Governance

Corporate Governance

Manuals and Policies

Preamble

The primary purpose of FIGARO COFFEE GROUP INC. (the “Company”) is to invest in, purchase, or otherwise acquire and own, hold, use, sell, assign, transfer, mortgage, pledge, hypothecate, exchange or otherwise dispose of real and personal property of every kind and description, including share of stocks, bonds, debentures, notes, evidence of indebtedness, and other securities or obligations and any corporation or corporations, association or associations, domestic or foreign, for whatever lawful purpose or purposes the same may have been organized and to pay therefor in money or by exchanging therefor stocks, bonds, or other evidences of indebtedness or securities of this or any other corporation, and while the owner or holder of any such real or personal property, stocks, bonds, debentures, contracts, or obligations to guarantee obligations, debts, or loans of a subsidiary related to foregoing and to receive, collect and dispose of the interest, dividends, and income arising from such property, and to possess and exercise in respect thereof all the rights, powers and priviledges of ownership.

As the Company moves towards the accomplishment of its corporate goals and ultimately to create and sustain increased value for all its shareholders, the Board of Directors (the “Board”), the management, officers and employees of the Company believe that sound and effective governance is fundamental to the its continued success and long-term existence.This Manual on Corporate Governance ( hereinafter the “Manual”) recognizes and safeguards the rights of every shareholder. It promotes shareholders’ rights, particularly the rights to information and to participate in the governance process. It supplements and complements the Articles of Incorporation and By-laws of the Company, which principally contain the basic structure of governance.The rationale of this Manual is to improve, systematize, and make transparent the governance of the Company, and demonstrate the Company’s commitment to good governance, by developing and furthering:

Responsible, accountable and value-based performance management;
Effective oversight, with Board Committees that act in the best interests of the Company and its stakeholders, including minority shareholders, and seek to enhance shareholder value in a sustainable manner; and
Adequate information disclosure and transparency, as well as effective system of risk management and internal control.

The members of the Board, the management, and employees understand this Manual as their joint obligation and obligate themselves to ensure that its provisions are fully implemented.

This Manual is issued in compliance with the Securities and Exchange Commission (the “Commission” or “SEC”) Memorandum Circular No. 19, Series of 2016 dated 31 March 2021, otherwise known as the Code of Corporate Governance for Publicly-Listed Companies to develop a strong corporate governance culture in line with recent developments in corporate governance.

Corporate Governance Framework

The Company’s corporate governance framework is based on the following principles:

Accountability – This Manual establishes the Company’s accountability to all its shareholders and guides the Board in setting strategies and monitoring the Company’s management.
Fairness – The Company obligates itself to safeguard shareholder rights and ensure the fair treatment of all shareholders, including minority shareholders.
Transparency – The Company ensures that timely and accurate disclosures are made on all material matters, including the financial situation, performance, ownership, and governance, in a manner easily accessible to the public and all interested parties.

Board Committees

Audit Committee

The Audit Committee will carry out, among other things, the following functions: (i) assist the Board in the performance of its oversight responsibility for: our financial reporting process; our system of internal control; our audit process and the monitoring of compliance with applicable laws, rules and regulations; (ii) supervise the effectiveness of our internal control procedures and corporate risk management systems; (iii) perform oversight functions over our internal and external auditors, ensuring that the internal and external auditors act independently from each other, and that each are given unrestricted access to all records, properties and personnel to enable them to perform their respective audit functions; (iv) review the annual internal audit plan to ensure its conformity with our objectives; (v) organize an internal audit department, and consider the appointment of an independent internal auditor and the terms and conditions of its engagement and removal; (vi) monitor and evaluate the adequacy and effectiveness of our internal control system, including financial reporting control and information technology security; (vii) review the reports submitted by the internal and external auditors; (viii) review the quarterly, half-year and annual financial statements before their submission to the Board; (ix) coordinate, monitor and facilitate compliance with laws, rules and regulations; (x) evaluate and determine non-audit work, if any, required of the external auditor, and periodically review the non-audit fees paid to the external auditor in relation to their significance to the total annual income of the external auditor and to our overall consultancy expenses; and (xi) establish and identify the reporting line of the internal auditor to enable them to properly fulfill their duties and responsibilities.

The Audit Committee shall consist of at least three (3) members of the Board of Directors, who shall preferably have accounting and finance backgrounds, one of whom shall be an independent director and another with audit experience. The Chair of the Audit Committee shall be an independent director.

Corporate Governance and Nominations Committee

The Corporate Governance (CG) and Nominations Committee will carry out, among other things, the following functions: (i) oversees the implementation of the corporate governance framework and periodically reviews the said framework to ensure that it remains appropriate in light of the material changes to the Company’s size, complexity and business strategy, as well as its business and regulatory environments; (ii) oversees the periodic performance evaluation of the Board and its committees as well as executive management, and conducts annual self-evaluation of its performance; (iii) adopts corporate governance policies and ensures that these are reviewed and updated regularly, and consistently implemented in form and substance; (iv) be responsible for providing shareholders with an independent and objective evaluation of and assurance that the members of the Board are competent and will foster our long-term success and secure our competitiveness; (v) determines the nomination and election process for the Company’s directors and has the special duty of defining the general profile of board members that the Company may need and ensure appropriate knowledge, competences and expertise that complement the existing skills of the Board; (vi) establishes a formal and transparent procedure to develop a policy of determining the remuneration of directors and officers that is consistent with the Company’s culture and strategy as well as the business environment in which it operates; (vii) review and evaluate the qualifications of persons nominated to the Board as well as other appointments that require Board approval; and (viii) assess the effectiveness of the Board’s processes and procedures in the election or replacement of directors.

The CG and Nominations Committee shall have at least three directors, including one independent director. The Chair of this Committee shall be an independent director.

Board Risk Oversight Committee

The Board Risk Oversight Committee will carry out, among other things, the following functions: (i) provide oversight over Management’s activities in managing credit, market, liquidity, operational, legal and other risks of the Company, including but not limited to regular receipt from Management of information on risk exposures, risk management and crisis management activities; (ii) oversee the performance of the Chief Risk Officer, who shall champion the Enterprise Risk Management system and possesses the authority, stature, resources and support to fulfill his/her responsibilities; (iii) review the adequacy and effectiveness of the Company’s policies and procedures relating to the identification, analysis, management, monitoring and reporting of financial and non-financial risks; and (iv) ensure that Management establishes, appraises and addresses the risks to the Company, and sufficiently and swiftly manages said risks, especially those categorized as having high impact with high probability of occurring.

The Board Risk Oversight Committee shall have at least three directors, including one independent director.

Related Party Transaction Committee

The Related Party Transaction (RPT) Committee will carry out, among other things, the following functions: (i) ensure that the Company has an enterprise-wide policy and system governing related party transactions (RPTs); (ii) evaluate and monitor existing relations between and among businesses and counterparties to ensure that all related parties are continuously identified, RPTs are monitored, and subsequent changes in relationships with counterparties (from non-related to related and vice versa) are captured; (iii) review, evaluate and approve all material RPTs in accordance with the parameters set by the Board; (iv) ensure that related parties, RPTs and changes in relationships are regularly reported to the Board, including information on the status, aggregate exposure to each related party and the total amount of exposure to all related parties; (v) ensure that the appropriate and mandatory disclosures are made to regulatory authorities relating to the Company’s RPTs; (vi) oversee the implementation of the Company’s RPT policy and system for identifying, monitoring, measuring, controlling and reporting RPTs, including a periodic review of RPT-related policies and procedures; and (vii) recommend any changes or enhancements to the Company’s RPT policies and procedures as and when it deems necessary.

Environmental, Social and Governance Policy

Introduction

The Figaro Coffee Group Inc. (FCGI) is a local brand that provides excellent food and beverage selection and gracious service creating a memorable experience for people who appreciate high quality of food and beverage and demand exceptional service.

The design of the Outlet, the craftsmanship, and the product line both for retail and service were the talk of the town. Figaro Coffee Group distinctive store design, unique ambience and style of service satisfy the global customer. It was a concept almost everybody thought and to this day still thinks as foreign. Our food and drink selection is also chosen based on what fits the concept of our brands, nothing pretentious but nothing too common. Even in pricing, our products are affordable but not cheap. This allows Figaro Group to be elevated to a symbol of status, well sought after yet attainable.

We operate our own Roasting facility, Warehouse & Supplies and Commissaries to cater and supply our stores and business partners.

We always practice good governance and actively pursue the cause of socio-cultural and environmental concerns.

Figaro Coffee Group creates long-term value for its owners and business partners through profitable operations and business sustainability and dignity of life for its employees.

As the Company moves towards the accomplishment of its corporate goals and ultimately to create and sustain increased value for all its shareholders, the Board of Directors, the management, officers and employees of the Company believe that sound and effective governance is fundamental to the its continued success and long-term existence.

ESG Governance

This Corporate Governance recognizes and safeguards the rights of every shareholder. It promotes shareholders’ rights, particularly the rights to information and to participate in the governance process. It supplements and complements the Articles of Incorporation and By-laws of the Company, which principally contain the basic structure of governance.

Our Corporate Sustainability Committee oversees our policies and operational controls for environmental, health, safety and social risks, and is led by the Chairman of our Board of Directors and our Chief Operating Officer. The Committee meets regularly to set goals, budgets, and implementation timelines and monitor progress and results.

ESG Commitment

Figaro Coffee Group Inc. believes in caring for our environment, and promoting the health, safety and security of our people and business partners. We are commited to comply with all applicable legal and regulatory requirements relevant to the promotion and preservation of the enironment. We strive to build sustainable, equitable, healthy, and diverse communities through a combination of innovative solutions and exemplary environmental, social and governance (ESG) performance As such, controls and measures are incorporated into all areas of business operations, and we strive to promote a culture wherein all employees share the same commitment.

Environmental Stewardship

Overview: Our environmental, social and governance (ESG) goals are embedded and remains our core in everything we do in business. We believe we have a responsibility to minimize the energy, carbon, water and waste impacts of our business and recognize that these impacts occur not just in the daily operations of our portfolio but also through our entire value chain. As a result, we strive to reduce environmental impacts across the full life cycle of our buildings and our corporate operations.

Statement on Climate Change: Climate change is a priority issue for our business. We have a long-standing strategy to reduce our carbon footprint. We approach this challenge by reducing the impact we have on climate change; by identifying the risks a changing climate have on our business; and by collaborating with key stakeholders to amplify our actions. Our climate strategy supports our sustainable agriculture, water and waste strategies.

We are committed to driving down our energy and carbon impacts, as we believe that climate change is one of the greatest risks to our world. The company supports a vision to be net zero carbon and to reduce our greenhouse emissions. Our sustainability program is committed to environmentally sustainable initiatives that deliver near-term efficiency, value, and health for our business, tenants and community.

Investing in Sustainable Buildings

Building Operations: We have a long-term environmental performance target for the portfolio that addresses energy and water consumption. To achieve our targets, each of our properties are monitored in real time by our third party consultants. Our energy consumption initiatives include energy retrofits, energy management system upgrades, and equipment upgrades. Our water consumption initiatives focused in achieving water security where the company operates and sources ingredients. We will maintain 100% replenishment, focusing on improving watershed health and sanitation hygiene programs which supports our agricultural supply chain.

Corporate Office: Although the environmental impacts of our corporate operations is a small part of our overall footprint, we believe it is important to live our values. As a result, we have adopted sustainability policies for our head office and all corporate and franchise stores that include criteria such as energy-efficient lighting and appliances, water-efficient fixtures, recycling programs, and e-waste collection events which promotes a healthy, safe working environment for all.

Engaging with Others

Store Engagement: It is critical that we engage both internal and external factors to drive sustainable innovation and systematic change. Store engagement is at the core of this mission. We drive store awareness and behavior change by providing infrastructure and amenities that make it easier for our store operation to implement sustainable practices. Finally, we aim to proactively engage our employees on sustainability issues through our online portal, annual employee surveys and initiative activities/awareness programs like e-waste recycling and good daily housekeeping.

Industry Engagement: A diverse and inclusive workplace is both the right thing to do and a strategic business priority. Diversity fosters creativity, innovation, and connection to the communities we serve. We strive to engage key industry players—including vendors, peers, and standard-setters—on sustainability, as averting a climate crisis and other environmental disasters requires large-scale transformation that we cannot achieve alone.

Social Responsibility

Overview: A deep commitment to social responsibility is core to who we are as a company. We believe people are at the heart of our business and take pride in our outstanding work culture. We strive to be an optimal employer to our employees, business partners, as well as a valued partner to our communities.

Compensation and Benefits: Figaro Coffee Group Inc. sets a competitive and market based compensation system that is anchored on the principle of equal pay for substantially equal work, in conformance with legally mandated regulations on condition of employment. We offer competitive compensation and benefits to all regular full-time employees, including but not limited to paid holiday, vacation, and sick time, retirement savings plans and medical, dental, and vision coverage.

Culture, Engagement and Growth: We create fun, spirited work environments that reward innovation and collaboration at all levels. Every new employee is given a copy of the FCGI VMG (vision, mission, goals) which is a set of key operating principals that we all strive to embody every day. Leaders are encouraged to demonstrate an “open door policy” and employees can provide feedback through their annual performance reviews. We hold periodic employee appreciation events, such as our Halloween costume contest and employee anniversary celebration. We also aim to foster both personal and professional growth for employees at all levels of the organization through annual performance reviews, role-specific training and professional development opportunities.

Health and Safety: The health and safety of our employees, tenants, and vendors is of the utmost importance to us, each year, we conduct various health seminars and awareness programs which require our employees to complete safety training.

Diversity and Inclusion: Figaro Coffee Group Inc. provides equal employment opportunity (EEO) to all employees without regard to gender, sexual orientation, religion, ethnicity, age, disability, marital status in accordance with applicable government regulations. We embrace and value diversity in all its forms, whether gender, age, ethnicity or cultural background. Equal opportunity is integral to our recruitment process, as we aim to develop a community of diverse talent. We seek to maintain a positive workplace, free from discrimination and harassment. We champion pay equity and mutual respect, promoting an environment of fairness and equality. Our commitment to diversity and inclusion applies to the highest levels of the organization, including at the board level, where we recognize that diversity strengthens board performance and promotes long-term shareholder value.

Strengthening our Communities: We have a long history of providing meaningful, and often transformational, support to the communities in which we operate. We also provide charitable support to key industry and professional organizations, often in the form of event sponsorships.

Overview: We view good governance as essential to creating and preserving value for our shareholders and other stakeholders. This includes a sound approach to corporate governance that complies with all applicable laws, rules, regulations and policies as well as unwavering adherence to our values.

Holding Ourselves Accountable

Corporate Governance: We have an effective and highly skilled Board of Directors with three committees: BG1 (Store Operations) BG2 (Support) BG3 (Sales and Business Development). We promote board independence and embrace board diversity in all its facets, including skills, experience, gender, ethnicity, and race. Our Corporate Governance Guidelines outline key principles and rules to help our Board of Directors exercise its responsibilities and serve the interests of the company and its stockholders.

Transparency: We believe in holding ourselves publicly accountable to our ESG commitments. We publish information about our ESG performance on a regular basis via our website, investor presentations, and annual ESG Report.

Doing what’s Right

Ethics: Our directors and all employees, including senior management, conduct themselves in accordance with the highest moral and ethical standards, informed by a robust Code of Business Conduct and Ethics. We are committed to ensuring a fair workplace for our employees as well as partners with whom we do business. We have strict policies to protect against unlawful discrimination and harassment. We have an Open-Door Policy to encourage honest and direct communication to resolve issues and concerns in an expeditious manner.

Human Rights: Our Human Rights Policy reflects our longstanding dedication to the preservation of basic rights and human dignity in our workplace and beyond. Figaro Coffee Group Inc. holds human rights to be an essential component of our business. We support internationally recognized human rights principles that promote and protect human rights. The policy applies to our operations and affiliates in all assets we own and operate.