OREANDA-NEWS. The Consortium of the Russian Institute of Directors and “Expert-RA”-“RID-Expert RA” Rating Agency awarded JSC “IDGC of Center and North Caucasus” the CMNR+ corporate management rating - “The developed corporate management practice” according to the scale of National corporate management.

Several changes, which allowed to review and raise the corporate management rating to CMRN+ level, were made from the moment when National corporate management rating awarded the Company at the end of 2006. The awarded rating of corporate management level reflects risks of JSC “IDGC of Center and North Caucasus” corporate management for the present shareholders structure and can be revised in case of shareholders structure changes.

Among the key positive moments of JSC “IDGC of Center and North Caucasus” corporate management practice the Consortium experts:

- functions on recording of Company share ownership, as well as, DGC of JSC “IDGC of Center and North Caucasus” service area is done by independent registrator – JSC “Central Moscow Depositary”;
- shareholders property rights protection assists the practice of tenders for services and goods acting in the Company and which is the subject to the acting Regulations;
- the Board of Directors of JSC ‘IDGC of Center and North Caucasus” approved the control over Company’s material assets. In particular, the amount of transactions, which requires the Board of Directors approval and the General Director quarterly reports the Board of Directors on executing the annual purchase program, was reduced;
- The Company shareholder is aimed to receive the valid estimation of Company and RGC of its service area assets by attracting independent appraisers;
- The shareholders and investors rights on getting qualitative information are secured by introduction of financial reporting of the Company in accordance with IAS and auditing of the report ZAO “PricewaterhauseCoopers Audit”.
- the Company took measures, which guarantee independence of external auditors. In particular, while choosing the auditing company the Company on the competitive basis, the auditor renders auditing services;
- The Board of Directors approved the Regulation on dividend policy of JSC ‘IDGC of Center and North Caucasus”. The Company made a decision on distribution of dividends following the results of 2005 and 2006, the dividends were paid on terms not exceeding 60 days;
- the Company approved the Corporate Management Code, which assigns main principals of corporate management practice of JSC “IDGC of Center and North Caucasus”;
- the members of JSC “IDGC of Center and North Caucasus” is independent from the Company management in order to stand objective and independent judgments concerning current operations of the Company and is able to evaluate the work of management.  The Board of Directors is composed of the representatives from minority shareholders of DGCs of the Company service area, which allows entertaining their opinion during the restructuring process;
- the Board of Directors body is balanced in the context of professionalism of the members who make the work of the Board of Directors more efficient;
- The Board of Directors plays an important role in determining the development strategy of the Company and control over the work of management;
- the meetings of JSC “IDGC of Center and North Caucasus” Board of Directors are held regularly and according to the approved plan in advance, and the members of the Board of Directors provide the information on the Board of Directors meeting preparation work beforehand;
- the members of the Board of Directors are paid the commission, which depends on the results of activity of JSC “IDGC of Center and North Caucasus”;
- the commissions of the General Director of the Company and top management of JSC “IDGC of Center and North Caucasus” depends on the results of the Company activity;
- the Company founded the personnel reserve and developed the programs of succession, which provide the JSC “IDGC of Center and North Caucasus” management succession;
- JSC “IDGC of Center and North Caucasus” developed the procedures, aimed to arrange the possible conflicts and interests of the executive bodies members and the Company Board of Directors members;
- the Company founded the structural department, and functions as internal audit, the work of which in planning, cooperation with other functions of internal control and audit corresponds to the International professional standards of internal audit;
- the corporate secretary is appointed in the Company;
- the Company approved clear and transparent informational policy;
- the Company provides free access of interested persons to financial and accounting reporting of the Company;
- the Company provides transparency of the main management bodies work – the general meeting of the shareholders and board of directors meeting;
- the Company discloses information on purchases and transactions to interested parties;
- the Company stimulates the implementation of corporate social responsibility in the distribution grid companies of the JSC “IDGC of Center and North Caucasus” service area.  In particular, the projects of corporate social responsibility regarding the employees and members of their family, projects of corporate social responsibility regarding the citizens of the DGC service area, charity and sponsorship projects;
- the Company approved the Concept of charity and sponsorship activity of JSC ‘IDGC of Center and North Caucasus” and the Regulations on committee on charity and sponsorship activity of JSC IDGC of Center and North Caucasus”, which determine the main principals and directions of charity and sponsorship activities of the Company, objectives and targets of responsible persons for their implementation, control instruments of projects effectiveness.

The Consortium specialists noted several disadvantages in the corporate management practice of JSC “IDGC of Center and North Caucasus”:

- all meetings of the Board of Directors are held in the correspondent form;
- the practice of acquaintance with the Company business, with organization of the Board of directors work, with the rights and obligations of newly elected to the Board of Directors body members is missing in the Company. The constant advanced training by the Board of Directors members is not provided in the Company;
- several members of the Company Board of Directors are participating in other 5 Boards of directors, that reduces the time for preparation of the Board of directors members to the Board of Directors meeting;  
- the auditing committee and personnel and compensation committee are not formed in the structure of the Board of Directors of the Company;
- the Board of directors of the Company is not responsible for the effectiveness of the risk management system and Company internal control system;
- the head of the organization department of the Company who functions as internal control, administrative and functional, is subordinate to the General Director of the JSC “IDGC of center and North Caucasus”;
- the Business Ethics Code is not approved by the Company.

According to the opinion of the Consortium “RID-Expert RA”, the company with CMNR from 6 to 8 has low risks of corporate management. The Company follows all requirements of the Russian legislation, follows the majority recommendations of the Russian Corporate Code of Conduct and several recommendations of the international practice of corporate management.