Appendices
Information on the Company’s Compliance with the Corporate Management Code
REPORT OF JSC “LENENERGO” ON COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE IN 2010.
(period 1 January 2010 through 31 December 2010)
| Provision of the Corporate Governance Code | Complied/
non-complied | Measures taken to comply with the provisions | |
|---|---|---|---|
| 3. Principles and structure of corporate governance in the company | |||
| 3.1 Definition and principles | |||
| The corporate governance in the Company is based on the following principles:
Accountability. The Board of Directors is accountable to all shareholders according to the effective laws; it serves as guidelines for the Board of Directors in the process of development of the strategy and performance of management of, and control over the activity of the Company's executive bodies. | Complied | The accountability of the Company's Board of Directors to all shareholders according to the effective laws serves as guidelines for the Board of Directors in the process of development of the strategy and performance of management of, and control over the activity of the Company's executive bodies.
The foundation, procedural and institutional documents of the Company govern the relations of the Company and shareholders distinctly, stipulate accountability of the Board of Directors and executive bodies to the General Meeting of Shareholders, draw the line between the competence of the Meeting of Shareholders, Board of Directors and executive bodies of the Company. The Company's Board of Directors submits the annual report for approval at the Company's annual General Meeting of Shareholders. According to the resolution of the Company Board of Directors dated 05.05.2010 (minutes #18), the Company 2009 annual report was submitted to the annual General Meeting of Shareholders and approved by it on 21.06.2010. (minutes #1/2010). | |
| Equity. The Company undertakes to protect the rights of shareholders and to ensure equal attitude to all shareholders. The Board of Directors provides all shareholders with an opportunity of obtaining effective protection in the event of their rights violation. | Complied | The Company ensures protection of the rights and legitimate interests of the Company's shareholders in the following manner:
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| Transparency. The Company ensures duly disclosure of trustworthy information about all material facts related with its activity, including about its financial position, social and ecological indicators, performance, property and management structure of the Company, as well as unhampered access by all interested persons to such information. | Complied | The Company meets the requirements to information disclosure in time: it submits statements and information materials to the Federal Financial Markets Service of the Russian Federation (FFMS), publishes the information to be disclosed according to the requirements of the effective laws of the Russian Federation in the newspaper "Nevskoe Vremya", news wire of the news agency Interfax and on the website of the Company http://www.lenenergo.ru in the Internet.
The Company discloses the following information:
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| Responsibility. The Company recognizes the rights of all interested persons stipulated by the effective laws and aims to cooperate with such persons in order to develop and maintain financial stability. | Complied | The Company recognizes the rights of all interested persons stipulated by the effective laws of the Russian Federation.
The members of the Board of Directors, Management Board, General Director, Acting General Director, and the management entity (managing director) are responsible to the Company for the losses caused to the Company by their actions (omission) (clause 15.4. Article 15, clause 21.23. Article 21 of the Articles of Association of JSC "Lenenergo"). | |
| 3.2. Internal documents. | |||
This code represents a collection of principles. Particular structures, procedures and practice of corporate governance are governed by the Articles of Association and internal documents of the Company, including:
| Complied | The internal documents of the Company are placed on the website of the Company in the network Internet at: http://www.lenenergo.ru | |
| 4. Corporate governance practice implemented in the company | |||
| The Company believes that the professional Board of Directors is an important element of the efficient corporate governance. The Board of Directors influences the Company's performance through exercising general strategic management of, and control over the work of the executive bodies in the interests of the Company and its shareholders. The executive bodies of the Company, which are responsible for the Company's current activity management, play an important part in the process of management as well. Efficient cooperation of these two bodies and precise delineation of their powers is one of the key factors of ensuring appropriate corporate governance practice. | Complied | The memberships of the Board of Directors of JSC "Lenenergo" working in the reporting period were elected by the annual General Meeting of Shareholders on 30.05.2008 (from 1.01.2009 through 11.06.2009) and 11.06.2009 (from 11.06.2009 through 31.12.2009). The membership of the Board of Directors included the representatives of the Company's main shareholders JSC "IDGC Holding", JSC "VTB Bank", representatives of the Saint Petersburg Government, Leningrad Region Government (before 11.06.2009), RF Energy Industry Ministry, and independent directors.
The corporate governance practice implemented in the Company implies presence and efficient cooperation of such management bodies as the Board of Directors and the executive bodies of the Company, which are responsible for management of the current activity of the Company - the Management Board and General Director of the Company. The membership of the Company's executive bodies is determined by article 21 of the Company's Articles of Association. The competence of the Board of Directors, Management Board and sole executive body are determined by clauses 15, 21 of the Company's Articles of Association accordingly. | |
| 4.1. Board of Directors. | |||
| 4.1.1. Election, term of office and termination of powers of the Board of Directors members | |||
| The members of the Board of Directors are elected for the period until the next annual meeting of shareholders. The Company's Board of Directors is elected by cumulative voting.
The Company does not think that imposing restrictions as regards the number of re-election of the members of the Board of Directors will meet the interests of the Company or its shareholders. The Board members, who are well acquainted with the Company's activities, play an important part in respect of ensuring appropriate management. The powers of the Board of Directors are governed by the Company's Articles of Association according to the effective laws and recommendations of the FCSM Code. The number of members of the Board of Directors is determined in the Company's Articles of Association. The General Meeting of Shareholders may terminate the powers of the whole Board of Directors only, rather than the powers of its particular members. | Complied | The membership of the Board of Directors of JSC "Lenenergo", which was working as at the date of the report, was elected by the cumulative voting by the annual General Meeting of Shareholders on 21.06.2010 (minutes #1/2010) according to clauses 16.1, 16.3. Article 16 of the Company's Articles of Association.
According to clause 16.4. Article 16 of the Company's Articles of Association, the persons elected to the membership of the Board of Directors may be re-elected an unlimited number of times. The powers of the Board of Directors are determined by Articles 15, 18 of the Company's Articles of Association and the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Board of Directors of JSC "Lenenergo". Article 16 determines that the number of members of the Board of Directors is 13 (thirteen) people. Article 16, clause 16.5 of the Company's Articles of Association determines that GMS may resolve to terminate the powers of all members of the Board of Directors ahead of schedule. | |
| 4.1.2. Independence. It is forbidden by law to hold the positions of the sole executive body and Chairman of the Board of Directors simultaneously | |||
| The Company thinks that the Board of Directors must be headed by the director, who is not the sole executive body and (or) a member of the collegiate body of the Company simultaneously, since this enables the Board of Directors to exercise its functions more efficiently. | Complied | According to clause 2 of section 66 of Federal Law #208-FZ "On Joint Stock Companies" dated 26.12.1995, the person exercising the functions of the sole executive body may not be simultaneously Chairman of the board of directors (supervisory board) of the company.
The person exercising the functions of the sole executive body is not Chairman of the Company's Board of Directors (resolution of the Board of Directors dated 20.07.2010 (minutes #1). N.N. Shvets, General Director of JSC "IDGC Holding" was elected as Chairman of the Company's Board of Directors. | |
| The membership of the Board of Directors ensures appropriate discharge of the duties related with control over and definition of the strategy and main lines of the Company development. | Complied | In compliance with Article 15 of the Company's Articles of Association, discharge of the duties related with performance of control, definition of the strategy and main lines of development of the Company is included in the competence of the Board of Directors, except for the issues referred by the Company's Articles of Association and FL "On Joint Stock Companies" to the competence of GMS. | |
| The membership of the Board of Directors includes 25% of executive directors at most, who are simultaneously employees of the Company. | Complied | The Company observes the requirements of Russian laws. According to clause 2 of section 66 of Federal Law #208-FZ dated 26.12.1995 "On Joint Stock Companies", the members of the collegiate executive body of the Company may not represent more than one fourth of the membership of the Board of Directors (supervisory board) of the company. The member of the Company management board occupying the position of Deputy General Director for Corporate Governance of JSC “Lenenergo” was elected to the membership of the Board of Directors of JSC "Lenenergo". | |
The Company aims to ensure presence of at least 3 (three) independent directors in the membership of the Board of Directors in order to ensure impartiality of taken resolutions and provide the balance of interests of various groups of shareholders. For the purposes of this Code, the Company defines that the directors meeting the following requirements of independence are considered independent:
| Complied | The membership of the Company's Board of Directors includes 10 (ten) independent directors:
1. Mikhail Victorovich Azovtsev; 2. Grigory Victorovich Dvas; 3. Alexey Valerievicih Kurochkin; 4. Mikhail Eduardovich Oseevsky; 5. Alexander Albertovich Popov; 6. Remes Seppo Yukha; 7. Alexey Ivanovich Sergeev; 8. Oleg Boorisovich Trishkin; 9. Nikolay Grigorievich Shulginov; 10. Sergey Evgenievich Yurchuk. | |
| 4.1.3. Membership of the Board of Directors and its committees | |||
| The Company may establish Committees of the Board of Directors.
The Committees of the Board of Directors are formed under the resolution of the Board of Directors. The activity of the committees of the Company's Board of Directors is governed by the Articles of Association, local normative documents of the Company, Regulations on the Committees of the Board of Directors containing the provisions about the membership, competence, procedure of work of the committees, and about the rights and duties of their members. The Committees of the Board of Directors are established to elaborate the issues included in the sphere of the competence of the Board of Directors or studied by the Board of Directors for the purpose of control over the activity of the Company's executive body, as well as to develop necessary recommendations for the Board of Directors and the executive body of the Company. | Complied | According to clause 19 of the Company's Articles of Association, the committees of the Board of Directors may be established under the resolution of the Board of Directors. The memberships of the of following Committees were elected by the Resolutions of the Board of Directors (minutes #1 dated 20.07.2010, minutes #7 dated 19.10.2010, minutes #9 dated 29.10.2010):
1. The Audit Committee of the Board of Directors of JSC “Lenenergo”; 2. The Personnel and Remuneration Committee of the Board of Directors of JSC “Lenenergo”; 3. The Technological Connection Committee of the Board of Directors of JSC “Lenenergo”; 4. The Strategy and Development Committee of JSC “Lenenergo”; 5. The Reliability Committee of JSC “Lenenergo”. The activity of the Company's Board of Directors is governed by the Articles of Association and the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Board of Directors of JSC "Lenenergo". The activity and competence of the Committees are governed by the Regulations approved by the Board of Directors: 1. Regulations on the Audit Committee of the Board of Directors of JSC "Lenenergo" (minutes #2 dated 22.08.2008, as amended minutes #1 dated 13.07.2009); 2. Regulations on the Personnel and Remuneration Committee of the Board of Directors of JSC "Lenenergo" (minutes #2 dated 22.08.2008, as amended minutes #1 dated 13.07.2009); 3. Regulations on the Technological Connection Committee of the Board of Directors of JSC "Lenenergo" (minutes #8 dated 9.02.2009) 4. Regulations on the Strategy and Development Committee of JSC "Lenenergo", new version (minutes #4 dated 9.09.2009). 5. Regulations on the Reliability Committee of the Board of Directors of JSC "Lenenergo" (minutes #13 dated 28.02.2006, as amended minutes #1 dated 13.07.2009.) The mentioned Regulations and changes thereto contain the norms on the membership, competence, procedure of work of the committees, as well as the rights and duties of their members. | |
| 4.1.4. Procedure of work | |||
| The Board of Directors holds meetings according to the Plan developed at the beginning of the term of its office, which ensures appropriate discharge of its duties. The Board of Directors holds the meetings at least once a quarter. Extraordinary meetings of the Board of Directors are held, as may be needed.
The procedure of work of the Board of Directors is governed by the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Board of Directors of the Joint-Stock Company JSC "Lenenergo". Corporate Secretary of the Board of Directors ensures timely provision of all directors with brief, but comprehensive information simultaneously with notification on conducting of the meeting of the Board of Directors, but no later than 11 business days prior to conducting of each meeting. The Board of Directors maintains minutes of its meetings. The minutes are signed by Chairman of the Company's Board of Directors and Corporate Secretary of the Board of Directors. | Complied | The operating procedure is governed by:
The activity of corporate secretary was carried out according to the Articles of Association, internal governing documents, the labor agreement concluded on 20.07.2010. The Company observes the requirements and time frames established by the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Board of Directors of JSC "Lenenergo". The minutes of the Board of Directors are signed by Chairman of the Company's Board of Directors and Company's Corporate Secretary. The Board of Directors held 24 meetings within the reporting period, including 2 joint-presence meeting, 2 joint-presence-and-absentee meetings and 18 absentee meetings. | |
| 4.1.5. Remuneration | |||
| Remuneration of the members of the Board of Directors meets the market conditions and is fixed so that to ensure that highly skilled specialists will be involved and will participate in the Company's activity, and to motivate them for fair and efficient activity.
The Company makes the information on remuneration of the members of the Board of Directors public. The Company does not grant loans to the members of the Board of Directors (except when a member of the Board of Directors is the sole executive body simultaneously or is a part of the collegiate body). | Complied | The members of the Board of Directors are remunerated according to the Regulations on Payment of Remuneration and Compensation to the Members of the Board of Directors (approved by AGMS on 30.05.2008, minutes #1).
The information on remuneration paid to the members of the Board of Directors is placed in the Company's quarterly report, Company's annual report. No loans were granted to the members of the Board of Directors in the reporting period. | |
| 4.1.6. Duties of the members of the Board of Directors | |||
| The members of the Board of Directors act in good faith and with due carefulness in the interests of the Company and all of its shareholders. Each director aims to participate in all meetings of the Board of Directors.
The members of the Board of Directors are aware of their responsibility to the shareholders, and believe that their main goal is diligent and competent discharge of duties in respect of management of the Company, which ensures maintenance and growth of the value of its shares, as well as protection of shareholders' rights and shareholders' possibility to exercise their rights. The members of the Board of Directors aim to hold a constant dialogue with shareholders. The members of the Board of Directors ensure formation and implementation of the Company's development strategy. The Board of Directors creates and supports necessary mechanisms of control over activities of the Company's Management Board, including monitoring and assessment of their results. The Board of Directors creates the system of clear and transparent criteria and procedures for appointment and replacement of the members of the Company's Management Board and efficient system of remuneration of its members. The members of the Board of Directors do not disclose and do not use confidential information on the Company for the personal advantage. The members of the Board of Directors undertake to abstain from the actions which may lead to a conflict between their interests and the interests of the Company. If such conflict occurs, the member of the Board of Directors undertakes to inform on this the other Board members and to abstain from voting regarding the respective items. | Complied | The rights, duties and responsibility of the members of the Board of Directors are determined by the Company's Articles of Association, this Code and the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Board of Directors of JSC "Lenenergo" (approved by AGMS on 26.06.2006, minutes #1).
According to the Articles of Association of JSC "Lenenergo" and Regulations on the Procedure for Convocation and Conducting of the Meetings of the Board of Directors of JSC "Lenenergo", the members of the Board of Directors, when exercising their rights and discharging their duties, shall act in the interests of the Company, exercise their rights and act in respect of the Company in good faith and reasonably. The members of the Board of Directors are liable to the Company for any losses caused to the Company by their wrongful acts (omission) according to the effective laws. The members of the Board of Directors, who voted against the resolution, which made the Company bear losses, or who did not take part in the voting are not liable in this regard. The members of the Board of Directors may not disclose the inside information on the company (Article 3 of the Inside Information Regulation). | |
| 4.2. Management Board and sole executive body | |||
| The Company is aware of the fact that the sole executive body represented by General Director is required for management of the current activities of the Company. The powers of the sole executive body of the Company may be transferred under the agreement to the management entity or managing director under the resolution of the General Meeting of Shareholders.
The Company is also aware of the fact that the process of management implies meeting of challenges, and the team philosophy is needed for their meeting, rather than the individual approach. In this regard, the Company forms the Management Board headed by Chairman of the Management Board. General Director exercises the functions of Chairman of the Company's Management Board. | Complied | According to clause 21.1 of Article 21 of the Company's Articles of Association, the management of the current activity of the Company is carried out by the sole executive body - General Director, and the collegiate executive body - the Management Board of the Company. The functions of Chairman of the Management Board are exercised by the Company's General Director.
The procedure of formation of the Management Board, time frames and procedure for convocation and holding of the Management Board meeting, as well as the procedure of taking resolutions by them are covered by the Articles of Association, Regulations on the Procedure for Convocation and Conducting of the Meetings of the Management Board of JSC "Lenenergo" (approved by the resolution of the AGMS of JSC “Lenenergo” on 30.05.2008). The amount of the remuneration paid to the members of the Management Board is determined by the resolution of the Company Board of Directors. | |
| 4.2.1. Powers | |||
| The sole executive body and the Management Board perform management of the Company's current activities in order to meet tasks and implement strategy of the Company. | Complied | General Director and the Management Board in their activities are guided by the effective laws, Company's Articles of Association, Regulations on the Management Board, and internal governing documents of the Company. The competence of General Director of the Company is determined in clause 21.3., Article 21 the Company's Articles of Association; that of the Management Board is determined by clause 21.6 of Article 21 of the Articles of Association. | |
| 4.2.2. Number of members | |||
| The number of the members of the Company's Management Board is determined by the Company's Articles of Association. | Complied | The Company's Articles of Association determines that the number of the members of the Management Board may not be less than 3 (three) people and is determined by the resolution of the Board of Directors (Article 21.7.).
The resolution of the Company's Board of Directors dated 11.07.2008 (minutes #1) determined that the number of members of the Management Board is 7 people. | |
| 4.2.3. Election, term of office and termination of powers of the sole executive body and Management Board | |||
| General Director is elected by the Company's Board of Directors by the majority of votes of the members of the Board of Directors participating in the meeting.
The terms of the labor agreements with General Director, including as regards the term of office, are determined by the Company's Board of Directors or the person authorized by the Company's Board of Directors to sign the labor agreement. If the General Meeting of Shareholders resolves to transfer the powers of the Company's sole executive body under the agreement to the management entity or managing director, the rights and duties of the management entity (managing director) in respect of performance of management of the Company's current activities are determined by the Russian Federation laws and the agreement concluded with the Company. The provisions of the agreement signed with the management entity (managing director), including as regards the term of office, are determined by the Company's Board of Directors or the person authorized by the Company's Board of Directors. The Company's sole executive body, in his/her turn, recommends candidates for the position of members of the Management Board to be approved by the Board of Directors. The Board of Directors is entitled to take a resolution on termination of the powers of General Director of the Company, members of the Management Board of the Company and formation of new executive bodies at any time. Termination of the powers of General Director and members of the Management Board is carried out on the grounds, as set forth by the Russian Federation laws and the labor agreement concluded by each of them with the Company. The General Meeting of Shareholders is entitled to take a resolution on early termination of the powers of the management entity (managing director) at any time. | Complied | According to subclause 41 of clause 15.1 of Article 15 of the Company's Articles of Association, election of the Company's General Director and early termination of his/her powers are covered by the competence of the Board of Directors.
The resolution is made by the majority of the votes of the members of the Board of Directors participating in the meeting (clause 21.4. of the Articles of Association of JSC “Lenenergo”). The Board of Directors of JSC “Lenenergo” by its resolution dated 30.07.2010 (minutes #2) elected A.V. Sorochinsky to the position of the Company General Director and terminated the powers of D.V. Ryabov as General Director. When the event occurs, the Company will be guided by the effective laws and the Company's Articles of Association. The functions of the Sole Executive Body were not transferred in the Company; however, according to subclause 29, clause 15.1., Article 15, subclause 21.19 of Article 21 of the Company's Articles of Association, the competence of the Board of Directors includes decision-making on suspension of the powers of the management company (managing director). Clause 21.18 of Article 21 of the Articles of Association of JSC “Lenenergo”. According to clause 21.7. of the Company's Articles of Association, the members of the Management Board are elected by the Board of Directors at the proposal of General Director. The current membership of the Company's Management Board was elected on 11.07.2008 by the Board of Directors of JSC "Lenenergo"; the membership was changed according to the resolutions of the Board of Directors dated 9.12.2008, 20.11.2009, 19.10.2010. All candidates for the members of the Management Board were recommended by the Company's General Director. According to subclause 41 of clause 15.1 of article 15, subclause 21.16 of Article 21 of the Company's Articles of Association. When the event occurs, the Company will be guided by the provisions of the Russian Federation laws, the Company's Articles of Association, internal governing documents, labor agreements concluded between the Company and General Director, and the members of the Management Board. The functions of the SEB (Sole Executive Body) were not transferred to the management company; however, according to subclause 21.19 of Article 21 of the Company's Articles of Association, the General Meeting of Shareholders is entitled to make a resolution on early termination of the powers of the management company (managing director) at any time. | |
| 4.2.4. Membership of the Management Board | |||
| The membership of the Management Board, which includes competent and skilled specialists, ensures efficient management of the Company's current activities. Each member of the Management Board, including Chairman of the Management Board, whose functions are exercised by the Company's General Director, has the experience, knowledge and qualification, which are necessary for appropriate discharge of the duties imposed on them.
| Complied | The current membership of the Management Board was elected on 11.07.2008 by the Company's Board of Directors; it was changed according to the resolutions of the Board of Directors dated 9.12.2008, 20.11.2009, 19.10.2010. The detailed information on the positions held by the members of the Management Board for the previous 5 years is presented on the corporate website www.lenenergo.ru (Section "Shareholders and Investors", subsection "Management and Control Bodies"). | |
| 4.2.5. Procedure of work of the Management Board | |||
| The Management Board holds regular meetings; the members of the Management Board obtain the information on the meeting agenda beforehand. The procedure of work of the Management Board is governed by the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Management Board of Joint-Stock Company of Power Industry and Electrification "Lenenergo". | Complied | According to the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Management Board (approved by AGMS on 30.05.2008, minutes #1). | |
| 4.2.6. Remuneration and work evaluation | |||
| The system of remuneration of the sole executive body and members of the Management Board is determined by the Board of Directors. The remuneration consists of the constant and variable parts, where the latter depends on compliance with a certain system of indicators (hereinafter referred to as the "Indicators") of the work of the executive bodies and is associated with their personal contribution to the provision of long-term development of the Company in the interests of its shareholders.
The Indicators are the system of financial and non-financial indicators influencing the quantitative or qualitative change of the results in relation to the strategic goal of the Company. When setting the Indicators for the executive bodies, the Company's Board of Directors is focused on the most essential of them only and does not take into consideration all minor ones, thus reducing their quantity to "key" ones. The quantity of the Indicators is limited (to insure their satisfiability and quality of monitoring). The task of the system of the Indicators consists in translation of the Company's strategy into a comprehensive set of the indicators of its activities determining key parameters of the measurement and management system. The set of indicators serves as a basis for formation of the Company's strategy and includes quantitative characteristics for informing the executive bodies on major factors of success in the present and the future. Formulating the strategy, the Company sets a goal and creates conditions to meet it. | Complied | The Board of Directors of JSC "Lenenergo" approved the Regulations on the Financial Incentives of General Director of JSC "Lenenergo" (minutes #2 dated 30.07.2007) meeting the requirements of this Code.
According to clause 2.5 of the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Management Board approved by the resolution of AGMS of JSC "Lenenergo" on 30.05.2008, a labor agreement is concluded with the elected members of the Management Board. The labor agreement on behalf of the Company is signed by Chairman of the Company's Board of Directors or the person authorized by the Company's Board of Directors. The amount of remuneration and compensation paid to the members of the Company's Management Board and the procedure of their payment are determined by the Company's Board of Directors. The Company's Board of Directors approves KPI (key performance indicators) (quarterly and annual ones), the compliance with which serves as a basis for payment of remuneration to General Director. Development of the principles and criteria of definition of the amounts of remuneration paid to the members of the Board of Directors, Management Board and General Director of the Company is included in the competence of the Personnel and Remuneration Committee. | |
| 4.2.7. Duties of executive bodies | |||
| The sole executive body and the members of the Management Board act in good faith and with due carefulness in the interests of the Company and all of its shareholders.
The sole executive body and the members of the Management Board undertake to abstain from the actions which may lead to a conflict between their interests and the interests of the Company. If such conflict occurs, Chairman of the Management Board and the members of the Management Board undertake to inform the Board of Directors members on this and to abstain from discussions and voting regarding the respective items. The Company is aware of the fact that the experience, public relations, knowledge and qualification of the members of the Management Board, including those acquired during their work with the Company, open opportunities for implementation of commercial activities (private and team activities - by way of holding stakes, shares), which are not related with the interests of the Company. At the same time, the members of the Management Board guarantee that implementation of such activities:
In order to exclude possible negative consequences for the Company, the members of the Management Board provide the Company with the information on implementation of commercial activities by them, which are not related with the interests of the Company according to the order established by local normative documents of the Company. | Complied | According to clause 3.1. of the Regulations on the Procedure for Convocation and Conducting of the Meetings of the Management Board of JSC "Lenenergo" approved by the resolution of AGMS dated 30.05.2008, the members of the Management Board are obliged:
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| 4.3. Relationship between the Board of Directors and executive bodies | |||
| Efficient corporate governance requires an open dialogue between the Board of Directors and executive bodies of the Company. The Management Board and the sole executive body act in the interests of the Company and are accountable to the General Meeting of Shareholders and the Board of Directors of the Company in their activities.
For this purpose, the sole executive body of the Company submits quarterly reports on its activity to the Board of Directors according to the Articles of Association and internal documents of the Company. | Complied | The Action Plan of the Board of Directors of JSC “Lenenergo” was approved (minutes #3 dated 2.08.2010), which specifies the due dates and lines of the activities, in respect of which General Director submits information for consideration by the Company Board of Directors.
According to subclause 21.2. of Article 21 of the Company's Articles of Association, General Director and the Management Board are accountable to the General Meeting and Board of Directors of the Company. General Director submits the following reports quarterly for consideration/approval by the Company's Board of Directors: on performance of the business plan, investment program, on compliance with KPI, cash flow targets, on the credit policy, on the purchasing activity, on performance of the BD resolutions, on the information policy, etc. | |
| 5. Shareholders of the company | |||
| 5.1. Shareholders’ rights and protection of shareholders’ rights | |||
| The shareholders of the Company have a set of the rights in respect of the Company, the observance and protection of which shall be ensured by the Board of Directors and General Director of the Company. | Complied | The rights of the Company's shareholders are determined by Article 6 of the Articles of Association of JSC "Lenenergo" approved by AGMS of JSC "Lenenergo", minutes #1/2010 dated 22.06.2010. | |
| The Company's shareholder register is maintained by an independent registrar. Choice and appointment of the independent registrar possessing all necessary facilities and faultless reputation enables the Company to ensure reliable and efficient registration of title to the property in respect of the shares and other securities of the Company | Complied | The Company concluded the agreement with the registrar - Open joint-stock company “R.O.S.T. Registrar” for maintenance of the shareholder register. The Company is responsible for maintenance of the shareholder register.
The information on the registrar of the Company is placed on the official website of the Company. | |
| The shareholders are entitled to obtain the information on the Company's activities timely and regularly in the volume and order, which meet the law requirements. | Complied | The following documents governing the order of information disclosure are effective in the Company:
Clause 4.2. of Information Policy Regulations of JSC "Lenenergo" determines the list of the information to be disclosed obligatorily according to the requirements of the Russian Federation laws: | |
| For the purpose of appropriate observance and protection of the mentioned right, the Company guarantees performance of the information disclosure requirements set forth by the laws.
The Company discloses its financial statements according to the requirements of the Russian Federation laws and according to the International Financial Reporting Standards (IFRS - on an annual basis). All information disclosed this way or another is necessarily placed on the website of the Company in the information network Internet. The shareholders holding voting shares are entitled to participate in the General Meeting of Shareholders with a right to vote on all items of its competence. The shareholders holding voting shares are entitled to participate in the General Meeting of Shareholders with a right to vote on all items of its competence. The shareholders holding preferred type A shares are entitled to participate in the General Meeting of Shareholders with a right to vote on the following items:
The Company undertakes to provide shareholders with the information on the items of the agenda of the General Meeting of Shareholders in the volume and within the time-frames, which allow shareholders to make reasoned decisions. | Complied | The address of the Company's corporate website: http://www.lenenergo.ru
The necessary information for the meeting is provided to the shareholders on the corporate website in the Internet as well. The following documents were disclosed for the reporting period: forms of financial statements: forms 1, 2 (balance sheet, profit and loss statement) for the year 2009, for the 1st quarter of 2010, for the 1st half of the year 2010 (under RAS standards), for the 1st half of 2010 under IFRS standards, based on the results of 9 months of 2010 (under RAS standards), based on the results of 9 months of 2010 (under RAS standards). The audited report on the Company financial indices under IFRS standards for the year 2009 on the corporate website of the Company, section “Shareholders and Investors”, subsection “Obligatory Disclosure”. The Company held 1 (one) annual general meeting of shareholders for the considered period on 21.06.2010 (minutes #1/2010 of AGMS of JSC “Lenenergo”). The agenda of the annual General Meeting of Shareholders: 1. Approval of the Annual Report, annual accounting statements including profit and losses statement of the Company), and profit and losses distribution (including dividend payment) based on performance results of the 2009 financial year; 2. Election of members of the Board of Directors; 3. Election of members of the Internal Audit Commission; 4. Approval of the Auditor; 5. Approval of the Articles of Association in the new edition. The shareholders owning the ordinary shares of JSC “Lenenergo” were entitled to take part in the annual General Meeting of Shareholders of 21.06.2010. The rights of the shareholders owning ordinary and preferred shares of the Company are determined by Article 6 of the Company’s Articles of Association. According to clause 11.5 Article 11 of the Company's Articles of Association, the Statement on Conducting of the General Meeting of Shareholders is published in the newspaper "Nevskoe Vremya". The Statement on Conducting of the General Meeting of Shareholders shall be published no later than 30 days prior to the date of conducting of the meeting. According to clause 11.6 of Article 11 of the Company's Articles of Association, the voting ballots are sent no later than 20 (twenty) days prior to the date of conducting of the meeting. | |
| In the events, as set forth by the law and the Articles of Association of the Company, the Board of Directors draws up impartial and reasoned recommendations for shareholders.
The information in respect of the General Meeting of Shareholders is necessarily disclosed on the website of the Company in the network Internet. The shareholders are entitled to obtain a part of the Company's net profit in the form of dividends. For the purpose of appropriate observance and protection of the mentioned right, the Company undertakes to pay declared dividends within the time frames, as set out by the General Meeting of Shareholders. The rights of shareholders are governed by the provisions of the Articles of Association and internal documents of the Company. | Complied | The Board of Directors considered the issues put to the meeting and offered the recommendations to the meeting of shareholders on 5.05.2010 (minutes #18).
The information is presented on the corporate website http://www.lenenenrgo.ru/ According to Article 6 of the Articles of Association of JSC "Lenenergo", the Company's shareholders are entitled to obtain the dividends declared by the Company. The time limit for payment of dividends is determined by the Company's General Meeting of Shareholders, but shall not be later than 60 (sixty) days after decision-making on their payment. | |
| 5.2. General Meeting of Shareholders | |||
| The Company approved the Regulations on the Procedure for Preparation and Conducting of the General Meeting of Shareholders of JSC "Lenenergo", which describes in detail the procedure for preparation, conducting and decision-making by the General Meeting of Shareholders. | Complied | The Company approved the Regulations on the Procedure for Preparation and Conducting of the General Meeting of Shareholders (AGMS 26.06.2006, minutes #1). | |
| 5.2.1. Preparation for the meeting. | |||
| Each shareholder is entitled to participate in the general meeting of shareholders, vote on its agenda items, receive the notice on such meeting and its agenda beforehand, as well as authentic, impartial and timely information, which is sufficient for decision-making on the agenda items. The Company's General Director is responsible for this process. | Complied | The order of participation of the shareholders in the general meetings of shareholders, voting on the agenda items and obtaining of notices on conducting of general meetings of shareholders of the Company and examination of the information on the agenda items are determined by Articles 11, 12, 13, 14 of the Company's Articles of Association. | |
| The Company makes provision of the fair and efficient procedure of submitting proposals in respect of recommendation of candidates for the members of the Board of Directors. The agenda of the General Meeting may not be changed after its approval by the Company's Board of Directors. | Complied | The order of submission of proposals to the agenda of the general meetings of shareholders and recommendation of candidates for the Company's management and control bodies is determined in Articles 13, 14 of the Company's Articles of Association. | |
| 5.2.2 Holding of the meeting. | |||
| The Company takes all measures as may be necessary for provision of participation of the shareholders in the General Meeting and voting on the agenda items.
The place of conducting of the General Meeting is accessible for the shareholders. The procedure of registration is convenient for participants and provides fast and unimpeded access to the place of the meeting. | Complied | In compliance with Article 10 of the Articles of Association, the address of conducting of the Company's General Meeting of Shareholders is determined by the Board of Directors. The General Meetings of Shareholders may be held at the place of the Company seat or in Moscow.
The annual general meeting of shareholders dated 21.06.2010 was held at: Saint Petersburg, Pobedy Square, 1, hotel “Park Inn Pulkovskaya, Saint Petersburg”. | |
| The Company ensures presence of the members of the Board of Directors, executive body, Internal Audit Commission and the auditor of the Company at the General Meeting of Shareholders, where possible, and authorizes them to answer questions of the shareholders. The shareholders are entitled to speak on the agenda items, submit respective proposals and ask questions. Chairman of the General Meeting ensures its efficient work. Voting is held via voting ballots. | Complied | The Company sent invitations to all members of the Board of Directors and the Internal Audit Commission of JSC "Lenenergo" for participation in AGMS within the framework of preparation for the annual general meeting of shareholders dated 21.06.2010. | |
| The procedure for calculation of votes at the General Meeting excludes an opportunity of manipulation by the voting results. The functions of the tabulation commission are exercised by the independent registrar of the Company. | Complied | The functions of the tabulation commission at AGMS dated 21.06.2010 were exercised by the independent registrar of the Company - JSC "Central Moscow Depository". | |
| 5.2.3. Results of the meeting | |||
| The voting results and other necessary materials are provided to the shareholders on the day of the General Meeting or after it, and are timely published in the website of the Company and in mass media. | Complied |
According to clause 11.13 of Article 11 of the Articles of Association, the voting results and the resolutions adopted by the Company's General Meeting of Shareholders may be announced at the Company's General Meeting of Shareholders. The voting results and the resolutions adopted by the Company's General Meeting of Shareholders dated 21.06.2010 were announced at the Company’s general meeting of shareholders on 21.06.2010. If the voting results and the resolutions adopted by the Company's General Meeting of Shareholders are not announced at the General Meeting, the resolutions adopted by the Company's General Meeting of Shareholders and the voting results are published by the Company in the newspaper "Nevskoe Vremya" in the form of the report on the voting results. Minutes #1/2010 of the annual General Meeting of Shareholders dated 22.06.2010 is placed on the corporate website http://www.lenenenrgo.ru/ in the section “Shareholders and Investors”. | |
| 5.3. Dividend policy | |||
The dividend policy is disclosed on the website of the Company, among other places. The order of definition of the amount of dividends per preferred shares does not prejudice the rights of holders of ordinary shares. The policy of the Company in respect of dividends stipulates:
| Complied partially | The Company applies the Dividend Policy Regulation (approved by the resolution of the Board of Directors dated 31.08.2010, minutes #4), which was presented on the corporate website http://www.lenenenrgo.ru/.
According to clause 7.3. of Article 7 of the Articles of Association "The total amount paid as the dividend per each preferred share is fixed at 10 (ten) percent of the Company's net profit based on the results of the last financial year determined pro rata to the number of the sold preferred type A shares". The Company pays declared dividends in compliance with Article 7 of the Company's Articles of Association and within the time frames, as set forth by the laws (no later than 60 days from the moment of the approval of the resolution on payment of dividends by the Company's Board of Directors). The Company annual General Meeting of Shareholders dated 21.06.2010 resolved to pay dividend per preferred shares based on the Company 2009 performance. The information on paid dividends for the 3 (three) past years, including time frames, amount and order of payment, as well as the comments on the securities inheritance procedure and the dividends payable per them is presented on the corporate website (http://www.lenenenrgo.ru/) in the section "Shareholders and Investors", subsection "Shareholders". According to the agreement signed between the Company and Open joint-stock company “R.O.S.T. Registrar” (Registrar), the shareholder may also turn to the Stand-alone Division of OJS Company “R.O.S.T. Registrar” in Saint Petersburg for additional information. The contact data of the Registrar are placed on the corporate website in the section "Shareholders and Investors", subsection "Shareholders" (http://www.lenenenrgo.ru/). | |
| 6. Information disclosure and transparency | |||
| Disclosing information on itself, the Company goes beyond the information, the disclosure of which is stipulated by normative and legal acts of the Russian Federation, and additionally discloses other information which provides a high degree of transparency of the Company and contributes to achievement of the goals of the information disclosure policy implemented by the Company. | Complied | The Company has the investor and shareholder relations division and the press service covering the Company's activities.
The Information Policy Regulations of JSC "Lenenergo" are effective in the Company (approved by the Resolution of the Board of Directors of JSC "Lenenergo" dated 9.12.2008, minutes #6). | |
| 6.1. Information disclosure policy and practice | |||
| The policy of disclosure of the information on the Company implemented by the Company has the main goal: ensuring of the highest possible degree of trust of shareholders, potential investors, contractors and other interested persons in the Company by way of provision of the mentioned persons with the information on itself, its activity and securities in the volume, which is sufficient for the mentioned persons to take reasoned and weighed decisions in respect of the Company and its securities.
Disclosing information on itself, the Company goes beyond the information, the disclosure of which is stipulated by normative and legal acts of the Russian Federation, and additionally discloses other information which provides a high degree of transparency of the Company and contributes to achievement of the goals of the information disclosure policy implemented by the Company. The Company is guided by the following principles when disclosing the information: | Complied | Clause 4.2. and 4.3. of the Information Policy Regulations, JSC "Lenenergo" determines the list of the information to be obligatorily disclosed, and the list of the information disclosed additionally according to the requirements of the RF laws, requirements of FFMS, internal governing documents of the Company, rules of listing of stock exchanges, where the Company's shares are traded. | |
| Principle of completeness and reliability of the disclosed information, according to which the Company provides all interested persons with the trustworthy information and at the same time does not evade from disclosure of negative information on itself, in the volume allowing to generate the fullest idea of the Company, of the results of the Company's activities;
Principle of the information availability, according to which the Company, when disclosing the information, uses channels of distribution of the information on its activity, which ensure unimpeded and easy access by shareholders, creditors, potential investors and other interested persons to the disclosed information; Principle of regularity and timeliness of information disclosure, which determines, that the Company provides shareholders, creditors, potential investors and other interested persons with the information on its activity within the time limits determined by normative legal acts of the Russian Federation and internal documents of the Company. The information disclosed by the Company is published on the website of the Company. The Company’s General Directors is responsible for disclosure of the information. The members of the Board of Directors disclose the information on themselves, which is necessary for disclosure, for the Company Principle of information balance, which means that the information policy of the Company is based on the reasonable balance of transparency of the Company for all interested persons on the one hand, and confidentiality on the other hand, in order to ensure the rights of shareholders to obtain the information on the Company's activities as much as possible on the assumption of protection of the information referred to confidential and inside information by the Company according to the normative legal acts of the Russian Federation. | Complied | All the information disclosed by the Company is placed on the Company’s website (http://www.lenenenrgo.ru/), thus the Company ensures unimpeded access of all interested persons to such information.
The information disclosed by the Company is placed on the Company’s website according to the requirements of the Company’s Information Policy Regulations in full and is trustworthy, allows to form the most comprehensive idea of the Company and its performance. Moreover, according to clause 5.1.2. of the Information Policy Regulations of JSC “Lenenergo” approved by the BD resolution on 9.12.2008 (minutes #6 dated 9.12.2008), the information disclosed by the Company obligatorily and additionally is brought to the notice of shareholders, investors and other interested persons by way of its publication in news wires (Interfax), in the periodic printed publication (newspaper “Nevskoe Vremya”), in the Internet at http://www.lenenenrgo.ru/. The RF laws, FFMS requirements and the Company internal governing documents determined the following obligatory time frames for disclosure by the Company of the information necessary for the shareholders, creditors and potential investors:
The information is presented on the Company's corporate website in the respective sections. The information policy of the Company is based on the reasonable balance of the Company transparency for all interested persons on the one hand, and confidentiality on the other hand, in order to ensure the rights of the shareholders in respect of obtaining the information on the Company's activity as much as possible provided that information referred to confidential or inside category is protected. | |
| 6.2. Financial statements | |||
| The Company maintains accounts and prepares financial statements according to the Russian accounting and financial reporting standards. The Company prepares the summary (consolidated) statements under the International Financial Reporting Standards (IFRS) and publishes such statements on the website of the Company.
The financial statements are accompanied by detailed notes allowing the addressee of such statements to interpret the information on the financial results of the Company's activities in the right way. The financial information is supplemented with comments and analytical assessments of the Company's management and the opinion of the Company's auditor and the Internal Audit Commission. The Company prepares the summary (consolidated) financial statements (of the Company and its subsidiaries and dependent entities) under the International Financial Reporting Standards (IFRS). | Complied | The Company maintains accounts and prepares financial statements according to Russian accounting and financial reporting standards quarterly.
The ways of maintenance of accounting and tax records chosen by JSC "Lenenergo" within the framework of formation of the Accounting Policy for 2010 were approved by the order of General Director and have been consistently applied since 1.01.2010. The Company prepares summary (consolidated) audited statements under the International Financial Reporting Standards (IFRS) and publishes such statements on the Company's website. Interpretation of the accounting statements is incorporated into the auditor's opinion to the accounting statements of the Company, which is available on the Company's official website. | |
| 6.3. Control over financial and economic activities | |||
| The Company is aware of the need for reduction in probability of occurrence of the events having negative impact on achievement by the Company of the set goals and leading to losses, including for the reasons of decision-making on the basis of incorrect judgments, human errors, conscious evasion from control, and is aware of a high degree of the shareholders' need for protection of their capital investments and safety of the Company's assets; therefore, it creates the system of financial and economic activity monitoring
The internal control over the financial and economic activity is focused on achievement of the following goals:
Functions, rights and duties, responsibility of the divisions functioning in the Company are stipulated by the executive documents of the Company. In order to ensure regularity of the control over financial and economic activities of the Company, the procedures of the internal control are carried out by the authorized division of the Company, which is responsible for the internal control, in cooperation with other bodies and divisions of the Company. Particular procedures and the bodies and persons responsible for implementation of the procedures of the internal control are determined by the Regulations on the Internal Control Procedures of the Company approved by the Company's Board of Directors. | Complied | The General Meeting of Shareholders elects the Internal Audit Commission which performs the internal financial and economic control over the activity of the Board of Directors, management bodies and officials of the Company for its compliance with the RF laws, Articles of Association and internal documents of the Company.
The Company approves the business plan annually, which enables efficient constant control over its financial and economic activities. The General Meeting of Shareholders approves the Auditor of the Company annually in order to check and confirm the Company's annual accounting statements. The Auditor of the Company checks the Company's financial and economic activity according to the requirements of the RF laws and on the basis of the agreement concluded with it. Within the framework of creation of the efficient system of the internal control in compliance with the law requirements, Company's Articles of Association and other governing documents, the Company has: The Internal Audit Commission of the Company (elected by GMS on 21.06.20109, minutes #1), which acts on the basis of laws, Company Articles of Association (Article 22). The Auditor of the Company (under RAS) was approved by GMS (21.06.2010, minutes #1/2010) – CJSC “HLB Vneshaudit”. The Audit Committee of the Board of Directors of JSC "Lenenergo" (minutes #1 dated 22.08.2008, as amended by minutes #1 dated 13.07.2009). The Company established the Internal Control and Audit Department, the duties of which include holding of daily internal control over the procedure of the Company's economic operations. The Company's Board of Directors approved the Regulations of the Internal Control Procedures of JSC "Lenenergo" (minutes #6 dated 9.12.2008). | |
| 6.4. Property structure | |||
| The Company ensures disclosure of information on real proprietors of five and more percent of the Company's voting shares. The information disclosed by the Company also describes the corporate relations in the group of companies. The Company aspires to provide transparency of the structure of the Company's joint-stock capital. | Complied | The structure of the Company's joint-stock capital and the list of affiliates are placed in the Internet on the official website of the Company. | |
| 7. Relationship with subsidiaries and dependent entities | |||
| Principles and practice of the relationship with subsidiaries and dependent entities. | |||
| The Company is in relationship with subsidiaries and dependent entities (SDEs) according to the requirements of the Russian Federation laws, Articles of Association and internal documents of the Company, articles of association of subsidiaries and dependent entities. | Complied | SDEs of the Company:
1) Closed Joint-Stock Company "Lenenergospetsremont" - 100% SDE. The main activities: provision of services on exercise of the powers of the sole executive body of the business entities; provision of property trust services; provision of electric power transmission services. 2) Closed Joint-Stock Company “Tsarskoselskaya Energy Company” (amount of the stake owned by JSC “Lenenergo” in the joint-stock capital is 96.97%). The main activities: provision of electricity transmission through distribution grids; services of technological connection of electrical units; Operational maintenance of the street lighting networks. 3) Closed Joint-Stock Company “Kurortenergo” (amount of the stake owned by JSC “Lenenergo” in the joint-stock capital is 98.13%). The main activities: provision of electricity transmission and other services, which are inseparably associated with the process of supplying electricity to consumers; technological connection of energy-receiving devices (energy units and electric grid facilities) of legal entities and individuals to electric grids. 4) Open Joint-Stock Company "Energouchet" (amount of the stake owned by JSC "Lenenergo" in the joint-stock capital is 40%). The main activities: production, implementation and repair of power resource measurement tools; development and implementation of energy saving technologies; certification of energy saving technologies. The management and control bodies of SDEs of JSC "Lenenergo" include the representatives of JSC "Lenenergo" elected by GMS of CJSC "Lenenergospetsremont" (minutes #30 of the Management Board of JSC “Lenenergo” dated 28.05.2010), OJSC "Energouchet" (minutes #1/2010 of GMS dated 25.06.2010), EGMS of CJSC “Kurortenergo” (minutes of EGMS #02/10 dated 10.12.2010, EGMS of CJSC “Tsarskoselskaya Energy Company” (minutes of EGMS #4/2010 dated 9.12.2010). | |
The main goals of the relationship of the Company with SDEs:
| Complied | Cooperating with SDEs, the Company is guided by the Articles of Association of JSC “Lenenergo” and SDEs, and the Procedure for Cooperation of JSC “Lenenergo” with the Economic Entities, the Shares (Stakes) of which are Held by the Company (approved by the Board of Directors dated 24.03.2009, minutes #12). | |
| The Order for Cooperation of JSC "Lenenergo" with Economic Entities, the Shares (Stakes) of which are Owned by the Company (hereinafter referred as the "Order") is the document fixing the main corporate governance principles and provisions of the Company's SDEs. According to the mentioned Order, the cooperation between the Company and SDEs is carried out in the event of taking by SDEs' management and control bodies of respective resolutions (resolutions of general meetings of shareholders, boards of directors, internal audit commissions and sole executive bodies within the framework of their competence). | Complied | The Procedure for Cooperation of the Company with the Economic Entities, the Shares (Stakes) of which are Held by the Company was approved by the Board of Directors of JSC “Lenenergo” in a new version (minutes #12 dated 24.03.2009) and is unconditionally complied with by the Company when cooperating with SDEs. | |
Besides the mentioned Order, the corporate governance process in SDEs is governed by the following documents:
| Complied | The Articles of Association of JSC “Lenenergo” in new version were approved by the resolution of AGMS on 21.06.2010 (minutes #1/2010) with the amendments incorporated by the resolution of the Company Board of Directors dated 18.06.2010 (minutes #22).
The Corporate Governance Code of JSC “Lenenergo” (approved by the resolution of the Board of Directors of JSC “Lenenergo” on 26.12.2008). The Articles of Association of CJSC “Lenenergospetsremont” were approved by the resolution of the Board of Directors dated 7.03.2003 (minutes #16 dated 7.03.2003) as amended by the resolution of EGMS of CJSC “Lenenergospetsremont” dated 5.09.2008 (minutes #3 of the Management Board of JSC “Lenenergo” dated 8.09.2008). The Articles of Association of CJSC “Tsarskoselskaya Energy Company” were approved by EGMS of CJSC “Tsarskoselskaya Energy Company” on 6.12.2010 (minutes of EGMS #4/2010 dated 9.12.2010). The Articles of Association of CJSC “Kurortenergo” were approved by AGMS of CJSC “Kurortenergo” on 28.05.2010 (minutes of AGMS of CJSC “Kurortenergo” #1/2010 dated 31.05.2010). The Articles of Association of OJSC “Energouchet” were approved by the resolution of EGMS on 11.02.2008 (minutes #1/2008 dated 11.02.2008) | |
| The Company will aim to develop corporate governance principles in respect of subsidiaries and dependent entities in process of the corporate governance practice development. | Complied | When new corporate governance standards applying to the Company are implemented, the advanced practice will also apply to the SDEs subject to the developed experience of mutual relations. | |
Note:
In this report the terms "Complied"/"Not complied" mean observance/non-observance by the Company of an essential part of the recommendations by virtue of the developed requirements of the Articles of Association and internal documents of the Company effective as at the moment of drawing up of the report.