[THE INVESTOR] Lee Hae-jin, the founder of South Korean internet giant Naver, has visited the Fair Trade Commission to seek an “ownerless” status designation for the company, as it is on course to obtain “large corporation” status and become subject to new antitrust regulations.
Lee, Naver’s Chief Financial Officer Park Sang-jin and the company’s head of legal affairs and compliance support, Jeong Yeon-ah, visited officials at FTC headquarters, including Chairperson Kim Sang-jo, earlier this week to discuss Naver’s imminent legal status change.
The FTC has a new law that categorizes companies with assets of more than 5 trillion won ($4.38 billion) as a large corporation, subject to limits on financial and interaffiliate transactions as well as mandatory disclosures.
The law also requires the owner of the corporation who exercises sizeable control over the company to become subject to tighter legal scrutiny.
In terms of shares, the owner is someone who holds more than 30 percent stake in the company, including shares held by family members.
The extension of antitrust regulations is designed to enhance corporate transparency among Korean conglomerates, many of which are family-owned, with assets of more than 10 trillion won.
Currently, Naver’s total assets amount to 6.37 trillion won, with its domestic assets alone falling slightly short of 5 trillion won. Naver is highly like to become subject to the law in the future.
As the FTC is reviewing the case, the Naver founder has asked the regulator to interpret the “owner” of Naver as not himself but the company, citing his low stake and limited influence on the company.
Naver also asserts it is one of few big businesses in Korea with a transparent and straightforward governance structure and an elected CEO system.
At the moment, the National Pension Service is Naver’s majority shareholder with 10.5 percent ownership. Foreign investors make up the second-largest share, while the founder Lee holds a 4.6 percent stake.
Naver says Lee currently holds little influence over the company, as he has formally left the top management. He resigned from the firm’s board last year to focus on the firm’s global investment agenda.
However, the founder is still widely regarded as a key figure who exerts powerful influence on Naver’s business direction as well as the appointment of key executives, with the market viewing him as the effective owner of the company.
The FTC is in the process of making a decision on Naver’s new legal status, set to take effect from Sept. 1, Naver said.
So far, the ownerless status has been designated only to firms like KT and Posco, which initially began as public companies without effective owners and later privatized or came to be owned by creditors.
By Sohn Ji-young/The Korea Herald (email@example.com)