On September 9, the Seoul Family Court ordered Smilegate founder Kwon Hyuk-bin to divide his property following his divorce from his spouse, Ms. Lee.
The amount is approximately 2 trillion 5500 hundred million won, but the method of dividing 35% of Smilegate shares rather than cash is connected to the company’s governance structure.
However, this ruling is from the first trial, so the actual transfer of shares and the final method of division have not been finalized.
3-Line Summary
1. Kwon Hyuk-bin’s property division amounts to 2 trillion 5500 hundred million won at the first trial
2. It includes 35% of the shares and 650 hundred million won in cash
3. Whether the ruling is finalized is the benchmark for changes in the governance structure
Shares 35% More Important Than 2 trillion 5500 hundred million won
The Seoul Family Court’s 3rd Collegiate Division for Domestic Relations ruled that Kwon Hyuk-bin, Smilegate’s Chief Vision Officer (CVO), should receive 35% of Smilegate shares in kind and pay 650 hundred million won in cash. The reported property division amount is approximately 2 trillion 5500 hundred million won, and is considered the largest property-division ruling in a publicly disclosed domestic divorce lawsuit.
The net worth of CVO Kwon calculated by the court is approximately 7 trillion 3375 hundred million won, of which the value of Smilegate shares is approximately 7 trillion 1049 hundred million won. Reports said the background to the in-kind division ruling was that most of the property was concentrated in unlisted shares, making it difficult to raise the entire amount in cash.
The panel considered Ms. Lee’s shareholding during the company’s early founding period, her registration as a representative director, household and child-rearing responsibilities during the marriage, and her early financial support. At the same time, it assessed CVO Kwon’s contribution through business ability and management judgment to the company’s growth more highly and set the ratio at 65% to 35%.
The Difference Between a 65% Majority Shareholder and a 35% Shareholder
If the ruling is finalized as it stands, CVO Kwon will retain 65% and maintain his position as the largest shareholder, while Ms. Lee will become a 35% shareholder. In this case, CVO Kwon’s influence may be maintained on matters subject to ordinary resolutions, but matters requiring a special resolution of the shareholders’ meeting, such as amendments to the articles of association or a merger or split, will be different.
According to reports, a special resolution requires the approval of at least two-thirds of the voting rights of shareholders present. If both shareholders attend and the 35% shareholder opposes the matter, 65% alone does not meet this threshold. For this reason, attention is focused not only on the amount of the personal property division in this case, but also on whether the way major decisions are made at Smilegate, which has so far had a sole-shareholder structure, could change.
However, this cannot immediately be concluded to mean a loss of management control or a specific management change. This is because the shareholding ratio and whether a transfer takes place may change depending on whether an appeal is filed, the decisions of higher courts, and the final payment method. The condition for a change that can currently be confirmed is that the first-trial ruling becomes final and 35% of the shares are actually transferred.
References
Tags #KwonHyukbin #Smilegate #PropertyDivision #DivorceLawsuit #SeoulFamilyCourt #UnlistedShares #35PercentStake #InKindDivision #CorporateGovernance #LargestShareholder #ShareholdersMeeting #SpecialResolution