| Kakao Chairman Kim Beom-soo |
Kakao has taken one step closer to becoming the largest shareholder of its internet-only bank subsidiary Kakao Bank as a government decision has cleared away some legal hurdles.
The company ― operator of the nation's most widely used messenger app KakaoTalk ― submitted an application to the Financial Services Commission (FSC) to become Kakao Bank's largest shareholder in April as lawmakers last year eased related internet-only bank laws prohibiting non-financial firms from owning more than a 10 percent stake in a financial firm.
Kakao's plan, however, faced an unexpected snag as the firm's Chairman Kim Beom-soo was summarily indicted for neglecting a disclosure obligation regarding Kakao's five affiliate companies.
Under the eased laws regarding internet-only banks, major non-financial shareholders seeking to own more than a 10 percent stake in an internet-only bank should not be subject to punishment heavier than a monetary penalty for violating the fair trade act, tax and special economic laws over the past five years.
The Ministry of Government Legislation ruled Tuesday that Kakao is eligible to become the largest shareholder of its internet-only bank regardless of Kim's actions.
“Kim is just a stakeholder of a non-financial company seeking to raise its stake in an internet-only bank, and does not own a stake in a financial company,” the ministry said in the ruling. “Kim is not subject to related laws regarding internet-only banks.”
The legislation ministry's decision came after the FSC earlier asked the ministry whether Kakao is eligible to raise its stake in Kakao Bank considering Kim's legal battle.
The decision means Kim and Kakao are not the same entity, and Kakao's plan to raise its stake in Kakao Bank isn't relevant to Kim's legal issue with the prosecution.
Kim was found not guilty in the first trial, but the prosecution appealed to a higher court against the decision.
The FSC said the agency will immediately resume its process allowing Kakao to become the internet-only bank's largest shareholder. The agency is expected to grant Kakao's application by August.