5.2

General information on corporate governance at the Company

Corporate Governance Principles

The corporate governance system of OGK-2 is aimed at increasing the efficiency of the Company’s operations, strengthening its goodwill and increasing capitalization. Corporate governance is an important factor in building trusting relations with all interested parties who are equally influenced by the Company and influence it themselves.

In the area of corporate governance, OGK-2 JSC is guided by the requirements of the Russian law, the Listing Rules of the Moscow Exchange PJSC (hereinafter also referred to as the Listing Rules), the recommendations of the Corporate Governance Code of the Bank of Russia (hereinafter also referred to as the Corporate Governance Code, the Code), as well as the Company’s internal documents defining the standards of corporate governance and focusing on application of best practices in the area of corporate governance and information disclosure.

The fundamental requirements as to ethical corporate conduct are set forth in the Code of Corporate Ethics of OGK-2 JSC. When interacting with external stakeholders, OGK-2 JSC is guided by the principles of courtesy, correctness and accuracy.

The corporate governance system in place at OGK-2 JSC fully complies with the requirements of the Russian law and the Listing Rules. The management is confident that it provides the shareholders and investors the necessary degree of assurance as to the consistency of the strategy implemented and the decisions made.

The specific character of the Company’s corporate governance is determined by the following main factors:

• ownership structure, namely the presence of one controlling shareholder (Centrenergoholding PJSC, which a member of Gazprom Group);
• Company development stage is the implementation of the strategy of Gazprom PJSC in the electric power industry for 2018–2027, approved by the Board of Directors of Gazprom PJSC in June 2018. The key strategic goal of Gazprom PJSC in the electric power industry for the period from 2018 to 2027 is ensuring stable profit growth while maintaining a high level of reliability of energy supply to consumers. The strategy, in particular, involves the implementation of projects to create new and renew existing generating facilities, as well as the withdrawal of facilities whose operation is not economically feasible. Special attention is paid to further improving operational efficiency, technological development, and the use of import-substituting equipment;
• listing on the Moscow Exchange in the second-level quotation list.

Strong points of the corporate governance of OGK-2:

• including to the competence of the Board of Directors of a wider range of issues than is provided by law;
• compliance of the number of members in the Board of Directors with the scale of the business and good awareness of the Board of Directors about the Company’s operations due to the fact that many members have been members of the Board for several years;
• disclosure by the Company of a significant scope of further information in addition to that provided by the law;
• early reporting disclosure terms subject to RAS and IFRS;
• development of corporate governance by introducing the best corporate practices used in the world;
• application of common standards and approaches to the formation of lists of affiliates, quarterly reports, individual messages on material facts and press releases related to the implementation of corporate events in Gazprom Energoholding LLC Group of Companies.

The corporate governance system of OGK-2 is based on the standards of the applicable Russian law, as well as on the main provisions of the Company’s internal corporate documents posted on the official website: https://www.ogk2.ru/o-kompanii/uchreditelnye-i-vnutrennie-dokumenty/.

The main documents of the Company regulating the corporate governance matters:

• Company Charter
• Corporate Governance Code of OGK-2 JSC
• Code of Corporate Ethics of OGK-2 JSC
• Regulation about the information policy of OGK-2 JSC
• Regulation about the procedure of access to insider information of OGK-2 JSC
• Regulation about the General Meeting of Shareholders of OGK-2 JSC
• Regulation about the Board of Directors of OGK-2 JSC
• Regulation about the General Director of OGK-2 JSC
• Regulation about the procedure for determining the amount of remuneration and compensation to the members of the Board of Directors of OGK-2 JSC
• Regulation about the Strategy and Investment Committee of the Board of Directors of OGK-2 JSC
• Amendment to the Regulation about the Strategy and Investment Committee of the Board of Directors of OGK-2 JSC
• Regulation about the Audit Committee of the Board of Directors of OGK-2 JSC
• Regulation about the Reliability Committee of the Board of Directors of OGK-2 JSC
• Regulation about the Human Resources and Remuneration Committee of the Board of Directors of OGK-2 JSC
• Regulation about the Corporate Secretary of OGK-2 JSC
• Risk Management and Internal Control Policy of OGK-2 JSC
• Internal Audit Policy of OGK-2 JSC

The Company's documents are available on the official website https://www.ogk2.ru/ in the section "About the Company".

OGK-2 Corporate Governance Improvements in 2020 and Plans for 2021

In 2020, works continued to improve the automated system, which had been created to prepare information about the companies of Gazprom Energoholding Group (including changes in the membership structure, name and location of the companies, composition of management bodies of the companies, ownership of shares in the Gazprom Group companies by members of the Boards of Directors, Management Boards, and Sole Executive Bodies; the automated system is being further developed to automate the procedures for convening and holding meetings of the Board of Directors and Committees under the Board of Directors).

The use of this automated system in the work of employees of the Directorate of Corporate and Property Relations of OGK-2 JSC ensures the optimization of processes related to the preparation of a number of documents provided by the law. These documents include the lists of affiliates and groups of individuals. Also, work in this program eliminates the risks of a conflict of interest when entering in contract relations with contractors.

In the reporting period, the companies of Gazprom Energoholding Group continued to actively cooperate with the Central Bank of the Russian Federation on conducting a number of consultations regarding raising the level of corporate governance in the companies of the Group, as well as on standard-setting activities.

In order to improve corporate governance, OGK-2 strives to improve compliance with the principles and recommendations set forth in the Corporate Governance Code of the Central Bank of the Russian Federation within the scope of implementation of Letter of the Bank of Russia No. 06-52/2463 “About the Corporate Governance Code” dated April 10, 2014; thus, the Annual General Meeting of Shareholders of OGK-2 JSC held on June 24, 2020 (Minutes No. 14 dated June 29, 2020) approved the Charter of OGK-2 JSC as amended, which provided for adding the following issues to the competence of the Company’s Board of Directors: reviewing reports of committees under the Company’s Board of Directors; approving a training and professional development program for members of the Board of Directors; and submitting recommendations to the General Meeting of Shareholders on all agenda items of the General Meeting of Shareholders.

In 2020, the work of the committees under the Company’s Board of Directors was strengthened. The overall number of meetings held increased by 92% compared to 2019, and by 42% in terms of preliminary work on a broader range of issues. Moreover, the Board of Directors of OGK-2 JSC approved new regulations about the Audit Committee of the Board of Directors in order to improve the level of support rendered to ensure the effectiveness of the Company’s Board of Directors work.

In 2020, the Human Resources and Remuneration Committee assessed all candidates nominated to the Board of Directors for their compliance with the criteria established by the Regulations about the Board of Directors of OGK-2 JSC, as well as with the independence criteria defined by the securities market regulator and Moscow Exchange PJSC, and it subsequently provided recommendation to the General Meeting of Shareholders of OGK-2 JSC in respect of voting for candidates to be elected to the Company’s Board of Directors.

Furthermore, to update the information included to the shareholder register, the Company carried out the following activities on interaction with the shareholders in the reporting period:

• under a fee-based service agreement entered into between OGK-2 JSC and DRAGA JSC on June 29, 2018, the information was updated in the Shareholder Register;
• together with a newsletter on convening an Annual General Meeting of Shareholders, all shareholders were informed in writing of the need to update their details of the Company’s shares owners;
• information on the need to update data is constantly published in printed media and on the Company’s and the Registrar’s web-sites in For Shareholders

As part of the implementation of Resolution No. 31 of the Management Board of Gazprom PJSC dated June 04, 2019, OGK-2 JSC monitored all the investment facilities in order to identify those that do not carry out financial and economic operations or perform duplicate and/or non-core functions.

Thus, in 2020, the Board of Directors of OGK-2 JSC reviewed and made the following decisions as to corporate governance.

Subject to the sale and purchase agreement made by and between OGK-2 JSC and Gazprom Energoholding LLC dated November 16, 2020, the property complex of Adlerskaya TPP was transferred to the balance sheet of OGK-2 JSC, an operating company.

In order to optimize the asset (CCGT-420) management structure and exclude the subsidiary, which demonstrated unprofitable operations, from the group of OGK-2 JSC, the Board of Directors of OGK-2 JSC decided to take measures to transfer the CCGT-420 Unit into the ownership of OGK-2 JSC under a sale and purchase agreement for non-residential immovable and movable property, and to subsequently liquidate OGK-Investproekt LLC.

Taking into account the regional market conditions and the fact that Chaika LLC meets the criteria for non-competitiveness, including due to significant physical wear and moral depreciation of the fixed assets, and also that Chaika LLC’s functioning is unprofitable for OGK-2 JSC under the current economic conditions, the Board of Directors made a decision to liquidate Chaika LLC (Minutes No. 242 dated July 20, 2020).

In the scope of completing the procedure for transferring Krasnoyarskaya GRES-2 to a new owner by OGK-2 JSC as part of fulfilment of its obligations under the sale and purchase agreement and the plant lease agreement for the period required for the new owner to obtain licenses and permits for operation of Krasnoyarskaya GRES-2, the Company’s Board of Directors decided to liquidate Krasnoyarskaya GRES-2 branch of OGK-2 JSC no later than by March 01, 2021.

On December 20, 2020, the Extraordinary General Meeting of Shareholders of NPPZhT LLC decided to voluntarily liquidate NPPZhT LLC due to the termination of its business operations.

Assessment of Compliance with the Corporate Governance Principles

The company annually conducts internal assessments of compliance with the level of corporate governance.

This report represents the results of the assessment of the compliance of the corporate governance level in OGK-2 with the principles of the Corporate Governance Code (approved by the letter of the Bank of Russia in 2014, annex to Letter of the Bank of Russia No. IN-06-52/8 dated February 17, 2016).

The assessment was carried out by the Company independently and subject to the Recommendations for the preparation of a report on compliance with the principles and recommendations of the Corporate Governance Code.

Comparison was made between the recommendations of the Code and the provisions of the current internal corporate documents of OGK-2, as well as the Company’s practice in the field of corporate governance. The assessment was carried out subject to the criteria recommended by the Code. Each principle was assessed by the criterion (status) “observed”, “not observed”, “partially observed”.

The report contains comments on the principles of the Code that are not observed or partially observed in the Company’s opinion. A detailed report is attached in Appendix 2.

Derating of the parameters of compliance with the Corporate Governance Code is due to the restrictions caused by the pandemic of a new coronavirus infection, which made it impossible to meet a number of criteria for compliance with the corporate governance principles of OGK-2 JSC.

Corporate Governance Structure

OGK-2 corporate governance bodies are the General Meeting of Shareholders, the Board of Directors, the chief executive officer represented by the managing company. The Board of Directors and the chief executive officer of the Company exercise Company management in strict compliance with the principles of shareholders and investors rights protection, transparency and information openness.