P R O S P E C T U S of the Issuer DRUŠTVO ZA ISTRAŽIVANJE, PROIZVODNJU, PRERADU, DISTRIBUCIJU I PROMET NAFTE I NAFTNIH DERIVATA I ISTRAŽIVANJE I PROIZVODNJU PRIRODNOG GASA NAFTNA INDUSTRIJA SRBIJE A.D. NOVI SAD Novi Sad, August 2010 А) PROSPECTUS INTRODUCTION The Securities Commission shall neither be liable for accuracy and completeness of data stated in the Prospectus neither for issuing securities, nor for the ability of the securities issuer to fulfill the obligations arising from the securities it issues. 1. ISSUER 1.1. Name, Registered office, Company ID number, Tax ID number DRUŠTVO ZA ISTRAŽIVANJE, PROIZVODNJU, PRERADU, DISTRIBUCIJU I PROMET NAFTE I NAFTNIH DERIVATA I ISTRAŽIVANJE I PROIZVODNJU PRIRODNOG GASA NAFTNA INDUSTRIJA SRBIJE A.D. NOVI SAD, NARODNOG FRONTA 12 COMPANY ID NUMBER. 20084693 TAX ID NUMBER. 104052135 1.2. Main activity 11101 – Crude oil extraction 1.3. Amount of share capital presented in the last financial statement RSD 87,128,024,000 REMARK: Basic capital in the amount of RSD 87,128,024,000.00 is comprised of the share and the other capital. The value of the registered share capital in the amount of RSD 81,530,200,000 is based on the assessment of the value of in kind contribution on 31 May 2005, that was made for the purpose of preparation of division balance and establishment of NIS a.d. Novi Sad by decision of the Government of the Republic of Serbia. Auditor of the financial statements for 2005 has determined that in the accountancy records of NIS a.d. Novi Sad the value of the share capital is higher for the amount of RSD 5,597,804,000 when compared to the amount registered with the Business Registers Agency and the Central Registry. Upon order of the auditor this difference is presented as the other capital. In 2009, the amount of RSD 20,000 is moved to the position Other capital in order to bring into line position between the value of the share capital registered with the Central Registry (RSD 81,530,200,000) and the value in the business records (RSD 81,530,220,000) which is shown in the statement as the changes in the capital. 2. SHARES TO BE ISSUED 2.1. Type, class, issue number, CFI code and ISIN number of securities 3. VOLUME OF SHARE ISSUE 3.1. State the total par value of all securities to be issued in RSD 4. NUMBER OF SHARES AND THEIR PAR VALUE 4.1. Total number of securities to be issued 4.2. Par value of a security 5. SALE PRICE OF SHARES 5.1. State the price the securities will be offered at 5.2. Method of payment for securities 2 6. RIGHTS AND OBLIGATIONS DERIVING FROM THE SHARES 6.1. State all rights and obligations deriving from the shares 6.2. Pre-emption rights 6.2.1. Persons with pre-emption rights, right to subscribe and acquire shares and grounds of such rights (holders of ordinary shares, warrant holders, holders of convertible bonds and convertible preference bonds) 6.2.2. Total number of securities based on which the pre-emption right if subscription is exercised 6.2.3. Number of newly issued shares with respect to which pre-emption rights of subscription can be exercised 6.3. Tax liabilities of share holders 6.3.1. Property tax, Sales tax, Profit tax, Tax relief, Tax incentives 6.4. Manner of settling potential disputes between the issuer and the holder of securities and the name of the competent court 7. TIME, PLACE AND DEADLINE FOR SUBSCRIPTION OF SHARES 7.1. State the business name, registered office, address and working hours of BDC/bank and a period of time for subscription of shares (particularly state the deadline for subscription based on the pre-emption rights of subscription) 8. PLACE AND TERMS OF PAYMENT OF SHARES 8.1. State the business name, registered office, address, deadline for payment of the shares and the business hours of the bank with which the payment can be made 8.2. State the manner of distribution of excess subscribed and paid up securities to the persons that subscribed and paid the securities. 8.3. Consequences of non-payment or failure to meet payment deadline 8.4. Number of securities to be subscribed and paid up for the sale to be considered successful (success threshold) 8.5. Manner and deadline of repayment of paid up amounts in case of sale failure, including the interest rate and the manner of its calculation to the paid up amounts 8.6. Name and the registered office of the person in charge for the register keeping and clearing and settling obligations deriving from the securities to be issued (Central Registry) 3 9. SECURITIES TRADING MARKET 9.1. Name and registered office of the organized market, date of admission of the same type of share to the organized market, transaction volume with that type of securities on the organized market in the past six months, stating the highest and the lowest price realized 10. BRIEF OVERVIEW OF THE SHARES ISSUER 10.1. Date of passing the decision on securities issuance and the name of the competent body passing of the issuer of such decision 10.2. Designation of proceeds collected from securities issuance; state the purpose of use of proceeds (for performing issuer’s activities or purchase of assets not intended for regular issuer’s activities, e.g. securities of other issuers) 10.3. State main data on issuer’s conduct of business and development plans 11. BROKER DEALER COMPANY AND/OR AUTHORIZED BANK PARTICIPATING IN ORGANIZATION OF THE PUBLIC OFFER 11.1. State the business name and registered office of the agent, i.e. issue underwriter who participates in organization of securities issuing 11.2. State the business name and registered office of the main organizer of issuing, if more parties participate in organization of issuing 11.3. State the type of the contract on organization of issuing and the type of agent’s obligation, i.e. underwriter’s obligation 11.4. State the amount of fee charged to the issuer by the agent, i.e. underwriter, for services related to issue organization, i.e. state the price difference between the price at which the underwriter buys securities from the issuer and the price at which it sells those in the issue procedure 11.5. State whether the agent’s obligation, i.e. issue underwriter’s obligation, relates to all or any particular portion of securities to be issued 4 B) BASIC PROSPECTUS 1) “Prospectus for issuing securities with supporting data, contains all necessary information enabling investors to make objective assessment of the financial and legal status of the securities issuer and assessment of rights and obligations related to such securities.” 2) “Prospectus for issuing securities does not contain data that can make investors have misconception about the issuer of the securities, securities to be issued and issuer’s securities already issued.” 1. DATA ON SHARES ISSUER 1.1. Main data 1.1.1. Name, registered office, address, company ID number and tax ID number: DRUŠTVO ZA ISTRAŢIVANJE, PROIZVODNJU, PRERADU, DISTRIBUCIJU I PROMET NAFTE I NAFTNIH DERIVATA I ISTRAŢIVANJE I PROIZVODNJU PRIRODNOG GASA NAFTNA INDUSTRIJA SRBIJE A.D. NOVI SAD, NARODNOG FRONTA 12 COMPANY ID NUMBER. 20084693 TAX ID NUMBER. 104052135 1.1.2. Number and date of registration with the Business Registers Agency: BD 92142 as of 29 September 2005 1.1.3. Date of incorporation: NIS a.d. Novi Sad predecessor company was the Company for Crude Oil Exploration and Production, incorporated in 1949 by the Resolution of the Government of the Federative National Republic of Yugoslavia, which in 1953 was named Naftagas. Naftagas was later transformed into the company incorporating refineries in Pančevo and Novi Sad, as well as Pančevo Azotara, a fertilizer plant. By the end of 1973 Naftagas integrated the retail companies Jugopetrol – Belgrade and Jugopetrol - Novi Sad (current NAP). Naftna industrija Srbije was established in 1991 as a public company for the exploration, production, refining and trade in crude oil, oil products and natural gas. At that time it was integrating the following companies: Naftagas, Gas, Energogas, Jugopetrol, Naftagas promet and Inzinjering as well as the production companies Pančevo Oil Refinery, Novi Said Oil Refinery, Belgrade Oil Refinery and Kruševac Lubricant Factory. In accordance with the article 2 of the Law on Repeal of the Law on Incorporation of the Public Company for Exploration, Production, Refining and Trade in Crude Oil, Oil Products and Natural Gas (Official Gazette of RS, no. 74/05) and the Resolution of the Government of the Republic of Serbia 05 no. 023-4377/2005-1 as of 7 July 2005, the Company for exploration, production, refining, distribution and trade in crude oil, oil products and exploration and production of natural gas Naftna industrija Srbije a.d. Novi Sad was established in the legal form of the closed joint stock company. The Shareholders Assembly of NIS a.d. Novi Sad has on 21 June 2010 issued the decision on transformation on NIS into open joint stock company. 1.1.4. Position of the issuer within the group 1.1.4.1. Relation with other companies: NIS a.d. Novi Sad is a subsidiary company of Gazprom Neft (Gazprom Neft owns 51% of ownership interest in NIS a.d. Novi Sad share capital) NIS a.d. Novi Sad is the parent/controlling company of the following companies: - O Zone a.d. Belgrade, ownership interest in share capital 100% - NIS –OIL Trading GmbH Frankfurt am Main, ownership interest in share capital 100% (the company in undergoing liquidation on the basis of the founder’s decision issued in 2010) - NIS Oversiz o.o.o.