I'm no lawyer, but these terms may be pertinent:
Without restricting the generality of the foregoing, Kobo may:
Accept or reject the Works at our discretion,
Copy and store your Works on one or more computers,
Convert, reformat and encode the Works into eBooks and enable and optimize the display of the Works on the eReading Service, provided that Kobo agrees that we shall make no modifications to the substance of the Works and Kobo shall not be responsible for any inaccuracies or errors in conversion or reformatting,
Display, market, transmit, distribute, sell and otherwise digitally make available all or any portion of the Works and the metadata you provide through Kobo Writing Life, for customers and prospective customers to download and/or store, access, copy and paste, print, annotate and/or view online and offline, including on portable devices,
Determine all marketing and promotion of your Works related to their sale on the eReading Service, including by making reasonable excerpts of an eBook available for free as promotional material to encourage users to purchase the eBook,
Elect at our sole discretion to remove any eBook from the eReading Service or reject an eBook that has been submitted by Publisher for sale on Kobo Writing Life, and
Exercise our rights and license set out in these Terms directly and through third party booksellers, retailers, distributors, affiliates and independent contractors.
I guess it could be argued that "convert, reformat, and encode" gives them the right to add DRM. It's not how I would read it, but I can see how it could be open to interpretation. I'm sending them an email anyway. They are usually pretty good about getting back to you, even if their replies rarely make sense.