One Bailey, the 'God of Reconstruction,' Faces Lawyer Leading Shareholder Activism

Interview with Heo Kwon, CEO of Heyholder
Corporate Governance Dispute Specialist Lawyer
Raises Issues in Reconstruction Procedures
Transforms into Spokesperson for Shareholder Activism

Heo Kwon, CEO of Heyholder

There is a lawyer who stood against Han Hyeong-gi, known as the 'God of Reconstruction.' This lawyer filed a suspension of duties lawsuit against Han Hyeong-gi during the reconstruction of One Bailey, a symbol of Gangnam. It was to assert at least procedural legitimacy in the comprehensive process of Gangnam apartment reconstruction driven by desire. That lawyer has now turned his eyes to the capital market. He submitted his resignation to the law firm and acquired the shareholder rights platform 'HeyHolder' in October 2023. The protagonist of this story is none other than Heo Gwon, CEO of HeyHolder. Asia Economy met with CEO Heo in person to hear his story, which is more interesting than a novel.

Corporate Dispute Specialist Lawyer Raises Issues in One Bailey Reconstruction Process

CEO Heo is a well-known litigation lawyer specializing in management rights disputes in the business world. After graduating from Seoul National University’s Department of Law and Law School, he passed the 5th Bar Exam and joined the law firm Gihyeon, a law firm specializing in corporate disputes. CEO Heo was involved in major lawsuits ranging from Kumho Group management rights disputes, Samsung Group succession, to the divorce lawsuit between Noh So-young, director of Art Center Nabi, and Chey Tae-won, chairman of SK Group.

Familiar with commercial law and corporate law, he began reviewing the Urban and Residential Environment Improvement Act in 2020 because he saw blatant violations of the law during the One Bailey reconstruction process. When asked why he raised issues despite the fact that ignoring them would have resulted in real estate worth tens of billions of won, he replied:

"People who think reconstruction is a 'speed race' easily lie and violently pressure those who oppose it. In the One Bailey reconstruction association president election, the principle of secret voting was not observed, such as redistributing ballots. There was also much talk about reserved land, where a 34-pyeong Han River view apartment was sold to a specific person at half the market price. Also, Mr. Han Hyeong-gi, the 'God of Reconstruction,' was allowed to freely choose building and unit numbers without bearing any contribution fees because he helped during the reconstruction process. Although I knew the interests in a 2 trillion won project were huge, the process was a mess. Voices of angry people gathered, and I took the lead to open an online cafe where association members could share information. We continued to raise issues, including filing for provisional injunctions to suspend the duties of the association president and vice president."

CEO Heo revealed there was no special reason. He said, "What I wanted most was to save as much money as possible and renovate my apartment well." The reconstruction succeeded. However, illegalities were not completely checked during the process. He is now holding them legally accountable afterward.

6 Billion Won Lost in KOSPI Listed Company... Shareholder Returns Are the Problem

Heo Kwon, CEO of Heyholder, is reviewing the shareholder proposal posted on the application.

There was a turning point that made him turn his attention to shareholder activism. After the reconstruction was completed, one day he checked his stock account. He found that he had nearly 300 million won in losses on his holding in Aplus Asset. The company was good, but shareholder returns were problematic.

"My friends and I held about 5% of Aplus Asset shares. I thought it was necessary to raise our voices together with others for shareholder returns. Although it was possible to receive the shareholder registry, it seemed difficult to verify actual shareholders. By chance, I got an idea while looking at the Toss app. I thought that using MyData, shareholders could be gathered all at once."

While planning MyData, he came to know about 'HeyHolder.' HeyHolder is a platform that can receive proxy voting rights from small shareholders all at once. Individual investors use it to make shareholder proposals. He thought of using HeyHolder and expanding the platform because shareholders of various stocks gather in one place.

CEO Heo contacted former CEO Park Hyeong-ryeol, who was a sole shareholder, and expressed his desire to acquire HeyHolder. Although there were other proxy voting platforms, he was attracted to 'HeyHolder.' He said, "I thought the MyData function was key. Verifying shareholder status is an important function of a proxy voting platform, and at that time, it was the only platform utilizing MyData."

In September 2023, the acquisition contract for HeyHolder’s management rights was swiftly concluded. After organizing the platform, he submitted his resignation to the law firm Gihyeon where he was employed. When asked why he submitted his resignation, he answered, "The biggest issue was conflict of interest, and above all, I found it interesting to represent shareholder voting rights."

HeyHolder soon began to attract attention. Small shareholders of Asia Paper joined forces with HeyHolder and took shareholder action. Asia Paper decided on an interim dividend and treasury stock acquisition for the first time in 58 years. Besides this, small shareholders of Ubiquoss, Vivozon, and others are raising their voices through HeyHolder.

Goal is Value Up... Dreaming of 'Commercial Law Democracy'

'Commercial Law Democracy' is the capitalism that CEO Heo dreams of. He is more interested in the consolidation of small shareholders than funds with capital power. He said, "Hedge funds say they can resolve the Korea discount (undervaluation of the Korean stock market), but there are limits," adding, "The nature of hedge funds is basically profit, and the liquidity of the Korean stock market is not good."

Above all, CEO Heo said, "I enjoy the thrilling fight of the underdog." By nature, he is a lawyer. He feels exhilaration in a different sense than corporate dispute cases. Therefore, the identity and operation of HeyHolder are planned to focus on small shareholders.

In fact, operating HeyHolder, he has also experienced limitations. He deeply feels that the relationship between companies and small shareholders is a 'tilted playing field.'

"Looking at the shareholder registry, only addresses are disclosed, but emails are not. The Enforcement Decree of the Commercial Act states that emails should be deleted and shared. Isn't that strange? Which is my personal information that should be protected? Address or email? Address means revealing where I live. Also, in the 21st century, to receive proxy voting rights, you have to visit the address in person. I wonder if this method is right."

As HeyHolder’s CEO, he summarized the causes of the Korea discount into three: shareholder returns, compliance, and lack of IR (Investor Relations).

Heo explained, "Running the One Bailey reconstruction cafe and HeyHolder’s essence are not different. Just as opinions of association members are collected, HeyHolder’s role is to check companies with governance problems."

In the case of large corporations, they create compliance regulations and try to communicate with shareholders, but mid-sized and small companies do not even make minimal efforts, according to his view. Regarding this, he pointed out, "The problem is that they do not consider shareholders as the owners of the company."

Heo emphasized, "If a company is listed, I think it should strengthen three things: shareholder returns, compliance, and IR. HeyHolder focuses on small shareholders and also emphasizes strengthening legal advice."

When asked about his future plans, Heo answered, "I want to focus on 'strengthening substance' rather than expanding scale." He explained that the goal is to communicate with companies, not just unilaterally voice shareholder opinions. He is already planning a business model related to this.

He said, "There were concerns that KakaoTalk would be difficult to make money at first, but eventually the direction was right. HeyHolder is also on the right path as a platform that reflects the voices of small shareholders, and I believe it will grow into a platform that generates profits."