Dunamu headquarters. Yonhap News
The presidential Regulatory Rationalization Committee has recommended supplementing the shareholder eligibility screening criteria for virtual asset service providers, raising the possibility that some of the regulatory burden surrounding the merger of Naver and Dunamu could be reduced.
According to the virtual asset industry on the 24th, the committee reviewed a proposed revision to the enforcement decree of the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Reporting Act) that day and recommended supplementing the shareholder eligibility criteria for virtual asset service providers to a level comparable to the Financial Investment Services and Capital Markets Act.
The revision stipulates that authorities may decline to accept a virtual asset service provider’s registration if the provider has a history of violating economic laws, including the Fair Trade Act, the Punishment of Tax Offenses Act, and the Act on the Aggravated Punishment of Specific Economic Crimes.
The industry has pointed out that the absence of separate criteria considering the degree of the violation or the circumstances of punishment could result in excessive regulation. The Capital Markets Act and the Act on Corporate Governance of Financial Companies recognize exceptions to shareholder disqualification when a violation of economic laws is minor, or when a corporation received a fine under joint penalty provisions.
The committee recommended establishing similar criteria in the Special Financial Reporting Act’s enforcement decree in consideration of parity with other financial laws. Accordingly, attention is focused on whether financial authorities will reflect provisions considering the severity of the violation and the circumstances of punishment in the revised enforcement decree, which is set to take effect next month.
The shareholder eligibility criteria drew attention during the process of pursuing the merger between Naver Financial and Dunamu. Naver is pursuing a transaction to incorporate Dunamu as a wholly owned subsidiary through its subsidiary Naver Financial.
Naver was sentenced to a fine in the first trial in September last year on charges of violating the Fair Trade Act, and an appeal is currently underway. Under the existing revision, observers noted that if a fine is confirmed in the future, Naver could face a disadvantage in the shareholder eligibility screening for Dunamu.
If the committee’s recommendation is reflected in the enforcement decree, the burden that Naver’s history of violating the Fair Trade Act places on the merger review could also be reduced. However, whether the recommendation will actually be reflected in the enforcement decree and the specific scope of the exceptions have not yet been determined.
Other regulatory procedures remain before the merger of Naver Financial and Dunamu can be completed. As the Fair Trade Commission’s review of the business combination has been delayed, Naver postponed the scheduled closing date of the transaction from the original June 30 to December 31.