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Principles and Practices of Corporate Governance

The Company’s corporate governance and control structure

The Company’s corporate governance and control structure

Corporate governance is understood by the Company as a complex of processes ensuring management of and control over the Company’s activity, including relationships between the shareholders, the Board of Directors and executive bodies in the interest of all participants of corporate relations that include shareholders and management bodies, as well as potential investors, service customers, Company’s employees, contractors, creditors, partners, the state and local communities.

Kubanenergo PJSC considers corporate governance to be a tool to improve its business efficiency, enhance its reputation and reduce the cost of raising funds.

 

The company adheres to the following principles of corporate governance:
  • Fairness. The Company shall respect shareholders’ legitimate rights and ensure equal treatment of all shareholders, as well as enable them to obtain efficient remedies in case of violation of their rights.
  • Strategic management of the Company is performed by the Board of Directors. The Board of Directors establishes the basic guidelines for long-term activities, principles of risk management and internal management, controls the activities of the Company’s executive bodies, plays a key role in the prevention and resolution of internal conflicts and ensuring the Company’s transparency. 
  • Accountability. The Company’s Board of Directors is accountable to all shareholders in accordance with the laws of the Russian Federation.
  • Transparency. The Company provides for timely disclosure of reliable information of all significant facts related to its activity, including its financial state, operational results, structure of property and Company management, as well as free access to such information for all interested parties.
  • Liability. The Company recognizes its responsibility to the shareholders of the Company and provides a reliable method of considering rights to their shares.

In order to ensure continuity of the corporate governance practices, the following internal documents have been approved and in force in the Company *:

  • Corporate Governance Code;
  • Regulations:
    • on General Meeting of Shareholders;
    • on Board of Directors;
    • on Management Board;
    • on Revision Commission;
    • on Committees of the Board of Director;
    • on Insider Information;
    • on Information Policy;
    • on Company’s Corporate Secretary;
    • on Dividend Policy, etc.

The Company generally observes the principles and recommendations of the Corporate Governance Code recommended by the Bank of Russia in Letter No. 06-52/2463 of 4/10/2014 for application by joint-stock companies having stocks admitted to on-exchange trading (the “Corporate Governance Code”) **.

Main events of the reporting year in the field of the Company’s corporate governance:

  • shareholders decided to increase the Company’s authorized capital through placing of additional shares, the Board of Directors approved the issue documents, registered the Company’s securities additional issue and prospectus;
  • approval of the following Regulations as amended in order to bring them into accordance with the Corporate Governance Code and with the corporate governance practice established in PJSC ROSSETI Group of Companies:
    • Regulations on Board of Directors (supplemented by the provisions on regular evaluation of the Board of Directors performance and on prevention of conflicts between the interests of the Board members).
    • Regulations on Audit Committee (the Committee objectives and competences as well as the list of points in its action plan were specified).
    • Regulations on Company’s Corporate Secretary (the functions were extended, requirements for the Corporate Secretary position, his/her responsibilities, and duty to annually account for his/her work to the Human Resources and Remuneration Committee as well as to the Company’s Board of Directors were specified).
  • Regulations on Strategy, Development, Investments and Restructuring Committee of the Board of Directors were amended (the Committee competences were supplemented by the control over organization and operation of the Company’s risk management system).
  • the number of issues considered by the Board of Directors increased by 10.9% as compared with the previous year.

The Company intends to maintain the attained level of corporate governance practice and works toward its further improvement.


* Find the documents listed below and other internal documents on corporate governance of Kubanenergo PJSC on website www.kubanenergo.ru – section About the Company / Constituent and in–house documents

** Report on Observance of the Corporate Governance Code is provided in Attachment 3.

 

 CORPORATE GOVERNANCE Principles and Practices of Corporate Governance