Corporate Governance System

Commentary-interview of the Deputy Director General for Corporate Governance and Property Management A. S. Starostin

Year after year we have been demonstrating our commitment to the best global practices in the field of corporate governance, information openness and transparency which form the cornerstone principles for establishment of corporate relations by the Company.

An important task, which invariably determines the specific attributes of corporate governance in the Company, is associated with the need to establish the efficient dialog between the shareholders in order to enable achievement of the Company’s objectives in its main operation areas and ensure reliable and accessible power supply in the Moscow area.

The main platform for establishment of this dialog in 2015 was the Board of Directors and Committees reporting to the Board of Directors. Thus, the Company arranged meetings of the Board of Directors in the form of physical attendance at least once a quarter. Additionally, it should be mentioned that certain meetings were held at the Company’s operation facilities, in particular, at the “Butovo” station and in the administrative building of HV Cable Lines branch. The members of the Board of Directors used this opportunity to observe the work of power grids facilities.

Another important focus of activities in terms of corporate governance in 2015 was associated with the Company’s efforts to bring the corporate governance system of PJSC MOESK in compliance with the new Corporate Governance Code recommended by the Bank of Russia and the new Listing Rules approved by CJSC MICEX Stock Exchange. This work will be continued in 2016.

It should be mentioned that the Company practices interaction with the investment community in the form of direct dialog. Over the reporting period, in the framework of communication with potential investments and analysts, we organized a number of meetings between representatives of investors and top-level executives of the Company, organized conference calls, attended investment conferences.

The Company makes every effort to maintain the high level of corporate governance recognized and confirmed by the independent rating agency CJSC Expert RA which assigned the A++.gq rating (“Exceptionally high level of governance quality”) to the Company.

In compliance with the Corporate Governance Code1the corporate governance in the Company is based on the following principles

Accountability

The corporate governance system is based on direct accountability of the Company’s Board of Directors to the shareholders in compliance with the effective law of the Russian Federation and is used as the key principle by the Board of Directors in the course of strategy development and control over the activities of the Company’s executive bodies.

Transparency

The Company shall ensure timely disclosure of accurate information about all significant facts regarding its operation, including its financial position, social and environmental indicators, operation results, structure of Company ownership and control as well as provide free access to this information to all interested parties.

Fairness

The Company shall protect the rights of shareholders and ensure equal treatment of all shareholders. The Board of Directors shall make sure that all shareholders have the opportunity of efficient protection if their rights are breached.

Responsibility

The Company acknowledges its responsibility to the Company shareholders. The Board of Directors, Management Board, and Director General shall bear responsibility to the Company for losses caused by their actions (omissions).

Structure of corporate management

Assessment of Corporate Governance Level

In 2015, the Company obtained the ISO 9001 quality management certificate, which confirms the high organization level of business processes in the Company and has positive effect on its rating, according to the leading analysts of the rating agency.

 

Rating agency Level Assignment date Rating
Expert RA Exceptionally high level of governance quality January 13, 2016 “А++.gq Exceptionally high level of governance quality

High level of compliance with the following criteria had positive effect on maintaining the high level of Company rating:

  • high level of organization of executive bodies (the Management Board was formed, its activities are regulated;
  • remuneration of the Management Board members depends on the long-term results of the Company operation)
  • high level of information transparency (information on the Company strategy, executives, and financial reports are available on the web site).
  • high level of organization of control over business activities (Auditing Commission and Internal Audit and Control);
  • high level of interaction between management bodies (the Company structure includes the Secretary of the Board of Directors, the Secretary’s duties are governed by the Regulations on the Board of Directors Secretariat);
  • high level of risk management;
  • high level of organization of committees assigned to the Board of Directors (Audit Committee, Personnel and Remuneration Committee, Technological Connection Committee, Reliability Committee, and Strategy and Development Committee);
  • high level of corporate and social responsibility (the Company implements a number of social and charitable projects; the Code of Ethics was adopted);
  • high efficiency level of Company operations and moderately high level of organization of the Board of Directors’ activities.

1 The new revision is approved by the resolution of the Board of Directors dated March 14, 2013, minutes No. 194 dated March 15, 2013.

My Report

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