[June 26, 2017]

Line Corporation Introduces Employee Stock Ownership Plan (Determination of the Details)

LINE Corporation (NYSE:LN) (TOKYO:3938) (Headquarters: Shinjuku-ku, Tokyo, Japan; President & CEO: Takeshi Idezawa; hereinafter the "Company") announced on February 23, 2017, the introduction of an Employee Stock Ownership Plan (J-ESOP; hereinafter called the "Plan"; and the trust to be established based on the trust agreement concluded with Mizuho Trust & Banking Co., Ltd. for the Plan, hereinafter called the "Trust") and has now determined the details, including the date of establishment of the Trust, etc. at the Board of Directors Meeting held today.

In conjunction with the introduction of the Plan, the Company has simultaneously decided to assign 1,007,810 new shares (3,999,997,890 yen) to Trust & Custody Services Bank, Ltd. (Trust E). For details, please refer to "Notice Regarding the Offering of Shares to Be Issued through Third-Party Allotment in Accordance with the Introduction of the Employee Stock Ownership Plan" dated today.

Notice Regarding the Offering of Shares to Be Issued through Third-Party Allotment in Accordance with the Introduction of the Employee Stock Ownership Plan

LINE Corporation (Headquarters: Shinjuku-ku, Tokyo, Japan; President & CEO: Takeshi Idezawa; the "Company") announces that it passed a resolution at its board meeting held today to conduct an offering of shares by means of a third-party allotment (the "Third-Party Allotment"), in accordance with the introduction of an Employee Stock Ownership Plan (J-ESOP; the "Plan") that was announced on February 23, 2017, as follows.

2. Purpose and reasons for the offering

The Company announced its introduction of the Plan on February 23, 2017, and then passed a resolution regarding detailed matters of the Plan at its board meeting held today. (For a summary of the Plan, please see the "Notice Regarding Introduction of Employee Stock Ownership Plan (Determination of the Details)" announced today.

The new shares to be issued through the Third-Party Allotment will be allotted to Trust & Custody Services Bank, Ltd. (Trust E) (the successor trustee entrusted by Mizuho Trust & Banking Co., Ltd., the trustee for the Plan) that is in charge of holding and disposing of the Company's shares and is established upon introduction of the Plan.

3. Amount, use, and scheduled timing of use of funds to be procured

(2) Use of the funds to be procured

The estimated net amount after expenses of 3,999,997,890 yen mentioned above will be appropriated entirely to operating funds, including payment of expenses on and after the payment date. The funds will be managed in the Company's bank account until they are used for the above purpose.

4. View on reasonableness of use of funds

The Company believes that the planned use of the funds to be procured by issuing new shares through the Third-Party Allotment is reasonable, as it will contribute to the operation of the Company's business.

5. Reasonableness of issuance terms and conditions

(1) Basis for calculation of issue price and details thereof

In order to determine the issue price non-arbitrarily, the Company set the issue price at 3,969 yen (any fraction less than one yen is rounded off), the average closing price of the Company's common stock traded on Tokyo Stock Exchange, Inc. during the one-month period from May 24, 2017, to the day immediately preceding the Board of Directors meeting at which the resolution for the Third-Party Allotment was passed (June 23, 2017). The reason for adopting the average closing price of the Company's common stock traded on the Tokyo Stock Exchange during the one-month period immediately preceding the resolution at the Board of Directors meeting is because the Company considers that it is more objective and reasonable as a calculation base to use the leveled value of the average share price over a certain period, rather than using the price at a specific point, since special factors such as temporary fluctuations in the share price are eliminated. In addition, the reason why the Company has adopted the most recent one-month period as the calculation period is that the Company believes it is more reasonable to adopt a certain period in which the average share price is closest to the most recent market price than to adopt the most recent three or six months.

The issue price of 3,969 yen is equal to (i) the closing price (3,995 yen) of the Company's stock on the business day immediately preceding the date of the resolution at the board meeting multiplied by 99.35%; (ii) the average of the closing prices (3,988 yen, any fraction less than one yen is rounded off) of the Company's stock during the three months starting from the business day immediately preceding the date of resolution at the board meeting multiplied by 99.52%, and (iii) the average of the closing prices (3,935 yen, any fraction less than one yen is rounded off) of the Company's stock during the six months starting from the business day immediately preceding the date of resolution at the board meeting multiplied by 100.86%. Taking these into consideration, the Company believes that the issue price for the Third-Party Allotment is not especially favorable to the prospective allottee and is reasonable.

Regarding the issue price stated above, 3 Corporate Auditors who attended the board meeting (2 of which are outside Corporate Auditors) have expressed their opinion that the price is not especially favorable to the prospective allottee.

(2) Basis for assessing that the number of shares to be issued and level of share dilution are reasonable

The number of shares to be issued through the Third-Party Allotment corresponds to the number of shares expected to be granted to the employees of the Company and those of its subsidiaries ("Relevant Employees") during the trust period in accordance with the Regulations on Stock Compensation; and it will be 0.46% of the total issued and outstanding shares (219,309,500 shares) as of May 31, 2017 (rounded off to two decimal places) and 0.46% of the total voting rights (2,192,959 voting rights) as of May 31, 2017 (rounded off to two decimal places). It is unlikely that the shares involving the Third-Party Allotment may be placed on a stock market all at once. In addition, the Third-Party Allotment will enhance morale and motivation of the Relevant Employees and contribute to securing excellent human resources and their long-term success, thereby enhancing the Company's corporate value. As such, the Company believes that the level of share dilution is reasonable, and there will only be a minor effect on the secondary market.

6. Reason for selection of prospective allottee

(2) Reason for selecting the prospective allottee

In accordance with the introduction of the trust to be created under the trust agreement to be executed with Mizuho Trust & Banking Co., Ltd. regarding the Plan, the Company allots the shares to the Trust E opened at Trust & Custody Services Bank, Ltd., the successor trustee, pursuant to the trust agreement.

(3) Prospective allottee's policy on holding shares

In accordance with the above-mentioned trust agreement, the prospective allottee, Trust & Custody Services Bank, Ltd. (Trust E), will possess the shares of the Company in order to provide the trust assets (such as shares of the Company) to the beneficiaries during the Trust Period, in accordance with the Regulations on Stock Compensation.

If the prospective allottee, Trust & Custody Services Bank, Ltd. (Trust E), transfers all or part of the allotted shares within two years from the payment date (July 18, 2017), the Company will obtain from the prospective allottee informal consent to concluding a pledge agreement with the Company, under which the prospective allottee shall immediately report to the Company, in writing, the purchaser's name and address, the number of shares transferred, the transfer date, transfer price, transfer reason, transfer method, etc., thereof, and the Company shall report the details of the report to the Tokyo Stock Exchange, Inc.; and the details of the report shall be made available for public inspection.

(4) Confirmation that the prospective allottee has the funds required for payment

The Company has confirmed through the J-ESOP Trust Agreement that with respect to the monetary equivalent to the funds required for payment by the prospective allottee, the initial trust money to be contributed by the Company to the Plan will exist within the trust assets as of the allotment date, as stated in the "Notice Regarding Introduction of Employee Stock Ownership Plan (Determination of the Details)" announced today.

For details, please refer to the "Notice Regarding Introduction of Employee Stock Ownership Plan (Determination of the Details)" announced today.

7. Major shareholders and shareholding ratios after the offering

8. Outlook for the future

There will be a minor impact on the business prospect for the current fiscal year.

9. Procedures under the Business Code of Conduct

Since the Third-Party Allotment (i) results in share dilution of less than 25%, and (ii) does not cause a change in controlling shareholder, obtaining an opinion from an independent third party and confirming the intention of the shareholders as set forth in Article 432 of the Securities Listing Regulations established by the Tokyo Stock Exchange, Inc. are not required.

10. Business results and equity finance position for the past three fiscal years

(3) Recent stock prices

3) Stock prices on the transaction day immediately preceding the date of resolution to issue new shares

(4) Equity finance position during the most recent three years

• Issuance of new shares by public offering (domestic offering and overseas offering)

• Issuance of new shares through third-party allotment in accordance with domestic and overseas offering via over-allotment

11. Terms and Conditions of Issuance

View source version on businesswire.com: http://www.businesswire.com/news/home/20170626005804/en/

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