Hwawoo Legal Firm, Lee Soo-legal man’s agent, issued a statement on February 7 outlining his position on suing SM Entertainment for breaking business rules.
SM Entertainment recently signed a collaboration agreement with Kakao Entertainment, and it was later discovered that the two labels took illegal steps to make Kakao the second-largest stakeholder in SM, accounting for 9.05% of their shares.
This was done without the knowledge of the agency’s founder and main shareholder, Lee Soo-man. The deal was accepted by the co-CEOs, Lee Sung-soo and Tak Young-joon, from Align Partners, SM’s second-largest investor after Lee Soo-man. Hwawoo claims that
“Align Partners proposed appointing an auditor to SM Entertainment’s regular shareholder meetings last year, and since then, there have been various disputes over the management rights asserted against Lee Soo-man, such as requesting access to accounting books and board meeting notes.”
It was previously revealed that Soo-man and Align Partners had a managerial disagreement (a shareholder activist fund). New stock and convertible bond issues are prohibited under such circumstances. This has a number of consequences, including decreased share value and less control over the company for current owners, making Soo-perspective man’s position reasonable given his position.
Netizens react to Lee Soo’s decision to sue SM Entertainment, the company he founded
Hwawoo’s comment explains the events that led to Soo-viewpoint in great detail. man’s It states,
“On January 20, this year, co-CEOs Lee Sung-soo and Tak Young-joon of SM Entertainment agreed to Align Partners’ proposal without consulting the company’s largest shareholder, Lee Soo-man.”
It continues,
“It is clearly illegal for SM Entertainment’s board of directors, chaired by the co-CEOs, to issue new shares and convertible bonds to third parties during a period of internal conflict.”
For what appeared to be illegal reasons, SM unilaterally granted Kakao new shares and convertible bonds.
“(They partnered with Kakao) to broaden their reach and make things more favorable to them, as well as to gain a competitive advantage in controlling the company’s direction.”
Lee Soo-man intends to sue SM Entertainment and take legal action against the company and its employees after discovering the company’s illegal behavior.
“We will use an injunction to prevent the board of directors of SM Entertainment from issuing additional shares and convertible bonds, and we will hold the directors civilly and criminally liable for this.”
When the news broke, many people were shocked to learn that the corporation had turned against its own founder. Despite the fact that such practices are common in the corporate world, netizens applaud Lee Soo-man for taking a brave stand and being willing to address the issue publicly and legally.
As they realized the broader implications of the situation, fans and netizens in general overwhelmingly supported him. Soo-approach men must protect not only their own share distribution but also share distribution to other shareholders. This includes SM Entertainment musicians’ earnings from albums and comebacks.
Fans are relieved to see Lee Soo-man act quickly to resolve the issue by taking appropriate action against it, which protects many individuals under the firm. Naturally, they hope that the situation will be resolved and that their collaboration with Kakao will be terminated.
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