Kwon Hyuk-bin, Smilegate founder and chief vision officer (CVO), was ordered in the first trial of a divorce suit with spouse Lee to partition property worth about 2.55 trillion won. The court told Kwon to transfer 35% of the shares of the unlisted game company Smilegate, in which Kwon holds 100% equity, to Lee, a decision expected to have a significant impact. While Kwon will retain management control, observers say the end of the sole ownership structure could bring changes to Smilegate's governance going forward.
The Seoul Family Court's Domestic Affairs Division 3 (Presiding Judge Jeong Dong-hyeok, senior judge) on the 9th accepted Lee's petition for divorce against Kwon. The court included Kwon's Smilegate shares in the marital property subject to division and recognized Lee's contribution to property formation at 35%. As a result, the founder Kwon must share with Lee a total of 2.55 trillion won, including 35% equity in Smilegate worth about 2.4867 trillion won and 65 billion won in cash. It is the largest publicly known property division award in a divorce case in Korea to date.
Kwon's assets recognized by the court total about 7.3375 trillion won, including 7.1409 trillion won in Smilegate share value. The panel said, "We set the property division ratio at 65% for Kwon and 35% for Lee," and added, "Transfer 35% of Smilegate shares to Lee and pay the shortfall of 65 billion won in cash." It found the parties equally responsible for the breakdown of the marriage and dismissed Lee's claim for damages.
◇ Will it shift from Kwon Hyuk-bin CVO's 100% equity to a 'two-shareholder system'?
The outcome of the divorce suit has drawn attention inside and outside the gaming industry because it could affect the governance or operating style of Smilegate, the only unlisted firm among Korea's top five game companies (Krafton, Nexon, NC, Netmarble), beyond a mere personal property partitioning for Kwon. The ruling came about four years after Lee filed suit in Nov. 2022.
The panel decided on in-kind division, noting that most of Kwon's assets are tied up in unlisted shares, making it difficult to raise 2.55 trillion won in cash without large-scale share sales. It also considered that even after transferring 35% out of his 100% equity, Kwon would still hold a majority stake (65%), allowing him to retain management control and status as the largest shareholder.
However, if the first-instance ruling is finalized on appeal and by the Supreme Court, industry and expert assessments are that changes to Smilegate's long-term operations will be unavoidable as Kwon's one-person control, maintained for 14 years, is broken. Kwon founded Smilegate in 2002 and, with hits such as "CrossFire" and "LOST ARK," grew it into Korea's No. 5 game company by last year's revenue. Starting in 2012, he repurchased Smilegate Holdings, then the holding company, equity from outside shareholders to secure 100% control. Early this year, Smilegate merged key entities—Smilegate Holdings, Smilegate Entertainment, and Smilegate RPG—and shifted to an integrated corporate management structure.
Industry watchers say the founder's 100% equity-based decision-making structure allowed Smilegate to focus on long-term investment and new titles without interference from outside shareholders or the market. It also enabled Kwon to receive large dividends each year. The dividends Kwon received were about 56.4 billion won in 2024 and about 168.4 billion won last year, totaling more than 200 billion won over the past two years. In 2021, he also received a 210 billion won special dividend.
However, if Lee secures 35% equity and rises to the No. 2 shareholder, Lee is expected to be able to exert some influence on corporate decision-making. Analysts say Kwon will find it difficult to unilaterally push through special resolutions at shareholders' meetings—such as mergers, partitioning, and articles-of-association changes—without prior agreement with Lee. Under the Commercial Act, special resolutions require the approval of at least two-thirds of the voting rights of shareholders present.
While the risk that Lee, with 35% equity, will directly participate in management or spark a control dispute is not high, it does mean Lee would gain enough influence to block special resolutions. Lee could also exercise shareholder rights such as calling an extraordinary shareholders' meeting, making shareholder proposals, and inspecting books. The possibility cannot be ruled out that Lee's side will demand large dividends or actively propose an initial public offering (IPO) to cash out unlisted shares. The fact that the equity could be sold to a third party is another variable.
Wi Jeong-hyeon, a professor at Chung-Ang University, said, "This ruling will not immediately shake Kwon CVO's management control or change the company's game development and services, but if the property division is realized and Lee holds onto the 35% equity without selling, Smilegate's long-term business strategy could be affected in part." That is because, if Smilegate later pursues mergers and acquisitions (M&A) or major contracts with other corporations and the No. 2 shareholder opposes, swift execution of strategy could be hindered.
◇ "A protracted legal battle expected until the Supreme Court ruling"
There is a view that the lawsuit is likely to turn into a long fight. Although both sides have yet to state whether they will appeal, the industry expects Kwon to appeal the ruling. A source in the gaming industry said, "For Kwon, who owned 100% of Smilegate's equity over the past 14 years to minimize outside interference, a 35% property division ratio would be no small shock."
Born in 1974, Kwon graduated from the electronic engineering department at Sogang University in 1999 and married Lee, whom he met during college, in 2001. The following year, he founded Smilegate with 50 million won in capital. At the time of founding, the equity split is known to have been 70% for Kwon and 30% for Lee. In Nov. 2022, Lee filed for divorce against Kwon and sought half of the Smilegate shares. Lee's side demanded a divorce, saying Kwon was responsible for the breakdown of the marriage, while Kwon maintained that there was no fault on his part and that he did not want a divorce.
The panel included Smilegate equity in the divisible property, considering that Lee initially held some shares at the time of Smilegate's founding and was registered as CEO, and that Lee handled housework and child-rearing for more than 20 years of marriage. However, in calculating the division ratio, it found that Kwon's business capability and management judgment, which built Smilegate into a major game company with annual revenue of about 1.4 trillion won, had a decisive impact on its growth.
Kwon's decision on whether to appeal is expected within two weeks. Kwon's attorney said, "While we regret the panel's finding that the marriage has broken down, we understand that the dismissal of the damages claim means it found no fault on the defendant's part," adding, "We will review the written judgment and decide after consulting with our client."
A Smilegate official said, "We have nothing particular to say about the majority shareholder's personal affairs," and added, "Smilegate will continue to faithfully carry out its core duties as before."