CORPORATE GOVERNANCE

3.1. Corporate Governance Practices

The corporate governance system of Unipro PJSC is built in full compliance with the norms and requirements of the Russian legislation. A special role in building an efficient corporate governance system goes to the governance standards which are extensively used by Uniper Group and which the Company vigorously incorporates into its governance practice.

The most critical priorities of Unipro PJSC include:

• organisation of effective corporate governance aimed at achieving the highest performance of the Company;
• increasing transparency and coherence of managerial decisions;
• risk mitigation and protection of rights and interests of the Company’s shareholders.

Improvement of the corporate governance system in 2019

Compliance with the Code of Corporate Governance

Unipro PJSC increases the level of corporate governance, progressively improving the quality of management practices each year. In 2019, the Company continued to improve its corporate governance system according to the recommendations set forth in the Bank of Russia Code of Corporate Governance, promptly responding to external changes and best practices.

The Company partially or fully complies with 95% of the principles of corporate governance and each year significantly improves the indicator of full compliance with the recommendations of the Code of Corporate Governance of the Central Bank of Russia.

See the interactive version of the Annual Report for the detailed Report on the Company’s adherence to the Code of Corporate Governance.

Unipro PJSC compliance with the Code of Corporate Governance

3.2. Structure and Results of Work by Corporate Governance Bodies

The governing bodies structure includes the General Shareholders' Meeting, the Board of Directors, the collective executive body (Management Board) and the sole executive body (CEO).

The Board of Directors has the broadest functions and plays a key role in management of the Company. The Board of Directors is supported in its work by the Audit Committee and the Appointment and Remuneration Committee.

General Shareholders' Meeting

The General Shareholders' Meeting is the highest governance body of Unipro PJSC. The competences of the General Shareholders' Meeting, as described in the Federal Law “On Joint-Stock Companies” and the Company’s Articles of Association, include:

• approval of annual reports and annual accounting statements;
• election of the Board of Directors and termination of its powers;
• appointment of the external auditor;
• making decisions on payment of dividends.

The procedure for convening, preparing, and holding General Shareholders' Meetings is governed by the Regulation on the Procedure for Preparing and Holding the General Shareholders' Meeting.*

Board of Directors

A competent and efficient Board of Directors of Unipro PJSC is a key element of the Company’s corporate governance system.

The activities of the Board of Directors are governed by the Regulation on the Board of Directors of Unipro PJSC The text of the Regulation on the Board of Directors of Unipro PJSC is published on the Company’s website at http://www.unipro.energy/management/documents/

The competencies of the Board of Directors are established in the Company’s Articles of Association, and are clearly differentiated from those of the Company’s executive bodies overseeing its daily operations. The Board of Directors, among other things:

• performs operational management of the Company’s activities;
• approves its priority development areas;
• ensures implementation and protection of the rights and legitimate interests of the shareholders;
• determines the Company’s vision, mission and strategy;
• establishes effective executive bodies and provides control over their activities by reviewing reports on implementing strategic and business plans of the Company and maintaining an effective incentive system;
• approves the internal control and risk management policy, ensures the functioning of risk management and internal control systems;
• focuses on improvement of the Company’s corporate management system and practices;
• ensures the timely disclosure of exhaustive and reliable information on the Company’s business.

Composition of the Board of Directors

The composition of the Board of Directors is structured in a way that ensures a balance of professionalism, knowledge and experience enabling proper performance of their duties by the members of the Board of Directors.

Members of the Board of Directors are elected annually at the General Shareholders' Meeting by cumulative voting.

Key requirements to the formation of the Board of Directors include the following:

• specific qualifications, experience, knowledge, business skills and business reputation of candidates;
• election of at least three independent directors of the Board;
• limitation of the number of executive directors (not more than a quarter of Board members),
• candidates should have no conflicts of interest.

The composition of the Board of Directors was changed in 2019. Andreas Schierenbeck and Georgiy Abdushelishvili were elected to the Board of Directors of Unipro PJSC at the Annual General Shareholders' Meeting that took place on 14 June 2019, and Klaus Schaeffer and Alexey Germanovich left the Board of Directors. David Bryson was elected to the Board of Directors of Unipro PJSC at the Extraordinary General Shareholders' Meeting that took place on 3 December 2019, and Uwe Fip left the Board of Directors.

These changes in the Board of Directors helped to bring a fresh perspective on matters reviewed at meetings of the Board and of its committees, and it is consistent with the current interests, strategies and mission of the Company.

At this stage, the Company pays special attention to working with the Company’s personnel as one of the areas of the Company development, building and improving teamwork and developing a motivation system.

The membership of the Board of Directors as of the end of the reference period was elected by the Extraordinary General Shareholders' Meeting on 3 December 2019.

Members of the Board of Directors as of 31 December 2019

Andreas Schierenbeck

Chairman of the Board of Directors

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Year of birth: 1966.
Education:
1992: Master of Science in Electrical Engineering, University of Dresden (Germany).
2009: MBA, Executive MBA Program, Harvard School of Business (USA).
Nationality: German
Positions held in the last 5 years:
Since 2019: Chief Executive Officer, Uniper SE (Düsseldorf, Germany).
2012−2019: Chief Executive Officer, ThyssenKrupp Elevator (Essen, Germany).
Current membership in managerial bodies of other companies:
Since 2019: Chairman of the Management Board, Uniper SE (Düsseldorf, Germany).
Since 2019: Chairman of the Board of Directors, Unipro PJSC.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Anna Belova

Deputy Chairwoman of the Board of Directors, independent director, Chairwoman of the Audit Committee, member of the Appointment and Remuneration Committee of the Board of Directors

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Year of birth: 1961.
Education: higher education.
In 1984, graduated from the Moscow Institute of Engineering Physics, majoring in System Engineering. In 1989, graduated from the Research and Development Institute of Radio Instrumentation Engineering (postgraduate programme). In 2000, graduated from the Academy of Advanced Training for Investment Managers and Specialists (specialisation: Finance and Credit). In 2002, awarded the degree of candidate of economic science.
Nationality: Russian.
Positions held in the last 5 years:
Since 2012: Professor of the Higher School of Management, Higher School of Economics.
Current membership in managerial bodies of other companies:
Since 2011: Deputy Chairman of the Board of Directors, CFE inc.
Since 2016: Member of the Board of Directors, Tiscali S.p.a.
Since 2016: Member of the Board of Directors, High-Speed Rail Lines JSC.
Since 2017: Member of the Board of Directors, Sistema Joint-Stock Financial Corporation.
Awards:
2013: Best Corporate Director of a Publicly Owned JSC in the category “Best Chairman of the Board of Directors of a Publicly Owned JSC” established by the National Corporate Directors Association under the auspices of the Federal Property Management Agency.
2014: ARISTOS Management Award in the category “Best Independent Director”.
2017: prize winner at the 12th Director of the Year National Awards: “Independent Director” as ranked by the Association of Independent Directors.
2018: one of the 50 best independent directors (ranking of the Association of Independent Directors).
First elected to the Board of Directors of Unipro PJSC on 15 June 2016.
She holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Maxim Shirokov

CEO, Member of the Board of Directors, Chairman of the Management Board

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Year of birth: 1966.
Education: higher education.
In 1988, graduated from the Moscow Red Banner Military Institute (Ministry of Defence). In 1994, graduated from the Moscow Law Institute. In 1996, obtained an MBA diploma at Pacific Coast University, USA. In 2003, graduated from the London Business School.
Nationality: Russian.
Positions held in the last 5 years:
Since 2012: Chief Executive Officer, Unipro PJSC.
2012−2015: Chief Executive Officer, E. ON Connecting Energies LLC.
2015−2016: Chief Executive Officer, Uniper LLC.
Since 2018: Chief Executive Officer, Unipro Engineering LLC.
Current membership in managerial bodies of other companies:
Since 2013: Member of the Supervisory Board, Council of the Association of Power Producers.
Since 2017: Member of the Board of Directors, Gazprom YRGM Development JSC.
First elected to the Board of Directors of Unipro PJSC on 21 February 2013.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Dr. Patrick Wolf

Member of the Board of Directors

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Year of birth: 1971.
Education:
In 1994, graduated from Rhineland Friedrich Wilhelm University (Germany). In 1997, graduated from Ludwig Maximilians University of Munich (Germany). In 1999, obtained a doctor’s degree in canon and civil law
Nationality: German.
Positions held in the last 5 years:
2004−2015: Vice President, E. ON SE (Dusseldorf, Germany).
Since 2016: Chief Legal Counsel and Compliance Manager, Uniper SE (Dusseldorf, Germany).
Current membership in managerial bodies of other companies:
Since 2015: Member of the Supervisory Board, Uniper Kraftwerke GmbH (Dusseldorf, Germany).
Since 2016: Member of the Supervisory Board, Uniper Global Commodities SE (Düsseldorf, Germany).
Since 2016: Chairman of the Supervisory Board, Hamburger Hof Versicherungs-AG (Dusseldorf, Germany).
First elected to the Board of Directors of Unipro PJSC on 15 June 2016.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Oleg Vyugin

Member of the Board of Directors, independent director, member of the Appointment and Remuneration Committee, member of the Audit Committee of the Board of Directors

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Year of birth: 1952.
Education: higher education.
In 1974, graduated from the Mechanics and Mathematics Faculty of Moscow State University majoring in mathematics. 1978: Obtained a degree of candidate of physical and mathematical sciences.
Nationality: Russian.
Positions held in the last 5 years:
Since 2007: Professor of the School of Finance, Faculty of Economic Sciences, Higher School of Economics.
2013−2015: Senior advisor for Russia and the CIS, Morgan Stanley Bank LLC.
Current membership in managerial bodies of other companies:
Since 2002: Member of the Board of the Centre for Strategic Research.
Since 2008: Member of the Guardian Council of the Non-Profit Organisation “Endowment Fund of the New Economic School”.
Since 2008: Member of the Board of Trustees of the European University in St Petersburg.
Since 2010: Chairman of the Board of Directors of the National Association of Equity Market Participants.
Since 2011: Member of the Supervisory Board of the National Settlement Depository.
Since 2011: Member of the Board of Trustees of the Forum Analytical Centre.
Since 2015: Member of the Board of Directors, Rosneft Oil Company PJSC.
Since 2016: Member of the Board of the AGAT Youth Entrepreneurship Support Fund.
Since 2017: Chairman of the Supervisory Board, Moscow Stock Exchange PJSC.
Since 2017: Member of the Board of Directors, Skolkovo Ventures LLC.
Since 2017: Chairman of the Board of Directors, SAFMAR Financial Investments PJSC.
Awards:
Honoured Economist of the Russian Federation.
2014: prize winner at the Reputation National Awards for Financial Experts in the category “Best Independent Director on the Financial Market”.
2015: one of the 25 best independent directors (ranking of the Association of Independent Directors).
2017: prize winner at the 12th “Director of the Year” National Awards (held by the Association of Independent Directors) in the categories “Independent Director” and “Chairman of the Board of Directors: Contribution to the Development of Corporate Governance”.
2018: one of the 25 best independent directors (ranking of the Association of Independent Directors).
First elected to the Board of Directors of Unipro PJSC on 7 December 2017.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Georgiy Abdushelishvili

Member of the Board of Directors, independent director, member of the Appointment and Remuneration Committee, member of the Audit Committee of the Board of Directors

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Year of birth: 1962.
Education: higher education.
In 1985, graduated from Leningrad State University, Economic Faculty. 1979−1981: Sports Faculty, Lesgaft Institute of Physical Training. 1992: Emory University (Atlanta, USA), management.
Nationality: Russian.
Positions held in the last 5 years:
2010−2017: Managing Director, Vektor Liderstva JSC.
Since 2017: Director for Business Development, Ward Howell LLC.
Since 2018: Managing Director — Senior Partner, Vektor Liderstva JSC.
Achievements:
He is included in the ranking of “The Global 200 Executive Recruiters”.
He was among the top 10 executives in the field of professional services according to the Kommersant Newspaper.
The founder of the nominal scholarship in anthropology at St. Petersburg State University.
He has a certificate of mastery in swimming.
First elected to the Board of Directors of Unipro PJSC on 14 June 2019.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Eckhardt Rümmler

Member of the Board of Directors

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Year of birth: 1960.
Education:
In 1984, he graduated from Hamburg University of Technology with a degree in Marine Shipbuilding Engineering.
Nationality: German.
Positions held in the last 5 years:
Since 2015: Chief Engineer, Uniper SE (Düsseldorf, Germany).
2016: Executive Director, Uniper Generation GmbH (Düsseldorf, Germany).
Since 2016: Executive Director, Uniper Kraftwerke GmbH (Düsseldorf, Germany).
Current membership in managerial bodies of other companies:
Since 2016: Chairman of the Supervisory Board, Uniper Technologies GmbH (Gelsenkirchen, Germany).
First elected to the Board of Directors of Unipro PJSC on 15 June 2016.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Reiner Hartmann

Member of the Board of Directors

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Year of birth: 1945.
Education:
Graduated from Bayreuth Private Trade School with a degree in Production Process Economics. Honourable Ph.D. from Marconi University (Italy).
Nationality: German.
Positions held in the last 5 years:
1992−2014: Head of the Moscow Representative Office, E. ON Ruhrgas AG (Germany).
2013: Director for Commerce, E. ON Russia Power LLC.
2013−2016: Head of the Moscow Representative Office, E. ON Global Commodities SE (Dusseldorf, Germany).
Since 2016: Head of the Moscow Representative Office, Uniper Global Commodities SE (Dusseldorf, Germany).
Current membership in managerial bodies of other companies:
Since 2014: Chairman of the Honorary Board, Association of European Businesses in the Russian Federation.
First elected to the Board of Directors of Unipro PJSC on 6 June 2008.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

David Bryson

Member of the Board of Directors

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Year of birth: 1967.
Education:
2018: Integrated Management Programme 114, INSEAD.
2014: Establishment of effective boards of directors (IESE / Harvard Business School).
2011−2012: The talent management system, planning of key staff pool, E.ON.
December 2007: MBA, Open University
1999−2000: Integrated Command and Staff Course, College of the Command and Staff Service of the Defense Forces.
1998−1999: Master of Defense Technology, University of Cranfield.
1990−1993: Bachelor of Engineering (Honors) Information Technology, Cranfield Institute of Technology.
1989: Commissioning Course, Sandhurst Royal Military Academy.
Nationality: United Kingdom.
Positions held in the last 5 years:
Since 2019: Chief Operating Officer, Uniper SE (Dusseldorf, Germany).
2015−2018: Executive Director for Asset Management, Uniper SE (Dusseldorf, Germany).
2015: Business Development Director, E. ON Unit Next Generation (Essen, Germany).
2011−2014: Vice President, Operational Efficiency, E. ON (Germany). First elected to the Board of Directors of Unipro PJSC on 3 December 2019.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Independent directors

Independent directors serving on the Board of Directors of Unipro PJSC in 2019 were as follows:

• Anna Belova;
• Oleg Vyugin;
• Alexey Germanovich (before 14 June 2019);
• Georgiy Abdushelishvili (since 14 June 2019).

In March and October 2019 the Appointment and Remuneration Committee analysed the professional qualifications and independence of all candidates to the Board of Directors of the Company. The analysis was carried out on the basis of information and completed questionnaires received from the candidates to the Board of Directors of the Company, and also based on the available personal data of candidates.

Meetings of the Board of Directors in 2019

The Board of Directors held 16 meetings in 2019, including four in the form of joint presence. A total of 81 agenda items were considered, mainly concerning Company strategy, corporate governance, financial and business operations, and HR matters.

In-person meetings of the Board of Directors

Main resolutions approved by the Board of Directors in 2019

The meeting of the Board of Directors held at Berezovskaya GRES (Sharypovo, Krasnoyarsk Territory)

The next meeting of members of the Board of Directors was held at Berezovskaya GRES on 22 October 2019. In addition to the current composition, the following persons took part in the work of the Board of Directors: Deputy CEO of Unipro PJSC Igor Popov, Director for Corporate Governance, Legal and Asset Management Elena Gabdulkhaeva, Director of Berezovskaya GRES Branch of Unipro PJSC Sergey Raikhel, Director for Capital Construction Igor Sokoushin, Director for Efficiency of New Build Projects Igor Shelukhin, Head of the Financial Control Department for Capital Construction Mikhail Ulyanov, Head of the Industrial Safety Service of Unipro PJSC Stanislav Sitnikov, and CEO of Uniper Technologies GmbH Cord Landsmen. During their visit, the members of the Board of Directors were shown around the museum of Berezovskaya GRES, where they learnt about the history of construction, main historical milestones and present-day equipment of one of the largest thermal power plants in Russia.

Also, members of the Board of Directors made a tour of the plant, during which they had an opportunity to ask questions regarding repair and reconstruction work, and industrial safety.

Eckhardt Rümmler, a member of the Uniper SE Management Board, noted that the power plant is committed to good work practices, safe handling of hazardous materials and compliance with rules for the use of personal protective equipment.

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

The system of the Board of Directors remuneration comprises a fixed (quarterly) and a variable (annual) parts. The fixed part depends on how actively the members participated in the work of the Board of Directors. The variable part is linked to the Company’s financial performance in order to encourage commitment of Board members to the Company’s business, and make them interested in achieving best-possible financial results* .

The regulation stipulates for the reimbursement to the members of the Board of Directors of all expenses incurred by them in the fulfilment of their job obligations as members of the Board of Directors.

Remuneration is only paid to those Board members who do not hold paid positions, and are not members of the Management Board of the Company and of its affiliates.

Information on remuneration of members of the Board of Directors of Unipro PJSC, RUB thousand

Committees of the Board of Directors

The committees are fully accountable in their work to the Board of Directors.

The committees are set up taking account of recommendations of the Code of Corporate Governance of the Bank of Russia, as well as the professional experience and knowledge of Board members in the relevant field, which enables them to carry out their tasks efficiently.

Under the Moscow Exchange Listing Rules, the Audit Committee and the Appointment and Remuneration Committee can only include independent directors. This helps to ensure that the recommendations are objective and well-grounded.

Audit Committee

Quantitative and personal composition of the Audit Committee in 2019

Key matters reviewed by the Audit Committee in 2019

Appointment and Remuneration Committee

• improvement of the efficiency and quality of the work of the Board of Directors by strengthening its professional composition and work efficiency and assisting the Board of Directors in considering issues associated with the development of efficient and transparent remuneration practices for members of the Board of Directors, executive bodies, and other key executives;
• preparation and development of recommendations to the Board of Directors for making resolutions on issues falling within the competence of the committee.

Quantitative and personal composition of the Appointment and Remuneration Committee in 2019

The committee acts by virtue of the Articles of Association and the Regulation on the Appointment and Remuneration Committee of the Board of Directors of Unipro PJSC.* The regulation takes into account all the requirements set out by the new Listing Rules of the Moscow Exchange PJSC for inclusion and maintenance of the shares of an issuer in the first level quotation list.

In 2019, the Appointment and Remuneration Committee held ten meetings, including six in-person meetings.

Evaluation of the performance of the Board of Directors and its committees

Key matters reviewed by the Appointment and Remuneration Committee in 2019

Positive dynamics in the performance of the Board of Directors over the past few years includes:

• improving the composition of the Board of Directors;
• improvements in the working procedures of the Board, including the coverage of topics discussed by the Board of Directors, the culture of discussion, as well as planning its work, frequency of in-person meetings, procedure for providing materials for the meetings;
• more effective interaction of the Board with the internal audit, deeper focus of the Board on the issues of risk management and compliance.

Results of the independent assessment of the Board of Directors' performance

Preventing conflicts of interest

The Company has integrated procedures in place for successful prevention and managing conflicts of interest of members of the Board of Directors, achieving reasonable assurance that conflicts of interest (if any) are settled at early stages, and that the interests of the Company and its shareholders are not harmed.

In exercising their rights and performing their duties, the members of the Board of Directors of Unipro PJSC shall be guided by the ethical standards adhered to by the Company, including the Code of Corporate Conduct, and shall comply with the Company’s by-laws concerning insider information and restrictions imposed by such by-laws on Board members in their capacity as Company insiders.

Members of the Board of Directors provide to the Corporate Secretary written information within five business days since the occurrence of any of the following circumstances:

• about the legal entities, in which a member of the Board of Directors holds, individually or jointly with an affiliated person(s), at least 20 percent of voting shares (equity interests or stakes);
• about the legal entities, in which a member of the Board of Directors holds positions in the management bodies;
• about all actual and potential transactions which a member of the Board of Directors is aware of, and in which such member can be qualified as a related party;
• about the circumstances as a result of which a member of the Board of Directors ceases to meet the independence criteria for members of the Board of Directors, as established by the Listing Rules of Moscow Exchange PJSC.

A member of the Board of Directors informs the Chairman of the Board of Directors of his/ her intention to join governing bodies of other organisations, as well as of the fact of such an appointment by sending a respective notice no later than 14 days from the date of the appointment.

A member of the Board of Directors shall notify the Board of Directors via the Corporate Secretary upon the occurrence of a conflict of interest in respect of any item of agenda of a meeting or absentee voting of the Board of Directors, before the start of discussion of such agenda item at an in-person meeting of the Board of Directors or within one day upon receipt of voting ballots for participation in an absentee voting. Each member of the Board of Directors shall abstain from voting on any agenda item where he/she faces a conflict of interests.

Moreover, a member of the Board of Directors is to timely disclose formation on the ownership of securities of the Company, the Company’s subsidiaries and controlling entities, on their sale and (or) acquisition, and on taking positions in other legal entities, on membership in the Board of Directors (Supervisory Board) of another legal entity, and on the change of the permanent (main) position.

To timely identify conflicts of interest, the Company developed a questionnaire for members of the Board of Directors, which incorporates both legislative requirements to completeness of disclosed information and changes to the Federal Law “On Joint-Stock Companies”. Members of the Board of Directors are to fill in the questionnaire on a quarterly basis, and disclose all relevant data that may imply a conflict of interest.

No notification was received from members of the Board of Directors concerning conflicts of interest during 2019

Management Board

The Management Board is a collective executive body supervising the most significant aspects of management of the Company’s business within the powers stipulated by the Articles of Association and the Regulation on the Management Board of Unipro PJSC* . The Management Board reports to the Board of Directors and the General Shareholders' Meeting.

Key responsibilities of the Management Board comprise the following:

• development and submission to the Board of Directors of long-run plans for implementing the Company’s key business activities;
• approval of major transactions of the Company;
• determination of the Company’s position on a number of most critical issues in the business of its subsidiaries;
• provision of social guarantees and benefits to Company employees;
• design of draft resolutions and recommendations to the Board of Directors.

Pursuant to Clause 18.3 of the Articles of Association of the Company, members of the Company’s Management Board are elected by the Board of Directors in the number of at least three persons. The Board of Directors may determine a greater number of members of the Management Board.

No changes to the Management Board took place in 2019.

Members of the Management Board as of 31 December 2019

Maxim Shirokov

CEO, Chairman of the Management Board, member of the Board of Directors

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Year of birth: 1966.
Education: higher education.
In 1988, graduated from the Moscow Red Banner Military Institute (Ministry of Defence). In 1994, graduated from the Moscow Law Institute. In 1996, obtained an MBA diploma at Pacific Coast University, USA. In 2003, graduated from the London Business School.
Nationality: Russian.
Positions held in the last 5 years:
Since 2012: Chief Executive Officer, Unipro PJSC.
2012−2015: Chief Executive Officer, E. ON Connecting Energies LLC.
2015−2016: Chief Executive Officer, Uniper LLC.
Since 2018: Chief Executive Officer, Unipro Engineering LLC.
Current membership in managerial bodies of other companies:
Since 2013: Member of the Supervisory Board, Council of the Association of Power Producers.
2016−2018: Member of the Board of Directors, Severneftegazprom JSC.
Since 2017: Member of the Board of Directors, Gazprom YRGM Development JSC.
Appointed to the Management Board of the Company on 16 July 2012. He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Ulf Backmeyer

Deputy CEO for Finance and Economics, Deputy Chairman of the Management Board

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Year of birth: 1970.
Educational attainment: higher education.
In 1996, graduated from Universität Passau (Germany), majoring in economics of culture.
In 2019, studied at the Harvard Business School under the Advanced Management Programme, Executive Master of Business Administration.
Nationality: German.
Positions held in the last 5 years:
Since 2011: Deputy CEO for Finance and Economics, Unipro PJSC.
Elected to the Management Board of the Company on 28 January 2011.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Igor Popov

Deputy CEO for Production, member of the Management Board

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Year of birth: 1965.
Educational attainment: higher education.
In 1988, graduated from Chita Polytechnic Institute, heat-and-power engineer.
Nationality: Russian.
Positions held in the last 5 years:
Since 2009: Deputy CEO for Production, Unipro PJSC.
Elected to the Management Board of the Company on 30 August 2012.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Meetings of the Management Board in 2019

In 2019, 45 meetings of the Management Board were held, in the course of which the Board discussed issues related to all areas of the Company’s operating activity.

Key issues reviewed by the Management Board in 2019

Remuneration and compensation to the Management Board

Remuneration and compensation to Company employees who are members of the Management Board are paid under employment contracts signed with them as fulltime employees, the terms and conditions of which are reviewed by the Appointment and Remuneration Committee.

The Regulation on the Management Board of Unipro PJSC does not provide for any special remunerations or compensations to employees acting as members of the Management Board.

In 2019, Company employees who were members of the Management Board received the following payments: salaries — RUB 178,358 thousand; bonuses — RUB 92,347 thousand; total — RUB 270,705 thousand.

Chief Executive Officer

The CEO is the Company’s sole executive body. The CEO is responsible for the Company’s daily operations according to the Articles of Association, resolutions of the General Shareholders' Meeting, the Board of Directors and the Management Board.

The CEO reports to the General Shareholders' Meeting and the Board of Directors. The CEO is elected by the Board of Directors by a majority of votes of those present at the Board meeting.

Maxim Shirokov was appointed the CEO by the Resolution of the Board of Directors dated 16 July 2012 and took office on 17 July 2012.

Maxim Shirokov

CEO, Chairman of the Management Board, member of the Board of Directors

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Year of birth: 1966.
Educational attainment: higher education.
In 1988, graduated from the Moscow Red Banner Military Institute (Ministry of Defence). In 1994, graduated from the Moscow Law Institute. In 1996, obtained an MBA diploma at Pacific Coast University, USA. In 2003, graduated from the London Business School.
Nationality: Russian.
Positions held in the last 5 years:
Since 2012: Chief Executive Officer, Unipro PJSC.
2012−2015: Chief Executive Officer, E. ON Connecting Energies LLC.
2015−2016: Chief Executive Officer, Uniper LLC.
Since 2018: Chief Executive Officer, Unipro Engineering LLC.
Current membership in managerial bodies of other companies:
Since 2013: Member of the Supervisory Board, Council of the Association of Power Producers.
2016−2018: Member of the Board of Directors, Severneftegazprom JSC.
Since 2017: Member of the Board of Directors, Gazprom YRGM Development JSC.
He holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Remuneration and compensation to the CEO

Remuneration and compensation payable to the CEO, including financial incentives, are described in the employment contract with the CEO, and the terms and conditions of such contract are approved by the Board of Directors of the Company. No other remunerations were paid to the CEO except those described in the employment contract. The amount of remuneration and compensation paid to the CEO in the reference period is included in the amount of remuneration and compensation paid to the Management Board.

Ekaterina Giganova

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Year of birth: 1982.
Educational attainment: higher education.
In 2004, graduated from the State University — Higher School of Economics, Law Faculty
Nationality: Russian.
Positions held in the last 5 years:
2011−2018: Senior Lawyer, DLA Piper Rus Limited.
Since 2019: Head of the Corporate Policy Department, Unipro PJSC.
She holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

Corporate Secretary

The key duties of the Corporate Secretary are: ensuring proper interaction with the Company’s shareholders; coordinating actions by the Company to defend the rights and interests of shareholders, and supporting efficient operations by the Board of Directors.

In accordance with the resolution of the Board of Directors of Unipro PJSC dated 28 March 2019 (Minutes No. 271 dated 29 March 2019), the functions of the Corporate Secretary are assigned to the Corporate Policy Department:

The following key tasks shall be assigned to the Corporate Policy Department:

• participation in improvement of the Company’s corporate governance system;
• coordination of the Company’s efforts aimed at protecting and ensuring the exercise of rights and interests held by the Company’s shareholders;
• efficient day-to-day interaction with the Company’s shareholders;
• support of efficient performance of the Company’s Board of Directors.

The Corporate Policy Department shall operate under the Russian laws, the Unipro PJSC Articles of Association, Unipro PJSC Regulation on the Corporate Policy Department, Regulation on the Function Performing the Duties of the Corporate Secretary of Unipro PJSC, and other corporate documents of the Company and resolutions of the General Shareholders' Meeting and the Board of Directors of the Company.

The Head of the Corporate Policy Department shall be subordinate and accountable to the Company’s Board of Directors. The Head of the Corporate Policy Department shall be appointed and dismissed by the Company’s CEO upon approval of the Company’s Board of Directors.

In March 2019, the Board of Directors of Unipro PJSC approved the appointment of Ekaterina Giganova to the position of the Head of the Corporate Policy Department of Unipro PJSC (Minutes No. 271 dated 29 March 2019).

No conflicts of interest in the work of the Corporate Secretary were identified in 2019.

Unipro PJSC Top Management

Control and audit

Unipro PJSC has a system for the control of financial and business operations, which consists of local regulatory documents, existing practices and procedures, and methodology. The key participants of the system are as follows:

• Revision Commission (dissolved on 14 June 2019);
• Audit Committee of the Board of Directors of Unipro PJSC;*
• Internal Audit Department;
• External Auditor.

Revision Commission

The Revision Commission of Unipro PJSC is a permanent elected body that oversees financial and business operations of the Company in accordance with the Articles of Association and the Regulation on the Audit Commission.*

The Revision Commission is elected by the General Shareholders' Meeting for a period until the next Annual General Shareholders' Meeting.

The Revision Commission continuously supervises the Company’s financial and operating activities, standalone divisions, officers, managerial bodies and structural units. The powers and operating procedures of the Revision Commission are described in the Regulation on the Revision Commission.

In 2019, the Unipro PJSC Revision Commission held two meetings, where the following issues were considered:

• the report of the CEO on related-party transactions entered into in 2018 by Unipro PJSC;
• review of the report on the 2018 results of Unipro PJSC, including the report on budget execution;
• review and approval of the draft opinion of the Revision Commission on the annual financial statements of the Company for 2018.

The Revision Commission operating in 2019 was elected by the Annual General Shareholders' Meeting of the Company on 14 June 2018 and consisted of 4 persons.

Pursuant to Clause 12.2 of the Regulation on the Revision Commission, no remuneration is paid to members of the Revision Commission for their work in that capacity. In 2019, no remuneration was paid to the members of the Revision Commission.

Due to amendments to the Federal Law “On Joint-Stock Companies” (according to which a public company establishes a revision commission if it is provided for by the articles of association of the public company), a new version of the Articles of Association was approved at the Annual General Shareholders' Meeting on 14 June 2019, which does not require the Company to establish a revision commission. The Internal Audit Department shall be the body supervising the Company’s financial and business operations.

Internal Audit Department

The function of internal audit at Unipro PJSC is assigned to the Internal Audit Department and is carried out in accordance with the Regulation on the Internal Audit Department.

Veronika Semenova

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Year of birth: 1985.
Educational attainment: higher education.
In 2007, graduated from Griboyedov Institute of International Law and Economics, Faculty of Economics.
Nationality: Russian.
Positions held in the last 5 years:
2011−2018: Senior Manager at KPMG Forensic.
Since 2019: Head of the Internal Audit Department, Unipro PJSC.
She holds no shares in the Company’s authorised capital and carried out no acquisitions and disposals of shares in Unipro PJSC in 2019.

The Internal Audit Department helps to achieve the Company’s objectives in the most efficient and economically sound way, by using a systematic and consistent approach to assess and improve the effectiveness of risk management, internal control and corporate governance systems.

To ensure the principle of independence and objectivity, the Internal Audit Department reports to the Board of Directors, and is administratively subordinated to the CEO.

The Head of the Internal Audit Department is functionally subordinate and reports to the Company’s Board of Directors. The Head of the Internal Audit Department is appointed and dismissed by the Company’s CEO upon approval of the Company’s Board of Directors.

On 4 April 2019, the Board of Directors of Unipro PJSC approved the appointment of Veronika Semenova to the position of the Head of the Internal Audit Department of Unipro PJSC (Minutes No. 272 dated 5 April 2019).

No conflicts of interest in the work of the Head of the Internal Audit Department were identified in 2019.

In its work the Internal Audit Department takes account of international professional standards for internal audit and the Code of Ethics for Internal Auditors, adopted by the Institute of Internal Auditors, and is guided by the Company’s internal audit regulations.

Audit procedures are based on the annual audit plan, which was prepared for 2019 using a risk-based approach to identify key areas for audit, taking account of the requests and recommendations of the management and shareholders.

PLANS FOR 2020

The work plan for the Internal Audit Department of Unipro PJSC for 2020 includes the following areas:

• audit of supervisory control and data acquisition (SCADA);
• audit of the procurement process;
• audit of the license management process;
• audit of selected topics related to the project of Refurbishment of Berezovskaya GRES Power Unit No. 3;
• audit of corporate communications and relationships;
• audit of the time tracking process;

• audit of the occupational health, safety and environment management system, including safeguarding of the health of personnel;
• audit of the boiler house construction at Smolenskaya GRES;
• analysis of readiness for the modernisation programme;
• audit of repair and maintenance processes at Yaivinskaya GRES;
• audit of the process of fulfilling contractual obligations and claims handling.

The Company has developed feedback channels for issues related to violations or inconsistencies in the preparation of financial statements or in operation of the internal control system. Any employee may refer these issues to the Internal Audit Department and the Audit Committee of the Board of Directors.

The audit plan for 2019 was 100% completed; the staff of the Internal Audit Department conducted 13 audits and investigations in the following functional areas: procurement, manufacturing, IT, health and safety, finance. A significant share of the audit procedures were carried out in respect of the project for the reinstatement of Berezovskaya GRES Power Unit No. 3.

In 2019, the Company’s hotline received several complaints, some of which were submitted to the Internal Audit Department for internal investigation. In total, four such complaints were submitted in 2019.

Of the 13 audits conducted in 2019, three were internal investigations, two of which were initiated as a result of complaints received through the Company’s hotline.

In one of the two investigations conducted in 2019 the information was partially confirmed.

During all conducted internal investigations, observations were made regarding the effectiveness of the analysed business processes, and recommendations were given to improve such processes. The Internal Audit monitors timely implementation of issued recommendations.

Two of the four complaints received will be investigated as part of the 2020 audits.

The staff of the Internal Audit Department systematically monitor and control the implementation of measures to prevent, correct or eliminate shortcomings that are identified by audit work, based on recommendations made by the auditors.

In 2019, the staff of the Internal Audit Department pursued further professional development and training. Management competencies were enhanced by obtaining of the NEBOSH certificate, which confirms an adequate knowledge for self-auditing in the field of health, safety, security and environment (HSSE). The staff of the department have been trained towards and continue to prepare for CIA (Certified Internal Auditor) and CFE (Certified Fraud Examiner) professional certifications.

External Auditor

3.3. Relations with Shareholders and Investors

The Company combines clear and efficient corporate governance rules with continuous information exchange with the outside audience.

In its work with shareholders and representatives of the investment community, Unipro PJSC prioritises the key task of increasing investment attractiveness, which it achieves by increasing the information transparency, implementing a stable dividend policy, and increasing the liquidity of its securities.

Rights of shareholders

Share capital structure of Unipro PJSC

The Company did not issue any additional shares in 2019.

Shares at stock exchanges

The authorised capital of Unipro PJSC is RUB 25,219,482,458.37. According to Unipro’s Articles of Association, 63,048,706,145 full and 44,925,042,874/49,130,625,974 fractional uncertificated registered ordinary shares are issued with a nominal value of RUB 0.40.

Unipro’s ordinary shares were listed in the first-tier quotation list of the Moscow Stock Exchange on 1 September 2014.

Outstanding shares

Total market capitalisation of Unipro PJSC*

Dividends

Developing its dividend policy, Unipro PJSC does not only comply in full with the Russian legal requirements, but also balances interests of its shareholders with the Company’s needs in development, boosting its investment appeal and capitalisation.

The Board of Directors approved on 11 March 2019 (Minutes No. 270 dated 12 March 2019) the Regulation on the Dividend Policy of the Company http://www.unipro.energy/management/documents/ developed according to the Russian law and the Articles of Association.

All of the Company’s shareholders enjoy equal and fair terms in receiving a share of Company profits through dividends, including:

• a clear and transparent mechanism for calculating and paying dividends;
• payment of dividends in cash only;
• exclusion of instances when shareholders receive Company profits in any manner other than as dividends and liquidation value.

Dividend history of the Company

Based on the Company’s performance in 2008−2010, the General Shareholders' Meeting made the decision to not pay out dividends.

Report on declared (accrued) dividends on shares for 2019

In 2019, based on a resolution of the Annual General Shareholders' Meeting, dividends for 2018 were declared in the amount of RUB 7.0 bln. The Extraordinary General Shareholders' Meeting held on 3 December 2019 resolved to pay interim dividends in the amount of RUB 7.0 bln for nine months of 2019.

As of the date of approval of the Annual Report, the declared dividends for 9 months of 2019 were paid in full, except for amounts which were unpaid due to reasons beyond the Company’s control (absence of accurate and necessary address data or bank details of the person entitled to receive dividends).

Registrar

Since 2009, Unipro’s registrar is R.O.S.T. Registrar JSC, a professional participant of the stock market, maintaining the register based on license No. 045−13976−000001 dated 3 December 2002.

Since December 2016, R.O.S.T. Registrar JSC has been a part of Independent Registrar Company R.O.S.T. Group, comprising the leaders of the registrar services market.

Detailed information on Independent Registrar Company R.O.S.T. JSC can be found in the “Contact Information” section.

Due to the expiration of the registry maintenance agreement between Unipro PJSC and Independent Registrar Company R.O.S.T. JSC, the Company carried out procurement procedures under the Regulation on Procurement of Unipro PJSC. The winner of the procurement procedures was VTB Registrar JSC. By the decision of the Board of Directors dated 10 December 2019 (Minutes No. 283 dated 12 December 2019), VTB Registrar JSC was approved as the registry holder of Unipro PJSC.

VTB Registrar JSC will commence its functions of the registry holder from the moment the registry is transferred from Independent Registrar Company R.O.S.T. JSC.*

Detailed information on VTB Registrar JSC can be found in the “Contact Information” section.

Disclosures

In 2019, Unipro PJSC approved the Information Policy*, the main purpose of which is to ensure the highest possible degree of trust of shareholders, potential investors, contractors and other stakeholders in the Company. To this end, these persons are provided with the possibility of free and unhindered access to information on the Company’s activities in an amount sufficient for them to make informed decisions regarding the Company and its securities.

The main objectives of the Information Policy include the following:

• ensuring timely and full disclosure of information about the Company to all the related parties in full compliance with current laws of the Russian Federation, regulatory legal acts of regulatory bodies, rules of securities market operators;
• ensuring neutral nature of the information upon disclosure;
• enhancing transparency and confidence;
• setting rules and the procedure for communication of information about the Company to all related parties, using the Company’s various channels and methods of disclosure being accessible for most related parties;
• ensuring information security and protection of the Company’s confidential information.

3.4. Compliance

Compliance is an integral part of the corporate governance system at Unipro PJSC. The Company values its business reputation and corporate culture, which have been built for many years, and operates exclusively under the applicable law, in accordance with the principles of good business conduct, high standards of business ethics and professional conduct.

The efficiency of the compliance system is based on personal responsibility of each employee. That is why, each employee of Unipro PJSC, regardless of the position, shall follow the rules of the Code of Corporate Conduct. It is a fundamental document which sets out the established rules that are mandatory for all employees of the Company.

The Code of Corporate Governance provides for training (e-learning) once every two years, as well as upon hire of new employees.

Unipro PJSC has a compliance risk management system: compliance risks are assessed for the Company’s activities, resulting in the creation of a risk map with the degree of probability of their materialisation and a set of measures to mitigate them. Further, based on the results of these actions, a detailed risk assessment report is prepared with a list of practical measures and specific deadlines for their implementation.

In addition, with participation of the senior management of Unipro PJSC, a separate antitrust risk assessment is conducted on an annual basis.

One of the main principles for responsible business practices of Unipro PJSC is counteraction to corruption. The Company recognises and monitors the compliance with local regulatory acts on corruption, and also implements a number of additional measures in terms of countering involvement in corruption activities. In particular, Unipro PJSC has organised a hotline for informing on any facts or prerequisites for the occurrence of a corruption situation, which is available to both the Company’s employees and partners.

In 2019, an audit of the compliance management system of Unipro PJSC was conducted by a well-known international audit company (hereinafter referred to as the Audit Company). The Audit Company conducted an audit to verify the suitability, implementation procedure and performance of the group-wide compliance system.

As part of the operating effectiveness testing, the Audit Company performed walkthroughs and sample testing of the compliance ICS controls, the significant measures identified in the audit as well as the measures mentioned in the compliance management system (CMS) description:

• testing of general CMS requirements and its measurements according to IDW AssS980 regarding an appropriate design of the compliance organisation in terms of its size, functions (guidelines, trainings, communication and compliance culture) and independence. Effectiveness testing of compliance measures implemented to adequately address the risks regarding missing compliance awareness in the organisation;
• testing of anti-corruption requirements and its measurements according to IDW AssS980 regarding an appropriate setup and effectiveness of anti-corruption measures and controls implemented in terms as specific risk assessment performed, offering specialised trainings for risk groups and adequate controls in identified high risk areas, e.g. new hires, procurement, sales and conflict of interest disclosures.

The Board of Directors of the Company reviewed and took note of the Audit Report of the Compliance Management System on 10 December 2019 (Minutes No. 283 of 12 December 2019).

In 2019, the compliance officer received more than 10 requests from employees of the Company, including requests in the field of potential conflicts of interest and requests on participation in events and congratulations to partners on memorable dates. Based on the results of the consideration of these appeals, all situations were assessed in terms of compliance with the principles of the Code of Corporate Conduct of Unipro PJSC, and the employees were offered the correct procedure.

In order to eliminate the risk of situations that could harm the interests of the Company and employees, the compliance officer pays special attention to appeals related to potential conflicts of interest. At the same time, the Company welcomes the continuity of generations and preservation of the dynasty of power engineers. Thus, the Company adheres to the position that each case of a potential conflict of interest is unique and should be considered individually, but additional control measures can be taken.

In 2020, Unipro PJSC will continue to work on development and improvement of the CMS, and will adopt a number of additional regulatory documents governing anti-corruption processes to conduct separate training and consulting for the Company’s employees on compliance with anti-corruption requirements.

3.5. Risk Management

Effective risk management is one of the most important prerequisites for sustainability of Unipro PJSC business.

The current integrated risk management system is aimed at the timely identification of risks, as well as the implementation of measures to manage them. The Company regularly reviews the planning, controlling and reporting processes in order to improve the efficiency and predictability of its financial position.

Corporate risk management system

In order to reduce the negative impact of potential hazards and to use favourable opportunities, Unipro PJSC operates the Corporate Risk Management System (CRMS).

The key elements of the risk management system are the Company’s strategy, internal regulations, including the Regulation on the CRMS, controlling, planning, the internal control and audit system, risks and opportunities reports, as well as operation of the Risk and Finance Committee.

Scheduled reports are provided on a quarterly basis. Moreover, the Company establishes a procedure for compiling and reviewing urgent reports in case of emerging material risks.

Reports on the most material risks and opportunities are laid before Unipro PJSC Audit Committee and the Board of Directors for consideration.

The Risk and Finance Committee of Unipro comprises heads and representatives of the key business units who are in charge of operational, legal and financial activities.

The committee ensures implementation of the credit and market risks management strategy, prepares recommendations for the Company’s executive bodies on risk management, reviews and approves risks and probabilities report.

CRMS organisational structure

At Unipro PJSC, the effectiveness of the CRMS is assessed as follows:

• the management informs annually the Board of Directors on results achieved in the field of risk management in the framework of corporate reports;
• twice a year, the Risk and Finance Committee evaluates the effectiveness of the CRMS operation in terms of involvement in the process of all relevant functional and legal structures of the Company;
• an independent audit of the risk management system is conducted annually.

Performance results of the risk management system in 2019

In the reference period, the Risk and Finance Committee paid special attention to monitoring the risks of the project to restore Power Unit No. 3 of Berezovskaya GRES, to the progress of fire hazard reduction recommendations issued during (Uni)performance inspections, as well as to monitoring the development and mitigation of the risk of BGRES Power Unit No. 3 CSA Unilateral Repudiation by capacity buyers.

With the existing risk management system, the Company ensures that risks are timely detected, estimated, managed, and controlled.

However, some risks may still emerge that are currently unknown or insignificant. Such risks may negatively affect the future performance of Unipro PJSC.

In 2019, the Treasury Operations and Risk Management Department focused on organising the process to identify and assess risks as well as to develop corresponding preventive measures with regard to projects aimed to implement the TPP modernisation programme, as well as on updating the insurance policies for construction and installation works under the Berezovskaya GRES Power Unit No. 3 recovery project with the significant reduction of the property franchise.

The insurance coverage for property damage and losses from business interruption in 2019 was renewed and expanded in respect of cybernetic risks and losses from employee disloyalty; the list of insured events was also expanded (in particular, consequences of terrorist acts and sabotage were included in the number of insured property losses and business damage).

Major risk management efforts in 2019 were directed at coordinating interactions of the Company’s divisions and their participation in the identification and mitigation of risks.

Plans for 2020

In the coming year, Unipro PJSC will continue its ongoing optimisation and improvement of the CRMS. The persistent task is to maintain the risk management function in terms of risk owners' influence on the quality of risk management processes at a high level.

Besides, in 2020, it is planned to optimise the insurance terms and purchase additional coverage for contracted works performed during main production and design activities (overhauls, technical refurbishment, modernisation).

Key risks

Most material net risks of Unipro PJSC at year end 2019

Risk category	Risk subcategory and preventive measures	Assessment of materiality and risk dynamics
Market risks	Commodity risks The main sector exposed to the commodity risk in the day-ahead market (DAM), where pricing takes place on an arm’s length principle. Thus far, excess capacity has been formed in the energy system as a result of commissioning of capacities by generators under investment programmes and zero growth of electric power consumption taken into account during the development of investment programmes. This fact has changed the flow volumes in the energy system and strengthened influence on the DAM price regarding the grid transmission capacity, grid maintenance, regional supply and demand balances. Nevertheless, the Company utilises all methods provided by the Wholesale Market Rules to increase its revenues from electric power sales in the free market sector.
	Currency The Company minimises the foreign exchange risk by hedging future liabilities in foreign currency.
Credit risks	Unipro PJSC manages credit risks by assessing fair practices of counterparties, by setting and controlling limits on transactions with financial institutions. In its operations, the Company has to supply electricity to certain regions of the Russian Federation, which fail to pay for consumption in full or in due time and increase their receivables to Unipro PJSC.
Financial risks	Tax risks Tax risks of the Company are caused by: reformation of the state oversight function; invariability of business tax conditions and length of the investment planning horizon; state readiness to support business initiatives by means of legal tax tools; gaps and contradictions in the tax legislation. Tax risks affect the Company activities to the same extent as those of any other players in the wholesale electricity market, which is typical for conducting business in the Russian Federation. The Company closely follows-up on trends in changes to the tax legislation and law-enforcement practices related to tax cases in order to timely incorporate these changes into its tax obligations.
Operational risks	Asset-related operational risks Business interruption risks This risk is caused by any factors that can lead to business interruption. Meanwhile, this risk includes both a direct stoppage in production resulting from physical damage of the equipment, and a consequential business interruption resulting from material loss at an outside facility that does not belong to the Company, and is not maintained or managed thereby. The main factors when assessing the possible losses include turbine oil catching fire, damage of the turbine wheelspace, explosion of the boiler at ignition, explosion in the chemical water treatment ammonia storage, washout of the water gathering pond dam, etc. In order to reduce the probability of adverse effects of such negative events, the Company takes the following measures: establishing a four-tier system of industrial control and industrial safety management; carrying out equipment maintenance in line with a strict schedule; ensuring high-quality training of the personnel (especially the employees operating hazardous industrial facilities), assessment of their knowledge and analysis of their reliability based on the investigation of incidents and near misses; ensuring systematic work with the personnel to increase their reliability manifesting itself in the absence or minimisation of consequences of any accidents/incidents resulting from human errors; performing close technical investigations of accidents, process incidents and significant defects with the identification of primary (root) causes and development of accident prevention measures using various tools, including the BSCAT methodology; organising a system to monitor the implementation of the accident prevention measures developed based on the investigation results, ensuring their use with the similar equipment at all power plants of the Company; implementing a risk-oriented approach to planning targeted measures improving the equipment reliability and implemented as part of repair and modernisation operations by generating risk maps for each equipment group, analysing previous and forecasting future forced unavailability; calculating and analysing the reliability indicators for equipment groups to forecast its forced unavailability and ensure that investments are used to minimise such forced unavailability; implementing the recommendations of risk engineers from insurance companies (following the audits) that are based on the best practices in improving the reliability and fire safety of equipment, buildings and structures; identifying and evaluating hazards and threats using the BowTie methodology, developing safeguards; ensuring thorough supervision over the maintenance personnel in terms of their strict compliance with the procedures for the maintenance and technical acceptance of repaired equipment by the customer’s representatives; using the system of regular equipment performance assessment; involving specialised contractors to assist with technical condition diagnostics and assessment; conducting on-site inspections to assess equipment maintenance readiness and completed repairs; investigating all instances of equipment failure affecting the operation of generating equipment; analysing changes in the equipment performance indicators and cost/performance ratios; implementing a comprehensive programme for the equipment replacement and per-unit reconditioning; implementing a comprehensive programme for advanced training of the production personnel; standardising repairs, including by developing maintenance data sheets and maintenance workflow specifications; providing employees with incentives intended to reduce the equipment damage rate and forced unavailability (including targeted reduction of the bonus rate depending on the contribution of specific employees to the forced unavailability value); insuring business interruptions and property damage.
	Asset-related project risks Risks associated with Berezovskaya GRES Power Unit No. 3 recovery A fire outbreak in the boiler house of Power Unit No. 3 of Berezovskaya GRES, that caused damage to the boiler, occurred on 1 February 2016. The fire was extinguished. Power Unit No. 3 of Berezovskaya GRES is currently under repair. There is a risk that the actual date of putting Power Unit No. 3 of Berezovskaya GRES into operation may differ from the scheduled one. The factors of this risk include unscheduled works (design and planning flaws, remedial works, accidents, etc.) and delays by contractors. The Company pays maximum attention to managing this risk through careful monitoring of the repair process. Moreover, the Company partially insured risks related to the project “Recovery of Power Unit No. 3 at Berezovskaya GRES”.
	Legal risks One of the risk groups significantly affecting the activities of Unipro PJSC are legal risks, i.e. the risks of adverse effects as a result of any misuse or misunderstanding of legal rules when making or implementing any managerial decisions and carrying out activities, or due to a significant change in any legal rules during the performance of a transaction or managerial action versus the period when such transaction has been agreed upon or such managerial decision has been made. Generally, such risks are borne by the majority of businesses operating in Russia and affect the Company’s activities to the same extent as those of any other players in the wholesale electricity market. Since the Company does not operate in foreign markets, legal risks are only described with regard to its domestic market. The Company’s core business activity covers generation and sales of electric and heat power, thus, legal risks related to the regulation of this area may have a significant impact on the Company’s situation. The enforcement of industry regulatory laws and regulations is aimed at deregulating the electric power and capacity market, transitioning to market pricing of electric power and capacity, creating a legal framework for deregulated electric power and capacity market operations, developing a competitive environment in the sector of electric and heat power generation and sales, creating mechanisms of flexible and balanced tariff regulation that would ensure the availability of products and services for consumers as well as a reasonable level of revenue and return on the Company’s investments. Another important aspect for the Unipro PJSC activities is self-regulation exercised through Association NP Market Council and its activities related to setting detailed rules of operations in the wholesale market for electricity and power, approving regulations and standard contracts regulating such activities. Taking into account that the government regulation in Russia tends to change frequently and fast, it cannot be guaranteed that the government would not cancel market deregulation and transition to the free market or would suspend reforms of the heat power market, or change — in any way that would be unfavourable for generation companies — its approaches to such reforms, retreat from the balanced approach to various types of tariff regulation in the industry, which, in its turn, may have an adverse impact on the Company’s activities and present a significant legal risk associated with the Company’s core business activity. Moreover, the independence of the Russian judicial system and the reliability of mechanisms protecting it against any economic, political and social impact have not been tested enough in practice yet. The judicial system suffers the shortage of competent staff and lack of funding, as well as an overload due to a great number of court cases pending. The enforcement of judgment may prove to be difficult. Frequent reforms to the organisation of courts and amendments to the procedural legislation, including the matters of competence of the court and its jurisdiction over a case, together with changes in approaches applied by courts to any particular category of cases, bring even more incertitude to the judicial system operations. The said factors make it impossible to predict the outcome of court proceedings in Russia and guarantee the efficiency of remedies. Moreover, sometimes claims may be brought to courts or administrative authorities, or a prosecution may be initiated for some political, competitive, administrative or other reasons rather than on legal grounds. Such actions can also be initiated against Unipro PJSC with no guarantee of impartial trial. The Company carefully and regularly studies changes in judicial practice related to its activities so as to ensure their timely consideration and take them into account in any then-current proceedings held with participation thereof. The judicial practice is analysed at the level of both the Supreme Court of the Russian Federation and commercial courts; the Company also examines the legal position of the Constitutional Court of the Russian Federation on certain law enforcement matters.
	Political and regulatory risks The Russian wholesale electricity market regularly undergoes changes, which affect both the structure of the electricity market and relations between its participants. According to the Company’s estimates, the important industry-specific risk that may significantly affect Unipro PJSC is the risk of change in functioning rules for the electricity and capacity market. Increase in the share of the regulated component in the wholesale market negatively affects the Company’s yield because it reduces the share of more efficient sales at non-regulated (free) prices.

Risks insurance management

In Russia, Unipro PJSC has the reputation of a leading insurer, whose experience is exemplary for the market.

The Company forms its insurance coverage according to the corporate Insurance Policy of Uniper SE under the supervision of corporate insurance broker Uniper Risk Consulting GmbH (URC).

The risk insurance function in Uniper SE is responsible for the implementation of measures related to the solution of insurance tasks within the perimeter of entire Uniper Group.

Together with the risk owners (legal entities, including Unipro PJSC) and the responsible functions of the Group, the insurance function determines whether it is necessary to use insurance contracts concluded by Uniper Group, coordinated programmes, regional or individual insurance contracts to cover the risks considered. Insurance tasks are solved taking into account commercial, legal, and regional aspects.

The insurance function is performed by achieving the following goals:

• provision of centralised access to the insurance markets for Uniper Group’s companies;
• support of legal entities and functional units in the analysis to identify, study, evaluate and quantify the risks to be insured;
• development, presentation and provision of risk-adequate and cost-effective insurance coverage, e.g. by considering self-insurance options (through deductibles or franchise pooling) and using internal risk carriers (captive insurance companies);
• ensuring standardised and efficient insurance claims management;
• ongoing monitoring of insurance markets and effective insurance terms.

3.6. Business Ethics and Anti-Corruption

The Company carries out its activities in strict compliance with the requirements of the anti-corruption laws of the Russian Federation, recognises anti-corruption procedures and controls compliance therewith.

For this purpose, the Company takes actions to identify, prevent and combat corrupt practices, provides support to law enforcement authorities in the identification and investigation of facts of corruption, takes necessary measures to keep and transfer documents and information on corruption offences to law enforcement authorities. For instance, together with law enforcement authorities, the Company identified and prevented illegal cash transfer from a representative of a commercial organisation to a Company employee as a bribe to win a tender for suppliers and get awarded with a service contract; corresponding criminal proceedings were initiated.