F-1

As filed with the Securities and Exchange Commission on June 10, 2016

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM F-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

LINE Kabushiki Kaisha

(Exact name of Registrant as specified in its charter)

LINE Corporation

(Translation of Registrant’s name into English)

Japan	7370	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Shibuya Hikarie, 27^th Floor

21-1 Shibuya 2-chome

Shibuya-ku, Tokyo 150-8510, Japan

+81-3-5155-1008

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

LINE Euro-Americas Corporation

5750 Wilshire Boulevard #640

Los Angeles, CA 90036

+1-323-591-0380

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Jinduk Han, Esq. Cleary Gottlieb Steen & Hamilton LLP 19F Ferrum Tower 19 Eulji-ro 5-gil Jung-gu, Seoul 04539, Korea +82-2-6353-8020 Craig B. Brod, Esq. Jeffrey D. Karpf, Esq. Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, NY 10006 +1-212-225-2000 Alan Cannon, Esq. David Sneider, Esq. Simpson Thacher & Bartlett LLP Ark Hills Sengokuyama Mori Tower, 41^st Floor 9-10, Roppongi 1-chome Minato-ku, Tokyo 106-0032 Japan +81-3-5562-6200 Youngjin Sohn, Esq. Simpson Thacher & Bartlett LLP 25^th Floor, West Tower Mirae Asset Center 1 Building 26 Eulji-ro 5-gil Jung-gu, Seoul 04539, Korea +82-2-6030-3800

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Proposed maximum aggregate offering price (3)	Amount of registration fee
Common stock, no par value (1)(2)	US$708,400,000	US$71,336

(1) Includes (i) shares of our common stock that a certain representative of the underwriters has the option to purchase to cover over-allotments as well as shares a certain representative of the underwriters may borrow from NAVER Corporation to facilitate settlement during the over-allotment period, if any, and (ii) all shares of our common stock initially offered or sold outside the United States that are thereafter sold or resold in the United States. Offers or sales of our shares or American depositary shares outside the United States are being made pursuant to Regulation S under the Securities Act of 1933, as amended, and are not covered by this registration statement.

(2) American depositary shares issuable upon deposit of shares of our common stock registered hereby will be registered under a separate registration statement on Form F-6. Each American depositary share will represent all or a specified portion of a share of our common stock.

(3) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell and it is not soliciting an offer to purchase these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED JUNE 10, 2016

PROSPECTUS

LINE Corporation

35,000,000 Shares of Common Stock

in the form of Shares or American Depositary Shares

In our initial public offering, we are offering              shares of our common stock in the form of shares or American depositary shares (“ADSs”) in the United States and elsewhere outside Japan. We refer to this offering as the international offering in this prospectus. Each ADS represents one share of our common stock. Concurrently with the international offering, we are offering              shares of our common stock in Japan. We refer to this offering as the Japanese offering in this prospectus. These offerings are collectively referred to in this prospectus as the global offering. We have granted to Morgan Stanley & Co. LLC, as representative of the international underwriters, and to Nomura Securities Co., Ltd., as representative of the Japanese underwriters, the options, in the aggregate, to purchase up to an additional 5,250,000 shares of our common stock, in each case solely to cover over-allotments.

The reference price per share we have included in our Japanese registration statement is ¥2,800, equivalent to approximately $26.30 per ADS. Based on such amounts, we estimate that the initial public offering price of the ADSs will be between $25 and $28 and the initial public offering price of the shares will be between ¥2,660 and ¥2,980.

Prior to the global offering, there has been no public market for shares of our common stock or ADSs. We have received approval to list and trade shares of our common stock on the Tokyo Stock Exchange under the securities identification code “3938.” We will apply for listing of our ADSs on the New York Stock Exchange under the symbol “LN.”

Investing in our shares of common stock or ADSs involves risks which are described in “Risk Factors” beginning on page 19 of this prospectus.

	Per ADS	Total	Per Share	Total
Public offering price	$	$	¥	¥
Underwriting discounts and commissions(1)	$	$	¥	¥
Proceeds, before expenses, to us	$	$	¥	¥

(1) For a description of compensation payable to the underwriters, see “Underwriting.”

The figures in the U.S. dollar “Total” column above assume that all shares in the global offering are sold in the form of ADSs, while those in the Japanese yen “Total” column assume that no shares in the global offering are sold in the form of ADSs.

Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission or any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver shares of our common stock to purchasers in Tokyo through the central clearing system in Japan, known as the Japan Securities Depository Center, Inc. (“JASDEC”), on or around July    , 2016, Tokyo time. The underwriters expect to deliver the ADSs to purchasers in New York through the facilities of The Depository Trust Company on or around July    , 2016, New York time.

Joint Global Coordinators

Morgan Stanley	Nomura
Goldman Sachs Japan Co., Ltd.	J.P. Morgan

Joint Lead Managers and Bookrunners

Morgan Stanley Goldman, Sachs & Co. J.P. Morgan Nomura

The date of this prospectus is             , 2016

[INTENTIONALLY LEFT BLANK]

Table of Contents

Prospectus Summary	1
Conventions Used in This Prospectus	18
Risk Factors	19
Forward-Looking Statements	50
Industry Data and User Metrics	52
Use of Proceeds	53
Dividend Policy	54
Capitalization	55
Dilution	56
Exchange Rates	58
Unaudited Pro Forma Financial Information	59
Selected Historical Financial and Operating Data	64
Management’s Discussion and Analysis of Financial Condition and Results of Operations	69
Business	119
Regulation	149
Management	152
Principal Shareholder	161
Certain Relationships and Related Party Transactions	162
Description of Capital Stock	164
Description of American Depositary Shares	174
Shares and ADSs Eligible for Future Sale	183
Japanese Foreign Exchange Controls and Securities Regulations	185
Taxation	188
Underwriting	195
Expenses Relating to This Offering	206
Enforceability of Civil Liabilities	207
Where You Can Find Additional Information	208
Legal Matters	209
Experts	209
Change In Accountants	209
Index to Financial Statements	F-1

You should rely only on the information contained in this prospectus or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free writing prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock and ADSs only in jurisdictions where such offers and sales are permitted. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock or ADSs.

Until             , 2016 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Each prospective purchaser who places an order for shares or ADSs offered in the international offering consents to the disclosure by the underwriters to us of the prospective purchaser’s identity, the details of such order and the actual amount purchased, if any.

PROSPECTUS SUMMARY

Our Mission and Vision

Our mission is “Closing the Distance” by bringing people closer to each other as well as to a wide variety of information and services.

Our vision is to become the “smart portal” through which users can access the people, information, services, companies and brands that they choose, from anywhere they are and anytime they need to.

Overview

We are a leading global platform for mobile messaging and communication services, content distribution and advertising. Our mobile messaging application, which is the foundation of our LINE platform and operates on all major mobile operating systems, enables our users to communicate through free instant messaging and voice and video calls and serves as a smart portal to our other applications and services. We provide users with access to a wide range of social and interactive content and services that satisfy our users’ individual needs for access to information and entertainment such as mobile games and music through our “content platform,” as well as online-to-offline (“O2O”) services such as payment services and job posting, restaurant reservation and taxi booking services through our “life platform.” We believe that the integration on our LINE platform of content and services offers our users a convenient way to connect and have fun with their family and friends, explore and share their interests and satisfy their daily needs with greater ease, which we believe enriches the user experience and ultimately contributes to higher user loyalty.

Since the introduction of our mobile messaging application in Japan in June 2011, LINE has grown into a global platform with users in more than 230 countries and a strong user base in Asia. Our active user base has grown to 218 million monthly active users (“MAUs”) globally in March 2016, with 152 million MAUs located in our four largest markets of Japan, Taiwan, Thailand and Indonesia. We strive to localize our services to take into account cultural differences and user needs, and we currently provide our services in 19 languages. According to App Annie Inc. (“App Annie”), LINE was the fourth largest application publisher globally for the two years ended March 31, 2016, based on the number of downloads from the Social Networking category on iOS App Store and Social and Communication categories on Google Play, combined. We believe the scale and growth of our global user base provide us with powerful network effects, whereby LINE becomes more valuable to users, driving further user growth and engagement as well as attracting more advertisers and platform partners.

At the heart of our platform is the LINE mobile messaging application, which enables users to communicate with family, friends and other people they care about.

• We address people’s basic communication needs.  We focus on serving users’ everyday communication needs by supplying easy-to-use tools, including chat, voice call and video call, with reliable and secure connectivity wherever they are. In March 2016, our users exchanged an average of 20.4 billion messages per day and our average daily active users (“DAUs”) represented approximately 61.4% of our MAUs globally and 73.0% of our MAUs in our four largest markets of Japan, Taiwan, Thailand and Indonesia, indicating that our services are already a meaningful part of the daily lives of many of our users.

• We enable closed and real relationship-based communication.  We believe that the most rewarding and lasting forms of expression are those involving private, two-way exchanges between people with real relationships, which enhance intimacy and security. Our users can connect with other users they know by directly adding them as friends on LINE or by importing their mobile contact list into LINE. We believe that closer, intimate relationships are integral to the broader social web of activity, representing a more meaningful and influential subset of social networks.

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• We make communication more enriching and expressive.  We are a pioneer in the creation and design of Stickers, our larger and more expressive version of emoticons. Users can express their emotions or actions by sending a single Sticker instead of a thread of plain text. We believe that Stickers have made communication both more convenient and more enriching. Our users in aggregate sent an average of 389 million Stickers per day in March 2016.

Our user engagement is driven by such communication being coupled with activities that are an indispensable part of users’ daily lives. LINE has evolved into an extensive platform that provides not only the ability to communicate but also access to a wide range of localized entertainment content and lifestyle services, such as games, video, music, camera and news applications through our content platform as well as O2O services through our life platform, offering our users richer experiences. With an increasing amount of activity on the internet being conducted through mobile applications, we believe that LINE provides a fast, versatile and user-friendly platform for the discovery of content and services in the mobile era. Our broad array of mobile services, combined with our large and highly engaged user base, gives us unique opportunities to offer greater personalization in terms of the service and content offerings by introducing a range of application settings.

We believe that our user base provides attractive marketing opportunities for our advertisers. We provide a variety of targeted and interactive marketing solutions that enable advertisers to promote their brands and amplify their visibility and reach. We offer a wide variety of “messenger ads” or user-initiated advertising solutions that are offered through the LINE messaging application, such as Official Accounts, Sponsored Stickers and LINE Point Ads, allowing advertisers to direct their efforts and communication in a more targeted manner. We also offer impression-based “performance ads” such as Timeline Ads and other advertisements that utilize our various communication and content offerings, allowing advertisers to effectively reach a larger number of LINE users. Our performance ads have become our fastest growing advertisement products.

We generate revenues in a variety of ways and from various participants active on the LINE platform. Our revenues are primarily generated from games, Stickers and advertising services on the LINE platform, as well as from advertising on our web portals. We generated revenues of ¥39,586 million in 2013, ¥86,366 million in 2014, ¥120,406 million in 2015 and ¥33,456 million in the first three months of 2016. For the two years ended March 31, 2016, according to App Annie, LINE ranked as the world’s largest mobile publisher based on non-game gross revenue from iOS App Store and Google Play, combined.

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Our User Base

Since its launch in Japan in June 2011, our LINE messaging service has attracted users from around the world. Today, we believe LINE is the leading mobile messaging application in Japan, Taiwan and Thailand in terms of numbers of users, and we have gained substantial numbers of users in other parts of Asia, including Indonesia, Hong Kong, Singapore, Malaysia and Myanmar. In recent quarters, we focused our marketing efforts on our key countries as a part of our increased emphasis on monetization in markets where we have achieved leading market positions, which has led to an increase in our MAUs in our four key countries of Japan, Taiwan, Thailand and Indonesia as well as overall MAUs. We plan to continue to focus on areas in which we enjoy competitive advantages and to allocate resources effectively.

According to App Annie, for the three months ended March 31, 2016, our LINE messaging application was the largest mobile application in Japan, Taiwan and Thailand in terms of MAUs both on iOS App Store and on Google Play, and the second and third largest mobile application in Indonesia on iOS App Store and Google Play, respectively. In September 2015 our LINE messaging application had the largest share of the total time spent on smartphones in Japan, accounting for 10.4% of the total time spent on all mobile phone applications during the month, according to data released by The Nielsen Company (“Nielsen”) in November 2015.

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Source: Nielsen Mobile NetView, Sep. 2015

Our Value Proposition for Our Users

Communicate with people you know in real life.  We provide free mobile communication tools that allow our users to connect with their friends, family and others that they care about in a private and intimate way.

Choose the way you communicate.  Our users can send instant messages to, or chat with, a friend while watching TV, call their colleagues while traveling on business, or enjoy video calls with their family members who are residing overseas. Our Timeline provides users with open access to, and the ability to share, a broad range of content with other users, and our low-cost voice over internet protocol (“VoIP”) service allows users to place calls to mobile and fixed phone lines.

Know that you have been heard.  Our messaging tool provides the sender with confirmation whether their message has been read, and recipients are notified and reminded of unread messages specifically directed to them.

Be creative and expressive.  We continue to be a pioneer and leader in the creation and design of Stickers. Users are able to colorfully express their emotions in the form of a single Sticker, which depicts LINE - developed characters or third-party characters or celebrities. Users can also design and distribute their own Stickers through our Creators Market service.

Discover attractive content.  Our content platform introduces users to a host of highly appealing, localized content to enrich their daily lives, including games, news, music, video and more. The LINE characters we have created, such as Brown the Bear and Cony the Rabbit, are widely recognized within Japan, Taiwan, Thailand and Korea and are receiving increasing recognition in other regions of the world. In particular, our LINE Friends characters have recently become popular in China and Hong Kong, where we have established retail stores to leverage their popularity.

Share the fun.  Users on our platform can share mobile games and other applications that they enjoy with their friends directly through a chat or by posting on their Timelines. For example, our users can see how their scores compare against their friends’ scores on their favorite games and send each other in-game purchased virtual items or pictures taken and decorated with Stickers on our camera application. Our LINE Music service enables users to share songs with their friends or add songs to their Timelines, bringing interaction to an otherwise isolated activity.

Enjoy one-stop access.  Users are able to satisfy many of their mobile needs through our life platform, which provides seamless access and navigation across a wide range of applications and services that we provide. Through our smart portal, users in Japan, for example, are able to book taxis, make restaurant reservations,

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check job postings, get tailored news updates, purchase and read comic books and make individual and group calls. We believe that utilization of the LINE messaging application as a smart portal to the applications and services we offer on our life platform serves as an easy and convenient one-stop navigation path for mobile users.

Our Value Proposition for Our Advertisers and Business Partners

Large user base and high level of engagement.  Our platform provides a powerful medium through which advertisers can reach our large user base, thereby amplifying their visibility. By integrating our advertising products with our messaging application, we allow advertisers to benefit from the high level of user engagement driven by communication, which has become indispensable to many people’s daily lives.

Impactful and targeted reach.  We offer advertisers a variety of ways to connect with our users. We offer opt-in products such as Official Accounts, Sponsored Stickers, LINE@ and LINE Point Ads, which we call “messenger ads,” that allow advertisers to engage only those users who have voluntarily initiated such engagement, such as by adding an advertiser as a LINE friend, allowing advertisers to direct their efforts in a more targeted manner. In addition to these user-initiated advertising products, we offer targeted native mobile advertising across our content products such as Timeline, LINE News and LINE Live, which we call “performance ads” and which do not require users to opt in, allowing advertisers to effectively reach a larger number of LINE users.

Business solutions.  The LINE platform provides business partners with solutions beyond simply an advertising medium. For example, Business Connect allows businesses to develop customized applications that can be offered on the LINE platform, and LINE@ enables small- and medium-sized enterprises (“SMEs”) to communicate with customers through LINE chat messages. We focus on developing new opportunities for our business partners to leverage the LINE platform and our user base.

Our Value Proposition for Our Platform Partners

Real relationship-based social distribution.  Content providers on our platform, such as application developers, not only are able to utilize our social distribution platform but also benefit from our real relationship-based user base to maximize their distribution efforts. We believe that real relationship-based sharing of experiences enhances the legitimacy of user recommendations and amplifies the benefits of network effects.

Direct sales platform.  Our content platform functions as a direct publishing platform for various content, including games, video, music and online comic books, which has contributed to LINE becoming a leading game publisher, as well as non-games content publisher, on iOS App Store and Google Play.

Proven distribution channel of scale.  We provide content providers with access to our large and highly engaged global user base and the benefits of our continued expansion. For example, we distribute and maintain a line-up of quality games that are enjoyed by millions of users globally. As of March 31, 2016, our games exceeded a combined 654 million downloads, including 14 games that exceeded 10 million downloads each.

Online to Offline Integration. Our life platform provides traditionally offline service providers, such as taxi booking services, beauty salons, travel agencies and restaurants, the ability to appeal to more LINE users by offering aspects of their services online, increasing user engagement and convenience.

Our Market Opportunity

Mobile Messaging and Social Networking Opportunity

Mobile messaging and social networking are some of the most frequent activities of mobile internet users as they have emerged as a new means of connecting people online. For the two years ended March 31, 2016, according to App Annie, mobile messaging applications constituted four of the top ten applications excluding games based on the number of downloads from iOS App Store and Google Play, combined; two of the remaining six were social networking applications.

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Advertising Market Opportunity

Digital advertising accounted for 20.1% of the total advertising market in Japan in 2015, which was lower than the corresponding percentages in each of the United States, China, the United Kingdom and Germany, according to International Data Corporation (“IDC”).

Source: IDC

From 2015 to 2020, the digital advertising markets in Taiwan, Thailand and Indonesia are projected to grow from $0.5 billion to $0.7 billion, from $0.3 billion to $0.5 billion and from $0.4 billion to $1.0 billion, respectively, according to IDC.

Mobile messaging and social networking platforms enable advertisers to execute highly targeted marketing initiatives and therefore are well-positioned to capture a greater share of advertising spending. The global mobile advertising market is projected to increase from $47.6 billion in 2015 to $173.6 billion in 2020, and the Asian mobile advertising market is projected to increase from $13.5 billion in 2015 to $55.6 billion in 2020 with the Japanese mobile advertising market projected to increase from $2.8 billion in 2015 to $5.3 billion in 2020, according to data released by IDC in April 2016.

Source: IDC

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Content Market Opportunity

We believe that people are increasingly using mobile content to enrich their interpersonal relationships and social experiences. Consumer spending on paid content on mobile devices globally is projected to increase from $75.6 billion in 2015 to $256.0 billion in 2020, according to data released by IDC in April 2016.

Our business benefits from the size and growth of the content market in our four key countries of Japan, Taiwan, Thailand and Indonesia. According to App Annie, Japan was the world’s largest market in terms of the amount of revenue on iOS App Store and Google Play in 2015, combined. According to IDC, from 2015 to 2020, consumer spending on paid content on mobile devices is expected to grow at a compound annual growth rate (“CAGR”) of 3.3%, 16.4% and 29.9%, from $5.2 billion to $6.1 billion, from $2.6 billion to $5.5 billion and from $2.7 billion to $10.0 billion in Taiwan, Thailand and Indonesia, respectively.

Our Strategies

Continue to Grow Our User Base and Enhance User Engagement

We aim to continue to grow our user base with a strategic focus on Asia and markets where we believe we are uniquely positioned to attract new smartphone users and build a leading position. We aim to penetrate targeted markets by introducing localized services and products that appeal to the cultural tastes and differentiated demands of each region. In our largest market of Japan, we plan to commence operations as a Mobile Virtual Network Operator (“MVNO”) in order to promote the use of smartphones in Japan and further increase our potential user base.

We strive to offer services and products that users find useful, reliable and entertaining, in order to enrich the user experience and encourage engagement. We believe that the social and interactive features of our services and products are integral to achieving high levels of user engagement, and continue to develop services and products designed to allow users a broad range of expression and opportunities for interaction. We also continue to introduce a wide range of localized content and services that further encourage users to integrate LINE into their daily lives. For example, LINE Live, a real-time video streaming service, and LINE TV, an on-demand video service, provide information and entertainment catered to each region, and LINE Pay and LINE Points, our mobile payment service and rewards programs, enable users to further converge their online and offline activities using our platform.

Expand and Improve Our Platform for Users and Content Providers

Our LINE platform integrates mobile messaging services with a wide range of social and interactive content. We intend to build upon our strength in mobile messaging services to develop and broaden our spectrum of content offerings on our LINE platform as well as integrate offline services in order to further enrich the user experience. For example, we offer a variety of LINE Games, which are popular among casual game players, and plan to expand our game portfolio to include more immersive role-playing games in order to broaden our appeal to diverse user groups. We are also enabling more cross-application interactions, such as posting LINE Music tracks to a user’s Timeline and sending in-game items from LINE Games to other users. In addition to serving as a portal to other content, our LINE messaging application encourages closer, intimate relationships through free instant messaging combined with the use of fun, expressive Stickers.

Offer a Differentiated Marketing Platform for Advertisers

We continue to enhance and broaden the range of our advertising services and products in order to enhance the appeal of LINE as an advertising platform and ultimately attract more advertisers. We intend to

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strengthen our ability to utilize data analytics and other technologies in order to provide more targeted and interactive advertising solutions that enable advertisers to best promote their brands and products and amplify their visibility and reach. For example, we recently introduced Timeline Ads to allow advertisers to reach a larger number of LINE users by posting advertisements on users’ Timelines, and implemented a new advertisement distribution system based on Hike, a smartphone native advertising platform that utilizes demographic and interest based targeting and real-time bidding to optimize online advertising inventory. We intend to attract additional business partners by introducing new and more comprehensive business solutions, such as Business Connect and LINE@, that help business partners integrate their online and offline advertising to better reach and communicate with customers. For larger businesses, we plan to launch our Official Web App designed to seamlessly incorporate their existing web services with LINE and to allow them to connect with our users with greater ease through automatic login and personalized push notifications. For SMEs, which may have limited or no web service capability, we plan to launch our SME Partnership Program, which is designed to help SMEs achieve better results by engaging with LINE users through aggregation services they already use.

Further Monetize Our User Base and User Traffic

We constantly explore and pursue new opportunities to monetize our user base. We focus our monetization and underlying marketing efforts on markets and regions where we have achieved a leading position. We intend to enhance and develop our content offerings and marketing solutions designed to capture increased monetization opportunities across our platforms.

Pursue Strategic Investments and Alliances

To develop and expand an ecosystem around our LINE platform, we intend to pursue strategic investments, acquisitions and alliances, in order to grow our user base and engagement and to introduce complementary services and products outside of our current content offerings. We also plan to selectively partner with leading content providers and service providers where such partnership would enable us to deliver a range of high-quality services through our LINE platform, leveraging our brand recognition and strong positioning as the leading messaging application in our key markets. For example, we have established a joint venture with transcosmos inc., an outsourcing service provider in Japan, to offer our business accounts customer support solutions utilizing one-to-one LINE chats.

Summary Risk Factors

Our business is subject to numerous risks described in the section entitled “Risk Factors” and elsewhere in this prospectus. You should carefully consider these risks before making an investment. Some of these risks include:

• If we fail to retain existing users or add new users, or if our users decrease their level of engagement with LINE, our revenue, financial results and business may be significantly harmed;

• We may not be successful in our efforts to monetize our products and services;

• Our business operates in an industry that is highly competitive, and competition presents an ongoing threat to the success of our business;

• We may not be successful if we are not able to develop new products and services in a timely and cost-effective manner that address rapidly evolving user preferences, and any new products and services we develop may expose us to new risks;

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• Japan is our largest market in terms of revenue, and our current business and future growth could be materially and adversely affected if we experience a decline in users or user engagement in Japan;

• We generate a substantial portion of our revenues from our advertising products. The loss of our advertisers, reduction in spending by our advertisers or failure to achieve market acceptance of new advertising products and services could negatively affect our business;

• We generate a substantial portion of our revenues from a small number of our mobile games and rely on third-party game developers. We must continue to offer games that attract and retain a significant number of users, or otherwise our business, financial condition and results of operations could be negatively affected;

• We generate a substantial portion of our revenues from our sale of Stickers, which is an evolving market, and if the popularity of Stickers declines from its current level in Japan or is not widely replicated in other markets, our business and future growth could be negatively affected;

• We plan to continue expanding our global operations into markets in which we have limited operating experience and, as a result, may become subject to increased business and economic risks, which could adversely affect our business, financial condition and results of operations;

• Our acquisitions and investments may not be successful in achieving their intended goals and could harm our business, financial condition and results of operations;

• Our parent, NAVER Corporation, offers a variety of products and services to internet users and advertisers, and the absence of contractually delineated spheres of operations means that competition and conflicts of interest between us and NAVER Corporation could arise in the future;

• Overlapping management and business relationships with NAVER Corporation, our parent, may adversely impact our business;

• There will be a gap of three business days between pricing and trading of our ADSs and a gap of four business days between pricing and trading of shares of our common stock, which means you will not be able to sell or otherwise trade shares of our common stock or ADSs during those periods; and

• In the past, we had identified material weaknesses in our internal control over financial reporting, which we have since remediated. If we fail to establish and maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be adversely affected, which could cause investors to lose confidence in our reported financial information and may lead to a decline in the trading price of shares of our common stock and ADSs.

Our History and Corporate Information

We were incorporated as a joint-stock corporation in Japan in September 2000. We began as an online game company and engaged in the development and distribution of online games under the Hangame brand. We subsequently expanded our business to portal services and acquired livedoor Co., Ltd., a Japanese internet portal company, in May 2010.

In June 2011, we launched the LINE messaging application to the public in Japan, followed by launches in other Asian countries. We initially focused on building our user base in Japan, but shortly afterwards began to

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actively conduct marketing efforts in other parts of Asia, where we believed there was significant market potential based on the relatively low level of smartphone penetration in a relatively large and growing population size. In order to more effectively pursue global expansion outside of Japan, we incorporated LINE Plus Corporation, which provides sales and marketing services for the LINE platform outside of Japan, in Korea in February 2013.

In February 2013, our board of directors decided to focus our business on the operation and expansion of the LINE platform and to dispose of our Hangame business along with related entities. We disposed of all of our interest in the Hangame business along with related entities (through the newly created NHN Japan Corporation) in the form of a non-cash dividend to NAVER Corporation in April 2013. In September 2014, as a part of our continued focus on the expansion of the LINE platform, our board of directors decided to dispose of our data management business, which consisted of DataHotel Co., Ltd., a wholly-owned subsidiary, and the data management business was subsequently sold to a subsidiary of NHN Entertainment Corporation, a Korean online game portal company that was spun off from NAVER Corporation in August 2013.

NAVER Corporation currently owns 100% of the outstanding shares of our capital stock. NAVER Corporation is a leading internet company in Korea and listed on the KOSPI Market of the Korea Exchange. See “Principal Shareholder.”

Our principal executive offices are located at Shibuya Hikarie, 27^th Floor, 21-1 Shibuya 2-chome, Shibuya-ku, Tokyo 150-8510, Japan, and our telephone number is +81-3-5155-1008. Our English website address is http://linecorp.com/en/. The information on, or that can be accessed through, our website is not part of this prospectus.

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The Global Offering

Global offering 35,000,000 shares of our common stock (including shares represented by ADSs).

International offering              shares of our common stock, deliverable in the form of shares or ADSs, to be offered in the United States and elsewhere outside Japan.

Japanese offering              shares of our common stock.

Total shares of common stock to be outstanding after the global offering 209,992,000 shares of our common stock (including shares represented by ADSs).

Over-allotment options We have granted to Morgan Stanley & Co. LLC, as representative of the international underwriters, and to Nomura Securities Co., Ltd., as representative of the Japanese underwriters, the options, in the aggregate, to purchase up to an additional 5,250,000 shares of our common stock, in each case solely to cover over-allotments. Such options may be exercised independently of each other. An affiliate of Morgan Stanley & Co. LLC as representative of the international underwriters, and Nomura Securities Co., Ltd., as representative of the Japanese underwriters, will enter into stock borrowing agreements with NAVER Corporation solely to facilitate settlement by the underwriters of over-allotments, if any. The affiliate of Morgan Stanley & Co. LLC and Nomura Securities Co., Ltd. are obligated to return all borrowed shares to NAVER Corporation concurrently with the expiration of the over-allotment options. See “Underwriting.”

Use of proceeds The primary purposes of the global offering are financing our business expansion, which may include investment, acquisition or strategic cooperation to expand our user base or procure additional content for the LINE platform, as well as marketing new products and services and repaying outstanding debt.

Sales to designated purchaser The LINE Employee Shareholding Association will purchase              shares of our common stock in the Japanese offering as a designated purchaser.

Lock-up agreements We, NAVER Corporation, certain of our and our subsidiaries’ directors and officers, the LINE Employee Shareholding Association and Mr. Joon Ho Lee, our former director, have agreed with the joint global coordinators (and, in the case of the LINE Employee Shareholding Association, the joint global coordinators and the Japanese joint lead managers named in the Japanese underwriting agreement) to restrictions on any sale of shares of our common stock or ADSs during the period beginning on the date of this prospectus and ending on the date that is 180 days from and including the date of delivery of the shares in the global offering, subject to the limited exceptions described in “Underwriting.”

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Timing of global offering The following is the anticipated timetable of various events in the global offering (Tokyo time, unless otherwise indicated):

Pricing of global offering	July 11, 2016
Japanese subscription period commences	July 12, 2016
Japanese subscription period closes	July 13, 2016
Trading of ADSs commences on the New York Stock Exchange	July 14, 2016 (New York time)
Delivery of shares through JASDEC	July 15, 2016
Trading of shares of our common stock commences on the Tokyo Stock Exchange	July 15, 2016
Delivery of ADSs through the facilities of The Depository Trust Company	July 15, 2016 (New York time)

Trading of ADSs on the New York Stock Exchange will not commence until three business days from the date of pricing of the global offering. Trading of shares of our common stock on the Tokyo Stock Exchange will then commence the business day following commencement of trading of ADSs on the New York Stock Exchange.

In addition, delivery of shares of our common stock and ADSs is expected to occur later than three business days after the date of pricing of the global offering. Because of the longer settlement period, purchasers who wish to trade shares of our common stock or ADSs on or soon after pricing may need to specify alternative settlement arrangements to prevent a failed settlement.

The closing for the sale of shares or ADSs in the international offering is conditioned upon the closing of the Japanese offering and vice versa.

The ADSs Each ADS represents one share of our common stock. The ADSs will be evidenced by American depositary receipts (“ADRs”).

The depositary will be the holder of the shares of our common stock underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time.

You may surrender your ADSs to the depositary to withdraw the shares of our common stock underlying your ADSs. The depositary will charge you a fee for such an exchange.

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We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or that materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement, as amended, if you continue to hold your ADSs.

To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.

Listings We will apply for listing of the ADSs on the New York Stock Exchange under the symbol “LN.” We have received approval to list and trade shares of our common stock on the Tokyo Stock Exchange under the securities identification code of “3938.”

Depositary for the ADSs JPMorgan Chase Bank, N.A.

Controlled company NAVER Corporation, our parent currently holding 100% of the outstanding shares of our capital stock and which after our initial public offering will control approximately 83.3% (before exercise of any over-allotment options) of the voting power of our outstanding capital stock, will have the ability to control the outcome of matters submitted to our shareholders for approval, including the election of our directors and significant corporate transactions such as a merger. Because NAVER Corporation controls a majority of the voting power of our outstanding capital stock, we will be a “controlled company” within the meaning of the New York Stock Exchange corporate governance rules. As a controlled company, we are eligible to and, in the event we no longer qualify as a foreign private issuer, we intend to elect not to comply with certain of the New York Stock Exchange corporate governance standards.

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Summary Financial and Operating Data

You should read the summary financial and operating data below in conjunction with “Unaudited Pro Forma Financial Information,” “Selected Historical Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements and related notes included in this prospectus.

The consolidated statement of financial position data as of December 31, 2014 and 2015 and the consolidated statement of profit or loss data for the years ended December 31, 2013, 2014 and 2015 have been derived from our audited consolidated financial statements and related notes included in this prospectus. These audited consolidated financial statements and related notes have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). The interim condensed consolidated statement of financial position data as of March 31, 2016 and the interim condensed consolidated statement of profit or loss data for the three months ended March 31, 2015 and 2016 have been derived from our unaudited consolidated financial statements and related notes included in this prospectus. The unaudited interim condensed consolidated financial statements and related notes have been prepared on the same basis as the audited consolidated financial statements and related notes and reflect, in the opinion of management, all adjustments of a normal recurring nature that are necessary for a fair statement of unaudited interim condensed consolidated financial statements.

The information set forth below is not necessarily indicative of the results of future operations, and the results in the first three months of the year ending December 31, 2016 are not necessarily indicative of results to be expected for the full year or any other period.

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Consolidated Statement of Profit or Loss Data

	For the year ended December 31,												For the three months ended March 31,
	2013			2014			2015			2015(1)			2015			2016			2016(1)
	(in millions of yen and millions of U.S. dollars, except share and per share data)
Revenues and other operating income:
Revenues	¥	39,586		¥	86,366		¥	120,406		$	1,071		¥	28,104		¥	33,456		$	298
Other operating income		69			296			474			4			117			660			5
Total revenues and other operating income		39,655			86,662			120,880			1,075			28,221			34,116			303
Operating expenses:
Payment processing and licensing expenses		(9,606	)		(20,598	)		(28,742	)		(256	)		(6,225	)		(7,750	)		(69	)
Employee compensation expenses		(8,490	)		(18,289	)		(35,572	)		(316	)		(7,574	)		(9,393	)		(84	)
Marketing expenses		(17,202	)		(18,069	)		(16,596	)		(148	)		(4,780	)		(2,307	)		(21	)
Infrastructure and communication expenses		(2,537	)		(4,492	)		(7,712	)		(69	)		(1,663	)		(1,782	)		(16	)
Authentication and other service expenses		(4,914	)		(7,874	)		(12,133	)		(108	)		(2,398	)		(2,897	)		(26	)
Depreciation and amortization expenses		(1,330	)		(2,370	)		(3,733	)		(33	)		(764	)		(968	)		(9	)
Other operating expenses		(3,313	)		(8,555	)		(14,432	)		(128	)		(3,393	)		(3,681	)		(31	)
Total operating expenses		(47,392	)		(80,247	)		(118,920	)		(1,058	)		(26,797	)		(28,778	)		(256	)
Profit (loss) from operating activities		(7,737	)		6,415			1,960			17			1,424			5,338			47
Finance income		67			86			71			1			23			27			0
Finance costs		(39	)		(137	)		(106	)		(1	)		(24	)		(24	)		(0	)
Share of loss of associates		(243	)		(167	)		(205	)		(2	)		(23	)		(63	)		(1	)
Gain (loss) on foreign currency transactions, net		(373	)		66			(520	)		(5	)		(64	)		(569	)		(5	)
Other non-operating income		7			—			157			1			14			21			0
Other non-operating expenses		—			—			(1,887	)		(16	)		(165	)		(587	)		(4	)
Profit (loss) before tax from continuing operations		(8,318	)		6,263			(530	)		(5	)		1,185			4,143			37
Income tax benefits (expenses)		648			(7,151	)		146			1			(2,942	)		(2,737	)		(24	)
Profit (loss) for the period from continuing operations		(7,670	)		(888	)		(384	)		(4	)		(1,757	)		1,406			13
Profit (loss) from discontinued operations, net of tax		1,279			2,892			(7,588	)		(67	)		(148	)		(1,640	)		(15	)
Profit (loss) for the period	¥	(6,391	)	¥	2,004		¥	(7,972	)	$	(71	)	¥	(1,905	)	¥	(234	)	$	(2	)
Attributable to:
The shareholder of the Company		(764	)		4,207			(7,582	)		(68	)		(1,888	)		(122	)		(1	)
Non-controlling interests(2)		(5,627	)		(2,203	)		(390	)		(3	)		(17	)		(112	)		(1	)
Earnings per share:
Basic profit (loss) for the period attributable to the shareholder of the Company	¥	(4.36	)	¥	24.05		¥	(43.33	)	$	(0.39	)	¥	(10.79	)	¥	(0.70	)	$	(0.01	)
Diluted profit (loss) for the period attributable to the shareholder of the Company		(4.36	)		22.14			(39.12	)		(0.35	)		(10.79	)		(0.63	)		(0.01	)
Earnings per share from continuing operations
Basic profit (loss) from continuing operations attributable to the shareholder of the Company		(11.67	)		7.52			0.04			0.00			(9.95	)		8.67			0.08
Diluted profit (loss) from continuing operations attributable to the shareholder of the Company		(11.67	)		6.92			0.03			0.00			(9.95	)		7.79			0.07
Earnings per share from discontinued operations
Basic profit from discontinued operations attributable to the shareholder of the Company		7.31			16.53			(43.37	)		(0.39	)		(0.84	)		(9.37	)		(0.09	)
Diluted profit from discontinued operations attributable to the shareholder of the Company		7.31			15.22			(39.15	)		(0.35	)		(0.84	)		(8.42	)		(0.08	)
Basic weighted average shares outstanding		174,992,000			174,992,000			174,992,000			174,992,000			174,992,000			174,992,000			174,992,000
Diluted weighted average shares outstanding		174,992,000			190,024,846			193,797,566			193,797,566			174,992,000			194,745,768			194,745,768

(1) For convenience, the Japanese yen amounts are expressed in U.S. dollars at the rate of ¥112.42 per US$1.00, the noon buying rate of the Federal Reserve Bank of New York for Japanese yen in effect on March 31, 2016.

(2) For each of the years ended December 31, 2013 and 2014, the non-controlling interests were mainly held by NAVER Corporation, our shareholder.

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Consolidated Statement of Financial Position Data

	As of December 31,								As of March 31,
	2014		2015			2015			2016			2016
	(in millions of yen and millions of U.S. dollars)
Cash and cash equivalents	¥	20,254	¥	33,652		$	299		¥	35,082		$	312
Trade and other receivables		24,223		27,248			242			23,632			210
Property and equipment		9,656		10,501			93			9,974			89
Total assets		85,664		122,159			1,087			118,621			1,055
Total liabilities		73,153		104,626			931			99,397			884
Total shareholder’s equity		12,511		17,533			156			19,224			171
Equity attributable to the shareholder of the Company		12,496		17,743			158			19,616			174
Equity attributable to non-controlling interests		15		(210	)		(2	)		(392	)		(3	)

Supplemental Financial Information

	For the year ended December 31,								For the three months ended March 31,
	2013		2014		2015		2015		2015		2016		2016
	(in millions of yen and millions of U.S. dollars)
Adjusted EBITDA(1)	¥	(5,603)	¥	11,760	¥	16,906	$	150	¥	4,475	¥	8,800	$	78
Adjusted profit (loss) for the period(1)		(6,911)		1,975		10,266		91		411		3,790		34

(1) See “— Non-IFRS Measures” below.

Non-IFRS Measures

We use non-IFRS financial measures such as adjusted EBITDA and adjusted profit (loss) for the period in evaluating our financial and operating results and for financial and operational decision making purposes.

We believe that adjusted EBITDA and adjusted profit (loss) for the period help identify underlying trends in our business that could otherwise be distorted by the effect of the income or expenses that we exclude in calculating adjusted EBITDA and adjusted profit (loss) for the period. We believe that adjusted EBITDA and adjusted profit (loss) for the period provide useful information about our financial and operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision making.

Adjusted EBITDA and adjusted profit (loss) for the period should not be considered in isolation or construed as an alternative to profit (loss) from operating activities, profit (loss) for the period, cash flows or any other measure of performance or as an indicator of our financial or operating performance. Adjusted EBITDA and adjusted profit (loss) for the period presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Adjusted EBITDA represents profit (loss) from operating activities (which does not include finance income, finance costs, share of profit or loss of associates, gain (loss) on foreign currency transactions, net, other non-operating income and expenses, income tax benefits or expenses and profit (loss) from discontinued operations, net of tax) before certain non-cash expenses, consisting of share-based compensation expenses and depreciation and amortization expenses.

Adjusted profit (loss) for the period represents profit (loss) for the period before share-based compensation expenses, tax impact of share-based compensation expenses and profit (loss) from discontinued operations, net of tax.

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The table below sets forth a reconciliation of our profit (loss) from operating activities to adjusted EBITDA for the periods indicated:

	For the year ended December 31,									For the three months ended March 31,
	2013			2014		2015		2015		2015		2016		2016
	(in millions of yen and millions of U.S. dollars)
Profit (loss) from operating activities	¥	(7,737	)	¥	6,415	¥	1,960	$	17	¥	1,424	¥	5,338	$	47
Add: Share-based compensation expenses		804			2,975		11,213		100		2,287		2,494		22
Add: Depreciation and amortization expenses		1,330			2,370		3,733		33		764		968		9
Adjusted EBITDA	¥	(5,603	)	¥	11,760	¥	16,906	$	150	¥	4,475	¥	8,800	$	78

The following table sets forth a reconciliation of our profit (loss) for the period to adjusted profit (loss) for the periods indicated:

	For the year ended December 31,												For the three months ended March 31,
	2013			2014			2015			2015			2015			2016			2016
	(in millions of yen and millions of U.S. dollars)
Profit (loss) for the period	¥	(6,391	)	¥	2,004		¥	(7,972	)	$	(71	)	¥	(1,905	)	¥	(234	)	$	(2	)
Add: Share-based compensation expenses		804			2,975			11,213			100			2,287			2,494			22
Subtract: Tax impact of share-based compensation expenses		(45	)		(112	)		(563	)		(5	)		(119	)		(110	)		(1	)
Subtract: Profit (loss) from discontinued operations, net of tax		(1,279	)		(2,892	)		7,588			67			148			1,640			15
Adjusted profit (loss) for the period	¥	(6,911	)	¥	1,975		¥	10,266		$	91		¥	411		¥	3,790		$	34

Summary Operating Data

	For the month of
	Mar. 2013		Jun.  2013		Sep. 2013		Dec. 2013		Mar.  2014		Jun. 2014		Sep. 2014		Dec. 2014		Mar. 2015		Jun. 2015		Sep. 2015		Dec. 2015		Mar. 2016
	(in millions)
Total MAUs(1)		75		94		125		137		159		170		179		190		205		211		212		215		218
Japan		31		35		39		41		45		47		49		51		54		55		57		58		61
Taiwan, Thailand and Indonesia		22		28		34		38		44		49		54		62		70		76		81		87		91
Total MPUs(2)		2.6		3.7		3.7		4.1		5.4		6.7		7.0		8.2		7.5		7.9		8.2		8.8		8.4

(1) Represents the number of user accounts that (i) accessed the LINE messaging application or any LINE Game through mobile devices; (ii) sent messages through the LINE messaging application from personal computers; or (iii) sent messages through any other LINE application from mobile devices, in each case at least once during the month indicated.

(2) Represents the number of user accounts that made (i) a payment for Stickers, Themes or LINE Out on the LINE messaging application through mobile devices or personal computers or (ii) a payment relating to any LINE Game through mobile devices, in each case at least once during the month indicated.

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Conventions Used in This Prospectus

Except where the context otherwise requires or unless otherwise specified, and for purposes of this prospectus only:

• “daily active users” or “DAUs” refers to the number of user accounts that (i) accessed the LINE messaging application or any LINE Game through mobile devices; (ii) sent messages through the LINE messaging application from personal computers; or (iii) sent messages through any other LINE application from mobile devices, in each case at least once during a given day;

• “Japanese yen,” “yen” or “¥” refers to the legal currency of Japan;

• “Korea” refers to the Republic of Korea;

• “Korean won,” “Won” or “￦” refers to the legal currency of Korea;

• “LINE,” “we,” “us,” “our company,” “the Company” or “our” refers to LINE Corporation and its consolidated subsidiaries taken as a whole, as well as the messaging application and other products of LINE Corporation;

• “messages” refers to text messages, voice messages, Stickers and photo, video, voice and text files sent and received, as well as free voice and video calls made and received, in each case using the LINE messaging application from either mobile devices or personal computers or using any LINE Game or any other LINE application from mobile devices;

• “monthly active users” or “MAUs” in a given month refers to the number of user accounts that (i) accessed the LINE messaging application or any LINE Game through mobile devices; (ii) sent messages through the LINE messaging application from personal computers; or (iii) sent messages through any other LINE application from mobile devices, in each case at least once during that month;

• “monthly paying users” or “MPUs” in a given month refers to the number of user accounts that made (i) a payment for Stickers, Themes or LINE Out on the LINE messaging application through mobile devices or personal computers or (ii) a payment relating to any LINE Game through mobile devices, in each case at least once during that month, and average MPUs for a particular period is the average of the MPUs at each month-end during that period;

• “platform partners” refers to application developers and other providers of content offered on the LINE platform;

• “stickers” refers to larger, cartoon-like emoticons that depict emotions and actions of characters, which are exchanged as part of chat messages on mobile messaging applications; and

• “U.S. dollar,” “US$” or “$” refers to the legal currency of the United States.

Unless we indicate otherwise, all information in this prospectus assumes no exercise by Morgan Stanley & Co. LLC, as representative of the international underwriters, and by Nomura Securities Co., Ltd., as representative of the Japanese underwriters, of their options to purchase up to 5,250,000 additional shares of our common stock, in the aggregate.

For your convenience, this prospectus contains translations of certain Japanese yen amounts into U.S. dollars at the noon buying rate of the Federal Reserve Bank of New York for Japanese yen in effect on March 31, 2016, which was ¥112.42 per US$1.00. On June 3, 2016, the noon buying rate was ¥106.88 per US$1.00. See “Exchange Rates.”

Any discrepancies in any table between the totals and the sums of the amounts listed are due to rounding.

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RISK FACTORS

Investing in shares of our common stock or ADSs involves a high level of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the financial statements and the related notes, before deciding whether to invest in shares of our common stock or ADSs. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. These risk factors are not presented in the order of importance or probability of occurrence. If any of the following risks actually occurs, our business, financial condition and results of operations could be materially and adversely affected. In that event, the market prices of shares of our common stock and ADSs could decline, and you could lose part or all of your investment.

Risks Related to Our Business and Industry

If we fail to retain existing users or add new users, or if our users decrease their level of engagement with LINE, our revenue, financial results and business may be significantly harmed.

The size of our user base and our users’ level of engagement are critical to our success. From our inception, we experienced our largest user growth in Japan, Taiwan, Thailand and Indonesia. While we achieved significant user growth in other parts of the world in 2013 and 2014, beginning in early 2015, we have refocused our marketing efforts on key countries in line with our increased emphasis on monetization in markets where we have achieved leading market positions. While this effort has led to a continued increase in our MAUs in the four key countries of Japan, Taiwan, Thailand and Indonesia as well as overall MAUs, it has at the same time contributed to a significant decrease in total MAUs outside of the four key countries, and there may be further decreases in the future. Our financial performance has been and will continue to be significantly determined by our success in adding, retaining and engaging active users. The growth rate of our active users has declined over time as the size of our active user base has increased and as we achieved higher penetration rates in our key markets. Our business performance will also become increasingly dependent on our ability to increase levels of user engagement in current and new markets. If people do not perceive our products and services to be useful, reliable or trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency, duration or level of their engagement. A number of other providers of mobile messaging applications and online companies that achieved early popularity have seen the sizes of their user bases or levels of engagement subsequently decline, in some cases precipitously.

Any number of factors could negatively affect user retention, growth or engagement, including if:

• we are unable to continue to offer products and services that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance, particularly in markets that we are targeting for expansion;

• users increasingly engage with competing products or services, particularly communication tools and mobile games;

• we are unable to provide a compelling and intuitive user experience and environment, particularly relating to the quality, volume, design and layout of the content and advertisements delivered on the LINE platform;

• we fail to provide adequate customer service to users or advertisers or maintain relationships with key platform partners such as mobile game developers;

• there are increased user concerns related to privacy and information sharing, safety or security;

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• there are adverse changes in our products or services that are mandated by legislation, regulatory authorities or legal proceedings;

• technical or other problems prevent us from delivering our products and services in a rapid and reliable manner or otherwise negatively affect the user experience; or

• we fail to maintain our brand image or our reputation is damaged.

There is no guarantee that we will not experience erosion of our active user base or decline in engagement levels. A decrease in user retention, growth or engagement could reduce our direct sales to users and render LINE less attractive to our platform partners and advertisers, thereby reducing our revenues from them, which may have a material and adverse impact on our business, financial condition and results of operations.

We may not be successful in our efforts to monetize our products and services.

Our ability to monetize our user base and user engagement is critical to our business and financial performance. We currently generate a substantial portion of our revenues from LINE Games, Stickers and our advertising products and services, including Official Accounts, Sponsored Stickers and LINE Point Ads. A substantial majority of these revenues come from our operations in Japan. We plan to continue to invest in product development and explore additional monetization opportunities in our largest markets such as Japan, Taiwan, Thailand and Indonesia and in other markets, but there is no guarantee that these efforts will be successful. Furthermore, there is no assurance that new products and services we introduce will generate the level of revenues we anticipate. We may have little or no success implementing our new advertisement distribution platform based on Hike, a native mobile advertising platform in Japan operated by our consolidated subsidiary, M.T. Burn Inc., (“M.T. Burn”) or monetizing our new services, including LINE Mobile, Business Platform and LINE Pay Card, either initially or at all. In addition, our monetization efforts could have a negative effect on user engagement if such efforts discourage users from using our existing products and services. If our monetization efforts are not as successful as we anticipate, we may not be able to maintain or grow our revenue and our financial condition and results of operations could be adversely affected.

Users and advertisers in certain markets are not as familiar with new forms of digital advertising, such as our Official Accounts and Sponsored Stickers services. In newer markets, we are investing to convince users and advertisers of the benefits of our products and services. However, we expect that monetizing efforts in many of these new markets may require a significant investment of time and resources, which may not result in sufficient, or any, returns to recover such investment.

Our business operates in an industry that is highly competitive, and competition presents an ongoing threat to the success of our business.

We compete against various companies to attract and engage users, some of which have greater financial resources and substantially larger user bases. We face direct competition from mobile messaging service providers such as Facebook’s WhatsApp and Messenger, Tencent’s WeChat, Telegram Messenger and BlackBerry Messenger, as well as mobile messaging services for specific operating platforms such as Apple’s iMessage. We also face significant competition in almost every aspect of our business, including from companies such as Facebook, Google, Twitter and Yahoo Japan, which offer a variety of social network services and products as well as online advertising services. We also face competition from game companies, mobile telecommunications companies, e-commerce companies, music streaming companies and other internet-related companies that offer products and services that may compete with specific features of the LINE messaging service or other applications that we offer. We also compete with traditional and online media businesses for a share of advertisers’ budgets and in the development of the tools and systems for managing and optimizing advertising campaigns. As we introduce new products and our existing products evolve, or as other companies introduce new products and services, we may become subject to additional competition.

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Scale benefits and other advantages may allow our competitors to respond more effectively than us to a rapidly evolving environment in the mobile internet industry, including industry consolidation that may result in increased competition. Our competitors may develop products, features or services that are similar to ours or that achieve greater market acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. In addition, platform partners may use information shared by our users through the LINE platform in order to develop products or features that compete with us. Certain competitors, including Facebook and Google, could use strong positions in one or more markets to gain competitive advantages against us in areas where we operate including: by integrating competing messaging applications or features into products they control such as social networking platforms, search engines, web browsers or mobile device operating systems; by making strategic acquisitions; or by making access to LINE more difficult. As a result, our competitors may acquire and engage users at the expense of our user base or our users’ engagement with our products and services, which may negatively affect our business, financial condition and results of operations.

We may not be successful if we are not able to develop new products and services in a timely and cost-effective manner that address rapidly evolving user preferences, and any new products and services we develop may expose us to new risks.

We compete in a highly competitive industry characterized by rapidly changing products and services, evolving industry standards and continual improvements in performance characteristics and product features. Rapidly evolving user preferences may lead to certain products and services becoming less competitive, or even obsolete. Accordingly, our success depends greatly on our ability to anticipate and respond to emerging user preferences and demands by ensuring continuing and timely development of new, as well as enhancements to existing, products and services. In order to respond to such preferences and demands, we may develop and introduce new products and services, including in areas where we have little or no prior development or operating experience.

We have previously developed and introduced new products and services that have failed to perform as anticipated, and we may do so in the future. For example, in 2013, we launched LINE Mall, an online marketplace, in Japan as a strategic initiative to broaden the spectrum of products and services offered on our platform. LINE Mall allowed our users to shop for goods and services from registered sellers, and we purchased a limited amount of inventory of goods through sourcing agents, engaged third-party delivery services and sold such goods directly to our users. Largely due to our lack of experience in online marketplace operations, however, we failed to develop a niche market for LINE Mall in the highly competitive mobile e-commerce market. LINE Mall was closed on May 31, 2016.

Some of our strategic initiatives may not directly or immediately generate revenue, but we expect they will enhance our attractiveness to users, platform partners and advertisers as well as contribute to increasing our active user base. Our new products and services may bring us into contact, directly or indirectly, with entities that are not within our traditional customer base or result in competing with entities that are our existing business partners. Such business activities expose us to new risks, including additional regulatory scrutiny as well as credit-related and other operational risks. For example, we plan to enter into a partnership with a company in the NTT group in order to commence operations as an MVNO and provide stable and affordably priced plans in Japan by using the infrastructure and communication system of NTT Docomo Inc. (“NTT Docomo”), a leading Japanese mobile phone service provider. We expect to launch the LINE Mobile MVNO service in the second half of 2016. However, we cannot be certain that our MVNO service will be profitable or competitive in the long term. As we will utilize the wireless communication networks of a third-party mobile phone operator, the success of our MVNO service will also largely depend on their wireless facilities, wireless network technologies and government authorizations. There can be no assurance that we will succeed in developing products and services that eventually become widely accepted, or that we will be able to timely release products and services that are commercially viable. Our inability to do so would have an adverse impact on our business, financial condition and results of operations.

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Japan is our largest market in terms of revenue, and our current business and future growth could be materially and adversely affected if we experience a decline in users or user engagement in Japan.

We are incorporated in Japan, and Japan is our largest market in terms of revenue. We also have the broadest product and service offerings in Japan, and we generated 86.9%, 75.8%, 70.4% and 71.1% of our revenues in Japan in 2013, 2014, 2015 and the first three months of 2016, respectively. We expect to continue to derive a substantial portion of our revenues from Japan in the near future. In general, a higher proportion of LINE users in Japan are paying users than LINE users in other countries, and our continuing growth will be dependent, at least in part, on maintaining or increasing revenues from users in Japan. In recent quarters, our active user growth rate in Japan has slowed, and our business performance in Japan will become increasingly dependent on our ability to increase the level of user engagement and our ability to further monetize users’ engagement with LINE. Our current business and future growth could be materially and adversely affected if we experience a decline in users or user engagement in Japan.

Due to the importance of the Japanese market to our business, we are also subject to macroeconomic risks specific to Japan. See “— A downturn in macroeconomic conditions may result in reduced demand for our products and services.”

We generate a substantial portion of our revenues from our advertising products. The loss of our advertisers, reduction in spending by our advertisers or failure to achieve market acceptance of new advertising products and services could negatively affect our business.

We generate a substantial portion of our revenues from third parties advertising on LINE, through their Official Accounts, Sponsored Stickers or LINE Point Ads, as well as from advertising on our livedoor and NAVER Matome (“Matome”) portals. In recent months, we have also generated an increasing portion of our advertising revenues from our Timeline Ads. As is common in the industry, our advertisers typically do not have long-term advertising commitments with us. Many of our advertisers spend only a relatively small portion of their overall advertising budget with us. In addition, some of our advertisers may view our products, such as Official Accounts, as experimental or unproven. Advertisers may not continue to do business with us, or they may reduce the prices or spending they are willing to pay to advertise with us, if we do not deliver advertisements and other commercial content in an effective manner, or if they do not believe that their investment in our advertising products and services will generate a competitive return relative to alternative methods of advertising.

In addition, our ability to increase our revenue will depend in large part on our ability to create successful new advertising products. We may introduce new and unproven advertising products and services, using advertising technology with which we have little or no prior development or operating experience. For example, we recently introduced advertisements on Timeline, LINE News and LINE Live, and a new advertisement distribution system based on Hike. If new advertising products and services fail to engage advertisers, we may fail to generate sufficient revenue to justify investment and our business may be adversely affected.

Our advertising revenue could also be adversely affected by a number of other factors, including:

• decreases in the number of active users and their engagement;

• our inability to improve our analytics and measurement solutions that demonstrate the value of advertising on LINE or our portals;

• our inability to create new products or services that sustain or increase the value of advertising on LINE or our portals;

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• product changes we may make that reduce the frequency or relative prominence of advertisements and other commercial content delivered through the LINE platform or our portals;

• our inability to increase the relevance of targeted ads shown to users;

• our inability to increase advertisers’ demand and inventory;

• loss of advertising market share to our competitors;

• adverse legal developments relating to advertising;

• adverse changes in the way online advertising on personal computers or mobile devices is priced;

• the degree to which users opt out of certain types of targeted ads;

• the impact of new technologies that could block or obscure the display of some types of advertisements and other commercial content; and

• the impact of macroeconomic conditions and conditions in the advertising industry in general.

The occurrence of any of these or other factors could result in a reduction in demand for advertisements, which may reduce the prices we receive for our advertisements, or cause advertisers to stop advertising with us altogether, either of which would negatively affect our business, financial condition and results of operations.

We generate a substantial portion of our revenues from a small number of our mobile games and rely on third-party game developers. We must continue to offer games that attract and retain a significant number of users, or otherwise our business, financial condition and results of operations could be negatively affected.

We offer various games on our LINE platform and they accounted for a significant portion of our revenues in 2013, 2014, 2015 and the first three months of 2016. We rely primarily on third-party game developers for the games offered on the LINE platform. As of March 31, 2016, we offered 56 games, of which 50 games were developed by third-party game developers and 6 games were developed by us. Accordingly, we believe that maintaining successful partnerships with, and the ability to attract and select from, third-party game developers are critical to our success. Existing and prospective mobile game developers may not be successful in developing games that create and maintain user engagement. Additionally, although our general policy is to enter into new contractual arrangements with third-party game developers to become the exclusive distributor of their games in a particular market, to the extent such arrangements are not yet in place, developers may choose to provide their content on other platforms, including mobile platforms controlled by our competitors, rather than offering them on the LINE platform. Our failure to maintain good relationships with third-party game developers or attract new developers could adversely affect our business, financial condition and results of operations.

Historically, we have depended on a small number of games for a majority of our mobile game revenues, and we expect that this dependence will continue for the foreseeable future. Our growth depends on our ability to consistently launch new games, whether developed internally or by third-party game developers, that achieve significant popularity, as well as to upgrade popular games with new features that our users find attractive. It is difficult to anticipate user preferences or demand, particularly as we procure new games in new genres or new markets, and constant enhancement requires the investment of significant resources. For example, in recent quarters MAUs of LINE games have decreased and while we have been able to maintain consistent MPUs of LINE games, there is no guarantee that we will be able to continue to do so. The success and performance of new and existing games is volatile and difficult to predict. If we fail to offer attractive in-game items, make unpopular changes to existing in-game items or offer games that do not encourage purchases of in-game items or upgrades of game versions, or if we fail to successfully launch new games that attract and retain a significant number of users or if upgrades and launches of new titles are delayed, revenues from our games will decrease and our business, financial condition and results of operations could be materially harmed.

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We generate a substantial portion of our revenues from our sale of Stickers, which is an evolving market, and if the popularity of Stickers declines from its current level in Japan or is not widely replicated in other markets, our business and future growth could be negatively affected.

We generate a substantial portion of our revenues from the sale of Stickers featuring characters developed by us as well as licensed from third parties, including our users who design and offer Stickers on Creators Market. The sale of Stickers is a rapidly evolving market, and the growth of the market for Stickers and the level of demand for, and market acceptance of, our Stickers are subject to a high degree of uncertainty. In particular, a substantial majority of revenues from the sale of our Stickers has been derived from sales in Japan, and there can be no assurance that such products will achieve a similar level of market acceptance elsewhere. Over time, users in Japan may also lose interest in purchasing new Stickers. Accordingly, revenue growth from our sale of Stickers depends to a large extent on our ability to consistently launch new and different types of Stickers that achieve significant popularity and effectively respond to changes in consumer demographics and public tastes and preferences. We also depend on third-party character developers and licensors for content that accounts for a substantial portion of our Sticker sales, and we expect that this dependence will continue for the foreseeable future. A decline in the popularity of our Stickers would negatively affect our business, financial condition and results of operations.

We plan to continue expanding our global operations into markets in which we have limited operating experience and, as a result, may become subject to increased business and economic risks, which could adversely affect our business, financial condition and results of operations.

We believe LINE is the leading mobile messaging application in Japan, Taiwan and Thailand in terms of number of users, and we have obtained substantial numbers of users in other parts of the world, including Indonesia, Hong Kong, Singapore, Malaysia and Myanmar in Asia, Egypt, Iran and Saudi Arabia in the Middle East, and the United States. We expect to continue to expand our global operations into new countries and to provide our offerings in additional languages. However, expansion of our operations abroad may be difficult due to the presence of established competitors in such markets. In addition, managing our business and expanding our operations globally require considerable management attention and resources and are subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems and commercial markets. Global expansion has required and will continue to require us to invest significant funds and other resources, and there can be no assurance that we will successfully achieve our growth objectives.

Operating globally subjects us to new risks and may increase risks that we currently face, including risks associated with:

• providing an engaging user experience while operating in different languages and cultures, and localizing our products, services, content and features to ensure that they are culturally attuned to the markets where they are offered;

• increased competition from mobile applications and internet services that have strong positions in particular markets and may continue to expand their geographic footprint;

• different and potentially lower levels of user growth, user engagement and demand for online advertising in new and emerging geographies, resulting in greater difficulty in monetizing our products and services;

• recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices;

• different levels of telecommunications infrastructure in developing countries that may create challenges in offering our products and services;

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• payment processing systems;

• compliance with applicable foreign laws and regulations, including laws and regulations with respect to economic sanctions and export controls, anti-corruption, anti-bribery and anti-kickback, privacy and consumer protection that may conflict with local customs and practices in some jurisdictions in which we operate and sell our products, and the risk of penalties if our practices are deemed not to be in compliance;

• political, social and economic instability in some countries;

• double taxation of our global earnings and potentially adverse tax consequences due to changes in the tax laws of Japan or other jurisdictions in which we operate; and

• higher costs of conducting business globally, including increased accounting, travel, infrastructure and legal compliance costs.

If we are unable to manage the complexity of our global operations successfully, our business, financial condition and results of operations could be adversely affected.

If we are not able to maintain and enhance our LINE brand, or if events occur that damage our reputation and brand, our relationships with our users, platform partners and advertisers may be harmed, which may negatively affect our business, financial condition and results of operations.

Since its introduction in June 2011, LINE has rapidly grown into a global platform for mobile messaging services and content distribution used in more than 230 countries, and we believe that the LINE brand has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brand is critical to expanding our user base, platform partners and advertisers. Many of our new users are referred by existing users, and therefore we strive to ensure that our users are satisfied with our products and services and otherwise remain favorably inclined toward LINE. Maintaining and enhancing our brand will depend largely on our ability to continue to provide simple, user-friendly, reliable and innovative products and services, which we may not do successfully. We may introduce new products or terms of service that users do not like, which may negatively affect our brand. It may also negatively affect our brand if users do not have a positive experience using our platform partners’ applications offered on LINE as well as websites linked with LINE. We have in the past experienced, and we may continue to experience, media, legislative or regulatory scrutiny of our decisions regarding user privacy or other issues, including our measures to protect minors, which may adversely affect our reputation and brand. We may also fail to provide adequate customer service, which could erode confidence in our brand. Our brand may also be negatively affected by attacks from our competitors, by negative publicity about the actions of users that are deemed to be hostile, illegal or inappropriate to other users, by third-party content providers acting inappropriately with respect to the LINE platform, by users acting under false identities, by any regulatory developments designed to address such risks, or due to legal proceedings. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. If we fail to successfully promote and maintain the LINE brand or if we incur excessive expenses in this effort, our business, financial condition and results of operations may be adversely affected.

We rely primarily on Apple App Store and Google Play as the channels for downloads of LINE and applications offered on the LINE platform as well as processing of payments, and any deterioration in our relationship with either of them may negatively impact our business.

We rely primarily on Apple App Store and Google Play as the channels for downloads of LINE and applications offered on the LINE platform as well as the processing of payments for our products and services. We expect that we will continue to rely on Apple App Store and Google Play for downloads of our applications as well as most of the payment processing for our products and services. Accordingly, we believe that maintaining successful partnerships with Apple and Google is critical to our success.

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The operating policies of Apple or Google have an impact on the accessibility of our products and services. In addition, our pricing strategy is impacted by changes in the payment processing fees charged by Apple or Google. Our inability to pass along increases in the payment processing fees charged by Apple or Google to our users on a timely basis or a decrease in paying user engagement due to a price increase may negatively impact our net revenue or profit margin. If we fail to maintain good relationships with Apple or Google, it may adversely impact our ability to continue to offer our products and services or effect payment processing, which in turn could have a material adverse impact on our business.

We have incurred significant operating losses in the past, and our ability to achieve profitability is uncertain.

We have incurred significant operating losses in the past. We recorded loss for the year of ¥6,391 million in 2013. We recorded profit for the year of ¥2,004 million in 2014 but recorded loss for the year of ¥7,972 million in 2015 and loss for the period of ¥234 million in the first three months of 2016, and we had an accumulated deficit of ¥19,301 million as of March 31, 2016. Although our revenues have grown rapidly, increasing from ¥39,586 million in 2013 to ¥86,366 million in 2014, ¥120,406 million in 2015 and ¥33,456 million in the first three months of 2016, our revenue growth rate has slowed recently and may do so in the future due to a variety of factors. We believe that our future revenue growth will depend on, among other factors, our ability to attract new users while retaining current users, increase user engagement and advertisement engagement, increase our brand awareness, compete effectively, maximize our sales efforts, demonstrate a positive return on investment for advertisers, successfully develop and operate new products and services and expand globally. Accordingly, you should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future revenue growth.

We expect our operating expenses to increase in future periods as we continue to expend substantial financial resources on:

• sales and marketing;

• global expansion;

• our technology infrastructure;

• attracting and retaining talented employees;

• strategic opportunities, including commercial relationships, acquisitions and capital injections;

• operation of newly developed or newly acquired businesses; and

• general administration, including personnel costs and legal and accounting expenses related to being a public company.

These investments, while increasing our expenses, may not result in an increase in revenues or growth in our business. For example, our marketing expenses have from time to time outpaced the growth of our revenues over the same period, which have materially impacted our results of operations. If we are unable to achieve adequate revenue growth and to manage our expenses, we may incur significant losses in the future.

We have a limited operating history in the developing and rapidly evolving market for our products and services, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

We launched our LINE messaging application in June 2011 and other LINE products and services more recently, and our limited operating history makes it difficult to effectively assess our future prospects or forecast

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our future results. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in this developing and rapidly evolving market environment. These risks and challenges include our ability to, among other things:

• increase our number of users and user engagement and monetize our products and services;

• successfully compete with other companies, some of which have substantially greater resources and market power than us, that are currently in, or may in the future enter, our markets, or duplicate the features of our products and services;

• successfully expand our business and enhance the LINE brand globally;

• continue to develop a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage globally;

• convince advertisers of the benefits of our advertising products and services compared to alternative forms of advertising;

• develop and deploy new features, products and services in a timely manner and the market acceptance of such offerings;

• cost-effectively manage and grow our operations;

• attract and maintain platform partners’ interest in building on the LINE platform;

• attract, retain and motivate talented management and employees, particularly software engineers, designers and product managers;

• process, store, protect and use personal data in compliance with governmental regulations, contractual obligations and other obligations related to privacy and security; and

• defend ourselves against litigation and regulatory, intellectual property, privacy or other claims.

Failure to adequately address the risks and challenges associated with this market may adversely affect our business, financial condition and results of operations.

Our user growth and engagement on mobile devices, which are required to access and use most of our products and services, depend upon effective operation with mobile operating systems that we do not control.

We are dependent on the interoperability of LINE with popular mobile operating systems, such as Android and iOS, and, to a lesser extent, web browsers, such as those for Windows and Mac OS, that we do not control. Any changes in such operating systems or web browsers that degrade the functionality of our products or services or give preferential treatment to our competitors’ products or services could adversely affect usage of our products and services. In addition, if the number of platforms for which we develop our products or services expands, it will result in an increase in our operating expenses.

We may not be successful in developing or maintaining relationships with key participants in the mobile telecommunications industry or in developing products that operate effectively with mobile operating systems, networks or standards. In the event that it becomes more difficult for our users to access and use LINE on their mobile devices, or if our users choose not to access or use LINE on their mobile devices or use mobile devices that do not offer access to LINE, our user growth and user engagement could be harmed, and our business, financial condition and results of operations could be adversely affected.

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If we or our users experience disruptions in mobile telecommunications or internet services or if mobile telecommunications and internet service providers are able to block, degrade or charge for access to our products and services, we could incur additional expenses and the loss of users and advertisers.

We depend on the ability of our users and advertisers to access mobile telecommunications services and the internet. Currently, this access is provided by companies that have significant market power in the mobile, broadband and internet access marketplaces, including incumbent mobile telecommunications companies, telephone companies, cable companies, government-owned service providers, device manufacturers and operating system providers, any of whom could take actions that degrade, disrupt or increase the cost of user access to our products or services, which would, in turn, negatively impact our business. The adoption of any laws or regulations that adversely affect the growth, popularity or use of mobile devices or the internet or disruption of our services in important markets for any political or other non-technical reasons could decrease the demand for, or the usage of, our products and services, increase our cost of doing business and adversely affect our business, financial condition and results of operations. We also rely on other companies to maintain reliable network systems that provide adequate speed, data capacity and security to us and our users. As mobile devices and the internet continue to experience growth in the number of users, frequency of use and amount of data transmitted, the mobile telecommunications and internet infrastructure that we and our users rely on may be unable to support the demands placed upon them. The failure of the operations of mobile telecommunications or internet infrastructure services that we or our users rely on, even for a short period of time, could undermine our operations, and our business, financial condition and results of operations could be adversely affected.

Certain of our user metrics are subject to inherent uncertainties in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

We use our internal data to calculate our MAUs, DAUs and MPUs. See “Conventions Used in This Prospectus” for definitions of such user metrics. While these numbers are based on what we believe to be reasonable estimates of our active user and paying user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products and services across large online and mobile populations around the world. For example, each LINE account is linked to a mobile phone number and there may be multiple LINE accounts held by the same person if the person carries multiple smartphones and has chosen to download a LINE application on each smartphone.

We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. Our measures of user growth and user engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology. If advertisers, platform partners or prospective investors do not perceive our user metrics to be accurate representations of our user base or user engagement, or if we discover material inaccuracies in our user metrics, our reputation may be harmed and platform partners and advertisers may be less willing to allocate their budgets or resources to our products and services.

Our business and operating results may be harmed by a disruption in our service due to failures in or changes to our systems, or by our failure to timely and effectively expand and adapt our technology and infrastructure.

Our reputation and ability to attract, retain, and serve our users is dependent in large part upon the reliable performance of LINE and our underlying technical infrastructure. Our systems may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could be harmful to our business. We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, hardware failure, capacity constraints due to an overwhelming number of people accessing our products and services simultaneously, computer viruses, denial of service or fraud or security attacks. Our technical infrastructure is also vulnerable to the risk of damage from natural disasters, such as earthquakes and typhoons,

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as well as from acts of terrorism or other criminal acts. Our services and products also incorporate software that is highly technical and complex. Our software has contained, and may now or in the future contain, undetected errors, bugs or vulnerabilities. Some errors in our software code may only be discovered after the code has been released.

In addition, a substantial portion of our network infrastructure is provided by third parties. Any disruption or failure in the services we receive from these providers could harm our ability to handle existing or increased traffic and could significantly harm our business. Any financial or other difficulties these providers face may also adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. In the event of a significant issue with the third-party network infrastructure supporting our network traffic, some of our products and services may become inaccessible or users may experience difficulties accessing our products and services. Any disruption or failure in our infrastructure could hinder our ability to handle existing or increased traffic on our platform, which could significantly harm our business.

As the number of our users increases and as our users generate and transmit increasing volumes of content, including photos, videos and music, we may be required to expand and adapt our technology and infrastructure to continue to reliably store and service such content. It may become increasingly difficult to maintain and improve the performance of our products and services, especially during peak usage times, as our products and services become more complex and our user traffic increases. In addition, we cannot provide assurance that we will be able to expand our data center infrastructure to meet user demand in a timely manner, or on favorable economic terms. If our users are unable to readily access LINE or access is disrupted, users may seek other service providers instead, and may not return to LINE or use LINE as often in the future. This would negatively impact our ability to attract users, platform partners and advertisers and increase engagement of our users. We expect to continue to make significant investments to maintain and improve the capacity, capability and reliability of our infrastructure. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed or continually develop our technology and infrastructure to accommodate actual and anticipated changes in our users’ needs, our business, financial condition and results of operations may be harmed.

If our security measures are breached, or if our products and services are subject to attacks that disrupt or deny the ability of users to access our products and services, our products and services may be perceived as not being secure and users and advertisers may curtail or stop using our products and services.

Our products and services involve the storage and transmission of large amounts of users’ and advertisers’ confidential information, and security breaches expose us to a risk of loss of this information, which may lead to improper use or disclosure of such information, ensuing potential liability and litigation, any of which could harm our reputation and adversely affect our business. From time to time, we experience cyber-attacks of varying degrees. Although there has been no material instance where an unauthorized party was able to obtain access to our data or our users’ or advertisers’ data, there can be no assurance that we will not be vulnerable to cyber-attacks in the future. Our security measures may also be breached due to employee error, malfeasance or otherwise. Given the rapid development and scope of the services we offer, including those developed in conjunction with third parties, instituting appropriate access controls and safeguards across all our services is challenging. Furthermore, outside parties may attempt to fraudulently induce employees, users or advertisers to disclose sensitive information in order to gain access to our data or our users’ or advertisers’ data or accounts, or may otherwise obtain access to such data or accounts. In addition, some platform partners may store information provided by our users through applications on the LINE platform or websites linked with LINE. If these third parties or platform partners fail to adopt or adhere to adequate data security practices or fail to comply with our terms and policies, or in the event of a breach of their networks, our users’ data may be improperly accessed or disclosed.

Since our users and advertisers may use their LINE accounts to establish and maintain online identities, unauthorized communications from LINE accounts that have been compromised may damage their reputations

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and brands as well as ours. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation and a loss of confidence in the security of our products and services, which could have an adverse effect on our business, financial condition and results of operations. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs or the market perception of the effectiveness of our security measures is harmed, we could lose users and advertisers and we may incur significant legal and financial exposure, including legal claims and regulatory fines and penalties.

Our financial results are likely to continue to fluctuate from quarter to quarter, which makes our period-to-period results volatile and difficult to predict.

We emphasize growth and the increase in engagement of our user base over short-term financial results. Due in part to such focus, our quarterly financial results have fluctuated in the past and are likely to fluctuate in the future. As a result, you should not rely upon our past quarterly financial results as indicators of future performance. You should also take into account the risks and uncertainties frequently encountered by companies in rapidly evolving markets. Our financial results in any given quarter or fiscal period can be influenced by numerous factors occurring in a particular period, many of which we are unable to predict or are outside of our control, including:

• the development and introduction of new products or services by us or our competitors, particularly the launching of mobile games and Stickers and their market acceptance;

• our ability to attract and retain advertisers;

• the growth of revenue sources as well as adjustments in fees charged to users and advertisers;

• increases in marketing, sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

• seasonal fluctuations in spending by our advertisers, especially in Japan where a majority of companies end their fiscal year on March 31 and advertising spending is traditionally stronger in our fourth and first quarters due to year-end effects and companies trying to spend their advertising budgets before the close of their fiscal year;

• introduction of new products and/or services, which may lead to higher expenses;

• changes in the way online advertising is priced;

• non-recurring transactions and related accounting and tax implications therefrom;

• unforeseen contingencies, such as adverse litigation judgments, settlements or other litigation-related costs;

• fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; and

• changes in business or macroeconomic conditions.

We may not be able to effectively manage our growth, which would harm our business and profitability.

We continue to experience rapid growth in our personnel and operations, which will continue to place significant demands on our management and operational and financial infrastructure. We face significant competition for qualified staff, particularly software engineers, designers and product managers, from other internet and high-growth technology companies, and we may not be able to hire new employees quickly enough to meet our needs. As we continue to grow, we are subject to the risks of over-hiring, overcompensating our

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employees and over-expanding our operating infrastructure, and to the challenges of integrating, developing and motivating a rapidly growing employee base in various countries around the world. As our organization continues to grow and we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the strengths of our corporate culture, including our ability to quickly develop and launch new products and services. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our employee morale, productivity and retention could suffer.

We also expect to continue to invest in our infrastructure in order to enable us to provide our products and services rapidly and reliably to users around the world, including in countries where we do not expect significant near-term monetization. Continued growth could strain our ability to maintain reliable service levels for our users and advertisers, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. As a public company we will incur significant legal, accounting and other expenses that we did not incur as a private company. Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, financial condition and results of operations would be harmed.

Our LINE mobile payment service may subject us to additional regulatory requirements and other risks that could be costly and difficult to comply with or that could harm our business.

As part of our efforts to diversify the payment options available for LINE users, in December 2014 we launched LINE Pay, our mobile payment service application, on iOS and Android operating systems. LINE Pay allows our users to register their credit cards and make mobile payments, regardless of their mobile carrier. LINE Pay is in its initial stage and such credit card payments can only be made on LINE Store and a number of select online partner retail stores. This credit card payment component is generally available in any country where our users are able to make purchases on their credit cards. Our users in Japan, Thailand and Taiwan can remit funds to each other or withdraw cash from certain banks within their respective countries through LINE Pay by linking their accounts at select banks in their respective countries or, in the case of users in Japan and Taiwan, by adding money to their LINE Pay accounts from convenience stores or ATMs or through internet banking. In addition to making online payments, users in Thailand can use LINE Pay to make purchases at over 140 offline retailers. We plan to expand the scope of LINE Pay by selectively incorporating it into our applications and exploring local partnership and joint venture opportunities in order to increase the convenience of our users. Through our partnership with JCB Co., Ltd., a leading Japanese credit card company, we also launched LINE Pay Card, a JCB-branded prepaid debit card that allows both online and offline purchases at any place where JCB cards are accepted, in March 2016.

Depending on how our products and services as well as payment processes evolve, we may become subject to a variety of laws and regulations in Japan and elsewhere, including those governing money transmission, payment settlement, e-commerce, electronic funds transfers, anti-money laundering and counter-terrorist financing. In some jurisdictions, the application or interpretation of these laws and regulations is not clear. We are registered as a funds transfer service provider and issuer of prepaid payment instruments for third-party businesses in Japan through LINE Pay Corporation, our subsidiary engaged in mobile payment service, which will generally require us to demonstrate compliance with many domestic laws in these areas. In the event that we are found to be in violation of any such legal or regulatory requirements, we may be subject to monetary fines or other penalties or sanctions such as a cease and desist order, or we may be required to make product changes, any of which could have an adverse effect on our business and financial results.

In addition, we may be subject to a variety of additional risks as a result of providing mobile payment services, including:

• increased operational costs and diversion of management time and effort and other resources to deal with fraudulent or failed transactions or customer disputes;

• the impact on our relationships with existing payment processing service providers;

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• increased capital costs in building out the infrastructure;

• potential fraudulent or otherwise illegal activity by users, platform partners, employees or third parties;

• leakage of customers’ personal information and concerns over the use and security of collected information;

• restrictions on the investment of consumer funds used to transact payments; and

• additional disclosure and reporting requirements.

We depend on key senior management to operate our business and execute our business strategy, and if we are unable to attract, retain and motivate our senior management and other key personnel, our operations may be negatively affected.

Our ability to execute our strategy efficiently is dependent upon contributions from our key senior management. Our future success will depend on the continued service of our key executive officers and managers who possess significant expertise and knowledge of our industry. A limited number of individuals have primary responsibility for the management of our business, including our relationships with key platform partners. From time to time, there may be changes in our senior management team that may be disruptive to our business, and we may not be able to find replacement key personnel in a timely manner. In addition, acquiring and retaining qualified personnel, such as systems engineers and designers, will be necessary to our achieving sustainable growth. Any loss or interruption of the services of these individuals, whether from retirement, loss to competitors or other causes, or failure to attract and retain other qualified new personnel, could prevent us from effectively executing our business strategy, cause us to lose key platform partner relationships, or otherwise materially affect our operations.

A downturn in macroeconomic conditions may result in reduced demand for our products and services.

Our business is sensitive to global economic conditions and depends on demand from our user base. There are many macroeconomic factors that influence consumer confidence and spending behavior, including the level of inflation and unemployment, fluctuations in energy prices and conditions in the real estate markets. Although there have been signs of global economic recovery in recent years, this recovery may be fragile and partially attributable to the effects of various government economic stimulus efforts. The sustainability of the global recovery is uncertain, particularly after the effects of these various government stimulus programs subside. The global financial markets continue to experience significant volatility as a result of, among other things, the slowdown of economic growth and financial instability in China and other major emerging market economies. In addition, economic and political instability in various countries in the Middle East and Northern Africa, including Iraq, Syria and Egypt, as well as in Ukraine and Russia, have resulted in an increase in volatility in the global financial markets. The outlook for the global economy in 2016 and beyond remains uncertain.

In recent years, the economic indicators in Japan, our largest market in terms of revenue and user base, have also shown mixed signs, and future growth of the Japanese economy is subject to many factors beyond our control. The current administration of Prime Minister Shinzo Abe, formed in late December 2012, has introduced policies to combat deflation and promote economic growth. In addition, the Bank of Japan introduced a plan for quantitative and qualitative monetary easing in April 2013 and announced a negative interest rate policy in January 2016. However, the long-term impact of these policy initiatives on Japan’s economy remains uncertain. In addition, the occurrence of large-scale natural disasters, such as the March 2011 Great East Japan Earthquake and the related Fukushima Daiichi nuclear disaster, as well as an increase in the consumption tax rate, which took place in April 2014 with a further increase expected in October 2019, may also adversely impact the Japanese economy, potentially impacting consumer spending and advertising spending by businesses. Any future deterioration of the Japanese or global economy may result in a decline in consumption that would have a negative impact on demand for our products and services and their prices.

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Our acquisitions and investments may not be successful in achieving their intended goals and could harm our business, financial condition and results of operations.

Our success will depend, in part, on our ability to expand our products and services, and grow our business in response to changing technologies, user and advertiser demands, and competitive pressures. In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through internal development. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. We have limited experience acquiring other businesses, and our ability to acquire and integrate other companies and assets, particularly larger or more complex companies, products, or technologies, in a successful manner remains subject to uncertainty. Any completed acquisitions may not achieve their intended goals and could be viewed negatively by users, platform partners, advertisers or investors. For example, we acquired assets of MixRadio, a mobile music streaming service, from Microsoft in March 2015, but after careful assessment of the overall performance of MixRadio, the financial challenges posed by the music streaming market, changing market conditions, an increase in the cost of maintaining the business and a shift in our overall priorities, our board of directors approved the abandonment of our MixRadio business in February 2016, which abandonment became effective on March 21, 2016. As a result, we have retrospectively classified the MixRadio operations as a discontinued operation in our consolidated financial statements as of and for the year ended December 31, 2015 and recognized impairment charges of ¥4.6 billion in the three months ended December 31, 2015. We also incurred additional restructuring costs of ¥1,183 million related to employee termination benefits and ¥127 million for the termination of office lease contracts, in the first three months of 2016 as a result of the abandonment of the MixRadio operations. For more information, see Note 24 and Note 35 of the notes to our annual consolidated financial statements and Note 9 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

The risks we face in connection with acquisitions also include:

• diversion of management time and focus from operating our business to addressing acquisition and integration challenges;

• challenges associated with the integration of product development and sales and marketing functions of the acquired company;

• challenges associated with the retention of key employees from the acquired company;

• cultural and operational challenges associated with integrating employees from the acquired company into our organization;

• challenges associated with the integration of the acquired company’s accounting, management information, human resources and other administrative systems;

• the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

• liability for activities of the acquired company before the acquisition, including intellectual property infringement claims;

• unanticipated write-offs or charges or impairment of goodwill; and

• litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former shareholders or other third parties.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions or investments could cause us to fail to realize the anticipated benefits of these acquisitions or

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investments, cause us to incur unanticipated liabilities, or could otherwise harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses or incremental operating expenses.

We may require additional capital to support our operations and the growth of our business, and we cannot be certain that financing will be available on reasonable terms when required, or at all.

From time to time, we may need additional financing to operate or grow our business. In the past, we have relied not only on debt financing but also on proceeds from issuances of shares of our capital stock to NAVER Corporation, our parent, as well as equity investment by NAVER Corporation into our subsidiary, LINE Plus Corporation, which has since become our wholly-owned subsidiary. Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets and other factors, and we cannot assure you that additional financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation and growth of our business could be significantly impaired and our operating results may be adversely affected.

Our business is subject to complex and evolving Japanese and foreign laws and regulations. These laws, regulations and actions are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations or declines in user growth, user engagement or advertising engagement, restricted access to LINE or otherwise harm our business.

We are subject to a variety of laws and regulations in Japan and elsewhere that involve matters central to our business, including privacy, rights of publicity, data protection and protection of personal information, content regulation, intellectual property, competition, protection of minors, consumer protection and taxation. See “Regulation” for a discussion of various laws and regulations applicable to us. Many of these laws and regulations are still evolving and could be interpreted or applied in ways that could limit our business, particularly in the new and rapidly evolving industry in which we operate. The introduction of new products or services in our existing markets and the expansion of our business to other countries may subject us to additional laws and regulations.

A number of proposals are pending before legislative and regulatory bodies that could significantly affect our business. For example, there have been a number of recent legislative proposals in Japan that would impose new obligations in areas such as privacy and liability for copyright infringement by third parties that could affect liabilities associated with websites that publish user-generated content. An amendment to the Act on the Protection of Personal Information of Japan (the “Act on the Protection of Personal Information”) was enacted in September 2015 and is expected to be fully enforced within two years from the date of the enactment. This amendment includes establishment of a new regulatory authority and introduction of new regulations on handling of anonymous personal data and transfer of personal information to foreign countries.

We collect personal information from our users and may expand our collection of personal information in order to comply with new and additional regulatory demands or we may independently decide to do so. Having additional personal information may subject us to additional regulation, and governmental regulators have been applying increased scrutiny to social media companies in this respect. Additionally, if third parties we work with, such as advertisers or platform partners, violate applicable laws or our policies, such violations may also put our users’ information at risk and could in turn have an adverse effect on our business. Further, it is difficult to predict how existing laws and regulations will be applied to our business and the new laws and regulations to which we may become subject, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our practices. For example, we believe that our products and services are not subject to regulations under the Act on Regulation on Soliciting Children by Using Opposite Sex Introducing Service on Internet of Japan, but there can be no assurance that we will not be subject to certain processes, administrative sanctions, fines or restrictions under such regulations in the future. Existing and proposed laws

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and regulations in any jurisdiction can be costly to comply with and can delay or impede the development of new products and services, result in negative publicity, significantly increase our operating costs, require significant time and attention of management and technical personnel and subject us to inquiries or investigations, claims or other remedies, including fines or demands that we modify or cease existing business practices.

The Payment Services Act of Japan (the “Payment Services Act”) requires entities that engage in business activities involving advance payments from customers using prepaid payment instruments, such as virtual currencies, to set aside for such customers amounts covering at least 50% of the total amount of the unused amounts or credits represented by such instruments issued as of the end of either the first or third quarter of any year (if such total amount is more than ¥10 million), either by making a deposit or by entering into guarantee or trust agreements, as well as to refund any remaining balance of virtual currencies issued if those entities stop selling such virtual currencies. We are registered with the Director of the Kanto Local Finance Bureau (“KLFB”) as an issuer of prepaid payment instruments. During the first half of 2016, the KLFB conducted an inspection of our business as an issuer of prepaid payment instruments and issued a notice of inspection results on May 16, 2016. Following the determination that one of our in-game items, for which we had not made a deposit or entered into a guarantee or trust agreement, would be deemed a prepaid payment instrument, on May 24, 2016 we entered into an additional guarantee agreement for ¥12.6 billion with an annual guarantee fee rate of 0.1% to comply with the Payment Services Act requirement, which resulted in an additional annual guarantee expense of ¥12.6 million. We are in the process of reviewing all of our in-game items that may potentially be deemed prepaid payment instruments, and accordingly, it may become necessary to enter into additional arrangements to comply with the Payment Services Act requirement in connection with any such in-game items. While we intend to enter into additional guarantee agreements to meet any additional deposit requirements, entering into additional guarantee agreements will require us to pay guarantee fees equal to the contractual amount times a guarantee fee rate, and there is no assurance that we will be able to enter into additional guarantee agreements on favorable terms when required, or at all. Any failure to enter into contractual arrangements on terms satisfactory to us when required may adversely affect our business, financial condition, results of operations and/or reputation. See “Regulation — Payment Services Regulations.”

It is also possible that governments or relevant regulators of one or more countries may seek to censor content offered on the LINE platform in their country, restrict access to LINE from their country entirely, or impose other restrictions that may affect the accessibility of LINE in their country for an extended period of time or indefinitely. For example, in China, message transmission service on our LINE messaging application, along with those of certain other non-Chinese service providers, was abruptly blocked on July 1, 2014. As of the date of this prospectus, our online services generally remain blocked in China, although we understand that certain users are able to access the service from China. We do not know when our services will be completely restored. If our services are not completely restored, our efforts to expand our user base in the rapidly evolving, highly competitive Chinese market may be significantly harmed. In addition, China’s State Internet and Information Office has issued rules requiring users of mobile messaging services who open new “public accounts,” which allow the accountholder to post messages to broad groups, to register using their real names and agree to follow certain guidelines regarding how they use their public accounts. While these rules may not directly impact our platform or services, increased focus on mobile messaging services by the Chinese government may result in other restrictions on access to our services. In the event that access to LINE is restricted, in whole or in part, in one or more other countries, our ability to retain or increase our user base and user engagement may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our business, financial condition and results of operations could be adversely affected.

We are regulated as a telecommunications company under Japanese law. If our business were deemed to be a regulated telecommunications business in multiple jurisdictions, it would significantly increase our expenses and may require us to change our products and other aspects of our business in potentially detrimental ways.

We are regulated as a telecommunications company pursuant to Japanese law, and we have submitted required notifications to the Ministry of Internal Affairs and Communication of Japan. We are subject to the risk

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that, due to changes in telecommunications, e-commerce and other similar laws and regulations or in the application, interpretation or enforcement of both existing and future such laws and regulations, we may be required to comply with additional laws and regulations in Japan and in other jurisdictions. In addition, we are continually seeking ways to improve our products and services, which may involve from time to time upgrades or changes in the technological infrastructure on which our products and services are based and which could result in subjecting our activities to greater regulation in multiple jurisdictions. If we are required to comply with telecommunications, e-commerce and other similar laws and regulations in multiple jurisdictions, we would need to meet a number of obligations, which could vary from jurisdiction to jurisdiction, including new or enhanced compliance in the following areas:

• licensing and notification requirements;

• emergency calling requirements, including enhanced emergency calling through multi-line telephone systems;

• universal service fund contribution requirements;

• lawful interception or wiretapping requirements;

• privacy and data retention and disclosure requirements;

• limitations on our ability to use encryption technology;

• disability access requirements;

• consumer protection requirements and local dispute resolution requirements;

• requirements related to customer support;

• quality of service requirements;

• provision of numbering directories;

• numbering rules, including portability requirements;

• directory and operator services; and

• access and interconnection obligations.

If we are required to comply with telecommunications, e-commerce and other similar laws and regulations in multiple jurisdictions, it could affect our business in many ways and areas, including the following:

• the cost and general impact of compliance would be substantial, may require significant investments and organizational changes and may erode or eliminate our pricing advantage over competing forms of communication and, potentially, our ability to compete effectively;

• compliance may require us to make certain fundamental and potentially detrimental changes to the products and services we offer and the way we conduct business in certain countries, including withdrawing from markets;

• compliance may be technically difficult or impossible;

• we may need to change our distribution, marketing and sales activities;

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• we may need to terminate or restructure partnerships and other commercial agreements; and

• we may need to establish a local presence in any given jurisdiction, sell our products through a local entity and be required to pay new or increased taxes in that jurisdiction.

Our intellectual property rights are valuable, and our inability to protect them could reduce the value of our products, services and brand.

Our trade secrets, trademarks, copyrights, patents and other intellectual property rights are important assets for us. We rely on, and expect to continue to rely on, a combination of confidentiality and license agreements with our employees, consultants and third parties with whom we have relationships, as well as trademark, trade dress, domain name, copyright, trade secret and patent laws, to protect our brand and other intellectual property rights. However, various events outside of our control may pose a threat to our intellectual property rights, as well as to our products, services and technologies. For example, we may fail to obtain effective intellectual property protection, or effective intellectual property protection may not be available in every country in which our products and services are available. In particular, the legal regimes relating to intellectual property rights in many of the countries in which we operate are limited and it is often difficult to effectively protect and enforce such rights in those countries. Also, the efforts we have taken to protect our intellectual property rights may not be sufficient or effective, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. There can be no assurance that our intellectual property rights will be sufficient to protect against others offering products or services that are substantially similar to ours and compete with our business.

We also rely on non-patented proprietary information and technology, such as trade secrets, confidential information, know-how and technical information. While in certain cases we have agreements in place with employees and third parties that place restrictions on the use and disclosure of this intellectual property, these agreements may be breached, or this intellectual property may otherwise be disclosed or become known to our competitors, which could cause us to lose competitive advantages resulting from this intellectual property. We are also pursuing registration of trademarks and domain names in Japan and in many jurisdictions outside of Japan. Effective protection of trademarks and domain names is expensive and difficult to maintain, both in terms of application and registration costs as well as the costs of defending and enforcing those rights. We may be required to protect our rights in an increasing number of countries, in a process that is expensive and may not be successful or which we may not pursue in every country in which our products and services are distributed or made available.

We are party to numerous agreements that grant licenses to third parties to use our intellectual property, including our trademarks. For example, some third parties distribute their content through LINE, embed LINE content in their applications, and make use of our trademarks in connection with their services. If the licensees of our trademarks are not using our trademarks properly, it may limit our ability to protect our trademarks and could ultimately result in our trademarks being declared invalid or unenforceable. There can be no assurance that we will be able to protect against the unauthorized use of our brand, trademarks or other assets. There is also a risk that one or more of our trademarks could become generic, which could result in them being declared invalid or unenforceable.

We also seek to obtain patent protection for some of our technology, and we have filed various applications in Japan and abroad for protection of certain aspects of our intellectual property and currently hold a number of issued patents in multiple jurisdictions. We may be unable to obtain patent or trademark protection for our technologies and brands, and our existing patents and trademarks, and any patents or trademarks that may be issued in the future, may not provide us with competitive advantages or distinguish our products and services from those of our competitors. In addition, any patents and trademarks may be contested, circumvented, or found unenforceable or invalid, and we may not be able to prevent third parties from infringing, diluting or otherwise violating them. Effective protection of intellectual property rights is expensive and difficult to maintain, both in

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terms of application and maintenance costs, as well as the costs of defending and enforcing those rights. Significant impairments of our intellectual property rights, and limitations on our ability to assert our intellectual property rights against others, could harm our business and our ability to compete.

We may become party to intellectual property rights claims in the future that are expensive and time consuming to defend, and, if resolved adversely, could have a significant impact on our business.

Technology companies own large numbers of patents, copyrights, trademarks and trade secrets, and frequently enter into litigation based on allegations of infringement, misappropriation or other violations of intellectual property or other rights. Many such companies, including many of our competitors, have substantially larger patent and intellectual property portfolios than we do, which could make us a target for litigation as we may not be able to assert counterclaims against parties that sue us for patent or other intellectual property infringement. In addition, various “non-practicing entities” that own patents and other intellectual property rights often attempt to aggressively assert claims in order to extract payments from technology companies. From time to time we have received, and may receive in the future, claims from third parties which allege that we have infringed upon their intellectual property rights. Furthermore, from time to time we may introduce new products and services, including in areas where we currently do not have an offering, which could increase our exposure to patent and other intellectual property claims from competitors and non-practicing entities. Some of our agreements with advertisers, platform partners and data partners require us to indemnify them for certain intellectual property claims against them, which could require us to incur considerable costs in defending such claims, and may require us to pay significant damages in the event of an adverse ruling. Such advertisers, platform partners and data partners may also discontinue use of our products, services and technologies as a result of injunctions or otherwise, which could result in loss of revenue and adversely impact our business.

As we face increasing competition and gain an increasingly high profile, patents and other intellectual property claims against us may grow. There may be intellectual property or other rights held by others, including issued or pending patents, that cover significant aspects of our products and services, and we cannot be sure that we are not infringing or violating, and have not infringed or violated, any third-party intellectual property rights or that we will not be held to have done so or be accused of doing so in the future. Any claim or litigation alleging that we have infringed or otherwise violated intellectual property or other rights of third parties, with or without merit, and whether or not settled out of court or determined in our favor, could be time-consuming and costly to address and resolve, and could divert the time and attention of our management and technical personnel. Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. The outcome of any litigation is inherently uncertain, and there can be no assurance that favorable final outcomes will be obtained. In addition, plaintiffs may seek, and we may become subject to, preliminary or provisional rulings in the course of any such litigation, including potential preliminary injunctions requiring us to cease some or all of our operations. We may decide to settle such lawsuits and disputes on terms that are unfavorable to us. Similarly, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that may not be reversed upon appeal. The terms of such a settlement or judgment may require us to cease some or all of our operations or pay substantial amounts to the other party. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights. If we are required or choose to enter into royalty or licensing arrangements, such arrangements may not be available on reasonable terms, or at all, and may significantly increase our operating costs and expenses. As a result, we may also be required to develop or procure alternative non-infringing technology or discontinue use of the technology. The development or procurement of alternative non-infringing technology could require significant effort and expense or may not be feasible. An unfavorable resolution of any disputes and litigation could adversely affect our business, financial condition and results of operations.

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Fluctuation of the value of the Japanese yen against certain foreign currencies may have a material adverse effect on the results of our operations.

Some of our foreign operations’ functional currencies are not the Japanese yen, and the financial statements of such foreign operations prepared initially using their functional currencies are translated into Japanese yen. Since the currency in which sales are recorded may not be the same as the currency in which expenses are incurred, foreign exchange rate fluctuations may materially affect our results of operations. In 2013, 2014, 2015 and the first three months of 2016, 13.1%, 24.2%, 29.6% and 28.9%, respectively, of our revenues were derived from markets outside of Japan, and we expect that an increasing portion of our revenues and expenses in the future will be denominated in currencies other than the Japanese yen. Accordingly, our consolidated financial results and assets and liabilities may be materially affected by changes in the exchange rates of foreign currencies in which we conduct our business. We strive to naturally offset our foreign exchange risk by matching foreign currency receivables with our foreign currency payables, and our overseas subsidiaries seek to conduct business transactions in the local currency of the respective market in which the transactions occur. When deemed appropriate, we also selectively use derivative contracts, primarily foreign currency forward contracts. However, there can be no assurance that our hedging activities will be successful in protecting us from adverse impacts from currency exchange rate fluctuations, and fluctuation of the Japanese yen against certain foreign currencies may have a material adverse effect on our results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk — Exchange Rate Risk” for a discussion of our foreign currency exposure and sensitivity analysis.

We may have exposure to greater than anticipated tax liabilities.

Our income tax obligations are based on our corporate operating structure and intercompany arrangements, including the manner in which we develop, value, and use our intellectual property and the valuations of our intercompany transactions. The tax laws applicable to our business activities, including the laws of Japan and other jurisdictions, are subject to interpretation. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and harm our financial position and results of operations. In addition, our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations or accounting principles. We are subject to regular review and audit by tax authorities of various jurisdictions in which we operate. Any adverse outcome of such a review or audit could have a negative effect on our financial position and results of operations. In addition, the determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment by management, and there are many transactions where the ultimate tax determination is uncertain. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

Due to the global nature of our business, we are subject to trade, economic sanctions and export laws and regulations in various jurisdictions that may govern or restrict our business and we, our directors and officers, may be subject to fines or other penalties for non-compliance with applicable trade, economic sanctions and export laws and regulations.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) administers and enforces certain laws and regulations (“OFAC Sanctions”) that impose restrictions upon U.S. persons regarding dealings with or related to certain countries and territories, governments, entities and individuals. Even though non-U.S. persons generally are not always directly bound to comply with OFAC Sanctions, in recent years, OFAC has asserted that such non-U.S. persons can be held liable for violations of OFAC Sanctions on various legal grounds, such as with respect to dealings in U.S. goods, services, or technology, or involving U.S. parties, causing violations by U.S. persons, or by engaging in transactions completed in part in the United States. In addition to the OFAC Sanctions, the United States maintains numerous secondary sanction programs that provide

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authority for the imposition of U.S. sanctions on foreign parties that engage in certain dealings with Iran and other U.S. sanctions targets regardless of whether there is a nexus to the United States. Following the occurrence on January 16, 2016 of “Implementation Day” of the Joint Comprehensive Plan of Action between the “P5+1” countries (including the United States) and Iran, pursuant to which Iran agreed to limits on its nuclear program and the P5+1 countries agreed to provide certain sanctions relief, secondary sanctions targeting Iran have been narrowed but not eliminated. For example, non-U.S. persons can still be sanctioned for engaging in dealings with certain persons on OFAC’s Specially Designated Nationals (“SDN”) list.

The European Union also enforces certain laws and regulations (“EU Sanctions”) that impose restrictions upon nationals and entities of, and business conducted in, European Union member states with respect to activities or transactions with certain countries, governments, entities and individuals that are the subject of EU Sanctions. The United Nations Security Council and other governmental entities also impose similar sanctions.

LINE can be used in 230 countries, including some countries and regions that are the subject of trade embargos and other economic sanctions (such as Iran), and we may have individual users who are the target of sanctions. In March 2016, we had approximately 9 million MAUs in Iran. In addition, LINE provides Official Accounts to local Iranian celebrities and engages in promotional activities directed at users in Iran. On May 5, 2016, we launched a website containing media content directed at users in Iran. Our business with Iran represented approximately 0.01% and 0.03% of our revenues for the year ended December 31, 2015 and the first three months of 2016, respectively. In addition, LINE Pay is available to users in Iran, Cuba, Sudan and Syria. We do not have a system in place to screen users of our services against OFAC’s SDN list and, accordingly, cannot guarantee that our services are not and will not be provided to SDNs.

The global nature of our business subjects us to the laws and regulations of various jurisdictions. Our significant international operations also expose us to economic sanctions risk and our continued expansion may increase the risk of violation of applicable economic sanctions laws and regulations. We intend our operations to comply with all applicable economic sanctions. Personal communications services are given favorable treatment under a number of economic sanctions regimes. However, given the global nature of our business, the fact that our business extends beyond personal communications services and the complexity and lack of certainty regarding the scope of some countries’ laws, there can be no assurance that our efforts to comply with all applicable economic sanctions and embargo laws and regulations will be completely effective to detect and prevent violations. There can also be no assurance that we will be in compliance with all applicable economic sanctions laws and regulations in the future. Such a violation could result in reputational damage, civil or criminal penalties or the imposition of sanctions against us or our affiliates, all of which could have a material adverse effect on our business, financial condition and reputation.

Risks Related to Our Initial Public Offering

Upon completion of this global offering, NAVER Corporation will own 83.3% of the outstanding shares of our common stock and continue to have substantial control over us, which will limit your ability to influence the outcome of important corporate decisions, including transactions involving a change in control.

Upon completion of this global offering, NAVER Corporation will own 83.3% (before exercise of any over-allotment options) of the outstanding shares of our common stock assuming no change in our capital stock or our ownership held by NAVER Corporation following this global offering. As a result, NAVER Corporation will continue to be able to influence or control matters requiring approval by our shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. NAVER Corporation may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of our company, could deprive our shareholders of an opportunity to

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receive a premium for their shares of our common stock as part of a sale of our company and might ultimately affect the market prices of shares of our common stock and ADSs.

We also engage in a number of related party transactions with NAVER Corporation and our affiliates. See “Certain Relationships and Related Party Transactions” for a discussion of our transactions with such entities. In the event NAVER Corporation, a publicly traded company, undergoes a change of control or experiences financial and other difficulties, it may materially and adversely affect our business, financial condition and results of operations.

Our parent, NAVER Corporation, offers a variety of products and services to internet users and advertisers, and the absence of contractually delineated spheres of operations means that competition and conflicts of interest between us and NAVER Corporation could arise in the future.

NAVER Corporation is publicly listed in Korea and also provides a variety of products and services to internet users, mobile application users and advertisers. NAVER Corporation operates the largest search portal site in Korea and is actively seeking to develop products and services to enhance the experience of mobile internet users. There is no contractual agreement between us and NAVER Corporation delineating our respective spheres of operation, and each company’s development team is actively introducing new services independently of one another. Current or future products and services offered by NAVER Corporation could compete with our own. NAVER Corporation’s business operations and the lack of contractual non-competition arrangements between NAVER Corporation and us could give rise to direct competition between us and conflicts regarding allocation of business opportunities and management and investment resources.

Overlapping management and business relationships with NAVER Corporation, our parent, may adversely impact our business.

Some of our senior management have overlapping duties with NAVER Corporation. Mr. Hae Jin Lee, our chairman, also serves as chairman of the board of directors of NAVER Corporation, and Mr. In Joon Hwang, our chief financial officer, serves as director of NAVER Corporation. In addition, one of our three corporate auditors, Mr. Jin Hee Kim, is an executive officer of NAVER Corporation. These individuals have fiduciary duties to both NAVER Corporation and us under Korean and Japanese law, respectively. As a result, conflicts of interests may arise due to their dual roles, which may adversely impact our business.

An active public trading market for shares of our common stock or ADSs may not develop, and they may trade below the initial public offering price.

Prior to this initial public offering, there has been no public market for shares of our common stock or ADSs. We have received approval to list and trade shares of our common stock on the Tokyo Stock Exchange and will apply to have our ADSs listed on the New York Stock Exchange. If active trading markets for shares of our common stock or ADSs do not develop after this global offering, the market prices and liquidity of shares of our common stock or ADSs may be materially and adversely affected. The initial public offering prices of shares of our common stock and ADSs were determined through negotiation between us and the underwriters, and these prices do not necessarily reflect the price at which investors in the market will be willing to buy and sell shares of our common stock or ADSs following this global offering. Investors in this global offering may experience a significant decrease in the market value of their investments regardless of our operating performance or prospects.

The market prices of shares of our common stock and ADSs may be volatile or may decline regardless of our operating or financial performance.

The market prices of shares of our common stock and ADSs following this global offering may fluctuate substantially and may be higher or lower than the initial public offering price. Market prices could be

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subject to wide fluctuations in response to various factors, many of which are beyond our control and may not be related to our operating or financial performance. These fluctuations could cause you to lose all or part of your investment since you might be unable to sell your shares of our common stock or ADSs at or above the price you paid in this global offering.

Factors that could cause fluctuations in the market prices of shares of our common stock and ADSs include the following:

• price and volume fluctuations in the global stock markets from time to time;

• changes in operating performance and stock market valuations of other technology sector companies generally, or those in our industry in particular;

• sales of shares of our common stock by us or our parent company;

• failure of securities analysts and credit rating agencies to maintain coverage of us, changes in financial estimates by securities analysts and credit rating agencies who follow our company, or our failure to meet these estimates or the expectations of investors;

• the financial projections we may provide to the public (in the event we decide to provide any such projections), any changes in those projections or our failure to meet those projections;

• announcements by us or our competitors of new products and services;

• the public’s reaction to our and NAVER Corporation’s press releases, other public announcements as well as filings with the SEC and the KLFB and timely disclosure of information required by the Tokyo Stock Exchange in our case and filings with the Korea Exchange in NAVER Corporation’s case;

• rumors and market speculation involving us or other companies in our industry;

• actual or anticipated changes in our results of operations or fluctuations in our results of operations;

• actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

• litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;

• developments or disputes concerning our intellectual property or other proprietary rights;

• announced or completed acquisitions of businesses or technologies by us or our competitors;

• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• changes in tax laws and regulations as well as accounting standards, policies, guidelines, interpretations or principles;

• any significant change in our management; and

• general economic conditions and slow or negative growth of our markets.

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In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

We may be classified as a passive foreign investment company for U.S. federal income tax purposes, which could subject U.S. investors in shares of our common stock or ADSs to adverse tax consequences, which may be significant.

We will be classified as a passive foreign investment company (a “PFIC”) in any taxable year in which, after taking into account our income and gross assets (and the income and assets of our subsidiaries pursuant to applicable “look-through rules”) either (i) 75% or more of our gross income consists of certain types of “passive income” or (ii) 50% or more of the average quarterly value of our assets is attributable to “passive assets” (assets that produce or are held for the production of passive income). We believe that we were not a PFIC for U.S. federal income tax purposes in 2015 and do not expect to be a PFIC in subsequent taxable years. PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and the value of our active versus passive assets. Because our belief is based in part on the expected market value of our equity, a decrease in the trading price of our common stock and ADSs following this offering may result in our becoming a PFIC. Additionally, the overall level of our passive assets will be significantly affected by changes in the amount of our cash, cash equivalents and securities held for investment, each of which may be classified as passive assets under the PFIC rules.

If we were to be or become classified as a PFIC, a U.S. Holder, as defined in “Taxation — United States Federal Income Taxation,” that does not make a “mark to market” election may incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of shares of our common stock or ADSs and on the receipt of distributions on the shares of our common stock or ADSs to the extent such distribution is treated as an “excess distribution” under the U.S. federal income tax rules. We do not intend to provide holders with the information necessary to make a “QEF election” (as described below under “Taxation — United States Federal Income Taxation — Passive Foreign Investment Company”). Thus, a U.S. Holder seeking to mitigate the potential adverse effects of the PFIC rules should consider making a mark to market election. Additionally, if we were to be or become classified as a PFIC, a U.S. Holder of shares of our common stock or ADSs will be subject to additional U.S. tax form filing requirements, and the statute of limitations for collections may be suspended if the U.S. Holder does not file the appropriate form. See “Taxation — United States Federal Income Taxation — Passive Foreign Investment Company.”

There will be a gap of three business days between pricing and trading of our ADSs and a gap of four business days between pricing and trading of shares of our common stock, which means you will not be able to sell or otherwise trade shares of our common stock or ADSs during those periods.

The initial price to the public of shares of our common stock and ADSs sold in the global offering was determined on the date of this prospectus. In order to permit completion of the subscription period in Japan, however, ADSs offered in the global offering will not commence trading on the New York Stock Exchange until three business days from the date of pricing. Trading of shares of our common stock on the Tokyo Stock Exchange will commence the business day immediately following the commencement of trading on the New York Stock Exchange. Accordingly, you will not be able to sell or otherwise trade shares of our common stock or ADSs prior to the commencement of trading on such markets. In addition, you will not be able to withdraw shares of our common stock represented by your ADSs in exchange for the surrender of your ADSs prior to the commencement of trading of shares of our common stock on the Tokyo Stock Exchange.

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After this global offering, shares of our common stock held by NAVER Corporation and our employee shareholding association, as well as shares issuable upon exercise by certain optionholders, will be restricted from immediate resale, but may be sold on a stock exchange in the near future. The large number of shares of our common stock eligible for future sale of our common stock could depress the market prices of the shares of our common stock and ADSs.

The market prices of the shares of our common stock and ADSs could decline as a result of sales of a large number of shares of our common stock or ADSs in the market after this initial public offering, and the perception that these sales could occur may also depress the market prices of the shares of our common stock and ADSs. We, our controlling shareholder, certain of our and our subsidiaries’ directors and officers, the LINE Employee Shareholding Association and Mr. Joon Ho Lee, our former director, have agreed with the joint global coordinators (and, in the case of the LINE Employee Shareholding Association, the joint global coordinators and the Japanese joint lead managers named in the Japanese underwriting agreement) to restrictions on sales and other dispositions of shares of our common stock or ADSs during the period beginning on the date of this prospectus and ending on the date that is 180 days from and including the date of delivery of the shares in the global offering. After the expiration of such restrictions, such directors, corporate auditors or other officers may choose to exercise their options and sell all or a portion of their shares of our common stock on the Tokyo Stock Exchange or otherwise in Japan or abroad. In addition, our board of directors will be able to issue and sell additional shares of our common stock within the unissued portion of our authorized share capital, generally without any shareholder vote. Any such sales could cause the prices of the shares of our common stock and ADSs to fall and may make it more difficult for you to sell your shares of our common stock or ADSs purchased in this global offering.

In making your investment decision, you should not rely on information in public media that is published by third parties. You should rely only on statements made in this prospectus in determining whether to purchase our shares.

You should carefully evaluate all of the information in this prospectus. We have in the past received, and may continue to receive, a high degree of media coverage, including coverage that is not directly attributable to statements made by our officers or employees, that incorrectly reports on statements made by our officers or employees, or that is misleading as a result of omitting information provided by us, our officers, or employees. You should rely only on the information contained in this prospectus (or in a related free writing prospectus) in determining whether to purchase the shares of our common stock or ADSs.

We have broad discretion in the use of the net proceeds from our initial public offering and may not use them effectively.

We cannot specify with any certainty the particular uses of the net proceeds that we will receive from our initial public offering. The primary purposes of the global offering are financing our business expansion, which may include investment, acquisition or strategic cooperation to expand our user base or procure additional content for the LINE platform, as well as marketing new products and services and repaying outstanding debt. Currently, however, we have no agreements or commitments for particular uses of the net proceeds from this global offering, and our management may exercise discretion over the terms and timing of any future transaction in light of the changing needs of our business. The failure by our management to apply these funds effectively could harm our business and financial condition. We may invest the net proceeds from our initial public offering in a manner that does not produce income or that loses value.

If securities or industry analysts do not publish or cease publishing research or other reports about us, our business or our market, or if they adversely change their recommendations regarding an investment in us, the prices of the shares of our common stock and ADSs or their trading volume could decline.

The trading markets for the shares of our common stock and ADSs will be influenced by the research and other reports that securities or industry analysts may publish about us, our business, our market or our competitors. If

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any of the analysts who may cover us adversely change their recommendation regarding an investment in us, or provide more favorable relative recommendations about our competitors, the prices of the shares of our common stock and ADSs would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the prices of the shares of our common stock and ADSs or their trading volume to decline.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment if the market price of the shares of our common stock or ADSs increases.

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we will be subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the U.S. Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Act, the listing standards of the New York Stock Exchange as applicable to a foreign private issuer, which are different in some material respects from those required for a U.S. public company, as well as the reporting requirements under the Financial Instruments and Exchange Act of Japan (the “FIEA”) and the rules of the Tokyo Stock Exchange. We also plan to continue to prepare annual financial statements of LINE Corporation on a standalone basis in accordance with generally accepted accounting principles in Japan (“Japanese GAAP”) for Japanese reporting purposes in addition to preparing our consolidated financial statements in accordance with IFRS as issued by the IASB. We expect that the requirements of these rules and regulations will increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources. As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors, shareholders or third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.

In the past, we had identified material weaknesses in our internal control over financial reporting, which we have since remediated. If we fail to establish and maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be adversely affected, which could cause investors to lose confidence in our reported financial information and may lead to a decline in the trading price of shares of our common stock and ADSs.

The Sarbanes-Oxley Act requires, among other things, that public companies maintain effective disclosure controls and procedures and internal control over financial reporting. For example, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report we file with the SEC. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on our internal control over financial reporting. We are still in the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404.

We previously identified material weaknesses in our internal control over financial reporting as of December 31, 2013 and 2014. We have since implemented measures designed to improve our internal control over financial reporting to remediate the control deficiencies that led to our material weaknesses, including requiring a formal review of the contractual terms and conditions and a more stringent board and management approval process for any significant related party transaction and more generally, we set up an internal control

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team to improve our accounting and finance systems. Based on the measures taken and implemented, we have concluded that the material weaknesses identified have been remediated as of December 31, 2015.

We cannot be certain that additional material weaknesses will not develop or be identified. Neither our management nor independent registered public accounting firm has ever performed a comprehensive evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Any failure to achieve and maintain adequate internal control over financial reporting or to implement required, new or improved controls, or difficulties encountered in their implementation could cause us to report material weaknesses or other deficiencies in our internal control over financial reporting in the future. If we are unable to successfully remediate any material weaknesses or other deficiencies in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected and investors may lose confidence in our financial reporting, and the price of shares of our common stock and ADSs may decline as a result. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange.

As a foreign private issuer, we are permitted to, and we intend to, rely on exemptions from certain SEC and New York Stock Exchange corporate governance standards applicable to public U.S. companies. This may afford less protection to holders of shares of our common stock or ADSs.

We are exempted from certain corporate governance requirements of the SEC and New York Stock Exchange by virtue of being a foreign private issuer. We are required to provide a brief description of the significant differences between our corporate governance practices and the corporate governance practices required to be followed by U.S. companies listed on the New York Stock Exchange. See “Management — Corporate Governance.” The standards applicable to us are considerably different from the standards applied to public U.S. companies. For instance, we are not required to:

• have a majority of our board of directors be independent;

• have a compensation committee or a nominating or corporate governance committee consisting entirely of independent directors; or

• have regularly scheduled executive sessions with only independent directors.

We have relied on and intend to continue to rely on all of these exemptions for so long as we maintain our status as a foreign private issuer. In addition, we have a board of corporate auditors in lieu of an audit committee in accordance with applicable Japanese laws, which is permitted under Rule 10A-3(c)(3) of the Exchange Act for foreign private issuers, subject to certain requirements. As a result, you may not be provided with the benefits of certain corporate governance standards applicable to public U.S. companies.

Upon completion of this global offering, our parent, NAVER Corporation, will control a majority of the voting power of the outstanding shares of our capital stock, making us a “controlled company” within the meaning of the New York Stock Exchange corporate governance rules. As a controlled company, we are eligible to, and, in the event we no longer qualify as a foreign private issuer, we intend to, elect not to comply with certain of the New York Stock Exchange corporate governance standards, including the requirement that a majority of directors on our board of directors are independent directors and the requirement that our remuneration committee and our nominating and corporate governance committee consist entirely of independent directors.

If you purchase shares of our common stock or ADSs in our initial public offering, you will experience substantial and immediate dilution.

If you purchase shares of our common stock or ADSs in our initial public offering, you will experience substantial and immediate dilution in the pro forma net tangible book value per share of ¥2,265 per share as of March 31, 2016 (assuming no exercise by Morgan Stanley & Co. LLC, as representative of the international

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underwriters, and by Nomura Securities Co., Ltd., as representative of the Japanese underwriters, of the over-allotment options to acquire additional shares of our common stock), based on an assumed initial public offering price of shares of our common stock of ¥2,800 per share (equivalent to dilution of $21.27 per ADS based on an assumed initial public offering price of $26.30 per ADS), the initial reference price we have included in our Japanese registration statement in accordance with Japanese regulations and the approximate midpoint of the price range on the cover page of this prospectus, because the price that you pay will be substantially greater than the pro forma net tangible book value per share or ADS of the shares of common stock or ADSs that you acquire. For more information, see “Dilution.” This dilution is due in large part to the fact that our earlier investor, NAVER Corporation, paid substantially less than the initial public offering price when it purchased shares of our capital stock. You will experience additional dilution upon exercise of stock options to purchase shares of our common stock or if we otherwise issue additional shares of our common stock or ADSs. For more information, see “Dilution.”

Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.

Our articles of incorporation and the Companies Act of Japan (the “Companies Act”) govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors’ and executive officers’ fiduciary duties and obligations and shareholders’ rights under Japanese law may be different from, or less clearly defined than, those that would apply to a company incorporated in any other jurisdiction. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the law of other countries. For example, under the Companies Act, only holders of 3% or more of our total voting rights or our outstanding shares are entitled to examine our accounting books and records. Furthermore, there is a degree of uncertainty as to what duties the directors of a Japanese joint stock corporation may have in response to an unsolicited takeover bid, and such uncertainty may be more pronounced than that in other jurisdictions.

Holders of ADSs have fewer rights than shareholders under Japanese law, and their voting rights are limited by the terms of the deposit agreement.

The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records, and exercising appraisal rights, are available only to shareholders of record. Because the depositary, through its custodian agents, is the record holder of the shares of our common stock underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. ADS holders will not be able to bring a derivative action, examine our accounting books and records, or exercise appraisal rights through the depositary.

Holders of ADSs may exercise their voting rights only in accordance with the provisions of the deposit agreement. Upon receipt of voting instructions from them in the manner set forth in the deposit agreement, the depositary will make efforts to vote the shares underlying the ADSs in accordance with the instructions of ADS holders. The depositary and its agents may not be able to send voting instructions to holders of ADSs or carry out their voting instructions in a timely manner. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise their right to vote.

Holders of ADSs may not receive distributions on shares of our common stock or any value for them if it is illegal or impractical to make them available to such holders.

The depositary of our ADSs has agreed to pay holders of ADSs the cash dividends or other distributions it or the custodian for our ADSs receives on shares of common stock or other deposited securities after deducting its fees and expenses. Holders of ADSs will receive these distributions in proportion to the number of shares of our common stock that such ADSs represent. However, the depositary is not responsible for making such

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payments or distributions if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act of 1933, as amended (the “Securities Act”), but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit distributions on our common stock to holders of ADSs. This means that holders of ADSs may not receive the distributions we make on shares of our common stock if it is illegal or impractical to make them available to such holders. These restrictions may materially reduce the value of our ADSs.

Holders of ADSs may be subject to limitations on transfer of their ADSs.

ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We may amend the deposit agreement without consent from holders of ADSs and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or withdrawing the underlying shares of our common stock.

We may agree with the depositary to amend the deposit agreement without consent from holders of ADSs. If an amendment increases fees to be charged to ADS holders or prejudices a material right of ADS holders, it will not become effective until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, ADS holders are considered, by continuing to hold their ADSs, to have agreed to the amendment and to be bound by the amended deposit agreement. If holders of ADSs do not agree with an amendment to the deposit agreement, their choices will be limited to selling the ADSs or withdrawing the underlying shares of our common stock. No assurance can be given that a sale of ADSs could be made at a price satisfactory to the holder in such circumstances.

We are incorporated in Japan, and it may be more difficult to enforce judgments obtained in courts outside Japan.

We are incorporated in Japan as a joint stock corporation with limited liability. Most of our directors are non-U.S. residents, and a substantial portion of our assets and the personal assets of our directors and corporate executive officers are located outside the United States. As a result, when compared to a U.S. company, it may be more difficult for investors to effect service of process in the United States upon us or to enforce against us, our directors or executive officers, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal or state securities laws of the U.S. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the United States.

Our shareholders of record on a given record date may not receive the dividend they anticipate.

The customary dividend payout practice of publicly listed companies in Japan may significantly differ from that widely followed or otherwise deemed necessary or fair in foreign markets. We may ultimately determine any dividend payment amount to our shareholders of record as of a record date, including whether we will make any dividend payment to such shareholders at all, only after such record date. For that reason, our shareholders of record on a given record date may not receive the dividends they anticipate.

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Dividend payments and the amount you may realize upon a sale of shares of our common stock or ADSs that you hold will be affected by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen.

Cash dividends, if any, in respect of the shares of our common stock represented by our ADSs will be paid to the depositary in Japanese yen and then converted by the depositary into U.S. dollars, subject to certain conditions. Accordingly, fluctuations in the exchange rate between the Japanese yen and the U.S. dollar will affect, among other things, the amounts a holder of ADSs will receive from the depositary in respect of dividends, the U.S. dollar value of the proceeds that a holder of ADSs would receive upon sale in Japan of the shares of our common stock obtained upon surrender of ADSs and the secondary market price of ADSs. Such fluctuations will also affect the U.S. dollar value of dividends and sales proceeds received by holders of shares of our common stock.

Daily price range limitations imposed by the Tokyo Stock Exchange may prevent you from selling shares of our common stock at a particular price on a particular trading day, or at all.

Share prices on the Tokyo Stock Exchange are determined on a real-time basis by the balance between bids and offers. The Tokyo Stock Exchange is an order-driven market without specialists or market makers to guide price formation. To prevent excessive volatility, the Tokyo Stock Exchange sets daily upward and downward price range limitations for each listed stock based on the previous day’s closing price or any “special quote,” a price indicated by the Tokyo Stock Exchange to notify investors that there are orders beyond such price that may result in a large price fluctuation. Although transactions may continue at the upward or downward limit price if the limit is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell shares of our common stock at a price above or below the relevant daily limit may not be able to effect a sale at such price on a particular trading day, or at all.

Investors holding less than a full “unit” of shares will have limited rights as shareholders.

Our articles of incorporation provide that 100 shares of our common stock constitute one “unit.” As a result of the unit share system, ADS holders will only be permitted to surrender ADSs and withdraw underlying shares of our common stock constituting whole units. The Companies Act imposes significant restrictions and limitations on holders of shares of our common stock that do not constitute a whole unit. In general, holders of shares of our common stock constituting less than one unit do not have the right to vote with respect to those shares. For further discussion of the unit share system and its effect on the rights of our shareholders, see “Description of Capital Stock — Unit Share System.”

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the U.S. federal securities laws, which statements involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to,” “should,” “could,” “target,” “project,” “contemplate,” “predict,” “potential,” “continue” or the negative of these words or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include:

• our ability to attract and retain users and increase the level of engagement of our users;

• our ability to improve user monetization;

• our ability to successfully enter new markets and manage our business expansion;

• our ability to compete in the global social network services market;

• our ability to develop or acquire new products and services, improve our existing products and services and increase the value of our products and services in a timely and cost-effective manner;

• our ability to maintain good relationships with platform partners and attract new platform partners;

• our ability to attract advertisers to our platform and increase the amount that advertisers spend with us;

• our expectations regarding our user growth rate and the usage of our mobile applications;

• our ability to increase our revenues and our revenue growth rate;

• our ability to timely and effectively scale and adapt our existing technology and network infrastructure;

• our ability to successfully acquire and integrate companies and assets;

• our future business development, results of operations and financial condition; and

• the regulatory environment in which we operate.

You should read thoroughly this prospectus with the understanding that our actual future results may be materially different from and worse than what we currently expect. We qualify all of our forward-looking statements by these cautionary statements. The forward-looking statements made in this prospectus are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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This prospectus contains data related to the mobile internet industry. These market data, including data from App Annie, IDC, MM Research Institute, Nielsen and Ovum Ltd. (“Ovum”), include projections that are based on a number of assumptions. The mobile internet industry may not grow at the rates projected by the market data, or at all. The failure of the market to grow at the projected rates may materially and adversely affect our business and the market price of our common shares and ADSs. In addition, the rapidly changing nature of the mobile internet industry subjects any projections or estimates relating to the growth prospects or future condition of our market to significant uncertainties. If any one or more of the assumptions underlying the market data proves to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update or revise any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information, future events or otherwise.

51

INDUSTRY DATA AND USER METRICS

This prospectus contains estimates and information concerning our industry, including market size and growth rates of the markets in which we participate, that are based on third-party industry publications and reports. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these third-party industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications and reports.

We review a number of metrics, including MAUs, DAUs and MPUs, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our MAUs, DAUs and MPUs are calculated using our internal data. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products and services across large online and mobile populations around the world. For example, each LINE account is linked to a mobile phone number, and there may be multiple LINE accounts held by the same person if the person carries multiple smartphones and has chosen to download the LINE messaging application on each smartphone. In addition, our data regarding user geographic location for purposes of reporting the geographic location of our MAUs, DAUs and MPUs is based on the mobile phone number associated with the account when a user initially registered the account on LINE. The phone number may not always accurately reflect a user’s actual location at the time of user engagement on our platform. See “Risk Factors — Risks Related to Our Business and Industry — Certain of our user metrics are subject to inherent uncertainties in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.”

We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. Our measures of user growth and user engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.

52

USE OF PROCEEDS

We estimate that we will receive proceeds from the sale of shares of our common stock (including shares represented by ADSs) in the global offering of approximately ¥98,000,000,000 before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. This estimate is based upon an assumed initial offering price of ¥2,800 per share in the global offering, which is the initial reference price we have included in our Japanese registration statement in accordance with Japanese regulations and the approximate midpoint of the estimated offering price range shown on the front cover page of this prospectus. The international underwriters will purchase shares from us in Japanese yen, including for the portion of shares that will be represented by ADSs. If Morgan Stanley & Co. LLC, as representative of the international underwriters, and Nomura Securities Co., Ltd., as representative of the Japanese underwriters, exercise in full their options, in the aggregate, to purchase up to an additional 5,250,000 shares, we estimate that we will receive proceeds of approximately ¥112,700,000,000 before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A ¥100 increase (decrease) in the assumed initial public offering price of ¥2,800 per share would increase (decrease) the proceeds of this offering to us by ¥3,500,000,000, assuming that the number of shares offered by us, as set forth on the front cover page of this prospectus, remains the same and before deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us.

The primary purposes of the global offering are financing our business expansion, which may include investment, acquisition or strategic cooperation to expand our user base or procure additional content for the LINE platform, marketing new products and services and for other general corporate purposes. In addition, we intend to use a portion of the proceeds from this offering to repay ¥42,000 million in loans, all due in June 2016, and which we plan to extend to September 2016, with interest rates between 0.11% and 0.22%, including ¥5,000 million in short-term borrowings we obtained in August 2015 primarily for income tax payments.

We have no agreements or commitments for particular uses of the net proceeds from this global offering, and our management may exercise discretion over the terms and timing of any future transaction in light of the changing needs of our business. In the meantime, we intend to hold any net proceeds in cash or invest them in short-term, investment-grade, interest-bearing instruments.

53

DIVIDEND POLICY

Since our inception, we have not declared or paid cash dividends on shares of our common stock. Any decision to pay dividends in the future will be subject to a number of factors, including our financial condition, results of operations, the level of our retained earnings, capital demands, general business conditions and other factors our board of directors may deem relevant. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Consequently, we cannot give any assurance that any dividends may be declared and paid in the future.

If declared, holders of outstanding shares of our capital stock on a dividend record date will be entitled to the full dividend declared without regard to the date of issuance of the shares or any subsequent transfer of the shares. Payment of declared annual dividends in respect of a particular year, if any, will be made in the following year after approval by our shareholders at the annual general meeting of shareholders, subject to certain provisions of our articles of incorporation and the Companies Act. See “Description of Capital Stock — Restriction on Distribution of Surplus.”

Subject to the terms of the deposit agreement for the ADSs, you will be entitled to receive dividends on shares of our common stock represented by ADSs to the same extent as the holders of shares of our common stock, less the fees and expenses payable under the deposit agreement in respect of, and any Japanese tax applicable to, such dividends. See “Taxation — Japanese Taxation” and “Description of American Depositary Shares.” The depositary will generally convert the Japanese yen it receives into U.S. dollars and distribute the U.S. dollar amounts to holders of ADSs. Cash dividends on shares of our common stock, if any, will be paid in Japanese yen.

54

CAPITALIZATION

The following table sets forth our short-term borrowings and capitalization as of March 31, 2016:

• on an actual basis; and

• on an as adjusted basis to give effect to (i) the sale of shares of our common stock in the global offering (assuming no exercise of the over-allotment options) at an assumed initial public offering price of ¥2,800 per share (equivalent to US$26.30 per ADS), the initial reference price we have included in our Japanese registration statement in accordance with Japanese regulations and the approximate midpoint of the estimated offering price ranges shown on the front cover page of this prospectus, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) our repayment of ¥42,000 million in loans.

You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	As of March 31, 2016
	Actual			As adjusted			Actual(1)			As adjusted(1)
	(in millions of yen and millions of U.S. dollars)
Short-term borrowings	¥	42,058		¥	58		$	374		$	1
Corporate bonds		263			263			2			2
Shareholder’s equity:
Common stock, no par value; 690,000,000 shares authorized; 174,992,000 shares issued and outstanding, actual; and 209,992,000 shares issued and outstanding, as adjusted to give effect to the global offering(2)		12,596			61,596			112			548
Share premium		21,451			70,344			191			626
Accumulated deficit		(19,301	)		(19,301	)		(172	)		(172	)
Accumulated other comprehensive income		4,870			4,870			43			43
Equity attributable to the shareholder of the Company		19,616			117,509			174			1,045
Non-controlling interest		(392	)		(392	)		(3	)		(3	)
Total shareholder’s equity		19,224			117,117			171			1,042
Total capitalization(3)	¥	19,487		¥	117,380		$	173		$	1,044

(1) For convenience, the Japanese yen amounts are expressed in U.S. dollars at the rate of ¥112.42 to US$1.00, the noon buying rate in effect on March 31, 2016 as quoted by the Federal Reserve Bank of New York. The reference price per share was converted to U.S. dollars at the rate of ¥106.47 to US$1.00, the midpoint fixing rate quoted on Reuters at 4:00 pm, June 9, 2016 London time.

(2) Assumes no exercise by Morgan Stanley & Co. LLC, as representative of the international underwriters, and by Nomura Securities Co., Ltd., as representative of the Japanese underwriters, of the overallotment options, and excludes 25,569,000 shares of our common stock issuable upon the exercise of outstanding stock options.

(3) A ¥100 increase (decrease) in the assumed initial public offering price of ¥2,800 per share of our common stock would increase (decrease) as adjusted total capitalization by approximately ¥3,500,000,000, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the options of Morgan Stanley & Co. LLC, as representative of the international underwriters, and of Nomura Securities Co., Ltd., as representative of the Japanese underwriters, to purchase, in the aggregate, 5,250,000 additional shares of our common stock from us were exercised in full, as adjusted total shareholder’s equity and total number of shares of our common stock outstanding as of March 31, 2016 would be ¥131,817 million and 215,242,000, respectively.

55

DILUTION

If you invest in shares of our common stock or ADSs, your interest will be diluted to the extent of the difference between the amount per share paid by purchasers of shares of our common stock or ADSs in this global offering and the net tangible book value per share or ADS immediately after the completion of this global offering. Dilution results from the fact that the initial public offering price per share is substantially in excess of the book value per share attributable to the existing shareholders for our presently outstanding shares. Our net tangible book value as of March 31, 2016 was approximately ¥82 per share of common stock. Net tangible book value per share represents the amount of total assets excluding goodwill and other intangible assets minus the amount of total liabilities, divided by the total number of shares of our common stock outstanding. Dilution is determined by subtracting net tangible book value per share, after giving effect to the additional proceeds we will receive from this global offering, from the assumed initial public offering price per share, which is the initial reference price we have included in our Japanese registration statement in accordance with Japanese regulations and the approximate midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus and before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Without taking into account any other changes in such net tangible book value after March 31, 2016, other than to give effect to our sale of shares of our common stock in the global offering at the assumed initial public offering price of ¥2,800 per share after deduction of estimated underwriting discounts and commissions and estimated offering expenses payable by us, our adjusted net tangible book value as of March 31, 2016 would have been ¥535 per outstanding share. This represents an immediate increase in net tangible book value of ¥453 per share to existing shareholders and an immediate dilution in net tangible book value of ¥2,265 per share (equivalent to $21.27 per ADS) to purchasers of shares of our common stock or ADSs in the global offering.

The following table illustrates such dilution on a per share of common stock basis:

Assumed initial public offering price per share of our common stock	¥	2,800
Net tangible book value per share of our common stock as of March 31, 2016	¥	82
Increase in net tangible book value per share of our common stock attributable to the sale of shares of our common stock in this global offering	¥	453
As adjusted net tangible book value per share of our common stock immediately after this global offering	¥	535
Dilution in net tangible book value per share of our common stock to new investors	¥	2,265

A ¥100 increase (decrease) in the assumed initial public offering price of ¥2,800 per share would increase (decrease) our as adjusted net tangible book value per share after giving effect to the global offering by ¥17 per share and the dilution in net tangible book value per share to new investors in the global offering by ¥83 per share (equivalent to $0.78 per ADS), assuming no change to the number of shares of our common stock offered by us as set forth on the cover page of this prospectus, and before deducting underwriting discounts and commissions and other offering expenses.

If the options of Morgan Stanley & Co. LLC and Nomura Securities Co., Ltd. to purchase, in the aggregate, 5,250,000 additional shares of our common stock are exercised in full, the as adjusted net tangible book value per share, as adjusted to give effect to the global offering, would be ¥591 per share, and the dilution in net tangible book value per share to new investors in the global offering would be ¥2,209 per share (equivalent to $20.75 per ADS).

56

The following table summarizes, as of March 31, 2016, the differences between our existing shareholder and the new investors purchasing shares of our common stock in the global offering, with respect to the respective number of shares purchased, total consideration paid, and average price per share paid, assuming an initial public offering price of ¥2,800 per share, which is the initial reference price we have included in our Japanese registration statement in accordance with Japanese regulations and the approximate midpoint of the estimated offering price range set forth on the front cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

	Shares of stock purchased					Total consideration						Average price per share
	Number		Percent			Amount			Percent
Existing shareholder		174,992,000		83.3	%	¥	12,596,197,697	(1)		11.4	%	¥	71.98
New investors		35,000,000		16.7			98,000,000,000			88.6			2,800
Total		209,992,000		100.0	%	¥	110,596,197,697			100.0	%	¥	526.67

(1) There were no non-cash payments made by NAVER Corporation.

A ¥100 increase (decrease) in the assumed public offering price of ¥2,800 per share of our common stock would increase (decrease) total consideration paid by new investors and average price per share paid by all shareholders by ¥3,500,000,000 and ¥16.67 per share, respectively, assuming a sale of 35,000,000 shares at ¥2,800, the initial reference price we have included in our Japanese registration statement in accordance with Japanese regulations and the approximate midpoint of the range set forth on the cover page of this prospectus, and before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the options of Morgan Stanley & Co. LLC and Nomura Securities Co., Ltd. to purchase, in the aggregate, 5,250,000 additional shares of our common stock are exercised in full, our existing shareholder would own 81.3% and our new investors would own 18.7% of the total number of our shares outstanding upon the completion of this global offering. The primary purposes of the global offering are financing our business expansion, which may include investment, acquisition or strategic cooperation to expand our user base or procure additional content for the LINE platform, marketing new products and services and other general corporate purposes and repaying outstanding debt.

The discussion and tables above also assume no exercise of any outstanding stock options. As of May 31, 2016, there were 25,526,500 shares of our common stock issuable upon exercise of outstanding stock options. See “Management — Stock Options.” To the extent that any of these options are exercised, there will be further dilution to new investors.

57

EXCHANGE RATES

The table below sets forth, for the periods and dates indicated, the noon buying rate in New York City for cable transfers in yen as certified for customs purposes by the Federal Reserve Bank of New York, expressed in yen per US$1.00. Unless otherwise stated, the translations of yen into U.S. dollars in this prospectus have been made at the noon buying rate of the Federal Reserve Bank of New York in effect on March 31, 2016, which was ¥112.42 to US$1.00. We do not intend to imply that the yen or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or yen, as the case may be, at any particular rate, or at all.

	Noon Buying Rate
Period	Average (1)		Period End		High		Low
	(¥ per US$1.00)
2012		80.10		86.64		86.64		76.11
2013		98.00		105.25		105.25		86.92
2014		106.63		119.85		121.38		101.11
2015		121.02		120.27		125.58		116.78
December		–		–		123.52		120.27
2016 (through June 3, 2016)		–		–		121.06		106.34
January		–		–		121.05		116.38
February		–		–		121.06		111.36
March		–		–		113.94		111.30
April		–		–		112.06		106.90
May		–		–		110.75		106.34
June (through June 3)		–		–		109.55		106.88

(1) Calculated by averaging the exchange rates on the last business day of each month during the respective periods.

58

UNAUDITED PRO FORMA FINANCIAL INFORMATION

We have prepared the following unaudited pro forma consolidated financial information to give effect to the deconsolidation of LINE BIZ Plus Ltd. (“BIZTH”), which offers payment services in Thailand.

Our former subsidiary BIZTH was deconsolidated as a result of the issuance of shares on April 25, 2016. BSS Holdings Co., Ltd. (“BSS Holdings”), a third party entity, acquired the newly issued shares and the transaction resulted in a decrease of our ownership of BIZTH from 100.0% to 50.0%. As a result of this transaction, we account for BIZTH as a joint venture under the equity method because we have joint control of the entity. To acquire the new shares, BSS Holdings contributed 750 million Baht, or ¥2,384 million in cash (exchange rate as of the transaction date, April 25, 2016). In conjunction with this transaction, we cancelled a trade receivable from BIZTH of 90 million Baht, or ¥284 million.

The unaudited pro forma condensed consolidated statement of profit or loss for the year ended December 31, 2015 gives effect to the deconsolidation of BIZTH as if it had occurred on January 1, 2015. The unaudited pro forma condensed consolidated statement of profit or loss for the three months ended March 31, 2016 gives effect to the deconsolidation of BIZTH as if it had occurred on January 1, 2015. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2016 gives effect to the deconsolidation of BIZTH as if it had occurred on March 31, 2016.

The pro forma consolidated financial information has not been audited and has been furnished for informational purposes only. We therefore caution you not to place undue reliance on the unaudited pro forma consolidated financial information.

Unless otherwise indicated, the following exchange rates of yen per 1.00 Baht have been applied in the preparation of the pro forma financial information:

Average exchange rate for the year ended December 31, 2015 (pro forma statement of profit or loss for the year ended December 31, 2015):	¥3.52472 / 1.00 Baht
Average exchange rate for the three months ended March 31, 2016 (pro forma statement of profit or loss for the three months ended March 31, 2016):	¥3.23543 / 1.00 Baht
Period-end exchange rate as of March 31, 2016 (pro forma balance sheet):	¥3.19000 / 1.00 Baht

59

Unaudited Pro Forma Condensed Consolidated Statement of Profit or Loss

For the year ended December 31, 2015

	(In thousands of yen, except per share data)
	As Reported			Pro Forma Adjustments			Pro Forma
Revenues and other operating income:
Revenues		120,405,531			111,775	(1)		120,517,306
Other operating income		474,363			(1,023	)(1)		473,340
Total revenues and other operating income		120,879,894			110,752			120,990,646
Operating expenses:
Payment processing and licensing expenses		(28,742,254	)		12,776	(2)		(28,729,478	)
Employee compensation expenses		(35,571,775	)		41,494	(2)		(35,530,281	)
Marketing expenses		(16,596,242	)		10,191	(2)		(16,586,051	)
Infrastructure and communication expenses		(7,712,095	)		44	(2)		(7,712,051	)
Authentication and other service expenses		(12,133,232	)		10,519	(2)		(12,122,713	)
Depreciation and amortization expenses		(3,732,775	)		3,168	(2)		(3,729,607	)
Other operating expenses		(14,431,395	)		34,062	(2)		(14,397,333	)
Total operating expenses		(118,919,768	)		112,254			(118,807,514	)
Profit from operating activities		1,960,126			223,006			2,183,132
Net finance income/(cost)		(35,081	)		29	(3)		(35,052	)
Share of loss of associates		(204,903	)		(125,156	)(4)		(330,059	)
Loss on foreign currency transactions, net		(519,846	)		14,941	(5)		(504,905	)
Other non-operating income		157,023			—			157,023
Other non-operating expenses		(1,887,437	)		12,337	(3)		(1,875,100	)
Loss before tax from continuing operations		(530,118	)		125,157			(404,961	)
Income tax benefits		146,004			—	(6)		146,004
Loss for the year from continuing operations		(384,114	)		125,157			(258,957	)
Attributable to:
The shareholder of the Company		6,196			68,880			75,076
Non-controlling interests		(390,310	)		56,277			(334,033	)
Earnings per share
Basic profit from continuing operations attributable to the shareholder of the Company (7)		0.04						0.44
Diluted profit from continuing operations attributable to the shareholder of the Company (7)		0.03						0.38

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

Pro forma adjustments:

(1) Reflects revenues and other operating income relating to the provision of IT services to BIZTH of ¥122 million, which were previously eliminated as part of the consolidation process but which are now presented as our revenue from BIZTH. This revenue amount reflects a revised service agreement, which is effective from the joint venture transaction date. The adjustment also includes ¥10 million of revenue generated directly by BIZTH from third party customers, which has been eliminated as this revenue was not generated by us. All of the transactions between BIZTH and us relate to the rendering of services and there was nothing recorded in the balance sheet related to these transactions. Therefore, the recognition is not dependent upon a transaction with a third party.

(2) Reflects the elimination of operating expenses directly attributable to BIZTH.

(3) Reflects the elimination of non-operating income and expenses directly attributable to BIZTH.

(4) Reflects our 50% share of loss incurred by BIZTH for the year ended December 31, 2015.

(5) Reflects the elimination of gains from foreign currency transactions directly attributable to BIZTH.

(6) BIZTH recorded a net loss during the year ended December 31, 2015 and therefore no pro forma adjustment was made to income tax benefit. No deferred tax assets on its unused tax losses were recognized by BIZTH as of December 31, 2015.

(7) Pro forma weighted average number of total common and class A shares for basic earnings per share and diluted earnings per share adjusted for the effect of dilution were 174,992,000 and 193,797,566, respectively.

60

Unaudited Pro Forma Condensed Consolidated Statement of Profit or Loss

For the three months ended March 31, 2016

	(In thousands of yen, except per share data)
	As Reported			Pro Forma Adjustments			Pro Forma
Revenues and other operating income:
Revenues		33,455,853			28,765	(8)		33,484,618
Other operating income		660,302			—			660,302
Total revenues and other operating income		34,116,155			28,765			34,144,920
Operating expenses:
Payment processing and licensing expenses		(7,750,301	)		5,488	(9)		(7,744,813	)
Employee compensation expenses		(9,393,213	)		16,991	(9)		(9,376,222	)
Marketing expenses		(2,306,594	)		32,564	(9)		(2,274,030	)
Infrastructure and communication expenses		(1,781,655	)		—	(9)		(1,781,655	)
Authentication and other service expenses		(2,896,673	)		5,486	(9)		(2,891,187	)
Depreciation and amortization expenses		(967,975	)		1,519	(9)		(966,456	)
Other operating expenses		(3,681,759	)		7,809	(9)		(3,673,950	)
Total operating expenses		(28,778,170	)		69,857			(28,708,313	)
Profit from operating activities		5,337,985			98,622			5,436,607
Net finance income		3,202			—			3,202
Share of loss of associates		(62,845	)		(29,989	)(10)		(92,834	)
Loss on foreign currency transactions, net		(568,698	)		(6,927	)(11)		(575,625	)
Other non-operating income		21,252			—			21,252
Other non-operating expenses		(587,886	)		—			(587,886	)
Profit before tax from continuing operations		4,143,010			61,706			4,204,716
Income tax expenses		(2,736,740	)		—	(12)		(2,736,740	)
Profit for the period from continuing operations		1,406,270			61,706			1,467,976
Attributable to:
The shareholder of the Company		1,517,890			34,571			1,552,461
Non-controlling interests		(111,620	)		27,135			(84,485	)
Earnings per share
Basic profit from continuing operations attributable to the shareholder of the Company(13)		8.67						8.87
Diluted profit from continuing operations attributable to the shareholder of the Company(13)		7.79						7.97

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

Pro forma adjustments:

(8) Reflects revenues and other operating income relating to the provision of IT services to BIZTH of ¥34 million, which were previously eliminated as part of the consolidation process but which are now presented as our revenue from BIZTH. This revenue amount reflects a revised service agreement, which is effective from the joint venture transaction date. The adjustment also includes ¥5 million of revenue generated directly by BIZTH from third party customers, which has been eliminated as this revenue was not generated by us. All of the transactions between BIZTH and us relate to the rendering of services and there was nothing recorded in the balance sheet related to these transactions. Therefore, the recognition is not dependent upon a transaction with a third party.

(9) Reflects the elimination of operating expenses directly attributable to BIZTH.

(10) Reflects our 50% share of loss incurred by BIZTH for the three months ended March 31, 2016.

(11) Reflects the elimination of gains from foreign currency transactions directly attributable to BIZTH.

(12) BIZTH recorded a net loss during the three months ended March 31, 2016 and therefore no pro forma adjustment was made to income tax benefit. No deferred tax assets on its unused tax losses were recognized by BIZTH as of March 31, 2016.

(13) Pro forma weighted average number of total common shares for basic earnings per share and diluted earnings per share adjusted for the effect of dilution were 174,992,000 and 194,745,768, respectively.

61

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of March 31, 2016

	(In thousands of yen)
	As Reported			Pro Forma Adjustments			Pro Forma
Assets
Current assets
Cash and cash equivalents		35,081,614			(479,932	)(14)		34,601,682
Trade and other receivables		23,631,977			(3,017	)(15)		23,628,960
Current assets – other		4,022,254			(27,046	)(16)		3,995,208
Total current assets		62,735,845			(509,995	)		62,225,850
Non-current assets
Investments in associates and joint venture		1,622,326			2,383,847	(17)		4,006,173
Other financial assets, non-current		22,878,331			(2,798	)(16)		22,875,533
Deferred tax assets		16,444,552			—	(12)		16,444,552
Non-current assets – other		14,940,397			(156,204	)(18)		14,784,193
Total non-current assets		55,885,606			2,224,845			58,110,451
Total assets		118,621,451			1,714,850			120,336,301
Liabilities
Current liabilities
Trade and other payables		21,870,091			(31,591	)(16)		21,838,500
Other financial liabilities, current		43,080,840			(31,087	)(16)		43,049,753
Other current liabilities		25,908,322			(5,132	)(16)		25,903,190
Total current liabilities		90,859,253			(67,810	)		90,791,443
Non-current liabilities		8,537,906			(4,234	)(16)		8,533,672
Total Liabilities		99,397,159			(72,044	)		99,325,115
Shareholder’s equity
Share capital		12,596,198			—			12,596,198
Share premium		21,451,394			—			21,451,394
Accumulated deficit		(19,301,340	)		1,175,372	(19)		(18,125,968	)
Accumulated other comprehensive income		4,870,329			66,118	(20)		4,936,447
Equity attributable to the shareholder of the Company		19,616,581			1,241,490			20,858,071
Non-controlling interests		(392,289	)		545,404	(21)		153,115
Total shareholder’s equity		19,224,292			1,786,894			21,011,186
Total liabilities and shareholder’s equity		118,621,451			1,714,850			120,336,301

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

Pro forma adjustments:

(14) Reflects the elimination of cash and cash equivalents directly attributable to BIZTH.

(15) Reflects trade and other receivables directly attributable to BIZTH of ¥8 million, which excluded an intercompany trade receivable of ¥5 million, which was previously eliminated as part of the consolidation process but which is now due to us from BIZTH as a result of the transaction. The trade receivable of ¥284 million from BIZTH described in the introductory paragraph does not impact this adjustment because the receivable position is cancelled as a result of the transaction. Refer to note (19) below for more information on the impact of the receivable cancellation on accumulated deficit.

(16) Reflects the elimination of assets and liabilities directly attributable to BIZTH.

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(17) Reflects the change in the ownership of BIZTH from a subsidiary to a 50% owned joint venture as follows:

	(In thousands of yen)
Net assets of BIZTH as reported in our consolidated financial statements as of March 31, 2016		753,855
Fair value adjustment(a)		1,629,993
Investment in associates and joint venture(a)		2,383,848

(a) This adjustment reflects the re-measurement to fair value of our 50% ownership interest in BIZTH. The fair value is based on the issuance of new shares for 750 million Baht (or ¥2,384 million using the exchange rate as of the transaction date, April 25, 2016) cash paid by BSS Holdings to acquire 50% of BIZTH.

(18) Reflects the elimination of other non-current assets directly attributable to BIZTH including ¥131 million of goodwill recognized by us as part of the original acquisition of BIZTH in February 2015.

(19) Mainly reflects a gain on the fair value adjustment attributable to us of ¥1,630 million (see table in note (17) above), partly offset by ¥407 million attributable to a 25% non-controlling interest held by a third party unrelated to BSS Holdings that remains in our post-transaction 50% ownership of BIZTH. The remaining balance was also offset by ¥71 million in connection with the write-off of the trade receivable mentioned in the introductory paragraph. Since the trade receivable cancellation took place while BIZTH was consolidated (i.e., the transaction date), our write-off loss was netted off by a gain in the same amount recorded by BIZTH as its payable to us was cancelled. However, as of transaction date BIZTH was still subject to a 25% non-controlling interest held by a third party unrelated to BSS Holdings. ¥71 million represents 25% of BIZTH’s ¥284 million gain on its payable cancellation. This non-controlling interest reduced BIZTH’s net assets.

(20) Reflects the reversal of the cumulative foreign currency translation adjustment directly attributable to BIZTH.

(21) This adjustment to non-controlling interest includes mainly ¥407 million for the fair value adjustment described in note (19) above. The adjustment also reflects the elimination of the portion of the accumulated loss of BIZTH attributable to a 25% non-controlling interest of ¥130 million. The post-transaction non-controlling interest of 25% described in note (19) was included with the profit that resulted directly from the transaction as of March 31, 2016 and therefore used 25% of our new ownership of 50%. The elimination of the accumulated loss of BIZTH of ¥130 million includes ¥16 million due to foreign currency translation.

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SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

You should read the selected historical financial and operating data below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements and related notes included in this prospectus.

The consolidated statement of financial position data as of December 31, 2014 and 2015 and the consolidated statement of profit or loss data for the years ended December 31, 2013, 2014 and 2015 have been derived from our audited consolidated financial statements and related notes included in this prospectus. The consolidated statement of financial position data as of December 31, 2012 and 2013 and the consolidated statement of profit or loss data for the year ended December 31, 2012 have been derived from our audited consolidated financial statements and related notes not included in this prospectus. These audited consolidated financial statements and the related notes have been prepared in accordance with IFRS as issued by the IASB. The interim condensed consolidated statement of financial position data as of March 31, 2016 and the interim condensed consolidated statement of profit or loss data for the three months ended March 31, 2015 and 2016 have been derived from our unaudited consolidated financial statements and related notes included in this prospectus. The unaudited interim condensed consolidated financial statements and related notes have been prepared on the same basis as the audited consolidated financial statements and related notes and reflect, in the opinion of management, all adjustments of a normal recurring nature that are necessary for a fair statement of unaudited interim condensed consolidated financial statements.

Our audited consolidated financial statements as of and for the year ended December 31, 2013, together with comparative audited consolidated financial statements as of and for the year ended December 31, 2012, are the first consolidated financial statements prepared in accordance with IFRS. For periods up to and including the year ended December 31, 2012, we prepared our consolidated financial statements in accordance with Japanese GAAP. Japanese GAAP differs in material respects from IFRS. For this reason, our financial information presented in accordance with Japanese GAAP, which we publish in Japan, is not directly comparable to our financial information prepared in accordance with IFRS included in this prospectus, and we have not included such information below.

The information set forth below is not necessarily indicative of the results of future operations, and the results of the three months ended March 31, 2016 are not necessarily indicative of results to be expected for the full year or any other period.

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Consolidated Statement of Profit or Loss Data

	For the year ended December 31,															For the three months ended March 31,
	2012			2013			2014			2015			2015(1)			2015			2016			2016(1)
				(in millions of yen and millions of U.S. dollars, except share and per share data)
Revenues and other operating income:
Revenues	¥	6,414		¥	39,586		¥	86,366		¥	120,406		$	1,071		¥	28,104		¥	33,456		$	298
Other operating income		94			69			296			474			4			117			660			5
Total revenues and other operating income		6,508			39,655			86,662			120,880			1,075			28,221			34,116			303
Operating expenses:
Payment processing and licensing expenses		(1,878	)		(9,606	)		(20,598	)		(28,742	)		(256	)		(6,225	)		(7,750	)		(69	)
Employee compensation expenses		(3,929	)		(8,490	)		(18,289	)		(35,572	)		(316	)		(7,574	)		(9,393	)		(84	)
Marketing expenses		(599	)		(17,202	)		(18,069	)		(16,596	)		(148	)		(4,780	)		(2,307	)		(21	)
Infrastructure and communication expenses		(383	)		(2,537	)		(4,492	)		(7,712	)		(69	)		(1,663	)		(1,782	)		(16	)
Authentication and other service expenses		(1,058	)		(4,914	)		(7,874	)		(12,133	)		(108	)		(2,398	)		(2,897	)		(26	)
Depreciation and amortization expenses		(805	)		(1,330	)		(2,370	)		(3,733	)		(33	)		(764	)		(968	)		(9	)
Other operating expenses		(1,282	)		(3,313	)		(8,555	)		(14,432	)		(128	)		(3,393	)		(3,681	)		(31	)
Total operating expenses		(9,934	)		(47,392	)		(80,247	)		(118,920	)		(1,058	)		(26,797	)		(28,778	)		(256	)
Profit (loss) from operating activities		(3,426	)		(7,737	)		6,415			1,960			17			1,424			5,338			47
Finance income		70			67			86			71			1			23			27			0
Finance costs		(73	)		(39	)		(137	)		(106	)		(1	)		(24	)		(24	)		(0	)
Share of loss of associates		—			(243	)		(167	)		(205	)		(2	)		(23	)		(63	)		(1	)
Gain (loss) on foreign currency transactions, net		234			(373	)		66			(520	)		(5	)		(64	)		(569	)		(5	)
Other non-operating income		—			7			—			157			1			14			21			0
Other non-operating expenses		(37	)		—			—			(1,887	)		(16	)		(165	)		(587	)		(4	)
Profit (loss) before tax from continuing operations		(3,232	)		(8,318	)		6,263			(530	)		(5	)		1,185			4,143			37
Income tax benefits (expenses)		(14	)		648			(7,151	)		146			1			(2,942	)		(2,737	)		(24	)
Profit (loss) for the period from continuing operations		(3,246	)		(7,670	)		(888	)		(384	)		(4	)		(1,757	)		1,406			13
Profit (loss) from discontinued operations, net of tax		2,832			1,279			2,892			(7,588	)		(67	)		(148	)		(1,640	)		(15	)
Profit (loss) for the period	¥	(414	)	¥	(6,391	)	¥	2,004		¥	(7,972	)	$	(71	)	¥	(1,905	)	¥	(234	)	$	(2	)
Attributable to:
The shareholder of the Company		(214	)		(764	)		4,207			(7,582	)		(68	)		(1,888	)		(122	)		(1	)
Non-controlling interests(2)		(200	)		(5,627	)		(2,203	)		(390	)		(3	)		(17	)		(112	)		(1	)
Earnings per share:
Basic profit (loss) for the period attributable to the shareholder of the Company	¥	(1.36	)	¥	(4.36	)	¥	24.05		¥	(43.33	)	$	(0.39	)	¥	(10.79	)	¥	(0.70	)	$	(0.01	)
Diluted profit (loss) for the period attributable to the shareholder of the Company		(1.36	)		(4.36	)		22.14			(39.12	)		(0.35	)		(10.79	)		(0.63	)		(0.01	)
Earnings per share from continuing operations
Basic profit (loss) from continuing operations attributable to the shareholder of the Company		(19.33	)		(11.67	)		7.52			0.04			0.00			(9.95	)		8.67			0.08
Diluted profit (loss) from continuing operations attributable to the shareholder of the Company		(19.33	)		(11.67	)		6.92			0.03			0.00			(9.95	)		7.79			0.07
Earnings per share from discontinued operations
Basic profit from discontinued operations attributable to the shareholder of the Company		17.97			7.31			16.53			(43.37	)		(0.39	)		(0.84	)		(9.37	)		(0.09	)
Diluted profit from discontinued operations attributable to the shareholder of the Company		17.97			7.31			15.22			(39.15	)		(0.35	)		(0.84	)		(8.42	)		(0.08	)
Basic weighted average shares outstanding		157,565,943			174,992,000			174,992,000			174,992,000			174,992,000			174,992,000			174,992,000			174,992,000
Diluted weighted average shares outstanding		157,565,943			174,992,000			190,024,846			193,797,566			193,797,566			174,992,000			194,745,768			194,745,768

(1) For convenience, the Japanese yen amounts are expressed in U.S. dollars at the rate of ¥112.42 per US$1.00, the noon buying rate of the Federal Reserve Bank of New York for Japanese yen in effect on March 31, 2016.

(2) For each of the years ended December 31, 2013 and 2014, the non-controlling interests were mainly held by NAVER Corporation, our shareholder.

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Consolidated Statement of Financial Position Data

	As of December 31,												As of March 31,
	2012		2013		2014		2015			2015			2016			2016
	(in millions of yen and millions of U.S. dollars)
Cash and cash equivalents	¥	7,153	¥	13,362	¥	20,254	¥	33,652		$	299		¥	35,082		$	312
Trade and other receivables		7,961		11,625		24,223		27,248			242			23,632			210
Property and equipment		7,504		8,102		9,656		10,501			93			9,974			89
Total assets		33,085		46,522		85,664		122,159			1,087			118,621			1,055
Total liabilities		13,148		34,206		73,153		104,626			931			99,397			884
Total shareholder’s equity		19,937		12,316		12,511		17,533			156			19,224			171
Equity attributable to the shareholder of the Company		19,855		10,727		12,496		17,743			158			19,616			174
Equity attributable to non-controlling interests		82		1,589		15		(210	)		(2	)		(392	)		(3	)

Supplemental Financial Information

	For the year ended December 31,								For the three months ended March 31,
	2013		2014		2015		2015		2015		2016		2016
	(in millions of yen and millions of U.S. dollars)
Adjusted EBITDA(1)..	¥	(5,603)	¥	11,760	¥	16,906	$	150	¥	4,475	¥	8,800	$	78
Adjusted profit (loss) for the period(1).		(6,911)		1,975		10,266		91		411		3,790		34

(1) See “— Non-IFRS Measures” below.

Non-IFRS Measures

We use non-IFRS financial measures such as adjusted EBITDA and adjusted profit (loss) for the period in evaluating our financial and operating results and for financial and operational decision making purposes.

We believe that adjusted EBITDA and adjusted profit (loss) for the period help identify underlying trends in our business that could otherwise be distorted by the effect of the income or expenses that we exclude in calculating adjusted EBITDA and adjusted profit (loss) for the period. We believe that adjusted EBITDA and adjusted profit (loss) for the period provide useful information about our financial and operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision making.

Adjusted EBITDA and adjusted profit (loss) for the period should not be considered in isolation or construed as an alternative to profit (loss) from operating activities, profit (loss) for the period, cash flows or any other measure of performance or as an indicator of our financial or operating performance. Adjusted EBITDA and adjusted profit (loss) for the period presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Adjusted EBITDA represents profit (loss) from operating activities (which does not include finance income, finance costs, share of profit or loss of associates, gain (loss) on foreign currency transactions, net, other non-operating income and expenses, income tax benefits or expenses and profit (loss) from discontinued operations, net of tax) before certain non-cash expenses, consisting of share-based compensation expenses and depreciation and amortization expenses.

Adjusted profit (loss) for the period represents profit (loss) for the period before share-based compensation expenses, tax impact of share-based compensation expenses and profit (loss) from discontinued operations, net of tax.

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The table below sets forth a reconciliation of our profit (loss) from operating activities to adjusted EBITDA for the periods indicated:

	For the year ended December 31,									For the three months ended March 31,
	2013			2014		2015		2015		2015		2016		2016
	(in millions of yen and millions of U.S. dollars)
Profit (loss) from operating activities	¥	(7,737	)	¥	6,415	¥	1,960	$	17	¥	1,424	¥	5,338	$	47
Add: Share-based compensation expenses		804			2,975		11,213		100		2,287		2,494		22
Add: Depreciation and amortization expenses		1,330			2,370		3,733		33		764		968		9
Adjusted EBITDA	¥	(5,603	)	¥	11,760	¥	16,906	$	150	¥	4,475	¥	8,800	$	78

The following table sets forth a reconciliation of our profit (loss) to adjusted profit (loss) for the periods indicated:

	For the year ended December 31,												For the three months ended March 31,
	2013			2014			2015			2015			2015			2016			2016
	(in millions of yen and millions of U.S. dollars)
Profit (loss) for the period	¥	(6,391	)	¥	2,004		¥	(7,972	)	$	(71	)	¥	(1,905	)	¥	(234	)	$	(2	)
Add: Share-based compensation expenses		804			2,975			11,213			100			2,287			2,494			22
Subtract: Tax impact of share-based compensation expenses		(45	)		(112	)		(563	)		(5	)		(119	)		(110	)		(1	)
Subtract: Profit (loss) from discontinued operations, net of tax		(1,279	)		(2,892	)		7,588			67			148			1,640			15
Adjusted profit (loss) for the period	¥	(6,911	)	¥	1,975		¥	10,266		$	91		¥	411		¥	3,790		$	34

Selected Operating Data

The following tables present our selected operating data as of the dates or for the periods indicated:

	For the month of
	Mar. 2013		Jun. 2013		Sep. 2013		Dec. 2013		Mar. 2014		Jun. 2014		Sep. 2014		Dec. 2014		Mar. 2015		Jun. 2015		Sep. 2015		Dec. 2015		Mar. 2016
	(in millions)
Total MAUs(1)		75		94		125		137		159		170		179		190		205		211		212		215		218
Japan		31		35		39		41		45		47		49		51		54		55		57		58		61
Taiwan, Thailand and Indonesia		22		28		34		38		44		49		54		62		70		76		81		87		91
Total MPUs(2)		2.6		3.7		3.7		4.1		5.4		6.7		7.0		8.2		7.5		7.9		8.2		8.8		8.4
MAUs of LINE Games(3)		18		19		21		22		35		34		33		39		38		36		32		32		31
MPUs of LINE Games(4)		0.6		0.8		1.1		1.1		1.5		1.4		1.4		1.8		1.5		1.4		1.4		1.6		1.6

(1) Represents the number of user accounts that (i) accessed the LINE messaging application or any LINE Game through mobile devices; (ii) sent messages through the LINE messaging application from personal computers; or (iii) sent messages through any other LINE application from mobile devices, in each case at least once during the month indicated.

(2) Represents the number of user accounts that made (i) a payment for Stickers, Themes or LINE Out on the LINE messaging application through mobile devices or personal computers or (ii) a payment relating to any LINE Game through mobile devices, in each case at least once during the month indicated.

(3) Represents the number of user accounts that accessed any LINE Game through mobile devices at least once during the month indicated.

(4) Represents the number of user accounts that made a payment relating to any LINE Game through mobile devices at least once during the month indicated.

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	As of
	Mar. 31, 2013		Jun. 30, 2013		Sep. 30, 2013		Dec. 31, 2013		Mar. 31, 2014		Jun. 30, 2014		Sep. 30, 2014		Dec. 31, 2014		Mar. 31, 2015		Jun. 30, 2015		Sep. 30, 2015		Dec. 31, 2015		Mar. 31 2016
	(in millions)
Cumulative downloads of applications offered on the LINE platform
Downloads of the LINE messaging application(1)		134		183		260		325		400		476		554		637		722		804		883		953		1,025
Downloads of LINE Games		93		146		191		235		312		367		428		485		527		563		597		628		654
Downloads of other LINE applications		58		80		101		125		145		169		191		223		270		327		391		441		500
Total		285		409		552		685		857		1,012		1,173		1,345		1,519		1,694		1,871		2,022		2,179

(1) As of March 31, 2016, the number of registered user accounts of the LINE messaging application, after adjusting for subsequent deregistrations, was 675 million.

	For the three months ended
	Mar. 31 2013		Jun. 30 2013		Sep. 30 2013		Dec. 31 2013		Mar. 31 2014		Jun. 30 2014		Sep. 30 2014		Dec. 31 2014		Mar. 31 2015		Jun. 30 2015		Sep. 30 2015		Dec. 31 2015		Mar. 31 2016
	(in millions)
Actual downloads of applications offered on the LINE platform per period
Downloads of the LINE messaging application		29		49		77		65		74		76		79		82		85		82		79		70		71
Downloads of LINE Games		29		53		45		44		77		55		62		57		42		36		33		31		26
Downloads of other LINE applications		17		22		21		24		21		24		22		32		47		57		64		50		58
Total		74		123		143		133		173		155		163		171		174		174		177		151		155

We periodically review the cumulative downloads of the LINE messaging application as an indicator of our performance in acquiring new LINE platform users and the cumulative downloads of LINE Games and other applications as an indicator of the popularity and user acceptance of the games and other content we distribute through the LINE platform.

	For the month of
	Mar. 2013		Jun.  2013		Sep.  2013		Dec.  2013		Mar.  2014		Jun.  2014		Sep.  2014		Dec.  2014		Mar. 2015		Jun.  2015		Sep. 2015		Dec. 2015		Mar. 2016
	(in millions, except Sticker sets available)
Messages(1)
Daily average number of messages sent		1,403		1,801		2,050		2,197		2,860		3,100		3,190		3,372		3,764		4,051		3,997		4,048		4,211
Daily average number of messages received		3,105		3,917		4,257		4,715		6,519		8,071		9,244		11,048		12,889		15,555		15,160		15,534		16,186
Stickers(2)
Daily average number of Stickers sent		155		204		231		267		346		350		328		335		358		397		379		388		389
Total number of Sticker sets available on the LINE platform		163		225		289		351		428		3,881		18,671		41,596		75,392		147,987		185,114		225,895		259,499

(1) Includes text messages, voice messages, Stickers and photo, video, voice and text files sent and received, as well as free voice and video calls made and received, in each case using the LINE messaging application from either mobile devices or personal computers or using any LINE Game or any other LINE application from mobile devices.

(2) Includes Stickers offered on Creators Market, which was launched in April 2014, and Sponsored Stickers.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled “Selected Historical Financial and Operating Data” and the consolidated financial statements and related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this prospectus.

Overview

We are a leading global platform for mobile messaging and communication services, content distribution and advertising. Our mobile messaging application, which is the foundation of our LINE platform and operates on all major mobile operating systems, enables our users to communicate through free instant messaging and voice and video calls and serves as a smart portal to our other applications and services. We provide users with access to a wide range of social and interactive content and services that satisfy our users’ individual needs for access to information and entertainment such as mobile games and music through our “content platform,” as well as O2O services such as payment services and job posting, restaurant reservation and taxi booking services through our “life platform.” We believe that the integration on our LINE platform of content and services offers our users a convenient way to connect and have fun with their family and friends, explore and share their interests and satisfy their daily needs with greater ease, which we believe enriches the user experience and ultimately contributes to higher user loyalty. For game developers and other content providers, we serve as a publishing and distribution platform for the direct sale of their products. Supported by our large user base and high level of user engagement, LINE has become an attractive advertising platform providing targeted and interactive marketing solutions that enable advertisers to promote their brands and amplify their visibility and reach.

Our focus has been on growing our user base and developing our LINE platform into one that is capable of supporting rapid and sustainable growth in a highly evolving, fast-changing industry. We have experienced our largest user growth in Japan, Taiwan, Thailand and Indonesia. In March 2016, we had 218 million MAUs globally, with 152 million MAUs located in Japan, Taiwan, Thailand and Indonesia combined. We strive to localize our services to take into account cultural differences and user needs, and we currently provide our services in 19 languages. According to App Annie, LINE was the fourth largest application publisher globally for the two years ended March 31, 2016, based on the number of downloads from the Social Networking category on iOS App Store and Social and Communication categories on Google Play, combined. At the same time, we have been focusing on increasing revenues generated from various participants active on the LINE platform. While our revenues have been derived primarily from games, Stickers and advertising services, we plan to continue to invest in product development and explore additional monetization opportunities in both our largest existing markets as well as in markets that we have entered more recently.

With an increasing amount of activity on the internet being conducted through mobile applications from a smartphone, we believe that LINE provides a fast, versatile and user-friendly platform for the discovery of content and services in the mobile era. Our approach in each market is to build a large user base through our LINE messaging application, promote user engagement and introduce and enhance entertainment and other content and services, all of which lead to greater monetization opportunities and enhanced media value for our advertising business.

Our Global Footprint and Expansion

We have experienced rapid growth in our business since the introduction of the LINE mobile messaging application in June 2011. We first launched the LINE messaging application to the public in Japan, followed by

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launches in other Asian countries. We initially focused on building our user base in Japan and shortly afterwards expanded our focus to other parts of Asia, where we believed there was significant market potential based on the relatively low level of smartphone penetration in a relatively large and growing population size. Today, we believe LINE is the leading mobile messaging application in Japan, Taiwan and Thailand in terms of number of users, and we have obtained substantial numbers of users in other parts of Asia, including Indonesia, Hong Kong, Singapore, Malaysia and Myanmar.

We have achieved this growth through active marketing of LINE as well as customizing our content offerings to suit local preferences and needs. We continue to see opportunities for growth in our leading markets of Japan, Taiwan, Thailand and Indonesia as we enhance and expand our offering of products and services, while we also continue to strive to enhance our position in additional markets by localizing our products and engaging in targeted marketing.

The growth rate of our active users has slowed recently as the size of our active user base has increased and we have achieved higher market penetration rates, particularly in our leading markets of Japan, Taiwan, Thailand and Indonesia. From our inception, we experienced our largest user growth in Japan, Taiwan, Thailand and Indonesia. While we achieved significant user growth in other parts of the world in 2013 and 2014, beginning in early 2015, we have refocused our marketing efforts on key countries in line with our increased emphasis on monetization in markets where we have achieved leading market positions. While this effort has led to a continued increase in our MAUs in the four key countries of Japan, Taiwan, Thailand and Indonesia as well as overall MAUs, it has at the same time contributed to a significant decrease in total MAUs outside the four key countries. We continue to strive to attract and retain new users in new markets by investing in various product offerings available on the LINE platform as well as marketing initiatives.

We believe that the scale and growth of our user base provide us with powerful network effects, whereby LINE becomes more valuable with more users driving further user growth and engagement as well as attracting more advertisers and platform partners. We benefit from such network effects where more activity on LINE leads to the creation and distribution of more content, which in turn attracts more users, platform partners and advertisers. We will continue to invest in new products and services and enhancements to our existing products and services, with the goal of further expanding our user base and increasing user engagement.

We generate revenues in a variety of ways and from various participants active on the LINE platform. Our revenues are primarily generated from games, Stickers and advertising services on the LINE platform as well as from advertising on our web portals. We generated revenues of ¥39,586 million in 2013, ¥86,366 million in 2014, ¥120,406 million in 2015 and ¥33,456 million in the first three months of 2016. For the two years ended March 31, 2016, according to App Annie, LINE ranked as the world’s largest mobile publisher based on non-game gross revenue from iOS App Store and Google Play, combined.

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Key Milestones

The following is a summary of our key product and service launches since June 2011:

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Key Metrics

MAUs are a measure of the size of our active user base. We define MAUs in a given month as the number of user accounts that (i) accessed the LINE messaging application or any LINE Game through mobile devices; (ii) sent messages through the LINE messaging application from personal computers; or (iii) sent messages through any other LINE application from mobile devices, in each case at least once during that month. Growth in our MAUs has been as follows:

MPUs are a measure of the number of our paying users, which we review to measure our ability to monetize our user base. We define MPUs in a given month as the number of user accounts that made (i) a payment for Stickers, Themes or LINE Out on the LINE messaging application through mobile devices or personal computers or (ii) a payment relating to any LINE Game through mobile devices, in each case at least once during that month. Growth in our MPUs has been as follows:

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Factors Affecting Our Financial Condition and Results of Operations

Our financial condition and results of operations have been and will continue to be materially affected by a number of factors and developments, some of which are outside of our control, including the following:

• user growth;

• user engagement;

• monetization;

• products and services innovation;

• marketing and brand promotion;

• competition;

• investment in talent; and

• seasonal fluctuations.

User Growth

The growth in MAUs affects our revenues and financial performance by influencing the volume of transactions on LINE, the number of advertisers we are able to attract and the rates we can charge such advertisers, as well as our expenses. In March 2016, we had 218 million MAUs globally, including a total of 152 million MAUs in Japan, Taiwan, Thailand and Indonesia. We intend to pursue MAU growth, particularly in Asia, where we have established significant brand recognition and market positioning through localized services and products. For example, we try to incentivize additional users to exchange messages and add more friends through promotional events, as well as broaden the ways users can interact with their friends on our games and other content applications.

User Engagement

Changes in user engagement also affect our revenues and financial performance. Growth in user engagement enhances our ability to deliver relevant content to users and increase the opportunities for us to generate revenues. Growth in user engagement also generally results in increases in our expenses and capital expenditures required to support user activity. Our average DAUs in March 2016 represented approximately 61.4% of our MAUs globally and 73.0% of our MAUs in our four largest markets of Japan, Taiwan, Thailand and Indonesia in March 2016.

We measure user engagement of communication products and services using various metrics, including daily average number of messages sent and received and daily average number of Stickers sent. While sending and receiving messages is free, when sending messages, our users often include in their messages purchased Stickers, which is our primary revenue source within our communication products offerings. In addition, these metrics affect the attractiveness of our LINE advertising products and services as a medium for advertisers, which in turn impacts our advertising revenue. Such metrics for the months indicated were as follows:

	For the month of
	Mar.  2013		Jun.  2013		Sep.  2013		Dec.  2013		Mar.  2014		Jun.  2014		Sep. 2014		Dec. 2014		Mar. 2015		Jun. 2015		Sep. 2015		Dec. 2015		Mar. 2016
	(in millions)
Daily average number of messages sent.		1,403		1,801		2,050		2,197		2,860		3,100		3,190		3,372		3,764		4,051		3,997		4,048		4,211
Daily average number of messages received		3,105		3,917		4,257		4,715		6,519		8,071		9,244		11,048		12,889		15,555		15,160		15,534		16,186
Daily average number of Stickers sent		155		204		231		267		346		350		328		335		358		397		379		388		389

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We measure user engagement of LINE Games primarily using MAUs of LINE Games. While downloading LINE Games is free, our active users often purchase in-game items to enhance their game experience, which is a key revenue source for us. MAUs of LINE Games may fluctuate depending on the level of popularity of our game titles at any given time. The MAUs of LINE Games for the months indicated were as follows:

	For the month of
	Mar. 2013		Jun. 2013		Sep. 2013		Dec. 2013		Mar. 2014		Jun. 2014		Sep. 2014		Dec. 2014		Mar. 2015		Jun. 2015		Sep. 2015		Dec. 2015		Mar. 2016
	(in millions)
MAUs of LINE Games(1)		18		19		21		22		35		34		33		39		38		36		32		32		31

(1) Represents the number of user accounts that accessed any LINE Game through mobile devices at least once during the month indicated.

Monetization

Our ability to monetize the increase in our user base and our users’ engagement with LINE is critical to our financial performance. We currently generate a substantial portion of our revenues from LINE Games, Stickers and our advertising products and services, including Official Accounts, Sponsored Stickers and LINE Point Ads. In recent months, we have also generated an increasing portion of our advertising revenues from our Timeline Ads. Our approach in each market is to build a large user base through our LINE messaging application, promote user engagement and introduce and enhance entertainment and other content and services, all of which lead to greater monetization opportunities and enhanced media value for our advertising business. We plan to continue to invest in product development, including localization of existing products and services for new markets, and explore ways to pursue additional monetization opportunities. For a discussion of our latest innovations, see “— Products and Services Innovation.”

We review MPUs, including MPUs of LINE Games, as a measure to evaluate trends in monetization. MPUs, including MPUs of LINE Games, may fluctuate depending on the level of success of our monetization efforts utilizing the line-up of our products and services. The following table sets forth the number of our MPUs and MPUs of LINE Games for the months indicated:

	For the month of
	Mar. 2013		Jun. 2013		Sep. 2013		Dec. 2013		Mar. 2014		Jun. 2014		Sep. 2014		Dec. 2014		Mar. 2015		Jun. 2015		Sep. 2015		Dec. 2015		Mar. 2016
	(in millions)
Total MPUs(1)		2.6		3.7		3.7		4.1		5.4		6.7		7.0		8.2		7.5		7.9		8.2		8.8		8.4
MPUs of LINE Games(2)		0.6		0.8		1.1		1.1		1.5		1.4		1.4		1.8		1.5		1.4		1.4		1.6		1.6

(1) Represents the number of user accounts that made (i) a payment for Stickers, Themes or LINE Out on the LINE messaging application through mobile devices or personal computers or (ii) a payment relating to any LINE Game through mobile devices, in each case at least once during the month indicated.

(2) Represents the number of user accounts that made a payment relating to any LINE Game through mobile devices at least once during the month indicated.

We intend to invest in our global operations in order to increase monetization outside of Japan, especially in our three other key countries of Taiwan, Thailand and Indonesia. We generated 84.6%, 73.1%, 67.8% and 68.7% of our LINE business revenues (i.e., our total revenues excluding revenues from portal advertising) from Japan in 2013, 2014, 2015 and the first three months of 2016, respectively, and we expect to continue to derive a significant portion of our revenues from Japan in the near future. Certain global markets are not as familiar with new forms of digital advertising, such as our Official Accounts, Sponsored Stickers and LINE Point Ads. In such markets, we are investing in marketing efforts to help our users and advertisers understand and take advantage of the benefits of products and services offered on the LINE platform.

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Products and Services Innovation

Our ability to increase the size of our user base and engagement of our users, attract platform partners and advertisers and generate revenues will depend in part on our ability to create successful new products and services, both independently and in conjunction with third parties. We plan to continue to make significant investments in product development and, from time to time, we may acquire companies to further enhance our products, services and technical capabilities.

As part of our efforts to provide innovative products and services, we launched Business Connect and LINE@ that help business partners integrate their online and offline advertising to better reach and communicate with customers, and recently introduced performance ads such as Timeline Ads and other advertisements that utilize our various communication and content offerings, to allow advertisers to effectively reach a larger number of LINE users. To increase the availability of high-quality content on the LINE platform, in December 2015 we expanded LINE News, our personalized news-clipping service that provides users with relevant real-time news stories based on the topics that users are most interested in, such as entertainment, sports, politics, economy, gourmet and fashion, and launched LINE Live, a real-time streaming service that allows users to access live streaming personal videos or commercial events, such as concerts and sporting events, provided by artists, celebrities and corporate sponsors. Both LINE News and LINE Live send updates to users through push notifications that users can check easily without having to leave the LINE messaging application. In March 2016, we announced the launch of LINE Mobile planned for the second half of 2016.

Our operating results have been, and will continue to be, affected by our ability to stimulate customer demand for new and upgraded products and to anticipate and respond to emerging customer preferences and demands by ensuring continuing and timely development of new products and services, as well as enhancements to existing products and services. New services will incur additional operating expenses with uncertainty on timing and level of monetization.

Marketing and Brand Promotion

As we continue to increase our footprint, we engage in active marketing campaigns to promote new products and services, build our brand and expand our user base. We utilize television commercials and internet and mobile advertising, often targeting younger generation users. Our marketing expenses, which consist primarily of costs related to advertising on mass media (primarily television advertising) and advertising on mobile applications (particularly mobile games), but excluding personnel-related costs of our marketing staff, were ¥17,202 million, ¥18,069 million, ¥16,596 million and ¥2,307 million in 2013, 2014, 2015 and the first three months of 2016, respectively. While we believe that our ability to grow through network effects will be fundamental to our growth, we expect to continue to invest significantly in marketing activities, including activities to further promote the growth we have experienced to date as we enter new markets and seek to expand our presence in existing markets. Our quarterly marketing expense has fluctuated in the past and will fluctuate in the future.

Competition

We compete against many companies in different industries and markets to attract and engage users and for advertiser spending. See “Business — Competition.” We must compete effectively for users and advertisers in order to grow our business and increase our revenues. Scale benefits and other advantages may allow our competitors to respond more quickly and effectively than us to a rapidly evolving environment in the mobile internet industry, including industry consolidation that may result in increased competition. We will continue to invest in our products and services for users and advertisers and to grow our active user base in order to address the competitive challenges in our industry. As part of our strategy to improve our products and services, we may acquire other companies to add talent or complementary products and technologies.

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Investment in Talent

We intend to continue to invest in hiring and retaining talented employees to grow our business and increase our revenues. We had 2,537 full-time employees as of March 31, 2016, compared to 2,454 as of December 31, 2015, 1,783 as of December 31, 2014 and 1,060 as of December 31, 2013. We expect to increase our personnel for the foreseeable future as we continue to invest in the growth of our business. We have also made and intend to continue to make acquisitions that increase the number of our engineers, designers, product managers and other personnel with specific technology expertise. In addition, we must retain our high-performing personnel in order to continue to develop, sell and market our products and services and manage our business.

We offer stock options for our directors and employees. For a discussion of our stock options, see Note 28 of the notes to our annual consolidated financial statements and Note 12 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus and “— Critical Accounting Judgments, Estimates and Assumptions — Share-based Payments and Valuation of Our Share Capital.” The stock options vest upon the satisfaction of service conditions. In connection with our stock option awards, we recorded expenses of ¥804 million, ¥2,975 million, ¥11,213 million and ¥2,494 million in 2013, 2014, 2015 and the first three months of 2016, respectively.

Seasonal Fluctuations

Our quarterly operating results may fluctuate significantly from period to period based on the seasonality of user spending for products and services offered on our LINE platform, such as Stickers for which various promotions may be offered either by us or by our advertisers in the year-end holiday season. In Japan, where a majority of companies end their fiscal year on March 31, advertising spending is traditionally stronger in our fourth and first quarters due to the year-end effects and companies in Japan trying to spend their advertising budgets before the close of their fiscal year. This seasonality in advertising has affected our quarterly results, with higher sequential advertising revenue growth from the third quarter to the fourth and then first quarter compared to slower growth or a decline in revenues and profits between the first quarter and the second quarter. For example, our LINE advertising revenues increased 14.5% from the three months ended September 30, 2015 to the three months ended December 31, 2015 and 13.0% from the three months ended December 31, 2015 to the three months ended March 31, 2016, while our LINE advertising revenues decreased 2.2% from the three months ended March 31, 2015 to the three months ended June 30, 2015. For these reasons, a sequential quarter-to-quarter or year-to-year comparison is not necessarily a good indication of our performance or of how our business will perform in the future. As the percentage of our advertising revenues increases, such seasonal impact may become more pronounced in the future.

Major Components of Results of Operations

We generate revenues from our LINE business and portal business. Revenues from our LINE business primarily consist of revenues from communication products and services on LINE, content on LINE and advertising on LINE, while revenues from our portal business consist of revenues from advertising on our livedoor and Matome portal sites.

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Revenues

The following sets forth the components of our revenues, and their percentages of total revenues, for the periods indicated:

	For the year ended December 31,												For the three months ended March 31,
	2013				2014				2015				2015				2016
	(in millions of yen or percentages)
Communication and content:
Communication	¥	9,893	25.0	%	¥	20,690	24.0	%	¥	28,725	23.9	%	¥	6,680	23.8	%	¥	7,686	23.0	%
Content		17,662	44.6			40,449	46.8			49,284	40.9			12,064	42.9			11,865	35.5
Others(1)		664	1.7			1,783	2.1			5,985	5.0			1,023	3.6			2,032	6.0
Sub-total		28,219	71.3			62,922	72.9			83,994	69.8			19,767	70.3			21,583	64.5
Advertising:
LINE advertising		5,322	13.4			14,603	16.9			26,487	22.0			5,591	19.9			9,302	27.8
Portal advertising		6,045	15.3			8,841	10.2			9,925	8.2			2,746	9.8			2,571	7.7
Sub-total		11,367	28.7			23,444	27.1			36,412	30.2			8,337	29.7			11,873	35.5
Total	¥	39,586	100.0	%	¥	86,366	100.0	%	¥	120,406	100.0	%	¥	28,104	100.0	%	¥	33,456	100.0	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

Communication and Content

• Communication.  Revenues from communication primarily consist of sales of Stickers. We recognize Sticker revenues at the time of purchase and over an estimated usage period which reflects end user usage patterns.

In the case of purchases of our virtual credits, revenues are not recognized when our users purchase virtual credits but rather when they use such virtual credits. When virtual credits are redeemed for the purchase of Stickers (or in-game items for games internally developed by us as described below), the credits redeemed are recognized as revenues over the estimated usage periods of Stickers (or in-game/in-app virtual items in the case of games/applications internally developed by us as described below).

• Content.  Revenues from content primarily consist of revenues from LINE Games.

For games developed by third-party game developers, revenues are recognized at the time of purchase of in-game items and over the contract periods during which such games are accessible on the LINE platform, depending on the types of services provided to third-party game developers. We recognize the net proceeds we receive as our revenue, which are equivalent to the total consideration paid by users less processing fees paid to payment processing service providers and the amounts paid to third-party game developers.

For games/applications internally developed by us, revenues are recognized at the time our users purchase in-game/in-app items or over the estimated periods over which the benefits of such items are enjoyed by our users, depending on the durability of the items. We recognize the amounts of total consideration paid by users as our revenues. Processing fees paid to payment processing service providers are recognized as part of our operating expenses as described below.

• Others.  Revenues from others primarily consist of sales of official LINE merchandise, royalty revenues related to LINE characters’ copyrights and revenues from our e-commerce services.

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Advertising

• LINE advertising.  Revenues from LINE advertising primarily consist of fees from Official Accounts, Sponsored Stickers and LINE Point Ads. For Official Accounts, we recognize monthly fees in the month services are rendered and, in certain jurisdictions where we also charge a one-time registration fee, such fee over the period of the advertising contract. For Sponsored Stickers, we provide marketing and design services and recognize revenues from such services over the advertising contract period. Through LINE Point Ads, we provide users with LINE Points for free as a reward for downloading certain applications, watching certain video commercials created by our advertisers or adding certain Official Accounts as a LINE friend. We charge advertisers a fixed fee per such action taken by our users and recognize such revenue in the period in which it is taken. For Timeline Ads, a new advertising product launched in December 2015 that allows advertisers to post advertisements on users’ Timelines, we charged advertisers a fixed fee per Timeline Ad until May 2016. Beginning in June 2016, we transitioned to charging advertisers a fixed fee per impression for Timeline Ads as well as for other targeted native mobile advertisements across our content products.

• Portal advertising.  Revenues from portal advertising primarily consist of advertising fees and subscription fees from our livedoor and Matome portal sites on both personal computers and mobile devices. We recognize advertising revenues over the advertising contract period. See “Business — LINE Platform — Advertising Products and Services — Portal Advertising” for a discussion of our livedoor and Matome portals.

For a discussion of details on how we recognize revenues for different services, see Note 3(21) of the notes to our annual consolidated financial statements appearing elsewhere in this prospectus.

Operating Expenses

The following are the principal components of our operating expenses:

• Payment processing and licensing expenses.  Payment processing and licensing expenses consist primarily of (i) processing fees paid to Apple and Google, our payment processing service providers, incurred from the sale of virtual items for internally-developed games and Stickers, and (ii) licensing fees paid to owners of third-party content used in Stickers and other products and services on a revenue-sharing basis.

• Employee compensation expenses.  Employee compensation expenses are our personnel-related costs, including salaries, benefits and share-based compensation.

• Marketing expenses.  Our marketing expenses consist primarily of costs related to (i) advertising on mass media, primarily television advertising and (ii) advertising on mobile applications. To a lesser extent, we also incur marketing expenses related to brand promotional events. Our marketing expenses do not include compensation expenses of our marketing personnel, which are included in employee compensation expenses.

• Infrastructure and communication expenses.  Infrastructure and communication expenses consist primarily of co-location charges incurred by us that are required for operation of the LINE platform and data centers, including fees for data transmission, data center infrastructure fees for maintenance of a suitable operating environment, server rental fees and server connection fees.

• Authentication and other service expenses.  Authentication and other service expenses primarily relate to (i) fees paid for mobile phone number authentication services, (ii) fees paid for server maintenance activities and (iii) fees paid to customer service center operators as well as outsourcing service providers, in each case for services outsourced to third parties on a fixed-fee basis.

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• Depreciation and amortization expenses.  Depreciation and amortization expenses primarily relate to depreciation of property and equipment, which is computed using the straight-line method based on the depreciable amount of the assets over their respective useful lives.

We plan to continue to expand our business globally. We plan to continue increasing the capacity and enhancing the capability and reliability of our infrastructure to support user growth and increased activity on our LINE platform. We also plan to continue to invest in marketing activities to increase brand awareness, promote launching of new services and expand our user base and advertiser base. Some of our operating expenses, such as employee compensation expenses, are relatively fixed, and other expenses, such as marketing expenses, may not directly correspond to revenues in the same period. We expect that our operating expenses will increase for the foreseeable future and may vary in the near term from period to period as a percentage of revenues.

Finance Income and Finance Costs

Our finance income consists of interest income, and our finance costs consist of interest expense.

Income Tax Benefits (Expenses)

Our income tax benefits (expenses) mainly consist of current income taxes in Japan and Korea, and deferred income taxes and changes in the related assessment of the recoverability of deferred tax assets reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under Japanese tax regulations that took effect on April 1, 2014, the statutory tax rate applicable to corporations was reduced from 38.0% to 35.6% for taxable years beginning on or after April 1, 2014. Under current Korean tax regulations, the statutory tax rate is approximately 22.0%. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.

Profit (Loss) from Discontinued Operations, Net of Tax

Prior to April 1, 2013, we were engaged in the development and distribution of online games through our Hangame business along with its related entities, including NHN Search Technology Corporation, NHNST Japan Corporation, Sync Corporation, Mediator Corporation and our 49.95% interest in Smartphone Contents Investment Limited Partnership. On February 13, 2013, we publicly announced our decision to dispose of our Hangame business and related entities, and they were classified as discontinued operations. The Hangame business and related entities were transferred to a new entity, NHN Japan Corporation, which specializes in internet and gaming services. We disposed of all of our ownership interest in NHN Japan Corporation by transferring all of the related shares in the form of a non-cash dividend to NAVER Corporation at book value, which was completed on April 1, 2013. The book value of NHN Japan Corporation was ¥8,652 million at the time of distribution, and no disposal gain or loss was recorded for financial accounting purposes although the transaction did entail a gain for income tax purposes.

On September 30, 2013, we publicly announced our decision to dispose of our online match-making service business, which was also classified as discontinued operations. We completed the disposition on December 2, 2013 by selling all related assets and liabilities of the business to an unrelated third party and recognized a gain of ¥739 million (prior to income taxes on disposal).

On September 19, 2014, our board of directors approved a plan to dispose of our data management business which consisted of data storage and server hosting services. The operations of the data management services business were classified as discontinued operations on September 19, 2014, and the disposition was completed on September 30, 2014 through a sale to a subsidiary of NHN Entertainment Corporation, an online game portal company that was spun off from NAVER Corporation in August 2013.

On February 12, 2016, after careful assessment of the overall performance of MixRadio, the financial challenges posed by the music streaming market, changing market conditions, an increase in the cost of

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maintaining the business and a shift in our overall priorities, our board of directors approved the abandonment of our MixRadio operations, which abandonment became effective on March 21, 2016. As a result, we have retrospectively classified the MixRadio business as a discontinued operation in our consolidated financial statements as of and for the year ended December 31, 2015 and recognized impairment charges of ¥4.6 billion in the fourth quarter of 2015. We also incurred additional restructuring costs of ¥1,183 million for employee termination benefits and ¥127 million for the termination of office lease contracts, in the first three months of 2016 as a result of the abandonment of the MixRadio operations. For more information, see Note 24 and Note 35 of the notes to our annual consolidated financial statements and Note 9 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

The results of the above discontinued operations for 2013, 2014 and 2015 were as follows:

	For the year ended December 31,						Changes						For the year ended December 31,						Changes						For the three months ended March 31,						Changes
	2013			2014			Amount			%			2014			2015			Amount			%			2015			2016			Amount			%
	(in millions of yen)									(in percentage)			(in millions of yen)									(in percentage)			(in millions of yen)									(in percentage)
Revenues	¥	11,275		¥	3,477		¥	(7,798	)		(69.2	)%	¥	3,477		¥	264		¥	(3,213	)		(92.4	)%	¥	10		¥	443		¥	433			4,330.0	%
Other income		61			1			(59	)		(99.0	)		1			—			(1	)		(100.0	)		103			—			(103	)		(100.0	)
Expenses		(9,631	)		(3,087	)		6,544			(67.9	)		(3,087	)		(11,767	)		(8,681	)		281.2			(261	)		(2,940	)		(2,679	)		(1026.4	)
Gain (loss) on the disposal of discontinued operations		739	(1)		2,456	(2)		1,716			232.1			2,456	(2)		—			(2,456	)		(100.0	)		—			—			—			—
Profit (loss) before tax from discontinued operations		2,444			2,847			403			16.5			2,847			(11,503	)		(14,350	)		N/A	(3)		(148	)		(2,497	)		(2,349	)		(1587.2	)
Income tax expenses on ordinary activities		(708	)		(216	)		492			(69.4	)		(216	)		—			216			(100.0	)		—			—			—			—
Income tax (expenses)/benefits on distribution and disposal		(457	)(4)		261	(2)		719			N/A	(3)		261	(2)		3,915	(5)		3,653			1,396.1			—			857			857	(5)		N/A	(3)
Profit (loss) for the period from discontinued operations	¥	1,279		¥	2,892		¥	1,613			126.2	%	¥	2,892		¥	(7,588	)	¥	(10,480	)		N/A	(3)	¥	(148	)	¥	(1,640	)	¥	(1,492	)		(1008.1	)%

(1) The gain is related to the disposal of the online match-making service business.

(2) We recognized a gain of ¥2,456 million on the disposal of the data management business for financial accounting purposes. However, for income tax purposes, we recognized a loss on the disposal of the data management business, based on the book value of our investment in the data management subsidiaries on a stand-alone basis. Accordingly, we incurred ¥261 million of income tax benefits on the loss on sale in 2014.

(3) N/A means not applicable.

(4) The divestiture of NHN Japan Corporation was accounted for as a transaction under common control and, accordingly, no disposal gain or loss was recorded for financial accounting purposes. However, the divestiture was deemed to be a transfer of assets for income tax purposes, and hence, was a taxable transaction. Accordingly, we incurred ¥288 million of income tax expense on the gain on sale. The remaining ¥169 million of income tax expense relates to the gain on sale of the online match-making services business.

(5) The income tax benefits of ¥3,915 million for 2015 and ¥857 million for the first three months of 2016 are mainly due to the deductible temporary difference which resulted from losses incurred in connection with MixRadio Limited.

For further information regarding discontinued operations, see Note 24 of the notes to our annual consolidated financial statements and Note 9 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

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Results of Operations

The following table presents our selected statements of profit or loss data for the periods indicated.

	For the year ended December 31,									For the three months ended March 31,
	2013			2014			2015			2015			2016
	(in millions of yen)
Revenues and other operating income:
Revenues	¥	39,586		¥	86,366		¥	120,406		¥	28,104		¥	33,456
Other operating income		69			296			474			117			660
Total revenues and other operating income		39,655			86,662			120,880			28,221			34,116
Operating expenses:
Payment processing and licensing expenses		(9,606	)		(20,598	)		(28,742	)		(6,225	)		(7,750	)
Employee compensation expenses		(8,490	)		(18,289	)		(35,572	)		(7,574	)		(9,393	)
Marketing expenses		(17,202	)		(18,069	)		(16,596	)		(4,780	)		(2,307	)
Infrastructure and communication expenses		(2,537	)		(4,492	)		(7,712	)		(1,663	)		(1,782	)
Authentication and other service expenses		(4,914	)		(7,874	)		(12,133	)		(2,398	)		(2,897	)
Depreciation and amortization expenses		(1,330	)		(2,370	)		(3,733	)		(764	)		(968	)
Other operating expenses		(3,313	)		(8,555	)		(14,432	)		(3,393	)		(3,681	)
Total operating expenses		(47,392	)		(80,247	)		(118,920	)		(26,797	)		(28,778	)
Profit (loss) from operating activities		(7,737	)		6,415			1,960			1,424			5,338
Finance income		67			86			71			23			27
Finance costs		(39	)		(137	)		(106	)		(24	)		(24	)
Share of loss of associates		(243	)		(167	)		(205	)		(23	)		(63	)
Gain (loss) on foreign currency transactions, net		(373	)		66			(520	)		(64	)		(569	)
Other non-operating income		7			—			157			14			21
Other non-operating expenses		—			—			(1,887	)		(165	)		(587	)
Profit (loss) before tax from continuing operations		(8,318	)		6,263			(530	)		1,185			4,143
Income tax benefits (expenses)		648			(7,151	)		146			(2,942	)		(2,737	)
Profit (loss) for the period from continuing operations		(7,670	)		(888	)		(384	)		(1,757	)		1,406
Profit from discontinued operations, net of tax		1,279			2,892			(7,588	)		(148	)		(1,640	)
Profit (loss) for the period	¥	(6,391	)	¥	2,004		¥	(7,972	)	¥	(1,905	)	¥	(234	)

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The following table presents our selected statements of profit or loss data as percentages of total revenues for the periods indicated.

	For the year ended December 31,									For the three months ended March 31,
	2013			2014			2015			2015			2016
	(in percentages)
Revenues and other operating income:
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Other operating income		0.2			0.3			0.4			0.4			2.0
Total revenues and other operating income		100.2			100.3			100.4			100.4			102.0
Operating expenses:
Payment processing and licensing expenses		(24.3	)		(23.8	)		(23.9	)		(22.2	)		(23.2	)
Employee compensation expenses		(21.4	)		(21.2	)		(29.5	)		(27.0	)		(28.1	)
Marketing expenses		(43.5	)		(20.9	)		(13.8	)		(17.0	)		(6.9	)
Infrastructure and communication expenses		(6.4	)		(5.2	)		(6.4	)		(5.9	)		(5.3	)
Authentication and other service expenses		(12.4	)		(9.1	)		(10.1	)		(8.5	)		(8.7	)
Depreciation and amortization expenses		(3.4	)		(2.7	)		(3.1	)		(2.7	)		(2.9	)
Other operating expenses		(8.3	)		(9.9	)		(12.0	)		(12.0	)		(10.9	)
Total operating expenses		(119.7	)		(92.8	)		(98.8	)		(95.3	)		(86.0	)
Profit (loss) from operating activities		(19.5	)		7.5			1.6			5.1			16.0
Finance income		0.2			0.1			0.1			0.1			0.1
Finance costs		(0.1	)		(0.2	)		(0.1	)		(0.1	)		(0.1	)
Share of loss of associates		(0.6	)		(0.2	)		(0.2	)		(0.1	)		(0.2	)
Gain (loss) on foreign currency transactions, net		(1.0	)		0.1			(0.4	)		(0.2	)		(1.7	)
Other non-operating income		0.0			—			0.1			0.1			0.1
Other non-operating expenses		—			—			(1.5	)		(0.7	)		(1.8	)
Profit (loss) before tax from continuing operations		(21.0	)		7.3			(0.4	)		4.2			12.4
Income tax benefits (expenses)		1.6			(8.3	)		0.1			(10.5	)		(8.2	)
Profit (loss) for the period from continuing operations		(19.4	)		(1.0	)		(0.3	)		(6.3	)		4.2
Profit from discontinued operations, net of tax		3.3			3.3			(6.3	)		(0.5	)		(4.9	)
Profit (loss) for the period		(16.1	)%		2.3	%		(6.6	)%		(6.8	)%		(0.7	)%

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Comparison of the Three Months Ended March 31, 2015 and 2016

Revenues

The following table presents a breakdown of our revenues by major services and changes therein for the periods indicated.

	For the three months ended March 31,				Changes
	2015		2016		Amount			%
	(in millions of yen or percentages)
Communication and content:
Communication	¥	6,680	¥	7,686	¥	1,006			15.1	%
Content		12,064		11,865		(199	)		(1.6	)
Others(1)		1,023		2,032		1,009			98.6
Sub-total		19,767		21,583		1,816			9.2
Advertising:
LINE advertising		5,591		9,302		3,711			66.4
Portal advertising		2,746		2,571		(175	)		(6.4	)
Sub-total		8,337		11,873		3,536			42.4
Total	¥	28,104	¥	33,456	¥	5,352			19.0	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

Our revenues increased by 19.0%, or ¥5,352 million, from ¥28,104 million in the first three months of 2015 to ¥33,456 million in the first three months of 2016 primarily due to the successful monetization of LINE advertising, backed by continued growth in our global active user base and their engagement level, as well as an increase in sales of Stickers. The expansion of LINE Point Ads and the continued growth of Official Accounts and Sponsored Stickers as well as the successful introduction and commencement of monetization of Timeline Ads helped to drive growth in revenues from LINE advertising. Our MAUs and MPUs increased from 205 million and 7.5 million in March 2015 to 218 million and 8.4 million in March 2016, respectively. In particular, MAUs in our four key countries increased from 123 million to 152 million during the same period, helping to drive growth in revenues from communication.

Communication and Content

	For the three months ended March 31,						Changes
	2015			2016			Amount			%
	(in millions of yen or percentages)
Communication	¥	6,680		¥	7,686		¥	1,006			15.1	%
Percentage of revenues		23.8	%		23.0	%
Content		12,064			11,865			(199	)		(1.6	)
Percentage of revenues		42.9	%		35.5	%
Others(1)		1,023			2,032			1,009			98.6
Percentage of revenues		3.6	%		6.0	%
Total communication and content	¥	19,767		¥	21,583		¥	1,816			9.2	%
Percentage of revenues		70.3	%		64.5	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

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Communication. Revenues from communication increased by 15.1%, or ¥1,006 million, from ¥6,680 million in the first three months of 2015 to ¥7,686 million in the first three months of 2016 primarily due to an increase in the volume of Stickers sold on Creators Market. The increase in these Sticker sales was driven by the redesign of our online Sticker shop in July 2015 and the increase in the number and variety of Stickers offered on Creators Market in the first three months of 2016 compared to the first three months of 2015, which was largely due to a streamlined selection process that enables our users to offer their self-designed Stickers for sale more easily.

Content. Revenues from content decreased slightly by 1.6%, or by ¥199 million, from ¥12,064 million in the first three months of 2015 to ¥11,865 million in the first three months of 2016 primarily due to a slight decrease in the sales volume of in-game items for LINE Games.

The decrease in the sales volume of in-game items was primarily driven by delays in releasing major updates to several of our popular LINE Games and fewer of our new games released in 2015 achieving successful results, which in turn led to reduced marketing for such games. As a result, a number of games launched in 2014, such as LINE Rangers, LINE Get Rich and LINE Pokopoko, saw declines in sales in the first three months of 2016 compared to the first three months of 2015. These declines were mostly offset by increases in revenue from several other games, such as LINE Bubble 2, which was launched in April 2015, and LINE Disney TsumTsum, for which there was increased marketing activity during the first three months of 2016 in conjunction with an update with new characters released in December 2015. LINE Bubble 2, an internally-developed game, generated revenues of ¥1,668 million in the first three months of 2016 compared to no such revenue in the first three months of 2015. For internally-developed games, we recognize as revenues the gross amount of consideration paid by users which amplifies the impact of purchases of in-game items on our revenue increase compared to third-party developed games, for which we recognize as revenues the net proceeds after deducting amounts paid to third-party game developers and payment processing service providers. See “— Major Components of Results of Operations — Revenues.” Cumulative downloads of LINE Games increased from 528 million as of March 31, 2015 to 654 million as of March 31, 2016.

Others. Revenues from the others category, which consists primarily of sales of official LINE merchandise at our flagship and fixed-duration pop-up retail stores, royalty revenues related to LINE characters’ copyrights and e-commerce revenues, increased 98.6%, or by ¥1,009 million, from ¥1,023 million in the first three months of 2015 to ¥2,032 million in the first three months of 2016 primarily due to an increase in numbers of and sales from LINE Friends stores in Korea, China and Hong Kong.

Advertising

	For the three months ended March 31,						Changes
	2015			2016			Amount			%
	(in millions of yen or percentages)
LINE advertising	¥	5,591		¥	9,302		¥	3,711			66.4	%
Percentage of revenues		19.9	%		27.8	%
Portal advertising		2,746			2,571			(175	)		(6.4	)
Percentage of revenues		9.8	%		7.7	%
Total advertising	¥	8,337		¥	11,873		¥	3,536			42.4	%
Percentage of revenues		29.7	%		35.5	%

LINE Advertising. Revenues from LINE advertising increased 66.4%, or by ¥3,711 million, from ¥5,591 million in the first three months of 2015 to ¥9,302 million in the first three months of 2016 primarily due to revenues attributable to LINE Point Ads. For LINE Point Ads, users increasingly took advantage of additional ways to earn LINE Points that were introduced in the second half of 2015, such as by viewing video commercials and film previews, which in turn led to an increase in revenues attributable to LINE Point Ads. The increase in

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revenues from LINE advertising was also attributable to an increase in the number of paid contracts for Official Accounts as well as increased numbers of sets of Sponsored Stickers, driven mainly by expanding advertising solutions and the increasing attractiveness of the LINE platform to existing as well as new advertisers as a result of our large user base and level of user engagement. The total number of paid Official Accounts outstanding at the end of each month during the period increased from 1,019 in the first three months of 2015 to 1,285 in the first three months of 2016, primarily as a result of our successful retention of existing advertisers as well as an increase in new advertisers, both mainly in Japan. In addition, the number of paid contracts for Sponsored Stickers in Taiwan and Thailand for which we collected fees increased in the first three months of 2016. Timeline Ads, which we launched in December 2015, also generated revenues of ¥609 million in the first three months of 2016 compared to no such revenue in the first three months of 2015.

Portal Advertising. Revenues from portal advertising decreased by 6.4%, or ¥175 million, from ¥2,746 million in the first three months of 2015 to ¥2,571 million in the first three months of 2016 primarily due to a decrease in traffic to our portal sites as indicated by the overall decrease in the number of page views, primarily as a result of updates to Google’s search algorithm in April 2015 that resulted in our sites being displayed lower in search rankings on mobile devices, leading to fewer overall page views. Page views from mobile devices, which generally result in higher advertising revenue compared to page views from personal computers, also decreased. The decrease in revenues as a result of the decrease in total page views was partially offset by an increase in the number of advertising display spaces that we made available on our mobile sites, leading to higher average revenue generated per page view. We typically make advertising display space on our portals on personal computers and mobile applications available through automated advertising networks. In the first three months of 2015 and the first three months of 2016, livedoor recorded 9.5 billion and 8.8 billion page views, respectively, and Matome recorded 3.0 billion and 2.4 billion page views, respectively, higher proportions of which were attributable to traffic through mobile devices in the first three months of 2016 compared to the first three months of 2015.

Geographic Information

Revenues from Japan accounted for 73.0% and 71.1% of our total revenues in the first three months of 2015 and the first three months of 2016, respectively.

Other Operating Income

Our other operating income increased 465.0%, or by ¥543 million, from ¥117 million in the first three months of 2015 to ¥660 million in the first three months of 2016, primarily due to ¥627 million of virtual credits breakage income in the first three months of 2016, including ¥449 million due to the expiration of LINE Points recognized for the first time beginning February 2016 compared to no such amount recognized in the first three months of 2015, and ¥179 million recognized in relation to the virtual credits that remained unused in the user accounts cancelled during the first three months of 2016 compared to ¥117 million in the first three months of 2015. LINE Points expire after 180 days from the date on which they were earned. To keep LINE Points active, a user must earn new LINE Points prior to such expiration date, which then extends the expiration date by 180 days.

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Operating Expenses

The following table presents a breakdown of our operating expenses and changes therein for the periods indicated.

	For the three months ended March 31,				Changes
	2015		2016		Amount			%
	(in millions of yen or percentages)
Payment processing and licensing expenses	¥	6,225	¥	7,750	¥	1,525			24.5	%
Employee compensation expenses		7,574		9,393		1,819			24.0
Marketing expenses		4,780		2,307		(2,473	)		(51.7	)
Infrastructure and communication expenses		1,663		1,782		118			7.1
Authentication and other service expenses		2,398		2,897		498			20.8
Depreciation and amortization expenses		764		968		204			26.7
Other operating expenses(1)		3,393		3,681		290			8.5
Total	¥	26,797	¥	28,778	¥	1,981			7.4	%

(1) Other operating expenses include rent, travel, professional fees, supplies, taxes and dues, office relocation expenses and other miscellaneous operating expenses.

The following table presents a breakdown of our operating expenses as percentages of total revenues for the periods indicated.

	For the three months ended March 31,
	2015			2016
	(in percentages of total revenues)
Payment processing and licensing expenses		22.2	%		23.2	%
Employee compensation expenses		27.0			28.1
Marketing expenses		17.0			6.9
Infrastructure and communication expenses		5.9			5.3
Authentication and other service expenses		8.5			8.7
Depreciation and amortization expenses		2.7			2.9
Other operating expenses(1)		12.0			10.9
Total		95.3	%		86.0	%

(1) Other operating expenses include rent, travel, professional fees, supplies, taxes and dues, office relocation expenses and other miscellaneous operating expenses.

Our operating expenses increased by 7.4%, or ¥1,981 million, from ¥26,797 million in the first three months of 2015 to ¥28,778 million in the first three months of 2016, primarily due to increases in employee compensation expenses and payment processing and licensing expenses, partially offset by a decrease in marketing expenses. Our operating expenses as a percentage of revenues decreased from 95.3% in the first three months of 2015 to 86.0% in the first three months of 2016.

Payment Processing and Licensing Expenses

	For the three months ended March 31,						Changes
	2015			2016			Amount		%
	(in millions of yen or percentages)
Payment processing and licensing expenses	¥	6,225		¥	7,750		¥	1,525		24.5	%
Percentage of revenues		22.2	%		23.2	%

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Payment processing and licensing expenses increased by 24.5%, or ¥1,525 million, from ¥6,225 million in the first three months of 2015 to ¥7,750 million in the first three months of 2016. Licensing expenses increased by 19.8%, or ¥686 million, from ¥3,464 million in the first three months of 2015 to ¥4,149 million in the first three months of 2016, primarily due to increased payments of licensing fees to users for Stickers designed by them and sold on Creators Market (which entail a higher license fee than for our other Stickers) and an increase in sales of Themes featuring licensed characters. Payment processing expenses increased by 30.4%, or ¥839 million, from ¥2,761 million in the first three months of 2015 to ¥3,601 million in the first three months of 2016 primarily due to increases in processing fees paid to payment processing service providers resulting from increased sales of virtual items for internally-developed games including LINE Bubble 2 and Stickers.

Employee Compensation Expenses

	For the three months ended March 31,						Changes
	2015			2016			Amount		%
	(in millions of yen or percentages)
Employee compensation expenses	¥	7,574		¥	9,393		¥	1,819		24.0	%
Percentage of revenues		27.0	%		28.1	%

Our employee compensation expenses increased by 24.0%, or ¥1,819 million, from ¥7,574 million in the first three months of 2015 to ¥9,393 million in the first three months of 2016 primarily due to an increase in the number of our employees. The number of our full-time employees (excluding those of our discontinued operations) increased from 2,016 as of March 31, 2015 to 2,537 as of March 31, 2016.

Marketing Expenses

	For the three months ended March 31,						Changes
	2015			2016			Amount			%
	(in millions of yen or percentages)
Marketing expenses	¥	4,780		¥	2,307		¥	(2,473	)		(51.7	)%
Percentage of revenues		17.0	%		6.9	%

Marketing expenses decreased by 51.7%, or ¥2,473 million, from ¥4,780 million in the first three months of 2015 to ¥2,307 million in the first three months of 2016 primarily due to a decrease in marketing expenses outside of our four key markets of Japan, Thailand, Taiwan and Indonesia as a result of our increased focus on our four key markets beginning in early 2015. In addition, we engaged in active marketing campaigns during the first three months of 2015 relating to the launch of LINE Pay, compared to no such marketing activities for new services implemented in the first three months of 2016.

Infrastructure and Communication Expenses

	For the three months ended March 31,						Changes
	2015			2016			Amount		%
	(in millions of yen or percentages)
Infrastructure and communication expenses	¥	1,663		¥	1,782		¥	118		7.1	%
Percentage of revenues		5.9	%		5.3	%

Our infrastructure and communication expenses increased by 7.1%, or ¥118 million, from ¥1,663 million in the first three months of 2015 to ¥1,782 million in the first three months of 2016 primarily due to increases in server rental fees, co-location charges for the operation of our servers and other network

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infrastructure as well as other expenses related to expanding and maintaining our content delivery network required to handle increased user traffic and transaction volumes, including increased bandwidth usage as a result of new services launched in 2015 such as LINE Live and LINE Music.

Authentication and Other Service Expenses

	For the three months ended March 31,						Changes
	2015			2016			Amount		%
	(in millions of yen or percentages)
Authentication and other service expenses	¥	2,398		¥	2,897		¥	498		20.8	%
Percentage of revenues		8.5	%		8.7	%

Our authentication and other service expenses increased by 20.8%, or ¥498 million, from ¥2,398 million in the first three months of 2015 to ¥2,897 million in the first three months of 2016. Other service expenses increased by 33.8%, or ¥612 million, from ¥1,811 million in the first three months of 2015 to ¥2,424 million in the first three months of 2016 due primarily to an increase in fees paid for content production, outsourcing fees for development of new applications, server hosting and maintenance services as well as expenses for personnel providing other outsourced services required to support increased user activities. This increase in other service expenses was partially offset by a decrease in authentication service expenses by 19.4%, or ¥114 million, from ¥587 million in the first three months of 2015 to ¥473 million in the first three months of 2016, due primarily to an 11.1% decrease in the number of downloads of our LINE messaging application in the first three months of 2016 compared to the first three months of 2015.

Profit from Operating Activities

Primarily due to the factors described above, our profit from operating activities increased by 275.0%, or ¥3,914 million, from ¥1,424 million in the first three months of 2015 to ¥5,338 million in the first three months of 2016. Our profit from operating activities as a percentage of our revenue increased from 5.1% in the first three months of 2015 to 16.0% in the first three months of 2016, as the increase in revenues outpaced the increase in operating expenses.

Finance Income and Finance Costs

Our finance income, which consists of interest income, increased by 14.9%, or ¥3 million, from ¥23 million in the first three months of 2015 to ¥27 million in the first three months of 2016 due primarily to an increase in the amount of interest bearing cash and cash equivalents, offset in part by a decrease in the average interest rate of such deposits. Our finance costs, which consist of interest expense, remained unchanged at ¥24 million in the first three months of 2015 and the first three months of 2016 as the weighted average interest rate of our borrowings remained unchanged at 0.2% for both periods while the increase in interest expense resulting from an increase in short-term borrowings was partially offset by a reduction in the interest expense resulting from a decrease in corporate bonds.

Share of Loss of Associates

We recognized net loss on our share of associates of ¥23 million in the first three months of 2015 primarily related to our interest in LINE Music Corporation, which incurred a loss primarily attributable to advertising expenses. We recognized net loss on our share of associates of ¥63 million in the first three months of 2016 primarily related to our interest in LINE Music Corporation, which incurred a loss primarily attributable to increased research activities in connection with the development of streaming technology and applications.

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Loss on Foreign Currency Transactions, Net

We recognized an increase in net loss on foreign currency transactions by 787.4%, or ¥505 million, from ¥64 million in the first three months of 2015 to ¥569 million in the first three months of 2016 resulting from fluctuations in exchange rates. In the first three months of 2015, the Japanese yen strengthened against the Korean won. Our net loss on foreign currency transactions in the first three months of 2015 related primarily to Korean won-denominated trade and other receivables at LINE Plus Corporation due largely from NAVER Corporation. The net loss was partially offset by foreign currency gain on Korean won-denominated payables related to operating expenses incurred at LINE Plus Corporation. In the first three months of 2016, the Japanese yen strengthened against the U.S. dollar, the Korean won and the Taiwan dollar. Our net loss on foreign currency transactions in the first three months of 2016 related primarily to U.S. dollar-denominated loan receivables at LINE Corporation due from its subsidiaries, as well as Korean won- and Taiwan dollar-denominated trade receivables, and Korean won-denominated loan receivables and other receivables at LINE Plus Corporation due largely from its subsidiaries. The net loss was partially offset by foreign currency gain on Korean won-denominated payables related to operating expenses incurred at LINE Plus Corporation.

Other Non-operating Income

We recognized other non-operating income of ¥14 million in the first three months of 2015 and ¥21 million in the first three months of 2016 in connection with the fair value measurement gain of foreign exchange forward contracts.

Other Non-operating Expenses

We recognized other non-operating expenses of ¥165 million in the first three months of 2015 due to impairment loss attributable to an available-for-sale security as a result of a decline in the stock price of iDreamSky Technology Limited, a mobile game publisher listed on NASDAQ Global Select Market. We recognized other non-operating expenses of ¥587 million in the first three months of 2016 primarily as a result of a ¥264 million impairment loss attributable to available-for-sale securities as a result of a decline in the stock price of gumi Inc., a mobile games developer and publisher listed on the Tokyo Stock Exchange and ¥246 million fair value measurement loss relating to conversion right of redeemable preferred stock in 4:33 Creative Lab, a Korean game development company we invested in through LINE C&I Corporation.

Income Tax Expenses

Our income tax expenses decreased by 7.0%, or ¥205 million, from ¥2,942 million in the first three months of 2015 to ¥2,737 million in the first three months of 2016. Our effective income tax rate of 248.3% for continuing operations for the first three months of 2015 differed from the Japanese statutory tax rate of 38.0% for the year ended December 31, 2014. Our effective income tax rate of 66.1% for continuing operations for the first three months of 2016 differed from the Japanese statutory tax rate of 35.6% for the year ended December 31, 2015. The effective income tax rates of 248.3% and 66.1% were primarily due to non-deductible share-based payment expenses, including share-based payment expenses in connection with stock options granted to non-Japanese employees and directors, as a result of additional stock options with incremental increases in the fair value granted in February, August and October 2014, and February 2015, and partially attributable to pre-tax losses recorded by subsidiaries on a standalone basis for which no deferred tax assets were recognized as the related tax benefits could not be recognized.

The effective tax rate for the three-month period ended March 31, 2016 decreased as compared to the same period in 2015 mainly due to an increase in the estimated annual profit before tax and a decrease in estimated annual non-deductible share-based payment expenses for the year ending December 31, 2016 as compared to the year ended December 31, 2015. The decrease in estimated annual non-deductible share-based payment expenses is due to the vesting in 2016 of most of the stock options granted to our directors and employees.

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Loss from Discontinued Operations, Net of Tax

We recognized loss from discontinued operations, net of tax, of ¥148 million in the first three months of 2015 and ¥1,640 million in the first three months of 2016 related to the abandonment of our MixRadio business effective March 21, 2016 and its retrospective presentation as a discontinued operation for both periods. See “— Major Components of Results of Operations — Profit (Loss) from Discontinued Operations, Net of Tax.”

Loss for the Period

As a result of the factors described above, our loss for the period decreased by 87.7%, or ¥1,671 million, from ¥1,905 million in the first three months of 2015 to ¥234 million in the first three months of 2016. Our loss for the period as a percentage of revenues was 6.8% in the first three months of 2015 compared to 0.7% in the first three months of 2016.

Comparison of the Years Ended December 31, 2014 and 2015

Revenues

The following table presents a breakdown of our revenues by major services and changes therein for the periods indicated.

	For the year ended December 31,				Changes
	2014		2015		Amount		%
	(in millions of yen or percentages)
Communication and content:
Communication	¥	20,690	¥	28,725	¥	8,035		38.8	%
Content		40,449		49,284		8,835		21.8
Others(1)		1,783		5,985		4,201		235.5
Sub-total		62,922		83,994		21,072		33.5
Advertising:
LINE advertising		14,603		26,487		11,884		81.4
Portal advertising		8,841		9,925		1,084		12.3
Sub-total		23,444		36,412		12,967		55.3
Total	¥	86,366	¥	120,406	¥	34,039		39.4	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

Our revenues increased by 39.4%, or ¥34,039 million, from ¥86,366 million in 2014 to ¥120,406 million in 2015 primarily due to the successful monetization of some of our products and services offered on the LINE platform, especially LINE advertising, LINE Games and Stickers, and continued growth in our active user base and their engagement level. Continued growth of Official Accounts and Sponsored Stickers as well as the expansion of our LINE Point Ads product helped drive growth in revenues from LINE advertising. Our MPUs increased from 8.2 million in December 2014 to 8.8 million in December 2015, helping to drive growth in revenues from content and communication.

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Communication and Content

	For the year ended December 31,						Changes
	2014			2015			Amount		%
	(in millions of yen or percentages)
Communication	¥	20,690		¥	28,725		¥	8,035		38.8	%
Percentage of revenues		24.0	%		23.9	%
Content		40,449			49,284			8,835		21.8
Percentage of revenues		46.8	%		40.9	%
Others(1)		1,783			5,985			4,201		235.5
Percentage of revenues		2.1	%		5.0	%
Total communication and content	¥	62,922		¥	83,994		¥	21,072		33.5	%
Percentage of revenues		72.9	%		69.8	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

Communication. Revenues from communication increased by 38.8%, or ¥8,035 million, from ¥20,690 million in 2014 to ¥28,725 million in 2015 primarily due to an increase in the volume of Stickers sold on Creators Market. The increase in these Sticker sales was driven by the redesign of our online Sticker shop and the increase in the number and variety of Stickers offered on Creators Market in 2015 compared to 2014, which was largely due to a streamlined selection process that enables our users to offer their self-designed Stickers for sale more easily. Sales of Themes, which users can download to decorate the displays of the LINE messaging application on their devices, also increased as we expanded the number of Themes offered to our users since launching Themes in March 2014. The increases in sales of Stickers offered on Creators Market and Themes more than offset a slight decrease in sales of our other Stickers.

Content. Revenues from content increased 21.8%, or by ¥8,835 million, from ¥40,449 million in 2014 to ¥49,284 million in 2015 primarily due to an increase in the sales volume of in-game items for LINE Games.

The increase in the sales volume of in-game items was primarily driven by the continued success of our portfolio of popular LINE Games, including internally-developed games such as LINE Rangers and LINE Bubble 2, as well as the increase in the number of games offered on the LINE platform, from 39 titles as of December 31, 2014 to 60 as of December 31, 2015, resulting in an increase in the average spending of our users. A number of new games launched in 2014, such as LINE Rangers (launched in February 2014), LINE Disney TsumTsum (launched in January 2014), LINE Pokopoko (launched in September 2014) and LINE Get Rich (launched in July 2014), remained popular in 2015 in Japan as well as in overseas markets due in part to major updates and marketing conducted for such games in 2015 as well as the introduction of many of our games in local languages. In addition, LINE Bubble 2, which was launched in April 2015, gained popularity during the year. As a result, cumulative downloads of LINE Games increased from 485 million as of December 31, 2014 to 628 million as of December 31, 2015. The success of our internally-developed games was the primary driver for revenue growth in 2015. LINE Rangers generated revenues of ¥13,381 million in 2015 compared to ¥10,751 million in 2014, while LINE Bubble 2 generated revenues of ¥4,925 million in 2015 compared to no revenue in 2014. For internally-developed games, we recognize as revenues the gross amount of consideration paid by users which amplifies the impact of purchases of in-game items on our revenue increase compared to third-party developed games, for which we recognize as revenues the net proceeds after deducting amounts paid to third-party game developers and payment processing service providers. The increases in revenues from these newly launched games more than offset decreases in revenues from some of our older titles such as LINE Pokopang and LINE Cookie Run. See “— Major Components of Results of Operations — Revenues.”

Others. Revenues from the others category, which consists primarily of sales of official LINE merchandise at our flagship and fixed-duration pop-up retail stores, royalty revenues related to LINE characters’

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copyrights and e-commerce revenues, increased 235.5%, or by ¥4,201 million, from ¥1,783 million in 2014 to ¥5,985 million in 2015 primarily due to an increase in numbers of and sales from LINE Friends stores in Korea, China and Hong Kong.

Advertising

	For the year ended December 31,						Changes
	2014			2015			Amount		%
	(in millions of yen or percentages)
LINE advertising	¥	14,603		¥	26,487		¥	11,884		81.4	%
Percentage of revenues		16.9	%		22.0	%
Portal advertising		8,841			9,925			1,084		12.3
Percentage of revenues		10.2	%		8.2	%
Total advertising	¥	23,444		¥	36,412		¥	12,967		55.3	%
Percentage of revenues		27.1	%		30.2	%

LINE Advertising. Revenues from LINE advertising increased 81.4%, or by ¥11,884 million, from ¥14,603 million in 2014 to ¥26,487 million in 2015 primarily due to an increase in the number of paid contracts for Official Accounts as well as increased numbers of sets of and price increases in Sponsored Stickers. We believe this increase was driven mainly by the increasing attractiveness of the LINE platform to existing as well as new advertisers as a result of the rapid growth in our user base and level of user engagement. The total number of paid Official Accounts outstanding at the end of each month increased from 2,902 in 2014 to 4,456 in 2015, primarily as a result of our successful retention of existing advertisers as well as an increase in new advertisers mainly in Japan and Thailand. For Sponsored Stickers, pricing in Japan increased from ¥25 million for our standard 8 sticker set and ¥30 million for our standard 16 sticker set to ¥30 million and ¥35 million, respectively, effective January 2015, and the number of paid contracts in Taiwan and Thailand for which we collected fees also increased in 2015. In addition, for LINE Point Ads, we have expanded the types of user actions for which LINE Points are offered to include downloading of applications, viewing of video commercials and film previews and adding certain Official Accounts as a LINE friend, and more users engaged in such actions which in turn led to an increase in revenues attributable to LINE Point Ads. Beginning in August 2015, we further expanded our LINE Point Ads service by allowing users to redeem their LINE Points for vouchers that can be used at various retail locations such as Starbucks and Lawson convenience stores in Japan, further encouraging our users to take actions to receive LINE Points and, as a result, driving demand for LINE Point Ads from advertisers.

Portal Advertising. Revenues from portal advertising increased by 12.3%, or ¥1,084 million, from ¥8,841 million in 2014 to ¥9,925 million in 2015 primarily due to an increase in traffic to our portal sites as indicated by the overall increase in the number of page views, which was partially offset by a decrease in page views following updates to Google’s search algorithm in April 2015 that resulted in our sites being displayed lower in search rankings on mobile devices, leading to fewer page views. Page views from mobile devices, which generally result in higher advertising revenue compared to page views from personal computers, increased in particular. Revenues also increased as a result of an increase in the number of advertising display spaces that we made available on our mobile sites, leading to higher average revenue generated per page view. We typically make advertising display space on our portals on personal computers and their mobile applications available through automated advertising networks. In 2014 and 2015, livedoor recorded 107 billion and 108 billion page views, respectively, and Matome recorded 29 billion and 32 billion page views, respectively, higher proportions of which were attributable to traffic through mobile devices in 2015 compared to 2014.

Geographic Information

Revenues from Japan accounted for 75.8% and 70.4% of our total revenues in 2014 and 2015, respectively.

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Other Operating Income

Our other operating income increased 60.3%, or by ¥178 million, from ¥296 million in 2014 to ¥474 million in 2015, primarily due to ¥347 million of virtual credits breakage income in 2015 that was recognized in relation to the virtual credits that remained unused in the user accounts cancelled during 2015, compared to ¥238 million of such income in 2014. We recognized virtual credit breakage income starting in the fourth quarter of 2014 when our legal analysis concluded that we do not have potential obligations to refund unused virtual credits.

Operating Expenses

The following table presents a breakdown of our operating expenses and changes therein for the periods indicated.

	For the year ended December 31,				Changes
	2014		2015		Amount			%
	(in millions of yen or percentages)
Payment processing and licensing expenses	¥	20,598	¥	28,742	¥	8,144			39.5	%
Employee compensation expenses		18,289		35,572		17,283			94.5
Marketing expenses		18,069		16,596		(1,473	)		(8.2	)
Infrastructure and communication expenses		4,492		7,712		3,220			71.7
Authentication and other service expenses		7,874		12,133		4,259			54.1
Depreciation and amortization expenses		2,370		3,733		1,363			57.5
Other operating expenses(1)		8,555		14,432		5,876			68.7
Total	¥	80,247	¥	118,920	¥	38,673			48.2	%

(1) Other operating expenses include rent, travel, professional fees, supplies, taxes and dues, office relocation expenses and other miscellaneous operating expenses.

The following table presents a breakdown of our operating expenses as percentages of total revenues for the periods indicated.

	For the year ended December 31,
	2014			2015
	(in percentages of total revenues)
Payment processing and licensing expenses		23.8	%		23.9	%
Employee compensation expenses		21.2			29.5
Marketing expenses		20.9			13.8
Infrastructure and communication expenses		5.2			6.4
Authentication and other service expenses		9.1			10.1
Depreciation and amortization expenses		2.7			3.1
Other operating expenses(1)		9.9			12.0
Total		92.8	%		98.8	%

(1) Other operating expenses include rent, travel, professional fees, supplies, taxes and dues, office relocation expenses and other miscellaneous operating expenses.

Our operating expenses increased by 48.2%, or ¥38,673 million, from ¥80,247 million in 2014 to ¥118,920 million in 2015, primarily due to increases in employee compensation expenses, payment processing and licensing expenses and authentication and other service expenses. Our operating expenses as a percentage of revenues increased from 92.8% in 2014 to 98.8% in 2015.

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Payment Processing and Licensing Expenses

	For the year ended December 31,						Changes
	2014			2015			Amount		%
	(in millions of yen or percentages)
Payment processing and licensing expenses	¥	20,598		¥	28,742		¥	8,144		39.5	%
Percentage of revenues		23.8	%		23.9	%

Payment processing and licensing expenses increased by 39.5%, or ¥8,144 million, from ¥20,598 million in 2014 to ¥28,742 million in 2015. Licensing expenses increased by 64.4%, or ¥4,989 million, from ¥7,747 million in 2014 to ¥12,736 million in 2015, primarily due to payment of licensing fees to users for Stickers designed by them and sold on Creators Market (which entail a higher license fee than for our other Stickers) beginning in April 2014, an increase in sales of Themes featuring licensed characters and, to a lesser extent, an increase in the portions of the gross sales proceeds from portal advertising that are paid as incentive payments to content providers for our livedoor and Matome portals. Payment processing expenses increased by 24.6%, or ¥3,156 million, from ¥12,851 million in 2014 to ¥16,006 million in 2015 primarily due to increases in processing fees paid to payment processing service providers resulting from increased sales of virtual items for internally-developed games and Stickers.

Employee Compensation Expenses

	For the year ended December 31,						Changes
	2014			2015			Amount		%
	(in millions of yen or percentages)
Employee compensation expenses	¥	18,289		¥	35,572		¥	17,283		94.5	%
Percentage of revenues		21.2	%		29.5	%

Our employee compensation expenses increased by 94.5%, or ¥17,283 million, from ¥18,289 million in 2014 to ¥35,572 million in 2015 primarily due to an increase in the number of our employees. The number of our full-time employees (excluding those of our discontinued operations) increased from 1,783 as of December 31, 2014 to 2,454 as of December 31, 2015. In addition, we granted additional stock options in February, August and October 2014 and February 2015 with incremental increases in the fair value of our stock options, resulting in an increase in our share-based compensation expenses from ¥2,975 million in 2014 to ¥11,213 million in 2015.

Marketing Expenses

	For the year ended December 31,						Changes
	2014			2015			Amount			%
	(in millions of yen or percentages)
Marketing expenses	¥	18,069		¥	16,596		¥	(1,473	)		(8.2	)%
Percentage of revenues		20.9	%		13.8	%

Marketing expenses decreased by 8.2%, or ¥1,473 million, from ¥18,069 million in 2014 to ¥16,596 million in 2015 primarily due to a decrease in marketing expenses related to the LINE messaging application outside of our four key markets of Japan, Thailand, Taiwan and Indonesia and a decrease in marketing expenses for games due to fewer of our new games released in 2015 achieving a level of success that would merit greater marketing activity.

Infrastructure and Communication Expenses

	For the year ended December 31,						Changes
	2014			2015			Amount		%
	(in millions of yen or percentages)
Infrastructure and communication expenses	¥	4,492		¥	7,712		¥	3,220		71.7	%
Percentage of revenues		5.2	%		6.4	%

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Our infrastructure and communication expenses increased by 71.7%, or ¥3,220 million, from ¥4,492 million in 2014 to ¥7,712 million in 2015 primarily due to increases in server rental fees, co-location charges for the operation of our servers and other network infrastructure as well as other expenses related to expanding and maintaining our content delivery network required to handle increased user traffic and transaction volumes.

Authentication and Other Service Expenses

	For the year ended December 31,						Changes
	2014			2015			Amount		%
	(in millions of yen or percentages)
Authentication and other service expenses	¥	7,874		¥	12,133		¥	4,259		54.1	%
Percentage of revenues		9.1	%		10.1	%

Our authentication and other service expenses increased by 54.1%, or ¥4,259 million, from ¥7,874 million in 2014 to ¥12,133 million in 2015. Other service expenses increased by 78.3%, or ¥4,301 million, from ¥5,496 million in 2014 to ¥9,798 million in 2015 due primarily to an increase in outsourcing fees for development of new applications, production of content and server hosting and maintenance services as well as expenses for personnel providing other outsourced services required to support increased user activities. This increase in other service expences was partially offset by a slight decrease in authentication service expenses by 1.8%, or ¥42 million, from ¥2,378 million in 2014 to ¥2,335 million in 2015, due primarily to a 7.4% decrease in the number of downloads of our LINE messaging application in 2015 compared to 2014.

Profit from Operating Activities

Primarily due to the factors described above, our profit from operating activities decreased by 69.4%, or ¥4,455 million, from ¥6,415 million in 2014 to ¥1,960 million in 2015. Our profit from operating activities as a percentage of our revenue decreased from 7.5% in 2014 to 1.6% in 2015, as the increase in operating expenses outpaced the increase in revenues.

Finance Income and Finance Costs

Our finance income, which consists of interest income, decreased by 18.2%, or ¥16 million, from ¥86 million in 2014 to ¥71 million in 2015 due primarily to a decrease in the amount of time deposits held at LINE Corporation, offset in part by an increase in the amount of time deposits held at LINE Plus Corporation in higher-interest earning products. Our finance costs, which consist of interest expense, decreased by 22.9%, or ¥31 million, from ¥137 million in 2014 to ¥106 million in 2015 primarily due to a decrease in the weighted average interest rate of our borrowings from 0.3% as of December 31, 2014 to 0.2% as of December 31, 2015, which was partially offset by an increase in our average short-term borrowings over such periods.

Share of Loss of Associates

We recognized net loss on our share of associates of ¥167 million in 2014 related to our interest in LINE Music Corporation, which incurred a loss primarily as a result of research activities in connection with the development of streaming technology and applications, as well as our 50% interest in LINE Project Production Partnership, which incurred a loss in connection with its production of animation involving LINE characters that ended in March 2014. We recognized net loss on our share of associates of ¥205 million in 2015 primarily related to our interest in LINE Music Corporation, which incurred a loss primarily attributable to advertising expenses.

Gain (Loss) on Foreign Currency Transactions, Net

We recognized a net loss on foreign currency transactions of ¥520 million in 2015 compared to a net gain on foreign currency transactions of ¥66 million in 2014 resulting from fluctuations in exchange rates, particularly the fluctuation of the Japanese yen against the Korean won during these periods.

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In 2014, the Japanese yen weakened against the Korean won. Our net gain on foreign currency transactions in 2014 related primarily to our Korean won-denominated demand deposits held by LINE Plus Corporation, whose functional currency is Japanese yen, of which Won 80 billion was subsequently paid to NAVER Corporation in relation to the reduction of the entire issued and paid-in capital of LINE Plus Corporation attributable to NAVER Corporation completed on September 5, 2014 (the “LINE Plus Capital Reduction”), as well as Korean won- and U.S. dollar-denominated loan receivables at LINE Plus Corporation due from its subsidiaries. The net gain was partially offset by foreign currency loss on Korean won-denominated payables related to operating expenses incurred at LINE Plus Corporation.

In 2015, the Japanese yen strengthened against the Korean won. Our net loss on foreign currency transactions in 2015 related primarily to Korean won-denominated demand deposits held by LINE NAVER Game Partnership, our joint operation with NAVER Corporation, in which we have a 66.7% ownership interest, as well as Korean won-denominated trade receivables, loan receivables and other receivables at LINE Plus Corporation due largely from its subsidiaries. The net loss was partially offset by foreign currency gain on Korean won-denominated payables related to operating expenses incurred at LINE Plus Corporation.

Other Non-operating Income

We recognized other non-operating income of ¥157 million in 2015 in connection with the fair value measurement gain of conversion right of redeemable preferred stock in 4:33 Creative Lab, a Korean game development company we invested in through LINE C&I Corporation. We did not recognize any other non-operating income in 2014.

Other Non-operating Expenses

We recognized other non-operating expenses of ¥1,887 million in 2015 due to impairment loss attributable to available-for-sale securities as a result of declines in stock prices of gumi Inc., a mobile games developer and publisher listed on the Tokyo Stock Exchange, and iDreamSky Technology Limited, a mobile game publisher listed on NASDAQ Global Select Market, and the fair value measurement loss of an unlisted equity security. We did not recognize other non-operating expenses in 2014.

Income Tax Benefit (Expenses)

We recognized income tax expenses of ¥7,151 million in 2014 compared to an income tax benefit of ¥146 million in 2015. Our effective income tax rate of 114.2% for continuing operations for 2014 differed from the Japanese statutory tax rate of 38.0% for 2014 primarily due to pre-tax losses recorded by our Korean subsidiaries for which no deferred tax assets were recognized and non-deductible share-based payment expenses incurred in connection with stock options granted to employees and directors who are non-Japanese residents. Our effective income tax rate of 27.5% for continuing operations for 2015 differed from the Japanese statutory tax rate of 35.6% for 2015. The effective income tax rate of 27.5% was primarily due to taxable income recorded by LINE Plus Corporation on a stand-alone basis, all of which was offset by previously unrecognized tax loss carryforwards, resulting in a decrease in current income tax expenses. In addition, we recognized previously unrecognized deferred tax assets for deductible temporary differences. These benefits were partially offset by pre-tax losses of subsidiaries for which no deferred tax assets were recognized and by non-deductible share-based payment expenses, including share-based payment expenses incurred in connection with stock options granted to employees and directors who are non-Japanese residents.

Profit (Loss) from Discontinued Operations, Net of Tax

We recognized profit from discontinued operations, net of tax, of ¥2,892 million in 2014, related to our data management business, which we disposed of in September 2014 and was retrospectively classified as part of discontinued operations. We recognized loss from discontinued operations, net of tax, of ¥7,588 million in 2015,

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related to the operations of MixRadio, which we abandoned in March 2016 and which was retrospectively classified as part of discontinued operations. See “— Major Components of Results of Operations — Profit (Loss) from Discontinued Operations, Net of Tax.”

Profit (Loss) for the Year

We recorded a profit for the year of ¥2,004 million in 2014 but recorded a loss for the year of ¥7,972 million in 2015 as a result of the factors described above. Our profit for the year as a percentage of revenues was 2.3% in 2014 and our loss for the year as a percentage of revenues was (6.6)% in 2015.

Comparison of the Years Ended December 31, 2013 and 2014

Revenues

The following table presents a breakdown of our revenues by major services and changes therein for the periods indicated.

	For the year ended December 31,				Changes
	2013		2014		Amount		%
	(in millions of yen or percentages)
Communication and content:
Communication	¥	9,893	¥	20,690	¥	10,796		109.1	%
Content		17,662		40,449		22,787		129.0
Others(1)		664		1,783		1,119		168.5
Sub-total		28,219		62,922		34,702		123.0
Advertising:
LINE advertising		5,322		14,603		9,282		174.4
Portal advertising		6,045		8,841		2,796		46.3
Sub-total		11,367		23,444		12,078		106.3
Total	¥	39,586	¥	86,366	¥	46,781		118.2	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

Our revenues increased by 118.2%, or ¥46,781 million, from ¥39,586 million in 2013 to ¥86,366 million in 2014 primarily due to the successful monetization of some of our products and services offered on the LINE platform, especially LINE Games, and rapid growth in our active user base and their engagement level. Our MPUs increased from 4.1 million for December 2013 to 8.2 million for December 2014, driving growth in revenues from content, communication and LINE advertising, among other factors described below.

Communication and Content

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
Communication	¥	9,893		¥	20,690		¥	10,796		109.1	%
Percentage of revenues		25.0	%		24.0	%
Content		17,662			40,449			22,787		129.0
Percentage of revenues		44.6	%		46.8	%
Others(1)		664			1,783			1,119		168.5
Percentage of revenues		1.7	%		2.1	%
Total communication and content	¥	28,219		¥	62,922		¥	34,702		123.0	%
Percentage of revenues		71.3	%		72.9	%

(1) Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.

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Communication.  Revenues from communication increased by 109.1%, or ¥10,796 million, from ¥9,893 million in 2013 to ¥20,690 million in 2014 primarily due to an increase in the volume of Sticker sales. The increase in Sticker sales was a result of an increase in MPUs over this period, primarily driven by an increase in the number and variety of Stickers offered in 2014 compared to 2013, due in part to initiatives such as the launch in April 2014 of Creators Market.

Content.  Revenues from content increased 129.0%, or by ¥22,787 million, from ¥17,662 million in 2013 to ¥40,449 million in 2014 primarily due to an increase in the sales volume of in-game items for LINE Games.

The increase in the sales volume of in-game items was driven by a continued expansion of our portfolio of successful LINE Games, through launches of new games, including internally-developed LINE Rangers, resulting in the increase in MPUs of LINE Games over this period from 1.1 million MPUs in December 2013 to 1.8 million MPUs in December 2014 and an increase in the average spending of our users. Some of our existing games, such as LINE Pokopang, and a number of new games launched in early 2014, such as LINE Rangers (launched in February 2014), LINE Disney TsumTsum (launched in January 2014), LINE Cookie Run (launched in January 2014) and LINE Pokopoko (launched in September 2014) gained popularity in Japan as well as in overseas markets, driven in part by the introduction of many of our games in local languages in such markets, including Taiwan and Thailand. As a result, cumulative downloads of LINE Games increased from 235 million as of December 31, 2013 to 485 million as of December 31, 2014. In particular, the increase in revenues from content was also attributable to the fact that LINE Rangers, an internally-developed game, generated revenues of ¥10,751 million in 2014 compared to no revenue in 2013.

Advertising

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
LINE advertising	¥	5,322		¥	14,603		¥	9,282		174.4	%
Percentage of revenues		13.4	%		16.9	%
Portal advertising		6,045			8,841			2,796		46.3
Percentage of revenues		15.3	%		10.2	%
Total advertising	¥	11,367		¥	23,444		¥	12,078		106.3	%
Percentage of revenues		28.7	%		27.1	%

LINE Advertising.  Revenues from LINE advertising increased 174.4%, or by ¥9,282 million, from ¥5,322 million in 2013 to ¥14,603 million in 2014 primarily due to an increase in the number of paid contracts for Official Accounts and Sponsored Stickers in Japan, which we believe was driven mainly by the increasing attractiveness of the LINE platform to existing as well as new advertisers as a result of the rapid growth in our user base and level of user engagement, and an increase in collection of fees for Sponsored Stickers in Taiwan and Thailand. This increase in revenue was also due in part to the fact that Sponsored Stickers were not introduced in Taiwan and Thailand until May 2013. The total number of paid Official Accounts outstanding at the end of each month increased from 1,251 in 2013 to 2,902 in 2014. For Sponsored Stickers, the number of paid contracts in Japan entered into during the year increased from 171 in 2013 to 250 in 2014, and the number of paid contracts for which we collected fees in Taiwan and Thailand also increased in 2014. Our revenue increase was also attributable to a gradual increase in the price of our standard 8 Sticker set from ¥15 million as of January 2013 to ¥30 million as of October 2014 and our standard 16 Sticker set from ¥20 million as of January 2013 to ¥35 million as of October 2014. In addition, since the introduction of our LINE Point Ads service in June 2013, we have expanded the types of user actions for which advertisers are charged to include downloading of applications and viewing of commercials and film previews, and more users engaged in such actions which in turn led to an increase in revenues attributable to LINE Point Ads.

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Portal Advertising.  Revenues from portal advertising increased by 46.3%, or ¥2,796 million, from ¥6,045 million in 2013 to ¥8,841 million in 2014 primarily due to an increase in traffic to our portal sites as indicated by the increase in the number of page views. Page views from mobile devices, which generally result in higher advertising revenue as compared to page views from personal computers, increased in particular. Revenues also increased as a result of an increase in the number of advertising display spaces that we made available on our mobile sites, leading to higher average revenue generated per page view. We typically make advertising display space on our portals on personal computers and their mobile applications available through automated advertising networks. In 2013 and 2014, livedoor recorded 96 billion and 107 billion page views, respectively, and Matome recorded 21 billion and 29 billion page views, respectively, higher proportions of which were attributable to traffic through mobile devices (as compared to personal computers) in 2014 as compared to 2013. The increase in page views was also attributable to the integration of content from Matome into Yahoo Japan’s search results, which gradually referred additional traffic from Yahoo Japan to Matome, beginning in March 2013.

Geographic Information

Revenues from Japan accounted for 86.9% and 75.8% of our total revenues in 2013 and 2014, respectively.

Other Operating Income

Our other operating income increased by 324.9%, or ¥226 million, from ¥69 million in 2013 to ¥296 million in 2014, primarily due to ¥238 million of virtual credits breakage income in 2014 which was recognized in relation to the virtual credits that remained unused in the user accounts cancelled on or prior to December 31, 2014, compared to no such income in 2013. This increase in other operating income was offset in part by a one-time event in 2013 in which we recorded gain on transfer of business of ¥55 million from the disposition of one of our portal website businesses to a third party, compared to no such gain in 2014.

Operating Expenses

The following table presents a breakdown of our operating expenses and changes therein for the periods indicated.

	For the year ended December 31,				Changes
	2013		2014		Amount		%
	(in millions of yen or percentages)
Payment processing and licensing expenses	¥	9,606	¥	20,598	¥	10,992		114.4	%
Employee compensation expenses		8,490		18,289		9,799		115.4
Marketing expenses		17,202		18,069		868		5.0
Infrastructure and communication expenses		2,537		4,492		1,955		77.1
Authentication and other service expenses		4,914		7,874		2,961		60.3
Depreciation and amortization expenses		1,330		2,370		1,040		78.2
Other operating expenses(1)		3,313		8,555		5,240		158.0
Total	¥	47,392	¥	80,247	¥	32,854		69.3	%

(1) Other operating expenses include rent, travel, professional fees, supplies, taxes and dues, office relocation expenses and other miscellaneous operating expenses.

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The following table presents a breakdown of our operating expenses as percentages of total revenues for the periods indicated.

	For the year ended December 31,
	2013			2014
	(in percentages of total revenues)
Payment processing and licensing expenses		24.3	%		23.8	%
Employee compensation expenses		21.4			21.2
Marketing expenses		43.5			20.9
Infrastructure and communication expenses		6.4			5.2
Authentication and other service expenses		12.4			9.1
Depreciation and amortization expenses		3.4			2.7
Other operating expenses(1)		8.3			9.9
Total		119.7	%		92.8	%

(1) Other operating expenses include rent, travel, professional fees, supplies, taxes and dues, office relocation expenses and other miscellaneous operating expenses.

Our operating expenses increased by 69.3%, or ¥32,854 million, from ¥47,392 million in 2013 to ¥80,247 million in 2014, primarily due to increases in payment processing and licensing expenses, employee compensation expenses and authentication and other service expenses. Our operating expenses as a percentage of revenues decreased from 119.7% in 2013 to 92.8% in 2014.

Payment Processing and Licensing Expenses

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
Payment processing and licensing expenses	¥	9,606		¥	20,598		¥	10,992		114.4	%
Percentage of revenues		24.3	%		23.8	%

Payment processing and licensing expenses increased by 114.4%, or ¥10,992 million, from ¥9,606 million in 2013 to ¥20,598 million in 2014. Payment processing expenses increased by 104.9%, or ¥6,579 million, from ¥6,272 million in 2013 to ¥12,851 million in 2014 due primarily to increases in processing fees paid to payment processing service providers resulting from increased sales of virtual items for internally- developed games and Stickers. Licensing expenses increased by 132.4%, or ¥4,413 million, from ¥3,334 million in 2013 to ¥7,747 million, primarily due to increased sales of Stickers featuring licensed characters, an increase in licensing fees paid to users for Stickers designed by them and sold on Creators Market (which entail a higher license fee than for our other Stickers), and, to a lesser extent, an increase in the portions of the gross sales proceeds from portal advertising that are paid as incentive payments to content providers for our livedoor and Matome portals.

Employee Compensation Expenses

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
Employee compensation expenses	¥	8,490		¥	18,289		¥	9,799		115.4	%
Percentage of revenues		21.4	%		21.2	%

Our employee compensation expenses increased by 115.4%, or ¥9,799 million, from ¥8,490 million in 2013 to ¥18,289 million in 2014, primarily due to an increase in the number of employees, particularly at our subsidiaries in Korea that support our global operations and, to a lesser extent, an increase in the general wage levels of our employees. The number of our full-time employees (excluding those of our discontinued operations)

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increased from 1,060 as of December 31, 2013 to 1,783 as of December 31, 2014. In addition, we granted additional stock options in December 2013 and February, August and October 2014, with a gradual increase in the fair value of the stock options, resulting in an increase in recognized share-based compensation expenses from ¥804 million in 2013 to ¥2,975 million in 2014.

Marketing Expenses

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
Marketing expenses	¥	17,202		¥	18,069		¥	868		5.0	%
Percentage of revenues		43.5	%		20.9	%

Marketing expenses increased by 5.0%, or ¥868 million, from ¥17,202 million in 2013 to ¥18,069 million in 2014 primarily due to an increase in our targeted advertising activities for LINE Games in markets where we maintain a leading market position, such as Indonesia and other countries in Southeast Asia, and in China during the first half of 2014 before our services were blocked, as well as promotions for LINE Play, LINE Mall and LINE Manga. This increase was partially offset by a decrease in our advertising activities in other markets such as Europe, Latin America, India and Russia.

Infrastructure and Communication Expenses

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
Infrastructure and communication expenses	¥	2,537		¥	4,492		¥	1,955		77.1	%
Percentage of revenues		6.4	%		5.2	%

Our infrastructure and communication expenses increased by 77.1%, or ¥1,955 million, from ¥2,537 million in 2013 to ¥4,492 million in 2014 primarily due to increases in co-location charges for the operation of our servers and other network infrastructure as well as other expenses related to expanding and maintaining our content delivery network required to handle increased user traffic and transaction volumes.

Authentication and Other Service Expenses

	For the year ended December 31,						Changes
	2013			2014			Amount		%
	(in millions of yen or percentages)
Authentication and other service expenses	¥	4,914		¥	7,874		¥	2,961		60.3	%
Percentage of revenues		12.4	%		9.1	%

Our authentication and other service expenses increased by 60.3%, or ¥2,961 million, from ¥4,914 million in 2013 to ¥7,874 million in 2014. Authentication service expenses increased by 46.0%, or ¥749 million, from ¥1,629 million in 2013 to ¥2,378 million in 2014, due primarily to a 34.5% increase in the number of downloads of our LINE messaging application in 2014 compared to 2013 and increases in fees for mobile number authentication services resulting from the growth in registered users of our LINE messaging application over such periods. Other service expenses increased by 67.3%, or ¥2,211 million, from ¥3,285 million in 2013 to ¥5,496 million in 2014, due primarily to the growth in fees for server hosting and maintenance services required to support increased user activities as well as fees for other outsourced services such as Sticker design and quality assurance and testing required for newly launched services.

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Profit (Loss) from Operating Activities

Primarily due to the factors described above, we recorded a profit from operating activities of ¥6,415 million in 2014 whereas we recorded a loss from operating activities of ¥7,737 million in 2013. Our loss from operating activities as a percentage of revenues in 2013 was (19.5)% and our profit from operating activities as a percentage of revenue in 2014 was 7.5%.

Finance Income and Finance Costs

Our finance income, which consists of interest income, increased by 28.5%, or ¥19 million, from ¥67 million in 2013 to ¥86 million in 2014 due primarily to an increase in the amount of time deposits held by us. Our finance costs, which consist of interest expense, increased by 248.8%, or ¥98 million, from ¥39 million in 2013 to ¥137 million in 2014 primarily due to an increase in our short-term borrowings mainly to fund investments in equity securities and the payment to NAVER Corporation in connection with the LINE Plus Capital Reduction.

Share of Loss of Associates

We recognized net loss on our share of associates of ¥243 million in 2013 related to our 50% interest in LINE Project Production Partnership, which incurred a loss in connection with its production of animation involving LINE characters. We recognized net loss on our share of associates of ¥167 million in 2014 primarily related to our interest in LINE Music Corporation, which incurred a loss primarily attributable to research activities in connection with the development of music streaming technology and applications, as well as our 50% interest in LINE Project Production Partnership. In 2014, our share of loss in LINE Music Corporation was ¥114 million, and our share of loss in LINE Project Production Partnership was ¥41 million.

Gain (Loss) on Foreign Currency Transactions, Net

We recognized a net loss on foreign currency transactions of ¥373 million in 2013 compared to a net gain on foreign currency transactions of ¥66 million in 2014 resulting from fluctuations in exchange rates, particularly the weakening of the Japanese yen against the Korean won and the U.S. dollar during such periods. Our net loss in 2013 related primarily to our Korean won-denominated payables relating to data hosting services infrastructure costs payable to NAVER Business Platform Corporation, a subsidiary of NAVER Corporation, as well as the Korean won-denominated payables at LINE Plus Corporation whose functional currency is the Japanese yen. Our net gain in 2014 related primarily to our Korean won-denominated receivables at LINE Corporation from LINE Plus Corporation, and net gain at LINE Plus Corporation, attributable mainly to foreign currency gain on the Korean won- and U.S. dollar-denominated loan receivables due from its subsidiaries, compared to no such loan receivables in 2013, which was partially offset by foreign currency loss on Korean won-denominated payables related to operating expenses incurred.

Other Non-operating Income

We recognized other non-operating income of ¥7 million in 2013 from gain on settlement of foreign exchange forward contracts. We did not recognize any other non-operating income in 2014.

Income Tax Benefits (Expenses)

We recognized income tax benefits of ¥648 million in 2013 compared to income tax expenses of ¥7,151 million in 2014. Our effective income tax rate of 7.8% for continuing operations for 2013 differed from the Japanese statutory tax rate of 38.0% primarily due to taxable income recorded by LINE Corporation on a stand-alone basis, approximately half of which was offset by previously unrecognized tax loss carryforwards, resulting in a decrease in current income tax expenses. In addition, we recognized previously unrecognized deferred tax assets for deductible temporary differences, resulting in the recognition of deferred tax benefits,

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which was partially offset by pre-tax losses recorded by our Korean subsidiaries for which no deferred tax assets were recognized. The losses incurred at our Korean subsidiaries were primarily due to marketing expenses incurred in connection with the early stages of our international expansion having exceeded revenues generated from our international operations attributable to such Korean subsidiaries. Our effective income tax rate of 114.2% for continuing operations for 2014 differed from the Japanese statutory tax rate of 38.0% primarily due to pre-tax losses recorded by our Korean subsidiaries for which no deferred tax assets were recognized and non-deductible share-based payment expenses incurred in connection with stock options granted to employees and directors who are non-Japanese residents.

For further information regarding our income tax benefits (expenses), see Note 14 of the notes to our annual consolidated financial statements and Note 6 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

Profit from Discontinued Operations, Net of Tax

We recognized profit from discontinued operations, net of tax, of ¥1,279 million in 2013 related to our former Hangame business that we disposed of in April 2013 and ¥2,892 million in 2014 related to our data management business that we disposed of in September 2014, each of which was retrospectively classified as part of discontinued operations. See “— Major Components of Results of Operations — Profit (Loss) from Discontinued Operations, Net of Tax.”

Profit (Loss) for the Period

We recorded a loss for the year of ¥6,391 million in 2013 but recorded a profit for the year of ¥2,004 million in 2014 as a result of the factors described above. Our loss for the year as a percentage of revenues was (16.1)% in 2013 and our profit for the year as a percentage of revenues was 2.3% in 2014.

Quarterly Results of Operations Data

The following table sets forth our selected statements of profit or loss data, as well as supplemental financial information, for the periods indicated.

	For the three months ended
	Mar. 31, 2015			Jun. 30, 2015			Sep. 30, 2015			Dec. 31, 2015			Mar. 31, 2016
	(in millions of yen) (unaudited)
Revenues and other operating income:
Revenues	¥	28,104		¥	28,070		¥	31,900		¥	32,332		¥	33,456
Other operating income		117			104			145			108			660
Operating expenses:
Payment processing and licensing expenses		(6,225	)		(6,935	)		(7,723	)		(7,859	)		(7,750	)
Employee compensation expenses		(7,574	)		(8,921	)		(9,049	)		(10,028	)		(9,393	)
Marketing expenses		(4,780	)		(5,233	)		(3,453	)		(3,130	)		(2,307	)
Infrastructure and communication expenses		(1,663	)		(1,854	)		(2,058	)		(2,137	)		(1,782	)
Authentication and other service expenses		(2,398	)		(3,446	)		(3,294	)		(2,995	)		(2,897	)
Depreciation and amortization expenses		(764	)		(935	)		(930	)		(1,104	)		(968	)
Other operating expenses		(3,393	)		(3,208	)		(3,425	)		(4,406	)		(3,681	)
Profit (loss) from operating activities		1,424			(2,358	)		2,113			781			5,338
Profit (loss) for the period from continuing operations		(1,757	)		(998	)		(202	)		2,573			1,406
Loss from discontinued operations, net of tax		(148	)		(2,449	)		(2,139	)		(2,852	)		(1,640	)
Loss for the period		(1,905	)		(3,447	)		(2,341	)		(279	)		(234	)
Supplemental Financial Information — Non-IFRS Measures(1)
Adjusted EBITDA	¥	4,475		¥	1,645		¥	6,022		¥	4,764		¥	8,800
Adjusted profit	¥	411		¥	1,920		¥	2,628		¥	5,307		¥	3,790

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The following tables present breakdowns of our revenues for the periods indicated:
	For the three months ended
	Mar. 31, 2015			Jun. 30, 2015			Sep. 30, 2015			Dec. 31, 2015			Mar. 31, 2016
	(in millions of yen) (unaudited)
Communication and content
Communication	¥	6,680		¥	6,524		¥	7,807		¥	7,714		¥	7,686
Content		12,064			12,401			13,182			11,637			11,865
Others(1)		1,023			1,264			1,383			2,315			2,032
Sub-total		19,767			20,189			22,372			21,666			21,583
Advertising
LINE advertising		5,591			5,466			7,195			8,235			9,302
Portal advertising		2,746			2,415			2,333			2,431			2,571
Sub-total		8,337			7,881			9,528			10,666			11,873
Total	¥	28,104		¥	28,070		¥	31,900		¥	32,332		¥	33,456
(1)    Others include revenues from character marketing, such as sales of LINE character merchandise at our retail stores and licensing of LINE characters’ copyrights, and revenues from e-commerce.
	For the three months ended
	Mar. 31, 2015			Jun. 30, 2015			Sep. 30, 2015			Dec. 31, 2015			Mar. 31, 2016
	(in millions of yen) (unaudited)
Revenues
Japan	¥	20,526		¥	19,597		¥	22,340		¥	22,317		¥	23,788
Taiwan, Thailand and Indonesia		5,490			6,121			6,867			7,714			6,713
Others		2,088			2,352			2,693			2,301			2,955
Total	¥	28,104		¥	28,070		¥	31,900		¥	32,332		¥	33,456
The following table sets forth a reconciliation of our profit (loss) from operating activities to adjusted EBITDA for the periods indicated:
	For the three months ended
	Mar. 31, 2015			Jun. 30, 2015			Sep. 30, 2015			Dec. 31, 2015			Mar. 31, 2016
	(in millions of yen) (unaudited)
Profit (loss) from operating activities	¥	1,424		¥	(2,358	)	¥	2,113		¥	781		¥	5,338
Add: Share-based compensation expenses		2,287			3,068			2,979			2,879			2,494
Add: Depreciation and amortization expenses		764			935			930			1,104			968
Adjusted EBITDA	¥	4,475		¥	1,645		¥	6,022		¥	4,764		¥	8,800
The following table sets forth a reconciliation of our loss for the period to adjusted profit for the periods indicated:
	For the three months ended
	Mar. 31, 2015			Jun. 30, 2015			Sep. 30, 2015			Dec. 31, 2015			Mar. 31, 2016
	(in millions of yen) (unaudited)
Loss for the period	¥	(1,905	)	¥	(3,447	)	¥	(2,341	)	¥	(279	)	¥	(234	)
Add: Share-based compensation expenses		2,287			3,068			2,979			2,879			2,494
Subtract: Tax impact of share-based compensation expenses		(119	)		(150	)		(149	)		(145	)		(110	)
Subtract: Loss from discontinued operations, net of tax		148			2,449			2,139			2,852			1,640
Adjusted profit for the period	¥	411		¥	1,920		¥	2,628		¥	5,307		¥	3,790

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For information on matters that may affect our quarterly results, see “Risk Factors — Our financial results are likely to continue to fluctuate from quarter to quarter, which makes our period-to-period results volatile and difficult to predict.”

Liquidity and Capital Resources

Cash Flows

The following table sets forth our cash flows for the periods indicated.

	For the year ended December 31,									For the three months ended March 31,
	2013			2014			2015			2015			2016
	(in millions of yen)
Net cash provided by (used in) operating activities	¥	886		¥	12,456		¥	6,979		¥	(7,538	)	¥	4,264
Net cash used in investing activities		(2,801	)		(12,967	)		(12,229	)		(6,755	)		(1,929	)
Net cash provided by financing activities		8,027			6,492			18,860			15,130			(683	)
Cash and cash equivalents at the beginning of the period		7,153			13,362			20,254			20,254			33,652
Cash and cash equivalents at the end of the period		13,362			20,254			33,652			20,877			35,082

Our cash and cash equivalents totaled ¥35,082 million as of March 31, 2016, an increase of ¥1,429 million from ¥33,652 million as of December 31, 2015. We recorded ¥4,264 million of cash provided by operating activities in the first three months of 2016, which was partially offset by ¥1,929 million of cash used in investing activities and ¥683 million of cash used for financing activities. Our cash and cash equivalents totaled ¥33,652 million as of December 31, 2015, an increase of ¥13,398 million from ¥20,254 million as of December 31, 2014. We recorded ¥18,860 million of cash provided by financing activities and ¥6,979 million of cash provided by operating activities in 2015, which was partially offset by ¥12,229 million of cash used in investing activities. Our cash and cash equivalents totaled ¥20,254 million as of December 31, 2014, an increase of ¥6,892 million from ¥13,362 million as of December 31, 2013. We recorded ¥12,967 million of cash used in investing activities, but this was more than offset by ¥12,456 million of cash provided by operating activities and ¥6,492 million of cash provided by financing activities. Our principal sources of liquidity since 2013 to date have been incurrences of debt, common stock issuances by us and our subsidiary, LINE Plus Corporation, to our controlling shareholder, NAVER Corporation, and cash generated by our operations.

We manage our liquidity risk to meet our working capital and operational requirements by continually managing projected cash flows. We also aim to mitigate liquidity risk by contracting with financial institutions with respect to bank overdrafts and banking facility agreements for efficient management of funds. We believe that cash from our operations, current and future financing arrangements (including short-term and long-term borrowing facilities and issuances of corporate bonds) and existing cash and cash equivalents are likely to be sufficient to satisfy our operating cash requirements, capital expenditure needs and debt service requirements for the next twelve months. However, we may need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition or strategic cooperation, which may include investing in technology, technical infrastructure or acquisition of additional equity interests in subsidiaries or associates. If we determine that our cash requirements exceed our available cash holdings, we may seek to issue additional debt or equity securities or obtain additional credit facilities or other sources of funding.

Net Cash Provided by (Used in) Operating Activities

Our net cash provided by operating activities consists of net profit or loss adjusted for certain non-cash items including depreciation and amortization and share-based compensation as well as the effect of changes in working capital and other activities. We recorded net cash used in operating activities of ¥7,538 million in the first three months of 2015 compared to net cash provided by operating activities of ¥4,264 million in the first three months of 2016. The increase in revenues described above led to an increase in profit before tax in the first

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three months of 2016. Adjustments for non-cash items and changes in working capital included an increase in trade and other receivables by ¥4,366 million, mainly due to the timing of payments from our main two payment processing providers, and a decrease in trade and other payables by ¥1,964 million, mainly due to the timing of disbursements to our two primary payment processing providers and to content providers. Cash used for income tax payment decreased from ¥6,883 million in the first three months of 2015 to ¥3,323 million in the first three months of 2016.

Our net cash provided by operating activities decreased from ¥12,456 million in 2014 to ¥6,979 million in 2015, due primarily to income taxes paid of ¥10,844 million in 2015 compared to ¥6,176 million in 2014, as well as profit before tax of ¥9,109 million in 2014 compared to loss before tax of ¥12,033 million in 2015 as described above, which was partially offset by adjustments for non-cash items, in particular adjustments made with respect to share-based compensation and impairments in 2015, and the net effects of changes in working capital and other operating activities. The increase in advances received by ¥4,350 million reflects the growth in sales of virtual currency. The increase in other current liabilities by ¥2,976 million is due to the growth in revenue, which is often deferred in accordance with the life of the virtual item or the advertising contract period. The increase in trade and other receivables by ¥3,067 million is mainly driven by growth in sales of virtual currency and advertising contracts and is dependent upon the timing of payments of our two main payment processing providers.

Our net cash provided by operating activities increased from ¥886 million in 2013 to ¥12,456 million in 2014. Such increase was due primarily to a profit before tax of ¥9,109 million in 2014 compared to a loss before tax of ¥5,875 million in 2013 as described above, which was partially offset by an increase in income taxes paid from ¥383 million in 2013 to ¥6,176 million in 2014, and the net effect of changes in working capital and other operating activities, in particular an increase in trade and other receivables related to sales of virtual items.

Net Cash Used in Investing Activities

Our net cash used in investing activities decreased from ¥6,755 million in the first three months of 2015 to ¥1,929 million in the first three months of 2016 primarily due to cash outflow of ¥2,927 million (net of cash acquired) in the first three months of 2015 related primarily to our acquisition in March 2015 of assets of MixRadio, compared to cash outflows of ¥423 million (net of cash acquired) in the first three months of 2016 related to our acquisition in February 2016 of a 50.5% interest in M.T. Burn as well as purchase of time deposits of ¥1,860 million in the first three months of 2015 compared to purchase of time deposits of ¥19 million in the first three months of 2016.

Our net cash used in investing activities decreased from ¥12,967 million in 2014 to ¥12,229 million in 2015. One factor in the decrease was a decrease in purchases of equity investments from ¥7,973 million in 2014 to ¥437 million in 2015 which was partly offset by cash outflow of ¥2,927 million (net of cash acquired) in 2015 related primarily to our acquisition in March 2015 of assets of MixRadio, a mobile music streaming service, from Microsoft. In addition, we recorded cash inflow of ¥1,391 million in 2014 related to our divestiture of DataHotel Co., Ltd. in September 2014 compared to no such proceeds in 2015 and an increase in investments in associates and joint ventures such as Lantu Games Limited from ¥209 million in 2014 to ¥1,567 million in 2015.

Our net cash used in investing activities increased from ¥2,801 million in 2013 to ¥12,967 million in 2014. Such increase was attributable primarily to an increase in equity investments relating to our stake acquisitions in gaming companies such as gumi Inc. from ¥908 million in 2013 to ¥7,973 million in 2014, as well as an increase in acquisition of property and equipment and intangible assets from ¥3,161 million in 2013 to ¥5,150 million in 2014. These factors were partially offset by the absence of payment of guarantee deposits in 2014 compared to our payment of guarantee deposits of ¥2,253 million in 2013, which deposits were made to satisfy requirements under the Payment Services Act, as well as net proceeds from maturities of time deposits of ¥2,182 million in 2013 compared to net purchases of time deposits of ¥20 million in 2014.

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The Payment Services Act requires entities that engage in business activities involving advance payments from customers using prepaid payment instruments such as virtual currencies to set aside amounts covering at least 50% of the total amount of the unused amounts or credits represented by such instruments issued as of the end of either the first or third quarter of any year (if such total amount is more than ¥10 million) for the users, either by making a deposit or by entering into certain guarantee or trust agreements. In accordance with the Payment Services Act, we had deposited ¥2,340 million, ¥2,340 million and ¥2,530 million as guarantee deposits as of December 31, 2013, 2014 and 2015, respectively. As part of our efforts to comply with the Payment Services Act, we deposited our investments in Japanese government bonds of ¥281 million as of December 31, 2013 and 2014 and ¥280 million as of December 31, 2015, which we intend to hold until maturity. In addition, we entered into a credit guarantee agreement with a bank for ¥2,000 million in 2013, which currently remains in place.

Net Cash Provided by (Used for) Financing Activities

We recorded net cash provided by financing activities of ¥15,130 million in the first three months of 2015 compared to net cash used for financing activities of ¥683 million in the first three months of 2016. This change was primarily attributable to payments of short-term borrowings of ¥434 million in the first three months of 2016 compared to net proceeds from short-term borrowings of ¥15,503 million in the first three months of 2015, due to a ¥16,000 million loan from Japanese financial institutions for income tax payments and to finance the acquisition of assets of MixRadio and operate the MixRadio mobile music streaming service.

Our net cash provided by financing activities increased from ¥6,492 million in 2014 to ¥18,860 million in 2015. This increase was primarily attributable to repayment of capital contribution to NAVER Corporation in the amount of ¥8,288 million in 2014 in connection with the LINE Plus Capital Reduction compared to no such repayment in 2015 and an increase in net proceeds from short-term borrowings from ¥15,748 million in 2014 to ¥19,808 million in 2015. During 2014, we obtained short-term borrowings for the purpose of investment in equity securities and the repayment of capital contribution to NAVER Corporation in connection with the LINE Plus Capital Reduction. During 2015, we obtained short-term borrowings for income tax payments and to finance the acquisition of assets of MixRadio and operate the MixRadio mobile music streaming service.

Our net cash provided by financing activities decreased from ¥8,027 million in 2013 to ¥6,492 million in 2014. This decrease was attributable primarily to repayment of capital contribution to NAVER Corporation in the amount of ¥8,288 million in 2014 in connection with the LINE Plus Capital Reduction compared to no such repayment in 2013, proceeds from stock issuance to NAVER Corporation of ¥7,254 million in 2013 related to the establishment of LINE Plus Corporation in February 2013 compared to capital contribution from third-party non-controlling interests of ¥31 million in 2014, and proceeds from the issuance of corporate bonds of ¥1,500 million in 2013 compared to no such proceeds from bond issuance in 2014. These factors were offset in part by cash outflow of ¥7,800 million in 2013 resulting from our divestitures of the Hangame business and related entities in April 2013 compared to no such decrease in 2014, and an increase in net proceeds from short-term borrowings from ¥8,824 million in 2013 to ¥15,748 million in 2014, which were incurred for the purpose of investment in equity securities and the repayment of capital contribution to NAVER Corporation in connection with the LINE Plus Capital Reduction.

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Contractual Obligations

Payments of contractual obligations and commitments will require considerable resources. In our ordinary course of business, we routinely enter into commercial commitments and financial obligations for various aspects of our operations. The following table sets forth the amount of our contractual obligations as of March 31, 2016.

	Payments due by period
Contractual obligations	Total		Less than 1 year		1 to 3 years		4 to 5 years		After 5 years
	(in millions of yen)
Corporate bond obligations(1)	¥	263	¥	263	¥	—	¥	—	¥	—
Short-term borrowing obligations(2)		42,075		42,075		—		—		—
Long-term borrowing obligations		205		—		205		—		—
Finance lease obligations(3)		1		1		0		—		—
Operating lease obligations(4)		4,917		2,689		1,896		332		—
Purchase obligations(5)		347		347		—		—		—
Deposits received(6)		753		753		—		—		—
Office security deposits received under sublease agreement		8		8		—		—		—
Future estimated defined benefit plan payments(7)		7,143		300		890		1,257		4,696
Total	¥	55,712	¥	46,436	¥	2,991	¥	1,589	¥	4,696

(1) Includes payment of principal and interest.

(2) As of March 31, 2016, the book value of our short-term borrowings was ¥42,058 million.

(3) We enter into finance lease agreements for various equipment.

(4) We enter into operating lease agreements for office space, data center facilities and motor vehicles.

(5) Our purchase obligations include contracts for property and equipment. See Note 9(3) of the notes to our annual consolidated financial statements and Note 5 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

(6) The deposits received primarily relate to withholding income tax for employees to be remitted to the Japanese National Tax Authority.

(7) Represents, as of December 31, 2015, the expected amount of retirement benefits that we will be required to pay within ten years under applicable law to employees of our Korean subsidiaries, including LINE Plus Corporation, LINE Play Corporation and LINE Biz Plus Corporation, when they reach their normal retirement age. The amounts were determined based on the employees’ current salary rates and the number of service years that will have been accumulated upon their retirement. These amounts do not include amounts that may be paid to employees who cease to work at the relevant company before their normal retirement age.

Apart from the contractual obligations listed above, we may be required, as a limited partner of a private equity venture capital fund in which we have invested, to contribute our pro rata share of the capital required to be contributed by all limited partners for portfolio investment. The amount of our unfunded capital commitment as of March 31, 2016 was US$0.4 million.

Borrowings and Corporate Bonds

As of March 31, 2016, we had short-term borrowings of ¥42,058 million, all of which consisted of borrowings in local currency. The weighted average interest rate of such short-term borrowings as of March 31, 2016 was 0.2%.

In August 2013, we issued unsecured corporate bonds with an aggregate principal amount of ¥1,500 million maturing on August 31, 2016, at a floating interest rate indexed to the six-month Tokyo Interbank Offer Rate.

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As of March 31, 2016, we maintained aggregate lines of credit with four banks of ¥54,200 million, of which ¥12,200 million remained unutilized. We believe that we have various options to meet our financing needs, including short-term and long-term borrowings and issuances of corporate bonds and equity securities. However, our ability to continue to obtain debt financing at a reasonable cost will depend on several factors, some of which may be outside our control, including general economic conditions, the liquidity of the Japanese and international debt capital markets and the Japanese government’s policies regarding the yen. These policies can affect our ability to borrow and gain access to domestic and foreign capital markets or restrict the use of proceeds of any financing, and can require us to incur indebtedness from other sources that entail higher interest rates or shorter maturities.

Capital Expenditures

Our business requires capital expenditures for the expansion and upgrading of facilities and equipment on a timely and cost-effective basis in order to maintain our competitiveness. As our user base and the activities on our platform grow, we expect that we will continue to invest in expansion and enhancement of our infrastructure, which primarily consist of purchases of networking equipment to increase the capacity of our infrastructure. Capital expenditures for acquisition of property and equipment and intangible assets amounted to ¥3,161 million in 2013, ¥5,150 million in 2014, ¥5,696 million in 2015 and ¥786 million in the first three months of 2016. We review our capital expenditure plans periodically and the actual amount expended on capital investments may differ based on market conditions, business outlook, changes in interest rates, availability of leasing alternatives and other factors.

Off-balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of December 31, 2013, 2014 and 2015 and March 31, 2016.

Market Risk

Market risk is the risk of loss related to adverse changes in market prices. We are exposed to foreign exchange rate and interest rate risk primarily associated with underlying assets and liabilities. Our financial assets and liabilities that are under financial risk management are comprised of the following:

• financial assets include cash and cash equivalents, short-term financial instruments, available-for-sale financial assets, trade and other receivables and other financial assets; and

• financial liabilities include trade and other payables, borrowings and bonds and other financial liabilities.

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The following table summarizes the carrying amounts, fair values, principal cash flows by maturity date and weighted average interest rates of our short-term and long-term liabilities as of December 31, 2015 which are sensitive to exchange rates and/or interest rates.

	By maturities (as of December 31, 2015)									Total as of December 31,
	2016			2017		2018		2019 and Beyond		2015					2014					2013
										Total			Fair value		Total			Fair value		Total			Fair value
	(in millions of yen, won and U.S. dollar, except rates)
Local currency (Japanese yen):
Fixed rate	¥	465		¥	—	¥	—	¥	—	¥	465		¥	465	¥	957		¥	957	¥	996		¥	996
Average weighted rate(1)		1.00	%		—		—		—		1.00	%				1.10	%				1.10	%
Variable rate		42,510			—		—		—		42,510			42,510		22,705			22,705		9,050			9,050
Average weighted rate(1)		0.21	%		—		—		—		0.21	%				0.28	%				0.71	%
Sub-total		42,975			—		—		—		42,975			42,975		23,662			23,662		10,046			10,046
Foreign currency (Korean won):
Fixed rate	￦	—		￦	—	￦	—	￦	—	￦	—			￦—	￦	—			￦—	￦	—		￦	—
Average weighted rate(1)		—			—		—		—		—			—		—					—
Variable rate		—			—		—		—		—			—		—			—		3,500			3,500
Average weighted rate(1)		—			—		—		—		—			—		—					6.90	%
Sub-total		—			—		—		—		—			—		—			—		3,500			3,500
Exchange rate (Japanese yen)		—									—			—		—			—		0.1			0.1
Sub-total	¥	—		¥	—	¥	—	¥	—	¥	—		¥	—	¥	—		¥	—	¥	350		¥	350
Foreign currency (U.S. dollar):
Fixed rate	$	—		$	—	$	—	$	—	$	—		$	—	$	—		$	—	$	3.00		$	3.00
Average weighted rate(1)		—			—		—		—		—			—		—					6.90	%
Variable rate		—			—		—		—		—			—		—			—		—			—
Average weighted rate(1)		—			—		—		—		—			—		—			—		—			—
Sub-total		—			—		—		—		—			—		—			—		3			3
Exchange rate (Japanese yen)		—			—		—		—		—			—		—			—		105.39			105.39
Sub-total	¥	—		¥	—	¥	—	¥	—	¥	—		¥	—	¥	—		¥	—	¥	305		¥	305
Total	¥	42,975		¥	—	¥	—	¥	—	¥	42,975		¥	42,975	¥	23,662		¥	23,662	¥	10,701		¥	10,701

(1) Weighted average rates of the portfolio at the period end. The amounts do not include estimated interest from borrowings and corporate bonds scheduled to be paid.

Exchange Rate Risk

Japan is our largest market and, therefore, a substantial majority of our cash flow is denominated in Japanese yen. However, 13.1%, 24.2%, 29.6% and 28.9% of our revenues in 2013, 2014, 2015 and the first three months of 2016, respectively, were derived from markets outside of Japan, and we expect that an increasing portion of our consolidated financial results in the future will be accounted for in currencies other than Japanese yen. In addition, some of our foreign operations’ functional currencies are not the Japanese yen, and the financial statements of our foreign operations prepared initially using their functional currencies are translated into Japanese yen. Since the currency in which sales are recorded may not be the same as the currency in which expenses are incurred, foreign exchange rate fluctuations may materially affect our results of operations.

We selectively enter into derivative financial instruments with major financial institutions to manage the related risk exposures, primarily with respect to foreign exchange rate risks. Our management determines the market risk tolerance level, measuring period, controlling responsibilities and management procedures. We also prohibit all speculative transactions and evaluate and manage foreign exchange exposures.

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The following table presents our foreign currency exposure and changes in shareholder’s equity and profit or loss before tax from a 5% increase or decrease in the value of Japanese yen against the currencies set forth below, for the periods indicated, assuming all other variables are constant:

	For the year ended December 31,
	2014								2015
	Shareholder’s equity				Profit or loss before tax				Shareholder’s equity						Profit or loss before tax
	Appreciation of functional currency by 5%		Depreciation of functional currency by 5%		Appreciation of functional currency by 5%		Depreciation of functional currency by 5%		Appreciation of functional currency by 5%			Depreciation of functional currency by 5%			Appreciation of functional currency by 5%			Depreciation of functional currency by 5%
	(in thousands of yen)
Korean won	¥	64,985		¥    (61,891)	¥	85,042		¥    (80,992)		¥    111,279		¥	(105,980	)		¥    143,735		¥	(136,891	)
U.S. dollar		41,935		(39,938)		55,031		(52,411)		163,904			(156,099	)		219,417			(208,969	)
Taiwanese dollar		27,121		(25,829)		34,770		(33,114)		4,067			(3,873	)		5,367			(5,111	)
Euro		2,103		(2,003)		2,696		(2,567)		(45,034	)		42,889			(56,476	)		53,787

See Note 26 of the notes to our annual consolidated financial statements appearing elsewhere in this prospectus.

Interest Rate Risk

Interest rate risk is defined as the risk that the fair value of future cash flows from a financial instrument will fluctuate because of changes in market interest rates. We are exposed to interest rate risk arising mainly through financial liabilities and assets that bear floating interest rates. Such financial liabilities and assets consist mainly of our outstanding borrowings and corporate bonds, as well as interest-bearing deposits and additional debt financings that we may periodically undertake for various reasons, including refinancing of our existing borrowings. The objective of interest rate risk management is to minimize financial costs and uncertainties associated with interest rate changes, and we strive to effectively manage our interest rate risk by periodic monitoring and responding to risk factors on a timely basis. In order to manage our interest rate risk in advance, we seek to minimize external borrowings by using internal funds, reduce borrowings with high interest rates, improve the structure of long-term and short-term borrowings, maintain the appropriate balance between borrowings with floating interest rates and fixed interest rates, and regularly monitor domestic and international interest rate changes.

Our cash equivalents and long-term and short-term financial instruments are also exposed to financial market risk arising from fluctuations in interest rates, which may affect the fair market value of our assets and investments. For example, an increase in interest rates would reduce the fair value of the fixed interest component of our interest-bearing securities. We manage our exposure to financial market risk by performing ongoing evaluations of our investment portfolio and investing some of our cash equivalents in fixed interest rate deposit instruments.

If interest rates had been 50 basis points higher or lower, the impact on our interest expenses of the applicable period would be as follows:

	For the year ended December 31,
	2014								2015
	Shareholder’s equity				Profit or loss before tax				Shareholder’s equity				Profit or loss before tax
	Increase of 50 basis points		Decrease of 50 basis points		Increase of 50 basis points		Decrease of 50 basis points		Increase of 50 basis points		Decrease of 50 basis points		Increase of 50 basis points		Decrease of 50 basis points
	(in thousands of yen)
Interest expenses	¥	(66,175)		¥        33,392	¥	(102,820)	¥	51,882	¥	(39,975)	¥	15,910	¥	(59,717)	¥	23,768

The above analysis was performed using balances of the financial liabilities with variable interest rates outstanding as of December 31, 2014 and 2015, assuming such liabilities were outstanding for the full fiscal year immediately before the respective dates, while holding all other variables constant. As of December 31, 2014 and 2015, we did not have any financial assets earning interest at variable rates.

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Inflation

Inflation generally affects us by necessitating increases in the salaries and wages of our employees as well as increasing the cost of goods and services that we purchase. The general rate of inflation in Japan was 0.4% in 2013, 2.8% in 2014 and 0.8% in 2015, according to the Organization for Economic Co-operation and Development. We do not believe that inflation has had a material impact on our results of operations in recent years.

Critical Accounting Judgments, Estimates and Assumptions

The preparation of our consolidated financial statements requires us to make difficult, complex and subjective judgments in making the appropriate estimates and assumptions that affect the amounts reported in our consolidated financial statements. By their nature, these judgments are subject to inherent uncertainty. These judgments are based on our historical experience, terms of existing contracts, our observation of trends in the relevant industries, information provided by our customers and information available from other outside sources, as appropriate. While we believe our estimates and judgments are reasonable under the circumstances in which they were made, there can be no assurance that our judgments will prove to be correct or that actual results reported in future periods will not differ from our expectations reflected in our accounting treatment of certain items. For a discussion of our significant accounting judgments, estimates and assumptions, see Note 4 of the notes to our annual consolidated financial statements and Note 2 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

Revenue Recognition for Internally-developed Virtual Items, LINE Stickers and Sponsored Stickers

We offer both consumable and durable virtual items in our internally-developed games and applications. Consumable virtual items are virtual items that are consumed by following an end users’ specific action and do not provide end users with continuing benefits, whereas durable virtual items are virtual items that provide the end user with continuing benefits over a specific period. The period of benefit of a durable virtual item generally ends at the earliest of (1) an item ceasing to provide further benefits to an end user (i.e., the period of benefit is represented by the usage period of such item), (2) an item being removed from the game board or application by specific in-app or in-game actions taken by an end user or (3) an end user abandoning the game or application. We recognize revenues attributable to consumable virtual items upon sale. For revenues attributable to durable virtual items, revenues are recognized either (1) ratably over the estimated usage period or (2) when we cannot estimate the estimated usage period upfront, ratably over the estimated average playing period of paying users adjusted for any virtual items removed from the game board or application. We recognize revenue attributable to the removed virtual items by developing estimated removal rates and applying such rates to total sales generated. We develop an estimated usage period for durable virtual items considering historical data on purchase patterns and user usage behavior.

We define the playing period as the period from when a paying user first purchased virtual currencies to when a paying user is deemed to have become inactive, i.e. when a paying user has not logged onto the game/app for two consecutive months. To estimate the average playing period for a paying user, we analyze monthly cohorts composed of paying users who made their first purchase of virtual currency during such month. We track these monthly cohorts and analyze the dates on which paying users within each cohort become inactive. Based on the actual data observed, we extrapolate the future declines in paying users to determine the ending point of a paying user’s life beyond the date for which observable data is available. We then use the actual and extrapolated data to calculate the average playing period.

Upon launching a new game or application, we evaluate the nature of the virtual items, the behavior of end users with respect to such items and the availability of supporting data in determining the related revenue recognition policy. We may also consider the data from other existing internally-developed games or applications as well as industry data in determining the related revenue recognition policy if there is insufficient history for such new game or application. If we do not have sufficient historical data to analyze user behavior and cannot identify any similar games or applications to serve as references for us to reasonably estimate the life of the game

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or application, we defer all sales until such history is developed. Once we have sufficient historical data, we assess the estimations (such as the estimated usage period and the estimated average playing period for paying users) for durable virtual items for each game or application on a quarterly basis.

Revenues attributable to the sales of Stickers are recognized over an estimated usage period which reflects historical end user usage patterns. Similarly, revenues attributable to the sales of Sponsored Stickers are recognized over the advertising contract period based on historical user usage patterns during the advertising contract period.

We believe that revenue recognition is a critical accounting estimate because significant management judgment is involved in determining the estimated usage period over which virtual items are expected to be used by users. If user behavior changes over time or deviates from our estimates, we may be required to change the timing of our revenue recognition. In this case, our results of operations could be materially and adversely affected.

Share-based Payments and Valuation of Our Share Capital

Share-based payment expenses related to stock options granted to directors and employees for acquisition of shares of our common stock are estimated based on the options’ fair value determined by the Black-Scholes-Merton (“Black-Scholes”) option pricing model. The Black-Scholes model requires various assumptions, including expected volatility, expected life of stock options and fair value of our common stock at the time of option grants.

The following assumptions for the Black-Scholes model were used to estimate the fair value of stock options granted in 2013, 2014 and 2015. We did not grant any stock options in the first three months of 2016.

	For the year ended December 31,
	2013		2014		2015
Dividend yield		0.0%		0.0%		0.0%
Expected volatility		67%		52-58%		56%
Risk-free interest rate		0.3%		0.2%		0.0%
Expected life of stock options		6 years		6 years		6 years
Grant date fair value of our equity per common share (in Yen)	¥	1,011	¥	1,161-3,297	¥	4,225

Our dividend yield is 0.0%, since we have not paid, and do not expect to pay in the foreseeable future, any cash dividends. Expected volatility is estimated based on the historical volatility of companies that we believe are comparable publicly-traded companies. Expected life of stock options is estimated based on the expected exercise pattern of the option holders. Risk-free interest rate is based on the yield of Japanese government bonds.

Through the second quarter of 2014, we determined the fair value of our common stock at the time of the option grants, using the income approach. The income approach involves using the discounted cash flow method which is based on estimated future cash flows and an appropriate discount rate. We also used the market approach as a reference to validate our valuation obtained using the discounted cash flow method. For the market approach, the value of our common stock is estimated using multiples derived from the trading stock prices of guideline companies.

Beginning in the third quarter of 2014, we determine the fair value of our common stock at the time of the option grants using both the income approach and the market approach. We then determine the valuation of our common stock to be the mid-point of the overlapping valuation range from both approaches.

In the absence of a public trading market, determining the fair value of our common stock at the time of option grants utilizing the discounted cash flow method is highly complex and subjective because it involves estimating future cash flows based on all relevant facts and circumstances known at the time of valuation, including but not limited to factors such as our historical financial results and the projections of our future

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operating and financial performance, market performance of comparable publicly traded companies, overall economic and industry outlook and discounting those cash flows at our weighted average cost of capital.

The assumptions used in calculating the fair value of the stock options represent our management’s best estimates, but these estimates involve inherent uncertainties and application of significant management judgment. As a result, if factors change or we utilize different assumptions, the fair value of stock options could be materially different for any period. Such estimates will not be necessary to determine the fair value of new stock option awards once we complete the global offering and the shares of our common stock and ADSs begin trading on public markets.

The following table sets forth the fair value of our common stock at the time of the stock option grants, as determined by us using the discounted cash flow method.

Stock option grant dates	Number of underlying shares of common stock		Exercise price		Fair value of common stock
			(in yen)
December 16, 2013		3,430,500	¥	344	¥	1,011
February 7, 2014		1,825,000		1,320		1,161
August 8, 2014		752,500		1,320		3,280
October 31, 2014		348,500		1,320		3,297
February 4, 2015		5,773,500		1,320		4,225

We believe that the increase in the fair value of our common stock from ¥1,011 per share as of December 16, 2013 to ¥1,161 per share as of February 7, 2014 was attributable to the growth in our revenues from ¥39,586 million in 2013 to ¥86,366 million in 2014, primarily driven by the increase in our MAUs and growth of the LINE business, as well as successful introduction of additional products and services in 2014, particularly LINE Games. Over this period, we continued to progress on our business plan. With an increase in the scale of our business, our operating expenses as a percentage of revenues decreased from 119.7% in 2013 to 92.8% in 2014. As a result, we recorded loss before tax from continuing operations of ¥8,318 million in 2013 but profit before tax from continuing operations of ¥6,263 million in 2014.

We believe that the increase in the fair value of our common stock from ¥1,161 per share as of February 7, 2014 to ¥3,280 per share as of August 8, 2014 and further to ¥3,297 per share as of October 31, 2014 and ¥4,225 as of February 4, 2015 was attributable to the continued strong growth of our revenues, the achievement of profitability in the first three-month period of 2014 and the maintenance of profitability in the remainder of 2014, as well as our updated outlook based on our portfolio of new businesses. Our revenues increased from ¥39,586 million in 2013 to ¥86,366 million in 2014, driven primarily by the continued increase in our MPUs as well as continued growth of our LINE business, particularly LINE Games which gained further popularity as we introduced many of our games in local languages in various markets. As we continued to successfully progress on our business plan, we were able to further increase the scale of our business, with our operating expenses as a percentage of revenue decreasing further from 119.7% in 2013 to 92.8% in 2014. As a result, we achieved profitability in 2014, recording a profit of ¥2,004 million compared to a loss of ¥6,391 million in 2013.

Income Taxes and Recovery of Deferred Tax Assets

Our income tax expenses are comprised of current tax and deferred tax. Current tax is the expected tax payable or receivable on our taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period and any adjustments to tax payable in respect of previous years.

We recognize deferred tax on temporary differences between the carrying value of an asset or liability for financial reporting purposes and the amounts used for taxation purposes. The deferred tax assets and deferred tax liabilities are calculated using the tax rates based on tax laws that have been enacted or substantively enacted by the end of the reporting period and the tax rates that are expected to apply to the period when the deferred tax asset is realized or the deferred tax liability is settled. Deferred tax assets are recognized for all deductible

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temporary differences, unused tax losses carried forward and unused tax credits carried forward to the extent that it is probable that taxable income will be available. The estimation of future taxable income is calculated based on business plans approved by our management, and it is based on our management’s subjective judgments and assumptions.

We believe that recognition of deferred tax assets is a significant accounting policy that requires our management’s estimates and assumptions regarding, among other things, the level of future taxable income, interpretation of the tax laws and tax planning. Changes in tax laws, projected levels of taxable income and tax planning could affect the effective tax rate and tax balances recorded by us in the future. As of March 31, 2016, we recorded deferred tax assets of ¥16,445 million and deferred tax liabilities of ¥1,711 million.

Impairment

Non-financial Assets

Non-current assets other than goodwill.  Non-current assets other than goodwill, such as property and equipment and intangible assets with definite lives, are assessed for indicators of impairment at the end of each reporting period. We evaluate both internal and external sources of information to assess whether impairment indicators exist. Some of the impairment indicators are evidence of obsolescence, significant adverse changes in the technological, market, economic or legal environment of the market in which we operate. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Likewise, the determination of the assets’ recoverable amounts involves the use of estimates by our management that can have a material impact on the respective values and ultimately the amount of any impairment. No impairment losses were recognized in 2013, 2014 and the first three months of 2016 as a result of testing our non-current assets other than goodwill for impairment, except for the impairment losses recognized for certain non-current assets held by LINE Vietnam Co., Ltd. (“LINE Vietnam”), our subsidiary in which we acquired a 95% voting interest from NAVER Corporation in August 2014. In 2015, impairment losses of ¥54 million were recognized for the full write-off of the MixRadio segment’s property and equipment. In addition, impairment losses of ¥709 million, ¥446 million and ¥218 million were recognized for the full write-off of the MixRadio segment’s software, music rights and other intangibles, respectively. Our MixRadio business was retrospectively classified as part of discontinued operations. See “— Major Components of Results of Operations — Profit (Loss) from Discontinued Operations, Net of Tax.” See Note 9 and Note 11 of the notes to our annual consolidated financial statements appearing elsewhere in this prospectus.

Goodwill.  As of March 31, 2016, we had ¥3,716 million of goodwill. The goodwill impairment test requires us to test at least annually and more frequently as indicators of impairment are identified. The goodwill impairment test requires us to exercise judgment and assess whether the carrying value of the cash-generating units to which goodwill has been allocated can be supported by the recoverable amount of such cash-generating units. The recoverable amount of a cash-generating unit is determined based on a value-in-use calculation that involves the use of estimates. The main assumptions used in the value-in-use calculation include the discount rate, terminal growth rate and expected future cash flow projections for a period of up to five years from financial budgets approved by our management. Cash flow projections after the planning period are extrapolated using terminal growth rates. Cash flow projections take into account past experience and represent our management’s best estimates. These assumptions are subject to significant adjustments from various factors including user trends, spending on marketing, technology infrastructure and competition.

In order to estimate the discount rate that reflects the time value of money and the risks specific to the cash-generating units, we have assumed a risk-free rate equal to one-month average market yields on 10-year Japanese government bonds at the date of performing the annual impairment test. We also incorporated a risk premium, such as a company specific premium and equity premium, in the discount rate. The terminal value growth rates, which are the long-term average inflation rates in Japan, take into consideration external macroeconomic data.

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The key assumptions used in our value-in-use calculations are as follows:

For the year ended December 31,
2013						2014						2015
Pre-tax discount rate			Terminal growth rate			Pre-tax discount rate			Terminal growth rate			Pre-tax discount rate			Terminal growth rate
	17.0	%		1.9	%		14.4	%		1.3	%		14.7	%		1.4	%

In validating the value-in-use determined for the cash-generating units, the sensitivity of key assumptions used in the discounted cash-flow model such as discount rates and the terminal growth rate was evaluated. No impairment losses were recognized in 2014 as a result of testing goodwill for impairment, as the recoverable amounts have considerably exceeded the carrying amounts of cash-generating units, and the outcomes of the impairment tests were not sensitive to reasonably likely changes in any of the assumptions underlying the cash flow projections used for the impairment tests or the discount rates in the periods presented for any cash-generating units. No impairment losses were recognized in 2013 as a result of testing goodwill for impairment, except for impairment losses of ¥40 million related to LINE Vietnam in 2013. In 2015, as a result of testing goodwill for impairment, we recognized impairment losses of ¥2,692 million, the total goodwill allocated to the MixRadio segment. See Note 12 of the notes to our annual consolidated financial statements and Note 14 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus. We believe that determining the existence and impairment of goodwill is a critical accounting estimate because significant management judgment is involved in the evaluation of the value of goodwill, and any reasonably possible changes in the key assumptions on which the recoverable amount is based would cause a change in the recoverable amounts of goodwill.

Financial assets measured at amortized cost

With respect to our financial assets measured at amortized cost, we assess on a quarterly basis whether there is any objective evidence that financial assets are impaired. If there is any objective evidence, we recognize the difference between the carrying value of the asset and the present value of estimated future cash flows as an impairment loss. When we estimate the future cash flows, our management considers the probability of default, time of recovery and past trend of losses, and decides whether the actual loss, which reflects current economic and credit conditions, is more or less than past trends. We consider these estimates to be significant because any adjustments may significantly affect the amount of an impairment loss for the financial assets measured at amortized cost.

No impairment losses were recognized in 2013, 2014, 2015 and the first three months of 2016 as a result of testing our financial assets measured at amortized cost for impairment. Historically, our estimates and assumptions used to evaluate impairment of financial assets measured at amortized cost have been within expectations. However, unforeseen circumstances such as adverse market conditions that deviate significantly from our estimates may require us to recognize losses on impairment of financial assets measured at amortized cost.

Available-for-sale financial assets

For an investment in an equity security classified as an available-for-sale financial asset, we consider a significant or prolonged decline in its fair value below its cost to be objective evidence of impairment. The determination of fair value of the investment involves considering factors such as the stock prices of public companies in which we have an equity investment, current economic and market conditions, the operating performance of the companies and other company and industry specific information. No impairment losses were recognized in 2013 and 2014 as a result of testing our available-for-sale financial assets for impairment. In 2015, we recognized impairment loss of ¥1,790 million primarily as a result of a decline in stock price of gumi Inc., a mobile game developer and publisher listed on the Tokyo Stock Exchange. In the first three months of 2016, we recognized impairment loss of ¥264 million primarily as a result of a decline in stock price of gumi Inc., a mobile games developer listed on the Tokyo Stock Exchange.

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Fair Value for Financial Instruments

We hold various financial instruments. Depending on the accounting treatment specific to each type of financial instrument, an estimate of fair value is required to record the instrument on our consolidated financial statements. Financial assets and financial liabilities held by us are measured at the following fair values:

• quoted prices in active markets for identical assets or liabilities;

• fair value calculated using observable inputs other than quoted prices for the assets or liabilities, either directly or indirectly; and

• fair value calculated using valuation techniques incorporating unobservable inputs.

In particular, the fair value estimates using valuation techniques that incorporate unobservable inputs are based on the judgment and assumptions of our management, such as experience assumptions, and the use of specific numerical calculation models, such as discounted cash flow models. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. The use of alternative estimates and assumptions could increase or decrease the estimated fair values of our investments and potentially impact our results of operations.

Provisions

We recognize asset retirement obligations related to assets leased under operating leases in our consolidated statement of financial position. These provisions are recognized based on our management’s best estimates of the expenses expected to be incurred for the restoration of the operating lease properties to the state as specified in the rental agreements upon termination of the operating leases. The estimation takes risks and uncertainty related to the obligations into account as of the fiscal year end date, and the estimates are evaluated on an annual basis.

We also record provision for the licensing royalty fees payable to third-party platform partners related to future redemption of virtual credits to purchase virtual items by our users. The provision is estimated using user trends, past experiences, and our management’s assumptions related to our business. Historically, our expenses have been within expectations and in line with the provision established. However, unforeseen circumstances such as adverse market conditions that deviate significantly from our estimates may require us to change the timing of our provisions or make additional provisions. In this case, our results of operations and financial condition could be materially and adversely affected.

Defined Benefit Plans

We offer employees in Korea, Taiwan and Thailand defined benefit plans. The specific features of these plans vary depending on the applicable laws and regulations in each country where the employees work. The majority of our defined benefit obligation consists of the unfunded defined benefits plans for employees of our subsidiaries located in Korea, including LINE Plus Corporation, LINE Play Corporation, LINE Biz Plus Corporation and LINE Friends Corporation. Such plans include lump sum payments and other post-employment benefits for the board of directors and employees with a service period of over one year. Expenses related to defined benefit plans were ¥252 million, ¥412 million, ¥1,106 million and ¥399 million in 2013, 2014, 2015 and the first three months of 2016, respectively, and we recorded liabilities for defined benefit obligations of ¥2,921 million, ¥5,495 million and ¥5,580 million as of December 31, 2014 and 2015 and March 31, 2016, respectively. The amount of expenses related to defined benefit plans increased in 2014 and 2015 primarily due to an increase in employees in Korea during such periods. The cost of the defined benefit plans and the present value of the obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that are reviewed at each reporting date, including the determination of the discount rate and future salary increases.

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We used the following assumptions to calculate our expenses related to defined benefit plans for the years indicated.

	December 31,
	2013			2014			2015
Discount rate		4.2	%		3.0	%		2.6	%
Weighted average of future salary increases		11.5	%		9.9% - 11.9	%		9.5% - 14.4	%

We determine the discount rate based on market returns of high-quality corporate bonds consistent with currencies and estimated payment terms applicable to the defined benefit obligations as of the reporting date in order to calculate present value of the defined benefit obligations. Estimated future salary increases are based on historical salary increases and expected future inflation rates. The plans expose us to actuarial risks, including interest rate risk, salary increase risk and longevity risk. Due to the complexities involved in the valuation and its long-term nature, defined benefit obligations are highly sensitive to changes in these assumptions. If the discount rate or rate of future salary increases had been 100 basis points higher or lower with all other variables held constant, the impact on our defined benefit obligations for 2015 would have been as follows:

	For the year ended December 31, 2015
	Discount rate					Salary increase rate
	100 basis points increase			100 basis points decrease		100 basis points increase		100 basis points decrease
	(in millions of yen)
Impact on defined benefit obligations	¥	(520	)	¥	615	¥	546	¥	(477	)

Recently Issued Accounting Standards

The IASB issued IFRS 15 Revenue from Contracts with Customers for recognizing revenue. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer, regardless of the type of revenue transaction or the industry with limited exceptions. In addition to the five-step model, the standard specifies how to account for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. If those costs are expected to be recovered, they can be capitalized and subsequently amortized and tested for impairment. IFRS 15 also applies to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of an entity’s ordinary activities, such as sales of property, plant and equipment or intangibles. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1, 2018. Early adoption is permitted under IFRS. The modified approach will allow the standard to be applied to existing contracts beginning with the current period. No restatement of the comparative periods will be required under this approach, as long as comparative disclosures about the current period’s revenues under existing IFRS are included. We have determined not to early adopt IFRS 15, and we are currently assessing the impact of IFRS 15’s adoption.

For a discussion of additional new standards, interpretations and amendments to IFRS, see Note 3(28) of the notes to our annual consolidated financial statements and Note 3 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

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BUSINESS

Our Mission and Vision

Our mission is “Closing the Distance” by bringing people closer to each other as well as to a wide variety of information and services.

Our vision is to become the “smart portal” through which users can access the people, information, services, companies and brands that they choose, from anywhere they are and anytime they need to.

Overview

We are a leading global platform for mobile messaging and communication services, content distribution and advertising. Our mobile messaging application, which is the foundation of our LINE platform and operates on all major mobile operating systems, enables our users to communicate through free instant messaging and voice and video calls and serves as a smart portal to our other applications and services. We provide users with access to a wide range of social and interactive content and services that satisfy our users’ individual needs for access to information and entertainment such as mobile games and music through our “content platform,” as well as O2O services such as payment services and job posting, restaurant reservation and taxi booking services through our “life platform.” We believe that the integration on our LINE platform of content and services offers our users a convenient way to connect and have fun with their family and friends, explore and share their interests and satisfy their daily needs with greater ease, which we believe enriches the user experience and ultimately contributes to higher user loyalty.

Since the introduction of our mobile messaging application in Japan in June 2011, LINE has grown into a global platform with users in more than 230 countries and a strong user base in Asia. Our active user base has grown to 218 million MAUs globally in March 2016, with 152 million MAUs located in our four largest markets of Japan, Taiwan, Thailand and Indonesia. We strive to localize our services to take into account cultural differences and user needs, and we currently provide our services in 19 languages. According to App Annie, LINE was the fourth largest application publisher globally for the two years ended March 31, 2016, based on the number of downloads from the Social Networking category on iOS App Store and Social and Communication categories on Google Play, combined. We believe the scale and growth of our global user base provide us with powerful network effects, whereby LINE becomes more valuable to users, driving further user growth and engagement as well as attracting more advertisers and platform partners.

At the heart of our platform is the LINE mobile messaging application, which enables users to communicate with family, friends and other people they care about.

• We address people’s basic communication needs.  We focus on serving users’ everyday communication needs by supplying easy-to-use tools, including chat, voice call and video call, with reliable and secure connectivity wherever they are. In March 2016, our users exchanged an average of 20.4 billion messages per day and our average DAUs represented approximately 61.4% of our MAUs globally and 73.0% of our MAUs in our four largest markets of Japan, Taiwan, Thailand and Indonesia, indicating that our services are already a meaningful part of the daily lives of many of our users.

• We enable closed and real relationship-based communication.  We believe that the most rewarding and lasting forms of expression are those involving private, two-way exchanges between people with real relationships, which enhance intimacy and security. Our users can connect with other users they know by directly adding them as friends on LINE or by importing their mobile contact list into LINE. We believe that closer, intimate relationships are integral to the broader social web of activity, representing a more meaningful and influential subset of social networks.

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• We make communication more enriching and expressive.  We are a pioneer in the creation and design of Stickers, our larger and more expressive version of emoticons. Users can express their emotions or actions by sending a single Sticker instead of a thread of plain text. We believe that Stickers have made communication both more convenient and more enriching. Our users in aggregate sent an average of 389 million Stickers per day in March 2016.

Our user engagement is driven by such communication being coupled with activities that are an indispensable part of users’ daily lives. LINE has evolved into an extensive platform that provides not only the ability to communicate but also access to a wide range of localized entertainment content and lifestyle services, such as games, video, music, camera and news applications through our content platform as well as O2O services through our life platform, offering our users richer experiences. With an increasing amount of activity on the internet being conducted through mobile applications, we believe that LINE provides a fast, versatile and user-friendly platform for the discovery of content and services in the mobile era. Our broad array of mobile services, combined with our large and highly engaged user base, gives us unique opportunities to offer greater personalization in terms of the service and content offerings by introducing a range of application settings.

We believe that our user base provides attractive marketing opportunities for our advertisers. We provide a variety of targeted and interactive marketing solutions that enable advertisers to promote their brands and amplify their visibility and reach. We offer a wide variety of “messenger ads” or user-initiated advertising solutions that are offered through the LINE messaging application, such as Official Accounts, Sponsored Stickers and LINE Point Ads, allowing advertisers to direct their efforts and communication in a more targeted manner. We also offer impression-based “performance ads” such as Timeline Ads and other advertisements that utilize our various communication and content offerings, allowing advertisers to effectively reach a larger number of LINE users. Our performance ads have become our fastest growing advertisement products.

We generate revenues in a variety of ways and from various participants active on the LINE platform. Our revenues are primarily generated from games, Stickers and advertising services on the LINE platform, as well as from advertising on our web portals. We generated revenues of ¥39,586 million in 2013, ¥86,366 million in 2014, ¥120,406 million in 2015 and ¥33,456 million in the first three months of 2016. For the two years ended March 31, 2016, according to App Annie, LINE ranked as the world’s largest mobile publisher based on non-game gross revenue from iOS App Store and Google Play, combined. Our approach in each market is to build a large user base through our LINE messaging application, promote user engagement and introduce and enhance entertainment and other content and services, all of which lead to greater monetization opportunities and enhanced media value for our advertising business. We are also exploring opportunities and partnerships to further expand the reach of our LINE platform and have introduced our own payment service, LINE Pay, in Japan, Taiwan and Thailand.

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Our User Base

Since its launch in Japan in June 2011, our LINE messaging service has attracted users from around the world. Today, we believe LINE is the leading mobile messaging application in Japan, Taiwan and Thailand in terms of numbers of users, and we have gained substantial numbers of users in other parts of Asia, including Indonesia, Hong Kong, Singapore, Malaysia and Myanmar. In recent quarters, we focused our marketing efforts on our key countries as a part of our increased emphasis on monetization in markets where we have achieved leading market positions, which has led to an increase in our MAUs in our four key countries of Japan, Taiwan, Thailand and Indonesia as well as overall MAUs. We plan to continue to focus on areas in which we enjoy competitive advantages and to allocate resources effectively.

According to App Annie, for the three months ended March 31, 2016, our LINE messaging application was the largest mobile application in Japan, Taiwan and Thailand in terms of MAUs both on iOS App Store and on Google Play, and the second and third largest mobile application in Indonesia on iOS App Store and Google Play, respectively. In September 2015 our LINE messaging application had the largest share of the total time spent on smartphones in Japan, accounting for 10.4% of the total time spent on all mobile phone applications during the month, according to data released by Nielsen in November 2015.

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Source: Nielsen Mobile NetView Sep. 2015

Our Value Proposition for Our Users

Communicate with people you know in real life.  We provide free mobile communication tools that allow our users to connect with their friends, family and others that they care about in a private and intimate way. We believe that our messaging application ultimately deepens their relationships and further enriches the user experience.

Choose the way you communicate.  Our users can send instant messages to, or chat with, a friend while watching TV, call their colleagues while traveling on business, or enjoy video calls with their family members who are residing overseas. We also provide other means of more open communication, as well as communication with non-LINE users. Our Timeline provides users with open access to, and the ability to share, a broad range of content with other users, and our low-cost VoIP service allows users to place calls to mobile and fixed phone lines, regardless of whether the recipient is a LINE user.

Know that you have been heard.  Our messaging tool provides the sender with confirmation whether their message has been read, and recipients are notified and reminded of unread messages specifically directed to them. We believe that this functionality increases the probability of achieving two-way communication.

Be creative and expressive.  We continue to be a pioneer and leader in the creation and design of Stickers. Users are able to colorfully express their emotions in the form of a single Sticker, which depicts LINE-developed characters or third-party characters or celebrities, such as Hello Kitty, Disney characters and Taylor Swift. We also invite users to participate in the creative process by designing and distributing their own Stickers through our Creators Market service, which in turn further amplifies the power of user-generated content. As of March 31, 2016, there were 259,499 Sticker sets available for download on the LINE platform.

Discover attractive content.  Our content platform introduces users to a host of highly appealing, localized content to enrich their daily lives, including games, news, music, video and more. Fundamental to the quality and appeal of our content are our in-house artistic design capabilities and their appeal to local culture and tastes. The LINE characters we have created, such as Brown the Bear and Cony the Rabbit, are widely recognized within Japan, Taiwan, Thailand and Korea and are receiving increasing recognition in other regions of the world. In particular, our LINE Friends characters have recently become popular in China and Hong Kong, where we have established retail stores to leverage their popularity. We also design our Stickers to appeal to people with a wide range of interests.

Share the fun.  Users on our platform can share mobile games and other applications that they enjoy with their friends directly through a chat or by posting on their Timelines. For example, our users can see how their scores compare against their friends’ scores on their favorite games and send each other in-game purchased virtual items or pictures taken and decorated with Stickers on our camera application. Our LINE Music service enables users to share songs with their friends or add songs to their Timelines, bringing interaction to an otherwise isolated activity. We believe that sharing fun experiences with friends helps to create even more fun, ultimately making users’ mobile experiences more engaging.

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Enjoy one-stop access.  Users are able to satisfy many of their mobile needs through our life platform, which provides seamless access and navigation across a wide range of applications and services that we provide. Through our smart portal, users in Japan, for example, are able to book taxis, make restaurant reservations, check job postings, get tailored news updates, purchase and read comic books and make individual and group calls. We believe that utilization of the LINE messaging application as a smart portal to the applications and services we offer on our life platform serves as an easy and convenient one-stop navigation path for mobile users.

Our Value Proposition for Our Advertisers and Business Partners

Large user base and high level of engagement.  Our platform provides a powerful medium through which advertisers can reach our large user base, thereby amplifying their visibility. By integrating our advertising products with our messaging application, we allow advertisers to benefit from the high level of user engagement driven by communication, which has become indispensable to many people’s daily lives.

Impactful and targeted reach.  We offer advertisers a variety of ways to connect with our users. We offer opt-in products, such as Official Accounts, Sponsored Stickers, LINE@ and LINE Point Ads, which we call “messenger ads,” that allow advertisers to engage only those users who have voluntarily initiated such engagement, such as by adding an advertiser as a LINE friend. We believe that this allows the advertiser to direct their efforts in a more targeted manner and therefore increases the probability of reaching a receptive and engaged audience, which in turn generates a higher return on investment. For example, advertisers can attach coupons to their messages, making it more convenient for the customer to pull up these coupons on their mobile devices at the store and ultimately more likely for the advertiser to achieve O2O sales. In addition to these user-initiated advertising products, we offer targeted native mobile advertising across our content products such as Timeline, LINE News and LINE Live, which we call “performance ads” and which do not require users to opt in, allowing advertisers to effectively reach a larger number of LINE users. In addition, LINE Point Ads allow users to earn LINE Points by viewing video commercials, downloading mobile applications or adding certain Official Accounts as a LINE friend, for example, and have become a powerful marketing tool as users are increasingly able to redeem LINE Points for Stickers or vouchers that can then be used at retail locations such as Starbucks and Lawson convenience stores in Japan.

Business solutions.  The LINE platform provides business partners with solutions beyond simply an advertising medium. For example, Business Connect allows businesses to develop customized applications that can be offered on the LINE platform, and LINE@ enables SMEs to communicate with customers through LINE chat messages. We focus on developing new opportunities for our business partners to leverage the LINE platform and our user base.

Our Value Proposition for Our Platform Partners

Real relationship-based social distribution.  Content providers on our platform, such as application developers, not only are able to utilize our social distribution platform, but also benefit from our real relationship-based user base to maximize their distribution efforts. For example, our users can invite their friends to enjoy a game they have played or send friends virtual items they have purchased. We believe that real relationship-based sharing of experiences enhances the legitimacy of user recommendations and amplifies the benefits of network effects.

Direct sales platform.  Our content platform functions as a direct publishing platform for various content, including games, video, music and online comic books. Third-party game developers and other content providers can sell their products directly on our LINE platform to achieve immediate monetization, which has contributed to LINE becoming a leading game publisher, as well as non-games content publisher, on iOS App Store and Google Play.

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Proven distribution channel of scale.  We provide content providers with access to our large and highly engaged global user base. Third-party content developers who conduct business on our LINE platform are also able to maximize the benefits of our continued expansion. For example, we distribute and maintain a line-up of quality games that are enjoyed by millions of users globally. As of March 31, 2016, our games exceeded a combined 654 million downloads, including 14 games that exceeded 10 million downloads each.

Online to Offline Integration.  Our life platform provides traditionally offline service providers, such as taxi booking services, beauty salons, travel agencies and restaurants, the ability to appeal to more LINE users by offering aspects of their services online, increasing user engagement and convenience.

Our Market Opportunity

The mobile internet industry continues to grow rapidly, with an increasing shift in mobile internet usage to social communications, entertainment and e-commerce. We believe that this presents an attractive market opportunity on which to focus our growth strategies.

Mobile Internet Opportunity

According to data released by Ovum in March 2016, mobile phone connections were projected to reach 7.2 billion globally as of December 31, 2015 and are expected to grow to 8.5 billion as of December 31, 2020. Advances in wireless technology, the build-out of network infrastructure and lower costs are facilitating the availability and adoption of high speed mobile data services globally. 3G and 4G connections are projected to grow from 3.6 billion as of December 31, 2015 to 7.4 billion as of December 31, 2020. A significant majority of the incremental connections are expected to be in the developing Asia-Pacific and Africa regions.

Global Mobile Phone Connections and 3G and 4G Connections (Estimated):

	As of December 31,
	Total Mobile Phone Connections				3G & 4G Connections
	2015		2020		2015		2020
	(in millions)
Asia-Pacific		3,816		4,465		1,701		3,843
Western Europe		500		518		397		508
United States and Canada		378		434		357		432
Other Americas		713		792		383		696
Eastern Europe		496		527		287		495
Africa		971		1,332		233		1,027
Middle East		370		428		193		365
Global		7,243		8,495		3,551		7,365

Source: Ovum

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The mobile internet industry has experienced rapid growth driven by the proliferation of mobile devices such as smartphones and tablets and the popularity of applications available on these devices. According to the Worldwide New Media Market Model released by IDC in April 2016, global mobile internet users were estimated to reach 1.9 billion as of December 31, 2015 and are projected to reach 3.0 billion as of December 31, 2020.

Source: IDC

Mobile Messaging and Social Networking Opportunity

Mobile messaging and social networking are some of the most frequent activities of mobile internet users as they have emerged as a new means of connecting people online. For the two years ended March 31, 2016, according to App Annie, mobile messaging applications constituted four of the top ten applications excluding games based on the number of downloads from iOS App Store and Google Play, combined; two of the remaining six were social networking applications.

Advertising Market Opportunity

Digital advertising accounted for 20.1% of the total advertising market in Japan in 2015, which was lower than the corresponding percentages in each of the United States, China, the United Kingdom and Germany, according to IDC.

Source: IDC

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From 2015 to 2020, the digital advertising markets in Taiwan, Thailand and Indonesia are projected to grow from $0.5 billion to $0.7 billion, from $0.3 billion to $0.5 billion and from $0.4 billion to $1.0 billion, respectively, according to IDC.

Mobile messaging and social networking platforms enable advertisers to execute highly targeted marketing initiatives and therefore are well-positioned to capture a greater share of mobile advertising spending. Personal relationships, frequent communications and interest-based activity on these platforms allow advertisers to target specific audiences. User activity patterns and users’ interest profiles can be analyzed on a real-time basis to improve the efficacy of advertising placements. To the extent that users access a broad variety of content and services via a single smart portal, the opportunities for optimization of the user experience and improved targeting of advertisements increase.

The global mobile advertising market is projected to increase from $47.6 billion in 2015 to $173.6 billion in 2020 and the Asian mobile advertising market is projected to increase from $13.5 billion in 2015 to $55.6 billion in 2020 with the Japanese mobile advertising market projected to increase from $2.8 billion in 2015 to $5.3 billion in 2020, according to data released by IDC in April 2016.

Source: IDC

Content Market Opportunity

We believe that people are increasingly using mobile content to enrich their interpersonal relationships and social experiences. Social and interactive features of such content introduce powerful virality to attract and retain users.

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Consumer spending on paid content on mobile devices globally is projected to increase from $75.6 billion in 2015 to $256.0 billion in 2020, according to data released by IDC in April 2016.

(1) Includes audio, video, online games, e-books and downloaded applications or software and others.

Source: IDC

Stickers (also referred to as “stamps” in certain markets) have become an increasingly popular feature available on many mobile messaging applications. The larger variety and higher quality of images that can be designed in the form of stickers, compared to the traditional smiley-face emoticons, provide a more entertaining chat experience. Highly appealing stickers help attract users and enhance user engagement. Messaging applications typically provide a basic set of free stickers and sell premium sets of stickers that incorporate characters licensed from, or designed by, third-party copyright owners.

Mobile messaging and social networking applications serve as natural marketing and distribution channels for mobile games, generating stable high-volume user traffic and facilitating growth by providing an attractive game-play environment. Mobile messaging and social networking platforms enhance user interaction and increase user loyalty through social functions such as user rankings, competitions and in-game virtual item exchanges. In addition, high quality mobile games benefit platforms by helping to attract and retain users, enhance user engagement, enrich platform content and increase user loyalty. Mobile games typically monetize through in-game purchases of virtual items. As smartphones become ever more central to people’s lives, mobile messaging and social networking platforms are becoming major channels for distributing and sharing a wide range of content, including music, videos, news and user reviews.

Our business benefits from the size and the growth of the content market in our four key countries of Japan, Taiwan, Thailand and Indonesia. According to App Annie, Japan was the world’s largest market in terms of the amount of revenue on iOS App Store and Google Play in 2015, combined. According to IDC, from 2015 to 2020, consumer spending on paid content on mobile devices is expected to grow at a CAGR of 3.3%, 16.4% and 29.9%, from $5.2 billion to $6.1 billion, from $2.6 billion to $5.5 billion and from $2.7 billion to $10.0 billion in Taiwan, Thailand and Indonesia, respectively.

Our Strategies

LINE has become the leading smart portal in Japan. We aim to replicate the success we have had in Japan in other strategic markets, with a particular focus on Asia, while continuing to deepen and expand our already strong position in Japan. The key elements of our strategy to grow our business include:

Continue to Grow Our User Base and Enhance User Engagement

We aim to continue to grow our user base with a strategic focus on Asia and markets where we believe we are uniquely positioned to attract new smartphone users and build a leading position. We aim to penetrate

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targeted markets by introducing localized services and products that appeal to the cultural tastes and differentiated demands of each region. In our largest market of Japan, we plan to commence operations as an MVNO in order to promote the use of smartphones in Japan and further increase our potential user base.

In markets where we have established substantial brand recognition and competitive market positioning, we focus on expanding our offerings to attract and increase the loyalty of our users and to make LINE an integral part of their daily lives.

We strive to offer services and products that users find useful, reliable and entertaining, in order to enrich the user experience and encourage engagement. We believe that the social and interactive features of our services and products are integral to achieving high levels of user engagement, and continue to develop services and products designed to allow users a broad range of expression and opportunities for interaction. We also continue to introduce a wide range of localized content and services that further encourage users to integrate LINE into their daily lives. For example, LINE Live, a real-time video streaming service, and LINE TV, an on-demand video service, provide information and entertainment catered to each region, and LINE Pay and LINE Points, our mobile payment service and rewards programs, enable users to further converge their online and offline activities using our platform.

Expand and Improve Our Platform for Users and Content Providers

Our LINE platform integrates mobile messaging services with a wide range of social and interactive content. We intend to build upon our strength in mobile messaging services to develop and broaden our spectrum of content offerings on our LINE platform as well as integrate offline services in order to further enrich the user experience. For example, we offer a variety of LINE Games, which are popular among casual game players, and plan to expand our game portfolio to include more immersive role-playing games in order to broaden our appeal to diverse user groups. We are also enabling more cross-application interactions, such as posting LINE Music tracks to a user’s Timeline and sending in-game items from LINE Games to other users. In addition to serving as a portal to other content, our LINE messaging application encourages closer, intimate relationships through free instant messaging combined with the use of fun, expressive Stickers.

Offer a Differentiated Marketing Platform for Advertisers

We continue to enhance and broaden the range of our advertising services and products in order to enhance the appeal of LINE as an advertising platform and ultimately attract more advertisers. We intend to strengthen our ability to utilize data analytics and other technologies in order to provide more targeted and interactive advertising solutions that enable advertisers to best promote their brands and products and amplify their visibility and reach. For example, we recently introduced Timeline Ads to allow advertisers to reach a larger number of LINE users by posting advertisements on users’ Timelines, and implemented a new advertisement distribution system based on Hike, a smartphone native advertising platform that utilizes demographic and interest based targeting and real-time bidding to optimize online advertising inventory.

We intend to attract additional business partners by introducing new and more comprehensive business solutions, such as Business Connect and LINE@, that help business partners integrate their online and offline advertising to better reach and communicate with customers. For larger businesses, we plan to launch our Official Web App designed to seamlessly incorporate their existing web services with LINE and to allow them to connect with our users with greater ease through automatic login and personalized push notifications. For example, customers will be able to quickly access businesses through Official Web App and complete transactions through LINE Pay and earn LINE Points or receive customer support through chat, all without having to fill out separate web service registration forms or leaving the LINE messaging application. For SMEs, which may have limited or no web service capability, we plan to launch our SME Partnership Program, which is designed to help SMEs achieve better results by engaging with LINE users through aggregation services they already use. For example, customers will be able to check reviews and wait times and make reservations at local restaurants, have food delivered, receive exclusive coupons from retail stores or find the nearest hair salon from

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within the LINE messaging application, and SMEs will be able to provide better and more responsive services to their customers, leading to higher engagement and interaction. Businesses will also be able to utilize our application programming interface to automate responses to common inquiries, freeing up employees to offer more personalized attention for complex inquiries. We expect our business partners to benefit from the increased flow of users to these accounts, which we also expect will contribute to the retention of users within the LINE messaging application.

Further Monetize Our User Base and User Traffic

We constantly explore and pursue new opportunities to monetize our user base. We focus our monetization and underlying marketing efforts on markets and regions where we have achieved a leading position. Our strategy also entails selective choice of monetization timing and methods. We intend to enhance and develop our content offerings and marketing solutions designed to capture increased monetization opportunities across our platforms.

Pursue Strategic Investments and Alliances

To develop and expand an ecosystem around our LINE platform, we intend to pursue strategic investments, acquisitions and alliances, in order to grow our user base and engagement, and to introduce complementary services and products outside of our current content offerings. We also plan to selectively partner with leading content providers and service providers where such partnership would enable us to deliver a range of high-quality services through our LINE platform, leveraging our brand recognition and strong positioning as the leading messaging application in our key markets. For example, we have established a joint venture with transcosmos inc., an outsourcing service provider in Japan, to offer our business accounts customer support solutions utilizing one-to-one LINE chats. Through our acquisition in February 2016 of a 50.5% interest in M.T. Burn, we recently introduced a new advertisement distribution system based on Hike, a native mobile advertising platform in Japan operated by M.T. Burn. In Thailand, we recently partnered with BSS Holdings, provider of Rabbit smart cards for mass transit systems and offline e-payment at retail stores, to launch Rabbit LINE Pay.

Our Global Footprint and Expansion

In June 2011, we launched the LINE messaging application to the public in Japan, followed by launches in other Asian countries. We initially focused on building our user base in Japan, but shortly afterwards began to actively conduct marketing efforts in other parts of Asia, where we believed there was significant market potential based on the relatively low level of smartphone penetration and relatively large population size. Today, we believe LINE is the leading mobile messaging application in Japan, Taiwan and Thailand in terms of number of users, and we have obtained substantial numbers of users in other parts of Asia, including Indonesia, Hong Kong, Singapore, Malaysia and Myanmar.

We have achieved this growth through active marketing of LINE as well as customizing our content offerings to suit local preferences and needs. We believe the scale and growth of our user base in many countries provide us with powerful network effects, whereby LINE becomes more valuable with more users and creates additional incentives for existing users to encourage new users to join and to stay connected to their circle of friends. We benefit from such network effects where more activity on LINE leads to the creation and distribution of more content, which in turn attracts more users, platform partners and advertisers. We will continue to invest in new products and services and enhancements to our existing products and services, with the goal of further expanding our user base and increasing user engagement.

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LINE Platform

We offer a simple, easy-to-use mobile messaging application as well as access to a wide range of social and interactive content on the LINE platform, which enable our users to share their interests and have fun with their friends.

Communication and Content

Communication

LINE enables our users to enjoy free instant messaging and voice and video calls with each other using their mobile devices (including smartphones and tablets) or personal computers through mobile networks and internet service providers as well as low-cost VoIP services for domestic and international calls to mobile and fixed-line phone users globally.

Our messaging application and related products and services offered on the LINE platform provide our users with a convenient and fun communication experience and include the following:

• Messaging.  LINE provides messaging services for a closed network of users who can select other users with whom they want to connect as “friends.” New friends can be added through inclusion of new contact information in a user’s mobile phone address book, searching for another user’s LINE identification in our database, invitation by email or text messaging, scanning QR codes or, if physically adjacent, shaking users’ smartphones simultaneously. The LINE messaging application can be downloaded for free onto various mobile operating systems (including Apple iOS, Google Android, Windows Mobile and BlackBerry) and personal computers using Windows or Mac OS operating systems. Our users can send free one-to-one text and voice messages to their friends using data services provided by their mobile network carriers or over the internet. Users can also send

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images and videos and share their location information using the messaging service. LINE also offers group chat functions, through which users can create or join groups to exchange text and voice messages and share images and videos with multiple friends in the group.

• Stickers.  While using the LINE messaging application, users can add emotional nuance and personalize their text messages by including Stickers, which are colorful icons depicting actions or expressions of our proprietary characters (such as Cony the Rabbit and Brown the Bear), characters from popular animation or manga created by third parties (such as Sanrio’s Hello Kitty and Disney characters), and real life celebrities and athletes (such as Maroon 5). We introduced animated Stickers in June 2014 and sound Stickers in April 2015 as a way to allow users to further personalize their messages and better express themselves. We continually look for new and innovative ways to let our users express themselves, including by releasing new and diverse Stickers on a regular basis. For example, we released new Pop-Up Stickers that fill up the entire chat screen in June 2016.

Users can place Stickers in a message to add fun, flair and color to a conversation. Our Stickers are typically offered in a set of 24 or 40 images relating to a particular theme or character. A majority of the Sticker sets may be downloaded for ¥240 per set in Japan and at comparable prices elsewhere, while certain promotional Stickers are offered for free.

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Our selection of Stickers varies by country depending on a number of factors, including local preferences, timely events and licensing arrangements for third-party copyrighted characters. The designs for our Stickers are often customized to reflect local culture and tastes.

We also launched Creators Market in April 2014. Users can design their own Stickers and offer them on Creators Market through LINE Store, our web store accessible from mobile devices and personal computers. After a review process and subject to our approval, users may sell their self-designed Stickers to other LINE users and use them on the LINE messaging application. We do not charge users a fee to offer their Stickers on Creators Market. Stickers sold on Creators Market are typically offered for sale in Japan for ¥120 per set of 40 Stickers and at comparable prices elsewhere. For Stickers sold on Creators Market, the designer receives half of the balance of sales proceeds after deducting fees charged by payment processors, as license fees. We believe that Creators Market enables us to diversify our selection of Stickers that reflect local culture and tastes and further promote the usage of Stickers generally. As of March 31, 2016, we had registered creators from 171 countries.

• Timeline.  Our Timeline service, which users access through the LINE messaging application, enables users to share their day-to-day experiences within the closed circle of people whom they choose as their friends. Each user has a profile screen allowing text, Stickers, images and videos and other activity to be posted to express themselves and to share with friends. Each user’s Timeline displays that user’s posts as well as posts by their friends and other interesting content that the user chooses, with the most recent posts appearing at the top of the Timeline. Our Timeline is designed to be simple and easy to view, and each post displays only the user profile, limited lines of text and any image or video included in the post. Users can choose the friends with whom they share their posts and whose posts they receive on their Timelines. Friends who see a user’s Timeline post can post their replies or press the “like” button to acknowledge the post. Users can also share music on their Timelines by streaming music from LINE Music, our on-demand music subscription service. In March 2016, 53 million of our MAUs in Japan accessed their Timelines.

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• Themes.  Our users can customize the look of the LINE messaging application on their devices by downloading “Themes” that feature LINE and third-party licensed characters. Themes are used to decorate their start up screen, friends list, chat rooms, menu buttons and other displays. Themes may generally be downloaded for ¥360 per set in Japan and at comparable prices elsewhere, while certain Themes are offered for free. In April 2016, we began allowing users to design their own Themes and offer them on Creators Market. Similar to Stickers offered on Creators Market, after a review process and subject to our approval, users may sell their self-designed Themes to other LINE users and use them on the LINE messaging application. We do not charge users a fee to offer their Themes on Creators Market. Themes sold on Creators Market are typically offered for sale in Japan for ¥360 per Theme and at comparable prices elsewhere. For Themes sold on Creators Market, the designer receives half of the balance of sales proceeds after deducting fees charged by payment processors, as license fees.

• Free Call.  Our users can make free one-on-one domestic or international voice calls and video calls to other LINE users worldwide who are registered as their friends on LINE and are using Apple iOS or Google Android smartphones or personal computers using Windows or Mac OS operating systems. In March 2016, we introduced a free group call feature which allows up to 200 users to participate in simultaneous voice calls through the LINE messaging application.

• LINE Out (VoIP).  In March 2014, we launched the LINE Out service, which provides a low-cost VoIP service that enables users to make domestic or international voice calls using the LINE messaging application to mobile and fixed-line phone users globally, regardless of the telecommunications network used by the recipient of the call and regardless of whether the recipient is a LINE user. We do not charge our users any initial setup fee, and users pay in advance for the minutes to be spent making calls by making an in-app purchase of minutes or purchasing minutes on LINE Store. As of March 31, 2016, users with mobile phone numbers registered in any one of 22 countries, including Japan, Thailand, Malaysia, Mexico, the United States and Spain, can use LINE Out to make phone calls to countries around the world.

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Content

LINE serves as a content platform for various other applications for our users, thereby offering users a wide range of entertainment and other useful and interactive tools. Such applications include:

• LINE Games.  We offer various games on the LINE platform. Unlike standalone games not offered on a broader platform, LINE Games enable users to invite their LINE friends to download games that they enjoy playing. This, along with a game score ranking system that displays scores of the player’s LINE friends, encourages our users to connect with their friends through our games and to help them build and enhance their relationships. All LINE Games are initially downloadable for free, typically with options to buy in-game items, such as extra lives or “boosters” that enhance the user’s performance level, or to upgrade game versions.

Typically, LINE Games are highly social by nature and simple to play. Our portfolio of games includes puzzle games (such as LINE Bubble 2, LINE Disney TsumTsum and LINE Pokopoko), adventure games (such as LINE Rangers) and board games (such as LINE Get Rich). We have also begun to expand our game portfolio into role-playing games, with the launch of games in select markets beginning in June 2015, to attract and engage more users. LINE Games are typically time-restricted and assign specific goals for the users to achieve, and users are encouraged to earn different awards that reflect their progress. Some awards are earned by advancing in the game while others require users to purchase in-game virtual currencies, such as “rubies” and “diamonds,” to use to earn awards. Users’ game scores are ranked and shared among their circle of LINE friends, and users can interact with friends by sending in-game items to one another.

We actively maintain the quality of games introduced on the LINE platform to promote an engaging experience for our users and enhance their overall satisfaction with LINE. We launched a total of 23 new games in 2015 and as of March 31, 2016, we offered 56 games on the LINE platform in Japan,

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of which 6 games were developed by us and the remainder were developed by third-party game developers. To grow our inventory of high-quality games, we continually seek to enhance our in-house game development capability as well as pursue a variety of partnerships, including in the form of equity investments in game developers. For more information on our game investments, see “— LINE Platform — Communication and Content — Others — Start-up Investments.” In many cases, we publish our game offerings in different languages, and as of March 31, 2016, we offered games in over 10 languages. In the past, we published most of the games developed by third-party game developers in the markets we serve on a non-exclusive basis. However, our general policy when offering new games on the LINE platform is to enter into new contractual arrangements with third-party game developers to become the exclusive distributor of their games in a particular market. Based on revenues, games are currently the most popular third-party applications that are used on the LINE platform.

Over 654 million downloads of individual LINE Games have been made on a global basis as of March 31, 2016. The selection of game titles and pricing of in-game purchase items vary by country subject to local preferences and licensing arrangements for third party-owned intellectual property, and we adjust our portfolio of games from time to time to meet our users’ evolving preferences. Games are popular among mobile game players and there were 31 million MAUs of LINE Games in March 2016. For the two years ended March 31, 2016, according to App Annie, LINE ranked as the world’s sixth largest mobile publisher based on gross game revenue from iOS App Store and Google Play game revenue.

• Other Applications.  We also offer a wide range of non-game applications on the LINE platform to enhance our user experience.

LINE Play is our virtual community that enables users to design their own avatars, or graphic identities that users select to represent themselves on screen, write and exchange diaries with other users’ avatars, visit other users’ avatar rooms and chat with other users who share common interests. Community members can also play interactive games with other users. Users may purchase in-app items to dress up their avatars or decorate their avatar rooms. Unlike our LINE messaging service, LINE Play is designed as an open social network where users can communicate freely with other LINE users who are not their LINE friends.

LINE News is our personalized news-clipping service application that provides users with relevant real-time news stories based on the topics that users are most interested in, such as entertainment, sports, politics, economy, gourmet and fashion. As of March 31, 2016, LINE News provided content sourced from 57 publishers. LINE News is also integrated into users’ Timelines and sends updates to users through push notifications, which allows seamless access to interesting and important news throughout the day without the need to leave the LINE messaging application. In addition, users can share interesting articles on their Timelines or with their friends through direct messages allowing for vibrant discussions. LINE News is currently available to our users in Japan, Taiwan, Thailand and Indonesia and was accessed by users on over 19 million mobile devices in March 2016.

LINE Live, released in December 2015, is a real-time streaming service that allows users to access live streaming personal videos or commercial events, such as concerts and sporting events, provided by artists, celebrities and corporate sponsors. LINE Live is currently available to our users in Japan and was viewed by over 9.3 million users in March 2016.

LINE TV, released in February 2015, is our on-demand video service that allows users to select and watch videos from diversified channels that offer an array of localized content. LINE TV is currently available to our users in Taiwan and Thailand and was accessed by users on over 17 million mobile devices and personal computers in March 2016.

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LINE Manga is our online comic book store that enables users to purchase and download from a selection of over 100,000 comic book titles as of March 31, 2016, read comic books on mobile devices and organize purchased titles on a virtual bookshelf. Users can also recommend comic books to their friends and share links to such comic books on their Timelines. LINE Manga is currently available in Japan and Taiwan.

LINE Music is our on-demand music subscription service that enables users to purchase and stream songs from a catalogue of over 15 million songs as of March 31, 2016, create playlists of their favorite music, send music or playlists directly to friends on the LINE chat screen or share music with friends by streaming it on their Timelines. LINE Music was launched in Thailand in May 2015 through local partnerships and in Japan in June 2015 by LINE Music Corporation, a joint venture with Sony Music Entertainment, Universal Music Group and Avex Digital Inc. in which we have a 33.4% interest as of March 31, 2016. We introduced paid subscription plans in both Japan and Thailand in the second quarter of 2015.

B612 is our “selfie” camera application that enables our users to express themselves through self-portraits customized through a wide variety of filters and effects and to share the portraits through the LINE messaging application or other social network services. Since its release in August 2014, B612 has been downloaded approximately 160 million times as of March 31, 2016 and was accessed by users on over 64 million mobile devices in March 2016.

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Examples of other applications offered on the LINE platform to further enhance user experience include the following:

Application		Description
	Fortune	Fortune-telling service
	LINE Camera	Camera application that enables users to edit, enhance and decorate photos and share them with friends through the LINE messaging application or other social network services
	LINE Part-time Job	Part-time job posting service provided through AUBE, Ltd., a joint venture with Intelligence Holdings, Ltd. in which we hold a 49.0% interest
	LINE Blog	Blogging platform designed to foster greater interaction between celebrities and their fans
	LINE Gourmet	Restaurant reservation service that allows users to make reservations at over 45,000 restaurants in Japan through the LINE messaging application
	LINE Gift	A social gifting service that allows our users to purchase and send gifts to their LINE friends without a delivery address or phone number or organize groups of LINE friends to spread the cost of gifts for special occasions
	LINE Flashsale	Flash sale service that offers items with limited inventory at a discounted price and during a limited period
	LINE Taxi	Taxi application for use in select areas in Japan that enables users to call taxis directly from the LINE messaging application and pay fares through LINE Pay
	Weather	Weather forecast service

For a discussion on how payments by users are shared among us, our platform partners and payment processing service providers, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Major Components of Results of Operations.”

Others

• LINE Friends.   We engage in character marketing using internally-designed LINE characters such as Cony the Rabbit and Brown the Bear, primarily to promote our brand and appeal and further expand our user base. LINE characters have initially gained popularity through Stickers and LINE Games that feature them, and we sell official LINE merchandise, such as plush toys, action figures, stationery goods, clothes, tableware and limited-edition collaboration items, at LINE Friends stores. As of March 31, 2016, we had a total of 18 LINE Friends stores located in Korea, China, Taiwan, Japan and Hong Kong. LINE Friends merchandise is also available through online stores, accessible in Japan, Korea and China. From time to time, we operate pop-up stores in various markets for fixed durations. We plan to continue to expand the number of retail stores and pop-up stores in key markets in Asia. In addition, we license our proprietary LINE characters to third parties for production and sale of various LINE-related merchandise. For example, we have partnered with Universal Studios Japan to release special edition Stickers in commemoration of the 15th year anniversary of the theme park, as well as with AirAsia to feature LINE colors and characters on one of their airplanes in conjunction with travel and other promotions. We believe such licensing and other partnerships contribute to building our brand awareness and recognition.

• LINE Mobile. We plan to enter into a partnership with a company in the NTT group in order to commence operations as an MVNO and provide stable and affordably priced plans in Japan by using the infrastructure and communication system of NTT Docomo, a leading Japanese mobile phone service provider. Individual smartphone ownership in Japan was estimated to be 56.9% of

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total population as of September 2015 according to data released by MM Research Institute, and we aim to promote the use of smartphones in Japan through our MVNO service, thereby increasing our potential user base. In March 2016, we announced the launch of the LINE Mobile MVNO service planned for the second half of 2016.

• Start-up Investments. We operate three investment funds, in order to incubate start-up companies that would help further enhance the content offerings on our LINE platform. Through these funds we invest in companies and service providers that we belive can enhance the LINE platform by further adding convenience and value to our users, such as those focused on Japanese game content and game development, as well as O2O, e-commerce, payment, media and entertainment, both inside and outside of Japan. The combined target capitalization of our three funds is ¥20 billion and as of March 31, 2016, we have committed approximately ¥6,082 million.

In July 2015, we created LINE NAVER Game Partnership, a joint venture with NAVER Corporation in which we own 66.7% and NAVER Corporation owns 33.3%, in order to invest in the competitive Korean game content development market. Under the terms of the joint venture agreement, all contributions and any distributions are made on a pro rata basis. As of March 31, 2016, LINE NAVER Game Partnership made investments totaling ¥29 million.

Advertising Products and Services

LINE Advertising

LINE offers targeted and interactive marketing products and services that enable advertisers of various sizes to promote their brands, products and services, amplify their visibility, better target their reach and enhance their advertising message by leveraging our user base. Advertisers can choose to subscribe to one product or service or multiple products or services that are bundled as a package. We have a sales force that is dedicated to attracting and retaining advertising customers and providing support to them throughout various stages of their campaigns, and our direct sales activities are supplemented by utilization of third-party advertising agencies. Advertisements and promotional messages can be instantly delivered to our users because they are displayed on our users’ smartphone screens through the LINE messaging application on a real-time basis. We are expanding our efforts to provide advertisers with tools to allow them to better leverage our database to target their customer reach. For example, in February 2016, we acquired a 50.5% interest in M.T. Burn, operator of a native mobile advertising platform in Japan, to strengthen and grow our advertising platform. Revenues from our advertising products and services consist primarily of the following:

• Official Accounts.  Official Accounts are LINE user accounts created for large-scale businesses and celebrities with followers that enable them to send messages directly to LINE users who have added them as a LINE friend. Once added as a LINE friend, such Official Account holder is displayed together with the users’ other LINE friends, and the users are instantly alerted of messages through push notifications on their smartphones, as would be the case with any other messages from their LINE friends. Official Accounts enable business enterprises to reach LINE users around the world who are interested in their business, products or services by notifying such users of their latest products and services as well as distributing coupons and promotional information. Since LINE is primarily used on mobile devices, we believe that Official Accounts bring promotional information to users’ attention more quickly and efficiently than personal computer-based advertisements. Celebrities can also promote themselves and their latest works, such as movies and music albums, by connecting with their fans through their Official Accounts. We also provide ongoing consulting services to advertisers regarding their use of Official Accounts. We offer initial subscription to Official Accounts for a duration of 4 weeks, 8 weeks or 12 weeks and charge a monthly fee based on the contract period and the numbers of messages to be sent to users and updates to be posted on Timelines. Contracts may be renewed for a minimum period of three months, and monthly fees for renewed contracts vary depending on the number

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of users who have added such Official Accounts as their LINE friends. In certain jurisdictions, we also charge a flat one-time registration fee. As of March 31, 2016, we had 228 paid Official Accounts outstanding in Japan and 212 paid Official Accounts outstanding in other countries.

• Sponsored Stickers.  Our advertisers can offer “Sponsored Stickers” to LINE users to promote their brands, products and services. We work with advertisers to design sets of Sponsored Stickers, which often feature the advertisers’ proprietary characters, and offer them in sets of 8 or 16 Stickers. Sponsored Stickers are available globally and typically downloadable during a period of 4 weeks for free by users who add the sponsor as their LINE friend. We charge the advertisers fees based on the number of Sponsored Stickers offered by them as well as a Sticker design fee. Advertisers can add special features to their Sponsored Stickers, such as “Must-View Stickers,” a feature that allows users who watch certain videos to download a special set of Stickers, and “Direct Stickers,” a feature that allows advertisers to invite users to download Stickers through LINE messages. Advertisers may also add an advertisement on our virtual Sticker shop on the LINE platform for an additional fee.

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• LINE Point Ads.  We offer “LINE Point Ads” to our advertisers which allow our users to receive LINE Points for free upon downloading certain applications, watching certain video commercials created by our advertisers or adding certain Official Accounts as a LINE friend. LINE Points can be used as virtual currency to purchase products offered on the LINE messaging application, such as Stickers. In addition, users can redeem LINE Points for vouchers that can then be used at retail locations such as Starbucks and Lawson convenience stores in Japan. We offer LINE Points through LINE Point Ads as a means of promoting advertisers’ applications, products or services because they encourage initial downloading of applications or viewing of their commercials and lead to greater exposure to LINE users. We charge advertisers a fixed fee per specific action taken by our users. Prior to April 25, 2016, LINE Point Ads was referred to as free LINE Coins and as of the same date, all previously issued free LINE Coins were converted to LINE Points. See “—Payment Mechanism for Our Users.”

• Sponsored Themes.  We introduced “Sponsored Themes” in March 2015 to offer our advertisers more ways to promote their brands, products and services to LINE users. Similar to Sponsored Stickers, Sponsored Themes often feature the advertisers’ proprietary characters and are typically downloadable during a period of four weeks for free and can be used for up to 180 days. We charge the advertisers fixed listing fees as well as a Theme design fee.

• LINE@. Our business users can create their own official accounts using our LINE@ application and send messages to, or post announcements on the Timelines of, other users who have added such LINE@ accounts as LINE friends, as well as respond to inquiries from other users on the LINE@ chat screen. For a monthly fee, users with LINE@ accounts can send more messages per month as well as image-based messages containing links to external websites. As of March 31, 2016, we had over 697,000 LINE@ accounts in Japan and over 1.6 million LINE@ accounts in other countries.

• Business Connect.  Business Connect provides our business partners with a set of tools, application programming interfaces and embeddable widgets that they can use to build customized applications that can be offered on the LINE platform, such as sales platforms, marketing tools and customer relationship management solutions.

• Timeline Ads.  Our advertisers can post advertisements on Timelines to reach our users. Such advertisements may include links to external corporate websites, promotions of application downloads or branding campaigns featuring video clips. We charge advertisers a fixed fee per Timeline Ad.

• Content-based Advertisements.  We recently introduced an advertising platform that leverages Hike and utilizes our various content offerings such as LINE News, LINE Blog, LINE Live and LINE TV that are accessible on the LINE platform. Through these content-based advertisements, we have begun to offer our advertisers a way to effectively reach our users across a number of LINE applications and services and achieve enhanced targeting.

Portal Advertising

In addition to advertising on our LINE platform, we also offer advertising services on both mobile devices and personal computers through the following portals that we operate:

• livedoor.  livedoor is a Japanese web portal that brings together information from a wide variety of sources and provides related services such as web search, news, weather and entertainment content and blog hosting. livedoor is one of the largest blogging service providers in Japan and had approximately 8.8 billion monthly page views in March 2016.

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• Matome.  We provide a personal web curation platform in Japan called Matome that enables individual users to create web pages that bundle images, links and videos under a specific topic. Such pages help viewers to see information collected from various sources sorted by topic that reflect the curating user’s perspectives and experiences on a specific topic. In March 2016, Matome had approximately 2.4 billion monthly page views.

We typically sell advertising space on these portals and their mobile applications through advertising networks such as Google and Yahoo Japan and through other brokers. From time to time, we also sell advertising space directly to advertisers.

Payment Mechanism for Our Users

Users of LINE and other applications offered on the LINE platform purchase products such as Stickers, in-game items or other in-app items primarily through the payment processing systems established by Google Play for Android-based smartphones and Apple App Store for iOS-based smartphones, for which such payment processing systems charge transaction fees based on a fixed percentage of the price paid by users. In addition, users of iOS- and Android-based smartphones may use LINE Coins as virtual credits for purchase of products and services on the LINE platform. Users may acquire LINE Coins, either by purchasing LINE Coins through their respective payment systems or converting their LINE Points into LINE Coins. We supplement such payment options with LINE Store, our web store accessible from mobile devices and personal computers, where users in Japan, Taiwan, Thailand and Indonesia have the option to pay with prepaid cards or credit cards or through direct mobile billing that adds the purchase amount to their monthly phone bill.

As part of our efforts to diversify payment options available for LINE users, in December 2014, we launched LINE Pay, our mobile payment service application, on both iOS and Android operating systems. LINE Pay allows our users to register their credit cards and make payments, regardless of their mobile carrier. LINE Pay is in its initial stage and such credit card payments can only be made on LINE Store and a number of select online partner retail stores. This credit card payment component is generally available in any country where our users are able to make purchases on their credit cards. Our users in Japan, Thailand and Taiwan can also make payments, remit funds to each other or withdraw cash from certain banks within their respective countries through LINE Pay by linking their accounts at select banks in their respective countries or, in the case of users in Japan and Taiwan, adding money to their LINE Pay accounts from convenience stores or ATMs or through internet banking. In addition to making online payments, users in Thailand are able to use LINE Pay to make purchases at over 140 offline retailers. We plan to expand the scope of LINE Pay by selectively incorporating it to our applications and exploring local partnership and joint venture opportunities in order to increase the convenience of our users. In Thailand, we have entered into an agreement with BSS Holdings, provider of Rabbit smart cards for mass transit and retail customers, to launch “Rabbit LINE Pay” service in Thailand and set up a local joint venture for this purpose. Through our partnership with JCB Co., Ltd., a leading Japanese credit card company, we have begun to offer LINE Pay Card, our JCB-branded prepaid debit card, to LINE users in Japan. Once a user adds money to his LINE Pay account he can use his LINE Pay Card for purchases both online and offline, which gives the user the ability to use LINE Pay at over 29 million merchants worldwide that accept JCB cards as of September 2015. To further promote the use of LINE Pay, we have recently introduced our LINE Points reward program, which allows users to earn points that they can add to their LINE Pay balance, redeem for purchases at LINE Store and online LINE Friends stores or convert to LINE Coins for further redemption on our LINE platform. LINE Pay Card users can also earn LINE Points equal to 2.0% of amounts spent.

Building and Maintaining User Trust

We strive to create products and services that are safe, secure and easy to use. We dedicate significant resources to the goal of building user trust through developing and implementing programs designed to protect user privacy, promote a safe online environment and assure the security of user data.

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Privacy and Sharing

People come to LINE to communicate and share their experience with friends. Protecting user privacy is a critical consideration in our product and service development process. Our objective is to give users control over what they share and with whom they share. Our efforts regarding user privacy are fundamental to our business and are focused on assuring control, transparency and accountability as follows:

• Control.  We believe that by providing our users with clear and easy-to-use controls, we will continue to promote trust in our products and services. We have introduced various personal information control tools and techniques. For example, a user can choose whether other users can search for his or her account and select the scope of the audience for his or her Timeline postings.

• Transparency.  Our privacy policy relates to our data use practices and privacy features. We also offer a number of tools and features that make disclosure to users on how their information is used on the LINE platform. Our application settings feature enables users to view each of the applications they have chosen to use, the information generally needed by each application, and the audience with whom users have chosen to share their experiences. We believe that our transparency efforts enable users to make more informed decisions about their activities on the LINE platform.

• Accountability.  We have implemented procedural safeguards as part of our privacy program. These include employing a dedicated team of privacy professionals who are involved in product development from design through launch, conducting ongoing review and monitoring of the way data is handled by existing features and applications and implementing systemic data security practices.

Safety

We generally design our products and services to include safety tools. To communicate directly with other LINE users, each user has the option to register a “LINE ID” to allow other users to find such user through a LINE ID search. Each user may choose whether his or her account is visible to other users’ LINE ID searches. We also cooperate regularly with mobile network providers and educators as well as law enforcement officers to promote proper and legal use of the LINE platform.

Security

We invest in technology, processes and people as part of our commitment to safeguarding our users’ personal information. We use both third-party developed and proprietary technologies to protect our users, including an intrusion detection system to protect the data entrusted to us, and we rely on multiple layers of network segregation using firewalls to protect against attacks or unauthorized access. Our security team actively scans for security vulnerabilities using commercial tools, penetration tests, code security reviews and internal and external audits. Our internal policy is to rigidly implement protective measures to safeguard user information, and we have acquired international certifications in both information security and privacy.

Sales and Marketing

The LINE user community has grown with users inviting their personal contacts to connect with them, supported by our internal efforts to stimulate user awareness and interest, such as advertising and marketing campaigns on television and the internet. As we continue to increase our global footprint, we engage in active advertising and promotional campaigns to build our brand and further expand our user base.

We utilize television commercials and internet and mobile advertising as well as product placements in television shows, often targeting younger generation users. Primarily to increase our brand recognition, we continue to expand the numbers of retail stores and fixed-duration pop-up stores in various markets where

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shoppers can purchase official LINE merchandise or take photographs with LINE character mascots. We have partnered with Shogakukan-Shueisha Productions Co., Ltd. of Japan to publish cartoons that feature LINE characters such as Cony the Rabbit and Brown the Bear. We also engage in promotional events and sales of the LINE characters through our LINE Friends stores. Our marketing expenses were ¥17,202 million in 2013, ¥18,069 million in 2014, ¥16,596 million in 2015 and ¥2,307 million in the first three months of 2016, excluding personnel-related costs of our marketing staff. While we believe that our ability to grow through network effects associated with the LINE platform will be fundamental to our growth in global markets, we expect to continue to invest significantly in marketing and promotional activities to further promote such growth.

We also focus on attracting and retaining advertisers. In Japan, we operate a dedicated sales force focused on providing support to advertisers throughout the stages of the advertising campaign cycle, from pre-purchase decision making to post-campaign analytics. For example, LINE Business Partners Corporation, our wholly-owned subsidiary, focuses on sales and operations of our key advertising products such as Official Accounts. Our direct sales activities are supplemented by third-party agencies that primarily assist with attracting large businesses that may be interested in creating Official Accounts, as well as application developers that may be interested in marketing their applications. We also invest in customer support for our users, platform partners and advertisers, and we regularly host conferences and other events to promote our products and services to platform partners and advertisers. Outside of Japan, we engage in global sales and marketing activities through LINE Plus Corporation. LINE Plus Corporation has a subsidiary in each of the United States, Taiwan, Thailand, China and Vietnam, which is responsible for the regional sales and marketing of LINE products. In addition, LINE Plus Corporation operates a sales office in each of Malaysia, Indonesia, Spain, Hong Kong, Dubai, Mexico and Colombia. LINE Plus Corporation develops marketing strategies for potential advertisers and regularly works with third-party agencies to promote advertising opportunities with LINE.

Technology

We have assembled a team of highly skilled engineers and computer scientists whose expertise spans a broad range of technical areas. We have made significant investments in scalable infrastructure to support large-scale, real-time messaging systems, data management and analysis technologies and voice and video call quality solutions.

Scalable Infrastructure to Support Large-Scale, Real-Time Messaging Systems

Our products and services are built on distributed computing architecture. We use a combination of off-the-shelf and custom software running on clusters of commodity computers to amass substantial computing capability. We intend to continue to develop server infrastructure that is operationally efficient, scalable and reliable, which is designed to do the following:

• adapt to meet the needs from increasing user base growth and activities on our platform through decentralized data networks;

• improve the functionality of servers through automated server management technology, thereby reducing the cost and improving operational agility;

• automatically detect and respond to errors in our infrastructure components, including application servers, storage infrastructure and system networks; and

• maintain reliable redundant systems for our infrastructure components in Japan and abroad to reduce the possibility of service interruptions.

Our infrastructure enables the storage and processing of large datasets and deployment of our products to our users on a global basis. As our user base grows and the level of engagement and activities on our platform continues to increase, we will continue to expand our computing infrastructure to sustain and further improve our

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operating efficiency and to provide our products and services quickly and reliably to all users around the world. Our core messaging system enables real-time processing of a large amount of user traffic and serves as the basis for our LINE platform operations by delivering messages as well as other content generated from LINE Games and other applications offered on the LINE platform on a real-time basis.

Data Management and Analytics Technologies

In order to provide each user with a personalized LINE experience, we process and analyze a vast and growing amount of content shared by our users, developers and advertisers. Accordingly, we have invested in developing technologies and analytics in areas including the following:

• a storage infrastructure that enables us to securely store hundreds of petabytes of data generated by our users;

• increased storage capacity for more efficient data distribution;

• a high-volume business intelligence system that enables large scale data analysis; and

• a data warehouse infrastructure that provides tools to enable easy data summarization, ad hoc querying and analysis of large datasets.

Voice and Video Call Quality Solutions

We believe that audio and video quality is critical to the enjoyment of the LINE experience, and we have made significant engineering and development efforts to improve our audio and video quality. Key areas of our investments include the following:

• proprietary audio and video communications technology that can reliably process millions of calls on a daily basis and group calls of up to 200 people at a time; and

• high performance codec and data transmission technologies and routing algorithms to improve overall call quality and user experience.

Game Development and Publishing Technologies

In order to continue to develop and publish successful games, we have invested in developing technologies designed to allow us to monetize games through in-game purchases, while providing players with an exciting experience. Areas of investment include:

• ability to conduct large-scale user data analysis during game play; and

• client/server technology designed to allow simultaneous, secure, fast and stable game play by users around the world.

Advertising Platform

We offer advertisers a powerful medium through which they can reach our large user base in a targeted manner using our array of advertising products. We intend to continue to offer effective advertising products by developing technologies that deliver:

• real-time rich-text notifications; and

• systems to better analyze user preferences and content consumption patterns in order to provide more personalized advertisements allowing advertisers to effectively manage their advertising budgets.

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Intellectual Property

Our success depends in part on our ability to protect our core technology and intellectual property. To establish and protect our proprietary rights, we rely on a combination of patents, trademarks, copyrights, trade secrets (including know-how), license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual and implicit rights worldwide. We also enter into confidentiality and invention assignment agreements with our employees, contractors and platform partners, and we control access to our proprietary technology and information. Despite our efforts to protect our proprietary technology and information through these efforts, unauthorized parties may still copy or otherwise obtain and misuse our intellectual property.

As of March 31, 2016, we had 44 issued patents and 73 filed patent applications in the United States, 40 issued patents and 75 filed patent applications in Japan and 28 issued patents and 139 filed patent applications in other countries primarily relating to social networking, user interface, telecommunications, image processing, web technologies and infrastructure technologies. We cannot predict whether any of our pending patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims. In addition, any of our patents may be contested, circumvented or found unenforceable or invalid, and we may not be able to prevent third parties from infringing them. We also pursue registrations of copyrights, domain names, designs, trademarks and service marks in Japan and elsewhere where we deem appropriate. As of March 31, 2016, we had 174 registered trademarks and service marks and 21 trademark and service mark applications in Japan and 245 registered trademarks and service marks in other countries. As with patents, we may not be able to prevent third parties from infringing or misappropriating our copyrights, domain names, designs, trademarks and service marks. While most of the intellectual property we use is developed by us, from time to time we acquire certain rights to proprietary intellectual property from third parties.

Companies in the internet, technology, telecommunications and media industries own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement, misappropriation or other violations of intellectual property or other rights. From time to time, we face, and we expect to face in the future, allegations that we have infringed the patents, trademarks, copyrights, trade secrets and other intellectual property rights of third parties, including our competitors and non-practicing entities. These infringement, data misappropriation, tort and other intellectual property issues apply to myriad third-party rights and contents material to our business, and we seek, but cannot guarantee, extensive licenses to such requisite third-party rights. As we face increasing competition and as our business grows, we will likely face more claims of infringement.

Competition

We compete against various companies to attract and engage users, some of which have greater financial resources and substantially larger user bases. We face direct competition from other mobile messaging service providers such as Facebook’s WhatsApp and Messenger, Tencent’s WeChat, Telegram Messenger and Blackberry Messenger, as well as mobile messaging services for specific operating platforms, such as Apple’s iMessage. We also face significant competition in almost every aspect of our business, including from companies such as Facebook, Google, Twitter and Yahoo Japan, which offer a variety of social network services and products as well as online advertising services.

We face competition from game companies, mobile telecommunications companies, e-commerce companies, music streaming companies and other internet-related companies that offer products and services that may compete with specific features of the LINE messaging service or other applications that we offer. We also compete with traditional and online media businesses for a share of advertisers’ budgets and in the development of tools and systems for managing and optimizing advertising campaigns. As we introduce new products and our existing products evolve, or as other companies introduce new products and services, we may become subject to additional competition.

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The key areas in which we compete include:

• Users and User Engagement.  We compete to attract and retain users. We believe that our ability to compete effectively for users depends on many factors, including the utility, ease of use, performance and reliability of our products and services; price; the amount, quality and timeliness of content generated by our users; our ability to establish and maintain relationships with platform partners; and our reputation and the strength of our brand. We also compete to attract and retain developers to build compelling games and other applications offered on the LINE platform, primarily based on size and composition of our user base, and our ability to drive traffic to developers’ applications.

• Advertising.  A significant portion of our revenue is generated from the sale of advertising services, and we face significant competition for advertiser spending. We believe that our ability to compete effectively for advertiser spending depends on many factors, including the size and composition of our user base; the effectiveness of our advertising targeting capabilities; the timing and market acceptance of our advertising services; our marketing and selling efforts; and the return our advertisers expect to receive from our advertising services.

• Personnel.  We experience significant competition for highly skilled personnel, including senior management, engineers, designers and product managers. Our growth strategy depends in part on our ability to retain our existing personnel and recruit highly skilled employees. Competition for highly skilled personnel is intense, particularly in Japan where our headquarters is located, and we compete for qualified personnel with online and mobile businesses, other companies in the technology industry and traditional media businesses. We believe that our ability to compete effectively for highly skilled personnel depends on many factors, including a work environment that encourages independence, creativity and innovation; opportunities to work on challenging, meaningful and important products; and compensation.

Properties

As of March 31, 2016, we had ¥9,974 million of property and equipment, which primarily consisted of our servers and networking equipment and land in Fukuoka, Japan. On May 31, 2016, we entered into an agreement to sell the Fukuoka property to Kyushu Railway Company for approximately ¥5,050 million, with closing of the sale scheduled for June 29, 2016. We expect to recognize a pre-tax gain on the sale of approximately ¥2,461 million. As of March 31, 2016, we leased office facilities in Japan and other countries, including Korea, the United States, Singapore, Taiwan, Thailand and Vietnam, including approximately 118,000 square feet for our corporate headquarters in Tokyo, Japan. We plan to relocate our head offices to a new location within Tokyo in 2017.

Employees

Our employees are critical to our success. We seek employees who are motivated to develop new products and services for our rapidly growing user base around the world as well as for our platform partners and advertisers. A vast majority of our new hires have prior experience in the internet or mobile services or related industries, and we strive to hire and retain employees with diverse backgrounds in addition to relevant work experience in order to achieve our objective to continue to grow globally.

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On a consolidated basis, we had 2,537, 2,454, 1,783 and 1,060 full-time employees as of March 31, 2016 and December 31, 2015, 2014 and 2013, respectively. From time to time, we also employ contract-based employees to enhance operational efficiency. The following table sets forth a breakdown of our full-time employees by location as of March 31, 2016:

Location	Number of full-time employees(1)
Japan	1,107
Outside Japan	1,430
Total	2,537

Compensation for our full-time employees consists of a combination of annual base salary, bonuses and share-based compensation. We also provide a wide range of benefits to our employees. We believe our compensation and benefit plans are competitive within our industry. Our employees are not unionized, and we consider our current relations with our employees to be good.

Legal Proceedings

We are involved in, and may in the future be involved in, legal proceedings, claims and government investigations in the ordinary course of business. In addition to the foregoing and the intellectual property risks discussed above, the nature of our business exposes us to claims related to defamation, rights of publicity and privacy and personal injury torts resulting from information that is published or made available on the LINE platform. This risk is enhanced in certain jurisdictions outside Japan where our protection from liability for content published on our platform by third parties may be unclear and where we may be less protected under local laws than we are in Japan. Our licenses and best practices may not reduce or eliminate such risks.

The Payment Services Act requires entities that engage in business activities involving advance payments from customers using prepaid payment instruments, such as virtual currencies, to set aside for such customers amounts covering at least 50% of the total amount of the unused amounts or credits represented by such instruments issued as of the end of either the first or third quarter of any year (if such total amount is more than ¥10 million), either by making a deposit or by entering into guarantee or trust agreements, as well as to refund any remaining balance of virtual currencies issued if those entities stop selling such virtual currencies. We are registered with the Director of the KLFB as an issuer of prepaid payment instruments. During the first half of 2016, the KLFB conducted an inspection of our business as an issuer of prepaid payment instruments and issued a notice of inspection results on May 16, 2016. Following the determination that one of our in-game items, for which we had not made a deposit or entered into a guarantee or trust agreement, would be deemed a prepaid payment instrument, on May 24, 2016 we entered into an additional guarantee agreement for ¥12.6 billion with an annual guarantee fee rate of 0.1% to comply with the Payment Services Act requirement, which resulted in an additional annual guarantee expense of ¥12.6 million. We are in the process of reviewing all of our in-game items that may potentially be deemed prepaid payment instruments, and accordingly, it may become necessary to enter into additional arrangements to comply with the Payment Services Act requirement in connection with any such in-game items. While we intend to enter into additional guarantee agreements to meet any additional deposit requirements, entering into additional guarantee agreements will require us to pay guarantee fees equal to the contractual amount times a guarantee fee rate, and there is no assurance that we will be able to enter into additional guarantee agreements on favorable terms when required, or at all. Any failure to enter into contractual arrangements on terms satisfactory to us when required may adversely affect our business, financial condition, results of operations and/or reputation. See “Regulation — Payment Services Regulation.”

Between December 2015 and May 2016, Uniloc USA, Inc. and Uniloc Luxembourg S.A. filed 16 patent infringement lawsuits related to systems and methods for initiating conference calls against at least 16 instant messaging service providers and telecommunications equipment and solution providers, including us, in the U.S. District Court for the Eastern District of Texas. The complaint seeks unspecified monetary damages, costs and injunctive relief against us. This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to Uniloc’s claims, is uncertain. We intend to vigorously defend against this lawsuit.

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The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and other factors. We do not believe that it is more likely than not that the final outcome of the legal proceedings, claims and government investigations in which we are involved will have a material adverse effect on our business, financial condition or operating results.

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REGULATION

We are subject to a number of Japanese and other foreign laws and regulations that affect companies conducting business on the internet, many of which are still evolving and being, or have not yet been, tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy, rights of publicity, data protection, telecommunications, liability of providers of online services for activities of their users and other third parties, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online payment services. Because our services are accessible worldwide in a variety of countries, certain jurisdictions may claim that we are required to comply with their laws, including even jurisdictions where we have no local entity, employees or infrastructure.

Regulations regarding Privacy and Protection of Personal Information and User Data

We are subject to laws and regulations, as well as pending legislative and regulatory proposals, regarding privacy and protection of user data and personal information, which could affect us in many jurisdictions throughout the world. The application and interpretation of these and other similar international laws and regulations concerning data protection and personal information is often uncertain, particularly in the new and rapidly evolving industry in which we operate, and in certain countries where the scope and interpretation of such laws and their application to the internet is in a state of flux. There is a risk that such laws may be interpreted and applied in conflicting ways in different states, countries, or regions, and in a manner that is not consistent with our current data protection practices. There also may be limited precedent in certain jurisdictions with regard to enforcement or interpretation of these laws.

In Japan, the Act on the Protection of Personal Information and its related guidelines impose various requirements on businesses, including us, that use databases containing personal information. Under this Act, we are required to lawfully use personal information we have obtained within the purpose of use we have specified and take appropriate measures to maintain security of such information. We are also restricted from providing personal information to third parties. An amendment to this Act was enacted in September 2015 and is expected to be fully enforced within two years. This amendment includes establishment of a new regulatory authority and introduction of new regulation on handling of anonymous personal data and transfer of personal information to foreign countries.

Privacy Policies

We post a privacy policy and terms of service with our applications, in which we describe our practices concerning the use, processing and disclosure of user data. Any failure by us to comply with our posted privacy policy or privacy related laws and regulations could result in proceedings against us by governmental authorities or others, which could harm our business. Our compliance with our privacy policy may be subject to regulation by governmental agencies in various jurisdictions. For example, the U.S. Federal Trade Commission may bring enforcement actions against unfair and deceptive trade practices, including the violation of privacy policies, and European authorities may take actions against violations of privacy policies as well.

Regulations of Telecommunications and Portal Businesses

The Telecommunications Business Act of Japan (the “Telecommunications Business Act”) generally requires that those who plan to provide telecommunications services be registered as telecommunications business operators. However, as long as the scale of the telecommunications circuit facilities to be installed for the telecommunication services and the scope of service area to be covered do not exceed certain thresholds set forth in an ordinance of the Ministry of Internal Affairs and Communications of Japan, or fall within a certain category of radio facilities, submission of a notice to the Minister of Internal Affairs and Communications of Japan, rather than registration, is required. We believe that our facilities and services do not exceed such thresholds, and we are subject to notification requirements. While we expect to launch our MVNO service in the

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second half of 2016, we believe that our facilities and services still would not exceed the relevant thresholds, and we will remain subject only to notification requirements. Although it is not expressly clear, we believe that our telecommunications service related to LINE Out is not subject to the Telecommunications Business Act since it is provided by LINE Plus Corporation, an overseas entity.

As a telecommunications business operator, we are prohibited from acquiring, using without permission, or leaking private communications (including, but not limited to, the contents of communications, the dates and places of the communications, the names and addresses, telephone numbers and IP addresses). The Telecommunications Business Act also requires a telecommunications business operator to, among other things, provide its service in a fair manner and, in certain emergency situations such as a natural disaster, prioritize important public communications. If, among other things, the acquisition, use without permission or leakage of private communications occurs or is not appropriately prevented in connection with the operation of the telecommunications business, a telecommunications business operator does not satisfy the foregoing requirements, or its business operation is otherwise inappropriate or unreasonable, such telecommunications business operator may be subjected to administrative or criminal sanctions.

The Provider Liability Limitation Act of Japan regulates a provider of communications services (the “specified communications services provider”) that circulates electronic information publicly through the internet, and our portal services are subject to such regulations. While this act limits the scope of liability of a specified telecommunications services provider that will be incurred when anyone’s rights are infringed upon as a result of the circulation of electronic information in connection with its communications services, it requires a specified communications services provider to disclose certain information related to those who engage in such infringement.

Payment Services Regulations

The Payment Services Act regulates prepaid payment instruments such as the prepaid cards and virtual currencies that we sell in Japan. Because we issue such prepaid instruments, we must comply with certain requirements, including an obligation to deposit or enter into certain guarantee or trust agreements for at least 50% of the total amount of unused amounts or credits represented by the instruments issued as of the end of either the first or third quarter of any year, if such total amount is more than ¥10 million; an obligation to refund any remaining amount of money or virtual currencies if we stop selling prepaid cards or virtual currencies, and general restrictions on refunds in other situations; and an obligation to secure any private information obtained in connection with our prepaid cards and virtual currencies. We may be subjected to administrative or criminal sanctions if we fail to fulfill such obligations.

We must also register with the director of the competent local finance bureau of the Ministry of Finance if our prepaid payment instruments can be used to purchase goods or services that are offered not only by ourselves or other closely related parties, including our affiliates, but also by third parties. We issue such instruments, and we are registered with the Director of the KLFB. The Director is authorized to issue a business improvement order or business suspension order, or cancel our registration if we fail to comply with such regulations.

The Payment Services Act also regulates funds transfer services. As our service allows our users to remit funds to each other or withdraw or deposit cash at convenience stores, ATMs or through internet banking, in each case up to ¥1 million, by linking their accounts at select banks, we are required to register and have registered with the Director of the KLFB. We must also comply with certain other requirements, including an obligation to deposit or enter into certain credit guarantee or trust agreements for the greater of ¥10 million or the full amount of our outstanding obligations as service provider payable to transferees in Japan plus the costs associated with exercise of their rights as creditors of our funds transfer service. The Director of the KLFB is authorized to issue a business improvement order, a business suspension order or cancel our registration if we fail to comply with such regulations.

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Various laws and regulations in the United States, such as the Bank Secrecy Act, the Dodd-Frank Act, the USA Patriot Act, and the Credit Card Act, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services. Under these laws and regulations, financial institutions are broadly defined to include money services businesses such as money transmitters, check cashers, and sellers or issuers of stored value. Requirements imposed on financial institutions under these laws include customer identification and verification programs, record retention policies and procedures and transaction reporting. We do not believe that we are a financial institution subject to these laws and regulations. However, it is possible that payments and other transactions on the LINE platform could deem us a financial institution subject to applicable U.S., state or foreign regulations.

Regulations on Advertising

The Premiums and Representations Act of Japan stipulates the restricted methods and means of various advertisements, representations and sales promotions, in a broad sense. When we advertise our products or services, such as games, on the internet, we must provide appropriate information under this Act, so as not to mislead our users.

In addition, regulations promulgated under the Premiums and Representations Act of Japan prohibit the inclusion in our games of certain mechanisms that are considered to excessively promote in-game purchases. These mechanisms typically feature a system in which users may pay for the chance to win an in-game item by random selection from different items, with certain combinations of items won providing users with special premium in-game items.

Regulations to Protect Minors

The Act on Establishment of Enhanced Environment for Youths’ Safe and Secure Internet Use of Japan regulates an administrator of servers publicly accessible through the internet (the “specified server administrator”), aiming to protect youths under the age of eighteen. Under this act, if the specified server administrator learns of any situation where harmful information that materially impairs the sound growth of youths has been provided, or it makes such information available to the public through the internet by the use of its servers, it will be required to make efforts to take measures to prevent youths from accessing such information. The specified server administrator is also required to make efforts to establish a system to receive information or inquiries from the public regarding any harmful information it sends, and to prepare and keep records of any measures that it has taken to prevent underage access to harmful information.

The Act on Regulation on Soliciting Children by Using Opposite Sex Introducing Service on Internet of Japan requires that those who operate an opposite sex introduction service through the internet submit a notification to the Public Safety Commission, and take certain actions to prevent sexual offenses against children conducted through an opposite sex introduction service. Although we believe that none of our products or services fall within the definition of an “opposite sex introduction service,” it is not expressly clear whether our interpretation is correct. In the event that any regulatory authority or court adopts a different interpretation, we may become subject to the regulations applicable to opposite sex introduction services under this Act, including the administrative or criminal sanctions thereunder.

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MANAGEMENT

Directors, Corporate Auditors and Executive Officers

Directors and Corporate Auditors

The following table sets forth information regarding members of our board of directors and board of corporate auditors as of the date of this prospectus. The business address of all of such members is 21-1 Shibuya 2-chome, Shibuya-ku, Tokyo 150-8510, Japan.

Name	Age	Position/Title
Hae Jin Lee	48	Chairman of the Board
Takeshi Idezawa	43	Representative Director, President and Chief Executive Officer
Joongho Shin	43	Director and Chief Global Officer
In Joon Hwang	50	Director and Chief Financial Officer
Jun Masuda	38	Director and Chief Strategy & Marketing Officer
Tadashi Kunihiro	60	Outside Director
Koji Kotaka	57	Outside Director
Rehito Hatoyama	42	Outside Director
Hitoshi Kurasawa	64	Corporate Auditor
Jin Hee Kim	49	Corporate Auditor
Takashi Kanai	52	Corporate Auditor

Hae Jin Lee.  Mr. Lee has served as a director since November 2005 and chairman of our board of directors since January 2012. Mr. Lee co-founded NAVER Corporation in June 1999 and currently serves as chairman of the board of NAVER Corporation and a director of LINE Plus Corporation. Prior to co-founding NAVER Corporation, from February 1992 to June 1999, Mr. Lee served in several roles at Samsung SDS Co., Ltd., an information technology services provider. Mr. Lee received a B.S. in computer science from Seoul National University and an M.S. in computer science from Korea Advanced Institute of Science and Technology.

Takeshi Idezawa.  Mr. Idezawa has served as our representative director since April 2014 and as president and chief executive officer since March 2015. He currently serves as a representative director of LINE Fukuoka Corporation. Previously, he served as our chief operating officer and as a representative director and president of livedoor Co., Ltd., our subsidiary, where he served in various roles after joining the company in June 2002. Mr. Idezawa received a B.A. in political science and economics from Waseda University.

Joongho Shin.  Mr. Shin has served as a director since January 2012 and as our chief global officer since April 2014. He has served as a representative director of LINE Plus Corporation since February 2013. Previously, he served as an outside director at livedoor Co., Ltd., our subsidiary. From June 2005 to April 2013, Mr. Shin served in several roles at NAVER Corporation, including as head of Japan services. Mr. Shin received a B.S. and an M.S. in computer science from Korea Advanced Institute of Science and Technology.

In Joon Hwang.  Mr. Hwang has served as a director since December 2008 and as our chief financial officer since March 2015. He currently serves as a director of NAVER Corporation, LINE Euro-Americas Corporation and LINE BIZ+ PTE. LTD. and a representative director of LINE C&I Corporation. Previously, Mr. Hwang served in several roles at NAVER Corporation, including as chief financial officer from November 2008 to January 2016. Prior to joining NAVER Corporation, Mr. Hwang served in several roles at Woori Investment & Securities Co., Ltd., Woori Finance Holdings Co., Ltd., Samsung Securities Co., Ltd., Credit Suisse and Samsung Electronics Co., Ltd. Mr. Hwang received a B.S. in economics from Seoul National University and an M.B.A. from New York University.

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Jun Masuda.  Mr. Masuda has served as a director since March 2015 and chief strategy and marketing officer since April 2014. Mr. Masuda currently serves as a representative director of LINE Pay Corporation, LINE Bros. Corporation, LINE Music Corporation and AUBE, Ltd. Previously, he served as a senior officer and chief strategy and marketing officer of NHN Japan Corporation. Prior to joining our company in October 2008, he served as a director and vice president of product at Baidu Japan Inc.

Tadashi Kunihiro.  Mr. Kunihiro has served as an outside director since October 2015. Mr. Kunihiro is an attorney in Japan and currently serves as a legal advisor to the Legal Compliance Office of the Japanese Cabinet, a legal compliance advisor to the Cabinet Affairs Office, an outside director of Tokio Marine & Nichido Fire Insurance Co., Ltd., an advisor for the Consumer Affairs Agency and an outside auditor of Mitsubishi Corporation. From June 2006 to June 2014, he also served as an outside auditor of Sekisui Chemical Co., Ltd. Mr. Kunihiro received an L.L.B. from the University of Tokyo.

Koji Kotaka.  Mr. Kotaka has served as an outside director since February 2016. Mr. Kotaka is an attorney in Japan and currently serves as a consultant at Raine Group LLC, Apollo Global Management LLC and Internet Initiative Japan Inc., an outside director at Monex Group and a supervisory director at Japan Senior Living Investment Corp. From June 2015 to January 2016, he also served as an outside director at Asia Growth Capital Ltd. Previously, he held positions at Nishimura & Asahi, Goldman Sachs Japan Co., Ltd., Sato and Tsuda Law Office and Legal Research and Training Institute of the Supreme Court of Japan. Mr. Kotaka received an L.L.B. from Keio University and an L.L.M. from University of Chicago Law School.

Rehito Hatoyama.  Mr. Hatoyama has served as an outside director since March 2016. Mr. Hatoyama is director at Sanrio Company, Ltd. and chief executive officer at Sanrio Media & Pictures Entertainment, Inc. Mr. Hatoyama also serves as an outside director at DeNA Co., Ltd. Mr. Hatoyama received a B.A. from Aoyama Gakuin University and an M.B.A. from Harvard Business School.

Hitoshi Kurasawa.  Mr. Kurasawa has served as our full-time corporate auditor since April 2013. He currently serves as a director at Hanno Golf Club Co., Ltd. From June 2000 to June 2011, Mr. Kurasawa served in several roles at Gurunavi, Inc., an online restaurants information provider, including as a corporate auditor, director and executive vice president. From July 1987 to January 2005, Mr. Kurasawa served in several roles at NKB System Kaihatsu Co., Ltd., a computer system developer, including as a director. Mr. Kurasawa received a B.S. in industrial engineering and management from Tokyo Institute of Technology.

Jin Hee Kim.  Mr. Kim has served as a corporate auditor since December 2012. Mr. Kim currently serves as an internal auditor of LINE Plus Corporation, Camp Mobile Corporation and NHN NEXT, the representative director of NAVER I&S Corporation, and a director of the Global Human Resources Group of NAVER Corporation, where he has previously served in several roles such as head of human resources and head of service management and support. Prior to joining NAVER Corporation in April 2003, Mr. Kim served in several roles at Hotel Shilla Co., Ltd. and Samsung SDS Co., Ltd. Mr. Kim received a B.S. in statistics from Korea University and an M.B.A. from Korea Advanced Institute of Science and Technology.

Takashi Kanai.  Mr. Kanai has served as a corporate auditor since July 2013. Mr. Kanai currently serves as a corporate auditor at Epoch Co., Ltd., a Japanese toy and computer games company, and as the representative of Frantech Law Office. He is an attorney in Japan and has been a lecturer at the Keio University School of Law since 1999 and an adjunct professor at Musashino University Faculty of Law since April 2015. Mr. Kanai received an L.L.B. and L.L.M. from Keio University, an L.L.M. from Cornell Law School and an L.L.M. from the University of London.

Some of our directors concurrently serve in senior positions at certain of our affiliates or other companies with which we have ordinary course business agreements and engage in ordinary course business transactions.

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Executive Officers

The following table sets forth information regarding our senior management, consisting of the officers identified below (“executive officers”), as of the date of this prospectus. The business address of all of our executive officers is 21-1 Shibuya 2-chome, Shibuya-ku, Tokyo 150-8510, Japan.

Executive Officers	Age	Position/Title
Takeshi Idezawa	43	Representative Director, President and Chief Executive Officer
In Joon Hwang	50	Director and Chief Financial Officer
Joongho Shin	43	Director and Chief Global Officer
Jun Masuda	38	Director and Chief Strategy & Marketing Officer
Euibin Park	41	Chief Technology Officer
Tomohiro Ikebe	39	Chief of Services Development
Takeshi Shimamura	39	Chief of Commerce Media
Shintaro Tabata	40	Chief of Corporate Business
Heechan Yang	37	Head of Technology Strategy Department and Data Labs
Seok-Ho Yang	38	Head of LINE Development Department 1

Euibin Park.  Ms. Park has served as chief technology officer since April 2014. She has served as head of our Web Services Development Group since June 2013. From June 2005 to April 2013, Ms. Park served in several roles at NAVER Corporation and its affiliated companies, primarily in Japan-related businesses. Prior to joining NAVER Corporation in June 2005, Ms. Park served in several roles at Neowiz Games Corporation, NOWCOM Co., Ltd. and Soteck Inc.. Ms. Park received a B.S. in information and communications from Chonbuk National University.

Tomohiro Ikebe.  Mr. Ikebe has served as chief of service development since April 2014. He currently serves as a director of LINE Business Partners Corporation and LINE Fukuoka Corporation. Previously, he served in several roles at DataHotel Co., Ltd., our subsidiary, after joining the company in October 2001, including as executive officer in charge of business development.

Takeshi Shimamura.  Mr. Shimamura has served as chief of commerce media since April 2014. He currently serves as a director of LINE Fukuoka Corporation. Since joining our company from Rakuten, Inc. in July 2004, Mr. Shimamura has served in several roles at our company, including as head of service planning. Mr. Shimamura received a B.A. in history from Komazawa University.

Shintaro Tabata.  Mr. Tabata has served as chief of corporate business since April 2014. Prior to joining our company in June 2012, Mr. Tabata served as Japan country manager at Condé Nast Digital, and prior to that, he served as head of media business at DataHotel Co., Ltd., which he joined in April 2005. He also served in several roles at Recruit Holdings Co., Ltd. and NTT Data Inc. Mr. Tabata received a B.S. in economics from Keio University.

Heechan Yang.  Mr. Yang has served as head of Technology Strategy Department and Data Labs since March 2016. From June 2013 to February 2016, Mr. Yang served as head of LINE Development Department 2 and Technology Strategy Department. Previously, he served in several engineering and product development-related roles at NHN Japan Corporation, NAVER Japan Corporation, NC Japan Corporation, NHN Corporation and Webtizen Co., Ltd. Mr. Yang received a B.S. in computer engineering from Hongik University.

Seokho Yang.  Mr. Yang has served as head of LINE Development Department 1 since June 2013. Previously, he served in several development-related roles at NHN Japan Corporation, NAVER Japan Corporation and NHN Corporation. Mr. Yang received a B.S. in computer science from Korea Advanced Institute of Science and Technology.

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Corporate Governance

After the consummation of this offering, we will be a “foreign private issuer” under the federal securities laws of the United States and the New York Stock Exchange listing standards. Under the federal securities laws of the United States, foreign private issuers are subject to different disclosure requirements than U.S.-domiciled registrants. We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act, the rules adopted by the SEC and the New York Stock Exchange listing standards. Under the SEC rules and the New York Stock Exchange listing standards, a foreign private issuer is subject to less stringent corporate governance requirements. Subject to certain exceptions, the SEC and the New York Stock Exchange permit a foreign private issuer to follow its home country practice in lieu of their respective rules and listing standards. Among others, we are not required to have a board of directors that is comprised of a majority of independent directors as required under the New York Stock Exchange listing standards.

Board of Directors

Our board of directors has the ultimate responsibility for the administration of our affairs. Our articles of incorporation provide for not fewer than three but not more than eight directors. Directors are typically nominated at the board level and are elected at general meetings of shareholders. The normal term of office of any director expires at the close of the ordinary general meeting of shareholders held with respect to the last fiscal year ended within two years after such director’s election to office. Our directors may, however, serve any number of consecutive terms.

The board of directors appoints from among its members one or more representative directors, who have the authority individually to represent us in the conduct of our affairs. The board of directors may appoint from among its members a chairman, a president or one or more deputy presidents, senior managing directors and managing directors.

We have three outside directors who satisfy the requirements for an outside director under the Companies Act.

Board of Corporate Auditors

Our corporate auditors constitute a board of corporate auditors. As permitted under the Companies Act, we have elected to structure our corporate governance system as a company with a separate board of corporate auditors instead of board committees. Our articles of incorporation provide for not more than five corporate auditors. Corporate auditors are typically nominated at the board level and are elected at general meetings of shareholders. The normal term of office of any corporate auditor expires at the close of the annual general meeting of shareholders held with respect to the last fiscal year ended within four years after such corporate auditor’s election to office. Our corporate auditors may, however, serve any number of consecutive terms. Corporate auditors may be removed by a special resolution of a general meeting of shareholders.

Our corporate auditors are not required to be certified public accountants. Our corporate auditors may not at the same time be directors, employees or accounting advisors (kaikei sanyo) of us or any of our subsidiaries or corporate officers of our subsidiaries. Under the Companies Act, at least one-half of them must be persons who satisfy the requirements for an outside corporate auditor under the Companies Act, and at least one of the corporate auditors must be a full-time corporate auditor.

The function of our board of corporate auditors and each corporate auditor is similar to that of independent directors, including those who are members of the audit committee, of a U.S. company. Each corporate auditor has a statutory duty to supervise the administration by the directors of our affairs, to examine the financial statements and business reports to be submitted by a representative director at the general meetings

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of shareholders and to prepare an audit report. They are obligated to participate in meetings of the board of directors and, if necessary, to express their opinion at such meetings, but are not entitled to vote. The board of corporate auditors has a statutory duty to prepare an audit report based on the audit reports issued by the individual corporate auditors and submit such audit reports to a relevant director and, in the case of audit reports related to financial statements, independent auditors each year. Each corporate auditor may note an opinion in an audit report issued by the board of corporate auditors, if the opinion expressed in such corporate auditor’s individual audit report is different from the opinion expressed in the audit report issued by the board of corporate auditors. The board of corporate auditors is empowered to establish the audit principles, the method of examination by the corporate auditors of our affairs and financial position and any other matters relating to the performance of the corporate auditors’ duties.

In addition to our corporate auditors, we must appoint independent certified public accountants. Such independent certified public accountants have the statutory duties of examining the financial statements to be submitted by a representative director at the general meetings of shareholders and reporting their opinion thereon to the relevant corporate auditors and directors. The independent certified public accountants also audit the financial statements to be included in the securities reports that are required to be filed with the director of the relevant local finance bureau of the Ministry of Finance. Deloitte Touche Tohmatsu LLC acted as our independent certified public accountant from 2007 to 2014 and PricewaterhouseCoopers Aarata acts as our independent certified public accountant beginning January 1, 2015.

In addition, under the Securities Listing Regulations of the Tokyo Stock Exchange, listed companies in Japan are required to have at least one independent officer. Such independent officer is required to be an outside director or an outside corporate auditor (as defined under the Companies Act) who is unlikely to have any conflicts of interest with shareholders. The Securities Listing Regulations also require listed companies to make efforts to have at least one director who meets the requirements for an independent officer (such director, an “Independent Director”). Further, a listed company that does not have two or more Independent Directors is required to publicly explain the reason. As of March 31, 2016, we have three Independent Directors.

Committees of the Board of Directors

Under the Companies Act, we have elected to structure our corporate governance system as a company with a separate board of corporate auditors and therefore do not have an audit committee. For foreign private issuers, use of a board of corporate auditors in compliance with home country rules is permitted under Rule 10A-3(c)(3) of the Exchange Act, and as such we are not required to and do not intend to form an audit committee. Our board of corporate auditors is a legally separate and independent body from our board of directors. See “— Directors, Corporate Auditors and Executive Officers — Directors and Corporate Auditors.” We do not have certain committees that are required of U.S. listed companies subject to the New York Stock Exchange corporate governance standards, including those that are responsible for director nomination and corporate governance and executive compensation.

Our board of directors is supported by a management committee to facilitate timely decision-making with respect to important administration and management issues. The management committee is composed of directors with business execution authority and other members appointed by the President. Currently, the management committee consists of the Chief Executive Officer, Chief Global Officer, Chief Strategy & Marketing Officer, Chief Privacy Officer/Chief Information Security Officer, certain senior officers in charge of finance and accounting, human resources and internal audit and a full-time corporate auditor. The management committee engages in discussion of various items to be resolved by, or reported to, the board of directors, and considers important administration and management issues in accordance with the basic strategies and policies set by the board of directors.

The management committee can delegate its authority to its subcommittees, including the risk management committee. The risk management committee facilitates timely decision-making with respect to risk

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management issues. The risk management committee is composed of the Representative Director and President, other directors with business execution authority, officers and employees heading key business divisions or those appointed by such officers or employees, and representatives of our subsidiaries or those appointed by such representatives.

Employment Agreements

We have entered into employment agreements with each of our executive officers who is not a director. Under these agreements, such executive officers are employed for a specified time period. We may terminate an executive officer’s employment for cause at any time, without remuneration, for certain acts, including but not limited to negligence or dishonest acts to the detriment of our company. Each such executive officer has agreed to hold, both during and subsequent to the term of his agreement, our confidential information in confidence and not to disclose such information to any outsider. Each such executive officer is required to not use our confidential information other than for our benefit. Our directors may be appointed as executive officers by the board of directors.

The compensation cost of employees’ severance benefits is recognized based on the vested benefits to which the employees are entitled if they leave our company immediately. We do not have service contracts with any of our directors or officers providing for benefits upon termination of their employment with us.

Compensation

In accordance with the Companies Act, compensation for our directors and corporate auditors, including bonuses, retirement allowances and incentive stock options, must be approved at our general meeting of shareholders, unless otherwise specified in our articles of incorporation in the future. The shareholders’ approval may specify the upper limit of the aggregate amount of compensation or calculation methods, but if compensation includes benefits in kind, the shareholders’ approval must include the description of such benefits. Compensation for a director or corporate auditor is fixed by our board of directors or by consultation among our corporate auditors in accordance with our internal regulations and practice and, in the case of retirement allowances, generally reflects the position of the director or corporate auditor at the time of retirement, length of service as a director or corporate auditor and contribution to our performance.

The following table summarizes the total remuneration paid, including in-kind benefits granted, to our directors and corporate auditors in 2015:

Total amount (in millions of yen)

By type (in millions of yen)

Number of persons

Base salary

Stock options

Bonuses

Retirement allowances

Directors(1)

5,588

229

5,286

67

6

5

Outside directors and outside corporate auditors

13

13

–

–

–

3

Full-time corporate auditors(2)

–

–

–

–

–

1

(1) Excludes outside directors.

(2) Excludes outside corporate auditors.

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The following table summarizes the remuneration paid, including in-kind benefits granted, by LINE Corporation and its consolidated subsidiaries to our directors or corporate auditors, on an individual basis, in an amount equal to or exceeding ¥100 million for 2015:

Name	Position/Title	Company	Type and amount (millions of yen)						Total (millions of yen)
			Base salary		Stock options(1)		Bonuses
Joongho Shin	Director	LINE Corporation		43		5,126		–		5,249
	Director	LINE Plus Corporation		63		–		16
Takeshi Idezawa	Director	LINE Corporation		40		84		9		133
Jun Masuda	Director	LINE Corporation		23		70		10		102

(1) The fair value per share at the date of grant of stock options granted during 2015 was ¥4,225 and was estimated using the Black-Scholes option-pricing model with several assumptions. See Note 28 of the notes to our annual consolidated financial statements and Note 12 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus. The fair value per share does not indicate the actual value that would be realized by a director upon the exercise of any stock options. The actual value, if any, that is realized by a director upon the exercise of any stock options will depend on the extent to which the market value of our common stock exceeds the exercise price of the stock options on the date of exercise and several other restrictions imposed on the exercise of the stock options, including the period when a director could exercise the stock options. Accordingly, there is no assurance that the value realized or to be realized by a director upon the exercise of the stock options is or will be at or near the fair value per share presented above. In addition, the above fair value per share was calculated to recognize compensation expense for 2015 for accounting purposes and should not be regarded as any indication or prediction of us with respect to our future stock performance.

We do not separately set aside any amounts for pension, retirement or other benefits for our directors, corporate auditors or executive officers other than for our subsidiaries in Korea where we are legally required to do so.

We do not have any loans or credits outstanding to any of our directors, corporate auditors or executive officers, and we do not have any guarantees outstanding for borrowings by any of our directors, corporate auditors or executive officers.

We have obtained directors’ and officers’ liability insurance which insures against certain liabilities that our directors and officers may, in such capacities, incur.

Limitation of Liability of Directors and Corporate Auditors

Under the Companies Act and our articles of incorporation we may exempt, by resolution of the board of directors, our directors and corporate auditors from liabilities to us arising in connection with their failure to execute their duties in good faith and without gross negligence, within the limits stipulated by applicable laws and regulations. In addition, our articles of incorporation provide that we may enter into agreements with our directors (excluding executive directors) and corporate auditors to limit their respective liabilities to us arising in connection with a failure to execute their duties in good faith and without gross negligence to the higher of either a predetermined amount which shall be no less than ¥10 million or an amount stipulated in laws and regulations. We plan to enter into a liability limitation agreement with each outside director and outside corporate auditor which limits the maximum amount of their liability to the higher of either ¥10 million or an amount stipulated in laws and regulations.

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Stock Options

We have granted stock options to purchase shares of our common stock in the form of stock acquisition rights pursuant to the Companies Act under grants authorized by our shareholder on December 17, 2012 and subsequently on February 5, 2014. The purpose of these grants is to enable our directors and employees, including our executive officers, to share in our successes and to reinforce a corporate culture that aligns employee interests with those of our shareholders. Stock options granted prior to 2012 were exercised in full by the grantees, but all of the shares so acquired were subsequently purchased by NAVER Corporation, our 100% shareholder. References in this prospectus to “stock options” are references to stock acquisition rights to purchase shares of our common stock, unless otherwise indicated.

Our stock options may be exercised during an eight-year period that begins two years from the date of grant. Our stock option grants generally do not allow for the transfer or assignment of options. An option holder who retires while one’s options are still exercisable loses such options, unless otherwise approved by our board of directors. In the event of a stock split, reverse stock split or issuance of new shares or disposal of treasury shares at below market price, the exercise price of and, in certain cases, the number of shares subject to outstanding options, will be proportionately adjusted.

On December 17, 2012, our board of directors approved a grant of stock options to certain of our directors. As a result of this grant, stock options to purchase an aggregate of 14,000,000 shares of our common stock were issued to such directors on the same date at an exercise price of ¥344 per share and with an expiration date of December 17, 2022, which fair value of our common stock was determined based on a number of different considerations including a third-party valuation of our shares obtained immediately prior to December 17, 2012.

On December 11, 2013, our board of directors approved grants of stock options to certain of our directors and employees and those of our subsidiaries. As a result of these grants, stock options to purchase an aggregate of 3,430,500 shares of our common stock were issued, including stock options to purchase 115,500 shares issued to certain of our directors, on December 16, 2013 at an exercise price of ¥344 per share and with an expiration date of December 16, 2023, which fair value of our common stock was determined based on a number of different considerations including a third-party valuation of our shares obtained immediately prior to December 16, 2013.

On February 5, 2014, our board of directors approved grants of stock options to our employees as well as directors and employees of our subsidiaries. As a result of these grants, stock options to purchase an aggregate of 1,825,000 shares of our common stock were issued on February 7, 2014 at an exercise price of ¥1,320 per share and with an expiration date of February 7, 2024, which fair value of our common stock was determined based on a number of different considerations including a third-party valuation of our shares obtained prior to February 7, 2014.

On August 1, 2014, our board of directors approved grants of stock options to our employees as well as directors and employees of our subsidiaries. As a result of these grants, stock options to purchase an aggregate of 752,500 shares of our common stock were issued on August 8, 2014 at an exercise price of ¥1,320 per share and with an expiration date of August 8, 2024.

On September 30, 2014, our board of directors approved grants of stock options to our employees as well as directors and employees of our subsidiaries. As a result of these grants, stock options to purchase an aggregate of 348,500 shares of our common stock were issued on October 31, 2014 at an exercise price of ¥1,320 per share and with an expiration date of October 31, 2024.

On January 30, 2015, our board of directors approved grants of stock options to certain of our directors and employees as well as directors, corporate auditors and employees of our subsidiaries. As a result of these

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grants, stock options to purchase an aggregate of 5,773,500 shares of our common stock were issued, including stock options to purchase 3,550,000 shares issued to certain of our directors, on February 4, 2015 at an exercise price of ¥1,320 per share and with an expiration date of February 3, 2025.

Of the stock options granted in the above-mentioned grants, options to acquire 603,500 shares of our common stock have been extinguished due to the departure of the grantees, and options to acquire 25,526,500 shares of our capital stock, including 16,027,500 shares under stock options held by our directors, remain outstanding as of May 31, 2016.

The following table summarizes the stock options with respect to our capital stock that we have granted to our directors and corporate auditors:

Name	Grant Date	Exercise period		Exercise price (per share)		Number of options granted
		From	To
Joongho Shin	December 17, 2012	December 18, 2014	December 17, 2022	¥	344		6,790,000
	February 4, 2015	February 4, 2017	February 3, 2025		1,320		3,474,500
Hae Jin Lee	December 17, 2012	December 18, 2014	December 17, 2022		344		5,572,000
Takeshi Idezawa	December 16, 2013	December 17, 2015	December 16, 2023		344		52,500
	February 4, 2015	February 4, 2017	February 3, 2025		1,320		44,000
Jun Masuda	December 16, 2013	December 17, 2015	December 16, 2023		344		63,000
	February 4, 2015	February 4, 2017	February 3, 2025		1,320		31,500

In connection with our grant of stock options, we recognized share-based compensation expenses of ¥804 million in 2013, ¥2,975 million in 2014, ¥11,213 million in 2015 and ¥2,494 million in the first three months of 2016.

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PRINCIPAL SHAREHOLDER

As of the date of this prospectus, NAVER Corporation owns 174,992,000 shares of our common stock, which represent 100% of our issued and outstanding shares of common stock. The total consideration paid by NAVER Corporation for such shares was ¥12,596,197,697. Immediately after the closing of this global offering, NAVER Corporation will own 83.3% of our total issued and outstanding shares of common stock assuming no exercise by Morgan Stanley & Co. LLC, as representative of the international underwriters, and by Nomura Securities Co., Ltd., as representative of the Japanese underwriters, of the over-allotment options and no exercise of outstanding stock options.

NAVER Corporation is a leading internet company in Korea. NAVER Corporation’s business is primarily focused around three key areas: advertising (including search and display advertising), content (including games and Stickers), and others (including LINE Friends and information technology infrastructure services). NAVER Corporation was established in Korea in June 1999 by a group of engineers led by Mr. Hae Jin Lee, who is currently serving as chairman of our board of directors. As of March 31, 2016, the National Pension Service of Korea was the largest shareholder of NAVER Corporation, holding 11.17% of the total outstanding shares of common stock. The shares of common stock of NAVER Corporation are listed on the KOSPI Market of the Korea Exchange.

Since its launch in 1999, NAVER Corporation’s primary search portal, NAVER, has amassed a large user base in Korea and abroad. NAVER had approximately 42 million subscribers and approximately 24 million average daily visitors who accessed the portal through mobile devices, according to NAVER Corporation’s quarterly report for the three months ended March 31, 2016. In addition to its ownership of us, NAVER Corporation has also operated the BAND mobile community application platform since August 2012, through its subsidiary CampMobile Corporation. NAVER Corporation also offers NAVER Mobile, a portal service optimized for mobile devices.

Since its incorporation in 1999, NAVER Corporation has grown both organically and through mergers and acquisitions. As of March 31, 2016, NAVER Corporation had 53 consolidated subsidiaries, including 21 in Korea and 13 in Japan (including LINE Corporation and its subsidiaries). See “Certain Relationships and Related Party Transactions” for the description of our material related party transactions with NAVER Corporation and its affiliates.

According to its annual report for the fiscal year ended December 31, 2015, NAVER Corporation’s consolidated revenues for the year were Won 3,251 billion, of which revenues for advertising, content and other services accounted for Won 2,322 billion, Won 851 billion and Won 77 billion, or 71.4%, 26.2% and 2.4%, respectively. Korea, Japan and other countries accounted for 66.7%, 31.6% and 1.7%, respectively, of NAVER Corporation’s consolidated revenues for the same year. As of March 31, 2016, NAVER Corporation had 2,338 full-time and contract-based employees. The registered address of NAVER Corporation is 6, Buljeong-ro, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NAVER Corporation

Issuance of Shares

On May 25, 2012, we issued 87,369 shares of our common stock to NAVER Corporation for ¥15,000 million. NAVER Corporation currently holds a 100.0% voting interest in us.

Mr. Hae Jin Lee, who currently serves as chairman of our board of directors, also serves as chairman of the board of directors of NAVER Corporation. Mr. In Joon Hwang, who currently serves as our director and chief financial officer, also serves as a director of NAVER Corporation. Mr. Jin Hee Kim, who currently serves as our corporate auditor, also serves as an executive officer of NAVER Corporation.

Guarantees

From time to time, we have received payment guarantees from NAVER Corporation in connection with our financings. NAVER Corporation provided guarantees on ¥4,000 million of our short-term borrowings as of December 31, 2013. On August 5, 2014, all outstanding guarantees from NAVER Corporation were terminated.

Non-cash Distributions

Prior to April 1, 2013, we were engaged in the development and distribution of online games through our Hangame business along with related entities, including NHN Search Technology Corporation, NHNST Japan Corporation, Sync Corporation and Mediator Corporation, as well as our 49.95% interest in Smartphone Contents Investment Limited Partnership. On February 13, 2013, we publicly announced our decision to dispose of our Hangame business and related entities, and they were classified as discontinued operations. The Hangame business and related entities were transferred to a new entity, NHN Japan Corporation, which specializes in internet and gaming services. We disposed of all of our ownership interest in NHN Japan Corporation by transferring all of the related shares in the form of a non-cash dividend to NAVER Corporation at book value, which was completed on April 1, 2013. The book value of NHN Japan Corporation was ¥8,652 million at the time of distribution, and no gain or loss was recorded for financial accounting purposes.

Transfer of Defined Benefit Obligation Liabilities

Certain employees of NAVER Corporation were transferred to LINE Plus Corporation when LINE Plus Corporation was established in 2013. LINE Plus Corporation received ¥595 million from NAVER Corporation for assuming the associated post-employment defined benefit plan obligations that NAVER Corporation had owed to those employees.

Personnel

From time to time we have transfers or secondments of employees from NAVER Corporation and our affiliates, the related personnel expenses of which are borne by us. Some of our directors, corporate auditors and executive officers concurrently serve in senior positions at certain of our affiliates with which we have ordinary course business agreements and engage in ordinary course business transactions. See “Management.”

International Operations

In February 2013, we established, together with NAVER Corporation, LINE Plus Corporation in order to more efficiently pursue global expansion outside of Japan. Prior to LINE Plus Corporation’s formation, we

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had a revenue-sharing arrangement with NAVER Corporation with respect to revenues generated from our Sticker sales outside of Japan, in exchange for NAVER Corporation’s provision of related sales and marketing services. Upon LINE Plus Corporation’s formation in February 2013, all sales and marketing employees for such international operations were transferred to LINE Plus Corporation, subsequent to which LINE Corporation and LINE Plus Corporation entered into an arrangement under which LINE Corporation is obligated to pay LINE Plus Corporation an amount equivalent to 70% of revenues generated from our Sticker sales and advertising revenues outside of Japan, in exchange for LINE Plus Corporation’s provision of such related sales and marketing services.

On August 1, 2014, the board of directors of NAVER Corporation and our board of directors approved a plan pursuant to which LINE Plus Corporation, then our 60% subsidiary, would become our wholly-owned subsidiary, in exchange for which LINE Plus Corporation would pay NAVER Corporation ￦80 billion, or approximately ¥8 billion, in cash to buy back the 40% interest then held by NAVER Corporation. The acquisition was completed on September 5, 2014.

Advertising Service

On January 1, 2014, LINE Plus Corporation entered into a service partnership agreement with NAVER Corporation to provide NAVER Corporation with advertising services via the LINE platform and the right to use certain LINE characters in NAVER Corporation’s advertising activities in exchange for advertising services to be provided to LINE Plus Corporation via NAVER Corporation’s portal website, NAVER. For services provided by NAVER Corporation, we recognized net expenses payable to NAVER Corporation of ¥21 million in 2014 and net revenue receivable from NAVER Corporation of ¥1,127 million in 2015 and ¥79 million in the first three months of 2016. We recorded ¥87 million of outstanding receivables balance from NAVER Corporation as of March 31, 2016.

NAVER Business Platform Corporation

Data Hosting Services

On December 20, 2010, we entered into a data hosting agreement with NAVER Business Platform Corporation, pursuant to which NAVER Business Platform Corporation provides data hosting services to us. The agreement was superseded by an information technology service agreement with NAVER Business Platform Corporation dated April 1, 2013. For such services, we recognized expenses payable to NAVER Business Platform Corporation of ¥2,604 million, ¥4,443 million, ¥8,139 million and ¥1,722 million in 2013, 2014, 2015 and the first three months of 2016, respectively. We recorded ¥868 million of outstanding expenses payable balance to NAVER Business Platform Corporation as of March 31, 2016.

For further details on related party transactions, see Note 29 of the notes to our annual consolidated financial statements and Note 13 of the notes to our interim condensed consolidated financial statements appearing elsewhere in this prospectus.

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DESCRIPTION OF CAPITAL STOCK

The following description is a summary of the material information concerning the shares of our capital stock, including brief summaries of the relevant provisions of our articles of incorporation and share handling regulations and of the Companies Act and the Act on Book-Entry Transfer of Company Bonds, Shares, etc. of Japan (Shasai Kabushiki tou no Furikae ni kansuru Houritsu) (Act No. 75 of 2001, as amended) (including regulations promulgated thereunder, the “Book-Entry Act”) relating to joint-stock corporations (kabushiki kaisha), and certain related laws and legislation, each as currently in effect. Because it is a summary, this discussion should be read together with our articles of incorporation and share handling regulations.

We are a joint-stock corporation incorporated in Japan under the Companies Act. The rights of our shareholders are represented by shares of our common stock as described below, and shareholders’ liability is limited to the amount of subscription for such shares. As of March 31, 2016, our authorized share capital consisted of 690,000,000 shares of common stock of which 174,992,000 shares were issued and outstanding.

Book-Entry Transfer System

The Japanese book-entry transfer system for listed shares of Japanese companies under the Book-Entry Act will apply to the shares of our common stock. Under this system, shares of all Japanese companies listed on any Japanese stock exchange are dematerialized. Under the book-entry transfer system, in order for any person to hold, sell or otherwise dispose of listed shares of Japanese companies, they must have an account at an account management institution unless such person has an account at JASDEC. “Account management institutions” are financial instruments business operators (i.e., securities firms), banks, trust companies and certain other financial institutions that meet the requirements prescribed by the Book-Entry Act, and only those financial institutions that meet the further stringent requirements of the Book-Entry Act can open accounts directly at JASDEC.

The following description of the book-entry transfer system assumes that the relevant person has no account at JASDEC.

Under the Book-Entry Act, any transfer of shares is effected through book-entry, and the title to the shares passes to the transferee at the time when the transferred number of shares is recorded in the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal owner of the shares held in such account.

Under the Companies Act, in order to assert shareholders’ rights against us, the transferee must have its name and address registered in the register of our shareholders, except in limited circumstances. Under the book-entry transfer system, such registration is generally made upon receipt of an all shareholders notice (as described in “— Register of Shareholders”) from JASDEC. For this purpose, shareholders are required to file their names and addresses with our transfer agent through the account management institution and JASDEC. See “— Register of Shareholders” for more information.

Non-resident shareholders are required to appoint a standing proxy in Japan or provide a mailing address in Japan. Each such shareholder must give notice of their standing proxy or a mailing address to the relevant account management institution. Such notice will be forwarded to our transfer agent through JASDEC. Japanese securities firms and commercial banks customarily act as standing proxies and provide related services for standard fees. Notices from us to non-resident shareholders are delivered to the standing proxies or mailing addresses.

Register of Shareholders

Under the book-entry transfer system, the registration of names, addresses and other information of shareholders in the register of our shareholders will be made by us upon the receipt of an all shareholders notice (soukabunushi tsuchi) (with the exception that in the event of the issuance of new shares, we will register the

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names, addresses and other information of our shareholders in the register of our shareholders without an all shareholders notice from JASDEC) given to us by JASDEC, which will give us such all shareholders notice based on information provided by the account management institutions. Such all shareholders notice will be made only in cases prescribed under the Book-Entry Act such as when we fix the record date and when we make a request to JASDEC with any justifiable reason. Therefore, a shareholder may not assert shareholders’ rights against us immediately after such shareholder acquires our shares, unless such shareholder’s name and address are registered in the register of our shareholders upon our receipt of an all shareholders notice; provided, however, that, in respect of the exercise of rights of minority shareholders as defined in the Book-Entry Act, a shareholder may exercise such rights upon giving us an individual shareholder notice (kobetsukabunushi tsuchi) through JASDEC only during a certain period prescribed under the Book-Entry Act.

Distribution of Surplus

Under the Companies Act, the distribution of dividends takes the form of distribution of Surplus, and a distribution of Surplus may be made in cash and/or in kind, with no restrictions on the timing and frequency of such distributions. The Companies Act generally requires a joint-stock corporation to make distributions of Surplus authorized by a resolution of a general meeting of shareholders. Distributions of Surplus are, however, permitted pursuant to a resolution of the board of directors if:

(a) the company’s articles of incorporation so provide (our articles of incorporation do not have provisions to this effect);

(b) the normal term of office of directors is no longer than one year (our articles of incorporation do not have provisions to this effect); and

(c) the company’s non-consolidated annual financial statements and certain documents for the latest fiscal year fairly present its assets and profit or loss, as required by the ordinances of the Ministry of Justice.

In an exception to the above rule, even if the requirements described in (a) through (c) are not met, the company may be permitted to make distributions of Surplus in cash to its shareholders by resolution of the board of directors once per fiscal year if its articles of incorporation so provide. Our articles of incorporation do not have provisions to that effect.

A resolution of a general meeting of shareholders authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders and the effective date of the distribution. If a distribution of Surplus is to be made in kind, we may, pursuant to a resolution of a general meeting of shareholders, grant a right to the shareholders to require us to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a general meeting of shareholders. See “— Voting Rights” for more details regarding a special resolution. Our articles of incorporation provide that we are relieved of our obligation to pay any distributions in cash that go unclaimed for three years after the date they first become payable.

Restriction on Distribution of Surplus

Under the Companies Act, we may distribute Surplus up to the excess of the aggregate of (a) and (b) below, less the aggregate of (c) through (f) below, as of the effective date of such distribution, if our net assets are not less than ¥3,000,000:

(a) the amount of Surplus, as described below;

(b) in the event that extraordinary financial statements as of, or for a period from the beginning of the fiscal year to, the specified date are approved, the aggregate amount of (i) the aggregate amount as

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provided for by an ordinance of the Ministry of Justice as the net income for such period described in the statement of income constituting the extraordinary financial statements, and (ii) the amount of consideration that we received for the treasury stock that we disposed of during such period;

(c) the book value of our treasury stock;

(d) in the event that we disposed of treasury stock after the end of the previous fiscal year, the amount of consideration that we received for such treasury stock;

(e) in the event described in (b) in this paragraph, the aggregate amount as provided for by an ordinance of the Ministry of Justice as the net loss for such period described in the statement of income constituting the extraordinary financial statements; and

(f) certain other amounts set forth in the ordinances of the Ministry of Justice, including (if the sum of one-half of goodwill and the deferred assets exceeds the total of share capital, additional paid-in capital and legal earnings reserve, each such amount as it appears on the balance sheet as of the end of the previous fiscal year) all or a certain part of such excess amount as calculated in accordance with the ordinances of the Ministry of Justice.

For the purposes of this section, the amount of “Surplus” is the excess of the aggregate of (I) through (IV) below, less the aggregate of (V) through (VII) below:

(I) the aggregate of other capital surplus and other retained earnings at the end of the previous fiscal year;

(II) in the event that we disposed of treasury stock after the end of the previous fiscal year, the difference between the book value of such treasury stock and the consideration that we received for such treasury stock;

(III) in the event that we reduced our share capital after the end of the previous fiscal year, the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital and/or legal earnings reserve (if any);

(IV) in the event that we reduced additional paid-in capital and/or legal earnings reserve after the end of the previous fiscal year, the amount of such reduction less the portion thereof that has been transferred to share capital (if any);

(V) in the event that we cancelled treasury stock after the end of the previous fiscal year, the book value of such treasury stock;

(VI) in the event that we distributed Surplus after the end of the previous fiscal year, the aggregate of the following amounts:

(1) the aggregate amount of the book value of the distributed assets, excluding the book value of such assets that would be distributed to shareholders but for their exercise of the right to receive dividends in cash instead of dividends in kind;

(2) the aggregate amount of cash distributed to shareholders who exercised the right to receive dividends in cash instead of dividends in kind; and

(3) the aggregate amount of cash paid to shareholders holding fewer shares than the shares that were required in order to receive dividends in kind;

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(VII) the aggregate amounts of (1) through (4) below, less (5) and (6) below:

(1) in the event that the amount of Surplus was reduced and transferred to additional paid-in capital, legal earnings reserve and/or share capital after the end of the previous fiscal year, the amount so transferred;

(2) in the event that we distributed Surplus after the end of the previous fiscal year, the amount set aside in additional paid-in capital and/or legal earnings reserve;

(3) in the event that we disposed of treasury stock in the process of (x) a merger in which we acquired all rights and obligations of a company, (y) a corporate split in which we acquired all or a part of the rights and obligations of a split company or (z) a share exchange (kabushiki kokan) in which we acquired all shares of a company after the end of the previous fiscal year, the difference between the book value of such treasury stock and the consideration that we received for such treasury stock;

(4) in the event that the amount of Surplus was reduced in the process of a corporate split in which we transferred all or a part of our rights and obligations after the end of the previous fiscal year, the amount so reduced;

(5) in the event of (x) a merger in which we acquired all rights and obligations of a company, (y) a corporate split in which we acquired all or a part of the rights and obligations of a split company or (z) a share exchange in which we acquired all shares of a company after the end of the previous fiscal year, the aggregate amount of (i) the amount of the other capital surplus after such merger, corporate split or share exchange, less the amount of other capital surplus before such merger, corporate split or share exchange, and (ii) the amount of the other retained earnings after such merger, corporate split or share exchange, less the amount of other retained earnings before such merger, corporate split or share exchange; and

(6) in the event that an obligation to cover a deficiency, such as the obligation of a person who subscribed newly issued shares with an unfair amount to be paid in, was fulfilled after the end of the previous fiscal year, the amount of other capital surplus increased by such payment.

In Japan, the “ex-dividend” date and the record date for any distribution of Surplus come before the date a company determines the amount of distribution of Surplus to be paid.

For information as to Japanese taxes on dividends, please refer to “Taxation — Japanese Taxation.”

Capital and Reserves

Under the Companies Act, the paid-in amount of any newly-issued shares of stock is required to be accounted for as share capital, although we may account for an amount not exceeding one-half of such paid-in amount as additional paid-in capital. We may generally reduce additional paid-in capital and/or legal earnings reserve by resolution of a general meeting of shareholders, subject to completion of protection procedures for creditors in accordance with the Companies Act, and, if so decided by the same resolution, we may account for the whole or any part of the amount of such reduction as share capital. We may generally reduce share capital by a special resolution of a general meeting of shareholders and, if so decided by the same resolution, we may account for the whole or any part of the amount of such reduction as additional paid-in capital.

Stock Splits

Under the Companies Act, we may at any time split shares in issue into a greater number of the same class of shares by a resolution of the board of directors. When a stock split is to be made, we must give public notice of the stock split, specifying the record date therefor, at least two weeks prior to such record date.

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Under the book-entry transfer system, on the effective date of the stock split, the numbers of shares recorded in all accounts held by our shareholders at account management institutions will be increased in accordance with the applicable ratio.

Gratuitous Allocations

Under the Companies Act, we may allot any class of shares to our existing shareholders without any additional contribution by resolution of the board of directors; provided that although our treasury stock may be allotted to our shareholders, any allotment of shares will not accrue to shares of our treasury stock.

When a gratuitous allocation is to be made and we set a record date therefor, we must give public notice of the gratuitous allocation, specifying the record date therefor, at least two weeks prior to the record date.

Under the book-entry transfer system, on the effective date of the gratuitous allocation, the number of shares of our common stock recorded in accounts held by our shareholders at account management institutions will be increased in accordance with a notice from us to JASDEC.

Reverse Stock Split

Under the Companies Act, we may at any time consolidate our shares into a smaller number of shares by a special resolution of the general meeting of shareholders. We must disclose the reason for the reverse stock split at the general meeting of shareholders. When a reverse stock split is to be made, we must give public notice of the reverse stock split, at least two weeks (or, in certain cases where any fractions of shares are left as a result of a reverse stock split, 20 days) prior to the effective date of the reverse stock split.

Under the book-entry transfer system, on the effective date of the reverse stock split, the numbers of shares recorded in all accounts held by our shareholders at account management institutions will be decreased in accordance with the applicable ratio.

Unit Share System

General

Our articles of incorporation provide that 100 shares constitute one “unit” of common stock. Our board of directors is permitted to reduce the number of shares that will constitute one unit or to abolish the unit share system entirely by amending our articles of incorporation, without shareholders’ approval, with public notice without delay after the effective date of such amendment.

Transferability of Shares Constituting Less Than One Unit

Under the book-entry transfer system, shares constituting less than one unit are transferable. Under the rules of the Japanese stock exchanges, however, shares constituting less than one unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese stock exchanges.

Voting Rights of a Holder of Shares Constituting Less Than One Unit

A holder of shares constituting less than one unit cannot exercise any voting rights pertaining to those shares. In calculating the quorum for various voting purposes, the aggregate number of shares constituting less than one unit will be excluded from the number of outstanding shares. A holder of shares representing one or more whole units will have one vote for each whole unit represented.

A holder of shares constituting less than one unit does not have any rights related to voting, such as the right to participate in a demand for the resignation of a director, the right to participate in a request for the convocation of a general meeting of shareholders and the right to join with other shareholders to propose a matter to be included in the agenda of a general meeting of shareholders.

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In accordance with the Companies Act, our articles of incorporation provide that a holder of shares constituting less than one unit does not have any other rights of a shareholder in respect of those shares, other than those provided by our articles of incorporation, including the following rights:

• to receive dividends;

• to receive cash or other assets in case of a reverse stock split or stock split, share exchange, share transfer or merger;

• to be allotted rights to subscribe for free for new shares and stock acquisition rights when such rights are granted to shareholders; or

• to participate in any distribution of surplus assets upon liquidation.

Rights of a Holder of Shares Constituting Less Than One Unit to Require Us to Purchase Shares and to Sell Shares

Under the Companies Act, a holder of shares constituting less than one full unit may at any time request that we purchase such shares. In addition, our articles of incorporation provide that, pursuant to our share handling regulations, a holder of shares constituting less than one full unit has the right to request that we sell to such holder such number of shares constituting less than one full unit which, when added to the shares constituting less than one full unit currently owned by such holder, will constitute one full unit.

Under the book-entry system, such a request must be made to us through the relevant account managing institution. The price at which shares of common stock constituting less than one unit will be purchased or sold by us pursuant to such a request will be equal to (a) the closing price of shares of our common stock reported by the Tokyo Stock Exchange on the day when the request is received by our transfer agent or (b) if no sale takes place on the Tokyo Stock Exchange on that day, the price at which the sale of shares of our common stock is executed on such stock exchange immediately thereafter.

General Meeting of Shareholders

Our ordinary general meeting of shareholders is usually held every March in Tokyo, Japan. The record date for an ordinary general meeting of shareholders is December 31 of each year. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks’ advance notice to shareholders.

Notice of convocation of a general meeting of shareholders setting forth the time, place, purpose thereof and certain other matters set forth in the Companies Act and relevant ordinances must be mailed to each shareholder having voting rights (or, in the case of a non-resident shareholder, to his or her standing proxy or mailing address in Japan) at least two weeks prior to the date set for such meeting. Such notice may be given to shareholders by electronic means, subject to the consent of the relevant shareholders.

Any shareholder or group of shareholders holding at least 3% of the total number of voting rights for a period of six months or more may require, with an individual shareholder notice (as described in “— Register of Shareholders”), the convocation of a general meeting of shareholders for a particular purpose. Unless such general meeting of shareholders is convened without delay or a convocation notice of a meeting which is to be held not later than eight weeks from the day of such demand is dispatched, the requiring shareholder may, upon obtaining a court approval, convene such general meeting of shareholders.

Any shareholder or group of shareholders holding at least 300 voting rights or 1% of the total number of voting rights for a period of six months or more may propose a matter to be included in the agenda of a general

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meeting of shareholders, and may propose to describe such matter together with a summary of the proposal to be submitted by such shareholder in a notice to our shareholders, by submitting a request to a director at least eight weeks prior to the date set for such meeting, with an individual shareholder notice.

The Companies Act enables a company to amend its articles of incorporation in order to loosen the requirements for the number of shares held and shareholding period, as well as the period required for dispatching a convocation notice or submission of requests, all of which are required for any shareholder or group of shareholders to request the convocation of a general meeting of shareholders or to propose a matter to be included in the agenda of a general meeting of shareholders. Our articles of incorporation do not provide for loosening such requirements.

Voting Rights

A shareholder of record is entitled to one vote per unit (100 shares) of common stock, except that neither we nor any corporation, partnership or other similar entity in which we hold, directly or indirectly, 25% or more of the voting rights shall exercise any voting rights in respect of shares held by us or such entity, as the case may be. Except as otherwise provided by law or by our articles of incorporation, a resolution can be adopted at a general meeting of shareholders by a majority of the voting rights represented at the meeting. Shareholders may also exercise their voting rights through proxies, provided that the proxy is granted to one of our shareholders having voting rights. The Companies Act and our articles of incorporation provide that the quorum for the election of directors and corporate auditors is one-third of the total number of voting rights. Our articles of incorporation provide that the shares may not be voted cumulatively for the election of directors.

The Companies Act provides that a special resolution of the general meeting of shareholders is required for certain significant corporate transactions, including:

• any amendment to our articles of incorporation (except for amendments that may be authorized solely by the board of directors under the Companies Act);

• a reduction of share capital, subject to certain exceptions under which a shareholders’ resolution is not required, such as a reduction of share capital for the purpose of replenishing capital deficiencies;

• transfer of the whole or a part of our equity interests in any of our subsidiaries, subject to certain exceptions under which a shareholders’ resolution is not required;

• a dissolution, merger or consolidation, subject to certain exceptions under which a shareholders’ resolution is not required;

• the transfer of the whole or a substantial part of our business, subject to certain exceptions under which a shareholders’ resolution is not required;

• the taking over of the whole of the business of any other corporation, subject to certain exceptions under which a shareholders’ resolution is not required;

• a corporate split, subject to certain exceptions under which a shareholders’ resolution is not required;

• share exchange (kabushiki kokan) or share transfer (kabushiki iten) for the purpose of establishing 100% parent-subsidiary relationships, subject to certain exceptions under which a shareholders’ resolution is not required;

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• any issuance of new shares or transfer of existing shares held by us as treasury stock at a “specially favorable” price and any issuance of stock acquisition rights or bonds with stock acquisition rights at a “specially favorable” price or in a “specially favorable” condition to any persons other than shareholders;

• any acquisition by us of our own shares from specific persons other than our subsidiaries (if any);

• reverse stock split; or

• the removal of a corporate auditor.

Except as otherwise provided by law or in our articles of incorporation, a special resolution of the general meeting of shareholders requires the approval of the holders of at least two-thirds of the voting rights of all shareholders present or represented at a meeting where a quorum is present. Our articles of incorporation provide that a quorum exists when a majority of the total number of voting rights is present or represented.

Liquidation Rights

If we are liquidated, the assets remaining after payment of all taxes, liquidation expenses and debts will be distributed among shareholders in proportion to the number of shares they hold.

Rights to Allotment of Shares

Holders of shares of our common stock have no pre-emptive rights. Authorized but unissued shares may be issued at the times and on the terms as the board of directors determines, so long as the limitations with respect to the issuance of new shares at “specially favorable” prices (as described in “— Voting Rights”) are observed. Our board of directors may, however, determine that shareholders shall be given rights to allotment regarding a particular issue of new shares, in which case such rights must be given on uniform terms to all holders of the shares as of a record date for which not less than two weeks’ prior public notice must be given. Each shareholder to whom such rights are given must also be given notice of the expiration date thereof at least two weeks prior to the date on which such rights expire. The rights to allotment of new shares may not be transferred. However, the Companies Act enables us to allot stock acquisition rights to shareholders without consideration therefor, and such stock acquisition rights are transferable. See “— Stock Acquisition Rights” below.

In cases where a particular issuance of new shares (i) violates laws and regulations or our articles of incorporation, or (ii) will be performed in a manner materially unfair, and shareholders may suffer disadvantages therefrom, such shareholders may file an injunction with a court of law to enjoin such issuance.

Stock Acquisition Rights

Subject to certain conditions and to the limitations on issuances at a “specially favorable” price or on “specially favorable” conditions described in “— Voting Rights,” we may issue stock acquisition rights (shinkabu yoyakuken) and bonds with stock acquisition rights (shinkabu yoyakuken-tsuki shasai) by a resolution of the board of directors. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as set forth in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, we will be obligated either to issue the relevant number of new shares or, alternatively, to transfer the necessary number of shares of treasury stock held by us.

Record Date

The record date for annual dividends and the determination of shareholders entitled to vote at the ordinary general meeting of our shareholders is December 31.

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In addition, by a resolution of the board of directors, we may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

Under the rules of JASDEC, we are required to give notice of each record date to JASDEC promptly after the resolution of the board of directors determining such record date. JASDEC is required to promptly give us notice of the names and addresses of the holders of shares of our common stock, the number of shares of our common stock held by them and other relevant information as at each record date.

Purchase of Our Own Shares

Under the Companies Act, we may acquire our own shares:

• by purchase on any stock exchange on which our shares are listed or by way of tender offer, pursuant to a resolution of our board of directors subject to certain requirements;

• by purchase from a specific party other than any of our subsidiaries, pursuant to a special resolution of a general meeting of shareholders; and

• by purchase from any of our subsidiaries, pursuant to a resolution of the board of directors.

If we acquire our own shares from a specific party other than any of our subsidiaries as specified above at a price higher than the greater of (i) (a) the closing price of the shares at the market trading such shares on the day immediately preceding the day on which the relevant special resolution of a general meeting of shareholders is made or (b) if no sale takes place at such market on that day, the price at which the sale of the shares is effected on such market immediately thereafter and (ii) in the event that such shares are subject to a tender offer, the price set in the contract regarding such tender offer on that day, shareholders may request that we include him or her as the seller of his or her shares in the proposed purchase. Any such acquisition of shares must satisfy certain requirements, such as that we may only acquire our own shares in an aggregate amount up to the amount that we may distribute as Surplus. See “— Distribution of Surplus” above for more details regarding this amount.

Our own shares acquired by us may be held by us as treasury stock for any period or may be cancelled by resolution of the board of directors. We may also transfer the shares held by us to any person, subject to a resolution of the board of directors, and subject also to other requirements similar to those applicable to the issuance of new shares, as described in “— Rights to Allotment of Shares” above. We may also utilize our treasury stock (x) for the purpose of transfer to any person upon exercise of stock acquisition rights or (y) for the purpose of acquiring another company by way of merger, share exchange, or corporate split through exchange of treasury stock for shares or assets of the acquired company.

Request by Controlling Shareholder to Sell All Shares

Under the Companies Act and our articles of incorporation, in general, a shareholder holding 98% or more of our voting rights, directly or through wholly-owned subsidiaries, shall have the right to request that all other shareholders (and all other holders of stock acquisition rights, as the case may be) sell all shares (and all stock acquisition rights, as the case may be) held by them with our approval, which must be made by a resolution of the board of directors (kabushiki tou uriwatashi seikyu, or a “Share Sales Request”). In order to make a Share Sales Request, such controlling shareholder will be required to issue a prior notice to us. If we approve such Share Sales Request, we will be required to make a public notice to all holders and registered pledgees of shares (and stock acquisition rights, as the case may be) not later than 20 days before the effective date of such sales.

Sale by Us of Shares Held by Shareholders Whose Addresses Are Unknown

Under the Companies Act, we are not required to send a notice to a shareholder if notices to such shareholder fail to arrive for a continuous period of five or more years at the registered address of such shareholder in the register of our shareholders or at the address otherwise notified to us.

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In addition, we may sell or otherwise dispose of the shares held by a shareholder whose location is unknown. Generally, if

• notices to a shareholder fail to arrive for a continuous period of five or more years at the shareholder’s registered address in the register of our shareholders or at the address otherwise notified to us, and

• the shareholder fails to receive distribution of Surplus on the shares for a continuous period of five or more years at the address registered in the register of our shareholders or at the address otherwise notified to us,

we may sell or otherwise dispose of the shareholder’s shares at the market price after giving at least three months’ prior public and individual notices, and hold or deposit the proceeds of such sale or disposal for the shareholder.

Reporting of Substantial Shareholdings

The FIEA and its related regulations require any person who has become beneficially, solely or jointly, a holder of more than 5% of total issued shares of our common stock, to file with the director of a relevant local finance bureau of the Ministry of Finance within five business days a report concerning such shareholdings. With certain exceptions, a similar report must also be filed in respect of any subsequent change of 1% or more in any such holdings or any change in material matters set out in reports previously filed. For this purpose, shares of our common stock issuable to such person upon exchange of exchangeable securities, conversion of convertible securities or exercise of warrants or stock acquisition rights (including those incorporated in bonds with stock acquisition rights) are taken into account in determining both the number of our shares held by the holder and our total issued share capital.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

American Depositary Shares

JPMorgan Chase Bank, N.A., as depositary, will register and deliver the ADSs. Each ADS will represent an ownership interest in one share of our common stock deposited with the office of Mizuho Bank, Ltd. 16-13, Tsukishima 4-chome, Chuo-ku, Tokyo, Japan 104-0052, as custodian for the depositary. Each ADS will also represent an ownership interest in any other securities, cash or other property which may be held by the depositary. The depositary’s corporate trust office at which the ADSs will be administered is located at JPMorgan Chase Bank, N.A., 4 New York Plaza, Floor 12, New York, New York, 10004. The principal executive office of the depositary is located at 4 New York Plaza, Floor 12, New York, New York, 10004.

The Direct Registration System (“DRS”) is a system administered by The Depository Trust Company, or DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto.

We will not treat ADS holders as our shareholders and accordingly, you, as an ADS holder, will not have a shareholder’s rights. Japanese law governs shareholders’ rights. The depositary will be the holder of the shares of our common stock underlying your ADSs. As a holder of ADSs, you will have an ADS holder’s rights. A deposit agreement among us, the depositary and the beneficial owners of ADSs sets out ADS holders’ rights as well as the rights and obligations of the depositary. The laws of the State of New York govern the deposit agreement and the ADSs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR. For directions on how to obtain copies of those documents, see “Where You Can Find Additional Information.”

Holding the ADSs

How will you hold your ADSs?

You may hold ADSs either (1) directly (a) by having an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (b) by holding ADSs in the DRS, or (2) indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. If you hold ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Dividends and Other Distributions

How will you receive dividends and other distributions on shares of our common stock?

The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on shares of our common stock or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares of our common stock your ADSs represent as of the record date (which will be as close as practicable to the record date for shares of our common stock) set by the depositary with respect to the ADSs.

• Cash.  The depositary will convert any cash dividend or other cash distribution we pay on the shares of our common stock or any net proceeds from the sale of any shares of our common stock, rights, securities or other entitlements into U.S. dollars if it may do so on a reasonable basis, and may transfer the U.S. dollars to the United States. If that is not possible or lawful or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary

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to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary that must be paid will be deducted. See “Taxation.” The depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.

• Shares.  The depositary may, upon our timely instruction, distribute additional ADSs representing any shares of common stock we distribute as a dividend or free distribution to the extent reasonably practicable and permissible under law. The depositary will only distribute whole ADSs. It will try to sell shares which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new shares of common stock. The depositary may sell a portion of the distributed shares of common stock sufficient to pay its fees and expenses in connection with that distribution.

• Elective distributions in cash or shares.  If we offer holders of shares of our common stock the option to receive dividends in either cash or shares, the depositary, after consultation with us and having received timely notice of such elective distribution by us, has discretion to determine to what extent such elective distribution will be made available to you as a holder of the ADSs. We must first instruct the depositary to make such elective distribution available to you and furnish it with satisfactory evidence that it is legal to do so. The depositary could decide it is not legal or reasonably practical to make such elective distribution available to you, or it could decide that it is only legal or reasonably practical to make such elective distribution available to some but not all holders of the ADSs. In such case, the depositary shall, on the basis of the same determination as is made in respect of the shares of our common stock for which no election is made, distribute either cash in the same way as it does in a cash distribution, or additional ADSs representing shares of our common stock in the same way as it does in a share distribution. The depositary is not obligated to make available to you a method to receive the elective dividend in shares rather than in ADSs. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of shares of common stock.

• Rights to purchase additional shares.  If we offer holders of shares of our common stock any rights to subscribe for additional shares or any other rights, the depositary may, after consultation with us and having received timely notice of such distribution by us, make these rights available to you. We must first instruct the depositary to make such rights available to you and furnish the depositary with satisfactory evidence that it is legal to do so. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the net proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.

If the depositary makes rights available to you, it will exercise the rights and purchase the shares on your behalf. The depositary will then deposit the shares and deliver ADSs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay.

U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in

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the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.

• Other distributions.  Subject to receipt of timely notice from us with the request to make any such distribution available to you, and provided the depositary has determined such distribution is lawful and reasonably practicable and feasible and in accordance with the terms of the deposit agreement, the depositary will send to you anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice: it may decide to sell what we distributed and distribute the net proceeds in the same way as it does with cash; or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to you unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act, in order to make a distribution to ADS holders. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.

Deposit, Withdrawal and Cancellation

How are ADSs issued?

The depositary will deliver ADSs if you or your broker deposit shares of our common stock or evidence of rights to receive shares of our common stock with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons entitled thereto.

How do ADS holders cancel an ADS?

You may turn in your ADSs at the depositary’s corporate trust office or by providing appropriate instructions to your broker. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the shares of our common stock and any other deposited securities underlying the ADSs to you or a person you designate at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, if feasible.

How do ADS holders interchange between certificated ADSs and uncertificated ADSs?

You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for ADRs, the depositary will execute and deliver to you an ADR evidencing those ADSs.

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Voting Rights

How do you vote?

You may instruct the depositary to vote the deposited securities underlying your ADSs. Otherwise, you will not be able to exercise your right to vote unless you withdraw the shares of our common stock your ADSs represent. However, you may not know about the meeting sufficiently in advance to withdraw the shares.

If we ask for your instructions, upon timely notice from us, the depositary will notify you of the upcoming vote and arrange to deliver our voting materials to you. The materials will (1) describe the matters to be voted on and (2) explain how you may instruct the depositary to vote the shares of our common stock or other deposited securities underlying your ADSs as you direct, including an express indication that such instruction may be given or deemed given in accordance with the second to last sentence of this paragraph if no instruction is received, to the depositary to give a discretionary proxy to a person designated by us. For instructions to be valid, the depositary must receive them on or before the date specified. The depositary will try, as far as practical, subject to Japanese laws and the provisions of our constitutive documents, to vote or to have its agents vote the shares of our common stock or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. If we timely requested the depositary to solicit your instructions but no instructions are received by the depositary from an owner with respect to any of the deposited securities represented by the ADSs of that owner on or before the date established by the depositary for such purpose, the depositary shall deem that owner to have instructed the depositary to give a discretionary proxy to a person designated by us with respect to such deposited securities, and the depositary shall give a discretionary proxy to a person designated by us to vote such deposited securities. However, no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter if we inform the depositary we do not wish such proxy given, substantial opposition exists or the matter materially and adversely affects the rights of holders of shares of our common stock.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the shares of our common stock underlying your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be nothing you can do if the shares of our common stock underlying your ADSs are not voted as you requested.

In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will try to give the depositary notice of any such meeting and details concerning the matters to be voted upon sufficiently in advance of the meeting date.

Voting instructions will not be deemed to be received until such time as the ADR department responsible for proxies and voting has received such instructions notwithstanding that such instructions may have been physically received by the depositary prior to such time.

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Fees and Expenses

Persons depositing or withdrawing shares must pay:	For:
US$5.00 (or less) per each 100 ADSs	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
US$0.05 (or less) per ADS	Any distribution of cash proceeds to you
A fee equivalent to the fee that would be payable if securities distributed to you had been shares of our common stock and the shares had been deposited for issuance of ADSs	Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders
US$0.05 per ADS per calendar year	Depositary services
Registration or transfer fees	Transfer and registration of shares of our common stock on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
Expenses of the depositary	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or share underlying an ADS, including any applicable interest and penalties thereon and any share transfer or other taxes or governmental charges; for example, stock transfer taxes, stamp duty or withholding taxes	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities	As necessary

JPMorgan Chase Bank, N.A., as depositary, has agreed to reimburse us for a portion of certain expenses we incur that are related to establishment and maintenance of the ADR program, including investor relations expenses. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not related to the amounts of fees the depositary collects from investors. Furthermore, the depositary has agreed to reimburse us certain fees payable to the depositary by holders of ADSs. Neither the depositary nor we can determine the exact amount to be made available to us because (i) the number of ADSs that will be issued and outstanding, (ii) the level of service fees to be charged to holders of ADSs and (iii) our reimbursable expenses related to the program are not known at this time.

The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

Reports and Other Communications

The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian and a designated transfer office the deposit agreement, the provisions of or governing deposited

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securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.

Additionally, if we make any written communications generally available to holders of our ordinary shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.

Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any net proceeds, or send to you any property, remaining after it has paid the taxes. You agree to indemnify us, the depositary, the custodian and each of our and their respective agents, directors, employees and affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any tax benefit obtained for you.

Reclassifications, Recapitalizations and Mergers

If we:	Then:
Change the nominal or par value of shares of our common stock	The cash, shares or other securities received by the depositary will become deposited securities.
Reclassify, split up or consolidate any of the deposited securities	Each ADS will automatically represent its equal share of the new deposited securities.
Distribute securities on the shares of our common stock that are not distributed to you or recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action	The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the form of ADR without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, including expenses incurred in connection with foreign exchange control regulations and other charges specifically payable by ADS holders under the deposit agreement, or materially prejudices a substantial existing right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

How may the deposit agreement be terminated?

The depositary will terminate the deposit agreement if we ask it to do so, in which case the depositary will give notice to you at least 90 days prior to termination. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign and we have not appointed a new depositary within 90 days. In such case, the depositary must notify you at least 30 days before termination.

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After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property, and deliver shares of our common stock and other deposited securities upon cancellation of ADSs after payment of any fees, charges, taxes or other governmental charges. Six months or more after termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. The depositary’s only obligations will be to account for the money and other cash. After termination, our only obligations will be to indemnify the depositary and to pay fees and expenses of the depositary that we agreed to pay.

Books of Depositary

The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs and the deposit agreement.

The depositary will maintain facilities in New York to record and process the issuance, cancellation, combination, split-up and transfer of ADRs.

These facilities may be closed from time to time, to the extent not prohibited by law or if any such action is deemed necessary or advisable by the depositary or us, in good faith, at any time or from time to time because of any requirement of law, any government or governmental body or commission or any securities exchange on which the ADRs or ADSs are listed, or under any provision of the deposit agreement or provisions of, or governing, the deposited securities, or any meeting of our shareholders or for any other reason.

Limitations on Obligations and Liability

Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

• are only obligated to take the actions specifically set forth in the deposit agreement without gross negligence or willful misconduct;

• are not liable if either of us is prevented or delayed by law or circumstances beyond our control from performing our obligations under the deposit agreement, including, without limitation, requirements of any present or future law, regulation, governmental or regulatory authority or share exchange of any applicable jurisdiction, any present or future provisions of our memorandum and articles of association, on account of possible civil or criminal penalties or restraint, any provisions of or governing the deposited securities or any act of God, war or other circumstances beyond our control as set forth in the deposit agreement;

• are not liable if either of us exercises, or fails to exercise, discretion permitted under the deposit agreement;

• are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any indirect, special, consequential or punitive damages for any breach of the terms of the deposit agreement;

• have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other party;

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• may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party;

• disclaim any liability for any action/inaction in reliance on the advice or information of legal counsel, accountants, any person presenting shares of our common stock for deposit, holders and beneficial owners (or authorized representatives) of ADSs, or any person believed in good faith to be competent to give such advice or information;

• disclaim any liability for inability of any holder to benefit from any distribution, offering, right or other benefit made available to holders of deposited securities but not made available to holders of ADSs; and

• disclaim any liability for any indirect, special, punitive or consequential damages.

The depositary and any of its agents also disclaim any liability for any failure to carry out any instructions to vote, the manner in which any vote is cast or the effect of any vote or failure to determine that any distribution or action may be lawful or reasonably practicable or for allowing any rights to lapse in accordance with the provisions of the deposit agreement, the failure or timeliness of any notice from us, the content of any information submitted to it by us for distribution to you or for any inaccuracy of any translation thereof, any investment risk associated with the acquisition of an interest in the deposited securities, the validity or worth of the deposited securities, the credit-worthiness of any third party, or for any tax consequences that may result from ownership of ADSs, shares of our common stock or deposited securities.

In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.

Requirements for Depositary Actions

Before the depositary will issue, deliver or register a transfer of an ADS, make a distribution on an ADS, or permit withdrawal of shares of our common stock, the depositary may require:

• payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares of common stock or other deposited securities and payment of the applicable fees, expenses and charges of the depositary;

• satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

• compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to issue and deliver ADSs or register transfers of ADSs generally when the register of the depositary or our transfer books are closed or at any time if the depositary or we think it is necessary or advisable to do so.

Your Right to Receive the Shares Underlying Your ADSs

You have the right to cancel your ADSs and withdraw the underlying shares of our common stock at any time except:

• when temporary delays arise because: (1) the depositary has closed its transfer books or we have closed our transfer books; (2) the transfer of shares of our common stock is blocked to permit voting at a shareholders’ meeting; or (3) we are paying a dividend on shares of our common stock;

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• when you owe money to pay fees, taxes and similar charges; or

• when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares of our common stock or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Pre-release of ADSs

The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying shares of our common stock. This is called a pre-release of the ADSs. The depositary may also deliver shares of our common stock upon cancellation of pre-released ADSs (even if the ADSs are cancelled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying shares of our common stock are delivered to the depositary. The depositary may receive ADSs instead of shares to close out a pre-release. The depositary may pre-release ADSs only under the following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its customer (a) owns the shares of our common stock or ADSs to be deposited, (b) assigns all beneficial rights, title and interest in such shares or ADSs to the depositary for the benefit of the owners, (c) will not take any action with respect to such shares or ADSs that is inconsistent with the transfer of beneficial ownership, (d) indicates the depositary as owner of such shares or ADSs in its records, and (e) unconditionally guarantees to deliver such shares or ADSs to the depositary or the custodian, as the case may be; (2) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; and (3) the depositary must be able to close out the pre-release on not more than five business days’ notice. Each pre-release is subject to further indemnities and credit regulations as the depositary considers appropriate. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of pre-release, although the depositary may disregard the limit from time to time, if it thinks it is appropriate to do so, including (1) due to a decrease in the aggregate number of ADSs outstanding that causes existing pre-release transactions to temporarily exceed the limit stated above or (2) where otherwise required by market conditions.

Direct Registration System

In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of an ADS holder, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register such transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not verify, determine or otherwise ascertain that the DTC participant which is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on, and compliance with, instructions received by the depositary through the DRS/Profile System and in accordance with the deposit agreement, shall not constitute negligence or bad faith on the part of the depositary.

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SHARES AND ADSs ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have outstanding 209,992,000 shares of our common stock (including            shares of our common stock represented by            ADSs issued in the international offering). All shares of our common stock sold in this offering (including the shares represented by the ADSs) will be freely transferable by persons other than our ‘‘affiliates’’ without restriction or further registration under the Securities Act. Rule 144 under the Securities Act defines an “affiliate” of a company as a person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, our company. All outstanding shares prior to this offering are “restricted securities” as that term is defined in Rule 144 because they were issued in a transaction or series of transactions not involving a public offering. Restricted securities, in the form of ADSs or otherwise, may be sold only if they are the subject of an effective registration statement under the Securities Act or if they are sold pursuant to an exemption from the registration requirement of the Securities Act such as those provided for in Rule 144 or 701 promulgated under the Securities Act, which rules are summarized below. Restricted shares of our common stock may also be sold outside of the United States to non-U.S. persons in accordance with Rule 904 of Regulation S under the Securities Act. Following completion of the global offering, previously outstanding shares of our common stock are eligible for trading on the Tokyo Stock Exchange. This prospectus may not be used in connection with any resale of our ADSs acquired in this offering by our affiliates.

Sales of substantial amounts of our shares or ADSs in the public market could adversely affect their prevailing market prices. Prior to this offering, there has been no public market for shares of our common stock or ADSs, and while we intend to apply to list shares of our common stock on the Tokyo Stock Exchange and our ADSs on the New York Stock Exchange, we cannot assure you that a regular trading market will develop.

Lock-Up Agreements

In connection with this offering, we, our controlling shareholder, certain of our and our subsidiaries’ directors and officers, the LINE Employee Shareholding Association and Mr. Joon Ho Lee, our former director, have entered into lock-up agreements described under “Underwriting” that restrict the sale of shares or ADSs beginning on the date of this prospectus and ending on the date that is 180 days from and including the date of delivery of the shares in the global offering.

Rule 144

In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated):

• who is not considered to have been one of our affiliates at any time during the 90 days preceding a sale; and

• who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell such person’s shares without restriction, subject to our compliance with the reporting obligations under the Exchange Act.

In general, under Rule 144, a person who is our affiliate and has beneficially owned shares of our common stock for at least six months is entitled to sell within any three-month period a number of shares that does not exceed the greater of:

• 1.0% of the number of shares of our common stock then outstanding which will equal approximately 2,099,920 shares of our common stock immediately after this offering; and

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• the average weekly trading volume of shares of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 in connection with the sale.

Any such sales by an affiliate are also subject to manner of sale provisions, notice requirements and our compliance with the Exchange Act reporting obligations. In addition, in each case, these shares would remain subject to any lock-up arrangements and would only become eligible for sale when the lock-up period expires.

Rule 701

Beginning 90 days after the date of this prospectus, persons other than affiliates who purchased shares of our common stock under a written compensatory plan or contract may be entitled to sell such shares in the United States in reliance on Rule 701 under the Securities Act, or Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 subject only to its manner of sale requirements. However, the Rule 701 shares would remain subject to any applicable lock-up arrangements and would only become eligible for sale when the lock-up period expires.

Regulation S

Regulation S under the Securities Act provides that shares owned by any person may be sold without registration in the United States, provided that the sale is effected in an offshore transaction and no directed selling efforts are made in the United States (as these terms are defined in Regulation S), subject to certain other conditions. In general, this means that our shares of common stock may be sold in some other manner outside the United States without requiring registration in the United States. Following completion of the global offering, previously outstanding shares of our common stock are eligible for trading on the Tokyo Stock Exchange.

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JAPANESE FOREIGN EXCHANGE CONTROLS AND SECURITIES REGULATIONS

Foreign Exchange Regulations

The Foreign Exchange and Foreign Trade Act of Japan (Gaikoku Kawase oyobi Gaikoku Boueki Hou) and related cabinet orders and ministerial ordinances, which we refer to collectively as the Foreign Exchange Regulations, govern certain aspects relating to the acquisition and holding of shares by “exchange non-residents” and by “foreign investors” (as these terms are defined below). It also applies in some cases to the acquisition and holding of ADSs representing shares of our common stock acquired and held by non-residents of Japan and by foreign investors. In general, the Foreign Exchange Regulations currently in effect do not affect transactions between exchange non-residents to purchase or sell shares or ADSs outside Japan using currencies other than Japanese yen.

Exchange residents are defined in the Foreign Exchange Regulations as:

(i) individuals who reside within Japan; or

(ii) corporations whose principal offices are located within Japan.

Exchange non-residents are defined in the Foreign Exchange Regulations as:

(i) individuals who do not reside in Japan; or

(ii) corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations located within Japan are regarded as exchange residents. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

Foreign investors are defined in the Foreign Exchange Regulations as:

(i) individuals who do not reside in Japan;

(ii) corporations or other entities organized under the laws of foreign countries or whose principal offices are located outside Japan;

(iii) corporations of which 50% or more of the total voting rights are held, directly or indirectly, by individuals and/or corporations falling within (i) and/or (ii) above; or

(iv) corporations or other entities having a majority of either (A) directors or other persons equivalent thereto or (B) directors or other persons equivalent thereto having the power of representation who are non-resident individuals.

Acquisition of Shares

Acquisition by an exchange non-resident of shares of a Japanese corporation from an exchange resident requires post facto reporting by the exchange resident to the Minister of Finance of Japan through the Bank of Japan. No such reporting requirement is imposed, however, if:

(i) the aggregate purchase price of the relevant shares is ¥100 million or less;

(ii) the acquisition is effected through any bank, financial instruments business operator or other entity prescribed by the Foreign Exchange Regulations acting as an agent or intermediary; or

(iii) the acquisition constitutes an “inward direct investment” described below.

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Inward Direct Investment in Shares of Listed Corporations

If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock exchange, such as the shares of our common stock, or that is traded on an over-the-counter market in Japan and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant company, such acquisition constitutes an “inward direct investment” and the foreign investor in general must file a report of the acquisition with the Minister of Finance and any other competent Ministers having jurisdiction over that Japanese company by the 15th day of the month immediately following the month to which the date of such acquisition belongs. In limited circumstances, such as where the foreign investor is in a country that is not listed on an exemption schedule in the Foreign Exchange Regulations, or where that Japanese company is engaged in certain businesses designated by the Foreign Exchange Regulations, a prior notification of the acquisition must be filed with the Minister of Finance and any other competent Ministers, who may then modify or prohibit the proposed acquisition.

Acquisition of shares by foreign investors by way of stock split is not subject to any of the foregoing notification or reporting requirements.

Dividends and Proceeds of Sale

Under the Foreign Exchange Regulations, dividends paid on, and the proceeds from sales in Japan of, shares held by exchange non-residents of Japan may generally be converted into any foreign currency and repatriated abroad.

Japanese Securities Market

The Tokyo Stock Exchange is the largest stock exchange in Japan. The cash equity market of the Tokyo Stock Exchange has been divided into the First Section, the Second Section, the Mothers Market, the TOKYO PRO Market, the JASDAQ Market and the TOKYO PRO-BOND Market. The First Section and the Second Section are the markets for leading major and medium-sized domestic and overseas corporations, and compose the central market of Japan. In particular, the First Section is a top-class international market in terms of both scale and liquidity, with much of the trading conducted by international investors. The First and Second Sections are collectively referred to as the “main market.” Following the business combination between the Tokyo Stock Exchange Group, Inc. and Osaka Securities Exchange Co., Ltd., the First and Second Sections of the Osaka Securities Exchange were integrated into the main market of the Tokyo Stock Exchange as of July 16, 2013.

A company applying for initial listing is required to meet certain numerical listing criteria. The Tokyo Stock Exchange conducts a rigorous examination of an applicant company using these criteria, with particular emphasis on whether or not fair price formation and appropriate market liquidity can be maintained and whether the public interest and protection of investors can be properly ensured. The Tokyo Stock Exchange decides whether or not to approve of the listing based on a comprehensive examination of these factors. At the end of May 2014, in connection with the liquidity and market capitalization requirements, both of which must be satisfied in usual cases, the Tokyo Stock Exchange has amended its listing criteria so that a Japanese company listed or to be listed on a foreign stock exchange can be required to satisfy only either the liquidity or market capitalization requirement.

The Tokyo Stock Exchange has regulations for the appropriate supervision of listed securities. Among other things, the Tokyo Stock Exchange obliges listed companies to release certain facts that it deems necessary for public disclosure to investors at an appropriate time and in an appropriate manner.

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TOPIX and Nikkei 225 are commonly used indices in Japan. TOPIX is a free-float adjusted market capitalization-weighted index that is calculated based on all of the domestic common stocks listed on the First Section of the Tokyo Stock Exchange. TOPIX shows the measure of current market capitalization assuming that market capitalization as of the base date (January 4, 1968) is 100 points. The Nikkei 225 is comprised of 225 stocks selected from domestic common stocks in the First Section of the Tokyo Stock Exchange, excluding ETFs, REITs, preferred equity contribution securities, tracking stocks (on subsidiary dividend) etc. other than common stocks.

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TAXATION

The following summary of the material Japanese and United States federal income tax consequences of an investment in our shares or ADSs is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our shares or ADSs, such as the tax consequences under state, local and other tax laws.

Japanese Taxation

The following is a general summary of the principal Japanese tax consequences (limited to national tax) to owners of shares of our common stock, in the form of shares or ADSs, who are non-resident individuals of Japan or who are non-Japanese corporations without a permanent establishment in Japan, collectively referred to in this section as non-resident holders. The statements below regarding Japanese tax laws are based on the laws and treaties in force and as interpreted by the Japanese tax authorities as of the date of this prospectus, and are subject to changes in applicable Japanese laws, tax treaties, conventions or agreements, or in the interpretation of them, occurring after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and disposition of shares of our common stock, including, specifically, the tax consequences under Japanese law, under the laws of the jurisdiction of which they are resident and under any tax treaty, convention or agreement between Japan and their country of residence, by consulting their own tax advisors.

For the purpose of Japanese tax law and the tax treaty between the United States and Japan, a U.S. holder of ADSs will generally be treated as the owner of the shares underlying the ADSs evidenced by the ADRs.

Generally, a non-resident holder of shares or ADSs will be subject to Japanese income tax collected by way of withholding on dividends (meaning in this section distributions made from our retained earnings for the Companies Act purposes) we pay with respect to shares of our common stock and such tax will be withheld prior to payment of dividends. Stock splits generally are not subject to Japanese income or corporation taxes.

In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of the Japanese withholding tax applicable to dividends paid by Japanese corporations on their shares of stock to non-resident holders is generally 20.42% (or 20% for dividends due and payable on or after January 1, 2038) under Japanese tax law. However, with respect to dividends paid on listed shares issued by a Japanese corporation (such as shares or ADSs) to non-resident holders, other than any individual shareholder who holds 3% or more of the total number of shares issued by the relevant Japanese corporation (to whom the aforementioned withholding tax rate will still apply), the aforementioned withholding tax rate is reduced to (i) 15.315% for dividends due and payable up to and including December 31, 2037 and (ii) 15% for dividends due and payable on or after January 1, 2038. The withholding tax rates described above include the special reconstruction surtax (2.1% multiplied by the original applicable withholding tax rate, i.e., 15% or 20%, as the case may be), which is imposed during the period from and including January 1, 2013 to and including December 31, 2037, to fund the reconstruction from the Great East Japan Earthquake.

If distributions were made from our capital surplus, rather than retained earnings, for the Companies Act purposes, the portion of such distributions in excess of the amount corresponding to a pro rata portion of return of capital as determined under Japanese tax laws would be deemed dividends for Japanese tax purposes, while the rest would be treated as return of capital for Japanese tax purposes. The deemed dividend portion, if any, would generally be subject to the same tax treatment as dividends as described above, and the return of capital portion would generally be treated as proceeds derived from the sale of shares and subject to the same tax treatment as sale of shares of our common stock as described below. Distributions made in consideration of repurchase by us of our own shares or in connection with certain reorganization transactions will be treated substantially in the same manner.

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Japan has income tax treaties whereby the withholding tax rate (including the special reconstruction surtax) may be reduced, generally to 15%, for portfolio investors, with, among others, Belgium, Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore and Spain, while the income tax treaties with, among others, Australia, France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the United States generally reduce the withholding tax rate to 10% for portfolio investors. In addition, under the income tax treaty between Japan and the United States, dividends paid to pension funds which are qualified U.S. residents eligible to enjoy treaty benefits are exempt from Japanese income taxation by way of withholding or otherwise unless the dividends are derived from the carrying on of a business, directly or indirectly, by the pension funds. Similar treatment is applicable to dividends paid to pension funds under the income tax treaties between Japan and the United Kingdom, the Netherlands and Switzerland. Under Japanese tax law, any reduced maximum rate applicable under a tax treaty shall be available when such maximum rate is below the rate otherwise applicable under the Japanese tax law referred to in the second preceding paragraph with respect to the dividends to be paid by us on our shares or ADSs.

Non-resident holders of our shares who are entitled under an applicable tax treaty to a reduced rate of, or exemption from, Japanese withholding tax on any dividends on our shares, in general, are required to submit, through the withholding agent to the relevant tax authority prior to the payment of dividends, an Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends together with any required forms and documents. A standing proxy for a non-resident holder of shares of our common stock or ADSs may be used in order to submit the application on a non-resident holder’s behalf. In this regard, a certain simplified special filing procedure is available for non-resident holders to claim treaty benefits of reduction of or exemption from Japanese withholding tax, by submitting a Special Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends of Listed Stock, together with any required forms or documents. If the depositary needs investigation to identify whether any non-resident holders of ADSs are entitled to claim treaty benefits of exemption from or reduction of Japanese withholding tax the depositary or its agent submits an application form before payment of dividends so that the withholding cannot be made in connection with such holders for eight months after the record date concerning such payment of dividends. If it is proved that such holders are entitled to claim treaty benefits of exemption from or reduction of Japanese withholding tax within the foregoing eight-month period, the depositary or its agent submits another application form together with certain other documents so that such holder can be subject to exemption from or reduction of Japanese withholding tax. To claim this reduced rate or exemption, such non-resident holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership, as applicable, and to provide other information or documents as may be required by the depositary. Non-resident holders who are entitled, under any applicable tax treaty, to a reduced rate of Japanese withholding tax below the rate otherwise applicable under Japanese tax law, or exemption therefrom, as the case may be, but fail to submit the required application in advance may nevertheless be entitled to claim a refund from the relevant Japanese tax authority of withholding taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident holders are entitled to a reduced treaty rate under the applicable tax treaty) or the full amount of tax withheld (if such non-resident holders are entitled to an exemption under the applicable tax treaty), as the case may be, by complying with a certain subsequent filing procedure. We do not assume any responsibility to ensure withholding at the reduced treaty rate, or exemption therefrom, for shareholders who would be eligible under an applicable tax treaty but who do not follow the required procedures as stated above.

Gains derived from the sale of our shares or ADSs outside Japan by a non-resident holder that is a portfolio investor will generally not be subject to Japanese income or corporation taxes. Japanese inheritance and gift taxes, at progressive rates, may be payable by an individual who has acquired from another individual our shares or ADSs as a legatee, heir or donee, even if none of the acquiring individual, the decedent or the donor is a Japanese resident.

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United States Federal Income Taxation

The following discussion is a summary of the material U.S. federal income tax consequences of the acquisition, ownership and disposition of shares of our common stock or ADSs, based on the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations promulgated thereunder, published administrative interpretations of the U.S. Internal Revenue Service (“IRS”), judicial decisions and the income tax treaty between the United States and Japan (the “Tax Convention”), all of which are subject to differing interpretations and to change, possibly with retroactive effect. This summary does not purport to be a comprehensive description of all of the tax consequences that may be relevant to a decision to hold or dispose of shares of our common stock or ADSs. This summary applies only to U.S. Holders (as defined below) that are initial purchasers of the shares of our common stock or ADSs pursuant to this global offering and that hold the shares of our common stock or ADSs as “capital assets” for U.S. federal income tax purposes. It does not address the tax treatment of investors subject to special tax rules, such as banks or other financial institutions, tax-exempt entities, partnerships (or entities or arrangements treated as partnerships for U.S. federal income tax purposes) or partners therein, insurance companies, dealers in securities, traders in securities that elect mark to market treatment for their securities, a person whose functional currency for tax purposes is not the U.S. dollar, investors that own or are treated as owning 10% or more of our voting stock (taking into account common shares held directly or through depositary arrangements), or investors that hold common shares or ADSs as part of a straddle, hedging, conversion or other integrated transaction. In addition, this summary does not address the tax consequences to U.S. Holders of acquiring, owning, or disposing of the common shares or ADSs under any U.S. federal estate or gift tax, U.S. alternative minimum tax, or U.S. state or local, foreign or other tax laws (such as the Medicare contribution tax on net investment income).

For purposes of this discussion, “U.S. Holder” means a beneficial owner of common shares or ADSs that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of, the United States, any State thereof or the District of Columbia, or (iii) otherwise subject to U.S. federal income tax on a net income basis with respect to the common shares or ADSs.

This summary is based, in part, upon the representations made by the depositary to us and assumes that the deposit agreement for the ADSs, and all other related agreements, will be performed in accordance with their terms.

Prospective purchasers should consult their own tax advisors concerning the U.S. federal, state, local, foreign and other tax consequences of acquiring, owning, and disposing of shares of our common stock or ADSs in light of their particular circumstances.

Treatment of the ADSs

U.S. Holders of ADSs generally will be treated for U.S. federal income tax purposes as holding shares of our common stock represented by the ADSs. No gain or loss will be recognized on an exchange of shares of our common stock for ADSs or an exchange of ADSs for shares of our common stock if the depositary has not taken any action inconsistent with the material terms of the deposit agreement for the ADSs or the U.S. Holder’s ownership of the underlying shares of our common stock. A U.S. Holder’s tax basis in the shares of our common stock received in exchange for ADSs will be the same as its tax basis in the ADSs, and the holding period in the shares will include the holding period in the ADSs.

Dividends

Subject to the application of the PFIC rules discussed below, a U.S. Holder generally will recognize ordinary dividend income in an amount equal to the amount of any cash and the value of any property we distribute as a distribution with respect to the U.S. Holder’s common stock (or ADSs), to the extent that the

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distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, when the distribution is received (or when received by the depositary in the case of ADSs). We do not intend to maintain calculations of earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that distributions paid with respect to the shares of our common stock or ADSs generally will be treated as dividends. Dividends will not be eligible for the dividends received deduction generally allowable to U.S. corporations under the Code. Dividends paid on the shares of our common stock or ADSs will be treated as “qualified dividends” taxable at preferential rates, if (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that the IRS has approved for the purposes of the qualified dividend rules, (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a PFIC, and (iii) the U.S. Holder satisfies certain holding period and other requirements. The Tax Convention has been approved for the purposes of the qualified dividend rules and we believe we will be eligible for the benefits of the Tax Convention.

Dividend income will include any amounts withheld in respect of Japanese taxes, and will be treated as foreign-source income for foreign tax credit purposes. Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s circumstances, Japanese taxes withheld from dividends on shares of our common stock or ADSs generally will be creditable against the U.S. Holder’s U.S. federal income tax liability to the extent such taxes do not exceed any reduced withholding rate available under the Tax Convention. The rules governing foreign tax credits are complex, and U.S. Holders should consult their tax advisors regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, a U.S. Holder may, at its election, deduct creditable foreign taxes, including Japanese taxes, in computing its taxable income, subject to applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued by the U.S. Holder in the taxable year.

Dividends paid in a currency other than U.S. dollars will be includable in income in a U.S. dollar amount based on the exchange rate in effect on the date of receipt (or the date of the depositary’s receipt in the case of ADSs), whether or not the payment is converted into U.S. dollars at that time. A U.S. Holder should not recognize any foreign currency gain or loss in respect of the distribution if the foreign currency is converted into U.S. dollars on the date the distribution is received. If the foreign currency is not converted into U.S. dollars on the date of receipt, however, gain or loss may be recognized upon a subsequent sale or other disposition of the foreign currency. The foreign currency gain or loss (if any) generally will be treated as ordinary income or loss to the U.S. Holder and generally will be treated as U.S.-source income or loss, which may be relevant in calculating the U.S. Holder’s foreign tax credit limitation.

Disposition

Subject to the application of the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss upon the sale, exchange (other than an exchange of ADSs for shares of our common stock or shares for ADSs) or other taxable disposition of the shares of our common stock or ADSs in an amount equal to the difference between the U.S. dollar value of the amount realized on the disposition and the U.S. Holder’s adjusted tax basis in the shares of our common stock or ADSs as determined in U.S. dollars. A U.S. Holder’s adjusted tax basis in the shares of our common stock or ADSs generally will be its U.S. dollar cost. The gain or loss generally will be treated as U.S.-source gain or loss. Net long-term capital gain recognized by a non-corporate U.S. Holder generally will be taxed at a preferential rate. Deductions for capital losses are subject to limitations.

The amount realized by a U.S. Holder on a sale, exchange (other than an exchange of ADSs for shares of our common stock or shares for ADSs) or other taxable disposition of shares of our common stock or ADSs for an amount in a currency other than U.S. dollars will be the U.S. dollar value of that amount on the date of sale, exchange or disposition. On the settlement date, the U.S. Holder will recognize U.S.-source foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between that U.S. dollar value and the U.S. dollar value as of the settlement date of the amount received, in each case based on the exchange rates in effect on the relevant date. However, in the case of shares of our common stock or ADSs that

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are traded on an established securities market that are sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), the amount realized will be based on the exchange rate in effect on the settlement date for the sale, and no exchange gain or loss will be recognized at that time. A U.S. Holder will have a tax basis in the currency received equal to the U.S. dollar value of the currency received on the settlement date. Any gain or loss on a subsequent conversion or other disposition of the currency for a different U.S. dollar amount generally will be U.S.-source ordinary income or loss, which may be relevant in calculating the U.S. Holder’s foreign tax credit limitation.

Passive Foreign Investment Company

We will be classified as a PFIC in any taxable year in which, after taking into account our income and gross assets (and the income and assets of our subsidiaries pursuant to applicable “look-through rules”) either (i) 75% or more of our gross income consists of certain types of “passive income” or (ii) 50% or more of the average quarterly value of our assets is attributable to “passive assets” (i.e., assets that produce or are held for the production of passive income). We believe that we were not a PFIC for U.S. federal income tax purposes in 2015 and do not expect to be a PFIC in 2016. However, PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and the value of our active versus passive assets. Because our belief is based in part on the expected market value of our equity, a decrease in the trading price of our common stock and/or ADSs following this offering may result in our becoming a PFIC. Additionally, the overall level of our passive assets will be significantly affected by changes in the amount of our cash, cash equivalents and securities held for investment, each of which may be classified as passive assets under the PFIC rules.

If we were to be or become a PFIC in any year during which a U.S. Holder owns shares of our common stock or ADSs, and the U.S. Holder has not made a mark to market election (as described below), the U.S. Holder generally will be subject to special rules (regardless of whether we continue to be a PFIC) with respect to its receipt of (i) any “excess distribution” (generally, any distribution on shares of common stock or ADSs that is greater than 125 percent of the average annual distributions paid to the U.S. Holder in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the shares or ADSs) and (ii) any gain realized on the sale or other disposition of shares of common stock or ADSs.

Under these rules (a) the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period, (b) the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income, and (c) the amount allocated to each of the other taxable years will be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit will be imposed with respect to the resulting tax attributable to each such other taxable year. If we are a PFIC, a U.S. Holder of shares of our common stock or ADSs generally will be subject to similar rules with respect to distributions to us by, and dispositions by us of the stock of, any of our direct or indirect subsidiaries that are also PFICs.

A U.S. Holder can avoid the interest charge described above by making a mark to market election with respect to its shares or ADSs, provided that the shares or ADSs are considered “marketable.” The shares or ADSs will be considered marketable if they are regularly traded on certain qualifying U.S. stock exchanges, such as the New York Stock Exchange, or on a foreign stock exchange if it is properly regulated and meets certain trading, listing, financial disclosure and other requirements. For this purpose, shares and ADSs will be considered regularly traded (i) during the current calendar year if they are traded, other than in de minimis quantities, on at least 1/6 of the days remaining in the quarter in which the global offering occurs, and on at least 15 days during each remaining quarter of the calendar year; and (ii) during any other calendar year if they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.

A U.S. Holder that makes a mark to market election must include in ordinary income for each year that we are a PFIC an amount equal to the excess, if any, of the fair market value of its shares or ADSs at the close of

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the taxable year over its adjusted basis therein. An electing holder may also claim an ordinary loss deduction for the excess, if any, of the U.S. Holder’s adjusted basis in shares or ADSs over their fair market value at the close of the taxable year, but this deduction is allowable only to the extent of any net mark to market gains for prior years. Any income or deductions taken into account under these mark to market rules will also increase or decrease a U.S. Holder’s adjusted tax basis in its shares or ADSs. Gains from an actual sale or other taxable disposition of shares or ADSs will be treated as ordinary income, and any losses incurred on a sale or other taxable disposition of shares or ADSs will be treated as an ordinary loss to the extent of any net mark to market gains for prior years. Once made, the election cannot be revoked without the consent of the IRS unless the shares or ADSs cease to be marketable. If we are a PFIC for any year in which the U.S. Holder owns shares of our common stock or ADSs but before a mark to market election is made, the interest charge rules described above will apply to any mark to market gain recognized in the year the election is made.

The Code provides an alternative election (a “QEF election”) to U.S. Holders that may mitigate the adverse U.S. federal income tax consequences to an electing U.S. Holder should we be classified as a PFIC. However, we do not intend to provide holders with the information necessary to make a QEF election. Thus, a U.S. Holder seeking to mitigate the potential adverse effects of the PFIC rules should consider making the mark to market election described above. A U.S. Holder should consult its tax advisor regarding the potential U.S. federal income tax consequences should we be classified as a PFIC in any taxable year.

As discussed in more detail below under “PFIC Reporting,” a U.S. Holder of shares of common stock or ADSs during any year in which we are treated as a PFIC generally will be required to file an annual report containing information with respect to its interest in a PFIC.

Reporting and Backup Withholding

Dividends on and proceeds from the sale or other disposition of shares of our common stock or ADSs that are made within the United States or through certain U.S.-related financial intermediaries may be reported to the IRS. Certain exempt recipients, such as corporations, are not subject to the information reporting or backup withholding requirements if they establish an exemption. Backup withholding may apply to amounts subject to reporting if the U.S. Holder fails to provide an accurate U.S. taxpayer identification number or otherwise to establish a basis for exemption. Backup withholding is not an additional tax. A U.S. Holder can claim a credit against its U.S. federal income tax liability for amounts withheld under the backup withholding rules, and a U.S. Holder can claim a refund for amounts in excess of its tax liability if it provides the required information to the IRS.

Each prospective purchaser should consult its own tax advisor regarding the application of the information reporting and backup withholding rules.

PFIC Reporting

Subject to certain exceptions, a U.S. Holder is required to file an annual information return, currently on Form 8621, with respect to each PFIC in which it owns an interest directly or, in some cases, indirectly (including through certain pass-through entities), and the statute of limitations for collections may be suspended if it does not file such form. If we are a PFIC and own an interest in another PFIC, holders of shares of our common stock or ADSs would be treated as owning a proportionate amount (by value) of the stock of such other PFIC. However, we may be unable to provide investors in shares of our common stock or ADSs with the information necessary to comply with reporting obligations with respect to such other PFIC. U.S. Holders should consult their own tax advisors regarding the PFIC reporting requirements.

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Foreign Financial Asset Reporting

Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. The understatement of income attributable to “specified foreign financial assets” in excess of U.S.$5,000 extends the statute of limitations with respect to the tax return to six years after the return was filed. U.S. Holders who fail to report the required information could be subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.

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UNDERWRITING

The global offering consists of (i) an international offering of                 shares, in the form of shares or ADSs, in the United States and elsewhere outside Japan and (ii) a Japanese offering of                 shares inside Japan. Morgan Stanley & Co. LLC, Nomura Securities Co., Ltd., Goldman Sachs Japan Co., Ltd. and JPMorgan Securities Japan Co., Ltd. have been appointed as the joint global coordinators for the global offering.

Under the terms and subject to the conditions contained in the international underwriting agreement dated the date of this prospectus, the international underwriters named below, for whom Morgan Stanley & Co. LLC, Goldman, Sachs & Co., J.P. Morgan Securities LLC and Nomura Securities International, Inc. are acting as international representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:

Name of International Underwriter	Number of Shares
Morgan Stanley & Co. LLC
Goldman, Sachs & Co.
J.P. Morgan Securities LLC
Nomura Securities International, Inc.
Total:

The international underwriters may elect to take delivery of all or a portion of the shares purchased in the form of ADSs. The international underwriters are offering the shares and ADSs subject to their acceptance of the shares and ADSs from us and subject to prior sale. The international underwriting agreement provides that the obligations of the several international underwriters to pay for and accept delivery of the shares and ADSs offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The international underwriters are obligated to take and pay for all of the shares and ADSs offered by this prospectus if any such shares or ADSs are taken. However, the international underwriters are not required to take or pay for the shares and ADSs covered by the over-allotment option granted to Morgan Stanley & Co. LLC, as representative of the international underwriters, as described below.

Certain of the international underwriters may resell shares or ADSs to or through one or more of their affiliates as selling agent. Any offers and sales in the United States will be conducted by broker-dealers registered with the SEC.

We have also entered into a Japanese underwriting agreement with certain Japanese underwriters. The Japanese underwriting agreement provides for the concurrent offering and sale by us in Japan of an aggregate of                 shares. Nomura Securities Co., Ltd. is the representative of the Japanese underwriters. The closing for the sale of shares or ADSs in the international offering is conditioned upon the closing of the Japanese offering and vice versa.

Initial offers and sales of shares of our common stock outside the United States have not been registered under the Securities Act in reliance upon Regulation S thereunder. This prospectus may be used in connection with initial offers and sales of the shares and ADSs outside of the United States and Japan, and insofar as the shares and ADSs are reoffered or resold from time to time in the United States in transactions that require registration under the Securities Act.

Options to Purchase Additional Shares

We have granted to Morgan Stanley & Co. LLC, as representative of the international underwriters, an option, exercisable until August 15, 2016, to purchase up to an aggregate of                 additional shares at the

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public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. Morgan Stanley & Co. LLC, on behalf of the international underwriters, may exercise this option solely for the purpose of returning borrowed shares used to cover over-allotments, if any, made by the international underwriters in connection with the international offering. In addition, in connection with the Japanese offering, we have granted to Nomura Securities Co., Ltd., as representative of the Japanese underwriters, an option, exercisable until August 15, 2016, to purchase up to an additional                 shares at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. Nomura Securities Co., Ltd., as representative of the Japanese underwriters, may exercise this option solely for the purpose of returning borrowed shares used to cover over-allotments, if any, made by the Japanese underwriters in connection with the Japanese offering. The option granted to Nomura Securities Co., Ltd., as representative of the Japanese underwriters, and the option granted to Morgan Stanley & Co. LLC, as representative of the international underwriters, may be exercised independently of each other.

In connection with over-allotments, if any, in the Japanese offering and the international offering, Nomura Securities Co., Ltd., as representative of the Japanese underwriters, and an affiliate of Morgan Stanley & Co. LLC, as representative of the international underwriters, will each enter into stock borrowing agreements with NAVER Corporation to facilitate settlement. Nomura Securities Co., Ltd. and the affiliate of Morgan Stanley & Co. LLC are obligated to return all borrowed shares to NAVER Corporation concurrently with the expiration of the over-allotment options granted by us. Following return of the borrowed shares, the shareholder has agreed to remain subject to the lock-up agreement terms described below.

Intersyndicate Agreement

The international underwriters and the Japanese underwriters have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the international underwriters and the Japanese underwriters have agreed that the Japanese underwriters may sell a limited number of shares to the international underwriters for resale by the international underwriters in the international offering. To the extent there are transfers or sales of shares under the intersyndicate agreement, at the discretion of the joint global coordinators, the number of shares or ADSs initially available for sale in the international offering may be greater, and the number of shares initially available for sale in the Japanese offering may be less, than the number of shares or ADSs described on the cover page of this prospectus as being offered in each respective offering.

Pursuant to the intersyndicate agreement, as part of the distribution of our shares in the global offering and subject to certain exceptions, the international underwriters and the Japanese underwriters have agreed that (i) the international underwriters will neither purchase, directly or indirectly, any shares offered in the global offering for the account of any Japanese person, nor offer or sell, directly or indirectly, any shares or ADSs offered in the global offering or distribute any prospectus relating to such shares in Japan or to any Japanese person, and (ii) the Japanese underwriters will neither purchase, directly or indirectly, any shares offered in the global offering for the account of any person or entity other than a Japanese person, nor offer or sell, directly or indirectly, any such shares or distribute any prospectus relating to such shares outside Japan or to any person or entity other than a Japanese person.

Commissions and Expenses

The international underwriters initially propose to offer part of the shares and ADSs directly to the public at the offering prices listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares and ADSs, the offering prices and other selling terms may from time to time be varied by the international representatives.

The purchase price for shares offered by this prospectus and in the Japanese offering, as well as the commission we must pay on each share, will be the same.

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The following table shows the public offering price, underwriting discounts and commissions, and proceeds before expenses to us for the international offering, each on a per ADS basis, a per share basis and a total basis. The figures in the “Total” columns are shown assuming both no exercise and full exercise by Morgan Stanley & Co. LLC of the option to purchase up to an additional                 shares.

			Total
	Per ADS	Per Share	No Exercise	Full Exercise
Public offering price	$	¥	¥	¥
Underwriting discounts and commissions to be paid by us
Proceeds, before expenses, to us

Under the international underwriting agreement, we will receive the proceeds from the international underwriters in Japanese yen regardless of whether the shares are sold in the form of shares or ADSs although the international underwriters may receive payment in dollars.

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $               , which includes legal, accounting and printing costs and various other fees associated with the registration of our shares and ADSs. We have agreed to reimburse the international underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority (“FINRA”) up to $               .

The international underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares or ADSs offered by them.

Listing

We have received approval to list and trade shares of our common stock on the Tokyo Stock Exchange under the securities identification code “3938.” We will apply for listing of our ADSs on the New York Stock Exchange under the symbol “LN.”

We expect that delivery of our shares and ADSs will be made to investors against payment therefor on or about July 15, 2016, which will be the fourth business day following the date of pricing of the global offering (such settlement being referred to as “T+4”). Under Rule 15c6-1 under the Exchange Act, trades in the secondary market are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade our shares or ADSs prior to delivery hereunder will be required, by virtue of the fact that our shares and ADSs initially settle in T+4, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of our shares or ADSs who wish to trade our shares or ADSs prior to their date of delivery hereunder should consult their advisors.

The initial price to the public of our shares and ADSs sold in the global offering will be determined on the date of this prospectus. In order to permit completion of the subscription period in Japan, however, ADSs offered in the global offering will not commence trading on the New York Stock Exchange until three business days from the date of pricing. Trading of shares on the Tokyo Stock Exchange will commence the business day immediately following the commencement of trading on the New York Stock Exchange.

Sales to Designated Purchaser

At our request, the Japanese underwriters have reserved up to 650,000 shares of our common stock to be sold to the LINE Employee Shareholding Association as a “designated purchaser” pursuant to the rules of the Japan Securities Dealers Association. Accordingly, in the Japanese offering, the LINE Employee Shareholding

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Association will purchase              shares of our common stock at the offering price. The aggregate holdings by the designated purchaser will be approximately             % of our outstanding shares of common stock after this global offering.

Lock-up Agreements

We, NAVER Corporation, certain of our and our subsidiaries’ directors and officers, the LINE Employee Shareholding Association and Mr. Joon Ho Lee, our former director, have agreed that, without the prior written consent of the joint global coordinators (and, in the case of the LINE Employee Shareholding Association, the joint global coordinators and the Japanese joint lead managers named in the Japanese underwriting agreement), we and they will not, among other things, during the period beginning on the date of this prospectus and ending on the date that is 180 days from and including the date of delivery of the shares in the global offering (the “restricted period”):

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares or ADSs or any securities convertible into or exercisable or exchangeable for shares or ADSs, whether any such transaction is to be settled by delivery of shares, ADSs or such other securities, in cash or otherwise; or

• enter into any derivative or other transaction that transfers to another, in whole or in part, any of the economic consequences of ownership of the shares or ADSs.

We are not subject to the restrictions described in the immediately preceding paragraph with respect to:

• the shares and ADSs to be sold under the international underwriting agreement and under the Japanese underwriting agreement; or

• the options to purchase shares to be granted to Morgan Stanley & Co. LLC, as representative of the international underwriters, and to Nomura Securities Co., Ltd., as representative of the Japanese underwriters, and shares to be issued or delivered upon the exercise of such options.

Subject to compliance with the notification requirements under FINRA Rule 5131 applicable to lock-up agreements with our directors or officers, if the joint global coordinators, in their sole discretion, agree to release or waive the restrictions set forth in a lock-up agreement for an officer or director of us and provide us with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, we agree to announce the impending release or waiver by issuing a press release through a major news service at least two business days before the effective date of the release or waiver.

Stabilization, Short Positions and Penalty Bids

In order to facilitate the offering of the shares and ADSs, the international underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the shares or ADSs in accordance with Regulation M under the Exchange Act. Specifically, the international underwriters may sell more shares or ADSs than they are obligated to purchase under the international underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares and ADSs available for purchase by the international underwriters under their over-allotment option. The international underwriters can close out a covered short sale by exercising their over-allotment option or purchasing shares or ADSs in the open market. In determining the source of shares or ADSs to close out a covered short sale, the international underwriters will

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consider, among other things, the open market price of shares and ADSs compared to the price available under their over-allotment option. The international underwriters may also sell shares and ADSs in excess of their over-allotment option, creating a naked short position. The international underwriters must close out any naked short position by purchasing shares or ADSs in the open market. A naked short position is more likely to be created if the international underwriters are concerned that there may be downward pressure on the price of the shares or ADSs in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the international underwriters may bid for, and purchase, shares or ADSs in the open market to stabilize the price of the shares or ADSs. These activities may raise or maintain the market price of the shares or ADSs above independent market levels or prevent or retard a decline in the market price of the shares or ADSs. The international underwriters are not required to engage in these activities and may end any of these activities at any time.

In addition to stabilization and short position transactions of the international underwriters described above in connection with the international offering, Nomura Securities Co., Ltd. may also purchase shares on the Tokyo Stock Exchange to reduce any syndicate short position created by over-allotment sales in lieu of exercising all or part of the Japanese underwriters’ over-allotment option in compliance with all applicable laws. Nomura Securities Co., Ltd. is not required to engage in these activities and may end any of these activities at any time. Such transactions may have the effect of raising or maintaining the market price of our shares or preventing or retarding a decline in the market price of our shares. As a result, the price of our shares may be higher than the price that might otherwise exist in the open market.

Indemnification

We and the international underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

Electronic Distribution

A prospectus in electronic format may be made available on websites maintained by one or more of the international underwriters, or selling group members, if any, participating in this offering. The international representatives may agree to allocate a number of shares or ADSs to international underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the international representatives to international underwriters that may make internet distributions on the same basis as other allocations.

Relationships

The international underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the international underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, and for our parent, NAVER Corporation, for which they received or will receive customary fees and expenses.

In addition, in the ordinary course of their various business activities, the international underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The international underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

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Pricing of the Offering

Prior to this offering, there has been no public market for our shares or ADSs. The initial public offering price will be determined by negotiations between us, the international representatives and the Japanese representatives. Among the factors considered in determining the initial public offering price will be our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

No Qualification of Shares or ADSs Outside of the United States and Japan

Other than in the United States and Japan, no action has been taken by us or the underwriters that would permit a public offering of the shares or ADSs offered in the global offering in any jurisdiction where action for that purpose is required. The shares and ADSs offered in the global offering may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of such shares or ADSs be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the global offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any shares or ADSs offered in the global offering in any jurisdiction in which such an offer or a solicitation is unlawful.

Selling Restrictions

Australia. The provision of this prospectus to any person does not constitute an offer of shares or ADSs to that person or an invitation to that person to apply for shares or ADSs. Any such offer or invitation will only be extended to a person in Australia if that person is a wholesale client for the purposes of section 761G of the Corporations Act 2001 (Cth) (“Australian Corporations Act”) or is a sophisticated investor or is a professional investor for the purposes of sections 708(8) or 708(11) of the Australian Corporations Act, respectively (all such persons together being referred to as a “wholesale investor”).

This prospectus is intended to be provided only to wholesale investors. By retaining this prospectus, the recipient represents that the recipient is a wholesale investor.

This prospectus is not intended to be distributed or passed on, directly or indirectly, to any other class of persons in Australia.

No persons referred to in this prospectus hold an Australian financial services license.

The information in this prospectus is not personal advice and has been prepared without taking into account any investor’s investment objectives, financial situation or particular needs. Before acting on the information the investor should consider its appropriateness having regard to their investment objectives, financial situation and needs and consider obtaining their own financial product advice from an independent person who is licensed by the Australian Securities and Investments Commission (“ASIC”) to give such advice.

This prospectus has not been prepared specifically for Australian investors and does not purport to include all of the information required in a product disclosure statement, prospectus or other disclosure document under the Australian Corporations Act. It:

• may contain references to dollar amounts which are not Australian dollars;

• may contain financial information which is not prepared in accordance with Australian law or practices;

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• may not address risks associated with investment in foreign currency denominated investments; and

• does not address Australian tax issues.

If a person to whom shares or ADSs are issued (“Investor”) on-sells shares or ADSs within 12 months from their issue, the Investor will be required to lodge a prospectus with ASIC unless either:

(a) that sale is to another wholesale investor; or

(b) the sale offer is received outside Australia.

Each Investor acknowledges the above and, by applying for shares or ADSs, gives an undertaking not to sell those shares or ADSs in any circumstances other than those described in paragraphs (a) and (b) above for 12 months after the date of issue.

This prospectus is issued by LINE. We are not licensed in Australia to provide financial product advice in relation to the shares or ADSs. An investor in the shares or ADSs will not have cooling off rights.

This prospectus does not constitute a product disclosure statement, prospectus or other disclosure document under the Australian Corporations Act and will not be lodged with ASIC.

Canada. The shares and ADSs may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares or ADSs must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the international underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Cayman Islands. This prospectus does not constitute a public offer of the shares or ADSs, whether by way of sale or subscription, in the Cayman Islands. Shares or ADSs have not been offered or sold, and will not be offered or sold, directly or indirectly, in the Cayman Islands.

Dubai International Financial Centre. This prospectus relates to an “Exempt Offer” in accordance with the Markets Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to Professional Clients (as defined by the DFSA) who are not natural persons. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved the shares or ADSs or this prospectus nor taken steps to verify the information set out in the prospectus, and has no responsibility for it. The shares, ADSs and interests therein to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares or ADSs and the respective interests therein should conduct their own due diligence on the shares and ADSs. If you do not understand the contents of this prospectus you should consult an authorized financial adviser.

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In relation to its use in the Dubai International Financial Centre, this prospectus is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the shares or ADSs may not be offered or sold directly or indirectly to the public in the Dubai International Financial Centre.

Member States of the European Economic Area. In relation to each Member State of the European Economic Area (each, a “Relevant Member State”), no offer of our shares or ADSs may be made to the public in that Relevant Member State other than:

A. to any legal entity which is a qualified investor as defined in the Prospectus Directive;

B. to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the underwriters; or

C. in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of shares or ADSs shall require us or the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State who initially acquires any of our shares or ADSs or to whom any offer is made will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive. In the case of any of our shares or ADSs being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares or ADSs acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any of our shares or ADSs to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the underwriters has been obtained for each such proposed offer or resale.

We, the underwriters and our respective affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.

This prospectus has been prepared on the basis that any offer of our shares or ADSs in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of our shares or ADSs. Accordingly, any person making or intending to make an offer in that Relevant Member State of our shares or ADSs which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither we nor the underwriters have authorized, nor do they authorize, the making of any offer of our shares or ADSs in circumstances in which an obligation arises for us or the underwriters to publish a prospectus for such offer.

For the purpose of the above provisions, the expression “an offer to the public” in relation to any of our shares or ADSs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares or ADSs to be offered so as to enable an investor to decide to purchase or subscribe our shares or ADSs, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive) and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

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Hong Kong. The shares and ADSs may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules promulgated thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares or ADSs may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares or ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules promulgated thereunder.

Japan. Neither the shares to be offered in the international offering nor ADSs may be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except (1) pursuant to an exemption from the registration requirements of the FIEA and (2) otherwise in compliance with the FIEA and other relevant laws, regulations and governmental guidelines of Japan.

Korea. The shares and ADSs may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the Financial Investment Services and Capital Markets Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The shares and ADSs have not been registered with the Financial Services Commission of Korea for public offering in Korea. Furthermore, the shares and ADSs may not be resold to Korean residents unless the purchaser of the shares or ADSs complies with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with their purchase.

Kuwait. Unless all necessary approvals from the Kuwait Ministry of Commerce and Industry required by Law No. 31/1990 “Regulating the Negotiation of Securities and Establishment of Investment Funds,” its Executive Regulations and the various Ministerial Orders issued pursuant thereto or in connection therewith, have been given in relation to the marketing and sale of the shares or ADSs, these may not be marketed, offered for sale, nor sold in the State of Kuwait. Neither this prospectus (including any related document), nor any of the information contained therein is intended to lead to the conclusion of any contract of whatsoever nature within Kuwait.

People’s Republic of China (excluding Hong Kong, Macau and Taiwan). The shares or ADSs may not be offered or sold directly or indirectly within the People’s Republic of China, which, for the purpose of this section of this prospectus, does not include Hong Kong, Macau and Taiwan (the “PRC”), except offers and sales made privately to no more than 200 specified investors in the PRC complying with requirements described in the paragraph below. This prospectus or any information contained or incorporated by reference herein relating to the shares or ADSs does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. This prospectus, any information contained herein or the shares or ADSs have not been, and will not be, submitted to, approved by, verified by or registered with any relevant governmental authorities in the PRC and thus may not be supplied to the public in the PRC or used in connection with any offer for the subscription or sale of the shares or ADSs in the PRC.

The shares or ADSs may only be invested by investors in the PRC that are authorized to engage in the investment in the shares or ADSs of the type being offered or sold. Investors in the PRC are responsible for obtaining all relevant governmental approvals, verifications, licenses or registrations (if any) from all relevant

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PRC governmental authorities, including, but not limited to, the State Administration of Foreign Exchange, or other relevant regulatory bodies, and complying with all relevant PRC regulations, including, but not limited to, any relevant foreign exchange regulations and/or overseas investment regulations.

Qatar. In the State of Qatar, the offer contained herein is made on an exclusive basis to the specifically intended recipient thereof, upon that person’s request and initiative, for personal use only and shall in no way be construed as a general offer for the sale of securities to the public or an attempt to do business as a bank, an investment company or otherwise in the State of Qatar. This prospectus and the underlying securities have not been approved or licensed by the Qatar Central Bank or the Qatar Financial Centre Regulatory Authority or any other regulator in the State of Qatar. The information contained in this prospectus shall only be shared with any third parties in Qatar on a need to know basis for the purpose of evaluating the contained offer. Any distribution of this prospectus by the recipient to third parties in Qatar beyond the terms hereof is not permitted and shall be at the liability of such recipient.

Saudi Arabia. This prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority. The Capital Market Authority does not make any representation as to the accuracy or completeness of this prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this prospectus you should consult an authorized financial adviser.

Singapore. This prospectus or any other offering material relating to our shares or ADSs has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act (the “SFA”), Chapter 289 of Singapore. Accordingly, (a) our shares and ADSs have not been, and will not be, offered or sold or made the subject of an invitation for subscription or purchase of such shares and ADSs in Singapore, and (b) this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our shares and ADSs have not been and will not be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor as specified in Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275 of the SFA) and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Switzerland. Neither this prospectus nor any other document relating to the shares and ADSs constitutes a public offering prospectus within the meaning of article 652a or 1156 of the Swiss Federal Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange Ltd. The shares and ADSs may not be publicly offered, sold or advertised, directly or indirectly, in or from Switzerland. Neither this prospectus nor any other document relating to the shares or ADSs may be publicly distributed or otherwise made publicly available in or from Switzerland. This prospectus is not intended as an offer or solicitation with respect to the purchase or sale of the shares or ADSs by the public and may be distributed only on a private placement basis, without any public distribution, offering or marketing in, or from, Switzerland, provided that any such distribution does not occur as a result of, or in connection with, public solicitation or marketing with respect to the purchase or sale of the shares or ADSs.

United Arab Emirates (excluding the Dubai International Centre). The shares and ADSs have not been offered or sold, and will not be offered or sold, directly or indirectly, in the United Arab Emirates, except: (1) in compliance with all applicable laws and regulations of the United Arab Emirates; and (2) through persons or corporate entities authorized and licensed to provide investment advice and/or engage in brokerage activity and/or trade in respect of foreign securities in the United Arab Emirates. The information contained in this prospectus does not constitute a public offer of securities in the United Arab Emirates in accordance with the Commercial Companies Law (Federal Law No. 8 of 1984 (as amended)) or otherwise and is not intended to be a public offer and is addressed only to persons who are sophisticated investors.

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United Kingdom. This prospectus is only being distributed to and is only directed at: (1) persons who are outside the United Kingdom; (2) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (3) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons falling within (1)-(3) together being referred to as “relevant persons”). The shares or ADSs are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire the shares or ADSs will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this prospectus or any of its contents.

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EXPENSES RELATING TO THIS OFFERING

Set forth below is an itemization of the total expenses, excluding underwriting discounts and commissions, that are expected to be incurred in connection with the offer and sale of shares of our common stock by us.

Type of expenses	Amount
SEC registration fee	$	71,336
New York Stock Exchange listing fee		*
FINRA fee		*
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Miscellaneous		*
Total	$	*

* To be completed by amendment.

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ENFORCEABILITY OF CIVIL LIABILITIES

We are a corporation organized under Japanese law. Most of our directors, corporate auditors and executive officers reside in Japan or Korea and significantly all of our assets and the assets of such persons are located outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon these persons or us or to enforce against them or us judgments obtained in U.S. courts, whether or not predicated upon the civil liability provisions of the federal securities laws of the United States or of the securities laws of any state of the United States. There is doubt as to the enforceability in Japan or Korea, either in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely on the federal securities laws of the United States or the securities laws of any state of the United States.

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and securities under the Securities Act with respect to the underlying shares of our common stock represented by the ADSs to be sold in this offering. A related registration statement on Form F-6 will be filed with the SEC to register the ADSs. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement. You should read the registration statement on Form F-1 and its exhibits and schedules for further information with respect to us and shares of our common stock and ADSs.

Immediately upon completion of this offering we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F which we are required to file within four months of the end of each fiscal year, and other information with the SEC. All information filed with the SEC can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. You may also obtain additional information over the internet at the SEC’s website at www.sec.gov.

As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to furnish the depositary with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with IFRS as issued by the IASB, and all notices of shareholders’ meeting and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our written request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us.

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LEGAL MATTERS

We are being represented by Cleary Gottlieb Steen & Hamilton LLP with respect to certain legal matters as to United States federal securities and New York State law. The underwriters are being represented by Simpson Thacher & Bartlett LLP with respect to certain legal matters as to United States federal securities and New York State law. The validity of the shares offered in this offering and certain legal matters as to Japanese law will be passed upon for us by Nishimura & Asahi. Certain legal matters as to Japanese law will be passed upon for the underwriters by Anderson Mori & Tomotsune.

EXPERTS

The financial statements as of December 31, 2014 and for each of the two years in the period ended December 31, 2014 included in this prospectus have been audited by Deloitte Touche Tohmatsu LLC, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes explanatory paragraphs relating to the distribution of our interest in the Hangame branded business, including related subsidiaries, to NAVER Corporation (formerly known as NHN Corporation) in April 2013, the disposal of the online matching services business in December 2013, the disposal of the data management business in September 2014, and LINE Plus Corporation’s buy-back of the 40% interest in LINE Plus Corporation owned by NAVER Corporation in September 2014). Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The offices of Deloitte Touche Tohmatsu LLC are located at Shinagawa Intercity 15-3, Konan 2-chome, Minato-ku, Tokyo, 108-6221, Japan.

The financial statements as of December 31, 2015 and for the year ended December 31, 2015 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers Aarata, an independent registered public accounting firm, given on the authority of said firm as experts in accounting and auditing.

The offices of PricewaterhouseCoopers Aarata are located at Sumitomo Fudosan Shiodome Hamarikyu Bldg., 8-21-1 Ginza, Chuo-ku, Tokyo 104-0061, Japan.

CHANGE IN ACCOUNTANTS

We have appointed a new independent registered public accounting firm to audit our financial statements starting with our fiscal year beginning January 1, 2015. In September 2014, in anticipation of the expiry of the engagement of its independent registered public accounting firm at the end of 2014, NAVER Corporation began an audit tender process with the intention of appointing an independent registered public accounting firm to act as the sole auditor for itself as well as its material subsidiaries, including LINE Corporation, in order to enhance consistency and efficiency of the consolidated audit of NAVER Corporation. In December 2014, after the tender process and careful consideration, NAVER Corporation decided to engage Samil PricewaterhouseCoopers as its new independent registered public accounting firm as of January 1, 2015. In line with NAVER Corporation’s decision, we informed Deloitte Touche Tohmatsu LLC (“Deloitte”) of our intention to engage PricewaterhouseCoopers Aarata (“PwC”) to serve as our independent registered public accounting firm, effective January 1, 2016, following the completion of our initial public offering as expected at the time, but to continue to engage Deloitte for fiscal year 2015.

After consideration, Deloitte declined to stand for re-election as our independent registered public accounting firm for 2015, which it indicated it would not have so declined had the future engagement been for multiple years and had Deloitte also been appointed as the sole auditor for NAVER Corporation and its material subsidiaries. As a result, in January 2015, our management decided to appoint PwC as our new independent registered public accounting firm beginning fiscal year 2015. This change in our independent registered public accounting firm was not related to the material weaknesses in our internal control over financial reporting that were identified as described elsewhere in this prospectus.

During the two fiscal years ended December 31, 2014 and the subsequent interim period through July 16, 2015, there were no disagreements with Deloitte on any matter of accounting principles or practices, financial

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statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused it to make reference to the subject matter of the disagreements in connection with any of its reports. There were also no “reportable events” within the meaning of Regulation S-K (“Regulation S-K”) under the Securities Act, except that as of December 31, 2013 and 2014, we did not maintain effective internal control over financial reporting due to the material weaknesses identified. Deloitte’s reports with respect to our consolidated financial statements did not contain any adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope or accounting principles.

Prior to PwC’s engagement, we did not consult PwC regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, or (ii) any matter that was either the subject of a “disagreement” or a “reportable event” within the meaning of Regulation S-K.

We provided Deloitte with a copy of the foregoing disclosure and requested Deloitte to furnish us with a letter addressed to the SEC stating whether it agrees with the above statements and, if not, stating the respects in which it does not agree. We have received the requested letter from Deloitte, a copy of which is included as an exhibit to the registration statement that includes this prospectus.

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INDEX TO FINANCIAL STATEMENTS

Audited consolidated financial statements

	Page
Report of Independent Registered Public Accounting Firm		F-2
Report of Independent Registered Public Accounting Firm		F-3
Consolidated Statements of Financial Position as of December  31, 2014 and 2015		F-4
Consolidated Statements of Profit or Loss for the Years Ended December  31, 2013, 2014 and 2015		F-5
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2013, 2014 and 2015		F-6
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2013, 2014 and 2015		F-7
Consolidated Statements of Cash Flows for the Years Ended December  31, 2013, 2014 and 2015		F-9
Notes to Consolidated Financial Statements		F-10

Unaudited consolidated financial statements

	Page
Interim Condensed Consolidated Statements of Financial Position as of December 31, 2015 and March 31, 2016		F-102
Interim Condensed Consolidated Statements of Profit or Loss for the Three Months Ended March 31, 2015 and 2016		F-103
Interim Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2015 and 2016		F-104
Interim Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2015 and 2016		F-105
Interim Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2016		F-106
Notes to Interim Condensed Consolidated Financial Statements		F-107

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of LINE Corporation:

In our opinion, the accompanying consolidated statement of financial position and the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows present fairly, in all material respects, the financial position of LINE Corporation and its subsidiaries at December 31, 2015, and the results of their operations and their cash flows for the year then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers Aarata

Tokyo, Japan

April 15, 2016, except for accounting for the MixRadio service as a discontinued operation as described in Note 3(1), as to which the date is May 25, 2016.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

LINE Corporation:

We have audited the accompanying consolidated statement of financial position of LINE Corporation and subsidiaries (the “Company”) as of December 31, 2014, and the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the two years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LINE Corporation and subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in Note 24 to the consolidated financial statements, the Company distributed its interest in the Hangame business and related subsidiaries, to NAVER Corporation (formerly NHN Corporation) on April 1, 2013. The Company also disposed of its online match-making services business on December 2, 2013. In addition, the Company disposed of its data management business on September 30, 2014. The gain on disposal and results prior to the distribution and disposal are included in profit from discontinued operations, net of tax in the accompanying consolidated financial statements.

As discussed in Note 3 to the consolidated financial statements, in September 2014, LINE Plus Corporation bought back the 40% interest in LINE Plus Corporation owned by NAVER Corporation by paying NAVER Corporation approximately 8.3 billion yen in cash, resulting in LINE Corporation’s 100% ownership of LINE Plus Corporation.

/s/ Deloitte Touche Tohmatsu LLC

Tokyo, Japan

July 16, 2015

F-3

LINE Corporation

Consolidated Statements of Financial Position

		(In thousands of yen)
	Notes	December 31, 2014			December 31, 2015
Assets
Current assets
Cash and cash equivalents	6, 26		20,254,455			33,652,250
Trade and other receivables	7, 16, 26		24,222,847			27,248,497
Other financial assets, current	16, 26		812,926			341,403
Inventories	8		2,108,470			1,475,939
Other current assets			1,966,011			2,454,776
Total current assets			49,364,709			65,172,865
Non-current assets
Property and equipment	9, 10, 18		9,655,519			10,500,750
Goodwill	11, 12		2,410,555			3,120,767
Other intangible assets	11, 12		224,003			1,011,531
Investments in associates and joint venture	33		470,447			1,785,826
Other financial assets, non-current	16, 26		19,733,240			23,466,920
Deferred tax assets	14		3,631,725			16,942,051
Other non-current assets			173,658			158,521
Total non-current assets			36,299,147			56,986,366
Total assets			85,663,856			122,159,231
Liabilities
Current liabilities
Trade and other payables	16, 26		19,368,920			22,983,242
Other financial liabilities, current	16, 26		25,400,471			43,933,212
Accrued expenses	2		6,325,277			7,019,114
Income tax payables			6,224,147			3,018,891
Advances received	2		5,172,511			9,517,756
Provisions, current	13		204,556			381,217
Other current liabilities	2, 15		5,604,079			9,024,284
Total current liabilities			68,299,961			95,877,716
Non-current liabilities
Other financial liabilities, non-current	16, 26		519,037			8,284
Deferred tax liabilities	14		443,173			1,843,944
Provisions, non-current	13		969,250			1,400,986
Post-employment benefits	17		2,921,467			5,495,416
Total non-current liabilities			4,852,927			8,748,630
Total liabilities			73,152,888			104,626,346
Shareholder’s equity
Share capital	20		12,596,198			12,596,198
Share premium	20		7,771,659			18,982,776
Accumulated deficit			(11,622,496	)		(19,204,203	)
Accumulated other comprehensive income			3,750,723			5,368,524
Equity attributable to the shareholder of the Company			12,496,084			17,743,295
Non-controlling interests	31, 32		14,884			(210,410	)
Total shareholder’s equity			12,510,968			17,532,885
Total liabilities and shareholder’s equity			85,663,856			122,159,231

See Notes to Consolidated Financial Statements

F-4

LINE Corporation

Consolidated Statements of Profit or Loss

		(In thousands of yen)
	Notes	2013			2014			2015
Revenues and other operating income:
Revenues	5, 22		39,585,761			86,366,269			120,405,531
Other operating income	23		69,644			295,901			474,363
Total revenues and other operating income			39,655,405			86,662,170			120,879,894
Operating expenses:
Payment processing and licensing expenses			(9,605,810	)		(20,597,937	)		(28,742,254	)
Employee compensation expenses	17, 28		(8,489,511	)		(18,288,804	)		(35,571,775	)
Marketing expenses			(17,201,523	)		(18,069,254	)		(16,596,242	)
Infrastructure and communication expenses			(2,536,974	)		(4,492,196	)		(7,712,095	)
Authentication and other service expenses			(4,913,604	)		(7,874,144	)		(12,133,232	)
Depreciation and amortization expenses	9, 11		(1,329,992	)		(2,369,622	)		(3,732,775	)
Other operating expenses	23		(3,315,245	)		(8,554,915	)		(14,431,395	)
Total operating expenses			(47,392,659	)		(80,246,872	)		(118,919,768	)
(Loss)/ profit from operating activities			(7,737,254	)		6,415,298			1,960,126
Finance income			67,149			86,311			70,587
Finance costs			(39,307	)		(137,092	)		(105,668	)
Share of loss of associates	33		(242,835	)		(168,050	)		(204,903	)
(Loss)/gain on foreign currency transactions, net			(373,130	)		66,340			(519,846	)
Other non-operating income	23		7,176			–			157,023
Other non-operating expenses	23, 27		–			–			(1,887,437	)
(Loss)/ profit before tax from continuing operations			(8,318,201	)		6,262,807			(530,118	)
Income tax benefits/(expenses)	14		648,521			(7,150,566	)		146,004
Loss for the year from continuing operations			(7,669,680	)		(887,759	)		(384,114	)
Profit/(loss) from discontinued operations, net of tax	24, 25		1,278,548			2,891,835			(7,587,997	)
(Loss)/ profit for the year			(6,391,132	)		2,004,076			(7,972,111	)
Attributable to:
The shareholder of the Company			(764,334	)		4,206,989			(7,581,801	)
Non-controlling interests(1)	31, 32		(5,626,798	)		(2,202,913	)		(390,310	)
								(In yen)
Earnings per share
Basic (loss)/ profit for the year attributable to the shareholder of the Company	25		(4.36	)		24.05			(43.33	)
Diluted (loss)/ profit for the year attributable to the shareholder of the Company	25		(4.36	)		22.14			(39.12	)
Earnings per share from continuing operations
Basic (loss)/ profit from continuing operations attributable to the shareholder of the Company	25		(11.67	)		7.52			0.04
Diluted (loss)/ profit from continuing operations attributable to the shareholder of the Company	25		(11.67	)		6.92			0.03
Earnings per share from discontinued operations
Basic profit/(loss) from discontinued operations attributable to the shareholder of the Company	25		7.31			16.53			(43.37	)
Diluted profit/(loss) from discontinued operations attributable to the shareholder of the Company	25		7.31			15.22			(39.15	)

⁽¹⁾ For the years ended December 31, 2013 and 2014, the non-controlling interests were mainly held by NAVER Corporation, the shareholder of the Company.

See Notes to Consolidated Financial Statements

F-5

LINE Corporation

Consolidated Statements of Comprehensive Income

	(In thousands of yen)
	Notes	2013			2014			2015
(Loss)/ profit for the year			(6,391,132	)		2,004,076			(7,972,111	)
Other comprehensive (loss)/income
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans	14, 17		24,690			(654,768	)		(1,722,112	)
Income tax relating to items that will not be reclassified to profit or loss	14		–			–			576,237
Items that may be reclassified to profit or loss
Available-for-sale financial assets:
Net change in fair value	14, 27		202,720			5,461,675			1,550,589
Reclassification to profit or loss	27		–			–			1,789,603
Exchange differences on translation of foreign operations:
Gain/(loss) arising during the year	14		11,226			533,750			(281,161	)
Proportionate share of other comprehensive income of associates			–			18,545			15,642
Income tax relating to items that may be reclassified subsequently to profit or loss	14		(59,586	)		(1,704,914	)		(289,878	)
Total other comprehensive income for the year, net of tax			179,050			3,654,288			1,638,920
Total comprehensive (loss)/ income for the year, net of tax			(6,212,082	)		5,658,364			(6,333,191	)
Attributable to:
The shareholder of the Company			(609,533	)		7,848,783			(5,964,000	)
Non-controlling interests(1)	31, 32		(5,602,549	)		(2,190,419	)		(369,191	)

⁽¹⁾  For the years ended December 31, 2013 and 2014, the non-controlling interests were mainly held by NAVER Corporation, the shareholder of the Company.

See Notes to Consolidated Financial Statements

F-6

LINE Corporation

Consolidated Statements of Changes in Equity

																								(In thousands of yen)
		Equity attributable to the shareholder of the Company
										Accumulated other comprehensive income
	Notes	Share capital		Share premium			Accumulated deficit			Foreign currency translation reserve			Available-for- sale reserve		Defined benefit plan reserve			Total			Non- controlling interests(1)				Total shareholder’s equity
Balance at January 1, 2013			12,596,198		13,087,481			(5,867,647	)		48,171			–		(9,085	)		19,855,118			81,889				19,937,007
Comprehensive (loss)/ income
Loss for the year			–		–			(764,334	)		–			–		–			(764,334	)		(5,626,798	)			(6,391,132	)
Other comprehensive income			–		–			–			24,163			114,168		16,470			154,801			24,249				179,050
Total comprehensive (loss)/ income for the year			–		–			(764,334	)		24,163			114,168		16,470			(609,533	)		(5,602,549	)			(6,212,082	)
Distribution to parent	20, 21		–		(216,217	)		–			–			–		–			(216,217	)		(144,145	)			(360,362	)
Stock issuance to parent(2)			–		–			–			–			–		–			–			7,253,669				7,253,669
Business divestiture to parent(3)	21, 24		–		–			(324,490	)		(84,958	)		–		–			(409,448	)		–				(409,448	)
Dividends(3)	21, 24		–		(8,651,680	)		–			–			–		–			(8,651,680	)		–				(8,651,680	)
Recognition of share-based payments	20, 28		–		804,438			–			–			–		–			804,438			–				804,438
Acquisition of LINE PLAY Corporation by the Group(4)	20		–		(45,450	)		–			–			–		–			(45,450	)		–				(45,450	)
Balance at December 31, 2013			12,596,198		4,978,572			(6,956,471	)		(12,624	)		114,168		7,385			10,727,228			1,588,864				12,316,092
																								(In thousands of yen)
		Equity attributable to the shareholder of the Company
										Accumulated other comprehensive income
	Notes	Share capital		Share premium			Accumulated deficit			Foreign currency translation reserve			Available-for- sale reserve		Defined benefit plan reserve			Total			Non- controlling interests				Total shareholder’s equity
Balance at January 1, 2014			12,596,198		4,978,572			(6,956,471	)		(12,624	)		114,168		7,385			10,727,228			1,588,864				12,316,092
Comprehensive income/(loss)
Profit/(loss) for the year			–		–			4,206,989			–			–		–			4,206,989			(2,202,913	)			2,004,076
Other comprehensive income/(loss)			–		–			–			540,426			3,752,112		(650,744	)		3,641,794			12,494				3,654,288
Total comprehensive income/(loss) for the year			–		–			4,206,989			540,426			3,752,112		(650,744	)		7,848,783			(2,190,419	)			5,658,364
Distribution to parent	20,21		–		(36,842	)		–			–			–		–			(36,842	)		–				(36,842	)
Net investment by non-controlling interests			–		–			–			–			–		–			–			31,425				31,425
Capital reduction(5)			–		–			(8,880,806	)		–			–		–			(8,880,806	)		592,806				(8,288,000	)
Disposal of share to the non-controlling interest shareholder			–		–			7,792			–			–		–			7,792			(7,792	)			–
Recognition of share-based payments	20, 28		–		2,974,692			–			–			–		–			2,974,692			–				2,974,692
Acquisition of LINE Vietnam Co. Ltd. by the Group(6)	20		–		(133,329	)		–			–			–		–			(133,329	)		–				(133,329	)
Other	20		–		(11,434	)		–			–			–		–			(11,434	)		–				(11,434	)
Balance at December 31, 2014			12,596,198		7,771,659			(11,622,496	)		527,802			3,866,280		(643,359	)		12,496,084			14,884				12,510,968

F-7

																								(In thousands of yen)
		Equity attributable to the shareholder of the Company
										Accumulated other comprehensive income
	Notes	Share capital		Share premium			Accumulated deficit			Foreign currency translation reserve			Available-for- sale reserve		Defined benefit plan reserve			Total			Non- controlling interests				Total shareholder’s equity
Balance at January 1, 2015			12,596,198		7,771,659			(11,622,496	)		527,802			3,866,280		(643,359	)		12,496,084			14,884				12,510,968
Comprehensive (loss)/income
Loss for the year			–		–			(7,581,801	)		–			–		–			(7,581,801	)		(390,310	)			(7,972,111	)
Other comprehensive (loss)/income			–		–			–			(287,818	)		3,051,494		(1,145,875	)		1,617,801			21,119				1,638,920
Total comprehensive (loss)/income for the year			–		–			(7,581,801	)		(287,818	)		3,051,494		(1,145,875	)		(5,964,000	)		(369,191	)			(6,333,191	)
Net investment by non-controlling interests			–		–			94			–			–		–			94			143,906				144,000
Recognition of share-based payments	20, 28		–		11,212,630			–			–			–		–			11,212,630			–				11,212,630
Acquisition of subsidiary	31		–		–			–			–			–		–			–			133				133
Acquisition of non-controlling interests	20, 31		–		(1,513	)		–			–			–		–			(1,513	)		(142	)			(1,655	)
Balance at December 31, 2015			12,596,198		18,982,776			(19,204,203	)		239,984			6,917,774		(1,789,234	)		17,743,295			(210,410	)			17,532,885

⁽¹⁾  The non-controlling interests were mainly held by NAVER Corporation, the shareholder of the Company. Refer to Note 32 Proportion of Equity Interest Held by Non-controlling Interests for more details.

⁽²⁾  LINE Plus Corporation was established by the Company and NAVER Corporation in 2013, in which the Company contributed 60% of the capital and NAVER Corporation contributed 40% of the capital. LINE Plus Corporation issued stock to NAVER Corporation, the non-controlling shareholder, in exchange for the capital contributions. Refer to Note 31 Principal Subsidiaries for more details.

⁽³⁾  The Group, the Company and its subsidiaries, divested the Hangame business and its related entities in 2013. The disposed Hangame business and related entities were transferred to a new entity, New NHN Japan Corporation. The shares of the new entity were then distributed to NAVER Corporation as a non-cash distribution, which was accounted for as a transaction under common control. 8,651,680 thousand yen represents the book value of the disposed new entity at the time of distribution. 324,490 thousand yen represents the reduction in accumulated deficit in relation to the portion of the deficit attributable to the disposed new entity. Refer to Note 21 Supplemental Cash Flow Information and Note 24 Discontinued Operations for more details.

⁽⁴⁾  The decrease in share premium was attributable to the acquisition of LINE PLAY Corporation from NAVER Corporation by the Group in 2013. Refer to Note 3 (3)(b) Significant Accounting Policies and Note 30 Business Combinations for more details.

⁽⁵⁾ In September 2014, LINE Plus Corporation bought back NAVER Corporation’s entire capital investment in LINE Plus Corporation a 60%-owned subsidiary of the Company at the time, resulting in the Company owning 100% of Line Plus Corporation. Refer to Note 3(1) Significant Accounting Policies for further details.

⁽⁶⁾ The Group, the Company and its subsidiaries, acquired LINE Vietnam Co., Ltd. from NAVER Corporation in August 2014. The acquisition of LINE Vietnam Co., Ltd. by the Group was accounted for as a business combination under common control using the pooling method. The decrease in share premium was attributable to the acquisition of LINE Vietnam Co., Ltd. from NAVER Corporation by the Group in 2014.

See Notes to Consolidated Financial Statements

F-8

LINE Corporation

Consolidated Statements of Cash Flows

(In thousands of yen)

	Notes	2013			2014			2015
Cash flows from operating activities
(Loss)/ profit before tax from continuing operations			(8,318,201	)		6,262,807			(530,118	)
Profit/(loss) before tax from discontinued operations	24		2,443,544			2,846,559			(11,503,098	)
(Loss)/ profit before tax			(5,874,657	)		9,109,366			(12,033,216	)
Adjustments for:
Depreciation and amortization expenses	9, 11		2,160,321			2,870,997			4,057,210
Finance income			(67,518	)		(86,753	)		(70,587	)
Finance costs			40,099			137,585			105,668
Share-based compensation expenses	28		804,438			2,974,692			11,212,630
Gain on financial assets at fair value through profit or loss	16		–			–			(110,507	)
Impairment loss of available-for-sale financial assets	16		–			–			1,789,603
Impairment loss of goodwill	2, 11		40,337			–			2,691,671
Impairment loss of other intangible assets	11		–			–			1,446,618
Gain on divestiture of business and subsidiaries	24		(794,879	)		(2,455,959	)		–
Share of loss of associates	33		242,835			168,050			204,903
Loss/(gain) on foreign currency transactions, net			13,685			(814,827	)		331,214
Changes in:
Trade and other receivables			(6,979,944	)		(13,133,354	)		(3,066,618	)
Inventories	8		(155,807	)		(1,928,266	)		582,257
Trade and other payables			5,221,764			11,199,450			2,262,748
Accrued expenses			2,164,275			2,449,358			179,313
Advances received			1,496,552			3,470,152			4,349,515
Provisions			20,010			27,015			348,900
Post-employment benefits			839,923			917,836			903,437
Other current assets			(815,214	)		(863,251	)		(416,477	)
Other current liabilities			2,479,611			4,590,262			2,975,553
Others	2		403,860			46,076			48,811
Cash provided by operating activities			1,239,691			18,678,429			17,792,646
Interest received			71,499			84,130			75,832
Dividend received			–			–			46,516
Interest paid			(41,752	)		(130,386	)		(91,596	)
Income taxes paid			(383,426	)		(6,176,203	)		(10,843,928	)
Net cash provided by operating activities			886,012			12,455,970			6,979,470
Cash flows from investing activities
Purchases of time deposits			(742,800	)		(1,298,251	)		(1,892,199	)
Proceeds from maturities of time deposits			2,924,948			1,277,989			2,383,591
Purchase of equity investments			(907,512	)		(7,973,496	)		(436,789	)
Proceeds from maturities of debt securities			400,000			–			–
Acquisition of property and equipment and intangible assets			(3,161,000	)		(5,149,642	)		(5,696,120	)
Investments in associates and joint venture			(302,085	)		(209,225	)		(1,567,100	)
Proceeds from divestitures of business and related entities	21		925,419			1,390,676			–
Office security deposits received under sublease agreement	16		393,650			7,502			–
Return of the office security deposits received under sublease agreement	16		–			–			(393,650	)
Payments of office security deposits			(228,476	)		(839,340	)		(2,035,674	)
Guarantee deposits for the Japanese Payment Services Act	16, 26		(2,253,000	)		–			(190,173	)
Refund of office securities deposits			76,100			188,817			138,403
Acquisition of subsidiaries, net of cash acquired	30		(68,157	)		(280,063	)		(2,926,572	)
Increase in loan receivables			–			(37,813	)		(22,783	)
Others			141,895			(44,220	)		410,489
Net cash used in investing activities			(2,801,018	)		(12,967,066	)		(12,228,577	)
Cash flows from financing activities
Proceeds from short-term borrowings, net			8,824,398			15,747,523			19,807,733
Repayment of long-term borrowings			(2,679,704	)		–			–
Proceeds from issuance of bonds			1,500,000			–			–
Payments for redemption of bonds			–			(495,000	)		(640,569	)
Repayment of borrowing arrangement	16, 26		(40,958	)		(491,500	)		(450,542	)
Proceeds from borrowing arrangement	16, 26		983,000			–			–
Capital contribution from parent	3, 31		7,253,669			–			–
Capital contribution from third party non-controlling interests			–			31,425			144,000
Repayment of capital contribution to parent	29		–			(8,288,000	)		–
Cash outflow from divestitures of business and related entities	21		(7,800,358	)		–			–
Others			(13,082	)		(12,136	)		(727	)
Net cash provided by financing activities			8,026,965			6,492,312			18,859,895
Net increase in cash and cash equivalents			6,111,959			5,981,216			13,610,788
Cash and cash equivalents at the beginning of the year	6		7,152,546			13,362,084			20,254,455
Effect of exchange rate fluctuations on cash and cash equivalents			97,579			911,155			(212,993	)
Cash and cash equivalents at the end of the year	6		13,362,084			20,254,455			33,652,250

See Notes to Consolidated Financial Statements.

F-9

LINE Corporation

Notes to Consolidated Financial Statements

1. Reporting Entity

LINE Corporation (the “Company”) was incorporated in September 2000 in Japan in accordance with the Companies Act of Japan under the name Hangame Japan Corporation to provide online gaming services. The Company changed its name to NHN Japan Corporation in August 2003, and subsequently changed its name to LINE Corporation in April 2013. The Company is a subsidiary of NAVER Corporation (“NAVER”), formerly NHN Corporation, which is domiciled in Korea. NAVER is the Company and its subsidiaries’ (collectively, the “Group”) ultimate parent company. The Company’s head office is located at 2-21-1 Shibuya, Shibuya-ku, Tokyo, Japan.

The Group mainly operates a cross-platform messenger application, LINE, and provides communication and content sales and advertising services. Communication and content are provided via the LINE platform, while advertising services are provided via LINE advertising, and web portals livedoor and NAVER Matome. The Group also offered data management services, which mainly consisted of data storage and server hosting services for the years ended December 31, 2013 until September 30, 2014, when it disposed of its data management business.

2. Basis of Preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The Group’s consolidated financial statements are presented in thousands of Japanese yen, which is also the Company’s functional currency.

The consolidated financial statements were approved by Representative Director, President Takeshi Idezawa and Director and Chief Financial Officer In Joon Hwang on April 15, 2016.

Reclassifications

Certain amounts in the prior year consolidated financial statements and footnotes have been reclassified to conform to the current year presentation.

Prior year adjustments

In the fiscal year ended December 31, 2015, the Group recorded adjustments to correct prior period errors in revenue and net loss on foreign currency transactions, which originated in the fiscal years ended December 31, 2013 and 2014. The aggregated adjustment decreased loss before tax from continuing operations in the Consolidated Statements of Profit or Loss by 123,616 thousand yen for the fiscal year ended December 31, 2015. The Group determined that the adjustment was not material to the Consolidated Financial Statements for any of the prior periods and for the year ended December 31, 2015.

3. Significant Accounting Policies

The significant accounting policies applied by the Group in preparing its consolidated financial statements are set out below. The accounting policies have been applied consistently to all periods presented in these consolidated financial statements. The adoption of new and revised IFRSs issued by the IASB that are mandatorily effective

F-10

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

for an accounting period that begins on or after January 1, 2015 had no impact on the Group’s annual consolidated financial statements as of December 31, 2014 and 2015, and for the years ended December 31, 2013, 2014 and 2015.

(1) Basis of Consolidation

The consolidated financial statements include the accounts of the Group, which are directly or indirectly controlled. Control is generally conveyed by ownership of the majority of voting rights. The Group controls an entity when the Group has power over the entity, is exposed, or has rights, to variable returns from the involvement with the entity and has the ability to affect those returns through its power over the entity.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. If the end of the reporting period of a subsidiary differs from that of the Company, the subsidiary prepares, for consolidation purposes, additional financial statements as of the same date as the consolidated financial statements of the Group.

Non-controlling interest in a subsidiary is accounted for separately from the parent’s ownership interests in a subsidiary. Profit or loss and each component of other comprehensive income are attributed to the shareholder of the parent and non-controlling interest, even if this results in the non-controlling interest having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Any difference between the adjustment to the non-controlling interest and the fair value of the consideration paid or received is recognized directly in shareholder’s equity as “equity attributable to the shareholder of the Company”.

On August 1, 2014, the board of directors of NAVER and the board of directors of the Company approved the reduction of capital contributed to date by NAVER in LINE Plus Corporation (“LINE Plus”) which, upon completion, would result in the Company owning 100% of the equity capital in LINE Plus (the “LINE Plus Capital Reduction”). NAVER had made a cumulative capital contribution of 7,253,669 thousand yen to LINE Plus as of August 1, 2014. Pursuant to the approval of the LINE Plus Capital Reduction, LINE Plus was obligated to buy back the entire 40% interest in LINE Plus owned by NAVER. LINE Plus paid NAVER 80 billion Korean won, or 8,288,000 thousand yen, upon the closing of this transaction on September 5, 2014.

In August 2014, LINE Plus, a 60%-owned subsidiary of the Company at the time, acquired 95% of the voting shares of LINE Vietnam Co. Ltd. (“LINE Vietnam”) from NAVER, while the remaining 5% non-controlling interests of LINE Vietnam were acquired by an unrelated third-party in Vietnam on the same date. 100% of the shares and voting interests of LINE Vietnam were acquired by NAVER on February 28, 2012, and such acquisition was accounted for as a business combination by NAVER. The acquisition of LINE Vietnam by the Group was accounted for as a business combination under common control using the pooling method. The financial statements of LINE Vietnam were retrospectively consolidated, as if such transaction had occurred on February 28, 2012. As a result, the Group’s 60% ownership interest in LINE Vietnam and the remaining 40% non-controlling interest held by NAVER were retrospectively reflected in the Group’s financial statements for the years ended December 31, 2013 and 2014.

On September 19, 2014, the Company’s board of directors approved a plan to dispose of its data management business, which consists of DataHotel Co., Ltd. (“DataHotel”), a wholly-owned subsidiary. The disposed data management business was sold to a subsidiary of NHN Entertainment Corporation. NHN

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(1) Basis of Consolidation (continued)

Entertainment Corporation was spun off by NAVER in August 2013. NAVER held a 9.54% interest in NHN Entertainment Corporation, which NAVER disposed on September 30, 2014. As of September 30, 2014, NAVER had no remaining interest in NHN Entertainment Corporation. The operation of the data management business was classified as a discontinued operation on September 19, 2014, and the disposition was completed on September 30, 2014. As a result, the data management business was retrospectively presented as part of the discontinued operations on the Consolidated Statements of Profit or Loss for the years ended December 31, 2013 and 2014.

On February 12, 2016, the board of directors approved the abandonment of the MixRadio service (“MixRadio”) segment. The operation of the MixRadio business was classified as a discontinued operation on March 21, 2016, when the abandonment took effect. As a result, the MixRadio business was retrospectively presented as a discontinued operation on the Consolidated Statements of Profit or Loss for the year ended December 31, 2015.

Intercompany balances and transactions have been eliminated upon consolidation.

(2) Basis of Measurement

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value, which is the price that would be received to sell such financial instruments or paid to transfer the related liability in an orderly transaction between market participants at the measurement date.

(3) Business Combinations

(a) Business combinations

The Group acquired ForSchooner in 2013, wit studio Co., ltd. (the “wit studio”) in 2014 and MixRadio in 2015, and accounted for such acquisitions using the acquisition method as noted below.

In accordance with IFRS 3 Business Combinations, each identifiable asset and liability is measured at its acquisition date fair value except for the following:

– Deferred tax assets or liabilities which are recognized and measured in accordance with IAS 12 Income Taxes; and

– Employee benefit arrangements which are recognized and measured in accordance with IAS 19 Employee Benefits

Leases and insurance contracts are classified on the basis of the contractual terms and other factors at the inception of the contract or at the date of modification, which could be the acquisition date if the terms of the contract have been modified in a manner that would change its classification.

Contingent liabilities assumed in a business combination are recognized when such liabilities are present obligations and their fair value can be measured reliably.

The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity interests issued by the

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(3) Business Combinations (continued)

acquirer. Acquisition-related costs are costs the acquirer incurs to effect a business combination. Those costs include finder’s fees; advisory, legal, accounting, valuation and other professional or consulting fees; general administrative costs, including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. Acquisition-related costs, other than those associated with the issue of debt or equity securities, are expensed in the periods in which the costs are incurred and the services are received.

The Group measures goodwill at the acquisition date as:

– the fair value of the consideration transferred; plus

– the recognized amount of any non-controlling interest in the acquiree; plus

– if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

– the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

Subsequent to initial recognition, goodwill is measured at cost less any accumulated impairment losses.

(b) Business combinations under common control

The Group acquired LINE PLAY Corporation. (“LINE Play”) in 2013 and LINE Vietnam in 2014 from NAVER. The acquisitions of LINE Play and LINE Vietnam were accounted for as business combinations under common control as noted below.

A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and in which control is not transitory. The Group has accounted for the acquisitions of LINE Play and LINE Vietnam based on the carrying amounts recorded in the consolidated financial statements of NAVER. The financial statements of LINE Play and LINE Vietnam have been retrospectively consolidated as part of the Group’s consolidated financial statements as if the acquisition of LINE Play had occurred at the beginning of the earliest period presented in the consolidated financial statements, and the acquisition of LINE Vietnam had occurred on February 28, 2012, the date of NAVER’s original acquisition, regardless of the actual date of acquisition.

(4) Associates and Joint Arrangements

(a) Associates

An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity, unless it can be clearly demonstrated that it is not the case.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in an associate is initially recognized at cost and the carrying amount is

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(4) Associates and Joint Arrangements (continued)

adjusted to recognize the Group’s share of the profit or loss and changes in equity of the associate after the date of acquisition. Gains and losses from transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Intra-group losses are recognized as an expense if intra-group losses indicate an impairment that requires recognition in the consolidated financial statements.

If an associate uses accounting policies different from those of the Group for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in applying the equity method.

When the Group’s share of losses exceeds its interest in associates, the carrying amount of that interest, including any long-term investments, is reduced to nil and the recognition of further losses is discontinued.

(b) Joint arrangements

A joint arrangement is an arrangement in which two or more parties have joint control. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement.

Joint operations are joint arrangements whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in joint operations in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method.

(5) Foreign Currencies

(a) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the reporting date’s exchange rate. Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are translated using the exchange rate at the date of the initial transactions. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, financial liabilities designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognized in other comprehensive income.

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(5) Foreign Currencies (continued)

(b) Foreign operations

If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:

The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the presentation currency at the average foreign exchange rates for the reporting period. Foreign currency differences are recognized in other comprehensive income.

When a foreign operation is disposed of, the relevant amount after the translation is reclassified to profit or loss as part of profit or loss on disposal. In the event that a partial disposal does not lead to a loss of control in a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. For partial disposals that involve the loss of control in a foreign operation, the relevant proportion is reclassified to profit or loss.

(6) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and short-term investments with maturity dates that are within three months from the purchase dates. Such investments are highly liquid and readily convertible to known amounts of cash. Cash and cash equivalents are subject to an insignificant risk of changes in value, and are used by the Group in managing its short-term commitments.

(7) Financial Assets

The Group classifies and measures financial assets based on the following four categories: financial assets at fair value through profit or loss; held-to-maturity investments; loans and receivables; and available-for-sale financial assets. The Group recognizes financial assets in the Consolidated Statements of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Upon initial recognition, financial assets are measured at their fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs that are directly attributable to the asset’s acquisition. Regular way purchases or sales of financial assets, i.e. purchases or sales under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned, are accounted for at the trade date.

(a) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading. Upon initial recognition, transaction costs are recognized in profit or loss when incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(7) Financial Assets (continued)

(b) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturities, for which the Group has the positive intention and ability to hold to maturity, are classified as held-to-maturity investments. Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method.

(c) Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, except for loans and receivables for which the effect of discounting is immaterial.

(d) Available-for-sale financial assets

Available-for-sale financial assets are those financial assets that are not classified as financial assets at fair value through profit or loss, held-to-maturity investments or loans and receivables. Subsequent to initial recognition, they are measured at fair value, and any changes in fair value, net of any tax effect, are recorded in other comprehensive income in equity. When a financial asset is derecognized or impairment losses are recognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Dividends on an available-for-sale equity instrument are recognized in profit or loss when the Group’s right to receive payment is established.

(e) Derivative financial instruments

The Group may use derivative financial instruments, such as exchange forward contracts, to hedge its foreign exchange risk. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Any gains or losses arising from changes in the fair value of derivatives are recognized in profit or loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Derivative financial instruments embedded in non-derivative host contracts are bifurcated and accounted for as separate derivatives when they meet the definition of a derivative, the economic characteristics and risks of the embedded derivatives are not closely related to those of the host contracts, and the contracts are not measured at fair value through profit or loss.

(f) Derecognition of a financial asset

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability.

If the Group retains substantially all the risks and rewards of ownership of the transferred financial assets, the Group continues to recognize the transferred financial assets and recognizes financial liabilities for the consideration received.

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(8) Financial Liabilities

The Group recognizes financial liabilities in the Consolidated Statements of Financial Position when the Group becomes a party to the contractual provisions of the financial liability. At the date of initial recognition, financial liabilities are measured at fair value, net of transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.

The Group derecognizes a financial liability from the Consolidated Statements of Financial Position when it is extinguished (i.e. when the obligation specified in the contract is discharged, canceled or expires).

(9) Inventories

Inventories, consisting of merchandise for resale, are stated at the lower of cost and net realizable value. Cost is determined on a first-in, first-out (“FIFO”) basis. Net realizable value is determined based on the estimated selling price, less costs to sell.

(10) Share Capital

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and stock options are recognized as a deduction from equity, net of any tax effects.

(11) Property and Equipment

Property and equipment are measured and recognized at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Cost includes any other costs directly attributable to bring the assets to a working condition for their intended use and the costs of dismantling and removing the assets and restoring the site on which they are located.

The cost of replacing a part of property and equipment is included in the carrying amount of the asset or recognized as a separate asset, as necessary, if it is probable that the future economic benefits embodied within the part will flow into the Group and if the cost can be reliably measured. Accordingly, the carrying amount of the replaced part is derecognized. The costs of day to day servicing of property and equipment are recognized in profit or loss as incurred.

Land and assets held within construction-in-progress are not depreciated. Depreciation of property and equipment is computed using the straight-line method based on the depreciable amount of the assets over their respective useful lives as provided below. A component that is significant compared with the total cost of an item of property and equipment is depreciated separately over its useful life.

Gains or losses arising from the derecognition of an item of property and equipment are determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and recognized in other operating income or expenses.

The estimated useful lives for the years ended December 31, 2013, 2014 and 2015 are as follows:

	Estimated useful lives (years)
Equipment	3–5
Furniture and fixtures	5
Others	3–5

F-17

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(11) Property and Equipment (continued)

Depreciation methods, useful lives and residual values are reviewed at each fiscal year-end and adjusted, as appropriate, if expectations differ from previous estimates. The change is accounted for as a change in an accounting estimate.

(12) Borrowing Costs

The Group capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are expensed as incurred. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use or sale.

To the extent that the Group borrows funds specifically for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

To the extent that the Group borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Group shall determine the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset, which is the effective interest rate of the general borrowing. The capitalization rate shall be the weighted average of the borrowing costs applicable to the borrowings of the Group that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs that the Group capitalizes during a period shall not exceed the amount of borrowing costs incurred during that period.

(13) Intangible Assets

Intangible assets are initially measured at cost, and carried at cost less accumulated amortization and accumulated impairment losses after initial recognition.

Intangible assets with finite lives are amortized mainly using the straight-line method over the useful lives of the respective assets as provided below and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The residual value of intangible assets is assumed to be zero.

The estimated useful lives for the intangible assets with finite lives for the years ended December 31, 2013, 2014 and 2015 are as follows:

	Estimated useful lives (years)
Software	2–5
Others	1–10

The amortization periods and methods for intangible assets with finite useful lives are reviewed at each fiscal year-end.

Research and development

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be measured reliably, the product or

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(13) Intangible Assets (continued)

process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

(14) Leases

Lease Transactions

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. In the event that fulfillment of the arrangement is dependent on the use of specific assets or the arrangement transfers a right to use the asset, such assets are defined as a lease transaction.

(a) Finance Leases

Leases that transfer substantially all risks and benefits of ownership of the leased item to the lessee are classified as finance leases.

Group as lessee

Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. The minimum lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. A leased asset is depreciated over the shorter of the estimated useful life of the asset or the lease term.

(b) Operating Leases

All lease arrangements, except finance leases that have been capitalized in the Consolidated Statements of Financial Position, are classified as operating leases.

Group as lessee

For operating lease transactions, lease payments are recognized as an expense using the straight-line method over the lease term in the Consolidated Statements of Profit or Loss.

Group as lessor

The Group had cancelable lease contracts related to servers, data storage, network equipment, personal computers and software with third parties for the years ended December 31, 2013 and 2014. The leased assets are included in “Property and equipment” in the Consolidated Statements of Financial Position and are depreciated over their expected useful lives on a basis consistent with similar assets included in property and equipment. Income from operating leases (net of any incentives given to the lessee) is recognized on a straight-line basis over the lease term.

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(15) Impairment of Financial Assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. However, losses expected as a result of future events, regardless of likelihood, are not recognized.

Objective evidence that financial assets, including equity securities, are impaired can include significant financial distress of issuers of financial assets or debtors, default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security, or the existence of observable data that shows the negative effect on expected future cash flows of the group of financial assets after the initial recognition can be reliably estimated, though the decrease in expected future cash flows of individual financial assets cannot be reliably estimated.

In addition, for an investment in an equity security classified as an available-for-sale financial asset, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

If financial assets have objective evidence that they are impaired, impairment losses should be measured and recognized.

(a) Financial assets measured at amortized cost

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flows discounted at the asset’s original effective interest rate. If it is not practicable to obtain the instrument’s estimated future cash flows, impairment losses are measured by using prices from any observable current market transactions. The Group can recognize impairment losses directly or establish a provision to cover impairment losses. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting an allowance account. Financial assets are directly written off when there is no realistic prospect of future recovery.

(b) Available-for-sale financial assets

While other evidence and indicators are taken into consideration, generally, when the fair value of an available-for-sale financial asset is below the acquisition cost consistently for a period of six months or more, or, if the fair value of the available-for-sale financial assets is 20% below its acquisition cost, impairment losses are assessed for such financial asset. When a decline in the fair value of an available-for-sale financial asset has been recognized in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment even though the financial asset has not been derecognized. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale

F-20

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(15) Impairment of Financial Assets (continued)

increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.

(16) Impairment of Non-financial Assets

The Group’s non-financial assets, which include tangible assets and intangible assets with definite useful lives and indefinite useful lives, but exclude deferred tax assets and non-current assets held for sale, are reviewed for impairment at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. In addition, annual impairment tests are performed for goodwill and intangible assets with indefinite useful lives.

If it is impossible to measure the individual recoverable amount of an asset, then the Group estimates the recoverable amount of the cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use or its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate to the estimated future cash flows expected to be generated by the asset or CGU. Such pre-tax discount rate reflects current market assessments of the time value of money and the risks specific to the asset or the CGU for which estimated future cash flows have not been adjusted.

An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Goodwill

Goodwill acquired in a business combination is, from the acquisition date, allocated to each CGU that is expected to benefit from the synergies arising from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Impairment losses are recognized in profit or loss, and impairment losses recognized for goodwill are not reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(17) Employee Compensation

(a) Short-term employee compensation

Short-term employee compensations are employee compensations that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render

F-21

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(17) Employee Compensation (continued)

the related service. The undiscounted short-term employee compensations are accounted for on an accrual basis over the period in which employees have provided the services.

(b) Defined benefit plans

The Group has defined benefit plans for employees of subsidiaries located in Korea, Taiwan and Thailand. A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s obligation represents the estimated amount of future benefits that employees have earned in return for their services in the current and prior periods. The calculation is performed annually by an independent actuary using the projected unit credit method. The calculation is reviewed and approved by the management of the Group.

Current service cost is the increase in the present value of the defined benefit obligation resulting from employee service in the current period. Past service cost, which is the change in the present value of the defined benefits obligation for employee services in prior periods, resulting in the current period from the introduction of, or change to post-employment benefits, is recognized in full in profit or loss in the period in which the plan amendment occurs.

Remeasurement of the net defined benefit liability is mainly comprised of actuarial gains and losses resulting from experience adjustments and the effects of changes in actuarial assumptions. Experience adjustments are the effects of differences between the previous actuarial assumptions and what has actually occurred. The Group recognizes all remeasurements of the net defined benefit liability in other comprehensive income when incurred.

The discount rate used in the present valuation calculation is the yield at the reporting date on high-quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

Net interest on the net defined benefit liability is determined by multiplying the net defined benefit liability by the discount rate noted above, taking account of any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. Interest on the net defined benefit liability is recognized in profit or loss.

(18) Share-based Payments

The Group has granted stock options to directors and employees. The fair values of the stock options are measured at the grant dates. Compensation expenses related to stock options are recognized over the vesting period of two years. Refer to Note 4 Significant Accounting Judgments, Estimates and Assumptions and Note 28 Share-Based Payments for more details on the valuation methodology of stock options and the assumptions used in such valuation.

(19) Marketing Expenses

The Group incurs marketing expenses to increase brand awareness and to promote the launch of new services. The Group’s marketing expenses are primarily related to advertising in mass media, namely television advertising and advertising on mobile applications, and expenses incurred for brand promotional events. Marketing personnel compensation expenses are not included in marketing expenses, and are recorded as part of the employee compensation expenses. Expenditures related to marketing activities are recognized as expenses when incurred.

F-22

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(20) Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

There are uncertainties about the amount and timing of the cash outflows related to provisions. The risks and uncertainties that inevitably surround events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

The Group’s provisions mainly comprise provision for restoration obligations for leased property, and the provision for the licensing expense payable to the third-party partners upon redemption of free promotional virtual credits for virtual items by customers in the future.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

A provision may only apply to expenditures for which the provision was originally recognized.

(21) Revenue

The Group mainly operates a cross-platform messenger application, LINE, and provides communication and content sales and advertising services. Communication and content sales are primarily made to end users in the form of communication products such as LINE Stickers, and content such as LINE Games. Advertising services are provided on the LINE platform through advertising products such as LINE Official Accounts and Sponsored Stickers, as well as the Group’s web portals, livedoor and NAVER Matome. Refer to Note 5 Segment Information for more details on product lines and services provided.

The Group recognizes revenues associated with the transactions by reference to the stage of completion of the transactions at the end of the reporting period. Determination of the stage of completion for the different revenue streams is described below. Revenue is measured at the fair value of the consideration of services provided in the ordinary course of business, less applicable sales and other taxes, where appropriate.

Virtual credits

Virtual credits may be purchased with credit cards or cash. Depending on the type of service, end users may make payments using cash, credit cards or the Group’s virtual credits. Most of the end-user purchases are processed through payment processing service providers such as Apple App Store and Google Play. A processing fee is charged by the payment processing service providers for each transaction processed which are recognized as “payment processing and licensing expenses” on the Company’s Consolidated Statements of Profit or Loss.

Upon the initial sales of the Group’s virtual credits, the Group records proceeds received as advances received on the Consolidated Statements of Financial Position. As prescribed in the terms and conditions between the Group and end users, the Group’s virtual credits are not refundable. However, in the event that the Group discontinues its operations, the Japanese Payment Services Act may require the Group to refund the advances received to the end users.

F-23

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(21) Revenue (continued)

When virtual credits are redeemed for the purchase of in-game/in-app virtual items, virtual credit balances of the end users are reduced by the price of the purchase, and the related advances received are reclassified to revenues over the applicable revenue recognition periods, as described in the following paragraphs. The total amount of revenues recognized is equivalent to the amount of total consideration paid by the end users.

(a) LINE business and portal

(i) Communication—LINE Stickers and Creator Stickers

LINE Stickers and Creator Stickers are emoticons that end users may purchase and use in instant messaging. Payments may be made with cash, virtual credits or credit cards. When virtual credits are redeemed for the purchase of Stickers, virtual credit balances of the end users are reduced by the price of the purchase, and the virtual credits redeemed are recognized as revenues over the revenue recognition period for Stickers. The Group acts as a principal in providing LINE Stickers and Creator Stickers to end users. Based on historical usage patterns tracked by the Group, the Group determined that a substantial majority of total expected usage of Stickers by end users occurred over 90 days from purchase, with actual usage concentrated during the earlier part of this period. Accordingly, the Group recognizes Stickers revenues over an estimated usage period of 90 days and on an accelerated basis within such period.

(ii) Content—LINE Games and Applications

– Games developed by third-party game developers

All games developed by third-party game developers are free to download from the LINE platform. End users may purchase in-game virtual items with cash or credit cards within the games.

The Group enters into revenue sharing arrangements with the third-party game developers. The terms of such arrangements provide that when end users purchase in-game virtual items sold by the game developer via the LINE platform, the Group receives a fixed percentage of the net proceeds received from payment processing service providers.

With respect to the sale of in-game virtual items to end users, the Group has determined that the third-party game developer is the primary obligor for the game-related services, as the third-party game developers have the primary responsibility for creating the in-game virtual items which end users may purchase and use in the mobile games, and developing, maintaining and updating the mobile games.

The Group views the third-party game developers to be its customers, and the Group’s deliverables to its customers over the term of the game are: 1) channeling users to the mobile games, 2) providing payment processing services, and 3) providing server hosting services.

The Group determined that each deliverable was a separate unit of account and it estimates the selling price of payment processing services and server hosting services based on cost plus margin, taking into consideration historical cost and industry profit margin range. The Group then allocates any residual amount to services for channeling users to the mobile games.

F-24

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(21) Revenue (continued)

The Group’s performance obligations with respect to channeling services are fulfilled at the time that the in-game virtual item is purchased by an end user and accordingly, the revenues attributable to the channeling services are recognized at the time of purchase.

Game termination announcements are made by sending notifications to end users two months prior to game termination. Once the game termination announcement is made, in-game virtual items are no longer available for purchase, but the game is still available to end users for the remaining two month period. Accordingly, subsequent to the announcement of game termination, the Group is required to provide two additional months of hosting services, i.e. up until game termination, and three months of payment processing services, i.e. up until one month after game termination, as payment processing services are provided on a three-month time lag.

The Group’s performance obligations with respect to the hosting services and payment processing services are fulfilled as such services are provided, i.e., from game inception through game termination, and from game inception through one month subsequent to game termination, respectively. Accordingly, the revenues attributable to the hosting services and payment processing services are recognized ratably over the service periods as described above. However, as the Group does not generate revenues subsequent to the announcement of game termination, the Group defers the revenue attributable to the post-termination-announcement performance obligations for hosting services and payment processing services from the amounts received in the first month of the arrangement, and recognizes such revenues over the two and three months, respectively, following the announcement of game termination.

The Group began providing third party games on its platform in 2012. As of December 31, 2015, the average life of third party games, which included both active and terminated third party games, was approximately 16 months. For the year ended December 31, 2015, on average, server hosting services revenues were recognized ratably over approximately 16 months, while payment processing services revenues were recognized ratably over approximately 17 months.

– Internally developed games and applications

The Group also provides games and applications (“apps”) developed internally for end users, and considers itself the principal in providing the games or apps to end users. The Group’s primary responsibility is to develop, maintain and provide the games and apps, and in-game/in-app virtual items to end users. All games and apps are free to download; however, in-game/in-app virtual items developed by the Group may be purchased with cash, credit cards or the Group’s virtual credits within the games/apps. The Group offers both consumable and durable virtual items in its internally developed games and apps. Common characteristics of consumable virtual items include virtual items that are consumed by end users’ specific actions and do not provide end users with any continuing benefits. Consumable virtual items offered by the Group are generally consumed upon purchase by end users. Accordingly, the Group recognizes revenues attributable to consumable virtual items upon sale.

A durable virtual item represents an item that provides the end user with continuing benefits. The period of benefit of a durable virtual item generally ends at the earliest of 1) an item ceasing to provide further benefits to an end user (i.e., the period of benefit is represented by the usage period of such item), 2) an item being removed from the game board or app, by specific in app/in-game

F-25

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(21) Revenue (continued)

actions taken by an end user, or 3) an end user abandoning the game or app. Accordingly, the Group determines that revenue attributable to durable virtual items is recognized either 1) ratably over the estimated usage period, or 2) when the Group cannot estimate the estimated usage period upfront, ratably over the estimated average playing period of paying users adjusted for any virtual items removed from the game board or app.

The estimated usage period for durable virtual items is developed by taking into consideration historical data on purchase patterns and user usage behavior. For the years ended December 31, 2013 and 2014, the estimated usage period was used for recognizing revenue from durable virtual items for only one of the Group’s internally developed games and was estimated to be several days. For the year ended December 31, 2014, sales generated by this internally developed game were immaterial. For the year ended December 31, 2015, the usage periods were estimated to be several days and the sales generated by such durable items were immaterial.

The Group defines the playing period as the period from when a paying user first purchased virtual currencies to when a paying user is deemed to have become inactive, i.e. when a paying user has not logged onto the game/app for two consecutive months. To estimate the average playing period for a paying user, the Group analyzes monthly cohorts composed of paying users who made their first purchase of virtual currency during such month. The Group tracks these monthly cohorts and analyzes the dates on which paying users within each cohort become inactive. Based on the actual data observed, the Group extrapolates the future declines in paying users to determine the ending point of a paying user’s life beyond the date for which observable data is available. The Group then uses the actual and extrapolated data to calculate the average playing period. For the year ended December 31, 2013, the average playing period was used for recognizing revenue for only one of the internally developed apps and was estimated to be approximately 12 months. For the years ended December 31, 2014 and 2015, the estimated average playing periods ranged from approximately 7 months to 12 months and 11 months to 21 months respectively.

Revenue attributable to the durable virtual items removed from the game board or app is recognized by developing estimated removal rates, i.e. the rates at which durable virtual items are being removed from the game board or app by end users, and applying such rates to total sales generated from durable virtual items.

Upon launching a new game/app, the Group evaluates the nature of the virtual items, the behavior of end users with respect to such items and the availability of supporting data in determining the related revenue recognition policy. The Group may also consider other existing internally developed games/apps data and industry data in determining the related revenue recognition policy if insufficient history has been developed for such new game/app. In the situation where the Group does not have sufficient data to analyze user behavior, and cannot identify any similar games/apps to serve as references for the Group to reasonably estimate the life of the game/app, the Group defers all sales until such history is developed. Once sufficient history is developed, the Group assesses the estimations (such as the estimated usage period and the estimated average playing period for paying users), for durable virtual items quarterly on a game/app by game/app basis.

F-26

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(21) Revenue (continued)

For the year ended December 31, 2012, the Group had one internally developed app for which it has insufficient history to estimate the removal rate and an average playing period for paying users. The Group determined that it had sufficient data to analyze the behavior of end users for such app as of March 31, 2013, and therefore began applying the estimated removal rates to sales generated in Q1’2013 and Q2’2013. However, the Group concluded that it did not have sufficient data to reasonably estimate the average playing period until the beginning of Q3’2013. Accordingly, for the purposes of recognizing revenue for such app for the quarters ended March 31, 2013 and June 30, 2013, the Group only recognized revenue attributable to removed virtual items for such app by applying the estimated removal rates for the respective periods, and deferred all remaining sales at the respective period end. Beginning of Q3’2013, the Group determined that it had sufficient history to reasonably estimate the average playing period for such app. Accordingly, the Group began recognizing revenues for virtual items which continued to be available to end users over the average playing period for such app. The changes in the estimates used in revenue recognition resulted in an increase of 103,154 thousand yen in revenue for the year ended December 31, 2013.

For the year ended December 31, 2014, the Group had one internally developed game for which it had insufficient data to reasonably estimate the average playing period until the beginning of Q3’2014. Accordingly, for the purposes of recognizing revenue for such game, for the quarters ended March 31, 2014 and June 30, 2014, the Group only recognized revenue attributable to removed virtual items by applying the estimated removal rates for the respective periods, and deferred all remaining sales. Beginning of Q3’2014, as the Group determined that it had sufficient history to reasonably estimate the average playing period for such game, the Group began recognizing revenues for virtual items which continued to be available to end users over the average playing period for such game.

In Q2’2015, the Group launched an internally developed game for which it had insufficient data to reasonably estimate the average playing period until the beginning of Q4’2015. Accordingly, for the purposes of recognizing revenue for this game, for the quarters ended June 30, 2015 and September 30, 2015, the Group recognized revenue based on the estimated average playing period of another game with similar characteristics. Beginning of Q4’2015, the Group determined that it had sufficient history to reasonably estimate the average playing period for such game. Accordingly, the Group began recognizing revenues for virtual items which continued to be available to end users over the average playing period for this game.

(iii) Others

Others mainly includes revenue from the sales of LINE character merchandise. Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and trade discounts.

(iv) LINE advertising—Official Accounts, Sponsored Stickers and Free LINE Coins service

LINE Official Accounts enable businesses and celebrities to send messages directly to LINE users who have added them as friends. The Group recognizes Official Accounts subscription revenues

F-27

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(21) Revenue (continued)

ratably over the advertising contract periods. In addition, advertisers with Official Accounts may offer Sponsored Stickers to LINE users, who may download them for free. Similar to the user usage pattern of LINE Stickers, the total Sponsored Stickers usage was also observed to be significantly weighted towards the earlier part of the usage period. Accordingly, the Group recognizes Sponsored Stickers revenue on an accelerated basis over a 208-day period following the commencement of the advertising contract period, throughout which Sponsored Stickers are available to be used by end users.

Free LINE Coins service is a pay-per-action advertising service the Group offers. Advertisers pay the Group a predetermined fixed fee per specific action taken by end users, such as successful downloading of an application or viewing of a commercial. In exchange, the Group publishes the applications or commercials produced by advertisers on the LINE platform, and issues LINE Coins to end users without charge (such LINE Coins, “free LINE Coins”). The Group recognizes revenue from Free LINE Coins service in the period in which an end user takes the action the advertiser contracted for, except for the portion of revenue attributable to the free LINE Coins issued by the Group. The portion of the revenue attributable to free LINE Coins is measured at the average selling price of LINE Coins. Revenue related to unused free LINE Coins at the end of the accounting period is deferred, while revenue related to redeemed free LINE Coins is recognized in accordance with the revenue recognition policy for the virtual item purchased.

(v) Portal advertising

The Group provides advertising services through its web portals, livedoor and NAVER Matome. The Group recognizes web portal advertising revenues ratably over the advertising contract periods.

(b) Data management services

The Group provides data management services and recognizes the revenues over the life of the service contract periods. The data management business was disposed on September 30, 2014. As a result, the data management business was retrospectively classified as part of the discontinued operations on the Consolidated Statements of Profit or Loss for the year ended December 31, 2013 and 2014. Refer to Note 3 (1) Significant Accounting Policies for further details.

(22) Finance Income and Finance Costs

Finance income mainly comprises interest income from time deposits and held-to-maturity investments. Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings and unwinding of the discount on provisions. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.

(23) Other Non-operating Income and Expenses

Other non-operating income comprises dividend income, gains on the disposal of available-for-sale financial assets, and changes in the fair value of financial assets at fair value through profit or loss. Dividend income is recognized in profit or loss on the date that the Group’s right to receive payment is established.

F-28

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(23) Other Non-operating Income and Expenses (continued)

Other non-operating expenses comprise changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognized on available-for-sale financial assets.

(24) Income Taxes

Income tax expenses comprise current and deferred tax. Current tax and deferred tax are recognized in profit or loss, except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive income.

(a) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

(b) Deferred tax

Deferred tax is recognized using the asset-liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which they can be utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable income.

The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, and associates, except to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group recognizes a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries and associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow, in a manner that the Group expects, at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities.

F-29

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(24) Income Taxes (continued)

Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax liabilities and assets, and they relate to income taxes levied on the same taxable entity by the same tax authority.

(25) Earnings per Share

The Group presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to the common shareholder of the Company by the weighted average number of common shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to the common shareholder and the weighted average number of common shares outstanding, adjusted for own shares held, for the effects of all dilutive potential common shares, such as stock options granted to directors and employees of the Group. Potential common shares are antidilutive when their conversion to common shares would increase earnings per share or decrease loss per share from continuing operations. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential common shares that would have an antidilutive effect on earnings per share.

(26) Operating Segments

The Group identifies segments based on the internal report reviewed by the Group’s Chief Operating Decision Maker to make decisions about resources to be allocated to segments and assess performance. The Chief Operating Decision Maker has been identified as the Company’s board of directors.

In 2013, the Group identified two reportable segments, LINE business and portal segment and data management services segment, which were the Group’s business units. On September 30, 2014, the Group disposed of its data management services segment. As a result, the data management services segment was retrospectively classified as part of the discontinued operations on the Consolidated Statements of Profit or Loss for the year ended December 31, 2013. Refer to Note 3 (1) Significant Accounting Policies for further details.

Since the fourth quarter of 2015, the structure of the business units that management uses to make decisions about operating matters, and the main performance measures used for the purpose of allocating resources to the units had changed. Segment reporting was based on two business units, the LINE business and portal segment, and the MixRadio segment. However, the MixRadio segment was subsequently abandoned on March 21, 2016, and retrospectively classified as a discontinued operation on the Consolidated Statements of Profit or Loss for the year ended December 31, 2015. Refer to Note 3 (1) Significant Accounting Policies for further details.

(27) Discontinued Operations and Non-current Assets Held for Sale

Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for sale or has been disposed of, if the component either (1) represents a separate major line of business or geographical area of operations and (2) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or (3) is a subsidiary acquired exclusively with a view to resale.

F-30

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(27) Discontinued Operations and Non-current Assets Held for Sale (continued)

The Group determined to dispose its Hangame business and related subsidiaries, and its online matchmaking services business in the year ended December 31, 2013. The Group determined to dispose its data management business in September 2014. In the Consolidated Statements of Profit or Loss, income from the discontinued operations is reported separately from loss from continuing operations; prior periods are presented on a comparable basis. The cash flows from discontinued operations are presented in Note 24 Discontinued Operations. References made to the Consolidated Statements of Profit or Loss, except for those noted in Note 24 Discontinued Operations, are related to continuing operations.

In the event that certain non-current assets and disposal groups whose carrying values will be recovered principally through a sale rather than through continuing use, such non-current assets and disposal groups are classified as held for sale. Non-current assets or disposal groups classified as held for sale or held for disposal are measured at the lower of their carrying amount or fair value less costs to sell, unless these items presented in the disposal group are not part of the measurement scope as defined in IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

(28) Standards Issued but not yet Effective

The standards and interpretations that are issued but not yet effective as of December 31, 2015 are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

– IFRS 9 Financial Instruments

The IASB issued the final version of IFRS 9 Financial Instruments which sets out the requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is the new standard for the financial reporting of financial instruments that is principles-based and brings together the classification and measurement, impairment and hedge accounting phases of the IASB’s project. IFRS 9 is built on a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics including new impairment requirements that are based on a more forward-looking expected credit loss model that will result in more timely recognition of loan losses and is a single model that is applicable to all financial instruments subject to impairment accounting. In addition, IFRS 9 addresses the so-called ‘own credit’ issue, whereby banks and others book gains through profit or loss as a result of the value of their own debt falling due to a decrease in credit worthiness when they have elected to measure that debt at fair value. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, and early application is permitted. The Group has determined not to early adopt IFRS 9 and is currently assessing the impacts of IFRS 9’s adoption.

– Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 Property, Plant and Equipment, and IAS 38 Intangible Assets)

The IASB issued amendments to IAS 16 Property, Plant and Equipment, and IAS 38 Intangible Assets to clarify that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate. The IASB also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendments are

F-31

LINE Corporation

Notes to Consolidated Financial Statements (continued)

3. Significant Accounting Policies (continued)

(28) Standards Issued but not yet Effective (continued)

effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. The Group does not expect the amendments to IAS 16 and IAS 38 will have material financial impact in future consolidated financial statements.

– IFRS 15 Revenue from Contracts with Customers

The IASB issued IFRS 15 Revenue from Contracts with Customers for recognizing revenue. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer, regardless of the type of revenue transaction or industry, with limited exceptions. In addition to the five-step model, the standard specifies how to account for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. If provided those costs are expected to be recovered, they can be capitalized and subsequently amortized and tested for impairment. IFRS 15 also applies to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of an entity’s ordinary activities, such as sales of property, plant and equipment or intangibles. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted under IFRS. The modified approach will allow the standard to be applied to existing contracts beginning with the current period but requires the cumulative effect of applying IFRS 15 to contracts that commenced prior to the current period to be recognized in the year of initial application as a catch-up adjustment. No restatement of the comparative periods will be required under this approach, as long as comparative disclosures about the current period’s revenues under existing IFRS are included. The Group has determined not to early adopt IFRS 15 and is currently assessing the impacts of IFRS 15’s adoption.

– IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests

The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. The Group has determined not to early adopt IFRS 11 and is currently assessing the impacts of IFRS 11’s adoption.

– IFRS 16 Leases

IFRS 16 governs the accounting for leases and the related contractual rights and obligations. In the future, lessees will no longer make a distinction between finance and operating leases as they have been required to do thus far under IAS17. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, although early adoption is permitted if IFRS 15 is also applied. The Group is currently assessing the impacts of IFRS 16’s adoption.

F-32

LINE Corporation

Notes to Consolidated Financial Statements (continued)

4. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the Group’s consolidated financial statements requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. These estimates and assumptions are based on the best judgment of the management in light of historical experience and various factors deemed to be reasonable as of the fiscal year end date. Given their nature, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The estimates and assumptions are continuously reviewed by the management. The effects of a change in estimates and assumptions are recognized in the period of the change or in the period of the change and future periods. Among estimates and assumptions made by the management, the following are ones that may have a material effect on the amounts recognized in the consolidated financial statements of the Group:

(a) Impairment

– Non-financial assets

Non-current assets other than goodwill

Non-current assets other than goodwill, such as property and equipment, and intangible assets with definite useful lives, are assessed for indications of impairment at the end of the reporting period. The Group evaluates both internal and external sources of information to assess whether impairment indicators exist. Some of the impairment indicators are evidence of obsolescence or significant adverse changes in the technological, market, economic or legal environment of the market in which the Group operates, or the asset is dedicated. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Likewise, the determination of the assets’ recoverable amounts involves the use of estimates by the management that can have a material impact on the respective values and ultimately the amount of any impairment.

Goodwill

The goodwill impairment test requires the Group to exercise judgment and assess whether the carrying value of the CGU to which goodwill has been allocated can be supported by the recoverable amount of such CGU to which goodwill has been allocated.

The recoverable amount of a CGU is determined based on a value in use calculation which involves the use of estimates. The main assumptions used in the value in use calculation include the discount rate, terminal growth rate and expected future cash flow projections for a period of up to five years from financial budgets approved by the management. Cash flow projections beyond the planning period are extrapolated using terminal growth rates. Cash flow projections take into account past experience and represent management’s best estimates. These assumptions can be subject to significant adjustments from such factors as user trend, spending on marketing, IT spending of corporations, and competition from competitors. The key assumptions used to determine the recoverable amounts of the different CGU to which goodwill has been allocated are disclosed and further explained in Note 12 Impairment.

– Financial assets measured at amortized cost

Regarding the financial assets measured at amortized cost, the Group assesses whether there is any objective evidence that financial assets are impaired on a quarterly basis. If there is any objective

F-33

LINE Corporation

Notes to Consolidated Financial Statements (continued)

4. Significant Accounting Judgments, Estimates and Assumptions (continued)

(a) Impairment (continued)

evidence, the Group recognizes the difference between carrying value of the asset and the present value of estimated future cash flows as an impairment loss. When the Group estimates the future cash flows, the management considers the probability of default, time of recovery and past trend of losses, and decides whether the actual loss, which reflects current economic and credit conditions, is more or less than past trends. The Group considers these estimates to be significant because any adjustments may significantly affect the amount of an impairment loss for the financial assets measured at amortized cost.

(b) Recoverability of deferred tax assets

Regarding temporary differences, which are differences between carrying value of an asset or liability in the Consolidated Statements of Financial Position and its tax base, the Group recognizes deferred tax assets and deferred tax liabilities. The deferred tax assets and deferred tax liabilities are calculated using the tax rates based on tax laws that have been enacted or substantively enacted by the end of the reporting period and the tax rates that are expected to apply to the period when the deferred tax asset is realized or the deferred tax liability is settled. Deferred tax assets are recognized for all deductible temporary differences, unused tax losses carryforward and unused tax credits carryforward to the extent that it is probable that taxable income will be available. The estimation of future taxable income is calculated based on financial budgets approved by management of the Group, and it is based on management’s subjective judgments and assumptions. The Group considers these estimates to be significant because any adjustments in the assumed conditions and amendments of tax laws in the future may significantly affect the amounts of deferred tax assets and deferred tax liabilities.

(c) Methods of determining fair value for financial instruments measured at fair value

Financial assets and financial liabilities held by the Group are measured at the following fair values:

– quoted prices in active markets for identical assets or liabilities;

– fair value calculated using observable inputs other than quoted prices for the assets or liabilities, either directly or indirectly; and

– fair value calculated using valuation techniques incorporating unobservable inputs.

In particular, the fair value estimates using valuation techniques that incorporate unobservable inputs are based on the judgment and assumptions of Group management, such as experience assumptions, and the use of specific numerical calculation models, such as discounted cash flow models.

(d) Provisions

The Group recognizes asset retirement obligations related to assets leased under operating leases in the Consolidated Statements of Financial Position. These provisions are recognized based on the best estimates of the costs expected to incur for the restoration of the operating lease properties to the state as specified in the rental agreements upon termination of the operating leases. The estimation takes risks and uncertainty related to the obligations into account as of the fiscal year end date.

F-34

LINE Corporation

Notes to Consolidated Financial Statements (continued)

4. Significant Accounting Judgments, Estimates and Assumptions (continued)

(d) Provisions (continued)

The Group records a provision for the licensing expense payable to the third-party platform partners upon redemption of promotional virtual credits for virtual items by end users in the future. For promotional and marketing purposes, virtual credits are given to end users free of charge.

(e) Defined benefit plans

The cost of the defined benefit plan and the present value of the obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions, including the determination of the discount rate and future salary increases.

The Group determines the discount rate based on market returns of high-quality corporate bonds consistent with currencies and estimated payment terms applicable to the defined benefit obligations as of the reporting date in order to calculate present value of the defined benefit obligations. Estimated future salary increases are based on historical salary increases and expected future inflation rates.

Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about the Group’s defined benefit obligations are presented in Note 17 Employment Benefits.

(f) Share-based payments

Share-based payment expenses related to stock options granted to directors and employees are estimated based on the option’s fair value determined under the Black-Scholes-Merton (“Black-Scholes”) option pricing model. The Black-Scholes model requires various highly judgmental assumptions, including expected volatility, expected life of stock options and fair value of share capital at the time of option grants, which will be discussed further below.

Expected volatility is estimated based on the historical volatility of reference companies which are comparable publicly traded companies. The expected life of stock options is estimated based on the expectation of future stock price movements and expected exercise patterns of the option holders.

(g) Valuation of common shares

In the absence of a public trading market, the Group exercised significant judgment in determining fair value of common shares at the time of option grants. Valuation is based on all relevant facts and circumstances known at the time of valuation, including but not limited to factors such as historical financial results and projections of the Group’s future operating and financial performance; market performance of comparable publicly traded companies; overall economic and industry outlook; and third-party valuations of the Group’s common shares as of the date of stock option grants.

(h) Revenues

For revenues attributable to the sales of in-game/app virtual items developed by the Group, revenues are recognized over periods over which the benefits are expected to be consumed by end users, taking into

F-35

LINE Corporation

Notes to Consolidated Financial Statements (continued)

4. Significant Accounting Judgments, Estimates and Assumptions (continued)

consideration historical data on purchase patterns, log-on information, and the removal rates of virtual items.

For revenues attributable to the sales of LINE Stickers, Creator Stickers and Sponsored Stickers, revenues are recognized over the estimated periods over which LINE Stickers, Creator Stickers and Sponsored Stickers are expected to be used by users, taking into consideration historical data on usage and user behavior.

5. Segment Information

The operating segment of the Group is a component for which discrete financial information is available and whose operating results are regularly reviewed by the Group’s chief operating decision maker in making decisions about resource allocation and assess performance. No operating segments have been aggregated to form the reportable segments.

For the year ended December 31, 2013 and for the nine-month period ended September 30, 2014, the Group had identified two reportable segments, LINE business and portal segment and data management services segment, which were the Group’s business units. On September 30, 2014, the Group disposed of its data management services segment. As a result, the data management services segment was retrospectively classified as part of the discontinued operations on the Consolidated Statements of Profit or Loss for the year ended December 31, 2013. The Group had a single reportable segment as of December 31, 2014. Refer to Note 3(1) Significant Accounting Policies for further details.

As described in Note 3 (26) Significant Accounting Policies, since the fourth quarter of 2015, the structure of the business units that management uses to make decisions about operating matters, and the main performance measures used for the purpose of allocating resources to the units had changed. Segment reporting was based on two business units, the LINE business and portal segment and the MixRadio segment.

However, the MixRadio segment was subsequently abandoned on March 21, 2016, and retrospectively classified as a discontinued operation on the Consolidated Statements of Profit or Loss for the year ended December 31, 2015. Refer to Note 24 Discontinued Operations for further details.

Segment information is presented for continuing operations.

(1) Description of Reportable Segment

The Group has a single reportable segment:

LINE business and portal segment – The Group mainly operates a cross-platform messenger application, LINE, and provides communication and content and advertising services. Communication and content are primarily provided to end users via various communication and content. Communication mainly includes LINE Stickers. Content includes LINE Games and LINE Play. Advertising services are provided via LINE advertising and web portals livedoor and NAVER Matome. LINE advertising includes LINE Official Accounts, Sponsored Stickers and Free LINE Coins.

F-36

LINE Corporation

Notes to Consolidated Financial Statements (continued)

5. Segment Information (continued)

(2) Revenues from Major Services

The Group’s revenues from continuing operations from its major services for the years ended December 31, 2013, 2014 and 2015 are as follows:

	(In thousands of yen)
	2013		2014		2015
LINE business and portal segment
Communication and content
Communication(1)		9,893,305		20,689,739		28,725,134
Content(2)		17,662,099		40,448,648		49,283,859
Others		664,286		1,783,666		5,985,048
Sub-total		28,219,690		62,922,053		83,994,041
Advertising
LINE advertising(3)		5,321,522		14,603,427		26,487,056
Portal advertising(4)		6,044,549		8,840,789		9,924,434
Sub-total		11,366,071		23,444,216		36,411,490
Total		39,585,761		86,366,269		120,405,531

⁽¹⁾  Revenues from communication were mainly attributable to sales of LINE Stickers and Creator Stickers.

⁽²⁾  Revenues from content primarily consisted of sales of LINE Games virtual items.

⁽³⁾  Revenues from LINE advertising primarily consisted of fees from LINE Official Accounts and Free LINE Coins, as well as sales of Sponsored Stickers.

⁽⁴⁾  Revenues from portal advertising were mainly attributable to advertising revenue from web portals, livedoor and NAVER Matome.

(3) Geographic Information

Revenues from external customers

Revenues from external customers classified by country or region by geographical proximity were based on the locations of customers. Revenues attributable to communication and content have been classified based on the geographical location of the end users. Revenues attributable to portal advertising have been classified based on the geographical locations where the services were provided.

	(In thousands of yen)
	2013		2014		2015
Japan (country of domicile)		34,412,006		65,476,215		84,779,808
Taiwan		2,156,142		10,514,667		17,057,953
Others		3,017,613		10,375,387		18,567,770
Total		39,585,761		86,366,269		120,405,531

F-37

LINE Corporation

Notes to Consolidated Financial Statements (continued)

5. Segment Information (continued)

(3) Geographic Information (continued)

Non-current operating assets

Non-current operating assets mainly consist of property and equipment and intangible assets.

	(In thousands of yen)
	2014		2015
Japan (country of domicile)		10,714,120		12,128,756
Korea		1,548,333		2,095,142
Others		27,624		567,671
Total		12,290,077		14,791,569

(4) Major Customers

No single customer accounted for 10 percent or more of the Group’s total revenues for the years ended December 31, 2013, 2014 and 2015.

6. Cash and Cash Equivalents

The breakdown of cash and cash equivalents as of December 31, 2014 and 2015 is as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Cash on hand		939		3,730
Demand deposits		20,253,516		33,648,520
Total cash and cash equivalents		20,254,455		33,652,250

7. Trade and Other Receivables

Trade and other receivables as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014			December 31, 2015
Trade and other receivables, current		24,488,309			27,645,690
Allowance for doubtful accounts, general		(265,462	)		(397,193	)
Trade receivables, non-current(1)		21,624			32,754
Allowance for doubtful accounts, specific		(21,624	)		(32,754	)
Total trade and other receivables		24,222,847			27,248,497

⁽¹⁾  The non-current trade receivables were tested for impairment on an individual basis as of the reporting dates based on how long such trade receivables were past due. As a result, full specific reserves were recorded.

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LINE Corporation

Notes to Consolidated Financial Statements (continued)

7. Trade and Other Receivables (continued)

For movement in the allowance of doubtful accounts for trade and other receivables, refer to Note 26 Financial Risk Management.

8. Inventories

Inventories as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Goods		2,108,470		1,475,939
Total Inventories		2,108,470		1,475,939

Cost of goods recognized from continuing operations for the years ended December 31, 2013, 2014 and 2015, were 4,142 thousand yen, 812,713 thousand yen and 2,474,809 thousand yen, respectively. Inventory valuation losses recognized from continuing operations for the years ended December 31, 2013, 2014 and 2015, were nil, 61,991 thousand yen and 734,218 thousand yen, respectively.

9. Property and Equipment

(1) Changes in property and equipment for the year ended December 31, 2014 are as follows:

									(In thousands of yen)
	Furniture and fixtures			Equipment			Land		Construction- in-progress		Others			Total
Acquisition cost
Balance at January 1, 2014		2,115,926			7,980,446			2,571,851		10,276		17,475			12,695,974
Acquisitions		596,190			4,491,323			12,506		28,235		180,867			5,309,121
Disposals		(63,348	)		(556,160	)		–		–		(17,418	)		(636,926	)
Acquisitions through business combinations		–			1,547			–		–		–			1,547
Exchange differences		–			27,767			–		–		4,436			32,203
Business divestiture		(178,989	)		(3,107,359	)		–		–		–			(3,286,348	)
Balance at December 31, 2014		2,469,779			8,837,564			2,584,357		38,511		185,360			14,115,571
Accumulated depreciation and impairment
Balance at January 1, 2014		576,898			4,012,809			–		–		4,355			4,594,062
Disposals		(47,779	)		(513,663	)		–		–		(6,307	)		(567,749	)
Depreciation(1)		445,796			2,324,992			–		–		29,887			2,800,675
Exchange differences		–			14,039			–		–		685			14,724
Business divestiture		(116,017	)		(2,265,643	)		–		–		–			(2,381,660	)
Balance at December 31, 2014		858,898			3,572,534			–		–		28,620			4,460,052
Carrying amounts
Balance at January 1, 2014		1,539,028			3,967,637			2,571,851		10,276		13,120			8,101,912
Balance at December 31, 2014		1,610,881			5,265,030			2,584,357		38,511		156,740			9,655,519

⁽¹⁾  This balance includes depreciation expenses of 473,415 thousand yen attributable to discontinued operations for the year ended December 31, 2014.

F-39

LINE Corporation

Notes to Consolidated Financial Statements (continued)

9. Property and Equipment (continued)

(2) Changes in property and equipment for the year ended December 31, 2015 are as follows:

								(In thousands of yen)
	Furniture and fixtures		Equipment			Land		Construction- in-progress			Others			Total
Acquisition cost
Balance at January 1, 2015		2,469,779		8,837,564			2,584,357		38,511			185,360			14,115,571
Acquisitions		453,187		4,033,212			–		59,800			202,885			4,749,084
Disposals		–		(596,214	)		–		–			(25,044	)		(621,258	)
Acquisitions through business combinations		16,742		24,546			–		–			–			41,288
Exchange differences		4,907		(51,143	)		–		–			(9,271	)		(55,507	)
Other		5,704		4,968			–		(38,511	)		1,580			(26,259	)
Balance at December 31, 2015		2,950,319		12,252,933			2,584,357		59,800			355,510			18,202,919
Accumulated depreciation and impairment
Balance at January 1, 2015		858,898		3,572,534			–		–			28,620			4,460,052
Disposals		–		(341,813	)		–		–			–			(341,813	)
Depreciation(1)		601,827		2,860,363			–		–			81,249			3,543,439
Exchange differences		4,831		(26,071	)		–		–			(6,981	)		(28,221	)
Impairment(2)		11,715		42,692			–		–			–			54,407
Other		2,070		13,349			–		–			(1,114	)		14,305
Balance at December 31, 2015		1,479,341		6,121,054			–		–			101,774			7,702,169
Carrying amounts
Balance at January 1, 2015		1,610,881		5,265,030			2,584,357		38,511			156,740			9,655,519
Balance at December 31, 2015		1,470,978		6,131,879			2,584,357		59,800			253,736			10,500,750

⁽¹⁾ The balance includes depreciation expenses of 17,086 thousand yen attributable to the MixRadio segment, which was retrospectively classified as a discontinued operation for the year ended December 31, 2015. Refer to Note 24 Discontinued Operations for further details.

⁽²⁾ A full write-off of the MixRadio segment’s property and equipment of 54,407 thousand yen was recognized as a result of the impairment test of the MixRadio segment for the year ended December 31, 2015. As a result of the subsequent abandonment on March 21, 2016, the impairment loss was recognized in the Consolidated Statement of Profit or Loss as “Profit/(loss) from discontinued operations, net of tax”. Refer to Note 12 (1) Impairment and Note 24 Discontinued Operations for further details.

(3) Contractual commitments for the acquisition of property and equipment:

	(In thousands of yen)
December 31, 2014	December 31, 2015
21,778	199,090

The carrying amounts of property and equipment held under finance leases contracts were 2,023 thousand yen and 1,329 thousand yen as of December 31, 2014 and 2015, respectively. Additions during the year included nil in 2014 and 2015 of property and equipment under finance leases and installment payment contracts. The leased assets and assets under installment payment contracts are pledged as collateral for the related finance lease and installment payment liabilities.

F-40

LINE Corporation

Notes to Consolidated Financial Statements (continued)

9. Property and Equipment (continued)

(3) Contractual commitments for the acquisition of property and equipment (continued):

Land with a carrying amount of 2,584,357 thousand yen as of December 31, 2014 and 2015 was subject to a first lien to secure one of the Group’s bank loans. Such lien was released in the year ended December 31, 2015. Construction-in-progress was related to capital expenditures for a building currently under construction.

10. Capitalized Borrowing Costs

The amount of borrowing costs capitalized during the years ended December 31, 2014 and 2015 were 12,683 thousand yen and nil, respectively. The rate used to determine the amount of borrowing costs eligible for capitalization in 2014 was 0.49%, which was the effective interest rate of the general borrowings.

11. Goodwill and Other Intangible Assets

(1) Changes in goodwill and other intangible assets for the year ended December 31, 2014 are as follows:

							(In thousands of yen)
Item	Goodwill			Software(1)			Others			Total
Acquisition cost
Balance at January 1, 2014		2,723,645			437,718			285,536			3,446,899
External acquisition		–			133,253			12,993			146,246
Acquisition through a business combination(2)		149,997			–			239			150,236
Disposal		–			(70,961	)		(609	)		(71,570	)
Exchange differences		13,881			586			22			14,489
Business divestiture(3)		(436,631	)		(116,012	)		(244,929	)		(797,572	)
Balance at December 31, 2014		2,450,892			384,584			53,252			2,888,728
Accumulated amortization and impairment
Balance at January 1, 2014		40,337			317,211			173,899			531,447
Disposals		–			(65,461	)		(80	)		(65,541	)
Amortization(4)		–			41,885			28,437			70,322
Exchange differences		–			(3,871	)		–			(3,871	)
Business divestiture(3)		–			(88,839	)		(189,348	)		(278,187	)
Balance at December 31, 2014		40,337			200,925			12,908			254,170
Carrying amounts
Balance at January 1, 2014		2,683,308			120,507			111,637			2,915,452
Balance at December 31, 2014		2,410,555			183,659			40,344			2,634,558

⁽¹⁾  Software was mainly comprised of externally acquired software. The remaining useful life of software as of December 31, 2014 was three years.

⁽²⁾  The balances were related to the Group’s acquisition of wit studio. Refer to Note 30 Business Combinations for further details.

⁽³⁾  The balances were related to the Group’s divestiture of the data management business. Refer to Note 24 Discontinued Operations for further details.

⁽⁴⁾  This balance included amortization expenses of 27,960 thousand yen attributable to the discontinued operations for the year ended December 31, 2014.

F-41

LINE Corporation

Notes to Consolidated Financial Statements (continued)

11. Goodwill and Other Intangible Assets (continued)

(2) Changes in goodwill and other intangible assets for the year ended December 31, 2015 are as follows:

										(In thousands of yen)
Item	Goodwill			Software(1)			Music rights			Others			Total
Acquisition cost
Balance at January 1, 2015		2,450,892			384,584			–			53,252			2,888,728
External acquisition		–			321,502			–			764,465			1,085,967
Acquisition through a business combination(2)		3,425,653			863,429			543,292			272,384			5,104,758
Disposal		–			(23,817	)		–			(35,000	)		(58,817	)
Exchange differences		(23,770	)		(439	)		(1,198	)		(2,527	)		(27,934	)
Other		–			(1,345	)		–			(10,427	)		(11,772	)
Balance at December 31, 2015		5,852,775			1,543,914			542,094			1,042,147			8,980,930
Accumulated amortization and impairment
Balance at January 1, 2015		40,337			200,925			–			12,908			254,170
Disposals		–			(23,744	)		–			(30,960	)		(54,704	)
Amortization(4)		–			265,226			96,884			151,661			513,771
Impairment(3)		2,691,671			709,287			446,408			290,923			4,138,289
Exchange differences		–			56			(1,198	)		(7,730	)		(8,872	)
Other		–			5,978			–			–			5,978
Balance at December 31, 2015		2,732,008			1,157,728			542,094			416,802			4,848,632
Carrying amounts
Balance at January 1, 2015		2,410,555			183,659			–			40,344			2,634,558
Balance at December 31, 2015		3,120,767			386,186			–			625,345			4,132,298

⁽¹⁾  Software was mainly comprised of externally acquired software. The remaining useful life of software as of December 31, 2015 was three years.

⁽²⁾  The balances were mainly related to the Group’s acquisition of MixRadio. Refer to Note 30 Business Combinations for further details.

⁽³⁾  As a result of the Group’s annual goodwill impairment test, impairment losses of 2,691,671 thousand yen, 709,287 thousand yen, 446,408 thousand yen and 217,963 thousand yen have been recognized for the full write-off of MixRadio segment’s goodwill, software, music rights and other intangibles, respectively. As the MixRadio segment was subsequently abandoned on March 21, 2016, and was retrospectively classified as a discontinued operation for the year ended December 31, 2015, the impairment losses were recognized in the Consolidated Statement of Profit or Loss as “Profit/(loss) for the year from discontinued operations, net of tax”. Refer to Note 12 (1) Impairment and Note 24 Discontinued Operations for further details.

⁽⁴⁾  The balance includes 307,349 thousand yen attributable to the MixRadio segment, which was retrospectively classified as a discontinued operation for the year ended December 31, 2015. Refer to Note 24 Discontinued Operations for further details.

The carrying amounts of goodwill were 2,410,555 thousand yen and 3,120,767 thousand yen as of December 31, 2014 and 2015, respectively. The majority of the goodwill was recognized as a result of the acquisition of livedoor Co., Ltd. in 2010.

F-42

LINE Corporation

Notes to Consolidated Financial Statements (continued)

11. Goodwill and Other Intangible Assets (continued)

(3) The research and development costs incurred for the years ended December 31, 2013 and 2014 were related to the data management business, which was classified as discontinued operations on September 19, 2014. Refer to Note 24 Discontinued Operations for further details. No research and development costs were incurred for the year ended December 31, 2015. Research and development costs included in the “Profit/(loss) from discontinued operations, net of tax” in the Consolidated Statements of Profit or Loss the years ended December 31, 2013, 2014 and 2015 are as follows:

(In thousands of yen)
2013	2014	2015
25,920	19,642	–

12. Impairment

(1) Impairment of Goodwill

Annual impairment testing for goodwill was performed as of October 1 for the years ended December 31, 2013, 2014 and 2015.

Goodwill has been allocated to two CGUs and one CGU for impairment testing purposes for the years ended December 31, 2013 and 2014, respectively. The two CGUs were the Group’s operating segments and also the reportable segments for the year ended December 31, 2013.

In September 2014, the Group disposed of its data management business. As a result, the data management services segment was retrospectively classified as part of the discontinued operations on the Consolidated Statements of Profit or Loss for the year ended December 31, 2013.

Goodwill has been allocated to two CGUs for the year ended December 31, 2015.

Carrying amount of goodwill allocated to each of the CGUs for impairment testing is as follows:

(In thousands of yen)
For the year ended December 31, 2013
LINE business and portal CGU	Data management services CGU	Total
2,246,677	436,631		2,683,308

(In thousands of yen)
For the year ended December 31, 2014
LINE business and portal CGU	Total
2,410,555	2,410,555

F-43

LINE Corporation

Notes to Consolidated Financial Statements (continued)

12. Impairment (continued)

(1) Impairment of Goodwill (continued)

(In thousands of yen)
For the year ended December 31, 2015
LINE business and portal CGU	MixRadio CGU	Total
3,120,767	2,691,671	5,812,438

The recoverable amounts of the CGUs have been determined based on a value in use calculation using cash flow projections for a period of up to five years from financial budgets approved by the Group’s management. Cash flow projections take into account past experience and represent management’s best estimates. The main assumptions used in the value in use calculation include the discount rate, terminal growth rate and expected future cash inflows. These assumptions can be subject to significant adjustments due to factors such as marketing budgets, IT spending of corporations, and competition from competitors. Cash flows beyond the planning periods were extrapolated using terminal growth rates.

To estimate the discount rate that reflects the time value of money and the risks specific to the CGUs, the Group has assumed a risk-free rate equal to one-month average market yields on 10-year Japanese government bonds at the date of performing the annual impairment test. The Group also incorporated risk premiums, such as a company specific premium and equity premium, in the discount rate. The terminal growth rates are based on the long-term average inflation rates of the Group’s main countries of operation, Japan, Taiwan and Thailand, which takes into consideration external macroeconomic sources of data.

(a) LINE business and portal CGU and Data management service CGU

The significant assumptions used in the value in use calculations are as follows:

	2013						2014						2015
CGU	Pre-tax discount rate			Terminal growth rate			Pre-tax discount rate			Terminal growth rate			Pre-tax discount rate			Terminal growth rate
LINE business and portal CGU		17.0	%		1.9	%		14.4	%		1.3	%		14.7	%		1.4	%
Data management services CGU		16.5	%		1.9	%		–			–			–			–

No impairment losses were recognized for goodwill for the years ended December 31, 2013 and 2014, as a result of the annual impairment testing, except for 40,337 thousand yen impairment losses related to LINE Vietnam in 2013. The related impairment losses were retrospectively restated in the Group’s consolidated financial statements, as the acquisition of LINE Vietnam was accounted for as a business combination under common control using the pooling method. Refer to Note 3 (1) Significant Accounting Policies for further details.

(b) MixRadio CGU

The Group acquired MixRadio in the first quarter of 2015 in order to expand the range of services. Refer to Note 30 Business Combinations for further details. However, the music streaming industry

F-44

LINE Corporation

Notes to Consolidated Financial Statements (continued)

12. Impairment (continued)

(1) Impairment of Goodwill (continued)

(b) MixRadio CGU (continued)

grew increasingly competitive over the second half of 2015, mainly due to the expansion by major technology firms in the music space and to market consolidation by competitors with large user bases. This intensified competition led to significant increases in royalties from music labels and publishers, and increases in marketing costs related to user acquisition. These factors negatively impacted the long term profitability of the MixRadio CGU and the Group. As a result, in the fourth quarter of 2015, the Group changed its strategic decision and decided to focus on its core LINE business and portal segment, and planned on exiting the MixRadio business by either selling its operations or, if no buyer was identified, abandoning MixRadio operations in 2016.

As of December 31, 2015, as no potential buyer was identified, the Group considered the abandonment of the MixRadio business to be probable. Therefore, as the future cash flows are expected to be negative, goodwill allocated to MixRadio CGU of 2,691,671 thousand yen was fully impaired. Further, as a result of the subsequent abandonment on March 21, 2016, the MixRadio CGU was retrospectively classified as a discontinued operation for the year ended December 31, 2015. Refer to Note 24 Discontinued Operations for further details.

(2) Sensitivity to Changes in Assumptions

For LINE business and portal CGU and Data management CGU, in the opinion of the Group’s management, the recoverable amounts have considerably exceeded the carrying amount of the CGUs, and the outcomes of the impairment tests are not sensitive to reasonably likely changes in any of the assumptions underlying the cash flow projections used for the impairment tests or the discount rates in the periods presented for any CGUs.

For the MixRadio CGU, due to the full impairment as described above, a sensitivity analysis has not been presented.

(3) Impairment of Tangible Assets and Intangible Assets with Definite Useful Lives

For the years ended December 31, 2013 and 2014, no impairment losses were recognized for tangible assets and intangible assets with definite useful lives except for the impairment losses recognized for certain non-current assets held by LINE Vietnam. For the year ended December 31, 2015, in connection with the MixRadio segment impairment as explained above, impairments of intangible assets with definite useful life in the amount of 1,373,658 thousand yen and property and equipment in the amount of 54,407 thousand yen were recognized. Refer to Note 9 Property and Equipment and Note 11 Goodwill and Other Intangible Assets for further details.

F-45

LINE Corporation

Notes to Consolidated Financial Statements (continued)

13. Provisions

Changes in provisions for the years ended December 31, 2014 and 2015 are as follows:

(In thousands of yen)
	Restoration obligations for operating lease properties			Promotional virtual credits reserve			Other		Total
At January 1, 2014		734,064			32,279			–		766,343
Arising during the year		297,830			354,723			–		652,553
Utilized		(7,447	)		(184,498	)		–		(191,945	)
Unwinding of discount and changes in the discount rate		1,692			–			–		1,692
Business divestitures		(71,625	)		–			–		(71,625	)
Exchange differences		16,788			–			–		16,788
At December 31, 2014		971,302			202,504			–		1,173,806
Arising during the year		249,900			224,775			278,643		753,318
Utilized		–			(136,937	)		–		(136,937	)
Unwinding of discount and changes in the discount rate		1,655			–			–		1,655
Exchange differences		(9,639	)		–			–		(9,639	)
At December 31, 2015		1,213,218			290,342			278,643		1,782,203

Restoration obligations for operating lease properties

The Group records a provision for the restoration obligations for the operating lease properties as the Group is required to restore the operating lease properties to the state as specified in the rental agreements upon termination of the operating leases. It is expected that the rental agreements will be terminated by 2017.

Promotional virtual credits

For promotional and marketing purposes, virtual credits are given to end users free of charge. The Group records a provision for the licensing expense payable to the third-party platform partners upon redemption of free promotional virtual credits for virtual items by end users in the future.

Others

Others mainly consisted of a provision for the losses expected to be incurred in relation to the existing headquarter rental agreement as a result of the scheduled headquarter relocation.

F-46

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes

(1) Current and deferred taxes related to each component of other comprehensive income for the years ended December 31, 2013, 2014 and 2015 are as follows:

	(In thousands of yen)
	2013							2014									2015
	Pretax		Tax			Post tax		Pretax			Tax			Post tax			Pretax			Tax			Post tax
Remeasurement of defined benefit plans		24,690		–			24,690		(654,768	)		4,024			(650,744	)		(1,722,112	)		576,237			(1,145,875	)
Foreign currency translation adjustments		11,226		–			11,226		533,750			–			533,750			(281,161	)		14,462			(266,699	)
Proportionate share of other comprehensive income of associates		–		–			–		18,545			–			18,545			15,642			(3,785	)		11,857
Net change in fair value of available-for-sale financial assets		202,720		(59,586	)		143,134		5,461,675			(1,708,938	)		3,752,737			1,550,589			276,788			1,827,377
Reclassification adjustments for net change in fair value of available-for sale financial assets		–		–			–		–			–			–			1,789,603			(577,343	)		1,212,260
Total		238,636		(59,586	)		179,050		5,359,202			(1,704,914	)		3,654,288			1,352,561			286,359			1,638,920

F-47

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

(2) Deferred Tax Assets and Deferred Tax Liabilities

Movements in deferred tax assets and deferred tax liabilities are as follows:

	(In thousands of yen)
	Beginning balance as of January 1, 2014			Amounts recorded under profit or loss			Amounts recognized under other comprehensive loss			Other(1)			Ending balance as of December 31, 2014
Deferred tax assets:
Tax losses		3,291			(1,693	)		–			–			1,598
Depreciation		577,017			52,270			–			(138,159	)		491,128
Advances received		542,652			1,134,726			–			–			1,677,378
Deferred revenue		618,052			615,931			–			–			1,233,983
Restoration obligations for operating lease properties		73,114			56,097			–			(14,632	)		114,579
Accrued bonuses		154,390			122,400			–			(22,332	)		254,458
Allowance for doubtful accounts		20,497			59,027			–			(6,095	)		73,429
Other accrued expenses		231,672			107,833			–			(30,179	)		309,326
Accrued enterprise taxes		255,694			335,740			–			(41,011	)		550,423
Other financial assets		92,301			(92,301	)		–			–			–
Share-based compensation		44,634			111,841			–			–			156,475
Other		158,613			379,434			–			(7,010	)		531,037
Total		2,771,927			2,881,305			–			(259,418	)		5,393,814
Deferred tax liabilities:
Customer-related intangible assets		(24,351	)		4,308			–			20,043			–
Available-for sale financial assets		(46,473	)		(796	)		(1,708,938	)		(1,464	)		(1,757,671	)
Prepaid expenses		–			(400,138	)		–			–			(400,138	)
Other		(33,297	)		(16,160	)		–			2,004			(47,453	)
Total		(104,121	)		(412,786	)		(1,708,938	)		20,583			(2,205,262	)

⁽¹⁾ Decreases in others are attributable mainly to disposal of DataHotel. Refer to Note 3 (1) Significant Accounting Policies for further details.

F-48

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

(2) Deferred Tax Assets and Deferred Tax Liabilities (continued)

	(In thousands of yen)
	Beginning balance as of January 1, 2015			Amounts recorded under profit or loss			Amounts recognized under other comprehensive loss			Other			Ending balance as of December 31, 2015
Deferred tax assets:
Tax losses		1,598			3,130,808			–			–			3,132,406
Depreciation		491,128			428,534			–			(21	)		919,641
Advances received		1,677,378			1,289,656			–			–			2,967,034
Deferred revenue		1,233,983			1,116,164			–			–			2,350,147
Restoration obligations for operating lease properties		114,579			93,611			–			(60	)		208,130
Accrued bonuses		254,458			360,353			–			(1,130	)		613,681
Allowance for doubtful accounts		73,429			11,543			–			–			84,972
Other accrued expenses		309,326			111,804			–			(566	)		420,564
Accrued enterprise taxes		550,423			(302,115	)		–			–			248,308
Available-for sale financial assets		–			559,412			–			(1,410	)		558,002
Share-based compensation		156,475			562,749			–			–			719,224
Post-employment benefits		13,813			426,513			576,237			1,007			1,017,570
Tax effect on equity interests in subsidiaries and associates		–			3,955,868			10,677			–			3,966,545
Other		517,224			(58,202	)		–			(33,148	)		425,874
Total		5,393,814			11,686,698			586,914			(35,328	)		17,632,098
Deferred tax liabilities:
Available-for sale financial assets		(1,757,671	)		(51,457	)		(300,555	)		2,246			(2,107,437	)
Prepaid expenses		(400,138	)		50,101			–			–			(350,037	)
Other		(47,453	)		(29,064	)		–			–			(76,517	)
Total		(2,205,262	)		(30,420	)		(300,555	)		2,246			(2,533,991	)

The deferred tax assets and liabilities reconcile to the amounts presented in the Consolidated Balance Sheet as follows:

	(In thousands of yen)
	December 31, 2014			December 31, 2015
Total deferred tax assets		5,393,814			17,632,098
Adjustment to offset deferred tax assets and liabilities		(1,762,089	)		(690,047	)
Net deferred tax assets		3,631,725			16,942,051

F-49

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

(2) Deferred Tax Assets and Deferred Tax Liabilities (continued)

	(In thousands of yen)
	December 31, 2014			December 31, 2015
Total deferred tax liabilities		(2,205,262	)		(2,533,991	)
Adjustment to offset deferred tax assets and liabilities		1,762,089			690,047
Net deferred tax liabilities		(443,173	)		(1,843,944	)

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Below is a breakdown of the deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets were recognized:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Deductible temporary differences		28,021,895		26,543,789
Unused tax losses		23,105,401		14,679,106
Unused tax credits		396,639		210,495
Total		51,523,935		41,433,390

Below is a breakdown of the unused tax losses by expiry date for which no deferred tax assets were recognized:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Less than one year		–		–
Between one year and five years		725,392		1,776,598
Five years and more		22,206,679		1,877,067
No expiration date		173,330		11,025,441
Total		23,105,401		14,679,106

F-50

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

(2) Deferred Tax Assets and Deferred Tax Liabilities (continued)

Below is a breakdown of unused tax credits by expiry date for which no deferred tax assets were recognized:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Less than one year		–		–
Between one year and five years		396,639		210,495
Five years and more		–		–
No expiration date		–		–
Total		396,639		210,495

As of December 31, 2014 and 2015, the total amounts of taxable temporary differences relating to investments in subsidiaries and associates for which deferred tax liabilities are not recognized were 2,076,670 thousand yen and 6,897,050 thousand yen, respectively.

(3) The components of income tax benefits/(expenses) for the years ended December 31, 2013, 2014 and 2015 are as follows:

	(In thousands of yen)
	2013			2014			2015
Current income tax:
Current income tax expenses(1)		(1,938,240	)		(9,619,085	)		(7,595,173	)
Deferred tax:
Changes related to origination and reversal of temporary differences(2)		2,617,768			2,739,637			8,757,821
Changes in the tax rate(3)		(31,007	)		(271,118	)		(1,016,644	)
Income tax benefits/(expenses)		648,521			(7,150,566	)		146,004

⁽¹⁾  Current income tax expenses include previously unrecognized tax benefits from tax loss carryforwards and deductible temporary differences. These benefits were 2,104,412 thousand yen, nil and 1,800,969 thousand yen for the years ended December 31, 2013, 2014 and 2015, respectively.

⁽²⁾  These balances represent the deferred tax benefit from the reversal of previously written-down deferred tax assets partially offset by write-downs of deferred tax assets. The Group had deferred tax benefits of 2,139,045 thousand yen, nil and 5,698,746 thousand yen for the years ended December 31, 2013, 2014 and 2015, respectively.

⁽³⁾  Amendments to the Japanese tax regulations were enacted into law on November 30, 2011. As a result of these amendments, the statutory income tax rate has been reduced to approximately 38.0% effective from the year ended December 31, 2013. Subsequent amendments to the Japanese tax regulations were enacted into law on March 31, 2014 and March 31, 2015. As a result of these amendments, the statutory income tax rate has been reduced to approximately 35.6% effective from the year ended December 31, 2015, and the statutory income tax rates are scheduled to be reduced to approximately 33.1% and 32.3%,

F-51

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

(3) The components of income tax benefits/(expenses) for the years ended December 31, 2013, 2014 and 2015 are as follows (continued):

effective from the years ending December 31, 2016 and 2017, respectively. The Group measured deferred tax assets and deferred tax liabilities at the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.

(4) The income tax expenses calculated by applying the statutory tax rates to the Group’s profit or loss before tax differ from the actual tax expenses in the Consolidated Statements of Profit or Loss for the years ended December 31, 2013, 2014 and 2015 for the following reasons:

	(In thousands of yen)
	2013			2014			2015
(Loss)/profit before tax from continuing operations		(8,318,201	)		6,262,807			(530,118	)
Profit/(loss) before tax from discontinued operations		2,443,544			2,846,559			(11,503,098	)
Accounting (loss)/profit before tax		(5,874,657	)		9,109,366			(12,033,216	)
Income tax benefits/(expenses) at a statutory rate of 35.6% (2013: 38.0% and 2014 38.0%)		2,232,956			(3,462,470	)		4,288,638
Permanent non-deductible items(1)		(354,447	)		(811,952	)		(3,386,033	)
Assessment of the recoverability of deferred tax assets(2)		848,727			(2,369,159	)		2,213,837
Effects of changes in tax rate		(33,609	)		(271,118	)		(1,016,644	)
Differences in applicable tax rate of subsidiaries(3)		(2,243,854	)		(1,463,557	)		(2,217,781	)
Business divestiture(4)		(287,972	)		–			–
Decrease in temporary differences from business divestiture		(596,415	)		(372,033	)		–
Non-taxable income(5)		–			1,511,341			–
Tax effect on equity interests in subsidiaries and associates(6)		–			–			4,260,291
Others		(81,861	)		133,658			(81,203	)
Income tax (expenses)/benefits at an effective tax rate of 33.7% (2013: (8.8%) and 2014: 78.0%)		(516,475	)		(7,105,290	)		4,061,105
Income tax benefits/(expenses) reported in the statements of profit or loss		648,521			(7,150,566	)		146,004
Income tax (expenses)/benefits attributable to discontinued operations		(1,164,996	)		45,276			3,915,101
		(516,475	)		(7,105,290	)		4,061,105

⁽¹⁾  Permanent non-deductible items were mainly related to non-deductible share-based payment expenses, including share-based payment expenses incurred in connection with stock options granted to non-Japanese employees and directors.

⁽²⁾ For the year ended December 31, 2013, the amount was due to recognizing previously unrecognized deferred tax assets of 2,132,169 thousand yen and 1,827,318 thousand yen for tax loss carryforwards and deductible temporary differences, respectively, primarily for the Company on a stand-alone basis. Such impact was partially offset by unrecognized deferred tax assets of 2,953,786 thousand yen and 156,974 thousand yen in connection with the pre-tax losses recorded by the Group’s Korean subsidiaries and the Group’s other subsidiaries, respectively, on a stand-alone basis.

F-52

LINE Corporation

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

(4) The income tax expenses calculated by applying the statutory tax rates to the Group’s profit or loss before tax differ from the actual tax expenses in the Consolidated Statements of Profit or Loss for the years ended December 31, 2013, 2014 and 2015 for the following reasons (continued):

For the year ended December 31, 2014, the amount was related to unrecognized deferred tax assets of 2,245,467 thousand yen and 123,692 thousand yen in connection with the pre-tax losses recorded by the Group’s Korean subsidiaries and the Group’s other subsidiaries, respectively, on a stand-alone basis.

For the year ended December 31, 2015, the amount was due to recognizing previously unrecognized deferred tax assets of 3,092,053 thousand yen and 2,434,188 thousand yen for tax loss carryforwards and deductible temporary differences, respectively, primarily for one of the Group’s Korean subsidiaries on a stand-alone basis. Such impact was partially offset by unrecognized deferred tax assets of 2,368,483 thousand yen and 943,921 thousand yen in connection with the pre-tax losses recorded by MixRadio Limited and the Group’s other subsidiaries, respectively, on a stand-alone basis.

⁽³⁾  The amounts were mainly related to the differences resulting from applying a lower statutory income tax rate of 22.0% for the Korean subsidiaries for the years ended December 31, 2013 and 2014, and a lower statutory income tax rate of 20.0% for MixRadio Limited for the year ended December 31, 2015, versus applying the higher Japanese statutory rates (38.0% for 2013, 38.0% for 2014 and 35.6% for 2015) for the respective fiscal years on pre-tax losses recorded by the Korean subsidiaries and MixRadio Limited.

⁽⁴⁾  The business divestiture was considered to be a transfer of assets for tax purposes and hence was a taxable transaction. However, as the business divestiture was accounted for as a transaction under common control, no gain on such divestiture was recognized in the Group’s Consolidated Statements of Profit or Loss.

⁽⁵⁾  The non-taxable income was related to dividend income received by the Group from one of its subsidiaries.

⁽⁶⁾  This tax effect is mainly due to the deductible temporary difference arising from the investment in MixRadio Limited, which incurred losses during the year. This tax effect offsets MixRadio Limited’s stand-alone tax impacts described in (2) and (3) above.

15. Other Current Liabilities

Other current liabilities as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Deferred revenue		4,160,404		7,820,054
Others		1,443,675		1,204,230
Total other current liabilities		5,604,079		9,024,284

F-53

LINE Corporation

Notes to Consolidated Financial Statements (continued)

16. Financial Assets and Financial Liabilities

The carrying amounts and fair value of financial instruments, except for cash and cash equivalents, by line item in the Consolidated Statements of Financial Position and by category as defined in IAS39 Financial Instruments: Recognition and Measurement as of December 31, 2014 and 2015 are as follows:

The fair value is not disclosed for those financial instruments which are not measured at fair value in the Consolidated Statements of Financial Position, and whose fair value approximates their carrying amount due to their short-term and/or variable-interest bearing nature. Refer to Note 27 Fair Value Measurements for more details on the fair value information of the financial instruments whose fair value is disclosed in this footnote.

					(In thousands of yen)
	December 31, 2014				December 31, 2015
Items	Book value		Fair value		Book value		Fair value
Financial assets
Trade and other receivables
Loans and receivables		24,222,847				27,248,497
Other financial assets, current
Loans and receivables-Time deposits		812,926				314,194
Other		–				27,209
Total		812,926				341,403
Other financial assets, non-current
Held-to-maturity investments(1)		280,567		296,478		280,490		294,595
Loans and receivables
Guarantee deposits(1)		2,341,620				2,531,620
Office security deposits		2,021,785		1,962,124		3,832,993		3,661,179
Financial assets at fair value through profit or loss
Conversion right of redeemable preferred stock		816,605		816,605		871,309		871,309
Available-for-sale financial assets(2)		14,228,204		14,228,204		15,863,543		15,863,543
Other		44,459				86,965
Total		19,733,240				23,466,920

F-54

LINE Corporation

Notes to Consolidated Financial Statements (continued)

16. Financial Assets and Financial Liabilities (continued)

					(In thousands of yen)
	December 31, 2014				December 31, 2015
Items	Book value		Fair value		Book value		Fair value
Financial liabilities
Trade and other payables
Financial liabilities measured at amortized cost		19,368,920				22,983,242
Other financial liabilities, current
Financial liabilities measured at amortized cost
Deposits received		1,403,764				935,041
Short-term borrowings(3)		22,656,788				42,464,553
Corporate bonds(4)		495,000				510,000
Borrowing arrangement(5)		450,542		450,665		–		–
Office security deposits received under sublease arrangement		393,650				–
Others		727				23,618
Total		25,400,471				43,933,212
Other financial liabilities non-current
Financial liabilities measured at amortized cost
Corporate bonds(4)		510,000				–
Office security deposits received under sublease agreement		7,502		7,493		7,502		7,502
Others		1,535				782
Total		519,037				8,284

⁽¹⁾  The Japanese Payment Services Act requires non-banking entities that engage in business activities involving advance payments from end users using virtual credits to secure a certain amount of money equal to or more than one half of the unused balance of virtual credits purchased by the end users as of the most recent base date set on March 31 and September 30 of each year, either by depositing or entrusting a cash reserve or government bonds with the Legal Affairs Bureau, or by concluding a guarantee contract with a financial institution. If deposits are made, they are recorded as guarantee deposits. If guarantee contracts are entered into, guarantee fees equal to the contractual amount times a guarantee fee rate are incurred. In accordance with the Japanese Payment Services Act, the Group had deposited cash of 2,340,200 thousand yen and 2,530,200 thousand yen as of December 31, 2014 and 2015, respectively. The Group also had deposited investments in Japanese government bonds of 280,567 thousand yen and 280,490 thousand yen as of December 31, 2014 and 2015, respectively, which the Group intends to hold until maturity for this purpose. In addition, the Group entered into a credit guarantee contract with a bank in the year ended December 31, 2014 for 2,000,000 thousand yen with a guarantee fee rate of 0.2%, covering, together with the cash reserve and Japanese government bonds described above, more than one half of the end users’ unused balance of virtual credits as of

F-55

LINE Corporation

Notes to Consolidated Financial Statements (continued)

16. Financial Assets and Financial Liabilities (continued)

September 30, 2014 and 2015 to comply with the Japanese Payment Services Act. In certain cases, the authorities may require companies either to make additional deposits with the Legal Affair Bureau or to enter into additional guarantee contracts with financial institutions. It is not practicable to estimate how any such requirements, if imposed on the Company, would impact the Group.

⁽²⁾  Impairment loss of 1,789,603 thousand yen was recognized for available-for-sale financial assets for the year ended December 31, 2015.

⁽³⁾  The weighted average interest rate of the remaining outstanding short-term borrowings as of December 31, 2014 and 2015 was 0.3% and 0.2%, respectively.

⁽⁴⁾  The Company issued unsecured corporate bonds on August 30, 2013 with an aggregate principal amount of 1,500,000 thousand yen due August 31, 2016, at a variable interest rate which was indexed to 6-month TIBOR. Interest and principal are payable semi-annually.

⁽⁵⁾  The Group entered into a secured borrowing arrangement in October 2013, containing a restrictive covenant requiring NAVER to own 50.1% or more shares of the Company, with a financial institution in relation to the security deposit for the Group’s head office lease agreement. The agreement requires the financial institution to guarantee the Group for a loss the Group incurs, up to a maximum of the outstanding amount under the borrowing arrangement, in the event the lessor fails to fully refund the deposit when due. In accordance with the agreement, the financial institution provided 983,000 thousand yen to the Group, for which the Group is required to make monthly interest payments and principal repayments over the two-year contract period. In the event that the security deposit is wholly or partly refunded to the Group by the lessor before the end of the lease agreement, the Group has to immediately repay an equivalent amount to the financial institution up to any outstanding amount under the borrowing arrangement. The effective interest rate of the borrowing arrangement was 1.5% as of December 31, 2014. The Group had repaid the borrowing arrangement in full in the year ended December 31, 2015.

17. Employment Benefits

The Group offers its employees in Korea, Taiwan and Thailand defined benefit plans. The specific features of these plans vary depending on the applicable laws and regulations in each country where the employees work. The majority of the Group’s defined benefit obligation represents the defined benefit plans (unfunded) for employees of LINE Plus, LINE Play, LINE Biz Plus Corporation and LINE Friends Corporation, which are located in Korea. The feature of the defined benefit plans in Korea is described below.

The legal and regulatory framework for the plans is based on the applicable Korean Employee Retirement Benefit Security Act (“ERBSA”). Post-employment defined benefit plan provides lump sum payments to the eligible employees. Directors and current employees of LINE Plus, LINE Play, LINE Biz Plus Corporation and LINE Friends Corporation with a service period of over one year are eligible for such post-employment defined benefits, which are calculated based on a final average pay formula.

Furthermore, the plans expose the Group to actuarial risks, such as interest rate risk, salary increase risk, and longevity risk. Interest rate risk refers to the risk of fluctuation of bond yields. A decrease in the bond yields will increase the defined benefit obligations liability. The salary increase risk refers to the risk that an increase in

F-56

LINE Corporation

Notes to Consolidated Financial Statements (continued)

17. Employment Benefits (continued)

future salary will increase the defined benefit obligations liability. Longevity risk refers to the risk that an increase in life expectancy of the plan participants will increase the defined benefit obligations liability. The defined benefit plans have no related plan assets and, therefore, no risk from plan assets is expected.

(1) Liabilities for defined benefit obligations as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Present value of defined benefit obligations		2,921,467		5,495,416
Liabilities for post-employment benefits		2,921,467		5,495,416

(2) Expenses related to defined benefit plans are recognized in the Consolidated Statements of Profit or Loss as operating expenses for the years ended December 31, 2013, 2014 and 2015 are comprised of the following:

	(In thousands of yen)
	2013		2014		2015
Current service costs		222,585		359,851		1,025,187
Interest costs		29,355		51,660		81,124
Total		251,940		411,511		1,106,311

(3) Movements in the present value of the defined benefit obligations for the years ended December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	2014			2015
Defined benefit obligations at the beginning of year		1,322,980			2,921,467
Current service costs		359,851			1,025,187
Interest costs		51,660			81,124
Remeasurement losses:
Actuarial losses arising from changes in demographic assumptions		–			496
Actuarial losses arising from changes in financial assumptions		280,216			1,042,820
Experience adjustments(1)		374,552			678,797
Payments from the plan		(76,616	)		(112,180	)
Net transfer(2)		369,498			161,862
Exchange differences on translation of foreign operations		239,326			(304,157	)
Defined benefit obligations at the end of year		2,921,467			5,495,416

⁽¹⁾  Experience adjustments mainly represent the effects of changes in actuarial assumptions attributable to the differences between the expected net employees transfer and actual net employees transfer.

⁽²⁾  Net transfer primarily represents the transfer of defined benefit obligations associated with employees of NAVER or other NAVER group companies joining LINE Plus, LINE Play, LINE Biz Plus Corporation and LINE Friends Corporation. Refer to Note 20 Issued Capital and Reserves for more details.

F-57

LINE Corporation

Notes to Consolidated Financial Statements (continued)

17. Employment Benefits (continued)

(4) Significant judgment is required when selecting key assumptions for measuring defined benefit expenses for a period and the defined benefit obligation at the period end for each defined benefit plan. The principal actuarial assumptions used include discount rates and salary increase rates.

The Group determined the discount rate based on market returns of high-quality corporate bonds consistent with the currencies and estimated payment terms corresponding to the defined benefit obligations as of the reporting date in order to calculate the present value of the defined benefit obligations.

	December 31, 2013	December 31, 2014	December 31, 2015
Discount rate	4.2%	3.0%	2.6%
Weighted average of salary increase	11.5%	9.9%-11.9%	9.5%-14.4%

(5) Economic factors and conditions often affect multiple assumptions simultaneously; as such, the effects of changes in key assumptions are not necessarily linear. The following sensitivity analysis illustrates the impact of changes in certain significant actuarial assumptions, leaving all other assumptions constant, as of December 31, 2015:

			(In thousands of yen)
Assumptions	Discount rate		Salary increase rate
Sensitivity level	100 basis point increase	100 basis point decrease	100 basis point increase	100 basis point decrease
Impact on the defined benefit obligations	(520,348)	615,235	545,676	(477,460)

(6) The average duration of the defined benefit plan obligations as of December 31, 2015 was 10.3 years.

The following table shows estimated future benefit payments within ten years from December 31, 2015. Actual payments may differ from those shown because of uncertain future events.

Years	(In thousands of yen)
2016		299,509
2017		399,172
2018		490,335
2019		582,472
2020		675,007
2021–2025		4,696,177

18. Leases—Group as Lessee

Finance leases—Group as lessee

The net carrying amount of assets held under finance leases at December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014	December 31, 2015
Equipment	2,023	1,329

F-58

LINE Corporation

Notes to Consolidated Financial Statements (continued)

18. Leases—Group as Lessee (continued)

The Group has entered into finance lease transactions for various items of equipment. These leases have terms of renewal, but no purchase options or escalation clauses. Renewals are at the option of the specific entity that holds the lease. Future minimum lease payments under finance leases contracts together with the present value of the net minimum lease payments are as follows:

	(In thousands of yen)
	December 31, 2014			December 31, 2015
Within one year
Minimum payments		728			758
Less amounts representing finance charges		(1	)		(1	)
Present value of minimum lease payments		727			757
After one year but not more than five years
Minimum payments		1,457			759
Less amounts representing finance charges		(9	)		(4	)
Present value of minimum lease payments		1,448			755
Total
Minimum payments		2,185			1,517
Less amounts representing finance charges		(10	)		(5	)
Present value of minimum lease payments		2,175			1,512

Operating lease commitments—Group as lessee

The Group has entered into commercial lease agreements for certain office space and stores. The significant leases have lives of between four and five years with renewal option included in the contracts. There are no restrictions placed upon the Group by entering into these leases.

Future minimum rentals payable under non-cancelable operating leases are as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Within one year		1,632,483		2,848,114
After one year but not more than five years		2,228,722		2,663,140
		3,861,205		5,511,254

Of the operating lease expenses of 1,418,802 thousand yen for the year ended December 31, 2014, 889,147 thousand yen was attributable to minimum lease payment expenses, and the remaining 529,655 thousand yen was related to the variable lease payment expenses.

Of the operating lease expenses of 2,840,428 thousand yen for the year ended December 31, 2015, 1,891,328 thousand yen was attributable to minimum lease payment expenses, and the remaining 949,100 thousand yen was related to the variable lease payment expenses.

F-59

LINE Corporation

Notes to Consolidated Financial Statements (continued)

19. Leases—Group as Lessor

Operating leases—Group as lessor

The Group has entered into cancelable lease contracts related to servers, data storage, network equipment, PCs and software with third parties.

In 2013, 2014 and 2015, the Group subleased part of its head office to a third party. There was no minimum payment requirement in the sublease arrangement, and sublease income was based on the actual square footage occupied by the third party. The Group recognized sublease income of 306,023 thousand yen, 469,267 thousand yen and 51,484 thousand yen for the years ended December 31, 2013, 2014 and 2015, respectively.

20. Issued Capital and Reserves

The movements in issued capital and reserves for the years ended December 31, 2013, 2014 and 2015 are as follows:

(1) Authorized shares and shares issued

The movements of authorized shares and shares issued for the years ended December 31, 2013, 2014 and 2015 are as follows:

	Authorized shares (Share capital with no-par value)(1)		Shares issued (Share capital with no-par value)(1)					Share capital (thousands of yen)
			Common Shares			Class A shares
January 1, 2013		400,000,000		174,992,000			–		12,596,198
Changes during the year		–		–			–		–
December 31, 2013		400,000,000		174,992,000			–		12,596,198
Changes during the year		–		–			–		–
December 31, 2014		400,000,000		174,992,000			–		12,596,198
Conversion of common shares to class A shares(2)		290,000,000		(174,992,000	)		174,992,000		–
December 31, 2015		690,000,000		–			174,992,000		12,596,198

⁽¹⁾  On July 28, 2014, the Company’s board of directors approved a five-hundred-for-one forward stock split of the Company’s common shares, effective July 28, 2014 (the “2014 Stock Split”). As a result of the stock split, the number of shares issued increased by 174,642,016 from 349,984 to 174,992,000. All references in the financial statements to the number of shares outstanding, per share amounts and stock option data of the Company have been adjusted to reflect the effect of the 2014 Stock Split for all periods presented.

⁽²⁾  Through the amendment of its articles of incorporation on June 15, 2015, the Company introduced a dual class structure of common shares and class A shares. Under the dual class structure, each common share has one vote per unit of 100 shares, and each class A share has one vote per unit of 10 shares, while both classes of shares have the same rights to share in profit, distribution of retained earnings and residual assets. As part of the amendment, the total number of authorized shares was increased to 690,000,000, of which up to 190,872,500 shares may be issued as class A shares. Additionally, the Company converted all

F-60

LINE Corporation

Notes to Consolidated Financial Statements (continued)

20. Issued Capital and Reserves (continued)

(1) Authorized shares and shares issued (continued)

outstanding shares held by NAVER into class A shares. Class A shares are mandatorily converted to common shares on a one-to-one basis upon passage of time or occurrence of certain events as specified in the articles of incorporation.

Through an amendment of its article of incorporation effective as of March 31, 2016, the Company terminated its dual class structure of shares. Refer to Note 35 Subsequent Events for further details.

(2) Share premium and retained earnings

Share premium

The movements in share premium for the years ended December 31, 2013, 2014 and 2015 are as follows:

	(In thousands of yen)
	Share-based payments(6)		Common control business combinations			Others			Share premium total
January 1, 2013		31,151		472,408			12,583,922			13,087,481
Distributions to the shareholder(1)		–		–			(216,217	)		(216,217	)
Dividends(2)		–		–			(8,651,680	)		(8,651,680	)
Share-based payments		804,438		–			–			804,438
Acquisition of LINE Play by the Group(3)		–		(45,450	)		–			(45,450	)
December 31, 2013		835,589		426,958			3,716,025			4,978,572
Distributions to the shareholder(4)		–		–			(36,842	)		(36,842	)
Share-based payments		2,974,692		–			–			2,974,692
Acquisition of LINE Vietnam by the Group(5)		–		(133,329	)		–			(133,329	)
Other		–		–			(11,434	)		(11,434	)
December 31, 2014		3,810,281		293,629			3,667,749			7,771,659
Share-based payments		11,212,630		–			–			11,212,630
Change in ownership interest in a subsidiary without losing control		–		–			(1,513	)		(1,513	)
December 31, 2015		15,022,911		293,629			3,666,236			18,982,776

F-61

LINE Corporation

Notes to Consolidated Financial Statements (continued)

20. Issued Capital and Reserves (continued)

(2) Share premium and retained earnings (continued)

Share premium (continued)

⁽¹⁾  LINE Plus was established by the Company and NAVER in February 2013. Certain NAVER employees, along with their associated post-employment defined benefit obligations at the time of transfer, were transferred to LINE Plus. LINE Plus received 595,079 thousand yen as a result of such transfer. 360,362 thousand yen is the difference between the total defined benefit obligations assumed by LINE Plus and the cash proceeds received from NAVER. Of the 360,362 thousand yen, 144,145 thousand yen was attributable to the non-controlling interest, while the remaining 216,217 thousand yen was attributable to the shareholder, which was accounted for as a deemed distribution to the shareholder and charged to share premium.

⁽²⁾  The disposed Hangame business and related entities were transferred to a new entity, New NHN Japan Corporation (“New NHN Japan”). The decrease in share premium was due to the distribution of the shares of New NHN Japan to NAVER. Refer to Note 21 Supplemental Cash Flow Information for more details.

⁽³⁾  The decrease in share premium was attributable to the acquisition of LINE Play from NAVER by the Group in 2013.

⁽⁴⁾  LINE Biz Plus Corporation was established by LINE Plus in 2014. Certain NAVER employees, along with their associated post-employment defined benefit obligations at the time of transfer, were transferred to LINE Biz Plus Corporation. There was a difference between the total defined benefit obligations assumed by the Group and the cash proceeds received from NAVER. Such difference of 36,842 thousand yen was accounted for as a deemed distribution to the shareholder and charged to share premium.

⁽⁵⁾  The decrease in share premium was attributable to the acquisition of LINE Vietnam from NAVER by the Group in 2014.

⁽⁶⁾  Through the amendment of its articles of incorporation on June 15, 2015, the Company amended the terms applicable to a portion of two tranches of stock options, which are the acquisition rights for common shares (the “Common Stock Options”). As a result of the amendment, 24,724 Common Stock Options originally granted on December 17, 2012 and 6,949 Common Stock Options originally granted on February 4, 2015 were converted to the acquisition rights for class A shares (the “Class A Stock Options”), with the holders of such options entitled to acquire 500 class A shares upon exercise of each stock option. Refer to Note 28 Share-Based Payments for further details.

Through an amendment of its article of incorporation effective as of March 31, 2016, the Company amended the terms applicable to stock options from class A shares to common shares. Refer to Note 35 Subsequent Events for further details.

Under the Companies Act of Japan, at least 50% of the proceeds of certain issuances of share capital shall be credited to share capital. The remaining proceeds shall be credited to share premium. The Companies Act permits, upon approval at the general meeting of shareholders, the transfer of amounts from share premium to share capital.

F-62

LINE Corporation

Notes to Consolidated Financial Statements (continued)

20. Issued Capital and Reserves (continued)

(2) Share premium and retained earnings (continued)

Retained earnings

The Companies Act of Japan requires that an amount equal to at least 10% of dividends from surplus, as defined under the Companies Act, shall be appropriated as capital reserve (part of share premium) or appropriated for legal earnings reserve (part of retained earnings) until the aggregate amount of capital reserve and legal earnings reserve is equal to 25% of share capital. The legal earnings reserve may be used to eliminate or reduce a deficit or be transferred to other retained earnings upon approval at the general meeting of shareholders. The Company has not declared or paid cash dividends to date, and therefore no legal earnings reserve has been recorded as of December 31, 2015.

21. Supplemental Cash Flow Information

Divestiture of Hangame Business

The Company’s board of directors approved a plan to dispose its Hangame business and related subsidiaries, including NHN Search Technology Corp., NHST Japan Corp., Sync. Corp., and Mediator Corp., as well as Smartphone Contents Investment Limited Partnership, which was one of the Group’s associates (49.95% ownership interest), in February 2013. The disposed Hangame business and related entities were transferred to a new entity, New NHN Japan.

All of the shares of New NHN Japan were distributed to NAVER in the form of a non-cash distribution in April 2013 which was accounted for as a transaction under common control. The book value of New NHN Japan was 8,651,680 thousand yen at the time of distribution. The assets and liabilities of the Hangame business and related entities eventually distributed to NAVER are presented below. Refer to Note 24 Discontinued Operations for more details.

	(In thousands of yen)
Cash and cash equivalents(1)		7,800,358
Other current assets		3,779,999
Non-current assets		1,065,204
Current liabilities		(3,436,143	)
Non-current liabilities		(148,290	)
Net assets transferred due to the divestiture of the Hangame business and related entities		9,061,128

⁽¹⁾  This amount is included in “Cash outflow from divestitures of business and related entities” in the Company’s Consolidated Statements of Cash Flows.

F-63

LINE Corporation

Notes to Consolidated Financial Statements (continued)

21. Supplemental Cash Flow Information (continued)

Divestiture of Match-Making Service Business

Assets and liabilities disposed, gain on divestiture of business, and cash consideration received in connection with the sale of the online match-making services business that occurred during 2013, are presented below. Refer to Note 24 Discontinued Operations for more details.

	(In thousands of yen)
Current assets		382,980
Non-current assets		138,812
Current liabilities		(391,252	)
Gain on divestiture of business		739,460
Net increase in cash and cash equivalents due to the divestiture of the online match-making services business(1)		870,000

⁽¹⁾  This amount is included in “Proceeds from divestitures of business and related entities” in the Company’s Consolidated Statements of Cash Flows.

Transfer of Post-Employment Defined Benefit Obligations

LINE Plus was established by the Company and NAVER in 2013. Certain NAVER employees, along with their associated post-employment defined benefit obligations at the time of transfer, were transferred to LINE Plus. There was a difference between the total defined benefit obligations assumed by the Group and the cash proceeds received from NAVER. Such difference of 360,362 thousand yen was of a non-cash nature.

LINE Biz Plus Corporation was established by the Group in 2014. Certain NAVER employees, along with their associated post-employment defined benefit obligations at the time of transfer, were transferred to LINE Biz Plus Corporation. There was a difference between the total defined benefit obligations assumed by the Group and the cash proceeds received from NAVER. Such difference of 36,842 thousand yen was of a non-cash nature.

F-64

LINE Corporation

Notes to Consolidated Financial Statements (continued)

21. Supplemental Cash Flow Information (continued)

Divestiture of Data Management Business

The Company’s board of directors approved a plan to dispose its data management business in September 2014. The assets and liabilities of the data management business, gain on divestiture of business and subsidiary, and cash consideration received in connection with such sale are presented below. Refer to Note 3 (1) Significant Accounting Policies and Note 24 Discontinued Operations for more details.

	(In thousands of yen)
Cash and cash equivalents		1,633,156
Other current assets		831,678
Non-current assets		1,820,138
Current liabilities		(3,614,222	)
Non-current liabilities		(102,877	)
Gain on divestiture of business and subsidiary		2,455,959
Total consideration received in cash		3,023,832
Net increase in cash and cash equivalents due to the divestiture of the data management business and subsidiary(1)		1,390,676

⁽¹⁾  This amount is included in “Proceeds from divestitures of business and related entities” in the Company’s Consolidated Statements of Cash Flows.

22. Revenues

Revenues were derived from the rendering of services, the sale of goods and royalties.

Revenues by category for the year ended December 31, 2013, 2014 and 2015 are as follows:

	(In thousands of yen)
	2013		2014		2015
Sale of goods		69,143		1,323,192		4,250,086
Rendering of services		39,516,618		85,043,077		115,515,009
Royalties		–		–		640,436
Total		39,585,761		86,366,269		120,405,531

F-65

LINE Corporation

Notes to Consolidated Financial Statements (continued)

23. Other Income and Expenses

(1) Other operating income for the years ended December 31, 2013, 2014 and 2015 is as follows:

	(In thousands of yen)
	2013		2014		2015
Virtual credits breakage income		–		238,480		346,535
Gain on divestitures of business and subsidiaries		55,419		–		–
Others		14,225		57,421		127,828
Total		69,644		295,901		474,363

(2) Other operating expenses for the years ended December 31, 2013, 2014 and 2015 are as follows:

		(In thousands of yen)
	2013		2014		2015
Rent(2)		867,741		1,431,397		2,301,692
Travel		522,589		1,419,270		1,851,145
Supplies		260,576		726,664		722,938
Taxes and dues		313,739		235,716		249,760
Professional fees		450,621		1,652,188		2,256,063
Cost of goods		4,142		874,704		3,209,027
Training(2)		113,227		483,664		823,412
Others		782,610		1,731,312		3,017,358
Total		3,315,245		8,554,915		14,431,395

(3) Other non-operating income for the years ended December 31, 2013, 2014 and 2015 is as follows:

	(In thousands of yen)
	2013		2014		2015
Gain on settlement of foreign exchange forward contracts		7,176		–		–
Gain on financial assets at fair value through profit		–		–		110,507
Dividend income		–		–		46,516
Total		7,176		–		157,023

(4) Other non-operating expenses for the years ended December 31, 2013, 2014 and 2015 are as follows:

	(In thousands of yen)
	2013		2014		2015
Loss on impairment of available-for-sale financial assets		–		–		1,789,603
Loss on settlement of foreign exchange forward contracts		–		–		38,838
Loss on valuation of foreign exchange forward contracts		–		–		22,864
Others		–		–		36,132
Total		–		–		1,887,437

F-66

LINE Corporation

Notes to Consolidated Financial Statements (continued)

24. Discontinued Operations

On February 13, 2013, the Company’s board of directors approved a plan to dispose of its Hangame business and related subsidiaries, including NHN Search Technology Corp., NHST Japan Corp., Sync. Corp and Mediator Corp., as well as Smartphone Contents Investment Limited Partnership, an associate in which the Group held a 49.95% ownership interest. The disposed Hangame business and related entities were transferred to a new entity, New NHN Japan, which specializes in gaming services. The Group later disposed of New NHN Japan by transferring all the related shares to NAVER. The operations of the Hangame business and related entities were classified as discontinued operations and the disposition was completed when all shares of New NHN Japan were distributed to NAVER on April 1, 2013. As New NHN Japan was transferred to NAVER, the parent of the Company, this disposal was accounted for as a transaction under common control and the Group did not record a gain or loss on distribution for financial accounting purposes, but did incur a gain for tax purposes.

On September 30, 2013, the Company’s board of directors approved a plan to dispose of its online match-making services business, which was part of the LINE business and portal segment. The disposition was completed on December 2, 2013 through a sale to an unrelated third party. For the assets and liabilities disposed and impact on the Group’s cash flows from these transactions, refer to Note 21 Supplemental Cash Flow Information for more details. Since the decisions to dispose and the disposals of the Hangame business and related entities and the online match-making services business occurred within the 2013 fiscal year, there were no disposal groups as of December 31, 2013.

On September 19, 2014, the Company’s board of directors approved a plan to dispose of its data management business. The operations of the data management business were classified as discontinued operations on September 19, 2014, and the disposition was completed through a sale to a subsidiary of NHN Entertainment Corporation on September 30, 2014. NHN Entertainment Corporation was spun off by NAVER in August 2013. NAVER held a 9.54% interest in NHN Entertainment Corporation, which NAVER disposed on September 30, 2014. As of September 30, 2014, NAVER had no remaining interest in NHN Entertainment Corporation. As a result, the data management business was retrospectively classified as part of the discontinued operations on the Consolidated Statements of Profit or Loss for the years ended December 31, 2013 and 2014. Refer to Note 3 (1) Significant Accounting Policies for more details.

On February 12, 2016, the board of directors approved the abandonment of the MixRadio segment. The operation of the MixRadio business was classified as a discontinued operation on March 21, 2016, when the abandonment took effect. As a result, the MixRadio business was retrospectively presented as a discontinued operation on the Consolidated Statements of Profit or Loss for the year ended December 31, 2015. Also refer to Note 12 (1), (3) Impairment for further details on impairment losses incurred attributable to the MixRadio segment.

F-67

LINE Corporation

Notes to Consolidated Financial Statements (continued)

24. Discontinued Operations (continued)

The aggregated results of the discontinued operations for the years ended December 31, 2013, 2014 and 2015 are presented below.

	(In thousands of yen)
	2013			2014			2015
Revenues		11,274,952			3,476,856			264,306
Other income		59,807			607			–
Expenses(1)		(9,630,675	)		(3,086,863	)		(11,767,404	)
Gain on the disposal of the discontinued operations(2)(3)		739,460			2,455,959			–
Profit/(loss) before tax from discontinued operations		2,443,544			2,846,559			(11,503,098	)
Income tax expenses on ordinary activities		(707,957	)		(216,418	)		–
Income tax (expenses)/benefits on distribution and disposal(3)(4)(5)		(457,039	)		261,694			3,915,101
Profit/(loss) for the year from discontinued operations (attributable to the shareholder of the Company)		1,278,548			2,891,835			(7,587,997	)

⁽¹⁾  The expenses for the year ended December 31, 2015 include impairment losses incurred attributable to the MixRadio segment. Refer to Note 12 (1), (3) Impairment for further details.

⁽²⁾  The gain for the year ended December 31, 2013 is related to the disposal of the online match-making services business.

⁽³⁾  The Group recognized a gain of 2,455,959 thousand yen on the disposal of the data management business for financial accounting purposes on a consolidated basis. However, for income tax purposes, the Group recognized a loss on the disposal of the data management business, based on the book value of its investment in the data management subsidiaries on a stand-alone basis. Accordingly, the Group incurred 261,694 thousand yen of income tax benefits on the loss on sale for the year ended December 31, 2014.

⁽⁴⁾  The divestiture of New NHN Japan was accounted for as a transaction under common control and, accordingly, no disposal gain or loss was recorded for financial accounting purposes. However, the divestiture was deemed to be a transfer of assets for income tax purposes, and hence, was a taxable transaction. Accordingly, the Group incurred 287,972 thousand yen of income tax expense on the gain on sale. The remaining 169,067 thousand yen of income tax expense relates to the gain on sale of the online match-making services business.

⁽⁵⁾  The income tax benefits of 3,915,101 thousand yen is mainly due to the deductible temporary difference arising from the investment in MixRadio Limited, which incurred losses during the year.

The aggregated cash flow information of the discontinued operations for the years ended December 31, 2013, 2014 and 2015, are presented below.

	(In thousands of yen)
	2013			2014		2015
Operating		2,970,930			384,183		(6,457,229	)
Investing		(743,383	)		1,034,244		(2,426,395	)
Financing		–			2,300,000		–
Net cash inflow/(outflow)		2,227,547			3,718,427		(8,883,624	)

F-68

LINE Corporation

Notes to Consolidated Financial Statements (continued)

25. Earnings per Share

The profit or loss for the year and the weighted average number of shares used in the calculation of earnings per share are as follows:

(In thousands of yen, except number of shares)
	2013			2014		2015
(Loss)/profit for the year attributable to the shareholder of the Company from continuing operations		(2,042,882	)		1,315,154		6,196
Profit/(loss) for the year attributable to the shareholder of the Company from discontinued operations		1,278,548			2,891,835		(7,587,997	)
Total (loss)/profit for the year attributable to the shareholder of the Company for basic earnings and diluted earnings per share		(764,334	)		4,206,989		(7,581,801	)
Weighted average number of common and class A shares for basic earnings per share		174,992,000			174,992,000		174,992,000
Effect of dilution:
Stock options		–			15,032,846		18,805,566
Weighted average number of total common and class A shares adjusted for the effect of dilution		174,992,000			190,024,846		193,797,566

As a result of the 2014 Stock Split, all historical per share data shown above reflects the application of the 2014 Stock Split. See Note 20 Issued Capital and Reserves for more details.

In calculating diluted earnings per share, stock options outstanding are taken into account where their impact is dilutive. Outstanding stock options as of December 31, 2013 and 2014, which were equivalent to 3,430,500 and 348,500 common shares upon exercise, respectively, were excluded from the calculation of the total diluted number of common shares for the year ended December 31, 2013 and 2014, respectively, as their impact is antidilutive.

Outstanding stock options as of December 31, 2015, which were equivalent to 9,848,000 common shares and 15,836,500 class A shares upon exercise, had a dilutive impact on the profit per share from continuing operations and were included in the calculation of the total diluted number of common shares and class A shares for the year ended December 31, 2015. For the year ended December 31, 2015, diluted loss per share attributable to the shareholder of the Company is lower than basic loss per share attributable to the shareholders of the Company because of the effect of losses from the discontinued operations.

Through an amendment of its article of incorporation effective as of March 31, 2016, the Company terminated its dual class structure of shares. Refer to Note 35 Subsequent Events for further details.

26. Financial Risk Management

The Group has exposure to the following risks from its use of financial instruments:

– Credit risk

– Liquidity risk

– Market risk

F-69

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout the Group’s consolidated financial statements.

(1) Risk Management Framework

The Group limits its fund management to highly liquid and low risk short-term investments, such as time deposits. The Group raises funds mainly through the issuance of corporate bonds, and borrowings from financial institutions, including banks, with high credit ratings. The Group may enter into foreign exchange forward contracts to hedge foreign exchange risk. The Group does not enter into any financial transactions for speculative purposes.

(2) Credit Risk

Credit risk is the risk of financial losses to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investments.

(a) Maximum amounts of possible financial loss to the Group due to credit risk as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
	Book value		Book value
Demand deposits(1)		20,253,516		33,648,520
Time deposits(1)		812,926		314,194
Guarantee deposits(1)(2)		2,341,620		2,531,620
Trade and other receivables(3)		24,222,847		27,248,497
Japanese debt securities(1)(2)		280,567		280,490
Office security deposits(1)(4)		2,021,785		3,832,993
Total		49,933,261		67,856,314

⁽¹⁾  None of these assets were past due or impaired at the end of the respective reporting period.

⁽²⁾  Refer to Note 16 Financial Assets and Financial Liabilities for details of the financial instruments being deposited under the Japanese Payment Services Act.

⁽³⁾  For receivables, the Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group regularly performs credit assessments on customers and counterparties considering their financial position and historical data in order to manage the credit risk.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical experience for similar assets.

F-70

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

(2) Credit Risk (continued)

The Group identifies concentrations of credit risk when a limited number of the Group’s counterparties that have similar characteristics or business activities, and thus are affected similarly by changes in economic or other conditions, account for a large portion of the entire trade and other receivables. The Group had significant concentrations of credit risk with two payment processing service providers, representing 67.5% and 59.5% of trade and other receivables as of December 31, 2014 and 2015, respectively.

⁽⁴⁾  The amount mainly consists of the office security deposits paid for the Group’s office lease agreements. In October 2013, the Group entered into an agreement with a financial institution to cover its credit risk associated with the office security deposit of the Group’s head office lease agreement. 450,542 thousand yen and nil was guaranteed by the agreement and a corresponding liability was recorded as a borrowing arrangement as of December 31, 2014 and 2015, respectively.

(b) Impaired or past-due financial assets

In case of impairment of financial assets, the Group does not directly write off such assets by reducing the carrying amount, but instead records an allowance for doubtful accounts. However, in the event that there is no realistic prospect of future recovery, financial assets are directly written off.

Below is the movement in the allowance for doubtful accounts attributable to trade and other receivables:

	(In thousands of yen)
	Allowance for doubtful accounts
Balance at January 1, 2014		79,969
Provision for the year		228,278
Reversal		(4,891	)
Business divestiture		(16,270	)
Balance at December 31, 2014		287,086
Provision for the year		253,795
Reversal		(108,718	)
Utilized		(2,216	)
Balance at December 31, 2015		429,947

Refer to Note 7 Trade and Other Receivables for more details on non-current trade and other receivables that were tested for impairment on an individual basis.

(3) Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as much as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

F-71

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

(3) Liquidity Risk (continued)

The Group monitors its cash flow through long-term and short-term management strategies and ensures it has sufficient cash on hand to meet expected operational expenses.

(a) Financial liabilities

The book values of financial liabilities based on the remaining maturities as of December 31, 2014 and 2015 are as follows. The amounts below include estimated interest from financial liabilities scheduled to be paid.

	(In thousands of yen)
	December 31, 2014
	Book value		Contractual cash outflows		Less than one year		One to five years		After five years
Trade and other payables		19,368,920		19,368,920		19,368,920		–		–
Short-term borrowings(1)		22,656,788		22,707,384		22,707,384		–		–
Deposits received		1,403,764		1,403,764		1,403,764		–		–
Borrowing arrangement(2)		450,542		453,752		453,752		–		–
Office security deposits received under sublease agreement		401,152		401,152		393,650		7,502		–
Corporate bonds		1,005,000		1,008,796		497,641		511,155		–
		45,286,166		45,343,768		44,825,111		518,657		–

	(In thousands of yen)
	December 31, 2015
	Book value		Contractual cash outflows		Less than one year		One to five years		After five years
Trade and other payables		22,983,242		22,983,242		22,964,373		18,869		–
Short-term borrowings(1)		42,464,553		42,487,943		42,487,943		–		–
Deposits received		935,041		935,041		935,041		–		–
Office security deposits received under sublease agreement		7,502		7,502		7,502		–		–
Corporate bonds		510,000		510,989		510,989		–		–
		66,900,338		66,924,717		66,905,848		18,869		–

⁽¹⁾  The Group had lines of credit with four banks for the years ended December 31, 2014 and 2015. The lines of credit available and the lines of credit used are as follows:

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Lines of credit available		24,700,000		54,200,000
Lines of credit used		22,656,788		42,464,553
Remaining lines of credit available		2,043,212		11,735,447

⁽²⁾  Refer to Note 16 Financial Assets and Financial Liabilities for details of the borrowing arrangement.

F-72

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

(3) Liquidity Risk (continued)

(b) Financial assets

Private equity investments

As a limited partner of the private equity investment funds, the Group may be required at any time to contribute to the partnership its pro rata share of the aggregate amount to be contributed by all limited partners for such portfolio investment, up to the amount of its unfunded capital commitment (380 thousand U.S. dollars, equivalent of 45,762 thousand yen, as of December 31, 2014 and 380 thousand U.S. dollars, equivalent of 45,818 thousand yen, as of December 31, 2015) as of the day of the capital contribution call.

(4) Market Risk

Market risk is the risk that changes in market prices which will affect the future cash flow or the value of the Group’s holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(a) Exchange rate risk

The Group has exposure to currency risk on sales and purchase transactions denominated in currencies other than the functional currencies. The main currencies used for transactions of the Group are the Japanese yen (“JPY”), the Korean won (“KRW”), the Taiwan dollar (“TWD”), the euro (“EUR”) and the U.S. dollar (“USD”).

The book values of major monetary assets and liabilities denominated in currencies other than the functional currency as of December 31, 2014 and 2015 are as follows:

	(In thousands)
	December 31, 2014
	Currency	Amount		Exchange rate		Yen equivalent
Monetary assets:
Cash and cash equivalents	EUR		1,274		146.54		186,663
	KRW		50,332,185		0.11		5,526,474
	USD		7,420		120.55		894,538
Trade receivables	KRW		1,096,604		0.11		120,407
	TWD		183,969		3.78		695,401
	USD		4,787		120.55		577,095
Other receivables	KRW		1,780,565		0.11		195,506
Total							8,196,084

F-73

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

(4) Market Risk (continued)

	(In thousands)
	December 31, 2015
	Currency	Amount			Exchange rate		Yen equivalent
Monetary assets:
Cash and cash equivalents	KRW		7,427,220			0.10		764,112
	USD		29,248			120.57		3,526,564
	TWD		29,382			3.65		107,341
	EUR		1,269			131.74		167,156
Trade receivables	KRW		4,359,230			0.10		448,478
	USD		7,599			120.57		916,210
Time deposits	KRW		2,899,989			0.10		298,351
Office security deposits	KRW		5,225,093			0.10		537,558
Available-for-sale financial assets	USD		5,336			120.57		643,446
Total								7,409,216
	(In thousands)
	December 31, 2014
	Currency	Amount			Exchange rate		Yen equivalent
Monetary liabilities:
Other payables	EUR		(906	)		146.54		(132,710	)
	KRW		(37,718,989	)		0.11		(4,141,545	)
	USD		(3,149	)		120.55		(379,611	)
Total								(4,653,866	)
	(In thousands)
	December 31, 2015
	Currency	Amount			Exchange rate		Yen equivalent
Monetary liabilities:
Other payables	KRW		8,030,768			0.10		826,205
	USD		(5,788	)		120.57		(697,879	)
	EUR		(9,843	)		131.74		(1,296,684	)
Total								(1,168,358	)

F-74

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

(4) Market Risk (continued)

The effects on profit or loss before tax from continuing operations and shareholder’s equity as a result of exchange rate fluctuations as of December 31, 2014 and 2015, are as follows:

	(In thousands of yen)
	December 31, 2014
	Shareholder’s equity					Profit or (loss) before tax
Currency	Appreciation of functional currency by 5%		Depreciation of functional currency by 5%			Appreciation of functional currency by 5%		Depreciation of functional currency by 5%
EUR		2,103		(2,003	)		2,696		(2,567	)
KRW		64,985		(61,891	)		85,042		(80,992	)
USD		41,935		(39,938	)		55,031		(52,411	)
TWD		27,121		(25,829	)		34,770		(33,114	)

	(In thousands of yen)
	December 31, 2015
	Shareholder’s equity						Profit or (loss) before tax
Currency	Appreciation of functional currency by 5%			Depreciation of functional currency by 5%			Appreciation of functional currency by 5%			Depreciation of functional currency by 5%
EUR		(45,034	)		42,889			(56,476	)		53,787
KRW		111,279			(105,980	)		143,735			(136,891	)
USD		163,904			(156,099	)		219,417			(208,969	)
TWD		4,067			(3,873	)		5,367			(5,111	)

The tables above demonstrate the sensitivity to a change in EUR, KRW, USD and TWD assuming all other variables are constant.

(b) Interest rate risk

Interest bearing financial assets and liabilities as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
	December 31, 2014				December 31, 2015
	Fixed rate		Variable rate		Fixed rate		Variable rate
Financial assets
Japanese debt securities		280,567		–		280,490		–
Time deposits		812,926		–		314,194		–
Total financial assets		1,093,493		–		594,684		–
Financial liabilities
Short-term borrowings		956,788		21,700,000		464,553		42,000,000
Corporate bonds		–		1,005,000		–		510,000
Total financial liabilities		956,788		22,705,000		464,553		42,510,000

F-75

LINE Corporation

Notes to Consolidated Financial Statements (continued)

26. Financial Risk Management (continued)

(4) Market Risk (continued)

The Group has exposure to interest rate risk as it possesses financial assets and liabilities bearing variable interest rates. The analysis below was performed using balances of the financial liabilities with variable interest rates outstanding as of December 31, 2014 and 2015, assuming such liabilities were outstanding for the full fiscal year immediately before the respective dates, while holding all other variables constant. Potential effects on shareholder’s equity and profit or loss for one year from the reporting date as a result of a change in the interest rate are as follows.

	(In thousands of yen)
	December 31, 2014
	Shareholder’s equity					Profit or (loss) before tax
	Increase of 50 basis points			Decrease of 50 basis points		Increase of 50 basis points			Decrease of 50 basis points
Interest expenses		(66,175	)		33,392		(102,820	)		51,882

	(In thousands of yen)
	December 31, 2015
	Shareholder’s equity					Profit or (loss) before tax
	Increase of 50 basis points			Decrease of 50 basis points		Increase of 50 basis points			Decrease of 50 basis points
Interest expenses		(39,975	)		15,910		(59,717	)		23,768

(5) Capital management

The Group maintains a strong capital base to ensure the Group will be able to continue as a going concern. In addition, through management of the debt and equity balances, the Group aims to maintain investor, creditor and market confidence, and to sustain future development of the business. In order to achieve sustainable growth, the Group understands that financing capacities sufficient to make business investments when there are opportunities, such as the acquisition of external resources for business growth, are required. For that reason, the Group aims to maintain a well-balanced capital structure by ensuring sound and flexible financial conditions for future business investment.

	(In thousands of yen)
	December 31, 2014		December 31, 2015
Short-term borrowings		22,656,788		42,464,553
Corporate bonds		1,005,000		510,000
Total		23,661,788		42,974,553
Total shareholder’s equity		12,510,968		17,532,885

The Group is not subject to any externally imposed capital requirements.

F-76

LINE Corporation

Notes to Consolidated Financial Statements (continued)

27. Fair Value Measurements

(1) Fair value hierarchy

The Group referred to the levels of the fair value hierarchy for financial instruments measured at fair value on the consolidated financial statements based on the following inputs:

– Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

– Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

– Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entity’s own assumptions that market participants would use in establishing a price.

Transfers between levels of the fair value hierarchy are recognized as if they have occurred at the beginning of the reporting period.

(2) Fair value measurements by fair value hierarchy

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
December 31, 2014	Level 1		Level 2		Level 3		Total
Financial asset at fair value through profit or loss
Conversion right of redeemable preferred stock		–		–		816,605		816,605
Available-for-sale financial assets
Listed equity securities		6,925,765		–		–		6,925,765
Private equity investments		–				7,302,439		7,302,439
Total		6,925,765		–		8,119,044		15,044,809
	(In thousands of yen)
December 31, 2015	Level 1		Level 2		Level 3		Total
Financial asset at fair value through profit or loss
Conversion right of redeemable preferred stock		–		–		871,309		871,309
Available-for-sale financial assets
Listed equity securities		2,215,330		–		–		2,215,330
Private equity investments		–		–		13,648,213		13,648,213
Total		2,215,330		–		14,519,522		16,734,852

F-77

LINE Corporation

Notes to Consolidated Financial Statements (continued)

27. Fair Value Measurements (continued)

(2) Fair value measurements by fair value hierarchy (continued)

Assets and liabilities for which fair values are disclosed as of December 31, 2014 and 2015 are as follows:

	(In thousands of yen)
December 31, 2014	Level 1		Level 2		Level 3		Total
Held-to-maturity investments
Japanese government bonds		–		296,478		–		296,478
Loans and receivables
Office security deposits		–		1,962,124		–		1,962,124
Total		–		2,258,602		–		2,258,602
Financial liabilities measured at amortized cost
Borrowing arrangement		–		450,665		–		450,665
Office security deposits received under sublease agreement		–		7,493		–		7,493
Total		–		458,158		–		458,158

	(In thousands of yen)
December 31, 2015	Level 1		Level 2		Level 3		Total
Held-to-maturity investments
Japanese government bonds		–		294,595		–		294,595
Loans and receivables
Office security deposits		–		3,661,179		–		3,661,179
Total		–		3,955,774		–		3,955,774
Financial liabilities measured at amortized cost
Office security deposits received under sublease agreement		–		7,502		–		7,502
Total		–		7,502		–		7,502

There have been no transfers among Level 1, Level 2 and Level 3 during the years ended December 31, 2014 and 2015, except for the transfer from Level 3 to Level 1 as described in (3) below.

F-78

LINE Corporation

Notes to Consolidated Financial Statements (continued)

27. Fair Value Measurements (continued)

(3) Reconciliations from the opening balance to the closing balance of financial instruments categorized within Level 3 are as follows:

	(In thousands of yen)
	2014					2015
	Private equity investments			Conversion right of redeemable preferred stock		Private equity investments			Conversion right of redeemable preferred stock
Fair value at the beginning of the year		1,243,718			–		7,302,439			816,605
Total gain for the year:
Included in profit or loss(1)		–			–		(184,928	)		110,507
Included in other comprehensive income(2)		2,209,320			–		6,506,889			–
Comprehensive income		2,209,320			–		6,321,961			110,507
Purchases		6,960,910			794,293		416,628			–
Return of capital		–			–		(37,887	)		–
Effect of exchange rate changes		218,581			22,312		(354,928	)		(55,803	)
Transfers out of Level 3(3)		(3,330,090	)		–		–			–
Fair value at the end of the year		7,302,439			816,605		13,648,213			871,309

⁽¹⁾  This amount is included in other non-operating income or expenses in the Group’s Consolidated Statements of Profit or Loss.

⁽²⁾  This amount is included in net change in fair value of available-for-sale financial assets in the Company’s Consolidated Statements of Comprehensive Income.

⁽³⁾  During the year ended December 31, 2014, a private company was listed on a stock exchange in Japan subsequent to our purchase of its equity securities. Accordingly, such equity investment was transferred from Level 3 to Level 1.

(4) Valuation techniques and inputs

Measured at fair value

Conversion right of redeemable preferred stock

The conversion right of redeemable preferred stock is an embedded derivative. Such conversion right is bifurcated from the underlying redeemable preferred stock and measured at fair value using a binomial option pricing model, which utilizes significant unobservable inputs including comparable listed companies’ average historical volatility of 13.9% and 63.6%, and discount rate of 7.6% and 1.9% for fiscal years 2014 and 2015, respectively. A significant increase (decrease) in the historical volatility would result in a higher (lower) fair value of the conversion right of redeemable preferred stock, while a significant increase (decrease) in the discount rate would result in a lower (higher) fair value of the conversion right of redeemable preferred stock.

F-79

LINE Corporation

Notes to Consolidated Financial Statements (continued)

27. Fair Value Measurements (continued)

(4) Valuation techniques and inputs (continued)

Private equity investments

Available-for-sale financial assets categorized within Level 3 mainly consist of unlisted equity securities and private equity investment funds. Private equity investment funds were measured at fair value based on net asset value as of December 31, 2014 and 2015. Unlisted equity securities are measured at fair value either based on the most recent transactions, or using the market approach and option pricing model. Below is the quantitative information regarding the valuation techniques and significant unobservable inputs used in measuring the fair value of certain unlisted equity securities:

Valuation technique	Significant unobservable input	2014	2015
Market approach – market comparable companies	EBITDA multiple	—	11.1-16.0
	EBIT multiple	—	11.4
	Revenue multiple	4.2	1.5-4.7
	Liquidity discount	30%	30%
Option pricing model	Comparable listed companies’ average historical volatility	—	64.5%-81.5%
	Discount rate	—	(0.0%)-1.9%

A significant increase (decrease) in the EBITDA, EBIT and revenue multiple would result in a higher (lower) fair value of the unlisted equity securities, while a significant increase (decrease) in the liquidity discount, comparable listed companies’ average historical volatility and discount rate would result in a lower (higher) fair value of the unlisted equity securities.

As of December 31, 2014, the fair value of one of the unlisted equity securities was based on the valuation techniques of the most recent transaction, which took place in November 2014, using both the discounted cash flow model and the market approach. The Group changed the valuation techniques for such equity to the market approach and the option pricing model because the information from the most recent transaction in November 2014 was no longer representative of the fair value as of December 31, 2015, and the Group believes that such valuation techniques are more appropriate under the circumstances. This change in valuation technique is applied prospectively as it is a change in estimate.

The valuation techniques and the valuation results of the Level 3 financial assets, including those performed by the external experts, were reviewed and approved by the management of the Group.

Not measured at fair value

Japanese government bonds

Japanese government bonds are included in held-to-maturity financial assets. The book value of Japanese government bonds are measured at amortized cost, while fair values are measured at observable quoted prices for identical securities as of the reporting dates.

However, as these Japanese government bonds were not actively traded, they were classified as level 2.

F-80

LINE Corporation

Notes to Consolidated Financial Statements (continued)

27. Fair Value Measurements (continued)

(4) Valuation techniques and inputs (continued)

Office security deposits, Borrowing arrangement and Office security deposits received under sublease agreements

The fair values of the office security deposits, borrowing arrangement and office security deposits received under sublease agreement are calculated by using the discounted cash flow method which utilizes observable inputs such as risk-free interest rates and credit spreads of the Group as of the reporting dates.

28. Share-Based Payments

The Group has stock option incentive plans for directors and employees. Each stock option represents the right to purchase 500 Company shares at a fixed price (344 yen for 2012 and 2013 grants and 1,320 yen for 2014 and 2015 grants per common share) per common share for a defined period of time. In the years ended December 31, 2013, 2014, and 2015, 6,861, 5,852 and 11,547 options, which, upon exercise, are equivalent to 3,430,500, 2,926,000 and 5,773,500 common shares, respectively, were granted. The fair value of stock options is determined using the Black-Scholes model, a commonly accepted stock option pricing method. Stock options granted vest after two years from the grant date and are exercisable for a period of eight years from the vesting date. Conditions for vesting and exercise of the stock options require that those who received the allotment of stock options continue to be employed by the Group from the grant date to the vesting date, and from the grant date to the exercise date, respectively, unless otherwise permitted by the board of directors. Refer to Note 4 Significant Accounting Judgments, Estimates and Assumptions (f) for more details on the valuation methodology of stock options, and the assumptions used in such valuation.

There were no cancellations or modifications to the awards in 2013, 2014 or 2015.

On June 15, 2015, through the amendment of its articles of incorporation, the Company introduced a dual class structure of common shares and class A shares. Under the dual class structure, each common share has one vote per unit of 100 shares, and each class A share has one vote per unit of 10 shares, while both classes of shares have the same rights to share in profit, distribution of retained earnings and residual assets. Additionally, the Company amended the terms applicable to a portion of two tranches of stock options. As a result of the amendment, 24,724 Common Stock Options originally granted on December 17, 2012 and 6,949 Common Stock Options originally granted on February 4, 2015 were converted to Class A Stock Options. While all other contract terms remain unchanged, the holders of Class A Stock Options are entitled to acquire 500 class A shares upon exercise of each stock option. The Class A Stock Options are mandatorily converted to Common Stock Options on a one-to-one basis upon passage of time or occurrence of certain events as specified in the terms and conditions of Class A Stock Options.

Through an amendment of its article of incorporation effective as of March 31, 2016, the Company amended the terms applicable to stock options from class A shares to common shares. Refer to Note 35 Subsequent Events for further details.

F-81

LINE Corporation

Notes to Consolidated Financial Statements (continued)

28. Share-Based Payments (continued)

(1) Movements during the years ended December 31, 2013, 2014 and 2015

The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, outstanding stock options on a per-common-share basis during the year:

	2013 Number (shares)(1)			2013 WAEP (yen per share)		2014 Number (shares)(1)			2014 WAEP (yen per share)
Outstanding at January 1		14,000,000			344		17,430,500			344
Granted during the year		3,430,500			344		2,926,000			1,320
Forfeited during the year		–			–		(139,000	)		944
Exercised during the year		–			–		–			–
Expired during the year		–			–		–			–
Outstanding at December 31		17,430,500			344		20,217,500			481
Exercisable at December 31		–			–		14,000,000			344
	2015
	Common Stock Options					Class A Stock Options
	Number (shares)(1)			WAEP (yen per share)		Number (shares)(1)			WAEP (yen per share)
Outstanding at January 1		20,217,500			481		–			–
Granted during the period		5,773,500			1,320		–			–
Forfeited during the period		(306,500	)		1,178		–			–
Exercised during the period		–			–		–			–
Expired during the period		–			–		–			–
Conversion of Common Stock Options to Class A Stock Options		(15,836,500	)		558		15,836,500			558
Outstanding at December 31		9,848,000			827		15,836,500			558
Exercisable at December 31		4,970,500			344		12,362,000			344

⁽¹⁾  The number of common shares and class A shares underlying the stock options has been adjusted to reflect the effect of the 2014 Stock Split. Refer to Note 25 Earnings per Share for further details.

The weighted average remaining contractual life for the stock options outstanding as of December 31, 2013, 2014 and 2015 was 9 years, 8.4 years and 7.7 years, respectively.

F-82

LINE Corporation

Notes to Consolidated Financial Statements (continued)

28. Share-Based Payments (continued)

(2) The following tables list the inputs to the models used for deriving the fair value of the stock options granted for the years ended December 31, 2013, 2014 and 2015

	Grant date
	2013
	December 16
Dividend yield		0.0%
Expected volatility		67%
Risk-free interest rate		0.3%
Expected life of stock options (years)		6
Exercise price (yen)		344
Fair value per common share at the grant date (yen)		1,011
Model used		Black-Scholes

The fair value of options granted during the years ended December 31, 2013 was 793 yen on a per-common-share basis.

	Grant dates
	2014
	February 7		August 8		October 31
Dividend yield		0.0%		0.0%		0.0%
Expected volatility		58%		53%		52%
Risk-free interest rate		0.2%		0.2%		0.2%
Expected life of stock options (years)		6		6		6
Exercise price (yen)		1,320		1,320		1,320
Fair value per common share at the grant date (yen)		1,161		3,280		3,297
Model used		Black-Scholes		Black-Scholes		Black-Scholes

The fair value of options granted as of February 7, 2014, August 8, 2014, and October 31, 2014 was 575 yen, 2,310 yen and 2,312 yen on a per-common-share basis, respectively.

	Grant dates
	2015
	February 4
Dividend yield		0.0%
Expected volatility		56%
Risk-free interest rate		0.0%
Expected life of stock options (years)		6
Exercise price (yen)		1,320
Fair value per common share at the grant date (yen)		4,225
Model used		Black-Scholes

The fair value of the options granted on February 4, 2015 was 3,219 yen on a per-common-share basis.

The expected volatility was derived from the historical volatility over a period similar to the expected life of the stock options for publicly listed companies that are comparable to the Group, and such volatility is assumed to be indicative of future trends, which may not necessarily be the actual outcome.

F-83

LINE Corporation

Notes to Consolidated Financial Statements (continued)

28. Share-Based Payments (continued)

(2) The following tables list the inputs to the models used for deriving the fair value of the stock options granted for the years ended December 31, 2013, 2014 and 2015 (continued)

The conversion of the Common Stock Options to Class A Stock Options had no impact on the fair values of such options. As a result, no incremental share-based compensation expenses were recognized in connection with such conversion.

(3) The expenses recognized in connection with share-based payments during the years ended December 31, 2013, 2014 and 2015 are shown in the following table:

	(In thousands of yen)
	2013	2014	2015
Total expenses arising from equity-settled share-based payment transactions	804,438	2,974,692	11,212,630

29. Related Party Transactions

Note 31 Principal Subsidiaries provides information about the Group’s structure, including details of the subsidiaries and the parent company. The following table provides the total amount of outstanding balances and related party transactions entered into during 2013, 2014 and 2015.

(1) Significant related party transactions and outstanding balances with related parties during the year ended December 31, 2013 are as follows:

	(In thousands of yen)
Relationship	Name	Transaction	Transaction amount		Outstanding payable balances(6)
Parent company	NAVER	Guarantee(1)		–		–
Parent company	NAVER	Non-cash distribution(2)		8,651,680		–
Parent company	NAVER	Cash received in exchange for defined benefit obligation liabilities associated with employees transferred(3)		595,079		–
Parent company	NAVER	Capital contribution(4)		5,887,842		–
Subsidiary of parent company	NAVER Business Platform Corp.(5)	Operating expenses		2,604,318		1,469,137

⁽¹⁾  NAVER provided a guarantee for the Group related to the outstanding borrowings of the Group of 4,000,000 thousand yen for the year ended December 31, 2013.

⁽²⁾  The Group disposed of its Hangame business and related entities by transferring all the related shares to NAVER on April 1, 2013. Refer to Note 24 Discontinued Operations for more details.

⁽³⁾  LINE Plus was established by the Company and NAVER in 2013. Certain NAVER employees, along with the associated post-employment defined benefit obligations at the time of transfer, were transferred to LINE Plus. LINE Plus received 595,079 thousand yen for assuming such defined benefit obligation liabilities. The significant terms of the defined benefit plans under NAVER and LINE Plus are identical.

F-84

LINE Corporation

Notes to Consolidated Financial Statements (continued)

29. Related Party Transactions (continued)

(1) Significant related party transactions and outstanding balances with related parties during the year ended December 31, 2013 are as follows (continued):

⁽⁴⁾  NAVER made an additional capital contribution of 5,887,842 thousand yen for LINE Plus in 2013. NAVER also made an initial capital contribution of 1,365,827 thousand yen prior to the establishment of LINE Plus.

⁽⁵⁾  This subsidiary of NAVER provided data hosting services to the Group.

⁽⁶⁾  The payable amount outstanding is unsecured and will be settled in cash.

(2) Significant related party transactions and outstanding balances with related parties during the year ended December 31, 2014 are as follows:

	(In thousands of yen)
Relationship	Name	Transaction	Transaction amount		Outstanding payable balances(5)
Parent company	NAVER	Guarantee(1)		–		–
Parent company	NAVER	Advertising service(2)		20,974		51,371
Parent company	NAVER	LINE Plus Capital Reduction(3)		8,288,000		–
Subsidiary of parent company	NAVER Business Platform Corp.(4)	Operating expenses		4,443,055		1,186,432

⁽¹⁾  NAVER provided a guarantee for the Group related to the outstanding borrowings of the Group of 4,000,000 thousand yen in prior year. Subsequently, in the third quarter of 2014 NAVER was released from the guarantee arrangement.

⁽²⁾  LINE Plus and NAVER entered into an agreement for exchange of services in which LINE Plus provides advertising services via the LINE platform and the right to use certain LINE characters in exchange for NAVER’s advertising services for LINE Plus via NAVER’s web portal. The Group incurred advertising expenses of 20,974 thousand yen in connection with the advertising services provided by NAVER for the year ended December 31, 2014.

⁽³⁾  Pursuant to the approval of the LINE Plus Capital Reduction, LINE Plus bought back NAVER its entire capital contribution amount of 8,288,000 thousand yen on September 5, 2014. Refer to Note 3(1) Significant Accounting Policies for further details.

⁽⁴⁾  This subsidiary of NAVER provided data hosting services to the Group.

⁽⁵⁾  The payable amount outstanding is unsecured and will be settled in cash.

(3) Significant related party transactions and outstanding balances with related parties during the year ended December 31, 2015 are as follows:

			(In thousands of yen)
Relationship	Name	Transaction	Transaction amount		Outstanding receivable/ (payable) balances(3)
Parent company	NAVER	Advertising service(1)		1,126,620		159,964
Subsidiary of parent company	NAVER Business Platform Corp.(2)	Operating expenses		8,139,487		(942,488	)

F-85

LINE Corporation

Notes to Consolidated Financial Statements (continued)

29. Related Party Transactions (continued)

(3) Significant related party transactions and outstanding balances with related parties during the year ended December 31, 2015 are as follows (continued):

⁽¹⁾  LINE Plus and NAVER entered into an agreement for exchange of services in which LINE Plus provides advertising services via the LINE platform and the right to use certain LINE characters in exchange for NAVER’s advertising services for LINE Plus via NAVER’s web portal. The Group generated advertising revenues of 1,126,620 thousand yen in connection with the advertising services provided to NAVER for the year ended December 31, 2015.

⁽²⁾  This subsidiary of NAVER provided IT infrastructure services and related development services to the Group.

⁽³⁾  The payable amount outstanding is unsecured and will be settled in cash.

(4) The total compensation of key management personnel for the years ended December 31, 2013, 2014 and 2015, was as follows:

	(In thousands of yen)
	2013		2014		2015
Salaries (including bonuses)		214,463		285,655		315,587
Share-based payments(1)		682,036		673,070		5,285,667
Total		896,499		958,725		5,601,254

⁽¹⁾  Refer to Note 28 Share-Based Payments for further details.

Key management personnel includes directors and corporate auditors of the Company.

30. Business Combinations

Acquisition in 2013

Acquisition of ForSchooner

On April 10, 2013, the Group acquired 100% of the voting shares of ForSchooner, an unlisted company based in Japan specializing in data storage and IT infrastructure solutions. The Group acquired ForSchooner as it was expected to significantly enhance the Group’s IT infrastructure environment and expand the range of services that the Group can offer.

F-86

LINE Corporation

Notes to Consolidated Financial Statements (continued)

30. Business Combinations (continued)

Acquisition in 2013 (continued)

Acquisition of ForSchooner (continued)

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of ForSchooner as of the date of acquisition were as follows:

	(In thousands of yen)
	Fair value recognized on acquisition
Assets
Cash and cash equivalents		41,843
Trade receivables, net		28,322
Property and equipment		2,685
Other assets		16,668
		89,518
Liabilities
Trade and other payables		21,429
Deposits received		4,599
Provisions		7,477
Consumption taxes payable		8,958
Loan payables		54,704
		97,167
Total identifiable net liabilities at fair value		(7,649	)
Goodwill		117,649
Total consideration		110,000

All consideration was paid in cash. The fair value of the trade receivables was 28,322 thousand yen. The gross contractual amounts of the trade receivables were not materially different from the fair value determined as part of the purchase price allocation.

Goodwill of 117,649 thousand yen represented the value of expected synergies arising from the acquisition and was allocated entirely to the data management services segment.

As part of the business combination, the Group also acquired talent and an assembled workforce from ForSchooner. However the assembled workforce did not meet the criteria for recognition as an intangible asset under IAS 38. None of the goodwill recognized was expected to be deductible for income tax purposes.

From the date of acquisition, ForSchooner had contributed 208,958 thousand yen to revenue and 76,256 thousand yen to the profit before tax from continuing operations of the Group. If the combination had taken place on January 1, 2013, revenue from continuing operations would have been 39,654,131 thousand yen (unaudited) and

F-87

LINE Corporation

Notes to Consolidated Financial Statements (continued)

30. Business Combinations (continued)

Acquisition in 2013 (continued)

Acquisition of ForSchooner (continued)

Assets acquired and liabilities assumed (continued)

the loss before tax from continuing operations for the Group would have been 8,320,986 thousand yen (unaudited) for the year ended December 31, 2013.

	(In thousands of yen)
Analysis of cash flows on acquisition:
Total consideration related to the acquisition		(110,000	)
Net cash acquired with the subsidiary		41,843
Net cash flows on acquisition (included in cash flows from investing activities)		(68,157	)

Transaction costs were expensed and included in operating expenses.

Acquisition of LINE Play

LINE Play was established by NAVER in 2011. The Group acquired LINE Play in September 2013 from NAVER. The acquisition of LINE Play by the Group was accounted for as a business combination under common control using the pooling method. As a result, the financial statements of LINE Play were retrospectively consolidated at predecessor carrying values, as if the acquisition of LINE Play had occurred at the beginning of the earliest period presented in the Group’s consolidated financial statements, regardless of the actual date of the combinations.

Acquisition in 2014

Acquisition of wit studio

On July 25, 2014, the Group acquired 100% of the voting shares of wit studio, an unlisted company based in Korea specializing in user interface design and enhancement. The Group acquired wit studio for the purpose of enhancing the user interface design of the applications offered by LINE.

F-88

LINE Corporation

Notes to Consolidated Financial Statements (continued)

30. Business Combinations (continued)

Acquisition in 2014 (continued)

Acquisition of wit studio  (continued)

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of wit studio as of the date of acquisition were as follows:

	(In thousands of yen)
	Fair value recognized on acquisition
Assets
Cash and cash equivalents		608
Trade receivables, net		398
Property and equipment		912
Other intangible assets		240
Office security deposits		4,020
		6,178
Liabilities
Trade and other payables		17
Other financial liabilities, current		172
Short-term borrowings		5,025
Other liabilities		210
		5,424
Total identifiable net assets at fair value		754
Goodwill		149,997
Total consideration		150,751

All consideration was paid in cash. The fair value of the trade receivables was 398 thousand yen. The gross contractual amounts of the trade receivables were not materially different from the fair value determined as part of the purchase price allocation.

Goodwill of 149,997 thousand yen represented the value of expected synergies arising from the acquisition and was allocated entirely to the LINE business and portal segment.

As part of the business combination, the Group also acquired talent and an assembled workforce from wit studio. However the assembled workforce did not meet the criteria for recognition as an intangible asset under IAS 38. None of the goodwill recognized was expected to be deductible for income tax purposes.

From the date of acquisition, wit studio had contributed 545 thousand yen to the revenue and had reduced profit before tax from continuing operations of the Group by 3,374 thousand yen. If the combination had taken place on January 1, 2014, revenue from continuing operations would have been 86,374,830 thousand yen (unaudited) and

F-89

LINE Corporation

Notes to Consolidated Financial Statements (continued)

30. Business Combinations (continued)

Acquisition in 2014 (continued)

Acquisition of wit studio  (continued)

Assets acquired and liabilities assumed (continued)

the profit before tax from continuing operations for the Group would have been 6,252,846 thousand yen (unaudited) for the year ended December 31, 2014.

	(In thousands of yen)
Analysis of cash flows on acquisition:
Total consideration related to the acquisition		(150,751	)
Net cash acquired with the subsidiary		608
Net cash flows on acquisition (included in cash flows from investing activities)		(150,143	)

Acquisition in 2015

Acquisition of MixRadio

On March 16, 2015, the Group acquired MixRadio, a music streaming service, from Microsoft Mobile Oy. The acquisition of MixRadio allows the Group to expand the range of services. The Group determined that the acquisition of MixRadio is a business combination in accordance with IFRS 3, as the Group acquired inputs and processes, such as music rights and the trade name of MixRadio, with which principal activities have been commenced. The valuation of the fair values of the assets acquired and the liabilities assumed was completed as of December 31, 2015, and remained unchanged as compared to the preliminary assessment at the time of acquisition.

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of MixRadio as of the date of acquisition were as follows:

	(In thousands of yen)
	Fair value recognized on acquisition
Assets
Property and equipment		39,320
Intangible assets
Technology		845,121
Music rights		543,292
Trademarks		156,951
Customer relationships		108,658
Other intangible assets		3,665
		1,697,007
Liabilities
Trade and other payables		1,544,410
Other liabilities		550,774
		2,095,184
Total identifiable net assets at fair value		(398,177	)
Goodwill		2,697,621
Total consideration		2,299,444

F-90

LINE Corporation

Notes to Consolidated Financial Statements (continued)

30. Business Combinations (continued)

Acquisition in 2015 (continued)

Acquisition of MixRadio  (continued)

Assets acquired and liabilities assumed (continued)

The Group paid 2,299,444 thousand yen in cash, which was included as part of cash flows from investing activities in the Consolidated Statements of Cash Flows, and assumed certain liabilities in acquiring MixRadio. Goodwill of 2,697,621 thousand yen represented the value of expected synergies arising from the acquisition.

As part of the business combination, the Group also acquired an assembled workforce from MixRadio. However, the assembled workforce did not meet the criteria for recognition as an intangible asset under IAS 38. All of the goodwill recognized is expected to be deductible for income tax purposes.

From the date of acquisition, MixRadio has increased loss from discontinued operations, net of tax, of the Group by 7,587,997 thousand yen, which includes the impairments discussed in Note 12 (1), (3) Impairment. Because MixRadio was classified as a discontinued operation, revenues and expenses from continuing operations are not impacted. If the combination had taken place on January 1, 2015, the loss for the year would have been 8,826,876 thousand yen (unaudited) for the year ended December 31, 2015. Because MixRadio was classified as a discontinued operation, revenues and expenses from continuing operations are not impacted.

Transaction costs of 74,029 thousand yen have been expensed and are included in other operating expenses in the Consolidated Statement of Profit or Loss.

Pursuant to the annual goodwill impairment test, impairment losses have been recognized for MixRadio. Further, MixRadio was subsequently abandoned on March 21, 2016. Refer to Note 12 (1) Impairment and Note 24 Discontinued Operations for further details.

F-91

LINE Corporation

Notes to Consolidated Financial Statements (continued)

31. Principal Subsidiaries

Information on subsidiaries

The consolidated financial statements of the Group include the following subsidiaries:

			Percentage of ownership
Name	Primary business activities	Country of incorporation	December 31, 2014			December 31, 2015
LINE Friends Corporation(1)	Character goods business	Korea		–			100	%
LINE Life Global Gateway, L.P.(2)	Investment	Japan		–			100	%
LINE BIZ Plus Ltd.(3)	Payment service	Thailand		–			100	%
LINE Digital Technologies India Private Limited(4)	Mobile advertising	India		–			100	%
WebPay Holdings, Inc.(5)	Management	Japan		–			100	%
WebPay, Inc.(5)	Payment service	Japan		–			100	%
LINE BIZ+ Taiwan Limited(6)	Payment service	Taiwan		–			100	%
MIXRADIO ENTERTAINMENT INDIA PRIVATE LIMITED(7)	Music distribution	India		–			99	%
wit studio(8)	UI solution development and design	Korea		100	%		–
MixRadio Limited(9)	Music distribution	United Kingdom of Great Britain and Northern Ireland		100	%		100	%
LINE Book Distribution Corporation(10)	Mobile Contents	Japan		100	%		52	%
LINE Pay Corporation	Software Development and mobile payment service	Japan		100	%		100	%
LINE BIZ+ PTE. LTD	Software Development and mobile payment service	Singapore		100	%		100	%
LINE Company (Thailand) Limited(11)	e-commerce	Thailand		50	%		50	%
LINE Taiwan Limited	Mobile Service	Taiwan		100	%		100	%
LINE Digital Technology (Shanghai) Limited.	Social Media	China		100	%		100	%
LINE C&I Corporation	Investment	Korea		100	%		100	%
LINE Biz Plus Corporation	Mobile payment service	Korea		100	%		100	%
LINE Ventures Corporation	Investment	Japan		100	%		100	%
LINE GAME Global Gateway, L.P.	Investment	Japan		100	%		100	%
Bonsai Garage Corporation	Fashion	Japan		100	%		100	%
LINE Plus	Global marketing	Korea		100	%		100	%
LINE Play	Content sales	Korea		100	%		100	%
LINE Euro-Americas Corp.	Global marketing	United States of America		100	%		100	%
LINE Vietnam	Online advertisement	Vietnam		95	%		95	%
NAVER Co., Ltd.	Dormant	Japan		100	%		100	%
LINE Business Partners Corporation	Online advertisement	Japan		100	%		100	%
LINE Fukuoka Corp.	Management support	Japan		100	%		100	%

⁽¹⁾  The Company established LINE Friends Corporation in January 2015.

F-92

LINE Corporation

Notes to Consolidated Financial Statements (continued)

31. Principal Subsidiaries (continued)

Information on subsidiaries (continued)

⁽²⁾  The Company and LINE Ventures Corporation established LINE Life Global Gateway, L.P. in February 2015.

⁽³⁾  LINE BIZ Plus Ltd. was acquired in February 2015 by LINE Company (Thailand) Limited and LINE BIZ+ PTE. LTD. While there is a non-controlling interest held by an unrelated third party in LINE BIZ Plus Ltd., the Group’s percentage of ownership is presented as 100% due to rounding. Refer to Note 35 Subsequent Events for further details.

⁽⁴⁾  LINE Plus established LINE Digital Technologies India Private Limited in February 2015.

⁽⁵⁾  LINE Pay Corporation acquired WebPay Holdings, Inc. and WebPay, Inc., a wholly owned subsidiary of WebPay Holdings, Inc., in February 2015.

⁽⁶⁾  LINE BIZ+ PTE. LTD. established LINE BIZ+ Taiwan Limited in March 2015.

⁽⁷⁾  MIXRADIO ENTERTAINMENT INDIA PRIVATE LIMITED was established by MixRadio Limited in December 2015.

⁽⁸⁾  Refer to Note 30 Business Combinations for further details. In August 2015, wit studio was merged with and absorbed by LINE Plus.

⁽⁹⁾  LINE (UK) Limited was renamed to MixRadio Limited in March 2015. As of December 31, 2015 the entity was classified as a discontinued operation. Refer to Note 24 Discontinued Operations for further details.

⁽¹⁰⁾  LMG Corporation was renamed to LINE Book Distribution Corporation in January 2015. The percentage of ownership was decreased due to additional capital contribution from an unrelated third party in January 2015.

⁽¹¹⁾  The Group’s ownership in LINE Company (Thailand) Limited is 50% but it holds 91% of the voting rights. Accordingly, LINE Company (Thailand) Limited is included in the scope of consolidation for the Group’s consolidated financial statements.

Ultimate parent company of the Group

The next senior and the ultimate parent company of the Group is NAVER, which is domiciled in Korea and listed on the Korean Stock Exchange.

32. Proportion of Equity Interest Held by Non-controlling Interests

As a result of the LINE Plus Capital Reduction in August 2014, the equity interest held by the non-controlling interest decreased from 40% to 0%. Refer to Note 3 (1) Significant Accounting Policies for further details.

Name	Country of incorporation and operation	December 31, 2013	December 31, 2014
LINE Plus	Korea	40%	–

F-93

LINE Corporation

Notes to Consolidated Financial Statements (continued)

32. Proportion of Equity Interest Held by Non-controlling Interests (continued)

The differences between the balances stated below and the non-controlling interest balances noted on the consolidated financial statements are attributable to immaterial non-controlling interest not presented below.

Loss allocated to material non-controlling interest in the years ended December 31, 2013 and 2014:

	(In thousands of yen)
Name	2013			2014
LINE Plus		(5,391,588	)		(2,092,307	)

Accumulated balances of material non-controlling interest as of December 31, 2013 and 2014:

	(In thousands of yen)
Name	December 31, 2013		December 31, 2014
LINE Plus		1,787,099		–

Summarized financial information related to the subsidiary is provided below. This information is based on amounts before inter-company eliminations.

Statement of Profit or Loss:

	(In thousands of yen)
	LINE Plus
	2013			2014
Revenues		9,223,904			29,475,352
Loss for the year		(13,534,900	)		(8,839,503	)
Total comprehensive loss for the year		(13,149,536	)		(9,547,419	)

Statement of Financial Position:

	(In thousands of yen)
	LINE Plus
	December 31, 2013		December 31, 2014
Current assets		15,787,367		19,513,632
Non-current assets		1,643,582		3,245,493
Current liabilities		11,944,618		14,815,269
Non-current liabilities		1,181,885		2,640,370

F-94

LINE Corporation

Notes to Consolidated Financial Statements (continued)

32. Proportion of Equity Interest Held by Non-controlling Interests (continued)

Statement of Cash Flows:

	(In thousands of yen)
	LINE Plus
	2013			2014
Operating		(10,173,277	)		(5,990,189	)
Investing		(1,518,538	)		(2,787,069	)
Financing		14,395,687			9,163,176
Net increase in cash and cash equivalents		2,703,872			385,918
Cash and cash equivalents at the beginning of year		3,414,566			5,722,601
Effect of exchange rate fluctuations on cash and cash equivalents		(395,837	)		646,162
Cash and cash equivalents at the end of year		5,722,601			6,754,681

33. Investments in Associates and Joint Venture

(1) Details of investments in the Group’s significant associates and joint venture are as follows:

											(In thousands of yen)
	Primary business activities	Country of incorporation	December 31, 2013					December 31, 2014					December 31, 2015
			Percentage of ownership			Carrying amount		Percentage of ownership			Carrying amount		Percentage of ownership			Carrying amount
Associates
LINE Project Production Partnership(1)	Animation production	Japan		50.0	%		59,250		50.0	%		–		50.0	%		–
Collab+LINE LLC(2)	Investment	United States of America		–			–		50.0	%		120,837		50.0	%		137,579
LINE Bros. Corporation(3)	Mobile contents	Japan		–			–		40.0	%		8,005		40.0	%		0
Epic Voyage, Inc.(4)	Mobile games	Japan		–			–		30.0	%		2,859		30.0	%		2,730
Green Monster, Inc.(5)	Mobile games	Japan		–			–		35.0	%		68,514		35.0	%		42,948
LINE MUSIC Corporation(6)	Music distribution	Japan		–			–		40.0	%		270,232		33.4	%		109,501
AUBE, Ltd.(7)	Job listing	Japan		–			–		–			–		49.0	%		287,319
Joint venture
Lantu Games Limited(8)	Mobile games	Hong Kong (China)		–			–		–			–		50.0	%		1,205,749

⁽¹⁾  The Group has a 50% ownership interest in LINE Project production Partnership (“LINE Project”) as of December 31, 2015. As the Group does not control and direct the daily activities of LINE Project, the Group has determined that it does not have control over LINE Project and therefore accounts for its ownership in LINE Project using the equity method.

F-95

LINE Corporation

Notes to Consolidated Financial Statements (continued)

33. Investments in Associates and Joint Venture (continued)

(1) Details of investments in the Group’s significant associates and joint venture are as follows (continued):

⁽²⁾  Collab+LINE LLC, which mainly identifies and invests in businesses in North America with the potential to create value and provide returns for the Group, was established in April 2014. Collab+LINE LLC is incorporated in North America. The Group has a 50% ownership interest in Collab+LINE LLC. As the Group does not control nor direct the daily activities of Collab+LINE LLC, the Group accounts for its ownership in Collab+LINE LLC using the equity method.

⁽³⁾  LINE Bros. Corporation (“LINE Bros.”), which plans to provide food delivery services via the LINE platform, was established in May 2014. The Group has a 40% ownership interest in LINE Bros. As the Group does not control nor direct the daily activities of LINE Bros., the Group accounts for its ownership in LINE Bros. using the equity method.

⁽⁴⁾  In October 2014, the Group obtained a 30% ownership interest in Epic Voyage, Inc. which mainly plans to provide mobile games planning, development and operations services. As the Group does not control nor direct the daily activities of Epic Voyage, Inc., the Group accounts for its ownership in Epic Voyage, Inc. using the equity method.

⁽⁵⁾  In November 2014, the Group obtained a 35% ownership interest in Green Monster, Inc. which mainly plans to provide mobile games planning, development and operations services. As the Group does not control nor direct the daily activities of Green Monster, Inc., the Group accounts for its ownership in Green Monster, Inc. using the equity method.

⁽⁶⁾  LINE MUSIC Corporation, which mainly plans to provide music distribution services, was established in December 2014. The Group has a 40% ownership interest in LINE MUSIC Corporation. As the Group does not control nor direct the daily activities of LINE MUSIC Corporation, the Group accounts for its ownership in LINE MUSIC Corporation using the equity method. The Group sold a part of its shares to third parties during 2015, resulting in the decrease in its ownership to 33.4%.

⁽⁷⁾ In February 2015, the Group obtained 49% interest in AUBE, Ltd., which provides job listings, announcements and related services online and through mobile application. As the Group does not control nor direct the daily activities of AUBE, Ltd., the Group accounts for its ownership in AUBE, Ltd. using the equity method.

⁽⁸⁾ In December 2015, the Group entered into a joint venture agreement whereby it obtained 50% of the ordinary shares of Lantu Games Limited. The joint venture is involved in the development and management of mobile games. The Group’s 50% interest in Lantu Games Limited is accounted for using the equity method.

F-96

LINE Corporation

Notes to Consolidated Financial Statements (continued)

33. Investments in Associates and Joint Venture (continued)

(2) Financial information on the Group’s investment in the associates is summarized as follows:

	(In thousands of yen)
	LINE Project
	December 31, 2013			December 31, 2014			December 31, 2015
Current assets		128,104			–			–
Current liabilities		9,605			–			–
Equity		118,499			–			–
Proportion of the Group’s ownership		50%			50%			50%
Group’s share of equity		59,250			–			–
Carrying amount of the interests		59,250			–			–
	LINE Project
	2013			2014			2015
Revenue		159,900			45,100			–
Loss for the year from continuing operations		(485,670	)		(81,829	)		–
Other comprehensive income for the year, net of tax		–			–			–
Total comprehensive loss for the year, net of tax		(485,670	)		(81,829	)		–
Group’s share of loss for the year		(242,835	)		(40,915	)		–

F-97

LINE Corporation

Notes to Consolidated Financial Statements (continued)

33. Investments in Associates and Joint Venture (continued)

(2) Financial information on the Group’s investment in the associates is summarized as follows (continued):

	(In thousands of yen)
	LINE MUSIC Corporation
	December 31, 2014			December 31, 2015
Current assets		960,280			943,791
Non-current assets		2,434			12,574
Current liabilities		287,133			628,519
Equity		675,581			327,846
Proportion of the Group’s ownership		40.0	%		33.4	%
Group’s share of equity		270,232			109,501
Carrying amount of the interests		270,232			109,501
		LINE MUSIC Corporation
		2014			2015
Revenue		–			272,731
Loss for the year from continuing operations		(284,419	)		(347,735	)
Total comprehensive loss for the year, net of tax		(284,419	)		(347,735	)
Group’s share of loss for the year		(113,768	)		(120,883	)

F-98

LINE Corporation

Notes to Consolidated Financial Statements (continued)

33. Investments in Associates and Joint Venture (continued)

(2) Financial information on the Group’s investment in the associates is summarized as follows (continued):

	(In thousands of yen)
	AUBE, Ltd.
	December 31, 2015
Current assets		670,524
Current liabilities		84,159
Equity		586,365
Proportion of the Group’s ownership		49.0	%
Group’s share of equity		287,319
Carrying amount of the interests		287,319
		AUBE, Ltd.
		2015
Revenue		830,010
Loss for the year from continuing operations		(13,635	)
Other comprehensive income for the year, net of tax		–
Total comprehensive loss for the year, net of tax		(13,635	)
Group’s share of loss for the year		(6,681	)

F-99

LINE Corporation

Notes to Consolidated Financial Statements (continued)

33. Investments in Associates and Joint Venture (continued)

(3) The aggregate amount of individually immaterial associates accounted for by the equity-method accounted investee is summarized as follows:

	(In thousands of yen)
	December 31, 2014			December 31, 2015
Current assets		314,585			213,434
Non-current assets		160,276			427,176
Current liabilities		7,891			29,574
Non-current liabilities		–			170,662
Equity		466,970			440,374
Group’s share of equity		200,215			196,620
Impairment		–			(13,363	)
Carrying amount of the interests		200,215			183,257
		2014			2015
Revenue		586			4,859
Loss for the year from continuing operations		(34,196	)		(228,225	)
Other comprehensive income for the year, net of tax		37,090			31,284
Total comprehensive income/(loss) for the year, net of tax		2,894			(196,941	)
Group’s share of profit/(loss) for the year		5,178			(71,667	)

The Group had no contingent liabilities or capital commitments relating to its associates as of December 31, 2014 and 2015.

(4) Financial information on the Group’s investment in a joint venture is summarized as follows:

	(In thousands of yen)
	Lantu Games Limited
	December 31, 2015
Cash and cash equivalents		2,411,498
Equity		2,411,498
Proportion of the Group’s ownership		50.0	%
Group’s share of equity		1,205,749
Carrying amount of the interests		1,205,749

The joint venture had no contingent liabilities or capital commitments as at December 31, 2015. Lantu Games Limited cannot distribute its profits without the consent from the two venture partners.

F-100

LINE Corporation

Notes to Consolidated Financial Statements (continued)

34. Interests in Joint Operation

In July 2015, the Group and NAVER contributed 66.7% and 33.3%, respectively, of the capital in a joint operation called LINE Naver Game Partnership, which plans to invest in companies specializing in game contents development and related businesses. The principal place of business of the joint operation is Korea.

35. Subsequent Events

Abandonment of MixRadio

On February 12, 2016, the board of directors approved the abandonment of the MixRadio segment. The operation of the MixRadio business was classified as a discontinued operation on March 21, 2016, when the abandonment took effect. Apart from the impairment losses incurred, further restructuring costs including 7,147 thousand pound sterling for employee termination benefits and 769 thousand pound sterling for the termination of office lease contracts are expected to be incurred in fiscal year 2016. Refer to Note 24 Discontinued Operations for further details on MixRadio’s retrospective presentation as a discontinued operation.

Termination of the dual class structure of shares

Through an amendment of its articles of incorporation effective as of March 31, 2016, the Company terminated its dual class structure of common shares and class A shares and converted all class A shares held by NAVER into common shares. Also, the Company amended the terms applicable to stock options from class A shares to common shares.

Deconsolidation of a subsidiary into a joint venture

On March 30, 2016, the board of directors approved a transaction that will result in a decrease of the Group’s ownership of LINE BIZ Plus Ltd. from 100% to 50%. After the transaction, LINE BIZ Plus Ltd. will be accounted for as a joint venture under the equity method because the Group will have joint control of the arrangement. The decrease in ownership will result from the issuance of additional shares by LINE BIZ Plus Ltd. on April 25, 2016. A third party will acquire the newly issued shares by contributing 750,000 thousand Baht in cash. The investment retained by the Group will be re-measured to its fair value when control is lost.

F-101

LINE Corporation

Interim Condensed Consolidated Statements of Financial Position - Unaudited

		(In thousands of yen)
	Notes	December 31, 2015			March 31, 2016
Assets
Current assets
Cash and cash equivalents			33,652,250			35,081,614
Trade and other receivables	7		27,248,497			23,631,977
Other financial assets, current	7		341,403			284,073
Inventories			1,475,939			1,080,709
Other current assets			2,454,776			2,657,472
Total current assets			65,172,865			62,735,845
Non-current assets
Property and equipment	5		10,500,750			9,974,252
Goodwill	14		3,120,767			3,715,512
Other intangible assets	14		1,011,531			1,079,676
Investments in associates and joint venture			1,785,826			1,622,326
Other financial assets, non-current	7		23,466,920			22,878,331
Deferred tax assets	6		16,942,051			16,444,552
Other non-current assets			158,521			170,957
Total non-current assets			56,986,366			55,885,606
Total assets			122,159,231			118,621,451
Liabilities
Current liabilities
Trade and other payables	7		22,983,242			21,870,091
Other financial liabilities, current	7		43,933,212			43,080,840
Accrued expenses			7,019,114			4,930,840
Income tax payables	6		3,018,891			1,320,204
Advances received			9,517,756			9,433,748
Provisions, current			381,217			607,209
Other current liabilities			9,024,284			9,616,321
Total current liabilities			95,877,716			90,859,253
Non-current liabilities
Other financial liabilities, non-current	7		8,284			492,224
Deferred tax liabilities	6		1,843,944			1,711,005
Provisions, non-current			1,400,986			754,971
Post-employment benefits			5,495,416			5,579,706
Total non-current liabilities			8,748,630			8,537,906
Total liabilities			104,626,346			99,397,159
Shareholder’s equity
Share capital	8		12,596,198			12,596,198
Share premium	8		18,982,776			21,451,394
Accumulated deficit			(19,204,203	)		(19,301,340	)
Accumulated other comprehensive income			5,368,524			4,870,329
Equity attributable to the shareholder of the Company			17,743,295			19,616,581
Non-controlling interests			(210,410	)		(392,289	)
Total shareholder’s equity			17,532,885			19,224,292
Total liabilities and shareholder’s equity			122,159,231			118,621,451

See Notes to Interim Condensed Consolidated Financial Statements

F-102

LINE Corporation

Interim Condensed Consolidated Statements of Profit or Loss - Unaudited

		(In thousands of yen)
	For the three-month period ended March 31,
	Notes	2015			2016
Revenues and other operating income:
Revenues			28,104,146			33,455,853
Other operating income			116,865			660,302
Total revenues and other operating income			28,221,011			34,116,155
Operating expenses:
Payment processing and licensing expenses			(6,225,090	)		(7,750,301	)
Employee compensation expenses	12		(7,574,367	)		(9,393,213	)
Marketing expenses			(4,779,867	)		(2,306,594	)
Infrastructure and communication expenses			(1,663,342	)		(1,781,655	)
Authentication and other service expenses			(2,398,457	)		(2,896,673	)
Depreciation and amortization expenses			(764,214	)		(967,975	)
Other operating expenses			(3,392,080	)		(3,681,759	)
Total operating expenses			(26,797,417	)		(28,778,170	)
Profit from operating activities			1,423,594			5,337,985
Finance income			23,343			26,827
Finance costs			(23,624	)		(23,625	)
Share of loss of associates			(23,272	)		(62,845	)
Loss on foreign currency transactions, net			(64,086	)		(568,698	)
Other non-operating income			14,178			21,252
Other non-operating expenses			(165,251	)		(587,886	)
Profit before tax from continuing operations			1,184,882			4,143,010
Income tax expenses	6		(2,941,945	)		(2,736,740	)
(Loss)/profit for the period from continuing operations			(1,757,063	)		1,406,270
Loss from discontinued operations, net of tax	9,10		(148,046	)		(1,640,163	)
Loss for the period			(1,905,109	)		(233,893	)
Attributable to:
The shareholder of the Company	10		(1,888,377	)		(122,273	)
Non-controlling interests			(16,732	)		(111,620	)
					(In yen)
Earnings per share
Basic loss for the period attributable to the shareholder of the Company	10		(10.79	)		(0.70	)
Diluted loss for the period attributable to the shareholder of the Company	10		(10.79	)		(0.63	)
Earnings per share from continuing operations
Basic (loss)/profit from continuing operations attributable to the shareholder of the Company	10		(9.95	)		8.67
Diluted (loss)/profit from continuing operations attributable to the shareholder of the Company	10		(9.95	)		7.79
Earnings per share from discontinued operations
Basic loss from discontinued operations attributable to the shareholder of the Company	10		(0.84	)		(9.37	)
Diluted loss from discontinued operations attributable to the shareholder of the Company	10		(0.84	)		(8.42	)

See Notes to Interim Condensed Consolidated Financial Statements

F-103

LINE Corporation

Interim Condensed Consolidated Statements of Comprehensive Income - Unaudited

	(In thousands of yen)
	For the three-month period ended March 31,
	Notes	2015			2016
Loss for the period			(1,905,109	)		(233,893	)
Other comprehensive income
Items that may be reclassified to profit or loss:
Available-for-sale financial assets:
Net change in fair value	11		(3,219,293	)		(329,173	)
Reclassification to profit or loss			165,251			264,060
Exchange differences on translation of foreign operations:
Loss arising during the period			(256,041	)		(324,403	)
Proportionate share of other comprehensive income of associates			(222	)		(10,108	)
Income tax relating to items that may be reclassified subsequently to profit or loss			1,105,195			(79,636	)
Total other comprehensive income for the period, net of tax			(2,205,110	)		(479,260	)
Total comprehensive loss for the period, net of tax			(4,110,219	)		(713,153	)
Attributable to:
The shareholder of the Company			(4,092,308	)		(620,468	)
Non-controlling interests			(17,911	)		(92,685	)

See Notes to Interim Condensed Consolidated Financial Statements

F-104

LINE Corporation

Interim Condensed Consolidated Statements of Change in Equity - Unaudited

																						(In thousands of yen)
	Equity attributable to the shareholder of the Company
										Accumulated other comprehensive income
	Notes	Share capital		Share premium			Accumulated deficit			Foreign currency translation reserve			Available-for- sale reserve			Defined benefit plan reserve			Total			Non- controlling interests			Total shareholder’s equity
Balance at January 1, 2015			12,596,198		7,771,659			(11,622,496	)		527,802			3,866,280			(643,359	)		12,496,084			14,884			12,510,968
Comprehensive loss
Loss for the period			–		–			(1,888,377	)		–			–			–			(1,888,377	)		(16,732	)		(1,905,109	)
Other comprehensive income			–		–			–			(255,084	)		(1,948,847	)		–			(2,203,931	)		(1,179	)		(2,205,110	)
Total comprehensive loss for the period			–		–			(1,888,377	)		(255,084	)		(1,948,847	)		–			(4,092,308	)		(17,911	)		(4,110,219	)
Net investment by non-controlling interests			–		–			94			–			–			–			94			143,906			144,000
Recognition of share-based payments	8,12		–		2,287,458			–			–			–			–			2,287,458			–			2,287,458
Acquisition of subsidiary			–		–			–			–			–			–			–			133			133
Balance at March 31, 2015			12,596,198		10,059,117			(13,510,779	)		272,718			1,917,433			(643,359	)		10,691,328			141,012			10,832,340
																						(In thousands of yen)
	Equity attributable to the shareholder of the Company
										Accumulated other comprehensive income
	Notes	Share capital		Share premium			Accumulated deficit			Foreign currency translation reserve			Available-for- sale reserve			Defined benefit plan reserve			Total			Non- controlling interests			Total shareholder’s equity
Balance at January 1, 2016			12,596,198		18,982,776			(19,204,203	)		239,984			6,917,774			(1,789,234	)		17,743,295			(210,410	)		17,532,885
Comprehensive (loss)/income
Loss for the period			–		–			(122,273	)		–			–			–			(122,273	)		(111,620	)		(233,893	)
Other comprehensive income			–		–			–			(528,167	)		29,972			–			(498,195	)		18,935			(479,260	)
Total comprehensive (loss)/income for the period			–		–			(122,273	)		(528,167	)		29,972			–			(620,468	)		(92,685	)		(713,153	)
Recognition of share-based payments	8,12		–		2,493,754			–			–			–			–			2,493,754			–			2,493,754
Forfeiture of stock options	8,12		–		(25,136	)		25,136			–			–			–			–			–			–
Acquisition of subsidiary	14		–		–			–			–			–			–			–			(89,194	)		(89,194	)
Balance at March 31, 2016			12,596,198		21,451,394			(19,301,340	)		(288,183	)		6,947,746			(1,789,234	)		19,616,581			(392,289	)		19,224,292

See Notes to Interim Condensed Consolidated Financial Statements

F-105

LINE Corporation

Interim Condensed Consolidated Statements of Cash Flows - Unaudited

(In thousands of yen)

	For the three-month period ended March 31,
	Notes	2015			2016
Cash flows from operating activities
Profit before tax from continuing operations			1,184,882			4,143,010
Loss before tax from discontinued operations	9		(148,046	)		(2,497,481	)
Profit before tax			1,036,836			1,645,529
Adjustments for:
Depreciation and amortization expenses			785,425			967,975
Finance income			(23,343	)		(26,827	)
Finance costs			23,624			23,625
Share-based compensation expenses	8, 12		2,287,458			2,493,754
Gain on divesture of subsidiary	15		–			(20,963	)
Loss on financial assets at fair value through profit or loss	11		–			245,919
Impairment loss of available-for-sale financial assets	7		165,251			264,060
Share of loss of associates			23,272			62,845
Loss on foreign currency transactions, net			1,065			539,514
Changes in:
Trade and other receivables			(720,723	)		3,645,179
Inventories			34,549			314,410
Trade and other payables			(2,896,138	)		(932,004	)
Accrued expenses			(1,773,916	)		(2,018,372	)
Advances received			781,480			(79,377	)
Provisions			97,956			27,928
Post-employment benefits			352,806			136,032
Other current assets			(368,332	)		(198,027	)
Other current liabilities			(486,163	)		452,247
Others			33,116			41,280
Cash (used in)/provided by operating activities			(645,777	)		7,584,727
Interest received			16,238			26,380
Interest paid			(24,774	)		(23,597	)
Income taxes paid			(6,883,277	)		(3,323,439	)
Net cash (used in)/provided by operating activities			(7,537,590	)		4,264,071
Cash flows from investing activities
Purchase of time deposits			(1,859,619	)		(18,769	)
Proceeds from maturities of time deposits			1,115			99,564
Purchase of equity investments	11		(95,000	)		(8,677	)
Acquisition of property and equipment and intangible assets			(917,150	)		(785,730	)
Investments in associates			(342,000	)		–
Payments of office security deposits			(90,594	)		(795,258	)
Guarantee deposits for the Japanese Payment Services Act			(120,000	)		–
Refund of office securities deposits			82,747			1,166
Return of the office security deposits received under sublease arrangement			(393,650	)		–
Decrease in loan receivables			38,551			579
Acquisition of subsidiaries, net of cash acquired	14		(2,926,572	)		(423,424	)
Others			(132,557	)		2,045
Net cash used in investing activities			(6,754,729	)		(1,928,504	)
Cash flows from financing activities
Proceeds from/(repayment of) short-term borrowings, net			15,502,620			(434,353	)
Payments for redemption of bonds			(393,069	)		(247,500	)
Repayment of borrowing arrangement			(122,875	)		–
Capital contribution from third party non-controlling interests			144,000			–
Others			(179	)		(1,535	)
Net cash provided by/(used for) financing activities			15,130,497			(683,388	)
Net increase in cash and cash equivalents			838,178			1,652,179
Cash and cash equivalents at the beginning of the year			20,254,455			33,652,250
Effect of exchange rate fluctuations on cash and cash equivalents			(215,973	)		(222,815	)
Cash and cash equivalents at the end of the interim reporting period			20,876,660			35,081,614

See Notes to Interim Condensed Consolidated Financial Statements

F-106

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited

1. Reporting Entity

LINE Corporation (the “Company”) was incorporated in September, 2000 in Japan in accordance with the Companies Act of Japan under the name Hangame Japan Corporation to provide online gaming services. The Company changed its name to NHN Japan Corporation in August 2003, and subsequently changed its name to LINE Corporation in April 2013. The Company is a subsidiary of NAVER Corporation (“NAVER”), formerly NHN Corporation, which is domiciled in Korea. NAVER is the Company and its subsidiaries’ (collectively, the “Group”) ultimate parent company. The Company’s head office is located at 2-21-1 Shibuya, Shibuya-ku, Tokyo, Japan.

The Group mainly operates a cross-platform messenger application, LINE, and provides communication and content sales and advertising services. Communication and content is provided via the LINE platform, while advertising services are provided via LINE advertising, livedoor blog and NAVER Matome.

2. Basis of Preparation

The unaudited interim condensed consolidated financial statements for the three-month periods ended March 31, 2015 and 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting. The unaudited interim condensed consolidated financial statements were approved by Representative Director, President and Chief Executive Officer Takeshi Idezawa and Director In Joon Hwang on May 25, 2016.

The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2015.

The preparation of the unaudited interim condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent amounts at the date of the interim condensed consolidated financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions are reviewed by management on a regular basis. The effects of a change in estimates and assumptions are recognized in the period of the change or in the period of the change and future periods.

On February 12, 2016, the board of directors approved the abandonment of the MixRadio service (the “MixRadio”). The operation of the MixRadio business was classified as a discontinued operation on March 21, 2016, when the abandonment took effect. As a result, the MixRadio business was retrospectively presented as a discontinued operation on the Interim Condensed Consolidated Statements of Profit or Loss for the three-month periods ended March 31, 2015 and 2016. Refer to Note 9 Discontinued Operations for further details.

Intercompany balances and transactions have been eliminated upon consolidation.

3. Significant Accounting Policies

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2015.

F-107

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

3. Significant Accounting Policies (continued)

The adoption of new and revised IFRSs issued by the International Accounting Standards Board that are mandatorily effective for an accounting period that begins on or after January 1, 2016 had no impact on the Group’s unaudited interim condensed consolidated financial statements as of and for the three-month periods ended March 31, 2015 and 2016.

The Group has not early adopted any other standards, interpretations or amendments that have been issued but are not yet effective.

4. Segment Information

The operating segment of the Group is a component for which discrete financial information is available and whose operating results are regularly reviewed by the Group’s chief operating decision maker in making decisions about resource allocation and assess performance. The chief operating decision maker has been identified as the Company’s board of directors. No operating segments have been aggregated to form the reportable segments.

Since the fourth quarter of 2015, the structure of the business units that management uses to make decisions about operating matters, and the main performance measures used for the purpose of allocating resources to the units had changed. Segment reporting was based on two business units, the LINE business and portal segment and the MixRadio segment.

However, the board of directors approved the abandonment of the MixRadio segment on February 12, 2016. The MixRadio segment was subsequently abandoned on March 21, 2016, and retrospectively classified as a discontinued operation. Refer to Note 9 Discontinued Operations for further details.

(1) Description of Reportable Segment

The Group has a single reportable segment:

LINE business and portal segment – The Group mainly operates a cross-platform messenger application, LINE, and provides communication and content and advertising services. Communication and content are primarily provided to end users via various communication and content. Communication mainly includes LINE Stickers. Content includes LINE Games and LINE Play. Advertising services are provided via LINE advertising, livedoor blog and NAVER Matome. LINE advertising includes LINE Official Accounts, Sponsored Stickers and Free LINE Coins.

5. Property and Equipment

During the three-month periods ended March 31, 2015 and 2016, the Group acquired property and equipment with a cost of 663,388 thousand yen and 672,221 thousand yen, respectively. Such purchase mainly consisted of server infrastructure purchased for its operation of the LINE business and portal segment. The purchases of server infrastructure amounted to 374,508 thousand yen and 245,229 thousand yen for the three-month periods ended March 31, 2015, and 2016, respectively.

F-108

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

5. Property and Equipment (continued)

Contractual commitments for the acquisition of property and equipment as of December 31, 2015 and March 31, 2016 were 199,090 thousand yen and 347,427 thousand yen, respectively.

6. Income Taxes

The Group’s tax provision for interim periods is determined using an estimate of the Group’s annual effective tax rate, adjusted for discrete items arising during the period. In each quarter the Group updates the estimate of the annual effective tax rate, and if the estimated annual tax rate changes, the Group makes a cumulative adjustment in that quarter.

The effective tax rate for the three-month period ended March 31, 2015 of 248.3% differed from the Japanese statutory tax rate of 38.0 % for the year ended December 31, 2014. The effective income tax rate of 248.3% was primarily due to non-deductible share-based payment expenses, including share-based payment expenses in connection with stock options granted to non-Japanese employees and directors, as a result of additional stock options with incremental increases in the fair value granted in February, August and October 2014, and February 2015, and partially attributable to pre-tax losses recorded by subsidiaries on a standalone basis for which no deferred tax assets were recognized as the related tax benefits could not be recognized.

The effective tax rate for the three-month period ended March 31, 2016 of 66.1% differed from the Japanese statutory tax rate of 35.6 % for the year ended December 31, 2015. The effective income tax rate of 66.1% was primarily due to non-deductible share-based payment expenses, including share-based payment expenses in connection with stock options granted to non-Japanese employees and directors, as a result of additional stock options with incremental increases in the fair value granted in February, August and October 2014, and February 2015, and partially attributable to pre-tax losses recorded by subsidiaries on a standalone basis for which no deferred tax assets were recognized as the related tax benefits could not be recognized.

The effective tax rate for the three-month period ended March 31, 2016 decreased as compared to the same period in 2015 mainly due to an increase in the estimated annual profit before tax and a decrease in estimated annual non-deductible share-based payment expenses for the year ending December 31, 2016 as compared to the year ended December 31, 2015. The decrease in estimated annual non-deductible share-based payment expenses is due to the vesting in 2016 of most of the stock options granted to the directors and employees.

F-109

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

7. Financial Assets and Financial Liabilities

The carrying amounts and fair value of financial instruments, except for cash and cash equivalents, by line item in the Interim Condensed Consolidated Statements of Financial Position and by category as defined in IAS 39 Financial Instruments: Recognition and Measurement as of December 31, 2015 and March 31, 2016, are as follows:

The fair value is not disclosed for those financial instruments which are not measured at fair value in the Interim Condensed Consolidated Statements of Financial Position, and whose fair value approximates their carrying amount due to their short-term and/or variable-interest bearing nature. Refer to Note 11 Fair Value Measurements for more details of the available-for-sale financial assets, which are measured at fair value.

					(In thousands of yen)
	December 31, 2015				March 31, 2016
Items	Book value		Fair value		Book value		Fair value
Financial assets
Trade and other receivables
Loans and receivables		27,248,497				23,631,977
Other financial assets, current
Loans and receivables-Time deposits		314,194				219,684
Other		27,209				64,389
Total		341,403				284,073
Other financial assets, non-current
Held-to-maturity investments(1)		280,490		294,595		280,471		298,177
Loans and receivables
Guarantee deposits(1)		2,531,620				2,531,620
Office security deposits		3,832,993		3,661,179		4,459,458		4,307,959
Financial assets at fair value through profit or loss
Conversion right of redeemable preferred stock		871,309		871,309		575,878		575,878
Available-for-sale financial assets(2)		15,863,543		15,863,543		14,963,305		14,963,305
Other		86,965				67,599
Total		23,466,920				22,878,331

F-110

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

7. Financial Assets and Financial Liabilities (continued)

					(In thousands of yen)
	December 31, 2015				March 31, 2016
Items	Book value		Fair value		Book value		Fair value
Financial liabilities
Trade and other payables
Financial liabilities measured at amortized cost		22,983,242				21,870,091
Other financial liabilities, current
Financial liabilities measured at amortized cost
Deposits received		935,041				752,838
Short-term borrowings(3)		42,464,553				42,058,000
Corporate bonds		510,000				262,500
Office security deposits received under sublease agreement		–				7,502
Other		23,618				–
Total		43,933,212				43,080,840
Other financial liabilities non-current
Financial liabilities measured at amortized cost
Other payables, non-current		–				290,000
Long-term borrowings		–				202,224
Office security deposits received under sublease agreement		7,502		7,502		–
Other		782				–
Total		8,284				492,224

⁽¹⁾ The Japanese Payment Services Act requires non-banking entities that engage in business activities involving advance payments from end users using virtual credits to secure a certain amount of money equal to or more than one half of the unused balance of virtual credits purchased by the end user as of the most recent base date set on March 31 and September 30 of each year, either by depositing or entrusting a cash reserve or government bonds with the Legal Affairs Bureau, or by concluding a guarantee contract with a financial institution. If deposits are made, they are recorded as guarantee deposits. If guarantee contracts are entered into, guarantee fees equal to the contractual amount times a guarantee fee rate are incurred. In accordance with the Japanese Payment Services Act, the Group had deposited cash of 2,530,200 thousand yen as of December 31, 2015 and March 31, 2016. The Group also had deposited investments in Japanese government bonds of 280,490 thousand yen and 280,471 thousand yen as of December 31, 2015 and March 31, 2016, respectively, which the Group intends to hold until maturity for this purpose. In addition, the Group entered into a credit guarantee contract with a bank in the year ended December 31, 2014 for 2,000,000 thousand yen with a guarantee fee rate of 0.2% to comply with the Japanese Payment Services Act.

F-111

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

7. Financial Assets and Financial Liabilities (continued)

⁽²⁾ Impairment loss of 1,789,603 thousand yen and 264,060 thousand yen was recognized for available-for-sale financial assets for the year ended December 31, 2015 and the three-month period ended March 31, 2016, respectively.

⁽³⁾ The weighted average interest rate of the remaining outstanding short-term borrowings as of December 31, 2015 and March 31, 2016 was 0.2%.

8. Issued Capital and Reserves

(1) Shares issued

The movement of shares issued for the three-month period ended March 31, 2016 is as follows:

	Shares issued (Share capital with no-par value)
	Common Shares		Class A shares
January 1, 2016		–		174,992,000
Conversion of class A shares to common shares(1)		174,992,000		(174,992,000	)
March 31, 2016		174,992,000		–

⁽¹⁾  Through an amendment of its articles of incorporation effective as of March 31, 2016, the Company terminated its dual class structure of common shares and class A shares and converted all class A shares into common shares.

(2) Share premium

The movements in share premium for the three-month period ended March 31, 2015 are as follows:

	(In thousands of yen)
	Share-based payments(1)		Common control business combinations		Others(2)		Share premium total
January 1, 2015		3,810,281		293,629		3,667,749		7,771,659
Share-based payments		2,287,458		–		–		2,287,458
March 31, 2015		6,097,739		293,629		3,667,749		10,059,117

F-112

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

8. Issued Capital and Reserves (continued)

(2) Share premium (continued)

The movements in share premium for the three-month period ended March 31, 2016 are as follows:

	(In thousands of yen)
	Share-based payments(1)			Common control business combinations		Others(2)		Share premium total
January 1, 2016		15,022,911			293,629		3,666,236		18,982,776
Share-based payments		2,493,754			–		–		2,493,754
Forfeiture of stock options		(25,136	)		–		–		(25,136	)
March 31, 2016		17,491,529			293,629		3,666,236		21,451,394

⁽¹⁾  Refer to Note 12 Share-Based Payments for further details.

⁽²⁾  Resulted mainly from capital reserve requirements under the Companies Act of Japan.

9. Discontinued Operations

The Group had acquired MixRadio on March 16, 2015. Subsequently, the Group made a strategic decision and decided to focus on its core LINE business and portal segment. On February 12, 2016, the board of directors approved the abandonment of the MixRadio segment. The operation of the MixRadio business was classified as a discontinued operation on March 21, 2016, when the abandonment took effect. As a result, the MixRadio business was retrospectively presented as a discontinued operation on the Interim Condensed Consolidated Statements of Profit or Loss for the three-month periods ended March 31, 2015 and 2016.

The aggregated results of the discontinued operations for the three-month periods ended March 31, 2015 and 2016 are presented below.

	(In thousands of yen)
	2015			2016
Revenues		9,799			443,053
Other income		103,064			–
Expenses(1)		(260,909	)		(2,940,534	)
Loss before tax from discontinued operations		(148,046	)		(2,497,481	)
Income taxes benefits on disposal(2)		–			857,318
Loss for the period from discontinued operations (attributable to the shareholder of the Company)		(148,046	)		(1,640,163	)

⁽¹⁾ In connection with the abandonment of MixRadio on March 21, 2016, restructuring expenses related to employee termination benefits of 7,147 thousand pound sterling (1,183,142 thousand yen) and office lease termination fees of 769 thousand pound sterling (127,322 thousand yen) have been incurred. As of March 31, 2016, the remaining liabilities related to the abandonment of MixRadio have been recorded in the Interim Condensed Consolidated Statements of Financial position as trade and other payables and provision, current.

F-113

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

9. Discontinued Operations (continued)

⁽²⁾ The income tax benefits for the three-month periods ended March 31, 2016 is mainly due to the deductible temporary difference arising from the investment in MixRadio Limited, which incurred losses during the period.

The aggregated cash flow information for the discontinued operations for the three-month periods ended March 31, 2015 and 2016 are presented below.

	(In thousands of yen)
	2015			2016
Operating		(276,044	)		(1,890,596	)
Investing		(2,301,280	)		(2,257	)
Financing		–			–
Net cash outflow		(2,577,324	)		(1,892,853	)

10. Earnings per Share

The profit or loss for the period and the weighted average number of shares used in the calculation of earnings per share are as follows:

For the three-month period ended March 31

(In thousands of yen, except number of shares)
	2015			2016
(Loss)/profit for the period attributable to the shareholder of the Company from continuing operations		(1,740,331	)		1,517,890
Loss for the period attributable to the shareholder of the Company from discontinued operations		(148,046	)		(1,640,163	)
Total loss for the period attributable to the shareholder of the Company for basic and diluted earnings per share		(1,888,377	)		(122,273	)
Weighted average number of total common shares for basic earnings per share		174,992,000			174,992,000
Effect of dilution:
Stock options		–			19,753,768
Weighted average number of total common shares adjusted for the effect of dilution		174,992,000			194,745,768

In calculating diluted earnings per share, share options outstanding and other potential shares are taken into account where their impact is dilutive. Potential common shares used in the calculation of diluted earnings per share for the three-month period ended March 31, 2015 excluded options representing 14,000,000 shares granted in 2012, 3,374,000 shares granted in 2013, 2,806,500 shares granted in 2014 and 5,786,000 shares granted in 2015 which were outstanding as of March 31, 2015, as their impact is antidilutive.

F-114

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

10. Earnings per Share (continued)

Potential common shares used in the calculation of diluted earnings per share for the three-month period ended March 31, 2016, included options representing 25,569,000 shares which were outstanding as of March 31, 2016 as their impact is dilutive. For the period ended March 31, 2016, diluted loss per share attributable to the shareholder of the Company is lower than basic loss per share attributable to the shareholders of the Company because of the effect of losses from the discontinued operations.

11. Fair Value Measurements

(1) Fair value hierarchy

The Group referred to the levels of the fair value hierarchy for financial instruments measured at fair value on the consolidated financial statements based on the following inputs:

– Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

– Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

– Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entity’s own assumptions that market participants would use in establishing a price.

(2) Fair value measurements by fair value hierarchy

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and March 31, 2016 are as follows:

	(In thousands of yen)
December 31, 2015	Level 1		Level 2		Level 3		Total
Financial asset at fair value through profit or loss
Conversion right of redeemable preferred stock		–		–		871,309		871,309
Available-for-sale financial assets
Listed equity securities		2,215,330		–		–		2,215,330
Private equity investments		–		–		13,648,213		13,648,213
Total		2,215,330		–		14,519,522		16,734,852

F-115

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

11. Fair Value Measurements (continued)

(2) Fair value measurements by fair value hierarchy (continued)

	(In thousands of yen)
March 31, 2016	Level 1		Level 2		Level 3		Total
Financial asset at fair value through profit or loss
Conversion right of redeemable preferred stock		–		–		575,878		575,878
Available-for-sale financial assets
Listed equity securities		1,937,314		–		–		1,937,314
Private equity investments		–		–		13,025,991		13,025,991
Total		1,937,314		–		13,601,869		15,539,183

There have been no transfers among Level 1, Level 2 and Level 3 during the three-month period ended March 31, 2016.

(3) Reconciliations from the opening balance to the closing balance of financial instruments categorized within Level 3 are as follows:

	(In thousands of yen)
	2015						2016
	Private equity investments			Conversion right of redeemable preferred stock			Private equity investments			Conversion right of redeemable preferred stock
Fair value as of January 1		7,302,439			816,605			13,648,213			871,309
Total (loss)/gain for the period:
Included in profit or loss(1)		–			–			–			(245,919	)
Included in other comprehensive income(2)		(52,913	)		–			26,259			–
Comprehensive income (loss)		(52,913	)		–			26,259			(245,919	)
Purchases		95,000			–			8,677			–
Effect of exchange rate changes		(49,217	)		(8,441	)		(657,158	)		(49,512	)
Fair value as of March 31		7,295,309			808,164			13,025,991			575,878

⁽¹⁾ This amount is included in other non-operating income or expenses in the Group’s Interim Condensed Consolidated Statements of Profit or Loss.

⁽²⁾ This amount is included in net change in fair value of available-for-sale financial assets in the Group’s Interim Condensed Consolidated Statement of Comprehensive Income.

F-116

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

11. Fair Value Measurements (continued)

(4) Valuation techniques and inputs

Measured at fair value

Conversion right of redeemable preferred stock

The conversion right of redeemable preferred stock is an embedded derivative. Such conversion right is bifurcated from the underlying redeemable preferred stock and measured at fair value using a binomial option pricing model, which utilizes significant unobservable inputs including comparable listed companies’ average historical volatility of 63.6% and 51.1%, and discount rate of 1.9% and 1.6% as of December 31, 2015 and March 31, 2016, respectively. A significant increase (decrease) in the comparable listed companies’ average historical volatility would result in a higher (lower) fair value of the conversion right of redeemable preferred stock, while a significant increase (decrease) in the discount rate would result in a lower (higher) fair value of the conversion right of redeemable preferred stock.

Private equity investments

Available-for-sale financial assets categorized within Level 3 mainly consist of unlisted equity securities and private equity investment funds. Private equity investment funds were measured at fair value based on net asset value as of December 31, 2015 and March 31, 2016.

Unlisted equity securities are measured at fair value either based on the most recent transactions, or using the market approach and option pricing model. Below is the quantitative information regarding the valuation techniques and significant unobservable inputs used in measuring the fair value of certain unlisted equity securities:

Valuation technique	Significant unobservable input	December 31, 2015	March 31, 2016
Market approach – market comparable companies	EBITDA multiple	11.1-16.0	8.0-16.5
	EBIT multiple	11.4	9.9
	Revenue multiple	1.5-4.7	1.5-5.2
	Liquidity discount	30%	30%
Option pricing model	Comparable listed companies’ average historical volatility	64.5%-81.5%	51.1%-81.3%
	Discount rate	(0.0%)-1.9%	(0.2%)-1.6%

A significant increase (decrease) in the EBITDA, EBIT and revenue multiple would result in a higher (lower) fair value of the unlisted equity securities, while a significant increase (decrease) in the liquidity discount, comparable listed companies’ average historical volatility and discount rate would result in a lower (higher) fair value of the unlisted equity securities.

The valuation techniques and the valuation results of the Level 3 financial assets, including those performed by the external experts, were reviewed and approved by the management of the Group.

F-117

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

12. Share-Based Payments

The Group has stock option incentive plans for directors and employees. Each stock option represents the right to purchase 500 common shares at a fixed price (344 yen for 2012 and 2013 grants and 1,320 yen for 2014 and 2015 grants per common share) for a defined period of time. During the three-month period ended March 31, 2016, no additional stock options were granted.

On June 15, 2015, through the amendment of its articles of incorporation, the Company introduced a dual class structure of common shares and class A shares. Under the dual class structure, each common share has one vote per unit of 100 shares, and each class A share has one vote per unit of 10 shares, while both classes of shares have the same rights to share in profit, distribution of retained earnings and residual assets. Additionally, the Company amended the terms applicable to a portion of two tranches of stock options. As a result of the amendment, 24,724 Common Stock Options originally granted on December 17, 2012 and 6,949 Common Stock Options originally granted on February 4, 2015 were converted to Class A Stock Options. While all other contract terms remain unchanged, the holders of Class A Stock Options are entitled to acquire 500 class A shares upon exercise of each stock option. The Class A Stock Options are mandatorily converted to Common Stock Options on a one-to-one basis upon passage of time or occurrence of certain events as specified in the terms and conditions of Class A Stock Options.

Through an amendment of its article of incorporation effective as of March 31, 2016, the Company terminated its dual class structure of commons shares and class A shares and amended the terms applicable to stock options from class A shares to common shares.

The fair value of stock options is determined using the Black-Scholes model, a commonly accepted stock option pricing method. Stock options granted vest after two years from the grant date and are exercisable for a period of eight years from the vesting date. Conditions for vesting and exercise of the stock options require that those who received the allotment of stock options continue to be employed by the Group from the grant date to the vesting date, and from the grant date to the exercise date, respectively, unless otherwise permitted by the board of directors.

F-118

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

12. Share-Based Payments (continued)

(1) Movements during the three-month period ended March 31, 2016

The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, outstanding Common Stock Options and Class A Stock Options on a per-common-share and a per-class-A-share basis, respectively, during the period:

	Common Stock Options					Class A Stock Options
	Number (shares)			WAEP (yen per share)		Number (shares)			WAEP (yen per share)
Outstanding at January 1, 2016		9,848,000			827		15,836,500			558
Granted during the period		–			–		–			–
Forfeited during the period		(115,500	)		1,159		–			–
Exercised during the period		–			–		–			–
Expired during the period		–			–		–			–
Conversion of Class A Stock Options to Common Stock Options		15,836,500			558		(15,836,500	)		558
Outstanding at March 31, 2016		25,569,000			659		–			–
Exercisable at March 31, 2016		18,943,500			428		–			–

The weighted average remaining contractual life for the Common Stock Options outstanding as of March 31, 2016 was 7.5 years.

(2) The Group has recognized 2,287,458 thousand yen and 2,493,754 thousand yen of share-based compensation expenses in the Interim Condensed Consolidated Statement of Profit or Loss for the three-month periods ended March 31, 2015 and 2016, respectively.

13. Related Party Transactions

The following table provides the total amount of related party transactions entered into during the three-month periods ended March 31, 2015 and 2016, as well as balances with related parties as of December 31, 2015 and March 31, 2016.

(1) Significant related party transactions during the three-month period ended March 31, 2015, and outstanding balances with related parties as of December 31, 2015, are as follows:

	(In thousands of yen)
Relationship	Name	Transaction	Transaction amount		Outstanding receivable/ (payable) balances(3)
Parent company	NAVER	Advertising service(1)		560,432		159,964
Subsidiary of parent company	NAVER Business Platform Corp.(2)	Operating expenses		1,710,137		(942,488	)

F-119

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

13. Related Party Transactions (continued)

(1) Significant related party transactions during the three-month period ended March 31, 2015, and outstanding balances with related parties as of December 31, 2015, are as follows (continued):

⁽¹⁾  LINE Plus and NAVER entered into an agreement for exchange of services in which LINE Plus provides advertising services via the LINE platform and the right to use certain LINE characters in exchange for NAVER’s advertising services for LINE Plus via NAVER’s web portal. The Group incurred advertising expenses of 560,432 thousand yen in connection with the advertising services provided by NAVER for the three-month period ended March 31, 2015.

⁽²⁾  This subsidiary of NAVER provided data hosting services to the Group.

⁽³⁾  The payable amount outstanding is unsecured and will be settled in cash.

(2) Significant related party transactions during the three-month period ended March 31, 2016 and outstanding balances with related parties as of March 31, 2016, are as follows:

	(In thousands of yen)
Relationship	Name	Transaction	Transaction amount		Outstanding receivable/ (payable) balances(3)
Parent company	NAVER	Advertising service(1)		78,982		86,579
Subsidiary of parent company	NAVER Business Platform Corp.(2)	Operating expenses		1,722,430		(868,225)

⁽¹⁾  LINE Plus and NAVER entered into an agreement for exchange of services in which LINE Plus provides advertising services via the LINE platform and the right to use certain LINE characters in exchange for NAVER’s advertising services for LINE Plus via NAVER’s web portal. The Group generated advertising revenues of 78,982 thousand yen in connection with the advertising services provided to NAVER for the three-month period ended March 31, 2016.

⁽²⁾  This subsidiary of NAVER provided IT infrastructure services and related development services to the Group.

⁽³⁾  The payable amount outstanding is unsecured and will be settled in cash.

(3) The total compensation of key management personnel for the three-month periods ended March 31, 2015 and 2016 was as follows:

	(In thousands of yen)
	2015		2016
Salaries (including bonuses)		61,753		142,265
Share-based payments(1)		940,280		1,428,431
Total		1,002,033		1,570,696

⁽¹⁾ Refer to Note 12 Share-Based Payments for further details.

Key management personnel include directors and corporate auditors of the Company.

F-120

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

14. Business combinations

Acquisition in 2015

Acquisition of MixRadio

On March 16, 2015, the Group acquired the MixRadio, a music streaming service, from Microsoft Mobile Oy. The acquisition of MixRadio allows the Group to expand the range of services. The Group determined that the acquisition of MixRadio is a business combination in accordance with IFRS 3, as the Group acquired inputs and processes, such as music rights and the trade name of MixRadio, with which principal activities have been commenced. The valuation of the fair values of the assets acquired and the liabilities assumed was completed as of December 31, 2015.

In the fourth quarter of 2015, the Group made a strategic decision and decided to focus on its core LINE business and portal segment. As of December 31, 2015, the Group considered the abandonment of the MixRadio business to be probable. Therefore, as the future cash flows were expected to be negative, goodwill allocated to the MixRadio business was fully impaired. In addition, MixRadio’s intangible assets with definite useful life and property and equipment were fully impaired. MixRadio was subsequently abandoned on March 21, 2016. Refer to Note 9 Discontinued Operations for further details.

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of MixRadio as of the date of acquisition were as follows:

	(In thousands of yen)
	Fair value recognized on acquisition
Assets
Property and equipment		39,320
Intangible assets
Technology		845,121
Music rights		543,292
Trademarks		156,951
Customer relationships		108,658
Other intangible assets		3,665
		1,697,007
Liabilities
Trade and other payables		1,544,410
Other liabilities		550,774
		2,095,184
Total identifiable net assets at fair value		(398,177	)
Goodwill		2,697,621
Total consideration		2,299,444

F-121

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

14. Business combinations (continued)

Acquisition in 2015 (continued)

Acquisition of MixRadio (continued)

Assets acquired and liabilities assumed (continued)

The Group paid 2,299,444 thousand yen in cash, which was included as part of cash flows from investing activities in the Interim Condensed Consolidated Statements of Cash Flows, and assumed certain liabilities in acquiring MixRadio. Goodwill of 2,697,621 thousand yen represented the value of expected synergies arising from the acquisition. All of the goodwill recognized is expected to be deductible for income tax purposes.

As part of the business combination, the Group also acquired an assembled workforce from MixRadio. However, the assembled workforce did not meet the criteria for recognition as an intangible asset under IAS 38.

From the date of acquisition, MixRadio has increased loss from discontinued operations, net of tax, of the Group by 148,046 thousand yen for the three-month period ended March 31, 2015. Because MixRadio was classified as a discontinued operation, revenues and expenses from continuing operations are not impacted. If the combination had taken place on January 1, 2015, the loss for the three-month period ended March 31, 2015, would have been 2,759,874 thousand yen (unaudited). Because MixRadio was classified as a discontinued operation, revenues and expenses from continuing operations are not impacted.

Transaction costs of 74,029 thousand yen have been expensed and are included in other operating expenses in the Interim Condensed Consolidated Statement of Profit or Loss.

F-122

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

14. Business combinations (continued)

Acquisition in 2016

Acquisition of M.T. Burn

On February 29, 2016, the Group acquired 50.5% of the voting shares of M.T. Burn Inc., (“M.T. Burn”), an unlisted company based in Japan, specialized in developing and providing a native mobile advertising platform, “Hike”. The Group acquired M.T. Burn for the purpose of enhancing the Group’s knowledge and technological capability for advertisement. Since the acquisition occurred on February 29, 2016, the Group is in the process of gathering information to evaluate the fair values of the assets acquired and liabilities assumed. The preliminary allocation of the consideration given related to this business combination, which is subject to change until the end of the measurement period (up to one year from the acquisition date), was as follows:

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of M.T. Burn as of the date of acquisition were as follows:

	(In thousands of yen)
	Fair value recognized on acquisition
Assets
Cash and cash equivalents		86,551
Trade receivables, net		83,161
Other assets		1,221
		170,933
Liabilities
Trade and other payables		77,695
Other financial liabilities, current		50,000
Other financial liabilities, non-current		210,141
Other liabilities		13,266
		351,102
Total identifiable net liabilities at fair value		(180,169	)
Non-controlling interest		89,194
Goodwill		600,950
Total consideration		509,975

All consideration was paid in cash. The fair value of the trade receivables was 83,161 thousand yen. The gross contractual amounts of the trade receivables were not materially different from the fair value determined as part of the purchase price allocation.

Non-controlling interest in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets at the acquisition date.

F-123

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

14. Business combinations (continued)

Acquisition in 2016 (continued)

Acquisition of M.T. Burn (continued)

Assets acquired and liabilities assumed (continued)

Goodwill of 600,950 thousand yen represented the value of expected synergies arising from the acquisition and was allocated entirely to the LINE business and portal segment. None of the goodwill recognized was expected to be deductible for income tax purposes.

From the date of acquisition, M.T. Burn had contributed 74,301 thousand yen to the revenue and 6,610 thousand yen to the profit before tax from continuing operations of the Group. If the combination had taken place on January 1, 2016, revenue for the Group from continuing operations would have been 33,592,845 thousand yen (unaudited) and the profit before tax from continuing operations for the Group would have been 4,133,154 thousand yen (unaudited) for the three-month period ended March 31, 2016.

Transaction costs of 5,468 thousand yen have been expensed and are included in other operating expenses in the Interim Condensed Consolidated Statement of Profit or Loss.

	(In thousands of yen)
Analysis of cash flows on acquisition:
Total consideration related to the acquisition		(509,975	)
Net cash acquired with the subsidiary		86,551
Net cash flows on acquisition (included in cash flows from investing activities)		(423,424	)

15. Principal Subsidiaries

Information on subsidiaries

The table below included subsidiaries which were newly consolidated during the three-month period ended March 31, 2016, and subsidiaries in which the Company’s percentage of ownership changed during such period:

			Percentage of ownership
Name	Primary business activities	Country of incorporation	December 31, 2015			March 31, 2016
PT LINE PLUS INDONESIA(1)	Marketing	Indonesia		–			99.8	%
LMN Corporation(2)	MVNO service	Japan		–			100.0	%
M.T. Burn(3)	Advertising platform service	Japan		–			50.5	%
Bonsai Garage Corporation(4)	Fashion	Japan		100.0	%		–

⁽¹⁾  LINE Plus established PT LINE PLUS INDONESIA in January 2016.

⁽²⁾  The Company established LMN Corporation in February 2016.

⁽³⁾  The Company acquired M.T. Burn in February 2016.

⁽⁴⁾  Bonsai Garage Corporation was sold to an unrelated third party in February 2016.

F-124

LINE Corporation

Notes to Interim Condensed Consolidated Financial Statements – Unaudited (continued)

15. Principal Subsidiaries (continued)

Information on subsidiaries (continued)

Ultimate parent company of the Group

The next senior and the ultimate parent company of the Group is NAVER, which is domiciled in Korea and listed on the Korean Stock Exchange.

16. Subsequent events

Deconsolidation of a subsidiary into a joint venture

On April 25, 2016, a transaction with a third party resulted in a decrease of the Group’s ownership of LINE BIZ Plus Ltd. from 100.0% to 50.0%. The decrease in ownership resulted from the issuance of shares by LINE BIZ Plus Ltd. The third party acquired the newly issued shares by contributing 750,000 thousand Baht (2,383,846 thousand yen) in cash.

The financial effects of this transaction have not been recognized as of March 31, 2016. From April 25, 2016, LINE BIZ Plus Ltd. will be accounted for as a joint venture under the equity method because the Group will have joint control of the entity. The investment retained by the Group will be re-measured to its fair value because control was lost. The accounting for this transaction is being finalized.

Additional guarantee contract related to the Japanese Payment Services Act

As of the most recent base date set on March 31, 2016, the Group was required to secure an additional amount of money, 12,592,543 thousand yen, under the Japanese Payment Services Act in order to cover at least one half of the unused balance of virtual credits purchased by end users. Therefore, the Group entered into a new credit guarantee contract with a bank on May 24, 2016 for 12,600,000 thousand yen with a guarantee fee rate of 0.1% to comply with the Japanese Payment Services Act. The impacts of this transaction to the Group’s Interim Condensed Consolidated Financial Statement are insignificant.

F-125

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article 330 of the Companies Act makes the provisions of Part III, Chapter 2, Section 10 of the Civil Code of Japan applicable to the relationship between us and our directors and corporate auditors. Section 10 of the Civil Code, among other things, provides in effect that:

(1) Any director or corporate auditor of a company may demand advance payment of expenses which are considered necessary for the management of the affairs of such company entrusted to him;

(2) If a director or a corporate auditor of a company has defrayed any expenses which are considered necessary for the management of the affairs of such company entrusted to him, he may demand reimbursement therefor and interest thereon after the date of payment from such company;

(3) If a director or a corporate auditor has assumed an obligation necessary for the management of the affairs of a company entrusted to him, he may require such company to perform it in his place or, if it is not due, to furnish adequate security; and

(4) If a director or a corporate auditor, without any fault on his part, sustains damage through the management of the affairs of a company entrusted to him, he may demand compensation therefor from such company.

Pursuant to Article 427, paragraph 1 of the Companies Act and our articles of incorporation, we plan to enter into an agreement with each of our outside directors and corporate auditors providing that such director’s or corporate auditor’s liability for damages to us shall be limited to the higher of either the amount we have determined in advance (which shall be not less than ¥10 million) or the amount prescribed by applicable laws and regulations, provided that such director or corporate auditor has acted in good faith and without gross negligence.

Further, pursuant to Article 426, paragraph 1 of the Companies Act and our articles of incorporation, we may, by resolution of the board of directors, release any of our directors or corporate auditors from liability for damages to us, provided that such director or corporate auditor has acted in good faith and without gross negligence to the extent permitted by applicable laws and regulations.

The form of underwriting agreement to be filed as Exhibit 1.1 to this registration statement will also provide for indemnification of us and our officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, we have issued the following securities (including options to acquire shares of our common stock). We believe that each of the following issuances was exempt from registration under the Securities Act in reliance on Regulation D under the Securities Act or pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions.

On December 16, 2013, we issued options to acquire an aggregate of 3,430,500 shares of our common stock, at an exercise price of ¥344 per share, to certain of our directors and employees and those of our subsidiaries. On February 7, 2014, we issued options to acquire an aggregate of 1,825,000 shares of our common stock, at an exercise price of ¥1,320 per share, to certain of our employees as well as directors and employees of our subsidiaries. On August 8, 2014, we issued options to acquire an aggregate of 752,500 shares of our common stock, at an exercise price of ¥1,320 per share, to certain of our employees and directors and employees of our

subsidiaries. On October 31, 2014, we issued options to acquire an aggregate of 348,500 shares of our common stock, at an exercise price of ¥1,320 per share, to certain of our employees and directors and employees of our subsidiaries. On February 4, 2015, we issued options to acquire an aggregate of 5,773,500 shares of our common stock, at an exercise price of ¥1,320 per share, to certain of our directors and employees as well as directors, corporate auditors and employees of our subsidiaries. On August 30, 2013, we issued to Sumitomo Mitsui Banking Corporation, as initial purchaser, unsecured floating rate notes with an aggregate principal amount of ¥1,500 million including the aggregate purchase discounts and commission of ¥3.75 million. We believe that the issuances of these securities were exempt from registration under the Securities Act because they were made pursuant to exemptions from registration provided by Section 4(2) of the Securities Act or Rule 701 or Regulation S promulgated thereunder.

ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

Number	Description
1.1*	Form of Underwriting Agreement
3.1*	Articles of Incorporation of the Registrant (English translation)
3.2*	Share Handling Regulations of the Registrant (English translation)
3.3*	Regulations of the Board of Directors of the Registrant (English translation)
3.4*	Regulations of the Board of Corporate Auditors of the Registrant (English translation)
4.1*	Form of Deposit Agreement among the Registrant, the depositary and holders of the American Depositary Receipts (including Form of American Depositary Receipt)
5.1**	Form of Opinion of Nishimura & Asahi
8.1	Opinion of Nishimura & Asahi regarding certain Japanese tax matters (included in Exhibit 5.1)
10.1	Form of Employee Agreement between the Registrant and its non-director executive officers (English translation)
10.2	Form of Employee Stock Option Agreement (English translation)
10.3	Reserved
10.4 †	Information Technology Service Agreement, dated April 1, 2013, between the Registrant and NAVER Business Platform Corporation and an amendment dated June 30, 2015 (English translation)
10.5	Business Sale Agreement, dated December 18, 2014, between the Registrant and Microsoft Mobile Oy
10.6	Service Partnership Agreement, dated January 1, 2014, between LINE Plus Corporation and NAVER Corporation and an amendment dated December 31, 2014 (English translation)
16.1	Letter from Deloitte Touche Tohmatsu LLC, dated June 10, 2016
21.1*	List of Subsidiaries of the Registrant
23.1	Consent of Nishimura & Asahi (included in Exhibit 5.1)
23.2	Consent of PricewaterhouseCoopers Aarata
23.3	Consent of Deloitte Touche Tohmatsu LLC
24.1	Power of Attorney (included on signature page)

* To be filed by amendment.

** Signed opinion to be filed by amendment.

† Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been separately filed with the Securities and Exchange Commission.

(b) Financial Statement Schedules

Schedules have been omitted because the information to be set forth therein is not applicable or is shown in the Financial Statements or the Notes thereto.

ITEM 9. UNDERTAKINGS

(a)        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b)        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(c)         The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Tokyo, Japan, on June 10, 2016.

LINE Corporation
By:	/s/ Takeshi Idezawa
	Name:	Takeshi Idezawa
	Title:	Representative Director, President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, each person whose signature appears below hereby constitutes and appoints Takeshi Idezawa and In Joon Hwang as his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her in any and all capacities, to do any and all acts and all things and to execute any and all instruments or documents which said attorneys-in-fact and agents may deem necessary or desirable to enable the registrant to comply with the U.S. Securities Act of 1933, as amended (the “Securities Act”), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of shares of common stock of the registrant and American Depositary Shares representing such shares of common stock (together, the “Shares”), including, without limitation, the power and authority to sign the registration statement on Form F-1 (the “Registration Statement”) to be filed with the Securities and Exchange Commission with respect to such Shares, any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Hae Jin Lee Name: Hae Jin Lee	Chairman	June 10, 2016
/s/ Takeshi Idezawa Name: Takeshi Idezawa	Representative Director, President and Chief Executive Officer (principal executive officer)	June 10, 2016
/s/ Joongho Shin Name: Joongho Shin	Director	June 10, 2016
/s/ Jun Masuda Name: Jun Masuda	Director	June 10, 2016
/s/ In Joon Hwang Name: In Joon Hwang	Director and Chief Financial Officer (principal financial officer)	June 10, 2016
/s/ Tadashi Kunihiro Name: Tadashi Kunihiro	Outside Director	June 10, 2016
/s/ Koji Kotaka Name: Koji Kotaka	Outside Director	June 10, 2016
/s/ Rehito Hatoyama Name: Rehito Hatoyama	Outside Director	June 10, 2016
/s/ Kokan Ki Name: Kokan Ki	Head of Finance and Accounting (principal accounting officer)	June 10, 2016

SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES

Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of LINE Corporation has signed this registration statement or amendment thereto in the city of Los Angeles, State of California, on June 10, 2016.

LINE Euro-Americas Corporation
By:	/s/ Youngsu Ko
	Name: Youngsu Ko
	Title: Chief Executive Officer

EX-5.1

EXHIBIT 5.1

[Nishimura & Asahi Letterhead]

                    , 2016

LINE Corporation

Shibuya Hikarie, 27th Floor,

2-21-1 Shibuya Shibuya-ku, Tokyo 150-8510

Japan

Dear Sirs:

We have acted as legal counsel to LINE Corporation (the “Company”) with respect to the laws of Japan in connection with the Registration Statement on Form F-1 which the Company filed with the United States Securities and Exchange Commission (the “Commission”) on [June 10], 2016, as amended by Amendment No. 1 thereto filed on [June 27], 2016 (the “Registration Statement”) to register under the United States Securities Act of 1933, as amended (the “Securities Act”) [22,000,000] shares of common stock of the Company, no par value, being issued and offered outside Japan by the Company (the “Shares”) in a public offering including, in the United States, in the form of American depositary shares.

Upon the request by the Company, we are furnishing our opinion to be filed as Exhibit 5.1 to the Registration Statement. For such purpose, we have examined the following documents:

(i) copies of the Articles of Incorporation, the Regulations of the Board of Directors, the Share Handing Regulations and the Regulations of the Board of Corporate Auditors of the Company certified by the Representative Director & CEO of the Company as being true and complete as of June [27], 2016;

(ii) a form of the International Underwriting Agreement (the “Underwriting Agreement”) to be executed on [July 11], 2016 between the Company and the International Underwriters;

(iii) copies of the minutes of the meetings of the Board of Directors of the Company held on June [10] and June [27], 2016;

(iv) a form of the notice to persons who intend to apply for share subscription, to be given by the Company to [                    ] on behalf of the International Underwriters, in respect of the Shares;

(v) a form of the share subscription form, to be delivered to the Company by [                    ] on behalf of the International Underwriters, in respect of the Shares;

(vi) a form of the share allotment notice, to be given by the Company to [                    ] on behalf of the International Underwriters, in respect of the Shares;

(vii) a certified copy of the Certificate of Complete History of Company Register of the Company dated [            ], 2016; and

(viii) a conformed copy of the Registration Statement and all exhibits thereto.

We have also examined such other certificates, corporate and other records of the Company and such other documents and records, and considered such questions of law, as we have deemed necessary or appropriate for the purpose of furnishing the opinion hereinafter set forth. We have relied, as to certain factual matters, upon the documents referred to in item (i) through (viii) above, and other certificates of officers or other authorized persons of the Company or public officials as we have deemed appropriate as a basis for the opinion expressed herein.

On the basis of such examination, and subject to the further assumptions and qualifications set forth below, we are of the opinion that insofar as the laws of Japan, in effect as of the date hereof, are concerned:

1.             The Shares to be newly issued and delivered by the Company under the Underwriting Agreement have been duly and validly authorized and will, when issued and delivered to the International Underwriters following payment therefor as provided in the Underwriting Agreement, be validly issued, fully paid and non-assessable; and

2.             The statements in the Registration Statement with respect to matters of, and regulations or restrictions under, the laws of Japan contained under the captions “Taxation — Japanese Taxation,” to the extent that they constitute a summary or description of matters of Japanese law (excluding any statement therein of factual matters or accounting treatment), are true and correct and fair in all material respects.

The foregoing opinion is subject to the assumptions and qualifications set forth below:

(a) In our examination, we have assumed (i) the legal capacity of all natural persons, the genuineness of all signatures and seals and the proper affixture thereof, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, the authenticity of the originals of such latter documents and (ii) that there has not been any action or inaction or agreements by the parties thereto (other than those contained in the documents and records that we examined) or any court or administrative order or judgment (other than those that we examined) which would invalidate or terminate or otherwise change any of the documents examined, and also (iii) that no agreements, contracts, instruments or documents which may contradict or be inconsistent with, or affect the characterization or the nature of, all the documents so examined or the transactions contemplated thereunder have existed or been made between any parties to such documents so examined;

In making our examination of documents, we have assumed that the parties, other than the Company, executing or delivering such documents were entities validly existing under the laws of the relevant jurisdictions and had the power, corporate or other, to execute or deliver such documents and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties (other than the Company) of such documents and the validity and binding effect of the due authorizations of such parties (other than the Company);

We also assume that (i) all documents submitted to us as forms will be duly and validly executed by the relevant party in such forms, (ii) the Underwriting Agreement will be duly executed and will become valid, legally binding and enforceable against each party thereto in accordance with its respective terms under its governing law, or not otherwise contrary to public policy or any mandatory provisions of applicable laws of any jurisdiction other than Japan, as presently or hereafter in force or given effect, (iii) statements or stipulated intentions and representations included in the foregoing documents or made to us in connection with the offering are true and conform to the relevant facts thereof and no material facts have been omitted from them, and (iv) the Representative Director & CEO of the Company will duly determine the Public Offering Price and Purchase Price of the Shares based on the results of the bookbuilding process and pursuant to the authorization of the board of directors of the Company;

(b) No opinion is expressed herein as to the law of any jurisdiction other than Japan. We neither express nor imply any opinion as to laws other than the laws of Japan existing as at the date of this opinion;

Further, we assume that there are no provisions of the laws of any jurisdiction outside Japan which would be contravened by the execution or delivery of the Underwriting Agreement and/or other documents specified or implied herein, and that none of our opinions set forth above will be affected by the laws (including public policy) of any jurisdiction outside Japan. To the extent that the laws of any

- 2 -

country or jurisdiction other than Japan may be relevant to any matters set forth in our opinion, we have assumed that such laws do not and/or will not result in any conclusions different from the opinion herein stated; and

(c) Where an assumption is stated to have been made in this opinion, or it is given subject to a qualification, we have not made any independent investigation in respect of the matters which are the subject of such assumption or qualification.

Furthermore, our opinion stated herein is subject to the following assumptions and qualifications:

a. In this opinion, Japanese legal concepts may also be expressed in English language terms as well as in their original Japanese terms, but the concepts concerned may not be identical to the concepts described by the equivalent English language terms as they exist under the laws of other jurisdictions;

b. We offer no opinion as to the tax laws of Japan or any other country, other than in paragraph 2 above. With regard to paragraph 2 above, the opinion expressed is not binding on the National Tax Administration or the relevant local tax authorities or any court of jurisdiction. In addition, for the avoidance of doubt, the section of the Registration Statement headed “Taxation-Japanese Taxation” is solely a general summary of the tax laws of Japan and there is therefore a possibility that such description may be affected by any foreign tax laws or any tax treaty (other than the ones described in the Registration Statement) or any fact;

c. With respect to the opinion set forth in paragraph 2 above, legal terms and concepts that relate to Japanese legal matters and that are expressed in the English language in the Registration Statement must be construed in accordance with Japanese law; and

d. In giving our opinion set forth in paragraph 1 above in connection with the issuance and delivery of the Shares in accordance with the Underwriting Agreement, we have assumed that the Company and the International Underwriters will have taken all necessary steps to be required after the date hereof under the applicable laws and regulations.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

Very truly yours,

Nishimura & Asahi

- 3 -

EX-10.1

Exhibit 10.1

Mr./Ms.                                                          

LINE Corporation

CEO Takeshi Idezawa

Notice of Employment (and Labor Contract)

The conditions of your employment are as provided below.

After confirming the details of this contract, sign and seal both copies, and submit one to LINE Corporation.

This document shall serve as your Labor Contract upon the execution of your signature and impression of your seal.

1. Hire Date	(Year)              (Month)              (Day)
2. Type of Employment	Permanent employee (seishain)
3. Term of Employment	Non-fixed
	Note, however that the first three months shall serve as a trial period, and in instances where your attendance or work performance during this period leads the company to determine that you are unsuitable for your role, or lacking the necessary abilities as an employee, your employment may be revoked, or the trial period may be extended.
4. Affiliation & Function 5. Level

	Note: The level above shows the ranking that serves as the basis of your treatment and handling within the company, as well as your position and responsibility. Note: The selectable benefit plan works in conjunction with this level.
6. Place of Employment	Shibuya Office (However, place of employment when deemed necessary for business operations)
7. Working Hours	Discretionary labor system (Starting and finishing times are decided at your own discretion. Standard work times are between 10:00 and 18:30.)
8. Days Off	Every Saturday, Sunday, National Holidays, Year-End and New Year Holidays
9. Vacation Days	Annual Paid Leave, Special Paid Leave for Weddings and Funerals, as stipulated in the LINE Rules of Employment

10. Salary-Related Items (1)    Payment in Fiscal 2015 will be as follows.

Monthly remuneration	Base annual salary	Yen
	Position allowance	Yen
Expected Target Incentive	Annual amount	Yen
Standard annual salary		Yen
Monthly amount		Yen
Selectable benefit plan	Annual amount	Yen
	Monthly amount	Yen

	(2)    The basic monthly salary in the above table shall be deposited on the 25th of that month in the bank account you specify.          However, income taxes, social insurance premiums, local resident taxes and other taxes will be deducted, as agreed to by the labor-management agreement. (3)    Commuting allowances are paid based on LINE Corporation prescriptions. (4)    Target incentive payments will vary according to the Company’s performance, your evaluation grade, and the length of your employment. An incentive payment will only be paid if you remain employed as of the payment date. (5)    Selectable benefits are paid based on LINE Corporation prescriptions.          (Note: Payment will be in January, April, July, and October; when first joining the company, initial payment will be made in first payment month following that of your initial hire date.) (6)    Salary revisions will be conducted twice a year. (According to company performance, your evaluation, length of employment, salary may increase, decrease or remain the same.) (7)    A severance allowance will not be paid. (8)    Assignment allowance will be paid with 40 hours of overtime and 10 hours of late night overtime included. Regardless of the number of late arrivals, early finishes or number of overtime hours worked, you shall be treated as working 40 hours of overtime a month. (9)    In cases where the totality of late arrivals and early finishes results in falling short of the prescribed working hours, a deduction will be made the following month in accordance with the number of insufficient working hours.          (Note: Excludes managers and employees on a discretionary labor system contract) (Details are in accordance with the provisions of the LINE Rules of Employment)
11. Resignation-Related Items	(1)    Mandatory retirement age (60) (2)    Voluntary resignation procedures (Please submit one month prior to resignation) (3)    Grounds and procedures for dismissal (In accordance with the provisions of the LINE Rules of Employment)
12. Other	(1)    Enrollment in social insurance (Health insurance, employee pension) (2)    Application of employment insurance (3)    Application of workers’ accident compensation insurance

Working conditions other than those listed above are in accordance with the LINE Rules of Employment or prescriptions otherwise provided by the Company.

I hereby agree to the working conditions of this notice, and allow this document to take effect with the conclusion of my sign and signature.

Date:                                                      (Year)         (Month)         (Day)

Address:                                                                                                    

Name:                                                                                                Stamp

EX-10.2

Exhibit 10.2

Stock Option Agreement

LINE Corporation (the “Company”) and [                    ] (the “Allottee”) shall conclude the following agreement (this “Agreement”) concerning the allotment of the         th LINE Corporation Stock Options (the “Stock Options”) that are to be issued as stock options pursuant to Articles 236 and 238 of the Companies Act of Japan (Kaisha-hou), the resolution of the Extraordinary Shareholders’ Meeting of the Company held on [date], and the resolution of the Board of Directors of the Company dated [date].

Article 1    (Allotment of the Stock Options)

The Company shall allot to the Allottee [    ] Stock Options, as provided in the provisions of the following items, and the Allottee shall accept the allotment on [date].

(1) Class and number of shares covered by the Stock Options:

The class of shares underlying the Stock Options shall be the Company’s common stock and the number of shares covered by each Stock Option shall be five hundred (500) shares (the “Number of Granted Shares”).

(2) Amount to be paid in exchange for the Stock Options:

The Allottee shall not be required to make any payment for the Stock Options.

(3) Value of property to be contributed upon exercise of the Stock Options:

The value of property to be contributed upon exercise of each Stock Option shall be the amount obtained by multiplying              yen (the “Exercise Price”), which is the amount to be paid in for one (1) share that may be received through the exercise of the Stock Options, by the Number of Granted Shares.

(4) Other details and conditions of the Stock Options shall be set forth in the Exhibit “LINE Corporation         th Terms and Conditions of Issuance of Stock Options” (the “Terms and Conditions of Issuance of Stock Options”), and the shares may be received upon the exercise of the Stock Options in accordance with the matters resolved for this purpose at the Shareholders’ Meeting under Article 238, paragraph 1 of the Companies Act of Japan.

Article 2    (Process of and Restrictions on the Exercise of the Stock Options)

1 The Allottee may exercise all or part of the Stock Options that are allotted. However, the Allottee may not split and exercise one (1) Stock Option.

2 Notwithstanding the preceding Paragraph, the Allottee shall not exercise the Stock Options in the event that the total amount of the Exercise Price to be paid upon the exercise of the Stock Options amounts to more than 12,000,000 yen per year (meaning the period on and from January 1 through to December 31 of each year); provided, however, that if the amount stipulated in Article 29-2, paragraph 1, item (2) of the Act on Special Measures Concerning Taxation of Japan is amended, the above 12,000,000 yen amount shall be amended and replaced by such amended amount, and the amendment of the said amount shall become effective as of the effective date of such amendment of the Act on Special Measures Concerning Taxation of Japan.

3 The Allottee may exercise the Stock Options only from [date] to [date] (the “Exercise Period”). If the last day of the Exercise Period falls on a holiday of the Company or of LINE Plus Corporation, the Exercise Period will end on the business day immediately preceding such day.

4 When the Allottee exercises the Stock Options, the Allottee shall submit a Request Form For Exercise of Stock Options (the “Request Form”) specified by the Company, on which the Allottee has entered any necessary matters and affixed its name or seal, to the HR Team of LINE Plus Corporation or any department responsible for such affairs from time to time.

5 When submitting the Request Form, the Allottee shall, by the time specified by the Company, pay in cash the total amount obtained by multiplying the value of the property to be contributed upon the exercise of each Stock Option by the number of exercised Stock Options, in accordance with Article 281, paragraph 1 of the Companies Act of Japan, to the account designated by the Company in Clause 16 of the Terms and Conditions of Issuance of Stock Options as the place of payment. The Allottee shall remit Japanese yen to the account designated by the Company and bear the bank transfer fees and remittance charges.

6 The Allottee shall, prior to the exercise of the Stock Options under Paragraphs 4 and 5, open a book-entry account for shares under the Allottee’s name in the manner prescribed by the Company and at the office of the financial instruments business operator designated by the Company, and shall (i) register or record the shares in the account book for the book-entry account for shares or (ii) entrust the financial instruments business operator to keep the shares. The Allottee shall bear the costs of opening and maintaining the book-entry account for shares.

7 The exercise of the Stock Options shall be effective at the time when (i) the Company accepts, pursuant to the provisions of this Article 2, the Request Form and other documents relevant to the exercise by the Allottee, and (ii) the money equivalent to the total amount to be paid in for the Stock Options that the Allottee intends to exercise is paid in to the place for payment.

8 With respect to the shares allotted to the Allottee upon the exercise of the Stock Options, the Company shall deliver the shares to the Allottee by transferring the shares to the Allottee’s book-entry account for shares as provided in Paragraph 6 after confirming that the Alottee has completed the payment of the total amount to be paid upon the exercise of the relevant Stock Options and submitted a Request Form for the exercise of the Stock Options. Upon delivery of the shares, the Allottee shall deposit the shares in the book-entry account for shares. In the event that the Allottee exercises the Stock Options after the date 4 business days prior to the record date (Article 124, paragraph 1 of the Companies Act of Japan; the same shall apply hereinafter), the Allottee may not hold the Company liable for damages even if the Allottee does not acquire the shareholder’s rights on the record date due to the increase of treasury shares granted by the Company being recorded in the Book-Entry Transfer System after the record date.

9 The Allottee may not cancel the exercise of the Stock Options without the Company’s approval after submitting the Request Form and other necessary documents under Paragraph 4 and making the remittance under Paragraph 5 of this Article.

10 Notwithstanding the Terms and Conditions of Issuance of Stock Options and the provisions of this Agreement, the Allottee shall or shall not exercise the Stock Options pursuant to the Company’s request if the exercise or non-exercise of the Stock Options will have any adverse effect on the Company’s common stocks being listed on any financial instruments exchange located in Japan or abroad.

Article 3    (Events of Forfeiture of Stock Options)

If any of the following events occur, the Allottee shall not be permitted to exercise any unexercised Stock Options on and after the date the event occurs and shall waive all unexercised Stock Options on that date:

(1) the Allottee is sentenced to imprisonment;

(2) the Allottee loses its position as a director, corporate auditor, officer, employee or any other similar position of the Company or the Company’s affiliated companies (as defined in the Ordinance on Terminology, Forms, and Preparation Methods of Financial Statements in Japan; the same shall apply hereinafter). However, the foregoing shall not apply in the event that the Board of Directors of the Company approves the retention and the exercise of the Stock Options of the Allottee in advance;

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(3) the Board of Directors of the Company determines that the Allottee caused or will cause loss or damage to the reputation and credit of the Company or the Company’s affiliated companies, or the Board of Directors of the Company determines that the Allottee shall not be permitted to exercise the Stock Options for any reason;

(4) the Allottee applies for waiver of all or part of the Stock Options by submitting a form provided by the Company;

(5) the Allottee breaches this Agreement or the pledge separately specified by the Company;

(6) a ruling is made against the Allottee for commencement of guardianship, curatorship or assistance;

(7) a ruling is made against the Allottee for commencement of bankruptcy procedures or civil rehabilitation procedures; or

(8) any change of the terms and conditions of the Stock Options becomes required by applicable foreign laws that is not acceptable in light of the resolution of the Extraordinary Shareholders’ Meeting of the Company held on February 5, 2014, any applicable Japanese law and the purpose of the Stock Options.

Article 4    (Prohibition of Disposition of Stock Options)

Notwithstanding Clause 8 of the Terms and Conditions of Issuance of Stock Options, the Allottee may not transfer, create a security interest over, advance, bequest or otherwise dispose of all or part of the Stock Options.

Article 5    (Exercise of Stock Options by Successors)

1 In the event that the Allottee passed away and the Board of Directors of the Company approves the exercise of the Stock Options by the Allottee’s heirs, the heirs will acquire the Stock Options. However, the person who inherits all of the Stock Options (the “Successor of Rights”) may exercise the Stock Options only if the Successor of Rights is limited to one person among the Allottee’s heirs and complies with this Article 5. In the event that the Allottee passed away and has no heirs, all unexercised Stock Options shall be deemed to be waived at the time of his/her death.

2 The Successor of Rights may exercise the Stock Options only for 1 year from the date on which the Successor of Rights inherits the Stock Options in accordance with Japanese or applicable foreign laws. However, such exercise shall be completed within the Exercise Period stipulated in Paragraph 3, Article 2 of this Agreement.

3 The Successor of Rights shall submit all of the following items in the form specified by the Company without delay following the commencement of succession (one year from the date of the commencement of succession, at the latest).

(1) Succession commencement date;

(2) The details and date of the legacy division conference regarding the Stock Options;

(3) The name and address of the Successor of Rights; and

(4) Other matters specified by the Company.

4 When submitting the notification prescribed in the preceding Paragraph, a copy of the nullified family register, legacy division agreement, certificate of seal-impression of the Successor of Rights, certificate of the name and address of the Successor of Rights, and other documentation specified or reasonably requested by the Company shall be attached to the notification.

5 If there is a change in any of the matters set forth in Item (3), Paragraph 3 of this Article, the Successor of Rights shall immediately provide notice in the form specified by the Company.

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6 In the event that the Successor of Rights does not exercise the Stock Options by the date stipulated in Paragraph 2 of this Article or does not submit the forms stipulated in Paragraph 3 of this Article by one year from the date of the commencement of succession, or the Successor of Rights dies, the Successor of Rights may not exercise the Stock Options after such date and all of the unexercised Stock Options will be waived.

7 After the commencement of succession, this Agreement shall apply to the Successor of Rights and he/she shall be deemed to be the Allottee.

Article 6    (Compliance with Applicable Laws and Internal Rules)

When the Allottee exercises the Stock Options, sells the shares acquired upon the exercise of the Stock Options, and purchases the shares before and after the above sale, the Allottee shall comply with the Financial Instruments and Exchange Act of Japan (kinnyu shouhinn torhikihi-hou), including the insider trading regulations, the Companies Act of Japan, tax laws and other relevant laws, regulations and ordinances, and the Company’s internal (management) rules including rules concerning the prevention of insider trading.

Article 7    (Demand for Purchase of Share Options)

The Allottee hereby covenants not to exercise the Share Option Purchase Demand right stipulated in Articles 118, 777, 787, and 808 of the Companies Act of Japan under any circumstances.

Article 8    (Waiver of Right to Claim Compensation for Damages, etc.)

The Allottee may not, under any circumstances or for any reason, hold the Company or the Company’s directors, corporate auditors, employees and their agents liable for compensation for losses, damages, expenses, or any other liabilities in relation to this Agreement.

Article 9    (Taxes and Expenses)

1 The Allottee hereby acknowledges and confirms that if the Allottee does not comply with any procedure required under Article 29-2 of the Act on Special Measures Concerning Taxation of Japan; Article 19-3 of the Order for Enforcement of the Act on Special Measures Concerning Taxation of Japan; and other relevant laws and ordinances, the tax exemption provided under these laws and ordinances shall no longer be available for economic profits obtained by the Allottee in connection with this Agreement.

2 The Allottee shall pay, at its own responsibility, (i) the income tax and any other taxes and public charges imposed as a result of the allotment and exercise of the Stock Options and sale of the Company’s shares acquired upon the exercise of the Stock Options, (ii) the expenses necessary for holding the shares acquired by the Allottee upon the exercise of the Stock Options and (iii) any other expenses.

3 If income tax is imposed on the Allottee for benefits acquired in connection with the exercise of the Stock Options, and the Company is obliged to withhold the income tax, the Allottee shall, pursuant to the Company’s request, pay in the amount of the withholding tax to the bank account designated by the Company by the date and time specified by the Company.

Article 10    (Purpose of Use of Personal Information, etc.)

1 Company shall use the personal information of the Allottee provided under this Agreement and that required with regard to the Stock Options only to the extent required to achieve the following purposes of use and in accordance with Private Information Protection Law of Japan and other relevant laws and regulations:

(1) the exercise of rights and the performance of duties arising from the Stock Options, this Agreement, and relevant agreements and rules (including laws and ordinances);

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(2) compliance with the Companies Act of Japan, the Financial Instruments and Exchange Act, tax laws, and other laws and ordinances;

(3) the management of the Stock Options and its holders (including creation of data on the Stock Options and its holders); and

(4) disclosure to directors of tax offices and other government organizations, financial instruments exchanges, the Financial Instruments Firms Association, the administrator of the shareholders register, and other third parties when necessary for the exercise of the Stock Options and other purposes contemplated by this Agreement in accordance with tax laws and other laws, ordinances, and regulations (including, but not limited to, regulations of financial instrument exchanges), etc. it includes public disclosure but is not limited to it.

2 The Allottee consents to the disclosure of his/her personal information to the third parties listed in Item (4), Paragraph 1 of this Article.

3 The Allottee shall not disclose any information with regard to the Stock Options and this Agreement to any third parties, except in the case of obtaining the Company’s written consent to such disclosure in advance.

Article 11    (Method for Declaration of Intent and Notifications)

1 Declarations of intent and notifications by the Company shall be sent to the Allottee in accordance with the following methods.

(1) If the Allottee holds a position as a director, corporate auditor, officer, or employee of the Company or the Company’s affiliated companies, the Company shall deliver documents directly to the Allottee, send documents to the address of the Allottee, or send e-mails or use other electronic means.

(2) If the Allottee is no longer a director, corporate auditor, officer, or employee of the Company or the Company’s affiliated companies, the Allottee shall notify the Company of its address and contact address, and the Company shall send documents to the notified address of the Allottee or send e-mails or use other electronic means to the notified contact address of the Allottee. The same shall apply when the Allottee changes its address or contact address. If the Allottee does not notify the Company of its address or contact address, the address of the Allottee at the time of the loss of his/her position shall be deemed to be the address of the Allottee after the loss of his/her position.

2 The Company may have LINE Plus Corporation notify the Allottee on its behalf using any of the methods stipulated in the above items of Paragraph 1 of this Article.

3 Documents that the Company sends in accordance with each of the items in Paragraph 1 of this Article shall be deemed to have reached the Allottee’s address at the time when such documents should normally have reached the said address.

4 Declarations of intent and notifications by the Allottee shall be sent in writing to the HR Team of LINE Plus Corporation; provided however, with the Company’s permission, such declarations and notifications can be made by emails or other electronic means.

Article 12    (Right to Establish Detailed Regulations)

1 The Company may establish detailed regulations concerning this Agreement (the “Detailed Regulations”) for the purpose of providing details concerning the implementation of this Agreement and may amend or repeal the Detailed Regulations, and the Allottee shall comply with the Detailed Regulations.

2 When the Company establishes, amends or repeals the Detailed Regulations, the Company shall promptly shall notify the Allottee thereof.

3 The Allottee may ask the Company for an inspection of the Detailed Regulations and to copy the Detailed Regulations at the Allottee’s expense during the Company’s business hours.

- 5 -

Article 13    (Modification of This Agreement)

1 If any provisions of this Agreement is inconsistent with the Income Tax Act (shotokzei-hou), the Corporation Tax Act (houjinnzei-hou), or other tax laws, or come to be inconsistent therewith due to an amendment of those laws after the conclusion of this Agreement, the Company may, by notice to the Allottee, amend or remove the relevant provisions. The same shall apply if provisions is inconsistent with or come to be inconsistent with the Companies Act of Japan, the Financial Instruments and Exchange Act, or other relevant laws and ordinances.

2 In addition to the preceding Paragraph, if it becomes necessary for the Company to modify this Agreement, Company may propose to the Allottee the modification of this Agreement.

3 After the sending of the proposal under the preceding Paragraph by the Company, if the Allottee does not object to the proposal in writing with an adequate reason attached within 2 weeks after the date of dispatch of proposal by the Company, this Agreement shall be deemed to be automatically modified according to the proposal made by the Company.

4 If the stock options of the Reorganized Company as stipulated in Clause 12 of the Terms and Conditions of Issuance of Stock Options are granted to the Allottee, the Company shall assign the Company’s status under this Agreement to the Reorganized Company, and as of applying this Agreement after such assignment, the stock options of the Reorganized Company shall be deemed to be the Stock Options.

Article 14    (Jurisdiction)

All disputes with regard to this Agreement and the Detailed Regulations shall be tried before the Tokyo District Court as the court of first instance with exclusive jurisdiction.

Article 15    (Governing Law)

This Agreement shall be governed by and construed in accordance with the laws of Japan.

Article 16    (Language)

This Agreement is executed in Japanese. If this Agreement is translated into other languages, only the Japanese version shall have effect, and in the case of inconsistencies between the Japanese version and a translated version, the Japanese version shall prevail.

Article 17    (Standard Time)

For the avoidance of doubt, all references to year, date, and time in this Agreement and the Detailed Regulations shall be interpreted in accordance with Japan Standard Time (UTC+9).

Article 18    (Transaction of Non-Prescribed Matters)

Any matters not provided for in this Agreement or the Detailed Regulations shall be resolved through mutual negotiation in good faith between the Company and the Allottee, and if the Allottee does not participate in the negotiation or an agreement cannot be reached even with sufficient negotiation, the Company’s decision shall be final.

- 6 -

IN WITNESS WHEREOF, two (2) originals of this Agreement have been prepared, and after affixing their names and seals hereto, each party shall retain one (1) copy.

[date]

(Company)	2-21-1, Shibuya, Shibuya-ku, Tokyo
	LINE Corporation
	President and Representative Director: [Name]
(The Allottee)	[Address                    ]
	[Name                    ]

(Exhibit: Terms and Conditions for Issuance of LINE Corporation         th Stock Acquisition Rights)

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Exhibit

Terms and Conditions for Issuance of LINE Corporation         th Stock Acquisition Rights

1. Name of Stock Options:

The LINE Corporation (the “Company”)         th Stock Acquisition Rights (shinkabu yoyakuken; the “Stock Options”).

2. Total Number of Stock Options:

         units

The above number is the number scheduled to be allotted. If the total number of Stock Options to be allotted is decreased, such as in the case where no Stock Option has been subscribed for, the total number of Stock Options to be allotted shall be the total number of Stock Options to be issued.

3. Money to be paid in exchange for the Stock Options

No money shall be required to be paid for the Stock Options.

4. Class and Number of Shares Covered by the Stock Options

The class of shares covered by the Stock Options shall be shares of common stock of the Company, and the number of shares covered by each Stock Option shall be five hundred (500) shares (the “Number of Granted Shares”).

However, the Number of Granted Shares shall be adjusted by the following formula if the Company splits (including allotment of shares of common stock of the Company without contribution; the same shall apply to any reference to a share split hereinafter) or consolidates shares of its common stock after the date for the allotment of the Stock Options set forth in Section 10 below (the “Allotment Date”), and fractions less than one (1) share arising as a result of such adjustment shall be rounded off.

Number of Granted
Shares after adjustment = Number of Granted
Shares before
adjustment × Share split or share consolidation ratio

The Number of Granted Shares after adjustment shall be applied, in the case of a share split, on and after the day immediately following the record date for the share split (if no record date is prescribed, the effective date of such share split) and, in the case of a share consolidation, on and after the effective date thereof; provided that, if a share split is subject to the condition that a proposal to increase the stated capital or reserves by decreasing the amount of surplus is approved at the Company’s shareholders meeting, and the record date for the share split is prescribed to be the date prior to the date of conclusion of such shareholders meeting, the Number of Granted Shares after adjustment shall be applied on and after the date immediately following the date of conclusion of such shareholders meeting.

When adjusting the Number of Granted Shares, the Company shall notify each holder of Stock Options set forth in the Stock Options register (each a “Stock Option Holder”) or give public notice of necessary matters by the date immediately preceding the application date of the Number of Granted Shares after adjustment; provided that, if the Company is unable to notify the Stock Option Holders or give public notice by the date immediately preceding the application date, the Company shall notify the Stock Option Holders or give public notice promptly thereafter.

5. Value of Property to be Contributed upon Exercise of Stock Options

(i) The value of property to be contributed upon exercise of each Stock Option shall be the amount obtained by multiplying the amount to be paid-in for one (1) share to be delivered by exercising such Stock Option (the “Exercise Price”) by the Number of Granted Shares.

- 8 -

The Exercise Price shall be              yen; provided that the Exercise Price shall be subject to the adjustment set forth in clause (ii) below.

(ii) If the Company takes any of the actions listed in items (a) and (b) below with respect to the shares of common stock of the Company after the Allotment Date, the Company shall adjust the Exercise Price by using the corresponding formula (the “Exercise Price Adjustment Formula”) set forth below. Any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest whole number:

(a) Split or consolidation of shares

Exercise Price after adjustment	=	Exercise Price before adjustment	×	1
				Share split or share consolidation ratio

The Exercise Price after adjustment shall be applied, in the case of a share split, on and after the day immediately following the record date for the share split (if no record date is prescribed, the effective date of such share split) and, in the case of a share consolidation, on and after the effective date thereof; provided that, if a share split is subject to the condition that a proposal to increase the stated capital or reserves by decreasing the amount of surplus is approved at the Company’s shareholders meeting, and the record date for the share split is prescribed to be the date prior to the date of conclusion of such shareholders meeting, the Exercise Price after adjustment shall be applied on and after the date immediately following the date of conclusion of such shareholders meeting.

(b) Issuance of new shares or disposition of treasury shares at a price lower than the market price for shares of common stock of the Company (excluding issuance or disposal upon exercise of the stock options)

Exercise Price after adjustment	=	Exercise Price before adjustment	×	Number of issued shares	+	Number of new shares to be issued	×	Amount to be paid-in per share
					Market price per share
				Number of issued shares		+	Number of new shares to be issued

i The “Market price” in the above Exercise Price Adjustment Formula shall be as follows:

a. On and prior to the date immediately preceding the date of the Listing (in the case set forth in item b. below)

The Exercise Price that is effective on the date immediately preceding the application date of the Exercise Price after adjustment

b. On or after the date when the shares of common stock of the Company are listed on any financial instruments exchanges in Japan or abroad (the “Listing”)

The average (fractional amounts less than one (1) yen shall be calculated to the hundredth and then rounded to the nearest tenth) of closing price (including indicative prices; hereinafter the same) of ordinary trading of shares of common stock of the Company listed on a financial instruments exchange (if the share of common stock of the Company are listed on two or more financial instruments exchanges, the main financial instruments exchange considered to be the most appropriate by taking into account the trading volume and the ratio of the pricing, etc. of the shares of common stock of the Company for the period specified in this sub-item) for a period of thirty (30) trading days (excluding days with no closing price) commencing on the forty-fifth trading day prior to the application date of the Exercise Price after adjustment.

- 9 -

ii The “Number of issued shares” in the above Exercise Price Adjustment Formula shall be the total number of issued shares of common stock of the Company as of the date one (1) month prior to the application date if no record date is prescribed, or as of the record date, if any, less the number of treasury shares of common stock of the Company; and in the case of disposition of treasury shares of common stock of the Company, the “Number of new shares to be issued” in the Exercise Price Adjustment Formula shall be replaced with the “Number of treasury shares to be disposed.”

iii The Exercise Price after adjustment shall be applied on and after the date immediately following the date of payment (if a period for payment is prescribed, the last day thereof) or on and after the date immediately following the record date for offering of shares of common stock of the Company, if any.

(c) When adjusting the Exercise Price, the Company shall notify the Stock Option Holders or give public notice of necessary matters by the date immediately preceding the application date of the Exercise Price after adjustment; provided that, if the Company is unable to notify the Stock Option Holders or give public notice by the date immediately preceding the application date, the Company shall notify the Stock Option Holders or give public notice promptly thereafter.

6. Exercise Period for the Stock Options

From: [date]

To:     [date]

If the last day of the Exercise Period falls on a holiday of the Company, the Exercise Period will end on the business day immediately preceding such day.

7. Matters regarding Increase of Stated Capital and Capital Reserve in Issuance of Shares upon Exercise of Stock Options

(i) The amount of the increase of stated capital in issuance of shares upon exercise of Stock Options shall be one-half (1/2) of the maximum amount of increase of stated capital, etc. to be calculated pursuant to Article 17, paragraph 1 of the Ordinance on Accounting of Companies. Any fraction less than one (1) yen resulting from the calculation shall be rounded up to the nearest whole number.

(ii) The amount of the increase of capital reserves in issuance of shares upon exercise of Stock Options shall be the maximum amount of increase of stated capital, etc. set forth in above clause (i) above less the amount of increase of stated capital set forth in clause (i) above.

8. Restrictions on Acquisition of the Stock Options by Transfer

Any acquisition of the Stock Options by transfer shall be subject to the approval by resolution of the Board of Directors of the Company.

9. Conditions on Exercise of the Stock Options

(i) When a Stock Option Holder passes away, his/her heirs may not exercise the Stock Options unless the Board of Directors of the Company determines otherwise.

(ii) Each Stock Option cannot be partially exercised.

10. Allotment Date for the Stock Options

[date]

11. Conditions on Acquisition of the Stock Options

The Company may acquire the Stock Options on a date separately prescribed by the Board of Directors of the Company (or an executive officer who has been delegated in accordance with Article 416, paragraph 4 of the Companies Act) without any consideration if any of the proposals listed in items (i), (ii), (iii), (iv) and (v) below is approved at a shareholders meeting of the Company (if no resolution at a shareholders meeting

- 10 -

is required, when a resolution of the Company’s Board of Directors or a decision of the executive officer who has been delegated in accordance with Article 416, paragraph 4 of the Companies Act has been passed or made):

(i) a proposal for approval of a merger agreement pursuant to which the Company will become an absorbed company;

(ii) a proposal for approval of a corporate split agreement or a corporate split plan pursuant to which the Company will become a splitting company;

(iii) a proposal for approval of a share exchange agreement or a share transfer plan pursuant to which the Company will become a wholly-owned subsidiary;

(iv) a proposal for approval of an amendment to the Articles of Incorporation of the Company to provide that the acquisition by transfer of all classes of shares issued by the Company is subject to the approval of the Company; or

(v) a proposal for approval of an amendment to the Articles of Incorporation of the Company to provide that the acquisition by transfer of the shares covered by the Stock Options is subject to the approval of the Company, or that all of the shares of such class may be acquired by the Company by a resolution of a shareholders meeting of the Company.

12. Matters related to Delivery of Stock Options upon Reorganization

In the event of a merger (limited to a merger by which the Company is absorbed), an absorption-type corporate split or incorporation-type corporate split (in either case, limited to a corporate split by which the Company becomes a splitting company), or a share exchange or share transfer (in either case, limited to a transaction by which the Company becomes a wholly-owned subsidiary) (hereinafter collectively referred to as a “Reorganization”) with regard to the Company, the Stock Option Holders holding the Stock Options (the “Outstanding Stock Options”) outstanding immediately prior to the effective date of such Reorganization (hereinafter meaning, in the case of an absorption-type merger, the date on which such absorption-type merger becomes effective; in the case of an incorporation-type merger, the date of incorporation of the company to be incorporated by such merger; in the case of an absorption-type corporate split, the date on which such absorption-type split becomes effective; in the case of an incorporation-type split, the date of incorporation of the company to be incorporated by such split; in the case of a share exchange, the date on which such share exchange becomes effective; and in the case of a share transfer, the date of incorporation of the wholly-owning parent company to be incorporated by such share transfer) shall be entitled to receive stock options of the company (the “Reorganized Company”) listed in Article 236, paragraph 1, item (8)(a) through (e) of the Companies Act. In such case, the Outstanding Stock Options shall be extinguished and the Reorganized Company shall issue new stock options on the condition that the relevant absorption-type merger agreement, incorporation-type merger agreement, absorption-type corporate split agreement, incorporation-type corporate split plan, share exchange agreement or share transfer plan provides that stock options of the Reorganized Company will be delivered as follows:

(i) Number of stock options of the Reorganized Company to be delivered

The number of stock options equal to the number of Outstanding Stock Options held by each Stock Option Holder shall be delivered.

(ii) Class of shares of the Reorganized Company covered by the stock options

Shares of common stock of the Reorganized Company shall be covered.

(iii) Number of shares of the Reorganized Company covered by the Stock Options

The number shall be determined in accordance with Section 4 above, taking into consideration of various factors such as the conditions of the Reorganization.

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(iv) Value of property to be contributed upon exercise of the stock options

The value of property to be contributed upon exercise of each stock option to be delivered shall be the amount obtained by multiplying (a) the exercise price after the Reorganization to be obtained by adjusting the Exercise Price set forth in Section 5 above after taking into consideration of various factors such as the conditions of the Reorganization by (b) the number of shares of the Reorganized Company covered by the stock options, which is determined pursuant to item (iii) above.

(v) Exercise period for the stock options

The exercise period shall commence on the commencement date of the exercise period of the Stock Options set forth in Section 6 above or the effective date of the Reorganization, whichever is later, and end on the expiration date of the exercise period of the Stock Options set forth in Section 6 above.

(vi) Matters regarding increase of stated capital and capital reserve in issuance of shares upon exercise of stock options

To be determined in accordance with Section 7 above.

(vii) Restrictions on acquisition of the stock options by transfer

Any acquisition of the stock options by transfer shall be subject to the approval by resolution of the Board of Directors of the Reorganized Company.

(viii) Other conditions on exercise of the stock options

To be determined in accordance with Section 9 above.

(ix) Conditions on acquisition of the stock options

To be determined in accordance with Section 11 above.

13. Treatment of Fractions Less than One (1) Share Arising upon Exercise of the Stock Options

If the number of shares to be delivered to a Stock Option Holder exercising the Stock Options includes any fraction less than one (1) share, such fraction shall be rounded down.

14. Method of Request for Exercise of Stock Options and Payment

(i) In order to exercise his/her Stock Options, a Stock Option Holder shall fill in the necessary matters in the “Request Form for Exercise of Stock Options” in the format designated by the Company, and affix his/her name and seal impression or signature thereon, and then submit the form at the location for accepting requests for exercise of the Stock Options set forth in Section 15 below.

(ii) Concurrently with the submission of the “Request Form for Exercise of Stock Options” set forth in clause (i) above, the exercising Stock Option Holder shall pay by wire transfer in cash the entire amount to be obtained by multiplying (a) the value of the property to be contributed upon exercise of each Stock Option by (b) the number of Stock Options to be exercised, to the account designated by the Company at the place for payment set forth in Section 16 below by the time and date to be designated by the Company in accordance with Article 281, paragraph 1 of the Companies Act.

15. Location for Accepting Requests for Exercise of Stock Options

The HR Team of LINE Plus Corporation or any other department responsible for such affairs from time to time.

16. The Place for Payment of Money to Be Contributed upon Exercise of Stock Options

SUMITOMO MITSUI BANKING CORPORATION, Shibuya-ekimae Branch (or the bank succeeding such bank from time to time or the branch succeeding such branch from time to time)

17. Effective Time for Exercise of Stock Options, Etc.

(i) The Stock Option Holder who exercises his/her Stock Options shall, pursuant to the provisions of the applicable laws and regulations, become a holder of the shares covered by the Stock Options.

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(ii) When the shares of common stock of the Company, which are covered by the Stock Options, is subject to the Act on Book-Entry of Bonds, etc., the Company shall, immediately after the completion of the procedures for exercising the Stock Options, undertake the procedures necessary for registering or recording the shares acquired by such Stock Option Holder upon exercise of Stock Options in an account of such Stock Option Holder opened with a financial instruments business operator, etc. designated by such Stock Option Holder in advance.

18. Replacements and Other Measures Taken in relation to These Terms and Conditions

If any replacements or other measures are required in connection with any of these Terms and Conditions, the Company may, with respect to the matters related thereto, amend these Terms and Conditions as it deems appropriate, in accordance with the provisions of the Companies Act and the purposes of the Stock Options. All such amendments shall constitute an integral part of these Terms and Conditions.

19. Public Notice

The Company shall keep a certified copy of these Terms and Conditions at its head office and make it available for inspection by the Stock Option Holders during the Company’s business hours.

End

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(TRANSLATION)

LETTER OF COMMITMENT

In connection with              share options (the “Share Options”) of LINE Corporation (the “Issuer”) to be allotted on [date] and to be allotted to and subscribed for by                      (the “Allottee”) as remuneration subject to Article 259 of the “Enforcement Rules for Securities Listing Regulations” prescribed by the Tokyo Stock Exchange, Inc. (“TSE”), the Allottee and the Issuer hereby agree, pursuant to the “Securities Listing Regulations” and “Enforcement Rules for Securities Listing Regulations”, as follows:

Article 1

1. The Allottee shall not transfer any of the Share Options to any person during the period from the allotment date of the Share Options (i.e., [date]) to, and including, the earlier of (i) the day immediately preceding the listing date of the shares of the Issuer, or (ii) the day on which the Allottee exercises the Share Options.

2. The Allottee shall not transfer any of (i) such shares or share options as are acquired by the exercise of the Share Options and (ii) shares or share options acquired by the share split, the share allotment or the share options allotment without consideration, or the share conversion of the shares or share options mentioned above (collectively, the “Acquired Shares”) to any person during the period from the allotment date of the Acquired Shares to, and including, the day immediately preceding the listing date of the shares of the Issuer; provided, however, that this provision shall not apply in the event (a) any of the following circumstances occurs, and (b) the Allottee submits to the Issuer in advance a written statement of its intent to transfer all or any part of the Acquired Shares because of such circumstances:

(1) in the case where the financial conditions of the Allottee have significantly deteriorated; or

(2) in the case where the transfer of all or any part of the Acquired Shares is considered unavoidable from a commonly accepted idea.

Article 2

1. Whenever the Allottee transfers all or any part of the Acquired Shares to any person, the Allottee shall immediately make a written report to the Issuer with respect to the relevant information including, but not limited to, the name(s) and address(es) of the transferee(s), number of the transferred Acquired Shares, transfer date, transfer price, method(s) of transfer and reason(s) for transfer.

2. When the Issuer makes an inquiry to the Allottee about the conditions of ownership of the Share Options or the Acquired Shares following an inquiry made by TSE to the Issuer about the conditions of ownership of the Share Options or the Acquired Shares, the Allottee shall immediately make a report to the Issuer on the details thereon.

3. In the event that the Allottee transfers all or any part of the Share Options or the Acquired Shares to any person, the Issuer shall make a written report to TSE on the details of the transfer. Such report(s) must be made either (i) at the time of application for listing of the shares of the Issuer, in the case where the Share Options or the Acquired Shares are transferred by the Allottee prior to the application for the listing of the shares of the Issuer, or (ii) immediately after the transfer of the Share Options or the Acquired Shares by the Allottee, in the case where such transfer occurs during the period from the application date for the listing of the shares of the Issuer to the day immediately precedes the listing date of the shares of the Issuer. In these cases, when the Issuer is inquired by TSE about the conditions of ownership of the Share Options or the Acquired Shares, the Issuer shall make a report about such conditions of ownership to TSE without delay.

4. The Allottee agrees that the Issuer shall make a report on the transfer of the Share Options or the Acquired Shares or the conditions of ownership of the Share Options or the Acquired Shares to TSE, and both the Allottee and the Issuer hereby consent to such report being made available by TSE to the public.

- 14 -

Article 3

1. In the event that the Issuer changes its plan for listing its shares on TSE, as a result of which the allotment date of the Share Options falls earlier than one year prior to the last day of the fiscal year of the Issuer that immediately precedes the application date for the listing, the Issuer shall give a written notice to that effect to the Allottee.

2. The provisions of the preceding two Articles shall become null and void when the Allottee receives the notice set forth in Paragraph 1 above.

Article 4

1. When the Issuer makes an application for listing of its shares on TSE, a copy of this Letter of Commitment shall be attached to the documents of the application for listing.

2. Both the Allottee and the Issuer agree that TSE shall make such copy of this Letter of Commitment available to the public.

IN WITNESS WHEREOF, one (1) original of this Letter of Commitment has been prepared and duly executed by both the Allottee and the Issuer with their respective name and seal impressions, and the Issuer shall retain the original while the Allottee shall retain a copy thereof.

[date]
	Allottee:	[Address]	(seal)
		[Name]
	Issuer:	2-21-1, Shibuya, Shibuya-ku, Tokyo
		LINE Corporation President and Representative Director
		[Name]	(seal)

- 15 -

EX-10.4

Exhibit 10.4

CONFIDENTIAL TREATMENT REQUESTED

Information Technology Service Agreement between LINE Corporation and NBP

April 1, 2013

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Table of Contents

Chapter 1. General Rules	3
Article 1. Purpose	3
Article 2. Definitions	3
Article 3. Agreement Document	3
Article 4. Term of Agreement	3
Article 5. Confidentiality	3
Article 6. Protection of Personal Information	4
Chapter 2. IT Service	5
Article 7. Scope of IT Service	5
Article 8. Service Use Time	5
Article 9. Restoration during Emergency Failures	5
Article 10. Obligation of Provider	6
Article 11. Obligation of Client	6
Chapter 3. Payment of the Service Fees for the IT Service	6
Article 12. Payment of the Service Fees for the IT Service	6
Chapter 4. Management of IT Service Execution	7
Article 13. Location of Work	7
Article 14. Managing the Provider’s Workforce and Operation Authority of the Work	7
Article 15. Management of IT Service Execution	7
Article 16. Transaction with the third Party	7
Article 17. The Use and Management of Computer Facilities	8
Chapter 5. Miscellaneous	8
Article 18. Intellectual Property Rights	8
Article 19. Use of Intellectual Property Rights of the third Party	8
Article 20. Limitation on Use	8
Article 21. Procedure of Limitation on Use	9
Article 22. Provider’s Responsibility to Compensate	10
Article 23. Indemnification	10
Article 24. Force Majeure	11
Article 25. Amendment of Agreement	11
Article 26. Termination of Agreement	11
Article 27. Pullout of Equipment	12
Article 28. The Effect of Termination	12
Article 29. Non-assignability	12
Article 30. Compliance with Legislation	13
Article 31. Dispute Resolution and Jurisdiction	13
Article 32. Entire Agreement	13
Article 33. Severability	13
Article 34. Independent Contractor	13
Article 35. Effectiveness of the Agreement	13

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Information Technology Service Agreement

LINE Corporation (hereinafter “Client”) and NHN Business Platform Corporation (hereinafter “Provider”) hereby enter into Information Technology Service (hereinafter “IT Service”) Agreement (hereinafter “Agreement”) regarding the service that the Provider provides to the Client under the following terms and conditions.

Chapter 1. General Provisions

Article 1. Purpose

The purpose of this Agreement is to set forth the terms and conditions under which Provider will provide Client with IT Service and Client will pay the payment to Provider accordingly.

Article 2. Definitions

(1) IT Service refers to a service of establishing, operating and managing Client’s Information System by Provider through utilizing IT resource of Client or Provider.

(2) Information System refers to all operating system and computer facilities of Client utilized for the provision of IT Service by Provider.

(3) Computer Facilities refer to all hardware, software and network utilized by Provider in performing IT Service.

(4) Use of Facilities refers to providing Computer Facilities that Provider has purchased, leased or rented to be used in Client’s work.

Article 3. Agreement Document

(1) IT Service agreement is consisted of the Agreement and Annex. Annex includes statement of work for each service and it may be added upon mutual written agreement between the parties.

(2) Should above agreement document conflict with one another, this Agreement shall prevail.

Article 4. Term of Agreement

This Agreement shall become effective from April 1, 2013 and continue to be effective until July 31, 2014 (“Initial Term”) and unless the Client or Provider wishes to change of the conditions herein or to terminate the Agreement three (3) months before the Initial Term ends in writing to its counterpart, the Agreement shall be extended automatically for one (1) year under the same conditions (however, the service fees shall be recalculated in a method that the Provider estimates a price, followed by Client’s acceptance.)

Article 5. Confidentiality

(1) “Confidential Information” refers to technical information, business information and other information provided by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in any form, written, electronic, oral, visual and etc., and the Agreement herein falls under the category of Confidential Information.

(2) If the Confidential Information is provided in a written form, it must be labeled or referred to as “Confidential” at all times and when rendered in other methods, it must be identified as confidential and when delivered orally, a written document marking such information as confidential shall be delivered within thirty (30) days since the oral delivery.

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(3) The obligations of this Article will not apply to information that:

A) becomes public after or before signing this Agreement, through no fault of the Receiving Party;

B) was in the Receiving Party’s possession before the information was provided to the Receiving Party as a Confidential Information, without any restrictions of use or disclosure from the Disclosing Party;

C) the Receiving Party has duly acquired from the third party who possess the right to expose the information without limits to the use or disclosure;

D) the Receiving Party acquires from its own development, independent of any Confidential Information of the Disclosing Party;

(4) The Receiving Party shall treat the Confidential Information as confidential and must not copy, use or disclose the information without authority and the Confidential Information can only be used for the purpose of the Agreement.

(5) The Receiving Party shall protect the Confidential Information in compliance with the confidentiality protection standard of the Disclosing Party and agrees to exercise at least the same degree of care and procedure as it uses with regard to preserving and protecting its own Confidential Information in protecting the confidentiality of the Disclosing Party’s Confidential Information.

(6) The Receiving Party shall not disclose the Confidential Information to a third party without prior written approval of the Disclosing Party. However, if the cases fall under the purview of below items, it shall be considered as an exception:

A) If required by the purpose of the Agreement herein, the information can be disclosed to staff, employees, agents, contractor and consultants of the Receiving Party, provided that the staff, employees, agents, contractor and consultants of the Receiving Party must make a separate agreement which is substantially similar to this clause to protect the Confidential Information of the Disclosing Party.

B) Confidential Information can be disclosed in a case where such disclosure is demanded by an applicable ordinance or legislation, provided that the Receiving Party notifies the Disclosing Party of such required disclosure, promptly and in writing in prior, however if the situation requires urgency, then a post notice is allowed immediately after the information is disclosed.

C) All Confidential Information shall be exclusively owned by the Disclosing Party and the disclosure of the information to the Receiving party does not mean that it provides license, intellectual property right or copyright, unless agreed otherwise.

Article 6. Protection of Personal Information

(1) Client and Provider shall mutually cooperate with one another to protect Personal Information of the employees of both Parties and the business customers (hereinafter “Personal Information”).

(2) In case the Provider needs to deal with Personal Information to provide IT Service, the Client shall make every necessary measure in order for Provider to handle Personal Information in a legitimate manner, such as securing consent from personal information holder for the provision of personal information from the Client to the Provider or taking measure to make sure that the agent of the personal information cannot be identified and the Provider, too, must fully cooperate with the measures taken by the Client and secure a strict security measures to ensure that the personal information is not infringed upon.

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Chapter 2. IT Service

Article 7. Scope of IT Service

(1) The IT Service that the Provider provides to the Client is as follows and the details and procedure of each service are defined in <Annex. Service Statement>.

A) IT Infrastructure Operation Service:

• Services in regards to establishing and operating IDC

• Services in regards to acquisition, installation, operation and management of servers

• Services in regards to acquisition, installation, management and operation of storage as well as data management utilizing DB and data backup/ restoration

• Services as to procurement of network equipment for the in-house and external communication, network establishment and provision of network environment for servicing domestic and foreign users.

• Procurement of facility and network to deliver internet content to its users as well as provision of service racks and network for maintenance and network environment.

B) Security service: Services as to the protection of facility and information assets from internal/external infiltration when it comes to providing internet service as well as vulnerability analysis

C) Additional infrastructure service: Additional services that are not included aforementioned items but are mutually agreed by the Client and Provider

(2) The Client may use any or all IT Service stipulated in Section 1, Article 7 upon mutual written agreement with the Provider. The Client and Provider shall sign <Annex. Service Statement> for the services that Client wishes to use.

(3) Should the Client exceeds the range of services set forth in this Agreement or request for additional tasks that do not belong to the scope of the Agreement, the level of cost as well as the scope shall be calculated additionally by mutual agreement.

(4) If the service representative of the Client designated and agreed by both Client and Provider requests for an increase or decrease of the IT Service via email, such request shall be considered as that of a Client. If there is a change to the service representative, the Client shall immediately notify of such matter to the Provider in writing and any consequences that arise due to the notification negligence shall be borne by the Client.

Article 8. Service Use Time

(1) Unless a technical or other reasons hinder, the Provider shall provide the service 24 hours a day, 365 days a year (including holidays) in principle

(2) The day or time during which service was not provided as agreed upon between Provider and Client shall not be included in the service hours defined in Section 1, Article 8.

Article 9. Restoration during Emergency Failures

(1) If the Provider notices the occurrence of accident or failure which could trigger interruption to the execution of IT Service, it shall notify the Client in no time regardless of the responsibility and take swift emergency measures first and report on the reasons and measures taken afterwards in a written form. However, in the occurrence of the emergency case, the notice to the Client can be made afterwards after an appropriate measure has been taken first.

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(2) Regardless of the responsibility and compensation of damage, the Client and Provider shall be concerned with restoration from the failure or damage over others and make utmost efforts in minimizing the damage.

(3) The Provider may limit the use of information resource, under the permission of the Client, for the preventive maintenance purpose, in order to ensure the improvement of efficiency and normal operation as well as the protection of device from calamity.

Article 10. Obligation of Provider

(1) The Provider shall implement the service defined herein with sincerity to enable the information system task of Client to be handled seamlessly.

(2) If a system which could deteriorate a stable operation of information system needs to be changed, the Provider shall do so upon notifying to Client in prior.

(3) If required for implementing the provisions herein, the Provider may utilize a third party to perform low ranking duties. In such case, the Client and Provider shall abide by the measures set in “Article 6. Protection of Personal Information” as in the relations with the third party defined herein as well.

Article 11. Obligation of Client

(1) If requested by Provider with respect to the service execution, the Client shall provide necessary data or document within reasonable scope and guarantee an entrance to a location required for work purpose.

(2) The Client shall provide information system for Provider so that the Provider can conform to the obligations defined hereunder.

(3) The Client shall designate a representative in related team who will take part in the operation and development of the information system for a close cooperation with Provider and shall notify of such fact to the Provider.

(4) Unless otherwise defined hereunder, the Client must notify the Provider, within seven (7) days from the receipt of the report that the Provider submits, of whether the Client approves or not and the Client will be deemed to have approved of the report if it failed to notify the Provider. However, the Client may extend the notification period upon consultation with the Provider within aforementioned 7-day period.

(5) The Client shall acquire all necessary consent or approval from the third party (including consent and approval on the intellectual property rights of the third party) to enable the Provider to use client’s information system as well as the rights for the purpose of executing the IT Service and render such to the Provider. The Cost arisen while acquiring such consent or approval shall be borne by the Client.

(6) The Client may not employ either the staff belonging to the Provider or its subcontractor who has been or is committed to the execution of the Agreement without a prior written consent from the Provider during the Agreement period as well as for 24 months after the termination of the Agreement.

Chapter 3. Payment of the Service Fees for the IT Service

Article 12. Payment of the Service Fees for the IT Service

(1) The Service Fees for using the IT Service that the Provider renders to the Client shall be defined specifically for each service in <Annex. Service Statement> according to Article 7. (“Service Fees”)

(2) The Provider shall issue an invoice to the Client for Service Fees as stipulated in <Annex. Service Statement> by the last date of the month the service rendered.

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(3) Once reviewing the invoice issued by Provider, the Client shall pay the Service Fees in cash to the Provider by the last date of month that follows the invoice issuance month, if there seems to be no problem to the invoice. However, the Service Fees shall be calculated using the standard exchange rate of the 1 business day prior to the payment date in Korean Won currency.

(4) If the Provider failed to pay the Service Fees until the payment due date, the Provider must pay a delay fee for the number of delayed days, with 5% annual interest rate on top of corporate bond current yield (3-year corporate bond unsecured A+ grade, posted in Korea Financial Investment Association) on the first day of the month when the payment was claimed. However when applying corporate bond yield, if the first day of the relevant month is holiday or a day-off, the applicable rate shall be the corporate bond current yield of the following business day.

(5) The Client shall be responsible for all tax (excluding tax imposed on the net profit of Provider) imposed on all the Service Fees paid to Provider according to the IT Service and the Agreement.

Chapter 4. Management of IT Service Execution

Article 13. Location of Work

(1) The Provider provides the IT Service in the IDC (Internet Data Center) of the Provider, in principle, and may provide the service in other location upon selecting an area appropriate for seamless performance and management of IT Service, when exceptionally requested by Client in a written form and deemed that such need is markedly existent, Provider may provide the service in such selected location upon mutual agreement with the Client.

(2) Should the Provider need to change the location of service provision, it shall consult with the Client by one (1) month before the expected date of changing the service location.

Article 14. Managing the Provider’s Workforce and Operation Authority of the Work

(1) All rights as well as operation authority to the IT Service provision according to the provisions hereunder vest in the Provider and the Provider may operate the workforce at its free will in providing mutually agreed service with the Client.

(2) The rights to command and manage the workforce injected by the Provider such as the authority for resource operation for and service execution vest in the Provider.

Article 15. Management of IT Service Execution

(1) For a seamless execution of the IT Service, the Client and Provider shall appoint respective responsible person (hereinafter “Responsible Person”). The Client and Provider shall notify each Responsible Person of the counterpart of the matters required for the execution of IT Service and all actions that require agreement of both parties for the execution of service (excluding changing the details of provision hereof) shall reach an agreement through a written form by and between the Responsible Person of Client or the one designated by the Client’s Responsible Person, or Responsible Person of Provider or the one designated by the Provider’s Responsible Person.

(2) Both parties may call for document and data required for the execution and confirmation of work and the counterpart shall submit such document within requested date unless special reason hinders the provision.

Article 16. Transaction with the third Party

The Provider may receive assistance, resources and subcontracting from the third party when necessary for the execution of work defined hereunder.

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Article 17. The Use and Management of Computer Facilities

(1) The computer facilities shall only be used for the Client, in principle. However, it may be defined otherwise upon mutual agreement by relevant parties.

(2) The Client and Provider shall attach respective markers to each computer facility of their own for identification.

(3) The Client and Provider shall mutually cooperate, if necessary for an appropriate maintenance and management of the computer facilities.

(4) The Client or Provider shall not allow any other third party to use counterpart’s computer facilities without the consent of the other party or dispose of such facilities including provide as collateral, transfer or rental.

(5) In the event that abnormal situations, such as bills or checks of the Client being bounced, seizure, injunction, enforcement, bankruptcy, application for corporate rehabilitation proceedings/ liquidation or labor disputes, are likely to occur or have already occurred and thus have the possibility to affect each other’s ownership of the computer facilities, the Client or Provider shall notify of such fact immediately to the counterpart and take an appropriate action such as handing the facilities over to the counterpart.

(6) Computer facilities can be additionally or newly adopted or the installation location of such can be changed for the convenience of the Client under the agreement of mutual parties, the Provider and Client, and expenses generated by such action shall vest in the Client accordingly.

Chapter 5. Miscellaneous

Article 18. Intellectual Property Rights

(1) Each party acknowledges that the intellectual property rights including patent and copyright that each party has previously possessed (including the right to receive patent) (hereinafter “Intellectual Property Rights”) shall vest in each relevant party.

(2) In the case where creation including invention and authoring, in the course of executing IT Service, has been performed by either Client or Provider, the Intellectual Property Rights of the relevant creation shall vest in the party who has performed the creation and each party shall grant the irrevocable, non-exclusive, non-transferable, global license to the other party at free of charge to use, duplicate and distribute such creation within the scope necessary for the implementation of the provisions herein.

Article 19. Use of Intellectual Property Rights of the third Party

(1) In the event where the use of Intellectual Property Rights of the third party is required in the course of executing the IT Service, the Client and Provider shall agree on the handling of such rights and take a necessary measure such as signing a license agreement with the third party.

(2) Issues that arise from the Intellectual Property Rights of the third party or the infringement thereof shall be handled in accordance with the agreement on the use of Intellectual Property Rights of the third party and the Provider shall not be liable for the issues occurring.

Article 20. Limitation on Use

(1) If the use of IT Service by Client falls under purview of the following items, Provider may restrict all or parts of the Client’s IT Service or suspend the service.

A) When the Client fails to comply with obligation stipulated herein;

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B) When a suspension of service has been requested by related organizations including The Korea Communications Standards Commission or the Korea Internet & Security Agency;

C) If Client attempts to use Provider’s IT Service for illegal activities;

D) If Client infringes the third parties’ intellectual property;

E) If Client spreads computer virus program that causes malfunction of information and communication equipment or destruction of information;

F) If Client poses threat to the Provider’s IT Service or inhibit a sound use of IT Service;

G) If there is a possibility of trouble on other Clients’ and Provider’s network due to an abnormality occurring in the Client’s information system;

H) If the use of service is temporarily suspended due to a traffic surge or emergency maintenance of IT Service;

I) If the use is suspended for the maintenance and repair due to a server breakdown or failure;

J) If the service is suspended due to a failure occurred in facilities or service of key telecommunications business which is not directly run by Provider;

K) If an infiltration incident from the outside may adversely affect Provider’s network and the Client’s Information System;

L) The Agreement for IT Service use is deemed difficult to maintain because a Client is involved in bankruptcy, insolvency, application for composition and etc.;

M) If Provider determines that normal IT Service is impossible to be rendered.

(2) The Provider may limit all or part of the IT Service or suspend the service if a serious damage is expected to be caused to unspecified Clients of Provider due to the state of emergency, service equipment failures, congestions or hacking/virus attempts.

(3) The Client may not perform business activities which are identical or similar to Provider’s IT Service by using the Service of Provider without signing an agreement of resale or commercial use through a separate consultation with Provider.

Article 21. Procedure of Limitation on Use

(1) Should the Provider wish to restrict the use of IT Service according to the Agreement, it may notify the relevant Client or its agent of the reason, date, restriction details via written form or phone immediately once such pertaining reason is detected. However, Provider may take such limitation measure first without prior consent from the clients if the situation does not allow for such consent under any of the following cases:

A) If the Client cannot be reached at the address or telephone number it provided

B) If it is deemed that the situation and time does not allow for such prior consent considering the dissemination speed of the abnormality occurred due to electronic infiltration incident.

C) There is a national emergency and a nationwide network trouble.

(2) Upon receiving the notice of suspension according to the provision in Section 1, a Client or its agent may file an objection with Provider in writing within 7 days of the date the notice was served.

(3) The Provider may extend the period of use until the filed objection according to the provision defined in Section 2 is confirmed and it shall notify of the result thereof to the Client or its agent in writing or by phone.

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(4) Once the reasons for suspension of IT Service are resolved, or if an objection is deemed appropriate, Provider shall immediately withdraw its decision to suspend the service.

Article 22. Provider’s Responsibility to Compensate

(1) In the event where a damage has been inflicted upon the Client by violating the conditions herein due to Provider’s intent or gross negligence while performing the IT Service, the Provider shall be responsible for the damage. However, it shall be excluded from the responsibilities for the damage occurred from Force Majeure Events including natural disasters and damage occurred from Client’s failure to perform measures that corresponds to a case when the Provider has already reported for damage and risk in prior to the Client for reasons that are not recognized as the Provider’s responsibilities including communication line failure due to external factor, error in information resource itself and the Client’s mis-operation.

(2) In case the Provider fails to provide service for longer than 3 hours from the time a Client issues a notice of service unavailability through no fault of its own, Provider shall be held liable to indemnify the Client as requested considering the moment Provider learned about the problem for the first time or when the cumulative trouble time exceeds 24 hours and consequently causes damage or loss to the Client. Cumulative trouble time shall be calculated per service used by Client.

(3) For the amount of indemnification as per Section 2, Article 22, Provider shall negotiate with the Client using as reference the set amount of money based on three times the amount calculated by multiplying the number of hours during which the service was unavailable by the average amount per hour obtained from the daily average of the service charge for the past 3 months divided by 24 (in case the time value is larger than 1/2, it shall be considered 1 hour).

(4) The Provider shall stipulate the level of key service quality that it provides as well as the compensation method for services that failed to meet up to a certain criteria in <Annex. Service Statement> upon agreeing additionally with the Client.

(5) In regards to a transaction defined in “Article 16. Transaction with the 3^rd Party,” should damage occur to the Client for an attributable reason of the third party, the Provider shall claim for damage to the third party and compensate for the damage to the Client within the scope of amount received by the third party.

(6) [***]*

(7) [***]*

Article 23. Indemnification

(1) If the IT Service trouble occurred for any of the following reasons, Provider shall not be held liable to indemnify the Client;

A) The service trouble occurred due to the defects of a terminal or device purchased by the Client himself/herself;

B) The service trouble occurred for reasons such as accident or due to the intention of the Client;

C) The service trouble such as long-term service suspension of the infrastructural business is inevitable owing to the characteristics of the telecommunications service;

D) If an infiltration incident has occurred due to neglect in the management of security for the Client’s information system;

* Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

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E) If accident has occurred due to an issue in device installed as a replacement of the device rendered by the Provider, under the necessity of the Client;

F) If a trouble has arisen due to force majeure reason such as warfare or equivalent national emergencies.

(2) The responsibilities of the Provider are only confined to the device or facilities in regards to the provision of IT Service and the Provider hall be exempted from any liability as to the contents or value of the data that the Client has posted, transmitted or received.

(3) The Client shall perform a periodic data backup for the Client’s server in preparation for a failure in data storage device and the Provider shall be exempt from any liabilities for damages that occur due to Client’s negligence to do so.

Article 24. Force Majeure

(1) Each party shall not be liable for failure to abide by contractual obligations to the counterpart due to natural disasters, government actions, riots, military actions, labor disputes and other reasons that cannot be reasonably controlled (hereinafter referred to as “Force Majeure Event”). However, if the reasons to the Force Majeure Event last for more than two (2) months, the Client and Provider mutually hold the right to terminate this Agreement.

(2) Even though the Provider cannot provide normal service due to Force Majeure reasons, both parties shall cooperate reasonably to minimize the damage from service failure or suspension.

Article 25. Amendment of Agreement

In the event that Provider and Client wish to change the conditions of the Agreement or the details of the service, this Agreement may be amended by a written instrument signed by the parties.

Article 26. Termination of Agreement

(1) Either party shall have the right to terminate this Agreement by notifying the other party in writing upon the following. The termination of the Agreement shall take effect from the time when the termination notification reaches the other party.

A) If one party experiences bankrupt securities to checks or promissory notes issued or endorsed by oneself.

B) In case a procedure such as corporate rearrangement and insolvency has been requested for or initiated according to Debtor Rehabilitation and Bankruptcy Act.

C) In case there is a ruling of provisional attachment, injunction, seizure, public disposition or commencement of auction on key assets.

D) If there is an important transfer of key asset, part or all of the business.

E) If the force majeure event lasts for more than two (2) months

F) If the Client has delayed the settlement of the Service Fees for the use for more than two (2) months without justifiable reason.

(2) In the event that there is any material breach of any terms and conditions in this Agreement by either the Client or the Provider, and the affected party may request for the correction within thirty (30) days in a written notice to the other party, however the correction has failed to be made, the affected party may terminate the Agreement through a written notice. However, if the violating party initiates correction measures within thirty (30) days and if it is reasonably accepted that the violation cannot be

11

corrected within 30 days, there will be an additional 30-day correction period. In this case, the effect of termination to the other party shall take effect from the time the termination notice has reached the counterpart.

Article 27. Pullout of Equipment

(1) A Client may pull out its equipment only when all Service Fees up to the time of contract termination have been cleared.

(2) A Client who terminated the Agreement or whose Agreement has been terminated shall pull out all the equipment from IDC within 7 days. Otherwise, the Client shall pay the Client equipment storage fee to the Provider for the period starting from the termination date to the pullout date upon calculating the prorated fee.

(3) As for the Section 2, if a Client does not pull out its equipment within 7 days of termination, the Provider shall notify the Client of its decision to pull out the Client’s equipment and move the equipment to a location specified by Provider and store them at its discretion, exercising its due fiduciary duty. In this case, the Client may not request for indemnification for any resulting data loss, unless the Client demonstrates that there lies an intent or gross negligence to the Provider.

(4) Pursuant to Section 3, Article 27, when the storage period of Provider exceeds one month, Provider may request the Client who terminated the Agreement or whose Agreement has been terminated to move the equipment within one month. In case the Client fails to comply with such request by the specified date, the Provider may put the equipment on an auction or sell them at its discretion and use the proceeds to pay for the account receivables, surcharges, and storage fee. In case the total amount of the account receivables, surcharges, and storage fee exceeds the value or price of the equipment, they may be appropriated as Provider’s property, and the Provider may request the Client to pay for the outstanding account receivables, etc.

Article 28. The Effect of Termination

(1) In the event of the termination or expiration of the Agreement, the Provider may cooperate with the Client, in migrating the Client data, system and the data that the Provider has provided to its Client according to the Agreement, to the Client or the third party designated by the Client and the matters required by the migration work as well as accompanied cost shall be consulted by and between the Client and Provider additionally.

(2) In the event that the Agreement is expired or otherwise terminated, the Client shall pay the Service Fees for all services that the Provider renders as well as the migration expense paid to the third party in relation to the data, equipment and software that are agreed to be migrated to the Client.

(3) If the Client ceases the use of computer facilities that the Provider has purchased, leased or rented on the premise that the Client would use for a certain period of time according to the request made by the Client due to reasons including termination of the Agreement, the Client shall pay the penalty prorated to the number of months remaining as detailed in <Annex. Service Statement> in order to compensate for the damage inflicted upon the Provider with respect to the suspension of use of the equipment.

(4) The Client shall pay all the relevant amount stipulated in Article 28, in cash within thirty (30) days from the date of the Provider asks for it.

Article 29. Non-assignability

Neither party shall assign, transfer or otherwise dispose all or any portion of its rights or obligation of this Agreement to any other third party without prior written approval of the other Party.

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Article 30. Compliance with Legislation

Each Party shall comply with laws and regulations associated with the service. Thus, each Party shall not be liable for the incompliance of the obligation if such compliance would result in the violation of legislation.

Article 31. Dispute Resolution and Jurisdiction

(1) Any dispute that may arise in connection with the interpretation of each provision hereunder, or for matters that are not specified herein shall be governed by and construed in accordance with the laws of Republic of Korea and commercial practice.

(2) The parties hereto irrevocably submit to the exclusive jurisdiction of the Seoul Central District Court for the purpose of any suit, action, or other proceedings arising out of this Agreement.

Article 32. Entire Agreement

This Agreement and Annex constitute the entire agreement between the Parties and supersedes all previous agreement, oral or written, between the Parties.

Article 33. Severability

If any provision of this Agreement is held to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect.

Article 34. Independent Contractor

Each Party is independent contractor and nothing in this Agreement shall be interpreted to constitute a joint venture, partnership, and representative or employment relationship of the both Parties.

Article 35. Effectiveness of the Agreement

This Agreement is effective as of the date signed by both Parties. However, if the Provider has initiated the IT Service in compliance with the provisions hereunder by mutual consultation of both Parties before the effective date, the Agreement shall take effect retroactively starting from the day when Provider has provided the IT Service to the Client for the first time.

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IN WITNESS WHEREOF, the Client and Provider hereto have executed the Agreement as of the effective date below.

April 1, 2013

Client: LINE Corporation Japan CEO            (Seal) Provider: NAVER Business Platform Corporation 9 Fl., First Tower, 266-1 Seohyun-dong, Bundang-gu, Seongnam-si, Gyeonggi-do CEO    Hui-young Choi            (Seal)

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Information Technology Service

Between LINE Corporation &

NHN Business Platform (NBP)

Annex

Service Statement

April 1, 2013

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Table of Contents

1.Agreement Details	17
(1) Contracted Price	17
(2) Standard for Calculating Price	17
(3) Standard for Operating Engineer Fee	17
2. Service Details	17
(1) Infrastructure Provision Service	17
A) IDC	17
B) Infrastructure Solution	18
C) Common Infrastructure	18
D) Security Infrastructure	18
(2) Circuit Service	18
A) Network Circuit	18
B) CDN Circuit	19
C) Office Circuit
(3) Equipment Provision Service	19
(4) Operation Service	19
(5) Software	20
(6) IPCC Service
3. Payment of Service Reward	20
4. Service Provision Procedure and Change	20
5. Person in Charge & Contact Info	21

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This Service Statement describes the detailed matters of the provided service, as the annex document to Information Technology (hereinafter “IT”) Service Agreement (“Agreement”) signed on April 1, 2013 by and between LINE Corporation (“Client”) and NHN Business Platform Corporation (“Provider”).

1. Agreement Details

(1) Contracted Price

	[Rounding down to 1000 KRW]
Service Use Fee (month)	[***] KRW (VAT excluded)*

(2) Standard for Calculating Price

(A) The amount of infrastructure resource usage shall be calculated with client’s ESM code on benchmark CMDB on the twentieth of corresponding month.

(B) The price for each item shall be renewed on a 6-month basis and should an adjustment to the price is necessary before such renewal time arrives, it can be done upon mutual consultation.

(C) The cost calculated on a monthly basis shall be executed based on the service actually provided in the relevant month and the details therein shall be set in the billing statement, transaction statement and review confirmation form of the relevant month.

(D) Project work can be executed upon consultation after calculating the expense for each task respectively.

(E) The details of use for each claiming item shall be calculated on a method defined in below table.

(F) Expense for consumables which is not defined in below table shall be claimed for additionally base on the actual expense.

(G) The unit price for each item below shall be defined in <Attachment 2. Unit Price>.

[***]*

(3) Standard for Operating Engineer Fee

[***]*

2. Service Details

(1) Infrastructure Provision Service

A) IDC

 Provider shall establish IDC facility and be responsible for operation and maintenance of the facility.

‚ Provider shall arrange a manager for providing a ceaseless service in each IDC to guarantee seamless monitoring and response.

ƒ Provider shall limit the number of servers and equipment so that the power consumption of a standard rack provided by Provider does not exceed the standard power level per rack in order for a standard operation of IDC facility and protection of entire Client facility.

* Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

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„ Provider may request for a rearrangement of Client device for an effective operation of internal thermohygrostat, network and power and Client shall comply with such request.

… IDC shall only be entered according to the procedure set by Provider.

(A) Client must make a prior reservation if he/she wishes to visit IDC.

(B) IDC entrance can only be materialized once the visitor is issued with entrance pass upon reservation confirmation process and the pass must be returned upon leaving the property.

(C) When the Client enters IDC upon receiving entrance authority, he/she must only access permitted areas at all time.

(D) When Client enters IDC, Client must abide by the relevant IDC entrance policy.

B) Infrastructure Solution

 Provider shall provide the provision, installation and operation of infrastructure solution for a seamless infrastructure management of Client.

‚ Provider allows the installation and operation of Provider’s infrastructure solution on Client’s device.

ƒ Provider shall make efforts to secure stability in the solution so that the provided infrastructure solution does not interfere with Client’s service.

C) Common Infrastructure

 Provider shall provide affiliated network and facility/equipment for the Client during operation of service based on IDC.

‚ Provider shall secure the common infrastructure beforehand depending on the service size of the Client and may suggest and change the configuration of such infrastructure to guarantee a stable and effective operational setting.

D) Security Infrastructure

 Provider shall be in charge of acquisition, installation and operation of security solution as well as equipment so that the Client’s service could be provided in a stable manner.

‚ Provider shall be in charge of security review and abusing response and also respond to the security breaches.

(2) Circuit Service

A) Network Circuit

 Provider shall prepare the circuit and unit equipment set forth herein this Agreement in accordance with the schedule and standard.

‚ Provider shall be in charge of network establishment as well as acquisition, installation, operation and maintenance of the device.

ƒ Provider may set an additional standard upon mutual agreement with Client for the quality of the circuit provided to Client.

„ Provider must check the entire network system 24-7 to provide a stable Service to Client and may run regular and irregular operation maintenance for such checkup.

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B) CDN Circuit

 Provider shall be in charge of acquisition, installation, operation and maintenance of network for delivering contents.

‚ Client shall provide information including service method and scope to Provider and select an optimal contents provision method for operation.

(3) Equipment Provision Service

A) Equipment Rental

 Provider may install and provide equipment according to Client’s service request and therefore be in charge of acquisition, installation, management/operation and maintenance of such equipment.

‚ Provider shall back up important data upon a request by Client before returning the rented server and once the return procedure is complete, the system shall be formatted and retrieved. Should there be a loss of data following above process; Client shall not hold Provider responsible for any damage or loss.

B) Management of Spare Equipment

 Upon the request by Client to calculate the capacity, if the required specification meets with the equipment of Provider, the reservation shall be made from spare equipment pool and if not, notify Client of the number of equipment that needs to be purchased.

‚ Provider may compose the spare equipment pool upon the request by Client and should Client uses the device within spare equipment pool, the fee thereafter shall be claimed for.

ƒ If the amount is below the level agreed upon mutually, notify Client of the necessity to purchase equipment while sharing the information on Provider’s standard equipment.

„ Provider shall manage the status of spare equipment pool and share the information with Client.

… Client shall perform assets and reserved component count.

† Spare component shall be managed according to the Provider’s guideline on component management procedure.

‡ The storage or termination of unused equipment can be provided by Provider upon the request made by Client. If a cost is inflicted in the course of doing so, it can additionally be claimed.

(4) Operation Service

A) Provider shall provide operation service stipulated in [Attachment 1. Operation Service Statement].

B) Client shall provide the configuration guidelines required during configuring new system to Provider.

C) Client shall provide information and access authority to Provider for a stable service operation.

D) Provider shall provide the service that Client has requested in a stable and continuous manner and should there be an occurrence of error, Provider shall make its utmost efforts to guarantee a stable service operation through immediate restoration.

E) Client shall prepare components for fixing so that Provider could take a swift measure against error in case such error occurs to the equipment owned by Client. Any delay in processing the fault that occurs due to Client’s failure of preparing components for fixing, shall not be included to the time when Provider failed to deliver service. Also, if the component is owned by Client, cooperate actively so that a support by the supplier could be done seamlessly.

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F) Client shall inform Provider of a contact point as well as the contact information required when Provider performs the operation service.

G) Provider may install/operate operation solution for operating Client’s service.

(5) Software

A) Provider may install below software to equipment set forth in Agreement as well as the Statement of Work that is attached thereto, if Client requests during equipment rental and shall claim for the concerned license fee.

B) If an installation of software stated in above provision A is necessary on Client’s own asset, Client shall send an additional written request to Provider.

C) Provider shall not be liable for any damage inflicted upon Client from the use of Software provided by Provider in accordance with this Article.

D) Client shall not use the software for purposes other than the purpose defined in Agreement and the statement attached thereto and in the violation of such matter, Client shall be liable for all civil and criminal responsibilities and shall indemnify of Provider at its own cost in the occurrence of conflict.

3. Payment of Service Reward

 The service fee shall be calculated upon applying the unit price defined in ‘1. Agreement Details’ based on the list of service provided to Client on a monthly basis.

‚ The period for calculating the use volume in order to claim for the service fee shall be from 21^st of a month prior to the claim until 20^th of the claiming month.

ƒ Provider shall issue tax invoice along with review confirmation form (or confirmation form made by staff in charge if necessary) as well as the billing statement by the last date of the corresponding moth to claim for service fee.

„ The calculation method for the usage volume per service that Provider provides is as follows:

(a) The calculation of the server in use shall be based on the data in CMDB. The standard for identifying the servers used as a resource for Client’s service shall be ‘Attachment 3. Service Code (ESM)’ and the calculation shall target the servers that are ‘operating’ on 20^th of the claiming month. However if Client has requested for a spare equipment, the fee for spare equipment shall also be charged.

(b) The number of server shall be the total number of physically rented server and virtual server.

… The service fee for internet circuit shall be based on monthly usage and calculated upon below standard.

(a) The traffic for internet line shall be based on nFAS data calculated in Provider’s equipment. However, if Client raises an objection, both parties may mutually consult for a common ground.

(b) The daily maximum traffic shall be the peak value measured among traffics recorded every minute.

(c) The charged traffic every month shall be an average of maximum traffic values provided by Provider recorded every day (MRTG) of the relevant month.

4. Service Provision Procedure and Change

 Provider shall provide the service by the establishment completion date, designated through a consultation with Client who applied for use, unless other special reason hinders.

‚ Client shall request for service expansion and change through Provider’s IT Service Operation Management System (NTREE) and follow the standard procedure presented by Provider then after.

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ƒ If the provision of service is confirmed by Provider’s approval to the service provision, Provider shall deliver the service on a date agreed mutually with Client.

„ However, if an emergency installation is required in 3 days, Provider may claim for additional cost upon Client for the emergency installation.

… Below is the service provision procedure.

5. Person in Charge & Contact Info

Client and Provider shall assign a responsible staff as below for a close partnership and if a contact information of the staff changes, both parties shall inform its counterpart of such change.

Category	NBP	Line Corp.
Person in charge	Keun-joo Han
Phone	031-600-6148
E-Mail	Kunju.han@nhn.com

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[Attachment 1] Operation Service Statement

[Attachment 1-1 Server Operation Service]

1. Server Platform Assistance Service

(1) Architecture & design

A) Analyze Client’s requirements.

Analyzing the requirements of Client is investigating and analyzing the crucial and overall needs of Client necessary for deciding the technical design of client service.

B) System design of Client’s service

Client service design includes an activity of organizing the Client’s requirements into a detailed and technical system design statement and covers the following activities.

 Calculate number of servers and specification

‚ Calculate the maximum network bandwidth based on Client’s documentation

ƒ Check whether to backup or not based on service importance

„ Redundant server rack design depending on the service importance

… Categorize network depending on service importance

(2) Installation & Setting

A) Server Hardware Installation

Perform basic activities for installing and configurating server hardware in compliance with the Provider’s standard policy as well as Client’s service needs.

B) Server OS and Software Installation

 OS shall be in compliance with Provider’s standard OS installation policy. The task also includes additional installation, deletion and upgrade of application which is included in OS distribution edition.

‚ Client shall install application other than OS.

ƒ Distribute/install/upgrade Provider’s distribution system and library management agent.

C) Server OS and System Setting

Server OS and system setting shall be in compliance with Provider’s standard OS installation policy. The task also includes the following activities.

 OS kernel parameter setting

‚ Set up NFS mount when using NAS

ƒ Set up FUSE mount when using OwFS

„ Server Static Route setting

… Loopback Address setting

† Disk RAID setting

D) Server redundancy

Server redundancy configuration includes L4 redundancy, server Loopback Address creation and network redundancy between server and switch and covers the following activities.

‡ L4 Loopback setting

ˆ Server NIC redundancy

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2. Server Operation and Management Service

(1) Regular Operation

A) Server Console Monitoring

Server console monitoring is performed by installing monitoring agent to server and monitoring on the console through setting the monitoring target on the server, based on a request made by Client. (Provider provides basic monitoring setting which is already agreed and Client shall directly perform additional monitoring.)

B) Server Failure Response and Management

For server failure response and management, Provider visually checks the server equipment for the target devices and performs the following activities upon a request by Client.

 Warm reboot

‚ Cold reboot

ƒ Physical On/Off

C) Server Change Management

Server change management is based on Client’s request and covers the following activities.

 Server/component replacement and expansion

‚ Server return and migration

ƒ Change server host name and IP address

„ Server access authentication management

… Change L4 binding

† Change DNS and GTM

‡ Reinstall OS

D) Server Issue Management

Perform the following activities when a troubleshooting is required if it is required by Client or based on Provider’s own checkup or failure.

 Manage server equipment (H/W) issue

‚ Manage OS issue (need to define the expense inflicted when requesting to vendor)

E) Server Capacity Management

Perform the following activities for server capacity management.

 Set critical point per server group and monitor based on the critical point.

‚ Analyze the critical point and trend and suggest whether to expand or return the servers.

F) Server Performance Management

Perform the following activities for server performance management.

 CPU, I/O Wait, Load Average index review

‚ Suggest idea if improvement is needed based on the review result.

G) Server Equipment Configuration Management

Performs configuration management and update for equipment of Client as well as Provider.

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H) Server Security Management

Server security management covers the following activities to prevent failure and maintain security level.

 Server system firmware upgrade

‚ OS security update

I) Server Operation Management

Server operation management covers the following activity.

 Draft operation report to submit to Client.

[Attachment 1-2 Network Operation Service]

1. Configuration Management

(1) Provider performs the following.

A) Select network equipment OS and standard configuration

B) Backup network equipment configuration information

C) Manage network configuration chart

(2) Client performs the following.

A) Provide requirements for selecting network equipment OS

B) Comply with security requirements related to network equipment configuration

2. Change Management

(1) Provider performs the following.

A) Establish the procedure that handles all changes including planned and emergency changes that could affect network setting (ex: review, approval, exchange of thoughts, documentation) together with Client.

B) Inform changes that could affect network setting according to proper procedure.

C) Record and track authorized change request

D) Evaluate planned change for network setting and inform the requirement necessary for supporting the change to Client

E) Set and manage schedule for testing and implementing the authorized change

F) Record and track managed resource change

(2) Client performs the following.

A) Cooperate with Provider when establishing the procedure that handles all changes including planned and emergency changes that could affect network setting (ex: review, approval, exchange of thoughts, documentation)

B) Notify Provider of a planned and emergency change of Client’s IT environment that could affect Provider’s provision of service

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3. Performance Management

(1) Provider performs the following.

A) Monitor network equipment’s performance

B) Take relevant measure when the performance of network device is affected (ex: inform Client’s network manager of the performance issue and adjust mutually for resolution)

C) Deliver network configuration and changes to Client that Provider needs to fulfill a certain service quality.

(2) Client performs the following.

A) Cooperate with Provider when the Provider establishes schedule for network maintenance, modification and improvement

B) Suggest a change on network configuration to Provider for performance improvement

4. Failure Management

(1) Provider performs the following.

A) Failure management including real-time network monitoring, error detection, report, record, tracking, solution, network, failure report and failure management

B) Define emergency contact process and procedure including the reporting process with Client’s support

C) Restore network damage from unplanned operational failure (ex: device breakdown, temporary error, abnormal operation).

(2) Client performs the following.

A) Provide the list of employees on Client’s end to Provider when it is necessary for resolving and reporting failure and notify of any changes made to the employees.

B) The manager on Client’s end shall cooperate with Provider when handling failure in order to resolve complex issue including network, server and software that affects Provider’s service delivery.

5. Capacity Management

(1) Provider performs the following.

A) Monitor current use volume of Client and document the record in order to provide information to Client with which the Client could decide future use.

(2) Client performs the following.

A) Forecast capacity which will be needed for a new service and provide the capacity information appropriate for service to Provider

6. Availability Management

(1) Provider performs the following.

A) Cooperate with Client when defining Client’s availability requirement

B) Provide hardware maintenance based on the equipment manufacturer’s specification

C) Recommend availability improvement ideas to Client

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(2) Client performs the following.

A) Define availability requirements under the support of Client

B) Recommend availability improvement ideas

7. Asset Management

(1) Provider performs the following.

A) Request for Client’s asset and cooperate with Client to establish receipt process

B) Cooperate with Client during asset count/discard owned by Client

C) Track and report regularly any changes made to servicing network equipment

(2) Client performs the following.

A) Provide supply plan of Client’s asset

B) Count and discard property owned by Client

[Attachment 1-3 DBMS Operation Service]

1. DBMS Management Service

(1) Architecture & Design

A) Analyze Client’s needs

Analyzing the requirements of Client is investigating and analyzing the crucial and overall needs of Client necessary for deciding the technical design of Client service.

B) System Design of Client Service

Client service design includes an activity of organizing the Client’s requirements into a detailed and technical system design statement and covers the following activities.

(2) Installation & Setting

A) DBMS Installation

DBMS installation performs basic activities for installing and setting in compliance with Client’s service needs and Provider’s standard policy.

B) DBMS Configuration

DBMS configuration covers activities including DBMS parameter setting, backup and monitoring setting that complies with Client’s service needs and Provider’s standard policy.

C) DBMS Monitoring System Sync

It syncs service target equipment of Client with default monitoring system.

D) DBMS System Security Setting

The task includes account/authority management for Client’s service target equipment as well as DB access restriction and logging management support.

E) DBMS Query Review and Tuning

DB system security setting covers DB query review and tuning upon Client’s request

F) DBMS Migration

DBMS migration performs migration for target equipment based on Client’s request.

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2. Regular Operation

(1) DBMS Failure Response and Management

It responds to failure occurred in Client’s service target equipment.

(2) DBMS Change Management

DBMS change management is based on Client’s request and covers the following activities.

A) DBMS configuration change (including DBMS parameter change)

B) Change DBMS redundancy

C) DBMS version patch

D) DBMS version upgrade

E) DBMS OBJECT creation/change

(3) DBMS Backup and Restoration

DBMS backup and restoration is done upon Client’s request and the restoration is done in local server.

(4) DBMS Performance Management

Server performance management covers the following works.

A) DBMS/log monitoring, DB server performance management, enhancement/maintenance of availability

B) Performance monitoring on DBMS resource and delayed duplication

C) Query monitoring/tuning

(5) DBMS Data Management

DBMS data management is done upon Client’s request and covers the following activities

A) It handles ‘Insert’ and ‘Delete’ data work as a service type that requests for data-related task. However, the data change (add/delete/change) is only confined to large change or data change at once through review that poses direct impact to service, and a minor changes for service operation as well as routine changes are not covered.

B) Request for data extraction/analysis from operation DB for statistical work.

(6) DBMS Configuration Management

DBMS Configuration Management covers configurating and updating Client’s service DB equipment.

(7) DBMS Security Management

It covers DBMS access control, logging management support and diagnosis support.

(8) DBMS Operation Management

It covers the following task.

A) Draft operation report to submit to Client

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[Attachment 1-4 Security Service]

1. Accident Response Service

(1) Provider performs the following.

A) Control events detected by security solution for entire service and office network. (24-7 supervision)

B) Once a security breach (including DDoS attach) is detected that is considered as infiltration attempt, send the notice to Client’s security manager and share the process details.

C) The response measure and level shall be dependent upon event rank.

D) Request for information and authority required for responsive measure.

E) Analyze the malicious code detected during infiltration and provide the result therein.

F) Share security guide for countermeasure and prevention of recurrence and deliver the result upon taking measure.

G) Respond to technical inquires of Client to prevent recurrence of incident.

H) Submit monthly hacking trend report and the report shall include infiltration attempts of the corresponding month as well as DDoS/Worm/virus occurrence status.

(2) Client performs the following.

A) Client may request for investigating the infiltration incident if such incident is suspected.

B) Designate contact process during infiltration event in prior and share with Provider.

C) Client’s security manager shall designate a staff that will cooperate with Provider in the occurrence of infiltration event, and support Provider with information necessary for countermeasure.

D) Grant information and authority required for Provider to respond to infiltration incident.

2. Comprehensive Diagnosis Service

(1) Provider performs the following.

A) Perform the comprehensive diagnosis according to the period and number of diagnosis set with Client.

B) Request for information and authority necessary for comprehensive security diagnosis.

C) Provide the result of comprehensive security diagnosis.

(2) Client performs the following.

A) Client shall designate the diagnosis target for comprehensive security diagnosis and support Provider with affiliated information required for the diagnosis.

B) Provide information and authority to Provider necessary for comprehensive security diagnosis.

3. Security Review Service

(1) Provider performs the following.

A) Provide infra security checklist for OS, WAS, DB and so on.

B) Check security level for areas of which the checklist had been sent and provide the following result.

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C) Review the security level on overall infra composition during service establishment and change and deliver the result.

D) Handle other requests concerning security within set deadline and consult with the requestor if there is an issue.

E) The security-related requests include ACL, SSL VPN, internal public IP, wireless lan router and exceptions to office security solution (vaccine, PMS, IPS, SPAM Filter and etc.).

F) Perform security review for web and game application service that Client provides.

G) Request for information and authority required for security review.

H) Provide security review result in a form agreed upon mutually.

I) Provide information on the history of security review result as well as the details of measures taken.

(2) Client performs the following.

A) Designate the target for comprehensive security diagnosis to Provider and support Provider with affiliated resources required for the analysis.

B) Grant information and authority required for diagnosis to Provider.

4. Security Solution Operation Service

(1) Provider performs the following.

A) Define and operate detection policy suitable for the security control target.

B) Detection policy shall be regularly renewed and in the occurrence of an issue, the policy must be renewed for an effective operation of security solution.

C) Define and operate infiltration blocking policy based on detection policy.

D) Infiltration blocking policy must be regularly renewed and in the occurrence of an issue, the policy must be renewed for an optimal performance of the detection.

E) Make sure the security system normally operates.

F) Provide quarterly report on security solution operation status.

5. Abusing Response Service

(1) Provider performs the following.

A) For abusing analysis request, perform the analysis and provide the result.

B) Request for information and authority required for abusing analysis.

C) Respond to technical inquiries for resolving Client’s abusing issue.

(2) Client performs the following.

A) Request for abusing analysis upon Provider if an activity suspected as abusing is spotted.

B) Support Provider with affiliated information necessary for abusing analysis as requested by Provider.

C) Grant information and authority required for abusing analysis to Provider.

D) Send technical inquiries to Provider to resolve abusing issue.

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6. Infiltration Detection/Response Service

(1) The scope of service shall be as follows.

A) Provide detection feature based on the pattern defined in infiltration detection system in prior through such system.

B) Do not provide the detection service for attacks of which the patterns are not defined (ex. Zero-day attach and etc.) in infiltration detection system. However, if the vendor of infiltration detection system has provided the pattern, Provider shall, in principle, apply such pattern to the system; however Provider shall not be responsible for a detection failure arising from not applying the pattern.

C) The scope of monitoring covered with infiltration detection system shall be the system within the IP bandwidth owned and designated by Client

D) Should an infiltration incident occur to Client’s system, Provider shall take responsive measure for the system where the incident has occurred. The information and authority that Provider asks for the measure shall be provided by Client to Provider.

(2) Provider shall not be liable for the failure in detecting infiltration attempt and an accident that follows from one of reasons defined below.

A) If it had occurred from a fault of Client

B) If it had occurred by applying the security policy requested by Client

C) If the failure had occurred from an attachment of which the pattern had not been defined in infiltration detection system in advance, although the system was in its normal operation

D) If it had occurred from Client’s failure to take measure against the vulnerability reported by Provider

E) Provider does not warrant that the detection of all infiltration is available for Client system.

F) Provider only provides infiltration detection system that Provider commonly operates to Client.

[Attachment 1-5 SIM (Service Infrastructure Manager) Service]

1. SIM assignment

(1) Provider shall respond to the requirements made by the Client by assigning a responsible staff in charge of the Client’s customer service.

(2) Provider may assign a different manager for each service of the Client if necessary.

(3) SIM serves as an agent who collects and responds to the inquiry/expansion/change task required by Client.

2. Infrastructure Architecture Design

(1) Analyze the requirements of Client service

(2) Infrastructural preparation in advance

A) Check Physical Architecture (infrastructure arrangement plan)

B) Check Logical Architecture (service arrangement plan)

C) Check server setting preparation

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D) Check network setting preparation

E) Check rack setting preparation

F) Check DBMS setting preparation

G) Check storage setting preparation

H) Check CDN setting preparation

I) Check DNS (Domain Name System)/GTM (Global Traffic Manager) setting preparation

(3) Installation & Arrangement Management

A) Check warehousing

B) Check installation

C) Check setting

3. Regular Operation

(1) Client Management

A) Respond to Client inquiry

B) Check complaints

C) Provide regular report

D) Draft and deliver a quarterly report for the service provided to Client.

(2) Overall Operation Management

A) Support expansion of infrastructure during operation

If expanding infrastructure is required while running the Client’s service, check below matters first and expand the infrastructure along with Client.

 Check Physical Architecture (infrastructure arrangement plan)

‚ Check Logical Architecture (service arrangement plan)

ƒ Check server setting

„ Check network setting

… Check rack setting

† Check DBMS setting

‡ Check storage setting

ˆ Check CDN setting

‰ Check DNS(Domain Name System)/GTM(Global Traffic Manager) setting

B) Support installation of infrastructure during operation

 Check warehousing

‚ Check installation

ƒ Check setting

C) Be responsible for handling all the task regarding fault/change occurred during operation and share the result with Client.

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D) Share the requirement raised by either Client or Provider during operation and coordinate the difference of opinion.

[Attachment 1-6 Storage/Backup Operation Service]

1. Storage/Backup Platform Support Service

(1) Architecture & Design

A) Analyze Client’s requirements

It investigates and analyzes key and overall requirement necessary for deciding the technical design of Client service.

B) System design for Client service

Client service design includes an activity of organizing the Client’s requirements into a detailed and technical system design statement and covers the following activities.

 Calculate storage capacity in consideration of Client’s need

‚ Calculate the number of storage and specification

(2) Installation & Setting

A) Install storage/backup hardware

 Install storage/backup system

B) Compose details of storage/backup

C) Allocate Client volume and compose solution

2. Storage/Backup Operation and Management Service

(1) Storage/Backup System Console Monitoring

For storage/backup system console monitoring, check whether there is any abnormalities in software and hardware.

(2) Storage/Backup System Change Management

Managing storage/backup system change is based on the Client’s request and covers the following activities.

A) Volume expansion and collection

B) Add Client server and make change concerning reinstallation

C) Change duplication composition

D) Entirely reorganize storage/backup

E) Change Firmware

F) Replace failed part

(3) Issue Management

Provider performs storage/backup issue management to the Client’s service equipment upon a request by Client or if troubleshooting is deemed necessary from Provider’s own review or fault.

(4) Storage/Backup System Equipment Composition

For storage/backup system equipment composition, perform composition management as well as update for the concerned device.

32

(5) Response to and Manage Storage/Backup System Error

Handle and manage storage/backup system error based on the monitoring result.

<Attachment 2> Unit price

[***]*

* Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

33

<Attachment 3> ESM Code

34

35

36

37

38

39

40

41

42

43

44

Contract Extension Agreement

NAVER Business Platform Corporation (hereinafter referred to as ‘NBP’) and LINE Corporation (hereinafter referred to as ‘LINE’) hereby agree to extend the agreement signed previously as below.

Article 1. Purpose

The purpose of this Agreement is to change the agreement signed by and between NBP and LINE upon mutual consultation and to clearly set forth the changes, effectiveness and others.

Article 2. Details of the Changes

1. Target agreement for change (hereinafter ‘Original Agreement’)

A. Agreement signing day: April 1, 2013

B. Agreement title: ‘Information Technology Service Agreement’ between LINE Corporation and NAVER Business Platform (include 1 annex – IT Infra Operation Service Statement) (hereinafter referred to as ‘Target Agreement’)

2. Agreed Change

A. According to the Article 4 in the Original Agreement, both parties hereby agree that the Original Agreement to be automatically extended for one (1) year on July 31, 2015. The termination date for the Original Agreement shall be changed to July 31, 2016, accordingly.

Article 3. Effectiveness

1. This Agreement shall become valid from the signing day.

2. The ‘Original Agreement’ shall be modified according to the conditions set forth herein this Agreement from the singing day of the Agreement and matters which have not been set forth separately herein shall follow the provisions stipulated in the ‘Original Agreement.’

Article 4. Interpretation, etc.

Matters which have not been stipulated herein this Agreement and ‘Original Agreement’ shall be defined upon a separate mutual consultation.

IN WITNESS WHEREOF, two (2) copies of the Agreement have been mutually signed and sealed, each party keeping one (1) copy at its custody.

June 30, 2015

‘NBP’ NAVER Business Platform Corporation NAVER Green Factory, 178-1, Jeongja-dong, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea   CEO                Weongi Park    (Seal) ‘LINE’ LINE Corporation 27F Shibuya Hikarie, 2-21-1 Shibuya Shibuya-ku, Tokyo, Japan   CEO                IDEZAWA TAKESHI    (Seal)

EX-10.5

Exhibit 10.5

DATED 18 December 2014

(1) MICROSOFT MOBILE OY

(2) LINE CORPORATION

BUSINESS SALE AGREEMENT

REFERENCE

MJY/AJC: 747922.00260

CONTENTS

CLAUSE

1	INTERPRETATION	4
2	CONDITIONS PRECEDENT	11
3	SALE AND PURCHASE OF THE BUSINESS	11
4	ASSUMPTION OF LIABILITIES	12
5	EXCLUDED ASSETS AND LIABILITIES	12
6	CONSIDERATION	14
7	PERIOD BEFORE COMPLETION	15
8	COMPLETION	16
9	ADJUSTMENT TO THE CONSIDERATION	17
10	RESCISSION	19
11	RISK AND INSURANCE	19
12	CONTRACTS	19
13	LEASEHOLD PROPERTIES	21
14	EMPLOYEES	21
15	WARRANTIES	21
16	BUYER’S WARRANTIES	22
17	POST-COMPLETION OBLIGATIONS	22
18	VAT	23
19	TERMINATION	25
20	CONFIDENTIALITY	25
21	SERVICE OF NOTICES	25
22	ANNOUNCEMENTS	26
23	COSTS	26
24	CURRENCY CONVERSION	27
25	NO SET-OFF	27
26	GROSSING UP	27
27	ENTIRE AGREEMENT	27
28	WAIVER	27
29	EFFECT OF COMPLETION	27
30	THIRD PARTY RIGHTS	27
31	ASSIGNMENT	28
32	SEVERANCE	28
33	FURTHER ASSURANCE	28
34	WRONG POCKETS	28
35	COUNTERPARTS	28
36	GOVERNING LANGUAGE	28
37	GOVERNING LAW	29
38	SERVICE OF PROCESS	29
39	BAN ON ORGANIZED CRIME	29

SCHEDULE
SCHEDULE 1	30
PART 1 – LEASEHOLD PROPERTY	30
PART 2 – CONDITIONS OF SALE OF LEASEHOLD PROPERTIES	31
SCHEDULE 2	36
CONDITIONS	36

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SCHEDULE 3	37
WARRANTIES	37
PART 1 – FUNDAMENTAL WARRANTIES	37
TITLE TO THE ASSETS, INCORPORATION, AUTHORITY AND CAPACITY OF THE SELLER	37
PART 2 – GENERAL WARRANTIES	38
PART 3 – INTELLECTUAL PROPERTY AND IP AGREEMENTS	42
PART 4 – ICT SYSTEMS AND ICT CONTRACTS	44
PART 5 – EMPLOYEES	44
PART 6 – PENSIONS	46
PART 7 – REAL ESTATE	46
PART 8 – TAXATION	47
SCHEDULE 4	48
SELLER PROTECTION	48
SCHEDULE 5	52
BUYER WARRANTIES	52
SCHEDULE 6	53
EMPLOYEE PROVISIONS	53
SCHEDULE 7	60
INTELLECTUAL PROPERTY	60
PART 1    REGISTERED INTELLECTUAL PROPERTY	60
PART 2    OWNED SOFTWARE	63
PART 3    THE MUSIC LICENCES	63
PART 4    THE DOMAIN NAMES	159
PART 5    THE IP AGREEMENTS	159
PART 6    THIRD PARTY SOFTWARE	163
PART 7    OPEN SOURCE SOFTWARE	163
SCHEDULE 8	219
CONTRACTS	219
PART 1    ICT CONTRACTS	219
PART 2    OTHER CONTRACTS	219
SCHEDULE 9 MUSIC LICENCE LIABILITIES	222

AGREED FORM DOCUMENT

Commercial Agreement

Transitional Services Agreement

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AGREEMENT dated 18 December 2014

BETWEEN:

(1) Microsoft Mobile Oy, a company registered in Finland under number 2583660-5 whose registered office is at Keilaranta 7, 02150, Espoo, Finland (‘the Seller’); and

(2) LINE CORPORATION, a company incorporated in Japan having its principal office at Shibuya House, 27th Floor, 2-21-1 Shibuya, Shibuya-ku, Tokyo, 150-8510, Japan (‘the Buyer’).

1 INTERPRETATION

1.1 In this Agreement, unless the context otherwise requires:

‘Accounting Date’ means 30 September 2014;

‘Accounting Expert’ shall be an accounting firm with an international reputation sufficiently experienced in music industry financial accounting having offices in London and having no other material relationship with either party as appointed by the parties in accordance with either clause 6.2 or 9.6 or otherwise determined pursuant to clause 9.7;

‘Accounts’ means the financial statements of the Seller relating to the Business for the financial period ended on the Accounting Date;

‘Accrued Employee Liabilities’ means any Employment Costs (as defined in Schedule 6) or other liabilities relating to the employees of the Business accrued or referable to the period up to and including, and outstanding as at, the Effective Time;

‘Actual Music Liability Amount’ means the actual amount of the Music Licence Liabilities determined in accordance with clause 9;

‘Ancillary Agreements’ means each of:

(a) Commercial Agreement;

(b) Transitional Services Agreement; and

(c) any other documents referred to in this Agreement,

in the agreed form;

‘Assets’ means all assets and other rights included in the sale under this Agreement;

‘Assignable Contracts’ means all the Contracts other than the Non-Assignable Contracts;

‘Assumed Liabilities’ means the liabilities of the Seller relating to the Business responsibility for which is to be assumed by the Buyer pursuant to clause 4;

‘Book Debts’ means the debts owing to the Seller in respect of goods or services supplied by the Seller in the ordinary course of the Business at the Effective Time;

‘Business’ means the business of a digital music streaming service, carried on up to the Effective Time by the Seller under the Business Name;

‘Business Day’ means a day, except a Saturday or a Sunday, on which clearing banks in the City of London, California and Seoul are open for business generally;

‘Business Name’ means the name MixRadio;

‘Business Warranties’ means the Warranties other than the Fundamental Warranties;

‘Buyer Documents’ means this Agreement and any other agreement referred to in this Agreement to which the Buyer is or has agreed to become a party;

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‘Buyer’s Group’ means the Buyer, its subsidiaries and subsidiary undertakings, any holding company or parent undertaking of the Buyer and all other subsidiaries and subsidiary undertakings of any such holding company or parent undertaking as the case may be from time to time;

‘Claim’ means a claim arising for breach of a Warranty;

‘Commercial Agreement’ means the agreed form Commercial Agreement entered into between the Buyer and the Seller;

‘Competent Authority’ includes any national or supra-national court, the European Commission, any governmental or local authority, any other body exercising powers pursuant to any Act of Parliament or Royal Charter and any equivalent or similar body in any jurisdiction;

‘Completion’ means completion of the sale and purchase of the Assets in accordance with clause 8;

‘Completion Date’ means the date on which Completion takes place;

‘Completion Payment’ has the meaning set out in clause 6.2;

‘Completion Statement’ has the meaning set out in clause 6.6;

‘Conditions’ has the meaning set out in clause 2.1;

‘Connected Person’ means, in relation to any person, the spouse or minor children of that person or a company controlled by that person or controlled together by that person and persons connected with him; and for such purposes ‘control’ shall be construed in accordance with section 450 of the Corporation Tax Act 2010;

‘Consideration’ has the meaning set out in clause 6.1;

‘Continuing Provisions’ means clauses 1, 20, 22, 24, 29, 30, 27, 32, 32, 31 and 32;

‘Contracts’ means all contracts, arrangements, orders and commitments entered into or placed by or with the Seller relating to the Business and outstanding at the Effective Time as set out in Part 3 of Schedule 7 and Schedule 8 and the IP Agreements but excluding, for the avoidance of doubt, the Leases and all contracts of employment;

‘Conversion Rate’ means the spot selling and buying mid-market closing rate for a transaction between the two currencies in question as quoted by the London edition of the Financial Times on any date on which a conversion rate is to be determined in accordance with this Agreement or, if no such rate is quoted on that date, on the first preceding day on which such rates are quoted by the Financial Times;

“CWM Service” means the music service known as ‘comes with music’ or ‘Nokia Music Unlimited’ in all jurisdictions other than India;

‘Data Room’ means the information made available on behalf of the Seller via the electronic data room as updated to 17 December 2014;

‘Data Protection Legislation’ means any Legislation relating to privacy, data protection, surveillance, direct marketing, data security or the handling or disclosure of personal data;

‘Disclosed’ means all matters fairly and accurately disclosed in the Disclosure Letter or the Disclosure Materials;

‘Disclosure Letter’ means a letter of the same date as this Agreement addressed by the Seller to the Buyer for the purpose of clause 15.2 and receipt of which is acknowledged by the Buyer and includes any document which is stated in that letter to be deemed to be included in or attached to it;

‘Disclosure Materials’ means:

(a) this Agreement;

(b) the documents and information Disclosed to the Buyer or its representatives or advisors through the Data Room, an index of which is attached to the Disclosure Letter; and

(c) the Disclosure Letter;

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‘Disputed Matters’ has the meaning set out in clause 9.6;

‘Domain Names’ has the meaning set out in paragraph 46 of Schedule 3;

‘Effective Time’ means 8.00am London time on the Completion Date;

‘Employees’ means the persons employed wholly or mainly for the purposes of the Business by a Seller Employer at the Transfer Date (which, at the date of this agreement, consists of those persons whose details are set out in Annex A);

‘Estimated Employee Liability Amount’ means the estimated Accrued Employee Liabilities at the Effective Time notified to the Buyer in accordance with clause 6.5;

‘Estimated Music Licence Liability Amount’ means the estimate of the Music Licence Liabilities as at the Effective Time calculated pursuant to clause 6.6;

‘Excluded Assets’ means the assets excluded from the sale and purchase under this Agreement by clause 5.1;

‘Excluded Liabilities’ means (a) all liabilities and obligations relating to the Excluded Assets, (b) Intra Group Payables, (c) any liabilities of the Business (including Tax, for the avoidance of doubt) accrued or referable to the period up to and including the Effective Time other than the Music License Liabilities, (d) all liabilities and obligations relating to non-trade creditors of the Business, (e) Accrued Employee Liabilities except to the extent deducted from the Consideration pursuant to clause 6.1(c), and (f) any liability to taxation of any member of the Seller’s Group;

‘Fixtures and Fittings’ means the fixtures (other than landlord’s fixtures), fittings (other than landlord’s fittings), plant and equipment affixed to or situated on the Leasehold Property at the Effective Time;

‘Fundamental Warranties’ means the covenants for the title implied by the words ‘free from all Security Interests and adverse rights of any description’ in clause 3.1 and those warranties set out in Part 1 of Schedule 3;

‘Goodwill’ means the goodwill of the Business, together with the exclusive right to use the Business Name and to represent the Buyer as carrying on the Business as a going concern in succession to the Seller;

‘Group’ means, in relation to any company, that company and any other company which at the relevant time is its subsidiary or holding company, or a subsidiary of any such holding company; and ‘Member’ of a Group has a corresponding meaning;

‘HMRC’ means HM Revenue and Customs;

‘ICT Contracts’ means all contracts and arrangements relating to the licensing of the ICT Systems and the provision of computer maintenance and support, web site hosting, disaster recovery, facilities management and bureau and on-line services to the Business which are in force at the Effective Time and which are set out in Part 1 of Schedule 8;

‘ICT Systems’ means all computer, communications, electronic and electronic control systems whether digital or analogue used by the Seller or another entity of the Seller’s Group in the Business at the Effective Time for receiving, processing, storing or transmitting data or instructions, including all hardware and software components of such systems;

‘Intellectual Property Rights’ means all industrial and intellectual property rights, whether registered or unregistered, including rights in inventions, trademarks and service marks, (including any goodwill related to any trademark or service mark), trade, brand and business name, designs and design rights, copyright and neighbouring rights, database rights, moral rights (including all such rights in computer software and databases, firmware and other digital material), domain names, all rights protecting confidential and proprietary knowledge and information, registration of, and applications for any of the

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foregoing and all other industrial and intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world;

‘Intellectual Property’ means (i) all Intellectual Property Rights listed in Part 1 or Part 4 of Schedule 7, (ii) all Intellectual Property Rights in and to the Owned Software, and (iii) all other Intellectual Property Rights that are owned by the Seller or any other entity of the Seller’s Group and used in, or in connection with, the Business at the Effective Time;

‘Intra-Group Payables’ means those amounts payable in respect of the Business to a member of the Seller’s Group other than amounts incurred post-Completion pursuant to an Ancillary Agreement or required pursuant to the assignment or licensing of any of the Leases;

‘IP Agreements’ means all licences, agreements, arrangements, authorisations and permissions:

(a) granting the right of, or otherwise relating to the, use or exploitation by the Seller or another entity of the Seller’s Group of any Intellectual Property Rights in connection with the Business;

(b) granting the right of, or otherwise relating to the, use or exploitation by any third party of any Intellectual Property; or

(c) between the Seller or another entity of the Seller’s Group and any third party entered into in connection with the Business and relating to the development of any material that is or may be the subject matter of Intellectual Property Rights,

which are listed in Part 5 of Schedule 7 but excluding the ICT Contracts and the Music Licences;

‘Leasehold Properties’ means the leasehold properties brief particulars of which are given in Part 1 of Schedule 1;

‘Leases’ means the leases, licences and supplemental documents of the Leasehold Properties details of which are set out in Schedule 1 and any other supplemental document entered into by the Seller in connection with those leases and licences pursuant to and in compliance with paragraph 8 of Part 2 of Schedule 1 between the date of this Agreement and the Completion Date;

‘Legislation’ includes all Acts of Parliament, all applicable provisions of the Treaties constituting the European Community, the European Union and the European Economic Area and all orders and regulations made pursuant to such an Act or Treaty or otherwise having the force of law;

‘Liabilities’ means all liabilities, duties, covenants, obligations of every kind, losses, damages and costs, whether arising under contract, common law, statute or otherwise in any jurisdiction;

‘Long Stop Date’ means the date falling 3 months after the date of this Agreement or such other date as the parties may agree in writing;

‘Material Contract means a Contract which currently involves an annual consideration of more than $100,000 irrespective of its outstanding term or length of notice, but shall not include any Contract which is:

(a) an ICT Contract or IP Agreement;

(b) a contract of employment or a contract for services; or

(c) a contract relating to the ownership or occupation of the Leasehold Properties;

‘Material IP Agreement’ has the meaning set out in paragraph 47 of Schedule 3;

‘Music Liability Statement’ has the meaning set out in clause 9.3;

‘Music Licence Liabilities’ means all financial liabilities and obligations to rights holders referable to the period up to and including the period before the Effective Time that have been accrued for by the

7

Seller’s Group and details of which, and the methodology for their accrual, being as set out in Schedule 9 (but excluding, for the avoidance of doubt, any accounts payable with respect to invoices received on or before the day immediately prior to delivery of the Completion Statement);

‘Music Licences’ means all licences, agreements, arrangements, authorisations and permissions granting the right of, or otherwise relating to the, use or exploitation by the Seller of any musical works or sound recordings in connection with the Business which are listed in Part 3 of Schedule 7;

‘Nominated Buyer Company’ has the meaning set out in clause 3.4;

‘Non-Assignable Contracts’ means all Contracts the assignment of which by the Seller to the Buyer would constitute a breach of the terms of the Contract or would permit any other party to the Contract to terminate it or to treat it as terminated;

‘Notice of Disagreement’ has the meaning set out in clause 9.3;

‘Open Source Software’ (a) means any software that (i) contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software (e.g., without limitation, Linux) or (ii) requires as a condition of its use, modification or distribution that it, or other software incorporated, distributed with, or derived from it, be disclosed or distributed in source code form or made available at no charge; and (b) includes without limitation software licensed under the GNU’s General Public License (GPL) or Lesser/Library GPL, the Mozilla Public License, the Netscape Public License, the Sun Community Source License, the Sun Industry Standards License, the BSD License, a Microsoft Shared Source License, the Common Public License, the Apache License, and any license listed at www.opensource.org;

‘Owned Software’ has the meaning set out in paragraph 44 of Schedule 3;

‘Owned Software Source Code’ has the meaning set out in paragraph 52 of Schedule 3;

‘personal data’ and ‘processing’ have the meanings accorded by applicable Data Protection Legislation;

‘Personal Data’ means the personal data which will be transferred to the Buyer in connection with the transfer of the Business as envisaged by this Agreement;

‘Pre-Completion Customer Notice’ has the meaning set out in clause 12.12;

‘Purchase Price’ means US$40,000,000;

‘Records’ means all books, files, documents and other records relating exclusively or primarily to the Business or any of the Assets in whatever medium held including all payroll, income and stock records, National Insurance, PAYE, VAT and other accounting records, information relating to suppliers or customers, information, records or reports provided under the Music Licences, all promotional material, sales publications, catalogues, price lists, advertising materials, terms and conditions of sale and other sales matter which relate to the Business, together with any plates, blocks, negatives and similar material relating to them;

‘Registered Intellectual Property’ has the meaning set out in clause 43 of Schedule 3;

‘Resolution Period’ has the meaning set out in clause 9.6;

‘Restructuring Costs’ means US$3.6 million;

‘Security Interest’ means any encumbrance, mortgage, charge, assignment, pledge, lien, right of set-off, pre-emption right, option, retention of title or hypothecation for the purpose of or which has the effect of granting a security interest of any kind whatsoever and any agreement, whether conditional or otherwise, to create any of the foregoing but shall not include any encumbrance, lien or retention of title with respect to a hire purchase agreement entered into in the ordinary course of the Business where, as at Completion, no breach has occurred with respect to that agreement;

8

‘Seller Employer’ means the Seller or a member of the Seller’s Group that employs one or more Employees;

‘Seller’s Group’ means the Seller, its subsidiaries and subsidiary undertakings, any holding company or parent undertaking of the Seller and all other subsidiaries and subsidiary undertakings of any such holding company or parent undertaking as the case may be from time to time;

‘Seller’s Solicitors’ means Reed Smith LLP of the Broadgate Tower, 20 Primrose Street, London EC2A 2RS;

‘Senior Employees’ means each of the following employees: Jyrki Rosenberg, Mike Bebel, Andy Toghill, Renee Porter, Jamie Robertson, Ralph Pighin, Karan Grover, Andy Gaitskell-Kendrick, Steve Robbins, Mitch Rubin and Jaime Gillespie;

‘Supervisory Authority’ has the meaning set out in paragraph 39 of Schedule 3;

‘Tax’ means all forms of taxation and statutory, governmental, state, federal, provincial, local, government or municipal charges, duties, imposts, contributions, levies, withholdings or liabilities wherever chargeable and whether of the UK or any other jurisdiction; and any penalty, fine, surcharge, interest, charges or costs relating thereto;

‘Tax Authority’ means any government, state or municipality or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official in the United Kingdom or elsewhere competent to impose, collect or assess any Tax;

‘Tax Warranties’ means those Warranties set out in Part 8 of Schedule 3;

‘Technical Information’ means all data, formulae, methods, techniques, recipes, specifications, designs, drawings, plans, photographs and other artistic works, instructional materials, know-how and other confidential information used by the Seller in connection with the Business;

‘Third Party Consent’ means a consent or waiver required from a third party for the assignment or novation of a Contract in favour of the Buyer;

‘Third Party Rights’ means the benefit (so far as the Seller can lawfully assign or transfer or hold the same in trust for the Buyer) of any claim or right of the Seller subsisting at the Effective Time against a third party arising in the course of the Business or otherwise relating to any of the Assets including any claim for breach of any condition, warranty or other contractual term or for any misrepresentation and any claim in respect of damage to any of the Assets under any insurance policy or otherwise but excluding any right or claim of the Seller in respect of Tax;

‘Third Party Software’ has the meaning set out in paragraph 45 of Schedule 3;

‘Transfer Date’ means the Completion Date;

‘Transitional Services Agreement’ means the agreed form Transitional Services Agreement entered into between the Buyer and the Seller;

‘TUPE Regulations’ means the Transfer of Undertakings (Protection of Employment) Regulations 2006;

‘VAT’ means (a) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and (b) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere;

‘VATA’ means the Value Added Tax Act 1994; and

‘Warranties’ means the covenants for title implied by the words ‘free from all Security Interests and adverse rights of any description’ in clause 3.1 and the warranties by the Seller contained in Schedule 3.

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1.2 In this Agreement, unless the context otherwise requires:

(a) a reference to a statute, statutory provision or EC Directive includes a reference to:

(i) that statute, provision or EC Directive as amended, re-enacted, replaced or modified on the date of this Agreement; and

(ii) any order, statutory instrument, regulation or other subordinate legislation made from time to time under the relevant statute or EC Directive;

(b) unless the context otherwise requires a reference to a statute or statutory provision shall be to an English statute or statutory provision (as applicable);

(c) a reference to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept, state of affairs or thing shall in respect of any jurisdiction other than England be deemed to include that which most approximates in that jurisdiction to the English legal term;

(d) a reference to a document ‘in the agreed form’ is a reference to the form of that document signed or initialled for identification purposes by or on behalf of the parties to this Agreement;

(e) a reference to ‘writing’, or any cognate expression, is a reference to any mode of representing or reproducing words in a visible, non-transitory form (but does not include a reference to e-mail, fax or other mode of representing or reproducing words in electronic form);

(f) where any statement in this Agreement or in the Disclosure Letter is qualified by the expression ‘so far as the Seller is aware’ or ‘to the best of the knowledge of the Seller’, or any cognate expression, that that statement shall refer to the state of the actual knowledge at the date of this Agreement of Jyrki Rosenberg, Andy Toghill, Mark Wheatley, Will Orndorff and Steve Robbins and of no other persons and neither the Seller nor such persons shall be obliged to make any enquiries of any other persons or of any nature whatsoever;

(g) where any statement refers to the knowledge or awareness of the Buyer, that statement shall refer to the state of actual knowledge at the date of this Agreement of June Cha, Heidi Kim, Anne Oh EJ Lee, Jung An Lee and Gena Yi;

(h) any phrase introduced by the terms ‘including’ or ‘in particular’, or any cognate expression, shall be construed as illustrative and not limiting of any preceding words;

(i) a reference to ‘a party’ is a reference to a party to this Agreement;

(j) a reference to a clause or a Schedule is a reference to a clause of or a Schedule to this Agreement; a reference to a paragraph (unless otherwise stated) is a reference to a paragraph of the Schedule in which the reference appears; and a reference to this Agreement includes a reference to each Schedule;

(k) the headings in this Agreement are for convenience only and shall not affect its interpretation;

(l) unless the context otherwise requires, words in the singular include the plural and vice versa and any references to gender includes all other genders;

(m) any reference to a contract or agreement being ‘assigned’ or ‘assignable’ shall be construed to include novation if novation is required by local law to transfer all of the benefits and obligations of the Seller to the Buyer under such contract or agreement and any reference to ‘novate’ or ‘novation’ shall be construed to be a reference to assignment where novation is not a legal concept under the relevant local law; and

(n) each of the Schedules shall have effect as if set out in this Agreement.

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2 CONDITIONS PRECEDENT

2.1 The obligations of the parties are in all respects conditional on the satisfaction (or waiver, as the case may be) of those matters set out in Schedule 2 (the ‘Conditions’).

2.2 The Seller shall use all reasonable endeavours to procure the fulfilment of the Conditions at their own cost as soon as possible and in any event before the Long Stop Date.

2.3 The Buyer may waive in whole or in part all or any of the Conditions set out in Schedule 2.

2.4 The Buyer shall provide all such assistance and co-operation (including the provision of information) that the Seller may reasonably require in connection with the fulfilment of the Conditions as soon as practicable on being requested to do so.

2.5 If requested by a counterparty to a Non-Assignable Contract the subject of the Condition in paragraph 1 of Schedule 2, the Buyer shall provide a parent company guarantee guaranteeing the ongoing obligations of any Nominated Buyer Company under such Non-Assignable Contract.

2.6 Each party undertakes to notify the other party in writing of anything which will or may prevent any of the Conditions from being satisfied on or before the Long Stop Date immediately that it comes to its attention.

2.7 The Seller undertakes to notify the Buyer as soon as possible on becoming aware that any of the Conditions has been satisfied and in any event within one (1) Business Day of such satisfaction.

2.8 If:

(a) any of the Conditions set out in paragraph 1 of Schedule 2 is not fulfilled or waived on or before the Long Stop Date; or

(b) the Conditions set out in paragraphs 2, 3 and 4 of Schedule 2 are not fulfilled or waived on the date of satisfaction or waiver of the last of the Conditions set out in paragraph 1 of Schedule 2 to be satisfied or waived in accordance with this clause 2, or, having been so fulfilled, does not continue to be true up to Completion (unless waived),

this Agreement shall terminate subject to, and on the basis set out in clause 18.1.

3 SALE AND PURCHASE OF THE BUSINESS

3.1 The Seller shall sell and, where any of the Assets are held by a member of the Seller’s Group, the Seller shall procure that member of the Seller’s Group to sell, the Assets to the Buyer or a Nominated Buyer Company free from all Security Interests and adverse rights of any description, and the Buyer shall (or shall procure that a Nominated Buyer Company shall) purchase the Assets with a view to carrying on the Business as a going concern in succession to the Seller or any relevant member of the Seller’s Group, with effect from the Effective Time on the terms and subject to the conditions of this Agreement.

3.2 The following shall be included in the sale under this Agreement:

(a) the Goodwill;

(b) the Leasehold Properties;

(c) the Fixtures and Fittings;

(d) the ICT Systems;

(e) the benefit of the Contracts;

(f) the Intellectual Property;

(g) the Technical Information;

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(h) the benefit of any pre-payments or deposits held in respect of any of the Contracts;

(i) the Records;

(j) the Third Party Rights; and

(k) all other assets, property and rights of the Seller relating to or connected with or required for or used in the Business other than the Excluded Assets.

3.3 Subject as provided in clauses 12 and 17.1, the Seller shall not be obliged to complete the sale of any of the Assets unless the sale of all the Assets is completed simultaneously.

3.4 The Buyer shall be entitled, having given no less than five (5) Business Days’ notice in writing to the Seller, to nominate one or more members of the Buyer’s Group (each a ‘Nominated Buyer Company’) to acquire all or any portion of the Business and/or Assets and/or assume any portion of the Assumed Liabilities. From the date of such notice, the Buyer irrevocably and unconditionally guarantees to the Seller the full, prompt and complete performance by each Nominated Buyer Company of any obligation under this Agreement in relation to such portion of the Business and/or Assets and/or assumption of such portion of the Assumed Liabilities.

3.5 The Seller and the Buyer shall (or shall procure that any relevant member of the Seller’s Group or any relevant Nominated Buyer Company shall) use all reasonable endeavours to provide mutual cooperation and assistance to each other (or, as applicable, to any other relevant member of the Buyer’s Group or to any other relevant member of the Seller’s Group), including if required the execution of short form separate transfer agreements, to ensure that any relevant transfer of the Business and Assets in any relevant jurisdiction is effected in a manner so as to reduce so far as possible any liability to Tax of either party arising in relation to such transfer or to help facilitate the transfer of local assets.

4 ASSUMPTION OF LIABILITIES

4.1 Save as otherwise set out in Schedule 6, at Completion the Buyer or Nominated Buyer Company (as applicable) shall with effect from the Effective Time assume responsibility for (a) the obligations of the Seller with respect to any and all debts, liabilities or obligations of the Seller relating to the Business or the Assets to the extent they are to be performed, or relate to the period after the Effective Time and (b) the Music Licence Liabilities, in each case other than the Excluded Liabilities (the ‘Assumed Liabilities’) and the Buyer undertakes to the Seller that it will pay, satisfy, discharge and fulfil all the Seller’s obligations with respect to such Assumed Liabilities and shall indemnify the Seller against all costs, claims, liabilities and expenses which the Seller may suffer or incur as a result of or in connection with any breach by the Buyer of its obligations under this clause 4.1.

4.2 At Completion the Buyer or Nominated Buyer Company (as applicable) shall with effect from the Effective Time assume responsibility for the obligations of the Seller to provide after-sales service in respect of goods supplied or services provided by the Seller in the ordinary course of the Business prior to the Effective Time.

4.3 The Buyer shall procure that as soon as reasonably practicable after Completion each member of the Seller’s Group shall be released from all guarantees and indemnities given by any of them to the extent that such guarantees and indemnities relate to the Assumed Liabilities. Pending such release the Buyer shall with effect from the Effective Time indemnify each such member of the Seller’s Group and keep each of them indemnified from and against all liabilities incurred in respect of each such guarantee or indemnity.

5 EXCLUDED ASSETS AND LIABILITIES

5.1 The following shall not be included in the sale of the Business and nothing in this Agreement shall operate to transfer:

(a) any cash in hand at bank or Book Debts at the Effective Time save for pre-payments or deposits held in respect of any of the Contracts; and

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(b) any amounts recoverable in respect of Tax relating to the Business attributable to periods ending or transactions entered into before the Effective Time,

(together the ‘Excluded Assets’).

5.2 The Buyer shall not be under any obligation or otherwise be responsible for, or incur any liability in respect of:

(a) any of the Excluded Liabilities;

(b) any act, neglect, default or omission in respect of any of the Contracts (including contracts relating to the Leasehold Properties) occurring before the Effective Time;

(c) any product delivered or service provided by the Seller before the Effective Time other than the provision of ordinary course after sales services provided in accordance with clause 4.2;

(d) the performance of any obligation following Completion (including payment for any product delivered or any service provided) which should have been performed by the Seller before the Effective Time other than the provision of ordinary course after sales services provided in accordance with clause 4.2;

(e) any amounts due to music rightsholders outstanding or referable to the period before the Effective Time, including, for the avoidance of doubt, in respect of sound recordings created before 1972, the CWM Service and any amounts payable to performers other than the Music Licence Liabilities (the ‘Unknown Music Liabilities’); or

(f) any other liability or obligation arising in connection with the Business or the Assets (including in respect of the Employees) which is outstanding on, or is referable to any period before, the Effective Time,

and the Seller shall, subject to the limitations set out in clause 5.3, indemnify and hold the Buyer and each of the other members of the Buyer’s Group harmless from and against all costs, claims, liabilities and expense (including Tax, for the avoidance of doubt) which the Buyer may suffer or incur as a result or in connection with any of the matters specified in this clause 5.2 provided that the Seller shall only be liable in respect of any Accrued Employee Liabilities for such amount which the Buyer may suffer or incur in excess of the Estimated Employee Liability Amount included in the calculation of the Consideration in accordance with clause 6.1(c).

5.3 If the Buyer receives any claim with respect to an Unknown Music Liability, the following provisions shall apply:

(a) the Buyer shall as soon as reasonably practicable and in any event within 20 Business Days of becoming aware of the matter, notify the Seller in writing of the matter;

(b) if the Unknown Music Liability relates to the period both before and after the Effective Time and either (i) at least one quarter of the claimed liability relates to the period after the Effective Time or (ii) any settlement will involve an ongoing licence of not less than 12 months with respect to rights the subject of the Unknown Music Liability, the Buyer shall be free to settle any claim on such terms as it deems appropriate (acting reasonably), provided that the terms upon which the liability is settled prior to the Effective Time (including calculation of quantum) are materially the same as the terms agreed for any existing or future liability post the Effective Time. If this clause applies and is complied with by the Buyer, the Buyer shall be deemed to have complied with its obligations under this clause 5.3;

(c) in the event sub-clause (b) does not apply, the Buyer shall at the time of giving notice pursuant to sub-clause (a) notify the Seller in writing of the matter and make available to it all information and documents in the possession or under the control of the Buyer in so far as they relate to that matter;

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(d) subject to the Buyer being indemnified to its reasonable satisfaction against all costs and expenses (including additional Tax) which might be incurred by it and which it would not otherwise incur, the Seller shall be entitled at any time by notice in writing to the Buyer to require that the Seller shall have the sole conduct and control on behalf of the Buyer of any actual or threatened claim, demand or proceedings against the Buyer with respect to the Unknown Music Liability and following such notice, without prejudice to the generality of the foregoing, the Seller shall in its absolute discretion be entitled to avoid, dispute, resist, settle, compromise, defend or appeal any such claim and the Buyer shall give to the Seller all such information and assistance as the Seller may reasonably require for such purposes, including instructing any such solicitors, counsel or other professional advisers as the Seller may nominate to act on behalf of the Buyer or member of the Buyer Group but in accordance with the Seller’s instructions, and the Buyer shall not do anything inconsistent therewith.

6 CONSIDERATION

6.1 The consideration for the sale and purchase of the business as a going concern shall be:

(a) the Purchase Price;

(b) less the Restructuring Costs;

(c) less the Estimated Employee Liability Amount;

(d) less the Estimated Music Licence Liability Amount;

(e) less, if determined in accordance with clause 9, the difference between the Actual Music Licence Liability Amount and the Estimated Music Licence Liability Amount if the Actual Music Licence Liability Amount is greater than the Estimated Music Licence Liability Amount; and

(f) plus the assumption by the Buyer of the Assumed Liabilities,

(the ‘Consideration’).

6.2 The Consideration shall be apportioned between the Assets in such manner as is agreed between the Parties no later than 20 Business Days before Completion or, failing agreement, at the election of either party, as determined by an Accounting Expert agreed by the parties. In the event the parties fail to agree on an Accounting Expert, the provisions of clause 9.7 shall apply as to the appointment of the Accounting Expert. The parties agree to adopt the agreed apportionment for all fiscal purposes.

6.3 The amount payable at Completion (the ‘Completion Payment’) shall be calculated as follows:

(a) the Purchase Price;

(b) less the Restructuring Costs;

(c) less the Estimated Employee Liability Amount; and

(d) less the Estimated Music Licence Liability Amount.

6.4 As soon as practicable following the date commencing 10 Business Days prior to the Completion Date but in any event not later than 2 Business Days prior to Completion, the Seller shall furnish to the Buyer a statement that shows the Estimated Employee Liability Amount at the Effective Time.

6.5 The parties shall cooperate with each other in facilitating the computation and review of the Estimated Employee Liability Amount and the Seller shall furnish such access to Buyer and its representatives to the Seller’s books and records relating to the Business as well as employees as the Buyer may reasonably request to assist in such task.

6.6 As soon as practicable following the date commencing 10 Business Days prior to the Completion Date but in any event not later than 2 Business Days prior to the Completion Date, the Seller shall furnish to the Buyer a statement that shows the Estimated Music Licence Liability Amount at the Effective Time (the ‘Completion Statement’).

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6.7 The Parties shall cooperate with each other in facilitating the computation and review of the Estimated Music Licence Liability Amount and the Seller shall furnish such access to Buyer and its representatives to the Seller’s books and records relating to the Business as well as employees as the Buyer may reasonably request to assist in such task.

6.8 The Completion Payment shall be paid in cash in accordance with clause 8.3.

6.9 Any payment made by the Seller under the Warranties or under an indemnity under this Agreement shall be treated as far as possible as a reduction of the Consideration. Any payment made by the Buyer under the warranties in Schedule 5 or under an indemnity under this Agreement shall be treated as far as possible as an increase in the Consideration.

7 PERIOD BEFORE COMPLETION

7.1 The Seller shall procure that from the date of this Agreement until Completion the Business will be conducted in the ordinary course and that, in the absence of the prior written consent of the Buyer or as otherwise provided for in this Agreement, the Seller will not do or agree to do any of the following:

(a) entering into, modifying or terminating any material contract or any contract affecting a material part of the Business;

(b) disposing of or granting any option in respect of any material part of the Assets;

(c) acquiring or disposing of any Asset having a book value in excess of US$40,000;

(d) making any material change in the nature or organisation of the Business;

(e) discontinuing or ceasing to operate all or a part of the Business;

(f) making any variation to the terms and conditions of employment of any employee engaged in the Business other than salary increases in the usual course and at normal market rates;

(g) appointing, employing any person (except where an offer to appoint or employ the person was made prior to the date of this Agreement) or offering to appoint or employ any person at a rate of remuneration per annum in excess of US$75,000 individually or which together with all other such appointments or offers made between the date of this Agreement and Completion exceeds US$300,000 in aggregate;

(h) transferring any employee engaged in the Business to work wholly or mainly in another part of its business;

(i) dismissing any employee engaged in the Business other than for gross misconduct or, directly or indirectly, inducing or attempting to induce any employee to terminate his employment;

(j) creating any Security Interest over any of the Assets or redeeming or releasing any Security Interest or giving any guarantees or indemnities;

(k) effecting any transaction between the Business and a member of the Seller’s Group otherwise than on arm’s length terms;

(l) granting, modifying or terminating any rights or entering into any agreement relating to the Intellectual Property or doing or omitting to do anything to jeopardise the validity or enforceability of the Intellectual Property, including the non-payment of any application, search, maintenance or other official fees;

(m) instituting or settling any legal proceedings relating to the Business or the Assets (except debt collection in the normal course of business); or

(n) entering into, modifying or terminating any agreement, tenancy or licence in respect of or affecting any of the Leasehold Properties.

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7.2 In the period between the date of this Agreement and Completion, the Seller shall procure that the Buyer and its agents shall be allowed:

(a) reasonable access to, and to take copies of (at the Buyer’s sole expense), the Records;

(b) reasonable access to the directors and employees of the Seller’s Group who are involved with the Business (who shall be instructed to give all such information, assistance and explanations as the Buyer or any person acting on the Buyer’s behalf may reasonably request); and

(c) with the prior consent of the Seller (not to be unreasonably withheld or delayed), reasonable access to the employees of the Seller’s Group who are partially but not wholly or mainly involved with the Business to discuss their potential employment in the Seller’s Group following Completion.

7.3 Any access granted pursuant to clause 7.2 shall only be permitted:

(a) within normal working hours upon reasonable prior notice having been provided to Seller;

(b) to the extent reasonably required by the Buyer to plan for (a) the integration of the Business into the Buyer’s Group, (b) the raising of new indebtedness for the Buyer’s Group or the Business or the syndication of existing indebtedness or equity and/or (c) any roll out of a management incentive plan to take effect from on or after Completion,

and provided that access shall not give the Buyer or its agents any right to give instructions or otherwise interfere with the management and conduct of the Business.

8 COMPLETION

8.1 Completion shall take place at the offices of the Seller’s Solicitors or at such place as is agreed in writing by the Seller and the Buyer on the third Business Day after the day on which the last Condition has been satisfied or waived by the Buyer or at such other place or time, or on such other date, as the parties may agree.

8.2 The Seller shall on Completion deliver (or, if applicable, procure the delivery of) to the Buyer or any relevant Nominated Buyer Company:

(a) evidence of fulfilment of the Conditions;

(b) physical possession of such of the Assets as are capable of passing by delivery with the intent that title in such Assets shall pass by and upon such delivery;

(c) subject as provided in clauses 12 and 17.1, all such duly executed deeds, documents, assignments and assurances as may be necessary to vest in the Buyer or any relevant Nominated Buyer Company the full legal and beneficial ownership of such of the Assets as are not capable of passing by delivery together with all documents of title relating to such Assets;

(d) all documents relating to the Intellectual Property including, in relation to any Intellectual Property which is registered, the original certificates of registration and, in the case of pending applications for the registration of Intellectual Property, copies of all documents in the possession of the Seller relating to such applications, including correspondence with trade mark attorneys and with relevant national and international, trade mark or other Intellectual Property Right granting authorities;

(e) a copy of the Ancillary Agreements executed by the relevant member of the Seller Group;

(f) all certificates, log books, licences, manuals, plans, drawings and other documents required for the lawful use or operation of or otherwise relating to the Assets;

(g) a copy of each power of attorney under which any document to be delivered to the Buyer or any relevant Nominated Buyer Company has been executed; and

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(h) a copy of the minutes of a meeting of the board of directors of the Seller authorising the execution by the Seller of this Agreement and all other Ancillary Documents to which it is a party.

8.3 Following the performance of the Seller’s obligations under clause 8.2, the Buyer (or Nominated Buyer Company, as applicable) shall on Completion:

(a) pay the Completion Payment to the Seller by wire transfer to the Buyer’s bank account, details of which are as follows:

Company: Microsoft Mobile Oy

Currency: USD

Bank: Bank of America

Branch: London

Account #: 59528144

IBAN: GB19BOFA16505059528144

(b) deliver to the Seller:

(i) a copy of the Ancillary Agreements executed by the Buyer; and

(ii) a copy of the minutes of the meeting of the board of directors of the Buyer in the agreed from at which this Agreement and the transactions contemplated by it were approved and the execution of this Agreement and all related documentation by or on behalf of the Buyer were authorised: and

(iii) a copy of each power of attorney under which any document to be delivered to the Seller has been executed.

8.4 If there is a breach of clause 8.2 on the Completion Date the Buyer shall not be obliged to complete this Agreement and may:

(a) defer Completion (with the provisions of this clause 8 applying to Completion as so deferred); or

(b) proceed to Completion as far as practicable (without limiting its rights and remedies under this Agreement); or

(c) treat this Agreement as terminated for breach of condition subject to, and on the basis set out in, clause 19.

8.5 The Seller shall be responsible for allocating any part of the Completion Payment to a member of the Seller’s Group and the payment of the Consideration to the Seller in accordance with clause 8.3 shall discharge the obligations of the Buyer under clauses 3 and 6 and the Buyer shall not be concerned with the application of such sum by the Seller.

9 ADJUSTMENT TO THE CONSIDERATION

9.1 The Buyer may at its sole discretion elect to re-calculate the Music Licence Liabilities in accordance with this clause 9. If the Buyer does not furnish the Seller with the Music Liability Statement in accordance with clause 9.3, the provisions of this clause shall cease to be in effect and neither party shall have any rights to re-calculate the Music Licence Liabilities (without prejudice to any other rights under this Agreement).

9.2 The parties shall cooperate with each other in facilitating the computation and review of the Music Licence Liabilities and, after the Completion Date, the Buyer shall furnish such access to the Seller and its representatives to the books and records relating to the Business as well as employees as the Seller may reasonably request for such task.

9.3 Not later than 6 months following the Completion Date, the Buyer may furnish to the Seller a statement that shows its estimation of all (but not some) of the Music Licence Liabilities as at the Effective Time

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(the ‘Music Liability Statement’) together with detailed supporting documentation explaining in sufficient detail how the Music Licence Liabilities have been calculated including the methodology used to determine which Music Licence Liabilities fall prior to and post the Effective Time, such methodology to be consistent with that set out in Schedule 9. The computation of the Music Licence Liabilities set forth in the Music Liability Statement shall be deemed to be the Actual Music Licence Liability Amount and become final and binding upon the parties unless the Seller gives written notice (the ‘Notice of Disagreement’) to the Buyer within 60 calendar days following receipt of the Music Liability Statement.

9.4 For the purposes of determining the Music Licence Liabilities as set out in the Music Liability Statement, the following provisions shall apply:

(a) Where the Music Licence Liability relates to payments to rightsholders where a music licence was not in force at the Effective Time and a music licence has subsequently been agreed with the relevant rightsholder, the licence payments due for usage prior to the Effective Time shall be deemed to be no higher than the terms agreed under the music licence after the Effective Time; and

(b) The methodology used to calculate the Music Licence Liabilities shall be consistent with the methodology set out in Schedule 9.

9.5 The Notice of Disagreement shall relate solely to the computation of the Music Licence Liabilities as set out in the Music Liability Statement and shall specify in respect of each figure that is not agreed, the reason for such disagreement, and where possible the Seller’s suggested alternative calculation of each such figure and shall include detailed supporting documentation.

9.6 During the period of 15 calendar days (the ‘Resolution Period’) following receipt by the Buyer of the Notice of Disagreement, the parties shall attempt to resolve any differences which they may have with respect to any matters specified in the Notice of Disagreement. If at the end of the Resolution Period the parties have failed to reach a written agreement with respect to all matters set out in the Notice of Disagreement, then all such matters as specified in the Notice of Disagreement as to which such written agreement has not been reached (the ‘Disputed Matters’) shall be submitted to (with submissions from the Buyer and Seller) and reviewed by an Accounting Expert.

9.7 If within 15 calendar days following the expiration of the Resolution Period, the parties have failed to agree in writing on the selection of the Accounting Expert or any Accounting Expert selected by them has not agreed to perform the services specified hereunder, the Accounting Expert shall, thereupon, at the election of either party be selected by the President of the Institute of Chartered Accountants in England and Wales.

9.8 The Accounting Expert shall compute the Actual Music Licence Liabilities within 30 calendar days of being so appointed and its decision with respect to the Actual Music Licence Liabilities shall be final and binding upon the parties. Where it is determined by the Accounting Expert that it is not possible to calculate with reasonable certainty the Music Licence Liabilities, the Estimated Music Licence Liability Amount shall be deemed to be the Actual Music Licence Liability Amount for the purposes of the Music Liability Statement.

9.9 With the exception of the Disputed Matters, the Accounting Expert’s computation shall, however, be based on the Buyer’s computations (for all elements of Buyer’s computation not mentioned in the Notice of Disagreement) or on written settlements reached by the parties (for all Disputed Matters on which the parties, before the examination by the Accounting Expert, reached an agreement). Any fees and expenses in connection with the determination of any Disputed Matter shall be borne equally by the Seller and the Buyer.

9.10 Within 10 Business Days after the Actual Music Licence Liability Amount has been determined in a binding manner in accordance with this clause 9, if the Estimated Music Licence Liability Amount is less than the Actual Music Licence Liability Amount, the Seller will pay to the Buyer an amount equal to such difference.

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10 RESCISSION

Unless otherwise provided in this Agreement the Buyer shall not have any right whether before or after Completion to rescind or terminate this Agreement except where such right is available in respect of fraud.

11 RISK AND INSURANCE

11.1 Risk in respect of the Assets shall pass to the Buyer or any relevant Nominated Buyer Company on the Effective Time.

11.2 The Seller gives no undertaking to the Buyer in relation to the maintenance of insurance in respect of the Business or the Assets from the Effective Time.

12 CONTRACTS

12.1 This Agreement shall constitute an assignment by the Seller to the Buyer or Nominated Buyer Company, as applicable of the benefit of each Assignable Contract with effect from the Effective Time.

12.2 The Buyer or Nominated Buyer Company, as applicable shall from the Effective Time:

(a) observe and perform all outstanding obligations and liabilities of the Seller under the Assignable Contracts in accordance with their terms (except for any obligations or liabilities attributable to the period before the Effective Time); and

(b) indemnify the Seller against all losses, damages, costs, claims, liabilities and expenses (including legal and other professional fees and expenses) which the Seller may suffer or incur as a result of or in connection with any breach by the Buyer of its obligations under clause 12.2(a).

12.3 This Agreement shall not constitute an assignment of any Non-Assignable Contract.

12.4 The Buyer and Seller shall each use all reasonable endeavours to obtain all consents and waivers of rights of termination as may be necessary to enable the Non-Assignable Contracts to be novated to the Buyer.

12.5 If requested by a counterparty to a Non-Assignable Contract, the Buyer shall provide a parent company guarantee guaranteeing the ongoing obligations of any Nominated Buyer Company under such Non-Assignable Contract.

12.6 Unless and until each of the Non-Assignable Contracts is novated to the Buyer or Nominated Buyer Company, as applicable in accordance with clause 12.4:

(a) except where such sub-contracting would constitute a breach of the Contract or would permit any other party to the Contract to terminate it or treat it as terminated, the Buyer or Nominated Buyer Company, as applicable shall observe and perform the obligations and liabilities of the Seller arising after the Effective Time under the Non-Assignable Contracts as the Seller’s sub-contractor and shall indemnify the Seller against all losses, damages, costs, claims, liabilities and expenses which the Seller may suffer or incur as a result of or in connection with any breach by the Buyer or Nominated Buyer Company, as applicable of its obligations under this clause; or

(b) where such sub-contracting as is specified in clause 12.6(a) would constitute a breach of the Contract or would permit any other party to the Contract to terminate it or treat it as terminated:

(i) the Seller shall observe and perform its obligations and liabilities under the Non-Assignable Contracts in accordance with the reasonable requirements of the Buyer and shall exercise all its rights and discretions under the Non-Assignable Contracts in accordance with the instructions of the Buyer or Nominated Buyer Company, as applicable; and

(ii) the Buyer or Nominated Buyer Company, as applicable shall render such assistance to the Seller in the performance of its obligations under the Non-Assignable Contracts as the

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Seller shall reasonably require and shall reimburse to the Seller all costs and expenses which the Seller reasonably incurs in performing its obligations under clause 12.6(b)(i) provided that such costs and expenses relate to the performance of obligations in the period following the Effective Time.

12.7 As soon as practicable after the necessary consents and waivers for the novation of a Non-Assignable Contract have been obtained, the Seller shall novate such Non-Assignable Contract to the Buyer or Nominated Buyer Company, as applicable and the Buyer or Nominated Buyer Company, as applicable shall from the date of novation:

(a) observe and perform all obligations and liabilities of the Seller under such Non-Assignable Contract arising after the Effective Time in accordance with its terms (except for any obligations or liabilities attributable to the period before the Effective Time); and

(b) indemnify the Seller against all losses, damages, costs, claims, liabilities and expenses (including legal and other professional fees and expenses) which the Seller may suffer or incur as a result of or in connection with any breach by the Buyer or Nominated Buyer Company, as applicable of its obligations under clause 12.7(a).

12.8 As soon as practicable after the necessary consents for the novation of a Non-Assignable Contract have been obtained, the parties shall procure that such Non-Assignable Contract is novated to the Buyer or Nominated Buyer Company, as applicable.

12.9 If consent to the novation of any Non-Assignable Contract is refused or otherwise not obtained within three months of the Completion Date, (i) the Buyer shall be entitled to require the Seller to serve notice and (ii) the Seller shall be entitled to serve notice, terminating that Contract and such contract shall be treated as an Excluded Asset for the purposes of this Agreement.

12.10 If, in respect of a Contract, the existence of which or any details that have been disclosed are inaccurate or misleading in a manner materially adverse to the Buyer or the Business, the Buyer shall be entitled to treat the Contract as an Excluded Asset and all obligations of the Buyer in respect of such Contract shall cease.

12.11 In the event that the transfer of a Contract listed in Part 3A of Schedule 7 from the Seller to the Buyer or Nominated Buyer Company, as applicable and/or the process of obtaining the required consents to the effect such transfer or extension, has led to a one-off lump sum fee payable to the counterparty then the parties agree that the Seller shall be responsible and shall pay any such fees and shall reimburse the Buyer for any fees or costs it has incurred, up to an aggregate cap of US$3,000,000 and the Buyer shall, only if and to the extent such fees are agreed in writing between the parties after notice has been given by the Seller to the Buyer of such additional expected fees in accordance with clause 22, be responsible and shall pay any such fees or costs and shall reimburse the Seller for any fees or costs it or a member of the Seller’s Group has incurred, beyond that cap. For the avoidance of doubt, this clause 12.11 shall not apply to any transitional contracts negotiated in respect of China for which the provisions of Schedule 9 shall apply.

12.12 As soon as practicable following the date commencing 10 Business Days prior to the Completion Date but in any event not later than 3 Business Days prior to Completion, the Seller shall send out a notice by email in a form agreed between the parties to all customers of the Seller in relation to the Business informing them of the sale and purchase of the Business to the Buyer and offering the customers an opportunity to opt out from, or, as the case may be an opt-in for, continuing as customers of the Business following Completion (the ‘Pre-Completion Customer Notice’).

12.13 Following the sending of the Pre-Completion Customer Notice, in respect of any opt out messages received by:

(a) the Seller during the 3 month period thereafter, the Seller shall provide the Buyer with the details of customers concerned and the Buyer shall immediately securely delete all Personal Data held in respect of such individuals forthwith, make no further use of such Personal Data and shall confirm in writing to the Seller that it has done so; and

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(b) the Buyer during the 3 month period thereafter, the Buyer shall immediately securely delete all Personal Data held in respect of such individuals forthwith and shall confirm in writing to the Seller that it has done so and shall make no further use of such Personal Data. In the event that any such opt out message appears to be an opt out by the customer in respect of products or services of the Seller other than the Business, the Buyer shall immediately inform the Seller of the same.

13 LEASEHOLD PROPERTIES

The provisions of Part 2 of Schedule 1 will apply with respect to the transfer of the Leases.

14 EMPLOYEES

The Seller and the Buyer undertake to perform their respective obligations Schedule 6 with regard to the Employees.

15 WARRANTIES

15.1 The Seller warrants to the Buyer in the terms contained in Schedule 3 as at the date of this Agreement and, in respect of the Fundamental Warranties at all times up to and including Completion, subject to the provisions of this Agreement, including in particular the provisions of Schedule 4 and each of the parties acknowledges that the terms of those Schedules and this clause are in the circumstances fair and reasonable.

15.2 The Warranties are given subject to matters Disclosed or referred to in or by virtue of the Disclosure Materials and any agreement entered into pursuant to this Agreement and the Buyer shall accordingly have no claim in respect of any of the Warranties in relation to any such matter.

15.3 The Buyer acknowledges and agrees that in entering into this Agreement it had relied only on the Warranties and that it shall have no right or remedy in respect of any representation, warranty, promise or assurance (made by any person whether or not a party to this Agreement) which is not included in the Warranties other than a fraudulent representation, warranty, promise or assurance.

15.4 Save as otherwise provided in this Agreement, the Buyer acknowledges and agrees that the only remedy available to it for breach of the Warranties shall be damages provided that nothing in this clause shall exclude or affect any right or remedy available to the Buyer in respect of fraud.

15.5 The Buyer agrees that no member of the Buyer’s Group has any rights against any member of the Seller’s Group (other than the Seller) or any present or former employee, director, agent or officer of any member of the Seller’s Group in connection with this Agreement or its subject matter (and to the extent that any member of the Buyer’s Group has any such rights, the Buyer hereby waives and shall procure that each member of the Buyer’s Group shall waive such rights) and the Buyer undertakes that it shall procure that no member of the Buyer’s Group shall make any claim against any member of the Seller’s Group (other than the Seller) or any present or former employee, director, agent or officer of any member of the Seller’s Group in connection with this Agreement or its subject matter, provided that nothing in this clause shall operate to prevent any member of the Buyer’s Group from enforcing rights or making a claim against any member of the Seller’s Group (other than the Seller) or any present or former employee, director, agent or officer of any member of the Seller’s Group in connection with this Agreement or its subject matter where those rights are available or that claim arises in respect of that person’s own fraud.

15.6 The Seller undertakes to irrevocably waive any right and claim which it may have against any present or past employee engaged to any extent in the Business or any present or past agent of any member of the Buyer’s Group arising in connection with a breach of the Warranties, save in the case of fraud.

15.7 As soon as possible after it comes to its notice, the Seller shall notify the Buyer in writing with full details of anything it becomes aware of prior to Completion which is or may reasonably be expected to cause a breach of, or be inconsistent with, any of the Warranties.

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15.8 Each of the Warranties shall be separate and independent and (unless expressly provided otherwise) shall not be limited by reference to any other Warranty or by anything in this Agreement.

16 BUYER’S WARRANTIES

The Buyer warrants to the Seller in the terms set out in Schedule 5.

17 POST-COMPLETION OBLIGATIONS

17.1 If the assignment, grant or transfer of any of the Assets except for the Contracts and the Leases requires the consent of a third party and that consent shall not have been obtained before Completion:

(a) the Seller shall (or shall procure that any relevant member of the Seller’s Group shall) from Completion hold that Asset in trust for the Buyer or any relevant Nominated Buyer Company and (so far as it may lawfully do so) act in accordance with the directions of the Buyer in all matters relating to that Asset until either the Asset is assigned, granted or transferred to the Buyer or to a Nominated Buyer Company, as applicable; and

(b) the parties shall continue to use all reasonable endeavours to obtain such consent and upon obtaining it, the Seller shall immediately deliver to the Buyer a duly executed assignment or instrument of grant or transfer of the Asset together with the consent.

17.2 The Buyer shall at all reasonable times (a) for a period of 7 years after Completion in respect of the Seller’s Group’s Tax computations or regulatory filings and (b) for a period of 18 months in respect of the preparation of the Seller’s Group’s accounts, allow the Seller or its agent to inspect and to take copies of or extracts from the Records reasonably necessary to complete such purpose, and shall not destroy any of them without first offering them to the Seller.

17.3 To the extent that any information required for the Business is not in the possession of the Buyer but remains held by the Sellers Group, the Seller shall procure that such information is provided to the Buyer as soon as practicable following request.

17.4 As soon as practicable following Completion, the Seller shall send out a notice or notices in a form approved by both parties to all customers, suppliers and other business contacts of the Seller in relation to the Business informing them of the sale and purchase of the Business.

17.5 All payments received with respect to any Book Debts that are received by any member of the Buyer’s Group on or after Completion shall be paid to the Seller as soon as practicable

17.6 All monies, orders, enquiries, notices, correspondence and any other communications or items relating to the Business that are received by any member of the Seller’s Group on or after Completion shall be passed to the Buyer as soon as practicable.

17.7 Unless otherwise provided for in the Ancillary Agreements, the Seller shall at its own cost procure that:

(a) immediately following Completion neither the Seller nor any member of the Seller’s Group shall use any mark, logo, name, symbol or design used in the Business or anything which is capable of being confused, or likely to be associated, with any of them unless otherwise agreed in writing between the Buyer and the Seller; and

(b) as soon as practicable following Completion, but not later than 90 Business Days following Completion, all references to the Business (including to the Business Name) shall be removed from the websites under any domain names retained by any member of the Seller’s Group, together with all hypertext links to websites relating to the Business unless otherwise agreed in writing between the Buyer and the Seller.

17.8 The Seller shall, from time to time following Completion, give or use all reasonable endeavours to obtain any consent or confirmation necessary to enable the Buyer or any member of the Buyer’s Group to use the Business Name as soon as practicable following being requested to do so.

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17.9 Having regard to the potential damage (including damage to reputation) which could be incurred by the Seller or a member of the Seller’s Group as a result of the Buyer’s use of the Personal Data following Completion, the Buyer shall ensure that:

(a) Its processing of the Personal Data for direct marketing purposes is limited to marketing in connection with and compatible with the nature of the Business and shall not extend to the marketing of third party products or services, unless the Buyer has first received the customer’s consent to do the same;

(b) All and any such direct marketing communications by or on behalf of the Buyer shall include a clear, simple and cost free means of allowing the customer to opt out from receiving future marketing communications from the Buyer; and

(c) It has made all appropriate regulatory registrations, including in particular a notification with the UK Information Commissioner’s Office as appropriate for its operation of the Business.

18 VAT

18.1 Any sum payable by the Buyer or any Nominated Buyer Company under this Agreement is exclusive of any applicable VAT.

18.2 If, notwithstanding clause 18.3, VAT is chargeable on any supply under this Agreement, the party to whom a supply is made (the ‘Payer’) shall, provided that the party who makes the supply (the ‘Supplier’) provides the Payer with a valid VAT invoice, pay any VAT which is due on the relevant supply to the Supplier within five (5) Business Days of receipt of such invoice.

18.3 If:

(a) the VAT legislation of the relevant jurisdictions in which the Assets are treated as supplied for VAT purposes by the Seller or any member of the Seller’s Group provides that such transactions as are referred to in articles 19 and 29 of Council Directive 2006/112/EC (the ‘EU VAT Directive’, and in the United Kingdom section 49(1) VATA and paragraph 5 of the Value Added Tax (Special Provisions) Order 1995) should be treated as neither a supply of goods nor a supply of services (a ‘transfer of a going concern’ or ‘TOGC’); and

(b) the conditions for a TOGC are met in respect of any transfer of the Business and Assets (or any part of them) by the Seller (or the relevant member of the Seller’s Group) to the Buyer (or the relevant Nominated Buyer Company),

the Seller and the Buyer intend and will (or will procure that the relevant member of the Seller’s Group or the relevant Nominated Buyer Company (as applicable) will) use all reasonable endeavours to ensure that such transfer of the Assets and Business (or any part of them) is treated as a TOGC for the purposes of article 19 and/or article 29 of the EU VAT Directive and/or the equivalent VAT legislation in the relevant jurisdiction, and will be treated as neither a supply of goods nor a supply of services for the purposes of VAT.

18.4 Notwithstanding the parties’ intention referred to in clause 18.3 if the Seller and the Buyer treat the sale of any of the Assets as a TOGC and any relevant Tax Authority subsequently determines in writing that VAT is chargeable on the sale and purchase of the Assets then the Buyer shall (or shall procure that the relevant Nominated Buyer Company shall) within five (5) Business Days of receipt of notice from the Seller (or the relevant member of the Seller’s Group) to that effect (together with the relevant Tax Authority’s written determination and a valid VAT invoice) or if later upon Completion pay to the Seller (or the relevant member of the Seller’s Group) the full amount of VAT chargeable in respect of the sale of the Assets.

18.5 The Buyer shall (or shall procure that the relevant Nominated Buyer Company shall) pay to the Seller (or the relevant member of the Seller’s Group) interest and penalties properly claimed by the relevant Tax

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Authority arising from any failure or delay in accounting for VAT due to a breach by the Buyer of its obligations and warranties in this clause 18 in the event that the sale of the Assets pursuant to this Agreement is determined by the relevant Tax Authority to be chargeable for VAT purposes.

18.6 The Seller represents and warrants (for itself and on behalf of any relevant member of the Seller’s Group) to the Buyer (for itself and on behalf of any relevant Nominated Buyer Company) that:

(a) it and any relevant member of the Seller’s Group is duly registered for VAT purposes in any relevant jurisdiction in which the Business is carried on; and

(b) the Business (together with the Assets) is operated as a going concern in such jurisdiction; and

(c) the Seller or any relevant member of the Seller’s Group has exercised the option to tax under Schedule 10 VATA in respect of the Leasehold Properties and will prior to Completion produce to the Buyer’s solicitors a certified copy of its notification to HMRC of such option(s) to tax and of an acknowledgment of receipt and any required permission granted by HMRC and will not on or before Completion revoke such option(s) to tax; and

(d) none of the Assets is a capital item the input tax on which could be subject to adjustment under Part XV of the Value Added Tax Regulations 1995.

18.7 To the extent that the transfer of the Business and Assets in any relevant jurisdiction is intended by the Seller and the Buyer to be treated as a TOGC for VAT purposes as referred to in clause 18.3, the Buyer represents and warrants (for itself and on behalf of any relevant Nominated Buyer Company) to the Seller (for itself and on behalf of any relevant member of the Seller’s Group) that:

(a) it and any relevant Buyer Nominated Company intends to use the Assets to carry on the same kind of business as the Business; and

(b) from and including the Effective Time, it and any relevant Buyer Nominated Company is duly registered for VAT in any relevant jurisdiction in which the Business is carried on or will as a result of the transfer of the Business and Assets immediately be required to be so registered in that relevant jurisdiction (if such registration or requirement to be so registered is a requirement of TOGC treatment under the VAT legislation in the relevant jurisdiction); and

(c) it or any relevant Nominated Buyer Company has exercised or will prior to Completion exercise an option (the ‘Option’) having effect under paragraph 2 of Schedule 10 to the VATA, and give notice (the ‘Notice’) of that Option (where required) to HMRC on or before Completion or within 30 days of making the Option (whichever is the earlier) in respect of the Leasehold Properties, such Option to have effect on or before Completion; and

(d) the Buyer will produce to the Seller on or before Completion a copy of any relevant Notice and of any written acknowledgement from HMRC of that Notice; and

(e) the Buyer will not (or will procure that the relevant Nominated Buyer Company will not) withdraw the Option either before or after the Completion Date or do or allow anything that could lead to the Option being withdrawn by HMRC.

18.8 The Buyer (itself or on behalf of any relevant Buyer Nominated Company) hereby notifies the Seller (for itself or on behalf of any relevant member of the Seller’s Group) that the provisions of paragraph 5(2)(b) of the Value Added Tax (Special Provisions) Order 1995 do not apply to the Buyer or the relevant Nominated Buyer Company in relation to the transfer of the Leasehold Properties.

18.9 The Seller (itself or on behalf of any relevant member of the Seller’s Group) and the Buyer (itself or on behalf of any relevant Nominated Buyer Company) do not intend to make a joint application to HMRC under regulation 6(1)(d) of the Value Added Tax Regulations 1995 or to any other relevant Tax Authority in any other relevant jurisdiction under the equivalent VAT legislation provision in such jurisdiction for the Buyer (or the relevant Nominated Buyer Company) to be registered for VAT under the VAT registration number of the Seller (or the relevant member of the Seller’s Group).

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19 TERMINATION

19.1 If this Agreement is terminated in accordance with:

(a) clause 2;

(b) clause 8; or

(c) clause 39,

the rights and obligations of the parties under this Agreement shall cease immediately, save in respect of antecedent breaches and under the Continuing Provisions.

19.2 Each party undertakes to disclose promptly to the other party in writing any breach, matter, event, condition, circumstance, fact or omission of which it becomes aware that may give rise to a termination right under this Agreement.

20 CONFIDENTIALITY

20.1 Save as expressly provided in clause 20.3, the Seller undertakes that it shall, and the Seller shall procure that each member of the Seller’s Group shall, treat as confidential the provisions of this Agreement and the Ancillary Documents, all information it has received or obtained relating to the and each other member of the Buyer’s Group as a result of negotiating or entering into this Agreement and the Ancillary Documents and, with effect from Completion, the Records.

20.2 Save as expressly provided in clause 20.3, the Buyer shall, and shall procure that each member of the Buyer’s Group shall, treat as confidential the provisions of this Agreement and the Ancillary Documents and all information it has received or obtained relating to the Seller’s Group (other than, after Completion, in relation to the Business) as a result of negotiating or entering into this Agreement and the Ancillary Documents.

20.3 A party may disclose, or permit the disclosure of, information which would otherwise be confidential if and to the extent that it:

(a) is required by law or any securities exchange, regulatory or governmental body or Tax Authority; or

(b) was already in the lawful possession of that party or its agents without any obligation of confidentiality (as evidenced by written records); or

(c) is in the public domain at the date of this Agreement or comes into the public domain other than as a result of a breach by a party of this clause 20,

provided that prior written notice of any confidential information to be disclosed pursuant to this clause 20 shall be given to the other party.

20.4 Nothing in this Agreement shall prevent or restrict the Seller or a member of Seller’s Group from retaining and continuing to process (in accordance with Applicable Data Protection Law) any personal data relating to customers of the Business with whom the Seller or a member of the Seller’s Group has a prior relationship in connection with any business or service other than the Business.

21 SERVICE OF NOTICES

21.1 Any notice or other communication to be given or served under or in connection with this Agreement shall be in writing and may be:

(a) delivered by hand;

(b) sent by ordinary first class (or airmail in the case of notices to or from any country outside the United Kingdom), special delivery or recorded delivery post (in each case, pre-paid); or

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(c) sent by fax,

to the party due to receive the notice at the following address:

(i) in the case of the Seller, to:

Microsoft Corporation

One Microsoft Way

Redmond

WA 98052-6399

Attention: Keith Dolliver

Assistant Secretary and Associate General Counsel,

with a copy to:

Michael Young

Reed Smith LLP

The Broadgate Tower

20 Primrose Street

London EC2A 2RS; and

(ii) in the case of the Buyer, at its registered office from time to time, marked for the attention of Anne Oh, Heidi Kim and June Cha

with a copy to:

Peter Jones

White & Case LLP

5, Old Broad Street

London EC2N 1DW

peter.jones@whitecase.com

or at such other address or fax number as may previously by notice given in accordance with this clause have been specified by that party.

21.2 A notice is deemed to be given or served:

(a) if delivered by hand, at the time it is left at the address;

(b) if sent by pre-paid post (whether ordinary first class, airmail, special delivery or recorded delivery), on the second Business Day after posting; and

(c) if sent by fax, on receipt of a clear transmission report.

21.3 In the case of a notice given or served by fax or by hand, where this occurs after 5.00pm on a Business Day, or on a day which is not a Business Day, the date of service shall be deemed to be the next Business Day.

22 ANNOUNCEMENTS

No announcement of the sale and purchase of the Assets under this Agreement or the terms of this Agreement shall be made by any party to any person without the consent of the other party and pending any announcement each party shall use its best endeavours to keep the existence of this Agreement and its terms confidential.

23 COSTS

The parties shall pay their own costs and expenses in connection with and incidental to this Agreement.

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24 CURRENCY CONVERSION

Any payment to be made under or pursuant to this Agreement shall, unless otherwise specified to the contrary or agreed in advance by the payee, be paid in dollars and to the extent necessary any other currency shall be converted into US dollars at the Conversion Rate prevailing on the day immediately preceding the date on which payment is due or, where the payment is to be made in respect of any claim for any breach of this Agreement, at the Conversion Rate prevailing on the date on which the parties agree that the payment is to be made or on the relevant judgment date.

25 NO SET-OFF

All payments to be made under this Agreement shall be made in full without any set-off or counterclaim and free from any deduction or withholding except as may be required by law.

26 GROSSING UP

If any party is required by law to make any deduction or withholding from any payment due from it to any other party under this Agreement, the sum due from such party shall be increased to the extent necessary to ensure that, after making such deduction or withholding, the payee receives and retains (free of any liability in respect of any such deduction or withholding) a net sum equal to the sum it would have received and retained had no deduction or withholding been required to be made.

27 ENTIRE AGREEMENT

This Agreement together with any documents referred to in it constitutes the whole agreement of the parties in relation to its subject matter and supersedes any previous agreement, representations, warranties or arrangements (whether in writing or oral) between them in relation to that subject matter; and no modification of this Agreement shall be effective unless it is made in writing.

28 WAIVER

The exercise, or partial exercise, of or any delay or omission in exercising any right conferred by this Agreement on either party shall not constitute a waiver of that or any other right or remedy available to that party or, subject to the time limits for making claims set out in Schedule 4, affect the right to exercise that right or remedy at a later time; and the rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

29 EFFECT OF COMPLETION

The Warranties, and all other provisions of this Agreement, insofar as they have not been performed at Completion, shall not be extinguished or affected by and shall remain in full force and effect notwithstanding Completion.

30 THIRD PARTY RIGHTS

No term of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 or otherwise by any person other than the parties to this Agreement, except:

(a) any person mentioned in clause 15.5, may enforce the terms of that clause in accordance with that Act but no such person shall be entitled to assign its rights in respect of that clause; and

(b) to the extent, if any, that any other provision of this Agreement otherwise expressly provides for that Act to apply to any of its terms.

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Notwithstanding that any term of this Agreement may be or become enforceable by a person who is not a party to it, the terms of this Agreement or any of them may be varied, amended or modified or this Agreement may be suspended, cancelled or terminated without the consent of any third party.

31 ASSIGNMENT

This Agreement is personal to the parties and accordingly no party may assign or grant any Security Interest over any of its rights under this Agreement or any benefits arising under it or any document referred to in it.

32 SEVERANCE

If any provision of this Agreement is held by a Competent Authority to be invalid or unenforceable in whole or in part, this Agreement shall continue to be valid as to its other provisions and the remainder of the affected provision.

33 FURTHER ASSURANCE

Each party shall from time to time and at all times after the Completion Date at its own cost and expense upon request by the other party do all such acts and execute all such documents as that party may reasonably require to give it the full benefit of this Agreement and to vest full legal and beneficial title to the Assets in the Buyer.

34 WRONG POCKETS

34.1 Without prejudice to any other rights or remedies of the Buyer under this Agreement, if any Asset has not been vested in the Buyer or another member of the Buyer’s Group by virtue of the transactions carried out under this Agreement and the other Ancillary Documents, the Buyer may give written notice of this to the Seller. If such notice is given:

(a) the Seller shall, as soon as practicable at its own cost, transfer or procure the transfer of such Asset to the Buyer or, at Buyer’s direction, to another member of the Buyer’s Group for no consideration;

(b) each party shall provide such assistance to the other party as it reasonably requires for the purposes of this clause 35; and

(c) the provisions of this Agreement shall extend to such Asset.

34.2 For the avoidance of doubt, clause 4 shall apply to any liability associated with any Asset or Excluded Asset.

35 COUNTERPARTS

35.1 This Agreement may be executed in more than one counterpart and shall come into force once each party has executed such a counterpart in identical form and exchanged it with the other parties.

36 GOVERNING LANGUAGE

36.1 If this Agreement is translated into any language other than English, the English language text shall prevail.

36.2 Each notice, instrument, certificate or other communication to be given by one party to another under or in connection with this Agreement shall be in English and if any such notice, instrument, certificate or other communication is translated into any other language, the English language text shall prevail.

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37 GOVERNING LAW

37.1 This Agreement and any dispute or claim (whether contractual or otherwise) arising out of or in connection with it or its subject matter, shall be governed by and construed in accordance with English law and the parties submit to the non-exclusive jurisdiction of the English courts.

38 SERVICE OF PROCESS

38.1 The Buyer irrevocably appoints LINE (UK) Limited of 20-22 Bedford Row London WC1R 4JS (with a copy to Peter Jones, White & Case LLP, 5, Old Broad Street, London EC2N 1DW, peter.jones@whitecase.com) as its process agent to receive on its behalf service of process in any proceedings in England. Such service shall be deemed completed on delivery to such process agent (whether or not it is forwarded to and received by the Buyer). If for any reason such process agent ceases to be able to act as a process agent or no longer has an address in England the Buyer irrevocably agrees to appoint a substitute process agent acceptable to the Seller and to deliver to the Seller a copy of the new process agent’s acceptance of that appointment within 28 days.

38.2 The Seller irrevocably appoints Reed Smith Corporate Services Limited of The Broadgate Tower, 20 Primrose Street, London EC2A 2RS as its process agent to receive on its behalf service of process in any proceedings in England. Such service shall be deemed completed on delivery to such process agent (whether or not it is forwarded to and received by the Seller). If for any reason such process agent ceases to be able to act as a process agent or no longer has an address in England the Seller irrevocably agrees to appoint a substitute process agent acceptable to the Buyer and to deliver to the Buyer a copy of the new process agent’s acceptance of that appointment within 28 days.

38.3 Each party irrevocably consents to any process in any legal action or proceedings in connection with this Agreement being served on it in accordance with the provisions of this Agreement relating to the service of notices. Nothing contained in this Agreement shall affect the right to serve process in any other manner permitted by law.

39 BAN ON ORGANIZED CRIME

39.1 Each party represents, warrants and covenants to the other party that neither it nor any of its representatives, officers, employees, persons who substantially have the power to direct its management, agents or brokers is or is associated with, or will be or will be associated with an organized group of criminals or a member of any organized group of criminals, such as bouryokudan, yakuza or mafia, now or in the future.

39.2 In the case where it is discovered that any party has violated any of the representations, warranties or covenants given under the preceding paragraph prior to Completion, the other party may immediately terminate this Agreement in accordance with clause 19 without any prior notification or liability for any loss or damage that is or may be incurred by the violating party.

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SCHEDULE 1

PART 1 – LEASEHOLD PROPERTY

(1) DESCRIPTION OF PROPERTY	(2) DATE OF LEASE	(3) PARTIES	(4) TERM
3rd Floor, 11-19 (odd) Wine Street, Bristol	13 February 2014	(1) Landlord: Strand Street Properties Limited (2) Tenant: Nokia UK Limited	13 February 2014 to 22 March 2017
4th Floor, 11-19 (odd) Wine Street, Bristol	13 February 2014	(1) Landlord: Strand Street Properties Limited (2) Tenant: Nokia UK Limited	13 February 2014 to 22 March 2017
5th Floor, 11-19 (odd) Wine Street, Bristol	13 February 2014	(1) Landlord: Strand Street Properties Limited (2) Tenant: Nokia UK Limited	13 February 2014 to 22 March 2017
6th Floor, 11-19 (odd) Wine Street, Bristol	13 February 2014	(1) Landlord: Strand Street Properties Limited (2) Tenant: Nokia UK Limited	13 February 2014 to 22 March 2017
Part 6th Floor, 11-19 (odd) Wine Street, Bristol	13 February 2014	(1) Nokia UK Limited (2) Xmos Limited	13 February 2014 to 19 March 2017

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PART 2 – CONDITIONS OF SALE OF LEASEHOLD PROPERTIES

1 Definitions

In this Part 2:

(a) ‘Assignment’ means an assignment of the Leasehold Properties in Land Registry form TR1;

(b) ‘Consent Long-Stop Date’ means the date as specified in paragraph 9(a);

(c) ‘Landlord’ means in respect of each Leasehold Property, the person or persons from time to time entitled to the reversion (whether immediate or not) expectant upon the termination of a Lease;

(d) ‘Landlord Consent’ means the consent of the Landlord of a Leasehold Property authorising an assignment of the residue of the term of the relevant Lease of that Leasehold Property to the Buyer in accordance with and pursuant to the terms of the Lease, such consent being evidenced in a written, formal licence to assign, dated and being obtained on terms reasonable to the Seller, signed or executed by or on behalf of all of the parties to it;

(e) ‘Lease Effective Time’ means the date the Landlord Consent has been obtained and an Assignment of the Leasehold Properties completed;

(f) ‘Licence Period’ means the period specified in paragraph 9(a) during which the Buyer may occupy and use the Leasehold Properties on the terms of paragraph 9 of Part 2 of this Schedule;

(g) ‘Part 2 Conditions’ means the conditions in Part 2 of the Standard Commercial Property Conditions (Second Edition); and

(h) ‘Standard Conditions’ means the Standard Commercial Property Conditions (Second Edition).

2 Standard commercial property conditions

(a) The Standard Conditions as amended by this Agreement shall be incorporated into this Agreement insofar as they are not varied by or inconsistent with the other terms expressly set out in this Agreement.

(b) Standard Conditions 1.3, 1.4, 2, 3.1, 3.3, 6.1, 6.2, 6.3, 6.4.2, 6.6.2, 6.6.5, 7.1.4(b), 8.5 10.3 and the Part 2 Conditions shall not apply.

(c) The Standard Conditions shall be amended as follows:

(i) the definition of ‘conveyancer’ in Standard Condition 1.1.1(f) shall be construed as referring to the Buyer’s Solicitors and/or the Seller’s Solicitors, as the context requires;

(ii) the definition of ‘completion date’ in Standard Condition 1.1.1(d) shall be construed as a reference to the Lease Effective Time; and

(iii) Condition 9.1.1 shall read “If any plan or statement in the contract, or in written replies which the seller’s conveyancer has given to any written enquiry raised by the buyer’s conveyancer before the date of the contract, is or was misleading or inaccurate due to any error or omission, the remedies available are as follows.”

3 Sale and purchase

(a) Subject to receipt of the Landlord Consent, the Seller shall transfer and the Buyer shall take a transfer of the Leases.

(b) In respect of each of the Leasehold Properties, the Buyer cannot require the Seller to transfer or assign it or any part of it to any person other than the Buyer.

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4 Completion and vacant possession

Completion of the sale and purchase of each Leasehold Properties shall take place on the Lease Effective Time.

5 Deducing title

Title to the Leasehold Properties have been deduced to the Buyer prior to the date of this Agreement and the Buyer will not raise any objection to or requisition on such title.

6 Title guarantee

On the Lease Effective Time, the Seller shall transfer or assign, or procure the assignment of the relevant Leasehold Properties with full title guarantee subject to the following provisions:

(a) The covenants for title implied by the Law of Property (Miscellaneous Provisions) Act 1994 (the ‘Act’) shall be varied so that:

(i) in section 2(1)(b) the words ‘at his own cost’ shall be deleted and the words ‘at the cost of the person to whom he disposes of the property’ shall be added at the end of that section;

(ii) in section 6(1) the word ‘particular’ shall be deleted and the words ‘or the contract for the disposition’ shall be added after the words ‘…to which the disposition…’;

(iii) the words ‘who shall be deemed to have actual knowledge of all entries made in any public register’ shall be added at the end of section 6(2);

(iv) section 4(1)(b) of the Act does not apply to any condition or obligation on the part of the tenant contained in the Lease or imposed by common law or otherwise relating to the repair and/or condition of the Leasehold Property.

(b) The covenants implied on the part of the Transferor by sections 2 and 3 of the Act shall be limited so that they shall not be annexed and incident to the property pursuant to section 7 of the Act.

7 Matters affecting the property

(a) The Leasehold Properties are affected by and sold subject to the matters contained or referred to in:

(i) the Leases;

(ii) any matters discoverable by inspection of each of the Leasehold Properties before the date of this agreement;

(iii) any matters that the Seller does not and could not reasonably know about;

(iv) any matters, Disclosed or which would have been disclosed by the searches and enquiries which a prudent buyer would have made before entering into this agreement;

(v) public requirements;

(vi) all local land charges whether or not registered before the date of this agreement and all matters capable of registration as local land charges whether or not actually so registered;

(vii) all notices served and orders, demands, proposals or requirements made by any local, public or other competent authority whether before or after the date of this agreement;

(viii) all actual or proposed charges, notices, orders, restrictions, agreements, conditions, contraventions or other matters arising under any statute;

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(ix) all easements, quasi-easements, rights, exceptions or other similar matters including rights of way, drainage, water and light, watercourses, rights of adjoining owners affecting the Leasehold Properties, liabilities or covenants to repair roads, pavements, paths, ways, passages, sewers, drains, gutters, fences and other like matters whether or not apparent on inspection or Disclosed in any of the documents referred to in this agreement, without any obligation on the Seller to provide evidence of the creation of any such liability or to define or apportion it; and

(x) any matters which are unregistered interests which override registered dispositions under Schedule 3 to the Land Registration Act 2002 or (where title to any of the Leasehold Properties is not registered) are unregistered interests which override first registration under Schedule 1 to the Land Registration Act 2002.

8 Landlord’s consent to a transfer of the leasehold properties

(a) Subject to the Buyer complying with its obligations in this Agreement the Seller will use all reasonable endeavours to obtain the Landlord Consent provided that the Seller shall not be obliged to commence proceedings against the Landlord for failure to give the Landlord Consent and provided further that the Seller will be under no obligation to give an authorised guarantee agreement, give or procure the giving of guarantees, lodge any money by way of deposit or pay or expend any other money in respect of any application for the Landlord Consent.

(b) The Buyer shall pay all proper and reasonable costs associated with obtaining, or seeking to obtain, each Landlord Consent.

(c) The Buyer will:

(i) give all reasonable assistance and provide such references accounts and information as may reasonably be required by the Landlord;

(ii) comply with the requirements of the Landlord in relation to the transfer of the relevant Lease;

(iii) enter into such direct covenants with the Landlord as he may require (in accordance with the terms of the relevant Lease);

(iv) provide a guarantor or guarantors of the Buyer’s obligations as the Landlord may require and supply such references accounts and other information in respect of proposed guarantor(s) as the Landlord may require (in accordance with the terms of the relevant Lease);

(v) provide such additional security (whether by way of guarantee rent deposit or otherwise) as may reasonably be required by the Landlord as a condition of the grant of the Landlord Consent (in accordance with the terms of the relevant Lease); and

(vi) respond promptly to any request made by the Seller for information approval and the subsequent execution of any deed or document necessary to obtain the Landlord Consent (in accordance with the terms of the relevant Lease).

(d) If the Landlord Consent is not obtained and agreement is not reached by the parties pursuant to paragraph 9(a) prior to the Long Stop Date, in respect of any Lease, the Seller may notify the Buyer that on the date of receipt of such notice the terms and obligations under Part 2 of Schedule 1 of this Agreement shall automatically rescind in relation to that Lease and the interest in the relevant Leasehold Property will remain vested in the Seller.

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9 Licence to Occupy

(a) The parties may agree in writing that the Buyer may use and occupy the Leasehold Properties as licensee of the Seller from and including the date of Completion to and including the earlier of:

(i) the date of the deed of assignment or transfer of the Lease;

(ii) the date which is 6 months from Completion (‘Consent Long Stop Date’).

(b) During the Licence Period, the Seller will hold its interest in the relevant Leases on trust for the Buyer.

(c) Nothing in paragraphs 9(a) and 9(b) is intended by the parties and is not to be interpreted as creating any legal demise or any rights in the relevant Leases greater than a licence.

(d) During the Licence Period the Buyer will pay to the Seller by way of a licence fee a sum equivalent to the yearly rent, reasonable property and liability insurance premiums, and service charge rent, if any, payable under the relevant Leases. The licence fee will be payable at the same times as the yearly rent, insurance rent and service charge rent, if any, are payable under that Lease. Notwithstanding the foregoing, the Seller will remain solely liable for any self-insured retentions, excesses or deductibles, as well as underinsured or insured claims or lawsuits.

(e) Subject to the receipt of the licence fee, the Seller will continue to pay the yearly rent, insurance rent and service charge rent, if any, due to the Landlord under the relevant Lease during the Licence Period.

(f) During the Licence Period the Buyer will be responsible for and will indemnify the Seller within 7 Business Days of demand against all rates, water rates and charges for gas, electricity, telephones and other services use on or supplied to the relevant Lease.

(g) During the Licence Period the Buyer will comply with the tenant’s covenants in the relevant Lease, other than the covenant to pay rent, and indemnify the Seller against all Liabilities arising directly out of any breach by the Buyer of those tenant’s covenants.

(h) This licence is personal to the Buyer and the Buyer must not assign or purport to assign it and must not share or allow any other person to occupy the whole or any part of the relevant Leasehold Property.

(i) The Buyer must indemnify and keep the Seller indemnified against all liability, loss or any damage to any property, claims, demands, actions, proceedings, damages, costs, expenses or injury to or death of any person caused by any negligent act or omission or wilful misconduct of the Buyer or the Buyer’s employees, agents or sub-contractors arising directly or indirectly from any breach of the Buyer’s obligations under this licence or from the occupation of the relevant Leasehold Property.

(j) The licence will end automatically at the end of the Licence Period or on notice from the Seller following a breach by the Buyer of any of its obligations in this paragraph 9.

(k) If during the Licence Period any Landlord requires the Seller to remove the Buyer from occupation of relevant Leasehold Property for whatever reason then Buyer will upon request forthwith give up occupation of that Leasehold Property such that the Seller will not have any liability to the Landlord in respect of Buyer’s occupation after the date of such request and the Buyer must indemnify the Seller against any such liability resulting from the Buyer’s failure to vacate.

(l) At the end of the Licence Period the Buyer must vacate and deliver the relevant Leasehold Property to the Seller in the same state and condition it was at the start of the Licence Period having made good any damage caused by occupying or vacating the relevant Leasehold Property.

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(m) In the event of a Landlord’s Consent having not been obtained by the Consent Long Stop Date neither party shall have any further obligation to the other with regard to the relevant Lease other than the Buyer’s obligation under paragraphs 9(d) – 9(l), except that if such Landlord’s Consent was refused or delayed by reason of the Buyer failing or otherwise being unable to satisfy any conditions imposed by the Landlord in accordance with the provisions of paragraph 8, the Buyer shall indemnify and hold the Seller harmless against any Liability incurred by the Seller as a result of the relevant Lease not being assigned to the Buyer in accordance with the terms of this Agreement.

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SCHEDULE 2

CONDITIONS

1. Third Party Consents

Third Party Consent being obtained to the novation and extension of the term to a date at least one month after Completion (conditional only on Completion) of the Music Licences set out in Part 3A of Schedule 7.

2. Conduct of Business before Completion

The Seller having not failed to comply with its obligations in clause 7 in such a manner that would have a material adverse effect on the Business.

3. Repetition of Warranties

The Fundamental Warranties being true and accurate in all respects and not misleading as if they had been made at the Completion Date.

4. Material Adverse Change

No change, event or circumstance having occurred which has had, or is reasonably likely to have, a materially adverse effect on the Assets, the financial condition or the operation of the Business (when taken as a whole) details of which is not Disclosed and is not caused by (i) any changes or effects in economic or financial conditions affecting businesses generally or relating to the general market environment including but not limited to changes in interest rates, exchange rates or securities or in economic, financial, markets, and (ii) any changes in international political or social conditions generally, including but not limited to, national emergency, sabotage, terrorism or act of war, and (iv) the failure of the Buyer to put in place an appropriate structure to acquire any Assets for use in China.

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SCHEDULE 3

WARRANTIES

PART 1 – FUNDAMENTAL WARRANTIES

TITLE TO THE ASSETS, INCORPORATION, AUTHORITY AND CAPACITY OF THE SELLER

1 Save for the Leasehold Properties and the Intellectual Property to which the provisions of Parts 3 and 7 apply, the Assets:

(a) are legally and beneficially owned by the Seller or a member of its Group free from any Security Interest and there is no agreement or commitment to give or create any Security Interest over or affecting any of the Assets and no claim has been made by any person to be entitled to such Security Interest;

(b) in the case of tangible assets, are in the possession or under the exclusive control of the Seller or a member of its Group; and

(c) which are capable of possession, is in the possession and control of the Seller or a member of the Seller’s Group.

2 The Seller has full power and authority and has taken all necessary corporate action to enable it to enter into and perform this Agreement and all Ancillary Documents to which it is a party, and such agreements, when executed, will constitute valid, binding and enforceable obligations of the Seller and any relevant member of the Seller’s Group in accordance with their respective terms.

3 This Agreement and each Ancillary Document entered into by a member of the Seller’s Group on the date of the Agreement constitute (when fully executed by all parties thereto) obligations binding on that member of the Seller’s Group.

4 Save as provided for in this Agreement or any Ancillary Document, no approval, waiver, registration, consultation or notification is required to be obtained or made by a member of the Seller’s Group in connection with the execution, performance or enforceability of this Agreement or any Ancillary Documents entered into or to be entered into by a member of the Seller’s Group.

5 The Seller is a company duly incorporated and existing under the laws of Finland.

6 The Seller is not and will not be required to give any notice or make any filing with or obtain any permit, consent or waiver or other authorization from any Competent Authority or any other person in connection with the execution, delivery or performance of this Agreement or any Ancillary Document other than as necessary to comply with any obligations in the Republic of China.

7 The Seller is not insolvent or unable to pay its debts within the meaning of the Insolvency Act 1986 (or under the insolvency laws of any applicable jurisdiction).

8 No order has been made and no resolution has been passed for the winding up of the Seller or for a provisional liquidator to be appointed in respect of it and no petition has been presented and no meeting has been convened for the purposes of its winding up.

9 No administrator has been appointed in respect of the Seller and no notice, petition or other documents have been given or filed for the purpose of placing it in administration.

10 No receiver (which expression shall include an administrative receiver) has been appointed in respect of the Seller.

11 No event analogous to any of the foregoing has occurred in or outside England with respect to the Seller.

12 The execution and delivery of, and the performance by the Seller of its obligations under, this Agreement and the Ancillary Documents will not:

(a) constitute or result in a breach of any provision of its memorandum or articles of association; or

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(b) constitute or result in a breach of any order, judgment or decree of any court or governmental agency to which it is a party or by which it is bound and which is material in the context of the transactions contemplated by this Agreement.

PART 2 – GENERAL WARRANTIES

THE ACCOUNTS

13 The Accounts have been prepared in accordance with the accounting principles and policies comprising International Financial Reporting Standards.

14 The Accounts give a true and fair view of the Seller’s results in respect of the Business for the period ended on the Accounting Date and of its financial position at the end of that period as at the date on which they were prepared.

CHANGES SINCE THE ACCOUNTING DATE

15 Since the Accounting Date:

(a) the Seller has in all material respects carried on the Business in the ordinary course;

(b) there has been no adverse change in the financial or trading position or prospects of the Business;

(c) no Asset has been acquired or disposed of nor has there been any agreement to acquire or dispose of any Asset;

(d) no liability (actual or contingent) has been incurred or has arisen in respect of the Business other than in the ordinary course of business;

(e) no Assets have been sold or agreed to be sold to trade customers other than in the ordinary course of business; and

(f) no member of the Seller’s Group has borrowed or raised any money and no capital expenditure has been incurred, in each case in relation to the Business.

INFORMATION RECORDS

16 The Records are in the possession or under the control of the Seller.

17 Where any of the Records are kept on computer, a member of the Seller’s Group is the owner of all hardware and all software licences necessary to enable it to use the Records in the manner in which they have been used prior to the Effective Time.

CONTRACTS

18 There is not outstanding:

(a) any Material Contract a copy of which or a summary of the terms of which has not been supplied to the Buyer;

(b) any Material Contract which is not capable of being fulfilled or performed on time without undue or unusual expenditure of money or personnel;

(c) any offer, tender or quotation made or given by the Seller capable by the unilateral act of any other person of giving rise to a Material Contract otherwise than in the ordinary course of business; or

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(d) any contract or arrangement to which the Seller is a party and in which any Member of the Seller’s Group or any director of the Seller or any Connected Person of any such director has a direct or indirect interest.

19 Parts 3 and 5 of Schedule 7 and Schedule 8 contains a complete and accurate list of all the Contracts.

20 Save as Disclosed, none of the Material Contracts:

(a) requires a third party consent for its assignment to the Buyer;

(b) is not in the ordinary course of business or is not of an arm’s length nature; or

(c) restricts the freedom of the Seller to carry out the whole or any part of the Business or to use or exploit any of the Assets in any part of the world in such manner as it sees fit.

21 Each of the Contracts is in full force and effect. Neither the Seller nor any member of the Seller’s Group is in breach of any Contract nor has any allegation of any breach or invalidity been made or received by the Seller or any member of the Seller’s Group. So far as the Seller is aware, no other party to a Contract is in breach of any Contract. No notice of termination of any Contract has been served or received by the Seller or any member of the Seller’s Group, there are no grounds for the determination, rescission, avoidance or repudiation of any Contract and there has been no allegation of such a thing.

MUSIC LICENCES

22 There is not outstanding:

(a) any Music Licence a copy of which or a summary of the terms of which has not been supplied to the Buyer; and

(b) any offer, tender or quotation made or given by the Seller capable by the unilateral act of any other person of giving rise to a Music Licence otherwise than in the ordinary course of business.

23 The details of the Music Licence provided in the Data Room are true and accurate in all material respects.

24 All payments due and payable to music and other rightsholders pursuant to the Music Licences have been made, including but not limited to in respect of sound recordings created before 1972.

CARRYING ON OF THE BUSINESS

25 The Seller is not and has not agreed to become a member of any partnership, consortium, trade association or any other association of persons (whether incorporated or not incorporated) which relates to the Business.

26 There is no order, decree or judgement of any Competent Authority outstanding which has had or is reasonably likely to have a material adverse effect upon the Business or the Assets.

27 The Seller:

(a) holds all regulatory licences, consents, permits and approvals which are required to operate the Business and copies of which have been supplied to the Buyer; and

(b) has not received notice that it has failed to comply with any of the terms and conditions of such licences, consents, permits and approvals which are to be performed by it or that any of them is liable to be suspended, cancelled or revoked.

REPAYMENT OF GRANTS

28 The Seller has not applied for or received any grant or other financial assistance from any Competent Authority in relation to the Business or any of the Assets.

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LITIGATION AND COMPLIANCE WITH LAWS

29 The Seller is not engaged or involved in or, so far as it is aware, threatened with:

(a) any litigation, prosecution, arbitration or other legal proceedings (whether as plaintiff, defendant or third party) which may materially adversely affect the financial position of the Business;

(b) any proceedings or enquiries before any tribunal, board of enquiry, commission or any other administrative body, whether judicial or quasi-judicial which materially adversely affects the financial position of the Business;

(c) any dispute with any taxation authority which may materially adversely affect the financial position of the Business; or

(d) any industrial dispute or action (whether official or unofficial), which may materially adversely affect the financial position of the Business.

30 The Seller has, at all times, conducted the Business in compliance with all applicable laws and regulations in each country in which the Business is or have been carried on.

31 The Seller has, at all times, conducted the Business in compliance with any applicable sanction laws and regulations (including the international sanction laws and regulations of the European Union, the United States and the United Nations, where applicable).

INSOLVENCY

32 No order has been made or petition presented, meeting convened or resolution passed for the winding up of the Seller nor, so far as the Seller is aware, has any administrator, administrative receiver or receiver been appointed.

33 So far as the Seller is aware, no composition in satisfaction of the debts of the Seller or scheme of arrangement of its affairs or compromise or arrangement between it and its creditors or members or any class of its creditors or members has been proposed, sanctioned or approved.

34 The Seller is not unable to pay its debts within the meaning of any insolvency Legislation applicable to it.

35 No distress, execution or other process has been levied in respect of the whole or any part of the Business or the Assets.

36 So far as the Seller is aware, no event has occurred causing, or which upon intervention or notice by any third party may cause any floating charge created by the Seller to crystallise over the Business or the Assets or any of them or any charge created by it to become enforceable over the Business or the Assets or any of them.

37 No event analogous to any of the foregoing has occurred in the UK or in any other jurisdiction.

COMPETITION

38 No agreement, arrangement or practice relating to the Business:

(a) infringes Article 101 or 102 of the Treaty on the Functioning of the European Union; or

(b) infringes Chapter I or Chapter II of the Competition Act 1998,

and the Seller is not bound by any undertaking given by it in relation to the Business to, or any order, judgment or direction made in relation to the Business by the Office of Fair Trading, the Competition Commission, the Competition Appeal Tribunal, the High Court, the Secretary of State, the European Commission or the Court of Justice of the European Union (including the General Court) or any other regulatory body or court or tribunal in any jurisdiction in connection with any law, rule or regulation mentioned above.

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DATA PROTECTION

39 In respect of the conduct of the Business by the Seller, the Seller has, if so required by any Data Protection Legislation, a current entry in all relevant registers maintained by all applicable authorities established pursuant to Data Protection Legislation (each, a ‘Supervisory Authority’), and particulars of the entry are set out in the Disclosure Letter.

40 In respect of the conduct of the Business by the Seller, the Seller has processed the Personal Data in material compliance with the terms of a privacy policy, the current versions of which are referred to in the Disclosure Letter.

41 In respect of the conduct of the Business by the Seller, in the past 9 months no member of the Seller’s Group has received any statutory notice, warrant or other communication from a Supervisory Authority alleging and/or enforcing non-compliance with any Data Protection Legislation, or requesting an audit relating to the Seller’s compliance with Data Protection Legislation, or to change or delete any of the Personal Data or prohibiting the transfer of the Personal Data to a third party or out of the European Union.

42 So far as the Seller is aware, in respect of the Personal Data, in the last 9 months, no individual has claimed or taken action for breach of their rights by the Seller under any Data Protection Legislation or pursuant to any contract entered into which requires compliance with Data Protection Legislation or with technical and organisational measures to protect the Personal Data against accidental or unlawful destruction or accidental loss, alteration, unauthorised disclosure or access.

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PART 3 – INTELLECTUAL PROPERTY AND IP AGREEMENTS

43 Part 1 of Schedule 7 contains a list (including where applicable, each renewal due date) of all registered Intellectual Property owned, used or held for use by the Seller or another entity of the Seller’s Group and applications for registration of Intellectual Property (the ‘Registered Intellectual Property’).

44 Part 2 of Schedule 7 contains a list of all software that is marketed, sold, distributed or licensed to third parties or being developed, in each case by or on behalf of the Seller or any other entity of the Seller’s Group, in each case in connection with the Business, and that is the subject-matter of Intellectual Property Rights owned by the Seller (‘Owned Software’).

45 Part 6 of Schedule 7 contains a list of all proprietary software that is licensed by third parties to the Seller in connection with the Business, and that is the subject-matter of Intellectual Property Rights owned by any other person than the Seller (‘Third Party Software’).

46 Part 7 of Schedule 7 contains a list of all Open Source Software that is incorporated into any item of the Owned Software, or sold, licensed or distributed in connection with any item of the Owned Software, or from which any item of the Owned Software is derived.

47 Part 4 of Schedule 7 contains a list (including certain registrar registration expiration dates) of all domain names owned, used or held for use by the Seller or another entity of the Seller’s Group in connection with the conduct of the Business (‘Domain Names’).

48 Part 5 of Schedule 7 contains a list and particulars of all IP Agreements being in full force and effect at the date of this Agreement except for IP Agreements regarding standard software other than IP Agreements granting the Seller rights to use Third Party Software (each such IP Agreement, a ‘Material IP Agreement’).

49 The Seller is the sole and exclusive legal and beneficial owner of all right, title, and interest in and to (i) each item of the Registered Intellectual Property, (ii) all Intellectual Property Rights embodied in the Owned Software, and (iii) each trade name used in connection with the conduct of the Business, in each case of (i) through (iii) free and clear of all Security Interests (except, with respect to Owned Software, any non-exclusive rights granted to any third party under any Material IP Agreement or otherwise by the Seller in the ordinary course of business). The Seller is the sole owner of all contractual rights in and to all Domain Names, in each case free and clear of all Security Interests. The Seller has the right to use each item of the Registered Intellectual Property, the Intellectual Property Rights embodied in the Owned Software, such trade names, and such domain names, to transfer and license each such item to third parties, without any restriction (subject only to the terms of any Material IP Agreement or any non-exclusive license under Intellectual Property granted to third parties by the Seller in the ordinary course of business), and without any obligation to pay any royalties, honoraria, fees or other payments to any person as a result of such use, transfer or license. The Seller, to the extent that it does, or that the Buyer will be obliged to do under any of the Ancillary Agreements, any of the following, has the valid right to use and exclusively or non-exclusively license: (i) the Third Party Software; and (ii) all Intellectual Property Rights which are the subject of any Material IP Agreement which grants the Seller Intellectual Property Rights used in the conduct of the Business. The Seller does not require any Intellectual Property Rights other than the Intellectual Property and those Intellectual Property Rights licensed to it pursuant to the IP Agreements and the Music Licences in order to carry on the Business materially in the same way as at the date of this Agreement.

50 The Seller is the registered proprietor of, or applicant in respect of, each item of the Registered Intellectual Property and registered with the relevant registry as the registrant of each Domain Name. So far as the Seller is aware, all Intellectual Property is valid, subsisting and enforceable.

51 None of the Registered Intellectual Property for which Part 1 of Schedule 7 specifies a renewal fee due date and none of the agreements with any registry regarding any of the Domain Names listed in Part 4 of Schedule 7 has expired or has been cancelled or terminated. All filing and registration fees and, where

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Part 1 of Schedule 7 specifies a renewal fee due date, all renewal and maintenance fees which were, are or will be due with respect to any item of Registered Intellectual Property or the Domain Names on or before Completion have or will have been paid as of the Completion Date. The Seller is not required to do any act within 120 days of the date of this Agreement the omission of which would jeopardise the maintenance or prosecution of any item of the Registered Intellectual Property or the Domain Names.

52 No Open Source Software (i) has been or is incorporated or combined with any Owned Software, (ii) has been or is being distributed in conjunction with any Owned Software; or (iii) has been used or is being used, in such a way that, with respect to clause (i), (ii), or (iii), creates, or purports to create obligations for the Seller or any of its successors with respect to any Owned Software or grants, or purports to grant, to any third party, any rights or immunities under any Owned Software (including using any Open Source Software that require, as a condition of use, modification or distribution of such Open Source Software that other software incorporated into, derived from or distributed with such Open Source Software be (i) disclosed or distributed in source code form, (ii) be licensed for the purpose of making derivative works, or (iii) be redistributable at no charge).

53 The Seller, or any other party acting on its behalf, has not disclosed or delivered, nor permitted the disclosure or delivery of, any Owned Software Source Code (as defined below) to any escrow agent or other person, except in the ordinary course of business to any person involved in the development of software for the Seller for the sole purpose of such development. The Seller is not party to any Contract pursuant to which the Seller may be required to deposit, with an escrow agent or other party, any Owned Software Source Code. ‘Owned Software Source Code’ means, collectively, any human readable software source code, or any material portion or aspect of the software source code, or any material algorithm contained in or relating to any software source code, that constitutes Owned Software.

54 So far as the Seller is aware, there has been, and there is, no infringement by any third party, including any current or former employee, or any current or former consultant or independent contractor of any entity of the Seller’s Group of any of the Intellectual Property, and no such infringement is anticipated.

55 So far as the Seller is aware, none of the Material IP Agreements or Music Licences, is the subject of any claim, dispute or proceeding that is pending or threatened:

56 So far as the Seller is aware, the operation of the Business as currently conducted (i) has not materially violated and does not materially violate any IP Agreement, and (ii) has not infringed or misappropriated, and does not infringe or misappropriate, any Intellectual Property Rights of any third party, and there is no pending claim or litigation asserting any material infringement or misappropriation or contesting the validity, ownership or right of the Seller to use any Intellectual Property.

57 Neither the execution, delivery or performance of this Agreement or the Ancillary Agreements nor the consummation of the sale and purchase of the Business or any other transaction contemplated by any of the Ancillary Agreements will: (i) constitute a material breach of or default under any IP Agreement, or any Music License; or (ii) cause the termination of, or give rise to a right of termination of, any IP Agreement, and, except as specified in Part 3 of Schedule 7, any Music License; or (iii) materially impair the right of the Buyer to use, license, or dispose of any Intellectual Property or portion thereof.

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PART 4 – ICT SYSTEMS AND ICT CONTRACTS

58 The ICT Systems have the performance capacity and are adequate for the purposes of carrying on the Business as at the date of this Agreement.

59 Except to the extent provided in the ICT Contracts, the Seller is the owner of and in possession of the ICT System, or is validly licensed to use the ICT Systems for at least twelve (12) months from the date of this Agreement. The Seller has furnished to the Buyer a complete and correct copy of each material ICT Contract before the date of this Agreement.

60 Part 1 of Schedule 8 contains a list of all material ICT Contracts. So far as the Seller is aware, each ICT Contract is valid and binding and the Seller has not breached any such contract.

61 The ICT Systems:

(a) are functioning properly, are fit for the purposes of carrying on the Business and have sufficient scalability, capacity, functionality and performance to meet the present and the reasonably projected requirements of the Business for 12 months after the Effective Time;

(b) are properly maintained and operated by the Seller to continue operating the Business in its present and presently contemplated form;

(c) are free from defects in design, material and workmanship;

(d) include sufficient user information to enable reasonably skilled personnel in the field to use and operate the ICT Systems without the need for further assistance; and

(e) have adequate safety, continuity and back-up procedures.

62 No ICT System has experienced any breakdowns or usage failures in the past twenty-four (24) months that have caused a material interruption of the business operations of the Seller or, to the best of the knowledge of the Seller, any of the Seller’s customers in the Business, for more than two (2) consecutive hours.

63 The Seller operates appropriate data storage and disaster recovery plans as necessary to enable it to carry on the conduct of the Business in the normal course in the event of any failure of any of ICT Systems.

PART 5 – EMPLOYEES

64 No person is employed or engaged in the Business (whether under a contract of service or contract for services) other than the Employees, and the Employees are all employed by a Seller Employer and work wholly or mainly in the Business

65 The Seller has disclosed:

(a) complete and accurate copies of all current service contracts for Senior Employees;

(b) complete and accurate copies of standard template employment contracts currently used by the Seller in the countries where Employees are located other than Senior Employees and of all employee handbooks and employment-related policies which apply to the Employees;

(c) complete and accurate particulars of the key current terms of employment of all Employees;

(d) complete and accurate copies of the contracts of employment of all Employees in each of China, France, Finland, India and the UK who will not sign new contracts of employment as part of the Microsoft Day Integration prior to Completion;

(e) complete and accurate copies of standard Microsoft template contracts that will apply after the Microsoft Day Integration to Employees in all countries except China, France, Finland, India and the UK.

(f) complete and accurate details of all current remuneration which the Employees receive and a summary of the benefits plans that apply to each Seller Employer; and

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(g) complete and accurate copies of all current agreements or arrangements with any trade union, employee representative or body of employees or their representatives which may affect the Employees.

66 Except where individual contracts of employment of Employees have been disclosed, all Employees are employed, or will be employed after the Microsoft Day Integration, on one of the applicable template contracts disclosed for each country.

67 No Seller Employer has made to any person any offer of employment or engagement to work in the Business that has not yet been accepted or that has been accepted but the employment or engagement has not yet started.

68 All current contracts of employment of the Employees and contracts for services for the supply of workers wholly or mainly dedicated to the Business with any agents of a Seller Employer are terminable by the relevant Seller Employer at any time on three months’ notice or less without compensation (other than for compensation under any applicable statutory regime in the relevant jurisdiction).

69 No Seller Employer has offered, promised or agreed to any future variation in any contract of employment of any one of the Employees or any other person employed by a Seller Employer in respect of whom liability is deemed by the ARD or Similar Laws to pass to the Buyer.

70 So far as the Seller is aware, there are no enquiries or investigations existing, pending or threatened affecting a Seller Employer or the Business by the Equality and Human Right Commission, the Health and Safety Executive or other bodies with similar functions or powers in relation to any Employees.

71 No Employee:

(a) has given or received notice to terminate their employment or engagement; or

(b) has been off sick for a period of six months or more in any twelve-month period within the three years ending on the date of this agreement (whether or not consecutive), or is receiving payment under any sickness or disability or permanent health insurance scheme; or

(c) is on secondment, maternity or other statutory leave or otherwise absent from work; or

(d) is subject to a current disciplinary warning or procedure; or

(e) so far as the Seller is aware, has objected to the transfer of the Business and/or their employment to the Buyer.

72 All salaries, wages and fees and other benefits of all Employees have, to the extent due, been paid or discharged in full together with all related payments to third party benefit providers or relevant authorities.

73 No past or present ARD Employee or Non-ARD Employee has any claim or right of action, either actual or which can reasonably be anticipated, against a Seller Employer.

74 There are no terms and conditions in any contract with any Employee, and no commitment has been made (whether or not legally binding) to any Employee, pursuant to which such person will be entitled to receive any payment or benefit or such person’s rights will change, or an entitlement of such Employee to terminate his employment or engagement will be triggered, as a direct consequence of the completion of the transaction contemplated by this Agreement.

75 All Employees are legally entitled to work in, and have complied with the local asylum and immigration requirements in, the relevant jurisdiction.

76 A complete list of all jurisdictions in which any Employees require work permits, visas or any other form of permission in order to comply with local asylum and immigration requirements has been disclosed.

77 All Employees in all countries except China, France, Finland, India and the UK have consented (in writing) to the changes to be made to their terms and conditions of employment as part of the Microsoft Day Integration.

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PART 6 – PENSIONS

78 There are no retirement benefit or life assurance schemes to which the Seller contributes or has contributed under which any of the Employees or their dependants are or will be entitled to benefit.

79 There is no legal liability or voluntary commitment of the Seller to pay or make provision for payment of any pension, lump sum, gratuity or other benefit on retirement, death, sickness, disability or other similar circumstances in respect of any of the Employees or their dependants.

PART 7 – REAL ESTATE

INTERESTS

80 The Leasehold Property comprises all the land and buildings owned by the Company or used or occupied by it or in which it has any other interest, right or liability.

81 The information in Part 1 of Schedule 1 is complete and accurate in all material respects and not misleading.

TITLE

82 There are no subsisting contracts involving any disposition of the Leasehold Properties or any interest in it.

83 The Seller has good and marketable title to and is the sole legal and beneficial owner of the Leasehold Properties.

84 The Leasehold Properties is free from any mortgage or charge, security interest, option, right of pre-emption, licence, rent charge, overriding interest (as defined in the Land Registration Act 2002), or lien or other similar interest (including any arising by statute).

STATUTORY OBLIGATIONS, NOTICES AND ORDERS

85 There are no outstanding unobserved or unperformed obligations with respect to the Leasehold Properties which are necessary to comply with the requirements (whether formal or informal) of any Competent Authority exercising statutory or delegated powers.

CLAIMS AND DISPUTES AND OTHER MATTERS

86 No notice, action, claim, proceeding, demand, dispute or liability (contingent or otherwise) in respect of the Leasehold Properties or its use is outstanding or anticipated, nor are there any known circumstances or issues which would negatively impact on the current use of the Leasehold Property going forward.

87 All rent and outgoings have been paid up-to-date and there are no outstanding liabilities for any rent, rates, taxes, charges or other sums due in respect of the Leasehold Properties.

88 The Seller is not for any reason anticipating the expenditure of any material sum of money in respect of the Leasehold Properties or incurred by the landlord of the lease of the Leasehold Properties which is recoverable from the Seller (this includes but is not limited to material repairs/dilapidations costs and re-location costs).

89 All covenants, conditions and agreements contained in the Leases, on the part of the landlord and the tenant, have been complied with in all material respects and no notice of breach of any of the tenant’s obligations under the Leases has been received from the landlord by the Seller and there has been no refusal to accept rent, nor are there any circumstances rendering any of the foregoing likely.

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PART 8 – TAXATION

90 So far as the Seller is aware, the Seller and each relevant member of the Seller’s Group has complied in all material respects with all statutory provisions, rules, regulations, orders and directions in relation to the Business concerning VAT, payroll and employment taxes (including all withholdings or deductions required by law) and national insurance and social security contributions including the making on time of accurate returns and payments and the proper maintenance and preservation of records, and the Seller and each relevant member of the Seller’s Group has not incurred any penalty, notice or warning in relation to such returns, payments and records.

91 No Tax Authority has operated or agreed to operate any arrangement that is not based on a strict application of the relevant legislation or published practice in relation to the Tax affairs of the Business.

92 None of the Seller or any relevant member of the Seller’s Group is involved in any dispute with any Tax Authority or, so far as the Seller is aware, is the subject of any enquiry by any Tax Authority which may, in either case, materially affect the Business or any of the Assets.

93 All documents in the possession or under the control of the Seller and any relevant member of the Seller’s Group which establish or are necessary to establish the right or title of the Seller or any relevant member of the Seller’s Group to the Assets and which attract stamp duty have been duly stamped and any applicable stamp duties or charges in respect of such documents or transactions necessary to establish the right or title of the Seller or the relevant member of the Seller’s Group to the Assets have been duly accounted for and paid.

94 All VAT payable on the importation of goods and all customs and excise duties payable to any Tax Authority in respect of the Assets have been paid in full and none of the Assets is liable to confiscation, forfeiture or distress

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SCHEDULE 4

SELLER PROTECTION

INTERPRETATION AND APPLICATION

95 The limitations and exclusions set out in this Schedule shall not apply:

(a) to any Claim which arises from;

(b) to the amount by which any Claim is increased as a result of; or

(c) where the delay in the discovery of any Claim arises from,

the fraud, deceit or wilful concealment by the Seller. The amount, or the increase in the amount, of any such Claim shall accordingly be disregarded for the purpose of calculating the amount specified in paragraph 6.

TIME LIMIT FOR MAKING CLAIMS

96 The Seller shall not be liable for a Claim unless:

(a) in the case of a Claim other than under the Tax Warranties or the Fundamental Warranties, the Buyer gives to the Seller written notification of the particulars of the Claim in reasonable detail as soon as possible and in any event before the period ending 18 months after Completion;

(b) in the case of a Claim under the Fundamental Warranties, the Buyer gives to the Seller written notification of the particulars of the Claim in reasonable detail as soon as possible and in any event before the seventh anniversary of Completion; and

(c) in the case of a Claim under the Tax Warranties, the Buyer gives to the Seller written notification of the particulars of the Claim in reasonable detail as soon as practicable and in any event before the seventh anniversary of Completion; and

(d) liability for the Claim is accepted by the Seller in writing or court proceedings in respect of the Claim are instituted and duly served in either case within 9 months from the last day for notification of the Claim under sub-paragraph (a).

Time shall be of the essence for the purpose of this paragraph.

EXCLUSION OF SMALL CLAIMS

97 The Seller shall not be liable for a Claim unless the amount payable in respect of that Claim:

(a) individually exceeds US$40,000; and

(b) in aggregate exceeds US$400,000 when added to the amount which is payable in respect of every other Claim,

in which case the Seller shall be liable for the whole amount and not merely the excess.

98 For the purpose of paragraph 3, two or more Claims arising from the same circumstance, or from the same set of circumstances, shall be treated as a single Claim.

99 For the purpose of determining the amount of the Claim in paragraph 3, no account shall be taken of any amount for which the Seller has no liability by virtue of any other paragraph of this Schedule and, subject thereto, the amount of the Claim shall be taken as being the amount agreed or finally determined to be payable in respect of that Claim.

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MAXIMUM LIABILITY

100 The total liability of the Seller (including liability for interest and for legal and other professional costs if any) for all Claims shall not exceed:

(a) in the case of Claims relating to a breach of the Tax Warranties or the Business Warranties together with all claims under Schedule 6, US$8,000,000; and

(b) in the case of all Claims together with all claims under Schedule 6, the Consideration.

BUYER’S KNOWLEDGE

101 The Seller shall not be liable for a Claim in respect of any matter of which the Buyer has actual knowledge at the date of this Agreement and the Buyer shall be deemed to have actual knowledge of all matters fairly and accurately disclosed in the final reports prepared for the Buyer for the purposes of its due diligence exercise into the Business by its, solicitors and accountants.

PROVISION IN ACCOUNTS, CHANGES IN LEGISLATION ETC

102 The Seller shall not be liable for any Claim:

(a) which arises in respect of any breach of Warranty which is capable of remedy except to the extent that the relevant breach remains unremedied after the expiry of 30 days following receipt by the Seller of a written notice from the Buyer giving full particulars of the relevant breach and requiring it to be remedied;

(b) to the extent of any amount which is provided for in the Accounts;

(c) to the extent that the Claim would arise or the amount of the Claim would be increased after the date of this Agreement as a result of:

(i) the enactment of any Legislation;

(ii) a change in law or previously published practice of any administrative authority (including a Tax Authority);

(iii) a change in the basis or method of calculation of Tax made after the date of this Agreement (other than where such change is necessary to comply with applicable accounting standards); or

(iv) the amendment, modification or withdrawal of any extra-statutory concession previously made available by a Tax Authority;

(d) to the extent that the liability to which the Claim relates is attributable to any act, omission, transaction or arrangement of the Buyer, or any member of the Buyer’s Group (including any change in accounting bases, policies, practices or methods applied in preparing any accounts or valuing any assets or liabilities of the Business from those used in preparing the Accounts) which act, omission, transaction or arrangement:

(i) was not in the ordinary course of business as carried on prior to the date of this Agreement; or

(ii) could reasonably have been avoided,

(e) to the extent that the same occurs after the date of this Agreement;

(f) to the extent of the amount by which any Assets shall have been omitted, understated or over-depreciated in the Accounts or any Assumed Liabilities shall have been overstated in the Accounts; or

(g) to the extent that it relates to any consequential loss of any kind including loss of goodwill or opportunity or future profits.

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RECOVERY FROM A THIRD PARTY ETC

103 The amount of the Seller’s liability for any Claim shall be reduced by:

(a) any sum which is recovered (whether by way of insurance, indemnification or otherwise) by the Buyer or a member of the Buyer’s Group (otherwise than from another of those companies) in respect of the loss or damage suffered by reason of the relevant breach, less the amount of any reasonable costs and expenses incurred in obtaining payment of that sum and of any Tax for which the Buyer or a member of the Buyer’s Group may be liable by reason of its receipt of that sum;

(b) the amount by which any provision or reserve made in the Accounts for the liability giving rise to any other Claim is found to exceed the actual amount of the liability; and

(c) the amount, if any, by which any Tax for which the Buyer is or would be liable but for the circumstances giving rise to the Claim is reduced or extinguished by reason of the circumstances giving rise to the Claim,

and if the Seller has paid to the Buyer any amount in respect of the Claim before the recovery of that sum, the Buyer shall repay to it, or procure the repayment to it of, the amount by which its liability is so reduced.

NO DOUBLE RECOVERY

104 The Buyer shall not be entitled to recover damages or otherwise obtain reimbursement or restitution more than once in respect of the same loss.

CONTINGENT CLAIMS

105 If the Claim arises in connection with a liability of the Buyer which, at the time at which the claim is notified to the Seller, is contingent then the Seller will have no obligation to make any payment to the Buyer in respect of that breach unless and until such time as the contingent liability ceases to be contingent and becomes an actual liability.

CONSEQUENTIAL LOSS ETC

106 The Seller shall not be liable whether in contract, tort or for breach of statutory duty or otherwise for any loss of profits, use, opportunity, goodwill, business or anticipated savings or for any indirect or consequential losses or for any third party claims in connection with this Agreement regardless of whether any such loss or claim was foreseeable or not and of whether or not the Seller was informed of the possibility of any such loss or claim.

NO LIMITATION

107 Each limitation of liability set out in this Schedule 4 shall be separate and independent and save as expressly provided otherwise in this Agreement shall not be limited by reference to any other such limitation or any other provision of this Agreement.

RESTRUCTURING

108 The Buyer shall not to be entitled to bring a Claim or otherwise bring a claim under this Agreement to the extent the loss has been provided for in determining the Restructuring Costs.

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PROCEDURE FOR MAKING A CLAIM

109 If any matter which will or in the reasonable opinion of the Buyer might give rise to a Claim comes to the notice of the Buyer, the following provisions shall apply:

(a) the Buyer shall as soon as reasonably practicable and in any event within 20 Business Days of becoming aware of the matter, notify the Seller in writing of the matter and, at its expense, make available to it all information and documents in the possession or under the control of the Buyer in so far as they relate to that matter;

(b) the Buyer shall not make any admission of liability or take any other action (except as required by law or by a Competent Authority) in connection with the matter without the previous written consent of the Seller (which shall not be unreasonably delayed or withheld);

(c) subject to it being indemnified to its reasonable satisfaction against all costs and expenses (including additional Tax) which might be incurred by it and which it would not otherwise incur, the Buyer shall take all such steps as the Seller may reasonably request to mitigate its liability under the Claim;

(d) subject to it being indemnified to its reasonable satisfaction against all costs and expenses (including additional Tax) which might be incurred by it and which it would not otherwise incur, the Seller shall be entitled at any time by notice in writing to the Buyer to require that the Seller shall have the sole conduct and control on behalf of the Buyer of any actual or threatened claim, demand or proceedings against the Buyer which may give rise to a Claim and following such notice, without prejudice to the generality of the foregoing, the Seller shall in its absolute discretion be entitled to avoid, dispute, resist, settle, compromise, defend or appeal any such claim and the Buyer shall give to the Seller all such information and assistance as the Seller may reasonably require for such purposes, including instructing any such solicitors, Counsel or other professional advisers as the Seller may nominate to act on behalf of the Buyer or member of the Buyer Group but in accordance with the Seller’s instructions, and the Buyer shall not do anything inconsistent therewith.

110 The obligations of the Buyer and other members of the Buyer’s Group under paragraphs 15 (c) and (d) shall not apply if in the reasonable opinion of the Buyer their performance would require the Buyer to do or omit to do any act or thing which act or omission would be or would likely to be materially prejudicial to the business, goodwill, standing or reputation of the Business or a member of the Buyer’s Group or to their respective relationships with customers, suppliers, employees or governmental, regulatory or taxation authorities.

111 The Seller’s liability for a Claim shall be conditional upon compliance with the provisions of paragraph 15 in relation to that Claim.

112 Nothing contained in this Schedule shall limit the Buyer’s obligations at common law to mitigate any loss or damage resulting from or arising as a consequence of any circumstances giving rise to any Claim.

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SCHEDULE 5

BUYER WARRANTIES

113 The Buyer has the requisite power and authority to enter into and perform the Buyer Documents.

114 This Agreement constitutes and the Buyer Documents will, when executed, constitute binding obligations of the Buyer in accordance with their respective terms.

115 No order has been made and no resolution has been passed for the winding up of the Buyer or for a provisional liquidator to be appointed in respect of it and no petition has been presented and no meeting has been convened for the purposes of its winding up.

116 No administrator has been appointed in respect of the Buyer and no notice, petition or other documents have been given or filed for the purpose of placing it in administration.

117 No receiver (which expression shall include an administrative receiver) has been appointed in respect of the Buyer.

118 The Buyer is not insolvent or unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986 and has not stopped paying its debts as they fall due.

119 No voluntary arrangement has been proposed under section 1 of the Insolvency Act 1986 in respect of the Buyer.

120 No event analogous to any of the foregoing has occurred in or outside England with respect to the Buyer.

121 The Buyer has obtained all necessary shareholder and board approvals in respect of this Agreement and the Buyer Documents.

122 The execution and delivery of, and the performance by the Buyer of its obligations under, this Agreement and the Buyer Documents will not:

(a) constitute or result in a breach of any provision of its memorandum or articles of association;

(b) constitute or result in a breach of, or constitute a default under, any instrument to which it is a party or by which it is bound and which is material in the context of the transactions contemplated by this Agreement;

(c) constitute or result in a breach of any order, judgment or decree of any court or governmental agency to which it is a party or by which it is bound and which is material in the context of the transactions contemplated by this Agreement; or

(d) require it to obtain any consent or approval of or give any notice to or make any registration with any governmental or other authority which has not been unconditionally and irrevocably obtained or made at the date of this Agreement.

123 The Buyer is acting as principal and not as agent or for or on behalf of any other person.

124 In respect of the Personal Data, the Buyer warrants that transfer of the Personal Data to the Buyer, or as the Buyer shall direct, as envisaged by this Agreement shall not involve or require the transfer of the Personal Data by the Seller to a recipient located outside the European Economic Area.

125 In respect of the management of customer opt outs which may be received following the sending of the Pre-Completion Customer Notice pursuant to clause 12.12, the Buyer warrants that it has sufficient technical and organisational measures in place to comply with its obligations in a timely and lawful manner.

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SCHEDULE 6

EMPLOYEE PROVISIONS

126 Transferring Employees: ARD Countries

(a) The Seller and the Buyer acknowledge and agree that the sale of the Business under this Agreement will constitute a transfer for the purposes of the ARD and Similar Law in the ARD Countries and accordingly, the contracts of employment and employment relationships between each Seller Employer and the ARD Transferring Employees as in force immediately before the Effective Time shall not terminate upon the Effective Time but will have effect from the Effective Time as if originally made between the Buyer and each ARD Transferring Employee and all the Seller Employers’ rights, powers, duties and liabilities under or in connection with such contracts and employment relationships shall transfer to the Buyer except in so far as such contracts relate to (i) benefits for old age, invalidity or survivors under any Occupational Pension Scheme save to the extent required by relevant applicable Legislation, or (ii) any ARD Employee who objects to the transfer of his contract of employment under the ARD or Similar Law. For the purposes of this Schedule 7, references to the Buyer shall include any member of the Buyer’s Group that employs any of the Transferring Employees with effect from the Effective Time.

(b) Each Seller Employer shall retain the services of the ARD Employees with the intent that their contracts of employment shall continue in force until the Effective Time and then be transferred to the Buyer under ARD or Similar Law on the Effective Time and each Seller Employer shall comply with all its obligations under such contracts of employment, under statute and under any agreement with any trade union or in respect of which it would be expected to comply by any regulatory, consultative or other body to which it is subject in relation to the Business. In particular, without limitation to the foregoing, each Seller Employer shall not, prior to the Effective Time, take any steps to:

(i) transfer any Employee from the Business to work wholly or mainly in another part of its business;

(ii) transfer any person who is not an Employee to work wholly or mainly in the Business;

(iii) employ or engage any person other than an Employee in the Business;

(iv) send any Employee on secondment;

(v) terminate the employment of any Employee otherwise than for gross misconduct, except for any terminations required for the purpose of transferring Employees between members of the Seller’s Group (by termination and rehire) as part of Microsoft Day Integration; or

(vi) make any changes or alteration to the terms and conditions of employment of any Employees otherwise than in the ordinary course of business or with the prior written consent of the Buyer, but, for the avoidance of doubt, changes or alterations that are connected with the transfer of Employees between members of the Seller’s Group as part of Microsoft Day Integration shall be permitted.

127 Transferring Employees: Non-ARD Countries

(a) In each of the Non-ARD Countries where offer and acceptance is an appropriate and agreed approach to the transfer the employment of the Non-ARD Employees to the Buyer, the parties shall comply with paragraphs 2(b) to (e) below. In all other Non-ARD Countries, the parties shall discuss in good faith and agree (subject to discussion with the relevant Non-ARD Employee) on the most appropriate and effective approach to be taken in respect of the Non-ARD Employees in those countries, and if no agreement can be reached by the date that falls three weeks prior to the Effective Time, paragraphs 2(b) to (e) below shall apply.

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(b) The Buyer will at least two weeks prior to the Effective Time, make a written offer of employment to take effect from the Effective Time to each of the Non-ARD Employees on such terms and conditions (including without limitation terms as to remuneration and benefits) that are materially the same and no less favourable overall than those which the Non-ARD Employees enjoyed immediately prior to such offer being made and with continuity of employment recognised in accordance with paragraph 4(b).

(c) The Buyer shall not directly or indirectly induce or persuade or seek to induce or persuade any Non-ARD Employee not to accept any offer made or to be made pursuant to paragraph 2(a) above.

(d) The Buyer shall allow each of the Non-ARD Employees made an offer of employment under paragraph 2(b) above a period of seven (7) calendar days to decide to accept that offer of employment. Where any Non-ARD Employee accepts an offer of employment made under paragraph 2(a) above, each Seller Employer will permit the relevant Non-ARD Employee to leave his employment to take up employment with the Buyer with effect from the Effective Time without having worked the whole of any applicable notice period.

(e) The Buyer will, upon written request from the relevant Seller Employer and provided the relevant Non-ARD Employee consents, provide the relevant Seller Employer with the details of the material terms of the offers made to the Non-ARD Employees pursuant to this paragraph.

(f) Any Non-ARD Employee accepting an offer of employment made under paragraph 2(a) above, or agreeing to an alternative approach to transfer his employment under paragraph 2(a) above, will be regarded as being and treated as a “Non-ARD Transferring Employee” for the purposes of this Schedule and the Buyer shall be responsible for all Employment Liabilities in respect of the Non-ARD Transferring Employees with effect from the Effective Time.

128 Transferring Employees: ARD Countries and Non-ARD Countries

(a) All Employment Costs in respect of the Transferring Employees:

(i) for any period up to the Effective Time (whether or not due for payment by that date) shall be borne and discharged by Seller, including, for the avoidance of doubt, all Special Retention Bonuses; and

(ii) for any period on or from the Effective Time will be borne and discharged by the Buyer,

and will if necessary be apportioned on a time basis between the Seller and the Buyer.

(b) Each Seller Employer shall comply with its obligations to inform and consult with the Employees or any Employee Representatives in accordance with the ARD or Similar Law (in respect of ARD Employees) or as otherwise required.

(c) The Buyer will provide the Seller no later than 28 days prior to the Effective Time with any information that the Seller reasonably requires to enable it or each Seller Employer to comply with its obligations under paragraph 3(b) above (including without limitation details of any measures) that the Buyer envisages taking in relation to those ARD Employees who become ARD Transferring Employees.

(d) The Buyer and the Seller will each give to the other such further assistance and information as they may reasonably require in order to comply with their respective obligations with regard to the provision of information and consultation in accordance with the ARD or Similar Law or as otherwise required.

(e) The Seller and Buyer intend that for the purposes of any severance or termination benefit plan, program, policy, agreement or arrangement with a Seller Employer and any statutory termination indemnity, notice requirement or statutory severance under applicable law or Legislation, the transactions contemplated by this Agreement shall not constitute a severance of employment of any Non-ARD Transferring Employee. The parties shall cooperate and make reasonable

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endeavours to take all appropriate steps to realise the intent of this paragraph 3(e) (which may include executing a form of tripartite agreement between the Seller Employer, the relevant member of the Buyer’s Group and the Non-ARD Transferring Employee, if the parties agree such a mechanism is in their mutual interest). For the avoidance of doubt, where the transactions contemplated by this Agreement do constitute a severance of employment of any Non-ARD Transferring Employee, the Seller shall bear all applicable severance and termination payments or benefits and the Seller shall indemnify, keep indemnified and fully reimburse the Buyer against all Employment Liabilities incurred, suffered or paid by the Buyer arising directly or indirectly in connection with such severance of employment of a Non-ARD Transferring Employee.

129 Commencement: Terms of Employment after the Effective Time

(a) The terms on which the Buyer shall employ the Non-ARD Transferring Employees shall at all times be in compliance with the requirements of this paragraph 4.

(b) The Buyer will:

(i) recognise and give credit for the accrued length of service that each Transferring Employee has completed with the relevant Seller Employer immediately prior to the Effective Time for all purposes, including:

(A) career advancement and promotion consideration;

(B) eligibility and vesting under retirement plans or pension benefit plans;

(C) eligibility to participate in medical, dental and other similar benefits plans; and

(D) vacation, retirement and severance plans and benefits;

(ii) subject to the process agreed pursuant to paragraph 2(a) above, ensure that there is no break in employment;

(iii) take full responsibility for all travel and relocation requirements and costs associated with any relocation of the Transferring Employees; and

(iv) from the Effective Time for the period up to and including 31 December 2015, provide each Transferring Employee who is involuntarily terminated by the Buyer without “cause” with severance and termination benefits, to the extent applicable, in an amount equal to the severance and termination benefits that would be due under the comparable applicable severance and termination benefit plans, programs, policies, agreements or arrangements of the Seller Employer that employed each Transferring Employee prior to the Effective Time in effect on the date of this Agreement. Without limiting the foregoing, in the event that Buyer, without a Transferring Employee’s prior consent, (i) reduces the wage rate or base salary of any Transferring Employee as in effect for such Transferring Employee immediately prior to the Effective Time or (ii) relocates a Transferring Employee’s principal place of employment to a facility or location that is more than fifty (50) kilometres (or such shorter distance as may be required pursuant to applicable Law) from the Transferring Employee’s principal place of employment as of immediately prior to the Effective Time (either of clause (i) or (ii) being “Good Reason”), in either case during the period from the Effective Time up to and including 31 December 2015, such Transferring Employee shall be entitled (for a period not to exceed thirty (30) days following the event giving rise to Good Reason) to terminate his or her employment and receive severance consistent with the terms of the previous sentence. For the purposes of this paragraph, “cause” shall mean a good faith determination by the Buyer that any of the following has occurred: (i) willful and gross misconduct or gross neglect of employee’s material duties (ii) commission by employee of a misdemeanor with moral turpitude or a felony/criminal offence under the law of the jurisdiction in which such employee works; (iii) commission by employee of fraud, theft or dishonesty in connection with the Buyer or

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any member of the Buyer’s Group; (iv) material breach by employee of their obligations under their contract of employment, the Buyer’s written policies or any agreement with the Buyer that results in injury to any member of the Buyer’s Group; or (v) the employee is found guilty of any conduct which in the opinion of the Buyer brings the employee, the Buyer or any member of the Buyer’s Group into disrepute.

130 Indemnities

(a) The Seller shall indemnify, keep indemnified and fully reimburse the Buyer against all Employment Costs and Employment Liabilities incurred, suffered or paid by the Buyer arising directly or indirectly in connection with:

(i) the employment of any of the Transferring Employees, or the termination of their employment, on or prior to the Effective Time;

(ii) any act, omission or fault of the Seller (or a Seller Employer) or any other event, matter or circumstance occurring or having its origin before the Effective Time in respect of any of the Transferring Employees;

(iii) the Seller’s (or a Seller Employer’s) failure to comply with any obligation it has to inform or consult with Employees or their Employee Representatives in accordance with the ARD or Similar Law or otherwise save where the Buyer has failed to comply with its obligations under the same (but, for the avoidance of doubt, this indemnity shall not apply to a failure to comply with any obligation to inform or consult in accordance with the ARD or Similar Law in respect of Non-ARD Employees or any failure by the Seller to conduct a 60-day pension consultation with Employees prior to the Effective Time in accordance with the Pension Regulations is subject to the Buyer’s indemnity at paragraph 5(g)(vi) below);

(iv) any claim or proceedings filed in a UK court of law by an ARD Transferring Employee in respect of any early retirement or redundancy pension or lump sum benefit acquired under the Nokia Group (UK) Pension Scheme, in respect of service prior to Completion and calculated by reference to the ARD Transferring Employee’s earnings at Completion, for which the Buyer has become liable as a result of the TUPE Regulations. The provisions of paragraphs 15 and 18 of Schedule 4 shall apply to any claim made under this indemnity.

(b) The Seller shall not be obliged to indemnify the Buyer under paragraph 5(a) above in respect of any Employment Liability to the extent that the relevant Employment Liability:

(i) is one which falls within the scope of any of the Buyer’s indemnities under paragraph 5((g) below:

(ii) arises as a result of a negligent or unlawful discriminatory act by the Buyer;

(iii) arises solely from the accrual of service by any of the ARD Transferring Employees prior to the Effective Time; or

(iv) is one in respect of which the Buyer has the benefit of any insurance policy transferred by operation of law from Seller to the Buyer.

(c) If it is found or alleged that any contract of employment relating to a person who is or has been an employee of a Seller Employer other than a Transferring Employee has effect as if originally made between the Buyer and that person as a result of the operation of the ARD or Similar Law then the Buyer shall, having become aware of such finding or allegation in relation to such contract, or alleged effect:

(i) notify the Seller as soon as possible of such finding or allegation (“Notification”);

(ii) the Seller shall, within the period of 14 days from the date of receipt by the Seller of such Notification make an offer of employment to such person on terms overall no less

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favourable (save for benefits for old age, invalidity or survivors under any Occupational Pension Scheme) than the employment contract of such person in existence immediately prior to the Effective Time, to take effect upon termination of the existing employment contract of such person;

(iii) if such offer is accepted, the Buyer shall immediately release such person from its employment; and

(iv) if no such offer is made within the 14 days period referred to in paragraph (c)(ii) above or if an offer is made but not accepted within that 14 day period, the Buyer may, after the Buyer has notified the Seller in writing of its intention to do so, terminate the employment of such person.

(d) Subject to the provisions of paragraph 5(c) above being followed by the Buyer, the Seller will indemnify, keep indemnified and fully reimburse the Buyer against any Employment Costs and Employment Liabilities arising in connection with the employment of any such person from the Effective Time until the termination of such employment and against any Employment Liabilities arising out of such termination, provided that:

(i) such indemnity shall not apply in respect of any person in respect of whom a Notification is received by the Seller more than six months after the Effective Time; and

(ii) the Buyer complies with the contract of employment of such person and uses its reasonable endeavours to comply with such procedures as are required to lawfully terminate employment under local law or Legislation; and

(iii) the Seller’s indemnity shall not cover claims arising out of the employment or termination of any such person for unlawful discrimination, harassment or whistleblowing.

(e) If the employment contract of any ARD Employee does not have effect after the Effective Time as if originally made with the Buyer (other than by reason of an ARD Employee exercising his rights under ARD or Similar Law to object to the transfer):

(i) the Seller shall notify the Buyer as soon as possible of such finding;

(ii) the Buyer shall, in consultation with the Seller, within 14 days of being notified of such finding by the Seller, make an offer of employment to such ARD Employee on terms overall no less favourable (save for benefits for old age, invalidity or survivors under any Occupational Pension Scheme) than the employment contract of such person in existence immediately prior to the Effective Time to take effect upon termination of the existing employment contract; and

(iii) if such offer is accepted, the Seller shall procure that the relevant Seller Employer terminates the employment of such ARD Employee immediately.

(f) If an offer in paragraph (e)(ii) is not accepted, the Seller shall indemnify, keep indemnified and fully reimburse the Buyer against all Employment Costs and Employment Liabilities arising in connection with the employment of any such ARD Employee from the Effective Time until the termination of such employment and against all Employment Costs and Employment Liabilities arising in connection with such termination, provided that such indemnity shall not apply in respect of any person in respect of whom a Notification is received by the Seller more than six months after the Effective Time.

(g) The Buyer shall indemnify and keep the Seller indemnified and fully reimbursed against all Employment Costs and Employment Liabilities incurred, suffered or paid by the Seller arising directly or indirectly in connection with:

(i) the employment of or termination of employment by the Buyer of any of the Transferring Employees on or after the Effective Time;

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(ii) any act, omission or fault of the Buyer on or after the Effective Time in respect of the employment by the Buyer of any of the Transferring Employees on or after the Effective Time or any other event, matter or circumstance occurring or having its origin on or after the Effective Time for which the Buyer is responsible;

(iii) any change to take effect on or after the Effective Time to any term or condition of employment or working condition of any ARD Transferring Employee or any proposal to make such a change, which would be to the detriment of such ARD Transferring Employee (whether the change is proposed before or after the Effective Time and whether the relevant claim is made before or after the Effective Time) including without limitation any claim arising out of the resignation by any ARD Transferring Employee from the employment of the Seller as a result of any such change or proposed change;

(iv) any statement communicated or action done by the Buyer up to the Effective Time to or in respect of any Transferring Employee which has not been agreed in advance by the Seller in writing;

(v) any failure by the Buyer to comply with any applicable obligations it has with regard to the provision of information or consultation with Transferring Employees or their Employee Representatives to which the Buyer is subject under the ARD or Similar Law; and

(vi) any failure by the Seller to conduct a 60-day pension consultation with Employees prior to the Effective Time in accordance with the Pension Regulations.

131 International Retirement Plans

The Seller undertakes that by the Effective Time, no Employee shall be an active member of or have any entitlement to be an active member of the Nokia International Retirement Plan or any other international retirement plan that the Seller operates for its expatriate employees.

132 Non-solicitation

The Seller shall not and shall procure that every member of the Seller’s Group shall not without the prior consent of the Buyer, for a period of 12 months from the Effective Time directly or indirectly (whether alone or in conjunction with or on behalf of some other person) solicit or entice, or endeavour to solicit or entice, away from the Buyer any of the Transferring Employees, unless such individual contacts any Seller Employer independently on his/her own initiative in response to a general recruitment advertisement issued by that Seller Employer.

133 Ongoing Assistance Clause

After the Effective Time the Buyer shall permit any Seller Employer and its authorized representatives upon reasonable notice during normal business hours to have full access to all personnel records of the Transferring Employees in order for that Seller Employer to respond to a subpoena, court order, audit, investigation, to obtain data for pension or other benefits, or otherwise as required by applicable Legislation and the Buyer shall provide any such Seller Employer, upon that Seller Employer’s reasonable request and at its expense, with copies of such personnel records.

134 Additional Definitions

In this Schedule:

“ARD” means the Acquired Rights Directive 2001/23 EC of the European Council dated 12^th March 2001 as may be amended from time to time and such law, agreement or other measure in each ARD Country that implements or extends the ARD including in the TUPE Regulations;

58

“ARD Countries” means any country in respect of which the parties have agreed that the ARD or Similar Law applies to the sale and purchase of the Business as contemplated by this Agreement, meaning Finland, Mexico, Turkey (but only in the event the Buyer has established a legal entity in Turkey) and the United Kingdom;

“ARD Employees” means Employees employed by a Seller Employer for the purposes of the Business in the ARD Countries;

“ARD Transferring Employees” means the ARD Employees whose employment automatically transfers to the Buyer in accordance with the ARD or Similar Law;

“Employment Costs” means anything paid to or in respect of any employee or worker and includes (without limitation) all salaries, wages, commissions, incentive payments, bonuses, all statutory contributions, holiday pay (including payment for accrued but untaken holiday), national insurance and other social security contributions or payments, pension contributions and employer’s insurance contributions made to or on behalf of or in respect of an employee, taxation (including all income or other tax deductible by law from an employee’s or worker’s pay), expenses and all other emoluments, benefits and outgoings;

“Employment Liabilities” includes all awards, compensation, costs, expenses, losses, liabilities, damages, claims, proceedings, awards, fines, orders, demands, actions, payments by way of settlement, penalties, payments pursuant to Court or Tribunal awards or orders and other liabilities (including legal and other professional fees and expenses on an indemnity basis) whenever or howsoever arising or brought;

“Employee Representatives” means recognised trade unions, works councils or other appropriate elected or appointed employee representatives;

“Microsoft Day Integration” means the planned restructuring and integration activities that Seller’s Group is undertaking to integrate the acquired Nokia devices and services business;

“Non-ARD Countries” means those countries in respect of which the parties have agreed that the ARD or Similar Law does not apply to the sale and purchase of the Business as contemplated by this Agreement, meaning Brazil, China, France, Germany, India, Indonesia, Italy, Russia, South Africa, Spain, Turkey (but only in the event the Buyer has not established a legal entity in Turkey), United Arab Emirates and United States of America;

“Non-ARD Employees” means the Employees employed by a Seller Employer for the purposes of the Business in the Non-ARD Countries;

“Occupational Pension Scheme” means an occupational pension scheme as defined in Section 1 of the UK Pension Schemes Act 1993 and any other supplementary company or intercompany pension scheme outside a statutory social security scheme;

“Pension Regulations” means the United Kingdom Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006;

“Similar Law” means any Legislation of any country outside the European Union that is similar to, has, or is equivalent in terms of its effect to the ARD;

“Special Retention Bonus” means the special one-off retention bonus payments offered to Employees in a letter from Jyrki Rosenberg sent in or around October 2014 and set out in the anonymised spreadsheet disclosed by the Seller; and

“Transferring Employees” means the ARD Transferring Employees and Non-ARD Employees who at the date of this Agreement are those persons whose details are set out in Annex A.

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SCHEDULE 7

INTELLECTUAL PROPERTY

PART 1 REGISTERED INTELLECTUAL PROPERTY

Country	Mark Name	Status	App No.	Filed Date	Registration Number	Granted Date	Renewal Due Date
Australia	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
Brazil	MIXRADIO AND DESIGN	Published	840,794,339	14 February 2014
Brazil	MIXRADIO AND DESIGN	Published	840,794,347	14 February 2014
Brazil	MIXRADIO AND DESIGN	Published	840,794,355	14 February 2014
Brazil	MIXRADIO AND DESIGN	Published	840,794,371	14 February 2014
Canada	MIXRADIO AND DESIGN	Application	1,664,337	18 February 2014
China	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
European Community	MIXRADIO AND DESIGN	Registered	12,078,531	20 August 2013	12,078,531	16 January 2014	20 August 2023
India	MIXRADIO AND DESIGN	Application	2,681,239	18 February 2014
Indonesia	MIXRADIO AND DESIGN	Application	D 002,014,006,751	18 February 2014
International	MIXRADIO AND DESIGN	Registered	IR 1,177,894	21 August 2013	IR 1,177,894	17 October 2013	21 August 2023
Malaysia	MIXRADIO AND DESIGN	Application	2014/001,910	19 February 2014

60

Country	Mark Name	Status	App No.	Filed Date	Registration Number	Granted Date	Renewal Due Date
Malaysia	MIXRADIO AND DESIGN	Application	2014/001,909	19 February 2014
Malaysia	MIXRADIO AND DESIGN	Application	2014/001,908	19 February 2014
Malaysia	MIXRADIO AND DESIGN	Application	2014/001,907	19 February 2014
Mexico	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
Norway	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
Russian Federation	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
Saudi Arabia	MIXRADIO AND DESIGN	Published	1,435,007,186	19 February 2014
Saudi Arabia	MIXRADIO AND DESIGN	Published	1,435,007,185	19 February 2014
Saudi Arabia	MIXRADIO AND DESIGN	Published	1,435,007,184	19 February 2014
Saudi Arabia	MIXRADIO AND DESIGN	Published	1,435,007,183	19 February 2014
Singapore	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
South Africa	MIXRADIO AND DESIGN	Application	2014/04,019	14 February 2014
South Africa	MIXRADIO AND DESIGN	Application	2014/04,976	14 February 2014
South Africa	MIXRADIO AND DESIGN	Application	2014/04,975	14 February 2014

61

Country	Mark Name	Status	App No.	Filed Date	Registration Number	Granted Date	Renewal Due Date
South Africa	MIXRADIO AND DESIGN	Application	2014/04,974	14 February 2014
Switzerland	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
Thailand	MIXRADIO AND DESIGN	To Be Filed	927,099
Thailand	MIXRADIO AND DESIGN	To Be Filed	927,098
Thailand	MIXRADIO AND DESIGN	To Be Filed	927,097
Thailand	MIXRADIO AND DESIGN	To Be Filed	927,096
Turkey	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
United Arab Emirates	MIXRADIO AND DESIGN	Application	206,303	17 February 2014
United Arab Emirates	MIXRADIO AND DESIGN	Application	206,302	17 February 2014
United Arab Emirates	MIXRADIO AND DESIGN	Application	206,301	17 February 2014
United Arab Emirates	MIXRADIO AND DESIGN	Application	206,300	17 February 2014
United States of America	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013
Vietnam	MIXRADIO AND DESIGN	Application	IR 1,177,894	21 August 2013

62

PART 2 OWNED SOFTWARE

Windows Phone client (distributed on Lumia)

Windows 8 client (distributed on Lumia 2520)

Asha NG client (distributed on Nokia Asha NG devices in some territories)

X client (distributed on Nokia X devices in some territories)

HTML5 web client (www.mixrad.io)

iOS client (in development)

Android client (in development)

PART 3 THE MUSIC LICENCES

Part 3A – Major Music Licences

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Sony Music Entertainment	Digital Download Sales Agency Agreement	ALC Sales Agency Agreement	31/08/2012	15/12/2014
Sony Music Entertainment	Attachment: Letter Content Escrow for Digital Download Sales Agency 4.2.2011	US Agency ALC Provision of electronic content during contract negotiation	4.2.2011	N/A
Sony Music Entertainment	Digital Sales Agreement	Original Distribution of digital music via Download Services	02.04.2008	Continues until terminated by the giving of 90 day notice
Sony Music Entertainment	First Amendment to the Digital Sales Agreement	1st Amendment to CWM subscription period amendment	signed 30.9.2008	Subject to main agreement
Sony Music Entertainment	Second Amendment to the Digital Sales Agreement	2nd Amendment to CWM – Adding Mexico to the Territory	signed 1.12.2008	Subject to main agreement
Sony Music Entertainment	Third Amendment to the Digital Sales Agreement	3rd Amendment to CWM – DRM Free and other amendments	signed 18.6.2009	Subject to main agreement
Sony Music Entertainment	Fourth Amendment to the Digital Sales Agreement	4th Amendment to CWM – CWM Fee amendments	dated 27.8.2009	31.12.2010
Sony Music Entertainment	Amendment 5	5th Amendment	dated 15.02.2010	Subject to main agreement

63

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Sony Music Entertainment	Sixth Amendment to the Digital Sales Agreement	6th Amendment to CWM – 6-month term for Brazil, Turkey & South Africa, extension for certain territories, use of clips through APIs	signed 30.09.2010	Territory term re Brazil, Turkey & South Africa extended through June 30, 2011
Sony Music Entertainment	7th Amendment to the Digital Sales Agreement	7th Amendment – is no longer valid – concerned India NMU as its been substituted by the later NMU deals in India, it is no longer applicable.	N/A	N/A
Sony Music Entertainment	8th Amendment to the Digital Sales Agreement	8th Amendment to CWM deal – is no longer valid -re 6 month extension of Brazilian CWM. As CWM has been ramped down in Brazil years ago and the rights similarly expired.	N/A	N/A
Sony Music Entertainment	9th Amendment to the Digital Sales Agreement	9th Amendment to CWM – Extension of CWM Term in Mexico	dated 27.04.2012	Subject to main agreement
Sony Music Entertainment	Tenth Amendment to the Digital Sales Agreement	10th Amendment to CWM – NMU India – 2013 extension	01.01.2013	31.12.2013 following a wind down period
Sony Music Entertainment (successor-in-interest to Sony BMG Music Entertainment)	Eleventh Amendment to the Digital Sales Agreement	11th Amendment to ALC Wholesale Pricing amendment	dated 26.6.2013	Subject to main agreement
Sony Music Entertainment (successor-in-interest to Sony BMG Music Entertainment)	Twelfth Amendment to the Digital Sales Agreement	Amendment to DMLA – 12th Amendment is the metadata deal for Bing search services.	18.12.2013	Subject to main agreement
Sony Music Entertainment (successor-in-interest to Sony BMG Music Entertainment)	Thirteenth Amendment to the Digital Sales Agreement	13th Amendment to the DMLA; India NMU for 2014	01.01.2014	31/12/2014

64

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Universal International Music BV	Agreement	Digital Music Distribution Framework Agreement (Comes with Music and Nokia Music Store) Digital Music Distribution Agreement (ALC and CWM / NMU)	27.11.2007	As amended by Amendment No 23
Universal International Music BV	Amendment [1 to main Agreement dated 27.11.2007]	Adding new countries to Territory	30.05.2008	Subject to main agreement
Universal International Music BV	Amendment 2	Amendment accomodating 18-month CWM subscription package	01.09.2008	Subject to main agreement
Universal International Music BV	Amendment 3 to Digital Music Distribution Agreement	Amendment adding France to the Territory definition	30.01.2009	Subject to main agreement
Universal International Music BV	Amendment 4 to the Agreement	Amendment adding Mexico to the Territory	01.05.2009	N/A
Universal International Music BV	Amendment to the Digital Music Distribution Agreement	Amendment accomodating CWM termination extension	31.08.2009	N/A
Universal International Music BV	Amendment 5 to the Digital Music Distribution Agreement	Amendment DRM Free, Playlists, Regional services	01.09.2009	N/A
Universal International Music BV	Amendment 6 to the Digital Music Distribution Agreement	Terms for China CWM Service 2010	26.02.2010	N/A
Universal International Music BV	Amendment 7 to the Digital Music Distribution Agreement	Media Box Trial including redefining Clips and Cover Artwork, and 6 month CWM in certain territories	01.11.2010	N/A
Universal International Music BV	Amendment 8 to the Digital Music Distribution Agreement	Extension of CWM in Mexico	26.04.2010	N/A

65

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Universal International Music BV	Amendment 9 to the Digital Music Distribution Agreement	Extension of CWM in Mexico	30.04.2010	N/A
Universal International Music BV	Amendment 10 to the Digital Music Distribution Agreement	Amendments to the terms for CWM in Mexico	07.05.2010	N/A
Universal International Music BV	Amendment 11 to the Digital Music Distribution Agreement	CWM extension of term, recoupability of prepayment and final settlement	05.11.2010	N/A
Universal International Music BV	Amendment 12 to the Digital Music Distribution Agreement	Exclusion of China from Global Framework, given local contract in place	08.06.2011	N/A
Universal International Music BV	Amendment 13 to the Digital Music Distribution Agreement	Amendment accomodating USA to the Territory with respect to the ALC store	31.05.2012	N/A
Universal International Music BV	Amendment 14 to the Digital Music Distribution Agreement	Amendment Accomodating Extension of ALC store term	31.08.2012	N/A
Universal International Music BV	Amendment 14 to the Digital Music Distribution Agreement	NMU China for Year 2013	01/02/2013	31/12/2013
Universal International Music BV	Amendment 15 to the Digital Music Distribution Agreement	Extension of Term, amendment to incentive criteria pricing	12.10.2012	N/A
Universal International Music BV	Amendment 16 to the Digital Music Distribution Agreement	Adding Canada to the Territory	29.04.2013	N/A
Universal International Music BV	Amendment 18 to the Agreement	18th Amendment to the DMLA: BING Metadata deal, linking Bing search results to ALC Music Store in Poland, Turkey and Russia	06.01.2014	N/A

66

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Universal International Music BV	Amendment 19 to the Agreement	19th Amendment to the DMLA: Extension of ALC store	27.01.2014	N/A
Universal International Music BV	Amendment 20 to the Digital Music Distribution Agreement	Amendment to DMLA accomodating India NMU for 2014	Agreement date 08.04.2014 effective date 01.01.2014	31/12/2014
Universal International Music BV	Amendment 21 to the Digital Music Distribution Agreement	Amendment 21 to the Agreement – Term extension	14/05/2014	13/07/2014
Universal International Music BV	Amendment 22 to the Agreement	Amendment 22 to the Agreement – Term extension	13/07/2014	13/10/2014
Universal International Music BV	Amendment 23 to the Agreement	Amendment 23 to the Agreement – Term extension	28/10/2014	13/01/2015
Warner Music Inc.	Digital Sales Agreement	Original DMLA and CWM – Distribution of digital music via Download Services	27.06.2008	Rolling on quarterly periods
Warner Music Inc.	Amendment 1 to Exhibit 1 of the Digital Sales Agreement	1st Amendment to CWM – adding Mexico to the Territory	24.11.2008	N/A
Warner Music Inc.	Amendment 2 to Digital Sales Agreement	2nd Amendment to CWM – Amends the pricing structure and content usage rules	02.07.2009	N/A
Warner Music Inc.	Amendment 3 to Digital Sales Agreement	3rd Amendment to CWM – Modification of CWM fees and enabling regional services	11.09.2009	N/A
Warner Music Inc.	Amendment 4 to Digital Sales Agreement	4th Amendment to CWM – Amendment adding Northern Cone and Pan Arabic Territories	19.02.2010	N/A
Warner Music Inc.	Amendment 5 to Digital Sales Agreement	5th Amendment to CWM – 6 Month Term for Brazil, Turkey and South Africa, API-related modifications globally, China related amendments	01.09.2010	N/A

67

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Warner Music Inc.	Amendment 6 to Digital Sales Agreement	6th Amendment to CWM – Term extension for Brazil until 31.12.2011	Feb-11	N/A
Warner Music Inc.	Amendment 7 to Digital Sales Agreement	7th Amendment to CWM – NMU 2012 for India and Bangladesh	11.12.2012	N/A
Warner Music Inc.	Amendment 8 to Digital Sales Agreement	8th Amendment to CWM – NMU 2013 for India, Pakistan, Nepal, Sri Lanka and Bangladesh	01.01.2013	N/A
Warner Music Inc.	Amendment 9 to Digital Sales Agreement	9th Amendment to CWM – re consent to assign and Bing metadata	12.02.2013	N/A
Warner Music Inc.	Amendment 10 to Digital Sales Agreement	10th Amendment to CWM – 2014 NMU in India extension until 12/31/2014	1.1.2014	31.12.2014
Universal International Music B.V.	Reinstated Digital Product Agreement	Digital streaming license Agreement for Mix Radio and Mix Radio+	15.11.2012	15.11.2013 (as amended; current term until 13.01.2015)
Universal International Music BV	Amendment 1 to the Reinstated Digital Product Agreement	1st Amendment to the MixRadio Agreement: Extension of Mix Radio Term and inclusion of Mix Sharing Social Feature	27.01.2014	13.4.2014
Universal International Music BV	Amendment 2 to the Reinstated Digital Product Agreement	2nd Amendment to the MixRadio Agreement; extension of Term and Extension of term with respect to NMU bundled MixRadio	08/04/2014	13.7.2014
Universal International Music BV	Amendment 3 to the Reinstated Digital Product Agreement	3rd Amendment to the Reinstated Digital Product Agreement – Further Extension	13/07/2014	13.10.2014
Universal International Music BV	Amendment 4 to the Reinstated Digital Product Agreement	4th Amendment to the Reinstated Digital Product Agreement – Further Extension	28/10/2014	13.01.2015

68

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Sony Music Entertainment	Content License Agreement for Radio Service	Original Digital streaming license Agreement for Global Mix Radio	2011-10-26	31.12.2013 (extended by amendment six)
Sony Music Entertainment	First Amendment to the Content License Agreement for Radio Service	1st Amendment to Mix Radio – Allows for Mix Radio streaming for free on CWM devices – no royalties are due.	10/11/2011	N/A
Sony Music Entertainment	Second Amendment to the Content License Agreement for Radio Service	2nd Amendment to Mix Radio – Inclusion of IODA content	dated 29 March 2012	N/A
Sony Music Entertainment	Third Amendment to the Content License Agreement for Radio Service	3rd Amendment to Mix Radio – Adding Mix Radio+ to scope and US to the Territory	dated August 31, 2012	N/A
Sony Music Entertainment	Fourth Amendment to the Content License Agreement for Radio Service	4th Amendment to Mix Radio- Amending rates for UAE	dated 27.2.2013	N/A
Sony Music Entertainment	Fifth Amendment to the Content License Agreement for Radio Service	Fifth Amendment to the Content License Agreement for Radio Service – Extension of Term, changes to True-Up dates	01.01.2014	31/05/2014
Sony Music Entertainment (successor-in-interest to Sony BMG Music Entertainment)	Sixth Amendment to the Content License Agreement for Radio Service	Sixth Amendment – Term Extension	14/05/2014	31/10/2014
Sony Music Entertainment	Seventh Amendment to the Content License Agreement for Radio Service	Seventh Amendment – Term Extension	14/10/2014	30/11/2014
Sony Music Entertainment	Eighth Amendment to the Content License Agreement for Radio Service	Eighth Amendment – Term Extension	30/11/2014	28/02/2015
Sony Music Entertainment	Letter of extension of the Term	Letter extending the Term of the Radio Service Agreement, as amended to extend until 10/31/14	05.09.2013	31.10.2014

69

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Sony Music Entertainment	Content License for Radio Service second extension letter	Sony 2nd Extension letter to Radio Services Agreement	01.01.2014	Subject to main agreement
Sony Music Entertainment	Novation Letter	Novation	2014-01-16	N/A
Sony Music Entertainment	Extension of Novation Agreement and Change of Control Letter	Extension and Consent to Change Control	2014-03-25	N/A
WEA International, Inc. And Warner Music, Inc.	Content License Agreement for Radio Service (First Amendment letter)	Amended and Restated Digital Streaming License Agreement for Mix Radio, as amended to include Mix Radio+ to the scope and US and Canada to Territory	31.08.2012	15.11.2013 (as amended)
WEA International, Inc. And Warner Music, Inc.	Second Amendment to the Content License Agreement for Radio Service	2nd Amendment to Mix Radio – Amending rates for UAE	19.03.2013	N/A
WEA International, Inc. And Warner Music, Inc.	Third Amendment to the Content License Agreement for Radio Service	3rd Amendment to Mix Radio – extends the term to 11/15/2014, allows for Mix Sharing friend streams, and assignment consent to MSFT	15/11/2013	15/11/2014
WEA International, Inc. And Warner Music, Inc.	Amendment to the Content License Agreement for Radio Service	Letter re Acquisition of Parlophone Label Group	08/08/2013	N/A
WEA International, Inc. And Warner Music, Inc.	Fourth Amendment to the Content License Agreement for Radio Service	4th Amendment to Mix Radio – Partial term extension	24/09/2014	First Amendment Initial Term extended through 11/15/2014
WEA International, Inc. And Warner Music, Inc.	Fifth Amendment to the Content License Agreement for Radio Service	5th Amendment to Mix Radio – term extension	15/11/2014	28/01/2015

70

Nokia Contracting Entity	Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Nokia (China) Investment Co Ltd	Warner Music Beijing Co Ltd	Digital Music License Agreement	Radio Service	08/04/2014	31/12/2014
Nokia (China) Investment Co Ltd	Beijing Starbright Technical Services Company Limited (Sony)	Digital Music License Agreement	Radio Service	08/04/2014	31/12/2014

Part 3B – All other Music Licences

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
3Label .SP	Digital Music License Agreement	10/11/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
8ball Music	Digital Music License Agreement & One Amendment	22/10/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
ABC Digital Distribution Limited	Digital Music License Agreement	29/04/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Abeille Musique (AMCD)	Digital Music License Agreement	01/09/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Abirami Audio Recording Pvt Ltd	Digital Music License Agreement & One Amendment	22/02/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Absolute Marketing International Ltd.	Digital Music License Agreement	24/03/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

71

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Africori	Digital Music License Agreement	13/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
AGI Music SDN BHD	Digital Music License Agreement	24/07/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Agora S.A	Digital Music License Agreement	22/10/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Alien Prod S.A.R.L.	Digital Music License Agreement	05/08/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Alpha Digitech	Digital Music License Agreement & One Amendment	09/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Altafonte	Digital Music License Agreement	29/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
ALTIUS Trading 437 PTY Ltd (aka Bozza)	Digital Music License Agreement	30/11/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Another Venture LTD d/b/a Seed	Digital Music License Agreement	19/05/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
AP Internationals (aka Anak Audio)	Digital Music License Agreement	22/04/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

72

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Aquarius Musikindo P.T.	Digital Music License Agreement	15/11/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Arka Music Indonesia	Digital Music License Agreement	23/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Arkwork Channel	Digital Music License Agreement & One Amendment	01/11/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Armada Music BV	Digital Music License Agreement	21/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Armada Music BV	Digital Music License Amendment	01/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Armada Music BV	Digital Music License Amendment	15/09/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Art Empire Industries Ltd	Digital Music License Agreement	04/05/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Artist First S.R.L	Digital Music License Agreement	22/10/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Arvato Services Nederland B.V. (aka Rough Trade)	Digital Music License Agreement	14/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

73

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
AT (h)OME SARL	Digital Music License Agreement	23/05/2005	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
AT (h)OME SARL	Digital Music License Amendment	29/08/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
ATR Trust-en administratle Kantoor beheergoederen NV Acting as Cloud 9 Dance	Digital Music License Agreement & One Amendment	15/05/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Audio & Video Labs Inc. dba CD Baby	Digital Music License Agreement	19/01/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Audio & Video Labs Inc. dba CD Baby	Digital Music License Amendment	29/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
AVISPA S.L	Digital Music License Agreement	23/09/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Awal (UK) Limited (delivering Kobalt)	Digital Music License Agreement	09/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Awal (UK) Limited (delivering Kobalt)	Digital Music License Amendment	22/09/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Be Yourself Music Catalogue B.V.	Digital Music License Agreement & one Amendment	18/06/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

74

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Because Music	Digital Music License Agreement	15/12/2004	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Beggars Group Digital Ltd.	Digital Music License Agreement	11/01/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Believe Digital	Digital Music License Agreement	29/01/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Believe Digital	Digital Music License Amendment	20/11/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Believe Digital	Digital Music License Amendment	11/01/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Binacatunes Media Pvt Ltd	Digital Music License Agreement & One Amendment	12/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Black Hole Recordings B.V.	Digital Music License Agreement	31/03/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Black Hole Recordings B.V.	Digital Music License Amendment	09/09/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Bliss Corporation	Digital Music License Agreement	24/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

75

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Bliss Corporation	Digital Music License Amendment	06/08/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Bliss Corporation	Digital Music License Amendment	16/11/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
BOEP	Digital Music License Agreement	31/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
BOEP	Digital Music License Amendment	20/12/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Bojagi Label and media	Digital Music License Agreement	07/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Budha Subba Digital Pvt Ltd.	Digital Music License Agreement & One Amendment	01/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
C.A.M. (Creazioni Artistiche Musicali S.r.l)	Digital Music License Agreement	24/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Cadiz Digital	Digital Music License Agreement	01/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Carosello C.E.M.E.D. Srl	Digital Music License Agreement	12/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

76

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Celldak Solutions	Digital Music License Agreement	26/08/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Cipher Entertainment FZ LLC	Digital Music License Agreement	15/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Clockwize Online	Digital Music License Agreement	20/08/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
CNR International	Digital Music License Agreement	20/02/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Countdown Media GmbH (aka Madacy)	Digital Music License Agreement	17/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Craze Productions	Digital Music License Agreement	01/02/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Danmark	Digital Music License Agreement	16/08/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Daredo GmbH	Digital Music License Agreement	18/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
DashGo	Digital Music License Agreement	22/05/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

77

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
DashGo	Digital Music License Amendment	11/05/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Deck Producoes Artisticas LTDA	Digital Music License Agreement	02/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Deck Producoes Artisticas LTDA	Digital Music License Amendment	13/07/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Deep Emotions Publishing Pvt Ltd	Digital Music License Agreement	24/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Delta Sound	Digital Music License Agreement	25/01/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
DFP Group	Digital Music License Agreement	11/12/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Digidance B.V.	Digital Music License Agreement	25/11/2004	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Digidance B.V.	Digital Music License Amendment	22/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
DiGiDi Digital Distribution a.m.b.a	Digital Music License Agreement	19/09/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

78

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Digitainment	Digital Music License Agreement	19/07/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Digitainment	Digital Music License Agreement	12/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
DIGITAL WORLD AG	Digital Music License Agreement & One Amendment	28/09/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Ditto Music (Ditto Ltd)	Digital Music License Agreement	16/05/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Dizital Geeks	Digital Music License Agreement & one Amendment	15/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Divo TV Private Limited	Digital Music License Agreement	16/10/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Domino	Digital Music License Agreement	10/01/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Dox/ Stroom Records	Digital Music License Agreement & One Amendment	25/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Drecords International Pvt Ltd	Digital Music License Agreement & One Amendment	20/10/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

79

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
DRJ Records	Digital Music License Agreement & One Amendment	08/11/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
E1 Entertainment U.S. LP	Digital Music License Agreement	08/06/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Ear Ache Records Ltd	Digital Music License Agreement	19/05/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
East Coast Audio Entertainment	Digital Music License Agreement & One Amendment	12/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Electromode (Pty) Ltd.	Digital Music License Agreement & One Amendment	26/01/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
EmuBands Ltd	Digital Music License Agreement	01/12/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
E-Muzyka S.A.	Digital Music License Agreement	09/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Eros International Limited	Digital Music License Agreement	01/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Essential Music and Marketing Ltd (aka Cooking Vinyl)	Digital Music License Agreement	13/06/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

80

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Exact Mobile (PTY) LTD	Digital Music License Agreement & One Amendment	08/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
finetunes GmbH	Digital Music License Agreement	14/02/2006	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Five Star Audio	Digital Music License Agreement & One Amendment	01/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Fundacion Musica de Chile (Sello Azul)	Digital Music License Agreement	21/10/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Gakk Media (BD) Limited	Digital Music License Agreement	01/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Generika.com	Digital Music License Agreement & One Amendment	09/05/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Giri Digital Solutions Private Limited	Digital Music License Agreement & One Amendment	01/10/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Global Wide	Digital Music License Agreement	24/08/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Globo Comunicacao E Participacoes SA (aka Som Livre)	Digital Music License Agreement	04/09/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

81

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
GMM Media Limited (t/a Wobblynote records)	Digital Music License Agreement	04/10/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
GoBindas Entertainment Pvt Ltd	Digital Music License Agreement & One Amendment	16/10/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
GoodToGo GmbH (aka Groove Attack)	Digital Music License Agreement	09/02/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Greg Stainer	Digital Music License Agreement	06/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Happy Music	Digital Music License Agreement	22/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Harmonia Mundi, SA	Digital Music License Agreement	01/03/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Heaven 11 LLC	Digital Music License Agreement	24/10/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Horus Music Limited	Digital Music License Agreement	11/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
IIP DDS BV	Digital Music License Agreement	13/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

82

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
IMM Satis Pazarlama Ve Dis Tic.LTD.STI	Digital Music License Agreement	17/02/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
IMUSICA S.A	Digital Music License Agreement	16/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Independent Digital (used to be Propolis Media)	Digital Music License Agreement	04/01/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Independent Digital Licensing Agency (IDLA)	Digital Music License Agreement & One Amendment	01/12/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Independent Distribution On Line (IDOL)	Digital Music License Agreement	01/02/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Inertia Pty Ltd	Digital Music License Agreement	10/05/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Intergroove	Digital Music License Agreement	15/09/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Intermezzo Music & Media Group	Digital Music License Agreement & One Amendment	13/06/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Isolation Network INC d/b/a INGROOVES and d/b/a One Digital Distribution	Digital Music License Agreement & One Amendment	21/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

83

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Jack Velt & Co Productions and Editions (aka PAD Editions)	Digital Music License Agreement	14/09/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Kappamakki Consultario Artistica E Cultural Ltda.	Digital Music License Agreement	23/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Kdigital (aka SSM)	Digital Music License Agreement – US only	03/03/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Keyzit	Digital Music License Agreement		Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Kiver SpA	Digital Music License Agreement	24/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Kontor New Media, a division of Kontor Records GmbH	Digital Music License Agreement & One Amendment	01/02/2006	02/01/2015	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Kuarup Produções Ltda	Digital Music License Agreement	04/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Kudos Records LTD	Digital Music License Agreement	06/10/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
KVZ	Digital Music License Agreement	26/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

84

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
KWAN Mobile S.R.L	Digital Music License Agreement	11/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
La Cupula (LCM)	Digital Music License Agreement	01/04/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Label Worx Limited	Digital Music License Agreement	01/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Laughing Buddha Entertainment	Digital Music License Agreement	07/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Leader Music	Digital Music License Agreement	29/04/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Listen.to.it Srl	Digital Music License Agreement & One Amendment	01/06/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
LMS Comercio (aka Building)	Digital Music License Agreement	22/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Lokdhun Telemedia	Digital Music License Agreement & One Amendment	11/02/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Lusafrica	Digital Music License Agreement	30/09/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

85

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
M/s Goyal Digi Music	Digital Music License Agreement & One Amendment	27/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
M6 Interactions SAS	Digital Music License Agreement	19/03/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
MADE IN eTALY s.r.l	Digital Music License Agreement	04/04/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Magenta Discos	Digital Music License Agreement	11/07/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Major Records Entertainment LLC	Digital Music License Agreement	12/02/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Manorama Music	Digital Music License Agreement & One Amendment	12/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Mars Inc.	Digital Music License Agreement & One Amendment	14/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Matchboxology – (Song King)	Digital Music License Agreement & One Amendment	25/08/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
maX Music	Digital Music License Agreement	17/07/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

86

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Megabop Records	Digital Music License Agreement	15/10/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Melody Entertainment	Digital Music License Agreement	15/05/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Metrobeam	Digital Music License Agreement	08/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
MGM Distribution (The Groove Merchants)	Digital Music License Agreement	07/02/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Milan Music	Digital Music License Agreement	29/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Ministry of Sound UK	Digital Music License Agreement & One Amendment	14/04/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Mobisoft Telesolutions Pvt. Ltd. (aka Phoneytunes)	Digital Music License Agreement & One Amendment	12/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Mobitel	Digital Music License Agreement & One Amendment	07/12/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Mohamed Sami Abdullah Ehsan	Digital Music License Agreement	10/03/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

87

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Music Box International	Digital Music License Agreement	01/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Music Dealers LLC	Digital Music License Agreement	27/02/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
MUSIC IN HEAD PRODUCTIONS srl	Digital Music License Agreement	15/09/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Music Kickup	Digital Music License Agreement	20/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Music mail	Digital Music License Agreement	01/09/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Music Wires	Digital Music License Agreement & One Amendment	18/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Musicraft	Digital Music License Agreement – US only & One Amendment	24/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Naïve	Digital Music License Agreement	01/10/2004	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Nation Music	Digital Music License Agreement	22/01/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

88

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Naxos Sweden (now Naxos of America)	Digital Music License Agreement & One Amendment	08/01/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Nettwerk Productions	Digital Music License Agreement	12/12/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
NewState Entertainment Ltd	Digital Music License Agreement & One Amendment	02/02/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Ocean Butterflies Music PTE (SG)	Digital Music License Agreement	20/06/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Off Limits SRL Uninominale	Digital Music License Agreement & One Amendment	15/12/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Oh Boy Records, Red Pajamas Records and Blue Plate Music	Digital Music License Agreement & One Amendment	10/09/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
One Stop Music	Digital Music License Agreement	01/04/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
OneRPM LLC	Digital Music License Agreement	01/07/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Orchard (The Orchard Enterprises, Inc. / OWIE)	Digital Music License Agreement & One Amendment	12/09/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

89

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Ordis / Soul Seduction [RMS=SSDD]	Digital Music License Agreement & One Amendment	15/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Ossigeno Srl (Alma Music)	Digital Music License Agreement	10/12/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Oy Ensio Music Ltd	Digital Music License Agreement	28/03/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PEACEFROG LIMITED	Digital Music License Agreement	13/05/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Phonofile AS (Phonofile Norway)	Digital Music License Agreement & One Amendment	03/06/2005	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Phonographic Performance Ltd (PPL)	Digital Music License Agreement	01/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PIAS Sprl / PIAS-VITAL	Digital Music License Agreement & One Amendment	01/09/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Pickwick	Digital Music License Agreement	22/01/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Pison Contents	Digital Music License Agreement – US only	26/02/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

90

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Planet41 Mobi-Venture Limited	Digital Music License Agreement & One Amendment	28/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
POPS Worldwide	Digital Music License Agreement	03/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Poptori Oy	Digital Music License Agreement	31/03/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Portal Latino SL	Digital Music License Agreement & One Amendment	18/12/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Produciones Alzur SL (aka Lanzadera)	Digital Music License Agreement	14/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Pschent	Digital Music License Agreement	29/08/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Alfa Kreasitama	Digital Music License Agreement	11/06/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT CeraHati Digital Media	Digital Music License Agreement	12/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Digital Rantai Maya	Digital Music License Agreement	13/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

91

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
PT Indo Semar Sakti	Digital Music License Agreement	29/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Kreasi Cakrawala Utama (aka Keci Muzik)	Digital Music License Agreement	01/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Musica Studios	Digital Music License Agreement	24/11/2013	14/11/2014	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Naga Swarasakti	Digital Music License Agreement	02/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Pelangi Prima Sejati	Digital Music License Agreement	23/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Redtree Indonesia (aka Seven Music)	Digital Music License Agreement	27/03/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Sani Sentosa Abadi	Digital Music License Agreement	01/06/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT Trinity Optima Productions	Digital Music License Agreement	04/06/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT. E-Motion Entertainment	Digital Music License Agreement	01/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

92

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Virgo Multi Cipta effective on October 1, 201 used to be PT. Virgo Ramayana Music & Entertainment	Digital Music License Agreement	03/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT.Gema Nada Pertim	Digital Music License Agreement	02/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
PT.Graha Prima Swara	Digital Music License Agreement	27/03/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rajaram Digital	Digital Music License Agreement & One Amendment	20/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rajshri	Digital Music License Agreement & One Amendment	16/10/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rants Limited t/as VidZone Digital Media	Digital Music License Agreement	12/12/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
RDC Media	Digital Music License Agreement & One Amendment	01/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rebeat Digital GmbH	Digital Music License Agreement	14/10/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Record Jet	Digital Music License Agreement & Amendment	14/10/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

93

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Red Bullet	Digital Music License Agreement & Amendment	12/08/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
RED Distribution LLC	Digital Music License Agreement – US only & Novation Letter	01/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Redeye Inc.	Digital Music License Agreement	20/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Republic of Music Ltd.	Digital Music License Agreement	02/10/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rock Records (S) Pte Ltd	Digital Music License Agreement	11/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Roja Mass Audios	Digital Music License Agreement	01/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rotana Audiovisual Company	Digital Music License Agreement & One Amendment	12/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Rotana Audiovisual Company	Digital Music License Agreement	12/04/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
RouteNote Ltd.	Digital Music License Agreement	03/04/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

94

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Saregama India Ltd	Digital Music License Agreement	24/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Saregama Tone	Digital Music License Agreement & One Amendment	01/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
SAS Entertainment	Digital Music License Agreement & One Amendment	20/02/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Second Wind Ltd	Digital Music License Agreement	24/09/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Shemaroo Entertainment Ltd	Digital Music License Agreement	27/11/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Shock Entertainment Pty Ltd	Digital Music License Agreement	05/02/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Silk Road Communications Pvt Ltd.	Digital Music License Agreement	23/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Silva Screen Records Ltd	Digital Music License Agreement	02/09/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Soor Mandir	Digital Music License Agreement & One Amendment	05/10/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

95

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Soulspazm Records Inc	Digital Music License Agreement	18/05/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
South India Digital Music Management Pvt Ltd	Digital Music License Agreement & One Amendment	19/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Southern Record Distribution (aka SRD)	Digital Music License Agreement	07/09/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
SPI Music Private Ltd. (aka Think Music)	Digital Music License Agreement – US only	14/02/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Spice Digital Limited	Digital Music License Agreement & One Amendment	01/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
SPV Schallplatten Produktion & Vertrieb GmbH	Digital Music License Agreement	28/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
SRK Media Entertainment	Digital Music License Agreement & One Amendment	20/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
ST2 Music LTDA	Digital Music License Agreement	06/08/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Star Music	Digital Music License Agreement & One Amendment	01/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

96

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Static Plastic Productions	Digital Music License Agreement	06/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Stingray Music USA Inc	Digital Music License Agreement & One Amendment	11/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Strumm Entertainment Pvt Ltd	Digital Music License Agreement & One Amendment	13/08/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Super Audio (Madras) Pvt Ltd	Digital Music License Agreement	23/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Symphonic Distribution	Digital Music License Agreement	18/07/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Symphony Recording Co.	Digital Music License Agreement – US only	14/02/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Syntax Distribution	Digital Music License Agreement & Two Amendments	12/06/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
TBA AG	Digital Music License Agreement & One Amendment	24/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Tellytune	Digital Music License Agreement & One Amendment	21/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

97

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
The Indian Record MFG.Co. LTD	Digital Music License Agreement & One Amendment	12/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
The New Digital Media	Digital Music License Agreement & One Amendment	11/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
The state51 Conspiracy LTD	Digital Music License Agreement	15/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Three Six Zero (aka AnD Press)	Digital Music License Agreement – US only	25/11/2011	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Times Internet Limited	Digital Music License Agreement	09/08/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
TMS Management OU	Digital Music License Agreement	30/12/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Tratore distribucao de CDS LTDA	Digital Music License Agreement	22/04/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Tricks and Cider (aka Victoria Ho)	Digital Music License Agreement	09/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Tropic Jaya Entertainment Sdn. Bhd (683252-P)	Digital Music License Agreement	01/07/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

98

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Tunecore, Inc	Digital Music License Agreement	19/05/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
UD Entertainment Pvt Ltd	Digital Music License Agreement & One Amendment	27/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Ultra Distributors Pvt Ltd	Digital Music License Agreement & One Amendment	10/01/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
UniArte S.r.l	Digital Music License Agreement	25/06/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Unisys Infosolutions Pvt Ltd	Digital Music License Agreement & One Amendment	05/10/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Universal Music Publishing Pvt Ltd	Digital Music License Agreement	24/01/2014	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Universal power systems pvt ltd alias TECHZONE	Digital Music License Agreement & One Amendment	19/12/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Universo S.p.A	Digital Music License Agreement	12/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
uTunes Entertainment Private Limited	Digital Music License Agreement & One Amendment	15/09/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

99

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Valleyarm Digital Pty Ltd	Digital Music License Agreement & Letter of Assignment	20/11/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Vega Entertainment	Digital Music License Agreement & One Amendment	27/05/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Venus Records & Tapes Pvt Ltd	Digital Music License Agreement	08/10/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
VIO Mobile	Digital Music License Agreement	16/09/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Violent Music BV	Digital Music License Agreement	01/02/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Virtual Marketing india Pvt Ltd (aka Hungama)	Digital Music License Agreement & Four Amendments	01/12/2007	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Voice Digital	Digital Music License Agreement & One Amendment	14/03/2013	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Wagram Music	Digital Music License Agreement	30/08/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Waptak Ltd (aka IRICOM aka Rightscom)	Digital Music License Agreement & Two Amendments	01/03/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

100

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Weapons of Mass Entertainment, LLC	Digital Music License Agreement	22/06/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Wireless Latin Entertainment, Inc	Digital Music License Agreement	01/09/2009	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
WMI	Digital Music License Agreement	08/02/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
World Music Office France SARL	Digital Music License Agreement	04/08/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
WorldWide Records	Digital Music License Agreement & One Amendment	01/10/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
X5 Music Group AB	Digital Music License Agreement	03/07/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Xelon Entertainment Ltd	Digital Music License Agreement	03/04/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Yozik	Digital Music License Agreement	27/05/2010	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Zojak World Wide, LLC	Digital Music License Agreement	06/07/2012	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store

101

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
ZYX Music GmbH & Co KG	Digital Music License Agreement & One Amendment	28/03/2008	Auto renew	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Faro Latino S.A.	Digital Music License Agreement	08/08/2014	1 year followed by successive 1 year terms until terminated	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
See Music (Hong Kong) International Limited	Digital Music License Agreement	19/08/2014	1 year followed by successive 1 year terms until terminated	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Navigator Records LLC	Digital Music License Agreement	25/09/2014	1 year followed by successive 1 year terms until terminated	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Casete Upload SA DE CV	Digital Music License Agreement	22/09/2014	1 year followed by successive 1 year terms until terminated	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
Roba	Digital Music License Agreement	30/09/2014	1 year followed by successive 1 year terms until terminated	Digital Music License to sell mp3 tracks & albums on Nokia Music Store
ABC Digital Distribution Limited	Content License Agreement for Radio Service	25/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Abirami Audio Recording Pvt Ltd	Content License Agreement for Radio Service	22/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Abirami Audio Recording Pvt Ltd	Amendment to Content License Agreement for Radio Service	23/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

102

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Absolute Marketing International Ltd.	Content License Agreement for Radio Service	24/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Absolute Marketing and Distribution Ltd.	Amendment to Content License Agreement for Radio Service	22/08/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Africori	Content License Agreement for Radio Service	13/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
AGI Music SDN BHD	Content License Agreement for Radio Service	14/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
AGI Music SDN BHD	Amendment to Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Alpha Digitech	Content License Agreement for Radio Service	09/11/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

103

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Alpha Digitech	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Altafonte Music Distribution SL	Content License Agreement for Radio Service	15/12/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Altafonte Music Distribution SL	Amendment for Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Another Venture LTD d/b/a Seed	Content License Agreement for Radio Service	25/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
AP Internationals (aka Anak Audio)	Content License Agreement for Radio Service	22/04/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Aquarius Musikindo P.T.	Content License Agreement for Radio Service	15/11/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

104

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Arkworks Channel	Content License Agreement for Radio Service	01/11/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Arkworks Channel	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Artist First S.R.L	Content License Agreement for Radio Service	22/10/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Audio & Video Labs Inc. dba CD Baby	Content License Agreement for Radio Service	28/10/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Audio & Video Labs Inc. dba CD Baby	Amendment to Content License Agreement for Radio Service	N/A	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
CD Baby	Amendment to Content License Agreement for Radio Service	23/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Awal (UK) Limited (delivering Kobalt)	Content License Agreement for Radio Service	22/09/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

105

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Awal Digital Ltd (formerly Awal (UK) Limited	Amendment to Content License Agreement for Radio Service	05/03/2013		To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Beggars Group Digital Ltd.	Content License Agreement for Radio Service	16/05/2012	31/12/2014	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Beggars Group Digital Ltd.	Amendment to Content License Agreement for Radio Service	24/06/2013	31/12/2014	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Beggars Group Digital Ltd.	Amendment Content License Agreement for Radio Service	10/02/2014	31/12/2014	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Believe Digital	Content License Agreement for Radio Service	14/10/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Believe Digital	Amendment to Content License Agreement for Radio Service	09/12/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

106

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Believe Digital	Amendment to Content License Agreement for Radio Service	22/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Binacatunes Media Pvt Ltd	Content License Agreement for Radio Service	12/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Binacatunes Media Pvt Ltd	Amendment to Content License Agreement for Radio Service	25/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Black Hole Recordings B.V.	Content License Agreement for Radio Service	24/10/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Black Hole Recordings B.V.	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Budha Subba Digital Pvt Ltd.	Content License Agreement for Radio Service	01/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

107

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Celldak Solutions	Content License Agreement for Radio Service	26/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Cipher Entertainment FZ LLC	Content License Agreement for Radio Service	15/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Deck Producoes Artisticas LTDA	Content License Agreement for Radio Service	20/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Deep Emotions Publishing Pvt Ltd	Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ditto Music (Ditto Ltd)	Content License Agreement for Radio Service	29/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ditto Music (Ditto Ltd)	Amendment to Content License Agreement for Radio Service	10/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

108

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Dizital Geeks	Content License Agreement for Radio Service	15/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Dizital Geeks	Amendment to Content License Agreement for Radio Service	2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Divo TV Private Limited	Content License Agreement for Radio Servce	16/10/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Domino	Content License Agreement for Radio Service	07/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Domino	Amendment to Content License Agreement for Radio Service	10/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Dox/ Stroom Records	Content License Agreement for Radio Service	29/11/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

109

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Dox/ Stroom Records	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Drecords International Pvt Ltd	Content License Agreement for Radio Service	20/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Drecords International Pvt Ltd	Amendment to Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
DRJ Records	Content License Agreement for Radio Service	08/11/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
DRJ Records	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
E1 Entertainment U.S. LP	Content License Agreement for Radio Service	29/06/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

110

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
E1 Entertainment U.S. LP	Amendment to Content License Agreement for Radio Service	20/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
East Coast Audio Entertainment	Content License Agreement for Radio Service	12/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
East Coast Audio Entertainment	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
E-Muzyka S.A.	content License Agreement for Radio Service	24/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Eros International Limited	Content License Agreement for Radio Service	01/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Essential Music and Marketing Ltd	Content License Agreement for Radio Service	06/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

111

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Essential Music and Marketing Ltd	Content License Agreement for Radio Service	02/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
finetunes GmbH	Content License Agreement for Radio Service	12/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Five Star Audio	Content License Agreement for Radio Service	01/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Five Star Audio	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Gakk Media (BD) Limited	Content License Agreement for Radio Service	01/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Gakk Media (BD) Limited	Amendment to Content License Agreement for Radio Service	21/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

112

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Giri Digital Solutions Private Limited	Content License Agreement for Radio Service	10/01/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Giri Digital Solutions Private Limited	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
GoBindas Entertainment Pvt Ltd	Content License Agreement for Radio Service	16/10/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
GoBindas Entertainment Pvt Ltd	Amendment to Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Heaven 11 LLC	Content License Agreement for Radio Service	24/10/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Hungama Digital Entertainment Pvt Ltd	Content License Agreement for Radio Service	26/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

113

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
IIP DDS BV	Content License Agreement for Radio Service	13/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Independent Digital Licensing Agency (IDLA)	Content License Agreement for Radio Service	15/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Independent Digital Sp z o.o. (used to be Propolis)	Content License Agreement for Radio Service	28/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Intermezzo Music & Media Group	Content License Agreement for Radio Service	28/11/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Involved Productions Ltd. (aka Anjunabeats, Above & Beyond)	Content License Agreement for Radio Service	03/05/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Isolation Network INC d/b/a INGROOVES and d/b/a One Digital Distribution	Content License Agreement for Radio Service	25/08/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

114

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Isolation Network INC d/b/a INGROOVES and d/b/a One Digital Distribution	Amendment to Content License Agreement for Radio Service	29/11/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Isolation Network INC d/b/a INGROOVES and d/b/a One Digital Distribution	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Isolation Network INC d/b/a INGROOVES and d/b/a One Digital Distribution	Amendment to Content License Agreement for Radio Service	12/09/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kappamakki Consultario Artistica E Cultural Ltda.	Content License Agreement for Radio Service	23/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kdigital (aka SSM)	Content License Agreement for Radio Service	03/03/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kiver SpA	Content License Agreement for Radio Service	20/12/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

115

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Kiver SpA	Amendment to Content License Agreement for Radio Service	03/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kontor New Media, a division of Kontor Records GmbH	Content License Agreement for Radio Service	02/01/2013	02/01/2015	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kontor New Media, a division of Kontor Records GmbH	Amendment to Content License Agreement for Radio Service	13/12/2013	Term extension, Auto Renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kuarup Produções Ltda	Content License Agreement for Radio Service	04/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kudos Records LTD	Content License Agreement for Radio Service	28/06/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Kudos Records LTD	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

116

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
KVZ	Content License Agreement for Radio Service	26/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Label Worx Limited	Content License Agreement for Radio Service	13/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Laughing Buddha Entertainment	Content License Agreement for Radio Service	07/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Laughing Buddha Entertainment	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Leader Music	Content License Agreement for Radio Service	08/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
LMS Comercio (aka Building)	Content License Agreement for Radio Service	14/01/2003	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

117

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Lokdhun Telemedia	Content License Agreement for Radio Service	11/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Lokdhun Telemedia	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
M/s Goyal Digi Music	Content License Agreement for Radio Service	27/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
M/s Goyal Digi Music	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Major Records Entertainment LLC	Content License Agreement for Radio Service	12/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Manorama Music	Content License Agreement for Radio Service	12/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

118

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Manorama Music	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Mars Inc.	Content License Agreement for Radio Service	15/11/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Mars Inc.	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
MGM Distribution (The Groove Merchants)	Content License Agreement for Radio Service	20/06/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
MGM Distribution (The Groove Merchants)	Amendment to Content License Agreement for Radio Service	06/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ministry of Sound UK	Content License Agreement for Radio Service	27/10/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

119

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Ministry of Sound UK	Amendment to Content License Agreement for Radio Service	20/12/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ministry of Sound UK	Amendment to Content License Agreement for Radio Service	01/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ministry of Sound UK	Amendment to Content License Agreement for Radio Service	02/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Mobisoft Telesolutions Pvt. Ltd. (aka Phoneytunes)	Content License Agreement for Radio Service	12/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Mobisoft Telesolutions Pvt. Ltd. (aka Phoneytunes)	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Mohamed Sami Abdullah Ehsan	Content License Agreement for Radio Service	10/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

120

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Music Dealers LLC	Content License Agreement for Radio Service	27/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Music Kickup	Content License Agreement for Radio Service	20/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Music Wires	Content License Agreement for Radio Service	18/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Music Wires	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Musicraft	Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Musicraft	Amendment to Content License Agreement for Radio Service	11/03/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

121

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Naïve	Content License Agreement for Radio Service	26/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Naxos Sweden (now Naxos of America)	Content License Agreement for Radio Service	23/09/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Naxos Sweden (now Naxos of America)	Amendment to Content License Agreement for Radio Service	28/11/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Naxos Sweden (now Naxos of America)	Amendment to Content License Agreement for Radio Service	17/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ocean Butterflies Music PTE (SG)	Content License Agreement for Radio Service	20/06/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Oh Boy Records, Red Pajamas Records and Blue Plate Music	Content License Agreement for Radio Service	06/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

122

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
One Stop Music	Content License Agreement for Radio Service	01/04/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
OneRPM LLC	Content License Agreement for Radio Service	01/07/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Phonofile AS (Phonofile Norway)	Content License Agreement for Radio Service	10/02/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Phonofile AS (Phonofile Norway)	Amendment to Content License Agreement for Radio Service	21/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Phonographic Performance Ltd (PPL)	Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PIAS Sprl / PIAS-VITAL	Content License Agreement for Radio Service	28/10/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

123

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
PIAS Sprl / PIAS-VITAL	Amendment to Content License Agreement for Radio Service	23/11/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PIAS Sprl / PIAS-VITAL	Amendment to Content License Agreement for Radio Service	22/08/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Pison Contents	Content License Agreement for Radio Service	26/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Planet41 Mobi-Venture Limited	Content License Agreement for Radio Service	28/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Planet41 Mobi-Venture Limited	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
POPS Worldwide	Content License Agreement for Radio Service	03/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

124

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Produciones Alzur SL (aka Lanzadera)	Content License Agreement for Radio Service	14/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Pschent	Content License Agreement for Radio Service	05/03/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Alfa Kreasitama	Content License Agreement for Radio Service	11/06/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Arka Music Indonesia	Content License Agreement for Radio Service	23/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT CeraHati Digital Media	Content License Agreement for Radio Service	12/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Digital Rantai Maya	Content License Agreement for Radio Service	13/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

125

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
PT Indo Semar Sakti	Content License Agreement for Radio Service	29/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Kreasi Cakrawala Utama (aka Keci Muzik)	Content License Agreement for Radio Service	01/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Naga Swarasakti	Content License Agreement for Radio Service	02/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Pelangi Prima Sejati	Content License Agreement for Radio Service	23/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Redtree Indonesia (aka Seven Music)	Content License Agreement for Radio Service	27/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT Sani Sentosa Abadi	Content License Agreement for Radio Service	01/06/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

126

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
PT. E-Motion Entertainment	Content License Agreement for Radio Service	01/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Virgo Multi Cipta effective on October 1, 201 used to be PT. Virgo Ramayana Music & Entertainment	Content License Agreement for Radio Service	03/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT.Gema Nada Pertim	Content License Agreement for Radio Service	02/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
PT.Graha Prima Swara	Content License Agreement for Radio Service	27/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Qanawat-FZ, LLC	Content License Agreement for Radio Service	16/04/2013	5/16/2014 – extension process ongoing	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rajaram Digital	Content License Agreement for Radio Service	20/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

127

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Rajaram Digital	Amendment to Content License Agreement for Radio Service	11/03/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rajshri Media P Ltd.	Content License Agreement for Radio Service	16/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rajshri Media P Ltd.	Amendment to Content License Agreement for Radio Service	29/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rants Limited t/as VidZone Digital Media	Content License Agreement for Radio Service	26/03/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rants Limited t/as VidZone Digital Media	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
RDC Media	Content License Agreement for Radio Service	01/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

128

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
RDC Media	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rebeat Digital GmbH	Content License Agreement for Radio Service	10/02/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rebeat Digital GmbH	Amendment to Content License Agreement for Radio Service	30/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rebeat Digital GmbH	Amendment to Content License Agreement for Radio Service	10/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Record Jet	Content License Agreement for Radio Service	18/06/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Record Jet	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

129

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Redeye Inc.	Content License Agreement for Radio Service	11/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Republic of Music Ltd.	Content License Agreement for Radio Service	18/07/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rock Records (S) Pte Ltd	Content License Agreement for Radio Service	11/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Roja Mass Audios	Content License Agreement for Radio Service	01/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Roja Mass Audios	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rotana Audiovisual Company	Content License Agreement for Radio Service MENA	12/04/2013	31/12/2014	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

130

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Rotana Audiovisual Company	Amendment to Content License Agreement for Radio Service	15/10/2013	31/12/2014	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Rotana Audiovisual Company	Content License Agreement for Radio Service ex MENA	12/04/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
RouteNote Ltd.	Content License Agreement for Radio Service	03/04/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Saregama India Limited	Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Saregama Tone	Content License Agreement for Radio Service	01/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Saregama Tone	Amendment to Content License Agreement for Radio Service	21/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

131

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
SAS Entertainment	Content License Agreement for Radio Service	20/02/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
SAS Entertainment	Amendment to Content License Agreement for Radio Service	25/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Shemaroo Entertainment Ltd	Digital Music License Agreement	27/11/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Silk Road Communications Pvt Ltd.	Content License Agreement for Radio Service	23/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Soor Mandir	Content License Agreement for Radio Service	05/10/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Soor Mandir	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

132

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
South India Digital Music Management Pvt Ltd	Content License Agreement for Radio Service	19/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
South India Digital Music Management Pvt Ltd	Amendment to Content License Agreement for Radio Service	22/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Southern Record Distribution (aka SRD)	Content License Agreement for Radio Service	13/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
SPI Music Private Ltd. (aka Think Music)	Content License Agreement for Radio Service	14/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
SPI Music Private Ltd. (aka Think Music)	Amendment to Content License Agreement for Radio Service	14/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Spice Digital Limited	Content License Agreement for Radio Service	30/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

133

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Spice Digital Limited	Amendment to Content License Agreement for Radio Service	27/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
SRK Media Entertainment	Content License Agreement for Radio Service	20/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
SRK Media Entertainment	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Star Music	Content License Agreement for Radio Service	01/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Star Music	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Static Plastic Productions	Content License Agreement for Radio Service	06/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

134

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Strumm Entertainment Pvt Ltd	Content License Agreement for Radio Service	13/08/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Strumm Entertainment Pvt Ltd	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Super Audio (Madras) Pvt Ltd	Content License Agreement for Radio Service	23/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Symphonic Distribution	Content License Agreement for Radio Service	18/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Symphony Recording Co.	Content License Agreement for Radio Service	14/02/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Symphony Recording Co.	Amendment to Content License Agreement for Radio Service	11/03/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

135

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Tellytune	Content License Agreement for Radio Service	21/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Tellytune	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
The Indian Record MFG.Co. LTD	Content License Agreement for Radio Service	17/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
The Indian Record MFG.Co. LTD	Amendment to Content License Agreement for Radio Service	02/04/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
The New Digital Media	Content License Agreement for Radio Service	11/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
The New Digital Media	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

136

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
The state51 Conspiracy LTD	Content License Agreement for Radio Service	14/11/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Tricks and Cider (aka Victoria Ho)	Content License Agreement for Radio Service	09/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Tunecore, Inc	Content License Agreement for Radio Service	02/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Tunecore, Inc	Amendment Content License Agreement for Radio Service	09/06/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
UD ENTERTAINMENT PVT LTD formerly UD Industries	Content License Agreement for Radio Service	27/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
UD ENTERTAINMENT PVT LTD formerly UD Industries	Amendment to Content License Agreement for Radio Service	11/03/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

137

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Ultra Distributors Pvt Ltd	Content License Agreement for Radio Service	10/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Ultra Distributors Pvt Ltd	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Unisys Infosolutions Pvt Ltd	Content License Agreement for Radio Service	05/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Unisys Infosolutions Pvt Ltd	Amendment to Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Universal Music Publishing Pvt Ltd	Content License Agreement for Radio Service	24/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Universal power systems pvt ltd alias TECHZONE	Content License Agreement for Radio Service	19/12/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

138

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Universal power systems pvt ltd alias TECHZONE	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
uTunes Entertainment Private Limited	Content License Agreement for Radio Service	15/09/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
uTunes Entertainment Private Limited	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Valleyarm Digital Pty Ltd	Content License Agreement for Radio Service	31/12/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Valleyarm Digital Pty Ltd	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Valleyarm Digital Pty Ltd	Amendment to Content License Agreement for Radio Service	23/01/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

139

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Vega Entertainment	Content License Agreement for Radio Service	27/05/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Vega Entertainment	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
VIO Mobile	Content License Agreement for Radio Service	17/09/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Voice Digital	Content License Agreement for Radio Service	14/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Voice Digital	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Waptak Ltd (aka Iricom and aka Rightscom)	Content License Agreement for Radio Service in Russia only	25/03/2013	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

140

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
WorldWide Records	Content License Agreement for Radio Service	01/10/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
WorldWide Records	Amendment to Content License Agreement for Radio Service	01/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
X5 Music Group AB	Content License Agreement for Radio Service	28/08/2011	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
X5 Music Group AB	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
X5 Music Group AB	Amendment to Content License Agreement for Radio Service	10/01/2014	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Zojak World Wide, LLC	Content License Agreement for Radio Service	06/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

141

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Zojak World Wide , LLC	Amendment to Content License Agreement for Radio Service	13/07/2012	Auto renew	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Faro Latino S.A.	Content License Agreement for Radio Service	08/08/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
La Cupula Music	Content License Agreement for Radio Service	29/07/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
See Music (Hong Kong) International Limited	Content License Agreement for Radio Service	19/08/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Navigator Records LLC	Content License Agreement for Radio Service	25/09/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Horus Music Limited	Content License Agreement for Radio Service	29/09/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.

142

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Roba	Content License Agreement for Radio Service	30/09/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Casete Upload SA DE CV	Content License Agreement for Radio Service	22/09/2014	1 year followed by successive 1 year terms until terminated	To exploit and sublicense audio recordings and related content for use on Nokia Mix Radio streaming service.
Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Beggars Group Digital	Digital Music License Agreement	Radio Service	05/08/2014	31/12/2014
Beggars Group Digital	Tax Authorisation Letter	Letter	05/08/2014	N/A
Beggars Group Digital	HM Revenue & Customs letter	Letter	30/07/2014	N/A
Ocean Interactive (Beijing) Culture Co. Ltd	Digital Music License Agreement	Radio Service	08/04/2014	31/12/2014
Kugou Computer Technology Co Ltd	Digital Music License Agreement	Radio Service	08/04/2014	31/12/2014
See Music (Shanghai) Co Ltd	Digital Music License Agreement	Radio Service	08/04/2014	31/12/2014
Beijing Yuelin Culture & Art Development Limited Company	Digital Music License Agreement	Radio Service	08/04/2014	01/01/2015
Rock Records (Beijing) Co., Ltd.	Digital Music License Agreement	Radio Service & other services	12/07/2013	31/12/2014
Rock Records (Beijing) Co., Ltd.	Digital Music License Amendment	Radio Service & other services	21/10/2013	31/12/2014
Rock Records (Beijing) Co., Ltd.	Amendment Agreement	Radio Service	23/10/2014	31/12/2014
Emperor Star (Beijing) Limited	Digital Music License Amendment	Radio Service & other services	08/04/2013	31/12/2014
Emperor Star (Beijing) Limited	Amendment Agreement	Radio Service	24/10/2014	31/12/2014

143

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
ABC Digital Distribution Limited	Digital Music License Agreement & Amendment	24/04/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Abirami Audio Recording Pvt Ltd	Digital Music License Agreement & Amendment	22/02/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
AGI Music SDN BHD	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Alpha Digitech	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
AP Internationals (aka Anak Audio)	Digital Music License Agreement	22/04/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Arkwork Channel	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Beggars	Digital Music License Agreement & Amendment	26/11/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Believe	Digital Music License Agreement & Amendment	09/09/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Binacatunes	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

144

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Budha Subba Digital Pvt Ltd.	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Celldak Solutions	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Deep Emotions Publishing Pvt Ltd	Digital Music License Agreement & Amendment	23/09/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Ditto Music (Ditto Ltd)	Digital Music License Agreement & Amendment	12/10/2011	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Dizital Geeks	Digital Music License Agreement & Amendment	15/08/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Divo TV Private Limited	Digital Music License Agreement	16/10/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Domino	Digital Music License Agreement & Amendment	09/04/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Drecords International Pvt Ltd	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
DRJ Records	Digital Music License Agreement & Amendment	08/11/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

145

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
East Coast Audio Entertainment	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Eros International Media Limited	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Five Star Audio	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Gakk Media (BD) Limited	Digital Music License Agreement & Amendments	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Giri Digital Solutions Private Limited	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
GoBindas Entertainment Pvt Ltd	Digital Music License Agreement & Amendment	16/10/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Laughing Buddha Entertainment	Digital Music License Agreement & Amendment	01/04/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Lokdhun Telemedia	Digital Music License Agreement & Amendment	11/02/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
M/s Goyal Digi Music	Digital Music License Agreement & Amendment	07/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

146

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Manorama Music	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Mars Inc.	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Mobisoft Telesolutions Pvt. Ltd. (aka Phoneytunes)	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Music Wires	Digital Music License Agreement & Amendment	18/05/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Orchard (The Orchard Enterprises, Inc. / OWIE)	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Phonofile AS (Phonofile Norway)	Digital Music License Agreement & Amendment	05/06/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Phonographic Performance Ltd (PPL)	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Planet41 Mobi-Venture Limited	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Qanawat-FZ, LLC	Digital Music License Agreement	16/04/2013	31/12/2013	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

147

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Rajaram Digital	Digital Music License Agreement	13/02/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Rajshri Media P Ltd.	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Rants Limited t/as VidZone Digital Media	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
RDC Media	Digital Music License Agreement & Amendment	01/04/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Rebeat Digital GmbH	Digital Music License Agreement & Amendment	11/02/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Roja Mass Audios	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Rotana Audiovisual Company	Digital Music License Agreement & Amendment	12/04/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Saregama India Limited	Digital Music License Agreement & Amendment	01/01/2013	31/03/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Saregama Tone	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

148

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
SAS Entertainment	Digital Music License Agreement & Amendment	20/02/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Shemaroo Entertainment Ltd	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Silk Road Communications Pvt Ltd.	Digital Music License Agreement & Amendment	23/09/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Soor Mandir	Digital Music License Agreement & Amendment	05/10/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
South India Digital Music Management Pvt. Ltd.	Digital Music License Agreement & Amendment	19/08/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
SPI Music Private Ltd. (aka Think Music)	Digital Music License Agreement & Amendment	14/02/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Spice Digital Limited	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
SRK Media Entertainment	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Star Music	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

149

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Strumm Entertainment Pvt. Ltd.	Digital Music License Agreement & Amendment	13/08/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Super Audio (Madras) Pvt Ltd	Digital Music License Agreement & Amendment	01/06/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Symphony Recording Co.	Digital Music License Agreement & Amendment	14/02/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Tellytune	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
The Indian Record MFG.Co. LTD	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
The New Digital Media	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Timesmobile Limited	Digital Music License Agreement & Amendment	05/12/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
UD ENTERTAINMENT PVT LTD formerly UD Industries	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Ultra Distributors Pvt Ltd	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

150

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Unisys Infosolutions Pvt Ltd	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Universal Music Publishing Pvt Ltd	Digital Music License Agreement & Amendment	23/09/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Universal power systems pvt ltd alias TECHZONE	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
uTunes Entertainment Private Limited	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Vega Entertainment	Digital Music License Agreement & Amendment	27/05/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Virtual Marketing india Pvt Ltd (aka Hungama)	Digital Music License Agreement & Amendments	01/01/2013	30/06/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Voice Digital	Digital Music License Agreement & Amendment	14/03/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
WorldWide Records	Digital Music License Agreement & Amendment	01/01/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
X5 Music Group AB	Digital Music License Agreement & Amendment	28/02/2013	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region

151

Counterparty Contracting Party	Agreement Title	Agreement Effective Date	Agreement Expiration Date	Brief Description of Agreement Purpose
Musicraft	Digital Music License Agreement	17/02/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Absolute Marketing and Distribution Ltd.	Digital Music License Agreement	22/08/2014	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
FreeSpirit Entertainment Pvt Ltd	Digital Music License Agreement & Amendments	05/12/2011	31/12/2014	Digital Music License for Nokia Music Unlimited (NMU) service in the Indian region
Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
PT. Warner Music Indonesia	License Agreement	License Agreement	2013-08-26	rolling
VCPMC (Vietnam Center for Protection of Music Copyright)	Licence Agreement	License Agreement	2013-10-01	28/02/2016
ARESA GmbH	Non-precedential ARESA-Licence	License Agreement	2013-07-01	31/12/2014
Peermusic Pacific Pte. Ltd.	License Agreement	License Agreement	2014-11-29	varies (2015)
PT. Sony Music Entertainment Indonesia	License Agreement	License Agreement	2014-01-03	31/12/2014
SACEM, SDRM, SESAM	Agreement	License Agreement	2013-12-12	rolling
SDRM on behalf of UMPI	Agreement	License Agreement	2013-12-12	rolling
SACEM, SDRM, SESAM	Agreement	License Agreement	2013-12-12	rolling
UBC (Uniao Brasileira de Compositores)	License Agreement – Contrato	License Agreement	2013-11-13	rolling
Musiikkituottajat IFPI Finland ry	Sponsorship Agreement	Sponsorship Agreement	2014-01-01	31/12/2014

152

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
APRA AMCOS	APRA/AMCOS digital music service agreement 2009	music publishing license	23/02/2011	31/12/2014 & rolling
APRA AMCOS	Letter for variation for Nokia Australia digital music service	music publishing license	03/12/2010	31/12/2014 & rolling
APRA AMCOS	APRA/AMCOS semi interactive digital music service license agreement	music publishing license	17/04/2013	30/06/2015
CELAS GmbH	CELAS Licence	music publishing license	04/03/2008	31/12/2014
CELAS GmbH	Sideletter	music publishing license	20/01/2009	31/12/2013 & renewal
CELAS GmbH	Sideletter Amendment 2	music publishing license	26/10/2011	31/12/2013 & renewal
CELAS GmbH	Sideletter Amendment 3	music publishing license	11/03/2013	31/12/2014
CELAS GmbH	Gulf Region Sideletter Amendment	music publishing license	18/03/2013	31/12/2014
EMI Music Publishing Malaysia Sdn Bhd	Nokia Music Services License Agreement	music publishing license	01/01/2012	2 years from launches
GEMA	Agreement	music publishing license	24/02/2012	31/12/2014
GEMA	Amendment	music publishing license	26/10/2012	31/12/2014
MESAM	Agreement	music publishing license	16/02/2010	31/12/2014 & rolling
MESAM	Amendment	music publishing license	06/09/2010	31/12/2014 & rolling
MESAM	Amendment 2	music publishing license	18/05/2012	31/12/2014 & rolling
MESAM	Termination letter	Termination letter	Termination as of 12/31/2014	N/A
MSG	Agreement 16.03.2010	music publishing license	16/03/2010	31/12/2014 & rolling

153

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
MSG	Amendment 06.09.2010	music publishing license	06/09/2010	31/12/2014 & rolling
MSG	Amendment 2 18.10.2012	music publishing license	18/05/2012	31/12/2014 & rolling
NORM	Agreement	music publishing license	24/08/2009	31/12/2014
NORM	Amendment	music publishing license	22/02/2011	31/12/2014
NORM	Amendment 2	music publishing license	27/07/2011	31/12/2014
NORM	Amendment 3	music publishing license	15/06/2012	31/12/2014
PAECOL GmbH	Agreement	music publishing license	23/09/2011	31/12/2014
PAECOL GmbH	Amendment	music publishing license	04/02/2013	31/12/2014
PRS Limited, MCPS Limited	Agreement	music publishing license	03/10/2012	30/06/2014 & rolling
PRS Limited, MCPS Limited	Amendment Agreement	music publishing license	03/01/2013	30/06/2014 & rolling
PRS Limited, MCPS Limited, Warner/Chappell Music Limited	PEDL Licence Agreement	music publishing license	19/02/2009	31/12/2013 (extension planned)
PRS Limited, MCPS Limited, Warner/Chappell Music Limited	PEDL Licence Amendment	music publishing license	29/01/2010	31/12/2013 (extension planned)
PRS Limited, MCPS Limited, Warner/Chappell Music Limited	PEDL Licence Amendment 2	music publishing license	21/04/2010	31/12/2013 (extension planned)
PRS Limited, MCPS Limited, Warner/Chappell Music Limited	PEDL Licence Amendment 3	music publishing license	21/04/2010	31/12/2013 (extension planned)
PRS Limited, MCPS Limited, Warner/Chappell Music Limited	PEDL Licence Amendment 4	music publishing license	26/04/2012	31/12/2013 (extension planned)

154

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
PRS Limited, MCPS Limited, Warner/Chappell Music Limited	PEDL Licence Amendment 4A	music publishing license	06/03/2013	31/12/2014 re the territory in schedules specified in the amendment
Rotana Publishing SARL	Agreement	music publishing license	13/03/2013	30/06/2015 & rolling
SAMRO	Agreement	music publishing license	13/08/2009	31/12/2014
SAMRO	Amendment	music publishing license	09/06/2011	31/12/2014
SAMRO	Amendment 2	music publishing license	15/09/2011	31/12/2014
SAMRO	Amendment 3	music publishing license	15/06/2012	31/12/2014
SIAE	Agreement	music publishing license	23/04/2013	31/12/2014 & renew
Sociedad General de Autores y Editores (SGAE)	License for music on demand	music publishing license	01/09/2011	30/06/2014 & renew
Sociedad General de Autores y Editores (SGAE)	Addendum	music publishing license	10/01/2012	30/06/2014 & renew
Sociedad General de Autores y Editores (SGAE)	Addendum 2	music publishing license	24/04/2013	30/06/2014 & renew
Sociedade Portuguesa de Autores (SPA)	Agreement	music publishing license	29/11/2004	31/12/2014 & renew
Sociedade Portuguesa de Autores (SPA)	Amendment	music publishing license	28/02/2006	31/12/2014 & renew
Sociedade Portuguesa de Autores (SPA)	Amendment 2	music publishing license	30/10/2008	31/12/2014 & renew
Sociedade Portuguesa de Autores (SPA)	Amendment 3	music publishing license	15/08/2011	31/12/2014 & renew
Sociedade Portuguesa de Autores (SPA)	Amendment 4	music publishing license	26/10/2012	31/12/2014 & renew
Sony Music Publishing Sdn Bhd	Nokia Music Services License Agreement	music publishing license	01/01/2012	2 years from launches

155

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
SUISA	Agreement	music publishing license	24/07/2008	31/12/2014 & renew
SUISA	Letter agreement with SUISA…	music publishing license	06/02/2013	31/12/2014 & renew
SUISA	Letter agreement	music publishing license	12/03/2013	9/30/2010 – the term shall continue for the full resulting periods applicable to CWM devices and renewal periods
TEOSTO r.y.; NCB	Letter agreement for final settlement…	music publishing license	04/10/2013	31/03/2014 & 31/12/2015
WapTak Ltd.	Agreement	music publishing license – extension negotiation ongoing	25/10/2012	31/12/2013 & options – extension planned
ZAiKS	License Agreement	music publishing license	09/11/2009	31/12/2014
ZAiKS	License Amendment Agreement	music publishing license	04/01/2012	31/12/2014
ZAiKS	License Amendment 2 Agreement	music publishing license	29/05/2012	31/12/2014
Warner/Chappell Music Publishing Agency (Beijing) Ltd	PEDL License Agreement	Publisher agreement	07/07/2010	06/04/2012
Warner/Chappell Music Publishing Agency (Beijing) Ltd	First Amendment to Pedl License Agreement	Publisher agreement	02/03/2012	06/04/2012
Warner/Chappell Music Publishing Agency (Beijing) Ltd	Second AMENDMENT TO PEDL LICENCE AGREEMENT	Publisher agreement	07/04/2012	06/04/2013
Warner/Chappell Music Publishing Agency (Beijing) Ltd	THIRD AMENDMENT TO PEDL LICENCE AGREEMENT	Publisher agreement	07/04/2013	4/6/2014, extension planned
ABEM (now part of UBEM)	Convenio sobre licenciamento…	music publishing license	28/04/2009	31/12/2014 & rolling
ABER (now part of UBEM)	Convenio sobre licenciamento…	music publishing license	03/04/2009	31/12/2014 & rolling

156

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
UBEM	Amendment to the agreements…	music publishing license	16/11/2011	31/12/2014 & rolling
UBEM	Amendment 2 to the agreements…	music publishing license	07/11/2012	31/12/2014 & rolling
ASCAP	License Agreement	music publishing license	28/12/2012	31/12/2014
ASCAP	side letter to License Agreement	music publishing license	28/12/2012	31/12/2014
BMG Rights Management (US) LLC	Agreement	music publishing license	17/08/2012	31/12/2014 & rolling
Kobalt Music Publishing America, Inc.	Agreement	music publishing license	16/08/2012	31/12/2014 & rolling
Peermusic III, Ltd.	Agreement	music publishing license	01/08/2012	01/09/2015 & rolling
SESAC LLC	SESAC performance license for Nokia	music publishing license	04/09/2012	31/12/2014 & rolling
The Harry Fox Agency, Inc.	Nokia-HFA administration service agreement	music administration service agreement	16/08/2012	01/08/2013 & rolling
Universal Music Publishing Group	Agreement	music publishing license	06/12/2012	31/12/2014
Warner/Chappell Music, Inc.	Agreement	music publishing license	01/09/2012	31/12/2014
SACM	Carta-Convenio con SACM con respecto a Mix Radio/Nokia Music+	license agreement	18/02/2014	17/04/2015
Peermusic Do Brasil Edicoes Musicais Ltda	License Agreement – Contrato	license agreement	25/02/2014	31/12/2014
Buma/Stemra	Letter agreement for final settlement to Buma/Stemra for the Licensed Service	license agreement	07/04/2014	31/12/2014
Beijing Golden Dynamic Software Development Co., Ltd	Publishing Aggregator AGREEMENT	Publishing aggregator agreement	08/04/2013	07/04/2014

157

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Ocean Interactive (Beijing) Culture Co Ltd	Publishing agreement	Publishing Agreement	08/04/2013	07/04/2013
EMI Music Publishing Asia	Direct Publishing License Agreement – Amendment to Ocean Interactive agreement dated 4/8/2013	Direct License deal for Mix Radio China for April to December 2014.	20/03/2014	31/12/2014
Sony/ATV Music Publishing (Hong Long)	Direct Publishing License Agreement – Amendment to Ocean Interactive agreement dated 4/8/2013	Direct License deal for Mix Radio China for April to December 2014.	20/03/2014	12/31/214
Music Authors’ Copyright Protection (MACP) Berhad	License Agreement	License Agreement for Malaysia	17/10/2013	31/12/2014
austro mechana & AKM	Agreement	license agreement for Austria	01/01/2012	31/12/2014
SABAM	2014 Annex for Extension, Annex 5	license agreement for Belgium	13/10/2014	31/12/2016
SABAM	Contract between SABAM and OD2	license agreement for Belgium	26/10/2004	31/12/2016
SABAM	Annex 1, Annex for Territory Extension	license agreement for Belgium & NL	date 2005	31/12/2016
SABAM	Annex 2, Annex for 2006 Extension	license agreement for Belgium & NL	26/04/2007	31/12/2016
SABAM	Annex 3, 2007 Annex for Extension	license agreement for Belgium & NL	08/01/2008	31/12/2016
SABAM	SABAM letter RE: SABAM & CELAS dated 8/01/2008 (part of Annex 3)	license agreement for Belgium & NL	08/01/2008	31/12/2016
SABAM	Annex 4, 2008 Annex for Extension	license agreement for Belgium & NL	date ?	31/12/2016
Composers and Authors Society of Singapore Ltd (COMPASS)	Licence – Agreement between COMPASS and Nokia Pte Ltd	license agreement for Singapore	01/01/2014	31/12/2014

158

PART 4 THE DOMAIN NAMES

Domain Name	Paid Through Date		Status	TLD
mixrad.io		15/08/2015	registered locked	.io
mixradio.biz		04/10/2015	registered locked	.biz
mixradio.cn		04/10/2015	registered locked	.cn
mixradio.co.id		02/12/2015	registered locked	.co.id
mixradio.in		04/10/2015	registered locked	.in
mixradio.mobi		04/10/2015	registered locked	.mobi
mixradio.net		18/03/2016	registered locked	.net
mixradio.us		04/10/2015	registered locked	.us
purefi.com		06/05/2015	Registered locked	.com
puremix.com		03/08/2018	Registered locked	.com
and brislabs.com		02/02/2015	Registered locked	.com

PART 5 THE IP AGREEMENTS

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Brasil Crowley Broadcast Analysis do Brasil Ltda.	Digital Music Data Provision	Music chart data	3.9.2013	auto renew
LyricFind Inc.	Service and Content License Agreement for ongoing Services relating to Nokia Music Services	Provision of lyrics to Mix Radio Service & Extension Letter	18.01.2013	One year fixed term, Nokia has a right to extend for additional two 12 months terms
LyricFind Inc.	Data Access Agreement	Provision of lyrics to Nokia Music Services in China	01.10.013	One year fixed term, continues in additional 1 year terms unless terminated in accordance with the agreement
McMaster University	Data Sharing and Co-operation Agreement	Provision of access to service data	31.05.2012	31.05.2017
media control GfK International	DIGITAL MUSIC DATA PROVISION AGMT	Music chart data	15.3.2012	Rolling Renewal

159

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
media control GfK International	Amendment (NO. 1) to the Music Data Provision Agreement	Amendment to add Territories	7.5.2013	Subject to main agreement
The Official UK Charts company	DIGITAL MUSIC DATA PROVISION AGMT	Music chart data	26.6.2011	Rolling Renewal
The Official UK Charts company	Amendment (NO. 1) to the Music Data Provision Agreement	Amendment to add Streaming Data	signed 18.03.2013	Subject to main agreement
Ticketmaster LLC.	Ticketmaster Affiliate Program	Data for gig finder	20.2.2013	on term by either party
Elisa Corporation	Mobile Operator Billing Agreement for Nokia Music Services	Operator billing service for end users	1.4.2013	One year fixed term, ongoing thereafter until terminated by the giving of 30 day notice by either party
Elisa Corporation	Amendment to Mobile Operator Billing Agreement for Nokia Music Services	Operator billing service for end users	1.7.2014	Subject to main agreement
The Nielsen Company	Nielsen Media Products Data Supply Agreement	Provision of sales information	15.11.2013	14.11.2015 (with auto renewals)
Microsoft Online, Inc	Microsoft Content License Agreement	Content license agreement	01.11.2013	Two years and auto renewal
Syntonetic Media Solutions A/S	Agreement for General Professional Services	Provision of service re music navigation, software and service	17.12.2013	One year fixed term
Syntonectic Media Solutions A/S	Amendment to the Agreement for General Professional Services	Supplement	24.4.2014	17.12.2014
Bristol Music Trust	Sponsorship Agreement	Sponsorship, advertising,	01.10.2013	30.09.2016
University of Cape Town	Framework research agreement	Research and development	1.1.2013	31.12.2017
AM Steinberg Advisors	Agreement for Consultancy Assignements 2.2	Consultancy Assignement	24/04/2014	30/09/2014

160

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
The Nielsen Company	Nielsen License Agreement for Entertainment Data and Services	License Agreement for Charts data with Nielsen Company LLC	09/06/2014	08/06/2015
Cooking Vinyl Publishing	License Agreement for Certain Master Recordings, Music and Underlying Works Thereof	License for preload	22/04/2014	Remains in force as long as Nokia is selling the Nokia Product
Gibson Brands Inc.	Agreement for providing material for use in advertising campaign for MixRadio.	Agreement for Trademark/promotional material	01/05/2014	No expiry date
YuMe Inc.	Agreement for software evaluation	Software Evaluation	31/07/2014	9/31/2014 & Option to renew by written agreement
Beijing Golden Dynamic Software Development Co., Ltd	Agreement for Consultancy Assignments	Consultancy	01/01/2014	31/12/2014
Branded Ltd and Indian Television Dot Com Pvt. Ltd.	Sponsorship Agreement	Sponsorship	26/11/2014	Earlier of the following: i) Future Events (as specified in the agreement) have been completed; ii) Nokia have been refused to sponsor the Event (as specified in the agreement)for 2015
Dolby Laboratories inc	software licensing agreement	Software Licensing	01/10/2012	No expiry date
BJ Wuxianjinli SW Development CO LT	Purchase order for Nokia Music Content Aggregation 3rd year	Purchase order	17/04/2014	N/A
Uservoice Inc	Sofware service agreement	Agreement for software as a service relating to uservoice service for mixradio	01/08/2014	31/07/2019

161

Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
AVC Edelman Company Ltd	Services Agreement	Promoting of MMO’s online music service (MixRadio)	01/07/2014	In force until the Services re Project are finalized or until terminated in accordance with the general conditions
BigChampagne	Digital Music Data Provision Agreement	Supply of sales and streaming information	13/06/2013	6/12/2014 and auto renew
Xamarin Inc	Agreement For Software Tools Licensing	Software Tools Licensing	01/09/2014	31/08/2015
Ab Leading High Performance Ltd	Agreement for Services	Management Consulting	15/08/2014	01/06/2015
Ab Leading High Performance Ltd	Amendment to Agreement for Services	Management Consulting	26/09/2014	01/06/2015
Fan Tan Entertainment Inc.	Agreement for Services	Management Consulting	21/07/2014	31/12/2014
Fan Tan Entertainment Inc.	Amendment to Agreement for Services	Management Consulting	01/09/2014	31/12/2014
Mosaic Island	Agreement for WS Development and Consultancy Projects	SW Development and consultancy	06/10/2014	09/03/2015
Musiikkituottajat – IFPI Finland ry	Sponsorship Agreement	sponsorship of Finland music charts	01/01/2014	31/12/2014
Musiikkituottajat – IFPI Finland ry	Amendment Agreement	sponsorship of Finland music charts	21/11/2014	31/12/2015

162

PART 6 THIRD PARTY SOFTWARE

1.	Beyond Compare
2.	Acrobat Pro
3.	Adobe Aftereffects 5.5
4.	Adobe Creative Suite CS5
5.	Adobe CS5 Design Premium
6.	Adobe Photoshop
7.	Adobe Web Premium CS3
8.	Adobe Web Premium CS5
9.	Agent Ransack
10.	AgileZen
11.	Balsamiq
12.	Beyond compare
13.	Browserstack
14.	Campfire
15.	Dreamweaver
16.	Glyphs 1.3.22 (496)
17.	HP quality center (VLM)
18.	IntelliJ 13 Ultimate Edition
19.	Keynote
20.	Microsoft Project
21.	Microsoft Visio
22.	Microsoft Visual Studio
23.	MindManger
24.	OmniGraffle Pro 5.4.2
25.	PagerDuty
26.	PHPStorm
27.	Resharper
28.	Snag IT
29.	Sprout Social
30.	Sublime Text 2
31.	SublimeText
32.	Tableau
33.	VisionApp
34.	VMWare
35.	Wirecast by Telestream

PART 7 OPEN SOURCE SOFTWARE

Team	Name
Watchmen	Media Info
Watchmen	Notepad++
Watchmen	7Zip
Watchmen	Nunit
Watchmen	MP3Lib
Watchmen	JSON.Net
Watchmen	Taglib-sharp

163

Team	Name
Watchmen	ID3Lib
Watchmen	Ionic.Zip
Watchmen	UITS tool
Watchmen	MOQ
Watchmen	SharpZipLib
Watchmen	Flac.exe
Watchmen	NLog
Watchmen	NMock
Watchmen	NMock2
Watchmen	Tortoise-Git
Web	Nodejs
Web	ReactJS
Web	BackboneJs
Web	Jplayer
Web	Director
Web	ES5Shim
Web	Jquery
Web	Lodash
Web	Mustache
Web	Statesman
Web	I18j-ns
Ops	Centos
Ops	Nagios
Ops	Cacti
Ops	Nexus
Ops	Apache HTTPD
Ops	Jboss
Ops	Jetty
Ops	MySql
Ops	MongoDB
Windows Client	JSON.Net
Windows Client	WinRT XAML Toolkit
Windows Client	SharpDX
Windows Client	SpecFlow *

164

Team	Name
Windows Client	Jenkins *
Windows Client	Nunit *
Windows Client	StyleCop *
Windows Client	ImageTools
Windows Client	WP Toolkit
Windows Client	SharpSerializer
Windows Client	Ionic.Zlib
Windows Client	SharpZipLib
Windows Client	WriteableBitmapEx
Windows Client	ID3.NET
Windows Client	SQLite
Windows Client	SQLite wrapper
Windows Client	SQLite native bridge
Windows Client	MOQ *
Windows Client	Sterling
Windows Client	XAML Styler *
Windows Client	NChurn *
Windows Client	OpenCover *
Windows Client	Nokia Imaging SDK
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-http-fake
Asimov	clj-time
Asimov	clojure-complete
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	commons-collections
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit

165

Team	Name
Asimov	metrics-clojure
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	ring-utils
Asimov	httpclient
Asimov	httpcore
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	rest-cljer
Asimov	ring-middleware-format
Asimov	samsa
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-http-fake
Asimov	clj-time
Asimov	clojure-complete
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	metrics-servlet
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit

166

Team	Name
Asimov	metrics-clojure
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	ring-utils
Asimov	httpclient
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	rest-cljer
Asimov	ring-jetty-adapter
Asimov	ring-middleware-format
Asimov	closchema
Asimov	logback-classic
Asimov	cheshire
Asimov	cinemagraph-loop
Asimov	clj-http
Asimov	clj-http-fake
Asimov	clj-time
Asimov	clojure-complete
Asimov	multipart
Asimov	rest-client-driver
Asimov	microsoft-windowsazure-api
Asimov	monger
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	metrics-servlet
Asimov	commons-io

167

Team	Name
Asimov	commons-lang
Asimov	compojure
Asimov	compojure-throttle
Asimov	environ
Asimov	jai-core
Asimov	jai_codec
Asimov	junit
Asimov	metrics-clojure
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	thumbnailator
Asimov	instrumented-ring-jetty-adapter
Asimov	ring-utils
Asimov	httpclient
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	rest-cljer
Asimov	ring-middleware-format
Asimov	slingshot
Asimov	xuggle-xuggler
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-http-fake
Asimov	clj-nokia-sso
Asimov	clj-time

168

Team	Name
Asimov	clojure-complete
Asimov	clout
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	metrics-servlet
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit
Asimov	metrics-clojure
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	ring-utils
Asimov	httpclient
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	rest-cljer
Asimov	ring-jetty-adapter
Asimov	ring-middleware-format
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-http-fake
Asimov	clj-keymaster-client

169

Team	Name
Asimov	clj-time
Asimov	clojure-complete
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit
Asimov	korma
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	mysql-connector-java
Asimov	mysql-connector-mxj
Asimov	instrumented-ring-jetty-adapter
Asimov	ring-utils
Asimov	httpclient
Asimov	httpcore
Asimov	clojure
Asimov	data.xml
Asimov	data.zip
Asimov	java.jdbc
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	rest-cljer
Asimov	ring-middleware-format
Asimov	slingshot
Asimov	validation-clj
Asimov	closchema

170

Team	Name
Asimov	logback-classic
Asimov	logback-core
Asimov	cheshire
Asimov	clj-http
Asimov	clj-webdriver
Asimov	clojure-complete
Asimov	rest-client-driver
Asimov	monger
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit-dep
Asimov	midje
Asimov	ring-utils
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	hamcrest-all
Asimov	runtime
Asimov	selenium-server
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	re-rand
Asimov	rest-cljer
Asimov	ring-devel
Asimov	ring-jetty-adapter
Asimov	slingshot
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-http-fake

171

Team	Name
Asimov	clj-time
Asimov	clojure-complete
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	commons-collections
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit
Asimov	korma
Asimov	metrics-clojure
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	jtds
Asimov	ring-utils
Asimov	httpclient
Asimov	httpcore
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	rest-cljer
Asimov	ring-middleware-format
Asimov	samsa
Asimov	clojure-complete
Asimov	tools.nrepl

172

Team	Name
Asimov	samsa
Asimov	logback-classic
Asimov	jackson-databind
Asimov	bonecp
Asimov	metrics-graphite
Asimov	metrics-httpclient
Asimov	metrics-logback
Asimov	commons-io
Asimov	commons-lang
Asimov	servlet-api
Asimov	joda-time
Asimov	mysql-connector-java
Asimov	httpclient
Asimov	httpcore
Asimov	jackson-core-asl
Asimov	jackson-mapper-asl
Asimov	hsqldb
Asimov	resteasy-jackson-provider
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	runtime
Asimov	quartz
Asimov	spring-context-support
Asimov	spring-jdbc
Asimov	spring-tx
Asimov	spring-web
Asimov	cglib-nodep
Asimov	metrics-servlet
Asimov	metrics-web
Asimov	aspectjweaver
Asimov	jcl-over-slf4j
Asimov	rest-client-driver
Asimov	rest-server-driver
Asimov	junit-dep

173

Team	Name
Asimov	hamcrest-core
Asimov	hamcrest-library
Asimov	hsqldb
Asimov	mockito-core
Asimov	cheshire
Asimov	clojure-complete
Asimov	kafka-2.9.2
Asimov	clojure
Asimov	tools.nrepl
Asimov	logback-classic
Asimov	echonest-api
Asimov	jackson-databind
Asimov	metrics-core
Asimov	metrics-graphite
Asimov	metrics-jetty
Asimov	metrics-logback
Asimov	commons-io
Asimov	commons-io
Asimov	commons-lang
Asimov	javax.inject
Asimov	validation-api
Asimov	jsr311-api
Asimov	joda-time
Asimov	log4j
Asimov	nearestlocation
Asimov	javacsv
Asimov	httpclient
Asimov	httpclient-cache
Asimov	httpcore
Asimov	aspectjrt
Asimov	bcprov-ext-jdk16
Asimov	jackson-core-asl
Asimov	jackson-mapper-asl
Asimov	jetty-server

174

Team	Name
Asimov	jetty-servlet
Asimov	jetty-webapp
Asimov	hibernate-validator
Asimov	resteasy-jaxb-provider
Asimov	resteasy-jaxrs
Asimov	runtime
Asimov	mongo-java-driver
Asimov	slf4j-api
Asimov	spring-beans
Asimov	spring-context
Asimov	aopalliance
Asimov	cglib-nodep
Asimov	logback-classic
Asimov	metrics-logback
Asimov	metrics-servlet
Asimov	aspectjweaver
Asimov	resteasy-jackson-provider
Asimov	resteasy-spring
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	spring-web
Asimov	logback-classic
Asimov	rest-client-driver
Asimov	rest-server-driver
Asimov	joda-time
Asimov	junit-dep
Asimov	hamcrest-core
Asimov	hamcrest-library
Asimov	mockito-core
Asimov	slf4j-nop
Asimov	bouncer
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http

175

Team	Name
Asimov	clj-http-fake
Asimov	clj-time
Asimov	clojure-complete
Asimov	rest-client-driver
Asimov	monger
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	metrics-servlet
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	junit
Asimov	metrics-clojure
Asimov	metrics-clojure-ring
Asimov	midje
Asimov	instrumented-ring-jetty-adapter
Asimov	ring-utils
Asimov	clojure
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	at-at
Asimov	rest-cljer
Asimov	ring-middleware-format
Asimov	logback-classic
Asimov	jackson-databind
Asimov	protobuf-java

176

Team	Name
Asimov	metrics-core
Asimov	metrics-graphite
Asimov	metrics-servlet
Asimov	commons-beanutils
Asimov	commons-codec
Asimov	commons-collections
Asimov	commons-io
Asimov	commons-lang
Asimov	commons-logging
Asimov	servlet-api
Asimov	joda-time
Asimov	log4j
Asimov	dozer
Asimov	opencsv
Asimov	httpclient
Asimov	httpcore
Asimov	jetty-servlets
Asimov	resteasy-jackson-provider
Asimov	resteasy-jaxb-provider
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	jdom
Asimov	json
Asimov	runtime
Asimov	spring-web
Asimov	soap
Asimov	rest-client-driver
Asimov	rest-driver-shared
Asimov	rest-server-driver
Asimov	json-path-assert
Asimov	junit-dep
Asimov	hamcrest-core
Asimov	hamcrest-library
Asimov	mockito-core

177

Team	Name
Asimov	selenium-java
Asimov	logback-classic
Asimov	jackson-databind
Asimov	protobuf-java
Asimov	metrics-core
Asimov	metrics-graphite
Asimov	metrics-servlet
Asimov	commons-beanutils
Asimov	commons-codec
Asimov	commons-collections
Asimov	commons-io
Asimov	commons-lang
Asimov	commons-logging
Asimov	servlet-api
Asimov	joda-time
Asimov	log4j
Asimov	dozer
Asimov	opencsv
Asimov	httpclient
Asimov	httpcore
Asimov	jetty-servlets
Asimov	resteasy-jackson-provider
Asimov	resteasy-jaxb-provider
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	jdom
Asimov	json
Asimov	runtime
Asimov	spring-web
Asimov	soap
Asimov	rest-client-driver
Asimov	rest-driver-shared
Asimov	rest-server-driver
Asimov	json-path-assert

178

Team	Name
Asimov	junit-dep
Asimov	hamcrest-core
Asimov	hamcrest-library
Asimov	mockito-core
Asimov	selenium-java
Asimov	closchema
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-http-fake
Asimov	clj-keymaster-client
Asimov	clj-nokia-sso
Asimov	clj-oauth
Asimov	clj-oauth-server
Asimov	clj-time
Asimov	clojure-complete
Asimov	jackson-databind
Asimov	multipart
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	commons-codec
Asimov	commons-io
Asimov	commons-lang
Asimov	commons-logging
Asimov	compojure
Asimov	environ
Asimov	joda-time
Asimov	junit
Asimov	midje
Asimov	ehcache
Asimov	instrumented-ring-jetty-adapter
Asimov	ring-utils
Asimov	httpclient

179

Team	Name
Asimov	httpcore
Asimov	clojure
Asimov	core.cache
Asimov	data.json
Asimov	data.xml
Asimov	data.zip
Asimov	tools.logging
Asimov	tools.nrepl
Asimov	libidn
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	jul-to-slf4j
Asimov	slf4j-api
Asimov	spring-core
Asimov	spring-test
Asimov	rest-cljer
Asimov	ring-jetty-adapter
Asimov	ring-middleware-format
Asimov	samsa
Asimov	slingshot
Asimov	logback-classic
Asimov	logback-core
Asimov	echonest-api
Asimov	jackson-databind
Asimov	jackson-jaxrs-json-provider
Asimov	guava
Asimov	protobuf-java
Asimov	protobuf-java
Asimov	json-simple
Asimov	json-path
Asimov	json-path-assert
Asimov	oauth-signature
Asimov	cors-filter
Asimov	xstream

180

Team	Name
Asimov	ipcalculator
Asimov	metrics-core
Asimov	metrics-core
Asimov	metrics-ehcache
Asimov	metrics-graphite
Asimov	metrics-servlet
Asimov	commons-beanutils
Asimov	commons-beanutils
Asimov	commons-codec
Asimov	commons-collections
Asimov	commons-httpclient
Asimov	commons-io
Asimov	commons-lang
Asimov	jsr311-api
Asimov	joda-time
Asimov	mysql-connector-java
Asimov	dozer
Asimov	ehcache-core
Asimov	opencsv
Asimov	commons-io
Asimov	httpclient
Asimov	httpclient-cache
Asimov	httpcore
Asimov	aspectjrt
Asimov	bcpg-jdk16
Asimov	bcprov-ext-jdk16
Asimov	bcprov-jdk16
Asimov	jackson-core-asl
Asimov	jackson-jaxrs
Asimov	jackson-mapper-asl
Asimov	libidn
Asimov	hamcrest-all
Asimov	jaxrs-api
Asimov	resteasy-jackson-provider

181

Team	Name
Asimov	resteasy-jaxb-provider
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	jdom
Asimov	json
Asimov	runtime
Asimov	mockito-all
Asimov	jcl-over-slf4j
Asimov	log4j-over-slf4j
Asimov	slf4j-api
Asimov	slf4j-api
Asimov	slf4j-api
Asimov	slf4j-api
Asimov	spring-context
Asimov	spring-core
Asimov	spring-orm
Asimov	spring-oxm
Asimov	spring-test
Asimov	spring-web
Asimov	spring-security-oauth
Asimov	soap
Asimov	xmlunit
Asimov	metrics-graphite
Asimov	aspectjweaver
Asimov	rest-client-driver
Asimov	rest-server-driver
Asimov	json-path-assert
Asimov	javassist
Asimov	junit-dep
Asimov	easymock
Asimov	hamcrest-core
Asimov	hamcrest-library
Asimov	mockito-all
Asimov	mockito-core

182

Team	Name
Asimov	powermock-api-easymock
Asimov	powermock-api-mockito
Asimov	powermock-module-junit4
Asimov	scribe
Asimov	xmlunit
Asimov	log4j
Asimov	cglib-nodep
Asimov	commons-beanutils
Asimov	commons-collections
Asimov	commons-httpclient
Asimov	commons-lang
Asimov	commons-logging
Asimov	javassist
Asimov	jsr311-api
Asimov	log4j
Asimov	dozer
Asimov	hibernate-annotations
Asimov	hibernate-core
Asimov	hibernate-entitymanager
Asimov	hibernate-validator
Asimov	runtime
Asimov	slf4j-log4j12
Asimov	spring
Asimov	soap
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	dom4j
Asimov	hsqldb
Asimov	jta
Asimov	junit
Asimov	mysql-connector-java
Asimov	easymock
Asimov	cglib-nodep
Asimov	commons-httpclient

183

Team	Name
Asimov	commons-logging
Asimov	jaxen
Asimov	log4j
Asimov	jdom
Asimov	runtime
Asimov	slf4j-log4j12
Asimov	spring
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	servlet-api
Asimov	jaxen
Asimov	junit
Asimov	easymock
Asimov	cglib-nodep
Asimov	commons-httpclient
Asimov	commons-logging
Asimov	javassist
Asimov	jsr311-api
Asimov	log4j
Asimov	hibernate-annotations
Asimov	hibernate-core
Asimov	hibernate-entitymanager
Asimov	hibernate-validator
Asimov	jdom
Asimov	runtime
Asimov	slf4j-log4j12
Asimov	spring
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	dom4j
Asimov	hsqldb
Asimov	jta
Asimov	junit
Asimov	easymock

184

Team	Name
Asimov	bultitude
Asimov	logback-classic
Asimov	cheshire
Asimov	clj-http
Asimov	clj-oauth
Asimov	clj-oauth-server
Asimov	clj-time
Asimov	clojure-complete
Asimov	closchema
Asimov	rest-client-driver
Asimov	metrics-graphite
Asimov	metrics-logback
Asimov	commons-io
Asimov	commons-lang
Asimov	compojure
Asimov	environ
Asimov	http.async.client
Asimov	junit
Asimov	midje
Asimov	instrumented-ring-jetty-adapter
Asimov	ring-utils
Asimov	clojure
Asimov	data.xml
Asimov	tools.nrepl
Asimov	runtime
Asimov	jcl-over-slf4j
Asimov	slf4j-api
Asimov	token-bucket
Asimov	logback-classic
Asimov	jackson-databind
Asimov	protobuf-java
Asimov	metrics-core
Asimov	metrics-graphite
Asimov	metrics-servlet

185

Team	Name
Asimov	commons-beanutils
Asimov	commons-codec
Asimov	commons-collections
Asimov	commons-io
Asimov	commons-lang
Asimov	commons-logging
Asimov	servlet-api
Asimov	joda-time
Asimov	log4j
Asimov	dozer
Asimov	opencsv
Asimov	httpclient
Asimov	httpcore
Asimov	jetty-servlets
Asimov	resteasy-jackson-provider
Asimov	resteasy-jaxb-provider
Asimov	resteasy-jaxrs
Asimov	resteasy-spring
Asimov	jdom
Asimov	json
Asimov	runtime
Asimov	spring-web
Asimov	soap
Asimov	rest-driver-shared
Asimov	rest-server-driver
Asimov	guava
Asimov	json-path-assert
Asimov	junit-dep
Asimov	jetty-server
Asimov	hamcrest-core
Asimov	hamcrest-library
Asimov	mockito-core
Asimov	selenium-java
Asimov	jcl-over-slf4j

186

Team	Name
Asimov	slf4j-nop
Asimov	oru
Asimov	jquery
Asimov	jquery.xml2json
Asimov	Jquery-ui
Asimov	jquery.maskedinput
Asimov	angular
Asimov	Angular-ui
Asimov	bootstrap
Asimov	Date-en-GB
Asimov	Angular
Asimov	Angular-ui
Asimov	bootstrap
Asimov	Date-en-gb
Asimov	jquery
Asimov	Jquery-min
Asimov	Jquery-xml2json
Asimov	xml2json
Asimov	oru
Asimov	bootstrap-transitions
Asimov	bootstrap
Asimov	underscore
Asimov	MongoDB
Asimov	MySql
Asimov	HSQLDB
Asimov	Jetty
Asimov	JBoss Community
Asimov	Kafka
Asimov	Zookeeper
Asimov	Jenkins
Asimov	Graphite
Fusion	antlr
Fusion	aopalliance
Fusion	apache-collections

187

Team	Name
Fusion	apache-httpclient
Fusion	apache-log4j
Fusion	asm
Fusion	backport-util-concurrent
Fusion	bultitude
Fusion	c3p0
Fusion	cglib
Fusion	cheshire
Fusion	ch.qos.logback
Fusion	classlojure
Fusion	clj-http-fake
Fusion	clj-http
Fusion	clj-json
Fusion	clj-stacktrace
Fusion	clj-time
Fusion	clj-yaml
Fusion	clojurewerkz
Fusion	clout
Fusion	colorize
Fusion	com.101tec
Fusion	com.amazonaws
Fusion	com.bigml
Fusion	com.bm
Fusion	com.cemerick
Fusion	com.codahale
Fusion	com.fasterxml.jackson.core
Fusion	com.fasterxml.jackson.dataformat
Fusion	com.fasterxml.jackson.datatype
Fusion	com.fasterxml.jackson.jaxrs
Fusion	com.fasterxml.jackson.module
Fusion	com.github.detro.ghostdriver
Fusion	com.github.rest-driver
Fusion	com.google.code.findbugs
Fusion	com.googlecode.json-simple

188

Team	Name
Fusion	com.googlecode.libphonenumber
Fusion	com.google.guava
Fusion	com.google.inject
Fusion	com.google.protobuf
Fusion	com.h2database
Fusion	com.ibm.icu
Fusion	com.jayway.jsonpath
Fusion	com.jcraft
Fusion	com.jolbox
Fusion	commons-beanutils
Fusion	commons-cli
Fusion	commons-codec
Fusion	commons-collections
Fusion	commons-dbcp
Fusion	commons-dbutils
Fusion	commons-fileupload
Fusion	commons-httpclient
Fusion	commons-http
Fusion	commons-io
Fusion	commons-lang
Fusion	commons-logging
Fusion	commons-pool
Fusion	com.novemberain
Fusion	compojure
Fusion	com.spatial4j
Fusion	com.sun.jersey.contribs.jersey-oauth
Fusion	com.sun.jersey
Fusion	com.sun.xml.bind
Fusion	com.sun.xml.stream
Fusion	com.thoughtworks.paranamer
Fusion	com.weiglewilczek.slf4s
Fusion	com.yammer.metrics
Fusion	couchbase
Fusion	crouton

189

Team	Name
Fusion	de.undercouch
Fusion	digest
Fusion	dom4j
Fusion	environ
Fusion	gfrlog
Fusion	gui-diff
Fusion	hibernate
Fusion	hiccup
Fusion	hsqldb
Fusion	httpunit
Fusion	io.netty
Fusion	javassist
Fusion	jaxen
Fusion	jboss
Fusion	jboss.jbossws
Fusion	jdom
Fusion	jline
Fusion	jmock
Fusion	joda-time
Fusion	jtidy
Fusion	junit
Fusion	leiningen-core
Fusion	log4j
Fusion	metrics-clojure
Fusion	metrics-clojure-ring
Fusion	midje
Fusion	mx4j
Fusion	mysql
Fusion	net.java.dev.jna
Fusion	net.jcip
Fusion	net.logstash.logback
Fusion	net.minidev
Fusion	net.schmizz
Fusion	net.sf.dozer

190

Team	Name
Fusion	net.sf.ehcache
Fusion	net.sf.jopt-simple
Fusion	net.sf.jsr107cache
Fusion	net.sf.opencsv
Fusion	net.sourceforge.cssparser
Fusion	net.sourceforge.htmlunit
Fusion	net.sourceforge.nekohtml
Fusion	net.sourceforge.pinyin4j
Fusion	net.spy
Fusion	ns-tracker
Fusion	ordered
Fusion	org.apache.commons
Fusion	org.apache.curator
Fusion	org.apache.geronimo.specs
Fusion	org.apache.httpcomponents
Fusion	org.apache.lucene
Fusion	org.apache.maven
Fusion	org.apache.maven.wagon
Fusion	org.apache.mina
Fusion	org.apache.solr
Fusion	org.apache.sshd
Fusion	org.apache.zookeeper
Fusion	org.aspectj
Fusion	org.bouncycastle
Fusion	org.carrot2
Fusion	org.clojars.mantree
Fusion	org.clojure
Fusion	org.codehaus.jackson
Fusion	org.codehaus.jettison
Fusion	org.codehaus.plexus
Fusion	org.codehaus.woodstox
Fusion	org.dbunit
Fusion	org.easymock
Fusion	org.eclipse.jetty

191

Team	Name
Fusion	org.eclipse.jetty.orbit
Fusion	org.gnu.inet
Fusion	org.hamcrest
Fusion	org.hibernate
Fusion	org.jboss.ejb3
Fusion	org.jboss
Fusion	org.jboss.javaee
Fusion	org.jboss.logging
Fusion	org.jboss.metadata
Fusion	org.jboss.resteasy
Fusion	org.jdom
Fusion	org.joda
Fusion	org.json
Fusion	org.jsoup
Fusion	org.jvnet.jaxb2_commons
Fusion	org.kitchen-eel
Fusion	org.mockito
Fusion	org.mongodb
Fusion	org.mongojack
Fusion	org.mortbay.jetty
Fusion	org.objenesis
Fusion	org.python
Fusion	org.quartz-scheduler
Fusion	org.scala-lang
Fusion	org.scannotation
Fusion	org.seleniumhq.selenium
Fusion	org.slf4j
Fusion	org.sonatype.aether
Fusion	org.sonatype.sisu
Fusion	org.specs2
Fusion	org.springframework.data
Fusion	org.springframework
Fusion	org.springframework.ldap
Fusion	org.springframework.retry

192

Team	Name
Fusion	org.springframework.security
Fusion	org.w3c.css
Fusion	org.webbitserver
Fusion	org.xerial.snappy
Fusion	org.yaml
Fusion	overtone
Fusion	ragtime
Fusion	re-rand
Fusion	rest-cljer
Fusion	rhino
Fusion	ring
Fusion	ring-middleware-format
Fusion	robert
Fusion	slingshot
Fusion	soap
Fusion	stax
Fusion	swiss-arrows
Fusion	tigris
Fusion	useful
Fusion	utilize
Fusion	xalan
Fusion	xerces
Fusion	xml-apis
Fusion	xmlunit
Fusion	xom
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	aws-java-sdk
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	commons-io
Magnum	commons-lang

193

Team	Name
Magnum	javax.inject
Magnum	joda-time
Magnum	opencsv
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	wikitext-core
Magnum	wikitext-mediawiki-core
Magnum	resteasy-client
Magnum	resteasy-spring
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-web
Magnum	xalan
Magnum	jackson-databind
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	joda-time
Magnum	junit
Magnum	junit-dep
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	metrics-jetty
Magnum	commons-dbcp

194

Team	Name
Magnum	commons-io
Magnum	commons-lang
Magnum	hsqldb
Magnum	javax.inject
Magnum	mysql-connector-java
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxb-provider
Magnum	resteasy-spring
Magnum	jsonassert
Magnum	slf4j-log4j12
Magnum	spring-beans
Magnum	spring-jdbc
Magnum	spring-test
Magnum	spring-web
Magnum	junit-dep
Magnum	dbunit
Magnum	hsqldb
Magnum	mockito-core
Magnum	commons-codec
Magnum	jetty-servlets
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	selenium-java
Magnum	logback-classic
Magnum	cheshire
Magnum	clj-http

195

Team	Name
Magnum	clj-time
Magnum	aws-java-sdk
Magnum	rest-client-driver
Magnum	environ
Magnum	junit
Magnum	midje
Magnum	clojure
Magnum	data.json
Magnum	tools.logging
Magnum	jul-to-slf4j
Magnum	slf4j-api
Magnum	rest-cljer
Magnum	logback-classic
Magnum	aws-java-sdk
Magnum	jackson-databind
Magnum	guava
Magnum	metrics-jetty
Magnum	commons-codec
Magnum	commons-collections
Magnum	commons-io
Magnum	commons-lang
Magnum	joda-time
Magnum	json-lib
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-servlets
Magnum	jetty-webapp
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	xom

196

Team	Name
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	slf4j-simple
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	commons-dbcp
Magnum	commons-httpclient
Magnum	commons-io
Magnum	commons-jxpath
Magnum	commons-lang
Magnum	javax.inject
Magnum	jaxen
Magnum	joda-time
Magnum	log4j
Magnum	jtds
Magnum	aspectjrt
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxb-provider
Magnum	resteasy-jaxrs
Magnum	resteasy-spring
Magnum	jdom
Magnum	jaxb2-basics-runtime
Magnum	runtime
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-jdbc
Magnum	spring-web
Magnum	xmlunit
Magnum	aspectjweaver
Magnum	rest-client-driver

197

Team	Name
Magnum	rest-server-driver
Magnum	json-simple
Magnum	junit-dep
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	commons-io
Magnum	commons-lang
Magnum	commons-net
Magnum	javax.inject
Magnum	joda-time
Magnum	sshj
Magnum	httpclient
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	resteasy-client
Magnum	resteasy-spring
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-web
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit-dep

198

Team	Name
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	axis
Magnum	dbdeploy-core
Magnum	gwt-servlet
Magnum	jsch
Magnum	smartgwt
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	commons-codec
Magnum	commons-collections
Magnum	commons-configuration
Magnum	commons-dbcp
Magnum	commons-httpclient
Magnum	commons-lang
Magnum	icontrol
Magnum	javassist
Magnum	mail
Magnum	smack
Magnum	smackx
Magnum	joda-time
Magnum	junit
Magnum	log4j
Magnum	mysql-connector-java
Magnum	commons-compress
Magnum	commons-io
Magnum	maven-plugin-api
Magnum	velocity
Magnum	aspectjrt
Magnum	aspectjweaver
Magnum	jackson-core-asl
Magnum	jackson-jaxrs
Magnum	jackson-mapper-asl

199

Team	Name
Magnum	jackson-mapper-asl
Magnum	jackson-xc
Magnum	dbunit
Magnum	hibernate-annotations
Magnum	hibernate-core
Magnum	hibernate-validator
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxb-provider
Magnum	resteasy-jaxrs
Magnum	resteasy-spring
Magnum	pircbot
Magnum	basic
Magnum	runtime
Magnum	jetty
Magnum	jetty-util
Magnum	selenium-java-client-driver
Magnum	slf4j-simple
Magnum	spring-aop
Magnum	spring-aspects
Magnum	spring-context-support
Magnum	spring-jdbc
Magnum	spring-orm
Magnum	spring-test
Magnum	spring-web
Magnum	spring-webmvc
Magnum	spring-security-config
Magnum	spring-security-core
Magnum	spring-security-web
Magnum	spring-modules-jakarta-commons
Magnum	velocity-tools
Magnum	jetty-management
Magnum	jsp-2.1
Magnum	jsp-api-2.1
Magnum	rest-server-driver

200

Team	Name
Magnum	maven-jstestdriver-plugin
Magnum	h2
Magnum	commons-beanutils
Magnum	dom4j
Magnum	junit
Magnum	junit
Magnum	hamcrest-all
Magnum	jmock-junit3
Magnum	mockito-all
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	aws-java-sdk
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	commons-io
Magnum	commons-lang
Magnum	javax.inject
Magnum	joda-time
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	elasticsearch
Magnum	elasticsearch-cloud-aws
Magnum	resteasy-client
Magnum	resteasy-spring
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api

201

Team	Name
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-web
Magnum	snappy-java
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	elasticsearch-test
Magnum	junit
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	commons-io
Magnum	commons-lang
Magnum	javax.inject
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	elasticsearch
Magnum	elasticsearch-cloud-aws
Magnum	resteasy-spring
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-web

202

Team	Name
Magnum	rest-server-driver
Magnum	elasticsearch-test
Magnum	junit-dep
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	aws-java-sdk
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	guava
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	commons-collections
Magnum	commons-io
Magnum	commons-lang
Magnum	javax.inject
Magnum	joda-time
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-servlets
Magnum	jetty-webapp
Magnum	elasticsearch
Magnum	elasticsearch-cloud-aws
Magnum	resteasy-client
Magnum	resteasy-spring
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-web

203

Team	Name
Magnum	snappy-java
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	elasticsearch-test
Magnum	commons-codec
Magnum	junit
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	logback-classic
Magnum	clj-http
Magnum	clj-time
Magnum	aws-java-sdk
Magnum	rest-client-driver
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	commons-lang
Magnum	compojure
Magnum	environ
Magnum	junit
Magnum	midje
Magnum	ring-utils
Magnum	clojure
Magnum	data.json
Magnum	data.xml
Magnum	data.zip
Magnum	tools.logging
Magnum	jackson-core-asl
Magnum	runtime
Magnum	jul-to-slf4j
Magnum	slf4j-api
Magnum	rest-cljer
Magnum	ring-jetty-adapter
Magnum	slingshot

204

Team	Name
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	aws-java-sdk
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	commons-io
Magnum	commons-lang
Magnum	javax.inject
Magnum	joda-time
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	resteasy-client
Magnum	resteasy-spring
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-web
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit-dep
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	commons-httpclient
Magnum	backport-util-concurrent

205

Team	Name
Magnum	logback-classic
Magnum	logback-core
Magnum	jackson-databind
Magnum	json-path-assert
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	metrics-logback
Magnum	commons-io
Magnum	commons-lang
Magnum	log4j
Magnum	mongo-jackson-mapper
Magnum	commons-lang3
Magnum	httpclient
Magnum	httpcore
Magnum	jackson-core-asl
Magnum	jackson-jaxrs
Magnum	jackson-mapper-asl
Magnum	easymock
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxb-provider
Magnum	resteasy-jaxrs
Magnum	runtime
Magnum	mongo-java-driver
Magnum	scribe
Magnum	slf4j-api
Magnum	spring-context
Magnum	spring-context-support
Magnum	spring-web

206

Team	Name
Magnum	xmlunit
Magnum	aopalliance
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	metrics-logback
Magnum	metrics-servlet
Magnum	metrics-web
Magnum	joda-time
Magnum	aspectjweaver
Magnum	resteasy-spring
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	spring-web
Magnum	logback-classic
Magnum	jackson-databind
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit
Magnum	easymock
Magnum	easymockclassextension
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	powermock-api-easymock
Magnum	powermock-api-mockito
Magnum	powermock-module-junit4
Magnum	slf4j-nop
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	aws-java-sdk
Magnum	jackson-databind
Magnum	jackson-jaxrs-json-provider
Magnum	metrics-graphite

207

Team	Name
Magnum	metrics-jetty
Magnum	commons-io
Magnum	commons-lang
Magnum	javax.inject
Magnum	jaxen
Magnum	joda-time
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	resteasy-client
Magnum	resteasy-spring
Magnum	jdom
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-web
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit
Magnum	junit-dep
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	commons-httpclient
Magnum	logback-classic
Magnum	jackson-databind
Magnum	jackson-datatype-joda
Magnum	annotations

208

Team	Name
Magnum	json-simple
Magnum	h2
Magnum	sqljdbc4
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	metrics-logback
Magnum	commons-io
Magnum	commons-lang
Magnum	joda-time
Magnum	httpclient
Magnum	httpcore
Magnum	jackson-core-asl
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	jaxrs-api
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxb-provider
Magnum	resteasy-jaxrs
Magnum	json
Magnum	runtime
Magnum	slf4j-api
Magnum	spring-context
Magnum	spring-test
Magnum	spring-web
Magnum	spring-data-jdbc-core
Magnum	spring-data-jpa
Magnum	xmlunit
Magnum	aopalliance
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	metrics-logback
Magnum	metrics-servlet

209

Team	Name
Magnum	metrics-web
Magnum	resteasy-spring
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	log4j-over-slf4j
Magnum	spring-web
Magnum	logback-classic
Magnum	jackson-databind
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	json-path
Magnum	json-path-assert
Magnum	junit
Magnum	junit-dep
Magnum	easymock
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-all
Magnum	mockito-core
Magnum	slf4j-nop
Magnum	logback-classic
Magnum	commons-io
Magnum	joda-time
Magnum	httpcore
Magnum	velocity
Magnum	jetty-servlets
Magnum	phantomjsdriver
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	json-path
Magnum	json-path-assert
Magnum	junit
Magnum	jackson-core-asl
Magnum	jackson-mapper-asl

210

Team	Name
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	selenium-java
Magnum	selenium-remote-driver
Magnum	selenium-server
Magnum	xmlunit
Magnum	c3p0
Magnum	jira-rest-java-client
Magnum	json-simple
Magnum	json-path
Magnum	commons-io
Magnum	commons-lang
Magnum	hsqldb
Magnum	javax.inject
Magnum	mail
Magnum	joda-time
Magnum	log4j
Magnum	mysql-connector-java
Magnum	httpclient
Magnum	httpcore
Magnum	velocity
Magnum	jackson-core-asl
Magnum	jackson-jaxrs
Magnum	jackson-mapper-asl
Magnum	jackson-xc
Magnum	hibernate-commons-annotations
Magnum	hibernate-entitymanager
Magnum	hibernate-validator
Magnum	jpa-api
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxb-provider
Magnum	resteasy-jaxrs
Magnum	resteasy-spring
Magnum	runtime

211

Team	Name
Magnum	slf4j-api
Magnum	slf4j-log4j12
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-core
Magnum	spring-jdbc
Magnum	spring-orm
Magnum	spring-webmvc
Magnum	spring-security-config
Magnum	spring-security-core
Magnum	spring-security-ldap
Magnum	spring-security-web
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	junit-dep
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	mockito-core
Magnum	httpcore
Magnum	velocity
Magnum	jetty-servlets
Magnum	phantomjsdriver
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	json-path
Magnum	json-path-assert
Magnum	junit-dep
Magnum	jackson-core-asl
Magnum	jackson-mapper-asl
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	selenium-java
Magnum	slf4j-simple
Magnum	xmlunit

212

Team	Name
Magnum	c3p0
Magnum	logback-classic
Magnum	clj-ftp
Magnum	clj-http
Magnum	clj-time
Magnum	postal
Magnum	rest-client-driver
Magnum	sqljdbc4
Magnum	monger
Magnum	lazytest
Magnum	metrics-graphite
Magnum	metrics-logback
Magnum	commons-io
Magnum	commons-lang
Magnum	compojure
Magnum	environ
Magnum	junit
Magnum	midje
Magnum	httpclient
Magnum	httpcore
Magnum	clojure
Magnum	data.json
Magnum	data.xml
Magnum	data.zip
Magnum	java.jdbc
Magnum	tools.logging
Magnum	runtime
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j
Magnum	slf4j-api
Magnum	at-at
Magnum	ring-jetty-adapter
Magnum	ring-middleware-format
Magnum	logback-classic

213

Team	Name
Magnum	jackson-databind
Magnum	jsch
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	metrics-jetty
Magnum	metrics-logback
Magnum	commons-io
Magnum	commons-lang
Magnum	commons-net
Magnum	ftp4j
Magnum	mail
Magnum	joda-time
Magnum	junit-dep
Magnum	httpclient
Magnum	httpcore
Magnum	jetty-server
Magnum	jetty-servlet
Magnum	jetty-webapp
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	runtime
Magnum	mockito-core
Magnum	slf4j-api
Magnum	spring-context
Magnum	aopalliance
Magnum	cglib-nodep
Magnum	logback-classic
Magnum	metrics-logback
Magnum	metrics-servlet
Magnum	metrics-web
Magnum	aspectjweaver
Magnum	resteasy-spring
Magnum	jcl-over-slf4j
Magnum	jul-to-slf4j

214

Team	Name
Magnum	spring-web
Magnum	logback-classic
Magnum	jackson-databind
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	commons-io
Magnum	junit-dep
Magnum	httpclient
Magnum	hamcrest-core
Magnum	hamcrest-library
Magnum	runtime
Magnum	MockFtpServer
Magnum	mockito-core
Magnum	logback-classic
Magnum	logback-core
Magnum	bonecp
Magnum	metrics-core
Magnum	metrics-graphite
Magnum	commons-codec
Magnum	commons-dbcp
Magnum	commons-httpclient
Magnum	commons-io
Magnum	commons-lang
Magnum	jta
Magnum	validation-api
Magnum	joda-time
Magnum	junit-dep
Magnum	log4j
Magnum	mysql-connector-java
Magnum	opencsv
Magnum	httpclient
Magnum	maven-jmeter-plugin
Magnum	lucene-core
Magnum	aspectjrt

215

Team	Name
Magnum	jackson-core-asl
Magnum	jackson-mapper-asl
Magnum	hibernate-core
Magnum	hibernate-entitymanager
Magnum	hibernate-validator
Magnum	hibernate-validator-legacy
Magnum	jpa-api
Magnum	resteasy-jackson-provider
Magnum	resteasy-jackson-provider
Magnum	resteasy-jaxrs
Magnum	resteasy-spring
Magnum	runtime
Magnum	quartz
Magnum	slf4j-api
Magnum	spring-beans
Magnum	spring-context
Magnum	spring-context-support
Magnum	spring-core
Magnum	spring-jdbc
Magnum	spring-orm
Magnum	spring-tx
Magnum	spring-web
Magnum	aspectjweaver
Magnum	rest-client-driver
Magnum	rest-server-driver
Magnum	h2
Magnum	commons-dbcp
Magnum	junit
Magnum	junit-dep
Magnum	dbunit
Magnum	easymock
Magnum	hamcrest-all
Magnum	hamcrest-core
Magnum	hamcrest-library

216

Team	Name
Magnum	mockito-core
Magnum	powermock-api-easymock
Magnum	powermock-module-junit4
Magnum	slf4j-simple
Magnum	naming-factory
Magnum	naming-resources
Magnum	xmlunit
Magnum	angular
Magnum	bootstrap-popover
Magnum	bootstrap-tooltip
Magnum	jquery
Magnum	jquery.ba-hashchange
Magnum	jquery-ui
Magnum	vkbeautify.0.95.01.beta.js
Magnum	angular-animate
Magnum	angular
Magnum	angular-route
Magnum	justgage
Magnum	moment
Magnum	raphael
Magnum	ui-bootstrap-tpls
Magnum	underscore
Magnum	angular
Magnum	underscore
Magnum	angular
Magnum	angular-mocks
Magnum	jquery
Magnum	jquery-cookie
Magnum	jquery-ui
Magnum	json-path
Magnum	underscore
Magnum	qunit
Magnum	angular
Magnum	angular-mocks

217

Team	Name
Magnum	angular-resource
Magnum	angular-ui
Magnum	bootbox
Magnum	bootstrap
Magnum	bootstrap-alert-manager
Magnum	browser-detect
Magnum	jquery
Magnum	jquery-cookie
Magnum	jquery-ui
Magnum	jquery-jplayer
Magnum	jquery-mousewheel
Magnum	underscore
Magnum	sinon
Magnum	jshamcrest
Magnum	MySQL
Magnum	Apache HTTP
Magnum	Apache Tomcat
Magnum	MySQL
Magnum	JBoss
Magnum	OpenFire
Magnum	ElasticSearch
Magnum	MongoDB

218

SCHEDULE 8

CONTRACTS

PART 1 ICT CONTRACTS

Nil

PART 2 OTHER CONTRACTS

Nokia Contracting Entity	Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Nokia Corporation	Brasil Crowley Broadcast Analysis do Brasil Ltda.	Digital Music Data Provision	Music chart data	3.9.2013	auto renew
Nokia Corporation	LyricFind Inc.	Service and Content License Agreement for ongoing Services relating to Nokia Music Services	Provision of lyrics to Mix Radio Service & Extension Letter	18.01.2013	One year fixed term, Nokia has a right to extend for additional two 12 months terms
Nokia Corporation	LyricFind Inc.	Data Access Agreement	Provision of lyrics to Nokia Music Services in China	01.10.013	One year fixed term, continues in additional 1 year terms unless terminated in accordance with the agreement
Nokia Corporation	McMaster University	Data Sharing and Co-operation Agreement	Provision of access to service data	31.05.2012	31.05.2017
Nokia Corporation	media control GfK International	DIGITAL MUSIC DATA PROVISION AGMT	Music chart data	15.3.2012	Rolling Renewal
Nokia Corporation	media control GfK International	Amendment (NO. 1) to the Music Data Provision Agreement	Amendment to add Territories	7.5.2013	Subject to main agreement
Nokia Corporation	The Official UK Charts company	DIGITAL MUSIC DATA PROVISION AGMT	Music chart data	26.6.2011	Rolling Renewal
Nokia Corporation	The Official UK Charts company	Amendment (NO. 1) to the Music Data Provision Agreement	Amendment to add Streaming Data	signed 18.03.2013	Subject to main agreement
Nokia Corporation	Ticketmaster LLC.	Ticketmaster Affiliate Program	Data for gig finder	20.2.2013	on term by either party
Nokia Corporation	Elisa Corporation	Mobile Operator Billing Agreement for Nokia Music Services	Operator billing service for end users	1.4.2013	One year fixed term, ongoing thereafter until terminated by the giving of 30 day notice by either party
Nokia Corporation	Elisa Corporation	Amendment to Mobile Operator Billing Agreement for Nokia Music Services	Operator billing service for end users	1.7.2014	Subject to main agreement
Nokia Corporation	The Nielsen Company	Nielsen Media Products Data Supply Agreement	Provision of sales information	15.11.2013	14.11.2015 (with auto renewals)
Nokia Corporation	Microsoft Online, Inc	Microsoft Content License Agreement	Content license agreement	01.11.2013	Two years and auto renewal

219

Nokia Contracting Entity	Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Nokia Corporation	Syntonetic Media Solutions A/S	Agreement for General Professional Services	Provision of service re music navigation, software and service	17.12.2013	One year fixed term
Nokia Corporation	Syntonectic Media Solutions A/S	Amendment to the Agreement for General Professional Services	Supplement	24.4.2014	17.12.2014
Nokia UK Ltd.	Bristol Music Trust	Sponsorship Agreement	Sponsorship, advertising,	01.10.2013	30.09.2016
Nokia Corporation	University of Cape Town	Framework research agreement	Research and development	1.1.2013	31.12.2017
Nokia Corporation	AM Steinberg Advisors	Agreement for Consultancy Assignements 2.2	Consultancy Assignement	24/04/2014	30/09/2014
Nokia Corporation	The Nielsen Company	Nielsen License Agreement for Entertainment Data and Services	License Agreement for Charts data with Nielsen Company LLC	09/06/2014	08/06/2015
Nokia Corporation	Cooking Vinyl Publishing	License Agreement for Certain Master Recordings, Music and Underlying Works Thereof	License for preload	22/04/2014	Remains in force as long as Nokia is selling the Nokia Product
Microsoft Mobile Oy	Gibson Brands Inc.	Agreement for providing material for use in advertising campaign for MixRadio.	Agreement for Trademark/promotional material	01/05/2014	No expiry date
Microsoft Mobile Oy	YuMe Inc.	Agreement for software evaluation	Software Evaluation	31/07/2014	9/31/2014 & Option to renew by written agreement
Nokia (China) Investment Co Ltd	Beijing Golden Dynamic Software Development Co., Ltd	Agreement for Consultancy Assignments	Consultancy	01/01/2014	31/12/2014
Nokia Corporation	Branded Ltd and Indian Television Dot Com Pvt. Ltd.	Sponsorship Agreement	Sponsorship	26/11/2014	Earlier of the following: i) Future Events (as specified in the agreement) have been completed; ii) Nokia have been refused to sponsor the Event (as specified in the agreement)for 2015
Nokia Corporation	Dolby Laboratories inc	software licensing agreement	Software Licensing	01/10/2012	No expiry date
Nokia (China) Investment Co Ltd	BJ Wuxianjinli SW Development CO LT	Purchase order for Nokia Music Content Aggregation 3rd year	Purchase order	17/04/2014	N/A
Microsoft Mobile Oy	Uservoice Inc	Software service agreement	Agreement for software as a service relating to uservoice service for mixradio	01/08/2014	31/07/2019

220

Nokia Contracting Entity	Supplier Contracting Entity	Agreement Name (descriptive)	Agreement type	Agreement Effective date	Agreement End date
Microsoft Mobile Oy	AVC Edelman Company Ltd	Services Agreement	Promoting of MMO’s online music service (MixRadio)	01/07/2014	In force until the Services re Project are finalized or until terminated in accordance with the general conditions
Nokia Corporation	BigChampagne	Digital Music Data Provision Agreement	Supply of sales and streaming information	13/06/2013	6/12/2014 and auto renew
Microsoft Mobile Oy	Xamarin Inc	Agreement For Software Tools Licensing	Software Tools Licensing	01/09/2014	31/08/2015
Microsoft Mobile Oy	Ab Leading High Performance Ltd	Agreement for Services	Management Consulting	15/08/2014	01/06/2015
Microsoft Mobile Oy	Ab Leading High Performance Ltd	Amendment to Agreement for Services	Management Consulting	26/09/2014	01/06/2015
Microsoft Mobile Oy	Fan Tan Entertainment Inc.	Agreement for Services	Management Consulting	21/07/2014	31/12/2014
Microsoft Mobile Oy	Fan Tan Entertainment Inc.	Amendment to Agreement for Services	Management Consulting	01/09/2014	31/12/2014
Microsoft Mobile Oy	Mosaic Island	Agreement for WS Development and Consultancy Projects	SW Development and consultancy	06/10/2014	09/03/2015
Nokia Corporation	Musiikkituottajat – IFPI Finland ry	Sponsorship Agreement	sponsorship of Finland music charts	01/01/2014	31/12/2014
Microsoft Mobile Oy	Musiikkituottajat – IFPI Finland ry	Amendment Agreement	sponsorship of Finland music charts	21/11/2014	31/12/2015

221

SCHEDULE 9 MUSIC LICENCE LIABILITIES

The below sets out the manner in which Microsoft calculates amounts owed to rightsholders in respect of the exploitation of sound recordings and musical compositions across the MixRadio, Nokia Music Unlimited, MixRadio + and MixRadio A La Carte services.

Mix Radio

Mix Radio Major Labels: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum across countries and months of (monthly device volume) times (per device minimum fee) times (major label activity ratio), and “invoiced liability” is the sum of (confirmed invoiced fees) by the Major Labels.

Please see worked example set out below

Mix Radio Indie Labels – Incurred Costs: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum across countries and months of (monthly plays) times (per play fee) times (indie label activity ratio), and “invoiced liability” is the sum of (confirmed invoiced fees) by the Indie Labels.

Please see worked example set out below

Mix Radio Indie Labels – Forecasted Costs: (outstanding liability) is calculated as the total global sum of (monthly forecasted plays) times (per play fee) times (cumulative indie label activity ratio), where monthly forecasted plays are calculated as the (24 month cumulative shipments) times (highest plays per 24 month cumulative shipments in the past 12 months), and per play fee is the weighted average per play fee based on global indie label incurred costs at close. 24 Month cumulative shipments is defined as the sum of device shipments with preloaded ad free Nokia / Microsoft Mix Radio clients in the previous 24 months (and excluding the post close Mix Radio preloaded clients where a separate fee is paid to the Buyer or a member of its Group).

Please see worked example set out below

Mix Radio Publishers – Incurred per play costs: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum across countries and months of (monthly plays) times (per play fee) times (per play publisher label activity ratio), and “invoiced liability” is cumulative confirmed invoiced fees by the per play publishers.

Please see worked example set out below

Mix Radio Publishers – Forecasted costs: (outstanding liability) is calculated as the total global sum of (monthly forecasted plays) times (per play fee) times (cumulative per play publisher activity ratio), where “monthly forecasted plays” are calculated as the (24 month cumulative shipments) times (highest plays per 24 month cumulative shipments in the past 12 months), and “per play fee” is the weighted average per play fee based on global per play publisher incurred costs at close.

Please see worked example set out below

Mix Radio Publishers – per device fees: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum across countries and months of (monthly device volume) times (per device minimum fee) times (per device publisher activity ratio), and “invoiced liability” is cumulative confirmed invoiced fees by the per device publisher (i.e. WC).

222

India NMU

India NMU Labels: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum across service terms and months of (monthly device volume) times (per device service term fee) times (88% cumulative label share, and “invoiced liability” is cumulative confirmed invoiced fees by the relevant Labels, adjusted for any shortfall of annual minimum commitments.

Please see worked example set out below

India NMU Publishers: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum across service terms and months of (monthly device volume) times (per device service term fee) times (12% cumulative publisher share), and “invoiced liability” is cumulative confirmed invoiced fees by the relevant Publishers, adjusted for any shortfall of annual minimum commitments.

Please see worked example set out below

China: Liabilities relating to amounts owed to rights holders in China for the period up to 31 December 2014 do not transfer to the Buyer under the Agreement and do not form part of the Music Licence Liabilities. If any agreement requiring a lump-sum payment is entered into relating to the period commencing after 31 December 2014 the Buyer shall be liable for a pro-rata share of such lump-sum payments from the period from Completion to the end of the relevant agreement provided that the Buyer gives prior written consent to such agreement (such consent not to be unreasonably withheld, conditioned or delayed).

Ala Carte Store: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum of (accrued Label and Publisher ALC revenue shares) for period 2012 to Close, and “invoiced liability” is cumulative (confirmed invoiced ALC revenue shares by the Labels and Publishers) for the period 2012 to Close.

Please see worked example set out below

Mix Radio + Subscriptions: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum of (accrued Label and Publisher subscription revenue shares) and “invoiced liability” is cumulative (confirmed invoiced subscription revenue shares by the Labels and Publishers).

Please see worked example set out below

India NMU Subscriptions: (outstanding liability) is calculated as the (cumulative liability) minus (invoiced liability), where “cumulative liability” is the total sum of (accrued Label and Publisher subscription revenue shares) and “invoiced liability” is cumulative (confirmed invoiced subscription revenue shares by the Labels and Publishers).

Please see worked example set out below

223

Worked Examples (numbers are examples only)

Mix Radio Major Labels

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 60	=	€ 210	–	€ 150
Cumulative Liability	Equals	Sum (Countries, Months)	of	Device Volume	Times	Per Device Minimum Fee (country)	Times	Major Label Activity Ratio
€ 210	=			500	x	€ 0.60	x	70%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ 150	=			€150

Mix Radio Indie Labels – Incurred Costs

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 4	=	€ 7	–	€ 3
Cumulative Liability	Equals	Sum (Countries, Months)	of	MR Plays	Times	Per Play Fee	Times	Indie Label Activity Ratio
€ 7	=			21,518	x	€ 0.00160	x	19%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ 3	=			€3

224

Mix Radio Indie Labels – Forecasted Costs

Outstanding Liability	Equals	Sum (Forecasted Months)	of	24 Month cumulative Shipments	Times	Latest 12 month highest Plays per Device	Times	Weighted average Per Play Fee	Times	Indie Label Activity Ratio
€ 52	=			35,436	x	4.14	x	€0.00149	x	24%

Mix Radio Publishers – Per Play Incurred Costs

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 6	=	€ 14	–	€ 8
Cumulative Liability	Equals	Sum (Countries, Months)	of	MR Plays	Times	Per Play Fee	Times	Per Play Publisher Activity Ratio
€ 14	=			21,518	x	€ 0.00078	x	86%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ 8	=			€ 8

Mix Radio Publishers – Forecasted Costs

Outstanding Liability	Equals	Sum (Months)	of	24 Month cumulative Shipments	Times	Latest 12 month highest Plays per Device	Times	Weighted average Per Play Fee	Times	Per Play Publisher Activity Ratio
€ 98	=			35,436	x	4.14	x	€ 0.00078	x	86%

225

Mix Radio Publishers – Per Device Fee

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 25	=	€ 25	–	€ —
Cumulative Liability	Equals	Sum (Countries, Months)	of	Device Volume	Times	Per Device Minimum Fee (country)	Times	Per Device Publisher Activity Ratio
€ 25	=			500	x	€ 0.350	x	14%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ —	=			€ —

India NMU

India NMU Labels

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 246	=	€ 396	–	€ 150
Cumulative Liability	Equals	Sum (Months, Service Terms)	of	Device Volume	Times	Per Device Fee (Service term)	Times	Label Share
€ 396	=			300	x	€ 1.50	x	88%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ 150	=			€ 150

226

India NMU Publishers

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 54	=	€ 54	–	€ —
Cumulative Liability	Equals	Sum (Months, Service Terms)	of	Device Volume	Times	Per Device Fee (Service term)	Times	Label Share
€ 54	=			300	x	€ 1.50	x	12%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ —	=			€ —

Ala Carte Store

Outstanding Liability	Equals	Cumulative Liability	Minus	Invoiced Liability
€ 36	=	€ 166	–	€ 130
Cumulative Liability	Equals	Sum (Months)	of	Purchased Quantity	Times	Per Item Cost	Times	Rights Holder Share
€ 166	=			250	x	€ 0.95	x	70%
Invoiced Liability	Equals	Sum (months)	of	Invoiced fees
€ 130	=			€130

227

Mix Radio (and India NMU) Subscriptions

Outstanding Liability

Equals

Cumulative Liability

Minus

Invoiced Liability

€ 239

=

€

489

–

€

250

Cumulative Liability

Equals

Sum (Months, Country)

of

Subscription Quantity (Country)

Times

Subscription Fee (Country)

Times

Rights Holder Share

€ 489

=

175

x

€

3.99

x

70

%

Invoiced Liability

Equals

Sum (months)

of

Invoiced fees

€ 250

=

€

250

24 month cumulative shipments example assuming devices stop shipping with the service preloaded on 31 December 2014 and the service continues to be available until 31 December 2016

The calculation adds up the device shipments for January 2013 – December 2014 and multiplies those with the plays per device per month to get the forecasted January 2015 plays, then adds up February 2013 – December 2014 device shipments and multiplies those with the plays per device per month to get the forecasted February 2015 plays, and so on. If you decompose the elements of the sum of the multiplications, it will end up having December 2014 device volume times plays per device per month 24 times, November 2014 volume will show up 23 times, and so on, until January 2013 volume is only part of the calculation one time.

228

Signed by Keith Dolliver	)
Director, for and on behalf of	)	/s/ Keith Dolliver
Microsoft Mobile Oy	)
Signed by Joongho Shin	)
for and on behalf of	)	/s/ Joongho Shin
LINE Corporation	)

229

Annex A

Employees

Unique Identifier for Deal		Address Book Title (Position Text)	Current Company Country	City
	1	Director of Entertainment IMEA	UAE	Dubai
	2	Entertainment Manager	UAE	Dubai
	3	Entertainment Manager, Brazil	Brazil	Sao Paulo
	4	Team Assistant	China	Beijing
	5	Operations & Reporting Manager, APAC	China	Beijing
	6	Marketing & Social Media Manager, China	China	Beijing
	7	Entertainment Manager	China	Beijing
	8	Product Manager, Entertainment Services	China	Beijing
	9	Head of Entertainment APAC	China	Beijing
	10	Head of Music Services & Operations	China	Beijing
	11	Head of Content Partnership & BD	China	Beijing
	12	Dir Business Development & Partnerships	Germany	Berlin
	13	Entertainment Manager	Germany	Ratingen
	14	Entertainment Manager	Spain	MADRID
	16	VP, Entertainment	Finland	Espoo
	17	Senior Software Engineer	Finland	Espoo
	18	Senior SW Engineer	Finland	Espoo
	19	Senior SW Engineer	Finland	Espoo
	20	Senior SW Engineer	Finland	Espoo
	21	Principal Engineer	Finland	Espoo
	23	Senior Engineer, R&D	Finland	Espoo
	24	Senior SW Engineer	Finland	Espoo
	25	Head of MP Partnership	Finland	Espoo
	26	Head of Sell In	Finland	Espoo
	27	Consumer Engagement Editor, Entertainment	Finland	Espoo
	28	Entertainment Manager	France	Courbevoie
	29	Head of Insights & Value Proposition	United Kingdom	London
	30	Industry Marketing & Events Manager	United Kingdom	London
	31	Head of Entertainment Product Marketing	United Kingdom	London
	32	Entertainment Partnership Manager	United Kingdom	London
	33	Marketing Co-Ordinator	United Kingdom	Bristol
	34	Music Marketing Activation Manager	United Kingdom	Bristol
	35	Digital Marketing Manager – Social Planning	United Kingdom	London
	36	Head of SD Partnership & Launch Readiness	United Kingdom	London
	37	Principal Designer	United Kingdom	Bristol
	38	Senior User Experience Designer	United Kingdom	Bristol
	39	Senior Visual Designer	United Kingdom	Bristol
	40	Senior Visual designer	United Kingdom	Bristol
	41	Principal Designer	United Kingdom	Bristol
	42	Head of Discover & Enjoy UX	United Kingdom	Bristol
	43	Senior User Experience Designer	United Kingdom	Bristol
	44	Junior Visual Designer	United Kingdom	Bristol
	45	Principal Designer	United Kingdom	Bristol
	46	Principle Designer	United Kingdom	Bristol
	47	User Experience Designer	United Kingdom	Bristol

230

Unique Identifier for Deal		Address Book Title (Position Text)	Current Company Country	City
	48	Business and Financial Analyst	United Kingdom	Bristol
	49	Promotions Analyst	United Kingdom	Bristol
	50	Senior Business Analyst	United Kingdom	Bristol
	51	Senior SW Engineer	United Kingdom	Bristol
	52	Senior SW Engineer	United Kingdom	Bristol
	53	Financial Reporting Analyst	United Kingdom	Bristol
	54	Commercial Finance and Reporting Mgr	United Kingdom	Bristol
	55	Finance & Control, Program Manager	United Kingdom	Bristol
	56	Manager – Data Manager	United Kingdom	Bristol
	57	Global Head of Independent Labels	United Kingdom	London
	58	Labels Relations Manager	United Kingdom	London
	59	Director Head of Major Label Relations	United Kingdom	London
	60	Business Development and Partnerships	United Kingdom	Bristol
	61	Head of Marketing & Brand Partnerships	United Kingdom	London
	62	Graphic Designer	United Kingdom	Bristol
	63	Entertainment Manager	United Kingdom	Bristol
	64	UK Entertainment Manager	United Kingdom	Bristol
	65	Operations Lead – Consumer Engagement	United Kingdom	Bristol
	66	Head of Entertainment Europe	United Kingdom	London
	67	Partnerships Producer	United Kingdom	Bristol
	68	Product Owner	United Kingdom	Bristol
	69	Product Owner	United Kingdom	Bristol
	70	Senior Product Manager – Music Svcs & Op	United Kingdom	Bristol
	71	Mixmanager in Chief	United Kingdom	Bristol
	72	Senior Product Manager	United Kingdom	Bristol
	73	Senior Product Manager	United Kingdom	Bristol
	74	Product Owner	United Kingdom	Bristol
	75	Product Manager	United Kingdom	London
	76	Content Quality Manager	United Kingdom	Bristol
	77	Senior Product Manager	United Kingdom	Bristol
	78	Product Owner	United Kingdom	Bristol
	79	Product Owner/Entertainment	United Kingdom	Bristol
	80	Director – Music and Media Experiences	United Kingdom	Bristol
	81	Product Owner	United Kingdom	Bristol
	82	Senior Architect	United Kingdom	Bristol
	83	Senior Architect	United Kingdom	Bristol
	84	Senior Architect	United Kingdom	Bristol
	85	Chief Architect	United Kingdom	Bristol
	86	Principal Architect	United Kingdom	Bristol
	87	Senior Architect	United Kingdom	Bristol
	88	Social Mixmaster	United Kingdom	Bristol
	89	Social Mixmaster	United Kingdom	Bristol
	90	Mixmaster	United Kingdom	Bristol
	91	Senior Data Analyst	United Kingdom	Bristol
	92	Mixmaster	United Kingdom	Bristol
	93	Senior SW Engineer	United Kingdom	Bristol
	94	Team Lead	United Kingdom	Bristol
	95	Senior SW Engineer	United Kingdom	Bristol
	96	Head of Technical Programme & Services	United Kingdom	Bristol

231

Unique Identifier for Deal		Address Book Title (Position Text)	Current Company Country	City
	97	Proto Manager	United Kingdom	Bristol
	98	Senior SW Engineer	United Kingdom	Bristol
	99	Error Manager	United Kingdom	Bristol
	100	Program Manager	United Kingdom	Bristol
	101	Trials Project Specialist	United Kingdom	Bristol
	102	Head of Consumer Data & Analytics, ENT	United Kingdom	Bristol
	103	Senior Program Manager	United Kingdom	Bristol
	104	Executive Assistant	United Kingdom	Bristol
	105	Senior Program Manager	United Kingdom	Bristol
	106	NPS Data Analysis	United Kingdom	Bristol
	107	Entertainment E2E Program Mgr – Music	United Kingdom	Bristol
	108	Deployment Manager	United Kingdom	London
	109	Technical Project Manager	United Kingdom	Bristol
	110	Head of Market Effectiveness	United Kingdom	Bristol
	111	Senior Program Manager	United Kingdom	Bristol
	112	Senior Program Manager	United Kingdom	Bristol
	113	Technical Programme Manager	United Kingdom	Bristol
	114	Senior Customer Data Analyst	United Kingdom	Bristol
	115	Service QA Analyst with Automation	United Kingdom	Bristol
	116	Senior SW Engineer	United Kingdom	Bristol
	117	Service QA Test Analyst	United Kingdom	Bristol
	118	Onboarding tester	United Kingdom	Bristol
	119	Mobile Onboarding Test Coordinator	United Kingdom	Bristol
	120	Onboarding tester	United Kingdom	Bristol
	121	Market On Boarding Team Leader	United Kingdom	Bristol
	122	Mobile Onboarding Test Coordinator	United Kingdom	Bristol
	123	Onboarding Tester	United Kingdom	Bristol
	124	Senior Device Software Tester	United Kingdom	Bristol
	125	Mobile Onboarding Project Coordinator	United Kingdom	Bristol
	126	Mobile Onboarding Senior Software Engine	United Kingdom	Bristol
	127	Team Leader – Device On Boarding	United Kingdom	Bristol
	128	Software Engineer	United Kingdom	Bristol
	129	Senior SW Engineer	United Kingdom	Bristol
	130	Senior Software Engineer	United Kingdom	Bristol
	131	Windows Phone Engineer	United Kingdom	Bristol
	132	Senior SW Engineer	United Kingdom	Bristol
	133	Senior Software Engineer	United Kingdom	Bristol
	134	Senior Software Engineer	United Kingdom	Bristol
	135	SW Engineer	United Kingdom	Bristol
	136	Senior Software Engineer	United Kingdom	Bristol
	137	Senior SW Engineer	United Kingdom	Bristol
	138	Senior Engineer	United Kingdom	Bristol
	139	SW Development Manager	United Kingdom	Bristol
	140	Senior SW Engineer	United Kingdom	Bristol
	141	Software Development Manager	United Kingdom	Bristol
	142	Community Relations & Events Manager	United Kingdom	Bristol
	143	Senior SW Engineer	United Kingdom	Bristol
	145	Senior SW Engineer	United Kingdom	Bristol
	147	Senior SW Engineer	United Kingdom	Bristol

232

Unique Identifier for Deal		Address Book Title (Position Text)	Current Company Country	City
	148	Senior Software Engineer	United Kingdom	Bristol
	149	Software Engineer	United Kingdom	Bristol
	150	Software Engineer	United Kingdom	Bristol
	151	Senior SW Engineer	United Kingdom	Bristol
	152	Senior SW Engineer	United Kingdom	Bristol
	154	Java Software Engineer	United Kingdom	Bristol
	155	Principal SW Engineer	United Kingdom	Bristol
	156	Team Assistant – Nokia Entertainment	United Kingdom	Bristol
	159	Senior Software Engineer	United Kingdom	Bristol
	160	Senior Engineer	United Kingdom	Bristol
	161	Senior SW Engineer	United Kingdom	Bristol
	162	Senior SW Engineer	United Kingdom	Bristol
	163	Software Engineer	United Kingdom	Bristol
	164	Senior Software Engineer	United Kingdom	Bristol
	165	Senior SW Engineer	United Kingdom	Bristol
	166	Senior SW Engineer	United Kingdom	Bristol
	167	Principal SW Engineer	United Kingdom	Bristol
	170	Senior Software Engineer	United Kingdom	Bristol
	171	Senior SW Engineer	United Kingdom	Bristol
	172	Software Engineer	United Kingdom	Bristol
	174	Senior Software Engineer	United Kingdom	Bristol
	175	Software Development Manager	United Kingdom	Bristol
	176	Senior software engineer	United Kingdom	Bristol
	177	Software Engineer	United Kingdom	Bristol
	178	Senior Software Engineer	United Kingdom	Bristol
	179	Director, Development and Delivery	United Kingdom	Bristol
	180	Senior SW Engineer	United Kingdom	Bristol
	181	Senior SW Engineer	United Kingdom	Bristol
	182	Senior Software Engineer	United Kingdom	Bristol
	183	Senior SW Engineer	United Kingdom	Bristol
	184	Software Engineer	United Kingdom	Bristol
	185	Software Development Manager	United Kingdom	Bristol
	186	Principal SW Engineer	United Kingdom	Bristol
	187	Senior Software Engineer	United Kingdom	Bristol
	189	Software Engineer	United Kingdom	Bristol
	190	Senior Engineer	United Kingdom	Bristol
	191	Service Delivery Manager	United Kingdom	Bristol
	192	Sr. Database Analyst	United Kingdom	Bristol
	193	Senior SW Engineer	United Kingdom	Bristol
	195	Head of Service Delivery	United Kingdom	Bristol
	197	Live Service Manager	United Kingdom	Bristol
	198	Principal Engineer	United Kingdom	Bristol
	199	Security and Privacy Specialist	United Kingdom	Bristol
	200	Senior Engineer	United Kingdom	Bristol
	201	Senior SW Engineer	United Kingdom	Bristol
	202	Database Administrator	United Kingdom	Bristol
	203	Production DBA	United Kingdom	Bristol
	204	Senior Digital Content Analyst	United Kingdom	Bristol
	205	Content Solutions Developer	United Kingdom	Bristol

233

Unique Identifier for Deal		Address Book Title (Position Text)	Current Company Country	City
	207	Content Solutions Developer	United Kingdom	Bristol
	208	Project Manager, Content Operations	United Kingdom	Bristol
	209	Content Solutions Developer	United Kingdom	Bristol
	210	Manager Entertainment Content Operations	United Kingdom	Bristol
	211	Supply Chain Coordinator	United Kingdom	Bristol
	212	Supply Chain Coordinator	United Kingdom	Bristol
	213	Supply Chain Support Team Leader	United Kingdom	Bristol
	214	Supply Chain Coordinator	United Kingdom	Bristol
	215	Entertainment Manager	Indonesia	Jakarta
	216	Product Manager	India	Mumbai
	218	Entertainment Manager	India	Mumbai
	219	Content & Operations Lead – IMEA	India	Mumbai
	220	Manager – Consumer Engagement	India	Mumbai
	221	Entertainment Manager	Italy	Milan
	222	Partner Manager, Mexico	Mexico	Mexico City
	223	Entertainment Lead, Russia	Russian Fed.	Moscow
	224	Entertainment Manager	Turkey	Istanbul
	225	Director, Music and Cross Ent Experience	USA	New York
	226	Administrative Assistant	USA	New York
	227	Director Business Planning & Programs	USA	New York
	228	Director, Business Affairs & Strategy	USA	New York
	229	Global Head of Major Label Relations	USA	New York
	230	Global Head of Music Publishing	USA	New York
	231	Head of Third Party Partnerships	USA	New York
	232	Entertainment Lead, North America	USA	Sunnyvale
	233	Head of Entertainment, Americas	USA	New York
	234	Music Content and Social Media Manager	USA	Sunnyvale
	235	Entertainment Manager – SEA Africa	South Africa	Johannesburg
	236	Senior Sourcing Manager	Finland	Espoo
	237	Care Project Manager	United Kingdom	Bristol
	238	Senior Legal Counsel	United Kingdom	London
	239	Finance Manager, Entertainment	United Kingdom	London

234

EX-10.6

Exhibit 10.6

Service Partnership Agreement

NAVER Corporation & LINE Plus Corporation

January 1, 2014

NAVER Corporation	LINE Plus Corporation
CEO Kim Sang Hun (seal)	CEO Shin Jung Ho (seal)

NAVER Corporation (hereinafter referred to as “NAVER”) and LINE Plus Corporation (hereinafter referred to as “LINE”) shall enter into the following Strategic Partnership Agreement (hereinafter referred to as the “Agreement”) with the goal of achieving mutual growth and improving cooperation between the two companies based on mutual trust.

Article 1. Purpose

The purpose of the Agreement is to define detailed scopes and methods of cooperation between LINE and NAVER when carrying forward work-related partnerships for both company’s Services, in order to achieve a mutually beneficial partnership that results in an increase of each company’s Services’ value and number of new subscribers.

Article 2. Service Scope

The scope LINE and NAVER services each company enters into a partnership for through this Agreement (hereinafter referred to as “Service”) is as shown below;

 LINE’s Service: The global mobile messenger service “LINE” and its series

‚ NAVER’s Service: Web, application and other wired and wireless internet portal services that is provided by NAVER in any format.

Article 3. Partnership Details

 NAVER shall conduct the following tasks for LINE Services.

i. Provide marketing tools: Provide display ads, content search features and other tools in PC and mobile NAVER Services

ii. Provide marketing-related resources: Provide support in marketing planning and operational activities.

iii. Provide contents: Provide NAVER’s Service contents and API.

‚ LINE shall conduct the following tasks for NAVER Services.

i. Provide marketing tools: Provide display ad and official accounts in LINE’s Services

ii. Support service distribution channel expansion: Provide channels to distribute NAVER’s Services within LINE’s Services (Display mobile apps within the Service, install widget, provide installation links etc…)

iii. Provide contents: Provide LINE’s Service contents, API, characters etc…

ƒ LINE and NAVER may add additional partnership activities, apart from those described in Clause 1 or 2 above, upon mutual discussion in order to discover each Service’s values.

Article 4. Abiding by Related Regulations

 NAVER and LINE shall faithfully abide by related laws and regulations when entering into and executing the Agreement.

‚ NAVER and LINE shall engage in close and mutual discussions on matters that are needed in order to execute tasks prescribed in the Agreement.

ƒ If issues arise due to violations of Clause 1 and 2 of this Article, the party that is responsible for the outbreak of the issue shall be obligated to resolve the issue and bear resulting expenses. However, NAVER and LINE shall provide active cooperation and support with utmost sincerity.

Article 5. Adjusting Activity Execution Details

 LINE and NAVER shall conduct partnership activities in accordance with provisions in Article 3 in order to mutually acquire an equal level of cost and effect through this partnership.

‚ Notwithstanding the foregoing, if a comparative review of the monthly cost execution statement recognizes that either party has earned more economic benefits than the other party through the cooperative relationship, settlements are conducted every quarter, and the difference shall be paid on the month following each quarter.

ƒ In order to execute provisions in Clause 1 and 2 of this Article, both parties shall calculate the cost execution statement with rational and impartial conditions that can be accepted objectively, in accordance with provisions in Appendix 1] Settlement Conditions.

„ When settling differences in amount, either party can offset the amount if the party has a receivable that is due to the other party.

Article 6. Confidentiality

NAVER and LINE shall keep any information, including either party’s confidential business-related information, resources or other information that has been obtained during the course of executing partnerships prescribed in the Agreement confidential, shall not disclose or reveal the information to a third party without the other party’s advanced written approval and shall not use the confidential information for purposes other than those defined herein. In the event either party is damaged by the other party’s violation of this Article, the violating party shall compensate for damages experienced by the other party.

Article 7. Non-Assignment

NAVER and LINE shall not assign, delegate, transfer or provide as security any full or partial rights or obligations given under the Agreement to a third party without written prior consent from the other party.

Article 8. Modifications

If either party wishes to modify provisions in the Agreement, modifications shall be made upon a written agreement between NAVER and LINE. The modified provisions shall supersede the Agreement if the modified provisions and provisions in the Agreement do not correspond to each other.

Article 9. Agreement Term and Cancellation or Termination of the Agreement

 The Agreement shall be valid from January 1, 2014 to December 31, 2014 and the term of the Agreement may be extended upon mutual written agreement from both parties.

‚ NAVER or LINE may immediately cancel or terminate the Agreement through a written notice in the event any of the following circumstances arise;

i. If the payment of a check or promissory note issued by either party has been suspended, either party goes bankrupt or if a financial institution suspends the trade of either party

ii. If either party has directly filed for insolvency, court receivership, composition, procedures prescribed in the Corporate Restructuring Promotion Act or other similar procedures, or has been filed for any of the above by a third party

iii. If a procedure for compulsory execution, such as seizure, injunction or delinquency disposition has been commenced on an important property.

iv. If business is suspended or cancelled by supervisory authorities

v. If the party that violates or fails to execute obligations in the Agreement does not execute obligations or resolve the violations within the given seven (7) day period, despite a written request to correct any misdoings within the said seven (7) days

ƒ If The Agreement is canceled or terminated due to reasons attributable to a party, the violating party shall be obligated to compensate for additional damages the other party experiences and shall pay the other party within seven (7) days from the date the other party demands the payment.

„ The cancellation or termination of the Agreement shall not influence any claim for compensation for rights or damages that occurred before the Agreement was canceled or terminated.

Article 10. Settlement of Disputes

Both parties shall try to resolve any disputes that arise between both parties hereto in relation to this Agreement through mutual accord and good faith. If the aforementioned dispute cannot be resolved amicably, all legal disputes between both parties shall be placed under the jurisdiction of the court defined under the Civil Procedure Act.

Article 11. Effectuation of the Agreement

The Agreement shall become effective once both parties sign and seal the Agreement. NAVER and LINE shall enter into the Agreement herein after thoroughly understanding the terms and conditions of the Agreement and in witness whereof, sign and seal the Agreement in duplicate and retain one (1) copy respectively.

Amendment Agreement

NAVER Corporation (hereinafter referred to as ‘NAVER’) and LINE Plus Corporation (hereinafter referred to as ‘LINE’) shall agree to amend the previously executed agreement in accordance with the provisions below.

Article 1 Purpose

The purpose of the Amendment Agreement is to amend the agreement that was entered into between NAVER and LINE through mutual agreement and to define the modifications and its effectiveness.

Article 2 Details on the Amendment Agreements

1. Agreement to amend (hereinafter referred to as the ‘Original Agreement’)

A. Agreement execution date: January 1, 2014

B. Agreement title: Service Partnership Agreement – NAVER Corporation & LINE Plus Corporation

2. Amendments that have been agreed upon

A. Article 9 (Agreement Term and Cancellation or Termination of the Agreement) Clause 4 of the Original Agreement shall be amended as shown below;

 The Agreement shall be valid from January 1, 2014 to December 31, 2014 and shall be automatically extended for one (1) year under identical conditions unless either party sends a written notification to the other party to do otherwise within one (1) month prior to the expiration of the agreement term.

B. Clause numbers of Clauses 4, 5 and 6 of Article 9 in the Original Agreement shall be modified to Clause 1, 2 and 3.

Article 3 Effectiveness

1. The Amendment Agreement shall be effective from the date the Amendment Agreement is executed.

2. The Original Agreement shall be amended in accordance with conditions defined in the Amendment Agreement from the date the Amendment Agreement is executed. Matters that are undefined in the Amendment Agreement shall be handled in accordance with provisions in the Original Agreement.

Article 4 Interpretation

Matters that are not defined in the Amendment Agreement or the Original Agreement shall be determined through separate discussion between both parties.

In witness whereof, the Agreement shall be made in duplicates, signed and sealed by both parties and both parties shall retain one (1) copy respectively.

December 31, 2014

‘NAVER’	‘LINE’
NAVER Corporation	LINE Plus Corporation
Green Factory	360-42, Hwangsaeul-ro, Bundang-gu
6, Buljeong-ro, Bundang-gu	Seongnam-si, Gyeonggi-do, Korea
Seongnam-si, Gyeonggi-do, Korea	(11 Fl., AK Plaza Bundang, Seohyun-dong)
CEO    Kim Sang Hun            (Seal)	CEO    Shin Jung Ho            (Seal)

EX-16.1

Exhibit 16.1

June 10, 2016

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549-7561

Dear Sirs/Madams:

We have read the section titled “Change in Accountants” in the registration statement on Form F-1 of LINE Corporation, filed with the Securities and Exchange Commission on June 10, 2016, and have the following comments:

1. We agree with the statements made in the last sentence of the first paragraph, the first sentence of the second paragraph and the statements made in the third and fifth paragraphs.

2. We have no basis on which to agree or disagree with other statements contained therein.

Yours truly,

/s/ Deloitte Touche Tohmatsu LLC

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form F-1 of LINE Corporation of our report dated April 15, 2016, except for accounting for the MixRadio service as a discontinued operation as described in Note 3(1), as to which the date is May 25, 2016, relating to the financial statements of LINE Corporation, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers Aarata

Tokyo, Japan

June 10, 2016

EX-23.3

EXHIBIT 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form F-1 of our report dated July 16, 2015 relating to the consolidated financial statements which include the consolidated statement of financial position of LINE Corporation and its subsidiaries (the “Company”) as of December 31, 2014, and the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the two years in the period ended December 31, 2014 (which report expresses an unqualified opinion and includes explanatory paragraphs relating to the distribution of the Company’s interest in the Hangame branded business, including related subsidiaries, to NAVER Corporation (formerly known as NHN Corporation) in April 2013, the disposal of the online matching services business in December 2013, the disposal of the data management business in September 2014, and LINE Plus Corporation’s buy-back of the 40% interest in LINE Plus Corporation owned by NAVER Corporation in September 2014), appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ Deloitte Touche Tohmatsu LLC

Tokyo, Japan

June 10, 2016