“Approved”
by the Board of Directors of JSC “TGC-4”
Minutes #11/ 29
as of “01” November 2006
Chairperson of the Board of Directors of
JSC “TGC-4”
____A.A. Dmitrenko
CORPORATE GOVERNANCE CODE OF
Joint-Stock Company
“Territorial Generating Company # 4”
(JSC "TGC - 4")
Tula
2006
Table of contents
1. Introduction
2. Information on the Company
3. Principles and structure of corporate governance in Company
3.1.
3.2.
3.3.
Definition and principles
Internal documents
General structure of the corporate governance
4. Corporate governance practice implemented in Company
Board of Directors
4.1.
4.2.
Management Board and Chairperson of Management Board
4.3.
Cooperation of Board of Directors and executive bodies
5. Company’s shareholders
Shareholders’ rights and shareholders’ rights protection
5.1.
5.2.
General Shareholders’ Meeting
5.3.
Dividend policy
6. Information disclosure and transparency
Policy and practice of information disclosure
6.1.
6.2.
Financial reports
6.3.
Control of financial and economic activities
6.4.
Ownership structure
7. Cooperation with subsidiary and dependent business companies
7.1. Principles and practice of cooperation with subsidiary and dependent business companies
8. Final provisions
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1. Introduction
The goals of this Corporate Governance Code (hereinafter referred to as the “Code”) are the
corporate governance improvement and systematization in Joint-Stock Company «Territorial
Generating Company #4» (hereinafter referred to as the “Company”), a bigger provision of governance
transparency by the Company and confirmation of the Company’s continuing readiness to follow the
standards of the proper corporate governance. In particular:
• governance by the Company must be carried out with a proper responsibility and
accountability level and by such a way, that the shareholder value should be maximized;
• Board of Directors and executive bodies must work efficiently, in favor of the Company
and its shareholders (including minority ones) and create conditions for the shareholder value’s
stable growth;
• they must provide reliable disclosure of information, transparency, and efficient work of
the risks and internal control management systems.
While adopting, improving from time to time and observing provisions of this Code,
Company’s Charter and other internal documents strictly, the Company confirms its intention to
contribute to the development and perfection of the proper corporate governance practice.
For the purpose of further strengthening of trust on part of the shareholders, employees,
investors and public, the Company was not limited to the Russian laws norms when elaborating
the Code, and included additional provisions in the Code, which are based on the generally
accepted Russian and international 1 standards of the corporate governance.
The Company assumes obligations, stipulated by this Code, and is obliged to observe
norms and principles established in it.
2. Information on the Company
Joint-Stock Company «Territorial Generating Company # 4» (JSC «TGC-4») was registered on
«20» April of 2005, upon the sole founder’s decision - JSC RAO «UES of Russia» (Instruction # 94r dd.
18.04.2005).
The main goal of the Company’s activities is the profit receipt by way of reliable and continuous
electric and heat energy supply to consumers. To receive profit, the Company has a right to implement
any types of activities, which are not forbidden by the law. The main types of the Company’s activities
are: production and sale of electric power; production, transportation and sale of heat energy;
operations of heat grids. Company is an energy company, the shareholders of which are both the
Russian, and foreign legal and natural persons. Company’s role in the Russian Federation’s economy is
of paramount importance. Company’s activities provide livelihoods of population and development of
the economic sectors of 11 regions of the Russian Federation.
Company’s activities are tied with responsibility both before the shareholders and before the
consumers, Company’s employees, before the state and suppliers.
While being aware of this responsibility and giving weight to a high level of the corporate
governance for successful conduct of the Company’s business and for the mutual understanding
achievement between all the persons interested in the Company’s activities, the Company assumes an
obligation to follow in its activities the principles outlined here and to use reasonable endeavors for their
observance by the Company in its day-to-day activities.
1 Corporate governance principles of OECD (Organization for Economic Cooperation and Development).
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3. PRINCIPLES AND STRUCTURE OF CORPORATE GOVERNANCE IN COMPANY
3.1. Definition and principles
The term corporate governance is used by the Company to refer to an aggregate of processes,
providing governance and control of its activities and including relations between the shareholders,
Board of Directors and executive bodies of the Company in favor of the shareholders. The Company
considers the corporate governance as means of efficiency increase of the Company’s activities, its
reputation consolidation and reduction of expenditures for attraction of capital by it.
This Code, in accordance with which the corporate governance is carried out in the Company, is
based on the Russian laws, Corporate Conduct Code recommended for use by FCSM by instruction
#421/r dd. 04.04.02 (hereinafter referred to as the “Code of FCSM”) and corporate governance
principles recognized in the international practice.
Corporate governance in the Company is based on the following principles:
- Accountability. Code stipulates the accountability of the Company’s Board of Directors to all the
shareholders according to the current laws, and is a manual for the Company’s Board of Directors in the
process of elaboration of the strategy and implementation of governance and control over activities of
the Company’s executive bodies.
- Justice. Company is obliged to protect the shareholders’ rights and provide equitable treatment to all
the shareholders. Board of Directors provides all the shareholders with a possibility of an efficient
protection receipt in case of their rights violation.
- Transparency. Company provides for the timely disclosure of authentic information on all the
essential facts touching upon its activities, including that on its financial standing, social and ecological
indicators, results of activities, structure of ownership and governance by the Company, and a free access
to such information of all the persons concerned.
- Responsibility. Company recognizes the rights of all the persons concerned, stipulated by the current
laws, and strives to cooperate with such persons for the purpose of own development and financial
stability provision.
3.2. Internal documents.
This Code represents a body of principles. Specific structures, procedures and practice of the
corporate governance are regulated by the Charter and Company’s internal documents, including:
- Regulation on the order of preparation and conduct of the General Shareholders’ Meeting;
- Regulation on the order of convocation and conduct of meetings of the Board of Directors;
- Regulation on the Internal Audit Commission;
- Regulation on the order of convocation and conduct of meetings of the Management Board;
- Regulation on the Strategy, Development, Investments, Reforming and Corporate Governance
Committee of the Board of Directors;
- Regulation on the Human Resources and Remuneration Committee;
- Regulation on the Reliability Committee;
- Regulation on the Audit Committee;
- Regulation on the Corporate Secretary;
- Regulation on branches;
- Regulation on the Information Policy;
- Regulation on the insider information.
The above stated internal documents of the Company are developed according to the laws, and
subject to the main provisions of the Corporate Conduct Code recommended for use by FCSM
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(Instruction # 421/r dd. 04.04.02) and are placed at the Company’s webpage on the Internet, at
http://www.tgk-4.ru
3.3. General structure of the corporate governance
System of the Company’s governance bodies includes:
- General Shareholders’ Meeting is the supreme governance body of the Company, via which the
shareholders implement their right to take part in governance by the Company;
- Board of Directors is a governance body, responsible for elaboration of the Company’s strategy,
general governance by its activities and control over the executive bodies’ activities. Company’s Board
of Directors can also establish committees under the Board of Directors.
- Committees under the Board of Directors are consultative and advisory bodies of the Company’s Board
of Directors, established for the preliminary consideration of the most important issues, related to the
Board of Directors’ competence.
- Management Board, Chairperson of the Management Board and Director General are governance
bodies governing the Company’s current activities and implementing the strategy determined by the
Company’s Board of Directors and Company’s shareholders;
- Internal Audit Commission is a body of control over the Company’s financial and economic activities,
accountable directly to the Company’s General Shareholders’ Meeting.
4. CORPORATE GOVERNANCE PRACTICE IMPLEMENTED IN COMPANY
Company believes that availability of a professional Board of Directors is an important element
of the efficient corporate governance. Board of Directors influences results of the Company’s work
through implementing the general strategic governance and control over the executive bodies’ work, in
favor of the Company and its shareholders. Company’s executive bodies, which are responsible for
governance of the Company’s current activities, also play an important role in the process of
governance. Efficient cooperation between these two bodies and distinct delimitation of their authorities
is one of the key factors in provision of a proper corporate governance practice.
4.1. Board of Directors.
4.1.1. Election, period and termination of authorities of the Board of Directors’
members.
Members of the Board of Directors are elected till the next annual Shareholders’ Meeting.
Company’s Board of Directors is elected by a cumulative voting.
Company doesn’t believe that introduction of the restrictions in relation to the fact how many
times members of the Board of Directors can be re-elected, shall satisfy the Company’s interests or
those of its shareholders. Members of the Board of Directors, who are well acquainted with the
Company’s activities, play an important role in proper governance provision.
Authorities of the Board of Directors are regulated by the Company’s Charter according to the
current laws and recommendations of the Code FCSM.
Number of members of the Board of Directors is determined in the Company’s Charter.
General Shareholders’ Meeting can terminate the powers of the whole Board of Directors only in
the aggregate.
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4.1.2. Independence. The law forbids positions overlapping of a sole executive body and of a
Chairperson of the Company’s Board of Directors. The Company believes that the Board of Directors
must be governed by a director 2 , who isn’t simultaneously the sole executive body and (or) a member
of the Company’s collegial executive body, since it makes it possible for the Board of Directors to
perform its functions more efficiently.
Membership of the Board of Directors provides the proper duties discharge on control
implementation and determination of a strategy and Company’s main development trends.
Membership of the Board of Directors has no more than 25% of the executive directors, being
simultaneously the Company’s employees.
To provide objectivity of the decisions taken and preserve the balance of interests of the different
shareholder groups, the Company strives to have at least 3 (three) independent directors in
membership of the Board of Directors. For this Code’s goals by the Company’s definition, those directors
are believed to be independent who meet the following requirements of independence:
- they are neither officers nor employees of the Company as of the election moment and during 3 years,
preceding the election;
- they are not officers of another business company, in which any officer of the Company is a member of
the Board of Directors’ Human Resources and Remuneration Committee;
- they are not spouses, parents, children, brothers and sisters of the Company’s officers;
- they are not the Company’s affiliated persons, except for a member of the Company’s Board of
Directors;
- they are not parties on the obligations with the issuer, according to the clauses of which they can
acquire the property (get money) the cost of which amounts to 10 and more percent of the stated
persons’ annual total income, except for a remuneration receipt for participation in the activities of the
Company’s Board of Directors;
- they are not representatives of the state and/or local government bodies, i.e. persons who must vote
on basis of written directives (instructions etc.) of authorized federal bodies of the state authority,
governmental authorities of the Russian Federation’s constituent entities or local government bodies.
4.1.3. Board of Directors’ structure and its Committees. For the preliminary consideration
of the most important issues, related to the Board of Directors’ competence, the following committees
of the Board of Directors are established in the Company:
-
Reliability Committee;
-
Audit Committee;
-
Human Resources and Remuneration Committee;
-
Strategy, Development, Investments, Reforming and Corporate Governance Committee of
the Board of Directors.
Activities of all the committees are regulated by local normative documents of the Company,
containing the provisions on membership, competence, work order of the committees, and on rights and
obligations of their members:
2
-
Regulation on the Reliability Committee;
-
Regulation on the Audit Committee;
-
Regulation on the Human Resources and Remuneration Committee;
-
Regulation on the Strategy, Development, Investments, Reforming and Corporate
Governance Committee of the Board of Directors;
Here and hereinafter referred to as: a member of the Company’s Board of Directors.
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4.1.4. Work order. Board of Directors holds meetings according to a schedule worked out at
the beginning of its authorities’ term; it provides its proper obligations fulfillment. Board of Directors
holds meetings according to the approved Action Plan of the Board of Directors, but at least once a
quarter. Where necessary, extraordinary meetings of the Board of Directors can be held.
Work order of the Board of Directors is regulated by the Regulation on the Board of Directors.
According to the approved Regulation on the Corporate Secretary, the Corporate Secretary of the Board
of Directors provides a timely receipt of the short, but comprehensive information by all the directors,
simultaneously with a notice on conduct of a meeting of the Board of Directors, but no later, than in
advance of 11 working days before each meeting conduct.
Board of Directors keeps minutes of its meetings. The minutes are signed by a Chairperson of
the Board and by a Corporate Secretary of the Board of Directors.
4.1.5. Remuneration. Remuneration of members of the Board of Directors corresponds to the
market conditions and is established by such a way, that attraction and participation of highly qualified
specialists in the Company’s work should be provided, to motivate them for honest and efficient
activities, according to the approved Regulation on Remunerations and Compensation Payout to the
Board of Directors’ Members.
Company discloses the information on remuneration of members of the Board of Directors
publicly.
Company doesn’t grant any loans to members of the Board of Directors 3 .
4.1.6. Duties of the Board of Directors’ members. Members of the Board of Directors act in
good faith and with due care in favor of the Company and all its shareholders. Each director strives to
take part in all the meetings of the Board of Directors.
Members of the Board of Directors are aware of their responsibility towards the shareholders
and believe their main objective is bona fide and competent duties discharge on governance by the
Company, which provides support and growth of its shares’ cost, and protection and a possibility of the
rights exercise by the shareholders, and are guided by the Charter and Regulation on the order of
convocation and conduct of meetings of the Company’s Board of Directors. Members of the Board of
Directors bear responsibility before the Company for losses, inflicted to the Company by their faulty
actions (omission). Thereby those members of the Board of Directors bear no responsibility, who have
voted against a decision, which brought about the losses infliction to the Company, or those who didn’t
take part in the voting.
Members of the Board of Directors provide formation and implementation of the Company’s
development strategy.
Board of Directors establishes and supports the necessary mechanisms of control of activities of
the Company’s Management Board, including monitoring and assessment of its results.
Board of Directors establishes the system of comprehensive and transparent criteria and
procedures of the members’ appointment, and substitution of the Company’s Management Board and
an efficient remuneration system of its members.
Members of the Board of Directors don’t divulge and don’t use the confidential information on
the Company to conduct personal business. Members of the Board of Directors are obliged to abstain
from actions which can result in a conflict initiation between their interests and the Company’s interests.
Should such a conflict be initiated, a member of the Board of Directors is obliged to report on it to other
members of the Board, and also to abstain from voting on the corresponding issues.
3
With an exception, if a member of the Board of Directors is simultaneously the sole executive body or constitutes the
membership of the collegial executive body.
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4.2. Management Board, Chairperson of Management Board and Director General
Company is aware of the fact that to govern the Company’s current activities, a sole executive
body represented by Director General is necessary. It also admits, that complex tasks in the governance
process are to be decided, and an individual approach is needed for their deciding rather a collective one.
In this connection the Company forms the Management Board headed by a Chairperson of the
Management Board.
4.2.1. Authorities. Director General and Management Board discharge governance of the
Company’s current activities in order to fulfill tasks and implement strategy of the Company.
4.2.2. Number of members of the Management Board. Director General presents
recommendations on the Management Board’s number of members, which is determined by the
Company’s Board of Directors. Management Board’s number of members can’t be composed of less than
three people.
4.2.3. Membership of the Management Board. Membership of the Management Board,
which includes competent and experienced persons, provides the efficient governance of the Company’s
current activities. Each member of the Management Board, including the Chairperson of the
Management Board, possesses experience, knowledge and qualification, which are necessary for the
proper duties discharge imposed on him/her.
4.2.4. Work order of the Management Board. Management Board holds regular meetings;
members of the Management Board receive the information in advance as to an agenda’s issues of the
meeting. Work order of the Management Board is regulated by a Provision on the Company’s
Management Board.
4.2.5. Election, authorities period and termination of the Director General and of the
Management Board. According to the Company’s Charter a Director General is elected by the
Company’s Board of Directors by the votes’ majority of its members, taking part in the meeting.
Candidacies recommendation for a position of the Company’s Director General for election by the Board
of Directors is made in an order, determined by an internal document, regulating the order of
convocation and conduct of meetings of the Company’s Board of Directors. According to the Charter the
Company’s Director General discharges the functions of the Chairperson of the Management Board.
Terms and conditions of the employment agreements (including as to the period of powers and amount
of the paid out remunerations and compensations), concluded with the Company’s Director General and
members of the Management Board, and change of the stated contracts, are approved by the
Company’s Board of Directors.
Members of the Company’s Management Board are elected by the Company’s Board of Directors
upon an offer of the Company’s Director General.
Board of Directors has a right to take a decision at any time on termination of the powers of the
Company’s Director General, members of the Company’s Management Board and on establishment of
new executive bodies. Termination of powers of the Director General and of members of the
Management Board is made by virtue of the grounds, established by RF laws and labor agreement,
concluded by each of them with the Company.
4.2.6.
Remuneration and work assessment. System of remuneration of the Director
General is determined by the Board of Directors. Remuneration is composed of permanent and variable
components, where the latter depends on fulfillment of a certain system of indicators (hereinafter
referred to as the “Indicators”) of the executive bodies’ work and is tied with their personal contribution
to provision of the Company’s long-term development, in favor of its shareholders.
Indicators are understood the system of financial and non-financial indicators, influencing the
quantitative or qualitative change of the results in relation to the Company’s strategic goal.
When defining the Indicators for the executive bodies, the Company’s Board of Directors
concentrates only on the most essential indicators, the secondary ones are got rid of, the number 8
of the
indicators is decreased in such a way that only “key indicators” remain. Number of the Indicators is
limited (for the practicability of their fulfillment and good quality of monitoring).
Objective of the system of Indicators consists in a transformation of the Company’s strategy into
the integrated set of indicators of its activities, which determines the basic parameters of the
measurement and governance system. A set of the indicators provides the grounding for the Company’s
strategy formation and includes the quantitative characteristics, in order to inform the executive bodies
about the main factors of success at the moment and in the future. While formulating the strategy, the
Company sets a goal and establishes conditions for its implementation.
4.2.7. Duties of the executive bodies. Director General and members of the Management
Board act in good faith and with due care in favor of the Company and all its shareholders.
Director General and members of the Management Board assume an obligation to abstain from
actions, which can result in a conflict initiation between their interests and the Company’s interests.
Should such a conflict be initiated, the Director General and members of the Management Board are
obliged to report on it to the Board of Directors, and also to abstain from discussing and voting on the
corresponding issues.
Company is aware of the fact, that experience, public relations, knowledge and qualification of
members of the Management Board, including those acquired by them during work in the Company, offer
opportunities for the commercial activities implementation (both private and collective – by way of
ownership of stakes, shares), not tied with the Company’s interests.
Together with this, members of the Management Board guarantee, that such activities
implementation:
- doesn’t interfere in any way with the functions discharge of a member of Company’s
Management Board;
- isn’t tied with use of the Company’s material and intellectual resources;
- won’t inflict any material loss to the Company;
- won’t inflict any damage to the Company’s business reputation;
- doesn’t provoke competition to the Company.
In case of non-fulfillment or creation of preconditions to non-fulfillment of at least one of the
stated above conditions, a member of the Management Board is obliged to cease carrying out of any
activities, tied with such non-fulfillment.
Aimed at non-admitting of would-be negative consequences for the Company, the members of
the Management Board disclose information to the Company on the commercial activities carrying out
by them, not tied with the Company’s interests, according to the order, established by the Company’s
local normative documents.
4.2.8. Cooperation of Board of Directors and executive bodies.
Efficient corporate governance demands an open dialogue between the Board of Directors and
executive bodies of the Company. For this purpose the Company’s Management Board presents reports
on activities of the Management Board to the Board of Directors, according to the Regulation on the
Management Board of JSC «TGC-4».
5. COMPANY’S SHAREHOLDERS
5.1. Shareholders’ rights and shareholders’ rights protection
Company’s shareholders possess a bundle of rights in relation to the Company, observance and
protection of which must be provided by the Company’s Board of Directors and Management Board.
Register of the Company’s shareholders is maintained by an independent registrar. Choice and
appointment of an independent registrar possessing all the necessary technical equipment and
unblemished reputation, makes it possible for the Company to provide reliable and efficient registration
of the proprietary rights for shares and other Company’s securities.
Shareholders have a right to receive regularly and timely the information on the Company’s
9
activities in a volume and in an order, conforming to the law requirements.
To observe and protect the stated right properly, the Company guarantees meeting of the
requirements established by the laws on the information disclosure.
Company discloses the financial reports according to the requirements of the Russian Federation
law, and according to the International Financial Reporting Standards (IFRS).
All the information disclosed by this or that way is placed obligatorily at the Company’s web page
on the Internet.
Shareholders, owners of the voting shares have a right to take part in the General Shareholders’
Meeting with a vote power regarding all the issues of its competence.
To observe and protect the stated right properly, the Company is obliged to organize conduct of
the General Shareholders’ Meeting by such a way, that the shareholders’ participation shouldn’t be tied
with big material expenses and span time for them, providing an equal treatment of all the
shareholders.
Company is obliged to present the information to the shareholders regarding an agenda’s issues
of the General Shareholders’ Meeting in a volume and within time, which make it possible for the
shareholders to take reasoned decisions.
In cases stipulated by the Law and by the Company’s Charter, the Board of Directors prepares
objective reasoned recommendations for the shareholders.
All the information, touching upon the General Shareholders’ Meeting, is disclosed obligatorily at
the Company’s web page on the Internet.
Shareholders have a right to receive a part of the Company’s net profit in form of dividends.
To observe and protect the stated right properly, the Company is obliged to pay out the declared
dividends within the terms established by the General Shareholders’ Meeting.
Shareholders’ rights are regulated by the Charter’s provisions and by the Company’s internal
documents.
5.2. General Shareholders’ Meeting
A Regulation on the General Shareholders’ Meeting is adopted in the Company, which describes
in detail the order of preparation, conduct and decisions taking by the General Shareholders’ Meeting.
5.2.1. Preparation to the meeting. Each shareholder has a right to take part in the General
Shareholders’ Meeting, to vote on its agenda’s issues, to receive in advance a notice on such a meeting
and its agenda, and also to receive authentic, objective and timely information, being sufficient for the
decisions taking on the agenda’s issues. Company’s executive bodies are responsible for this process
provision.
A fair and efficient order of the offers submission to the General Meeting’s agenda, including
offers on the candidates’ recommendation for members of the Board of Directors, is stipulated in the
Company. Agenda of the General Meeting can’t be changed after its approval by the Board of Directors.
10
5.2.2. Meeting conduct. Company takes all the necessary measures in order to provide the
shareholders’ participation in the General Meeting and voting on the agenda’s issues.
Place of conduct of the General Meeting is accessible for the shareholders. Registration order is
convenient for the participants and provides a quick and trouble-free access to the place of the meeting
conduct.
As far as possible, the Company provides a presence of members of the Board of Directors,
executive bodies, members of the Internal Audit Commission, Company’s auditor at the General
Shareholders’ Meeting and empowers them to answer the shareholders’ questions. Shareholders have
a right to speak concerning the agenda’s issues, to introduce the corresponding offers and ask
questions. Chairperson of the General Meeting provides its efficient work.
Voting is made using voting bulletins.
Order of the votes’ calculation at the General Meeting excludes a possibility of manipulation of
the vote results. Functions of a counting commission are discharged by Company’s independent
registrar.
5.2.3. Meeting results. Vote results and other necessary materials are presented to the
shareholders on the day of the General Meeting conduct or after its conduct, and are published timely at
the Company’s web page and in mass media.
5.3. Dividend policy
Dividend policy takes one of the key places, and the management team of JSC «TGC-4» is
focused on the Company’s revenues growth, assumes to implement transparent and forecasted
dividend policy, formed by the core owners of the business.
Dividend policy provides a balance of the shareholders’ interests and long-term prospects of the
Company’s development
Definition order of the dividends’ amount on the preferred shares doesn’t prejudice rights of the
ordinary shares’ owners. Company’s policy in relation to the dividends stipulates:
• establishment of transparent and comprehensive mechanism of dividends amount definition;
• provision of the order of the dividends payout, which is the most convenient one for shareholders;
• measures, excluding incomplete or untimely payout of the declared dividends.
6. INFORMATION DISCLOSURE AND TRANSPARENCY
6.1. Policy and practice of information disclosure
Policy of the information disclosure on the Company, implemented by the Company is aimed
mainly at providing of a maximally high degree of the shareholders’ trust, that of would be investors,
counterparts and other concerned parties in relation to the Company, by way of the information
presentation to the stated persons on itself, on its activities and on securities in a volume, being
sufficient for the reasoned and balanced decisions taking by the stated persons in relation to the
Company and its securities.
While disclosing the information on itself, the Company doesn’t confine itself to the information,
disclosure of which is stipulated by the normative legal acts of RF and discloses additionally other
information, which provides a high degree of the Company’s transparency and promotes achievement of
the goals of the information disclosure policy implemented by the Company.
List of the information disclosed by the Company, order and terms of the information disclosure
are determined by the Regulation on Information Policy of JSC “TGC-4” approved by the Company’s
Board of Directors.
When disclosing information, the Company is guided by the following principles:
11
Principle of completeness and authenticity of information disclosed, according to which
the Company presents the information to all concerned parties, which corresponds to the facts, thereby
without deviating from the negative information disclosure on itself, in a volume which makes it possible
to form the fullest idea on the Company, on results of the Company’s activities;
Principle of information accessibility, according to which the Company, while disclosing the
information, uses dissemination channels on its activities, providing a free and non-burdensome access
of the shareholders, creditors, would-be investors and other concerned parties to the information
disclosed;
Principle of information equilibrium, which means that the Company’s information policy is
based on a reasoned balance of the Company’s transparency for all the concerned parties on the one
hand, and on confidentiality on the other hand, in order to implement the shareholders’ rights for the
information receipt on the Company’s activities to the fullest extent, provided that the information
which is referred to confidential or insider one is protected;
Principle of regularity and timeliness of information disclosure, which determines that
the Company presents the information on its activities to the shareholders, creditors, would-be
investors and other concerned parties within the terms, based on normative legal acts of the Russian
Federation and the Company’s internal documents.
Information disclosed by the Company is published at the Company’s web page. Company’s web
page has an English-language version.
Responsibility for the information disclosure is borne by the Company’s executive bodies.
Members of the Board of Directors disclose to the Company the information on themselves, being
necessary for the information disclosure by the Company according to the normative legal acts of the
Russian Federation and the Regulation on the Company’s Information Policy.
6.2. Financial reports
Company maintains accounts and prepares the financial reports according to the Russian
Accounting Standards and financial accountability standards. Company prepares the summary
(consolidated) reports using International Financial Reporting Standard (IFRS) and publishes such
reports at the Company’s web page.
Financial reports are accompanied with detailed notes, which make it possible for an addressee of
such reports to interpret correctly the data on the financial results of the Company’s activities. Financial
information is supplemented with comments and analytic assessments of the Company’s management,
and with findings of the Company’s auditor and Internal Audit Commission.
6.3. Control of financial and economic activities
Being aware of a necessity in reduction of a probability of events occurrence, influencing
negatively on the goals achievement set by the Company and human errors, conscious deviation from
control bringing about losses, including on the ground of the decisions taking on basis of misjudgments,
and admitting a high degree of the shareholders’ need in protection of their capital investments and
preservation of the Company’s assets, the Company establishes a system of control of the financial and
economic activities.
Internal control of the financial and economic activities is focused on the following goals
achievement:
- provision of completeness and authenticity of the financial, accounting, statistic managerial and other
reports;
- provision of observance of the normative legal acts of the Russian Federation, decisions of the
Company’s governance bodies and the Company’s internal documents;
- provision of preservation of the Company’s assets;
- provision of fulfillment of the goals set by the Company, by the most efficient way;
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- provision of the efficient and economic use of the Company’s resources;
- provision of the timely detection and analysis of the financial and operating risks, which can have an
essential negative impact on achievement of the Company goals tied with the financial and economic
activities.
System of control of the Company’s financial and economic activities includes the procedures of
control determined by the normative legal acts of the Russian Federation, decisions of the General
Shareholders’ Meeting and of the Company’s Board of Directors, and totality of the Company’s bodies
(department, persons) implementing the internal control – Internal Audit Commission, Board of
Directors (directly and via the Audit Committee), and also a separate structural division (totality of
divisions) authorized to implement such control.
Functions, rights and obligations, responsibility of the departments functioning in the Company
are stipulated by the Company’s organizational and administrative documents.
To provide the system character of control of the Company’s financial and economic activities,
carrying out of the internal control procedures is made by the Company’s authorized division, which is
responsible for internal control, in cooperation with other bodies and departments of the Company.
Specific procedures, and bodies and persons, being responsible for implementation of the internal
control procedures are determined by the Regulation on the Internal Control Procedures of the
Company approved by the Company’s Board of Directors.
6.4. Ownership structure
Company provides the information disclosure on the actual owners of five and more percent of the
Company’s voting shares. Corporate relations in the group of companies are also described in the
information disclosed by the Company. Company strives to provide transparency of structure of the
Company’s stockholder capital.
7. COOPERATION WITH SUBSIDIARY AND DEPENDENT BUSINESS COMPANIES
7.1. Principles and practice of cooperation with subsidiaries and dependent business
companies
Company strives to the balanced development, based on the efficient mechanisms of the
corporate governance.
Company cooperates with the subsidiaries and dependent business companies (SDBCS)
according to the Russian Federation law requirements, Charter and Company’s internal documents,
Charters of the subsidiaries and dependent business companies.
Main goals of the Company’s cooperation with SDBCs are as follows:
- provision of stable financial development, profitability of functioning, investment appeal increase
of the Company and of SDBCs;
- provision of protection of the rights and interests of the Company’s and SDBCs’ shareholders
protected by the law;
- relations harmonization between shareholders, officers and members of the Company’s and
SDBCs’ labour collectives, non-admission of the conflicts initiation between them and inside the stated
groups;
- development and implementation of the coordinated and efficient investment policy of the
Company and of SDBCs.
Order of cooperation of JSC «TGC-4» with business companies, the shares (stakes) of which are
owned by JSC «TGC-4» (hereinafter referred to as the “Order”) is a document fastening the underlying
principles and provisions of the corporate governance of the Company’s SDBCs. According to the stated
order, the Company’s cooperation with SDBCs is performed provided that the corresponding decisions
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(decisions of the General Shareholders’ Meetings’, of the Boards of Directors, Internal Audit
Commission, Management Boards and Sole Executive Bodies within the framework of their
competence) are taken by the governance and control bodies of SDBCs.
Besides the stated Order, the corporate governance process of SDBCs is regulated by the following
documents:
- Charter of the Company;
- Company’s Corporate Governance Code;
- Charters of the Company’s SDBCs;
- Standard of the Activities of the Company’s Representatives in SDBCS’ governance bodies;
- Standard of Formation of SDBCS’ Governance and Control Bodies.
So far as the corporate governance practice is developed, the Company shall strive to develop the
corporate governance principles in relation to the subsidiaries and dependent business companies.
8. Final provisions
This Code comes into effect after its approval by the Company’s Board of Directors.
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