DJ PJSC RusHydro: Results of the Board of Directors Meeting on June 29, 2020
PJSC RusHydro (HYDR)
PJSC RusHydro: Results of the Board of Directors Meeting on June 29, 2020
02-Jul-2020 / 16:02 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Results of the Board of Directors Meeting on June 29, 2020
PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that
the Company's Board of Directors held a meeting in absentia on June 29,
2020.
Resolutions passed on Items of the agenda:
Item 1: Approval of the report on the interim results of execution of the
Company's Business Plan for 2020 considering the actual results for Q1 2020
(including the report on execution of the Investment Program, including the
Complex Modernization Program for Generating Facilities, for Q1 2020).
Resolution adopted:
To approve the report on the interim results of execution of the Company's
Business Plan for 2020 considering the actual results for Q1 2020 (including
the report on execution of the Investment Program, including the Complex
Modernization Program for Generating Facilities, for Q1 2020) (Schedule 1 to
the Minutes).
Item 2: Approval of the report on execution of RusHydro's Annual Complex
Procurement Program for Q1 2020.
Resolution adopted:
To approve the report on execution of RusHydro's Annual Complex Procurement
Program for Q1 2020 (Schedule 2 to the Minutes).
Item 3: Approval of the report on implementation of the Company's Action
Plan for the Sale of Non?ore Assets for Q1 2020.
Resolution adopted:
1. To approve the report on implementation of RusHydro's Action Plan for the
Sale of Non?ore Assets for Q1 2020 (Schedule 3 to the Minutes).
2. To amend the Register of Non?ore Assets of the Company approved by the
Resolution of the Board of Directors of the Company on December 24, 2019
(Minutes No. 302 dated December 26, 2019) (Schedule 4 to the Minutes).
3. To approve the conclusion of the Agreement on the Gratuitous Transfer
(Donation) of Property (the "Agreement") under the following material terms
and conditions:
Parties to the Agreement:
The Donor is the Company.
The Donee is the Russian Federation represented by the Territorial
Directorate of the Federal Agency for State Property Management in the
Saratov Region.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall take into
possession the real property facilities (a motor road bridge across bays and
two highways) according to the list given in Schedule 5 to the Minutes.
Item 4: Approval of the reports on the performance results of the Committees
under the RusHydro Board of Directors for the 2019-2020 corporate year.
Resolution adopted:
1. To approve the report on the performance results of the Audit Committee
under the Board of Directors of the Company for the 2019-2020 corporate year
(Schedule 6 to the Minutes).
2. To approve the report on the performance results of the HR and
Remuneration (Nominations) Committee under the Board of Directors for the
2019-2020 corporate year (Schedule 7 to the Minutes).
3. To approve the report on the performance results of the Strategy
Committee under the Company's Board of Directors for the 2019-2020 corporate
year (Schedule 8 to the Minutes).
4. To approve the report on the performance results of the Investments
Committee under the Company's Board of Directors for the 2019-2020 corporate
year (Schedule 9 to the Minutes).
5. To approve the report on the performance results of the Reliability,
Energy Efficiency, and Innovations Committee under the Company's Board of
Directors for the 2019-2020 corporate year (Schedule 10 to the Minutes).
6. To approve the report on the performance results of the Far East Power
Industry Development Committee under the Company's Board of Directors for
the 2019-2020 corporate year (Schedule 11 to the Minutes).
Item 5: Consideration of matters of significance to the Company:
5.1. Matters related to the consolidation of energy assets in the Sakhalin
Region:
Item 5.1.1. The Company's participation in and withdrawal from other
entities (directive item).
Resolution adopted:
1. Approve a change in the Company's interest in the authorized capital of
JSC CEK through the conclusion of a share purchase and sale agreement (the
"Agreement") under the following material terms and conditions:
Parties to the Agreement:
The Seller is PJSC Rosneft Oil Company.
The Buyer is RusHydro.
Subject of the Agreement:
The Seller shall transfer one million (1,000,000) ordinary shares of JSC CEK
(state registration number of the issue of shares No. 1-01-32890-F) with a
nominal value of one thousand (1,000) rubles each (the "Shares") to the
Buyer, and the Buyer shall accept and pay for them.
Share price and payment procedure:
The price of the ordinary shares of JSC CEK purchased by the Buyer is
determined on the basis of the report of the independent appraiser, Ernst &
Young Appraisal and Consulting Services LLC, and amounts to one thousand
(1,000) rubles per share.
The Company's interest in the authorized capital of JSC CEK before the
Company's purchase of the shares of JSC CEK from PJSC Rosneft Oil Company:
26.94%.
The Company's interest in the authorized capital of JSC CEK after the
Company's purchase of the shares of JSC CEK from PJSC Rosneft Oil Company:
34.62%.
2) To consider the resolution in clause 1 to be an approval of the
transaction in accordance with letter "c" of subclause 24 of clause 12.1
of the Company's Articles of Association.
3. To approve a change in the Company's interest in JSC RAO ES of the East
and the Company's withdrawal from JSC CEK as a result of the Company's
contribution of four million five hundred seven thousand five hundred and
sixty-eight (4,507,568) ordinary shares of JSC CEK* to the authorized
capital of JSC RAO ES of the East as payment for additional ordinary shares
of JSC RAO ES of the East placed for the benefit of RusHydro by subscription
in a quantity to be determined depending on the price of the additional
ordinary shares of JSC RAO ES of the East and the price of the ordinary
shares of JSC CEK.
The price of the ordinary shares of JSC CEK that are to be contributed to
the authorized capital of JSC RAO ES of the East as payment for the
additional ordinary shares of JSC RAO ES of the East and the price of
placement of the additional ordinary shares of JSC RAO ES of the East shall
be determined by the Board of Directors of JSC RAO ES of the East in
accordance with Federal Law No. 208-FZ dated December 26, 1995 "On
Joint-Stock Companies."
The Company's interest in the authorized capital of JSC CEK after the
Company's contribution of the ordinary shares of JSC CEK to the authorized
capital of JSC RAO ES of the East: 0%.
The Company's interest in the authorized capital of JSC RAO ES of the East
after the Company's contribution of the ordinary shares of JSC CEK to the
authorized capital of JSC RAO ES of the East will be determined according to
the results of the placement of the additional shares of JSC RAO ES of the
East for the benefit of RusHydro and will be at least 84.39%.
The total interest of the Company and its controlled companies in the
authorized capital of JSC RAO ES of the East after the Company's
contribution of the ordinary shares of JSC CEK to the authorized capital of
JSC RAO ES of the East will be determined according to the results of the
placement of the additional shares of JSC RAO ES of the East for the benefit
of RusHydro and will be at least 99.98%.
* Including the 1,000,000 ordinary shares of JSC CEK purchased by RusHydro
from PJSC Rosneft Oil Company.
Item 5.1.2. Confidential.
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Resolution adopted: Confidential.
Item 5.2. Approval of transactions related to the implementation of the
investment project for reconstruction of Vladivostokskaya CHP-2.
Resolution adopted:
1. For the purpose of implementing the investment project for reconstruction
of Vladivostokskaya CHP-2, to approve the conclusion of:
1.1. A purchase and sale agreement between the Company (the Buyer) and JSC
FEGC (the Seller), the subject of which shall be movable and immovable
property and unfinished construction facilities registered to
Vladivostokskaya CHP-2 - Primorskaya Generation, a branch of JSC FEGC,
recognized in the "Noncurrent Assets" section of the balance sheet of JSC
FEGC (the "property of Vladivostokskaya CHP-2"), at the price of RUB
5,720,211,193 (excluding VAT) in accordance with assessment report of Nexia
Pacioli Consulting LLC No. 2032233/0320 dated May 6, 2020.
1.2. An agreement for the lease of the property of Vladivostokskaya CHP-2 to
be concluded between the Company (the Lessor) and JSC FEGC (the Lessee)
after the Company purchases the property specified in clause 1.1 of this
resolution.
2. To determine that the rent under the lease agreement specified in clause
1.2 of this resolution shall be based on the lessor's expenses and a rate of
return of no more than 1%.
Item 5.3. Confidential.
Resolution adopted: Confidential.
Item 5.4. Status of the implementation of priority projects for the
construction of facilities in the Far East as of March 31, 2020.
Resolution adopted:
To take under advisement information on the status of the implementation of
priority projects for the construction of facilities in the Far East as of
March 31, 2020 (Schedule 12 to the Minutes).
Item 5.5. Adjustment of the Action Plan for RusHydro's Transition to the
Preferential Use of National Software.
Resolution adopted:
To approve:
1. The Action Plan for the Company's Transition to the Preferential Use of
National Software for 2019-2021 (Schedule 13 to the Minutes).
2. Performance indicators for the implementation of the Action Plan for the
Company's Transition to the Preferential Use of National Software (Schedule
14 to the Minutes).
3. To deem null and void the Action Plan for the Company's Transition to the
Preferential Use of National Software for 2018-2021 approved by the
resolution of the Board of Directors of the Company (Minutes No. 285 dated
March 29, 2019).
Item 5.6. Consideration of the Report on Transactions Performed by
Subsidiaries in accordance with the resolution of the Board of Directors
dated August 29, 2019 (Minutes No. 294), regarding Item 6.1.
Resolution adopted:
1. To accept the Report on Transactions Performed by Subsidiaries in
accordance with the resolution of the Board of Directors dated August 29,
2019 (Minutes No. 294), regarding Item 6.1 pursuant to Schedule 15 to the
Minutes.
2. To instruct the Company's Management Board to submit subsequent reports
to the Company's Board of Directors on performed transactions specified in
clause 1 of this resolution annually within 90 days after the end of the
financial year.
Item 5.7. Recognition of members of the Company's Board of Directors as
independent.
Resolution adopted:
1) In accordance with the recommendations of the HR and Remuneration
(Nominations) Committee under the Board of Directors (Minutes No. 99 dated
May 22, 2020), to take under advisement information on the results of the
assessment of the conformity of the members of the Board of Directors to
the independence criteria prescribed by Schedule 4 to the Listing Rules of
the Moscow Exchange** (the "Listing Rules").
** Approved by the Supervisory Board of the Moscow Exchange on January 21,
2020 (Minutes No. 18).
2) Guided by clause 2 of section 2.18 of Schedule 2 and Schedule 4 of the
Listing Rules, to recognize:
Vyacheslav Viktorovich Pivovarov as an independent member of the Company's
Board of Directors on the grounds specified in Schedule 16 to the
Minutes***.
3) Guided by clause 2 of section 2.18 of Schedule 2 and Schedule 4 of the
Listing Rules, to recognize:
Maksim Sergeyevich Bystrov as an independent member of the Company's Board
of Directors on the grounds specified in Schedule 17 to the Minutes****.
*** Schedule 16 to the Minutes
Having assessed the compliance of V. V. Pivovarov, a member of the Board of
Directors of the Company, with the criteria for determining the independence
of members of the Board of Directors stipulated in Schedule 4 to the Listing
Rules, the Human Resources and Remuneration (Nominations) Committee (minutes
No. 99 dated May 22, 2020) found that Mr. Pivovarov is not a person
connected to:
- a substantial shareholder of the Company;
- a substantial counterparty/competitor of the Company;
- the state (Russian Federation, constituent entity of the Russian
Federation) or a municipality.
Based on the assessment results, a connection between Mr. Pivovarov and the
Company was revealed, as Mr. Pivovarov, since April 28, 2020, has been a
member of the Board of Directors of the Company for more than 7 years but
less than 12 years (7 full years).
The Human Resources and Remuneration (Nominations) Committee under the Board
of Directors found that the connection to the Company is a formality and
recommended that the Board of Directors recognize Mr. Pivovarov as an
independent director.
Mr. Pivovarov's connection to the Company is formal and cannot affect his
ability to form objective and independent opinions on the agenda of the
Board of Directors and act for the benefit of the Company and all its
shareholders for the following reasons:
- in accordance with Order of the Government of the Russian Federation No.
607-r dated March 30, 2019 and No. 804-r dated March 30, 2020, Mr. Pivovarov
was nominated by the Russian Federation as an independent director;
therefore, Mr. Pivovarov has no obligation to vote according to the
directives of the Government of the Russian Federation (Clause 16 of
Regulation of the Government of the Russian Federation No. 738 dated
December 3, 2004);
- during the entire period he has acted as a member of the Board of
Directors, Mr. Pivovarov has been actively involved in the work of the
Company's Board of Directors: he has participated in the absolute majority
of meetings of the Board of Directors (in 19 out of 20 meetings in 2019) and
Committees under the Company's Board of Directors in 2019 (the Audit
Committee, in 19 out of 21 meetings; the Human Resources and Remuneration
(Nominations) Committee, in 15 out of 15 meetings; the Strategy Committee,
in 12 out of 12 meetings; the Investment Committee, in 8 out of 9 meetings);
- Mr. Pivovarov's work in the Board of Directors and the Committees of the
Company in 2013-2019 demonstrated his ability to make independent, objective
and conscientious judgments, since Mr. Pivovarov's position on the agenda of
meetings of the Board of Directors and the Committees under the Board of
Directors was based on his professionalism and experience and was
independent. The nature of the decisions made by Mr. Pivovarov earlier and
currently makes it possible to conclude that, after the formal connection to
the Company arose, it has not changed, since Mr. Pivovarov has acted and
acts for the benefit of the Company and all its shareholders;
- since 2015, Mr. Pivovarov has been a member and the Chairman of the Human
Resources and Remuneration (Nominations) Committee, as well as a member of
the Audit Committee under the Company's Board of Directors. From 2013 to
2019, he was also a member of the Company's Board of Directors and other
Committees under the Company's Board of Directors. Mr. Pivovarov's long-term
work in the Company's Board of Directors, the Human Resources and
Remuneration (Nominations) Committee, and the Audit Committee under the
Board of Directors is an advantage for the Company, since Mr. Pivovarov has
the necessary long-term professional experience in the preparation,
analysis, assessment, and audit of accounting (financial) statements and
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