Kakao compliance committee instructs affiliates to overhaul governance

Tech

Published: 20 Feb. 2024, 16:22

Kakao compliance committee instructs affiliates to overhaul governance

Kakao compliance & trust committee [KAKAO]

Kakao's compliance and trust committee issued a written advice that recommends six of its affiliates come up with ways to achieve sustainable growth.

The move comes two months after the committee was formed with the objective of overhauling governance and management of the much-plagued IT company.

The external consultative body headed by former Supreme Court Justice Kim So-young proposed that the six companies come up with reform solutions for responsible management, ethical leadership and social confidence recovery.

The companies — Kakao, Kakao Games, Kakao Mobility, Kakao Bank, Kakao Entertainment and Kakao Pay — are required to report to the committee within three months.

The panel also requested that Kim Beom-su, the founder of Kakao who returned to spearhead the restructuring efforts after resigning as its chair in 2022, exert comprehensive efforts to overhaul the company's governance.

The consultative body further requested that the companies establish a systematic process for making influential decisions, such as those related to hefty investments. The companies will also have to set up assessment standards for management as well as compensation obligations in case they incur losses for the company.

The committee also recommended companies to draft a strategy that benefits both stakeholders and partners in order to regain social confidence. It will have the companies come up with solutions to protect stakeholder value when pushing for major business decisions such as mergers and acquisitions as well as IPOs.

Stock value depreciation for a parent company when a subsidiary goes public has been a chronic issue at Kakao, with more than 100 affiliates under its wings.

"I hope the latest set of recommendations act as a starting point for compliance and credible management principles at Kakao," said committee leader Kim.

"The compliance committee will monitor whether the recommendations are being carried out properly and try to make a new future with Kakao."

Chung Shin-a, a CEO-designate at Kakao, said she respects the recommendations that are aimed at making a healthy change at the company.

"I will try to come up with plans that reflect the committee's recommendations so that Kakao can move in the right direction to gain confidence and support from society," Chung said.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]