[BizHanKook] Amid a divorce ruling ordering Smilegate founder and Chief Vision Officer (CVO) Kwon Hyuk-bin to “transfer shares worth 2.5 trillion won to his spouse,” legal experts are predicting a likely appeal. Although CVO Kwon holds 100% of the shares, meaning his management control is not immediately threatened, experts note that potential "conflicts" could arise during major decision-making processes.
However, the legal community anticipates that it will be difficult for CVO Kwon to overturn the result in the second trial, as the structure of this case differs from the divorce suit of SK Group Chairman Chey Tae-won and Art Center Nabi Director Roh Soh-yeong, which previously held the record for the largest property division.
First Trial Recognizes ‘35%’ Stake for Wife Involved in Early Startup Phase
The divorce of Kwon Hyuk-bin, the Smilegate founder and CVO who created an 8-trillion-won asset legend with global mega-hits “Crossfire” and “Lost Ark,” has resulted in what is expected to be the “largest property division in history.”
On the 9th, the Seoul Family Court (Presiding Judge Jung Dong-hyuk) valued Smilegate at approximately 7 trillion won in the first trial of the divorce suit between CVO Kwon and his spouse, identified as Ms. Lee. The court ruled, “CVO Kwon must transfer 35% of Smilegate shares in kind (worth approximately 2.4867 trillion won) to Ms. Lee and pay 650 billion won in cash.” This amount far exceeds the 944 billion won awarded to Director Roh Soh-yeong, marking the largest division on record.
Smilegate Holdings, the top-tier holding company of the Smilegate Group, was 100% owned by CVO Kwon. If 35% of the shares are transferred in kind to Ms. Lee as per the first ruling, Kwon’s stake will drop to 65%. Since it would become impossible for him to secure two-thirds (66.7%) of the voting rights of attending shareholders, critical decisions such as mergers and divisions would become difficult for Kwon to execute alone.
Given that the two sides remained sharply divided throughout the first trial—with CVO Kwon denying the divorce itself, stating, “The marriage has not broken down and I wish to maintain the family,” and Ms. Lee insisting, “I should receive 50% of the shares”—the legal community expects both parties to appeal.
A legal expert familiar with the case explained, “While management control is not in immediate danger, CVO Kwon had been able to make decisions quickly due to his 100% stake. He might appeal to reduce the share transfer to under 30% or attempt to negotiate by offering more cash instead. Ms. Lee is also likely to appeal to receive a larger portion of the shares.”
Different from ‘Inheritor’ SK Group Chairman Chey Tae-won?
The legal community is paying attention to the fact that similar results were reached even though the process of building wealth in this case differs from that of the Chey Tae-won and Roh Soh-yeong divorce.
In Chairman Chey Tae-won’s case, there was sufficient grounds to argue that the SK Group shares he inherited were “separate property.” However, in the case of CVO Kwon and Ms. Lee, the assets were “joint property built together from scratch after marriage,” yet both cases resulted in a property division ratio in the mid-30% range.
CVO Kwon and his wife, Ms. Lee, founded Smilegate in 2002 with a capital of 50 million won, one year after their marriage. In the early stages of the startup, Ms. Lee held a 30% stake and was listed on the corporate registry as a representative director and internal director. Although Ms. Lee was primarily responsible for housework and child-rearing, the first-trial court considered all these factors and granted her 35%, a figure higher than the “standard” level for a full-time housewife (20-30%).
Considering that the division ratio in the Chey Tae-won-Roh Soh-yeong divorce was approximately 67% to 33%, some observers suggest that the portion of Smilegate shares subject to division could potentially increase even further in the second trial.
A partner at a major law firm tipped, “Director Roh Soh-yeong received 33% despite no direct recognition of management contribution, so the fact that Ms. Lee—who was listed as a representative and registered director early on—only received 35% might actually put CVO Kwon at a further disadvantage in the future.”
An appeal can be filed within two weeks after the delivery of the written judgment, and neither side has yet disclosed their intentions. However, it is widely predicted that both sides will fight fiercely over whether it was a “joint venture.” CVO Kwon’s side argues, “Ms. Lee never actually invested or worked there, so she cannot be considered a co-founder.” Conversely, Ms. Lee’s side is expected to counter, “She held a 30% stake at the start and has a history of being registered as a director and representative, so she must be seen as a co-founder.”
A lawyer and former judge experienced in corporate divorce cases said, “Director Roh Soh-yeong shifted from asking for shares in the first trial to ‘cash’ in the second to reduce unnecessary controversy over management rights. Since the structure of CVO Kwon and Ms. Lee’s case is different, both sides are likely busy analyzing the first-trial judgment with their attorneys to determine what logic to present in the second trial to secure even a little bit more.”