[디지털데일리 왕진화 기자] Nexon, which exceeded 3 trillion won in annual sales last year, is evaluated as a game company with a very high market value in the domestic and foreign game markets. There is another expression to modify Nexon. It is a self-made conglomerate. The late Nexon founder Kim Jeong-ju adhered to conservative management principles and has not released his stake in NXC, the holding company of the Nexon Group and an unlisted company, to the market.
His strong foundation and success story were hindered by the enormous inheritance tax.
Previously, about 98.28% of NXC shares were owned by founder Kim and his bereaved family. Founder Kim owned a 67.49% stake in NXC. Spouse Yoo Jung-hyun, director of NXC, owned 29.43%, and her two daughters each 0.68%.
If you add in the fact that Wise Kids, an affiliate owned by the bereaved family, owned the remaining 1.72% of NXC, founder Kim and his family actually own 100%. This was also the method by which founder Kim had firmly protected management rights from the outside during his lifetime.
The bereaved family chose to inherit the 67.49% stake owned by founder Kim rather than sell it. As a result, director Yoo inherited 4.57% and his two daughters inherited 30.78% each. In this process, the whereabouts of the remaining 1.36% stake are unknown.
However, in order to fully inherit, you have to pay inheritance tax. The bereaved family had to pay about 6 trillion won in inheritance tax to the state in order to inherit the stake. In principle, national taxes are paid in cash (cash). However, it would not have been easy even for the bereaved family to suddenly prepare cash to pay this enormous inheritance tax.
Accordingly, the bereaved family chose to pay inheritance tax in kind, such as government bonds and real estate. The government allows inheritance tax to be paid with real estate or unlisted securities rather than cash, considering that the property to be inherited is generally composed of real estate or securities.
The bereaved family of the late founder Kim paid part of the inheritance tax with 852,190 shares (29.3%) of NXC unlisted shares instead. The value of the stake alone amounts to about 4.7358 trillion won. Founder Kim’s stubbornness, which had thoroughly defended against outside intervention, eventually collapsed in front of the inheritance tax that the bereaved family had to pay.
With the inheritance tax paid this time, director Yoo and his two daughters’ stake in Wise Kids totaled 69.34%. Director Yoo’s share ratio remained at 34%. Only the share held by the two daughters decreased from 31.46% to 16.81% respectively. Management rights were kept stable, but the second largest shareholder had nothing to do with Nexon.
The Ministry of Strategy and Finance immediately became the second largest shareholder of NXC with a 29.3% stake received through payment in kind. However, the Ministry of Strategy and Finance believes that the expression “the second largest shareholder” is inappropriate. The purpose of the Ministry of Strategy and Finance is to go through the sale process as quickly as possible and sell it at its full price, as it received unlisted stocks. The sale of stocks for payment was entrusted to Korea Asset Management Corporation (KAMCO).
Accordingly, the Ministry of Strategy and Finance and KAMCO held the 4th national tax payment company investment briefing at the Conrad Hotel in Yeouido on the morning of the 6th. It was prepared as a place to explain stocks in kind to institutional investors and introduce cases of sales outcomes.
The government provides institutional investors with the opportunity to purchase stocks they are interested in through the investment-type sale system. Here, the investment-type sale system is a system in which institutional investors can purchase a company that is judged to have growth potential and investment value at a predetermined price through evaluation by an external accounting firm.
About 60 institutional investors, including securities firms, asset management companies, and venture capital firms, reportedly attended the briefing session. NXC received a lot of attention as it was introduced as one of the government’s major blue-chip water supply companies. In fact, broadly speaking, NXC’s second-largest shareholder in the future may have a fresh influence on the Nexon Group. It is an opportunity to create a new foothold for growth in an unexpected place.
However, even where there is interest in buying shares, concerns are bound to be deep. First of all, since the value of the stake is the largest ever, not many investors will acquire it at once. In addition, even if they buy 29.3% of NXC’s shares in installments, they cannot hold management rights because the bereaved family owns 69.34% of the shares. Even if it is acquired, it is not easy to trade because it is an unlisted stock. It is difficult to liquidate and it is more difficult than expected to be evaluated at the right price.
Therefore, the possibility that domestic capital will fully purchase them is relatively low. However, it may be a different story for foreign companies. The more capital is available, the more likely it is to jump into shopping to claim the title of the second largest shareholder of NXC. For example, Tencent, the third largest shareholder of Netmarble and the second largest shareholder of Krafton, joined hands with domestic capital such as Netmarble and MBK Partners when the sale of Nexon was promoted in 2019.
Such a harsh inheritance tax makes both the paying position and the receiving position suffer from various side effects. Korea is notorious for its structure, which makes it difficult for companies to maintain management rights, as the burden of inheritance tax is the highest among the 38 OECD member countries. Korea’s inheritance tax rate rises to 60% if a surcharge (20%) for the largest shareholder is added.
With the inheritance tax threatening business existence, experts as well as the business world are raising their voices for related laws and system improvements. In particular, they share a common opinion that the government needs to look at inheritance as a means of strengthening national competitiveness and succession of companies, rather than passing down wealth.
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