Fairlane Raymundo
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[Breaking News] COURT Accepted provisional injunction saying "HYBE cannot exercise voting rights on Min Hee-jin's dismissal"
🕑 Added 2024-05-30 07:10:09 +0000 UTCVERBAL EXPLANATION OF THE DECISION: https://youtu.be/lRVkxumSe3c
The court accepted the application for a temporary injunction to prohibit the exercise of voting rights filed by Min Hee-jin, CEO of ADOR, the group's New Jeans agency, against HYBE.
THE STORY IS STILL DEVELOPING.
I will update when I get more info.
https://m.entertain.naver.com/article/477/0000493152
https://m.entertain.naver.com/article/241/0003354132
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The key issue in the court's decision to uphold the provisional injunction was whether the shareholder agreement that CEO Min signed with HYBE effectively restricted voting rights. During the injunction hearing, it was noted that the shareholder agreement, signed by CEO Min and HYBE in March of the previous year, stated that actions must be taken with the voting rights of the shares held to ensure that ADOR could maintain Min's position as CEO and executive director for five years from the date of establishment. Based on this agreement, it was argued that HYBE's voting rights could be restricted.
Conversely, HYBE requested the court to dismiss the injunction, arguing that, under commercial law, major shareholders are only responsible for damages and that exercising voting rights for the dismissal of directors is justified.
Until now, there has been no Supreme Court precedent regarding the effectiveness of such contracts to restrict voting rights, making the outcome of the provisional injunction difficult to predict. However, the court concluded that HYBE had not sufficiently demonstrated the reasons for dismissing CEO Min.
In its ruling, the court stated, "Given that the dismissal or resignation of Min Hee-jin constitutes an exceptional case where HYBE can avoid the aforementioned restrictions on exercising voting rights, HYBE must explain the grounds for her dismissal or resignation. A thorough examination of the evidence and a detailed review of the main case are necessary to determine if there is a valid reason for Min Hee-jin's dismissal or resignation. Based solely on the claims and materials submitted so far, it is not sufficiently demonstrated that a valid reason for her resignation exists."
The court further noted, "Min Hee-jin weakened HYBE’s control over ADOR by leaving HYBE’s sphere of influence with NEWJEANS or by pressuring HYBE to sell its shares in ADOR. It is evident that she was seeking a solution to this issue. However, it is difficult to conclude that she moved beyond the stage of exploring solutions to taking concrete actions. While her actions could be considered disloyal to HYBE, they do not necessarily constitute a breach of trust toward ADOR."
Additionally, the court stated, "With the general shareholders' meeting imminent, it is challenging for Min Hee-jin to seek relief through a lawsuit on the merits. The damage caused by her losing the opportunity to perform her duties as an ADOR director during the remaining period must be compensated with post facto monetary compensation. Given the difficulty in recovering such losses, there is a demonstrated need to ban HYBE from exercising its voting rights through a preliminary injunction prior to the main case ruling."
The court also set a compensation amount of 20 billion won if HYBE violates this and dismisses CEO Min Hee-jin.
One month into the ADOR incident... Min Hee-jin vs. HYBE: The winner is Min Hee-jin.
With the provisional injunction approved, HYBE was unable to exercise its voting rights at the extraordinary shareholders' meeting. As a result, CEO Min was able to retain his position. However, since other executives, including the Vice President, have not signed a shareholder agreement, they are not subject to voting restrictions, making it highly likely that all executives other than CEO Min will be dismissed. In this scenario, even if CEO Min remains in office, he will become an isolated figure within the label. There is also a possibility that HYBE will file an appeal.
HYBE had been searching for new management candidates, confident that the injunction would be dismissed. According to the investment banking industry, Jae-sang Lee, HYBE CSO (Chief Strategy Officer), Joo-young Kim, HYBE CHRO (Chief Human Resources Officer), and Gyeong-jun Lee, HYBE CFO (Chief Financial Officer) were mentioned as candidates for ADOR's new board of directors. However, with the injunction granted, HYBE's plans became futile.
Additionally, the court ruled that it was difficult to consider CEO Min's breach of trust charges since they had not been specifically carried out, raising the possibility that future criminal trials would unfold similarly.
HYBE began an audit on the 22nd of last month, claiming that ADOR's corporate value was damaged by CEO Min's attempt to usurp management rights. Three days later, on the 25th, it reported CEO Min and other ADOR executives to the police on charges of breach of trust and other offenses. On the 10th, it was confirmed that ADOR's extraordinary general shareholders' meeting, where the dismissal of CEO Min was on the agenda, would proceed. Prior to this, CEO Min applied for a temporary injunction on the 7th to block HYBE, which owns 80% of ADOR's shares, from exercising its voting rights.
Both sides have engaged in a fierce public opinion battle for about a month, exchanging official positions. This process has generated numerous provocative keywords and sensitive issues, such as suspicions of usurping management rights, plagiarism, shareholder contracts, album delays, neglecting NewJeans, and shamanic management, leading to heated conflicts in online communities.
Even during the interrogation held on the 17th, both sides strengthened their claims through 30-minute presentations, fiercely arguing with legal and personal attacks, and engaging in a petition war, continuing the intense conflict.
