OJSC Kubanenergo
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Principles and Practices of Corporate Governance

Company Corporate Governance and Control Pattern

Company Corporate Governance and Control Pattern

Corporate Governance is understood by the Company as a set of processes ensuring management of and control over the activities of the Company, including relationships between its shareholders, the Board of Directors and executive bodies in the interest of all participants of corporate relations, including shareholders and management bodies, as well as potential investors, consumers of services, Company employees, suppliers, creditors, partners, the state and local communities.

OJSC 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 legitimate rights of the shareholders 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 executive bodies of the Company, plays a key role in the prevention and resolution of internal conflicts and ensuring the transparency of the Company. 
  • Accountability.The Board of Directors of the Company shall be 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 recording 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: the Corporate Governance Code, Regulations on Insider Information, Regulations on Information Policy, Regulations on Dividend Policy *

The Company generally complies with the principles and recommendations of the Corporate Governance Code recommended by the Bank of Russia on 21.03.2014 (the respective compliance report is given in Appendix 4).

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

  • in order to take account of the changed requirements of the law on joint stock companies, a new revision of the Company Charter was approved,
  • improvement of the system of internal control and risk management and development of the internal audit function were established as the Company's business priorities,
  • in order to provide the Board of Directors and executive bodies of the Company with independent and objective assurance that adequate internal control systems, risk management and corporate governance are in place, the Internal Audit Policy of the Company was approved,
  • new revisions of the following documents were approved:
    • Regulations on the Revision commission of the Company,
    • Internal Control Policy and Risk Management Policy, taking into account the provisions of the Strategy of Development of the Electric Grid Complex of the Russian Federation approved by Decree No.511-r of the RF Government of 03.04.2013, and the Strategy of Development and Improvement of the Internal Control System of JSC Russian Grids and its subsidiaries and affiliates, approved by the Board of Directors of JSC Russian Grids (Minutes No.143 of 13.02.2014)
    • Regulations on the Reliability Committee and the Committee for Personnel and Remuneration of the Board of Directors of the Company (the competence of the two committees additionally includes preliminary review of proposals for the reorganization of the Company's management)
  • the Policy of Cooperation with the Society, Consumers and Authorities of JSC Russian Grids was approved as an internal document of the Company (for the development of local regulations of the Company, establishing goals, objectives and main provisions of the work with external stakeholders).

* Find the documents listed above and other internal documents on corporate governance of OJSC Kubanenergo on its website www.kubaenergo.ru, in section About the Company / Constituent and in-house documents. Overview of OJSC 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 – Appendix 5.