Corporate management (стр. 3 )

Information about positions held by members of the Management Board is given as at 31 December 2011.

With the exception of Inver Yusufovich Natkho no member of the Management Board owns shares in the Company and/or its subsidiaries and affiliates. Inver Yusufovich Natkho at 31 Dedember 2011 owned 20 ordinary shares (0.00002% of equity capital) in Kubanenergo.

Remuneration of members of the Management Board In accordance with the Statement on the Management Board confirmed by decision of the annual general shareholders meeting of Kubanenergo (Protocol of 06.06.2008 №23) supplementary agreements to employment contracts have been concluded with members of the Management Board.

Remuneration to members of the Management Board at the current time is paid monthly in the amount equivalent to the minimal monthly tariff rate for a first class worker set by the sectoral tariff agreement in the electrical energy sector of the Russian Federation for , taking into account differentiation between the status of members of the Management Board (Chairman of the Management Board, Deputy Chairman and members of the Management Board).

The total remuneration paid to members of the Management Board for 2011 was 16 311 000 rubles. The Company owes no money with regard to remuneration of members of the Management Board.

Corporate secretary

To properly comply with the order of preparing for and holder general shareholders meetings, organisation of the activities of the Board of Directors, and to also facilitate effective dialogue between the main participants in the corporate management system in Kubanenergo there is stipulated the post of Corporate Secretary, who is elected by the Board of Directors.

The main functions, order of appointment and termination of authority, rights and duties of the Corporate Secretary of the Company are set out in the Statement on the Corporate Secretary approved by the Board of Directors[11].

Information about the Corporate Secretariat

Name	Year of birth, citizenship	Main place of work and position held	Education	Dates of service as Corporate Secretary at Kubanenergo
Andrei Anatolevich Kantsurov	1974, citizen of the Russian Federation	Deputy Head of Corporate Management Department, Head of Section for Corporate Management and Restructuring at MRSK Yuga	tertiary law	2007 to 20.07.2011
Olga Vladimirovna Russu	1967, citizen of the Russian Federation	Senior Specialist, Department for Corporate Management and Investor Relations, Kubanenergo	tertiary economics law	since 20.07.2011

Auditing commission

The Auditing Commission is a permanent organ of internal control in Kubanenergo, carrying out regular supervision of the financial and operation activities of the Company to ensure compliance with legislation in the Russian Federation, the Charter and internal Company documents.

The Auditing Commission acts in the interests of Company shareholders and is accountable to the general shareholders meeting in its work. When carrying out its functions it is independent of postholders, management bodies and managers of structural subdivisions of the executive apparatus of the Company.

In its work the Auditing Commission is governed by legislation in the Russian Federation, the Charter of Kubanenergo and the Statement on the Auditing Commission [12].

Results of the work of the Auditing Commission In 2011 the Auditing Commission of Kubanenergo carried out supervision by holding planned and unplanned checks on financial and operating activities.

In 2011 four meetings of the Auditing Commission were held, at which the following questions were considered [13]:

–  carrying out the revision inspection of the financial and operating activities of Kubanenergo for 2010;

–  approving the conclusions and act of the Auditing Commission on the results of the inspection of the financial and operating activities of Kubanenergo for 2010;

–  carrying out monitoring work to analyse construction and operation of fibre optic power lines at Kubanenergo for and engaging specialists (experts) to carry out the monitoring work;

–  electing a Chairman and Secretary to the Auditing Commission;

–  approving the act of the Auditing Commission on the results of carrying out monitoring work to analyse construction and operation of fibre optic power lines at Kubanenergo;

–  carrying out monitoring work at Kubanenergo on realisation of projects in the targeted Federal Programme for Construction of Olympic facilities and Development of the City of Sochi as a Mountain Resort and engaging experts (specialists) to carry out the monitoring work;

–  approving the act of the Auditing Commission on the results of carrying out monitoring work of execution of the targeted Federal Programme for Construction of Olympic facilities and Development of the City of Sochi as a Mountain Resort.

An act (conclusions) was drawn up regarding the results of each of the monitoring works containing recommendations on improving the control environment and eliminating infringements. The acts and instructions of the Auditing Commission were sent to the Society for Development of Work on Eliminating Infringements and Execution of Instructions and Recommendations.

Membership of the Auditing Commission

Current membership of the Auditing Commission elected at the annual general shareholders meeting of Kubanenergo held on 14 June 2011.

1	Izumrud Aligadzhiyevna Alimuradova, 1971 Chair of the Auditing Commission Head of the Department for Internal Auditing and Risk Management at MRSK Holding Education: Dagestan Lenin State University, PhD in Economics
2	Vladimir Nikolayevich Arkhipov, 1956 Head of the Department for Safety at MRSK Holding Education: Novosibirsk Electronic Institute of Communications
3	Lyudmila Dmitriyevna Kormushkina, 1956 Head of Department for Internal Auditing, Revision Inspections and Appraisals of the Department for Internal Auditing and Risk Management at MRSK Holding Education: Dalnevostochnaya State Academy of Economics and Management
4	Aleksandr Valentinovich Krotov, 1959 Deputy Head of the Audit Department at Rosneft Education: Yaroslav Higher Military Financial College, Moscow Institute of Finance
5	Irina Andreyevna Chentsova, 1985 Until September 2011 was consultant to the Administration of the Federal Property Management Agency Education: Russian Tsiolkovskii State University.

Membership of the Auditing Commission

elected at the annual general shareholders meeting of 30 June 2010, authority terminated 14 June 2011.

1. Izumrud Aligadzhiyevna Alimuradova, Chair of the Auditing Commission, Head of the Department for Internal Auditing and Risk Management at MRSK Holding

2. Vladimir Nikolayevich Arkhipov, Head of the Department for Safety at MRSK Holding

3. Evgenii Sergeevich, Senior Specialist Expert of the Analysis and Activity Indicator Monitoring Section of the Administration of the Federal Property Management Agency

4. Lyudmila Dmitriyevna Kormushkina, Head of Department for Internal Auditing, Revision Inspections and Appraisals of the Department for Internal Auditing and Risk Management at MRSK Holding

5. Aleksandr Valentinovich Krotov, Deputy Head of the Audit Department at Rosneft

Information about positions held by members of the Auditing Commission: current membership of the Auditing Commission - at 21 December 2011; previous members of the Auditing Commission - at the time of election.

Remuneration of members of the Auditing Commission In accordance with the Statement at Kubanenergo on remuneration and compensation payments to the Auditing Commission remuneration to members of the Auditing Commission at the current time are set at twenty times the amount of the minimum monthly tariff rate for a first class worker set by the sectoral tariff agreement in the electrical energy sector of the Russian Federation. In addition remuneration is made for expenses related to taking part in meetings of the the Auditing Commission and carrying out inspections, in accordance with the Company’s norms for reimbursing business trip expenses in force at the time of the meeting or inspection.

The total remuneration paid to members of the Auditing Commission for 2011 was rubles. The Company owes no money with regard to remuneration of members of the Auditing Commission.

Interaction with subsidiaries and affiliates

At the current time Kubanenergo is a participant in three subsidiary open joint stock companies with a share in their equity capital of 100%:

Main aims in interaction between the Company and subsidiaries and affiliates

·  To ensure stable financial development and profitability of сбалансированности ·  To protect the rights and legally protected interests of shareholders in the Company and the subsidiaries and affiliates ·  To improve the investment attractiveness of the Company and the subsidiaries and affiliates by providing the investment community with full, timely and veracious information on the activities of subsidiaries and affiliates, as well as by harmony and predictability of corporate policy as a whole ·  Developing and carrying out a coordinated and effective investment policy for

·  Energetik holiday hotel, providing holiday and health improvement services for children and adults, mostly for Company employees and members of their families, as well as holding seminars, conferences, education and training courses and sports competitions.

·  Energoservis Kubani, carrying out technical testing and instrumental inspection of energy production facilities (mostly for the Company) and energy audits, as well as work within energy service contracts.

·  Plamya health complex, created to provide holidays and health improvement services for children, in the most post for children of Company employees, as well as holding seminars, conferences, education and training courses and sports competitions.

Interaction between the Company and subsidiaries is carried out in accordance with the requirements of legislation in the Russian Federation and internal documents at Kubanenergo and its subsidiaries, I ncluding the Order of interaction between Kubanenergo and companies in which the Company owns shares approved in 2009 by the Board of Directors[14].

Management and monitoring of the activities of the subsidiaries is carried out by the Company using the following corporate management mechanisms:

·  in accordance with the Charter of Kubanenergo the function of general shareholders meetings of 100% subsidiary companies is carried out by the Management Board of the Company;

·  general management of the activities of subsidiaries is carried out their Boards of Directors, the majority of whose members are representatives of Kubanenergo;

·  regular inspection of financial and operating activities of subsidiaries is carried out by their auditing commissions, whose membership is representatives of Kubanenergo.

Operational management of each subsidiary is carried out by a single executive body, the General Director. Collegiate executive bodies (Management Boards) are not applicable.

For the Company to monitor and control the current activities of subsidiaries planned net profit targets and current liquidity ratios are set for them in accordance with which the business plans of the companies are approved. Reports from the General Director of the Company for Managing Subsidiaries and Affiliates are examined quarterly by the Board of Directors of Kubanenergo.

Information on managing bodies of subsidiaries and affiliates

Abbreviated name of subsidiary or affiliate	Members of current Boards of Directors of Subsidiaries and Affiliates Name, position, main place of work, year of birth	Single executive body of subsidiary or affiliate Name, main place of work, position, year of birth
Energetik	Svetlana Stanislavovna Samoilenko, Chair of the Board of Directors, Deputy General Director, Secretary General, Kubanenergo, 1963	LA Kreizman, General Director, Energetik, 1968
AA Shvetsov, Deputy General Director for Safety, Kubanenergo, 1955
VA Belik, Head of Department for Personnel Management and Project Organisation, Kubanenergo, 1978
KM Kurishkin, Senior Expert of the Department of Corporate Management and Investor Relations, MRSK Holding, 1980
LA Kreizman, General Director, Energetik, 1968
Plamya	Svetlana Stanislavovna Samoilenko, Chair of the Board of Directors, Deputy General Director, Secretary General, Kubanenergo, 1963	LA Kreizman, General Director, Energetik, 1968
AA Shvetsov, Deputy General Director for Safety, Kubanenergo, 1955
VA Belik, Head of Department for Personnel Management and Project Organisation, Kubanenergo, 1978
MA Storchai, Senior Expert in the Department of Standard and Methodology of the Department of Corporate Management and Investor Relations, 1982
LA Kreizman, General Director, Energetik, 1968
Energoservis Kubani	Andrei Vladimirovich Lyashko, Chair of the Board of Directors, Deputy General Director for Development and Realising Services, Kubanenergo, 1978	SL Ovchenkov, General Director, Energoservis Kubani, 1964
Vitalii Aleksandrovich Kocherga, Deputy General Director for Corporate Management Kubanenergo, 1977
Sergei Vladimirovich Anatskii, Deputy, General Director for Capital Construction, Kubanenergo, 1965
AN Galyaev, Deputy General Director for Capital for Economics and Finance Kubanenergo, 1972
Pavel Vasilevich Zinchenko, – Deputy General Director for Technical Questions, Head Engineer, Kubanenergo, 1963
KS Konevets, Head of Legal Department, Kubanenergo, 1983
AS Bulavintsev, Head of Department for Organisation of Electricity Metering of the Department of Transport, Electricity and Energy Saving, MRSK Holding,1976

Detailed information about all subsidiaries and affiliates can be found on the Kubanenergo website in the section titled Subsidiaries. More information on the results of the business and financial performance of affiliates and subsidiaries is presented in the annual report in Results of the Company’s activities/Financial results/Financial analysis/Financial and economic performance indicators for affiliates and subsidiaries. Information on the equity capital of affiliates and subsidiaries and other information is presented in the annual report in Appendix 6, Kubanenergo participation in other organisations.

5.1.10. Information policy and exterior lines of communication

Main principles of disclosure of information at Kubanenergo

·  Regularity and effectiveness ·  Accessibility of information ·  Fullness and accuracy of information disclosed ·  Observing a sensible balance between the openness of the Company and its commercial interests

The information policy at Kubanenergo is aimed at the fullest satisfaction of the requirements of shareholders, investor and other interested parties in accurate information about the Company and its activities, as well as providing free and easy access to this information.

The aims, principles, basic forms and order of disclosure of information by the Company are set in the Statement on information policy at Kubanenergo approved by the Board of Directors[15].

Disclosure of information on the Company’s activities is carried out in the main by placing it on the corporate website at www. *****, in the news feed of the authorised information agency Interfax, publication in printed and electronic media, and by phone conferencing, briefings and meetings with shareholders and other interested.

Investor relations In 2011 a position was created in the Department of Corporate Management and Investor Relations for a person to be responsible for executing the functions of interaction with investors. The aim was to organise meaningful interaction with investors and financial analysts. One of the key tasks for the Investor Relations officer in the first year was to provide potential investors with good quality information on the activities of the Company and to get feedback from them. Constant communication with investment communities showed that in 2011 the main interest of investors was shown in the results of Kubanenergo’s operational activities and intermediate results of introducing a new method for regulating tariffs on electricity transmission services (Regulatory Asset Base), which provides return on investment capital and guarantees an income from invested resources. The Company provided full answers and commentaries to all questions from investors and analysts.

For the convenience of potential investors and analysts a special Investor Centre (For shareholders and investors/Investor Centre) has been set up on the Kubanenergo website. This site already hosts the Investor Relations calendar and announcements of key events for investors, quarterly information bulletins about the Company, and presentations from management about the results of activities.

Public relations, communication with organs of state power and congress exhibition work

Providing reliable and stable electricity supply in Krasnodar Region and the Republic of Adigeya with a total population of more than five and a half million, Kubanenergo plays an important role in the social and economic development of this region in Russia. For this reason constant dialogue with interested parties and providing them with information about what is taking place in the activities of the Company is an essential part of our daily work.

Public relations

During 2011 Kubanenergo carried out large scale work on comprehensive strengthening and development of interaction with organs of state power, the mass media, the scientific community, veterans’ and youth associations and non-government organisations.

In the accounting year large scale coverage was organised and executed in external open information sources on a range of targeted communications programmes whose execution significantly strengthened the image of Kubanenergo as a socially responsible company.

In 2011 Kubanenergo organised within the area of responsibility of the Company a targeted communications programme for MRSK Holding, The Electricity Network Distribution Sector - Working to Protect the Environment. More than 500 Company employees took part in tree planting events which took place in all 11 Kubananergo branches and the executive apparatus of the Company. Employees led by General Director Georgii Sultanov planted thirty red oaks in the Kosenko Botanical Gardens in Krasnodar to create an Electrical Power Engineers’ Alley.

As part of the public relations programme on measures to prevent accidents with electricity among outsiders on electricity distribution facilities, in 2011 Kubanenergo gave lessons on electrical safety in schools within the Company’s area of responsibility. This made it possible to significantly lower the risk of injury or death of children out of ignorance of elementary safety rules on behaviour around electricity facilities or when there is a risk of electric shock. During this programme it was possible to achieve a significant reduction in expenditure by distributing materials in electronic form.

In May and June 2011 Kubanenergo took part in the events of the Victory Day Relay Race, which began in Moscow at the Central Museum of the Armed Forces of the Russian Federation by holding a reception for Chairpersons of Veterans’ Unions at branches, members of the Coordinated Union of Veterans and the Unified Youth Union of MRSK Holding in honour of the 66th anniversary of Victory. The events took place on 22 June on the day of the 70th anniversary of the beginning of the Great Patriotic War.

Electric power engineers in the Kuban and Adigeya carried out events in honour of the legendary Victory Banner in all 54 electricity network district falling Kubanenergo’s area of responsibility. In total more than a thousand residents of the Kuban and Adigeya took part in these events.

Interaction with organs of power

During 2011 Kubanenergo worked actively in organising interaction with organs of state power. The events held in this area made it possible to establish and support construction interaction between Kubanenergo and organs of power at all levels and to improve awareness of the Company’s activities among the managers of these organs.

In the accounting year information was regularly provided at working meetings and operational meetings between the management of Kubanenergo and its branches and managers of organs of power, as well as coverage in the media of progress in executing joint decisions taken at these events. Invitations were issued and information provided to managers of organs of power on taking part in celebrations for the 90th anniversary of Krasnodar Electricity Networks (December 2011).

In addition, in the accounting year representatives from organs of power took an active part in events at Kubanenergo carried out withing the framework of the Preserve the Energy of the Forest and Victory Day Relay Race communications programmes at MRSK Holding.

Work with mass media

In total over 2articles about the activities of Kubanenergo were published in the media, which was four times more than for 2010. Of these publications 2224 were about the Company’s production activities and 341 about social activities. 2250 articles were positive, 231 neutral, and 84 negative.

Distribution of positive, neutral and negative articles about Kubanenergo in the media in 2011

Positive articles 88%

Neutral articles 9%

Negative articles 3%

The Company’s expenditure on paid for publications not related to obligatory disclosure of information decreased in comparison with the previous year by 5.6 times and totalled 463 000 rubles in 2011 (2 893 000 rubles in 2010).

In 2011 work was carried out to improve and expand the content of the Kubanenergo website. Its structure was optimised, a system for placing banners on the home page was added, the design was modernised and navigation elements were added, which significantly simplified the search function and made it easier and more intuitively understandable for visitors to the site.

Congress exhibition activities

Organising and providing information on participation by our Company in congress exhibition events is one the most important instruments in strengthening its image position and investment attractiveness in the external environment.

During 2011 Kubanenergo was represented at the following congress exhibition events:

·  Electricity Networks in Russia 2011 international specialised exhibition;

·  Х Anniversary International Investment Forum Sochi 2011;

·  Electricity Networks in Russia 2011 international specialised exhibition, which took place in Moscow with the support of the Ministry of Energy of the Russian Fededration and MRSK Holding. The Kubanenergo delegation included our specialists whose work is related to innovative development as well maintenance and operation of electricity network infrastructure in Krasnodar Region and The Republic of Adigeya included in the zone of responsibility of the Company. The most anticipated event for Company employees was participation in the Innovation Potential of the Russian Electricity Distribution Network Sector business forum, during which electricity engineers discussed pressing questions for the sector on renovation and improving efficiency in using existing equipment and modernising emergency response systems following natural disasters. One of the leading topics was the programme for innovative development of distribution network companies making up MRSK Holding;

·  The Electric and Power Infrastructure Sochi (EPIS 2011) international specialised exhibition of the infrastructure of electricity supply in the South of Russia. During the three days of the exhibition representatives of Kubanenergo gave presentations of the Company’s main activities, and described the long term development of the electricity network sector in its area of responsibility in Krasnodar Region and the Republic of Adigeya. Other aims for use in taking part in the exhibition were to learn about new developments presented by manufacturers, establishing contacts with potential business partners and exchanging experience.

[1] Internal documents mentioned here and other internal documents on corporate management at Kubanenergo can be found at www. ***** in About the company/Constituent and in house documents

[2] The Statement on the order of preparing and holding general shareholders meetings at Kubanenergo can be found at www. ***** – in About the company/Constituent and in house documents.

[3] Protocols of general shareholders meetings at Kubanenergo can be found at www. ***** – in About the company/Management/Shareholders general meeting.

[4] The Statement on the order of convening and holding meetings of the Board of Directors of Kubanenergo can be found at www. ***** in About the company - Constituent and in house documents.

[5] Agreement on disclosure of personal information shown in Corporate Management was given by all persons who are or have been members of management and control bodies at Kubanenergo.

[6] Protocols of meetings of the Board of Directors can be found at www. ***** – in About the company/Management/Board of Directors «О компании / Органы управления / Совет директоров»

[7] The Statement on the Committees of the Board of Directors can be found at www. ***** – in About the company/Constituent and in house documents.

[8] Protocols of meetings of the Committees of the Board of Directors can be found at www. ***** – in About the company/Management/Board of Directors/Commissions under the Board of Directors.

[9] Detailed biographical information on the General Director is contained in the information about the current membership of the Management Board.

[10] The Statement on the Management Board at Kubanenergo can be found at www. ***** – in About the company/Constituent and in house documents.

[11] The Statement on the Corporate Secretary of Kubanenergo can be found at www. ***** – in About the company/Constituent and in house documents.

[12] The Statement on the Auditing Commission of Kubanenergo can be found at www. ***** – in About the company/Constituent and in house documents.

[13] Protocols of meetings of the Auditing Commission can be found at www. ***** – in About the company/Activities control system/Auditing Commission.

[14] The order of interaction by Kubanenergo with businesses in which the Company owns shares (stocks) can be found at www. ***** – in About the company/Constituent and in house documents.

[15] The Statement on information policy at Kubanenergo can be found at www. ***** in About the company/Constituent and in house documents.