Story of a Big Player from Gangnam

At that moment, Ms. Jang came into the room. President Song teased her.

“Ms. Jang, right? Ms. Jang, you can’t just come and go like that, leaving us by ourselves here with four floor cushions. One of them is yours, right?”

“Oh, my, I have to make money, sir, don’t I? Even though this restaurant looks like a joke, it requires my close attention all the time.”

“Didn’t you miss me?”

“Huh? Sir, have we seen each other before? How can I possibly miss someone who I haven’t seen before?”

“We just saw each other a few minutes ago.”

“Haha. You are a funny man.”

President Song was holding Ms. Jang’s hand already. The internal auditor was just smiling. It seemed that he hadn’t been to a place like this before.

Three pretty girls came into the room. They were wearing Korean traditional dress. Each girl sat next to each man to serve them during dinner. A moment later, another two girls came in with Gayageum*.

The room was soon filled with the melody of Gayageum, and the three men enjoyed whiskey while listening to it. Gun-Ho didn’t mention even a word about work until then. He acted as if he came to the restaurant with his friends for fun.

After a while when he felt like he had enough drinks, Gun-Ho said to the girls as he paid tips to them, “You can leave now. We— three oppas— have something to talk about between us. You did a great job tonight. Thank you.”

Gun-Ho referred to President Song and the internal auditor as oppa even though they were old enough to be those girls’ fathers. The girls left the room looking satisfied with the tips.

Gun-Ho sipped a cup of green tea, and said, “You two must have felt exhausted with the work at the companies, especially with all the things going on there right now.”

“We are good, sir.”

“As the sales increased, we hired more workers, and the work itself became complex. You now have more people to manage with a heavier workload than before.”

“That’s true, but we’ve established a system to manage them efficiently. So, you don’t have to worry about it, sir.”

At that moment, Ms. Jang opened the room door a little bit and asked, “Is there anything else you need, gentlemen?”

Gun-Ho gestured to her showing that they didn’t need anything else for the moment. Ms. Jang closed the door quietly.

Gun-Ho looked at the internal auditor and said, “We will soon receive the certificate being recognized as a startup company with technology, right?”

“I believe so, sir. It won’t take long.”

President Song chipped in, “You have increased Dyeon Korea’s capital recently, and you are trying to receive the certificate to be recognized as a startup company with technology as soon as possible. I guess you are aiming at registering with KOSDAQ for Dyeon Korea soon, aren’t you, sir? Once the company goes public, the value of its shares will substantially go up like by five times. What do you think, Ms. Internal Auditor?”

“It would be really nice if our sales revenue is a bit higher than now. Since our annual sales revenue is less than 100 billion won, we can’t expect a dramatic increase in the company’s share price. Once a company goes public, its stock value will be affected by its sales revenue. But, I do agree with you about the five times more increase in the share price.”

“Well, one thing for sure is that you will make a substantial amount of money, sir. The price of the company share that you are holding right now will increase by five times. The current capital of Dyeon Korea is 19 billion won, right?”

“Yes, it is, after the recent increase of the capital.”

“That makes your share 9.5 billion won, and it will increase to 47.5 billion won after the price jumps to five times of it.”

“Theoretically, yes.”

President Song sipped his tea and said, “But, you need to consider the required stock dispersion of 30% to minority shareholders. You will need to disperse at least 15% out of your current portion— 50%.”

“I actually wanted to discuss it with you two while having dinner today.”

Gun-Ho looked at the internal auditor’s face and said, “Mr. Internal Auditor, is the 30% stock dispersion required for a certified startup company with technology as well?”

“For a startup company with technology, they apply the stock dispersion requirement based on the capital invested by its shareholders within one year from the date of the application to register with KOSDAQ. They will consider 10% of the total number of issued stock.”

“I need to start the process of dispersing my shares then.”

“If you want to register with KOSDAQ within this year, you will have to disperse 30% of the current shares among 500 minority shareholders. However, if you decide to register with KOSDAQ next year, you should be okay with dispersing only 10%.”

“Hmm.”

“It’s the end of April. If you want to go with 10%, we can register in May next year. It takes at least four months to go through all sorts of examinations and get to the final approval.”

“Hmm.”

“So, the question is whether we want to do it this year or next year.”

The three men became lost in thought with their arms folded over their chests.

It was President Song who broke the moment of thought.

“This is what I think. Dispersing stocks is not absolutely bad; it will make the sales of our stocks vigorous in the stock market. However, it could hurt the major shareholders’ interests.”

“Hmm.”

“I believe that the price of a Dyeon Korea’s stock is 10,000 won now.”

“That’s correct.”

“Since the capital has increased to 19 billion won now, the number of its stocks is 1.9 million. 10% of 1.9 million is 190,000. We can disperse 190,000 shares among 500 people without going through a stock company. We have 150 workers in Dyeon Korea and 500 workers in GH Mobile. We can distribute the shares to them.”

Gun-Ho said slowly, “That’s what I’m thinking of doing, but my concern is that we will possibly see many forfeited shares. It will make things even more complicated. If we let a stock company handle the dispersion, we won’t have to worry about it.”

“Yes, we will see forfeited shares. Say, we distribute the 190,000 shares to 650 persons. That means that each person will be assigned with 292 shares. Since the price per share is 10,000 won, a worker will need to come up with 2.92 million won which is not an insignificant amount of money for many of our workers. However, we can provide them with a payment plan, and let them know that the price of the shares will increase once the company goes public. I’m sure that we will see a lot less forfeited shares this way.”

“Hmm.”

The internal auditor agreed with President Song.

“Dyeon Korea achieved a sales revenue of 52.8 billion won last year. With the increase of volume of product orders from GH Mobile, we can expect to make more than 70 billion won by the end of this year.”

“Are you saying that it will work favorably when we do public offerings?”

“That’s right, sir.”

“What if we wait until Dyeon Korea reaches its sales revenue of 100 billion won?”

“That will be even better. But, I wonder if we can achieve 100 billion won anytime soon.”

“I can make it happen.”

“Huh? How, sir?”

President Song and the internal auditor looked at Gun-Ho’s face with a questioning look on their faces.

Note*

Gayageum – A traditional musical instrument of Korea.