AR Ali 77

Business Overview
and pseudonymized data, increased cybersecurity with respect to Telecommunications Services Company
requirements, mandatory data breach notification (MTN Irancell), the relevant SoftBank subsidiary intends
requirements and higher standards for controllers to to continue these activities. With respect to services
demonstrate that they have obtained a valid legal provided to accounts affiliated with the Embassy
basis for certain data processing activities. of Iran in Japan, the relevant SoftBank subsidiary is
obligated under contract to continue these services.
The activities of data processors will be regulated for
the first time, and companies undertaking processing In addition, during fiscal year 2021, SoftBank, through
activities are required to offer certain guarantees in one of its non-U.S. indirect subsidiaries, provided office
relation to the security of processing and the handling supplies to the Embassy of Iran in Japan. SoftBank
of personal data. Contracts with data processors will estimates that gross revenue and net profit generated
also need to be updated to include certain terms by these services were under US$2,575 and US$502,
prescribed by the GDPR, and negotiating these respectively. We were not involved in, and did not
updates may not be fully successful in all cases. receive any revenue from any of these activities. The
Failure to comply with EU laws, including failure under relevant SoftBank subsidiary intends to continue these
the GDPR and other laws relating to the security of activities.
personal data may result in fines up to €20,000,000
or up to 4% of the total worldwide annual turnover Legal and Administrative Proceedings
of the preceding financial year, if greater, and other
administrative penalties including criminal liability. We are involved from time to time, and may in the
future be involved in, litigation, claims or other disputes
Disclosure of Iranian Activities under Section in the ordinary course of business regarding, among
other things, contract disputes with our customers,
13(r) of the U.S. Exchange Act
copyright, trademark and other intellectual property
Section 219 of the U.S. Iran Threat Reduction and infringement claims, consumer protection claims,
Syria Human Rights Act of 2012 added Section 13(r) employment related cases and other matters, as well
to the U.S. Exchange Act. Section 13(r) requires an as disputes between our merchants and consumers
issuer to disclose in its annual or quarterly reports, as or pursuant to anti-monopoly or unfair competition
applicable, whether it or any of its affiliates knowingly laws or involving high amounts of alleged damages.
engaged in certain activities, including, among other We have also been, and may in the future be, involved
matters, transactions or dealings relating to the in litigation, regulatory investigations or inquiries and
government of Iran. Disclosure is required even where administrative proceedings that may not necessarily
the activities, transactions or dealings are conducted arise from our ordinary course of business, such as
outside the U.S. by non-U.S. affiliates in compliance securities class action lawsuits and investigations or
with applicable law, and whether or not the activities inquiries by securities regulators.
are sanctionable under U.S. law.
We establish balance sheet provisions relating to
SoftBank is one of our substantial shareholders. potential losses from litigation based on estimates
During fiscal year 2021, SoftBank, through one of of the losses. For this purpose, we classify potential
its non-U.S. subsidiaries, provided roaming services losses as remote, reasonably possible or probable. We
in Iran through Telecommunications Services analyze potential outcomes from current and potential
Company (MTN Irancell), which is or may be a litigation and proceedings as loss contingencies in
government-controlled entity. During fiscal year 2021, accordance with U.S. GAAP.
SoftBank had no gross revenues from these services
and no net profit was generated. This subsidiary Pending SEC Inquiry
also provided telecommunications services in the
In early 2016, the SEC informed us that it had initiated
ordinary course of business to accounts affiliated
an investigation into whether there have been any
with the Embassy of Iran in Japan. During fiscal year
violations of the federal securities laws. The SEC
2021, SoftBank estimates that gross revenues and
has requested that we voluntarily provide it with
net profit generated by these services were both
documents and information relating to, among
under US$12,505. We were not involved in, and did
other things, our consolidation policies and practices
not receive any revenue from, any of these activities.
(including our prior practice of accounting for Cainiao
These activities have been conducted in accordance
Network as an equity method investee), our policies
with applicable laws and regulations, and they are not
and practices applicable to related party transactions
sanctionable under U.S. or Japanese law. Accordingly,
Fiscal Year 2021 Annual Report 85

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Business Overview

Fiscal Year 2021 Annual Report 85

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