Our Board of Directors (the “Board”) is responsible for performing the corporate governance duties and setting out the terms of reference on corporate governance functions. Throughout the financial year ended 31 December 2021, the Company has complied with all the then-effective code provisions of the Corporate Governance Code as set forth in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”), except that the Company and its directors (including independent non-executive directors (“INEDs”)) have not entered into any service contract with a specified term. All directors of our Company are subject to retirement by rotation and re-election at our annual general meetings (the “AGM(s)”) every three years, and all newly-appointed directors are subject to re-election by shareholders at the first AGM after their appointment.

We require our Board, the board committees and other internal organs to strictly comply with their internal procedures in accordance with the principles of the Corporate Governance Code. The following are the major respects 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 2021) are INEDs.
• China Mobile discloses the interests of its directors in the shares of China Mobile 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”).
• We publish the terms of reference and membership of the board committees on the Company’s and the HKEX’s websites.
• All members of our board committees are INEDs, with appropriate professional qualifications and/or expertise in business management, accounting and financial management, legal and compliance, artificial intelligence and scientific research, and so forth.
• China Mobile provides trainings to its directors and management on an annual basis.
• Each director discloses to the Company at the time of his appointment and then annually for any change of, his position holding in any public companies or organizations and other significant commitments.
• China Mobile has published a Sustainability Report for fifteen consecutive years, reporting 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 principal executive and principal financial officers shall make annual written statements to the US SEC, and our management shall make annual back-up certifications to the Company, confirming their personal responsibilities with respect to a series of risk management and internal controls.
• Our Audit Committee conducts annual evaluation with respect to the effectiveness of risk management and internal control and procedures, and publishes its results.
• 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 established in Hong Kong and owned by all shareholders. Our ultimate controlling shareholder is China Mobile Communications Group Co., Ltd., which, as of 31 December 2021, indirectly held approximately 72.72% of the total number of issued shares of the Company. The remaining approximately 27.28% of the total number of issued shares were held by public investors.

During 2021, the Board put forward to the shareholders for approval, and the shareholders approved, the following amendments to the Articles of Association (the “Articles”) of the Company:

Full text of the amended Articles of the Company is available on the websites of the Company, the SSE and the HKEX.

Shareholder Rights

According to the Articles 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 AGM; (ii) requisition to convene an extraordinary general meeting (an “EGM”); and (iii) propose a person other than a retiring director for election as a director at a general meeting. Relevant details and procedures are available on our website.

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, which is usually held in May. In accordance with section 615 of the Hong Kong Companies Ordinance, a requisition to move a resolution at the AGM may be submitted by:

The requisition must state the resolution, and must be signed by all the requisitionists. The requisition must be deposited at our Registered Office 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.

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 our Registered Office for the attention of the Company Secretary.

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. 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.

For requesting the Company to circulate to shareholders a statement with respect to a matter mentioned in a proposed resolution or any other business to be dealt with at a general meeting, shareholders are requested to follow the requirements and procedures as set out in section 580 of the Hong Kong Companies Ordinance.

Shareholder Value and Communication

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

On 4 January 2022, with the approval of the Board, the Company announced its plans to exercise its powers granted by the shareholders to make on-market buy-backs of shares on the HKEX after the completion of the RMB Share Issue and subject to compliance with all applicable laws, rules and regulations.

¹ Pending approval at the AGM.
² Dividends will be denominated and declared in Hong Kong dollars. Dividends for A-shares will be paid in Renminbi with the conversion rate to be calculated based on the average central parity rate between Hong Kong dollars and Renminbi announced by the People’s Bank of China in the week before the date of the declaration of dividends at the annual general meeting, and a separate announcement will be made before the annual general meeting as regards the exact amount. Dividends for Hong Kong shares will be paid in Hong Kong dollars.
³ Being a special dividend of HK$3.200 per share in celebration of the 20th anniversary of our public listing.

To ensure the effective communications between the Company and its shareholders, we have formulated communication policies with shareholders. We regularly review these policies to ensure their effectiveness. We have established a securities affairs department, dedicated to provide 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 telephone 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 voluntarily disclosing on a quarterly basis certain key, unaudited operational and financial data 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 2021, our management attended 13 investor conferences and 91 routine investor meetings, and met with nearly 700 investors. We will continue our efforts to enhance the investor relations work.

The Company also attaches high importance to the AGMs, and makes substantial efforts to enhance communications between the Board and the shareholders. At the AGMs, the Board always makes efforts to fully address the questions raised by shareholders. We held our 2021 AGM on 29 April 2021 in the Grand Ballroom, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong. The major items discussed and the percentage of votes cast in favor of the resolutions are set out as follows:

1. The review and consideration of the audited financial statements and the reports of the directors and auditors for the year ended 31 December 2020 (99.9981%);
2. The declaration of a final dividend for the year ended 31 December 2020 (99.9942%);
3. The re-election of Mr. YANG Jie as an executive director (99.2506%);
4. The re-election of Mr. DONG Xin as an executive director (99.7794%);
5. The re-election of Mr. LI Ronghua as an executive director (99.4673%);
6. The re-election of Dr. YANG Qiang as an independent non-executive director (99.4116%);
7. The appointment of KPMG and KPMG Huazhen LLP as auditors of the Group for Hong Kong financial reporting and US financial reporting purposes, respectively, and authorizing the Board to fix their remuneration (99.9141%);
8. To give a general mandate to the Board to buy back shares in the Company not exceeding 10% of the number of issued shares (99.8964%);
9. To give a general mandate to the Board to allot, issue and deal with additional shares in the Company not exceeding 20% of the number of issued shares (93.3407%);
10. To extend the general mandate granted to the Board to allot, issue and deal with shares by the number of shares bought back (93.4030%); and
11. To approve and adopt the new Articles of the Company (99.6181%).

On 9 June 2021, we held the 2021 EGM in the Grand Ballroom, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, 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 RMB Share Issue and a specific mandate to allot and issue RMB Shares pursuant to the RMB Share Issue (99.1173%);
2. To consider and approve the authorization to the Board and its authorized persons to deal with matters relating to the RMB Share Issue (99.1463%);
3. To consider and approve the plan for distribution of profits accumulated before the RMB Share Issue (99.9811%);
4. To consider and approve the plan for stabilization of the price of RMB Shares within three years following the RMB Share Issue (99.9660%);
5. To consider and approve the shareholder return plan within three years following the RMB Share Issue (99.9811%);
6. To consider and approve the use of proceeds from the RMB Share Issue (99.9730%);
7. To consider and approve the remedial measures for the potential dilution of immediate returns resulting from the RMB Share Issue (99.9810%);
8. To consider and approve the undertakings and corresponding binding measures for the RMB Share Issue (99.9728%);
9. To consider and approve the proposed dealing with matter related to director and senior management liability insurance and A share prospectus liability insurance (99.8423%);
10. To consider and approve the adoption of the policy governing the procedures of general meetings which will take effect on the date of listing of RMB Shares on the SSE (99.9931%);
11. To consider and approve the adoption of the policy governing the procedures of Board meetings which will take effect on the date of listing of RMB Shares on the SSE (99.9932%); and
12. To consider and approve the amendments to the Articles (99.9689%).

All resolutions were duly passed at the 2021 AGM and 2021 EGM (collectively the “2021 General Meetings”). As at the date of each of the 2021 General Meetings, the number of issued shares of the Company was 20,475,482,897 shares, which was the total number of shares entitling the holders to attend and vote for or against all the resolutions proposed at the 2021 General Meetings. No shareholders were required to abstain from voting on the resolutions proposed at the 2021 General Meetings. Hong Kong Registrars Limited, the share registrar of the Company, acted as scrutineer for vote-taking at the 2021 General Meetings. Poll results were announced on the websites of the Company and the HKEXnews on the day of each of the 2021 General Meetings.

Shareholders' Calendar

The following table sets out the tentative key dates for our shareholders for the financial year ending 31 December 2022. 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, among others, formulating the Group’s overall strategies, setting management targets, monitoring internal controls and financial management, supervising the performance of our management, developing and reviewing the policies and practices of corporate governance (the Terms of Reference of its corporate governance function are available on the websites of our Company and the HKEXnews), while day-to-day operations and management are delegated by the Board to the executives of the Company. The Board operates in accordance with established practices (including those relating to reporting and supervision).

The Board currently comprises eight directors, namely Mr. YANG Jie (Chairman), Mr. DONG Xin (CEO), Mr. WANG Yuhang and Mr. LI Ronghua (CFO) as executive directors, and Dr. Moses CHENG Mo Chi, Mr. Paul CHOW Man Yiu, Mr. Stephen YIU Kin Wah and Dr. YANG Qiang as independent non-executive directors. The list of directors and their role and function is available on the websites of our Company and the HKEXnews. The biographies of our directors are presented on pages 7 to 12 of this annual report and on our website.

Board meetings are held at least once a quarter and as and when necessary. Directors are requested to declare their direct or indirect interests, if any, in any proposals or transactions to be considered by the Board at Board meetings and abstain from voting as appropriate. In 2021, as all of our executive directors hold executive positions at CMCC, they have voluntarily abstained from voting on the board resolution approving the continuing connected transactions.

During the financial year ended 31 December 2021, the Board met on seven occasions and the directors’ attendances at the meetings are as follows:

All board meetings and committee meetings were attended by the directors in person or by video or telephone conferencing. In 2021, the Board met and discussed various matters relating to the annual results, interim results, dividends, continuing connected transactions, corporate strategic planning, annual investment updates, sustainability report, change of auditors, revision of the Articles, RMB Share Issue, compliance with the Corporate Governance Code and related Hong Kong Listing Rules provisions 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 2021, 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 2021, our Nomination Committee reviewed the structure and composition of the Board; at the committee meeting, the committee members discussed requirements relating to board diversity policy under the Hong Kong Listing Rules and in the relevant consultation papers published by the HKEX, and made recommendations to the Board on Board Diversity Policy and director succession planning based on the Company’s circumstances.

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.

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. There is no financial, business, family or other material relationships among members of the Board. 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 Dr. Moses CHENG Mo Chi, Mr. Paul CHOW Man Yiu, Mr. Stephen YIU Kin Wah and Dr. YANG Qiang, and considers them to be independent. The Board is of the view that they not only are able to completely fulfill their responsibilities as an INED, but will also continue to play a role and contribute to our board committees. They being our INEDs will benefit the Company and all shareholders as a whole.

The directors have disclosed to the Company the positions held by them in other listed public companies or organizations or associated companies, and the information regarding their directorships in other listed public companies in the last three years is set out on pages 7 to 12 of this annual report and on the Company’s website.

All our directors confirmed that they have complied with Paragraph A.6.5 of the Corporate Governance Code (effective as of 31 December 2021) with respect to directors’ training. In 2021, all Board and senior management members participated in listing tutorial in relation to our RMB Share Issue on the SSE over, among other things, listing-related work requirements and procedures, conditions and overall procedures of listing, post-listing regulatory requirements, obligations and duties of independent directors, and internal control requirements in relation to listed companies.

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 71 of this annual report, none of the directors had any other interest in the shares of the Company as of 31 December 2021. All directors have confirmed, following specific enquiry by the Company that they have complied with the Model Code during the period between 1 January 2021 and 31 December 2021.

The directors of the Company are responsible for the preparation of the consolidated financial statements of the Company. The Company has received acknowledgments from the directors of their responsibility for preparing the financial statements and the declaration by the auditors of the Company about their reporting responsibilities. For the reporting responsibilities of the auditors with respect to our financial statements, please refer to the Independent Auditor’s Report on pages 79 to 83 in this annual report.

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

To satisfy the relevant regulatory requirements in relation to our RMB Share Issue, the Board reviewed and approved certain amendments to the terms of reference of the board committees. The amended terms of reference of the board committees took effect from the date of listing of RMB Shares on the SSE, and are available on the websites of the Company, the SSE and the HKEXnews, and can be obtained from the Company Secretary upon written request.

The Remuneration Committee is responsible for determining the remuneration packages of all executive directors and senior management. The remuneration package of our executive directors consists of a basic salary, a performance-linked annual bonus and a term incentive. The remuneration of independent non-executive directors is determined in part by reference to their experience, the prevailing market conditions and their workload as independent non-executive directors and members of the board committees of the Company. Please refer to note 11 to the consolidated financial statements on page 116 of this annual report for directors’ and senior management’s remuneration in 2021.

The Board has adopted a Director Nomination Policy. The Nomination Committee and/or the Board should, upon receipt of the proposal on appointment of new director and the biographical information (or relevant details) of the candidate, evaluate such candidate based on the criteria as set out below to determine whether such candidate is qualified for directorship. The Nomination Committee should then recommend to the Board to appoint the appropriate candidate for directorship, as applicable. Criteria in evaluating and selecting candidates for directorship include:

• Character and integrity;
• Qualifications including professional qualifications, skills, knowledge and experience that are relevant to the Company’s business and corporate strategy, and consideration on diversity under the Board Diversity Policy;
• Requirement for the Board to have independent directors in accordance with the Hong Kong Listing Rules and whether the candidate would be considered independent with reference to the independence guidelines set out in the Hong Kong Listing Rules;
• Any potential contributions the candidate can bring to the Board in terms of qualifications, skills, experience, independence and gender diversity;
• Willingness and ability to devote adequate time to discharge duties as a member of the Board and/or board committee(s) of the Company; and
• Such other perspectives that are appropriate to the Company’s business and succession plan and where applicable, may be adopted and/or amended by the Board and/or the Nomination Committee from time to time for nomination of directors and succession planning.

All newly-appointed directors receive a comprehensive induction of directors’ duties to make sure that they have a proper understanding of the operations and business of the Company, and that they are fully aware of their responsibilities as a director, the listing rules of the stock exchanges on which the Company is listed, applicable laws and regulations, and the operation and governance policies of the Company. All newly-appointed directors are subject to re-election by shareholders at the first AGM after their appointment. Every director is subject to retirement by rotation and needs to stand for re-election at least once every three years.

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 7 to 12 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.

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 accordance with the requirements of the SOX Act. 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. The code of ethics has been filed with the US SEC as an exhibit to our annual report on Form 20-F for the financial year ended 31 December 2003, which may also be viewed and downloaded from our website.

On whistleblowing, the Company has set up a mailing address, a telephone hotline, work sites and a general manager mailbox as channels for employees and the public to raise concerns about misconduct, malpractices or improprieties in any matters related to the Company.

With respect to anti-corruption, we persisted in establishing anti-corruption systems that penetrate and cover all aspects of anti-corruption. We printed and distributed responsibility checklists and seven annual task lists, to ensure that each unit takes its responsibilities and makes contribution from its perspective. We formulated embedded guidance on corruption risk prevention and control, to enhance implementation of roles, prevention and control, and management and supervisory responsibilities. We also established a unified, embedded prevention and control management platform. By fully leveraging our technologies, we built early-warning models and launched pilot schemes addressing key grassroot, problem-prone areas. We established comprehensive control over corruption risk factors, and implemented corruption risk prevention and control at various levels. In 2021, more than 9,762 prevention and control measures were introduced or updated, 1,089 non-compliant projects were suspended, and 623 personnel in key positions were adjusted. Meanwhile, we also launched an anti-corruption education month, with a focus on educating our employees on our anti-corruption systems, work requirements and case studies. During the month we organized 11,300 trainings 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 2021, we strengthened key risk management and control, conducted risk management by means of risk collection, risk identification, combined assessment, measure decomposition and quantitative monitoring, and formulated 24 measures and more than 30 quantitative monitoring indicators with respect to five key risks. We regularly tracked down the implementation of these measures and indicators and found no major operating risks or losses that occurred throughout the year.

With respect to compliance management, aiming at “creating a world-class enterprise, becoming a cyberpower, a digital China, and the main force of a smart society”, focusing on making breakthroughs based on “Compliance Escort Plan”, we continue building our compliance management system, making practical moves in serving the Company’s strategy and safeguarding the Company’s high-quality development with compliance, as well as applying the concept of legal compliance throughout the entire operation and management process. As we accelerate the establishment of a new information service system of “connectivity, computing force and ability” and focus on 5G new infrastructure, 5G+ vertical industry applications, supply chain security innovation and others, we strengthened our pre-emptive compliance review and early identification of risk factors. As we expanded our compliance management to new businesses, we conducted extensive research on requirements relating to online transactions and customer personal information protection, and compiled relevant area-specific compliance guidelines. We strengthen our research and publicity efforts in laws and regulations in key areas, carried out specific trainings on Cyber Security Laws, Data Security Laws, Personal Information Protection Laws, Critical Information Infrastructure Security Protection Regulations and other topics, and also, compiled and issued research reports on Data Security Laws and Personal Information Protection Laws, among others. We further improved our information-based compliance management system to build a centralized and intelligent contract management system, gave full play to the role of the joint meeting on accountability for illegal business operations and investment, and strengthened the closed loop of compliance management.

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, section 404 of the SOX Act, Basic Norms for Enterprise Internal Controls, Guidelines for Evaluation of Enterprise Internal Controls and other laws and regulations 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 2021, based on the development strategy of building a world-class “Powerhouse”, we conducted auditing with a focus on key fields such as business development, major financial income and expenditure, and network and information security. Meanwhile, we upgraded our “on-site + remote + cloud” auditing model and brought innovation to auditing. Auditing helped us prevent risks, strengthened the effectiveness of audit rectifications, and promoted the sustainable and healthy development of the Company.

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 2021, we focused our audit on the main findings of each audit project and their rectification. We provide specific guidance on audit focus, rectification advice, data audit, team building and others to ensure the effectiveness of internal audit functions.

In 2022, we will further improve the “1+3+N” internal audit system, strengthen the coordination between the two levels of auditing, and carry out auditing surrounding regulatory requirements and the Company’s strategies. Meanwhile, we will also enhance our targeted audit policies, and continue to innovate and promote the digitalized and intelligent transformation of auditing, so as to promote the high-quality development of the Company.

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 our 2021 AGM 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 as the auditors of the Group for the year ending 31 December 2021 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; and
• audit of the effectiveness of the Group’s internal control over financial reporting as of 31 December 2021.

Apart from providing the above-mentioned audit services to the Group, the external auditors also provided other non – audit services to the Group, which were permitted under section 404 of the SOX Act and 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):

⁴ Including the fees rendered for the audit of internal control over financial reporting as required by relevant regulatory requirements.
⁵ Including the fees for tax compliance and advisory services, risk assessment and compliance advisory services, performance improvement and business process optimization advisory services, and other 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 targets and to make reasonable but not absolute assurances with respect to material misrepresentations or losses. As of 31 December 2021, our Audit Committee has 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 and financial reporting, staff qualification and experience, staff training courses and related budget. Based on such review, we consider the Group’s risk management and internal control systems to be effective and adequate.

The management of the Company reports to Audit Committee annually 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. In 2021, the Company has received the management’s affirmation with respect to the effectiveness of the risk management and internal controls.

Our management is responsible for establishing and maintaining internal control over financial reporting. 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 section 404 of the SOX Act and the code provisions of the Corporate Governance Code issued by HKEX, we refined our routine management mechanism of internal controls, in establishing a stringent internal control system over financial reporting.

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 management believes that, as of 31 December 2021, 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.

All disclosure of material information relating to the Company is made through the unified leadership and management of the Board, with the Company’s management performing its relevant duties. The Company has performed an annual review of the effectiveness of the Company’s disclosure controls and procedures, and concluded that, as of 31 December 2021, the Company’s disclosure controls and procedures were effectively executed at a reasonable assurance level.

According to the Hong Kong Listing Rules and United States Securities Act, 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 Rules for the Management of Information Disclosure and the Rules for the Management of Proceeds. These rules took effect from the date of listing of RMB Shares on the SSE and are available in Chinese on the websites of the Company, the SSE and the HKEX.

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.

Our IA Dept. conducts annual evaluation with respect to the effectiveness of disclosure internal controls and procedures and its performance, and issues audit reports for management and the Audit Committee to evaluate. Based on such reports, our principal executive and principal financial officers shall make written statements with respect to our annual report on Form 20-F and take personal responsibilities in accordance with the requirements of the US Securities Act. The Disclosure Committee can revise the disclosure internal controls and procedures in accordance with its performance and the development of relevant laws with approval of the senior management. The revised internal control procedures and articles shall be circulated to all departments and subsidiaries within the Group.

The Company attaches great importance to the management of insider information. In compliance with the provisions of Hong Kong Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”) and others, 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. 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.