Corporate Governance Model
A well‑functioning corporate governance framework is essential to the Company’s successful growth as it maintains the appropriate balance of interests between creditors, investors, shareholders and employees. PJSC Rosseti is one of the largest Russian public companies in terms of the scale of its operations.
The number of shareholders of the Company at the end of the reporting period exceeded 928,000 persons. The total number of private shareholders as of 31 December 2023 is 925,700 persons. Compared to the beginning of the reporting year, the share in the Company’s authorised capital owned by individuals increased from 5.7% to 6.31%.
Due to the substantial number of private shareholders, the Company bears a great deal of responsibility for seeing to it that their rights are respected. For this reason, the Company gives this task particular attention.
Company’s equity holding structure, %
The corporate governance model of PJSC Rosseti is a system of relationships between shareholders, the Board of Directors of the Company, executive bodies of the Company, local communities in the areas of the Company’s operations and other stakeholders, which ensures operations and areas for development, management and control, rules and procedures for corporate decision‑making in the Company and in the Rosseti Group as a whole.
Corporate governance objectives:
The practice of corporate governance in the Company is based on the principles of corporate governance enshrined in the Corporate Governance Code of the Bank of Russia, as well as the provisions of the Corporate Governance Code of the CompanyMinutes of the Company’s Board of Directors No. 556 dated 22 November 2021..
- Respect and guarantees for rights and legitimate interests of shareholders, investors as well as stakeholders of the Company
- Information and financial transparency of the Company’s activities
- Predictable dividend policy of the Company that considers fair the reasonable expectations of investors
- Efficient and professional Board of Directors accountable to the shareholders of the Company, and its active involvement in strategic planning, management and control of business processes
- Consistency and collegiality in decision‑making
- Zero tolerance to corruption and fraud
- High standards of business ethics and compliance
- Minimisation and settlement of corporate conflicts
- Effective risk management
- Well‑developed corporate culture and corporate social responsibility practice
- Stronger emphasis on using ESG principles
- Prompt response to the challenges of the external environment
- Consideration of the opinions of minority shareholders of the Company and companies of the Rosseti Group in the course of corporate governance
- Continuous improvement of corporate governance framework
- Introduction of uniform management standards at the Rosseti Group
- Higher operational efficiency, better management system of the Company and of Rosseti Group, and improved quality of business processes
- Professional interaction with investors, employees and partners of the Company
- Improved information transparency of the Company, better internal control and audit mechanisms
- Introduction of corporate governance elements that facilitate objective and high‑quality disclosure of non‑financial information by the Company
The Company’s compliance with the principles and priorities of corporate governance in all areas of its activities enables achievement of the goals of corporate governance, primarily ensuring the growth of shareholder value and investment attractiveness of the Company and the Rosseti Group as a whole.
By timely introducing the necessary changes into corporate governance practices and ensuring high efficiency of management decisions, the Company adheres to the requirements of the law, the Listing Rules of the PJSC Moscow Exchange and corporate governance standards recognised in Russian and international practice. The Company conducts a systematic evaluation of corporate governance and presents its findings for consideration to the Board of Directors of the Company (its dedicated committee).
Specific Features of the PJSC Rosseti’s Corporate Governance Model
The Russian Federation represented by Rosimushchestvo is the major (controlling) shareholder and owner of 75.28%Structure as of 31 December 2023, including outstanding shares of additional issue 1-01-65018-D-109D. of PJSC Rosseti’s ordinary shares. The status of a company with state participation requires a number of governance features, including ones below:
- PJSC Rosseti manages the power grid complex of Russia. The main goal of the Company’s activities is defined as ensuring the reliability of the operation of the power grid complex and uninterrupted power supply to consumers. PJSC Rosseti also coordinates the activities of power grid companies, the Rosseti Group, including those in the field of tariffs, technical policy, investment planning, financial and economic activities, as well as in the field of anti‑corruption policy.
- PJSC Rosseti is included in the List of strategic joint stock companiesApproved by Decree of the President of the Russian Federation No. 1009 dated 4 August 2004.. The status of a strategic joint stock company implies a special procedure for the management and control of the Company by the President, the Government and the federal executive authorities of the Russian Federation.
- PJSC Rosseti is included in a special list of joint stock companies for which the Russian GovernmentExecutive Order of the Government of the Russian Federation No. 91-r dated 23 January 2003. determines the position on the most important issues (including the entry of items on the agenda of the General Meeting of Shareholders, nomination of candidates for election to management and control bodies, voting on items on the agenda of the General Meeting of Shareholders, etc.), as well as approves directives to representatives of the interests of the Russian Federation on the Boards of Directors.
- PJSC Rosseti undertakes to ensure the fulfilment of certain instructions and tasks initiated by the Russian Federation in its subsidiaries as well.
Key Documents Regulating Corporate Governance in PJSC Rosseti
- Corporate Governance Code of the Bank of Russia
- Company’s Articles of Association
- Company’s Corporate Governance Code
- Regulations on the Management and Control Bodies of the Company (on the General Meeting of Shareholders, on the Board of Directors, on the Management Board and on the Audit Commission)
- Regulations on Remuneration and Compensation paid to Members of the Board of Directors of the Company and the Audit Commission of the Company
- Regulations on Committees under the Board of Directors:
- Regulations on the Audit Committee of the Board of Directors
- Regulations on the Personnel and Remuneration Committee of the Board of Directors
- Regulations on the Strategy Committee of the Board of Directors
- Regulations on the Investment Committee of the Board of Directors
- Regulations on the Remuneration and Compensation paid to Members of the Committees under the Board of Directors of the Company
- Regulations on the Dividend Policy
- Regulations on the Corporate Secretary
- Regulations on the Performance Evaluation of the Board of Directors
- Anti‑Corruption Policy of PJSC Rosseti and subsidiaries of PJSC Rosseti
- Internal Audit Policy
- Risk Management and Internal Control Policy of PJSC Rosseti and its subsidiaries (Rosseti Group)
- Code of Corporate Ethics and Conduct of Employees
- Regulations on the Information Policy
- Regulations on Insider Information Protection
Management of the Group’s Companies
As of 31 December 2023, PJSC Rosseti has 46 regional branches, including 7 branches of «Main Power Grids» (MPG), 1 branch of the Centre for Technical Supervision, 37 branches of «Main Power Grid Enterprise» (MPGE) and «Bely Rust» Specialised Production Base.
As of 31 December 2023, PJSC Rosseti participates in 48 business companies that operate in various sectors, including those that ensure the functioning of the power grid complex.
— The interests of the merged companies and the Company’s shareholders were taken into consideration during the preparation and implementation of the restructuring process, and their expectations and suggestions were meticulously accommodated. The Company kept up a high standard of corporate governance throughout the restructuring.
Furthermore, we expeditiously incorporated our corporate standards into the operations of three new companies that joined the Rosseti Group as part of an additional issue.
PJSC Rosseti manages the Group’s companies in accordance with uniform corporate standards aimed at ensuring the efficiency of business processes, controlling their quality, and minimising risks.
The primary means of engagement is guaranteed by corporate procedures, decision-making as the sole shareholder with regard to 100% owned subsidiaries, the exercise of shareholder rights with regard to other Group’s companies, notably through representation on boards of directors and board committees.
These tools make it possible to control the actions of governance bodies on all key issues, the list of which is specified in the Articles of Association of PJSC Rosseti and its subsidiaries.
We also maintain an open dialogue with minority shareholders of the Group’s companies. Interaction within the framework of the General Meetings of Shareholders and the work of the Boards of Directors, whose members and chairmen are senior managers of PJSC Rosseti, plays an important role.