Legal Materials - Board of Directors Regulation

APPROVED

by the decision of the RAO UES of Russia annual General Shareholders Meeting dated June 28, 2002, as amended by the RAO UES of Russia annual General Shareholders Meeting decision dated May 30, 2003.

REGULATION

on the Board of Directors of the Unified Energy System of Russia, a Russian public joint stock company "RAO UES of Russia".

1.    GENERAL

1.1. The Board of Directors of the Unified Energy System of Russia "RAO UES of Russia", a Russian public joint stock company (hereinafter referred to as the Company) is the management body of the Company and shall operate on the basis of the Company Articles of Association and this Regulation.

1.2 The Board of Directors shall effect the general management of the Company operations except for the issues referred to the general shareholders meeting terms of reference pursuant to the Federal Law "On Joint Stock Companies".

1.3. The general shareholders meeting shall elect the Company Board of Directors by cumulative voting. The Board of Directors shall consist of 15 members.

The Board of Directors members shall be elected for the period of one year. The persons elected as the Board of Directors members may be reelected into the Board for the unlimited number of times.

The procedure of the Board of Directors election voting list nomination is set forth in the Company Articles of Association.

Only a natural person can be a member of the Company Board of Directors. No shareholding qualification shall be required of any member of the Company Board of Directors.

The Company Board of Management members cannot constitute more than one fourth of the Company Board of Directors members.

The Company Board of Management Chairman cannot concurrently occupy the position of the Company Board of Directors Chairman.

The general shareholders meeting decision on the early termination of the office can be adopted only in respect of all the Company Board of Directors members.

1.4. The Board of Directors Chairman and his deputies shall be elected by the Board of Directors members among themselves by the majority vote to the general number of the Board of Directors members.

The Board of Directors shall be entitled at any time to reelect its Chairman and the Board of Directors Deputy Chairman by the majority vote to the general number of the Board of Directors members.

1.5. Technical (information, documentary, protocol, secretarial) support of the current Board of Directors operations shall be provided by the Board of Directors executive secretary subject to this Regulation and pursuant to the Board of Directors Chairman commissions. Should the Board of Directors secretariat office is established the Board of Directors executive secretary shall directly manage the Board of Directors secretariat office activities.

The Board of Directors executive secretary shall be approved by the Company Board of Directors.

2. THE COMPANY BOARD OF DIRECTORS TERMS OF REFERENCE

2.1. The Company Board of Directors terms of reference shall include the Company operations general management issues except for the issues referred to the general shareholders meeting terms of reference pursuant to the Company Articles of Association.

2.2. The Company Board of Directors shall perform overall management of the Company executive bodies, but shall not interfere with the executive bodies business management and organizational operations.

2.3. The Company Board of Directors terms of reference include the issues stipulated in the Company Articles of Association.

2.4. The issues included to the Company Board of Directors terms of reference shall not be referred to the Company management body decision.

3. RIGHTS, RESPONSIBILITIES AND LIABILITY OF THE COMPANY BOARD OF DIRECTORS MEMBERS

3.1. Subject to the required non-disclosure of the received information the Board of Directors members shall be entitled to:

participate in the Board of Directors meetings;

participate in the Company events;

receive the operational and technical, economic, business and other information about the Company as might be required to perform his duties;

study the Company documents, receive the copies of the same, and the copies of the daughter and dependent companies, available at the Company pursuant to the list approved by the Company Board of Directors.

The information and documents specified herein shall be made available to the Company Board of Directors members within seven calendar days after the Company received an appropriate request addressed to the Company Board of Management Chairman.

3.2. The Board of Directors members shall be entitled to use social and other benefits as the Company employees unless that is expressly prohibited by the applicable legislation.  

Pursuant to the general shareholders meeting decision the Board of Directors members for the period of their tenure may be reimbursed and (or) compensated for the expenses related to discharging their functions of the Company Board of Directors members.  The amount of such reimbursement and compensation shall be specified by the decision of the general shareholders meeting.

3.3. The Board of Directors shall be responsible for:

- fulfilling the decisions of the general shareholders meeting with regard to the Board of Directors terms of reference;

- consequences of the decisions made on the issues included into its terms of reference.  

3.4. The Board of Directors members shall be loyal to the Company.

The Board of Directors member shall:

- regularly attend the Board of Directors meetings;

- fulfill the decisions adopted by the general shareholders meeting and the Board of Directors;

- advise the Board of Directors executive secretary on the alteration of his permanent (principal) place of employment (service, business, etc)

- advise the Board of Directors, Auditing Commission and the Company Auditor of its relation to any transaction of which the Company is or is likely to be a party, or in case of any other clash of interests of the said person and the Company in relation to the existing or contemplated transaction.

3.5. The Board of Directors members during their tenure in that capcity shall inform the Board of Directors of their intention to establish or participate in the enterprises entering the competition with the Company.

3.6. The Board of Directors members shall not directly or indirectly be reimbursed for exercising their influence on the Company Board of Directors and/or general shareholders meeting decision making.

3.7. The Board of Directors shall discharge their duties in good faith and in such a manner, which they deem appropriate to the benefit of the Company.

3.8. The Company Board of Directors members shall be liable before the Company for the losses incurred by the Company through their wrongful acts (failure to act), unless other liability grounds and amount are not stipulated in the Federal laws.  Meanwhile the Board of Directors members, who voted against the decision that entailed the losses sustained by the Company, or who did not participate in the voting, shall be relieved from any liability.

3.9. The Board of Directors members violating the responsibilities stipulated in the Board of Directors Regulation and the Company Articles of Association shall be liable in the amount of the losses sustained by the Company as a result of violating the aforesaid responsibilities by the Board of Directors member, including the Company lost profits in the amount of their full and fair market value unless other liability ground and extent is not stipulated in the applicable Russian Federation legislation.

4. RIGHTS, RESPONSIBILITIES AND LIABILITY OF THE BOARD OF DIRECTORS CHAIRMAN

4.1. The Board of Directors Chairman shall:

1) generally arrange the Board of Directors operations;

2) convene the scheduled and extraordinary BD meetings, in particular notify the Board of Directors members of the next Board of Directors meeting subject to the procedure stipulated herein, determines the meeting agenda and form (formal or absentee voting), unless the meeting form is predetermined by the Board of Directors decision or the Board of Directors works schedule, supervise the Board of Directors meetings arranged as absentee votes;

3) perform the chairman functions at the Board of Directors meetings:

• following the information provided by the Board of Directors executive secretary officially record the meeting quorum or its absence, and inform the Board of Directors members of the quorum available to make the Board of Directors decision on an appropriate issue,

• point out possible changes in the meeting agenda issues succession, general agenda modifications; if necessary initiate the discussion of the possible modifications to the scheduled meeting agenda issues succession,

• ensure final approval of the particular Board of Directors meeting agenda and following the approval results notify the Board of Directors members of the official meeting agenda,

• officially open the meeting or notify the attending Board of Directors members of the Board of Directors ineligibility at this meeting,

• take steps to postpone the meeting with a particular agenda in case the quorum is unavailable and arrange the notification of those absent about the decision made,

• introduce the attending persons to the Board of Directors members and make sure that the persons invited the meeting on individual agenda issues shall be attending the meeting strictly within the Board of Directors scope of work on such issues, or make an appropriate commission to the Board of Directors executive secretary,

• monitor the meeting order requirements stipulated in p. 9.4. herein,

• call upon the speakers, presenters, and those willing to make a report, and if appropriate open a free discussion on a corresponding issue,

• record official suggestions made by the Board of Directors members on an appropriate draft(s) decision(s) of the Board of Directors,

• in order of their submission call for a vote on the draft decisions proposed by the Board of Directors members at the meeting and/or during its preparation,

• arrange voting on the called Board of Directors meeting draft decision,

• at the formal Board of Directors meeting officially announce the Board decision taken (following voting results) or notify all the Board of Directors members in writing about the decision taken by the Board following the absentee voting meeting,

• officially close the Board of Directors meeting when the agenda is finished or subject to the Board of Directors decision on early termination of the meeting,

• arrange the Board of Directors meeting minutes recording,

• supervise the activities of the Board of Directors executive secretary and the Board of Directors secretarial office (if any),

• sign the Board of Directors meeting minutes as a chairman;

4) act as a chairman of the general shareholders meeting, fulfilling appropriate duties stipulated in the Company Articles of Association and the Company general shareholders meeting Regulation;

5) personally supervise the preparation to annual and extraordinary Company general shareholders meetings;

6) arrange and supervise the process of the Board of Directors members receiving the information about the Company operations pursuant hereto;

7) supervise the fulfillment of the Board of Directors work schedule approved by the Board of Directors;

8) represent the Board of Directors in its relations to the Company management bodies;

9) on behalf of the Board of Directors arrange the supervision over the fulfillment of the general shareholders meeting and Board of Directors decisions;

10) represent the Board in its relations with the representative bodies of other organizations;

11) supervise the official correspondence of the Board of Directors with shareholders, management bodies and employees of the Company, sign the letters and other documents on behalf of the Board of Directors;

12) taking into account the Board of Directors opinion make official comments and interpret previously adopted decisions of the Board of Directors and also state the Board of Directors opinion on the issues discussed at the Board of Directors but not formalized in appropriate Board of Directors decisions;

13) take steps so that the shareholders should be fully informed about the decisions taken by the Board of Directors (in particular, through publishing the Board of Directors meetings minutes on the Company web-site);

14) arrange and supervise the activities of the commissions, committees and panels of the Board of Directors (if any);

15) officially enforce the supervision of the Board of Directors decision fulfillment and terminate the supervision of the Board of Directors decision fulfillment;

16) make sure that the Board of Directors members, Board of Directors executive secretary and secretarial office (if any) and other persons and bodies strictly adhere to the requirements of this Regulation;

17) systematically, proactively and in cooperation with the Company Auditing Committee supervise on behalf of the Board of Directors the activities of the Company management bodies and administrative staff with the purpose of precluding the attempts of the said Com bodies to make decisions referred to the Company general shareholders meeting, Board of Directors and Auditing Committee terms of reference pursuant to the applicable legislation, Company Artciles of Association and Company by-laws;

18) make provisions to take into account the opinion of each Board of Directors member regarding the wording of an appropriate Board of Directors meeting minutes;

19) exercise other functions arising from the Board of Directors authorities (terms of reference) stipulated in the Company Articles of Association , and the powers stipulated in the applicable legislation and the Company Articles of Association.

4.2. In case the Board of Directors Chairman fails to attend the Board of Directors meetings and is absent at its permanent place of employment between the meetings for 45 calendar days or in case he is unable to perform his functions, his duties shall be performed by the Board of Directors Deputy Chairman.

4.3. In case the Board of Directors Chairman and his Deputy fail to attend the Board of Directors meetings the Board of Directors Chairman functions in relation to the Board of Directors decisions shall be performed by one of the Board of Directors members.

5. RIGHTS, RESPONSIBILITIES AND LIABILITY OF THE BOARD OF DIRECTORS EXECUTIVE SECRETARY AND SECRETARIAL OFFICE (IF ANY)

5.1. The Company Board of Directors executive secretary shall be appointed by the Board of Directors decision.

5.2. If necessary the Board of Directors shall establish the Board of Directors secretarial office headed by the Board of Directors executive secretary.

5.3. The Board of Directors executive secretary shall:

1) personally and through supervision of the Board of Directors secretarial office (if any) operations provide organizational, information and documentary support of the Board of Directors activities both in relation to preparing and convening the Board of Directors meetings and between the meetings, including:

• under the commission of the Board of Directors Chairman and on his own responsibility inform all the Board of Directors members about forthcoming extraordinary and scheduled meetings of the Board of Directors subject to the procedure stipulated herein,

• provide the Board of Directors members with appropriate documents, materials and draft documents and materials required to conduct the Board of Directors meeting,

• register the correspondence addressed to the Board of Directors and/or its Chairman and/or Board of Directors Deputy Chairman (including requests, demands, petitions) and provide organizational support for preparing appropriate replies, clarifications, press releases and any other form of the Board of Directors response to incoming correspondence,

• forward to the Board of Directors members the correspondence received and addressed to them, which does not contain the requirement or suggestion to put forward an appropriate issue to the Board of Directors meeting, and, if appropriate, assist the Board of Directors members in preparing the replies to letters, requests, petitions, etc.,

• arrange the speech records at the Board of Directors meetings (minutes or verbatim recording),

• provide comprehensive technical and organizational assistance to the Board of Directors members responsible for preparing an appropriate issue for the scheduled and extraordinary meeting of the Board of Directors,

• provide for printing out, editing, duplication, translation and forwarding to appropriate persons of the documents, materials, draft documents and materials of the Board of Directors,

• as a response to suggestions (requests) of the Board of Directors member(s) provide the information to the Board of Directors Chairman and, if necessary, to other Board of Directors members about the Board of Directors member(s) suggestions on appropriate Board of Directors draft decisions submitted prior to the Board of Directors meeting, or about their opinion (position) of principle on an appropriate issue,

• in cooperation with the Company management body make sure that the invited persons attend the Board of Directors meeting, and make sure that the actual participation of the invited persons in the Board of Directors meeting corresponds to the agenda item under consideration,

• in cooperation with the Company management body and administrative staff provide for the technical preparation for formal Board of Directors meetings (premises, materials, free access to appropriate premises by the Board of Directors members and invited persons, provision of the newly received materials, secretarial services, etc);

2) provide for compilation and distribution of the questionnaires to the BS members in case the Board of Directors meeting is conducted by absentee voting and also their consolidation and processing pursuant hereto;

3) provide organizational support for voting at the Board of Directors meeting;

4) provide organizational and technical support for the Board of Directors meeting minutes recording and their distribution to all Board of Directors members within 3 days after the Board of Directors meeting minutes are signed with dissenting opinion of the Board of Directors members who voted against an appropriate draft decision and submitted the said dissenting opinion in writing to the Board of Directors secretarial office;

5) pursuant to the Board of Directors special decision or as commissioned by the Board of Directors make organizational and technical provisions for verbatim recording of the Board of Directors meeting progress or its recording on magnetic or other electronic media;

6) arrange the cooperation with management body and the Company administrative staff, archiving and safe custody of all documents and materials related to the Board of Directors activities;

7) provide for compilation, safe custody and timely updating of the Board of Directors members questionnaires complied for the purpose of efficient information services to be provided to the Board of Directors members;

8) maintain the official correspondence log (incoming and outgoing documents) and in case of special commission by the Board of Directors Chairman – the telephone and fax messages log;

9) make technical provisions to keep the Board of Directors attributes and details, office equipment, expandable materials and other valuables dedicated and/or assigned by the Company and individual Company shareholders to the Board of Directors in order to provide for its activities;

10) ensure general management of the Board of Directors secretarial office (of any), provides comprehensive assistance to the Board of Directors committees, commissions, and panels;

11) personally and pursuant to the Board of Directors Chairman commissions provide them with official information of the Company management body addressed to the Board of Directors;

12) provide organizational support for preparation of the Board of Directors public events (press conferences, submission of official announcements and memorandums to the mass media, the Board of Directors and its representatives participation in the Company employees meetings, public participation meetings, etc.);

13) under the supervision of the Board of Directors Chairman make sure that all the requirements stipulated herein are strictly observed;

14) perform specific commissions of the Board of Directors Chairman;

15) perform other functions pursuant to the applicable legislation, the Company Articles of Association, this Regulation and the Company by-laws.

5.4. The costs of the Board of Directors secretarial office (if any) and remuneration of its employees shall be paid at the expense of the Company subject to the cost estimate approved by the Board of Directors decision.

5.5. The objective of the Board of Directors secretarial office (if any) is to make technical provisions for the efficient operations of the Board of Directors.

6. THE BOARD OF DIRECTORS COMMITTEES AND COMMISSIONS

6.1. The Board of Directors committees and commissions shall be established pursuant to the Board of Directors decision.

6.2. The Board of Directors committees and commissions shall be established for the purpose of advanced elaboration on the issues included into the Board of Directors terms of reference or investigated by the Board of Directors in order to supervise the activities of the Company management body or administrative staff, and for the purpose of developing appropriate recommendation to the Company Board of Directors and management body.

6.3. The Board of Directors committees shall be established to investigate the long-term issues of the Company operations, and to ensure efficient implementation of the key managerial and supervisory functions of the Board of Directors.  The Board committees shall include the Board of Directors members and experts. The Board of Directors shall commission a Board of Directors member to manage the committee activities. As agreed with the management bodies the Board of Directors can establish joint committees of the Board of Directors and other management bodies of the Company.

6.4. The Board of Directors commissions shall be established to investigate the current Company development and projects.  The Board of Directors commissions may include the Board of Directors members, the Company administrative staff, the Board of Directors secretarial office employees (if any), experts, including the outsourced ones. The Board of Directors commission head shall be appointed by the Board of Directors decision.

6.5. The regulations, terms of reference, and duration of the Board of Directors commissions and committees shall be established by individual decisions of the Board of Directors.

7. THE COMPANY BOARD OF DIRECTORS MEETINGS

7.1. The Board of Directors meeting can be convened following the request by the Company Board of Directors member, the Company Auditing Committee, the Company Auditor, the Company Board of Management Chairman and the Company Board of Management.  The scheduled Board of Directors meetings shall be convened by the Board of Directors pursuant to the Board of Directors working plan and taking into account the date (time) and agenda of the next meeting as determined at a previous Board of Directors meeting.

7.2. The Board of Directors meetings shall be convened as necessary but at least once every three months.

7.3. The Company Board of Directors decisions shall be legitimate (the meeting quorum is present) provided at least a half of the overall number of the Company Board of Directors members participated in the voting on the agenda item.

When determining the present quorum and the voting results on the Board of Directors meeting agenda item the written opinions of the Company Board of Directors members not attending the meeting shall be taken into account provided they have been submitted prior to closing the vote on the agenda item. For the purposes of this Regulation the written opinion of the Company Board of Directors member shall mean the document signed by him and:

mailed with delivery notification or forwarded by courier service at the Company mailing address or at the address specified in the Company Board of Directors meeting agenda;

delivered against signature of the Company Board of Management Chairman, or the Company Board of Directors Chairman, or the Board of Directors secretary, or the persons performing their duties;

faxed at the number specified in the Company Board of Directors meeting agenda;

forwarded by electronic mail using the electronic signature at the e-mail address specified in the Company Board of Directors meeting agenda.

7.4. All the Board of Directors members shall be entitled to one voting right. Pursuant to the current legislation one Board of Directors member shall not cede his voting right to any other Board of Directors member.  In case of the Board of Directors members tied vote the Board of Directors Chairman's vote shall be decisive in making the Board of Directors decision.

7.5. The Board of Directors meetings shall be usually convened as formal meetings (i.e. the compresense of the Board of Directors members for the purpose of discussing the agenda items and making appropriate decisions).

In case of the absentee voting the questionnaires shall be submitted to the Board of Directors members. The questionnaires forwarded in this case to the Board of Directors members shall be complied by the Board of Directors executive secretary and signed by the Board of Directors Chairman. The questionnaires shall include the following positions:

1) reference to the decision of the Board of Directors, Board of Directors Chairman, or the item of the Board of Directors working plan subject to which this absentee voting is conducted and in case the voting is conducted upon request of other persons or bodies – reference to the meeting initiators;

2) (agenda) issue wording;

3) draft wording of the decision on each of the agenda issues;

4) main voting positions ("pro", "contra", "abstain");

5) instruction to fill one of the main voting position as appropriate for each issue;

6) description of the appropriate voting position filling details (underline, cross, delineate, etc.);

7) instruction for the Board of Directors member to sign the questionnaire;

8) indication of the date before which the filled questionnaire shall be submitted;

9) indication of the communication channels to be used for the filled questionnaire submission;

10) "Dissenting Opinion" item (in case the "contra" or "abstain" position is filled, or in case the Board of Directors member has not found it fit to specify its position).

Subject to the Board of Directors Chairman commission the Board of Directors executive secretary shall process the questionnaires submitted by the Board of Directors members.

In case the Board of Directors meeting is conducted as absentee voting the Board of Directors decision shall be deemed to have been adopted if the majority of the overall number of the Board of Directors members voted for it (subject to p. 7.4. herein).

7.6. The Board of Directors shall approve the List of basic issues to be considered at the Company Board of Directors meetings for the period before the next annual Company general shareholders meeting to be formed based on the suggestions by the shareholders owning totally at least five per cent of the ordinary shares, the Board of Directors Chairman and members, Auditing Commission, and the Company Board of Management, and the Board of Directors meetings schedule for the next three months.

Additional issues shall be included into the approved meetings schedule subject to the Board of Directors decision.

7.7. At least 10 days prior to the date of the meeting a written notification of the same shall be served to each member of the Board of Directors.  The notification shall include the suggested meeting agenda.

If necessary the Board of Directors may be postponed as agreed by all present Board of Directors members without taking any decisions on the agenda items.

7.8. Public officers, members of the Company Board of Management, Auditing Commission, administrative staff experts may be invited to the Board of Directors meetings subject to the list approved by the Board of Directors Chairman.

7.9. When preparing the decision making and when making the decisions stipulated in p. 11.1.24 of the Company Articles of Association the Company Board of Directors and the Company management bodies shall adhere to the following:

1. The notions of "non-circulating assets", "subsidiaries" and "dependent companies" shall be interpreted subject to the current legislation.

2. When approving the transactions where the subject is the shares of the subsidiaries or dependent companies both ordinary and preference shares of such companies shall be taken into account subject to the shareholder registers of the said companies.

3. The balance sheet value of the Company non-circulating assets shall be determined based on the last Company bookkeeping balance sheet complied and duly accepted by the tax authorities.

4. The non-circulating assets transactions shall be understood both as an individual transaction and as a number of (several) transactions with non-circulating assets concluded in succession within six months following the date of the first of the appropriate number of such transactions, while their progressive total exceeds 10% of the said assets balance-sheet value. 

For the purposes of this Regulation the transactions with the subsidiaries and dependent companies shares shall be understood both as an individual transaction and a number of (several) transactions with the shares of appropriate subsidiary or dependent company, concluded within six months following the date when the first of the appropriate number of such transactions was concluded by the Company management body. In such case the charter capital size as the basis for calculations shall be determined as of the date when the Company management body initiated the conclusion of the first of such transactions.

5. In order to receive the Board of Directors approval (authorization) to conclude the transaction stipulated in p. 11.1.24 of the Company Articles of Association the Company management body shall make up the requests to the Board of Directors subject to the procedure set out herein.

6. The Company Management Board Chairman shall forward the request for the Board of Directors tentative approval (authorization) of the transactions stipulated in p. 11.1.24 of the Company Articles of Association within 15 calendar days prior to the duly scheduled date of the Board of Directors meeting (the meeting date included into the Board of Directors working plan or agreed by the Board of Directors members as a date of the extraordinary meeting).

7. The request form as determined by the Company management body shall include the following positions: 1) transaction type, 2) transaction parties, 3) transaction subject, 4) transaction price (subject to an independent surveyor estimate), 5) performance period and other essential conditions, 6) penalties for non-fulfillment of transaction obligations, 7) jurisdiction, 8) transaction feasibility study, 9) suggested date of the Company management body report(s) on the performance of the current transaction and the summary performance report, 10) dates of signing and enforcement of an appropriate contract(s), 11) the procedure of amending and modifying and appropriate contract, 12)desired date when this request should be reviewed by the Board of Directors, 13) reasonable opinion about the interest of specific persons in an appropriate transaction taking into account the requirements specified in articles 81-83 of the Federal Law "On Joint Stock Companies".  Subject to the Company management body decision the request might be supplemented with the draft contract(s) or an agreement of intent.

8. The Board of Directors tentative approval (authorization) of the transaction specified in p. 11.1.24 of the Company Articles of Association shall be valid until the transaction is executed.

9. The Board of Directors shall supervise the execution of the approved (authorized) transaction by reviewing appropriate summary reports by the Company management body.

8. PREPARING THE BOARD OF DIRECTORS MEETING

8.1. The draft agenda for the regular Board of Directors meeting shall be formed by the executive secretary and approved by the Board of Directors Chairman.

8.2. The agenda item may be included following the requests by the persons specified in p. 7.6. herein. The originator shall provide the Company Board of Directors executive secretary the suggestion addressed to the Board of Directors Chairman about inclusion of the issue into the agenda and the following documents:

- explanatory note with substantiation of the necessity to consider a draft document (an issue) at the Board of Directors meeting;

- draft decision of the Board of Directors on an appropriate issue;

- accompanying material.

8.3. An explanatory note and the Board of Directors draft decision shall correspond to the information submission standards (formats) approved by the Board of Directors.

An explanatory note, the Board of Directors draft decision and accompanying materials shall be submitted to the Board of Directors executive secretary not later than 25 days prior to the meeting.

8.4. The Company Board of Directors executive secretary shall supervise the timely submission of the suggestions to include the issues into the Board of Directors meeting agenda (including an explanatory note, the Board of Directors draft decision, accompanying materials) and also the compliance of the explanatory note and the Board of Directors draft decision form to the approved information submission standards (formats).

The executive secretary shall inform the Board of Directors Chairman on the failure to comply with the date of the Board of Directors meeting agenda item inclusion suggestion (including an explanatory note, the Board of Directors draft decision, accompanying materials), and of the failure to comply with the standards (formats) of the explanatory note and the Board of Directors draft decision submission for the Board of Directors Chairman to take a decision to approve the Board of Directors meeting draft agenda.

8.5. At least 20 days prior to the meeting date the Board of Directors meeting draft agenda, an explanatory note, the Board of Directors draft decision and appropriate accompanying materials to justify the decision shall be submitted to the Board of Directors members, and the government federal property management authority to prepare the voting instructions for the Russian Federation representatives.

8.6. The issues prepared in violation of the dates of distributing the Board of Directors meeting draft agenda, explanatory note and accompanying materials among the Board of Directors members, in violation of the standards (formats) of the explanatory note and the Board of Directors draft decision may not be considered subject to the Board of Directors decision to be taken by the majority of the attending Board of Directors members.

8.7. Not later than 2 days prior to the meeting the Board of Directors members may submit to the Board of Directors executive secretary their remarks and suggestions on the issues under consideration.

8.8. The issue as may be included into the Board of Directors meeting agenda at the Board of Directors meeting subject to the Board of Directors decision to be taken by twp thirds of the attending Board of Directors members.

9. BOARD OF DIRECTORS MEETINGS AND FORMALIZATION OF THE DECISIONS TAKEN

9.1. The Board of Directors members and the persons invited to the meeting for each of the issue considered shall participate in the Board of Directors meetings subject to the list approved by the Board of Directors Chairman.

9.2. The formal Board of Directors meeting quorum shall be recorded by the Board of Directors executive secretary in the Board of Directors meeting minutes.

In case the quorum is not available the meeting shall be declared illegitimate. In such case the Board of Directors Chairman shall make one of the following decisions:

1) by consultation with the attending Board of Directors members to determine the date of the new meeting to be conducted instead of the failed one with the predetermined agenda, taking steps to make sure the Board of Directors members attend the meeting;

2) to determine personally the date of the new meeting to be conducted instead of the failed one with the predetermined agenda, taking steps to make sure the Board of Directors members attend the meeting;

3) inform the Board of Directors members of the expected time when they shall be advised of the new meeting to be conducted instead of the failed one subject to the procedure stipulated herein;

4) include the agenda of the failed meeting into the agenda of the next scheduled Board of Directors meeting;

5) as agreed by the attending Board of Directors members exclude all or part of the issues (agenda) of the failed meeting from the list of issues to be discussed at the Board of Directors meetings (except for the cases stipulated in the current legislation).

The new meeting instead of the failed one can be convened not earlier than one hour and not later than 20 days after the Board of Directors Chairman has made an appropriate decision on this issue.

The quorum of the Board of Directors meeting of a given agenda recorded as specified above shall be determined one time for the entire Board of Directors meeting of a given agenda irrespective of the actual duration of the Board operation during the meeting.

If during the Board of Directors meeting the Board of Directors member(s) departure caused their number to fall below one half of the Board of Directors number, the Board of Directors Chairman shall be entitled to make one of the following decisions:

1) since it is impossible to make a decision due to the absence of the decision making Board of Directors quorum as determined subject to the procedure stipulated herein (as appropriate) to terminate the Board of Directors meeting after summing up the discussion of the last of the issues considered,

2) due to the absence of quorum for the Board of Directors decision making as determined subject to the procedure stipulated herein, to continue the Board of Directors meeting without making any decision in order to determine the position of the remaining Board of Directors members and to develop the recommendations for the Board of Directors to be considered at the next scheduled Board of Directors meeting,

Subject hereto the quorum recording shall be deemed a preliminary procedure preceding the Board of Directors meeting proper. Voting on approving the quorum qualification (the Board of Directors executive secretary information about the quorum availability) shall not be conducted.

The meeting quorum recording is a restricted procedure of the Board of Directors activity, attendance of the invited or other persons shall not be allowed.

9.3. Prior to approving the meeting agenda the Board of Directors Chairman himself shall be entitled to discard the issues from the agenda suggested to be included into the draft agenda, for the following reasons:

- absence of the issue originator at the Board of Directors meeting; 

- oral or written application of the initiator to exclude the issue from the agenda.

The list of reasons to exclude the issues from the agenda specified herein shall be the entire list.

9.4. At the Board of Directors meetings the report time shall be limited to 10 minutes, the co-report and discussion speech time – to 5 minutes, the information report time – to 3 minutes. If necessary the meeting chairman may change the time allocated for the speech.

The meeting participants and the invited persons may participate in discussion, put forward their suggestions, make comments, provide information to the point of the issues discussed.  The discussion shall be stopped following the suggestion of the chairperson or a Board of Directors member.

9.5. A field meeting of the Company Board of Directors may be conducted if necessary.

9.6. For the purpose of the draft decision follow-up elaboration and consideration of the suggestions and remarks put forward at the meeting working panels may be established as agreed by the Company Board of Directors Chairman to include the Company administrative staff officials.  

The persons in charge of the said working panels subject to the Board of Directors decision shall arrange their operations and make sure that the elaborated draft decisions are submitted as scheduled.  In case the schedule is not specified the draft decision follow-up elaboration deadline shall be three days.

9.7. The Board of Directors executive secretary shall keep the minutes of the Company Board of Directors meeting. The Board of Directors meeting audio recording can be used as a supplementary material to issue the Board of Directors meeting minutes.  The minutes shall be complied not later than 3 days following the meeting.

The meeting minutes shall include:

- the meeting place and date;

- persons attending the meeting;

- the meeting agenda;

- the voted issues and voting results;

- adopted decisions.

The Company Board of Directors decisions adopted through absentee voting shall be formalized as a separate protocol.

The Company Board of Directors meetings minutes shall be numbered consecutively.

The Company Board of Directors meeting minutes shall be signed by the chairperson and the Board of Directors executive secretary who shall be responsible for the correct minutes recording.

The Board of Directors Chairman and the Board of Directors executive secretary shall be entitled to produce and certify the extracts from the Board of Directors minutes on behalf of the Company (the Company Board of Directors). The Board of Directors executive secretary shall maintain the log of the extracts from the Board of Directors minutes.

9.8. The Company Board of Directors decision shall be binding upon the Board of Management Chairman, Board of Management, the Company structural divisions and employees.

9.9. The Company Board of Directors decisions shall be distributed to their executors as the meeting minutes extracts separately for each issue.

The Board of Directors executive secretary shall produce and issue the Board of Directors meeting minutes extract to the decisions executors against their signature within 2 days after the date of the meeting minutes.

9.10. The Board of Directors Chairman and executive secretary as commissioned by the Chairman shall monitor the fulfillment of the decisions made at the Board of Directors meetings.

9.11. When closed Board of Directors meetings are conducted the materials preparation, admission, minutes keeping and resolutions issuance shall be subject to the official, commercial and state secrecy.

10. SAFE CUSTODY AND USAGE OF THE BOARD OF DIRECTORS DOCUMENTS

10.1. The Company Board of Directors meetings minutes shall be made available for any Company shareholder, Board of Directors member, Auditing Commission member, the Company Auditor, federal supervisory authorities officials at the Company registered address or at any other location as determined by the Company Board of Directors.

10.2. The supervisory authorities officials shall be provided with the Company Board of Directors meetings minutes and accompanying documents to be studied at the archive premises in the presence of the archive employees, or at the Board of Directors executive secretary against signature subject to the approval of the Board of Directors Chairman upon appropriate request.

10.3. The Board of Directors operations results form the Board of Directors file (archives).

The Company Board of Directors File (archives) includes:

1. the Board of Directors meeting minutes,

2. annexes to the Board of Directors meeting minutes,

3. other information materials for the Board of Directors meetings,

4. the Company general shareholders meeting minutes,

5. the Board of Directors official correspondence log,

6. staff schedule of the Board of Directors secretarial office (if any),

7. documents and materials of the Board of Directors commissions, committees and working panels,

8. documents and materials requested by the Board of Directors or its members subject to the procedure stipulated by a special regulation approved by the Board of Directors decision,

9. void attributes and details of the Board of Directors,

10. the Board of Directors members forms (to be filled after election for the purpose of serving notices and materials by the Board of Directors secretarial office (if any),

11. records of the Board of Directors decision performance progress or their elements,

12. the Board of Directors meeting minutes extracts recording log,

13. other materials and documents.

The documents included into the Board of Directors file shall be kept in safe custody on the perpetual basin in the Company premises (where the Company management body is located).  The safe custody expenses are paid by the Company.

The Board of Directors executive secretary shall file and archive the Board of Directors documents and materials under the Board of Directors Chairman supervision. The Board of Directors executive secretary shall comply (maintain) the list of all the Board of Directors documents and materials both as hard copies and in the electronic form.

A Board of Directors member shall have unrestricted access to materials and documents of the Board of Directors file and to the list of documents and filed materials and also shall be entitled to make copies of the same.  Subject to the Board of Directors decision the Board of Directors can possess its own attributes and details – numbered letterheads, stamps, seals, signs, symbols, etc

The Board of Directors Chairman shall be responsible for their fabrication,  custody, patenting and timely disavowal. The Board attributes and details application regulation shall be established by the Board of Directors meeting decision.

10.4. The Company administrative staff members having access to the Company Board of Directors documents shall be liable for the confidential information disclosure.  The Board of Directors shall determine the information confidential qualification and record the same in the minutes of an appropriate meeting.

10.5. In the cases stipulated herein the access to the information on the issues discussed at the Company Board of Directors meetings can be granted only subject to the approval of the Board of Directors, the Board of Directors Chairman or his proxy.

11. APPROVAL AND AMENDMENT OF THE COMPANY BOARD OF DIRECTORS REGULATION

11.1. Pursuant to subparagraph 19 of paragraph 1 of Article of the Federal Law "On Joint Stock Companies" the Company Board of Directors Regulation and amendments of the same shall be approved by the Company general shareholders meeting.

11.2. The Company Board of Directors shall propose that the Company general shareholders meeting should approve the draft Board of Directors Regulation, and amendments of the same.

11.3. Amendment of the Company Board of Directors Regulation may be initiated by the persons specified in paragraph 7.6. herein and also subject to the procedure specified in p. 8.2. herein.