Annual report 2010

JSC IDGC Holding. Annual Report 20109.6. Corporate Governance of SDCsInteraction of JSC IDGC Holding with its SDCs isaimed at implementing the corporate policy inthe electricity distribution grid sector, ensuringthe stable financial development and investorappeal of JSC IDGC Holding and its SDCs, and protectingthe rights and statutory interests ofshareholders of JSC IDGC Holding and its SDCs.As of December 31, 2010, JSC IDGC Holding was ashareholder of 45 open joint-stock companies anda member of one limited liability company and sixnonprofit partnerships. JSC IDGC Holding employscorporate methods for managing its subsidiariesand dependent companies, complying with the proceduresprescribed by the applicable laws and theirarticles of association and internal documents.The mechanisms and principles that underlie thecorporate administration of JSC IDGC Holding’sSDCs are defined by the Articles of Association ofthe Company, the Procedure for Interaction of JSCIDGC Holding with the Economic Entities WhoseShares (Equities) Are Owned by JSC IDGC Holding,and other internal documents.The corporate administration of JSC IDGCHolding’s SDCs is effected through the Company’srepresentatives in management bodies (boards ofdirectors and general meetings of shareholders)and control bodies (internal audit commissions)of SDCs (“Company Representatives”).The Company representative at the GeneralMeeting of Shareholders of the SDCs of theHolding Company is the person (whether or notinvolved in employment relations with theCompany) authorized to act on behalf of theCompany under the relevant power of attorney atthe General Meeting of Shareholders of JSC IDGCHolding’s SDCs.The Company representative is tasked with ensuringthe exercise and protection of the lawfulrights and interests of the Company as a shareholderof the SDCs of JSC IDGC Holding, directlyparticipating in the general meetings of shareholders,voting on agenda items, etc.The Company representative acts under a power ofattorney authorizing them to exercise the shareholder’srights on behalf of the Company and areprovided with the Final Instructions, a documentreflecting the Company’s position for the purposesof voting on the items included on theagendas of general meetings of shareholders ofIDGC Holding’s SDCs.The Company representative on the Board ofDirectors of the SDCs of the Holding Company isthe person (whether or not involved in employmentrelations with the Company):— nominated by the Company as members ofboards of directors for whom the Companyvotes at general meetings of shareholders ofIDGC Holding’s SDCs and who are elected toboards of directors of IDGC Holding’s SDCsaccording to the voting results;— nominated by other shareholders but voluntarilyexpressing their intention to performthe functions of Company Representativesfor whom the Company votes at generalmeetings of shareholders of IDGC Holding’sSDCs;— elected to boards of directors of IDGCHolding’s SDCs according to the votingresults, or elected to boards of directors ofSDCs to represent other shareholders butexpressing their intention to perform thefunctions of Company Representatives.The Company Representative on boards of directorsof IDGC Holding’s SDCs signs statements containingthe consent to represent the Company.The main functions of the Company Represen -tative include taking part in the work of boards ofdirectors of IDGC Holding’s SDCs, ensuring theprotection of the Company’s interests whenboards of directors make decisions, providing theCompany with information about the work ofboards of directors of IDGC Holding’s SDCs, etc.The Company Representative’ participation in thework of boards of directors of IDGC Holding’s SDCsis governed by the requirements of the applicablelaws, the provisions of the articles of associationand internal documents of IDGC Holding’s SDCs,and the Final Instructions.68