Lee Soo Man, sudden return to Korea → hospitalization…”Dispute over management rights with SM”
Former general producer and largest shareholder Lee Soo Man, who heralded a dispute over management rights with SM, entered Korea.
According to the music industry on Feb 8th, Lee Soo Man returned to Korea via Incheon International Airport the previous day. It is known that Lee Soo Man, who suffered an arm fracture overseas, is currently receiving treatment at a hospital in Seoul.
Regarding Lee Soo Man’s sudden return to Korea, it is speculated that it is for legal action against SM’s board of directors, which he announced through a law firm on Feb 7th. In particular, SM’s general meeting of stockholders scheduled for next month is also being mentioned.
On Feb 7th, Kakao became the second-largest shareholder by securing a 9.05% stake in SM. Kakao acquired 1.23 million new shares issued by SM in the form of third-party allocation paid-in capital increase and secured about 1.14 million shares through the acquisition of convertible bonds.
In this regard, Lee Soo Man’s side said, “It’s clearly an illegal act that violates commercial law and the articles of association. We’ll fundamentally block the SM’s board of directors’ illegal attempts through an injunction banning the issuance of illegal new shares and convertible bonds.”
Lee Soo Man’s legal representative argued that issuing new shares or convertible bonds to a third party is infringing on the shareholders’ right to take over new shares. The convertible bonds issued to Kakao are not aimed at raising funds but at changing corporate governance to defend management rights or control of the management.
On February 8th, Lee Soo Man’s legal representative said, “We have received an application for a provisional injunction against SM to ban the issuance of new shares and convertible bonds to the Seoul Eastern District Court.”
SM’s internal dispute is deepening over Lee Soo Man’s resignation. On February 5th, Kim Min Jong, outside director of SM, sent an email to all SM employees, saying, “Co-CEOs Lee Sung Soo and Tak Young Joon cut off all conversations with Lee Soo Man and unilaterally made an official announcement about his resignation without any discussion with insiders.”
Meanwhile, this year, SM is switching from Lee Soo Man’s general production system to a multi-production system. According to “SM 3.0: IP Strategy – Multi Production Center/Label System”, the new system supports both autonomy and growth opportunities by independent labels for artists.
In addition, on February 7th, Kakao, Kakao Entertainment, and SM Entertainment signed a three-way business agreement while Kakao secured a stake in SM, with the goal of continuing various business collaborations along with the music business, such as production and distribution of albums and digital releases globally.
Source: Daum.
