Will Hyukbin Kwon’s Single-Shareholder Control End?... Smilegate Vows to Focus on Core Business

Court Orders 35% of Shares to Be Given to Spouse
Difficulties Anticipated in Independently Handling Major Issues such as Mergers

The court has ruled in the divorce case of Smilegate founder and Chief Vision Officer (CVO) Hyukbin Kwon, ordering him to allocate 35% of the company's shares to his spouse, Lee. This decision significantly increases the likelihood that Smilegate’s over 20-year history of single-shareholder control will come to an end. Although Mr. Kwon will retain management rights with a 65% stake, he will have difficulty independently handling matters that require special resolutions at shareholders’ meetings, such as amendments to the articles of incorporation, mergers, or spin-offs.

Hyukbin Kwon, Founder and Chief Vision Officer (CVO) of Smilegate. Photo by Yonhap News

On September 9, the Seoul Family Court’s Panel Division 3 (Presiding Judge Jeong Dong-hyuk) upheld Lee’s petition for divorce and ruled, “The defendant (CVO Kwon) must pay the plaintiff (Lee) 35% of Smilegate’s shares in kind as part of the division of property.” The court recognized Lee’s contributions as the person responsible for housework and child-rearing, awarding her a share of stock worth approximately 2.487 trillion won and 65 billion won in cash, out of Smilegate’s total estimated equity value of 7.1049 trillion won.

This compensation is more than double the 944 billion won awarded in July to So-Young Roh in the retrial of her divorce from Chairman Tae-won Choi of SK Group, making it the largest property division in the history of divorce settlements in South Korea. However, the court dismissed Lee’s claim for alimony.

If this verdict is finalized, Mr. Kwon’s stake will decrease to 65%. He will still be able to defend basic management rights through his majority shareholding, but will no longer be able to avoid a weakening of his control. According to the Commercial Act, critical matters such as company mergers or spin-offs, amendments to the articles of incorporation, and the dismissal of directors or auditors require a special resolution at the shareholders’ meeting, which must be passed by at least two-thirds of the voting rights of shareholders present. Without consent from Lee, who is to receive 35% of the shares, Mr. Kwon will no longer be able to make these decisions unilaterally.

Industry insiders believe the likelihood of Mr. Kwon appealing the ruling is high for these reasons. If the single-shareholder structure collapses, Lee could interfere in management by demanding the convening of an extraordinary general meeting, or even sell her shareholding to a third party. During the trial, Mr. Kwon's side argued that “Lee was neither a co-founder nor a capital contributor.”

Mr. Kwon's legal representative stated, “The fact that the alimony claim was dismissed indicates the court found Mr. Kwon was not at fault,” and added, “As for next steps, we will decide after reviewing the written judgment and consulting with our client.”

The company has stated that it intends to stay focused on game development and sales growth. A Smilegate official commented, “We have no special comment regarding the personal affairs of our major shareholder,” and continued, “The company will continue to diligently carry out its duties as before.”

This content was produced with the assistance of AI translation services.