Minutes of 24.06.2019 № 292

MINUTES No. 292

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):

June 21, 2019, 6:00 p.m.

(Moscow time).

Date the minutes were drafted:

June 24, 2019

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 persons

Members of the Board of Directors who voted:

 

A.D. Avetisyan

M.S. Bystrov

P.S. Grachev

S.N. Ivanov

V.M. Kravchenko

P.A. Livinskiy

V.V. Pivovarov

M.A. Rasstrigin

N.D. Rogalyov

Yu.P. Trutnev

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, a quorum for the meeting of the Board of Directors is present.

 

AGENDA OF THE MEETING:

  1. Approval of amendments to the Decision on the additional issue of the Company's securities.
  2. Approval of amendments to the Company's Securities Prospectus.
  3. Approval of the report on the interim results of execution of the Company's Business Plan for 2019 considering the actual results for Q1 2019 (including the report on execution of the Investment Program, including the Complex Modernization Program for Generating Facilities, for Q1 2019).
  4. Approval of the report on execution of the Annual Complex Procurement Program of the Company for Q1 2019.
  5. Election of members of Committees under the Company's Board of Directors.
  6. Approval of the reports on the performance results of the Committees under the RusHydro Board of Directors for the 2018–2019 corporate year.
  7. Consideration of the Report on the Company Management Board's Activities for 2018.
  8. Approval of the Company's internal documents.
  9. Consideration of matters of significance to the Company.

 

RESULTS OF VOTING ON AGENDA ITEMS:

 

Item 1. Approval of amendments to the Decision on the additional issue of the Company's securities.

 

It is resolved:

To introduce (approve) amendments to the Decision on the additional issue of RusHydro securities (ordinary shares) (Schedule No. 1 hereto).

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 2. Approval of amendments to the Company's Securities Prospectus.

 

It is resolved:

To introduce (approve) amendments to the RusHydro Securities Prospectus (for ordinary shares) (Schedule No. 2 hereto).

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 3. Approval of the report on the interim results of execution of the Company's Business Plan for 2019 considering the actual results for Q1 2019 (including the report on execution of the Investment Program, including the Complex Modernization Program for Generating Facilities, for Q1 2019).

 

It is resolved:

To approve the report on the interim results of execution of the Business Plan for 2019 considering the actual results for Q1 2019 (including the report on execution of the Investment Program, including the Complex Modernization Program for Generating Facilities, for Q1 2019) (Schedule No. 3 hereto).

 

Voting results:

For: 12 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.V. Pivovarov, P.A. Livinskiy, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 4. Approval of the report on execution of the Annual Complex Procurement Program of the Company for Q1 2019.

 

It is resolved:

To approve the report on execution of RusHydro's Annual Complex Procurement Program for Q1 2019 (Schedule No. 4 hereto).

 

Voting results:

For: 12 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.V. Pivovarov, P.A. Livinskiy, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 5. Election of members of Committees under the Company's Board of Directors:

Item 5.1. Election of members to the HR and Remuneration (Nominations) Committee under the Company's Board of Directors.

 

It is resolved:

  1. To terminate ahead of time the powers of Sergey Nikolayevich Ivanov, a member of the HR and Remuneration (Nominations) Committee under the Company's Board of Directors.
  2. To elect Pavel Sergeyevich Grachev, a member of the Board of Directors, to the HR and Remuneration (Nominations) Committee under the Company's Board of Directors.

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 5.2. Election of members to the Audit Committee under the Company's Board of Directors.

 

It is resolved:

  1. To terminate ahead of time the powers of Sergey Nikolayevich Ivanov, a member of the Audit Committee under the Company's Board of Directors.
  2. To elect Pavel Sergeyevich Grachev, a member of the Board of Directors, to the Audit Committee under the Company's Board of Directors.
  3. To elect Pavel Sergeyevich Grachev as the Chairman of the Audit Committee under the Company's Board of Directors.

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

 

 

Item 6: Approval of the reports on the performance results of the Committees under the RusHydro Board of Directors for the 2018–2019 corporate year.

 

It is resolved:

To defer consideration of the item to a later date.

 

Voting results:

For: 12 (A.D. Avetisyan, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinskiy, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 7. Consideration of the Report on the Company Management Board's Activities for 2018.

 

It is resolved:

To take into consideration the Report on the Company Management Board's Activities for 2018 (Schedule No. 5 hereto).

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 8. Approval of the Company's internal documents:

8.1. Amending the Unified Regulation on Procurement of Products for the Needs of RusHydro Group: extending the practice of using factoring when carrying out contracts for the supply of goods (performance of work, provision of services).

 

It is resolved:

  1. To amend Clause 5.3.9 of the Unified Regulation on Procurement of Products for the Needs of RusHydro Group approved by Decision of the RusHydro Board of Directors (Minutes No. 277 dated October 4, 2018) to read as follows:

      "5.3.9. A procurement notice and/or procurement documentation may provide for the use of assignment of claim (factoring) when carrying out product delivery contracts concluded by the Customer with small and medium business entities based on the results of procurements held in the form of a competitive tender in accordance with the provisions of the civil laws of the Russian Federation."

  1. To instruct the Chairman of the Management Board and General Director of the Company N. G. Shulginov:

      2.1. To notify controlled organizations that have acceded to the Unified Regulation on Procurement of Products for the Needs of RusHydro Group about the amendments introduced thereto within 10 business days after this resolution is adopted.

     2.2. To publish information about the execution of Directives of the Government of the Russian Federation No. 4111p-p13 dated May 8, 2019, along with electronic copies of the supporting documents on the Interdepartmental State Property Management Portal by July 10, 2019.

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

Item 9. Consideration of matters of significance to the Company.

Item 9.1 Creation of a General Service Center performing accounting and tax accounting functions and generation of reports in RusHydro Group. 

 

It is resolved:

To approve the creation of a General Service Center performing accounting and tax accounting functions and generation of reports in RusHydro Group based at HydroEngineering Siberia JSC.

 

Voting results:

For: 12 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.V. Pivovarov, P.A. Livinskiy, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

 

Item 9.2. Consideration of the progress report on the Action Plan (list of measures) for the introduction of professional standards in the Company's operations.

 

It is resolved:

To approve the progress report on the Action Plan (list of measures) for the introduction of professional standards in the Company's operations in Q4 2018 and Q1 2019 (Schedule No. 6 hereto).

 

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

Item 9.3. Progress of priority projects for the construction of two facilities in the Far East (CHPP in Sovetskaya Gavan, Sakhalinskaya GRES-2 (stage 1)) as of March 31, 2019.

 

It is resolved:

To take note of information on the progress of priority projects for the construction of two facilities in the Far East (CHPP in Sovetskaya Gavan, Sakhalinskaya GRES-2 (stage 1)) as of March 31, 2019 (Schedule No. 7 hereto).

 

Voting results:

For: 12 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinskiy, N.D. Rogalyov, Yu.P. Trutnev, S.V. Shishin, A.N. Shishkin, N.G. Shulginov)

Against: 0

Abstained: 1 (M.A. Rasstrigin)

 

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

Resolution adopted.

 

Item 9.4. Recognizing candidates to the Company's Board of Directors (Member of the Company's Board of Directors) as independent.

 

It is resolved:

In accordance with the recommendations of the HR and Remuneration (Nominations) Committee under the Company's Board of Directors:

  1. To take into consideration information on the results of the evaluation of conformity of A.O. Chekunkov, a candidate nominated for election to the Company's Board of Directors at the annual General Meeting of Shareholders in 2019, to the independence criteria stipulated in Schedule No. 4 to the MOEX Listing Rules.

A.O. Chekunkov is not affiliated with the Company, a substantial shareholder of the Company, or the Company's competitors.

 

Mr. Chekunkov has formal criteria for affiliation with:

 

- The state, as Mr. Chekunkov is General Director of the Far East and Baikal Region Development Fund JSC, an organization controlled by the Russian Federation.

 

- The Company's substantial counterparty, the Far East and Baikal Region Development Fund JSC (FEDF), as the amount of liabilities between the Company and the FEDF under a loan agreement exceeds 2% of the book value of assets and 2% of revenue of the FEDF.

 

To note that the affiliation between A.O. Chekunkov and the state and the substantial counterparty is formal in nature and does not affect Mr. Chekunkov's ability to act on the Board of Directors for the benefit of the Company and all its shareholders for the following reasons:

 

- In accordance with Order of the Government of the Russian Federation No. 607-r dated March 30, 2019, A.O. Chekunkov has been nominated by the Russian Federation as an independent director; therefore, Mr. Chekunkov has no obligation to vote according to the directives of the Government of the Russian Federation (Clause 16 of Regulation of the Government of the Russian Federation No. 738 dated December 3, 2004).

 

- A.O. Chekunkov's affiliation with the state is formal in nature because his labor relations with the Far East and Baikal Region Development Fund JSC do not influence the objective and independent decisions made by Mr. Chekunkov because the Russian Federation's control over the Far East and Baikal Region Development Fund JSC is indirect and is exercised via the State Development Corporation VEB.RF, which is managed by management bodies typical for a commercial institution.

 

- A.O. Chekunkov's affiliation with RusHydro's substantial counterparty is formal in nature due to the following:

 

On April 4, 2018, RusHydro (the Borrower) and the FEDF (the Lender) concluded a financing (target loan) agreement for the construction of offsite infrastructure facilities at Sakhalinskaya GRES-2 (the Project). The borrowed funds were allocated to RusHydro on a repayable and paid basis; the loan agreement was concluded for a period until June 25, 2026, for a total amount of up to RUB 5 billion at 5% per annum.

 

Provision of funds to the FEDF to finance RAO Energy Systems of the East JSC for implementation of the Project in accordance with Regulation of the Government of the Russian Federation No. 1055 dated October 16, 2014, has been preliminarily approved by the Government Subcommission for the Implementation of Investment Projects in the Far East and the Baikal Region (Minutes No. 3 dated December 25, 2017), by the FEDF Board of Directors (Minutes No. 57 dated December 29, 2017), and by the RusHydro Board of Directors as an interested party transaction (Minutes No. 265 dated February 6, 2018; A.O. Chekunkov did not vote on this item). As of December 31, 2018, the loan had been disbursed in full (RUB 5 billion) and the loan funds had been allocated to finance the Project by way of their transfer in the form of a loan to an organization controlled by the Company, RAO Energy Systems of the East JSC. 

 

- The track record of A.O. Chekunkov in the Company's Board of Directors and the Company's Committees in 2016–2018 has proved his ability to make independent, unbiased, and conscientious judgments because Mr. Chekunkov's opinion on the agenda items of meetings of the Board of Directors and committees under the Board of Directors was based on his expertise and experience and was autonomous and independent, and the decisions made by Mr. Chekunkov previously allow one to draw the conclusion that his formal connection with the state did not influence his decisions, as Mr. Chekunkov acted for the benefit of the Company and all its shareholders.

  1. For the purpose of increasing the transparency of RusHydro, building its positive business reputation, strengthening the positive current expert evaluation of the corporate governance system, increasing the share of independent directors in the Board of Directors[1], and ensuring the conformity of RusHydro to the recommendations of the Code of Corporate Governance and the Company's internal documents, it is suggested that the candidate to the RusHydro Board of Directors Alexey Olegovich Chekunkov be recognized as an independent director.

Mr. Chekunkov has an excellent business and personal reputation, the knowledge, skills, and experience necessary to make decisions that fall within the competence of the Board of Directors and required for the effective performance of his functions, thus allowing him, among other things, to participate in the work of various committees under the RusHydro Board of Directors. Since 2015, Mr. Chekunkov has been a member of the Committee for Far East Energy Development under the Board of Directors of the Company. In 2016–2018, he was a member of the Company's Board of Directors and of the Reliability, Energy Efficiency, and Innovations Committee and the Investment Committee under the Company's Board of Directors. Mr. Chekunkov's long service on the Company's Board of Directors and the Committee for Far East Energy Development is his strength, as Mr. Chekunkov has the necessary longstanding experience in the field of electrical power and investments and extensive knowledge of the Company's business, which can contribute to the effective work of the Board of Directors and the Committees of the Company.

 

During the meetings of the Committees and the Board of Directors, Mr. Chekunkov was always active in discussing the agenda items and always expressed an objective and well-considered opinion in voting that was independent from the opinion of the Company's management. He is responsible and proactive. When participating in the work of the Board of Directors and its Committees, Mr. Chekunkov made a significant contribution to the Company's implementation of the most important matters related to various areas of the Company's business, including priority projects for the construction of facilities in the Far East, investment projects, and the RusHydro innovation development program.

 

Furthermore, Mr. Chekunkov chaired the Far East and Baikal Region Development Fund for a long time. He has 18 years of experience working in the direct investments sector. He has held senior positions in the Russian Direct Investment Fund (RDIF), A-1 (Alfa-Group consortium), Delta Private Equity (US-Russian investment fund), and Alrosa Investment Group OJSC. He is also a member of the Supervisory Board of Alrosa JSC (PJSC). Mr. Chekunkov took part in building the main mechanisms and approaches that served as the basis for the state system of management of Far East development and was one of the visionaries and creators of the Voskhod investment system for attracting capital to investment projects in the Far East.

 

The work experience described above, deep knowledge of the specifics of the Company's work, an understanding of business processes, possession of the necessary professional skills in the financial, administrative, and economic spheres, and use of the best corporate governance practices in his work make Mr. Chekunkov's experience significant for the Company.

  1. Based on Clause 2 of Section 2.18 of Schedule No. 2 and based on Schedule No. 4 to the MOEX Listing Rules, to recognize Alexey Olegovich Chekunkov as an independent director.

Voting results:

For: 13 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.M. Kravchenko, V.V. Pivovarov, P.A. Livinsky, M.A. Rasstrigin, N.D. Rogalyov, Yu.P. Trutnev, 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 item shall be adopted by a simple majority vote of the members of the Board of Directors taking part in the meeting.

Resolution adopted.

 

Item 9.5  Consideration of the Electrical Power Development Program to ensure advanced economic growth in the Far Eastern Federal District.

 

It is resolved:

To take into consideration the Electrical Power Development Program to ensure advanced economic growth in the Far Eastern Federal District (Schedule No. 8 hereto).

 

Voting results:

For: 10 (A.D. Avetisyan, M.S. Bystrov, P.S. Grachev, S.N. Ivanov, V.V. Pivovarov, P.A. Livinskiy, N.D. Rogalyov, Yu.P. Trutnev, S.V. Shishin, N.G. Shulginov)

Against: 2 (V.M. Kravchenko, M.A. Rasstrigin)

Abstained: 1 (A.N. Shishkin)

 

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

Resolution adopted.

 

Confidential

Item 9.6.

Resolution adopted.

The special opinions of members of RusHydro Board of Directors V.M. Kravchenko and M.A. Rasstrigin are attached to the Minutes.

Chairman

of the Board of Directors                                                             Yu. P. Trutnev

 

Corporate Secretary                                                                    N.G. Kovaleva

 

[1] According to the recommendations following the external independent audit of performance of the Board of Directors conducted in 2018 by PricewaterhouseCoopers Consulting Services LLC, it is necessary to increase the share of independent directors in the Board of Directors (to elect an additional independent director with global expertise in the [hydro-]power industry).

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