Principles and Practices of Corporate Governance

Company Corporate Governance and Control Pattern

Corporate Governance

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.

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

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 position, results of the activity, structure of property and Company managements, 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;
  • Regulations on Board of Directors;
  • Regulations on Management Board;
  • Regulations on Revision Commission;
  • Regulations on Committees of the Board of Director;
  • Regulations on Insider Information;
  • Regulation on Information Policy;
  • Regulation on Dividend Policy, etc.

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

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

  • Reference to Company’s public status was included into its corporate name.
  •  The Company’s Articles of Association is approved as amended taking into account changes of the civil laws of the Russian Federation and regulations of the Corporate Governance Code recommended by Letter No. 06-52/2463 of 1April 10, 2014 by the Bank of Russia (the main changes are as follows: shareholders’ empowerment and extension of the Board of Directors competence, as well as specification of the Revision Commission competence);
  •  the Regulations were approved as amended:
  •  on the General Meeting of Shareholders (except for the change of the Company’s name, regulations on information support of shareholders, procedure for meeting participants registration and issue of certified copies of voting ballots are specified and expanded);
  • on the Board of Directors, on the Management Board, on the Revision Commission (in connection with change of the Company’s name);
  • on payment to the Board members and the Revision Commission of remunerations and compensations (the main changes in the standards established in the Company: dependence of the amount of remunerations payable to the members of the Board of Directors and the Revision Commission to the Company’s total revenue, the amount of compensation to the members of the Board of Directors and the Revision Commission for the expenses associated with their participation in work of governing/control body);
  • on the Audit and Reliability Committees of the Board of Directors (the main changes: expansion of tasks and competence of the committees);
  •  activity of participation of the Board members in meetings of this governing body in 2015 increased by 11.9 % against the previous year;
  • in 2015, PJSC Kubanenergo became the prize-winner of the XII open annual reports competition of joint-stock companies organized by Administration of the Krasnodar Krai in three nominations:
  • “The Best Annual Report of the Companies from Krasnodar Krai”;
  • “The Best Annual Report in Service Industry”;
  • “The Best Electronic Annual Report”.

* Find the documents listed above and other internal documents on corporate governance of PJSC Kubanenergo on website www.kubanenergo.ru – section About the Company / Constituent and in–house documents Overview of PJSC Kubanenergo internal documents and regulations regulating the activity of its management and control bodies, as well as functioning of key procedures of corporate governance procedures (see Attachment 4).

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