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 set to obtain “large corporation” status and become subject to new antitrust regulations.
Lee, Naver’s Chief Financial Officer Park Sang-jin and its head of legal affairs and compliance support, Jeong Yeon-ah, visited officials at the FTC headquarters, including its 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 inter-affiliate 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 a more than 30 percent stake in the company, including those held by family members.
It is an extension of antitrust regulations 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. Therefore, Naver is highly like to become subject to this law.
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 that it is one of the 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 a 10.5 percent stake. Foreign investors make up the second-largest shareholder, while the founder Lee holds a 4.6 percent stake.
Naver claims that 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, ownerless status has been designated only to firms like KT and Posco, which initially began as public companies without effective owners and have now privatized or are owned by creditors.