Chapter 4

Corporate governance

4.1 Corporate governance system

4.1.1 Corporate governance structure

The highest governance body in the Company is the General Meeting of Shareholders, which annually elects the Board of Directors, the Audit Commission and the auditor. The Board of Directors forms the Committees of the Board of Directors and the Management Board, appoints the Chairman of the Management Board – CEO, the Corporate Secretary and approves the appointment of the Head of the Internal Audit Service. In 2016, there were no significant changes in the Corporate Governance System.

4.1.2 Compliance with the principles of the Corporate Governance Code

The key document determining corporate governance in the Company is the Corporate Governance Code of the Company. The Corporate Governance Code was approved by the Board of Directors of the Company on June 19, 2015. By the decision of the Board of Directors of June 23, 2016 a number of amendments were made to the Code. In 2016, the Company introduced the provisions of the Code by bringing internal documents in line with it, as well as applying the provisions in daily practice.

Compliance with the principles of the Corporate Governance Code*

Status of the implementation of the Code provisions and principlesPrinciples, the Company that are fully observedPrinciples, the Company that are partially observedPrinciples, the Company that are not observedNot applicableIn total
Shareholder rights and equality of shareholders in the exercise of their rights910321113
Board of Directors122017127436
Corporate Secretary222
System of remuneration of members of the Board of Directors, executive bodies and other key management employees of the Company3106110
Risk management and internal control system55116
Information Disclosure on the Company, the Company’s information policy13647
Significant Corporate Actions44115

4.1.3 Subsidiaries management

PJSC RusHydro participates in the authorized capitals of companies engaged in design, construction, maintenance and repair, technical re-equipment and reconstruction of power facilities, and production and sale of electricity.

The interaction between the Company and its subsidiaries is aimed at implementing the Company strategy, ensuring stable economic development and investment attractiveness, protecting the rights and interests of shareholders, both the Company itself and the subsidiaries.

The subsidiary companies are managed through their representatives by the General Meetings of Shareholders, the boards of directors and in the control bodies of subsidiaries in accordance with the Articles of Association and the Regulations governing the operations of the representatives of PJSC RusHydro in the management bodies of the companies it participates in.

The adoption of decisions on the management of subsidiaries, whose authorized capital fully belongs to the Company, is within the competence of the Board of Directors. Determination of the Company’s position on strategic issues related to the activities of its subsidiaries (reorganization, liquidation, change of the authorized capital, approval of major transactions, participation in other organizations, etc.) is within the competence of the Board of Directors.

In 2016, the Company purchased shares of RAO ES EAST, PJSC, the largest holding company of the Company, from minority shareholders on the basis of a public offer. In 2017, PJSC RusHydro will manage the operations of RAO ES EAST, PJSC as well as thouse of its controlled companies.