Hwawoo Law Firm, which represents Lee Soo-legal, released a statement on February 7 outlining their stance on the lawsuit against SM Entertainment for violating business rules. SM Entertainment recently signed a partnership agreement with Kakao Entertainment and the two record labels were later found to have taken illegal steps to make Kakao the second largest shareholder of SM, with a 9.05% stake in them.
This was done without the knowledge of Lee Soo-man, the founder and major shareholder of the company. Co-CEOs, Lee Sung-soo and Tak Young-joon, have accepted the deal with Align Partners, SM’s second-largest investor after Lee Soo-man. According to Hwawoo,
“Align Partners made a series of proposals to appoint auditors for SM Entertainment’s regular shareholder meetings last year, and since then there have been many disputes over management rights over Lee Soo-man, such as requesting access to the books of accounts and the board of directors. meeting notes.”
It was previously revealed that there was a management disagreement between Soo-man and Align Partners (a shareholder activist fund). Under such conditions, the issuance of new shares and convertible bonds is considered prohibited. This leads to various disadvantages, a decrease in the value of the stock and less control of the company by the current owners, which makes the man in Soo’s opinion justified in his position.
Netizens’ reaction to Lee Soo’s decision to sue SM Entertainment, the company he founded.
Hwawoo’s comment clearly explains the events that led to Soo’s point of view. the man said
On January 20 of this year, SM Entertainment co-CEOs Lee Sung-soo and Tak Young-joon agreed to Align Partners’ proposal without consulting the company’s largest shareholder, Lee Soo-man.”
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“It is illegal for SM Entertainment’s board of directors, chaired by co-CEOs, to issue new shares and convertible bonds to a third party during a period of internal conflict that is clearly illegal.”
SM unilaterally granted new shares and convertible bonds to Kakao for seemingly illegal reasons.
“(They partnered with Kakao) to expand their reach and make things more convenient for them, while they seek to gain a competitive advantage in controlling the direction of the company.”
Lee Soo-man plans to sue SM Entertainment and take legal action against the corporation and its workers after discovering the company’s illegal behavior.
“We will use this ban to prevent SM Entertainment’s board of directors from issuing more shares and convertible bonds, and we will hold the directors civil and criminally liable.”
Many were shocked to find out that the corporation was going against its own founder when the news broke. Although such practices later proved to be typical in the corporate world, netizens still praised Lee Soo-man for taking a brave stance and willing to address the issue openly and legally.
Fans and netizens in general overwhelmingly supported him as they realized the broader implications of this situation. Those who follow the Soo approach need to protect not only their own distribution of shares, but also the distribution of shares to other shareholders. This includes SM Entertainment musicians as well as their album and comeback earnings. Fans were relieved to see Lee Soo-man quickly resolve the matter by taking appropriate action against him, which protects many individuals within the company. Of course, they hoped that the situation would be resolved and cooperation with Kakao would be cancelled.
According to JTBC, Lee Soo-man is in the US and rushed back to Korea on February 7 https://t.co/YkrGJW3SpF
– TMIKpop (@tmikpop) February 8, 2023
Another comment on the post said
“I heard the reason SM stock is undervalued is because Lee soo-man invested too much and lost a lot hahaha. It is human greed” https://t.co/18hq9XQ056
— cow (@HlGHNOVA) February 7, 2023
Categories: Entertaintment
Source: HIS Education