Ubisoft 2016 Annual Report Download - page 46

Governance, risks, riskmanagement andinternalcontrol
3Report of the Chairman of the Board of Directors on corporate governance, internal control andriskmanagement
parties on an international level and, where appropriate and,
where required, effi ciently fi ghts all forms of piracy and copyright
infringement (removal procedures in relation to contested products,
legal action, etc.).
In spite of these precautions and vigilance on the part of Ubisoft,
the Group cannot of course rule out any copyright infringement or
piracy risks in relation to its intellectual property rights.
RISKS ASSOCIATED WITH REGULATIONS
Through its external and organic growth policy, Ubisoft has expanded
its presence abroad and stepped up the diversifi cation of its activities.
As a result, the Group is now subject to a wide range of rapidly-
changing and complex laws and regulations. These regulations
mainly relate to the general conduct of business, competition,
personal data processing, information confi dentiality, consumer
protection (the classifi cation of games according to age-rating
systems) and local and international tax systems.
Ubisoft continually monitors regulatory changes in the various
countries in which it operates and is careful to comply with current
rules and practices. To this end, the Group has implemented a
number of internal control procedures to ensure that it complies
with all relevant regulations.
a)The collection and processing of personal data
Ubisoft ensures that it complies with applicable regulations in terms
of collecting, using, storing and transferring personal data relating
to players, its partners and its employees. In particular, it ensures
that only information strictly necessary for its business purposes
is collected. The Group includes the same rules relating to security
and control in all agreements with its partners. Ubisoft takes the
utmost care in collecting personal data from children under 13 and
has established parental consent procedures.
Despite all of these measures and a strong determination to protect
players, its partners and its employees, there are still risks inherent
in the collection and processing of personal data. Risks of fraud,
piracy and fl aws in IT system security in particular could result
in the loss and/or theft of confi dential data and legal action being
taken by those involved.
Furthermore, regulations on the processing of personal data are
constantly changing and Ubisoft cannot rule out any impact that these
changes may have on its activity. By way of example, the European
Court of Justice (ECJ) recently declared that the “Safe Harbor”
agreement established by the United States was invalid, on the grounds
that the United States does not offer adequate levels of protection
for transferred personal data. Similarly, the ECJ also ruled invalid
the European data retention regulation (Directive 2006/24/EC)
on the grounds of infringement of the right to a private life. Ubisoft
strives to mitigate these challenges and regulatory changes by
implementing measures that are as close as possible to current
policies and practices – but of course cannot guarantee that these
changes will not affect its activity.
b)Information confi dentiality
Ubisoft endeavors to protect the confi dentiality of all information
shared within the Group. In this regard, it works hard to raise
employee and partner awareness on this matter. Internal rules on
the dissemination and protection of information are established
according to the level of confi dentiality. Specifi c procedures are
implemented to ensure that confi dential information is only
distributed to or accessible by authorized persons who require it for
their work (“need to know”principle), in conjunction with encryption
and segmentation procedures, internal control procedures and,
where appropriate, specifi c confi dentiality agreements, etc.
Despite all of these precautions, the risk of disclosure of confi dential
information may not be completely ruled out and could naturally
have a detrimental effect on the Company.
c)Consumer protection
Ubisoft ensures that it complies with applicable regulations
relating to consumer protection, in particular the information
given to consumers on the rules of use and content of games, the
classifi cation of games in accordance with the age-rating systems
of PEGI (Pan European Game Information) in Europe and ESRB
(Entertainment Software Rating Board) in the United States.
Committed to protecting its players and complying with video game
industry practices and policies, the Group is actively involved in the
work of numerous bodies: the ISFE (Interactive Software Federation
of Europe), SELL (Syndicat des éditeurs de logiciels de loisirs) in
France, and the ESA (Entertainment Software Association) in the
United States and Canada.
Notwithstanding these measures and precautions, a risk of breaching
consumer protection laws still exists.
d)Policies supporting the sector
The Group benefi ts from public policies that support the sector,
particularly in France, Canada, the United Kingdom and Singapore.
Under these policies, Ubisoft benefi ts from substantial grants and
any change in government policy could have a signifi cant impact on
the Company’s production costs and profi tability. As a result, Ubisoft
ensures that it regularly renegotiates these agreements so as to limit,
as much as possible, any risks associated with a change in public
policies. The amount and geographical distribution of the grants
are detailed in Note 20 to the consolidated fi nancial statements.
e)Fiscal policies
The modifi cation of fi scal rules, tax rates and regulations in terms
of transfer prices are important risk factors for the Group. Ubisoft
strives to anticipate these risks and limit the impact thereof through
the continuous monitoring of possible developments.
RISKS ASSOCIATED WITH ADMINISTRATIVE
ANDLEGAL PROCEEDINGS
There are no government, legal or arbitration proceedings pending
that are likely to have or that, over the past twelve months, have had
a material impact on the Group’s fi nancial position or profi tability.
The Group is subject to regular tax inspections by the tax authorities
in the countries where it is present. Current tax audits are detailed
in Note 11 to the consolidated fi nancial statements.
- Registration Document 2016
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