Sony 2015 Annual Report Download - page 24

Sony is subject to a wide range of regulations related to social responsibility, such as environmental,
occupational health and safety, and certain human rights regulations that can increase the costs of
operations, limit its activities, or affect its reputation.
Sony is subject to a broad range of social responsibility laws and regulations covering issues related, inter-
alia, to the environment, occupational health and safety, labor practices and human rights. These include laws
and regulations relating to air pollution; water pollution; the management, elimination or reduction of the use of
hazardous substances; energy efficiency of certain products; waste management; recycling of products, batteries
and packaging materials; site remediation; worker and consumer health and safety; and human rights issues such
as those related to procurement and production processes. For example, Sony is currently required to comply
with:
• Environmental regulations enacted by the EU, such as the Restriction of Hazardous Substances
(“RoHS”) Directive, the Waste Electrical and Electronic Equipment (“WEEE”) Directive, the ecodesign
requirements for Energy-related Products (“ErP”) Directive and the Registration, Evaluation,
Authorization and Restriction of Chemicals (“REACH”) regulation;
• Regulations or governmental policies related to climate change issues such as carbon disclosure,
greenhouse gas emission reduction, carbon taxes and energy efficiency for electronics products; and
• Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act which requires
annual disclosures related to “Conflict Minerals” and their derivatives that are necessary to the
functionality or production of products manufactured by Sony. “Conflict Minerals” are defined as
cassiterite, columbite-tantalite, gold, wolframite, and other minerals determined by the U.S. government
to be financing conflict in the Democratic Republic of Congo or adjoining countries.
Additionally, there is a growing global consumer focus on companies’ social responsibilities. In particular,
there is an interest regarding labor practices, including work environments at electronics components’
manufacturers and original design manufacturing/original equipment manufacturing (“ODM/OEM”) product
manufacturers operating in the Asian region.
These social responsibility laws and regulations may become more significant, and additional social
responsibility laws and regulations may be adopted in the future. Further countries, including emerging market
countries, are enacting similar laws and regulations. Such new laws and regulations may result in an increase in
Sony’s cost of compliance. Additionally, if Sony is not perceived as having responded to existing and new laws
and regulations in these varied areas, it may result in fines, penalties, legal judgments or other costs or
remediation obligations, and may adversely affect Sony’s operating results and financial condition. In addition,
such a finding of non-compliance, or the perception that Sony has not responded appropriately to growing
consumer concern for such issues, whether or not Sony is legally required to do so, may adversely affect Sony’s
reputation. Sony’s operating results and financial condition may also be adversely affected if consumers
therefore choose to purchase products of other companies.
Holders of American Depositary Shares have fewer rights than shareholders and may not be able to enforce
judgments based on U.S. securities laws.
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining Sony’s accounting books and records, and
exercising appraisal rights, are available only to shareholders of record. Because the depositary, through its
custodian agents, is the record holder of the shares underlying the American Depositary Shares (“ADSs”), only
the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts
to vote the shares underlying ADSs in accordance with the instructions of ADS holders and will pay the
dividends and distributions collected from Sony. However, ADS holders will not be able to bring a derivative
action, examine Sony’s accounting books and records, or exercise appraisal rights through the depositary.
Sony Corporation is incorporated in Japan with limited liability. A majority of Sony’s directors and
corporate executive officers are non-U.S. residents, and a substantial portion of the assets of Sony Corporation
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