Compliance

The LY Corporation Group (the “Group”) aims to carry out its mission with integrity, earn the broad trust of its stakeholders, and fulfill its corporate social responsibilities. To achieve this, the Group has established the "LY Corporation Group Code of Conduct" as a guideline for the actions of its officers and employees, and is working to ensure its thorough implementation while strengthening its compliance framework.

LY Corporation Group Code of Conduct

The LY Corporation Group Code of Conduct ("Code of Conduct” or “CoC") sets forth the standards of conduct that all officers and employees of LY Corporation (the “Company”) and its Group companies are required to follow. The LY Corporation Group widely communicates the CoC throughout the Group and promotes compliance with laws, regulations, and corporate ethics in day-to-day operations.
The CoC was established following approval by the Board of Directors of LY Corporation. In March 2024, LY Corporation and certain Group companies*1 obtained written pledges regarding the CoC from their officers and employees (excluding subcontract employees).
The Group also asks its business partners to respect the principles set out in the CoC.

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

CoC Questionnaire

To enhance the effectiveness of the CoC, from FY2024, the Company conducts the "LY Corporation Group Code of Conduct Penetration Survey (CoC Questionnaire)" annually. This initiative is designed to enable self-assessment of compliance and to identify potential compliance risks across the Group.

Overview of the Questionnaire

  • Purpose
    • To assess awareness, understanding, and compliance with the CoC
    • To evaluate compliance risks based on the CoC’s priority focus areas
    • To utilize the results in planning compliance activities for the following fiscal year
  • Target participants: All officers and employees primarily employed by LY Corporation Group companies,*2 excluding those on leave, those who have left the Company, and subcontract employees
  • How the results are used
    • Report findings to the Compliance Committee to identify compliance risks and deliberate on remedial measures
    • Provide feedback to relevant departments and Group companies for use in developing initiatives for the following fiscal year
  • Examples of utilization in FY2025

*2 FY2025 CoC questionnaire was conducted at the following companies:
LY Corporation, Actapio, Inc., BEENOS Inc., Chat Support Base Corporation, LINE Company (Thailand) Limited, LINE Credit Corporation, LINE Financial Corporation, LINE MUSIC CORPORATION, LINE NEXT Corporation, LINE Plus Corporation, LINE STUDIO Corporation, LINE Taiwan Limited, LINE TECHNOLOGY VIETNAM CO., LTD, LINE VIETNAM COMPANY LIMITED, LINE Xenesis Corporation, LINE Securities Corporation, LY Communications Corporation, LY Business Support Corporation, LY Business Partners Corporation, LY Marketing Corporation, PayPay Insurance Service Corporation, PT. LINE PLUS INDONESIA, Techbase VietNam Co., Ltd, Z Venture Capital Corporation, Ikyu Corporation, Kurashiru, Inc., Stanby, Inc.

Note: From the perspective of ensuring independence, publicly listed Group companies and other Group companies that have established their own codes of conduct are excluded from the scope of the questionnaire. The Company confirms that these entities conduct monitoring through their respective mechanisms and has verified that the CoC is effectively embedded in practice.

Compliance System

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 (independent outside director) 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 twice a year.

Group Compliance

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.
If any violations of laws, regulations, or internal rules that may constitute a breach of the CoC are identified within the LY Corporation Group, each company will respond to the matter in accordance with its prescribed standards and procedures. When necessary, internal investigations, determination of root causes, and the formulation of preventive measures will be conducted, taking into account consultations and discussions with external experts. For compliance violation cases that constitute violations of each company's work rules, appropriate disciplinary actions will be implemented in accordance with the prescribed standards and procedures of each company.

Compliance violation cases that occur at Group companies are reported to LY Corporation’s compliance division as appropriate.

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).*1, 2 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).

*1 Examples of topics covered in the training conducted in FY2024: code of conduct, insider trading, entertainment & gifting, and harassment.
*2 Examples of topics covered in the training conducted in FY2025: prohibition on the removal of trade secrets, whistleblowing, Subcontract Act, insider trading, human rights.

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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