The Previous Day, SM's Board of Directors Announced a Legal Response to Joining Kakao.

Source: The Fact DB

The news that Lee So Man, the majority shareholder of SM Entertainment (hereinafter referred to as SM), has returned home quickly due to an arm injury is becoming a hot topic. As reported by Yonhap News and the music world on the 8th, General Manager Lee So Man, who was staying overseas, recently arrived at Incheon International Airport the day before and was hospitalized at a hospital in Seoul. The news of the hospitalization of the major shareholder, Lee So Man, adds to the curiosity about the current decision of the SM board to issue new shares and convertible bonds to Kakao via a press release. Earlier, the SM board of directors, including Lee Sung-so, the co-CEO of SM, issued new shares and convertible bonds in the form of raising capital allocated to third parties through an emergency board meeting, then sold to Kakao Entertainment (hereinafter referred to as Kakao) and transferred 9.05%. As a result, Kakao became the second largest shareholder after Lee So Man, who owns 18.45% of the shares. Through the signing of a Memorandum of Understanding (MOU), the company is expected to cooperate in SM's new music business with SM 3.0 representatives. However, the majority shareholder, Lee So Man, criticized SM's cooperation with Kakao, stating that "This is clearly a violation of the Trade Act and the Company's Charter. We expect to pursue all civil and criminal liabilities and foreshadow future legal action between the founder and the company.