Lee Soo Man Reportedly Suing SM Entertainment For Unlawful Practices
Lee Soo Man is reportedly taking legal action against SM Entertainment for illegal practices. Certain claims and plans have been disclosed, earning netizens' attention.
Here's what happened.
Lee Soo Man To Sue SM Entertainment For Unauthorized Deal With Kakao
On January 7, it was revealed that Lee Soo Man, SM's Entertainment's founder and its largest shareholder, will file legal action against the company.
According to a Hwawoo legal representative, it was revealed that both SM Entertainment and Kakao used illegal procedures to obtain shares. The shares acquired were provided to Kakao.
Hwawoo addressed the management dispute between SM Entertainment, Align Partners (activist fund shareholder), and Lee Soo Man.
It explained that Align Partners proposed to hire an auditor, in charge of handling shareholder meetings in the company. The proposals were suggested in 2022.
From there, the company went haywire, causing disputes regarding management rights. There were also claims of requesting admission for accounting books and board meeting documents.
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It was disclosed that SM's co-CEOs Lee Sung Soo and Tak Young Joon didn't consult Lee Soo Man first before agreeing with Align Partners' proposal. This caused infighting among SM Entertainment authorities over management rights.
Relating to the topic, a leaked email also revealed internal conflict. This event occurred after the agency declared the beginning of "SM 3.0" era, during Lee Soo Man's resignation.
Legal Firm Hwawoo To File Injunction to SM Entertainment's Board of Directors
According to Hwawoo, the act is a violation on Commercial Law and Articles of Association. It detailed that distributing new shares and giving convertible bonds to third parties are illegal, especially in such time when the company is in dispute.
The statement furthered that SM's board of directors firmly supplied new shares to third party, Kakao, for their expansion and pursuit of authority of SM Entertainment.
Since legal firm is sided with the company's largest shareholder, Lee Soo Man, they assured these actions will be thwarted through an injunction.
It also confirmed the attempts of issuing new shares and convertible bonds will be prevented, as well as sue the board of directors for these actions.
"As reported around in the media, a management dispute between SM Entertainment's founder Lee Soo Man and Align Partners."
"SM's co-CEOs Lee Sung Soo and Tak Young Joon agreed to Align Partners' Proposal without consulting Lee Soo Man, the company's largest shareholder, which led to several management disputes."
"The co-CEOs attempt to issue new shares and convertible bonds to a third party, amid management dispute, is a violation of Commercial Law, as well as the Articles of Association."
"As the agent of the largest shareholder, the firm will block the board of directors' efforts through an injunction. We will hold legal liabilities, both civilly and criminally."
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