momo has set-up a comprehensive risk management mechanism, with the management and employees all playing a part in its implementation. The mechanism not only identifies potential risks so that early action can be taken and helps momo maintain steady growth, but also safeguards stakeholders' interests so that we can fulfill our responsibility on social sustainability.
Risk Management Mechanism
• Policy and System Development
momo has established a comprehensive organizational structure for risk management, in which the Board of Directors serves as the highest decision-making unit, while the Audit Committee under its purview is tasked with overseeing the implementation of risk-related strategies; in addition, the Auditing Office assists the Audit Committee in carrying out matters related to risk management, and reports the implementation of risk management to the Board of Directors on a regular basis (at least once a year). Each business unit is responsible for risk identification, assessment, and control, where the responsible personnel at each business unit is charged with planning and supervising risk management operations within the unit.
In November 2023, momo' s Board of Directors approved the revision of the "Risk Management Policies and Procedures" as the highest guiding principle for risk management. This aims to establish a more comprehensive risk governance and management framework and to continuously promote a risk management-oriented business model.
• Risk Identification
The risk management process includes risk identification, risk analysis, risk assessment, risk response, as well as risk monitoring and review. Management identifies the primary operational risks based on experience and professional judgment after assessing and taking into account the sources of risks encountered in the Company' s daily operations. On the other hand, each business unit analyzes the tolerance level for each risk indicator, establishes procedures for handling various types of risks, and thus implement risk management according to these procedures.
Supervision and Management of Internal Auditing
The Company has set up an internal audit arm under the Board of Directors to assess, plan and step up review procedures in relation to principal risks for annual and ad hoc audits in the spirit of independence and objectivity and based on the major operational risks identified by the Company. The scope of the audit covers the financial and business operations and management functions of the Company and its subsidiaries to identify possible flaws in the internal control system in a timely manner, and to produce audit reports to provide timely recommendations for improvement to each unit and management to ensure the continued and effective administration of the internal control system, and for the chief auditor to report regularly to the Audit Committee and the Board of Directors on the execution of the audit. Upon completion of the audit plan in 2024, each unit has made improvements in response to the deficiencies and suggestions raised in the audit within the approved timeline, and will continue to follow up on those to which improvements are yet to be made within the approved period until improvements are completed.
The internal audit undertakes routine audits and also supervises the implementation of annual self-evaluation by each unit within the Company to establish a self-monitoring mechanism for the Company. The results of the self-evaluation are used as the main basis for the Board of Directors and the President to assess the effectiveness of the overall internal control system and to issue a statement on the internal control system.
Ethical Corporate Management
momo is committed to the practice of business ethics in accordance with "integrity", our core values and philosophy. To give our internal and external stakeholders a better understanding of our corporate ethical guidelines and in the spirit of ethical business practices, momo has instituted the "Code of Ethics" and the "Ethical Corporate Management Best Practice Principles" and the "Anti-Money Laundering and Counter-Terrorism Financing Policy", to which all directors, managerial officers, and employees are required to adhere. In addition to publishing the aforesaid rules and regulations on our corporate website, momo also expects all employees to maintain a high level of personal integrity and professional ethics at work and when performing their duties and responsibilities, If any illegal behavior or violations of the Code of Ethics are encountered at work or in the performance of duties and responsibilities, employees should also file a report or complaint, thereby upholding corporate practice and protecting shareholder interests.
Well-Defined Whistleblowing Mechanism
At momo, we encourage anyone to report illegal activities or conduct that violate the Code of Ethics or Ethical Corporate Management Best Practice Principles in order to ensure proper enforcement. The "Regulations Governing the Handling of Complaints on Illegal, Unethical, or Dishonest Behavior" was formulated for this purpose. To establish effective internal and external whistleblowing channels and processing mechanism at momo, the processing unit, complaint channels and procedure are explicitly noted on the corporate website and internal employee website. This ensures the proper enforcement of the Code of Ethics and Ethical Corporate Management Best Practice Principles created by momo while also protecting the legal rights of whistleblowers and corresponding parties.
Whistleblower complaints can be made through three channels: in person, by the phone, or via mail. An independent whistleblowing mailbox (audit@fmt.com.tw) was also set up for the use of internal and external personnel. No employee violations of the Ethical Corporate Management Best Practice Principles were reported at momo in 2024.
Education and Training on Ethical Conduct
To strengthen corporate governance and implement the core values of corporate integrity management, the Company continuously promotes communication and training related to policies on integrity management and ethical conduct. All directors, managers, and employees have undergone 100% communication and promotion of the relevant policies. At the same time, according to the nature of their duties, all directors, managers, and employees receive regular education and training through various methods such as internal promotion, online courses, and assessments. The purpose is to enhance the awareness and practice of all colleagues regarding integrity management, professional ethics, and anti-corruption issues.
• 2024 Implementation Results
momo continues to practice and actively strengthen our compliance management and we are working to establish a sound compliance culture. In addition to tracking and assessing existing regulations and assigning certain regulations to dedicated units, the Company has also devised various policies and rules for implementing compliance. Education and training are utilized to assist employees, related supplier partners, and stores with understanding the laws and standards that must be followed in their work. Finally, annual compliance self-assessments are conducted in conjunction with internal control operations so that each unit can examine their compliance performance during their year. The systematic approach outlined above is used to construct an effective safety net for preventing risk events. momo strictly abides by the regulations and administrative directives of the relevant authorities, and adds and modifies internal workflow management mechanisms at any time pursuant to the latest regulatory amendments and enactments to ensure that all business operations are carried out in accordance with the law. All corrective measures were taken immediately to rectify the issues as instructed by the competent authorities to ensure compliance with the law. In 2024, momo reported no major violations of social and economic laws and regulations related to advertising, labeling, and labor disputes; no major violations of environmental laws and regulations; and no violations of health and safety laws and regulations related to products and services. Any major fine related to momo' s operations, whose amount is NT$1,000,000 or more as stipulated in Chapter 2 (Material Information), Article 4, Paragraph 1, Subparagraph 26, Item 3 of the "Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities", shall be disclosed.
In 2024, momo reported 31 advertising violation, 1 labeling violation, and 4 labor disputes. All corrective measures were taken immediately to rectify the issues as instructed by the competent authorities to ensure compliance with the law.
To strengthen the establishment of sound legal concepts, the Legal Affairs Office continuously conducts regular and irregular legal education and promotion for suppliers, stores, and affiliated employees.
Regarding the main business-related regulations, the Legal Affairs Office provides legal promotion announcements and cases of violations, instructing the responsible units to communicate and implement relevant matters to suppliers and stores through the online SCM system and the Store Rules Center. Additionally, legal promotion is conducted for affiliated employees through internal official document circulation and other methods. In addition, the Legal Affairs Office uses the digital learning platform system HRD (Human Resource Development) online course content to promote intellectual property rights and company-related regulations. It also conducts promotional training on intellectual property rights and trade secrets for new employees upon their entry, in order to strengthen the Company' s awareness and understanding of intellectual property protection.