SECURITIES PROSPECTUS

15.2. Contingent liabilities (losses) shall be recognized through the accrual ofreserve in the synthetic and analytical accounting records as closing turnover of thereporting period prior to the approval of the annual accounting report. Contingent assetsshall not be recognized in the accounting books and the relevant information shall bedisclosed in the explanatory note. Information about contingent facts shall be disclosedin the statements based on the calculation prepared by the Department (function) towhich the event relates in accordance with the functions performed.16. Information About Related Parties16.1. In accordance with AR 11/2008 approved by Decree of the Ministry ofFinance of the Russian Federation No. 48n, dated April 29, 2008, the Company shallinclude information concerning related parties in a separate section of the explanatorynote made part of the financial statements.17. Tax Accounting17.1. Organization of Tax Accounting17.1.1. The Company shall calculate and pay taxes and dues in accordance with thelaws of the Russian Federation on taxes and dues and the laws of the constituententities of the Russian Federation on taxes and dues.17.1.2. Tax report preparation procedure, tax ledger forms and maintenanceprocedure, tax base formation procedure, the calculation and payment of taxes anddues shall be governed by these Regulations for the Accounting Policy as well theinternal documents of JSC IDGC Holding on the procedure for the calculation andpayment of individual taxes and dues. Tax ledgers may be maintained as specialforms (hard copies), in electronic format and/or using any machine-readable media.17.1.3 The tax portion of the accounting policy of JSC IDGC Holding shall beamended in the event of changes in the accounting procedure for certain businessoperations and/or assets for tax purposes in the event of changes in laws or applicableaccounting methods or if JSC IDGC Holding launches new activities.17.1.4. An inventory of liabilities related to settlements for taxes and dues shall betaken and debt reconciliation with tax authorities shall be performed on a quarterlybasis.231