General information on corporate governance

Objectives of the Company’s corporate governance

Principles of Corporate Governance of Rosseti Kuban

Key documents regulating corporate governance in the Company

• Articles of Association
• Provisions regulating the activities of the Company’s management bodies (General Meeting of Shareholders, Board of Directors, Management Board)
• Regulations on the committees of the Board of Directors
• Methodology of assessment of the performance of the Board of Directors and committees under the Board of Directors
• Corporate Governance Code
• Regulation on the Dividend Policy
• Regulations on insider information and information policy
• Regulations on the Corporate Secretary of the Company
• Procedure for interaction between the Company and Business Entities whose Shares (Stakes) are owned by Rosseti Kuban, PJSC, etc.

POLICIES REGULATING THE MAIN BUSINESS PROCESSES OF THE COMPANY

The Company has a Corporate Governance Code in place in order to ensure and protect the rights and interests of all of its shareholders, to improve corporate governance practices, to ensure transparency of the Company’s management efficiency and to confirm its commitment to following the recommendations and advanced principles of corporate governanceThe current version was approved by the decision of the Board of Directors of Rosseti Kuban, PJSC dated 2 December 2021 (Minutes No. 456/2021 dated 3 December 2021)..

Rosseti Kuban abides by the principles and recommendations of the Corporate Governance Code of the Bank of Russia as well. The report on compliance with Corporate Governance Code in 2022 is available in Appendix No. 1. The Board of Directors certifies that all report data contain full and reliable information on the Company’s compliance with the principles and recommendations of the Corporate Governance Code of the Bank of Russia.

Promotion of Corporate Governance System in 2022

The Company continued to improve its corporate governance in the reporting year.

In 2022, in accordance with Russian law, the annual General Meeting of Shareholders was held in the form of absentee voting, with shareholders being given the opportunity to vote by filling out electronic ballot forms on the official website of the registrar – NRC – R.O.S.T., JSC.

The annual General Meeting of Shareholders of the Company approved a new version of the Regulations on the Auditing Committee of the Company, which takes into account the amendments to Federal Law No. 208-FZ dated 26 December 1995 On Joint Stock Companies.

The Board of Directors of the Company approved:

• Amended Regulation on Information Policy accommodating the requirements of Bank of Russia Regulations No. 714-P On Disclosure of Information by Issuers of Equity Securities dated 27 March 2020, as well as Recommendations on Disclosure of Non-Financial Information by Public Joint Stock Companies Related to the Activity of Such Companies sent by Bank of Russia Letter No. IN-06-28/49 dated 12 July 2021
• Amendments to the Regulations on the Audit Committee under the Board of Directors

In the reporting year, the Board of Directors and its committees carried out a self-assessment of their performance for the 2021/2022 corporate year, rating their work and organisation fairly highly (overall average score of 4.7 with a maximum score of 5).

A total of 167 corporate events were held in 2022, including:

• 2 General Meetings of shareholders
• 44 meetings of the Board of Directors, with 99.2% attendance by members of this governing body, an increase of 11.5% compared to 2021
• 75 meetings of Board committees, with 100% attendance by committee members in the work of these bodies
• 46 meetings of the Management Board

Plans for 2023

In 2023, the Company will keep on working on the improvement of the corporate governance, based on analysis of the best corporate governance practices, as well as the results of the corporate governance assessment and assessment (self-assessment) of the operation of the Board of Directors and its committees, including:

• Updating the Articles of Association and internal documents of the Company in line with the recommendations of the Corporate Governance Code of the Bank of Russia
• Ensuring that the Company’s activities comply with the requirements of by-laws and conducting the necessary corporate procedures
• Conducting a self-assessment of the performance efficiency of the Board of Directors and its committees
• Planning and delivering the corrective action plans based on the results of the corporate governance assessment carried out by the internal audit function
• Supervising the timely and proper implementation of decisions of the Company’s governing bodies
• Full and timely disclosure of information about the Company as required by the laws on joint stock companies and the stock market

Corporate Governance Level Assessment

In the reporting year, the Company’s internal audit conducted an assessment of corporate governance at the end of the 2021/2022 corporate year concerning its compliance with the laws of the Russian Federation, principles and recommendations of the Corporate Governance Code of the Bank of Russia, Listing Regulations of the Moscow Exchange and the best corporate practices. The assessment followed the Company’s methodology, which corresponds to the standard corporate governance assessment method adopted at Rosseti’s S&As.

Objectives of the assessment:

• Providing the Board of Directors of the Company, the Audit Committee of the Board of Directors of the Company, and the executive bodies of the Company with objective and independent information on the state of corporate governance in the Company and its efficiency
• Making recommendations to improve the Company’s corporate governance

Following the results, the internal audit recognised the Company’s corporate governance as corresponding to the developed practice level; it also noted that the potential for improvement on a number of issues depends on the standing of the main shareholder and other external factors that the Company cannot have influence on.