Minutes of 01.06.2018 №271

MINUTES No. 271

OF THE MEETING OF THE BOARD OF DIRECTORS


Date and time of the meeting of the Board of Directors (date and time of the vote count):

May 31, 2018, 6:00 p.m.

(Moscow time)

Date the minutes were drafted:

June 1, 2018

Form of the meeting:

Absentee voting

Place of the vote count:

7 Malaya Dmitrovka St., Moscow

Number of elected members of the Board of Directors:

13

Members of the Board of Directors who took part in voting:

A. D. Avetisyan

M. S. Bystrov

P. S. Grachev

S. N. Ivanov

V. M. Kravchenko

V. V. Pivovarov

N. D. Rogalev

A. O. Chekunkov

S. V. Shishin

A. N. Shishkin

N. G. Shulginov

In accordance with the Federal Law "On Joint-Stock Companies" and the Company's Articles of Association, the quorum for the meeting of the Board of Directors is present.


MEETING AGENDA:


1. On declaring candidates to the Company's Board of Directors (members of the Company's Board of Directors) independent.

2. On approval of the Report on the implementation of the Action Plan for the sale of noncore assets of the Company for Q1 2018.

3. On the performance of transactions by JSC RusHydro related to the gratuitous transfer of the Company's property to a third party.

4. On priority areas of RusHydro's activities.

5. On determining the position of RusHydro (the delegates of the Company) on the agenda items of meetings of the Boards of Directors and general meetings of shareholders of subsidiaries.

6. On the review of the results of the assessment of the Company’s corporate governance practices.


RESULTS OF VOTING ON THE AGENDA ITEMS:


Item 1: On declaring candidates to the Company's Board of Directors (members of the Company's Board of Directors) independent.


It is resolved:

As per the recommendations of the HR and Remunerations (Nominations) Committee under the Company's Board of Directors adopted on May 18, 2018 (Minutes No. 74 dated May 18, 2018):

1. To take note of the information on the results of evaluation of the compliance of member of the Board of Directors (candidate nominated for election to the Company Board of Directors at the annual General Meeting of Shareholders in 2018) Maksim Sergeyevich Bystrov with the independence criteria provided for in Annex 4.1 to the Listing Rules of the Moscow Exchange.

There is no connection between Maksim Bystrov and the Company, a significant shareholder, competitors, the state, or a municipal entity.

Maksim Bystrov meets the formal criteria of connection with the Company's significant counterparties—JSC ATS, JSC SO UES, JSC FSC[1], and ANO Market Council Training Center[2] —as the amount of obligations between the Company and each of the said counterparties performed during the last year exceeds 2% of the book value of assets and 2% of the revenue of each counterparty.

To note that the connection between Maksim Bystrov and significant counterparties of the Company—JSC ATS, JSC SO UES, JSC FSC, and ANO Market Council Training Center—is formal in nature and does not affect Mr. Bystrov’s ability to act, as a member of the Board of Directors, in the interests of the Company and its shareholders for the following reasons:

- JSC ATS[3] (Joint-Stock Company Administrator of the Trade System of the Wholesale Electricity Market) renders the services of a commercial operator of the wholesale electricity and capacity market (the "wholesale market") to the Company in the manner provided for in Clause 7 of Article 33 of Federal Law No. 35-FZ dated March 26, 2003, "On the Electric Power Industry" (the "Federal Law on the Electric Power Industry") under an Agreement for Integration into the Trade System of the Wholesale Market. Commercial relations between the Company and JSC ATS are based on the principle of nondiscriminatory access to the services of commercial infrastructure organizations of the wholesale market (Article 20 of the Federal Law on the Electric Power Industry, Regulation of the Government No. 861 dated December 27, 2004) and on the principle of state regulation of tariffs for the services of a commercial operator of the wholesale market (Article 23.1 of the Federal Law on the Electric Power Industry).

- JSC SO UES (Joint-Stock Company System Operator of the Unified Energy System) provides the Company with operational dispatch management services in the electric power industry due to its status as a system operator envisioned by Clause 1 of Article 12 of the Federal Law on the Electric Power Industry and under the Agreement for Integration into the Trade System of the Wholesale Market. Commercial relations between the Company and JSC SO UES are based on the principle of nondiscriminatory access to operational dispatch management services in the electric power industry (Clause 6 of Article 20 of the Federal Law on the Electric Power Industry, Government Decree No. 861 dated December 27, 2004) and on the principle of state regulation of tariffs for operational dispatch management services (Article 23.1 of the Federal Law on the Electric Power Industry).

- JSC FSC (Joint-Stock Company Financial Settlement Center) is classified among the commercial infrastructure organizations of the wholesale electricity and capacity market of the Russian Federation; it ensures the functioning of the contractual structure of the wholesale market and the system of financial settlements between its participants and renders services to the Company under the Agreement for Integration into the Trade System of the Wholesale Market. The Agreement was concluded in accordance with Clause 1 of Article 32 of the Federal Law on the Electric Power Industry and Clause 40 of the Rules for the Wholesale Electricity and Capacity Market approved by Regulation of the Government of the RF No. 1172 dated December 27, 2010.

Commercial relations between the Company and JSC FSC are based on the principle of nondiscriminatory access to the services of commercial infrastructure organizations of the wholesale market (Article 20 of the Federal Law on the Electric Power Industry, Regulation of the Government of the RF No. 861 dated December 27, 2004). The uniform charge for the service package provided by JSC FSC (for all counterparties) is approved by the Supervisory Board of the Association NP Market Council.

- ANO Market Council Training Center (Autonomous Noncommercial Organization of Continuing Professional Education NP Market Council Training Center), established under the Association NP Market Council, is an infrastructure organization of wholesale and retail trade in electricity and capacity; it renders services to the Company in the field of education and training of specialists in organizing an effective system of wholesale and retail trade in electricity and capacity.

Considering that the wholesale market regulations adopted by the Supervisory Board of the Association NP Market Council are amended monthly, to maintain a high level of knowledge in the field of wholesale market procedures and to obtain information on current and planned changes in the wholesale market, the employees of the Company need to undergo training at the primary source—that is, at ANO Market Council Training Center. The training contracts between the Company and ANO Market Council Training Center are concluded on an arm's-length basis.

Mr. Bystrov’s track record in the Company Board of Directors proves his ability to make independent, unbiased, and conscientious judgments as Mr. Bystrov’s stand on agenda items of meetings of the Board of Directors and committees under the Board of Directors is based on his expertise and experience, is autonomous and independent, and the decisions made by Mr. Bystrov allow one to draw the conclusion that his formal connection with significant counterparties of the Company—JSC ATS, JSC SO UES, JSC FSC, and ANO Market Council Training Center—does not influence his decision making as Mr. Bystrov acts in the interests of the Company and all its shareholders.

Based on Clause 2 of Section 2.18 of Annex 2 and on Annex 4.1 to the Listing Rules of the Moscow Exchange, to recognize Maksim Sergeyevich Bystrov as an independent director.

2. To take note of the information on the results of evaluation of the compliance of member of the Board of Directors (candidate nominated for election to the Company Board of Directors at the annual General Meeting of Shareholders in 2018) Sergey Nikolayevich Ivanov with the independence criteria provided for in Annex 4.1 to the Listing Rules of the Moscow Exchange.

There is no connection between Sergey Ivanov and the Company, a significant shareholder, significant counterparties, competitors of the Company, or a municipal entity.

Sergey Ivanov meets the formal criteria of connection with the state as, during the year preceding his election to the Company Board of Directors, Mr. Ivanov acted as general director of RT-Capital LLC, an entity controlled by the Russian Federation.

To note that the connection between Mr. Ivanov and the state is formal in nature and does not affect Mr. Ivanov’s ability to act as a member of the Board of Directors in the interests of the Company and all its shareholders for the following reasons:

- In accordance with Order of the Government of the Russian Federation No. 405-r dated March 9, 2018, Mr. Ivanov has been nominated by the Russian Federation as an independent director; therefore, Mr. Ivanov has no obligation to vote on the instructions of the Government of the Russian Federation (Clause 16 of Regulation of the Government of the RF No. 738 dated December 3, 2004).

- Mr. Ivanov's connection with the state is formal due to the fact that the employment relations with RT-Capital LLC, which were terminated in February 2018, did not and will not influence the making of unbiased and independent decisions by Mr. Ivanov, as the control of the Russian Federation over RT-Capital LLC is indirect and is carried out through the State Corporation for the Promotion of the Development, Production, and Export of High-Tech Industrial Products Rostek, which is operated through management bodies typical of a commercial organization.

- Mr. Ivanov's track record in the Company Board of Directors proves his ability to make independent, unbiased, and conscientious judgments as Mr. Ivanov's stand on agenda items of meetings of the Board of Directors and committees under the Board of Directors is based on his expertise and experience and is autonomous and independent, and the decisions made by Mr. Ivanov allow one to draw the conclusion that his formal connection with the state does not influence his decision making as Mr. Ivanov acts in the interests of the Company and all its shareholders.

Based on Clause 2 of Section 2.18 of Annex 2 and on Annex 4.1 to the Listing Rules of the Moscow Exchange, to recognize Sergey Nikolayevich Ivanov as an independent director.


Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


Item 2: On approval of the Report on the implementation of the Action Plan for the sale of noncore assets of the Company for Q1 2018.


It is resolved:

1. To approve the Report on the implementation of the Action Plan for the sale of noncore assets of the Company for Q1 2018 (Schedule No. 1 to the Minutes).

2. To make the following amendments to the Register of Noncore Assets of the Company approved by the decision of the Company Board of Directors dated December 28, 2017 (Minutes No. 263):

– To change the planned disposition of the facilities "Road No. 1-2 of the 4th cat." and "Road No. 2-3 of the 4th cat." (Clauses 6 and 8 of the "Gratuitous Transfer" section) from "gratuitous transfer" to "liquidation"

– To change the planned disposition of the facility VolgaHydro LLC (Clause 4 of the "Retention of noncore assets" section) from "retention" to "sale"

– To exclude the facility JSC Yuzhno-Yakutskiy HPC (Clause 4 of the "Liquidation" section)


Voting results:

For: 10 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 1 (V. M. Kravchenko)

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


Item 3: On the performance of transactions by JSC RusHydro related to the gratuitous transfer of the Company's property to a third party.


It is resolved:

To approve the conclusion of a Property Donation Agreement on the following material terms:

Parties to the Agreement:

The Donor is the Company.

The Donee is a federal subject of the Russian Federation, the Karachay-Cherkess Republic.

Subject of the Agreement:

The Donor shall gratuitously transfer, and the Donee shall take into possession the following real estate properties for use as public transportation facilities:

– The overpass (bridge) over the Kardonikskiy inverted siphon, cadastral number 09:06:0000009:114, located at: Karachay-Cherkess Republic, Zelenchukskiy District, Zelenchukskaya Stanitsa, facilities of the Zelenchukskiye HPPs power complex.

– The bridge on PK-26 + 81.8 channel B. Zelenchuk—Husa-Kardonikskaya, cadastral number 09:06:0000009:109, located at: Karachay-Cherkess Republic, Zelenchukskiy District, facilities of the Zelenchukskiye HPPs power complex.

The carrying value of the transferred property as of March 31, 2018, is:

6,297,418 (six million two hundred ninety-seven thousand four hundred and eighteen) rubles.


Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


Item 4: Priority areas of RusHydro activities:

4.1. On consideration of the report on the progress of the Action Plan (the list of measures) for the implementation of occupational standards in the Company's operations.


It is resolved:

To approve the report on the progress of the implementation of the Action Plan (the list of measures) for the introduction of occupational standards in the operations of RusHydro in Q4 2017 and Q1 2018 (Schedule No. 2 to the Minutes).


Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


4.2. On progress in executing individual instructions of the President of the Russian Federation and the Government of the Russian Federation regarding the refinancing of the loan debt of the Holding Company RAO Energy Systems of the East.


It is resolved:

To take note of the report on the completion of measures related to the refinancing of the debt of the Holding Company RAO Energy Systems of the East (Schedule No. 3 to the Minutes).


Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


4.3. On approval of the report on the implementation of the RusHydro Group Innovative Development Program for 2016–2020 with an outlook for 2025 in 2017.


It is resolved:

1. To approve the report on the implementation of the RusHydro Group Innovative Development Program for 2016–2020 with an outlook for 2025 in 2017 (Schedule No. 4 to the Minutes).

2. For the purpose of implementing the provisions of directives of the Government of the Russian Federation No. 3262p-P13 dated April 27, 2018, to amend the resolution of the Company Board of Directors (Minutes No. 263 dated December 28, 2017) on agenda item 4.4 "On consideration of proposals for improving the quality of the preparation and implementation of the RusHydro Group Innovative Development Program for 2016–2020 with an outlook for 2025," rewording it as follows:

"To instruct the Chairman of the Board and General Director of the Company N. G. Shulginov to ensure the following:

1. Comparison by the Company of its level of technological development and current key performance indicators with the level of development and indicators of leading peer companies, including foreign ones, in accordance with the Methodological Recommendations for comparing the level of technological development and key performance indicators of partially government-owned joint-stock companies, state corporations, state companies, and federal state unitary enterprises with the level of development and indicators of leading peer companies approved by the Interagency Working Group on the Implementation of Priorities for Innovative Development at the Presidium of the Presidential Council for the Modernization of the Economy and the Innovative Development of Russia (the "IWG") (Minutes No. 2 dated September 19, 2017) with the involvement of an external consultant in accordance with the established procedure by July 30, 2018.

2. Submission for consideration of the Board of Directors no later than October 15, 2018, and the sending to the Ministry of Economic Development and Trade of the Russian Federation and the federal executive body coordinating the Company’s operations no later than November 1, 2018, of the following:

– The results of the comparison of the level of technological development

– Proposals for adjusting the innovative development program and the long-term development program

– Proposals concerning the composition and values of the integral key performance indicator (the "IKPI") for 2019"


Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


4.4. On updating the RusHydro Group Long-Term Development Program for 2018–2022.

It is resolved:

To approve the updated RusHydro Group Long-Term Development Program for 2018–2022 (Schedule No. 5 to the Minutes).


Voting results:

For: 10 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 1 (V. M. Kravchenko)

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


Item 5: On determining the position of RusHydro (the delegates of the Company) on the agenda items of meetings of the Boards of Directors and general meetings of shareholders of subsidiaries:

5.1. On determining the position of the Company (the delegates of the Company) regarding the agenda of the management bodies of JSC RAO Energy Systems of the East.


It is resolved:

To instruct the Company's delegates to the management bodies of JSC RAO Energy Systems of the East to vote "FOR" the following resolution on the item "On the execution by the Company of related transactions associated with the alienation of property constituting fixed assets whose target use is the generation, transmission, and distribution of electricity and thermal energy":

"To approve the execution by the Company of related transactions associated with the alienation of property constituting fixed assets whose target use is the generation, transmission, and distribution of electricity and thermal energy on the following material terms:

Parties to the transaction:

The Alienator is JSC RAO Energy Systems of the East.

The Acquirer is PJSC Sakhalinenergo.

Subject of the transaction:

The Alienator shall transfer the title to the property of the 5th power unit of Yuzhno-Sakhalinskaya CHPP-1 and the network property in accordance with Schedule 6 to the Minutes (the "Property") to the Acquirer, and the Acquirer undertakes to offer additional publicly-traded ordinary shares in favor of the Alienator (state registration number of the additional issue of securities: 1-03-00272-А-001D dated December 7, 2017) (the "Shares") in an amount to be determined based on the Property price and the offering price of the Shares, which is 10 rubles 00 kopecks per 1 (one) share.

Property Price:

To be determined based on a report on the assessed market value of the Property prepared by a qualified appraiser".


Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.6 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a 2/3 majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


5.2. On determining the position of the Company (the delegates of the Company) regarding the agenda of the General Meeting of Shareholders of JSC Sakhalinskaya SDPP-2: "On consent to perform a major transaction—the conclusion by JSC Sakhalinskaya SDPP-2 of an Addendum to the General Contract Agreement for the construction of the facility 'Construction of the Sakhalinskaya SDPP-2. Main production complex. On-site facilities (1st stage of construction) dated January 23, 2015, No. SGRES-15/0002.'"


It is resolved:

Instruct the representatives of the Company to vote at the General Meeting of Shareholders of Sakhalin GRES-2 JSC on the item: "On consent to perform a major transaction—the conclusion by JSC Sakhalinskaya SDPP-2 of an Addendum to the General Contract Agreement for the construction of the facility 'Construction of the Sakhalinskaya SDPP-2. Main production complex. On-site facilities (1st stage of construction)' dated January 23, 2015, No. SGRES-15/0002," to vote "FOR" the adoption of the following resolution:

"To consent to perform a major transaction—the conclusion of an Addendum to the General Contract Agreement for the construction of the facility 'Construction of the Sakhalinskaya SDPP-2. Main production complex. On-site facilities (1st stage of construction)'" dated January 23, 2015, No. SGRES-15/0002 (the 'Agreement'), which is a major transaction, the value of which exceeds 50 percent of the book value of the assets of JSC Sakhalinskaya SDPP-2, on the following material terms:

Parties to the transaction:

The Customer is JSC Sakhalinskaya SDPP-2.

The General Contractor is JSC TEK Mosenergo.

Subject of the transaction:

1. Alteration of the terms previously approved by the general meeting of shareholders of JSC Sakhalinskaya SDPP-2 (resolution of the trustee of JSC RAO Energy Systems of the East dated December 29, 2014, No. 03/2014-SGRES) with regard to the performance timeline:

Scheduled ready for commissioning date: October 26, 2018.

Scheduled actual completion date: December 1, 2018.

2. Preservation of the Customer’s right to present claims to the General Contractor related to violations of the terms of the Agreement committed prior to the conclusion hereof.

Price of the transaction:

The ceiling price of the Agreement shall not change as a result of the conclusion of the Addendum and amounts to 30,236,000,000 (thirty billion two hundred thirty-six million) rubles 00 kopecks, including VAT (18%)."


Voting results:

For: 9 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, N. G. Shulginov)

Against: 0

Abstained: 1 (A. N. Shishkin)

According to Clause 15.6 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a 2/3 majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


Item 6: On the review of the results of the assessment of the Company’s corporate governance practices.

It is resolved:

To take note of the results of the assessment of the Company’s corporate governance practices and the recommendations for improving corporate governance.

Voting results:

For: 11 (A. D. Avetisyan, M. S. Bystrov, P. S. Grachev, S. N. Ivanov, V. M. Kravchenko, V. V. Pivovarov, N. D. Rogalev, A. O. Chekunkov, S. V. Shishin, A. N. Shishkin, N. G. Shulginov)

Against: 0

Abstained: 0

According to Clause 15.3 of Article 15 of the Articles of Association of RusHydro, the resolution on this matter shall be adopted by a simple majority vote of the members of the Board of Directors who take part in the meeting.

Resolution adopted.


The minority opinion of member of the Board of Directors V. M. Kravchenko on agenda item No. 4.4 is attached to the minutes.



Deputy Chairman
of the Board of Directors

S. N. Ivanov


Corporate SecretaryN.G. Kovaleva


[1] The volume of obligations between the Company and JSC FSC performed during the last year exceeds 2% of the book value of assets and 2% of the revenue of the Company and JSC FSC.

[2]Mr. Bystrov is a member of the boards of directors of JSC ATS and JSC SO UES. JSC FSC (through JSC ATS) and ANO Market Council Training Center are controlled entities of the Association NP Market Council, a member of whose Supervisory Board Mr. Bystrov is; also, Mr. Bystrov is the Chairman of the Board of the Association NP Market Council.

[3] By decision of the Supervisory Board of the Association NP Market Council (formerly known as NP ATS) dated November 30, 2007, since April 1, 2008, JSC ATS has been entrusted with the performance of the functions of a commercial operator of the wholesale market, classified by Clause 1 of Article 33 of the Federal Law on the Electric Power Industry as commercial infrastructure organizations of the wholesale market.  

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