Our Board of Directors (the “Board”) is responsible for corporate governance and formulates terms of reference, corporate governance principles and structure. Throughout the financial year ended 31 December 2022, the Company has complied with all the code provisions of the Corporate Governance Code as set forth in Part 2 of Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”).

We require the procedures of our Board, the Board committees and other internal bodies to strictly comply with the principles of the Corporate Governance Code. The followings are the major aspects in which China Mobile meets or exceeds the principles of the Corporate Governance Code:

• More than one-third of the Board (4 out of 8 as of 31 December 2022) are INEDs.
• Indication of important shareholders’ dates in the coming financial year.
• Disclosure of directors’ interests in shares of the Company and its associated corporations, and their confirmation of compliance with the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Hong Kong Listing Rules (the “Model Code”).
• Publication of the terms of reference and membership of the Board committees on the websites of the Company, the HKEX and the SSE.
• All members of our Board committees are INEDs, each with appropriate professional qualifications and extensive experience in accounting, finance and risk management, artificial intelligence and sci-tech research, laws and regulations, economics and business and so forth.
• Appropriate training to directors and management on an annual basis.
• Each director discloses to the Company at the time of his/her appointment and timely thereafter for any change of, his/her position in any public companies or organizations and other significant commitments.
• Publication of Sustainability Reports for sixteen consecutive years, reporting on its performance on ESG issues, which, in many respects, exceed the terms of the ESG Reporting Guide set out in Appendix 27 to the Hong Kong Listing Rules.
• Our Audit Committee discusses and conducts annual evaluation with respect to the effectiveness of the Company’s risk management and internal control system, and publishes the results of its evaluation.
• The Company and its operating subsidiaries have set up internal audit departments, which independently audit the business units of the Company and its operating subsidiaries.

The Company is incorporated in 1997 in Hong Kong and owned by all shareholders. Our ultimate controlling shareholder is CMCC. Our ordinary shares were listed on the HKEX and the SSE on 23 October 1997 and 5 January 2022, respectively. As of 31 December 2022, our total number of issued shares was 21,362,826,764, among which, approximately 69.82% were held directly and indirectly by CMCC. The remaining approximately 30.18% were held by public investors.

At an extraordinary general meeting (“EGM”) of the Company held on 9 June 2021 (the “2021 EGM”), the shareholders of the Company approved as a special resolution to amend the Articles of Association to satisfy the relevant regulatory requirements in relation to our corporate governance structure after the initial public offering and listing (the “RMB Share Issue”) of RMB Shares on the SSE. The amended Articles of Association took effect from the date of listing of RMB Shares on the SSE, being 5 January 2022. Full text of the amended Articles of Association of the Company is available on the websites of the Company, the HKEX and the SSE.

Shareholder Rights

According to the Articles of Association of the Company and the Companies Ordinance (Cap. 622 of the Laws of Hong Kong) (the “Hong Kong Companies Ordinance”), shareholders holding the requisite voting rights may: (i) requisition to move a resolution at an annual general meeting (“AGM”); (ii) requisition to convene an extraordinary general meeting (“EGM”); and (iii) propose a person other than a retiring director for election as a director at a general meeting.

Shareholders may make inquiries in writing to the Board. Inquiries must be deposited at our registered office at 60/F, The Center, 99 Queen’s Road Central, Hong Kong (the “Registered Office”), for the attention of the Company Secretary, providing sufficient contact information so that such inquiries can be properly handled. In addition, shareholders may also raise their concerns and suggestions in the Q&A session at our AGMs.

I. Requisition to move a resolution at an AGM

• The Company holds a general meeting as its AGM every year. The AGM is usually held in May.
• A requisition to move a resolution at the AGM may be submitted by:
  
  
  (i) any number of shareholders representing not less than one-fortieth (1/40th) of the total voting rights of all shareholders having the right to vote at the AGM; or
  (ii) not less than 50 shareholders holding shares in the Company on which there has been paid up an average sum, per shareholder, of not less than HK$2,000.
• The requisition must state the resolution, and must be signed by all the requisitionists on one or more copies which between them contain the signatures of all the requisitionists.
• The requisition must be deposited at 60/F, The Center, 99 Queen’s Road Central, Hong Kong, the registered office of the Company, for the attention of the Company Secretary not less than six weeks before the meeting in the case of a requisition requiring notice of a resolution and not less than one week in the case of any other requisition.
• The requisition will be verified with Hong Kong Registrars Limited, the Company’s share registrar, and upon their confirmation that the requisition is proper and in order, the Company Secretary will ask the Board to include the resolution in the agenda for the AGM provided that the requisitionists have deposited or tendered with the requisition a sum reasonably sufficient to meet the Company’s expenses in serving the notice of the resolution in accordance with the statutory requirements to all the registered shareholders of the Company. On the contrary, if the requisition has been verified as not in order or the requisitionists have failed to deposit sufficient sum to meet the Company’s expenses for the said purposes, the requisitionists will be advised of this outcome and accordingly, the proposed resolution will not be included in the agenda for the AGM.

II. Requisition to convene an EGM

• Shareholders holding not less than one-twentieth (1/20th) of the paid-up capital of the Company which carries the right of voting at general meetings of the Company can deposit a requisition to convene an EGM.
• The requisition must state the objects of the meeting, and must be signed by the requisitionists and may consist of several documents in like form, each signed by one or more requisitionists. The requisition must be deposited at 60/F, The Center, 99 Queen’s Road Central, Hong Kong, the registered office of the Company, for the attention of the Company Secretary.
• The requisition will be verified with Hong Kong Registrars Limited, the Company’s share registrar, and upon their confirmation that the requisition is proper and in order, the Company Secretary will ask the Board to convene an EGM by serving sufficient notice in accordance with the statutory requirements to all the registered shareholders. On the contrary, if the requisition has been verified as not in order, the requisitionists will be advised of this outcome and accordingly, an EGM will not be convened as requested.

III. Proposing a person other than a retiring director for election as a director at a general meeting

If a shareholder wishes to propose a person other than a retiring director for election as a director at a general meeting, he/she must lodge a written notice to that effect at our Registered Office for the attention of the Company Secretary. In order for the Company to inform shareholders of that proposal, the written notice must state the full name and biographical details of the person proposed for election as a director as required by Rule 13.51(2) of the Hong Kong Listing Rules, and be signed by such shareholder. A written notice signed by the person proposed for election as a director indicating his/her willingness to be elected must also be lodged with the Company. The period for lodgment of such written notices shall be of not less than seven days and shall commence no earlier than the dispatch of the notice of the general meeting and end no later than seven days prior to the date of the general meeting. If the notices are received less than 15 days prior to the general meeting, the Company will need to consider the adjournment of the general meeting in order to allow shareholders 14 days’ notice of the proposal.

The above details and procedures are available on our website.

Shareholder Value and Communication

The Company’s established principle is to strive to create value and bring favorable returns for shareholders. We believe that our industry-leading profitability and ability to generate healthy cash flow will provide sufficient support for the future development while continuing to create higher value for our shareholders.

On 4 January 2022, the Company announced its plans to exercise its powers granted by the shareholders to make on-market buy-backs of shares in the Company listed on the Main Board of HKEX (the “Hong Kong Shares”) on the HKEX after the expiration of the exercise period of the over-allotment option in relation to the RMB Share Issue and subject to compliance with all applicable laws, rules and regulations. In February 2022, we bought back and cancelled a total of 15,424,000 Hong Kong Shares on the HKEX, at a price of HK$54.15 to HK$58.15 per share and an aggregate price of HK$866 million.

¹ Pending approval at the AGM.
² The final dividend will be paid to holders of A Shares in RMB at an exchange rate calculated on the basis of the average of the mid-prices of HKD to RMB as announced by the People’s Bank of China during the one week prior to the date of the annual general meeting for declaring the dividend.

To ensure the effective communications between the Company and its shareholders, we have formulated communication policies with shareholders. We regularly review the implementation of these policies and consider them to be effective. We have established a securities affairs department, dedicated to providing necessary information and services to, and communicate with, shareholders and investors and other participants in the capital market, to maintain an active dialogue with them and make sure they are fully informed of the Company’s operation and development.

We use a number of formal channels to report to shareholders on the performance and operations of the Company, particularly through our annual and interim reports. Generally, when announcing interim results, annual results or any major transactions in accordance with the relevant regulatory requirements, the Company arranges investment analyst conferences, press conferences and investor conferences to explain the relevant results or major transactions to the shareholders, investors and the general public, listen to their opinions and address any questions that they may have. In addition, the Company adheres to the practice of disclosing certain key, unaudited operational and financial data on a quarterly basis, and voluntarily discloses certain customer statistics on a monthly basis, to further increase the Group’s transparency and to provide shareholders, investors and the general public with additional information so as to facilitate their understanding of the Group’s operations.

The Company maintains close communication with investors through investment conferences, one-on-one meetings, video-conferencing and other forms of exchange interaction to timely deliver information on our operating conditions to the capital markets. In 2022, our management attended 13 investor conferences and 120 routine investor meetings, and met with 1,196 investors. We will continue our efforts to enhance the investor relations work.

The Company also attaches high importance to the general meetings, including AGMs and EGMs, and makes substantial efforts to enhance communications between the Board and the shareholders. At each general meetings, the Board always makes efforts to fully address questions raised by shareholders. In 2022, we held one AGM and one EGM.

On 18 May 2022, we held our AGM in the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong. The major items discussed and the percentage of votes cast in favor of the resolutions are set out as follows:

1. to consider and approve the audited consolidated financial statements and the Report of the Auditors prepared in accordance with the Hong Kong Companies Ordinance, and the 2021 annual report published on the SSE (including the audited consolidated financial statements and the Report of the Auditors) for the year ended 31 December 2021 (99.9866%);
2. to consider and approve the Report of the Directors for the year ended 31 December 2021 (99.9942%);
3. to consider and approve the profit distribution plan and declare a final dividend for the year ended 31 December 2021 (99.9942%);
4. to re-appoint KPMG and KPMG Huazhen LLP as the auditors of the Group, and to authorize the Board to fix their remuneration (99.9942%);
5. to give a general mandate to the Board to buy back Hong Kong Shares not exceeding 10% of the number of issued Hong Kong Shares (99.9139%);
6. to give a general mandate to the Board to allot, issue and deal with additional Hong Kong Shares not exceeding 20% of the number of issued Hong Kong Shares (95.6675%);
7. to extend the general mandate granted to the Board to allot, issue and deal with Hong Kong Shares by the number of Hong Kong Shares bought back (95.6781%);
8. to consider and approve the authorization to the Board to determine interim profit distribution for the year ended 31 December 2022 (99.9942%).
9. to consider and approve the external guarantees plan for 2022 (98.7012%); and
10. to consider and approve director and senior management liability insurance (99.9733%).

On 22 December 2022, we held an EGM in the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong to consider and, if thought fit, approve the extension of the shareholding increase plan of the actual controller, CMCC, which was approved with 99.8802% votes cast in favor of the resolution.

All resolutions were duly passed at the AGM and EGM. As at the date of each of the above general meetings, the number of issued shares of the Company was 21,362,826,764 shares, which was the total number of shares entitling the holders to attend and vote for or against all the resolutions proposed at the AGM. China Mobile Hong Kong (BVI) Limited and CMCC, as controlling shareholders of the Company, holding an aggregate of 14,916,325,052 shares (representing approximately 69.82% of the total number of issued shares of the Company), abstained from voting on the resolution proposed at the EGM. As such, the total number of shares entitling the holders to attend and vote for or against the resolution proposed at the EGM was 6,446,501,712 shares. Save as disclosed above, no shareholders were required to abstain from voting on the resolutions proposed at the above General Meetings. Hong Kong Registrars Limited, the Hong Kong share registrar of the Company, acted as scrutineer for vote-taking at the above general meetings. Poll results were announced on the websites of the Company, the HKEX and the SSE on the day of each of the above general meetings.

Shareholders' Calendar

The following table sets out the tentative key dates for our shareholders for the financial year ending 31 December 2023. Such dates are subject to change depending on actual circumstance. Shareholders should note our announcements issued from time to time.

The Board of Directors

The key responsibilities of the Board include formulating the Group’s overall strategies and objectives, setting management targets, overseeing internal controls and financial management, supervising the performance of our management, performing corporate governance responsibilities (the Terms of Reference of its corporate governance functions are available on our Company’s website), while day-to-day operations and management are delegated by the Board to the executives of the Company.

In accordance with the Articles of Association and the Policy Governing the Procedures of Board Meetings of the Company, the main functions and powers of the Board include:

1. to convene general meetings and report its work at general meetings;
2. to execute resolutions passed at general meetings;
3. to formulate proposals for distribution of dividends of the Company;
4. to formulate proposals for increasing or reducing the number of issued shares of the Company;
5. to formulate proposals for the amalgamation, winding up or change of company status of the Company (including a change from a public company to a private company):
6. to the extent permitted under or authorized at applicable laws and regulations, the listing rules, general meetings and the Articles of Association, to consider and approve the material transactions, external investments, acquisitions or disposals of assets, pledges of assets, external guarantees, entrusted financial management, connected transactions, affiliated transactions and other matters;
7. to appoint or remove the chief executive officer, other members of senior management and the company secretary of the Company and to determine their remuneration as well as awards and penalties;
8. to formulate proposals for amending the Articles of Association;
9. to propose to the general meeting the appointment or change of the auditors in charge of the audit of the Company;
10. to the extent permitted by applicable laws and regulations and the listing rules, to consider and approve the issue of bonds (other than convertible bonds that require consideration and approval at a general meeting) by the Company; and
11. Other functions and powers as provided under applicable laws and regulations, the listing rules, the Articles of Association and so forth.

The Board currently comprises eight directors, namely Mr. YANG Jie (Chairman), Mr. DONG Xin (CEO), Mr. LI Pizheng and Mr. LI Ronghua (CFO) as executive directors, and Mr. Stephen YIU Kin Wah, Dr. YANG Qiang, Mr. Carmelo LEE Ka Sze and Mrs. Margaret LEUNG KO May Yee as INEDs. There is no financial, business, family or other material/relevant relationship(s) between the Board members. The list of directors and their role and function is available on the websites of our Company, the HKEX and the SSE. The biographies of our directors are presented on pages 8 to 13 of this annual report and on our website.

In 2022, Mr. WANG Yuhang resigned from his position as an Executive Director of the Company by reason of age with effect from 19 April 2022. Dr. Moses CHENG Mo Chi retired by rotation at the 2022 AGM and did not offer himself for re-election as he would like to devote more time to other businesses; and Mr. Paul CHOW Man Yiu also retired by rotation at the 2022 AGM and also did not offer himself for re-election by reason of age. As a result of the aforesaid retirement by rotation, Dr. Moses CHENG Mo Chi resigned from his positions as an INED, a member of the Audit Committee, a member of the Nomination Committee and the Chairman of the Remuneration Committee; and Mr. Paul CHOW Man Yiu resigned from his positions as an INED, a member of the Audit Committee, the Chairman of the Nomination Committee and a member of the Remuneration Committee, in each case with effect from 18 May 2022 upon the conclusion of the 2022 AGM. Each of Mr. WANG Yuhang, Dr. Moses CHENG Mo Chi and Mr. Paul CHOW Man Yiu confirmed that there was no disagreement with the Board and there was no matter relating to his resignation that needs to be brought to the attention of the shareholders of the Company.

At the Board meeting held subsequent to the conclusion of the 2022 AGM, as proposed by the Nomination Committee and after review and approval by the Board, Mr. LI Pizheng was appointed as an Executive Director; and each of Mr. Carmelo LEE Ka Sze and Mrs. Margaret LEUNG KO May Yee was appointed as an INED, a member of the Audit Committee, a member of the Nomination Committee and a member of the Remuneration Committee, in each case with effect from 18 May 2022.

³ Dr. Moses CHENG Mo Chi and Mr. Paul CHOW Man Yiu resigned from their positions as INEDs in each case with effect from 18 May 2022 upon the conclusion of the AGM.

⁴ Mr. LI Pizheng was appointed as an Executive Director, Mr. Carmelo LEE Ka Sze and Mrs. Margaret LEUNG KO May Yee were appointed as INEDs, in each case with effect from 18 May 2022.

⁵ Mr. WANG Yuhang resigned from his position as an Executive Director with effect from 19 April 2022.

All board meetings and committee meetings were attended by the directors in person or by video or telephone conferencing. In 2022, the Board met and discussed various matters relating to the annual results, interim results, dividends, change of directors, continuing connected and routine affiliated transactions, second grant of share options, annual business, investment and financial plans, sustainability report, re-appointment of external auditors and determination of their remuneration, amendment of the internal audit charter, deposit and actual utilization of proceeds from RMB Share Issue, INED work report, internal control system evaluation report, annual external guarantees plan and other matters. In addition, the Board reviewed and approved our quarterly results and others by means of written resolutions.

The Board is responsible for performing the corporate governance duties and setting and reviewing the terms of reference on corporate governance functions, which you may review or download on the website of the Company, as well as our corporate governance policies and practices. In 2022, the Board also met and discussed the Company’s corporate governance report.

The Board has adopted a Board Diversity Policy since September 2013. In considering the composition of the Board, diversity will be considered from a number of perspectives in accordance with our business model and specific needs, including professional experience and qualifications, regional and industry experience, educational and cultural background, skills, industry knowledge and reputation, knowledge of the laws and regulations applicable to the Group, gender, ethnicity, language skills and length of service etc. Such perspectives under the Board Diversity Policy shall be taken into account in recommending appointment and re-election of directors and be monitored on an on-going basis by the Nomination Committee of the Company. In 2022, our Nomination Committee reviewed the structure, composition and succession arrangement of the Board, and provided comments and recommendations to the Board. The Board currently includes one female director and has met its target for gender diversity.

We have established a succession mechanism to maintain a balanced composition of the Board, and to ensure independent views and input are available to the Board. In 2022, having regard to the work load and succession arrangements of the Board, and to enhance our corporate governance, the Board approved the appointment of Mr. LI Pizheng as an executive director, and Mr. Carmelo LEE Ka Sze and Ms. Margaret LEUNG KO May Yee as INEDs of the Company.

The Board has adopted a Dividend Policy in 2019 to set out the principles and guidelines that the Company intends to apply in relation to the declaration, payment and distribution of dividends to the shareholders of the Company, which includes, among others, in recommending or declaring dividends, the Company shall allow its shareholders to participate in the Company’s profits whilst retaining adequate cash reserves for meeting its working capital requirements and long-term sustainable development. The Company shall also take into account the actual financial performance of the Group, the Group’s business strategies and operations, including future capital requirements and investment needs; economic conditions and other internal or external factors that may have an impact on the business or financial performance and situation of the Group, and any other factors that the Board may consider relevant, etc. To fully protect the rights and interests of the shareholders, to provide a sustainable, stable and reasonable investment return to the shareholders, to further improve the profits distribution mechanism, and to enable shareholders to supervise the Company’s profits distribution, after taking into full account the Company’s actual operation conditions and the needs for future development, the Company put forward to the shareholders for approval, and the shareholders approved at the 2021 EGM, a shareholder return plan within three years following the RMB Share Issue. Such shareholder return plan took effect from the date of listing of RMB Shares on the SSE. The profit to be distributed in cash for 2023 will gradually increase to 70% or above of the profit attributable to equity shareholders of the Company for that year.

To ensure the timely disclosure of any change of directors’ personal information, we have set up a specific communication channel with each of our directors. The directors have disclosed to the Company their positions in other public companies or organizations and other significant commitments at the time of their appointments, and the Company has made enquiries with all directors for any changes in the course of preparing our annual and interim reports and made appropriate disclosures in a timely manner. Information regarding their directorships in other listed public companies in the last three years is set out on pages 8 to 13 of this annual report and on the Company’s website. The Company purchases a directors and officers’ liabilities insurance on behalf of its directors and officers and reviews the terms of such insurance annually.

In compliance with the requirement of the Hong Kong Listing Rules, the Company has received a confirmation of independence from each of our INEDs, namely Mr. Stephen YIU Kin Wah, Dr. YANG Qiang, Mr. Carmelo LEE Ka Sze and Mrs. Margaret LEUNG KO May Yee and considers them to be independent.

All our directors have complied with Code Provision C.1.4 of the Corporate Governance Code with respect to directors’ continuous professional development, and provided a record of the trainings they received to the Company. In 2022, we provided the newly-appointed directors with guidance on the continuing obligations of Hong Kong listed companies and their directors as well as training on the standardized operation of A Share listed companies, and also provided trainings on the Company’s strategy, internal audit management, innovation and development and other topics.

The Company has adopted the Model Code set out in Appendix 10 to the Hong Kong Listing Rules to regulate the directors’ securities transactions. Save and except for the interests disclosed in the report of the directors on page 75 of this annual report, none of the directors had any other interest in the shares of the Company as of 31 December 2022. All directors have confirmed, following specific enquiry by the Company that they have complied with the Model Code during the period between 1 January 2022 and 31 December 2022.

The directors of the Company are responsible for the preparation of the consolidated financial statements of the Company. Our management submits a monthly report to the members of the Board, setting out the Company’s performance, and reports and information on the ICT industry, to enable them to make a more comprehensive assessment and to have a more throughout understanding of our performance and prospects. For the reporting responsibilities of the auditors with respect to our financial statements, please refer to the Independent Auditor’s Report on pages 85 to 90 in this annual report.

The Board currently has three principal board committees, which are the Audit Committee, the Remuneration Committee and the Nomination Committee, each consists solely of INEDs. With the appointment and authorization of the Board, each of the board committees operates under its written terms of reference.

On 5 January 2022, in connection with the listing of our RMB Shares on the SSE, the amended terms of reference of the Board committees of the Company took effect, which are available on the websites of the Company, the HKEX and the SSE, and can be obtained from the Company Secretary upon written request.

The task of the management and employees is to implement the strategy and direction as determined by the Board, to take care of day-to-day operations and functions of the Company, and to maintain the values and corporate culture of China Mobile. The division of responsibilities among our principal executive officers and senior management is set out in the biographies of directors and senior management on pages 8 to 13 of this annual report and on the Company’s website.

The Company provides clear guiding principles for our management and employees to do what is right and obey all laws and regulations. They are also subject to various trainings and continuous professional development, including a variety of online learning and information sources, formal executive development programs and attendance at executive briefings on relevant topics. These principles cover all aspects of our operations.

We embrace diversity and uphold non-discriminatory employment practices. Strictly abiding by the requirements under the Special Rules on the Labor Protection of Female Employees and other policies, we have upheld the principles of fairness, openness and impartiality in our recruitment process, and challenged and taken measures to prevent any form of workplace discrimination. We formulated and stipulated in the China Mobile Recruitment Management Measures that there shall be no discriminatory recruitment conditions such as race, ethnicity, gender, religion, body height, appearance or any other conditions that are irrelevant to the work duties. By the end of 2022, the total number of our employees (including senior management) reached 450,698, among which 237,171 were female employees.

Code of Ethics and Anti-Corruption

For the purpose of promoting honest and ethical conducts and deterring wrongdoings, the Company, in 2004, adopted a code of ethics, which is applicable to our chief executive officer, chief financial officer, deputy chief financial officer, assistant chief financial officer and other designated senior officers of the Group. In the event of a breach of the code of ethics, the Company may take appropriate preventive or disciplinary actions after consultation with the Board.

On whistleblowing, the Company has set up a mailing address (Tower A, 29 Jin Rong Revenue, Xicheng District, Beijing 100033) and a CEO mailbox, as well as welcomes reports during on-site supervision and inspections, as channels for employees and the public to raise concerns about misconduct, malpractices or improprieties in any matter related to the Company. The Company upholds whistleblowers’ lawful rights and interests and keeps reports, status of investigations and information of whistleblowers strictly confidential. More information for the number of corruption litigation cases and their results are published on the website of the Central Commission for Discipline Inspection and the National Supervisory Commission.

With respect to anti-corruption, we persisted in establishing anti-corruption systems that cover all aspects of anti- corruption. We furthered and optimized our information platform for prevention and control of corruption risks, and strengthened and solidified our culture of integrity. By the end of 2022, our risk warning platform had collated more than 22,000 corruption risks covering 20 areas at the headquarters and other units and sections, and issued an aggregate of over 29,000 warnings. We formulated and issued the Implementation Opinions on Strengthening a Culture of Integrity in the New Era and introduced 18 implementation measures. Meanwhile, focusing on initiatives, practical results and development, we carried out 11,500 anti-corruption learning and education activities covering over 90% of our employees.

Management Mechanism

The Company has established collective decision-making policies for major issues. We keep refining our major issue catalogue and criteria to prevent risks in decision-making. We have continuously strengthened the inspection mechanisms, especially on key areas such as procurement biddings to look for loopholes in our management system and resolve them. Within the Group, we urge for honest operation, healthy development, good performance and shareholders’ interest protection.

We continued to optimize our management system and improve our business processes. With respect to risk management, we made great efforts on the closed-loop management process of “risk evaluation at the beginning of the year – quarterly risk monitoring – interim risk assessment – annual review and evaluation”, and established a reporting mechanism for major business risk events to maintain the bottom line of no major risks occurrence. In 2022, we continued to enhance our risk assessment system by planning and deploying prevention and control measures concurrently with our strategic planning and production and operational decision-taking, thereby ensuring responsibilities for risk prevention and control were taken seriously. We built an internal control risk management system and promoted the digital intelligent transformation of risk control. We further strengthened identification and quantitative assessment of major risks, which enabled us to manage and control risks in an accurate and scientific manner, and issued a total of 13 types of risk warnings throughout the year.

With respect to compliance management, we safeguarded our new development targets by furthering our “Compliance Escort Plan”. We ran an extensive campaign during the year to strengthen our compliance management. Through integrating compliance management with our digital intelligent transformation and high-quality development, we continued to enhance our compliance management systems and maintain high compliance standards in operation. Our Chairman took the lead and signed the Compliance Initiative Proposal while our management and employees at all levels echoed the call for compliance and signed a Compliance Undertaking. We conducted follow-on analysis on national laws and regulations, compiled and published compliance guidelines on online transactions and customer data protection, and issued analysis reports on the Anti-monopoly Law of the People’s Republic of China, the Law on Combating Telecom and Online Fraud of the People’s Republic of China, among others. Meanwhile, we amended and improved our network service agreement for customers and further enhanced customer data protection to safeguard their legitimate rights and interests. We optimized 7 major artificial intelligence modules of our contract management system to further promote the digital intelligent transformation of compliance management. We continued to provide compliance trainings to our legal, compliance and business management and staff, to improve our compliance management capabilities and to shape our compliance culture.

The Internal Audit Department (the “IA Dept.”) conducts independent and objective confirmation and provides consulting services in respect of the appropriateness, compliance and effectiveness of the Company’s business activities, internal controls and risk management by applying systematic and standardized auditing procedures and methods. The IA Dept. also assists the Company in improving the effectiveness of corporate governance, risk management and internal controls, with an aim to promoting its corporate value, operations, and sustainable and healthy development as well as contributing to the achievement of its strategic objectives.

The Company and its operating subsidiaries have set up internal audit departments, which independently audit the business units of the Company and its operating subsidiaries. The head of the IA Dept. directly reports, four times a year, to the Audit Committee which, in turn, reports to the Board regularly. The Board and the Audit Committee give instructions with respect to internal auditing. The IA Dept. regularly reports to the senior management. The senior management ensures that adequate resources and level of authorization are allocated and granted for internal audit, and deploys and supervises follow-up and rectification in connection with issues identified in audit. The IA Dept. has unrestricted access to the relevant businesses and assets records and personnel in the course of performing their duties.

The IA Dept. establishes an internal audit scope and framework and carries out risk investigations on an annual basis. According to the results of the risk investigations, the IA Dept. formulates an internal audit project rolling plan and an annual audit plan and, together with the Audit Committee and the Board, reviews and approves the annual audit plan and resources allocation. The annual audit plan of the IA Dept. covers various areas including financial audit, internal controls audit, information systems audit and risk assessment. For financial audit, the IA Dept. reviews and assesses the truthfulness, accuracy, compliance and efficiency of the Company’s financial activities and financial information as well as the management and utilization of the Company’s capital and assets. For internal controls audit, the IA Dept. audits and assesses the effectiveness in the design and implementation of the Company’s internal control system. According to the requirements under the Corporate Governance Code under the Hong Kong Listing Rules, the General Provisions on Annual Internal Control Evaluation Report from the CSRC, the Guideline No. 1 for Self-Discipline of Listed Companies – Standardized Operation from the SSE, the Basic Norms for Enterprise Internal Controls, the Guidelines for Evaluation of Enterprise Internal Controls and other relevant regulatory requirements of the mainland of China, the IA Dept. organizes and performs audit assessment on the internal control over financial and non-financial reporting of the Group, covering all material areas such as financial, operational and compliance controls, on an annual basis, to provide assurance for the Company’s management in its issuance of the internal control assessment report. The information systems audit focuses on reviewing and assessing the information systems, information technology applications, information security and the related internal controls and procedures. At the same time, the IA Dept. carries on special projects and investigations in response to requests from the Company’s management or the Audit Committee or if otherwise required. In addition, without prejudice to its independence, if requested by the Company’s management and as required by business needs, the IA Dept. provides management advice or consultancy services by making use of audit resources and audit information to facilitate the Company’s decision-making and operational management.

The IA Dept. makes improvement recommendations in respect of its findings in the course of the audits and requests the management to undertake and to confirm the implementation plans, methods and timeline. It regularly monitors the status of the implementation of the recommendations to ensure their completion.

In 2022, based on our development strategy of building a world-class “Powerhouse”, we actively explored and implemented research-based audit, and prioritized key areas and issued. We focused our internal audits on key businesses in the CHBN markets, information services facility security, financial income and expenditure, key costs, overseas operations and other key areas, and improved coordination in the reporting of audit findings and supervision to uphold responsibility for rectification of internal audit findings. We also promoted audit informationization in the Group, upgraded our “on-site + remote + cloud” audit model, and furthered the integration development and application of our audit informationization system.

We report regularly to the Board and the Audit Committee with respect to the building up of our internal audit organization, its human resources and qualifications, staff training, annual audit plan and budget, and the audit results. In 2022, we focused our audit on the main findings of each audit project and their rectification. We provide specific guidance on major policies, audit focus, rectification advice, data audit, team building and others to ensure the effectiveness of internal audit functions.

In 2023, we will further advance the “1+3+N” internal audit system, the high-quality and comprehensive coverage of audit supervision, the digital and intelligent transformation of “on-site + remote + cloud” audit model, the rectification of audit findings and accountability, and lead audit innovation with research-based audit, so as to promote our high-quality development.

CMCC, our ultimate controlling shareholder, is a central state-owned enterprise regulated by the State-owned Assets Supervision and Administration Commission of the State Council of China (“SASAC”). Under the relevant requirements of the Ministry of Finance and SASAC, there are certain limits to the number of years for which an accounting firm may continuously undertake financial auditing work in respect of a central state- owned enterprise and its subsidiaries. Due to the relevant requirements, the former external auditors of the Group, PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP (collectively, “PwC”), retired as the auditors of the Group with effect from the conclusion of the 2021 AGM of the Company and were not re- appointed. PwC had confirmed in writing that there were no other matters or circumstances that need to be brought to the attention of the shareholders of the Company in connection with the above change. The Board confirmed that there were no other matters or circumstances that need to be brought to the attention of the shareholders of the Company in connection with the above change. The Board and the Audit Committee also confirmed that there were no disagreements or unresolved matters between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

At the recommendation by the Audit Committee, the Board proposed, and the shareholders approved at the 2021 AGM, to appoint KPMG and KPMG Huazhen LLP (collectively, “KPMG”) as the auditors of the Group for the year ending 31 December 2021 for financial reporting purposes. Subsequently, with the shareholders’ approval at the 2022 AGM, the Company re-appointed KPMG as the external auditors of the Group for the year ending 31 December 2022 for financial reporting purposes. The principal services provided by the external auditors included:

• review of interim consolidated financial information of the Group;
• audit of annual consolidated financial statements of the Group and annual financial statements of its subsidiaries;
• audit of the effectiveness of the Group’s internal control over financial reporting as of 31 December 2022; and
• other non-audit services, pre-approved by the Audit Committee.

The following table sets forth the types of, and fees for, the principal audit services and non-audit services provided by the external auditors (please refer to note 7 to the consolidated financial statements for details):

⁶ The item (excluding VAT) includes RMB16 million (2021: RMB18 million) as the fees rendered for the audit of internal control over financial reporting as required by relevant regulatory requirements. The audit fees paid to KPMG were RMB88 million (2021: RMB92 million).
⁷ Including the fees for tax compliance services and advisory services.

Our Audit Committee under the Board is responsible for conducting annual review of the effectiveness of the Group’s risk management and internal control systems to reasonably ensure that the Company is operating legally and the assets are safeguarded and to ensure the accuracy and reliability of the financial information that the Company employs in its business or releases to the public. The said systems are designed to manage rather than eliminate the risk of failure to meet business objectives, and can only make reasonable but not absolute assurances against material misstatement or losses. During the year ended 31 December 2022, our Audit Committee evaluated the effectiveness of the Group’s risk management and internal controls covering all important aspects including financial, operational and compliance controls, to ensure we have sufficient resources in accounting, internal audit, financial reporting, ESG performance and reporting, staff qualification and experience, staff training courses and related budget. Based on such review, the Board considered the Group’s risk management and internal control systems to be effective and adequate.

Our management is responsible for establishing and maintaining internal control over financial reporting. The management of the Company reports to Audit Committee at least twice a year about the building-up and performance of its risk management and internal controls, including interim and annual evaluation reports, and receives guidance and supervision from the Audit Committee. We adopted the control criteria framework set out in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013). In compliance with the provisions and requirements under the Hong Kong Listing Rules, and Basic Norms for Enterprise Internal Controls, the Guidelines for Evaluation of Enterprise Internal Controls and other relevant regulatory requirements of the mainland of China, we refined our routine management mechanism of internal controls, in establishing a stringent internal control system over financial reporting. In 2022, the Company has received the management’s affirmation with respect to the effectiveness of the risk management and internal controls.

We established a hierarchical top-down risk assessment mechanism, relying on the strategic level risk assessment (material risk assessment), the management level risk assessment (major projects risk assessment) and the operational level risk assessment (procedure risk assessment), to assist the management to acknowledge risk information in a timely manner in order to make a reasonable decision. Based on risk assessment, we established a three-tier internal controls of “the top level internal control system, the internal control professional system and the internal control practices guidelines”, which brought the control requirements to the whole process of marketing, production and management. Based on our business operation, we focus on high risk and key management areas and perform risk assessment, so as to enforce our internal control requirement in our daily operations. Meanwhile, we assigned specific responsibilities to individuals and input the control requirements in our IT systems to strengthen the internal controls. And through multiple internal and external supervision and inspections, including self-assessment, management evaluation, external audit, etc., we effectively improved the execution efficiency and effectiveness of our internal controls.

Based on the evaluation conducted by the management of the Company, the Board believes that, as of 31 December 2022, the Company’s internal control over financial reporting was effective, which provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for reporting purposes in accordance with generally accepted accounting principles.

Information disclosure by the Company is made under the unified leadership and management of the Board, and performed by the management. Since 2003, the Company has implemented the information disclosure internal controls and procedures, and established a Disclosure Committee, the members of which include our Chairman, chief executive officer, chief financial officer and heads of main functional departments. Empowered by the Board, the Disclosure Committee is responsible for organizing and coordinating routine reporting and disclosure to prompt timely, compliant, truthful and complete disclosure of information, ensure good corporate governance and transparency, properly get back to the investors, analysts and media inquiries, to prevent volatility of our share price caused by false market information.

To satisfy the relevant regulatory requirements in relation to our RMB Share Issue, the Board reviewed and approved the Administrative Measures for Information Disclosure and the Administrative Measures for Raised Funds, which had taken effect on 5 January 2022 and are available in Chinese on the websites of the Company, the HKEX and the SSE.

Under circumstances where any departments or officers are in breach of disclosure procedures and internal controls, resulting in reporting or disclosure errors, or in breach of disclosure related laws and regulations, the Company shall hold the relevant personnel accountable. Members of the Disclosure Committee, heads of our IA Dept. and other relevant departments and each of our subsidiaries shall give confirmations annually and take personal responsibilities with respect to their disclosure duties.

In compliance with the provisions of Hong Kong Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”), the Securities Law of China, Administrative Measures for Information Disclosure of Listed Companies from the CSRC and other requirements, we formulated China Mobile Management Method on Inside Information, setting up rules and black-out periods on directors, management and employees in dealing with the shares of the Company or exercising share options while they are in possession of inside information. Those who may come into possession of inside information in performing their duties are required to sign an undertaking on their duty of confidentiality and prohibition against insider dealing. Unauthorized use of confidential or inside information for profits is strictly prohibited to prevent violation of laws and regulations and internal disciplines.

The Company attaches great importance to the management of inside information. In general, any authorized speaker from the Company only makes clarification and explanation on information already available in the market, and avoid revealing any unpublished inside information. Before any external interview, such speaker shall seek verification from the relevant department about any information to be disclosed.

We will closely study the development of governance practices among the world’s leading corporations, future evolution of the relevant regulatory environment and the requirements of the investors on an ongoing basis. We will also review and enhance our corporate governance procedures and practices from time to time to keep improving our capabilities in fulfilling our governance responsibilities, so as to meet our shareholders’ expectations and ensure the long-term sustainable development of the Company.