Corporate Governance Code regulation |
Compliance (yes/no) |
Comments |
Company's Corporate Governance Principles and Structure |
| The Company should be in
compliance with the corporate governance principles |
Yes |
The
main corporate governance principles of the Company's are set out in its Corporate
Governance Code. It is the responsibility of the Company to ensure compliance with these
principles.
Accountability. The Board of Directors of the Company is
accountable to all shareholders in accordance with the applicable laws. For instance, the
Board of Directors presents its annual report for approval by the shareholders at the AGM
of the Company. In accordance with the resolution adopted by the Board of Directors of the
Company on 25 May 2007 (Board Minutes No. 252), the Annual Report in respect of 2006 of
the Company was submitted and approved at the AGM held 26 June 2007.
Fairness. The Company provides for the protection of
shareholders' rights and legitimate interests by:
- ensuring that share ownership records are maintained properly and that it is possible
for shareholders to promptly and easily dispose of their shares;
- ensuring that shareholders are able to exercise their right to participate in the
management of the Company by voting at general meetings on the key decisions affecting the
Company.
- enabling the shareholders to participate in the Company's profit by using a transparent
mechanism for determining the dividend amount (The Methodology used by RAO "UES of
Russia" for the calculation of dividends was approved by the Board of Directors on 28
January 2005 (Board Minutes No. 186) and can be viewed on the Company's website.)
Transparency. Apart from the information required to be
disclosed by law, the Company discloses some additional information according to the
Information Policy Regulations adopted by the Company. During the reporting period, the
Company disclosed all material facts, filed quarterly reports for Q4 2006 and Q1, Q2, Q3
2007, the Annual Report for 2006. IN the course of preparation and conduct of the AGM of
26 June 2007, shareholders were granted access to the information required by the Federal
Law On Joint Stock Companies. All information disclosed by the Company can be viewed on
the corporate site in Russian and English.
Responsibility. The Company recognizes the rights of all
stakeholders under the applicable laws. The responsibility of members of the Board of
Directors and Management Board of the Company is set out in Article 71 of the Federal Law
On Joint Stock Companies, the Regulations on the Board of Directors and the Regulations on
the Management Board. |
| The Company should have
internal regulations governing activities of its management and control bodies and their
compliance with the applicable laws |
Yes |
The Company has adopted
the following bylaws: Charter, Regulations on the General Shareholders' Meeting of the
Company, Regulations on the Board of Directors of the Company; Regulations on Remuneration
of Members of the Board of Directors for the Performance of their Duties and Reimbursement
of their Expenses Relating to the Performance of their Functions as Board Members;
Regulations on the Activities of the Auditing Commission of the Company; Regulations on
Remuneration of Members of the Auditing Commission for the Performance of their Duties and
Reimbursement of their Expenses Relating to Visits to the Company's Facilities;
Regulations on the Management Board of the Company. All these documents are in compliance
with the statutory provisions. |
| The regulations governing the activities of the Company's management and
control bodies should be available on the corporate website. |
Yes |
The following bylaws and regulations governing the activities of the
Company's management and control bodies may be viewed on the corporate website: Charter,
Regulations on the General Shareholders' Meeting of the Company, Regulations on the Board
of Directors of the Company; Regulations on Remuneration of Members of the Board of
Directors for the Performance of their Duties and Reimbursement of their Expenses Relating
to the Performance of their Functions as Board Members; Regulations on the Activities of
the Auditing Commission of the Company; Regulations on Remuneration of Members of the
Auditing Commission for the Performance of their Duties and Reimbursement of their
Expenses Relating to Visits to the Company's Facilities; Regulations on the Management
Board of the Company. |
Company's Corporate Governance Practices |
Board of Directors |
| The Company should abide
by the procedure for electing and dismissing Board members. |
Yes |
The
procedure for election of the Board of Directors is set out in Section 11.2 of the Company
Charter and Section 1.3 of the Regulations on the Board of Directors of the Company. The
Board of Directors has 15 members. The members of the Board of Directors which worked in
the first half of 2007 were elected by a cumulative vote at the AGM of 28 June 2006. The
Chairman of the Board of Directors was unanimously elected at the Board meeting of 28 July
2006 (Board Minutes No. 225).
At the AGM of RAO "UES of Russia" held on 26 June 2007 to
consider the 2006 results, the shareholders elected by a cumulative vote new members of
the Board of Directors. |
| The Company Charter
should contain a provision that Board members may be elected only by a cumulative vote |
Yes |
As provided by Section
11.2 of the Company Charter, members of the Board of Directors are elected by a cumulative
vote at the general meeting of shareholders. |
| There should be no
restrictions as to the number of times a person may be elected a Board member |
Yes |
As provided by Section
11.2 of the Company Charter, "persons elected members of the Board of Directors may
be re-elected an unlimited number of times". |
| The Board of Directors of
the Company should have at least three independent directors |
Yes |
Pursuant
to the shareholder resolution adopted by the AGM on 28 June 2006, the following directors
qualifying as independent were elected to the Board of Directors of the Company: G.V.
Berezkin, A.E. Bugrov, K.G. Seleznyov, S.J. Remes.
Pursuant to the shareholder resolution adopted by the AGM on 26 June
2006, the following directors qualifying as independent were elected to the Board of
Directors of the Company: V.V. Rashevsky, A.E. Bugrov, K.G. Seleznyov, S.J. Remes. |
| The Board of Directors of
the Company should have no more than 25 percent of executive directors that are
simultaneously employees of the Company |
Yes |
Out of
the 15 Board members in H1 2007, two were simultaneously officers of the Company (Chairman
of the Company's Management Board Anatoly Chubais and Deputy Chairman of the Management
Board Yakov Urinson), which is less than 25 percent of executive directors.
Among the members of the Board of Directors elected on 26 June 2007,
there were two members who were simultaneously officers of the Company (Chairman of the
Company's Management Board Anatoly Chubais and Deputy Chairman of the Management Board
Yakov Urinson), which is less than 25 percent of executive directors. |
| The Company should comply
with the principle that the Company's chief executive may not hold the position of the
Board Chairman. |
Yes |
Anatoly Chubais is the
Chairman of the Management Board. The Board meeting held 27 July 2007 (Board Minutes No.
225) elected Alexander Voloshin as Chairman of the Board of Directors. |
| The Company's Board of
Directors should have the following Committees: Audit Committee, HR and Remunerations
Committee, Strategy and Reform Committee, and Appraisal Committee |
Yes |
The Company has the
following committees under the Board of Directors:
- Audit Committee (created by the Board of Directors on 29 August 2003, Board minutes No.
149);
- HR and Remunerations Committee (created by the Board of Directors on 25 March 2005,
Board minutes No. 191);
- Strategy and Reform Committee (created by the Board of Directors on 31 August 2001,
Board minutes No. 99);
- Appraisal Committee (created by the Board of Directors on 26 April 2002, Board minutes
No. 114);
In their activities the Committees are guided by the respective
Regulations.
Also, the Company has the Commission for Investments and Fuel Supply
for Investment Projects (created by the Board of Directors on 09 February 2007, Board
minutes No. 242). |
| The Audit Committee and
HR and Remunerations Committee should be headed by independent directors |
Yes |
Chairman
of the Audit Committee Mr. Seppo Remes is a member of the Company's Board of Directors and
meets the independence requirements.
Chairman of the HR and Remunerations Committee A.E. Bugrov is a member
of the Company's Board of Directors and meets the independence requirements. |
| The Company should have
an approved schedule for holding Board meetings. |
Yes |
On 28
July 2006, the Board of Directors approved a tentative list of matters to be considered at
the Board meetings in July 2006 to June 2007.
On 28 July 2007, the Board of Directors approved a tentative list of
matters to be considered at the Board meetings in July 2007 to June 2008.
Also, the Board of Directors approves Board meeting schedules for each
quarter. |
| The Board of Directors of
the Company should hold its meetings no less frequently than once a quarter |
Yes |
As provided by Section
7.2 of the Regulations on the Board of Directors of the Company, Board meetings are held
as needed, but no less frequently than once a quarter. During the reporting period, the
Board of Directors held 31 meetings (Board minutes No. 240-270). |
| The Company's bylaws
should set out the procedure for holding meetings of the Board of Directors of the Company
|
Yes |
The rules of procedure
for the preparation for and holding of Board meetings are set out in the Regulations on
the Board of Directors of the Company approved by the general shareholders' meeting on 28
June 2002. |
| Information on the
amounts of remuneration paid to the members of the Company's Board of Directors is
available to the general public on the corporate website |
Yes |
The provisions concerning
payment of remuneration to Board members are set out in the Regulations on Remuneration of
Members of the Board of Directors for the Performance of their Duties and Reimbursement of
their Expenses Relating to the Performance of their Duties as Board Members approved on 26
June 2002 (as amended), which may be viewed on the Company's website. |
| No loans should be
provided to Board members |
Yes |
During the reporting
period, no loans were provided to the members of the Board of Directors of the Company. |
| The Board members should comply with their responsibilities set out in the
Company's regulatory documents. |
Yes |
The members of the Board of Directors are in compliance with their
obligations provided by Section 3 of the Regulations on the Board of Directors of the
Company. |
Management Board and Chairman of the
Management Board |
| The procedure for
election of the Chairman and members of the Management Board should be complied with |
Yes |
As provided by Section 11
of the Company Charter and Section 2 of the Regulations on the Management Board of the
Company, Management Board members are nominated by the Management Board Chairman and
appointed by the Board of Directors. During the reporting period, no new members of the
Management Board of the Company were appointed by the Board of Directors. |
| The rules of procedure
for the activities of the Management Board of the Company should be complied with. |
Yes |
Pursuant to Section 5 of
the Regulations on the Management Board of the Company, meetings of the Management Board
are held according to the plan approved by the Management Board Chairman. |
| The Company should have
an incentive plan adopted by the Board of Directors for the members of the Management
Board. |
Yes |
The incentive plan for
the members of the Management Board was adopted by the Board of Directors of the Company
(Board Minutes No. 172, dated 25 June 2004, as amended). No amendments were made to the
incentive plan during the reporting period. |
| The members of the
Management Board have a duty to avoid any actions that create, or may create, a conflict
between their personal interests and those of the Company; if such conflict of interest
arises, it is the duty of the Management Board member to disclose the same to the Board of
Directors of the Company. |
Yes |
During the reporting
period, no cases of breach have been discovered. |
| The members of the
Management Board should disclose to the Company any information regarding their business
activities not related to the Company's interests. |
Yes |
During the reporting
period, no cases of breach have been discovered. |
Interaction between the Board of Directors
and the executive bodies |
| The Management Board should report on its activities to the Board of
Directors of the Company. |
Yes |
On 9 February 2007, the Management Board presented a report to the Board of
Directors for Q4 2006 and an action plan for Q1 2007 (Board minutes No. 242). At the Board
meeting held 27 April 2007, the Management Board presented a report on its activities in
Q1 2007 and an action plan for Q2 2007 (Board minutes No. 250). At the Board meeting held
27 July 2007, the Management Board presented a report on its activities in Q2 2007 and an
action plan for Q3 2007 (Board minutes No. 256). At the Board meeting held 27 October
2007, the Management Board presented a report on its activities in Q3 2007 and an action
plan for Q4 2007 (Board minutes No. 263). |
Company Shareholders |
Shareholder Rights and Shareholder Protection |
| Observance of the
shareholders' right to receive timely information |
Yes |
The Company provides
information in the manner and within the time frame required by Russian laws, the
Company's Charter and Regulations on the Information Policy of the Company. |
| The Company should comply with the information disclosure requirements,
including through the Internet. |
Yes |
The Company discloses information in the manner and within the time frame
required by the Russian securities laws, including publication on its corporate website. |
General Meeting of Shareholders |
| Shareholders should be
given notice of the general meeting of the Company. |
Yes |
The procedure for
notifying shareholders of a general meeting of shareholders of the Company is set forth in
Section 10.5 of the Company Charter. The notice of the Annual General Meeting of 26 June
2007 was published on 24 May 2007 in the Izvestia newspaper and posted on the Company's
website. The notice of the Extraordinary General Meeting of 26 October 2007 was published
in the Izvestia newspaper on 8 August 2006 and posted on the Company's website on 27 July
2007. |
| Соблюдение
порядка внесения предложений в повестку дня
общего собрания акционеров Общества |
Yes |
The
procedure for submitting items of business to be placed on the agenda of a General
Shareholder Meeting of the Company is set forth in Section 10.6 of the Company Charter.
Motions to be considered at the AGM (lists of nominees for the Company's management and
control bodies) were submitted by OOO "Gazoenergeticheskaya Kompaniya", the
Federal Agency for Federal Property Management, and OAO "Norilsk Nickel Mining and
Metallurgical Company". At the time of such motions, each of the above shareholders
held more than 2 percent of the Company's voting shares. The motions were received by the
Company not later than 60 days after the end of the financial year and contained the
nominees' passport details, statement of consent by the nominee to be elected to Company's
management and control bodies. The nominations made by the shareholders are in conformity
with the requirements of Article 53 of the Federal Law On Joint Stock Companies, dated 26
December 1995, and Resolution No. 17/ps of the Federal Commission for Securities Market of
Russia On the Approval of the Regulations on Additional Requirements For the Preparation,
Convocation and Conduct of a General Meeting of Shareholders, dated 31 May 2002.
Simultaneously, the Board of Directors of the Company reviewed
shareholder proposals and placed them on the agenda of the AGM (Board minutes No 245,
dated 02 March 2007).
Proposals to be considered at the EGM held on 26 October 2007 were
submitted by OOO "Gazoenergeticheskaya Kompaniya", the Federal Agency for
Federal Property Management, and OAO "Norilsk Nickel Mining and Metallurgical
Company":
- the proposals were submitted by the deadline provided by Article 53 of the Federal Law
On Joint Stock Companies and the Charter of OAO RAO "UES of Russia".
- the shareholders submitting the proposals held more than 2 percent of the Company's
shares;
- the proposals were made in a form meeting the requirements of Article 53 of the Federal
Law On Joint Stock Companies.
|
| The Company shareholders
should be given an opportunity to review the list of persons entitled to participate in
the General Shareholder Meeting of the Company, beginning from the date of notice of the
General Shareholder Meeting and until the meeting is closed (in case of a physical
meeting), or until the closing date for receipt of ballots (where the voting is conducted
without a physical meeting). |
Yes |
Pursuant to Section 10.4.
of the Company Charter, the Company makes the list of persons entitled to participate in
the General Shareholder Meeting available for review upon request of the persons included
on such list, provided that they are entitled to at least 1 percent of votes. However, the
document and mailing address details of such individuals included on the list may not be
provided without their consent. Due to the absence of requests for such list, the
Company's did not make the list of persons entitled to participate in the AGM of 26 June
2007 or the EGM available for review by the Company shareholders. |
| Shareholders should have
an opportunity to review the documents relating to the General Shareholder Meeting through
electronic communications media, including the Internet. |
Yes |
As provided by Article 52
of the Federal Law On Joint Stock Companies, the shareholders of OAO RAO "UES of
Russia" are given an opportunity to review the documents relating to the shareholder
meeting on the internet during the 20 days before the General Meeting of shareholders (or,
if the General Meeting of shareholders is to consider a proposal to reorganize the
Company, 30 days prior to such meeting). Order No. 29 of OAO RAO "UES of Russia"
of 23 January 2007 sets out the requirements for the publication of such information on
the corporate website. The documents relating to General Meetings of shareholders of the
Company are available for review on the corporate website in the Shareholder and Investor
Relations, and in the offices of the Company's Registrar, ZAO "Status Registration
Company", and the offices of OAO RAO "UES of Russia" at 101 Prospekt
Vernadskogo, bldg. 3, Moscow 119526. |
| The General Meeting of shareholders must be attended by the then current
members of the Board of Directors, the Management Board, members of the executive bodies,
the Auditing Commission, and the Company Auditors. |
Yes |
At the AGM held on 26 June 2007, the following Board
members were present:
A.S. Voloshin, Chairman of the Board of Directors; A.B. Chubais,
Chairman of the Management Board and member of the Board of Directors; Ya.M. Urinson,
Deputy Chairman of the Management Board and member of the Board of Directors; Seppo Juha
Remes, member of the Board of Directors and Chairman of the Audit Committee; and I.A.
Yuzhanov, member of the Board of Directors.
In accordance with the composition of the AGM Secretariat approved by
the Board of Directors (Board minutes No. 252 of 25 May 2007), the members of the
executive staff of the Company were able to attend the AGM.
On 26 October 2007, the Company held an EGM in which shareholders voted
by mail. |
Dividend Policy |
| The Company should have
in place approved Regulations on the Dividend Policy. |
Yes |
The methodology used by
OAO RAO "UES of Russia" for the calculation of dividends was approved by the
Board of Directors on 28 January 2005 (Board Minutes No. 186). |
| The Company should comply with the procedure and time frame for dividend
payment. |
Yes |
As provided by Section 8.1. of the Charter, the Company
may, once a year, decide on dividend payment. The dividends are paid out of the Company's
net income for the current year. The Company shareholders decide on payment of the annual
dividends and the dividend amount to be paid on different classes of shares at the General
Meeting as recommended by the Board of Directors.
At the AGM held 26 June 2007, the shareholders decided to pass the
dividend for 2006. |
Information Disclosure and Transparency |
Information Disclosure Policies and Practices |
| The Company should have
in place approved Regulations on the Information Policy. |
Yes |
On 23 June 2006, the
Board of Directors approved the Regulations on Information Policy of the Company (Board
minutes No. 224). |
| Corporate information
should be disclosed on the corporate website |
Yes |
The Company updates its
website on a daily basis, including by disclosing information pursuant to the Regulations
on Information Policy. In January 2007, the Company issued the Order "On implementing
a new structure of the corporate website and ensuring regular disclosure of information on
the activities of OAO RAO "UES of Russia" on its website". |
| Information Disclosure in
annual and quarterly reports. |
Yes |
The Company regularly
discloses information on the Company's operations in its annual and quarterly reports in
accordance with the Regulations on Information Policy. Order No. 739 of 23 October 2006
currently in effect governs the provision of information needed for the preparation of the
issuer's quarterly report. During the reporting period, the Company filed securities
issuer's quarterly reports for Q4 2006 and Q1, Q2, and Q3 2007, and its Annual Report for
2006. The reports are published on the corporate website in the Shareholder and Investor
Relations section. |
| An English-language
version of the corporate website should be in place. |
Yes |
The Company's website has
an English-language version. |
| The Company should have in place a document approved by the Board of
Directors of the Company which regulates the use of insider information (i.e. material
information about the Company's activities, its shares and other securities, and
securities transactions which is not publicly available and may have a material effect on
the market prices of the Company's shares and other securities). |
Yes |
At its meeting held on 27 May 2005, the Board of Directors adopted the
Procedure for the Declaration of Insider Deals in Securities of OAO RAO "UES of
Russia" and its SDCs by Persons Having Access to Insider Information (Board minutes
No. 196). |
Financial Statements |
| The Company should
maintain accounting records and prepare statutory financial statements (accounts) in
accordance with the Russian Accounting Standards. |
Yes |
The
Company prepares statutory financial statements in accordance with the Russian Accounting
Standards on a quarterly basis. Pursuant to the Resolution of the Russian Government of 21
January, the Company published its Annual Financial Statements for 2006 and the Auditor's
Report in the Rossiyskaya Gazeta newspaper on 30 May 2007.
The H1 2007 financial statements were prepared on 30 July 2007.
The 9M 2007 financial statements were prepared on 30 October 2007. |
| The Company should release its financial statements (accounts) in
accordance with the IFRS. |
Yes |
During the reporting period, the Company prepared and
released its IFRS financial statements:
Consolidated Financial Statements of the Group of OAO RAO "UES of Russia" for
2006 on 20 July 2007.
the financial statements of OAO RAO "UES of Russia" for 2006
on 2 August 2007. |
Control of Business Operations |
| The Company should have
an internal control policy approved by the Board of Directors setting out the internal
control framework for the Company activities. |
Yes |
The Regulations on
Internal Control Procedures of the Company were adopted by the Board of Directors on 16
March 2006 (Board minutes No. 217). |
| The Company should have a
dedicated internal control department to oversee compliance with the Regulations on
Internal Control. |
Yes |
The Company has dedicated
departments—Internal Audit Department of the Corporate Center and the Financial and
Corporate Control Center of OAO RAO "UES of Russia" - responsible for compliance
with the internal control procedures. |
| The Company should have
internal policies adopted by the shareholders for the review of the Company's activities
by the Auditing Commission. |
Yes |
The Regulations in the
Activities of the Auditing Commission of the Company were approved by the shareholders at
the AGM held on 22 June 2002. |
| The Company should ensure
compliance with the policies for the review of the Company's activities by the Auditing
Commission. |
Yes |
The policies required by
the Regulations on the Activities of the Auditing Commission of the Company are being
complied with. |
| The Auditor's Report should be reviewed by the Audit Committee of the
Company before the report is submitted for approval by the Company shareholders. |
Yes |
The Audit Committee of the Board of Directors prepared a review of the
Auditor's Report on the financial statements of the Company for 2006 and recommended that
the Board of Directors approve the financial statements and the Auditor's report and
submit them for shareholder approval at the AGM which was held 26 June 2007. |
Ownership Structure |
| The Company should disclose information on the ultimate beneficial owners
holding 5 percent or more of its voting shares. |
Yes |
Pursuant to the Regulations on Information Policy, the Company uses its
best endeavours to disclose information on the ultimate beneficial owners of 5 percent or
more of its voting shares based on the information provided by the registered holders of 5
percent or more of the Company's voting shares. |
Company Restructuring and Relationships with Subsidiaries and Dependent
Companies |
Company Restructuring |
| The Company should have
an approved reorganization concept statement. |
Yes |
The
principal document setting out the Company's key objectives and goals in pursuing the
electricity industry reform and the basic principles of the Company reorganization is the
Strategy Concept of OAO RAO "UES of Russia" for Years 2003-2008 "5+5",
which was adopted by the Board of Directors .
The action plan for the final phase of the Company's reorganization was
adopted by the Board of Directors (Board minutes No. 245 of 02 March 2007; No. 250 of 27
April 2007; No. 252 of 25 May 2007; No. 256 of 27 July 2007, and No. 258 of 31 August
2007) and approved by the General Meeting of shareholders of the Company held on 26
October 2007. |
| The Company should ensure observance of the rights of the Company's
shareholders in the reorganization process. |
Yes |
The key principle of the Company's reorganization is
that OAO RAO "UES of Russia" should safeguard its shareholders' rights and
legitimate interests. The principal instruments of shareholder protection are as follows:
- The Company shareholders who do not take part in the voting or vote against the
reorganization are entitled to require the Company to repurchase all or part of their
shares.
- Each shareholder who voted against the reorganization is guaranteed a right to receive
shares in each company to be spun off from OAO RAO "UES of Russia" upon its
reorganization pro rata to that shareholder's stake in OAO RAO "UES of Russia".
The shareholder resolution approving the final phase of the Company's
reorganization imposes an unconditional ban on the disposal by the Company of shares in
the thermal generation companies (TGCs) attributable to minority shareholders of OAO RAO
"UES of Russia". This provides an additional safeguard for the minority
shareholders in the process of distribution of shares in companies to be created in the
course of the reorganization and conversion of shares in the companies spun off from OAO
RAO "UES of Russia" into TGC shares.
Also, in order to protect shareholder rights in the course of
reorganization, the Company uses a competitive process to engage investment banks, PR and
IR consultants, appraisers and other advisors.
Appraisal firms have conducted an independent appraisal of the market
value of assets involved in the final phase of the Company's reorganization. The terms and
conditions of the Company's reorganization approved by the Board of Directors and
shareholders have been prepared based on the recommendations of investment banks, taking
into account the independent appraisers' reports.
A consortium of investment banks gave an independent opinion as to
whether the terms of the final phase of the Company's reorganization are fair to
shareholders of OAO RAO "UES of Russia" from the financial point of view. |
Principles and Practices of Relationships
with Subsidiaries and Dependent Companies |
| The Company should have in
place the Rules for the Interaction with its Subsidiaries and Dependent Companies. |
Yes |
The Board of Directors
approved the Procedure for Interaction with Business Companies Whose Shares (Ownership
Interests) are Held by OAO RAO "UES of Russia" on 21 April 2006 (Board Minutes
No. 220). |
