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>>Naver’s planned merger with crypto exchange Dunamu faces five legal challenges, according to a report.

Naver’s planned merger with crypto exchange Dunamu faces five legal challenges, according to a report.

crypthub

2 days ago

Potential Merger Challenges

Dunamu, operator of the South Korean exchange Upbit, faces five significant legal hurdles to its proposed merger with Naver, South Korea’s leading internet company. This potential union could create a major crypto-tech entity in East Asia, but regulatory and legal issues present substantial roadblocks. The merger’s success hinges on overcoming these complexities and uncertainties surrounding new legislation.

Stablecoin and Regulatory Hurdles

A key goal of the merger appears to be the launch of won-denominated stablecoins, expanding Naver's payment ecosystem. However, differing opinions exist regarding stablecoin legislation, with the central Bank of Korea favoring a bank-centric structure which could limit the merged entity's role. The existing Electronic Financial Transactions Act also requires adjustments for Naver’s financial arm to be integrated.

Conflict of Interests and Stock Market Considerations

Issuing a stablecoin could prevent the new company from listing it on Upbit due to regulations barring exchanges from trading affiliated coins. Potential NASDAQ listings, and changes in Commercial and Capital Markets Acts, pose further complications regarding minority shareholder protection and fair value offers. Legal action could arise if shareholder interests are deemed unfairly impacted.

Governance Structure and Shareholder Concerns

Speculation regarding leadership succession and potential shifts in shareholder control within Dunamu are also creating uncertainty. Achieving management rights or becoming the largest individual shareholder requires navigating complex market regulations. The path forward demands careful consideration of compliance requirements and shareholder value.