The supreme managing body of the Company shall be the General Shareholders Meeting. The Company should hold the annual General Shareholders Meeting once a year. The Annual Shareholders Meeting should be held not earlier than 2 months and not later than 6 months after the end of the financial year of the Company. The annual Shareholders Meeting shall approve the annual report of the Company, the annual balance sheet, profit and loss account, distribution of revenue and losses, the Auditor of the Company, also the new Board of Directors and members of the Auditing Committee shall be elected.
The Board of Directors shall conduct the general management of the Company excluding the questions related to entire competency of the General Shareholders Meeting.
The members of the Board of Directors shall be elected at the annual General Shareholders Meeting for one year and can be re-elected an unlimited number of times.
General director and Management Board implement the managing by current activity of the Company.

The Company consists of the following branches:

1. Nogliki branch, Nogliki, the Sakhalin region
2.  Kurilsk, located in the town of Kurilsk, the Sakhalin Region
3.  Nevelsk, located in the town of Nevelsk, the Sakhalin Region
4.  Okha, located in the town of Okha, the Sakhalin Region
5.  East branch, located in the town of Poronaisk, the Sakhalin Region
6.  North-Kurilsk, located in the town of North-Kurilsk, the Sakhalin Region
7.  Uglegorsk inter-regional, located in the town of Uglegorsk, the Sakhalin Region
8.  Kholmsk, located in the town of Kholmsk, the Sakhalin Region
9. South-Kurilsk, located in the town of South-Kurilsk, the Sakhalin Region
10. Tymovsk inter-regional, located in the town of Tymovsk, the Sakhalin Region
11. Tomary base of materials stocking, located in the town of Tomary, the Sakhalin Region.
12. Tele-communications of South Sakhalin, inter-regional, located in the city of Yuzhno-Sakhalinsk, the Sakhalin Region
13. United Branch of Telecommunication Services, located in the city of Yuzhno-Sakhalinsk, the Sakhalin Region.

Competence of the General Shareholders Meeting includes:

The items of competency of the General Shareholders Meeting shall be as follows:

1 Changes and amendments into the Statutes of the Company except of the cases related to an increase of the Authorised capital of the Company stated in the item 12.4 of the Statutes or approval of the Statutes in a new version;
2 Taking decision about reorganisation of the Company;
3 Taking decision about dissolution of the Company, appointment of the Liquidation committee and approval of liquidation balance sheets (interim and final);
4 Determination of number of members the Board Directors of the Company, election of Directors and early termination of their authority. Determination of remuneration and compensation related to implementation of the Company's Board members functions;
5 Determination of the limits of the shares declared;
6 Taking decision about increase of the authorized Capital of the Company by increasing the par value of shares or by placing additional shares if the Board of Directors members do not come to one decision;
7 Taking decision about decrease of the authorized Capital of the Company by decreasing the par value of shares, purchasing shares by the Company in order to reduce their total number or paying up shares which are not paid in full and also by redemption of shares purchased or paid up by the Company;
8 Appointment of the General Director of the Company and earlier termination of his authority;
9 Election of the Audit Committee members and earlier termination of their authority;
10 Approval of the Auditor of the Company;
11 Approval of annual reports, accounting balance reports, profit and loss account, profit and loss distribution;
12 Resolution on non-applying of the shareholders primary right to purchase shares of the Company or securities being converted into the shares, placed by the method of open subscription with payment in cash and on the period of validity of such a resolution;
13 The order of the General Shareholders Meeting conduction;
14 Creation of the Counting Committee;
15 Determination of the form of the Company's shareholders informing and determination of the publishing press;
16 Resolution on subdivision and consolidation of the Company shares;
17 Resolution on conclusion of transactions with interested persons who possess 20% and more of the voting shares of the legal entity which is the party of the transaction; or persons who occupy the managing positions in the legal entity which is a party of the transaction or persons acting in the transaction as a representative person or mediator in the following cases:

• if payment amount of transaction and the value of property which is subject of the transaction determined by market prices shall exceed 2% of the Company's assets.
• if the transaction and/or a number of mutually connected transactions shall be placement of the Company's voting shares or other securities, converted into the voting shares for amount which shall exceed 2% of previously placed voting shares of the Company.
• if all the members of the Board of Directors shall be recognised as interested persons, but the majority of the shareholders are not interested in the transaction.

18 Conclusion of big transactions connected with purchase or alienation of property in the following cases:

• if the resolution on the big transaction a subject of which is property the price of which varies from 25% to 50% of the book value of the Company's assets on the date of taking of this resolution was not passed by the Board of Directors unanimously;
• if the property value is more than 50% of the book value of the Company's assets on the date of the transaction.

19 Purchasing and redemption by the Company of the placed shares;
20 Participation in holding companies, financial and industrial groups and other associations of commercial companies;
21 Resolution on payment of annual dividends, approval of the dividends amount, form, terms and order of payment on every kind of shares on the grounds of recommendation of the Board of Directors;
22 Resolution on the question of losses compensation at the expense of the Company funds in case of calling the extraordinary General Meeting by persons demanding its calling;
23 Approval of Regulations determining the order of the Auditing commission and the Board of Directors activity.

Competence of the Board of Directors includes:

1. Determination of priority directions of the Company's activity (approval of the perspective & annual plans of the company activity including business plan approval on separate objects)
2. Convening of the Annual and Extraordinary General Shareholders meetings
3. Approving the General meeting agenda
4. Determining the date of making up a list of shareholders who have a right to take part in the General meeting.

Submitting the following questions
to the General Shareholders Meeting:

- The JSC reorganisation;
- Non-applying of the shareholders� preference for buying the Company shares or the securities that can be converted into shares;
- Determining the form of communication with shareholders, including determination of the publishing press;
- Division and consolidation of shares;
- Conclusion of transactions with the following interested persons:

a. persons interested in transaction.
b. persons who possess 20% and more of the voting shares of the entity which is a party of the transaction.
c. persons who occupy positions in the management body of legal entity which is a party of the transaction or which is a representative or a mediator

- conclusion of great transactions connected with purchase or alienation of property of the Company.
- participation in holding companies, financial and industrial groups and other unions of commercial organisations

1. Placement of bonds and other securities;
2. Determination of market value of the property;
3. Purchasing of the placed company shares, bonds and other securities;
4. Recommendations on the Auditing Committee fees and compensations as well as determination of the Auditor's fee;
5. Recommendations on the shares' dividend amount and the order of it's payment;
6. Use of the reserve and other funds of the company;
7. Approval of internal documents of the Company which determine the order of activity of the Company�s management bodies;
8. Establishing the branches and representative offices of the company;
9. Making decisions on Company�s participation in other organisations (excluding holding companies, financial and industrial groups and other unions of commercial organisations);
10. Conclusion of large-scope transactions related to purchase or alienation, or direct (indirect) possibility of property alienation, of the Company property with price from 25% to 50% of the book value of the Company's assets at the date of taking of this resolution, as well as the transaction connected with ordinary shares placement;
11. Conclusion of transactions with the persons interested in transaction made by the Company and possessing 20% and more of the voting shares of the entity which is a party of the transaction as well as occupying positions in the management body of legal entity which is a party of the transaction or which is a representative or a mediator;
12. Agreement of the transactions or some connected transactions making up from 1% to 25% of the Company�s assets book value at the date of making decision on such transactions concluding by the executive bodies;
13. Preliminary approval of the Annual Report of the JSC not later than 30 days before the date of Annual General Shareholders meeting holding;
14. Approval of the decisions regarding issue of the securities, prospectuses of issues and reports about the results of the securities issue;
15. Approval of the form of the Shareholder�s Requirement on purchase of shares by the JSC and the form of the Shareholder Application on selling shares to the Company;
16. Election of The Chairman Of the Board Of Directors;
17. Appointing and dismissing the Collective Executive Organ members;
18. Making decisions on choosing an independent Registrar (on concluding a contract with an independent Registrar);
19. Moving amendments into the Statutes concerning increase of the Authorised capital of the Company on the basis of the decision on increasing the Authorised capital by means of increasing the nominal value of shares or placement of the new shares;
20. Taking a decision on increase of the Authorised capital by means of increase of the nominal value of shares or placement of the new shares within the limits of the declared number of shares;
21. Determination of the contents, size and order of protection of the data being a commercial secret.

Current activity of the company is under control of
the General Director and the Executive Board of the Company.
The competency of the Executive bodies shall include all the questions of management of the Company's current activity excluding questions related to competency of the General Shareholders Meeting and of the Board of Directors.
Resolutions regarding transactions the cost of which is from 1% to 25% of the book value of the Company assets, should be passed by the Board of Directors approval.
The Executive bodies shall implement the resolutions of the General Shareholders Meeting and the Board of Directors of the Company.

The General Director shall act on behalf of
the Company without a power of attorney, including:

• operative management of the Company's activity
• a first signatory right on financial documents
• being in charge of the Company�s property for providing its current activity within the limits determined by the Statutes, legislation and decisions of the General Shareholders meeting, representation of the Company's interests, both in Russia and abroad; approval of staff, conclusion of labour agreements with the Company's employees, application of incentives and imposing of penalties.
• Acting as a Chairman at the General Shareholders Meeting.
• Managing the Governing Board activity, acts as a chairman at its meetings; recommends the candidates for the Governing Board for the Board Of directors approval.
• issue of power of attorney on behalf of the Company.
• opening of the Company's bank accounts
• organisation of accounting and reporting systems of the Company
• issue of decrees and instructions which are obligatory for all employees of the Company.
• organisation and management of the activities regarding the list of data which are commercial secret, issue of orders and making notes concerning meeting the requirements of securing the commercial secret.
• implementation of other functions which shall be necessary to achieve the Company's activity targets and to provide it's regular running in accordance with legislation and the Statutes excluding the functions that are fulfilled by some other managing bodies of the Company according to the Statutes.

General Director fulfils the functions of the Company�s Governing Board Chairman.
At the Board Of Directors and Shareholders meetings the General Director presents the opinion of the Governing Board.
The Governing Board is a collective executive organ. It organises implementation of the resolutions of the General Shareholders Meeting and the Board of Directors of the Company.