The higher rating means that IDGS of Centre has low corporate management risks, complies with the corporate management requirements of the Russian law, and follows most of the recommendations of the Russian Corporate Conduct Code and the best practices of international corporate management.
It should be noted that in 2007 IDGS of Centre was given an NCMR 6 + rating certificate to its management practices that were recognized as the "developed corporate management practices" under the National Corporate Management Scale. ‘Since IDGS of Centre was given its first National Corporate Management Rating in 2007, the Company has made a large number of changes to its management practices that centered on the establishment of important institutions to protect the rights of the shareholders and regulate the activities of its management and control structures, none of which could have been introduced under the previous shareholders,’ notes Yekaterina Nikitchanova, head of the Russian Institute of Directors, ‘Thus in terms of protecting the rights of shareholders, our assessment is that IDGS of Centre has superb corporate management practices.’
During this period the company has completed a restructuring under which newly established energy companies were integrated across regions after their splitting up by business segment. The establishment of IDGS of Centre was completed by merging it with 11 distribution grid companies, in the form of its subsidiaries (branches) and by issuing a new shares of common type in IDGS of Centre.
IDGS of Centre, JSC is a public company: its shares have been traded on FB MMVB and RTS OJSC since May 21st 2008. As a result of the reform the company’s share capital underwent significant changes; now it has minority shareholders. At present the largest shareholder is IDGS Holding with a 50.23 interest in the equity capital.
The consortium’s experts noted the following factors as having been key in helping increase the company’s rating: title to its shares is kept track of by an independent registry, Central Moscow Depositary, IDGS of Centre has an established tender solicitation and evaluation procedure for selecting suppliers of goods and services, the company routinely uses the services of independent appraisers and not just when it’s required by law. In addition to that IDGS of Centre follows practices and procedures that insure complete independence of its external auditors, which are selected using a tender solicitation and evaluation process.
IDGS of Centre’s management and control bodies were rated by experts as satisfactory. Among the key positive aspects the consortium’s experts noted the following: the company’s board of directors ensures a sufficient level of balance of interests to make it independent from the management, also the fact that some of the directors represent minority shareholders means the board also takes into account the interests of all related parties. The company’s board of directors also performs a number of key functions that guarantee it has a prominent role in the Company’s corporate management system.
Information disclosure practices were rated high as well. IDGS of Centre took a series of significant steps to ensure transparency and consistency of its information disclosure practices in the future.
Corporate social responsibility and protection of the interests of other related parties are also very good. ‘Being awarded a higher rating is a well deserved recognition of the efforts we made to improve corporate management at IGSC,’ notes IDSC Centre’s deputy general director for corporate management, Konstantin Kotikov, ‘And at the same time obtaining a higher rating also services for us as a powerful incentive to keep improving. Our next goal is to become a company with ‘cutting edge’ corporate management practices.
To further improve its operations the company is going to start publishing social reports and get an ISO 14000 environmental management certificate.