Preliminary Review of Acquisition and Stock Transactions... Powerful Subcommittee with Strong Authority "Will Establish Internal Control Framework at Kakao" (Comprehensive Report 2)

The First Meeting of the Junshin Committee Held, Full-Scale Activities Begin
Kakao Affiliates Require Junshin Committee's Prior Review for Mergers and Large Stock Transactions
"Confident in Kakao's Willingness to Change"

On the afternoon of the 18th, the first meeting of the 'Compliance and Trust Committee' (Junshinwi), an external body to oversee compliance and ethical management of the KAO Group, was held at the Junshinwi office located in the EG Building, Daechi-dong, Gangnam-gu, Seoul. Kim So-young, Chairperson of the Compliance and Trust Committee, is speaking.

The external independent body holding the key to Kakao's reform, the 'Compliance and Trust Committee' (hereafter referred to as the Compliance Committee), concluded its first meeting on the 18th. The Compliance Committee, which holds strong authority including prior review of major management activities, will transparently disclose its activities going forward and dedicate itself to restoring trust in Kakao.

On the day, the Compliance Committee held its first meeting from 1 p.m. to 5 p.m. at the EG Building in Gangnam-gu, reviewing compliance-related policies of affiliates participating in the 'Agreement for Co-growth and Compliance Management of the Kakao Community' and discussing topics that need to be addressed initially.

The Compliance Committee signed the agreement on the 11th with Kakao, Kakao Games, Kakao Bank, Kakao Mobility, and Kakao Pay. Including Kakao Entertainment, which is expected to finalize board approval soon, six companies will participate together.

Compliance officers from Kakao, Kakao Games, and Kakao Mobility attended the meeting to report on organizational status, compliance ethics regulations, and operational rules. Jeongshin A, the designated CEO of Kakao and CEO of Kakao Ventures, also visited for greetings. Kim Jeong-ho, Kakao's Chief of Management Support and one of the Compliance Committee members, did not attend. He recently requested 'self-discipline' after internal strife arose due to his exposure of internal corruption allegations on social networking services (SNS). Since no conclusion has been reached regarding the disciplinary action, he is expected to refrain from official activities for the time being.

The Compliance Committee will carry out the following: ▲ establishing a compliance control framework including compliance programs ▲ prior review and provision of opinions on major management activities ▲ supervision and recommendations on compliance programs ▲ direct investigation of compliance obligation violation risks ▲ oversight of core decision-making organizations.

Major management activities subject to prior review and opinion provision include affiliates' ▲ accounting treatment and large-scale stock market transactions ▲ organizational changes such as mergers, splits, acquisitions, and initial public offerings ▲ internal transactions and other dealings. If there is a risk of compliance obligation violations related to user interest protection and industry co-prosperity, the committee may request data submission from the relevant affiliates and provide opinions to the board regarding compliance violations by top executives and compliance officers.

Before the meeting, Chairperson Kim So-young, a former Supreme Court Justice, stated in her opening remarks, "Kakao started as a startup over ten years ago and was loved by the public as a representative innovator," but added, "However, affectionate views toward Kakao have turned into concerns and criticism in recent years. Numerous internal and external issues have surfaced, resulting in public disappointment."

She pointed out, "The cause lies with Kakao. While emphasizing the innovation Kakao created, there was insufficient consideration for those harmed behind the scenes. The focus on external growth led to failure in meeting societal standards and expectations."

However, Chairperson Kim saw Kakao's willingness to change. She said, "Before the first meeting, I met with Kim Beom-su, Chair of the Management Reform Committee, and shared concerns while listening to the voices of Kakao crew members. After hearing various opinions, I am convinced that although Kakao faces many accumulated problems, its members have a strong will to change."

She added, "We will establish legislative and internal control frameworks to ensure Kakao can make the right choices regardless of future circumstances. We will also diligently monitor the operation process so that principles of compliance management and trust management take root."

Kakao established the Compliance Committee on the 3rd of last month and appointed former Supreme Court Justice Kim as the inaugural chairperson. The committee members include Chair Kim, Kim Yong-jin (Director of the Good Management Research Institute and co-founder of Freechal), Ahn Soo-hyun (Professor at Hankuk University of Foreign Studies Law School and former President of the Korean Banking Law Association), Yoo Byung-joon (Professor at Seoul National University Business School and former President of the Korean Venture Startup Association), Lee Young-joo (Chairperson of Gyeonggi Social Economy Center and former Deputy Director of the Judicial Research and Training Institute), Lee Ji-woon (Head of Strategic Planning at Seoul Shinmun and former Editor-in-Chief), and Kim Jeong-ho (Kakao Chief of Management Support). The term of office is two years.

Meanwhile, the Compliance Committee publicly disclosed the internal whistleblowing email for company internal corruption to employees for the first time on the day.

Yang Hyun-seo, Secretary-General of the Compliance Committee, said, "The whistleblowing email may be disclosed externally. When the website is launched in mid-next month, there will be a whistleblowing page, so we will listen to various stories through diverse channels."

The Compliance Committee plans to hold regular meetings once a month. The next meeting will be held on January 8 next year at the EG Building.

This content was produced with the assistance of AI translation services.