Annual report 2010

9. Corporate Governance System of JSC IDGC HoldingThe Articles of Association of the Company (subparagraph22 of paragraph 11.1 and subparagraph5 of paragraph 13.2) and the Procedure forInteraction of JSC IDGC Holding with theEconomic Entities Whose Shares (Equities) AreOwned by JSC IDGC Holding (paragraph 2.3) listthe most important agenda items of general meetingsof shareholders and meetings of boardsof directors, which agenda items require decisionsof the Company’s Board of Directors on definingthe position of the Company (or CompanyRepresentatives).Such agenda items include adopting decisions todefine agendas of general meetings of shareholders(members) of IDGC Holding’s SDCs; reorganizeor liquidate IDGC Holding’s SDCs; and determinethe number of members of the boards of directorsof IDGC Holding’s SDCs, nominate and elect suchmembers, and decide on early termination of theirpowers; etc.The issues specified above must be addressedby boards of directors or general meetings ofshareholders of IDGC Holding’s SDCs only afterthe position of the Company (or CompanyRepresentatives) is defined.For the purposes of controlling financial and economicactivities of IDGC Holding’s SDCs and complyingwith corporate governance procedures,Company Representatives take part in the work ofinternal audit commissions of IDGC Holding’s SDCs.9.7. Property ManagementAs of December 31, 2010, JSC IDGC Holding hadshareholdings in 11 interregional distributiongrid companies, five regional grid companies,seven sales companies, 10 R&D and design companies,13 construction, service and supplyingcompanies and companies performing other activities.Furthermore, JSC IDGC Holding owned 471real property items, including 458 assets-underconstructionlocated in the Chechen Republic.In 2010, the shareholdings owned by JSC IDGCHolding changed as follows:— the transaction for selling 166,560,049 ordinaryshares (25% + 1 share in the authorizedcapital) in JSC ChirkeyGESstroy, result inprofit generation by the Company, was completed;— the stake in the authorized capital of JSCKubanenergo increased from 24% to40,6275% in connection with a follow-onoffering.In 2010, four real property items located inVerkhny Tagil were sold in a bidding procedure forthe purposes of optimizing the list of propertyitems and reducing property maintenance costs.In 2010, as part of implementing the programs ofrenovation and performance of activities for theenhancement of energy conservation and energyefficiency, JSC IDGC Holding intensified workaimed at developing activities in the field of scientificresearch, development, engineering andtransfer of technologies in the top-priority areasof the grid sector development. To that end, JSCResearch and Engineering Center of IDGC wasestablished.The fiscal year witnessed creation of the center ofexcellence and coordination of activities fordevelopment of fiber-optic links on the base ofJSC Center for Settlement of Accounts Receivableand Payable of UPS, a wholly-owned subsidiary ofJSC IDGC Holding. For creating the business, it isplanned to use overhead distributiondistributionlines of the SDCs of JSC IDGC Holding and todevelop active cooperation with communicationservice operators with regard to the use and operationof fiber-optic links.69