As filed with the Securities and Exchange Commission on March 29, 201927, 2020

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form20-F

(Mark One)

OR

For the fiscal year ended December 31, 20182019

OR

OR

Date of event requiring this shell company report                    

For the transition period from                    to                    

Commission file number001-37821

LINE Kabushiki Kaisha

(Exact name of Registrant as specified in its charter)

JR Shinjuku Miraina Tower, 23rd Floor

4-1-6 Shinjuku

Shinjuku-ku, Tokyo,160-0022, Japan

(Address of principal executive offices)

Satoshi Yano

Telephone:+81-3-4316-2050;E-mail: ir@linecorp.com; Facsimile:+81-3-4316-2131

(Name, telephone,e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

As of December 31, 2018,2019, there were 240,524,642241,133,142 shares of common stock outstanding

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes☒    No  ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    YesYes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer  ☒             Accelerated filer  ☐            Non-acceleratedNon-accelerated filer  ☐             Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

U.S. GAAP  ☐    IFRS  International Financial Reporting Standards as issued by the International Accounting Standards Board☒            Other  ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    YesYes  ☐    NoNo  ☒

TABLE OF CONTENTS

i

ii

CONVENTIONS USED IN THIS ANNUAL REPORT

Except where the context otherwise requires or unless otherwise specified, and for purposes of this annual report on Form20-F only:

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

iii

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements with respect to our current plans, estimates, strategies and beliefs. Forward-looking statements include, but are not limited to, those statements using words such as “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project,” “aim,” “plan,” “likely to,” “target,” “contemplate,” “predict,” “potential” and similar expressions and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may,” or similar expressions generally intended to identify forward-looking statements. These forward-looking statements are based on information currently available to us, speak only as of the date hereof and are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control. As a consequence, current plans, anticipated actions and future financial position and results of operations may differ significantly from those expressed in any forward-looking statements in this annual report. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented and we do not intend to update any of these forward-looking statements. Risks and uncertainties that might affect us include, but are not limited to:

You are urged to read the sections “Item 3.D. Risk Factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects” of this annual report for a more complete discussion of the factors that could affect our performance and the industry in which we operate.

iv

LIMITATIONS OF USER METRICS

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 “Item 3.D. Risk Factors — Factors—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.

v

PART I

Not applicable

Not applicable

Recent Developments—The Planned Transaction

On December 23, 2019, SoftBank Corp., a joint stock company incorporated under the laws of Japan, NAVER Corporation, Z Holdings Corporation, a joint stock company incorporated under the laws of Japan and we entered into a business integration agreement (the “Business Integration Agreement”) concerning the business integration of Z Holdings Corporation and us (the “Planned Transaction”). If consummated, the Planned Transaction will result in making us a privately held company and integrating the business operations of Z Holdings Corporation and us.

The Planned Offer is the first step in a series of transactions with the purpose of consummating the Planned Transaction in a spirit of equal partnership. The Planned Transaction aims to combine the management and operational resources of LINE and Z Holdings Corporation, and to bring together their respective customer bases. It is expected that the combined company will strengthen and pursue synergies in the respective businesses currently operated by LINE and Z Holdings Corporation and make investments to expand into new business areas, such as AI, commerce, fintech, advertising andonline-to-offline, with the aim of growing into a leading internet company in Japan and the rest of Asia. While formulation of the business plan for the integrated LINE-Z Holdings Corporation (the “Integrated Company”) will be considered further after the Planned Transaction has been completed currently, LINE expects to realize synergies in the following areas:

(i) Synergies in attracting customers

By connecting LINE’s communication platform, which has a user base of 82 million active users per month in Japan and 104 million active users per month abroad, with thee-commerce service sites of Z Holdings Corporation’s group of companies (including Yahoo Shopping, PayPay Mall, PayPay Flea Market, YAHUOKU!, ZOZOTOWN, Yahoo Travel, Ikyu.com and others), the expectation is that there will be increased customer traffic to all of Z Holdings Corporation’s group services, with the greatest impact being one-commerce services. LINE has a broad user demographic, including people who rarely or never usee-commerce services, and the expectation is that synergies in this area can be developed at an early stage by applying theknow-how for accelerating customer referrals that were obtained through past collaboration between SoftBank Corp. and Ikyu.com. In addition, it is anticipated that the number of users and their retention rates will increase for the Integrated Company because it will be able to reach users of the LINE platform through their official LINE accounts, which provide direct access to those users.

(ii) Synergies with Fintech business

By collaborating on the payments and financial businesses that each of Z Holdings Corporation and LINE are already actively promoting, and making further improvements in terms of increasing the user base and increasing, and making joint use of, the number of retail outlets compatible with Z Holdings Corporation’s and

LINE’s payment and financial services, greater convenience for both users and retail outlets can be expected. In addition, the companies believe it will be possible for Z Holdings Corporation and LINE to strengthen their existing fintech businesses by utilizing their strong customer bases, which already use Z Holdings Corporation’s or LINE’s payments services, as well as from taking advantage of cost reductions from operational efficiencies resulting from shared business activities.

(iii) Marketing business synergies

By utilizing the“multi-big data” of both the Z Holdings Corporation group and the LINE group, the companies believe that all companies engaged in marketing activities in Japan will be able to conduct their own marketing activities more productively, making it possible to improve sales as a result of increased advertising unit prices and cross-selling of the Integrated Company group’s advertising products. In addition, by exploiting Z Holdings Corporation’s and LINE’s complementary product lineups, together with developing the O2O(Online-to-Offline)/OMO (Online Merges with Offline) field as a new area for advertising, LINE expects expanded integrated marketing solutions that will have a synergistic effect on the Integrated Company and its users.

(iv) Synergies in new business / system development

By increasing engineering resources and sharing Z Holdings Corporation’s and LINE’sknow-how regarding system development, LINE expects it will be possible for the Integrated Company to create more attractive services for its customers. Although acceleration of development in various fields is expected, Z Holdings Corporation and LINE have been focusing their resources on developing AI infrastructure in particular. LINE intends that the Integrated Company will further strengthen and accelerate AI infrastructure development that will support all of the Integrated Company group’s services. In addition to the above, Z Holdings Corporation and LINE plan to continue to study opportunities for additional areas of collaboration to create more business synergies for the Integrated Company.

The Planned Transaction is expected to be implemented by carrying out the following transactions:

The consolidated statement of financial position data as of December 31, 20172018 and 20182019 and the consolidated statement of profit or loss data for the years ended December 31, 2016, 2017, 2018 and 20182019 have been derived from our audited consolidated financial statements and related notes included in this annual report. The consolidated statement of financial position data as of December 31, 2014, 2015, 2016 and 20162017 and the consolidated statement of profit or loss data for the years ended December 31, 20142015 and 20152016 have been derived from our consolidated financial statements and related notes not included in this annual report. These consolidated financial statements and the related notes have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”).

The information set forth below is not necessarily indicative of the results of future operations.

Consolidated Statement of Financial Position Data

Not applicable

Not applicable

Risks Related to the Planned Offer and Planned Transaction

The conditions of the Planned Offer may not be satisfied at all or in the anticipated timeframe.

Under the Business Integration Agreement, the commencement of the Planned Offer is subject to certain conditions. Satisfaction of certain of the conditions, such as the receipt of required regulatory approvals, the approval of the shareholders of Z Holdings Corporation with respect to the Share Exchange, or the absence of circumstances that would make the Planned Transaction or the achievement of its purposes extremely difficult due to material adverse effects on the parties to the agreement, is not within our control, and difficulties in otherwise satisfying the conditions may prevent, delay, or otherwise materially and adversely affect the commencement of the Planned Offer. We cannot predict with certainty whether and when any of the required conditions will be satisfied. If the Planned Offer does not receive, or timely receive, the required antitrust approvals and clearances, or if another event occurs delaying or preventing the Planned Offer, such delay in commencing or completing, or failure to commence or complete, the Planned Offer may create uncertainty or otherwise have negative consequences that may materially and adversely affect our financial condition and results of operations.

While the Planned Transaction is pending, we are subject to business, legal and regulatory uncertainties and contractual restrictions that could disrupt our business.

The Planned Offer and subsequent steps in the Planned Transaction, and as well as any uncertainties concerning them, may have a variety of adverse effects on our business and operations while they are pending, including the following.

Such risks may have a material adverse effect on our business, financial condition, or results of operations. The Planned Transaction may be pending, and thus we may be subject to these risks, for a significant period of time after the date hereof: the Planned Offer is expected to commence no earlier than May 2020, with the actual timing depending on, among other factors, when the conditions precedent for the Planned Offer, including the receipt of certain government approvals, are satisfied.

Our executive officers and directors may have interests that are different from, or in addition to, those of our shareholders generally.

Our executive officers directors may have interests in the Planned Transaction that are different from, or are in addition to, those of our shareholders generally. These interests include direct or indirect ownership of our stock options following the completion of the Planned Transaction. In addition, certain of our directors have current or prior business or personal relationships with NAVER Corporation, SoftBank Corp. and Z Holdings Corporation, and each of their respective representatives. Such interests may influence their decisions concerning the Planned Transaction in ways that are not fully aligned with the interests of our shareholders generally. These interests could also cause our executive officers or directors to have perceived conflicts of interest in recommending approval of the Planned Offer and Planned Transaction.

In the event that the Planned Offer is not consummated, or doubts relating to whether the Planned Transaction will be consummated arise, the trading price of our common stock and our future business and results of operations may be negatively affected.

The conditions to the commencement of the Planned Offer may not be satisfied, as noted above. Furthermore, the Business Integration Agreement may be terminated under certain circumstances, including (i) the agreement to do so by all parties to the agreement, (ii) the Planned Offer not commencing by June 23, 2021, or (iii) a party, prior to the commencement of the Planned Offer, giving written notice to all other parties to the Agreement upon the occurrence of certain events, such as a material breach of the Business Integration Agreement or certain insolvency or similar events. In such an event case, the Planned Offer would likely not be commenced.

If the Planned Offer is not consummated, we will have incurred, or would remain liable for, significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the Planned Transaction.

Furthermore, if we do not consummate the Planned Offer, or if doubts relating to whether the Planned Transaction will be consummated arise, the price of our common stock may decline significantly from the current market price, regardless of the state of our business at the time, as we believe the current market price reflects a market assumption that the Planned Offer will be consummated as currently contemplated.

In addition, a failure of the Planned Offer and the subsequent Planned Transaction, or doubts relating to whether the Planned Transaction will be consummated, may result in negative publicity and a negative impression of us in the investment community, and have a negative impact on our ability to raise additional financing or conduct business combinations in the future.

Finally, any disruptions to our business resulting from the announcement and pendency of the Planned Transaction, including any adverse changes in our relationships with our business partners and current or potential personnel, could continue or accelerate in the event of a failed transaction or heightened uncertainty about the Planned Transaction.

For these and other reasons, not consummating the Planned Transaction could adversely affect our business and results of operations.

If the Planned Offer is consummated, our ADSs will be delisted, and an active public market for our ADSs may cease to exist.

If the Planned Offer is consummated, there will be a substantial reduction in the number of shareholders of the Company and, consequently, there may no longer be an active public market for ADSs. In addition, under the Business Integration Agreement we are required, in connection with the implementation of the LINESqueeze-out, to take such steps as may be required to delist the Company’s ADSs from the New York Stock Exchange.

To the extent that LINEde-lists the ADSs after the consummation of the Planned Offer, the absence of an active trading market in Japan and the United States would reduce the liquidity of your ADSs and the underlying shares of our common stock.

SoftBank Corp. and NAVER Corporation have announced that if the Planned Offer is completed, they intend to carry out the LINESqueeze-Out, with the goal of acquiring any shares of our common stock or our ADSs not tendered during the acceptance period of the Planned Offer. In such case, you may be forced, subject to any ability to exercise applicable appraisal rights, to sell your ADSs to SoftBank Corp. and NAVER Corporation at the same amount per ADS as the tender offer price for shares of our common stock in the Planned Offer.

Risks Related to Our Business

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, and our financial performance has been and will continue to be significantly determined by our success in adding, retaining and engaging active users. From our inception, we experienced our largest user growth in Japan, Thailand, Taiwan and Indonesia. For example, our aggregate MAUs in Japan, Thailand and Taiwan were 127 million in December 2016, 135 million in December 2017, and 144 million in December 2018.2018 and 149 million in December 2019. Despite such growth, the growth rate of our users in such markets has declined over time as we achieved higher penetration rates in those markets. In Indonesia, we have experienced a decrease in the number of our MAUs starting in the second quarter of 2017 primarily due to intensified competition in that market, and our MAUs in Indonesia were 40 million in December 2016, 32 million in December 2017, and 20 million in December 2018.2018 and 15 million in December 2019. In part due to refocusing of our marketing efforts on these key countries in line with our increased emphasis on monetization in markets where we have achieved leading market positions, we have experienced a significant decrease not only in total MAUs but also in the level of user engagement outside of the four countries, and there may be further decreases in the future.

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.

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 plan to continue to invest in product development and explore additional monetization opportunities, including those related to fintech, artificial intelligence (“AI”) and blockchain, 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. For example, we are currently pursuing a variety of new business initiatives related to fintech, including mobile payment and online financial services, and whether we will be able to successfully monetize these new services remains uncertain. In addition, users and advertisers in certain markets are not as familiar with new forms of digital advertising, such as ourLINE Official Accounts and Sponsored Stickers, as well as display ads posted on Timeline, LINE NEWS and LINE NEWS.Smart Channel. In newer markets, we are investing to convince users and advertisers of the benefits of our products and services. However, we expectit remains our expectation 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.

As part of our business strategy, we are seekingWe continue to seek ways to increase our revenue by selectively introducing commissions and other charges with respect to our existing products and services that are currently offered for free, as well as adding new advertising services and developing other new revenue generating products and services. However, there is no guarantee that our efforts to further monetize our products and services will be successful in generating significant new revenues or profits. Furthermore, our monetization efforts could have a negative effect on user engagement and user base growth if such efforts discourage users from using our products

service providers such as Facebook’s WhatsApp and Messenger and Tencent’s WeChat, 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. We face competition from mobile telecommunications companies, game companies, music and video streaming companies, mobile payment companies, fintech companies, AI companies,e-commerce 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.

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 morefar-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 and provide 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 and provide, including those related to fintech, AI and blockchain, may expose us to new risks.

We compete in a highly competitive industryindustries 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 and provision 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. For example, in March 2017, we launched our next-generation AI platform called “Cloud Virtual Assistant (or “Clova”),” which enables voice interfaces to process a wide range ofreal-world inputs and deliver our products and services in a coherent and optimized manner. We have

consumer loans and internet banking on the LINE platform, as well as the launch of BITBOX,BITFRONT (previously known as BITBOX) and BITMAX, our virtual currency exchangecryptocurrency exchanges in Singapore.Singapore and Japan, respectively. We are also pursuing business opportunities related to blockchain, such as the launch of LINK, the base digital token for our blockchain ecosystem.ecosystem, which we have been developing since the second quarter of 2018. As mostmany of these venturesstrategic initiatives are still in the early stages of operation, there can be no assurance that any of themthey will gain market acceptance and be used widely by our existing and potential users.

We expect to continue to expend significant time and resources in developing, launching and marketing these ventures, and there can be no assurance that such initiatives will be successful.other strategic initiatives. These ambitions could place significant strain on our management, personnel, operations, systems, financial resources and internal financial control and reporting functions.

AnyMoreover, any of these activities could expose us to new risks, including additional regulatory scrutiny andcredit-related and other operational risks, such as inventory risk for our unsold products. We have previously developed and introduced new products and services or entered into new business areas that did not lead to the results we anticipated, which may again occur in the future. There can be no assurance that we will succeed in developing products and services that eventually become widely accepted, that we will be able to timely release products and services that are commercially viable, or that we will establish ourselves as a successful player in a new business area. Our inability to do so would have an adverse impact on 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 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 decide to do so through the acquisition of complementary businesses and technologies or the investment in attractive business opportunities through partnerships with established players in the target industry, rather than through internal development. The identification of suitable acquisition candidates or business partners can be difficult, time-consuming and costly, and we may not be able to successfully consummate the identified acquisition or investment transactions.

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. In addition, 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 liquidation of our MixRadio business that became effective in March 2016. For more information, see Note 23 of the notes to our annual consolidated financial statements. We

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions or our investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, or could otherwise harm our business generally. Future acquisitions or investments could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses or incremental operating expenses.

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 71.7%72.6%, 72.6%71.6% and 71.6%73.2% of our revenues in Japan in 2016, 2017, 2018 and 2018,2019, 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 continued growth will depend, 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

deteriorated in recent years, with global financial and capital markets experiencing substantial volatility and disruption. Such developments have been caused by, and continue to be exacerbated by, among other things, the slowdown of economic growth in China and other major emerging market economies, adverse economic and political conditions in Europe and Latin America and continuing geopolitical and social instability in North Korea and various parts of the Middle East, as well as a deterioration in economic and trade relations between the United States and its major trading partners, including China. The overall prospects for the global economy and the industries in which we operate in 2020 and beyond remain 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 the strength of the Japanese economy is subject to many factors beyond our control. For example, the impact of Brexit on the Japanese economy and on the value of the Japanese yen against currencies of other countries in which we generate revenue in the long term is uncertain. In addition, an increase in the consumption tax rate that became effective in October 2019 is adversely impacting the Japanese economy, potentially impacting consumer spending and advertising spending by businesses.

In addition, the outbreak of theCOVID-19 disease caused bySARS-CoV-2, a new strain of coronavirus, has adversely affected the global economy, including the Japanese economy. While the full macroeconomic effect thatCOVID-19 or the government responses to it will have on the global economy, or on the economies of our principal geographic markets, will not be known for some time, our operations have been impacted, and may be further impacted, by them. For example, while we are still in the process of assessing their current and potential future impact on our operations generally, we are aware that our LINE Friends business has been adversely affected by the outbreak of the virus in China and Korea and the government measures taken in response to it, due to such factors as the business’s manufacturing operations there having been halted as well as the decrease in the number of customers visiting our offline stores in such countries. To the extent that the outbreak persists, it may have a significant adverse effect on our financial condition and results of operations, both through causing disruption in our supplies and marketing channels as described above, as well as in other ways such as triggering a downturn in consumer spending or corporate expenditures. In addition, if stock prices suffer a sustained decline on account of theCOVID-19 outbreak and government measures in response to it, we will likely need to record valuation losses on our equity investments in our listed subsidiaries or our listed equity-method associates; such losses may be significant.

Any further deterioration of the Japanese or global economy may result in further decline in consumption that would have a greater negative impact on demand for our products and services and their prices.

A substantial portion of our revenues is derived 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.

A substantial portion of our revenues is derived from our advertising products and services. 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 LINE 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, as well as improving features of existing products and services on our platform that further enhance the media value for our advertising business. For example, in 2018, we have recently completed a series of enhancements to various functionalities of our display ads platform, which we believe would lead to improved operational capabilities, upgraded targeting technology and enhanced user experience. In 2019, we

launched a new advertisement product called “Smart Channel” which allows advertisements to be posted prominently at the top of our users’ chat lists. Although we expend a significant amount of time and resources inon these efforts, such initiatives may not always lead to the anticipated benefits. We may also introduce new and unproven advertising products and services, using advertising technology with which we have little or no prior development or operating experience. 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:

and select from, third-party game developers are important for 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 in this area depends on our ability to consistently launch new games 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. We plan to continue to focus on game development not only through internal development but also through investments in associates by entering into strategic partnerships with experienced players in the game industry. Our success in part will depend on our ability to find and collaborate effectively with such partners. See “—Our acquisitions and investments may not be successful in achieving their intended goals and could harm our business, financial condition and results of operations.”

In recent years, our revenues from LINE Games have declined, with total MAUs steadily decreasing from 39 million in December 2014 to 1815 million in December 2018.2019. As a relatively small portion of our players account for a large portion of our revenues from LINE Games, we must constantly seek new ways to convertnon-paying players into paying players and attract and retain paying players. However, the success and performance of new and existing games is volatile and difficult to predict. If we fail to offer attractivein-game items, make unpopular changes to existingin-game items or offer games that do not encourage purchases ofin-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.

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, Thailand and Taiwan in terms of number of users, and we have obtained substantial numbers of users in other parts of the world, including Indonesia, the United States, Korea, Vietnam, Saudi Arabia and Malaysia. We expect to continue to expand our offerings of products and services in our key markets.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:

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, 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.

2019. Even though our revenues have grown over the years, from ¥140,704 million in 2016 to ¥167,147 million in 2017 andto ¥207,182 million in 2018 and ¥227,485 million in 2019, our revenue growth rate has slowed in recent years 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 and successfully develop and operate new products and services. 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:

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

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 iOS and Android, 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,

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 othernon-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 Annual Report” 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, which may negatively affect our business.

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

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. For example, in May 2019, LINE Pay Corporation, our subsidiary engaged in mobile payment services, extended the duration of a 30 billion yen giveaway promotional campaign, as certain users were not able to open LINE Pay accounts in order to participate in it, or to complete the requisite identity verification process. These technical difficulties were caused by the large volume of people seeking to participate in a short period of time, overwhelming the infrastructure of certain of our service providers and partner institutions. 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 or misuse 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 unauthorized access to 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, including ones that may involve hackers planting malicious codes into our servers that remain dormant until initiated at some point in the future, making it difficult to measure the potential damage that could result from such attack or to detect such breach altogether. In particular, some of the

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, as well as spam accounts posing as such users and advertisers, may damage theirour users’ and advertisers’ reputations 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 there are often unknown vulnerabilities that are not recognized until exploited against a target, we may be unable to anticipate these techniques and vulnerabilities, address them promptly or to implement adequate preventative measures. In addition, some cyber-attacks are designed to evade detection, such as attacks designed to extract information from targets at a slow rate, which further complicate efforts to detect and resolve system breaches in a timely manner. 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 ourperiod-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:

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

We continue to experience 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 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 incur significant legal, accounting and other expenses that we did not incur as a private company. Managing our growth will continue to 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.

The products and services we offer, including those relating to fintech, AI and blockchain, 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.

The products and services we offer, including those relating to fintech, AI and blockchain, subject us to a variety of laws and regulations in Japan and elsewhere. For example, LINE Pay, our mobile payment service application, enables our users to make payments, regardless of their mobile carrier, on LINE Store and a number of select online and offline partner retail stores. We have also entered into, and are currently in the process of exploring,have recently established partnership and joint venture opportunities with reputable players in the financial services industry to offer new services related to insurance, online securities brokerage, consumer loans and internet banking, among others, on the LINE platform. See “Item 4.B. Business Overview — Overview—Our Products and Services — Services—Strategic Business Segment — Others — Fintech” and “Item 4.B. Business Overview — Our Investments.Segment—Others—Fintech.”

Smart Invest, which subjects us to a number of registration and other operational laws in Japan. See “Item 4.B. Business Overview — Overview—Regulation.”

With respect to our cryptocurrency operations, governments have reacted differently to cryptocurrencies, with certain governments deeming them illegal and others allowing their use and trade. Various foreign jurisdictions may, in the near future, adopt laws, regulations, or directives that could adversely affect BITFRONT or BITMAX, or ownership of LINK, including, but not limited to, restricting the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. Governments could also take regulatory action that would increase the cost of, or subject cryptocurrency companies to, additional regulation. In addition, there is significant uncertainty with respect to the tax treatment of an investment in cryptocurrency. Cryptocurrencies may be considered assets in certain jurisdictions, or currencies in others. As such, it is difficult to determine exactly how cryptocurrency will be taxed in any given year which could negatively impact adoption of the cryptocurrency and consequently the results of our operations. Such restrictions or regulatory actions could have a material adverse effect on our ability to pursue business in the cryptocurrency space, which would have a material adverse effect on our business, financial condition and results of operations.

Furthermore, in the event that we are found to be in violation of any of these or other similar legal or regulatory requirements after they come into effect, or if there is a delay in the implementation of internal systems and controls necessary to ensure compliance with such 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, financial condition and financial results. of operations.

In addition, we may be subject to a variety of additional risks as a result of providing products and services relating to fintech, AI and blockchain, including:

Our cryptocurrency exchange business exposes us to a number of legal and regulatory risks

Growth in our cryptocurrency exchange business will expose us to increasing levels of legal and regulatory risks, including, among others, potential liability from disputes over terms of a cryptocurrency trade or from claims that a system or operational failure caused monetary losses to a customer, as well as potential liability from claims that we that we provided materially false or misleading statements in connection with a

transaction, facilitated unauthorized transactions or did not take adequate steps to prevent such transactions. Dissatisfied customers frequently make claims against their service providers regarding quality of trade execution, improperly settled trades, mismanagement or even fraud.

In addition, flaws or vulnerabilities in the information security of our cryptocurrency exchanges may be exposed by hackers to commit theft, which could cause large financial harm to users of our platforms and also harm the reputation of our cryptocurrency exchanges and call into question the security and reliability of our other services. A number of cryptocurrency exchanges, such as Mt. Gox, Coincheck, Bitfinex, Bitpoint and Upbit, have been targets of hacking resulting in harm to users, including exposed login and other information and significant financial losses. Such attacks have in some cases led to protracted legal disputes and the liquidation of exchanges.

We could also be exposed to substantial liability under laws, regulations and court decisions in the various countries where we operate such as Japan, the United States and Singapore, including rules and regulations promulgated by the FSA, the SEC and the Monetary Authority of Singapore. Such regulators are vested with broad enforcement powers over exchanges in their respective jurisdictions, including powers to censure, fine, issuecease-and-desist orders, prohibit an exchange from engaging in some of its operations or suspend or revoke an exchange’s recognition, license or registration. Any investigation or proceedings carried out by a regulator, whether successful or unsuccessful, could result in substantial costs and diversions of resources and could adversely affect our business, financial condition and operating results. In addition, an adverse resolution of any lawsuit or claim against us may require us to pay substantial damages or impose restrictions on how we conduct our business, either of which could adversely affect our cryptocurrency business, and the reputation of LINE, both in Japan and abroad, which could have a significant negative impact on our business, financial condition and results of operation.

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.

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 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 usingto purchase 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

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 onnon-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

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 andnon-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.

material adverse effect on our results of operations. See “Item 11. Quantitative and Qualitative Disclosures About Market 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,

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.

LINE can be used in 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. We screen

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 contractualnon-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.

From time to time, members of our senior management have overlapping duties with NAVER Corporation. For example, Mr. Hae Jin Lee, chairman of our board of directors, also serves as an executive

Substantial future sales of our common stock or the conversion into common stock of the Convertible Bonds, or the perception that these transactions could occur, 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 or the conversion into common stock of the Convertible Bonds, and the perception that these transactions could occur may also depress the market prices of the shares of our common stock and ADSs. As of December 31, 2018,2019, there were 2,701,4002,376,000 shares of our common stock issuable upon exercise of outstanding stock options, and holders of our stock options 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. As of December 31, 2018,2019, our equity-settled and cash-settled employee stock ownership plans also held 1,979,7751,524,392 shares of our common stock as treasury shares, which arehave been granted from time to time as shares or cash (after sale of the underlying shares by the trust) as part of our share-

Japan (the “FIEA”) and the rules of the Tokyo Stock Exchange. We also continue to prepare annual financial statements of LINE Corporation on a standalone basis in accordance with generally accepted accounting principles in Japan for Japanese reporting purposes in addition to preparing our consolidated financial statements in accordance with IFRS as issued by the IASB. Complying with these requirements is time-consuming and costly and places significant strain on our personnel, systems and resources. As a result of disclosure of information in filings and submissions required of a public company, our business and financial condition will become more visible, which 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.

of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies.

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

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.

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

In July 2016, we completed our initial public offering and listed our common stock on the First Section of the Tokyo Stock Exchange under the securities identification code 3938 and our ADSs, each representing one share of our common stock, on the New York Stock Exchange under the ticker symbol “LN.”

In December 2019, we entered into a business integration agreement with SoftBank Corp., NAVER Corporation and Z Holdings Corporation concerning the Planned Transaction. If consummated, the Planned Transaction will result in making us a privately held company and integrating the business operations of Z Holdings Corporation and us. See “Item 3. Key Information—Recent Development—The Planned Transaction.” The Planned Transaction is subject to certain conditions, as described in further detail in “Item 10.C—Material Contracts—Business Integration Agreement.”

Our legal and commercial name is LINE Corporation. Our principal executive offices are located at JR Shinjuku Miraina Tower, 23rd Floor,4-1-6 Shinjuku,Shinjuku-ku, Tokyo,160-0022, Japan, and our telephone number is+81-3-4316-2000.81-3-4316-2050. Our English website address ishttp://linecorp.com/en/.

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 while creating value for advertisers by connecting them with their target audience using the LINE platform.

We believe LINE is the leading mobile messaging application in Japan, Thailand and Taiwan in terms of the number of users, and we have obtained substantial numbers of users in other parts of Asia, including Indonesia. 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.

In recent years, we have focused our strategy on exploring a variety of new business opportunities related to fintech. Some of our recent fintech-related activities include, among others, expansion of services available to our users through LINE Pay, pursuit of alliances with reputable players in the financial services industry to offer new services related to insurance, online securities brokerage, consumer loans and internet banking on the LINE platform, as well as the launch of BITBOX, our virtual currency exchange in Singapore.platform. Although most of these ventures are still in the early stages of operation, we believe that they have the potential to contribute to our operating results over the medium- to long-term, and we plan to continue to selectively pursue investment opportunities that we believe would further enhance our capabilities in the financial industry domain. During 2019, we launched various financial related services including LINE Score (which incorporates a credit scoring model), LINE Pocket Money (a personal unsecured loan services), and LINE Securities (an online securities brokerage and investment consultation service). Additionally, BITMAX, a cryptocurrency exchange, launched in September 2019 in Japan following the launch of BITBOX in July 2018. BITBOX is a cryptocurrency exchange for global users excluding Japan which was renamed to BITFRONT as of February 2020.

We are also continuing to focus our research and development efforts on emerging technologies, including AI and blockchain. Since the launch of our next-generation AI platform called LINE Clova in March 2017, we have continued to develop and strengthen our capabilities in AI. Through a series of LINE Clova-integrated smart speakers launched starting in October 2017, our users carry out a natural conversation with LINE Clova in engaging in a wide range of products and services offered by us and other third-party service

As described in “Item 3. Key Information—Recent Development—The Planned Transaction,” Z Holdings Corporation and we have announced certain strategic initiatives that Z Holdings Corporation and we currently intend to execute as an associate underintegrated group after the equity method rather thanconsummation of the Planned Transaction. However, until Z Holdings Corporation and we receive the required regulatory approvals to conduct the Planned Transaction, Z Holdings Corporation and we intend to act as independent businesses, though subject to certain constraints set forth in the Business Integration Agreement. For a consolidated subsidiary.description of such contractual restrictions, see “Item 10.C—Material Contracts—Business Integration Agreement.”

We currently charge our customers a monthly fee based on a number of factors, such as the contract period and the number of times messages are to be sent to users, among others. In Japan, we currently charge ourLINE Official Accounts customers based on apay-as-you-go system pursuant to the implementation of a modified pricing model adopted insince December 2018.

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:

Content

LINE serves as a content platform for various applications for our users, offering users a wide range of entertainment and other useful and interactive tools. Such applications include:

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. To grow our inventory of high-quality games, we pursue a variety of partnerships, including in the form of

In July 2018, we entered into an alliance with NAVER WEBTOON Corporation (“NAVER WEBTOON”), Korea’s leadinge-comics provider, to establish LINE Digital Frontier Corporation (“LINE Digital Frontier”), in which we hold a 70.0% interest, with NAVER WEBTOON holding the remainder of the interest in LINE Digital Frontier. Through the joint venture, we aim to leverage NAVER WEBTOON’s technical expertise in the development, publishing and distribution ofe-comics on LINE Manga.