[비즈한국] A resolution finally appears to be in sight for the conflict between OGQ CEO Shin Chul-ho and investors over a 12-billion-won investment, which had dragged on for more than 8 months. This follows the delivery of a consent form for capital reduction to OGQ by the investment fund, which includes KB Securities and Hana Securities as LPs (Limited Partners). It is particularly noteworthy that for the first time, a practical procedure has been set in motion in a situation where a method to return the investment existed but the necessary consent for its execution had been blocked.
CEO Shin stated on social media on the 28th, "After 8 months, the investment firm, with KB Securities and Hana Securities as LPs, has sent a consent form for capital reduction. We are finally able to resolve this issue." However, it is reported that the forced execution on CEO Shin’s management shares, real estate, salary, and severance pay by the investors has not yet been halted.
The incident began in 2021 when OGQ attracted 9 billion won from an investment firm for the acquisition of Getty Images Korea. After the acquisition fell through, the investors demanded the return of the investment not from the company, but from CEO Shin personally, identifying him as an "interested party" under the investment contract.
Following a Supreme Court ruling in April that favored the investors, CEO Shin became liable for approximately 12 billion won, consisting of the principal plus 12% annual interest. The court determined this not to be a traditional joint guarantee, but rather a separate payment obligation assumed by CEO Shin under the investment agreement.
However, according to CEO Shin, the original 9 billion won investment remains within OGQ. To resolve this, CEO Shin proposed that the company acquire and retire the investors' redeemable preferred shares at a fair market value of approximately 9.425 billion won, based on an external appraisal, and that he would personally guarantee the remaining gap of approximately 2.37 billion won by pledging his own shares.
The problem was that neither the capital reduction nor the disposal of shares could be decided by CEO Shin alone. While the investment contract required consent procedures and internal corporate decision-making, the investors' court-ordered forced execution was possible without any separate shareholder consent. In effect, the structure prevented him from paying back the debt by disposing of his own assets, while allowing the creditor to forcibly sell them.
With the actual delivery of the capital reduction consent form this time, one of the most critical hurdles in a deadlock that lasted for 8 months has been cleared.
Controversy Over ‘Indirect Joint Guarantee’ Reaches President and National Assembly
The OGQ incident has recently expanded beyond a single corporate investment dispute into the issue of personal liability imposed on founders in venture investment contracts. Although the government has abolished joint guarantees, mainly in policy finance, critics point out that if clauses regarding "interested parties," stock purchase options, or separate payment obligations are utilized, the risks of a company can effectively be transferred to the founder personally.
President Lee Jae-myung also emphasized the need for institutional reform during the "Dialogue with SMEs" held at the Blue House Guest House on March 20 this year, noting the unreasonable burdens placed on small and medium-sized startups. He expressed the view that since policies are already being pursued toward abolishing practices like joint guarantees that hinder a founder's comeback, it is necessary to examine whether structures that shift responsibility onto individuals while only changing the form still remain.
The OGQ incident was even raised directly in the National Assembly this year. On July 29, at the National Assembly's National Policy Committee, Democratic Party lawmaker Min Byung-duk cited the OGQ case to question the role of financial firms like KB Securities and Hana Securities. In response, Financial Services Commission Chairman Lee Bok-hyun answered that the prohibition on imposing joint liability on interested parties has been in effect since March of this year and that he would look into the matter.
Democratic Party lawmaker Kim Han-kyu also mentioned the OGQ incident on the 12th, stating, "We will improve the system so that founders do not unfairly bear debt." Office of Rep. Kim is pushing for legislation that would restrict not only explicit joint guarantees but also "so-called indirect joint guarantees," where corporate risks are shifted to founders through other contract forms such as separate payment obligations or stock purchase options.
Amidst this growing interest from financial authorities and the National Assembly, the capital reduction process, which had been at a standstill for a long time, has finally progressed to the actual delivery of a consent form. While it cannot be concluded that the attention of relevant authorities had a direct impact on this decision, it is noteworthy that negotiations took a concrete turn after the OGQ issue expanded into a systemic controversy.
Path to Capital Reduction Opened, But Forced Sale Continues
The arrival of the capital reduction consent form does not mean the dispute is over. Additional procedures, such as internal company decision-making and consent from other shareholders, remain before the actual capital reduction can occur.
The biggest variable is the forced execution. According to CEO Shin, even while sending the capital reduction consent form, the investors are continuing with the procedures for the forced sale and collection regarding his management shares, house, salary, and severance pay.
CEO Shin requested, "The investment principal is still in the company, and a path for recovery through a fair-value capital reduction has opened. Please stop the forced sale now." He added, "I hope we can resolve this long-standing issue amicably through a shareholder meeting resolution without further mutual exhaustion."
The OGQ dispute has now shifted from a question of whether there is a way to return the investment to a question of whether the opened recovery route can actually be executed. The investment principal remains in the company, the investment fund has sent the consent form, and a plan has been proposed for CEO Shin to personally take responsibility for the shortfall.
What remains is the decision-making by the company and its shareholders for the capital reduction, and the cessation of forced execution by the investors. Attention is now focused on whether the OGQ situation, which escalated into a 12-billion-won personal debt and a threat to management rights, will be resolved through investment return and agreement rather than forced liquidation.