Corporative Governance

Introduction of corporate governance standards helps expand the range of potential investors and impacts on the capitalisation of the companies making up JSC RusHydro. At the same time, organisation of an efficient system of interaction between shareholders and managers creates the preconditions for successful implementation of the reform strategy.

The fundamental principles behind the system of corporate governance of subsidiary and dependent companies of JSC RusHydro are based on the unified corporate standards of JSC RAO UES of Russia:

·                     Consideration of the interests and observance of the rights of SDC shareholders while carrying out corporate measures, including on matters associated with SDC reform;

·                     Fulfilment of measures designed to increase SDC capitalisation and maintain SDC share liquidity;

·                     Bringing the corporate governance system into line with the latest standards of Russian and foreign companies;

·                     Control on the part of the Board of Directors of JSC RusHydro over the procedure for SDC asset management.

In accordance with the Articles of Association of the Company, the Board of Directors of JSC RusHydro should determine the Company’s position on a number of issues connected with the activities of subsidiaries and dependent companies. These include issues concerning the convening of General Meetings of Shareholders of SDCs, reorganisation and liquidation of SDCs, increase in the authorised equity capital, approval of major transactions, participation in other organisations and performance of transactions with the core property of SDCs.

For the purpose of regulating actions in this sphere, on 10 October, 2005, the Board of Directors of the Company approved the Procedure for interaction between JSC RusHydro and business companies in which it holds shares (an ownership interest).

Procedure for interaction between JSC RusHydro and entities with RusHydro participation