9.1. Authorized capital structure

TGC-1’s authorized capital is RUR 38,543,414,165.71 and is represented by 3,854,341,416,571 and 3/7 registered ordinary shares with a par value of RUR 0.01.


 

As of December 31, 2009, the TGC-1 shareholders registry kept by Central Moscow Depositary, was comprised of 294,494 shareholders, including:


9.2. Floating of securities
Shares

Shares of TGC-1 are traded on the main trading platforms of the Russian stock market: MICEX and RTS stock exchanges. On MICEX, the shares of the Company are included on the quotation list A of the first level and on RTS on the quotation list B.

In 2009, 124,155 market transactions were concluded with the shares of TGC-1 on MICEX (compared to 39,849 transactions in 2008). The volume of real-time trade comprised 595,565 mn shares or RUR 4,852.3 mn (106,026.3 mn units or RUR 1,191.8 mn in 2008).

In 2009, there were 357 market transactions on the RTS stock exchange (36 transactions in 2008). The volume of real-time trade comprised 112.06 mn shares or RUR 1.1 mn (49.35 mn shares or RUR 1.06 mn in 2008). There were no transactions on the classic market.

In 2009, TGC-1 proceeded implementing its policy aimed at increasing the Company’s appeal for investors. Observing the requirements of Russian and international law, as well as following the principles of informational openness and transparency, the Company considers protection of its shareholders’ and potential investors’ rights to be one of its priority tasks. Consecutive increase of the level of corporate management resulted in transfer of the shares of TGC-1 from the quotation list A of the second level to the quotation list A of the first level on MICEX.

During 2009, capitalization of TGC-1 increased by 385.29%, exceeding significantly the growth of the Russian equity market for that period. For 12 months of 2009, MICEX and RTS indexes grew by 121.1 and 128.6% respectively, branch indexes “MICEX power industry” and “RTS electricity industry” increased by 167.3 and 133% respectively.


 

Dividend

Pursuant to the resolution of the AGM of TGC-1 of June 17, 2009, no dividend on the Company’s shares for 2008 were paid in 2009. No resolutions on payment of interim dividend in 2009 were made by the Company’s Board of Directors.


Bonds

 

Floating of securities on foreign markets



The program of global depositary receipts (GDR) on the TGC-1 shares was launched on July 9, 2008. The program was initiated in order to guarantee the rights of the holders of RAO UES of Russia shares, who, upon liquidation of the holding, received securities of the spin-off companies proportionally to their stake in the holding.

In May 2008, TGC-1 received permission from the Federal Service for Financial Markets of the Russian Federation for placement and circulation of ordinary registered non-documentary shares outside the Russian Federation in the amount of up to 20% from the total amount of shares.

TGC-1 nominated The Bank of New York Mellon as the Depositary Bank following a competitive bidding process, the Bank being the world leader in this segment of financial market and having been the holder of the depositary receipts programs for RAO UES of Russia.

Depositary receipts were issued under Regulation S and Rule 144A. Each Global Depositary Receipt equals 5000 ordinary shares of TGC-1. The shares are circulating on the over-the-counter market.

GDR under the Rule 144A of Securities and Exchange Commission may be issued by non-American companies on the US market without registration in the Commission for large institutional investors (Qualified Institutional Buyers, QIBs).

GDR under Regulation S may be placed only outside the USA in accordance with the regulation (Regulation S) of the Board of Governors of the US Federal Reserve System.


 

9.3. Principles and practice of corporate governance

The Board of Directors and Management Board run the Company in strict compliance with the principles listed in the Code of corporate conduct, recommended by the FCSM, the most important of which are protection of shareholders’ and investors’ rights, transparency and informational openness. The documents regulating the system of corporate governance are posted on the Internet on the Company’s Web site.

In 2009, the Company’s management implemented measures aimed at protection of shareholders’ and investors’ rights.

In order to ensure the level of efficiency of making resolutions by the Board of Directors of TGC-1 the following committees of the Board remained active:

To improve the efficiency of work the Committee for Business Strategy and the Investments Committee were consolidated pursuant to the resolution of the Board of Directors. New provisions of the Committee for Business Strategy and Investments were approved.

The membership of the Committees of the Board of Directors includes both members of the Board and representatives from shareholders, Energy and Engineering Committee of the Government of St. Petersburg. In 2009, the Committees discussed organizational, financial and economic issues of TGC-1 operations as submitted for consideration to the Board of Directors.

In 2009, the Company management continued work on improvement of the Company’s corporate governance compliance with the Code of Corporate Conduct developed by the FCSM of the Russian Federation.

In order to raise the level of corporate governance and improve the Board of Directors and Management Board meetings preparation efficiency, the Company has developed, and the Management Board has approved regulations on documentation preparation for meetings of the Board of Directors, the Management Board of TGC-1, and implementation of their decisions, several changes in the organizational structure of the Company management divisions were made.

New revisions were developed and approved for the Procedure of TGC-1 divisions developing and issuing commissions to TGC-1 representatives participating in the General Shareholder Meetings and on the Board of Directors of the organizations, where TGC-1 is a shareholder/participant, and for the Provisions on TGC-1 representatives in managing and supervisory bodies of organizations, where TGC-1 has shares/stock in.

TGC-1 is one of a few companies in the Russian power industry with a public corporate governance rating issued by the international rating agency Standard & Poor’s. The rating was first assigned to TGC-1 in February 2006. In 2009, TGC-1 moved to using a new corporate governance rating system of Standard & Poor’s – GAMMA.

GAMMA rating (which is an abbreviation of governance, accountability, management metrics and analysis) shows the evaluation of the Corporate Governance Rating Service of Standard & Poor’s on advantages and drawbacks of the corporate governance practices of an organization as to the investors protection from possible cost losses or lost opportunities for cost generation which may result from the corporate governance drawbacks. Practice and policy of corporate governance are evaluated using the rating methodology of Standard & Poor’s which aggregates provisions of international codes, principles and recommendations on best practices of corporate governance.

Following rating re-evaluation in 2009 the corporate governance rating service of Standard & Poor’s assigned a GAMMA-5 rating to the Company. The corporate governance score (CGS) under the Russian scale increased CGS-5.0 to CGS-5.2 and was withdrawn due to adioption of the GAMMA system.

GAMMA rating is assigned based on evaluation using four analysis components with an evaluation scale from 1 (low) to 10 (high).

In 2009, TGC-1 was assigned the following scores:



9.4. Management and supervisory bodies
9.4.1. General meeting of shareholders

In accordance with article 14 of the Articles of Association of TGC-1, the General Shareholder Meeting is the supreme management body of the Company. The following matters lie within the competency of the General Shareholder Meeting:

1. Introduction of amendments and additions to the present Articles (except for the cases, provided for by subparagraph 33, paragraph. 20.1, article 20 of the present articles) or approval of the revised Articles of the Company, resolution on which is made by no less than three fourths of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

2. Reorganization of the Company, resolution on which is made by at least three fourths of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

3. Liquidation of the Company, appointment of the liquidation commission and approval of the interim and final liquidation balances, resolution on which is made by at least three fourths of votes of the shareholders, holding voting shares of the Company and participating in the General Shareholder Meeting;

4. Election of members of the Board of Directors and early termination of powers thereof. Resolution on election of members of the Board of Directors is made by means of cumulative vote. Resolution on early termination of powers of members of the Board of Directors is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

5. Definition of the amount, nominal value, category (type) of authorized stock and rights, provided by these shares, resolution on which is made by at least three fourths of votes of the shareholders, holding voting shares of the Company and participating in the General Shareholder Meeting;

6. Increasing the authorized capital of the Company by means of increasing the nominal value of shares or by means of placement of additional shares, resolution on which is made by a majority of votes of the shareholders, holding voting shares of the Company and participating in the General Shareholder Meeting, except for times when the authorized capital is increased by means of placement of ordinary shares by private or public subscription, comprising more than 25 % of the previously placed ordinary shares, resolution on which is made by at least three fourths of votes of the shareholders, holding voting shares of the Company and participating in the General Shareholder Meeting;

7. Decreasing the authorized capital of the Company by means of decreasing the nominal value of shares, resolution on which is made by three fourths of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting, by means of acquisition by the Company of a part of the shares with view to reduce the total amount thereof, as well as by means of redemption of the acquired or repurchased shares, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

8. Election of members of the Audit Commission of the Company and early termination of powers thereof, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

9. Approval of the Auditor of the Company, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

10. Approval of annual reports, annual financial statements, including profit and loss statements (accounts of profit and loss) of the Company, as well as distribution of profit (including payment (declaration) of dividend, except for profit, distributed in the form of dividends as of the results of the first quarter, half-year, nine months of the fiscal year) and loss of the Company as of the results of the fiscal year, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

11. Payment (declaration) of dividends of the Company as of the results of the first quarter, half-year, nine months of the fiscal year, approval of the amount, form, term and procedure of payment as per each category (type) of shares, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

12. Approval of the internal instruments, regulating the activity of the Company bodies, resolution on which is made by majority of votes of the shareholders holding voting shares of the Company and participating in the General Meeting;

13. Definition of the order of holding the General Shareholder Meeting, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

14. Split and consolidation of shares of the Company, resolution on which is made by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

15. Placement by the Company of equity securities, convertible into stock, by means of private subscription, or placement of equity securities, convertible into ordinary shares, by means of public subscription, which can be converted into ordinary shares comprising more than 25% of the previously placed ordinary shares, resolution on which is made by three-fourths’ majority of votes of the shareholders, holding voting shares of the Company and participating in the General Shareholder Meeting;

16. Resolving on approval of deals, being interested-party transactions, when stipulated by the legislation of the Russian Federation; such resolutions are made by a majority of votes of all independent shareholders, holding voting shares;

17. Resolving on approval of major transactions, subject whereof is property with the value exceeding 50% of the net book value of the Company’s assets, is carried out by three-fourths' majority of votes of the shareholders, holding voting shares and participating in the General Shareholder Meeting; as In the latter case, resolution on approval of a major transaction is made at the General Shareholder Meeting by a majority of votes of the shareholders, holding voting shares and participating in the General Shareholder Meeting;

18. Resolving on participation in the financial and industrial groups, associations and other alliances of commercial organizations, is carried out by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

19. Resolving on delegation of authorities from a single executive body of the Company to the Managing company (Manager) and early termination of powers of the Managing company (Manager) is carried out by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

20. Resolving on payment of remunerations and (or) compensations to the members of the Audit Commission of the Company is carried out by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

21. Resolving on payment of remunerations and (or) compensations to the members of the Board of Directors of the Company is carried out by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting;

22. Resolving on other matters, considered to be within the competency of the General Shareholder Meeting by the legislation of the Russian Federation, is carried out by majority of votes of the shareholders, holding voting shares of the Company and participating in the General Meeting, unless otherwise stipulated by the effective legislation.

The procedure for calling, preparing, holding, and tallying up results of the General Meeting is defined by the Provisions on the General Shareholder Meeting of TGC-1 approved by the General Shareholder Meeting on June 17, 2009.

Extraordinary General Shareholder Meeting is held by the resolution of the Board of Directors of TGC-1 based on its own initiative, request of the Company’s Audit Commission, the Company’s external auditor, as well as of the Company’s shareholder(s), holding no less than 10% of voting shares of the Company as of the date of making the giving claim. The matters of agenda of Extraordinary General Shareholders Meeting are suggested by the initiating party.

In 2009, General Shareholder Meeting of TGC-1 was held.


9.4.2. Board of Directors

Procedure of activity and meetings of the Company’s Board of Directors is regulated by the Provisions on the Board of Directors of TGC-1 approved by the AGM of the Company of June 18, 2009.

According to the Provisions, TGC-1’s Board of Directors provides general management of the Company’s business, controls compliance with the General Meeting’s resolutions, and guarantees the rights and interests of the Company’s shareholders as required by the laws of Russia.

The Board of Directors consists of 11 members, including four representatives of Gazprom Group, three representatives of Fortum, one representative of the local administration (Vice-Governor of St. Petersburg), one representative of System Operator of UES, the General Director of TGC-1, and one representative of WGC-6.

The Board of Directors had 25 meetings in 2009.


 



CVs of the Members of the Board of Directors

Kirill Seleznev, Chairman of the Board of Directors
Born in 1974. Graduated from the Ustinov Baltic State Technical University, with a degree in impulse devices and automatic rotor lines (1997), and from the St. Petersburg State University, with a degree in finances and credit (2002).
1997–1998: Manager, Baltic Finance Company.
1998–1999: Technical analyst on money market instruments, Specialist, Lead Specialist for Securities, Stock Exchange Transaction Department, JSC Investment Finance Group “Management. Investments. Development”.
1999–2000: Chief Specialist of Investments Group, JSC “Sea Port of St. Petersburg”.
2000–2001: Head of Taxation Group, JSC Baltic Pipeline System, later in JSC Verkhnevolzhskie Main Oil Pipelines, a branch of JSC Baltic Pipeline System.
2001–2002: Deputy Head of Board Administration, Assistant of the Board Chairman, JSC Gazprom.
From 2002: Head of Marketing, Gas and Liquid Hydrocarbons Processing, JSC Gazprom, Board member, JSC Gazprom.
From 2003: General Director, Mezhregiongaz.
2004–2008: member of the Board of Directors, RAO UES of Russia.
Starting from 2008: Chairman of the Board of Directors, JSC TGC-1.
He is also a Chairman of the Board of Directors of JSC Mosenergo, and Chairman of the Board of Directors of ZAO Gazenergoprombank.

Holding no shares of TGC-1.

Kari Kautinen, Deputy Chairman of the Board of Directors
Born in 1964. Graduated from Helsinki University in 1989. Ph.D. in law.
Vice-President of Fortum Power and Heat Oy since 2005.
Starting from 2007: Vice-President of Fortum Oyj.

Holding no shares of TGC-1.

Denis Fedorov, Deputy Chairman of the Board of Directors
Born in 1978. Graduated from the Moscow Bauman State Technical University and completed a full-time postgraduate course of Moscow Energy Institute, Ph.D. in Economics.
2001–2003: worked in RAO UES of Russia, then in Scientific Production company Turbocon.
2003–2006: Head of the Investment Technologies and Technological Projects Department in EuroSibEnergo Engineering, as well as of the Investment Department in Corporation Gazenergoprom.
2006–2007: Advisor of the General Director, Mezhregiongaz.
Starting from 2006, he is co-jointly the General Director of Mezhregionenergosbyt JSC.
Starting from 2007: Head of Electricity Sector Development and Marketing, JSC Gazprom.
Starting from 2008: Chairman of the Board of Directors, WGC-2 and WGC-6, TEC Mosenergo, Deputy Chairman of the Board of Directors, JSC TGC-1.
Starting from 2009: General Director, Gazprom Energoholding.

Holding no shares of TGC-1.

Boris Vainzikher, Member of the Board of Directors
Born in 1968. In 1993, graduated from the St. Petersburg State Technical University, in 2002 from the Open School of Business, Great Britain University, with a degree in management.
2002–2005: General Director, Executive Director, JSC Kirishskaya GRES.
2005–2007: Board member, Technical Director, RAO UES of Russia.
In 2007: General Director, JSC Power Machines.
2007– 2008: Board member, Technical Director, RAO UES of Russia.
Starting from 2008: General Director, TGC-1.

Holding 0.062 % of TGC-1 shares.

Alexey Mityushov, Member of the Board of Directors
Born in 1975. Graduated from the Ustinov Baltic State Technical University (St. Petersburg), with a degree in impulse devices and automatic rotor lines; in 1999 – Faculty of International Educational Programs of North-Western Corresponding Polytechnic Institute; in 2008 – International Management Institute of St. Petersburg (IMISP), “Master of business administration”.
1997 – 2003 worked in various enterprises of St. Petersburg (JSC Open systems, JSC Kirovsky Plant, ZAO Service Industry Development, JSC Electrosila, Nevka Spb).
2003 2007: Head of Property and Corporate Department, Mezhregiongaz.
2003–2007: General Director, JSC Mezhregionteploenergo (part-time job).
Starting from 2007: General Director, Gazpromenergo.
Starting from June 2008: General Director, Chairman of the Board, JSC WGC-6.

Holding no shares of TGC-1.

Valentin Kazachenkov, Member of the Board of Directors
Born in 1949. In 1972, graduated from the Bryansk Technological Institute, with a degree in turbo machinery.
Worked as a production foreman, director of the Power Engineering Machinery Plant in Leningrad.
1994–1996: Deputy Director, starting from 1996 – General Director, Sigma-gaz.
1999–2004: General Director, Peterburgregiongaz.
Starting from 2004: General Director, ZAO Petersburgregiongaz.
Starting from 2007, he is co-jointly the General Director of Kaliningradregiongaz.
He is a member of the Board of Directors of the following organizations: ZAO Peterburgregiongaz, Peterburgregiongaz LLC, Kaliningradregiongaz, Lenoblteploenergo, Peterburgteploenergo, Gatchinagaz.

Holding no shares of TGC-1.

Irina Grave, Member of the Board of Directors
Born in 1968. In 1992, graduated from St. Petersburg State University, Law faculty with a degree in jurisprudence; in 2000 – from the Management faculty, with a degree in Financial Management.
2000–2004: Lawyer and attorney, Salans, Hertzfeld & Heilbronn International .
2005–2007: Vice President, Head of St. Petersburg Office, Fortum Power and Heat Oy (Finland).
Starting from 2007 – Vice-President for Investments in SA of Fortum Oyj (Finland).
She is the member of the Board of Directors of JSC Petersburg Sales Company, as well as of JSC North-West Power Managing company and JSC Ural Power Managing company.

Holding no shares of TGC-1.

Dmitry Novoselov, Member of the Board of Directors
Born in 1961. In 1984, graduated from Lomonosov Moscow State University, Institute of Asian and African Studies.
1986–1992: member of Institute of Oriental Studies of the Academy of Sciences of the USSR. Later joined the State Committee for economic relationships in Karachi, Pakistan.
1992–1997: the third, and later the second secretary in the Third Asian Department of the Ministry of Foreign Affairs of the Russian Federation.
1997–2004: Head of Financial and Administrative Service of the Support Fund for the Coal Industry Reorganization, starting from February 1998: Executive director of the Fund.
2004–2008: Vice-President, Director of Operation, Fortum in Russia.
Starting from 2008: General Director, JSC Fortum.
He is the member of the Board of Directors of JSC Petersburg Sales Company, as well as of JSC North-West Power Managing company and JSC Petersburg Main Grid.

Holding no shares of TGC-1.

Andrey Drachuk, Member of the Board of Directors
Born in 1971. In 1993, he graduated from the judicial-procuratorial faculty of the Sverdlov The Red Banner of Labour Law Institute (starting from 1992, the Ural State Law Academy), with a degree in jurisprudence, qualification lawyer.
2002–2007: Lawyer in Lawyer’s office No.30 of the Sverdlov Region Bar Association.
2004–2006: First Deputy Executive Director – Director for Corporate Affairs and Property of AFK Corporation.
2006–2007: Executive director – First Vice-President of AFK Corporation .
Starting from 2007: Head, Economic Analysis of Investment Projects in the Electricity Sector,
SO of UES.

Holding no shares of TGC-1.

Alexey Sergeev, Member of the Board of Directors
Born in 1954. In 1978, graduated from Leningrad Polytechnic Institute, with a degree in Mechanical Engineering.
1977–1981: Deputy Secretary, later Secretary of the All-Union Leninist Young Communist League Committee of Leningrad Polytechnic Institute.
1981–1985: Second Secretary, later First Secretary of the Kaliningrad managing committee of the All-Union Leninist Young Communist League.
1985–1989: Deputy foreman, foreman, head of assembly facility of the production plant of Leningrad Optical and Mechanical Factory.
1989–1991: Instructor, later Deputy Head of the Department of Leningrad Organizing Committee of the All-Union Leninist Young Communist League.
1991–1992: Deputy Director for Commercial Affairs of Leningrad regional factory for furs and leather goods.
1992–2004: General Director, ZAO Sampo.
2004–2006: Head of Administration of Kaliningrad district of St. Petersburg.
2006–2009: Head of the Committee for Economic Development, Industrial Policy and Trade of the Government of St. Petersburg.
Starting from 2009: Vice-Governor of St. Petersburg.

Holding no shares of TGC-1.

Alexander Dushko, Member of the Board of Directors
Born in 1964. Graduated from St. Petersburg Engineering Economic Academy.
2001–2002: Head of Department for Development of TEC and consumption market, JSC Gazprom.
2002–2002: Head of Budget Planning Department, JSC Gazprom, Deputy Head of Corporate Financing Department, JSC Gazprom.
Starting from 2002 till present time: Deputy Head of Department for Economy and Finance, JSC Gazprom.

Holding no shares of TGC-1.


Members of the Board of Directors whose powers were terminated starting from June 17, 2009

Anatoly Gavrilenko
Born in 1972. Graduated from Moscow Lomonosov State University with a degree in economic cybernetics in 2001 – Moscow Lomonosov State University, with a degree in jurisprudence, in 2001, Intersectoral Institute of Professional Development and Retraining of Management Personnel and Specialists of Plekhanov Russian Economic Academy, with a degree in Enterprise (business) value estimation.
1998–2001: Executive Director, Director for strategic financial planning, General Director of ZAO Alor-Invest.
2001–2004: General Director of Managing company Agana.
Starting from 2004: General Director, member of the Board of Directors of ZAO Leader.

Holding no shares of TGC-1.

Mikhail Khodursky
Born in 1971. Graduated from Moscow Aviation Institute, with a degree in aircraft instruments and measuring and computing complexes; in 1996 – International University (master of economics); in 2004 – Moscow State University of Technology and Management (PhD in Economics).
1999–2004: Deputy Chairman of the Board of ZAO Republican Bank.
2004–2006: Department of private financial services in Banking corporation Gazprombank.
2006–2007: Advisor of the General Director, Mezhregiongaz.
Starting from 2007, he is the Chairman of the Board of ZAO Gazenergoprombank.

Holding no shares of TGC-1.

Tapio Kuula
Born in 1957. Graduated from the Technical University in Tampere (Finland), with a degree in engineering, and from the Tampere University with degree in Economics.
Starting from 2000 till present time: President of Fortum Power and Heat.
2000–2008: of the Board of Directors, starting from 2000 – Senior Vice-President of Fortum Oyj, starting from 2000 – member of the Board of Directors and starting from 2008: Chairman of the Board of Directors of Teollisuuden Voima Oy.
Starting from 2001 till present time: Deputy Chairman of the Board of Directors of Fortum Foundation.
Starting from 2002 till present time: member of Supervisory Board of Pension Insurance company Varma.
Starting from 2009: President and CEO of Fortum.

Holding no shares of TGC-1.

Alexander Polukeev
Born in 1948. In 1971, graduated from Riga Institute of Civil Aviation Engineers, with a degree in economics and organization of air transport.
1978–1981: Chairman of the Leningrad branch “Druzhba” of the International Youth travel bureau “Sputnik” of Central Committee of the All-Union Leninist Young Communist League.
1981–1982: Head of the Department of generalization and extension of advanced experience and production management in the Leningrad Civil Aviation Department.
1982–1989: Deputy General Director for HR and household in the Leningrad Production Association Lenmyasoprom.
1989–2003: Various positions in Leningrad agro-industrial Committee and in the leading enterprises of the city.
2003–2006: Head of Administration of Moskovsky district of St. Petersburg.
2006–2009: Vice-Governor, city of Saint Petersburg.

Holding no shares of TGC-1.

Information on remunerations and compensations to members of the Board of Directors


The amounts of remunerations and compensations to the members of the Board for the period of their activities are defined on the basis of the provisions on payment of remunerations and compensations to the Members of the Board of Directors, approved by the AGM as of June 18, 2009. In accordance with the provisions, payment of compensations is made only if the member of the Board took actual part in the work of the Board; payment of remunerations is made for participation in the meeting of the Board of Directors (regardless of the way it was held).

Overall amount of remunerations to the Board of Directors in 2009 totalled RUR 6,910,803; compensation of costs related to participation in the Board of Directors meetings – RUR 8,971.

9.4.3. Committees of the Board of Directors

The goal of the Committees consists in ensuring the effective work of the Board of Directors in solution of the matters, reserved for its competence. At present time, there are four Committees of the Board of Directors of TGC-1:


Audit Committee of the Board of Directors

The Committee is responsible for elaborating and submitting recommendations (resolutions) for the Board of Directors and the executives of the Company with regard to its audits and reports.

Pursuant to the Provisions on recompensation to members of the Audit Committee of the Board of Directors of TGC-1, shareholder representatives in the Committee work for and at the expense of the shareholders. Only independent members of the Committee are compensated for the costs for participation in the meetings.


 

Committee for Business Strategy and Investment

The Committee is responsible for elaborating and submitting recommendations (resolutions) for the Board of Directors and the executives of the Company in the following areas of the Board of Directors’ activity:

Pursuant to the Provisions on recompensation to members of the Committee for Business Strategy and Investment of the Board of Directors of TGC-1, shareholder representatives in the Committee work for and at the expense of the shareholders. Only independent members of the Committee are compensated for the costs for participation in the meetings.


 

Committee for HR and Remuneration

The Committee is responsible for elaborating and submitting recommendations (resolutions) to the Board of Directors and the executives of the Company in areas of the Board of Directors’ activity relating to HR and the Company’s social responsibility and employment policy.

Pursuant to the Provisions on recompensation to members of the Committee for HR and Remuneration of the Board of Directors of 
TGC-1, shareholder representatives in the Committee work for and at the expense of the shareholders. Only independent members of the Committee are compensated for the costs for participation in the meetings.


 

Reliability Committee

The Committee is responsible for elaborating and submitting recommendations (resolutions) for the Board of Directors and the executives of the Company in the following areas of the Board of Directors’ activity:

Pursuant to the Provisions on recompensation to members of the Reliability Committee of the Board of Directors of TGC-1, shareholder representatives in the Committee work for and at the expense of the shareholders. Only independent members of the Committee are compensated for the costs for participation in the meetings.


 

9.4.4. Audit Commission

The operating procedures of the Audit Commission of TGC-1 are regulated by the Provisions on the Audit Commission, approved by the AGM on 27 May 2005.

In accordance with article 2.1 of the Provisions, the primary goals of the Audit Commission of the Company lie in:

Recompensation and remunerations to members of the Audit Commission are paid in accordance with the Provisions on recompensation and remunerations payment to members of the Audit Commission of TGC-1 approved by the General Shareholder Meeting on 27 May 2005. Pursuant to the Provisions, the procedure and amount of remuneration and recompense payment to members of the Audit Commission are as follows:


 

CVs of the Audit Commission Members

Eugeny Zemlyanoy, Chairman of the Audit Commission
Born in 1985.
Education: Higher, G.V. Plekhanov Russian Economic Academy, with a degree in finance and credit (2007) and jurisprudence (2008).
Positions for the past five years:
2003–2005: Financial Director, Art Creation.
2006–2007: Consultant of the Corporate Finances Practice, BDO Unicon ZAO.
Starting from 2007: Senior Specialist, Power Engineering Department, Electricity Sector Development and Marketing, Gazprom.

Holding no shares of TGC-1.

Margarita Mironova
Born in 1964.
Education: Higher, Plekhanov Moscow Institute of National Economy 1995, Russian Correspondence Institute Textile and Light Industry, 1993.
Positions for the past five years:
2003–2005: Head of Division, Deputy Head of Department, First Deputy Head of Internal Audit Department, Gazprom.
Starting from 2005: Head of Internal Audit Department, Mezhregiongaz.

Holding no shares of TGC-1.

Irja Vekkila
Born in 1949.
Education: Higher, Helsinki High School of Commerce, 1973.
Positions for the past five years:
2001–2005: Auditor, Fortum Oyj.
Starting from 2005: Vice-President, Fortum Oyj.

Holding no shares of TGC-1.

Natalya Orlova
Born in 1976.
Education: Higher, St. Petersburg State University of Engineering and Economics, 2002.
Positions for the past five years:
2001–2005: Senior Specialist of Accountants, Head of Consolidated Reporting Group, Consolidated Reporting Department, Directorate for Economy, Finance and Accounting; Head of Consolidated Reporting Department, Head of Consolidated Reporting Group, Department for Finance and Accounting, Lenenergo JSC.
Starting from 2005: Head of Consolidated Reporting Department – Deputy Chief Accountant, TGC-1.

Holding no shares of TGC-1.

Elena Goldobina
Born in 1962.
Education: Higher, Perm University, Faculty of Economics, 1984.
Starting from 1995: Chief Economist, Department for Control of the Firms Ensuring Gas Supply System Operation, Department of Internal Audit and Control of Subsidiaries Operations, Management Administration, Gazprom.

Holding no shares of TGC-1.


9.4.5. Management Board

Management Board is a corporate executive body of TGC-1 responsible for the daily operation of the Company as determined by article 22 of the Articles of Association of TGC-1. Provisions on the Management Board of TGC-1 was approved by the General Shareholder Meeting of TGC-1.






Members of the Management Board as at December 31, 2009

Boris Vainzikher, General Director, Chairman of the Management Board
Born in 1968. In 1993, graduated from the St. Petersburg State Technical University, in 2002 – from the Open School of Business,
Great Britain University, with a degree in management.
2002–2005: General Director, Executive Director, JSC Kirishskaya GRES.
2005–2007: Board member, Technical Director, RAO UES of Russia.
In 2007: General Director, JSC Power Machines.
2007–2008: Board member, Technical Director, RAO UES of Russia.
From 2008: General Director, Chairman of the Management Board, TGC-1.

Holding 0.062 % of TGC-1 shares.

Sergey Laputko, Deputy General Director, Chief Engineer – Director of Nevsky Branch
Born in 1948. Graduated from the Leningrad Technology Institute of the Pulp and Paper Industry.
2000–2005: First Deputy General Director – Chief Engineer, Chief Engineer, Lenenergo.
2005–2007: Chief Engineer, TGC-1.
Starting from 2007: First Deputy General Director for Technical Policy – Chief Engineer
(as of 2010 – Deputy General Director, Chief Engineer – Director of Nevsky Branch), TGC-1.

Holding 0.000005 % of TGC-1 shares.

Kirill Lykov, Director for Economy and Finance (CFO)
Born in 1971. Graduated from St. Petersburg State University of Economics and Finance.
2000–2004 – Project Manager of Corporate Affairs Department (2002), Deputy Director for Corporate Affairs (2003–2004),
Director for Corporate Affairs (2004–2006), Director for Property Management (2006–2007). Power machines.
2007–2008: Deputy General Director for Operations, Polus Zoloto.
2008–2009: Executive Director, INTERROS Holding company.
Starting from 2009: Deputy General Director for Economy and Finance (as of 2010 – Director for Economy and Finance), TGC-1.

Holding no shares of TGC-1.

Sergey Redkin, Director for Development
Born in 1977. Graduated from the St. Petersburg State Technical University.
2006–2008: Head of Business Development Department, RAO UES of Russia.
2008–2009: Project Director, SPb Upravcom .
Starting from 2009 till present time: Deputy General Director for Development (as of 2010 – Director for Development), TGC-1.

Holding no shares of TGC-1.

Igor Dubinnikov, Administrative Director
Born in 1976. Graduated from the Kursk State Pedagogical University, and in 2002 from Orel Regional Academy of Public Administration under the auspices of the President of the Russian Federation, with a degree in public administration.
2005–2006: Deputy General Director for HR Management, Russian Managing Company.
2006–2007: Board member – Administrative Director, Power Machines corporation, Director for HR and Social Affairs, Leningradsky Metallichesky Zavod (LMZ).
2008–2009: General Director, SPb Upravcom.
Starting from 2009: Chairman of the Committee for personnel and social policy and professional education of St. Petersburg Chamber of Commerce and Industry.
Starting from 2009: Deputy General Director for HR (as of 2010 – Administrative Director), TGC-1.

Holding no shares of TGC-1.

Alexander Antipov, Deputy General Director, Director of Kolsky Branch
Born in 1953. Graduated from the Leningrad Polytechnic Institute.
2005–2007: Director of Kolsky Branch, TGC-1.
Starting from 2007: Deputy General Director – Director of Kolsky Branch, TGC-1.

Holding no shares of TGC-1.

Raisa Stanishevskaya, Chief Accountant
Born in 1959. Graduated from the Engels Leningrad Institute of Soviet Trade.
1992–2005: Chief Specialist of the methodological accounting group; Deputy Chief Accountant; Head of Consolidated book-keeping Department, Directorate for Economics, Finance and Accounting – Deputy Chief Accountant; Deputy Director – Head of the Audit Department, Audit and Economic Security Department, JSC Lenenergo.
Starting from 2005: Chief Accountant, TGC-1.

Holding 0.0000001% of TGC-1 shares.

Andrey Fedorov, Director for Internal Security
Born in 1960. Graduated from the Leningrad State University.
2005–2007: Head of Special Programs Department, TGC-1.
Starting from 2007: Deputy General Director for General Affairs (as of 2010 – Director for Internal Security), TGC-1.

Holding no shares of TGC-1.

Valery Belov, Deputy General Director, Director of Karelsky Branch
Born in 1972. Graduated from the St. Petersburg Technical University.
In 2004: First Deputy Chief Engineer, JSC Karelenergo.
In 2005: First Deputy General Director – Chief Engineer, JSC Karelenergogeneratsiya.
2005–2007: Director of Karelsky Branch, TGC-1.
Starting from 2007 till present time: Deputy General Director – Director of Karelsky Branch, TGC-1.

Holding 0.00000002% of TGC-1 shares.

Andrey Sokolov, Director for Logistics
Born in 1963. Graduated from the Leningrad State University.
In 2005: Deputy Director for Repair and Capital Construction, Generating company JSC Lenenergo.
2005–2008: Deputy Head of Operations Support Department, Head of Fuel Supply and Procurement Department, TGC-1.
Starting from 2008: Deputy General Director for Purchasing and Logistics (as of 2010 – Director for Logistics), TGC-1.

Holding no shares of TGC-1.

Alexander Stolyarov, Director for Sales
Born in 1975. Graduated from the St. Petersburg State Technical University in 1997.
2005–2006: General Director, Petersburg Power Sales Company.
In 2006: Adviser to the General Director, Office of General Director, Petersburg Power Sales Company.
In 2007: Deputy General Director for Sales, TGC-1.
Starting from 2007: Deputy General Director for Sales, TGC-1.
Left the Company in 2010.

Holding no shares of TGC-1.

Andrey Filippov, Director for Capital Construction
Born in 1959. In 1981, graduated from Leningrad Lenin Higher Naval Engineering School,
in 2002 – from the St. Petersburg Ustinov Baltic State Technical University “Voenmekh”.
2006–2007: Deputy General Director, Peterburgteploenergo, Gazprom.
2007–2009: Deputy General Director for Investment and Capital Construction, TGC-1.
Starting from 2009: Deputy General Director for Capital Construction (as of 2010 – Director for Capital Construction), TGC-1.

Holding no shares of TGC-1.



9.5. Subsidiaries and affiliates of TGC-1

 

9.5.1. Principles of subsidiaries and affiliates management

Corporate subsidiaries and affiliates (SA) management by the Company is delivered based on the following principles:

Principles of corporate SA management are based on the following regulations:


9.5.2. Subsidiaries and affiliates activities in 2009

Murmanskaya CHPP

Murmanskaya CHPP was built in 1934 for supplying power to the city of Murmansk and neighbouring regions. In 1963, Murmanskaya CHPP joined Kolenergo. In October 2005 in accordance with the Russian power industry reform plan, it split off as an independent joint stock company, with its personnel and generating facilities remaining with RAO UES of Russia, and in 2007 it became a subsidiary of TGC-1. At the present time, Murmanskaya CHPP has a co-generation power plant and two boiler units with installed heat and electric capacity of 1,111 GCal/h and 12MW respectively, and starting from July 2005, 12 electric boiler stations with total installed capacity of 60MW joined Murmanskaya CHPP. Furthermore, Murmanskaya CHPP possesses a main distribution plant ensuring power supply to the city of Murmansk, and 50 kilometres of heating mains in Murmansk and 10 kilometres of heating grids in the settlements of Murmashi and Murmashi-3.

Murmanskaya CHPP provides heat to three fourths of all plants and residential areas of Murmansk, and residents of the settlements of Murmashi, Verkhnetulomsky and Kola station.

In 2009, pursuant to Article 84.2 of Federal Law No.208-FZ of December 26, 1995 on Joint Stock Companies, TGC-1 made a mandatory offer to Murmanskaya CHPP shareholders of buy-back of their ordinary and preferred shares. The shares buy-back price was calculated in accordance with the laws as a weighted average market value of shares for the past six months and amounted RUR 0.06155 per ordinary registered non-documentary share of Murmanskaya CHPP and RUR 0.11954 per preferred registered non-documentary share of type A of Murmanskaya CHPP. As a result of securities redemption, the portion of Murmanskaya CHPP ordinary shares owned by TGC-1 increased from 90.24% to 95.03%, and TGC-1's share in the authorized capital of Murmanskaya CHPP increased from 84.06% to 90.34%.

Khibiny Heating Company

JSC Khibiny Heating Company (KhHC) was established within the framework of the Agreement on main principles of implementation and mechanism of interaction while reforming the heat supply system of the Apatity and Kirovsk regions, concluded on May 26, 2006 between the Government of the Murmansk Region, RAO UES of Russia, TGC-1, Apatitskaya CHPP, PhosAgro and Apatit.

TGC-1 and Apatit are co-founders and co-owners of KhHC and have an equal number of shares.

The goal of establishment of Khibiny Heating Company is the implementation of the investment project for refurbishment of Apatitskaya CHPP and construction of the heating mains from the city of Kirovsk with installation of the central heating station, commissioning and operation of the heating mains. It is further planned to operate the heating grids of the city of Kirovsk and grids of Apatitskaya CHPP of Kolsky Branch of TGC-1.

The objective of the project to refurbish Apatitskaya CHPP and build heating mains for the city of Kirovsk with installation of the central heating station is to create a system for supplying heat from Apatitskaya CHPP to the city of Kirovsk and the settlement of Kukisvumchor, with shutting down of the boiler unit in the city of Kirovsk. It is planned to connect load of the city of Kirovsk and the settlement of Kukisvumchor total of 270 GCal/h maximum. Suggested heat output is up to 650,000 GCal per annum.

At the present time construction of the heating mains project is being developed and approved. In 2010, the participants of the project plano make the investment decision on the project and start its implementation through participation of a third-party investor.

St. Petersburg Heating Grid

On December 21, 2009 the Board of Directors of TGC-1 decided to establish a subsidiary – St. Petersburg Heating Grid. Creation of St. Petersburg Heating Grid was the result of a trilateral agreement between the Administration of St. Petersburg, TGC-1 and GUP TEC SPb to unify the heating grids within the territory of CHPPs of TGC-1. At the initial stage the St. Petersburg Heating Grid will exercise control over TGC-1 heat mains and inter-district grids of TEC SPb covered by TGC-1 which will be transferred to it on a lease basis. In 2010, additional shares issue of St. Petersburg Heating Grid is planned with TGC-1 and TEC SPb participating in it by transferring the leased grids as payment for the shares. St. Petersburg participation share in the St. Petersburg Heating Grid will amount to 25-40% and will be defined proceeding from results of independent evaluation of TGC-1 and TEC SPb property and assets. TGC-1 reserves heat sales ensuring required level of control over heat business. St. Petersburg Heating Grid will start heat transmission in early 2011.

Integrated management of these networks will lead to a better allocation of funds for maintenance and reconstruction of heating grids, monitoring of delivery of heat power from generating stations to consumers, as well as improving the responsiveness of maintenance divisions to breakdowns and emergencies. The establishment of St. Petersburg Heating Grid will also attract targeted investments for development of heating grids.

TGC-1 appointed Eugeny Khachaturov to the position of the General Director of St. Petersburg Heating Grid.

Membership of the Board of Directors of St. Petersburg Heating Grid: B. F. Vainzikher, S. M. Redkin, Riho Sild, O. B. Trishkin, A. A. Fedorov, S. S. Fil and A. N. Shishkin.