Within the implementation of principles determined in the Corporate Governance Code, the Company created the consulting bodies under the Board of Directors of IDGC of the North-West: Audit Committee, HR and Remuneration Committee, Strategy and Development Committee, Reliability Committee and Committee of Technological Connection to Electric Grids (hereinafter referred to as the Committees).

The Committees play an active part in the process of making decisions by the Board of Directors of the Company, increasing the efficiency of the Board of Directors activities. They preliminary review, develop and provide recommendations (opinions) on the most important matters referred to the competence of the Board of Directors. Decisions of the Committees are of the recommendation nature for the Board of Directors of the Company.

Activities of the Committees are regulated by internal documents of the Company: the Regulations on Committees governing activities, procedure for creation, competence and the term of powers of the Committees.

Quantitative and individual compositions of each Committee are determined by resolution of the Board of Directors of the Company.

Due to the fact that members of the Committees are elected for a period until the first meeting of members of the Board of Directors elected in a new composition there were three different individual compositions of each Committee.

The effective quantitative and individual compositions of Committees are determined by the resolution of the Board of Directors of the Company of September 19, 2012 (Minutes No. 110/8).

Activities of the Committees are carried out in accordance with the plans of the Committees' work annually approved at the first meeting of the Committees elected in a new composition.

Audit Committee

The key goals and tasks of the Audit Committee are the assurance of effective work of the Board of Directors in carrying out control over financial and business activities of the Company, over the process and procedures of preparation of financial (accounting) statements, including review of financial (accounting) statements; effectiveness of the internal control and risk management systems; election of a new external independent auditor and assessment of their; activities of the subdivision performing functions of internal control/audit of the Company; compliance by the Company of legal requirements of the Russian Federation, industrial standards, and internal regulations of the Company.

The new revision of the Provision on the Audit Committee of the Board of Directors of the Company was approved by resolution of the Board of Directors of the Company of August 27, 2012.

The composition of the Audit Committee includes only independent members of the Board of Directors of JSC IDGC of the North-West.

Chairman of the Audit Committee is an independent director, qualified specialist in Finances Seppo Yukha Remes, who participates actively in the improvement of the internal audit and risk management system of the Company.

In order to make more detailed and substantiated decisions in the area of internal audit and risk management, an employee of the Internal Audit and Risk Management Department of JSC IDGC Holding was invited as an expert to participate in activities of the Audit Committee.

In 2012 the Audit Committee held 12 meetings, 2 of them were held in presence. During the meetings recommendations on a range of matters were considered and given to the Board of Directors:

With regard to the preparation of materials for the Annual General Meetings of Shareholders:

• the Company's annual report for 2011 was recommended;
• annual accounting (financial) statements of the Company for 2011 prepared in accordance with the Russian Accounting Standards (RAS) were recommended;
• evaluation of the auditor's report on the accuracy of accounting (financial) statements of the Company for 2011 prepared in accordance with the Russian Accounting Standards (RAS) was approved;
• a nominee for the position of an auditor of accounting (financial) statements of the Company for 2012 prepared in accordance with the Russian Accounting Standards (RAS) was recommended for approval at the Annual General Meeting of the Company for 2011.

With regard to monitoring of the internal control and risk management systems:

• the work schedule of the Internal Audit and Risk Management Administration of JSC IDGC of the North-West for 2012 and its adjustment were approved;
• a nominee for the Head of the Company's Internal Audit and Risk Management Administration was approved;
• the following internal documents were preliminary reviewed (prior to their approval at the meeting of the Board of Directors): the Company's Internal Control Policy in a new revision, insofar as it relates to the compliance with requirements of Federal Law No. 224-FZ of July 27, 2010 and as supplemented by section "Internal Control Procedures"; the Provision on the Audit Committee of the Board of Directors of the Company in a new revision, insofar as it relates to extension of the goals, tasks and competences of the Committee;
• reports of the Internal Audit and Risk Management Administration of the Company are reviewed on a quarterly basis; information on the state of affairs relating to implementation of the documents aimed at improvement and development of internal control, audit and risk management in the Company; reports on results of taking measures ensuring compliance with legal requirements relating to insider information control in the Company.

With regard to financial (accounting) statements of the Company and supervision of the selection of an external auditor and assessment of its work, the Committee reviewed:

• financial statements of the Company prepared in accordance with the International Financial Reporting Standards (IFRS);
• accounting (financial) statements of the Company prepared in accordance with the Russian Accounting Standards (RAS);
• comments of the external auditor on the key issues of the accounting (financial) statements of the Company for 2011 prepared in accordance with RAS;
• report (memorandum) of the external auditors on the key issues of the accounting (financial) statements of the Company for 2011 prepared in accordance with IFRS;
• the amount of remuneration of external auditors of the statements prepared in accordance with RAS for 2012 and with IFRS for 2012.

Moreover, the Committee in its meetings reviews reports of independent assessors on determination of the market value of the Company's real estate.

HR and Remuneration Committee

In accordance with the relevant Regulation, the HR and Remuneration Committee develops and presents to the Company's Board of Directors recommendations on matters relating to establishment of principles and criteria of remuneration of members of the Board of Directors, Management Board, Director General of the Company, determination of material terms and conditions of agreements with them, assessment of their activities and on matters of organizational structure of the executive apparatus.

The Provision on the HR and Remuneration Committee of the Board of Directors of IDGC of the North-West was approved by the Board of Directors on July 30, 2010, as amended March 31, 2011.

The composition of the HR and Remuneration Committee includes only independent members of the Board of Directors of JSC IDGC of the North-West.

In 2012 the HR and Remuneration Committee took active part in the process of creation of recommendations for the Board of Directors and Director General. 16 meetings were held, in which a wide range of matters was reviewed.

With regard to the preparation of materials for the Annual General Meetings of Shareholders the Committee regularly performs a preliminary assessment of nominees to the Board of Directors.

With regard to the preparation of recommendations to the Board of Directors of the Company:

on matters of personnel appointments the Committee preliminary reviewed nominees for the following positions:

• Director General of the Company;
• Deputy Director General: for safety, for capital construction, head of the Apparatus, for technical issues — Chief Engineer, Director of Kolenergo branch and the head of Internal Audit and Risk Management Administration, head of the Technical Inspection Department, head of the Public Relations Department;
• recommendations on termination of powers and election of members of the Management Board of the Company were given;

on matters of remuneration and provision of financial incentives the Committee prepared recommendations in the area of:

• modifying the system of key performance indicators for Director General and top managers of the Company;
• regulations on provision of financial incentives to Director General of JSC IDGC of the North-West in the new revision and its adjustment.

With regard to the preparation of recommendations to Director General of the Company on matters of personnel appointments:

• the nominees for the positions of Deputy Directors of branches of JSC IDGC of the North-West were preliminary approved:  
  • for safety — the head of the security service of Pskovenergo branch;
  • for technical issues — Chief Engineer of Novgorodenergo branch, 
  • for development and sales of services of Kolenergo branch,
  • for technical issues — Chief Engineer of Komienergo branch.
• performance results were assessed and recommendations for continuation of employment relations with following Deputy Director General of the Company were given:
  • for development and realization of the services, for corporate governance, economy and finance,
  • logistics and material and technical support;
  • with Directors of branches of JSC IDGC of the North-West: Vologdaenergo, Komienergo, Pskovenergo, Karelenergo, Novgorodenergo;
  • with Chief Accountant — the head of Accounting and Tax and Financial Reporting Department.

on matters of creation of the skill pool of young professionals:

• the Regulation on the Skill Pool of Young Professionals of JSC IDGC of the North-West and External Skill Pool of Young Professionals from student of profile educational institutions was recommended for approval;
• the list of target positions and mentors for members of the skill pool of young professionals of JSC IDGC of the North-West as approved;
• the list of employees of JSC IDGC of the North-West included in the skill pool of JSC IDGC Holding for replacing the heads of regional electric grids.

Strategy and Development Committee

The Strategy and Development Committee, in accordance with the relevant Regulation, develops and provides recommendations to the Board of Directors of the Company on priorities, strategic objectives and core principles for the strategic development of the Company, as well as on performance evaluation, improvement of investment opportunities and financial planning of the Company.

The Provision on the Strategy and Development Committee of the Board of Directors of JSC IDGC of the North-West was approved by the Board of Directors of the Company on August 22, 2008.

In 2012 the Strategy and Development Committee headed by its Chairman, Director for Strategy, Development and Innovations of JSC IDGC Holding Dmitry Leonidovich Pankov, took an active part in the process of making strategic decisions.

The members of the Committee, representatives of minority shareholders: Seppo Yukha Remes, Roman Alexeevich Filkin, Alexey Nikolaevich Zharikov, Sergey Vadimovich Pokrovsky, took active part in activities of the Committee and contributed to more detailed review of the matters.

In 2012 the Strategy and Development Committee held 17 meetings, 2 of them were held in presence. At the meetings recommendations to the Board of Directors of the Company were reviewed and prepared, including:

With regard to the determination of the Company's priority activity areas:

• implementation of the production asset management system in the Company;
• construction and operation of fiber-optic communication lines;
• implementation of the production asset management system;
• modifying the system of key performance indicators for Director General and top managers of the Company.

With regard to financial, business and investment activities:

• the key performance indicators, adjusted business plan and investment program of the Company for 2012, their adjustments for 2012-2017, 2013-2017 and quarterly reports on their implementation were approved;
• reports on the course of implementation of the Plan of Actions for carrying out the mandatory energy inspection of production and business facilities as well as electric grid facilities of the Company on a quarterly basis were reviewed as well as reports on results of implementation of the construction management system for major investment projects of the Company;
• the long-term Programs, their adjustments, reports on their implementation were reviewed:

the Energy Saving and Energy Efficiency Increase of JSC IDGC of the North-West for 2012 and forecast for 2013-2016; the Program for Long-Term Development of Electricity Metering Systems in the Electricity Retails Market in Distribution Grids of JSC IDGC of the North-West; Program of Innovative Development of JSC IDGC of the North-West.

With regard to the Company's participation in other organizations:

• terms and conditions of termination of participation of the Company in CJSC Bezhanits Butter and Cheese Production Plant, in CJSC Pushkinogorsk Butter and Cheese Production Plant, CJSC Gdov Milk Plant and participation of the Company in Non-Commercial Partnership National Committee SIRED. Electric Distribution Grids, Non-Commercial Partnership Market Council.

Furthermore, at its in-presence meeting the Committee reviewed the Plan for Implementation of JSC IDGC Holding Development Strategy within the Company until 2015 and prospectively until 2020 prepared with regard to proposals of minority shareholders.

Reliability Committee

Establishment of the Reliability Committee is determined by the necessity of guarantees ensuring control and maintaining reliability of the functioning of the Company's grid complex.

The Provision on the Reliability Committee of the Board of Directors of JSC IDGC of the North-West was approved by the Company's Board of Directors on December 28, 2005.

In 2012 10 meetings of the Reliability Committee were held, at which 28 matters were reviewed, including:

With regard to production activities recommendations to the Board of Directors of the Company were analyzed and developed:

• on the Company's investment program for 2012, its adjustment, long-term investment program until 2017, quarterly reports on its implementation in terms of assurance of compliance with comprehensive reliability requirements;
• based on the results of the Company's work in the conditions of the 2011-2012 fall-winter period, on the preparation of the Company's electric grid facilities to the 2012-2013 fall-winter period and preparation of the Company to work in the 2012-2013 fall-winter period.

With regard to the development of the automated project designing of overhead lines, the Committee recommended to the Board of Directors of the Company to approve the Standard for Project Designing of Overhead Electricity Transmission Lines of JSC IDGC of the North-West 35 kV and above using the computer-aided design system (CAD).

With regard to the implementation of the production asset management system in the Company:

• the Standard for Managing Production Assets of the Company and Plan-Schedule of Actions for Implementation of the Production Asset Management System in the Company and quarterly reports on its realization were reviewed.

The Committee carries out a quarterly analysis of implementation of the Company's repair program.

Committee of Technological Connection to Electric Grids

The main purpose of the Committee on technological connection to the grid is to ensure transparency of activities and nondiscriminatory access to technological connection of consumers to the electric networks of the Company.

The Provision on the Committee on Technological Connection to the Grid of the Board of Directors of JSC IDGC of the North-West was approved by the Board of Directors of the Company on February 10, 2009.

In 2012 the Committee of Technological Connection to Electric Grids headed by its Chairman, independent director Tatiana Petrovna Dronova, held 5 meetings at which the following matters were reviewed:

• quarterly monitoring of the Company's activities on matters of technological connection of consumers to distribution electric grids, including contract work and general statistics of connection by separate groups of consumers;
• the report on the results of technological connection activities in Pskovenergo branch of JSC IDGC of the North-West for 2011;
• the report on implementation of implementation of the plan of actions for elimination of violations in the process of technological connection.

Compositions of the Committees of the Board of Directors effective in 2012

In 2012 each of the Committees of the Board of Directors worked in three different compositions.