Responsible Business Operation
The Z Holdings Group establishes the Z Holdings Group Code of Conduct to be observed by all officers and employees, and actively conducts measures to prevent corruptions such as bribery, as well as measures to prevent money laundering.
Fully committed to prevent corruptions
The Z Holdings Group values the importance of aspiring to achieve a safe and sustainable Internet society through the trust entrusted and its harmony with the society. In addition, the Z Holdings Group is committed to act with the spirit of fair play and to fulfill its social responsibility. To this end, the Z Holdings Group thoroughly notifies and provides online learning on the Z Holdings Anti-Corruption Regulation to its employees, and pursues efficient corporate activities while maintaining the necessary corporate governance to gain the trust and understanding of our stakeholders.
In the regulation, Z Holdings Corporation, in principle, prohibits officers and employees from receiving entertainment or gifts from public officials or private business partners. The regulation also stipulates that entertainment and other expenses should be spent within the scope of socially accepted rationality and in accordance with legitimate business purposes.
In addition, in regards to facilitation payments in countries other than Japan, the Z Holdings Group analyzes the areas and businesses with high risk of facilitation payments. These analyses are used to raise the awareness of local employees on the prohibition of such payments and to select business partners. More specifically, expense application and record taking of accounting evidence are thoroughly enforced. Administrative procedures with the authorities are made online without the help of mediators. Periodic audits are carried out to supervise compliance on these matters.
Z Holdings Corporation and the Z Holdings Group also maintain internal and external channels through which to report (consult about) violations against the Z Holdings Anti-Corruption Regulation. The privacy of the person who consults or reports is strictly protected, and the system is institutionalized so that the person who consults reports will not be disadvantaged. There are currently three such channels: the compliance division, officers (representative director, and full-time audit and supervisory committee members), and an external law firm.
In fiscal 2020, the Z Holdings Group received no legal actions regarding corruption, bribery and the like.
Policies to prevent money laundering and financing of terrorism, and our commitment
The Z Holdings Group, based on its Basic Policy on Anti-Money Laundering and Anti-Terrorist Financing, will not be involved in transactions related to the proceeds derived from illegal acts, transactions that fund terrorists, and transactions with counterparties with whom transaction is prohibited by the government of each country, etc.
To this end, the Z Holdings Group has built systems to manage customer identification and reporting of suspicious transactions based on the Act on Prevention of Transfer of Criminal Proceeds, and endeavors to prevent abuse of financial services in organizational crimes. Moreover, for Group companies to which the Act on Prevention of Transfer of Criminal Proceeds apply (PayPay Bank, PayPay, YJ Card, LINE Pay, LINE Securities, etc.), we are strengthening our efforts to prevent money laundering and terrorist financing based on the measures required by laws, regulations and guidelines.
For example, PayPay Bank, a group company of the Z Holdings Corporation, verifies identity of a user opening an account by requiring users to submit designated identity verification materials as well as by sending the transaction documents (cash cards, etc.) to the registered address by registered mail. Furthermore, PayPay Bank strictly confirms the details of the application, and if circumstances so require, requires additional verification materials or denies the opening of the account, etc. In addition, opened accounts are continuously monitored for their transactions by specialized divisions to prevent unauthorized use.
At PayPay and LINE Pay, authentication by eKYC or bank accounts is used to confirm transactions when users open their accounts. The details of the application are strictly confirmed, and account openings are denied depending on circumstances. Furthermore, risks are mitigated through measures such as setting an original upper limit on usage. In addition, opened accounts are continuously monitored for their transactions by specialized divisions to prevent unauthorized use.
At YJ Card Corporation, a group company of the Z Holdings Corporation, Yahoo! JAPAN Cards can only be used through measures such as confirming the user as the person who made the application by requiring users to show their identity verification materials when they receive the credit cards. For specific cases in which unauthorized use, etc. can be suspected at screening, additional hearings, etc. are made to reduce the risk of unauthorized use. Even after a card is issued, a specialized department continuously monitors credit card usage to prevent unauthorized use.
Audits are continuously conducted for Group companies to which the Act on Prevention of Transfer of Criminal Proceeds apply, to ensure the effectiveness of measures to prevent money laundering and terrorist financing.
Ensuring fair competition
Under the Z Holding Group Code of Conduct, the Group upholds the principle of conducting business operations with the spirit of fair play under free and fair competition.
Yahoo Japan Corporation (“Yahoo! JAPAN”) and LINE Corporation (“LINE”) stipulate this in their internal regulations, in line with the Subcontract Act, Intellectual Property Acts, and Unfair Competition Prevention Act. Also, measures to raise the awareness are taken to forestall unfair restraints of trade and unfair trade methods that are subject to control under the Antimonopoly Act.
With respect to the Subcontract Act, an emphasis is placed on raising the awareness against acts that harm the interests of subcontractors. To convey the fundamental purpose of the Subcontract Act, which is to ensure fair subcontracting transactions and to protect the interests of subcontractors, specific problematic examples that may constitute incompliance with the law, such as reducing the subcontract proceeds or changing details of the payment arrangement without due reasons, are explained.
In addition, intellectual properties rights, such as those protected under the Patent Act, Trademark Act, and Copyright Act, and trade secrets protected under the Unfair Competition Prevention Act, are clearly expressed as extremely important to the company’s business. Along with this, rules are stipulated to urge respect for, and not to violate, intellectual property rights of business partners and third parties.
Prohibition of acts of conflict of interest
Z Holdings Corporation stipulates in its internal regulations the guidelines and procedures relating to acts of conflict of interest (acts that create conflict of interests between the company and the employee) so that employees are able to make the right decision and take the right course of action when confronted by such a situation.
The regulations stipulate that employee is obliged to notify the superior in advance of any act of trade that may possibly conflict with the company’s interest, and that the superior who is notified must take necessary actions to prevent conflict of interests between the company and the said employee. In addition to this, Yahoo! JAPAN, which is a business operator, has its own regulations in place that explicitly prohibit acts of competition contrary to the interest of the company.
Basic Tax Policy
In addition to aiming to solve social issues through our business and contributing to the creation of new value in the Internet industry, the Z Holdings Group believes that it is necessary to appropriately return profits from our business activities to our various stakeholders for the development of our country and the regions where we are based.
With regard to tax payment, which is one of the most basic and important social responsibilities, the Z Holdings Group ensures tax transparency, addresses international tax compliance such as the BEPS Action Plan, complies with tax-related laws and international laws in all countries and regions where we operate, and make appropriate tax payments to the countries and regions in line with the intent of each law.
The amount of corporate income tax in the consolidated profit and income statement for fiscal 2020 amounted to JPY 53,495 million.
Tax risk management and governance structure
The Z Holdings Group maintains fair and equitable transactions both in Japan and overseas, reduces tax risks through appropriate and reasonable tax planning, and fulfills its responsibilities as a tax payer. The GCFO (Group Chief Financial Officer) is responsible for managing the Group’s tax practices and policy for handling the issue. Tax risks are examined by periodically seeking advice from external advisors. With respect to the Group’s international transactions, we have put the following systems in place to ensure appropriate practices relating to transfer pricing taxation and tax havens.
Approach to transfer pricing taxation
We carry out the Group’s international transactions in compliance with laws and regulations of each country and respond appropriately when revisions are made in taxation systems. To reduce tax risks, we examine the rationality of the Group’s international transactions and document such transactions. We also monitor investments in low-tax countries and have a system in place for appropriate tax declaration.
Approach to controlled foreign corporation rules
We do not engage in tax planning intended for tax avoidance, such as the use of tax havens by business entities with no business purposes or substance. When we make investments in low-tax countries, or when the tax rates are reduced as a result of revisions in the laws and regulations in the countries and regions where we operate, we assess whether controlled foreign corporation rules apply or not according to the laws and regulations of each country. As a result, if the controlled foreign corporation rules apply, we appropriately file tax returns and make tax payments.
Z Holdings Corporation, Yahoo! JAPAN and LINE consider digital transformation as one of the important themes, and participate in the political fundraising parties of politicians who promote these policies, ensuring that the participations comply with the Political Funds Control Law (JPY 6.09 million for FY2020). However, we have not made any political donations.
Z Holdings Corporation has established the Expert Panel on AI Ethics to clarify the basic policies necessary for users to use our services without anxiety when AI technology is used in the digital society, and to formulate effective voluntary rules.
The Expert Panel will discuss the roles that business entities should play, the matters that should be explained to users, the state of governance to prevent disadvantages that may be caused by the use of AI, and the policy for dealing with disadvantages in the event that they occur, The Panel plans to announce the Z Holdings Group’s Basic Policy on AI Ethics (tentative name) within fiscal 2021.