6:30 p.m. local
time. Seating will be limited.
What is the difference between holding shares as a stockholder of
record and as a beneficial owner?
If
your shares are registered directly in your name with our transfer
agent, Pacific Stock Transfer Company, you are considered the
“stockholder of record” with respect to those shares.
If you are a stockholder of record, we are sending the Proxy
Materials directly to you at the address of record on account with
Pacific Stock Transfer Company.
If
your shares are held in a stock brokerage account or by a bank or
other holder of record, those shares are held in “street
name.” You are considered the “beneficial owner”
of those shares held in street name. The Proxy Materials have been
forwarded to you by your broker, bank or other holder of record who
is considered, with respect to those shares, the stockholder of
record. As the beneficial owner, you have the right to direct your
broker, bank or other holder of record on how to vote your shares
by using the proxy or voting instructions included in the mailing
or by following their instructions for voting by telephone or on
the internet.
Why did I receive in the mail a Notice of Internet Availability of
Proxy Materials?
Under
rules adopted by the United States Securities and Exchange
Commission (the “SEC”), we are providing access to our
Proxy Materials over the internet. Accordingly, we are sending a
Notice of Internet Availability of Proxy Materials to many of our
stockholders. If you received a notice by mail, you will not
receive a printed copy of the Proxy Materials unless you request
one. The notice tells you how to access and review the Proxy
Materials over the internet at www.proxyvote.com. The notice also
tells you how to access your proxy card to vote on the internet. If
you received a notice by mail and would like to receive a printed
or email copy of the Proxy Materials, please follow the
instructions included in the notice.
What should I bring with me to attend the 2019 Annual
Meeting?
Stockholders
must present a form of personal identification to be admitted to
the 2019 Annual Meeting.
If
your shares are held beneficially in the name of a broker, bank or
other holder of record and you plan to attend the 2019 Annual
Meeting, you must also present proof of your ownership of Company
common stock, such as a brokerage or bank account statement in your
name or a signed letter from the brokerage or bank that
beneficially holds your shares identifying you as the ultimate
beneficial owner of the shares, to be admitted to the 2019 Annual
Meeting.
1
No
cameras, recording equipment, electronic devices, large bags,
briefcases or packages will be permitted in the 2019 Annual
Meeting.
Who is entitled to vote at the 2019 Annual Meeting?
Stockholders
of record at the close of business on July 15, 2019, the record
date for the 2019 Annual Meeting, are entitled to receive notice of
and vote at the 2019 Annual Meeting. You are entitled to one vote
on each matter presented at the 2019 Annual Meeting for each share
of common stock you owned at that time. Stockholders have no right
to cumulative voting as to any matter, including the election of
directors. At the close of business on July 15, 2019, there were
58,093,212 shares of our common stock outstanding.
How do I vote?
You
may vote using any of the following methods:
By Mail
If
you received paper copies of the Proxy Materials, you may vote by
completing, signing and dating your proxy card and returning it in
the enclosed envelope.
By Internet
We
encourage you to vote and submit your proxy over the internet at
www.proxyvote.com.
By Telephone
You
may vote by telephone by calling 1-800-690-6903.
In person at the 2019 Annual Meeting
Stockholders
may vote in person at the 2019 Annual Meeting. You may also be
represented by another person at the 2019 Annual Meeting by
executing a proper proxy designating that person. If you are a
beneficial owner of shares, you must obtain a legal proxy from your
broker, bank or other holder of record and present it to the
inspector of election with your ballot and a form of identification
to be able to vote at the 2019 Annual Meeting.
What can I do if I change my mind after I vote my
shares?
If
you are a stockholder of record, you can revoke your proxy before
it is exercised by:
●
written notice of
revocation to our Corporate Secretary at Freedom Holding
Corp.,
1930 Village Center Cir. #3-6972, Las Vegas Nevada
89134
;
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timely submission
of a valid, later-dated proxy via mail, the internet or the
telephone; or
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voting by ballot at
the 2019 Annual Meeting.
If
you are a beneficial owner of shares, you may submit new voting
instructions by contacting your broker, bank or other holder of
record. You may also vote in person at the 2019 Annual Meeting if
you obtain a legal proxy as described in the answer to the previous
question.
2
Can I vote if my shares are held in “street
name”?
If
the shares you own are held in “street name” by a
brokerage firm, your brokerage firm, as the record holder of your
shares, is required to vote your shares according to your
instructions. To vote your shares, you will need to follow the
directions your brokerage firm provides you. Many brokers also
offer the option of voting over the internet or by telephone,
instructions for which would be provided by your brokerage firm on
your voting instruction form.
If
you do not give instructions to your brokerage firm, it will still
be able to vote your shares with respect to certain
“discretionary” items, but it will not be allowed to
vote your shares with respect to
certain “non-discretionary” items. The
ratification of WSRP, LLC as our independent registered public
accounting firm (Proposal Two) is considered to be a discretionary
item, and your brokerage firm will thus be able to vote on that
item even if it does not receive instructions from you, so long as
it holds your shares in its name. The election of directors
(Proposal One) is considered to be a non-discretionary item;
therefore if you do not instruct your broker how to vote with
respect to this proposal, your broker is not permitted to vote with
respect to that proposal and those votes will thus be considered
“broker non-votes.” “Broker non-votes” are
shares that are held in “street name” by a bank or
brokerage firm that indicates on its proxy that it does not have or
did not exercise discretionary authority to vote on a particular
matter.
If
your shares are held in street name, you must bring an account
statement or letter from your bank or brokerage firm showing that
you are the beneficial owner of the shares as of the record date
(July 15, 2019) along with a form of personal identification to be
admitted to the 2019 Annual Meeting on September 10, 2019. To be
able to vote your shares held in street name at the 2019 Annual
Meeting, you will need to obtain a proxy card from the holder of
record.
How will votes be counted?
Each
share of common stock will be counted as one vote according to the
instructions contained on a proper proxy card, whether submitted by
mail, over the internet or by telephone, or on a ballot voted in
person at the 2019 Annual Meeting.
What constitutes a quorum?
For
business to be conducted at the 2019 Annual Meeting, a quorum must
be present in person or represented by valid proxies. For each of
the proposals to be presented at the 2019 Annual Meeting, a quorum
consists of the holders of a majority of the shares of common stock
issued and outstanding on July 15, 2019, the record date, or at
least 29,046,607 shares.
Shares
of common stock present in person or represented by proxy
(including “broker non-votes” and shares that
abstain or do not vote with respect to a particular proposal) will
be counted for purposes of determining whether a quorum exists at
the 2019 Annual Meeting.
If
a quorum is not present, the 2019 Annual Meeting will be adjourned
until a quorum is obtained.
What vote is required for each item and how does the Board
recommend that I vote?
Proposal One – Election
of Directors
. Under our
By-Laws, a nominee for director will be elected to the Board by a
plurality of votes given at the election, meaning the nominee will
be elected if the votes cast “for” the nominee’s
election exceed the votes cast “against” the
nominee’s election. Abstentions and
broker non-votes are not considered votes cast for or
against the nominee and will have no effect on the proposal. If you
do not instruct your broker how to vote with respect to this
proposal, your broker cannot vote your shares with respect to the
election of directors.
3
Our
Restated Articles of Incorporation provide that our Board shall be
divided into three classes. Each class shall consist, as nearly as
may be possible, of one-third of the total number of directors,
with each director serving for a term of three years and until his
or her successor has been duly elected and qualified. Our
Nominating and Corporate Governance Committee (“nominating
committee”) recommended to the Board, and Board has nominated
two individuals, Timur Turlov and Jason Kerr, each of whom
currently serves as a Class III director, for election as Class III
directors at the 2019 Annual Meeting.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE TWO
NOMINEES NAMED IN THE ENCLOSED PROXY MATERIALS TO THE
BOARD
Proposal Two –
Ratification of Independent Registered Public Accounting
Firm
. The affirmative vote of
the holders of a majority of the total number of votes of our
common stock present in person or represented by proxy and entitled
to vote on the proposal is needed to ratify the selection of WSRP,
LLC as our independent registered public accounting firm for our
2020 fiscal year. Abstentions count as votes against the proposal.
If you do not provide instructions to your brokerage firm regarding
how to vote your shares on this proposal, your broker may
(a) vote your shares on your behalf (because this proposal is
a “discretionary” item) or (b) leave your shares
unvoted. Our By-laws do not require that stockholders ratify the
appointment of our independent auditors. However, we are submitting
the appointment of WSRP, LLC to you for ratification as a matter of
good corporate governance. If our stockholders fail to ratify the
selection, we will consider that failure as a direction to the
Board and the Audit Committee of the Board (the “audit
committee”) to consider the selection of a different firm.
Even if the selection is ratified, the audit committee in its
discretion may select a different independent registered public
accounting firm, at any time during the year if it determines that
such a change would be in the best interests of the Company and our
stockholders.
THE BOARD RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF WSRP, LLC AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
Where can I find the voting results?
We
will report the voting results in a Current Report on
Form 8-K within four business days after completion of
our 2019 Annual Meeting.
Could other matters be decided at the 2019 Annual
Meeting?
At
the date this proxy statement went to press, we did not know of any
matters to be raised at the 2019 Annual Meeting other than those
described in this proxy statement. If other matters are properly
presented at the 2019 Annual Meeting for consideration, however,
the proxies appointed by the Board will have the discretion to vote
on those matters for you.
Who will pay for the cost of this proxy solicitation?
We
will pay for the cost of this proxy solicitation. We do not intend
to solicit proxies other than by use of the mail or website
posting, but certain of our directors, officers and other
employees, without additional compensation, may solicit proxies
personally or by telephone, facsimile or email on our
behalf.
Who will count the vote?
The
inspector of elections appointed for the 2019 Annual Meeting will
tabulate all votes.
4
What is “householding” and how does it affect
me?
We
have adopted a procedure approved by the SEC called
“householding.” Under this procedure, stockholders of
record who have the same address and last name will receive only
one copy of the Proxy Materials, unless one or more of these
stockholders notifies us that they wish to continue receiving
individual copies. This procedure will reduce our printing costs
and postage fees.
Stockholders
who participate in householding will continue to receive separate
proxy cards. Also, householding will not in any way affect dividend
check mailings, if any.
If you are eligible for householding, but you and
other stockholders of record with whom you share an address
currently receive multiple copies of the Proxy Materials, or if you
hold stock in more than one account, and in either case you wish to
receive only a single copy of each of these documents for your
household, please make a written request to the: Corporate
Secretary, Freedom Holding Corp.,
1930 Village Center Cir.
#3-6972, Las Vegas, Nevada 89134,
email usoffice@freedomholdingcorp.com or contact
our Corporate Secretary at (801) 355-2227. If multiple stockholders
of record who have the same address receive only one copy of the
Proxy Materials and would like to receive additional copies, or if
they would like to receive a copy for each stockholder living at
that address in the future, send a written request to the address
or email address above or contact our Corporate Secretary at (801)
355-2227. Upon such written or oral request, we will promptly
deliver separate Proxy Materials to any stockholders who receive
one paper copy at a shared address.
Beneficial
owners can request information about householding from their
brokers, banks or other holders of record.
Other information
Our
Annual Report on Form 10-K for the fiscal year ended
March 31, 2019 (the “2019 Annual Report”), accompanies
this proxy statement. No material contained in the Annual Report is
to be considered a part of the Proxy Materials. “Fiscal
2019” refers to the 52-week fiscal year that ended
on March 31, 2019. “Fiscal 2018” refers to
the 52-week fiscal year that ended on March 31,
2018. The contents of our corporate website or the corporate
website of any of our subsidiaries are not incorporated by
reference into this proxy statement.
PROPOSAL ONE—ELECTION OF DIRECTORS
Our
Restated Articles of Incorporation provide that our Board shall be
divided into three classes. Generally, each director serves for a
term of three years and until his or her successor has been duly
elected and qualified. The term of office of the Class III
Directors expires at the 2019 Annual Meeting. The nominating
committee recommended and the Board has nominated Timur Turlov and
Jason Kerr to stand for re-election at the 2019 Annual Meeting as
Class III Directors. Mr. Turlov has served as a member of the board
since November 2015 and Mr. Kerr has served as a member of the
board since May 2008. If elected at the 2019 Annual Meeting each of
these nominees would serve until the 2022 Annual Meeting and until
his successor is duly elected and qualified, or if sooner, until
the director’s death, resignation or removal.
Directors
are elected by a plurality of the votes cast in person or by proxy
and entitled to vote on the election of directors. The two nominees
receiving the most “For” votes (from the holders of
shares present in person or represented by proxy at the 2019 Annual
Meeting and voting on the election of directors) will be elected.
If no contrary indication is made, shares represented by executed
proxies will be voted “For” the election of the two
nominees named above. If, prior to the 2019 Annual Meeting, it
should become known that either of the nominees will be unwilling
or unable to serve as a director after the 2019 Annual Meeting by
reason of resignation, death, incapacity or other unexpected
occurrence, the proxies will be voted “For” such
substitute nominee as is determined by nominating committee and the
Board or, alternatively, not voted for any nominee. The Board has
no reason to believe that either nominee will withdraw or be unable
to serve. Proxies cannot be voted for more than the number of
nominees proposed for election.
5
The
Board believes that it is necessary for each of our directors to
possess many qualities and skills. When searching for candidates,
the nominating committee considers the evolving needs of the Board
and searches for candidates that fill any current or anticipated
future gap. The nominating committee considers a candidate’s
business experience, issues of judgment, background, stature,
conflicts of interest, integrity, ethics and commitment to the goal
of maximizing stockholder value. Candidates should possess one or
more of the following skills and qualifications: experience in the
financial services industry, experience in international business
regulation, financial expertise, accounting skills, human resource
management, public company management, etc. The nominating
committee does not have a formal policy with respect to Board
diversity. The Board and the nominating committee believe that it
is desirable to have a variety of viewpoints on the Board, which
may be enhanced by a mix of different professional and personal
backgrounds and experience. In considering candidates for the
Board, the nominating committee considers the entirety of each
candidate’s credentials in the context of these standards.
With respect to the nomination of continuing directors
for re-election, the individual’s contributions to
the Board are also considered.
The
following is a brief biography of the nominees for Class III
directors and each person whose term as a Class I or Class II
director will continue after the 2019 Annual Meeting.
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Timur Turlov
Age:
31
Class
III Director Since:
November
2015
Non-independent
Committee
Memberships:
Nominating
and Corporate Governance
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Mr.
Turlov graduated from Russia State Technic University (named after
Tsiolkovsky) in 2009 with a Bachelor of Science degree in economics
and management. Mr. Turlov has more than 10 years of experience in
various areas in the international securities industry. From July
2013 to July 2017, Mr. Turlov served as the Advisor to the Chairman
of the Board of JSC Freedom Finance (“Freedom KZ”). In
that capacity, Mr. Turlov was primarily responsible for strategic
management, public and investor relations events, investment
strategy, sales strategy, and government relations. In July 2017,
Mr. Turlov became Chairman of the Board of Directors of Freedom KZ.
He has also served as the General Director of LLC IC Freedom
Finance (“Freedom RU”), since August 2011. As the
General Director, Mr. Turlov is responsible for establishing
Freedom RU’s strategic goals, including acquisition and
retention of large clients, sales strategy and company development.
From May 2012 through January 2013, Mr. Turlov served as the
Chairman of the Board of Directors of JSC Nomad Finance where he
oversaw business set up and acquisition of large clients. From July
2010 through August 2011, Mr. Turlov was employed as the Vice
Director of the International Sales Department of Nettrader LLC. In
this capacity, his major responsibilities included consulting to
set up access to foreign markets, trading, back office, and
internal accounting functions. Mr. Turlov also owns interests in
other businesses, including other securities brokerage firms that
are not subsidiaries of the Company.
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Skills and Qualifications
: Mr.
Turlov was selected as a director nominee based on his in depth
knowledge of the business of the Company and capital markets, his
professional experience and his educational background in economics
and management.
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Jason Kerr
Age:
47
Class
III Director Since:
May
2008
Independent
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Mr. Kerr earned his
Bachelor of Science degree in economics in 1995 and a Juris
Doctorate in 1998 from the University of Utah, where he was named
the William H. Leary Scholar. In 2011, Mr. Kerr founded the law
firm Price, Parkinson & Kerr, where he practices commercial
litigation. From 2006 to 2011, Mr. Kerr was the associate general
counsel of Basic Research, LLC, concentrating in intellectual
property litigation. Before joining Basic Research, Mr. Kerr was a
partner with the law firm of Plant, Christensen & Kanell in
Salt Lake City, Utah. Mr. Kerr was employed with Plant, Christensen
& Kanell from 1996 through 2001 and from 2004 to 2006. From
2001 through 2004, Mr. Kerr was employed as a commercial litigator
with the Las Vegas office of Lewis and Roca. Mr. Kerr became our
director in May 2008.
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| Committee Memberships: |
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Audit
Nominating
and Corporate Governance
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Skills and Qualifications
:
Mr. Kerr was selected as a director
nominee based on his educational background in economics, his
managerial and business management skills, and his extensive
professional experience as both in-house and outside legal
counsel.
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6
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Boris Cherdabayev
Age:
65
Class I
Director Since:
February
2019
Continuing
in office until the 2020 Annual Meeting
Independent
Committee
Memberships:
Audit
Compensation
|
|
Since
2012 Mr. Cherdabayev has served as Counsellor to the Chairman of
the management board of Weatherford-CER, a privately owned joint
venture company between Weatherford International and Caspian
Energy Research LLP. Mr. Cherdabayev served as the Chairman of the
board of BMB Munai Inc., the predecessor of the Company, from
November 2003 to November 2015 and also as Chief Executive Officer
from November 2003 through August 2007. From May 2000 to May 2003,
Mr. Cherdabayev served as Director at TengizChevroil LLP
multi-national oil and gas company owned by Chevron, ExxonMobil,
KazMunayGas and LukOil. From 1998 to May 2000, Mr. Cherdabayev
served as a member of the Board of Directors, Vice-President of
Exploration and Production and Executive Director on Services
Projects Development for NOC “Kazakhoil”, an oil and
gas exploration and production company. From 1983 to 1988 and from
1994 to 1998 he served as a people’s representative at
Novouzen City Council (Kazakhstan); he served as a people’s
representative at Mangistau Oblast Maslikhat (regional level
legislative structure) and a Chairman of the Committee on Law and
Order. For his achievements Mr. Cherdabayev has been awarded with a
national “Kurmet” order. Mr. Cherdabayev earned an
engineering degree from the Ufa Oil & Gas Institute, with a
specialization in “machinery and equipment of oil and gas
fields” in 1976. Mr. Cherdabayev also earned an engineering
degree from Kazakh Polytechnic Institute, with a specialization in
“mining engineer on oil and gas fields’
development.” During his career he also completed an English
language program in the United States, the
СНАМР Program (Chevron Advanced
Management Program) at Chevron Corporation offices in San
Francisco, California, and the CSEP Program (Columbia Senior
Executive Program) at Columbia University.
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Skills and Qualifications
:
Mr. Cherdabayev was selected as a
director because of his extensive executive management and board
experience with both private and U.S. public
companies.
|
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Askar Tashtitov
Age:
40
Class I
Director Since:
May
2008
Continuing
in office until the 2020 Annual Meeting
Non-independent
|
|
Mr. Tashtitov has served as the president of the Company since June
2018 and leads our investment banking activities. He has served as
a director of the Company since May 2008 and was employed with BMB
Munai, Inc., the predecessor of the Company, from December 2004
through November 2015, serving as the president from May 2006 to
November 2015. Mr. Tashtitov earned a Bachelor of Arts degree from
Yale University majoring in economics and history in 2002. Mr.
Tashtitov passed the AICPA Uniform CPA Examination in
2006.
Skills and Qualifications
:
Mr. Tashtitov was selected as a
director because he has 15 years of experience in the public
company arena, with particular expertise in interfacing with equity
and debt financing professionals, as well as investment banking and
significant business management experience.
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Committee
Memberships:
Compensation
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7
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Leonard Stillman
Age:
76
Class
II Director Since:
October
2006
Continuing
in office until the 2020 Annual Meeting
Independent
Committee
Memberships:
Audit
Compensation
Nominating
and Corporate Governance
|
|
Mr.
Stillman earned his Bachelor of Science degree in mathematics from
Brigham Young University and Masters of Business Administration
from the University of Utah. He began his career in 1963 with
Sperry UNIVAC as a programmer developing trajectory analysis
software for the Sergeant Missile system. Mr. Stillman spent many
years as a designer and teacher of computer language classes at
Brigham Young University, where he developed applications for the
Administrative Department including the school’s first
automated teacher evaluation system. During that time, he was also
a vice-president of Research and Development for Automated
Industrial Data Systems, Inc. and the Owner of World Data Systems
Company, which provided computerized payroll services for companies
such as Boise Cascade. Mr. Stillman has over 45 years of extensive
business expertise, including strategic planning, venture capital
financing, budgeting, manufacturing planning, cost controls,
personnel management, quality planning and management, and the
development of standards, policies, and procedures. He has
extensive skills in the design and development of computer software
systems and computer evaluation. Mr. Stillman helped found Stillman
George, Inc. in 1993 and founded Business Plan Tools, LLC in 2004.
He was employed with Stillman George, Inc. until 2010, where his
primary responsibilities included managing information, technical
development, and financial analysis projects and development, as
well as general company management and consulting activities. From
2008 to 2009 Mr. Stillman served as the interim chief financial
officer of BMB Munai, Inc., the predecessor to the Company. He is
currently employed by Business Plan Tools, LLC, which provides
cloud-based SaaS business planning software and consolidates a
broad variety of skills from a growing group of business
professionals to provide needed support in finance, marketing,
management, sales, planning, product development, and more to
businesses worldwide.
Skills and Qualifications
:
The Board selected Mr. Stillman as a
director because of his significant background in business
management, strategic planning, corporate finance, and information
management.
|
No
directors, nominees for director or executive officers have any
family relationship to any other director, nominee for director or
executive officer. None of the nominees have held directorships
with other public corporations during the past five
years.
No
director, nominee for director or executive officers or, to our
knowledge, any owner of record or beneficially of more than five
percent of our common stock, or any associate of any such director,
officer, affiliate of the Company, or security holder is a party
adverse to us or any of our subsidiaries or has a material interest
adverse to us or any of our subsidiaries.
|
THE BOARD
RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
EACH OF THE DIRECTOR NOMINEES LISTED ABOVE
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8
CORPORATE GOVERNANCE
Director Independence
The
Board relies upon the OTC Markets Group OTCQX Rules for U.S.
Companies and the SEC’s director independence requirements to
provide guidelines to assist it in its determination of director
independence. The Company is a “Controlled Company” as
defined by the NYSE and NASDAQ. As such, we are not required to
have a majority of independent directors on our Board, nor are we
required to have a majority of independent directors on our
nominating committee or our compensation committee. While our Board
is presently staffed by a majority of independent directors that
may not always be the case. Our audit committee is currently
staffed solely by independent directors, but our compensation
committee and nominating committee each have one member that is not
independent. For so long as the Company remains a Controlled
Company, we anticipate we may take advantage of the exemptions to
the independence requirements available to Controlled
Companies.
The
nominating committee and the full Board review the independence of
all members of the Board for purposes of determining which Board
members are deemed independent. Based on the director independence
standards of the OTC Markets Group OTCQX Rules for U.S. Companies,
the nominating committee and the full Board affirmatively
determined that Mr. Kerr, Mr. Stillman and Mr. Cherdabayev are
independent. In making this determination, our nominating committee
and Board considered the current and prior relationships that each
of the directors has with our Company and all other facts and
circumstances our nominating committee and Board deemed relevant in
determining their independence, including the beneficial ownership
of our capital stock by each non-employee director and other
transactions, relationships, and arrangements that are not required
to be disclosed in this proxy statement.
Transactions with Related Persons
Our
named executive officers and the Board are required to complete a
questionnaire on an annual basis that requires them to disclose any
related person transactions and potential conflicts of interest.
Our Chief Financial Officer reviews the responses to the
questionnaires and, if a related person transaction or potential
conflict of interest is reported by a director or named executive
officer, the questionnaire will be submitted to the audit committee
for review. If necessary, the audit committee will determine
whether the relationship is material and will have any effect on
the director’s independence. After making that determination,
the audit committee will approve or reject the
transaction.
Communication with the Board
The Board encourages communication from our
stockholders. Any interested parties who wish to communicate with
the non-management directors should send any such
communication to the Corporate Secretary at
1930 Village
Center Cir. #3-6972, Las Vegas, Nevada 89134
. All such stockholder communication will be
reviewed by the Corporate Secretary who will determine the
appropriate response or course of action.
BOARD LEADERSHIP STRUCTURE
Board Leadership
The Chairman of the Board and Chief
Executive Officer of the Company is Timur Turlov, our controlling
stockholder. Mr. Turlov, along with the executive management
team,
is responsible for
setting our strategic direction and
our day-to-day leadership and performance, while the
Board is responsible to hold management accountable for execution
of strategy once it is developed. The Board believes that it is
currently in the best interests of the Company and our stockholders
for Mr. Turlov to serve as Chief Executive Officer and Chairman of
the Board. Our directors bring different perspectives, experience,
insight and expertise from outside the Company while Mr. Turlov
brings Company specific experience and expertise. The Board
believes that the combined role of Chairman and Chief Executive
Officer also facilitates flow of information between the Board and
management.
9
The
Board currently consists of five members; our Chief Executive
Officer, our President and three non-employee directors, all of
whom are independent. Members of the Board are kept informed of the
Company’s operations by reviewing materials provided to them,
speaking to our executives, employees and legal counsel and by
attending meetings of the Board. We do not currently have a lead
independent director.
BOARD COMMITTEES
Prior
to July 2018, the full Board fulfilled the functions which have now
been assigned to the Board committees listed in the table below. As
noted above, as a Controlled Company we are exempt from certain
board and committee independence requirements of the NYSE and
NASDAQ. Our audit committee consists of all independent directors.
Our compensation committee and our nominating committee are each
staffed by two independent directors and one non-independent
director.
The
memberships of each committee as of the date of this proxy
statement are listed below:
|
Name
|
Audit
Committee
|
Compensation
Committee
|
Nominating and
Corporate Governance Committee
|
|
Leonard
Stillman
|
C
|
X
|
X
|
|
Jason
Kerr
|
X
|
|
X
|
|
Boris
Cherdabayev
|
X
|
X
|
|
|
Timur
Turlov*
|
|
|
C
|
|
Askar
Tashtitov*
|
|
C
|
|
An
“X” indicates membership on the committee.
A
“C” indicates that the director serves as the chairman
of the committee.
* Mr.
Turlov and Mr. Tashtitov do not meet the independence
qualifications.
Audit Committee
The Audit Committee Charter provides that the
audit committee is primarily responsible for the integrity of our
accounting and financial reporting process, our compliance with
legal and regulatory requirements, the independence, qualifications
and the performance of our independent registered public accounting
firm, and performance of internal audit functions. Specifically,
these duties include: selecting, retaining, compensating,
overseeing, and if necessary, terminating our independent
registered public accounting firm and any other registered public
accounting firm, as necessary; approving audit and non-audit
services provided to us by the independent registered public
accounting firm; approving all audit engagement fees and terms;
reviewing the scope of the audit to be conducted by such firm,
including the firm’s internal quality control procedures, and
issues raised by the most recent peer review or
public company accounting oversight board (United
States) (“
PCAOB”)
review or inspection, as well as the results of its audit;
evaluating, at least annually, the qualifications, performance and
independence of the independent auditors; reviewing and discussing
with the independent auditors any audit problems, difficulties and
disagreements and management’s responses to same; overseeing
our financial reporting activities, including annual and quarterly
reports and the accounting standards and principles followed;
reviewing and approving the design and implementation of an
internal audit function; reviewing and approving related-party
transactions; overseeing legal and regulatory compliance;
overseeing disclosure and internal controls, including establishing
and overseeing procedures to address concerns about the same; and
preparing the report of the audit committee, as required by the
rules and regulations of the SEC, included in this proxy
statement.
10
Each
member of the audit committee is financially literate. Mr.
Stillman, Mr. Kerr and Mr. Cherdabayev each meet the
“Independent Director” definition of the OTC Markets
Group OTCQX Rules for U.S. Companies and the SEC. The Board has
determined that Mr. Stillman qualifies as an audit committee
financial expert as defined in Item 407(d)(5)(ii) of Regulation
S-K. We did not staff our audit committee until July 2018 and the
full Board performed the functions of the audit committee. During
fiscal 2019, the audit committee did not meet independent of the
full board. The amendments to the Audit Committee Charter adopted
in February 2019 provide that the audit committee will meet at
least four times annually. As of the date of printing the audit
committee has met three times during fiscal 2020.
Report of the Audit Committee
The
audit committee oversees our financial reporting process on behalf
of the Board. Management is responsible for our internal controls,
financial reporting process and compliance with laws, regulations
and ethical business standards. Our independent registered public
accounting firm is responsible for performing an integrated audit
of our consolidated financial statements and of our internal
control over financial reporting in accordance with standards of
the PCAOB, and to issue opinions thereon. The audit
committee’s responsibility is to monitor and oversee these
processes. In this capacity, the audit committee provides advice,
counsel, and direction to management and the auditors on the basis
of the information it receives, discussions with management and the
auditors, and the experience of the audit committee’s members
in business, financial and accounting matters.
The
audit committee reviewed and discussed with management and WSRP,
LLC, our independent registered public accounting firm, our audited
financial statements for the fiscal year ended March 31, 2019. The
audit committee reviewed and discussed with management and WSRP,
LLC, management’s assessment of the effectiveness of the
Company’s internal control over financial reporting and WSRP,
LLC’s opinion about the effectiveness of the Company’s
internal control over financial reporting. The audit committee
discussed with WSRP, LLC the matters required to be discussed by
applicable requirements of the PCAOB as currently in effect. The
audit committee also received the written disclosures and the
letter from WSRP, LLC required by applicable requirements of the
PCAOB regarding auditor-audit committee communications concerning
independence and discussed with WSRP, LLC its independence from
Freedom Holding Corp. and its management.
In
reliance on the reviews and discussions referred to above, the
audit committee recommended to the Board, and the Board approved,
that our audited financial statements be included in the
Company’s 2019 Annual Report, which has been filed with the
SEC. These are the same financial statements that appear in our
Annual Report.
Members of the Audit
Committee
:
Leonard
Stillman, Chair
Jason
Kerr
Boris
Cherdabayev
Compensation Committee
The
compensation committee charter provides that the primary function
of the compensation committee is to carry out the duties assigned
to it by the Board relating to review and determination of
executive compensation. The Compensation Committee Charter assigns
the compensation committee the following authority and
responsibilities: reviewing and approving corporate goals and
objectives applicable to the compensation of the chief executive
officer (“CEO”) and evaluation of the CEO’s
performance to determine and approve CEO compensation; reviewing
and approving the compensation of all other executive officers;
reviewing, approving and, when appropriate, recommending to the
Board for approval, incentive compensation plans and equity-based
plans, and where appropriate or required, recommending such plans
for approval by our stockholders; reviewing with management
executive compensation disclosure to be included, as required by
SEC rules and regulations, in our annual reports on Form 10-K
and/or proxy statements; reviewing, approving and, when
appropriate, recommending to the Board for approval, any employment
agreements and severance arrangements or plans, including any
benefits to be provided in connection with a change in control, and
any amendments or terminations thereto; determining stock ownership
guidelines for executive officers and monitoring compliance with
such guidelines; reviewing incentive compensation arrangements and
the relationship between risk management policies and practices and
compensation policies and practices; reviewing and recommending to
the Board for approval the frequency of Say on Pay votes; reviewing
all director compensation and benefits; and overseeing engagement
with stockholder and proxy advisory firms on matters of executive
compensation.
11
The
Compensation Committee Charter allows the compensation committee to
invite such members of management to its meeting as it deems
appropriate, but in all cases the CEO and any other such officers
shall not be present at meetings at which their compensation or
performance is discussed or determined.
The
Compensation Committee Charter provides that the compensation
committee will annually conduct an evaluation of its duties under
the charter and present the result to the Board. The Compensation
Committee Charter also authorizes the compensation committee to
access, at our expense, such internal and external resources,
including retaining, legal, financial and other advisors, such as
compensation consultants, as the compensation committee deems
necessary or appropriate to fulfill its responsibilities. Neither
the compensation committee nor the Board retained the services of a
compensation consultant during fiscal 2019. The Compensation
Committee Charter authorizes the compensation committee to delegate
any of its responsibilities and authority to one or more
subcommitees as it deems appropriate.
Mr.
Tashtitov is the Chairman of the compensation committee and Mr.
Stillman and Mr. Cherdabayev are members of the committee. As our
president, Mr. Tashtitov does not qualify as an independent
director. Mr. Stillman and Mr. Cherdabayev do qualify as
independent directors. To the extent securities laws or other laws,
rules or regulations require approval by the full Board, or by the
independent members of the Board, such matters will be submitted
for appropriate approval. The compensation committee did not meet
independent of the full board during fiscal 2019, but as of the
date of printing, it has met once during fiscal 2020.
Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee Charter provides that
the nominating committee’s responsibilities include, among
other things: determining the qualifications, qualities, skills,
and other expertise required to be a director; identifying
individuals qualified to become Board members; recommending to the
Board nominees to stand for election or to fill any vacancies;
developing and recommending a set of corporate governance
guidelines; overseeing our corporate governance practices and
procedures; developing, subject to approval by the Board, a process
for an annual evaluation of the Board and its committees and
overseeing the conduct of the annual evaluation; reviewing the
Board’s committee structure and composition and making
recommendations to the Board regarding the appointment of directors
to serve as members of each committee; developing and recommending
to the Board for approval director standards for determining
whether a director has a material relationship with the Company
that would impair his or her independence; as necessary, amending
and updating our Code of Ethics and Business Conduct; monitoring
compliance with, investigating any alleged breach or violation of,
and enforcing the provisions of our Code of Ethics and Business
Conduct; developing and recommending to the Board for approval an
officer succession plan; and reviewing all tendered director
resignation letters and evaluating and recommending to the Board
whether such resignations should be accepted.
In
discharging its responsibilities to nominate candidates for
election to the Board neither the Board, nor the nominating
committee has, at this time, specified any minimum qualifications
for serving on the Board. We believe that our directors should have
the highest professional and personal ethics and values, consistent
with our values and standards. They should be committed to
enhancing stockholder value and should have sufficient time to
carry out their duties and to provide insight and practical wisdom
based on experience. Their service on other boards of public
companies should be limited to a number that permits them, given
their individual circumstances, to perform responsibly all director
duties for us. Each director must represent the interests of all
stockholders. When considering potential director candidates, the
nominating committee also considers the candidate’s
character, judgment, diversity, age and skills, including financial
literacy and experience in the context of our needs and the needs
of the Board.
Because
of the size of the Company and the limited need to seek additional
directors, there is no assurance that all stockholder proposed
candidates will be fully considered, that all candidates will be
considered equally, or that the proponent of any candidate or the
proposed candidate will be contacted by the Company, the Board or
the nominating committee, and no undertaking to do so is implied by
the willingness to consider candidates proposed by stockholders.
The nominating committee did not meet independent of the full board
during fiscal 2019. As of the date of printing the nominating
committee has met once during fiscal 2020.
12
The
Nominating and Corporate Governance Charter authorizes the
nominating committee to access, at our expense, such internal and
external resources, including retaining, legal, financial and other
advisors, such as the nominating committee deems necessary or
appropriate to fulfill its responsibilities.
Stockholder Nominees for Director
Our
nominating committee will consider qualified director nominees
recommended by stockholders when such recommendations are submitted
in accordance with applicable SEC requirements, our By-laws, Nevada
state corporate law and any other applicable law, rule or
regulation regarding director nominations. Under our By-laws,
nominations of persons for election to the Board may be made at an
annual meeting of stockholders by any stockholder who was a
stockholder of record as of the record date and at the time of
giving of the notice provided for in our By-laws and at the time of
the annual meeting; and provides timely notice and otherwise
complies with the procedures set forth in our By-laws.
No
candidates for director nominations were submitted to the
nominating committee by any stockholder in connection with 2019
Annual Meeting. Any stockholder desiring to present a nomination
for consideration by the nominating committee prior to the 2020
Annual Meeting must do so in accordance with our By-laws and
policies as described in more detail in “Stockholder
Proposals for the 2020 Annual Meeting,” elsewhere in this
proxy statement.
Advance Notice Provisions
To be timely, a stockholder’s notice
pursuant to the advance notice provisions of our By-laws must be in
writing and delivered to us at our principal executive offices not
later than the close of business on the 90th day, nor earlier than
the close of business on the 120th day, in advance of the
anniversary of the previous year’s annual meeting if such
meeting is to be held on a day which is not more than 30 days in
advance of the anniversary of the previous year’s annual
meeting or not later than 60 days after the anniversary of the
previous year’s annual meeting; and with respect to any other
annual meeting of stockholders, including in the event that no
annual meeting was held in the previous year, not earlier than the
close of business on the 120th day prior to the annual meeting and
not later than the close of business on the later of: (1) the 90th
day prior to the annual meeting and (2)
the tenth day
following the day following the day on which public announcement of
the date of such meeting is first made
. A stockholder’s notice pursuant to the
advance notice provision of our By-Laws should be delivered to:
Chairman of the Nominating and Corporate Governance Committee c/o
Corporate Secretary, Freedom Holding Corp, “Esentai
Tower” BC, Floor 7, 77/7 Al Farabi Ave., Almaty, 050040,
Republic of Kazakhstan.
To
be in proper form, a stockholder’s notice pursuant to the
advance notice provisions of our By-laws must set forth, as to the
stockholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination is made:
●
the
name and address of the stockholder as they appear on our books and
of the beneficial owner, if any, on whose behalf the nomination is
being made;
●
the
class and number of our shares which are owned by the stockholder
(beneficially and of record) and owned by the beneficial owner, if
any, on whose behalf the nomination is being made, as of the date
of the notice, and a representation that the stockholder will
notify us in writing of the class and number of such shares owned
of record and beneficially by the stockholder as of the record date
for the meeting within five business days after the record date for
such meeting;
●
a
description of any agreement, arrangement, or understanding with
respect to such nomination between or among the stockholder or the
beneficial owner, if any, on whose behalf the nomination is being
made and any of their affiliates or associates, and any others
(including their names) acting in concert with any of the
foregoing, and a representation that the stockholder will notify us
in writing of any such agreement, arrangement, or understanding in
effect as of the record date for the meeting within five business
days after the record date for such meeting;
●
a
description of any agreement, arrangement, or understanding
(including any derivative or short positions, profit interests,
options, hedging transactions, and borrowed or loaned shares) that
has been entered into as of the date of your notice by, or on the
stockholder’s behalf, or the beneficial owner, if any, on
whose behalf the nomination is being made and any of their
affiliates or associates, the effect or intent of which is to
mitigate loss to, manage risk or benefit of share price changes
for, or increase or decrease the voting power of such person or any
of their affiliates or associates with respect to shares of our
stock, and a representation that the stockholder will notify us in
writing of any such agreement, arrangement, or understanding in
effect as of the record date for the meeting within five business
days after the record date for such meeting;
13
●
a
representation that the stockholder is a holder of record of our
shares entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons
specified in the notice, and
●
a
representation whether the stockholder intends to deliver a proxy
statement and/or form of proxy to holders of at least the
percentage of our outstanding capital stock required to approve the
nomination and/or otherwise to solicit proxies from stockholders in
support of the nomination. We may require any proposed nominee to
furnish such other information as we may reasonably require to
determine the eligibility of such proposed nominee to serve as an
independent director or that could be material to a reasonable
stockholder’s understanding of the independence, or lack
thereof, of such nominee.
The
stockholder’s notice must provide the nominating committee
the following:
●
the name, age,
business address, and residence address of each proposed
nominee;
●
the principal
occupation or employment of each such nominee;
●
the class and
number of shares of capital stock of the Corporation which are
owned of record and beneficially by each such nominee (if
any);
●
such other
information concerning each such nominee as would be required to be
disclosed in a proxy statement soliciting proxies for the election
of such nominee as a director in an election contest (even if an
election contest is not involved) or that is otherwise required to
be disclosed, under Section 14(a) of the Exchange Act;
●
a
written questionnaire with respect to the background and
qualification of such proposed nominee (which questionnaire shall
be provided by the Corporate Secretary upon written request) and a
written statement and agreement executed by each such nominee
acknowledging that such person:
o
consents
to being named in the Corporation’s proxy statement as a
nominee and to serving as a director if elected,
o
intends
to serve as a director for the full term for which such person is
standing for election, and
o
makes
the following representations: (1) that the nominee has read and
agrees to adhere to our Code of Ethics and Business Conduct and
other corporate governance policies and guidelines applicable to
directors, (2) that the nominee is not and will not become a party
to any agreement, arrangement, or understanding with, and has not
given any commitment or assurance to, any person or entity as to
how such person, if elected as a director, will act or vote on any
issue or question, (3) that the nominee is not and will not become
a party to any agreement, arrangement, or understanding with any
person or entity other than the Corporation with respect to any
direct or indirect compensation, reimbursement, or indemnification
in connection with such person’s nomination for director or
service as a director.
Proxy Access Provisions
Pursuant
to the proxy access provisions of our By-laws, a stockholder, or a
group of not more than 20 stockholders, that has continuously owned
for at least three years a number of shares that represents at
least 3% of our outstanding voting shares can nominate for
inclusion in the Company’s proxy statement a number of
nominees not to exceed 20% of the number of directors in office as
of the last day on which notice of a nomination may be delivered to
the Company, or if such amount is not a whole number, the closest
whole number less than 20%, provided that the stockholder(s) and
the stockholder nominee(s) satisfy the requirements specified in
our By-laws. Such requirements include the timely delivery of a
stockholder’s notice to our Corporate Secretary.
To be timely, a stockholder’s notice
pursuant to the proxy access provisions must be delivered to our
Corporate Secretary at our principal executive offices not later
than 120 days nor more than 150 days prior to the first anniversary
of the date the definitive proxy statement was first sent to
stockholders in connection with the preceding year’s annual
meeting; provided, however, that in the event that the date of the
annual meeting is advanced more than 30 days or delayed more than
60 days from the anniversary of the preceding year’s annual
meeting, or if no annual meeting was held in the preceding year,
the notice must be delivered not earlier than the close of business
on the 150
th
day prior to such annual meeting and
not later than the close of business on the later of (i) the
120
th
day prior to such annual meeting or
the tenth day following the day on which public announcement of the
date of such meeting is first made.
14
A
stockholder’s notice pursuant to the proxy access provisions
must set forth, as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination is
made:
●
the
information required in a stockholder’s notice pursuant to
the advance notice provisions of our By-laws;
●
a statement of the
stockholder (a) setting forth and certifying to the number of
shares of the Company the stockholder owns and has owned
continuously for at least three years as of the date of the notice
and (b) agreeing to continue to own such shares through the
applicable annual meeting;
●
a copy of the
Schedule 14N that has been or concurrently is filed with the SEC as
required by Rule 14a-18 under the Exchange
Act;
●
the
details of any relationship that existed within the past three
years and that would have been described pursuant to Item 6(e) of
Schedule 14N if the relationship existed on the date of submission
of the Schedule 14N; and
●
written agreements
of the stockholder(s) setting forth certain additional agreements,
representations and warranties specified in our
By-laws.
Corporate Governance Guidelines
The
Nominating and Corporate Governance Committee Charter provides that
the nominating committee will develop Corporate Governance
Guidelines, and once developed, assess and review those guidelines
at least annually. The Corporate Governance Guidelines are
anticipated to describe our corporate governance practices and
address corporate governance areas such as Board composition and
responsibilities, compensation of directors and executive
succession planning.
Executive Sessions
The
Board held no executive sessions with only the independent
directors in attendance during the 2019 fiscal year. We anticipate
the Corporate Governance Guidelines to be developed by the
nominating committee will provide guidelines for holding executive
sessions.
Meeting Attendance
The
Board met three times during fiscal 2019 and took action by
unanimous written consent of the board of directors one other time
during fiscal 2019. Each director attended at least 75% of the
meetings of the Board. In addition to participation in Board
meetings, our directors discharged their responsibilities
throughout the year through personal meetings and other
communications, including telephone contact on any matters of
interest and concern.
We
do not have a formal policy requiring members of the Board to
attend the annual meeting, although all directors are encouraged to
attend if available. Two members of our board of directors attended
the 2018 annual meeting of stockholders.
Risk Management
The
Board has an active role, in overseeing management of our risks. In
June 2018, the Board adopted a charter for the audit committee and
in July the Board adopted charters for the compensation committee
and the nominating committee. These charters were amended in
February 2019. The Board committees were initially staffed by the
Board in July 2018. Prior to July 2018, the full Board fulfilled
the functions which are now assigned to those committees. The audit
committee oversees management of financial risks. The compensation
committee is responsible for overseeing the management of risks
relating to our executive compensation plans and arrangements. The
nominating committee manages risks associated with the independence
of the Board and potential conflicts of interest. While each
committee is responsible for evaluating certain risks and
overseeing the management of such risks, the entire Board is
regularly informed about those risks. The Board seeks to ensure
that management has in place processes for dealing appropriately
with risk. It is the responsibility of our senior management to
develop and implement our short-term and long-term objectives and
to identify, evaluate, manage and mitigate the risks inherent in
seeking to achieve those objectives. Management is responsible for
identifying risks and risk controls related to significant business
activities and Company objectives, developing programs to determine
the sufficiency of risk identification, balancing of potential risk
to potential reward and the appropriate manner in which to control
risk.
15
Indemnification
As
permitted by Nevada state corporate law, our Restated Articles of
Incorporation and By-Laws authorize and require us to indemnify our
officers and directors to the fullest extent permitted under Nevada
law.
Other Corporate Governance Resources
The
charters of each committee and our Code of Ethics and Business
Conduct are available on the Investor Relations Section of our
website, www.freedomholdingcorp.us.
DIRECTOR COMPENSATION
We
had five directors on March 31, 2019, the last day of our 2019
fiscal year. The independent members of our Board are paid an
annual cash retainer of $24,000. Generally, Directors do not
receive board meeting attendance fees. Our independent directors
are also paid an annual cash retainer of $3,000 for each committee
of the Board they serve on. In addition to the above cash
retainers, directors may be compensated on an ad hoc basis for
special committee or subcommittee meetings held or tasks performed
by a committee or subcommittee designated by either the full Board
or by a standing committee of the full Board, with such
compensation determined upon completion of the tasks
performed.
The following table provides information
concerning the compensation of each director who served in fiscal
2019 other than Mr. Turlov whose compensation is described
under the heading “
Executive
Compensation
”
elsewhere in this proxy statement and who did not
receive any compensation for his services on the
Board:
|
Name
|
|
Fees Earned or
Paid in Cash($)
|
|
|
Stock Awards($)
|
|
|
All Other
Compensation($)
|
|
|
Total ($)
|
|
Boris
Cherdabayev
(1)
|
|
4,666
|
|
|
--
|
|
|
--
|
|
|
4,666
|
|
Jason
Kerr
|
|
29,314
|
|
|
--
|
|
|
--
|
|
|
29,314
|
|
Leonard
Stillman
|
|
30,163
|
|
|
--
|
|
|
--
|
|
|
30,163
|
|
Arkady
Rakhilkin
(2)
|
|
24,218
|
|
|
--
|
|
|
--
|
|
|
24,218
|
|
Askar
Tashtitov
|
|
--
|
|
|
--
|
|
|
65,660
|
(3)
|
|
65,660
|
(1)
On February 4,
2019, Mr. Cherdabayev was appointed as a member of the Board to
fill the vacancy created by Mr. Rakhilkin’s resignation from
the Board.
(2)
On February 1,
2019, Mr. Rakhilkin resigned as a member of the Board.
(3)
In November 2018
the Company began paying Mr. Tashtitov a salary of $4 million
Kazakhstani tenge (approximately $11,000 USD) per month.
Compensation paid to Mr. Turlov reflected in the table also
includes salary-related taxes and dues of $9,183. We have an
employment agreement with Mr. Tashtitov, which is the standard
statutorily required employment agreement for all employees in the
Republic of Kazakhstan. This standard employment agreement is
limited in its terms and primarily provides for statutory
requirements relating to the rights of employees, base salary, and
payment of salary-related taxes and dues, which includes personal
income taxes and
nationally-sponsored
pension program
obligations. Mr. Tashtitov provides services to the Company on an
at-will basis. We have no agreement with Mr. Tashtitov that could
result in the payment of benefits to him in the event of his
resignation, retirement or other termination or as a result of a
change in control of the Company or a change in his
responsibilities following a change in control of the
Company.
16
As
of March 31, 2019, no member of our Board held any outstanding
stock options or other equity awards. We do not currently have a
fixed plan for the award of equity compensation to our directors.
Any equity grants to directors will be granted at a price equal to
the fair market value of our common stock on the date of the grant.
We did not award any equity compensation to our directors during
the fiscal years ended March 31, 2019 or 2018.
SECURITY OWNERSHIP
As of
July 15, 2019, FRHC had 58,093,212 shares of common stock issued
and outstanding. The following table sets forth the outstanding
shares of common stock owned of record or beneficially by each
person that owned of record, or was known to us to own
beneficially, more than 5% of our issued and outstanding stock, and
the name and stock holdings of each director and nominee for
director, and the stock holdings of all of the executive officers
and directors as a group:
|
Name of Person or
Group(1)
|
Nature of
Ownership
|
Amount
|
Percent(2)
|
|
Principal
Stockholders:
|
|
|
|
|
Timur
Turlov
|
Common
Stock
|
42,405,112
|
73.0
%
|
|
|
|
|
|
|
Directors
and Nominees:
|
|
|
|
|
Timur
Turlov
|
Common
Stock
|
42,405,112
|
73.0
%
|
|
Jason
Kerr
|
Common
Stock
|
--
|
--
|
|
Boris
Cherdabayev
|
Common
Stock
|
18,474
|
*
|
|
Leonard
Stillman
|
Common
Stock
|
--
|
--
|
|
Askar
Tashtitov
|
Common
Stock
|
47,200
|
*
|
|
|
|
|
|
|
All
Executive Officers, Directors and Nominees as a Group (6
persons
(3)
)
|
Common
Stock
|
42,548,386
|
73.2
%
|
*
Less than
1%.
(1)
Unless otherwise
indicated, the mailing address of each beneficial owner is c/o
Freedom Holding Corp., “Esentai Tower” BC, Floor 7,
77/7 Al Farabi Ave., Almaty, 050040, Republic of Kazakhstan. The
information provided in the table is based on our records,
information filed with the SEC, and information provided to us,
except where otherwise noted.
(2)
The amounts and
percentages of shares beneficially owned are reported on the basis
of SEC regulations governing the determination of beneficial
ownership of securities. Under SEC rules, a person is deemed to be
a “beneficial” owner of a security if that person has
or shares voting power or investment power, which includes the
power to dispose of or to direct the disposition of such security.
A person is also deemed to be a beneficial owner of any securities
of which that person has a right to acquire beneficial ownership
within 60 days.
(3)
Includes 77,600
shares held by our Chief Financial Officer, Evgeniy Ler. Of these
shares, 35,000 are subject to vesting conditioned upon his
continued employment with us through October 6, 2019, except upon
the occurrence of certain events, such as death, disability, a
change in control, or termination by us not for cause. Mr. Ler has
the right to vote the unvested shares in any matter brought for a
vote of our common stockholders.
For
certain information concerning our executive officers, see
“Information About our Executive Officers” in Item 1 of
Part I of our Annual Report.
17
Equity Compensation Plan Information
The
following table sets forth, as of July 15, 2019, certain
information related to our equity compensation plans.
|
Plan
Category
|
Number of Securities
to Be Issued upon Exercise of Outstanding Options,Warrants and
Rights(a)
|
Weighted-Average
Exercise Price of Outstanding Options,Warrants and
Rights(b)
|
Number of Securities
Remaining Available for Future Issuance under EquityCompensation
Plans (Excluding Securities Reflected in
Column(a))
|
|
Equity compensation
plans approved by security holders
|
300,000
(1)
|
$
1.98
|
3,740,000
(2)
|
|
Equity compensation
plans not approved by security holders
|
--
|
--
|
--
|
|
|
|
|
|
|
Total
|
300,000
|
1.98
|
3,740,000
|
(1)
Consists
solely of stock options awarded to two Company employees. These
options are subject to a three-year vesting period contingent upon
continued employment with the Company, with one-third of the option
grants vesting each year on the anniversary date of grant, which
was October 6, 2017. The options are nonqualified options and
expire on October 6, 2027. The exercise price of the options is
$1.98 per share.
(2)
Securities
available for award under the Freedom Holding Corp., 2019 Equity
Incentive Plan.
EXECUTIVE COMPENSATION
The
table below summarizes compensation paid to or earned by our named
executive officers (“NEOs”) for the years ended March
31, 2019 and 2018.
Summary Compensation Table
|
Name and
Principal Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
All Other
Compensation
($)
(2)
|
|
Total
($)
|
|
Timur
Turlov
|
|
2019
|
|
101,043
|
|
--
|
|
|
--
|
|
21,842
|
|
122,885
|
|
CEO and
Chairman
|
|
2018
|
|
95,440
|
|
--
|
|
|
--
|
|
19,213
|
|
114,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Evgeniy
Ler
|
|
2019
|
|
74,459
|
|
--
|
|
|
--
|
|
13,005
|
|
87,464
|
|
CFO
|
|
2018
|
|
20,825
|
|
147,000
|
(3)
|
|
--
|
|
4,769
|
|
172,594
|
(1)
Annual salary is
net of all salary-related taxes and dues required under the laws of
the Russian Federation and the Republic of Kazakhstan, which are
legally the responsibility of the Company.
(2)
Includes
salary-related taxes and dues of $18,513 and a car allowance of
$3,329 for Mr. Turlov and salary-related taxes and dues of $13,005
for Mr. Ler during fiscal 2019. Includes salary-related taxes and
dues of $16,927 and a car allowance of $2,286 for Mr.Turlov and
salary-related taxes and dues of $4,769 for Mr. Ler for the year
2018.
(3)
Consists of a
restricted stock award of 70,000 shares made on October 6, 2017,
valued at $2.10 per share which vest as described in the notes to
the table under “
Outstanding
Equity Awards at Fiscal Year-End
” below.
18
Outstanding Equity Awards at Fiscal Year-End
Mr.
Turlov held no outstanding equity awards from the Company as of the
fiscal year ended March 31, 2019. On October 6, 2017, Mr. Ler was
awarded a restricted stock grant of 70,000 shares. 35,000 shares
vested on October 6, 2018, and assuming Mr. Ler satisfies the
applicable vesting conditions, the remaining 35,000 vest will vest
on October 6, 2019.
|
|
|
STOCK
AWARDS
|
|||||||
|
Name
|
|
Number of Shares or
Units of Stock That Have Not Vested
(#)
|
|
|
Market Value of
Shares or Units of Stock that Have Not
Vested
($)
(1)
|
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights That
Have Not Vested
(#)
|
|
Equity Incentive
Plan Awards: Market of Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|
Timur
Turlov
|
|
--
|
|
|
--
|
|
--
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
Evgeniy
Ler
|
|
35,000
|
(2)
|
|
303,450
|
|
--
|
|
--
|
(1)
Valued
at the closing market price of our common stock on March 29, 2019 -
$8.67.
(2)
35,000 shares will
vest to Mr. Ler on October 6, 2019, subject to his continued
employment with us through October 6, 2019.
Option Exercises and Stock Vested
Neither
Mr. Turlov nor Mr. Ler exercised stock options and no stock vested
to Mr. Turlov during fiscal 2018 or 2019. During fiscal 2019 35,000
shares of restricted stock vested to Mr. Ler.
Nonqualified Deferred Compensation
We
do not have a deferred compensation program for our employees,
officers or directors.
Pension and Retirement Benefits
We
do not offer a company-sponsored pension program or retirement
benefits for our employees, officers or directors. Several of the
countries in which we operate have nationally-sponsored pension
programs to which we are required to make contributions. Such
contributions are paid by us to the government on behalf of the
employee. We do not have other liabilities related to any
supplementary pensions, post-retirement health care, insurance
benefits or retirement indemnities.
Employment Agreements
At
this time we do not have a written or unwritten employment
agreement with Mr. Turlov. The employment agreement we have with
Mr. Ler is the standard statutorily required employment agreement
for all employees in the Republic of Kazakhstan. This standard
employment agreement is limited in its terms and primarily provides
for statutory requirements relating to the rights of employees,
base salary, and payment of salary-related taxes and dues, include
personal income taxes and pension fund obligations. Both Mr. Turlov
and Mr. Ler provide services to the Company on an at-will
basis.
19
Potential Payments upon Termination or Change in
Control
We do
not currently have any contract, agreement, plan or arrangement
with Mr. Turlov or Mr. Ler that would result in any potential
payment upon resignation, retirement or other termination of
employment with the Company or as a result of a change in control
of the Company or change of responsibilities of either individual
in the event of a change in control of the Company.
PROPOSAL TWO—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The
Board, upon the recommendation of the audit committee, has
appointed WSRP, LLC to serve as our independent registered public
accounting firm for fiscal year 2020.
Representatives
of WSRP, LLC are expected to be present telephonically at the 2019
Annual Meeting and are expected to be available to respond to
appropriate questions. They also will have the opportunity to make
a statement if they desire to do so.
We
are asking our stockholders to ratify the selection of WSRP, LLC as
our independent registered public accounting firm. Although
ratification is not required by our By-Laws or otherwise, the Board
is submitting the selection of WSRP, LLC to our stockholders for
ratification as our audit committee has recommended because we
value our stockholders’ views on our independent registered
public accounting firm and as a matter of good corporate practice.
If our stockholders fail to ratify the selection, we will consider
that failure as a direction to the Board and the audit committee to
consider the selection of a different firm. Even if the selection
is ratified, the audit committee in its discretion may select a
different independent registered public accounting firm, at any
time during the year if it determines that such a change would be
in the best interests of the Company and our
stockholders.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Pre-Approval of Services
In
June 2018 our Board adopted an Audit Committee Charter, which was
subsequently amended in February 2019, and staffed the audit
committee in July 2018. Prior to staffing the audit committee, the
procedures that are now performed by the audit committee were
performed by our full Board.
The
audit committee annually engages our independent registered public
accounting firm and pre-approves, for the following
fiscal year, their services related to the annual audit and interim
quarterly reviews of our financial statements and all
reasonably-related assurance services.
All non-audit services are considered
for pre-approval by the audit committee as our management
requests.
Audit
committee pre-approval of audit
and non-audit services is not required if the engagement
for the services is entered into pursuant
to pre-approval policies and procedures established by
the audit committee regarding our engagement of the independent
registered public accounting firm, provided the policies and
procedures are detailed as to the particular service, the audit
committee is informed of each service provided and those policies
and procedures do not include delegation of the audit
committee’s responsibilities under the Exchange Act to our
management.
20
Audit Fees
The
firm of WSRP, LLC has served as our independent registered public
accounting firm for the fiscal years ended March 31, 2019 and 2018.
Principal accounting fees for professional services provided to us
by WSRP, LLC for the fiscal years ended March 31, 2019 and 2018 are
summarized as follows:
|
Fee
Type
|
For the year
ended
March
31,
2019
($)
|
For the year
ended
March
31,
2018
($)
|
|
Audit
fees
|
607,380
|
90,612
|
|
Audit-related
fees
|
31,197
|
259,505
|
|
Tax
fees
|
8,334
|
16,302
|
|
All
other fees
|
---
|
—
|
|
|
|
|
|
Total
|
646,911
|
366,419
|
Audit Fees
. Audit fees were for
professional services rendered in connection with the audit of the
financial statements included in our annual report on Form 10-K and
review of the financial statements included in our quarterly
reports of Form 10-Q and for services normally provided by our
independent registered public accounting firm in connection with
statutory and regulatory filings or engagements and fees for
Sarbanes-Oxley 404 audit work.
Audit-Related Fees
. Audit-related fees
during the fiscal year ended March 31, 2019, were primarily fees
billed for professional services related to foreign statutory
reporting and document review. Audit-related fees during the fiscal
year ended March 31, 2018, were primarily for professional services
related to the acquisitions of Freedom RU and its subsidiaries and
FFINEU Investment Limited.
Tax Fees
. Fees billed for professional
services rendered for tax compliance, tax advice and tax planning
within the United States for the fiscal years ended March 31, 2019
and 2018.
The
audit committee has determined that the provision of services by
our independent registered accounting firm described above is
compatible with maintaining WSPR, LLC’s
independence.
|
|
|
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR”
THE RATIFICATION OF WSRP, LLC AS OUR INDEPENDENT REGISTERED
ACCOUNTING FIRM FOR THE 2020 FISAL YEAR.
|
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
In addition to the compensation arrangements
discussed above under “
Executive
Compensation
” elsewhere
in this proxy statement, the following is a description of
transactions since April 1, 2017, to which we have been a
participant, in which the amount involved in the transaction
exceeds or will exceed the lesser of (i) $120,000 or
(ii) 1% of the average of our total assets at year end
for the last two completed fiscal years, and in which any of
our directors, executive officers or holders of more than 5% of our
capital stock, or any immediate family member of, or person sharing
the household with, any of these individuals, had or will have a
direct or indirect material interest or such other persons as may
be required to be disclosed pursuant to Item 404 of
Regulation S-K, which we refer collectively refer to as
related parties.
From
time to time in the ordinary course of business, we, through our
subsidiaries, engage in transactions with other corporations or
entities whose owners, executive officers or directors are also
directors, executive officers or shareholders of FRHC or have an
affiliation with our directors, executive officers or shareholders.
Such transactions are conducted on an arm’s-length
basis.
21
Certain
of our executive officers, directors, greater than 5% shareholders
and persons or entities affiliated with them have brokerage and/or
other discretionary accounts with our subsidiary companies and
engage in transactions with those entities in the ordinary course
of business involving brokerage, banking and investment banking
services. Such transactions are made on substantially the same
terms and conditions as other similarly-situated clients who are
not our directors, executive officers or greater than 5%
shareholders or their affiliates. In connection with these
accounts, our subsidiaries may extend credit in the ordinary course
of business to certain of our directors, executive officers,
greater than 5% shareholders and persons or entities affiliated
with them. These extensions of credit may be in connection with
margin loans or other extensions of credit by our subsidiaries in
the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable extensions of credit with persons not related
to the lender and do not involve more than the normal risk of
collectability or present other unfavorable features.
In
November 2015, we entered into a Share Exchange and Acquisition
Agreement with Timur Turlov (the “Acquisition
Agreement”) to acquire certain securities brokerage and
financial services companies located primarily in Eastern Europe
and Central Asia. In accordance with the Acquisition Agreement, in
June 2017, we closed the acquisition of LLC IC Freedom Finance
(“Freedom RU”) and its subsidiaries and the securities
brokerage and financial services business conducted by them in
Russia and Kazakhstan. We acquired Freedom RU from Mr. Turlov in
exchange for 20,665,023 shares of our common stock. In November
2017, we acquired FFINEU Investments Limited (n.k.a. Freedom Cyprus
Limited) (“Freedom CY”) and the securities brokerage
and financial services business conducted by it in Cyprus, from Mr.
Turlov in exchange for 12,758,011 shares of our common
stock.
In
December 2017, Freedom CY received a loan for $94,368 from
D-FINANCE, Inc., an entity in which Mr. Turlov is a stockholder.
The loan matures in December 2019, and bears interest at a rate of
1% per annum. The full principal amount and accrued interest is
payable at the end of the loan term. The amount of interest accrued
on the loan as of June 30, 2019 was $1,404. As a result of
fluctuations between the USD and Euro (the originating currency of
the loan) the outstanding balance of the loan as of June 30, 2019,
was $92,442.
In
April 2018, our subsidiary JSC Freedom Finance (“Freedom
KZ”) completed the sale of certain apartments it owned to
Turlov Property Management LLC, for $929,779. The purchase price
was approximately equal to the fair value of the apartments. Mr.
Turlov is a member of Turlov Property Management LLC.
In
March 2018, we completed a private placement to accredited
investors of 5,426,612 shares of our restricted common stock at a
price of $5.50 per share in exchange for aggregate offering
proceeds of $29,846,366 (the “March 2018 Private
Placement.”) In connection with the March 2018 Private
Placement, we paid placement agent fees of $447,695 to FFIN
Brokerage Services Inc, (“FFIN Brokerage”) a securities
broker-dealer. Mr. Turlov is a director and sole owner of FFIN
Brokerage. Askar Tashtitov, a Company director, purchased 28,000
shares for $154,000 in the March 2018 Private
Placement.
During
the fiscal years ended March 31, 2019 and 2018, Mr. Turlov made
capital contributions of $225,000 and $8,594,000, respectively, to
the Company.
In
March 2018, we loaned $1,747,887 to FFIN Brokerage to advance our
business purposes. The loan was made in the ordinary course of our
business operations and at arm’s length. The loan bore
interest at a rate of 4% per annum and was repaid in June
2018.
In
April 2018, Freedom KZ completed the acquisition and merger of JSC
Asyl Invest (“Asyl”) and the securities brokerage
business conducted by it in Kazakhstan. At the time of the
acquisition, Asyl was 100% controlled by Mr. Turlov. The Company
acquired Asyl from Mr. Turlov for approximately $2,240,424, which
was equal to the fair value of the net assets
acquired.
In
May 2018, our subsidiary Freedom RU completed the acquisition and
merger of LLC Nettrader (“Nettrader”) and the
securities brokerage business conducted by it in Russia. At the
time of the acquisition, Nettrader was 100% controlled by Mr.
Turlov. The consideration for closing the Nettrader acquisition was
$3,815,523, which was equal to the fair value of the net assets
received by Freedom RU, and paid to Mr. Turlov.
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During
fiscal 2019, we received loans totaling $3,866,425 as of March 31,
2019, from FFIN Brokerage. These loans mature at various dates from
April 30, 2019 through December 31, 2019. The loans bear interest
at a rate of 3% per annum. The full principal amount and accrued
interest is payable at the end of the term of the loans. The amount
of interest accrued on the loans as of March 31, 2019 was
$46,943.
As
noted elsewhere in this proxy statement, under U.S. exchange and
market rules, we are deemed a “Controlled Company”
because Mr. Turlov owns 73% of our total outstanding common stock.
The Audit Committee Charter provides that the audit committee will
review all relationships and transactions with related parties.
Based on all the relevant facts and circumstances, the audit
committee will decide whether a related-person transaction is
appropriate and will approve only those transactions that are in
our best interests and that conform with SEC rules prohibiting
personal loans to executive officers and directors.
STOCKHOLDER PROPOSALS
FOR THE 2020 ANNUAL MEETING
As
required by SEC Rule 14a-8 and provided in the proxy access
provisions of our By-Laws, you may request that we include a
proposal in the proxy statement and form of proxy for our 2020
annual meeting of stockholders (the “2020 Annual
Meeting”). The proposal must be in writing and should be
mailed by certified mail, return receipt requested, and must comply
in all respects with
Rule 14a-8 under the Exchange
Act,
the laws of the state of Nevada and our By-Laws. Your
proposals should be delivered to the
Chairman of the Nominating and Corporate
Governance Committee c/o
Corporate Secretary, Freedom
Holding Corp, “Esentai Tower” BC, Floor 7, 77/7 Al
Farabi Ave., Almaty, 050040, Republic of Kazakhstan.
For a proposal to be included in our
Proxy Materials for the 2020 Annual Meeting, it must delivered to
us not earlier than the close of business on April 13, 2020, and
not later than the close of business on May 13, 2020.
In the event that our 2020 Annual Meeting is
advanced by more than 30 days or delayed by more than 60 days from
the anniversary date of our 2019 Annual Meeting, your proposal must
be delivered to us not earlier than the close of business on the
150
th
day prior to the date of our 2020
Annual Meeting and not later than the close of business on the
later to occur of (i) the 120
th
day prior to the 2020 Annual Meeting,
and (ii)
the tenth day following the day following the day
on which public announcement of the date of such meeting is first
made.
Notice of any proposal that you intend to present
at the 2020 Annual Meeting, but do not intend to have included in
the proxy statement and form of proxy relating to the 2020 Annual
Meeting (other than pursuant to Rule 14a-8 or the proxy access
provisions of our By-laws), must be in writing and delivered to us
at our principal executive offices not earlier than close of
business on May 13, 2020, and not later than the close of business
on June 12, 2020. In the event that our 2020 Annual Meeting is
advanced by more than 30 days or delayed by more than 60 days from
the anniversary date of our 2019 Annual Meeting, your proposal must
be delivered to us not earlier than the close of business on the
120
th
day prior to the date of our 2020
Annual Meeting and not later than the close of business on the
later to occur of (i) the 90
th
day prior to the 2020 Annual Meeting,
and (ii)
the tenth day following the day following the day
on which public announcement of the date of such meeting is first
made.
Each
item of business proposed by a stockholder, including director
nominations, must be made in accordance with our By-laws, Nevada
state corporate law and any other applicable law, rule or
regulation. In addition, any notice of a proposed director
candidate must also comply with our By-laws, including the criteria
set forth under “Stockholder Nominees for Director”
elsewhere in this this proxy statement. If written notice is not
given in accordance with these requirements, the proposal or
nomination will be considered deficient or untimely, as applicable,
and we may exclude such business from consideration at the
meeting.
For all
matters other than director nominations that you wish to bring
before the meeting, you must provide the following
information:
●
a brief description
of the business desired to be brought before the
meeting;
●
the reason for
conducting such business at the meeting;
●
the text of any
proposal or business;
23
●
any substantial
interest (such as financial or personal interest) you and the
beneficial owner, if any, on whose behalf the matter is being
proposed have in the matter;
●
any other
information relating to you and the beneficial owner, if any, on
whose behalf the proposal is being made, required to be disclosed
in a proxy statement or other filings required to be made in
connection with solicitations of proxies for the proposal and
pursuant to and in accordance with Section 14(a) of the Exchange
Act and the rules and regulations promulgated
thereunder;
●
a description of
all agreements, arrangements, or understandings between or among
you and the beneficial owner, if any, on whose behalf you are
making the proposal, including any of their affiliates or
associates, and any other person or persons (including their names)
in connection with the proposal of such business and any material
interest of such person or persons or any of their affiliates or
associates, in such business, including any anticipated benefit
therefrom to such person or persons, or their affiliates or
associates; and
●
As to you, you must
provide:
o
your name and
address as they appear on our books and of the beneficial owner, if
any, on whose behalf the nomination is being made;
o
the class and
number of our shares which are owned by you (beneficially and of
record) and owned by the beneficial owner, if any, on whose behalf
the nomination is being made, as of the date of your notice, and a
representation that you will notify us in writing of the class and
number of such shares owned of record and beneficially by you as of
the record date for the meeting within five business days after the
record date for such meeting;
o
a description of
any agreement, arrangement, or understanding with respect to such
nomination between or among you or the beneficial owner, if any, on
whose behalf the nomination is being made and any of their
affiliates or associates, and any others (including their names)
acting in concert with any of the foregoing, and a representation
that you will notify us in writing of any such agreement,
arrangement, or understanding in effect as of the record date for
the meeting within five business days after the record date for
such meeting;
o
a description of
any agreement, arrangement, or understanding (including any
derivative or short positions, profit interests, options, hedging
transactions, and borrowed or loaned shares) that has been entered
into as of the date of your notice by, or on your behalf, or the
beneficial owner, if any, on whose behalf the nomination is being
made and any of their affiliates or associates, the effect or
intent of which is to mitigate loss to, manage risk or benefit of
share price changes for, or increase or decrease the voting power
of such person or any of their affiliates or associates with
respect to shares of our stock, and a representation that you will
notify us in writing of any such agreement, arrangement, or
understanding in effect as of the record date for the meeting
within five business days after the record date for such
meeting;
o
a representation
that you are a holder of record of our shares entitled to vote at
the meeting and you intend to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
and
o
a representation
whether you intend to deliver a proxy statement and/or form of
proxy to holders of at least the percentage of our outstanding
capital stock required to approve the nomination and/or otherwise
to solicit proxies from stockholders in support of the nomination.
We may require any proposed nominee to furnish such other
information as we may reasonably require to determine the
eligibility of such proposed nominee to serve as an independent
director or that could be material to a reasonable
stockholder’s understanding of the independence, or lack
thereof, of such nominee.
2019 ANNUAL REPORT ON FORM 10-K
Included with these Proxy Materials is a copy of
our Annual Report on Form 10-K for the fiscal year ended March
31, 2019, without exhibits, as filed with the SEC. We will
furnish to each person whose proxy is solicited, on the written
request of that person, a copy of the exhibits to that Annual
Report on Form 10-K without charge. We will also mail to you
without charge, upon request, a copy of any document specifically
referenced or incorporated by reference in this proxy statement.
Please direct your request to Corporate Secretary at Freedom
Holding Corp,
1930 Village Center Cir. #3-6972, Las Vegas,
Nevada 89134
.
OTHER MATTERS
We
know of no other matters to be submitted to our stockholders at the
2019 Annual Meeting. If any other matters are properly brought
before the 2019 Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote on such matters in
accordance with their best judgment.
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TABLE OF CONTENTS