The Board of Directors carries out overall management of the Company’s activities with the exception of questions within the competence of the Shareholders General Meeting, and plays a fundamental role in managing the Company.

Members of the Board of Directors recognise their responsibility to the shareholders and consider their main task to be honest and competent execution of the obligations of managing the Company, ensuring support and growth in value of its shares, as well as protection of shareholders’ legal rights and their ability to realise these. The Board of Directors creates and supports all necessary mechanisms to control the activities of executive bodies of the Company, including monitoring and assessing its results.

In accordance with the Kubanenergo Charter the following questions in particular lie within the remit of the Board of Directors of the Company:

• determining priority areas of activity and development strategy for the Company;
• convening annual and extraordinary general shareholders meetings;
• determining the price (monetary value) of property, prices of offering and buyback of shares in the Company;
• acquisition and realisation of shares offered by the Company in the circumstances stipulated by the Federal law On Publically Owned Companies;
• electing the General Director of the Company and early termination of his authority;
• electing members of the Management of the Company and early termination of their authority;
• recommendations to the general shareholders meeting on the amount of fees and compensation to be paid to members of the Revision Commission and determining the size of the fee to be paid to the auditor;
• recommendations on the size of dividends on shares and the order of payment;
• approving internal documents at the Company;
• approving the business plan, including the investment programme, and quarterly reports on their execution;
• setting up branches and opening offices, as well as their liquidation;
• decisions on the Company participating in other organisations;
• setting the borrowing policy of the Company;
• approving major transactions as well as transactions in which there is an interest in the circumstances stipulated by the Federal law On Publically Owned Companies ;
• consideration of reports from the General Director on the Company’s activities and on execution of decisions taken by the general shareholders meeting and the Board of Directors;
• approving the order of the Company’s work with other organisations in which they play a part;
• determining the Company’s position on main agenda questions for shareholders general meetings and meetings of the Boards of Directors of subsidiaries and affiliates;
• preliminary approval of decisions for the company to carry out the following transactions:
• transactions, the subject of which is fixed assets of the Company in an amount more than 10% of the balance value of its aggregated fixed assets;
• transactions related to transfer of ownership or possible transfer of ownership of property which is fixed assets, non-material assets, uncompleted construction, with the aim of whose use is transmission, dispatching, distribution of electricity;
• transactions related to uncompensated transfer of Company property or property rights (requirements) to itself or to a third part; transactions related to deliverance from property obligations towards itself or a third party; transactions related to uncompensated provision of services by the Company to a third party;
• determining the procurement policy of the Company, as well as approving the annual integrated purchasing programme;
• approving target values of key indicators of Company effectiveness and reports on their execution;
• determining the policy of the Company relating to improving reliability of the distribution network and other electricity network facilities, including approving strategic programmes on developing the electricity network and improving its reliability and safety;
• setting up committees of the Board of Directors of the Company, electing their members and early termination of their authority.

The Statement on the order of convening and holding meetings of the Board of Directors of the company^* sets the make up and order of formation of the Board of Directors, the rights, duties and responsibilities of its members, the order for convening and holding its meetings, the order for making decisions, as well as other questions regarding its work. The Board of Directors is elected as eleven members by the general shareholders meeting for a period lasting until the next annual general shareholders meeting.

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   The Statement on the order of convening and holding meetings of the Board of Directors of Kubanenergo can be found at www.kubanenergo.ru in About the company — Constituent and in house documents