SECURITIES PROSPECTUS

Risks associated with changes in court practices on matters related to the issuer’s activities(including licensing matters) which can adversely affect its performance and the outcome ofpending legal proceedings in which the issuer participates:In certain cases, changes in court practices on matters related to the issuer’s activities cancause an increase in costs in connection with retaining skilled lawyers and court judgmentsagainst the Issuer, which can adversely affect the performance of the issuer. The issuer believesthat such risks are unlikely to occur and negligible.In the event of changes in court practices on matters related to the issuer’s activities, theissuer intends to adjust the planning of its financial and business activities for these changes.3.5.5. Risks Associated with the Issuer’s ActivitiesRisks associated with pending legal proceedings in which the issuer participates:The issuer does not act as respondent in any legal proceedings, including the obligations ofsubsidiaries and dependent companies, and therefore does not believe that significant risksassociated with participation in any legal proceedings are likely to occur.Risks associated with the impossibility of extending the issuer’s license to perform acertain type of activity or use constrained assets (including natural resources):The above-mentioned risks do not exist, since the issuer neither performs nor plans toperform any licensable activities specified in the laws of the Russian Federation or use constrainedassets (including natural resources).Risks associated with the possible liability of the issuer for third-party debts, includingthe issuer’s subsidiaries:Currently, the issuer is not liable for any third-party debts since the issuer did notcollateralize their obligations.Risks associated with the possible liability of the issuer for third-party debts are assessed bythe issuer as negligible.The issuer can assume liability for the debts owed by its subsidiaries (IDGCs) if the issuer’sinstructions binding upon subsidiaries cause losses or bankruptcy to such company. However, theissuer uses its best efforts to prevent such situation since this will contradict the principal businessgoal of the issuer, i.e. profit generation. The above-mentioned risks are unlikely to occur.Risks associated with the possible loss of customers accounting for at least 10 percent oftotal revenue from the sale of the issuer’s products (work, services)Since the issuer’s core business is the corporate management of interregional distributiongrid companies, the issuer incurs the risk of customer loss.The issuer, in its turn, can be affected by the loss of customers by the companies itmanages. However, this risk can be assessed as negligible since regional external entities do nothave alternative grid equipment or qualified personnel (to maintain and repair it). At the same timethere is a risk associated with large customers switching to JSC FGC UES, specifically through theconstruction of alternative power grid facilities3.5.6. Bank RisksNot applicable since the issuer is not a lending institution.25