The founder and former CEO of SM Entertainment, Lee Soo-man, is threatening to sue the company for illegal business. The company has been planning to make several changes this year, and amid those meetings, several employee disputes have been rising. Kakao Entertainment has been openly showcasing their interest in joining hands with SM Entertainment, and recently they have bought 9% of the shares, becoming the second largest shareholder.
Following the company’s new relationship with Kakao, Soo-man has decided to file for an injunction. Hwawoo, the legal firm representing the former CEO, made a statement about the situation, saying that both companies have used illegal methods to make important decisions about the future.
Further reports say that SM Entertainment has decided to sell a large portion of the shares to Kakao without consulting with Soo-man. The decision was made in his absence, which is illegal since he is the largest shareholder in the company. This action has further strained the relationship between the company and the founder.
The rash decision directly violates the commercial law; hence, Lee Soo-man can sue them on those grounds. Previously it was also announced that Soo-man’s production contract was terminated, and disputes due to that have been rising. Insiders claim that the decision was made recklessly, and further board meetings are being held to solve the problem.
Kakao bought 9.05 per cent of SM’s shares for $172.8 million on February 7, 2023. However, apart from the tech company becoming SM’s second-largest shareholder, the companies also signed a business agreement. It states that Kakao Entertainment is allowed to use their expertise in tech, entertainment and music to produce new K-pop artists and run global businesses.
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Watch Lee Soo-man at SM Congress 2021
Earlier, SM Entertainment revealed its 2023 business plans for the company’s future. CEO Lee Sung-soo announced that starting in 2023, the company will officially begin its 3.0. phase. This phase will focus on expanding the company’s global reach and will further be delving into the metaverse world.
Along with that, they will also be debuting three new groups and the first virtual solo artist, Navevis. They also plan to release 41 albums from group and solo artists and aim for 18 million album sales.
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