To Our Shareholders and Investors

Corporate Governance Principles

The main principles of corporate governance according to the Company are:

protection of shareholder and investor rights;
transparency and availability of information;
examination and assessment of the quality of management practices.

To all its shareholders and investors MOSENERGO guarantees enforceability of their rights protection of which is secured through:

registration of share ownership;
keeping and safe custody of the Company's share register pursuant to Articles 44, 45, 46 of the RF Federal Law «On Joint Stock Companies»;
the ability of free and quick alienation of the shares belonging to the shareholders;
the right to take part in the Company management by way of participation in general meetings of shareholders with a right to vote on all issues within its competence, participation of shareholder representatives in the work of the Board of Directors and other bodies of the Company management and supervision;
participation in the Company's profits in the form of dividends;
the right to receive complete and true information about the Company regularly and in time.

The Company in its business adheres to the principles of maximum information transparency and openness. In accordance with the Regulation on MOSENERGO's Information Policy, the Company seeks to satisfy needs of shareholders, potential investors and professional securities market makers for credible information about the Company's operations. For this reason, the Company timely provides all information about its performance, plans and prospects and answers shareholders' requests.

The all-round information support of the Company activities and further strengthening and extending of contacts with the mass media is the main task of MOSENERGO's Press Service. Thanks to regular press conferences, briefings and press tours to various MOSENERGO facilities, journalists of the national and regional mass media receive accurate, current and copious information about the Company activities. The year 2005 saw 85 information events in the printed word and electronic media, and over 3000 published news stories about MOSENERGO activities.

MOSENERGO's official site is an important source of information and an effective means of communication. The site provides real-time news about the Company, information about corporate governance and securities, regularly updates its key performance and finance indicators.

The top management of the Company regularly holds press conferences and Internet conferences with investment analysts, briefings, and participates in conferences, exhibitions and TV programs.

Every year the Company publishes its Annual Report to the shareholders, in which it covers the key areas of production and financial operations and carries out economic analysis of the results of its work for the accounting year. The annual report to MOSENERGO's shareholders for 2004 was awarded the prize at the annual competition Best Annual Reports of Russian Companies organized by the rating agency Expert RA.

The quality of MOSENERGO's business management is controlled and assessed by the Board of Directors, Audit Commission, Audit Committee at the Board of Directors, internal audit directorate, and an external auditor of the Company.

To establish good corporate governance practices, the Company in 2005 approved a number of internal documents worked out in accordance with the Corporate Governance Code and with regard to the sector of operation, capital structure and other salient features of the Company. The meeting of shareholders approved (Minutes No. 1 dated June 29, 2005):

the redrafted Charter of the Company;
the redrafted Procedure for Convocation and Holding of Meetings of the Company's Board of Directors;
the redrafted Regulation on Payment of Remuneration and Compensations to the Members of the Company's Board of Directors;
the redrafted Articles of the Executive Board of the Company.

The Board of Directors approved:

the Articles of the Audit Committee of the Company's Board of Directors (Minutes No. 18 dated March 04, 2005);
the Articles of the Human Resources and Remuneration Committee of the Company's Board of Directors (Minutes No. 30 dated June 27, 2005);
Regulation on Internal Control of the Company (Minutes No. 30 dated June 27, 2005).

With a view to improve the quality of corporate governance, MOSENERGO plans to take the following steps in the short term:

to improve mechanisms of corporate governance of the Company's subsidiaries and associates through formulation of documents regulating activities of MOSENERGO representatives to the management bodies of the subsidiary and associated companies;
to redraft the Regulation on the Economic Mechanism of the Company.

The regulatory and legal framework embodying legal acts of the Russian Federation, regulatory documents of Russia’s Federal Service for Financial Markets and MOSENERGO’s internal documents approved by the general meeting of shareholders and by the Company’s Board of Directors serves as a guarantee that the principles of corporate governance are complied with.

In furtherance of the corporate governance principles, MOSENERGO has in place a corporate governance structure that has proved its efficiency for years.