Japanese and South Korean shareholders of LY Corp., the Tokyo-based operator of the popular Line messaging app, may conclude talks on reviewing their capital relationship without any plan to change their equal stakes, a South Korean government source said Tuesday.
Japan's SoftBank Corp. and South Korea's Naver Corp. have been negotiating a change of their equal stakes in the messaging app business after the Japanese government called on LY to strengthen its data security by seeking Naver's divestment.
SoftBank and Naver jointly own A Holdings Corp., which has a 64.5 percent stake in LY. LY is listed on the Tokyo bourse.
A report to be submitted by LY to Japan's Ministry of Internal Affairs and Communications by July 1 may not include Naver's partial sale of its stake in A Holdings, the South Korean presidential office official said.
The official said the presidential office has been communicating with Naver and will provide necessary support for the company's effort to improve data security as long as it involves no change in the capital relationship.
Any change of LY's capital structure that is disadvantageous to Naver should not be made, the official added.
The Japanese ministry is seeking LY's review of its operation following the leakage of a total of about 520,000 items of personal data, including those related to the app's users and business partners, between November and February.
The Japanese ministry said in March that LY relies heavily on Naver to operate the app system and is under "considerable influence" of the South Korean company, making it difficult for the app operator to strongly urge Naver to take security improvement measures.
In South Korea, Naver's possible divestment has been criticized as an attempt to weaken management control on LY of the South Korean company, an original developer of Line.
Japan's communications minister Takeaki Matsumoto on Tuesday denied any attempt to strengthen SoftBank's control of LY, saying the government only wants to ensure the protection of personal data.
