IDGC of Centre confirmed its corporate governance rating NCGR 7+ — "Developed Corporate Governance Practice"

8 October 2012

NCGR 7 + is assigned to a company that complies with the requirements of the Russian legislation on corporate governance, most of the recommendations of the Russian Corporate Governance Code and certain recommendations of international best practices in corporate governance. The company is characterized by relatively low risk of losses by owners related to the quality of corporate governance.

Since the confirmation of the National Corporate Governance Rating (NCGR) in August 2011 IDGC of Centre has had a number of corporate events.

In particular, the Annual General Meeting of Shareholders was held in 2011. The meeting elected the new Board of Directors and Audit Commission, approved amendments to the Articles of Association, the new edition of the Regulations on the procedure for convening and holding meetings of the Board of Directors of IDGC of Centre, and declared dividends for 2011.

According to the results of the tender ZAO “KPMG” was chosen as the external auditor of the Company in accordance with IFRS and RAS, part of the “big four” world’s leading auditing firms.

The Audit Commission was composed of five persons who are not members of management or employees of the Company, ensuring the objectivity and independence of its judgment.

August 23, 2012 the Extraordinary General Meeting of Shareholders was held in IDGC of Centre, which approved the new Board of Directors of the Company.

The Board of Directors consists of 11 members, of which two meet substantive aspects of independence[1] (Shevchuk A.V., Kulikov D.V.). One director is an executive (CEO of IDGC of Centre Gudzhoyan D.O.) and eight directors — non-executive.

The corporate governance practice of the Company with regard to the protection of shareholders’ rights is ranked high. The Company has established corporate governance institutions to protect shareholders’ rights against abuse by management, as well as proper attention to the rights of minority shareholders.

The corporate governance practice of the Company in terms of the management and control bodies is estimated well. Among the key positive aspects of this practice the Consortium’s experts note the following:

— the Board of Directors provides the necessary balance between the interests of its independence from management. In addition, there are two independent directors and minority shareholders’ representatives in it, which suggests it is balanced in terms of the interests of all stakeholders;

— meetings of the Board of Directors are held regularly in accordance with a pre-approved plan of work, and members of the Board of Directors are provided with information needed to prepare for the meetings;

— in the Company there is an order declaring by the members of the Board of Directors and members of the executive bodies of their affiliation, and their responsibility to provide information on the ownership of the Company’s securities and transactions with them is also fixed;

— in the structure of the Board of Directors there are committees established to consider the most important preliminary questions concerning the competence of the Board of Directors: Committee for Audit, Committee for Personnel and Remuneration, Reliability Committee, Strategy and Development Committee, Committee for technological connection to power grids;

— remuneration of members of the Board of Directors and senior managers of IDGC of Centre depends on the performance of the Company;

— the Company has approved internal regulations governing the implementation of internal control over financial and economic activities, the Board of Directors annually assesses the effectiveness of the internal control system of IDGC of Centre;

— the Company has approved its regulatory and methodological framework of risk management, there is an internal structural unit that performs the key functions of the risk management and implements internal audit, whose work in terms planning, interaction with other functions of the internal control and audit complies with International professional standards of internal audit.

The corporate governance practice of the Company in terms of disclosure of information about its activities is ranked high. The Company has undertaken a number of significant steps to ensure the transparency of its operations and the continuity of this practice in the future.

The corporate governance practice of the Company in terms of its activity in the interests of other stakeholders, and corporate social responsibility is estimated well. The Company implements a variety of social projects for its employees and their families, service customers and is actively involved in charity and sponsorship.


[1] In terms of the perception of the members of the Board of Directors by the investment community

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