Controlled entities

The governance at its controlled entities is based on a legal framework put in place to ensure the interests and rights of FESCO as the major shareholder/member of the Group. Below are the key principles underpinning it:

• all transactions and actions of the controlled entities require approval by the Board of Directors and/or the Executive Board of FESCO as set out in the Company’s Articles of Association;
• the Board of Directors and the Executive Board of FESCO approve the voting position of the Company’s representatives in the governing bodies of the controlled entities on key issues;
• the governing bodies of the Group's companies (boards of directors (supervisory boards), executive bodies) are made up of FESCO's representatives;
• FESCO or its controlled entities are authorised to exercise the powers of the sole executive body at certain companies of the Group;
• the constituent and internal documents and the remits of the governing bodies of the Group’s companies are harmonised at the Group's level.

The framework for governance at FESCO's controlled entities is implemented by FESCO Service Centre (FSC), an integrated centre servicing most of the Group’s companies.

The governance control is regulated either via a three-tier system (general meeting, board of directors / supervisory board, sole executive body) or via a two-tier system (general meeting, sole executive body).

FESCO has control over the following key matters related to operations of the Group’s companies:

• approval of budgets, strategic development programmes, business plans, investment programmes and projects;
• approval of certain transactions and actions specified by the Articles of Association of FESCO and its controlled entities;
• approval of candidates to be elected as the sole executive body or to the board of directors / supervisory board at FESCO's controlled entities;
• preliminary consideration of matters related to the appointment of management at the controlled entities;
• approval of candidates to the auditors at controlled entities.

In 2022, the Board of Directors and the Executive Board of FESCO passed about 335 resolutions related to governance at controlled entities. Pursuant to these resolutions, the governing bodies of FESCO's controlled entities made over 400 decisions.