[Exclusive] Largest shareholder Song Chi-hyung to transfer some voting rights to Naver

After a share exchange of Naver Financial

Voting rights to be transferred by trust

Naver, the second-largest shareholder, will have 'de facto control'

In the integration process between Naver and Dunamu, it has been confirmed that Song Chi-hyung, chairman of Dunamu, will become the single largest shareholder of Naver Financial, but control will be handed over to Naver. This is intended to emphasize that, in the process of bringing Dunamu into Naver's group, Naver holds de facto control beyond the direct share ratio.

According to industry sources on the 29th, if Naver Financial's corporate value is valued at 4.7 trillion won and Dunamu's corporate value at about 14 trillion won and a share swap is carried out at approximately a 1-to-3 ratio, Chairman Song would become the single largest shareholder of the combined Naver Financial with about 19% of the shares. Naver, the current largest shareholder of Naver Financial (70%), would fall to the second-largest shareholder with roughly 17%. Dunamu Vice Chairman Kim Hyung-nyeon would become the third-largest shareholder with around 9%. Dunamu's management would secure about 28% of the shares.

However, under a governance structure where Chairman Song is the largest shareholder, Naver would face the drawback of having to reflect Dunamu's operating profit—which earns more than 1 trillion won annually—as equity-method income instead of consolidated results. Observers say this could hinder the full realization of synergies. Naver decided to resolve this governance issue through the transfer of voting rights in order to include Dunamu as a Naver affiliate. The method is to receive more than half of the voting rights attached to the shares held by Dunamu's management. Under current Fair Trade Act rules, affiliate inclusion is determined not by whether a single shareholder is the largest shareholder but by de facto control that directly or indirectly controls the company.

When determining de facto control, the Fair Trade Commission first looks at whether certain shareholders and related parties hold 30% or more of the shares in unlisted companies. Limiting the shareholding ratio of related parties such as Chairman Song and Vice Chairman Kim to below 30% also appears to have been considered a measure to avoid control. Naver is expected to put in place indirect mechanisms such as maintaining a majority of the Naver Financial board or retaining the right to appoint the CEO. However, there are also assessments that it is uncertain whether the Fair Trade Commission will judge procedures, including voting rights delegations, as constituting effective control.

Reporter Cha Junho chacha@hankyung.com