Compliance

In the LY Corporation Group Code of Conduct, the LY Corporation Group (the "Group") sets forth a code of conduct for its officers and employees in order to carry out its mission in good faith, and in turn, earn the trust of stakeholders and fulfill its corporate social responsibilities. To realize these guidelines, the Group works to promote the adoption of these rules among all officers and employees of the Group and enhance the compliance system.

LY Corporation Group Code of Conduct

The LY Corporation Group Code of Conduct ("Code of Conduct") is the code of conduct for all officers and employees of LY Corporation (the "Company") and its Group companies. The Group raises awareness of the Code of Conduct among its workforce and works to ensure that everyone complies with laws, regulations, and business ethics in their day-to-day duties.

To allow the Group to carry out its mission in good faith and both earn the trust of stakeholders and fulfill its social responsibilities, LY Corporation's Board of Directors approved the Code of Conduct to serve as the foundation for compliance activities. All business partners are also asked to respect the content of the Code of Conduct.

From FY2024, the Company conducts the "LY Corporation Group Code of Conduct Penetration Survey (CoC Questionnaire)" annually to assess the penetration of the LY Corporation Group Code of Conduct. This initiative is designed to enable self-assessment of compliance and to identify potential compliance risks across the Group. (Certain Group companies with their own code of conduct are excluded from this survey.)

In addition, in March 2024, LY Corporation and some Group companies* have obtained a pledge regarding the LY Corporation Group Code of Conduct from officers and employees (excluding subcontract employees).

To ensure the effective implementation of the Code of Conduct, LY Corporation provides feedback on the CoC Questionnaire results also to the heads of each business division. Additionally, the results of the CoC Questionnaire are reported to and discussed at the Compliance Committee of LY Corporation to regularly review the effectiveness of the Code of Conduct and to shape the Company's compliance plans for the following fiscal year. The results are also shared with the Group companies to support the compliance activities of the companies that participated in the CoC Questionnaire.

In the event that a violation of laws, internal rules, or any actions constituting a breach of the LY Corporation Group Code of Conduct are discovered within the LY Corporation Group, measures such as internal investigations, cause analysis, and the implementation of recurrence prevention strategies will be taken in accordance with each company's established standards and procedures, and in consultation with external experts as necessary. Furthermore, if a compliance violation case arises that breaches the Rules of Employment of each company, appropriate disciplinary actions will be administered according to the established standards and procedures of each company.

Compliance violations occurring within Group companies are reported to the compliance division of LY Corporation as appropriate.

*LINE Credit Corporation, LINE MUSIC CORPORATION, LINE Pay Corporation, LINE Xenesis Corporation, LINE Securities Corporation, LINE Healthcare Corporation, LINE Friends Japan Corporation, LINE Business Support Corporation, LY Communications Corporation, LY Marketing Corporation, LINE TECHNOLOGY VIETNAM CO.，LTD

Compliance System

The diagram illustrates the compliance system of the LY Corporation Group. The Compliance Division provides compliance-related education and awareness-raising notifications to internal business divisions at normal times and conducts investigations and disciplinary actions during emergencies. The division makes proposals and reports to the Compliance Committee as needed, which reports to the Board of Directors. Upon receiving the reports, the Board of Directors and the Compliance Committee provide instructions and supervision as appropriate. For the Group companies, the Compliance Division of LY Corporation provides support and information as well as receive reports and consultations from the compliance divisions of each Group company.

LY Corporation has established the Regulations on Compliance in accordance with its Basic Policy for Internal Control so as to promote the compliance system across the entire Group.

The Company established the Compliance Committee, which meets twice a year, as a body to oversee its compliance system in accordance with the Regulations on Compliance.
The Committee is chaired by the President and Representative Director (chief executive of compliance), and the members include the Chairperson and Representative Director (kaicho), the persons in charge (PIC) of the Corporate Administration Division, Legal Division, Compliance Division (PIC of the Company’s compliance operations), and Personnel Division. A full-time Audit and Supervisory Committee member also participates as an observer.
Along with approving and receiving progress reports on compliance activity plans, the Compliance Committee also collects reports on the status of the whistleblowing system and Group compliance initiatives, thereby working to develop a Group-wide compliance system and identify any issues.
The Board of Directors appropriately supervises Committee meetings by receiving reports on agenda from the PIC of compliance operations.

Collaboration with Group Companies

LY Corporation receives reports on the status of compliance systems from its subsidiaries and other affiliates twice a year in order to report the status of compliance activities at Group companies to the Compliance Committee.

Compliance managers from each Group company also meet once a year to share compliance-related information, brush up their skills, and hold discussions.

In addition, the Company strengthens collaboration with Group companies to maintain and improve the level of compliance throughout the Group: exchanging information with the compliance managers and providing them with a range of useful materials for compliance activities when needed.

Compliance Education

LY Corporation provides compliance training during onboarding for new hires as a key part of reinforcing compliance. Employees learn about how they should behave and increase their knowledge on the subject by going through worker guidelines, the main internal regulations, and other content.

The Company also regularly runs an e-learning compliance course for all employees (permanent employees, contract employees, part-time employees, employees seconded from other companies).* The material covers the LY Corporation Group Code of Conduct to help everyone become better aware of and comply with the rules. Compliance training for newly appointed managers and compliance training targeting officers and others are also provided.

In addition to this, other departments also offer more specialized courses suited to their particular field (e.g., information security).

*Examples of topics covered in the training conducted in FY2024: code of conduct, insider trading, entertainment & gifting, and harassment.

Whistleblowing System

To enhance integrity and the ability to self-regulate, the Group has set up a whistleblowing system in accordance with its Regulations on Whistleblowing. The person in charge of the compliance division is in charge of the whistleblowing hotline and bears the responsibility of the operation of the internal reporting system. The system accepts reports on regulatory and compliance violations, which the relevant department will then investigate and respond to. Following this, they will decide on what disciplinary action to take based on the case (e.g., dismissal, demotion, a pay cut, or reprimand), act to prevent a reoccurrence, or take other necessary measures. They will also report these outcomes to the Compliance Committee and Board of Directors to contribute to planning for compliance activities.

The Group strives to ensure that whistleblowers are comfortable with using the whistleblowing system, with some of the measures it has taken listed below.

  • Forbids the disadvantageous treatment of, retaliation against, or probing of whistleblowers (violators will be subject to disciplinary actions)
  • Protects the confidentiality of the whistleblower and the details of their report
  • Allows for anonymous reporting
  • Allows for reports to be submitted to external lawyers who are independent of company management
  • Allows for reports to be received 24 hours (although processing by personnel is done within normal business hours)
  • Provides multilanguage support (Japanese, English, Korean)
  • Publishes the number of whistleblower reports

LY Corporation Group Whistleblowing Hotline: Officers and employees of the LY Corporation Group companies or those of business partners (including anyone who has resigned in the past year) can make anonymous reports via this hotline. The whistleblowers can choose to make reports to either an external law firm or LY Corporation's Compliance Division. Depending on the nature of the case, the PIC of whistleblowing at Group companies will investigate and take appropriate actions.

In addition to the above, the Company provides information to its officers and employees of LY Corporation on the internal Compliance Consultation Desk and how to submit a report directly to officers. Reports received through these routes may be investigated as a whistleblowing case.

Furthermore, some Group companies have established their own reporting channels and offer consultation services in local languages.

Necessary information regarding these systems is continuously communicated to officers and employees through constant publication on the intranet, and to business partners through the corporate website. Additionally, compliance training courses for new hires and newly appointed managers include content related to the whistleblowing system, ensuring ongoing awareness raising efforts.

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