Exclusive Networks // Sustainability Report 2022

Risks and opportunities Risk factors

Risk related to litigation and disputes

Criticality level: ■ ■ ■

Risk description

Risk management

The Group may become involved in legal proceedings, including government investigations, that arise out of the ordinary conduct of its business, including matters involving intellectual property rights, commercial matters, merger-related matters, domestic and/or international regulations, product liability and other actions. The Group is currently not involved in any claims, litigation or lawsuits. Although the Group may not always win its case, the risk is not expected to have a material adverse effect on its consolidated financial position, results of operations or cash flows. The Group can also not predict the outcome of litigation or other investigations in which it may be involved at any time. As at the date of the 2022 Universal Registration Document, there are no pending or potential legal or arbitration proceedings, including any proceedings of which the Group is aware, that are likely to have or have had in the last twelve months a material effect on the Group’s financial position or profitability, other than those reflected in the financial statements or disclosed in the notes to the financial statements. Due to the global and cross-border nature of its distribution business, and given the complex international tax environment, the Group faces tax risks and uncertainties inherent to its business. This is due to the number and complexity of tax regulations, both local and international (including transfer pricing rules and principles governing the application of withholding taxes), and their interpretation in each country. In particular, in many jurisdictions, there is substantial uncertainty as to the classification of cybersecurity solution licence proceeds as business profits or royalties. In this global environment, the Group aims to comply with all applicable tax rules and regulations in the countries in which it operates, ensuring that the correct amount of tax is paid in the jurisdictions where it generates profits and value. The Exclusive Networks Group is committed to upholding local and international rules, including the principles laid down by the OECD. Tax risk Risk description

The Group closely monitors the status of ongoing litigation and disputes and has implemented reporting rules to enable the Group’s Legal Department to be informed as soon as possible of the occurrence of a significant dispute and to optimise its handling and understanding of related risks and possible consequences. A provision is made in the financial statements for any litigation that may arise. The Group relies on a network of lawyers and advisers specialised in their field and selected by the Group’s Legal Department to manage and monitor the main disputes and litigation. The Group considers that customer satisfaction and respect for good commercial and ethical practices are key to limiting the number of disputes to which the Group could be exposed. It therefore pays particular attention to customer satisfaction and the implementation of good practices on a daily basis.

Criticality level: ■ ■ ■

Risk management

The Exclusive Networks Group handles tax issues with integrity and does not engage in any artificial tax schemes. The Group’s tax department is organised around a central tax team that reports to the Group Finance Department and locally to the local Finance Directors. The Group also uses external advisers to ensure that risks are identified and assessed and that measures to control them are put in place. Any tax disputes give rise to provisions that are duly recorded in the accounts. For more information on tax policy and tax avoidance, see section 6.6 “Transparency and the fight against tax avoidance” in Chapter 6.

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Exclusive Networks

Sustainability Report 2022

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